Document:

Loan Agreement dated July 12, 2006

 EXHIBIT 10.1 
  

 LOAN AGREEMENT 
 between 
 FOUNTAIN POWERBOATS, INC., 
 as Borrower, 
 FOUNTAIN POWERBOAT INDUSTRIES, INC., 
 as Parent Guarantor 
 and 
 REGIONS BANK 
 $5,000,000 Credit Facility

 July 12, 2006 
  

 TABLE OF CONTENTS 
  

					
	 	  	 	  	Page
	
	ARTICLE I
	
	DEFINITIONS
			
	1.1	  	Defined Terms	  	1
	1.2	  	Accounting Terms	  	12
	1.3	  	Singular/Plural	  	12
	1.4	  	Other Terms	  	12
	
	ARTICLE II
	
	TERMS OF THE LOANS
			
	2.1	  	Commitment; Loans	  	13
	2.2	  	Evidence of Loans; Note	  	13
	2.3	  	Borrowings	  	13
	2.4	  	Repayment; Maturity of the Loans	  	13
	2.5	  	Optional Prepayment of any Loan	  	14
	2.6	  	Use of Proceeds	  	14
	2.7	  	Interest	  	14
	2.8	  	Payment	  	15
	2.9	  	Taxes	  	15
	2.10	  	Basis for Determining Interest Rate Inadequate or Unfair	  	15
	2.11	  	Illegality	  	16
	2.12	  	Increased Cost and Reduced Return.	  	16
	2.13	  	Base Rate Loans Substituted for Affected LIBOR Loans	  	17
	2.14	  	Compensation	  	17
	
	ARTICLE III
	
	CONDITIONS TO EFFECTIVENESS AND BORROWING
			
	3.1	  	Conditions of Effectiveness	  	18
	3.2	  	Conditions of All Borrowings	  	20
	3.3	  	Waiver of Conditions Precedent	  	20
	
	ARTICLE IV
	
	REPRESENTATIONS AND WARRANTIES
			
	4.1	  	Corporate Organization and Power	  	21
	4.2	  	Corporate Authority: No Conflict With Other Instruments or Law	  	21
	4.3	  	Due Execution and Delivery	  	21
	4.4	  	Enforceability	  	21

  

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	4.5	  	Governmental Approval	  	22
	4.6	  	Margin Stock	  	22
	4.7	  	Investment Company	  	22
	4.8	  	Taxes	  	22
	4.9	  	Litigation	  	22
	4.10	  	Financial Statements	  	22
	4.11	  	No Material Adverse Change	  	23
	4.12	  	Compliance with Laws	  	23
	4.13	  	Environmental Compliance	  	23
	4.14	  	Ownership of Properties	  	24
	4.15	  	Intellectual Property	  	24
	4.16	  	Insurance	  	24
	4.17	  	ERISA	  	25
	4.18	  	Full Disclosure	  	25
	4.19	  	No Default	  	25
	4.20	  	Subsidiaries	  	25
	4.21	  	First Priority Liens	  	25
	4.22	  	Labor Relations	  	25
	4.23	  	OFAC; Anti-Terrorism Laws	  	26
	
	ARTICLE V
	
	AFFIRMATIVE COVENANTS
			
	5.1	  	Financial and Business Information	  	26
	5.2	  	Notice of Certain Events	  	27
	5.3	  	Existence; Franchises; Maintenance of Properties	  	27
	5.4	  	Compliance with Laws	  	28
	5.5	  	Payment of Obligations	  	28
	5.6	  	Maintenance of Books and Records; Inspection	  	28
	5.7	  	Maintenance of Insurance	  	28
	5.8	  	Compliance with ERISA	  	28
	5.9	  	Name Change	  	29
	5.10	  	OFAC, PATRIOT Act Compliance	  	29
	5.11	  	Further Assurances	  	29
	
	ARTICLE VI
	
	FINANCIAL COVENANTS
			
	6.1	  	Fixed Charge Coverage Ratio	  	29
	6.2	  	Minimum Tangible Net Worth	  	29
	6.3	  	Debt to Tangible Net Worth Ratio	  	30
	6.4	  	Capital Expenditures	  	30

  

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	ARTICLE VII
	
	NEGATIVE COVENANTS
			
	7.1	  	Mergers; Consolidations	  	30
	7.2	  	Indebtedness	  	30
	7.3	  	Liens and Encumbrances	  	31
	7.4	  	Disposition of Assets	  	32
	7.5	  	Restricted Investments	  	32
	7.6	  	Restricted Payments	  	32
	7.7	  	Transactions With Related Persons	  	33
	7.8	  	Sale-Leaseback Transactions	  	33
	7.9	  	Certain Amendments	  	33
	7.10	  	Limitation on Certain Restrictions	  	34
	7.11	  	No Other Negative Pledges	  	34
	7.12	  	Partnerships	  	34
	7.13	  	Lines of Business	  	34
	7.14	  	Boat Collateral	  	34
	7.15	  	Fiscal Year	  	35
	7.16	  	Accounting Changes	  	35
	7.17	  	Additional Covenants of the Parent	  	35
	
	ARTICLE VIII
	
	EVENTS OF DEFAULT; REMEDIES
			
	8.1	  	Events of Default	  	36
	8.2	  	Remedies	  	37
	
	ARTICLE IX
	
	GUARANTY
			
	9.1	  	The Parent Guaranty	  	38
	9.2	  	Guaranty Unconditional	  	39
	9.3	  	Nature of Liability	  	39
	9.4	  	Independent Obligation	  	39
	9.5	  	Authorization	  	39
	9.6	  	Reliance	  	40
	9.7	  	Waiver	  	40
	9.8	  	Application; Set-Off	  	41
	
	ARTICLE X
	
	MISCELLANEOUS
			
	10.1	  	Costs, Expenses and Taxes	  	42
	10.2	  	Indemnification	  	42

  

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	10.3	  	Waiver of Jury Trial	  	43
	10.4	  	Waiver of Automatic or Supplemental Stay	  	43
	10.5	  	Notices	  	43
	10.6	  	Continuing Obligations	  	44
	10.7	  	Controlling Law	  	44
	10.8	  	Successors and Assigns	  	44
	10.9	  	Assignment and Sale	  	44
	10.10	  	Entire Agreement	  	44
	10.11	  	Amendment	  	45
	10.12	  	Severability	  	45
	10.13	  	Counterparts	  	45
	10.14	  	Captions	  	45
	10.15	  	Consent Under Term Loan Agreement	  	45

  

			
	Exhibit A	  	Form of Note
	Exhibit B	  	Form of Compliance Certificate
	Exhibit C	  	Form of Borrowing Notice
		
	Schedule 4.9	  	Litigation
	Schedule 4.13	  	Environmental Compliance
	Schedule 4.14	  	Realty; Registry
	Schedule 4.15	  	Intellectual Property
	Schedule 4.16	  	Insurance

  

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 LOAN AGREEMENT 
 THIS LOAN AGREEMENT, dated as of July 12, 2006, is made and entered into by and between FOUNTAIN POWERBOATS, INC., a North Carolina corporation with its principal office at 1653 Whichard’s Beach
Road, Washington, North Carolina 27889 (the “Borrower”), FOUNTAIN POWERBOAT INDUSTRIES, INC., a Nevada corporation (the “Parent”), and REGIONS BANK, an Alabama chartered bank with offices in Charlotte,
North Carolina. 
 BACKGROUND STATEMENT 
 A. The Borrower has requested that the Bank extend a $5,000,000 non-revolving line of credit to the Borrower, to be advanced by the Bank pursuant to the terms and conditions hereof. 
 B. The Bank is willing to extend the non-revolving line of credit described above upon the terms and subject to the conditions set forth in this
Agreement. 
 AGREEMENT 
 NOW, THEREFORE, in consideration of the premises, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to induce the Bank to make the loans described herein, the
parties hereto hereby agree as follows: 
 ARTICLE I 
 DEFINITIONS 
 1.1 Defined Terms. In addition to the words and terms defined elsewhere in this
Agreement, the following terms when used herein shall have the following respective meanings: 
 “Adjusted Base Rate” shall
mean an interest rate per annum equal to the sum of (i) the Base Rate, and (ii) the Applicable Margin in effect at such time with respect to such Loan. 
 “Adjusted LIBOR Rate” shall mean, with respect to any Interest Period, a rate per annum equal to the sum of (i) the quotient obtained (rounded upwards, if necessary, to the next higher 1/100 of
one percent) by dividing (A) the LIBOR Rate for such Interest Period by (B) 1.00 minus the Eurodollar Reserve Percentage, and (ii) the Applicable Margin in effect at such time with respect to such Loan. 
 “Affiliate” shall mean, as to any Person, (i) any other Person which directly, or indirectly through one or more intermediaries,
controls such Person, (ii) any other Person which directly, or indirectly through one or more intermediaries, is controlled by or is under common control with such Person, or (iii) any other Person of which such Person owns, directly or
indirectly, ten percent (10%) or more of the common stock or equivalent equity interests. As used herein, the term “control” means possession, directly or indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership of voting 
  

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 securities or otherwise. Notwithstanding anything to the contrary set forth herein, so long as Brunswick Corporation does
not own ten percent (10%) or more of the Capital Stock of the Parent, it shall not be considered an Affiliate of the Parent or the Borrower. 
 “Agreement” shall mean this Loan Agreement and all schedules and exhibits hereto, together with any amendments, modifications, replacements and supplements hereto, and any substitutes herefor. 
 “Applicable Margin” shall mean, (i) with respect to LIBOR Loans, 1.75% per annum; and (ii) with respect to Base Rate
Loans, 0% per annum. 
 “Bank” shall mean Regions Bank, an Alabama chartered bank with offices in Charlotte, North Carolina,
and its successors and assigns. 
 “Bankruptcy Code” shall mean Title 11 of the United States Code, as amended, and any
successor statute or statutes having substantially the same function. 
 “Base Rate” shall mean the higher of (i) the
rate which the Bank announces from time to time as its prime lending rate, as in effect from time to time, or (ii) the Federal Funds Rate, as in effect from time to time, plus one-half of one percent ( 1/2%) per annum (any changes in such rates to be effective as of the date of any change in such rate). The Bank
prime lending rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer. The Bank may make commercial loans or other loans at rates of interest at, above, or below the Bank prime lending
rate. 
 “Base Rate Loan” shall mean, at any time, all or any portion of any Loan that bears interest at the Adjusted
Base Rate at such time. 
 “Boat Collateral” shall mean, with respect to each Loan, the Watercraft (as defined in
§75A-33 of the North Carolina General Statutes) and all other parts, products, equipment and inventory related thereto, an adequate description of which is contained in the manufacturer’s statement of origin attached to the Borrowing
Notice for such Loan. 
 “Borrower” shall have the meaning given to such term in the introductory paragraph hereof.

 “Borrowing” shall mean the borrowing of any Loan pursuant to Article II. 
 “Borrowing Date” shall have the meaning set forth in Section 2.3. 
 “Business Day” shall mean any day of the year on which banks are open for business in Charlotte, North Carolina. 
 “Capitalized Lease” shall mean any lease or similar arrangement which is of a nature that payment obligations of the lessee or obligor
thereunder at the time are or should be capitalized and shown as liabilities (other than current liabilities) upon a balance sheet of such lessee or obligor prepared in accordance with GAAP. 
  

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 “Capitalized Lease Obligations” shall mean, with respect to any Capital Lease, the
amount of the obligation of the lessee thereunder that would, in accordance with GAAP, appear on a balance sheet of such lessee with respect to such Capital Lease. 
 “Capital Expenditures” shall mean during any period, the sum of all amounts paid during such period that would, in accordance with GAAP, be included on the consolidated statement of cash flows of the
Parent and its Subsidiaries as an acquisition of fixed assets or improvements, replacements, substitutions or additions thereto. 
 “Capital Stock” shall mean (i) with respect to any Person that is a corporation, any and all shares, interests or equivalents in capital stock (whether voting or nonvoting, and whether common or preferred) of such
corporation, and (ii) with respect to any Person that is not a corporation, any and all partnership, membership, limited liability company or other equity interests of such Person; and in each case, any and all warrants, rights or options to
purchase any of the foregoing. 
 “Cash Equivalents” shall mean (i) securities issued or unconditionally guaranteed or
insured by the United States of America or any agency or instrumentality thereof, backed by the full faith and credit of the United States of America and maturing within one year from the date of acquisition, (ii) commercial paper issued by any
Person organized under the laws of the United States of America, maturing within 180 days from the date of acquisition and, at the time of acquisition, having a rating of at least A-1 or the equivalent thereof by Standard & Poor’s
Ratings Services or at least P-1 or the equivalent thereof by Moody’s Investors Service, Inc., (iii) time deposits and certificates of deposit maturing within 180 days from the date of issuance and issued by a bank or trust company
organized under the laws of the United States of America or any state thereof (y) that has combined capital and surplus of at least $500,000,000 or (z) that has (or is a subsidiary of a bank holding company that has) a long-term unsecured
debt rating of at least A or the equivalent thereof by Standard & Poor’s Ratings Services or at least A2 or the equivalent thereof by Moody’s Investors Service, Inc., (iv) repurchase obligations with a term not exceeding
thirty (30) days with respect to underlying securities of the types described in clause (i) above entered into with any bank or trust company meeting the qualifications specified in clause (iii) above, and (v) money market funds
at least ninety-five percent (95%) of the assets of which are continuously invested in securities of the foregoing types. 
 “Change in Control” shall mean and be deemed to occur if (i) the Parent ceases to own, beneficially and of record, and control 100% of the total Capital Stock of the Borrower, (ii) any Person, or group of Persons
acting in concert, other than Reginald M. Fountain, Jr. shall become the “beneficial owner” of Capital Stock of the Parent representing 25% or more of the combined voting power of the then outstanding Capital Stock of the Parent ordinarily
having the right to vote in the election of directors, (iii) during any period of up to twelve (12) consecutive months, commencing after the Closing Date, individuals who at the beginning of such twelve (12) month period were
directors of the Parent (together with any new director whose election by the Parent’s board of directors or whose nomination for election by Parent’s stockholders was approved by a vote of at least two-thirds of the directors then still
in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the directors of the Parent then in office, or
(iv) Reginald M. Fountain, Jr. shall cease to serve as the chief executive officer of the Parent and the Borrower unless the Parent and the Borrower shall have selected a chief executive officer reasonably satisfactory to the Bank. 

 

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 “Change of Law” shall mean the adoption of any applicable law, rule or regulation, or
any change therein or any existing or future law, rule or regulation, or any change in the interpretation or administration thereof, by any Governmental Authority, or compliance by the Bank with any with any request or directive (whether or not
having the force of law) of any Governmental Authority. 
 “Closing Date” shall mean the date upon which each of the
conditions set forth in Section 3.1 shall have been satisfied or waived in accordance with the terms of this Agreement. 
 “Code” shall mean the Internal Revenue Code of 1986, as amended, or any successor federal tax code. Any reference to any provision of the Code shall also include the income tax regulations promulgated thereunder, whether
final, temporary or proposed. 
 “Compliance Certificate” shall mean a fully completed and duly executed certificate in the
form of Exhibit B, together with a Covenant Compliance Worksheet. 
 “Consolidated EBITDA” shall mean, for any Person
for any period, the aggregate of (i) Consolidated Net Income of such Person for such period, plus (ii) the sum of depreciation, amortization of intangible assets, interest expense, and income tax expense, and minus
(iii) interest income, all to the extent taken into account in the calculation of Consolidated Net Income of such Person for such period. 
 “Consolidated Fixed Charges” shall mean, for any Person for any period of four consecutive fiscal quarters, the aggregate (without duplication) of (i) Consolidated Interest Expense to the extent paid (or required to be
paid) in cash during such period, and (ii) the aggregate (without duplication) of all scheduled payments of principal on Funded Debt required to have been made by such Person and its Subsidiaries during such period (whether or not such payments
are actually made), including, without limitation, the aggregate principal amount of the Loans due during such period under Section 2.4 (as such amounts may have been previously adjusted in accordance with the terms of this Agreement as
a result of prior prepayments on the Loans, including adjustments made pursuant to Section 2.5). 
 “Consolidated
Indebtedness” shall mean, as of the last day of any fiscal quarter, the aggregate of all Indebtedness (whether or not reflected on the Parent’s or any Subsidiary’s balance sheet) of the Parent and its Subsidiaries as of such date,
determined on a consolidated basis in accordance with GAAP. 
 “Consolidated Interest Expense” shall mean, for any Person
for any period, the aggregate (without duplication) of (i) total interest expense of such Person and its Subsidiaries for such period in respect of Funded Debt of such Person and its Subsidiaries (including all such interest expense accrued or
capitalized during such period, whether or not actually paid during such period), and (ii) all net amounts payable under or in respect of Hedge Agreements, to the extent paid or accrued by such Person and its Subsidiaries during such period.

  

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 “Consolidated Net Income” shall mean, for any Person for any period, the net income (or
loss) of such Person and its Subsidiaries, as determined on consolidated basis in accordance with GAAP. 
 “Consolidated Tangible Net
Worth” shall mean, as of any date of determination, the (i) total assets of the Parent and its Subsidiaries as of such date, other than assets which would be treated as intangible assets for balance sheet presentation purposes under
GAAP, including without limitation goodwill, trademarks, tradenames, copyrights, patents and technologies, and unamortized debt discount and expense, minus (ii) total liabilities of the Parent and its Subsidiaries as of such date, in
each case determined on a consolidated basis in accordance with GAAP. 
 “Controlled Group” shall mean all members of a
controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Borrower, are treated as a single employer under Section 414 of the Code. 
 “Costs” shall have the meaning set forth in Section 10.2. 
 “Covenant Compliance Worksheet” shall mean a fully completed worksheet in the form of Attachment A to Exhibit B.

 “Debt to Tangible Net Worth Ratio” shall mean, as of the last day of any fiscal quarter, the ratio of (i) Funded
Debt as of such date to (ii) Consolidated Tangible Net Worth as of such date. 
 “Default” shall mean any event which
with the giving of notice, lapse of time, or both, would become an Event of Default. 
 “Default Rate” shall mean an
interest rate equal to the Base Rate plus two percent (2.0%) per annum. 
 “Dollar” or “$” shall mean
dollars in lawful currency of the United States of America. 
 “Environmental Law” shall mean any federal, state or local
law, statute, ordinance, rule, regulation, permit, license, approval, interpretation, order, guidance or other legal requirement (including without limitation any subsequent enactment, amendment or modification) relating to the protection of human
health or the environment, including, but not limited to, any requirement pertaining to the manufacture, processing, distribution, use, treatment, storage, disposal, transportation, handling, reporting, licensing, permitting, investigation or
remediation of materials that are or may constitute a threat to human health or the environment. 
 “ERISA” shall mean the
Employee Retirement Income Security Act of 1974, as amended from time to time, and all rules and regulations from time to time promulgated thereunder. 
 “ERISA Affiliate” shall mean any Person (including any trade or business, whether or not incorporated) that would be deemed to be under “common control” with, or a member of the same
Controlled Group as, the Borrower or any of its Subsidiaries, within the meaning of Sections 414(b), (c), (m) or (o) of the Internal Revenue Code or Section 4001 of ERISA. 
  

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 “ERISA Event” shall mean any of the following with respect to a Plan or Multiemployer
Plan, as applicable: (i) a Reportable Event with respect to a Plan or a Multiemployer Plan, (ii) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan that results in liability under
Section 4201 or 4204 of ERISA, or the receipt by the Borrower or any ERISA Affiliate of notice from a Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA or that it intends to terminate
or has terminated under Section 4041A of ERISA, (iii) the distribution by the Borrower or any ERISA Affiliate under Section 4041 or 4041A of ERISA of a notice of intent to terminate any Plan or the taking of any action to terminate
any Plan, (iv) the commencement of proceedings by the PBGC under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or the receipt by the Borrower or any ERISA Affiliate of a notice from
any Multiemployer Plan that such action has been taken by the PBGC with respect to such Multiemployer Plan, (v) the institution of a proceeding by any fiduciary of any Multiemployer Plan against the Borrower or any ERISA Affiliate to enforce
Section 515 of ERISA, which is not dismissed within thirty (30) days, (vi) the imposition upon the Borrower or any ERISA Affiliate of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under
Section 4007 of ERISA, or the imposition or threatened imposition of any Lien upon any assets of the Borrower or any ERISA Affiliate as a result of any alleged failure to comply with the Internal Revenue Code or ERISA in respect of any Plan,
(vii) the engaging in or otherwise becoming liable for a nonexempt Prohibited Transaction by the Borrower or any ERISA Affiliate, (viii) a violation of the applicable requirements of Section 404 or 405 of ERISA or the exclusive
benefit rule under Section 401(a) of the Internal Revenue Code by any fiduciary of any Plan for which the Borrower or any of its ERISA Affiliates may be directly or indirectly liable or (ix) the adoption of an amendment to any Plan that,
pursuant to Section 401(a)(29) of the Internal Revenue Code or Section 307 of ERISA, would result in the loss of tax-exempt status of the trust of which such Plan is a part if the Borrower or an ERISA Affiliate fails to timely provide
security to such Plan in accordance with the provisions of such sections. 
 “Eurodollar Reserve Percentage” shall mean for
any day that the percentage (expressed as a decimal) which is in effect on such day, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement for a member bank of the
Federal Reserve System in respect of “Eurocurrency liabilities” (or in respect of any other category of liabilities which includes deposits by reference to which the interest rate on LIBOR Loans is determined or any category of
extensions of credit or other assets which includes loans by a non-United States office of the Bank to United States residents). The Adjusted LIBOR Rate shall be adjusted automatically on and as of the effective date of any change in the Eurodollar
Reserve Percentage. 
 “Event of Default” shall have the meaning specified in Article VIII hereof. 
 “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time, and any successor statute, and all rules
and regulations from time to time promulgated thereunder. 
 “Federal Funds Rate” shall mean, for any period, a fluctuating
per annum interest rate (rounded upwards, if necessary, to the nearest 1/100 of one percentage point) equal for each day during such period to the weighted average of the rates on overnight federal funds transactions 
  

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 with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or, if such day
is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or if such rate is not so published for any day that is a Business Day, the average of the quotations for such day on such transactions received by
the Bank from three federal funds brokers of recognized standing selected by the Bank. 
 “fiscal quarter” or
“FQ” shall mean a fiscal quarter of the Parent and its Subsidiaries. 
 “fiscal year” or
“FY” shall mean a fiscal year of the Parent and its Subsidiaries. 
 “Fixed Charge Coverage Ratio” shall
mean, as of the last day of any period of four consecutive fiscal quarters, the ratio of: (i)(A) Consolidated EBITDA of the Parent for such period minus (B) aggregate tax expense to the extent paid in cash by the Borrower and its
Subsidiaries during such period minus (C) all dividends and distributions paid in cash by the Parent to its shareholders during such period, to (ii) Consolidated Fixed Charges of the Parent for such period. 
 “Funded Debt” shall mean all Indebtedness of the Parent and its Subsidiaries (other than Indebtedness of the types referred to in clause
(xi) thereof or permitted under Section 7.2(iv)). 
 “GAAP” shall mean generally accepted accounting
principles, as recognized by the American Institute of Certified Public Accountants, consistently applied and maintained on a consistent basis for the Parent and its Subsidiaries on a consolidated basis throughout the period indicated and consistent
with the financial practice of the Parent and its Subsidiaries after the date hereof. 
 “Governmental Authority” shall mean
any nation or government, any state, department, agency or other political subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to any government, and any
corporation or other entity owned or controlled (through stock or capital ownership or otherwise) by any of the foregoing. 
 “Guaranteed Obligations” shall have the meaning specified in Section 9.1. 
 “Hazardous
Material” shall mean any substance or material meeting any one or more of the following criteria: (i) it is or contains a substance designated as a hazardous waste, hazardous substance, pollutant, contaminant or toxic substance under
any Environmental Law; (ii) it is toxic, explosive, corrosive, ignitable, infectious, radioactive, mutagenic or otherwise hazardous, (iii) its presence requires investigation or remediation under an Environmental Law or common law;
(iv) it constitutes a danger, nuisance, trespass or health or safety hazard to persons or property; and/or (v) it is or contains, without limiting the foregoing, petroleum hydrocarbons. 
 “Hedge Agreement” shall mean any interest or foreign currency rate swap, cap, collar, option, hedge, forward rate or other similar
agreement or arrangement designed to protect against fluctuations in interest rates or currency exchange rates. 
  

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 “Indebtedness” shall mean, for any Person, without duplication (i) obligations of
such Person for borrowed money; (ii) obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; (iii) obligations of such Person in respect of the deferred purchase price of property or services (other
than trade payables incurred in the ordinary course of business on terms customary in the trade); (iv) obligations of such Person under any conditional sale or other title retention agreement(s) relating to property acquired by such Person;
(v) Capitalized Lease Obligations of such Person; (vi) obligations, contingent or otherwise, of such Person in respect of letters of credit, acceptances or similar extensions of credit (whether or not drawn upon and in the stated amount
thereof); (vii) guaranties by such Person of the type of indebtedness described in clauses (i) through (vi) above; (viii) all indebtedness of a third party secured by any Lien on property owned by such Person, whether or not such
indebtedness has been assumed by such Person; (ix) all obligations of such Person, contingent or otherwise, to purchase, redeem, retire or otherwise acquire for value any common stock of such Person; (x) off-balance sheet liability
retained in connection with asset securitization programs, synthetic leases, sale and leaseback transactions or other similar obligations arising with respect to any other transaction which is the functional equivalent of or takes the place of
borrowing but which does not constitute a liability on the consolidated balance sheet of such Person and its Subsidiaries; and (xi) obligations under any Hedge Agreement. 
 “Intellectual Property” shall mean (i) all inventions (whether or not patentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications, and patent disclosures, together with all reissues, continuations, continuations-in-part, divisions, revisions, extensions, and reexaminations thereof, (ii) all trademarks, service
marks, trade dress, logos, trade names, and corporate names, together with all goodwill associated therewith, and all applications, registrations, and renewals in connection therewith, (iii) all copyrightable works and all copyrights
(registered and unregistered), (iv) all trade secrets and confidential information (including, without limitation, financial, business and marketing plans and customer and supplier lists and related information), (v) all computer software
and software systems (including, without limitation, data, databases and related documentation), (vi) all Internet web sites and domain names, (vii) all technology, know-how, processes and other proprietary rights, and (viii) all
licenses or other agreements to or from third parties regarding any of the foregoing. 
 “Interest Period” shall mean, with
respect to any LIBOR Loan, the period commencing on the Borrowing Date of such LIBOR Loan (or conversion of such Loan into a LIBOR Loan in accordance with Section 2.7(b)) and each subsequent period commencing at midnight of the last day of
the preceding Interest Period for such LIBOR Loan, and ending on the last Business Day of each calendar month; provided that any Interest Period which begins before the Loan Maturity Date for such LIBOR Loan and would otherwise end after the
Loan Maturity Date for such LIBOR Loan shall end on the Loan Maturity Date for such LIBOR Loan. 
 “Investments” shall have
the meaning set forth in Section 7.5. 
 “LIBOR Loan” shall mean, at any time, all or any portion of any Loan
that bears interest at the Adjusted LIBOR Rate at such time. 
  

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 “LIBOR Rate” applicable to any LIBOR Loan shall mean, for the Interest Period of such
LIBOR Loan the rate per annum determined on the basis of the rate for deposits in Dollars of amounts equal or comparable to the principal amount of such LIBOR Loan offered for a one-month term, which rate appears on the display designated as Page
“3750” of the Telerate Service (or such other page as may replace page 3750 of that service or such other service or services as may be nominated by the British Banker’s Association for the purpose of displaying London
Interbank Offered Rates for U.S. dollar deposits) determined as of 11:00 a.m. London time, two (2) Business Days prior to the first day of such Interest Period. 
 “Lien” shall mean any mortgage, pledge, hypothecation, assignment, security interest, lien (statutory or otherwise), charge or other encumbrance of any nature, whether voluntary or involuntary,
including, without limitation, the interest of any vendor or lessor under any conditional sale agreement, title retention agreement, Capital Lease or any other lease or arrangement having substantially the same effect as any of the foregoing.

 “Loan Documents” shall mean and collectively refer to this Agreement, the Note, the Security Documents and any and all
other agreements, instruments and documents, including, without limitation, notes, guaranties, mortgages, deeds to secure debt, deeds of trust, chattel mortgages, pledges, powers of attorney, consents, assignments, contracts, notices, security
agreements, trust account agreements and all other written matters whether heretofore, now or hereafter executed by or in behalf of the Borrower or delivered to the Bank with respect to this Agreement or with respect to the transactions contemplated
by this Agreement, and in each case, together with any amendments, modifications and supplements thereto, any replacements, renewals, extensions and restatements thereof, and any substitutes therefor, in whole or in part. 
 “Loan Commitment” shall have the meaning set forth in Section 2.1. 
 “Loan Commitment Termination Date” shall mean the first anniversary of the Closing Date. 
 “Loan Maturity Date” shall have the meaning set forth in Section 2.4(a)(i). 
 “Loans” shall have the meaning set forth in Section 2.1. 
 “Master Agreement” shall mean the Master Agreement, dated as of July 17, 2003, between and among Brunswick Corporation, the Parent,
the Borrower and Reginald M. Fountain, Jr. 
 “Material Adverse Effect” or “Material Adverse Change” shall
mean a material adverse effect upon, or a material adverse change in, any of (i) the financial condition, operations, business, properties or prospects of the Parent and its Subsidiaries, taken as a whole; (ii) the ability of the Parent or
any Subsidiary to perform under this Agreement or any other Loan Document in any material respect or any other material contract in any material respect to which any one or more of them is a party; (iii) the legality, validity or enforceability
of this Agreement or any other Loan Document; or (iv) the perfection or priority of the Liens of the Bank granted under this Agreement or any other Loan Document or the rights and remedies of the Bank under this Agreement or any other Loan
Document (other than a change resulting from any act or omission by the Bank). 
  

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 “Mortgage” shall mean any mortgage, deed of trust, deed to secure debt, collateral
assignment of lease or similar agreement or instrument pursuant to which the Borrower or any of its Subsidiaries grants in favor of the Bank, or a trustee for the benefit of the Bank, a security interest in and Lien upon any fee or leasehold
interest in the Realty, as amended on the date hereof, and as may be further amended, modified, restated or supplemented from time to time. 
 “Multiemployer Plan” shall mean any “multiemployer plan” within the meaning of Section 4001(a)(3) of ERISA. 
 “Note” shall mean the promissory note of the Borrower dated the date hereof in the form of Exhibit A attached hereto, executed and delivered to the Bank pursuant to Article II hereof,
evidencing the obligation of the Borrower to repay the Loans, together with any amendments, modifications and supplements thereto, any replacements, restatements, renewals and extensions thereof, and any substitutes therefor, in whole or in part.

 “Notice of Borrowing” shall have the meaning set forth in Section 2.3. 
 “Obligations” shall mean and include (i) the Loans and all other loans, advances, indebtedness, liabilities, obligations, covenants
and duties owing, arising, due or payable from the Borrower to the Bank of any kind or nature, present or future, arising under this Agreement, the Note or the other Loan Documents or any Hedge Agreement, whether direct or indirect (including those
acquired by assignment), absolute or contingent, primary or secondary, due or to become due, now existing or hereafter arising and however acquired; and (ii) all interest (including to the extent permitted by law, all post-petition interest),
charges, expenses, fees, attorneys’ fees and any other sums payable by the Borrower to the Bank under this Agreement or any of the other Loan Documents. 
 “OFAC” shall mean the U.S. Department of the Treasury’s Office of Foreign Assets Control, and any successor thereto. 
 “Parent” shall have the meaning given to such term in the introductory paragraph hereof. 
 “Parent Guaranty” shall mean the guaranty made by the Parent in favor of the Bank pursuant to the terms of Article IX. 
 “PATRIOT Act” shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT Act of 2001), as amended from time to time, and
any successor statute, and all rules and regulations from time to time promulgated thereunder. 
 “PBGC” shall mean the
Pension Benefit Guaranty Corporation and any successor thereto. 
 “Permitted Liens” shall have the meaning set forth in
Section 7.3. 
 “Person” shall mean an individual, a corporation, a partnership, a limited liability company, an
association, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. 
  

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 “Plan” shall mean, at any time, an employee pension benefit plan which is covered by
Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code and is either (i) maintained by a member of the Controlled Group for employees of any member of the Controlled Group, or (ii) maintained
pursuant to a collective bargaining agreement or any other arrangement under which more than one employer makes contributions and to which a member of the Controlled Group is then making or accruing an obligation to make contributions or has within
the preceding five plan years made contributions. 
 “Pledge Agreement” shall mean a pledge agreement, dated as of
September 19, 2005, made by the Parent and the Bank, as amended on the date hereof, and as may be further amended, modified, restated or supplemented from time to time. 
 “Pre-Tax Income” shall mean, for any Person for any period, Consolidated Net Income for such Person, without regard to income tax
expense for such period. 
 “Realty” shall mean the real property owned by the Borrower and set forth on Schedule
4.14. 
 “Registry” shall mean the office of the Register of Deeds (or comparable Governmental Authority) for each piece
of Realty, as set forth on Schedule 4.14. 
 “Requirement of Law” shall mean, with respect to any Person, the
charter, articles or certificate of organization or incorporation and bylaws or other organizational or governing documents of such Person, and any statute, law, treaty, rule, regulation, order, decree, writ, injunction or determination of any
arbitrator or court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject or otherwise pertaining to any or all of the transactions
contemplated by this Agreement and the other Loan Documents. 
 “Sanctioned Country” shall mean a country subject to a
sanctions program identified on the list maintained by OFAC and available at http://www.treas.gov/offices/eotffc/ofac/sanctions/index/html, or as otherwise published from time to time. 
 “Sanctioned Person” shall mean (i) a Person named on the list of Specially Designated Nationals or Blocked Persons maintained by
OFAC available at http://www.treas.gov/offices/eotffc/ofac/sdn/index/html, or as otherwise published from time to time, or (ii) (A) an agency of the government of a Sanctioned Country, (B) an organization controlled by a
Sanctioned Country, or (C) a Person resident in a Sanctioned Country, to the extent subject to a sanctions program administered by OFAC. 
 “Security Agreement” shall mean the Security Agreement, dated as of September 19, 2005, between the Parent, the Borrower and the Bank, as amended on the date hereof, and as may be further amended, modified,
supplemented or restated from time to time. 
 “Security Documents” shall mean the Security Agreement, the Pledge Agreement,
the Mortgages, the collateral assignment of life insurance policy and all other pledge or security agreements, mortgages, deeds of trust, assignments or other similar agreements or instruments 
  

 11 

 executed and delivered by the Parent or any of its Subsidiaries pursuant to the terms of this Agreement or otherwise in
connection with the transactions contemplated hereby, in each case as amended, modified or supplemented from time to time. 
 “Solvent” shall mean as to any Person on any particular date, that such Person (i) has capital sufficient to carry on its business as now conducted and as presently proposed to be conducted, (ii) is able to pay
its debts as they become due in the ordinary course of business, and (iii) has assets with a present fair saleable value greater than its total stated liabilities and identified contingent liabilities, including any amounts necessary to satisfy
preferential rights of shareholders. 
 “Subsidiary” shall mean any corporation, partnership, limited liability company,
association or other business entity of which the Parent owns, directly or indirectly, more than fifty percent (50%) of the voting securities thereof. 
 “Term Loan Agreement “ shall mean the Loan Agreement, dated as of September 19, 2005, between the Parent, the Borrower and the Bank, as may be amended, modified, supplemented or restated from
time to time. 
 “Wholly Owned” shall mean, with respect to any Subsidiary of any Person, that 100% of the outstanding
Capital Stock of such Subsidiary is owned, directly or indirectly, by such Person. 
 1.2 Accounting Terms. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with, GAAP applied on a basis
consistent with the most recent audited consolidated financial statements of the Parent delivered to the Bank prior to the Closing Date; provided that if the Borrower notifies the Bank that it wishes to amend any financial covenant in
Article VI to eliminate the effect of any change in GAAP on the operation of such covenant (or if the Bank notifies the Borrower that it wishes to amend Article VI for such purpose), then the Borrower’s compliance with such
covenant shall be determined on the basis of GAAP as in effect immediately before the relevant change in GAAP became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the Borrower and the Bank.

 1.3 Singular/Plural. Unless the context otherwise requires, words in the singular include the plural and words in the plural
include the singular. 
 1.4 Other Terms. All other terms contained in this Agreement shall, when the context so indicates, have the
meanings provided for by the Uniform Commercial Code of the State of North Carolina to the extent the same are used or defined therein. 
  

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 ARTICLE II 
 TERMS OF THE LOANS 
 2.1 Commitment; Loans. 
 (a) The Bank agrees, on the terms and conditions set forth herein, to make loans (each, a “Loan,” and collectively, the
“Loans”) to the Borrower, from time to time on any Business Day before the Loan Commitment Termination Date, provided that no Borrowing of Loans shall be made if, immediately after giving effect thereto, the aggregate amount
of all Loans made by the Bank to the Borrower hereunder would exceed $5,000,000 (the “Loan Commitment”). To the extent repaid, the Loans may not be reborrowed. 
 (b) Subject to the Bank’s right to cease making Loans upon the occurrence of a Default or an Event of Default, the Loan Commitment and the
Bank’s obligation to make Loans thereunder shall continue until the Loan Commitment Termination Date. 
 2.2 Evidence of Loans;
Note. On the Closing Date, the Borrower shall execute and deliver to the Bank the Note to evidence the Loans. The Note shall be in the form of Exhibit A and dated as of the date hereof. The Borrower and the Bank hereby agree that the
terms of this Agreement shall be incorporated by reference to the Note as if set forth therein and, in the event of any conflict between the terms of this Agreement and the Note, the terms of this Agreement shall control. 
 2.3 Borrowings. In order to make a Borrowing, the Borrower will give the Bank written notice not later than 11:00 a.m., Charlotte time, three
(3) Business Days prior to each Borrowing to be comprised of LIBOR Loans and one (1) Business Day prior to each Borrowing to be comprised of Base Rate Loans; provided, however, that requests for the Borrowing of the Loans to
be made on the Closing Date may, at the discretion of the Bank, be given with less advance notice than as specified hereinabove. Each such notice (each, a “Notice of Borrowing”) shall be irrevocable, shall be given in the form of
Exhibit C and shall (i) specify the aggregate principal amount of the Loan, (ii) specify whether the Loan shall be maintained as a Base Rate Loan or a LIBOR Loan, (iii) specify the requested borrowing date (the
“Borrowing Date”), which shall be a Business Day, (iv) attach the manufacturer’s statement of origin for the Boat Collateral securing such Loan, and (v) include a reasonably detailed summary of the cost associated
with the construction of such Boat Collateral. 
 2.4 Repayment; Maturity of the Loans. 
 (a) The Borrower shall repay each Loan: 
 (i) Except as set forth in Section 2.1(b), in full, on the first anniversary of the Borrowing Date for such Loan (the “Loan Maturity Date”); 
 (ii) In full, upon the occurrence of any Event of Default and acceleration of the Obligations by the Bank pursuant to Article VIII
hereof; 
 (iii) In full, upon the sale, assignment or transfer of the Boat Collateral securing such Loan; and 
 (b) The Borrower shall have the right with respect to any Loan, upon written notice given to the Bank not later than 11:00 a.m., Charlotte time, three
(3) Business Days prior to the Loan Maturity Date for such Loan, to extend such Loan Maturity Date for a period of six (6) calendar months; provided that such six-month extension shall not be permitted unless the Borrower repays at
least twenty percent (20%) of the outstanding principal amount of such Loan prior to such Loan Maturity Date. 
  

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 (c) In the event that, at any time, the aggregate amount of all Loans made by the Bank to the Borrower
hereunder shall exceed the Loan Commitment, the Borrower will immediately prepay the outstanding principal amount of the Loans in the amount of such excess. 
 2.5 Optional Prepayment of any Loan. At any time and from time to time, the Borrower shall have the right to prepay any Loan, in whole or in part, without premium or penalty (except as provided in clause
(ii) below), upon written notice given to the Bank not later than 11:00 a.m., Charlotte time, (i) one (1) Business Day prior to each intended prepayment of any portion of any Loan that is maintained as a Base Rate Loan, or
(ii) three (3) Business Days prior to each intended prepayment of any portion of any Loan that is maintained as a LIBOR Loan, provided that unless made together with all amounts required under Section 2.14 to be paid as
a consequence of such prepayment, a prepayment of any portion of any Loan that is a LIBOR Loan may be made only on the last day of the Interest Period applicable thereto. 
 2.6 Use of Proceeds. The proceeds of each Loan shall be used by the Borrower solely to reimburse the Borrower for the costs attributable to (i) the construction of the Boat Collateral securing such Loan
and (ii) the financing of such Boat Collateral until such Boat Collateral is otherwise sold, assigned or transferred to any third party purchaser. 
 2.7 Interest. 
 (a) At the option of the Borrower and subject to the terms and conditions of this
Agreement, each Loan shall bear, and the Borrower shall pay, interest from the Borrowing Date on the unpaid principal balance thereof at either (i) the Base Rate or (ii) the Adjusted LIBOR Rate. 
 (b) So long as no Default or Event of Default has occurred and is continuing, the Borrower may convert any Base Rate Loan into a LIBOR Loan on the last
Business Day of any calendar month by providing the Bank written notice at least three (3) Business Days prior to such conversion. The Borrower may convert any LIBOR Loan into a Base Rate Loan at the end of the Interest Period applicable
thereto by providing the Bank written notice at least one (1) Business Day prior to such conversion. Any LIBOR Loan for which the Borrower does not provide a notice of conversion as described in the immediately preceding sentence shall, at the
end of the applicable Interest Period, be automatically continued as a LIBOR Loan for the subsequent Interest Period. 
 (c) Interest on the
outstanding principal balance of each Loan shall be due and payable (i)(A) with respect to any Loan that is maintained as a Base Rate Loan, monthly on the last day of each successive month, in arrears, commencing on the last day of the month during
which the Borrowing Date occurs, and continuing on the last day of each month thereafter until the entire principal amount of the Loan plus interest thereon is paid in full and (B) with respect to any Loan that is maintained as a LIBOR Loan, at
the expiration of each such LIBOR Loan’s applicable Interest Period, and (ii) on each date when all or any amount of the unpaid principal balance of such Loan shall be due (whether at maturity, by acceleration or otherwise), but only to
the extent accrued. 
  

 14 

 (d) Interest on each Loan and fees shall be computed on the basis of a 360-day year and the actual number
of days elapsed. 
 (e) Nothing contained in this Agreement or the Note shall be deemed to establish or require the payment of interest to
the Bank at a rate in excess of the maximum rate permitted by governing law. In the event that the rate of interest required to be paid under this Agreement or the Note exceeds the maximum rate permitted by governing law, the rate of interest
required to be paid hereunder and under the Note shall be automatically reduced to the maximum rate permitted by governing law and any amounts collected in excess of the permissible amount shall be deemed a prepayment of principal on the Note.

 (f) Notwithstanding any other provision of this Agreement to the contrary, upon and during the continuance of any Event of Default under
this Agreement, at the option of the Bank without any required notice to the Borrower, the outstanding principal amount of each Loan, and to the full extent permitted by law, all interest accrued on each Loan, shall bear interest at the Default
Rate, and such default interest shall be payable on demand. Additionally, and notwithstanding any other provision of this Agreement, upon application of the Default Rate to each Loan pursuant to this Section, any portion of any Loan that is
maintained as a LIBOR Loan then outstanding shall immediately and automatically be converted into a Base Rate Loan. 
 2.8 Payment.
All payments (including prepayments) by the Borrower on account of principal, interest and fees on any Loan shall be made in immediately available funds to the Bank at its offices at 6805 Morrison Boulevard, Suite 100, Charlotte, North Carolina
28211, prior to 2:00 p.m., Charlotte time, on the date payment is due, or (i) at such other place as designated in writing by the Bank or (ii) in accordance with wiring instructions designated in writing by the Bank. 
 2.9 Taxes. All payments of principal, interest and fees and all other amounts to be made by the Borrower pursuant to this Agreement with respect
to any Loan or fees relating thereto shall be paid without deduction for, and free from, any tax, imposts, levies, duties, deductions, or withholdings of any nature now or at any time hereafter imposed on or measured by any governmental authority or
by any taxing authority thereof, or therein, excluding (i) taxes imposed on or measured by the Bank’s net income, (ii) franchise taxes imposed on the Bank by the jurisdiction under the laws of which the Bank is organized or any
political subdivision thereof, and (iii) taxes imposed on the Bank’s income. In the event that the Borrower is required by applicable law to make any such withholding or deduction of taxes with respect to any Loan or fee or other amount,
the Borrower shall pay such deduction or withholding to the applicable taxing authority, shall promptly furnish to the Bank all receipts and other additional amounts as may be necessary in order that the amount received by the Bank after the
required withholding or other payment shall equal the amount the Bank would have received had no such withholding or other payment been made. 
 2.10 Basis for Determining Interest Rate Inadequate or Unfair. If on or prior to the first day of any Interest Period: 
 (a)
the Bank reasonably determines that deposits in Dollars (in the applicable amounts) are not being offered in the relevant market for such Interest Period, or 
  

 15 

 (b) the Bank reasonably determines that the LIBOR Rate will not adequately and fairly reflect the cost to
the Bank of funding a LIBOR Loan for such Interest Period, the Bank shall forthwith give notice thereof to the Borrower, whereupon until the Bank notifies the Borrower that the circumstances giving rise to such suspension no longer exist
(i) the obligation of the Bank to fund LIBOR Loans shall be suspended and (ii) all then outstanding LIBOR Loans shall be converted to Base Rate Loans, and during such suspension period all payments of principal which would otherwise be
applied to repay LIBOR Loans shall be applied to repay Base Rate Loans. At the end of any such suspension period, the Bank shall promptly notify Borrower of the end of the suspension period, and Borrower shall be allowed, in its sole discretion, to
reconvert the then outstanding principal amount of the Base Rate Loans to LIBOR Loans. 
 2.11 Illegality. If, after the date hereof,
any Change of Law, or any change in interpretation or administration thereof by any Governmental Authority, or compliance by the Bank with any request or directive (whether or not having the force of law) by any Governmental Authority, shall make it
unlawful or impossible for the Bank to make, maintain or fund LIBOR Loans, then the Bank shall so notify the Borrower, whereupon until the Bank notifies the Borrower that the circumstances giving rise to such suspension no longer exist, the
obligation of the Bank to fund LIBOR Loans shall be suspended. If the Bank shall determine that it may not lawfully continue to maintain and fund LIBOR Loans to maturity and shall so specify in such notice, the Borrower shall immediately prepay in
full the then outstanding principal amount of the LIBOR Loans, together with accrued interest thereon and any amount due the Bank pursuant to Section 2.14(a). Concurrently with prepaying each of the LIBOR Loans, the Borrower shall borrow
a Base Rate Loan with respect to each LIBOR Loan in a principal amount equal to the respective amount of such LIBOR Loan from the Bank, and the Bank shall make such Base Rate Loans. 
 2.12 Increased Cost and Reduced Return. 
 (a) If after the date hereof, a Change of Law or compliance by the Bank with any request or directive (whether or not having the force of law) of any Governmental Authority: 
 (i) shall impose, modify or deem applicable any new reserve, special deposit or similar requirement (including, without limitation, any
such requirement imposed by the Board of Governors of the Federal Reserve System, but excluding with respect to any LIBOR Loan any such requirement included in an applicable Eurodollar Reserve Percentage) against assets of, deposits with or for the
account of, or credit extended by, the Bank; or 
 (ii) shall impose on the Bank or on the United States market for
certificates of deposit or the London interbank market any other new condition affecting LIBOR Loans, the Note or its obligation to make LIBOR Loans; 
  

 16 

 and the result of any of the foregoing is to increase the cost to the Bank of making or maintaining any LIBOR Loan, or to
reduce the amount of any sum received or receivable by the Bank under this Agreement or under its Note with respect thereto, by an amount deemed by the Bank to be material, then, within fifteen (15) days after demand by the Bank, the Borrower
shall pay to the Bank such additional amount or amounts as will compensate the Bank for such increased cost or reduction. 
 (b) If the Bank
shall have determined that after the date hereof, any Change of Law, or any change in the interpretation or administration thereof, or compliance by the Bank with any request or directive regarding capital adequacy (whether or not having the force
of law) by any Governmental Authority, has or would have the effect of reducing the rate of return on the Bank’s capital as a consequence of its obligations hereunder to a level below that which the Bank could have achieved but for such
adoption, change or compliance (taking into consideration the Bank’s policies with respect to capital adequacy) by an amount deemed by the Bank to be material, then from time to time, within fifteen (15) days after demand by the Bank, the
Borrower shall pay to the Bank such additional amount or amounts as will compensate the Bank for such reduction. 
 (c) The Bank will
promptly notify the Borrower of any event of which it has knowledge, occurring after the date hereof, which will entitle the Bank to compensation pursuant to this Section. A certificate of the Bank claiming compensation under this Section and
setting forth the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of manifest error. In determining such amount, the Bank may use any reasonable averaging and attribution methods. 
 (d) The provisions of this Section 2.12 shall be applicable with respect to any participant, assignee or other transferee, and any
calculations required by such provisions shall be made based upon the circumstances of such participant, assignee or other transferee. 
 2.13 Base Rate Loans Substituted for Affected LIBOR Loans. If (i) the obligation of the Bank to make or maintain LIBOR Loans has been suspended pursuant to Section 2.11 or (ii) the Bank has demanded compensation
under Section 2.12, and the Borrower shall, by at least five (5) Business Days’ prior notice to the Bank, have elected that the provisions of this Section shall apply to the Bank, then, unless and until the Bank notifies the
Borrower that the circumstances giving rise to such suspension or demand for compensation no longer apply, all then outstanding LIBOR Loans shall be converted into Base Rate Loans and all payments of principal which would otherwise be applied to
repay the LIBOR Loans shall be applied to repay its Base Rate Loans instead. At the end of any such suspension period, the Bank shall promptly notify Borrower of the end of the suspension period, and Borrower shall be allowed, in its sole
discretion, to reconvert the then outstanding principal amount of the Base Rate Loans to LIBOR Loans. 
 2.14 Compensation. Upon the
request of the Bank, delivered to the Borrower, the Borrower shall pay to the Bank such amount or amounts as shall compensate the Bank for any loss, cost or expense incurred by the Bank as a result of: 
 (a) any payment or prepayment of any portion of any Loan maintained as a LIBOR Loan on a date other than the last day of an Interest Period for such LIBOR
Loan; or: 
  

 17 

 (b) any failure by the Borrower to prepay any portion of any Loan maintained as a LIBOR Loan on the date
for such prepayment specified in the relevant notice of prepayment hereunder; 
 such compensation to include, without limitation, an amount equal to the
excess, if any, of (i) the amount of interest which would have accrued on the amount so paid or prepaid or not prepaid or borrowed for the period from the date of such payment, prepayment or failure to prepay or borrow to the last day of the
then current Interest Period for such portion of such Loan maintained as a LIBOR Loan (or, in the case of a failure to prepay or borrow, the Interest Period for such portion of such Loan maintained as a LIBOR Loan which would have commenced on the
date of such failure to prepay or borrow) at the applicable rate of interest for such portion of such Loan maintained as a LIBOR Loan provided for herein over (ii) the amount of interest (as reasonably determined by the Bank) the Bank
would have paid on deposits in Dollars of comparable amounts having terms comparable to such period placed with it by leading banks in London interbank market. 
 ARTICLE III 
 CONDITIONS TO EFFECTIVENESS AND BORROWING 
 3.1 Conditions to Effectiveness. The effectiveness of this Agreement is subject to the satisfaction of the following conditions precedent:

 (a) Loan Documents. The Bank shall have received the following, each dated as of the Closing Date (unless otherwise specified) and
in such number of copies as the Bank shall have requested: 
 (i) from each of the parties hereto, a duly executed counterpart
of this Agreement signed by such party; 
 (ii) a duly executed Note for the account of the Bank; 
 (iii) an amendment to the Security Agreement, duly completed and executed by the Parent and the Borrower, in form and substance
satisfactory to the Bank; 
 (iv) an amendment to the Pledge Agreement, duly completed and executed by the Parent, in form and
substance satisfactory to the Bank; 
 (v) an amendment to each existing Mortgage, and an update or endorsement of each of the
mortgagee title insurance policies with respect to each amendment to an existing Mortgage, each in form and substance satisfactory to the Bank; and 
 (vi) an opinion of counsel of (A) Ward and Smith, P.A., counsel to the Borrower, and (B) McDonald Carano Wilson, LLP, special Nevada counsel to the Parent, each addressed to the Bank and in form and
substance satisfactory to the Bank. 
  

 18 

 (b) Closing Certificate. The Bank shall have received a certificate, signed by the president, the
chief executive officer or the chief financial officer of the Borrower, dated as of the Closing Date and in form and substance reasonably satisfactory to the Bank, certifying that (i) all representations and warranties of the Parent and the
Borrower contained in this Agreement and the other Loan Documents are true, correct and complete as of the Closing Date (except to the extent any such representation or warranty is expressly stated to have been made as of a specific date, in which
case such representation or warranty shall be true and correct as of such date), (ii) no Default or Event of Default has occurred and is continuing, (iii) no Material Adverse Effect has occurred since June 30, 2005, and there exists
no event, condition or state of facts that could reasonably be expected to result in a Material Adverse Effect, and (iv) all conditions to the effectiveness of this Agreement set forth in this Section 3.1 have been satisfied or
waived as required hereunder. 
 (c) Secretary’s Certificate. The Bank shall have received a certificate of the secretary or an
assistant secretary of each of the Parent and the Borrower, dated as of the Closing Date and in form and substance reasonably satisfactory to the Bank, certifying (i) that attached thereto is a true and complete copy of the articles or
certificate of incorporation, certificate of formation or other organizational document and all amendments thereto of such party, certified as of a recent date by the Secretary of State (or comparable Governmental Authority) of its jurisdiction of
organization, and that the same has not been amended since the date of such certification, (ii) that attached thereto is a true and complete copy of the bylaws, operating agreement or similar governing document of such party, as then in effect
and as in effect at all times from the date on which the resolutions referred to in clause (iii) below were adopted to and including the date of such certificate, (iii) that attached thereto is a true and complete copy of resolutions
adopted by the board of directors (or similar governing body) of such party, authorizing the execution, delivery and performance of this Agreement and the other Loan Documents to which it is a party, and (iv) as to the incumbency and
genuineness of the signature of each officer of such party executing this Agreement or any of such other Loan Documents, and attaching all such copies of the documents described above. 
 (d) Good Standings. The Bank shall have received a certificate as of a recent date of the good standing or existence of the Parent and the
Borrower under the laws of its jurisdiction of organization, from the Secretary of State (or comparable Governmental Authority) of such jurisdiction. 
 (e) Consents; Approvals. All approvals, permits and consents of any Governmental Authorities or other Persons required in connection with the execution and delivery of this Agreement or the other Loan Documents
shall have been obtained, without the imposition of conditions that are not acceptable to the Bank, and all related filings, if any, shall have been made, and all such approvals, permits, consents and filings shall be in full force and effect and
the Bank shall have received such copies thereof as it shall have reasonably requested. 
 (f) Recording and Filing. The Bank shall
have received evidence that the amendment to each existing Mortgage has been duly recorded in the Registry and that all other filings and action needed to provide the Bank with a perfected, first priority security interest in the collateral
described in the Security Documents have occurred. 
  

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 (g) No Litigation. No action, proceeding, investigation, regulation or legislation shall have been
instituted, threatened or proposed before any court or other governmental authority to enjoin, restrain or prohibit, or to obtain substantial damages in respect of, or that is related to or arises from, entering into this Agreement or any of the
other Loan Documents. 
 (h) Fees; Expenses. The Borrower shall have paid (i) to the Bank, the fees required to be paid to them
on the Closing Date, and (ii) all other fees and reasonable expenses required hereunder or under any other Loan Document to be paid on or prior to the Closing Date (including reasonable fees and expenses of counsel) in connection with this
Agreement and the other Loan Documents. 
 (i) No Material Adverse Change. Since June 30, 2005, both immediately before and after
giving effect to the consummation of this Agreement, there shall not have occurred (i) a Material Adverse Effect or (ii) any event, condition or state of facts that could reasonably be expected to have a Material Adverse Effect.

 (j) Other Documents. The Bank shall have received such other documents, certificates, opinions, instruments and other evidence as
the Bank may reasonably request, all in form and substance satisfactory to the Bank and its counsel. 
 3.2 Conditions of All
Borrowings. The obligation of the Bank to make any Loan hereunder is subject to the satisfaction of the following conditions precedent on the relevant Borrowing Date: 
 (a) The Bank shall have received a Notice of Borrowing in accordance with Section 2.3. 
 (b)
Each of the representations and warranties contained in Article IV and in the other Loan Documents shall be true and correct on and as of such Borrowing Date, both immediately before and after giving effect to the Loan to be made on such date
(except to the extent any such representation or warranty is expressly stated to have been made as of a specific date, in which case such representation or warranty shall be true and correct as of such date). 
 (c) No Default or Event of Default shall have occurred and be continuing on such date, both immediately before and after giving effect to the Loan to be
made on such date. 
 3.3 Waiver of Conditions Precedent. If the Bank funds any portion of any Loan hereunder prior to the fulfillment
of any of the conditions precedent set forth in this Article III, the making of such Loan shall constitute only an extension of time for the fulfillment of such condition and not a waiver thereof, and the Borrower shall thereafter use its
best efforts to fulfill each such condition within thirty (30) days after the making of such Loan. 
  

 20 

 ARTICLE IV 
 REPRESENTATIONS AND WARRANTIES 
 Each of the Parent and the Borrower represents and warrants to the
Bank as follows: 
 4.1 Corporate Organization and Power. Each of the Parent and its Subsidiaries (a) is a corporation or a
limited liability company duly organized or formed, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation, as the case may be; (b) is duly qualified or licensed to do business and is in good
standing in every other jurisdiction where the nature of its business or its properties makes such qualification or licensing necessary (except where the failure to be so qualified or licensed would not have a Material Adverse Effect); (c) has
full corporate or limited liability company power and authority to execute, deliver and perform the Loan Documents to which it is or will be a party, to own and hold its property and to engage in its business as presently conducted, and (d) has
all governmental licenses, permits, franchises, certificates, inspections, authorizations, consents and approvals required to carry on its business as it is now being conducted (except where the failure to have such governmental authorization would
not have a Material Adverse Effect). 
 4.2 Corporate Authority: No Conflict With Other Instruments or Law. The execution, delivery
and performance of this Agreement and the other Loan Documents and the consummation of the transactions contemplated hereby and thereby (a) are within the corporate or limited liability company power and authority of the Parent and each of its
Subsidiaries, (b) have been duly authorized by all necessary corporate or limited liability company action on the part of the Parent and each of its Subsidiaries, (c) do not and will not conflict with, contravene or violate any provision
of, or result in a breach of or default under, or require the waiver (not already obtained) of any provision of or the consent (not already given) of any Person under the terms of the Parent’s or any of its Subsidiaries’ articles or
certificate of incorporation or formation, its bylaws or operating agreement, or other applicable formation or organizational documents, or any indenture, mortgage, deed of trust, loan or credit agreement or other agreement or instrument to which
the Parent or any of its Subsidiaries is a party or by which it is bound or to which any of its properties are subject, (d) will not violate, conflict with, give rise to any liability under, or constitute a default under any Requirement of Law,
and (e) will not result in the creation, imposition, or acceleration of any indebtedness or tax or any Lien that is not a Permitted Lien of any nature upon, or with respect to, the Parent or any of its Subsidiaries or any of their properties.

 4.3 Due Execution and Delivery. This Agreement and the other Loan Documents to which the Parent and each of its Subsidiaries is a
party have been duly executed and delivered to the Bank by an officer of the Borrower who has been duly authorized to perform such acts. 
 4.4 Enforceability. This Agreement and the other Loan Documents to which the Parent and each of its Subsidiaries is a party constitute the legal, valid and binding obligations of the Parent and each of its Subsidiaries enforceable
against the Parent and each of its Subsidiaries in accordance with their terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws, statutes or rules of general application affecting the
enforcement of creditor’s rights or general principles of equity. 
  

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 4.5 Governmental Approval. The execution, delivery and performance of this Agreement and the other
Loan Documents to which the Parent and each of its Subsidiaries is a party and the transactions contemplated hereby and thereby do not require any authorization, exemption, consent or approval of, notice to, or declaration or filing with, any
Governmental Authority other than those obtained on or before the Closing Date. 
 4.6 Margin Stock. None of the Parent and its
Subsidiaries is engaged principally or as one of its important activities in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation T, U or X of the Board of Governors of the Federal
Reserve System). The execution, delivery and performance of this Agreement and the use of the proceeds of any Loan or any extension of credit hereunder, do not and will not constitute a violation of such Regulations. 
 4.7 Investment Company. None of the Parent and its Subsidiaries is an “investment company” or a company
“controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended. 
 4.8 Taxes. None of the Parent and its Subsidiaries is delinquent in the payment of any taxes that have been levied or assessed by any Governmental Authority against it or its assets unless such tax is being contested in good faith by
proper proceedings and adequate reserves satisfactory to the Bank have been established and maintained with respect thereto. The Parent and each of its Subsidiaries has timely filed all tax returns that are required by law to be filed, and has paid
all taxes shown on said returns to be payable by the Parent and each of its Subsidiaries and all other assessments or fees levied upon it or upon its properties to the extent that such taxes, assessments or fees have become due, and if not due, such
taxes have been adequately provided for and sufficient reserves therefor established on its books of account. No material controversy in respect of the Parent’s or any of its Subsidiaries’ income taxes is pending or, to the knowledge of
the Borrower or any of its Subsidiaries, threatened. 
 4.9 Litigation. Except as set forth on Schedule 4.9, there is no
judgment, injunction or similar order or decree which, and no action, suit, claim, investigation or proceeding pending or, to the knowledge of the Parent or any of its Subsidiaries, threatened against or affecting the Parent or any of its
Subsidiaries, before any court, commission, panel, board, bureau, arbitrator or any Governmental Authority. 
 4.10 Financial
Statements. The Borrower has delivered to the Bank (i) the audited consolidated balance sheets of the Parent and its Subsidiaries as of June 30, 2005, 2004 and 2003, in each case with the related statements of income, cash flows and
stockholders’ equity for the fiscal years then ended, together with the opinion of Pritchett, Siler & Hardy, P.C. thereon, and (ii) the unaudited consolidated balance sheet of the Parent and its Subsidiaries as of March 31,
2006, and the related statements of income, cash flows and stockholders’ equity for the six-month period then ended. Such financial statements contain no material misstatement or omission and fairly present the financial position, assets and
liabilities of the Parent and each of its Subsidiaries for the respective periods then ended. Except as fully reflected in the most recent financial statements referred to above and the notes thereto, there are no material liabilities or obligations
with respect to the Parent and its Subsidiaries of any nature whatsoever (whether absolute, contingent or otherwise and whether or not due) that are required in accordance with GAAP to be reflected in such financial statements and that are not so
reflected. 
  

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 4.11 No Material Adverse Change. Since June 30, 2005, there has been no Material Adverse
Change, nor to the knowledge of the Parent and each of its Subsidiaries, is any Material Adverse Change threatened or reasonably likely to occur. 
 4.12 Compliance with Laws. The Parent and each of its Subsidiaries has timely filed all material reports, documents and other materials required to be filed by it under all applicable Requirements of Law with any Governmental
Authority, has retained all material records and documents required to be retained by it under all applicable Requirements of Law, and is otherwise in compliance with all applicable Requirements of Law in respect of the conduct of its business and
the ownership and operation of its properties, except in each case to the extent that the failure to comply therewith, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 
 4.13 Environmental Compliance. Except as set forth on Schedule 4.13, 
 (a) (i) no Hazardous Material (other than cleaning supplies, as well as all other substances and materials used in the ordinary course of the
Borrower’s operations, manufacturing and other legitimate business processes and operations) is or has been generated, used, released, treated, disposed of or stored, or otherwise located, in, on or under any property owned, leased or operated
by the Parent or any of its Subsidiaries or any portion thereof, and no part of the property owned, leased or operated by the Parent or any of its Subsidiaries (now or in the past), including without limitation the soil and groundwater located
thereon and thereunder, has been contaminated by any Hazardous Material; (ii) no improvements on the property owned, leased or operated by the Parent or any of its Subsidiaries contain any asbestos or substances containing asbestos;
(iii) none of the property owned, leased or operated by the Parent or any of its Subsidiaries has been the subject of an environmental audit or assessment, or remedial action; and (iv) to the best of the Parent’s and its
Subsidiaries’ knowledge, the foregoing statements are true and correct with respect to all of the real property adjoining any of the property owned, leased or operated by the Parent or any of its Subsidiaries. 
 (b) None of the property owned, leased or operated by the Parent or any of its Subsidiaries (now or in the past) has, pursuant to any Environmental Law,
been placed on the “National Priorities List” or “CERCLIS List” (or any similar federal, state or local list) of sites subject to possible environmental problems. 
 (c) There are no underground storage tanks situated on the property owned, leased or operated by the Parent or any of its Subsidiaries and, to the best
of the knowledge of the Parent and its Subsidiaries, no underground storage tanks have ever been situated on the property owned, leased or operated by the Parent or any of its Subsidiaries. 
 (d) All activities and operations of the Parent and each of its Subsidiaries meet all requirements of all applicable Environmental Laws, the Parent and
each of its Subsidiaries has not violated any Environmental Law in the past, and the property owned, leased or operated by the Parent or any of its Subsidiaries has never been the site of a violation of any Environmental Law. 
  

 23 

 (e) None of the Parent or its Subsidiaries has sent a Hazardous Material to a site which, pursuant to any
Environmental Law, (i) has been placed on the “National Priorities List” or “CERCLIS List” (or any similar federal, state or local list) of sites subject to possible environmental problems, or (ii) is
subject to, or the source of, a claim, an administrative order or other request to take “response,” “removal,” “corrective” or “remedial” action, as defined in any Environmental
Law, or to pay for or contribute to the costs of cleaning up the site. 
 (f) None of the Parent or its Subsidiaries is involved in any suit
or proceeding and has not received any notice from any Governmental Authority or other third party with respect to a release or threat of release of any Hazardous Material, or violation or alleged violation of any Environmental Law, and has not
received notice of any claim from any person or entity relating to property damage or to personal injuries from exposure to any Hazardous Material. 
 (g) The Parent and each of its Subsidiaries has timely filed all reports required to be filed, has acquired all necessary certificates, approvals and permits, and has generated and maintained all required data, documentation and records
required under all Environmental Laws. 
 4.14 Ownership of Properties. The Parent and each of its Subsidiaries (i) has good and
marketable title to all real property owned by it, (ii) holds interests as lessee under valid leases in full force and effect with respect to all material leased real and personal property used in connection with its business, and
(iii) has good title to all of its other material properties and assets reflected in the financial statements referred to in Section 4.10 (except as sold or otherwise disposed of since the date thereof in the ordinary course of
business), in each case free and clear of all Liens other than Permitted Liens. Schedule 4.14 lists, as of the Closing Date, all Realty of the Parent and each of its Subsidiaries subject to the Mortgage, in each case indicating the identity
of the owner, the address of the property, the nature of use of the premises, and whether such interest is a leasehold or fee ownership interest. 
 4.15 Intellectual Property. The Parent and each of its Subsidiaries owns, or has the legal right to use, all Intellectual Property necessary for it to conduct its business as currently conducted. Schedule 4.15 lists, as of the
Closing Date, all registered Intellectual Property owned by the Parent of any of its Subsidiaries. No claim has been asserted or is pending by any Person challenging or questioning the use of any such Intellectual Property or the validity or
effectiveness of any such Intellectual Property, nor does the Parent or the Borrower know of any such claim, and to the knowledge of the Parent or the Borrower, the use of such Intellectual Property by does not infringe on the known rights of any
Person. 
 4.16 Insurance. Schedule 4.16 sets forth, as of the Closing Date, an accurate and complete list and a brief
description (including the insurer, policy number, type of insurance, coverage limits, deductibles, expiration dates and any special cancellation conditions) of all policies of property and casualty, liability (including, but not limited to, product
liability), workers’ compensation, keyman life insurance, and other forms of insurance owned or held by the Parent or any of its Subsidiaries or pursuant to which any of their respective assets are insured. The assets, properties and business
of the Parent or any of its Subsidiaries are insured 
  

 24 

 against such hazards and liabilities, under such coverages and in such amounts, as are customarily maintained by prudent
companies similarly situated and under policies issued by insurers of recognized responsibility. 
 4.17 ERISA. The Parent and each of
its Subsidiaries are in compliance in all material respects with the presently applicable provisions of ERISA and the Code, and have not incurred any liability to the PBGC or a Plan under Title IV of ERISA. 
 4.18 Full Disclosure. All information heretofore furnished to the Bank by the Parent and each of its Subsidiaries for purposes of or in connection
with this Agreement or any transaction contemplated hereby is, and all such information hereafter furnished to the Bank by the Parent and each of its Subsidiaries will be, true, accurate and complete in every material respect or based on reasonable
estimates on the date as of which such information is stated or certified. The Parent and each of its Subsidiaries has disclosed to the Bank in writing any and all facts which materially and adversely affect or may affect (to the extent the Parent
or any of its Subsidiaries can now reasonably foresee), the business, operations, prospects or condition, financial or otherwise, of the Parent or any of its Subsidiaries, or the ability of the Parent or any of its Subsidiaries to perform its
obligations under this Agreement or any of the other Loan Documents. 
 4.19 No Default. No Default or Event of Default under this
Agreement has occurred and is continuing. 
 4.20 Subsidiaries. The Borrower has no Subsidiaries. The Parent owns all of the
outstanding Capital Stock of the Borrower. Except for the Capital Stock expressly indicated on Schedule I to the Pledge Agreement, there are no shares of capital stock, partnership interests, warrants, rights, options or other equity securities, or
other Capital Stock of the Borrower outstanding or reserved for any purpose. 
 4.21 First Priority Liens. Except for Permitted Liens,
this Agreement, together with the Security Documents, will create valid, perfected, first-priority security interests in the collateral described in the Security Documents, in each case enforceable against the Parent and each of its Subsidiaries and
securing the payment of all obligations purported to be secured thereby. 
 4.22 Labor Relations. None of the Parent and its
Subsidiaries is engaged in any unfair labor practice within the meaning of the National Labor Relations Act of 1947, as amended. As of the Closing Date, there is (i) no unfair labor practice complaint before the National Labor Relations Board,
or grievance or arbitration proceeding arising out of or under any collective bargaining agreement, pending or, to the knowledge of the Parent or the Borrower, threatened, against the Parent or any of its Subsidiaries, (ii) no strike, lock-out,
slowdown, stoppage, walkout or other labor dispute pending or, to the knowledge of the Parent or the Borrower, threatened, against the Parent or any of its Subsidiaries, and (iii) to the knowledge of the Parent or the Borrower, no petition for
certification or union election or union organizing activities taking place with respect to the Parent or any of its Subsidiaries. As of the Closing Date, there are no collective bargaining agreements or Multiemployer Plans covering the employees of
the Borrower or any of its Subsidiaries. 
  

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 4.23 OFAC; Anti-Terrorism Laws. 
 (a) The Parent and its Subsidiaries are not a Sanctioned Person or does not do business in a Sanctioned Country or with a Sanctioned Person in violation
of the economic sanctions of the United States administered by OFAC. 
 (b) The Parent and its Subsidiaries are in compliance in all material
respects with the PATRIOT Act. No part of the proceeds of any Loan hereunder will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political
office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended. 
 ARTICLE V 
 AFFIRMATIVE COVENANTS

 Until payment in full of all Obligations of the Borrower to the Bank, each of the Parent and the Borrower will, and will cause each of
its Subsidiaries to: 
 5.1 Financial and Business Information. Deliver to the Bank: 
 (a) Within forty-five (45) days after the close of each of the first three fiscal quarters of each fiscal year of the Parent (or, if earlier, within
three (3) days after the Parent files its Quarterly Report on Form 10-Q for with the Securities and Exchange Commission for such fiscal quarter), a consolidated balance sheet of the Parent and its Subsidiaries as of the close of such fiscal
quarter and consolidated statements of income and cash flows for the Parent and its Subsidiaries for the fiscal quarter then ended and for that portion of the fiscal year then ended, including the notes to each, all in reasonable detail setting
forth in comparative form the corresponding figures for the preceding fiscal year, all prepared in accordance with GAAP applied on a basis consistent with that of the preceding period or containing disclosure of the effect on the financial position
or results of operation of any change in the application of accounting principles and practices during the period, subject only to audit and year-end adjustments, and certified by the Parent’s president or chief financial officer to be true and
accurate; 
 (b) Within one hundred twenty (120) days after the close of the fiscal year of the Parent (or, if earlier, within three
(3) days after the Parent files its Annual Report on 10-K with the Securities and Exchange Commission for such fiscal year), an audited consolidated balance sheet of the Parent and its Subsidiaries as of the close of such fiscal year and
audited consolidated statements of income and cash flows for the Parent and its Subsidiaries for the fiscal year then ended, including the notes to each, all in reasonable detail setting forth in comparative form the corresponding figures for the
preceding fiscal year, prepared by an independent certified public accountant reasonably acceptable to the Bank, in accordance with GAAP applied on a basis consistent with that of the preceding year or containing disclosure of the effect on the
financial position or results of operation of any change in the application of accounting principles and practices during the year, and accompanied by a report thereon by such certified public accountant containing an opinion that is not qualified
with respect to scope limitations imposed by the Parent or its Subsidiaries or with respect to accounting principles followed by the Parent or its Subsidiaries not in accordance with GAAP; 
  

 26 

 (c) Concurrently with the delivery of the financial statements described in subsection (b) above, a
certificate addressed to the Bank from the independent certified public accountant that in making its audit of the financial statements of the Parent and its Subsidiaries, it obtained no knowledge of the occurrence or existence of any Default or
Event of Default under this Agreement, or specifying the nature and period of existence of any such Default or Event of Default; provided, however, that such accountant shall not be liable to anyone by reason of its failure to obtain
knowledge of any such Default or Event of Default that would not be disclosed in the course of an audit conducted in accordance with generally accepted auditing standards; 
 (d) Concurrently with the delivery of the financial statements described in subsections (a) and (b) above, a Compliance Certificate with
respect to the period covered by the financial statements being delivered thereunder, executed by the president or chief financial officer of the Borrower, together with a Covenant Compliance Worksheet reflecting the computation of the financial
covenants set forth in Article VI as of the last day of the period covered by such financial statements; 
 (e) Prompt notice of any
Material Adverse Change; and 
 (f) Within a reasonable time, upon the Bank’s request, such other information about the property,
financial condition and operations of the Parent and its Subsidiaries as the Bank may from time to time reasonably request. 
 5.2 Notice
of Certain Events. Promptly give notice in writing to the Bank of: 
 (a) All litigation when the Parent or any of its Subsidiaries is a
defendant, that would, if adversely determined, be reasonably likely to have a Material Adverse Effect; 
 (b) Any dispute which may exist
between the Parent and any Subsidiary on the one hand and any Governmental Authority on the other or any threatened action by any Governmental Authority to acquire or condemn any of the properties of the Parent or any Subsidiary; 
 (c) Any proceeding or order before any court or administrative body requiring the Parent or any Subsidiary to comply with any statute or regulation
regarding protection of the environment; and 
 (d) Any Default or Event of Default. 
 5.3 Existence; Franchises; Maintenance of Properties. (a) Maintain and preserve in full force and effect its legal existence, its good
standing under the laws of the jurisdiction of its incorporation or formation, as the case may be, and its qualification to do business in every other jurisdiction where the nature of its business or its properties makes such qualification necessary
(except where the failure to be so qualified or licensed would not have a Material Adverse Effect), (b) obtain, maintain and preserve in full force and effect its Intellectual Property and all other rights, franchises, licenses, permits,
certifications, approvals and authorizations required by 
  

 27 

 Governmental Authorities and necessary to the ownership, occupation or use of its properties or the conduct of its
business, except to the extent the failure to do so would not have a Material Adverse Effect, and (c) keep all material properties in good working order and condition (normal wear and tear and damage by casualty excepted) and from time to time
make all necessary repairs to and renewals and replacements of such properties, except to the extent that any of such properties are obsolete or are being replaced or, in the good faith judgment of the Borrower, are no longer useful or desirable in
the conduct of the business. 
 5.4 Compliance with Laws. Comply in all respects with all Requirements of Law applicable in respect of
the conduct of its business and the ownership and operation of its properties, except to the extent the failure so to comply could not reasonably be expected to have a Material Adverse Effect. 
 5.5 Payment of Obligations. (a) Pay, discharge or otherwise satisfy at or before maturity all liabilities and obligations as and when due
(subject to any applicable subordination, grace and notice provisions), except to the extent failure to do so could not reasonably be expected to have a Material Adverse Effect, and (b) pay and discharge all taxes, assessments and governmental
charges or levies imposed upon it, upon its income or profits or upon any of its properties, prior to the date on which penalties would attach thereto, and all lawful claims that, if unpaid, would become a Lien (other than a Permitted Lien) upon any
of the properties of the Parent or any of its Subsidiaries; provided, however, that the Parent and its Subsidiaries shall not be required to pay any such tax, assessment, charge, levy or claim that is being contested in good faith and
by proper proceedings and as to which such party is maintaining adequate reserves with respect thereto in accordance with GAAP. 
 5.6
Maintenance of Books and Records; Inspection. (a) Maintain adequate books, accounts and records, and prepare all financial statements required under this Agreement in accordance with GAAP and in compliance with the regulations of any
Governmental Authority having jurisdiction over it, and (b) permit any employee or representative of the Bank to visit and inspect any of its properties, to examine and audit its books of account, records, reports and other papers, to make
copies and extracts therefrom, and to discuss its affairs, finances and accounts with its officers and, upon prior notice to the Parent or the Borrower, its independent public accountants (and by this provision the Parent authorizes said accountants
to discuss the finances and affairs of the Parent and its Subsidiaries with the Bank and to provide the Bank with access to such accountants’ work papers), all upon reasonable notice during business hours and as often as may be reasonably
requested. 
 5.7 Maintenance of Insurance. Maintain and pay for insurance with respect to its property, wherever located, covering
casualty, hazard, public liability, product liability, boiler, fidelity and such other risks, casualties and contingencies as is customarily maintained by companies in the same or similar businesses similarly situated. 
 5.8 Compliance with ERISA. 
 (a) The
Parent will, and will cause each of its Subsidiaries and each member of the Controlled Group to, comply in all material respects with ERISA and the Code and the regulations and requirements of the PBGC, except where the necessity of such compliance
is being contested in good faith through appropriate proceedings. 
  

 28 

 (b) The Parent and each member of the Controlled Group will make timely payment of contributions required
to meet the minimum funding standards set forth in ERISA and the Code with respect to any Plan, and will not take any action or fail to take action the result of which action or inaction could be a material liability for the Parent or a member of
the Controlled Group to the PBGC or a Multiemployer Plan. Neither the Parent nor a member of the Controlled Group will participate in a prohibited transaction, as defined in Section 406 of ERISA or Section 4975(c) of the Code, which could
subject either the Parent or a member of the Controlled Group to any material civil penalty under ERISA or material tax under the Code. 
 5.9 Name Change. Notify the Bank at least thirty (30) days prior to the effective date of any change of its name, and prior to such effective date the Borrower shall have executed any required amended or new UCC financing
statements and other documents necessary to maintain and continue the perfected security interests of the Bank in all of its collateral and shall have taken such other actions and executed such documents as the Bank shall reasonably require.

 5.10 OFAC, PATRIOT Act Compliance. (a) Refrain from doing business in a Sanctioned Country or with a Sanctioned Person in
violation of the economic sanctions of the United States administered by OFAC, and (b) provide, to the extent commercially reasonable, such information and take such actions as are reasonably requested by the Bank in order to assist the Bank in
maintaining compliance with the PATRIOT Act. 
 5.11 Further Assurances. Make, execute, endorse, acknowledge and deliver to the Bank
any amendments, restatements, modifications or supplements hereto and any other agreements, instruments or documents, and take any and all such other actions, as may from time to time be reasonably requested by the Bank to effect, confirm or further
assure or protect and preserve the interests, rights and remedies of the Bank under this Agreement and the other Loan Documents. 
 ARTICLE
VI 
 FINANCIAL COVENANTS 
 Each of the Parent and the Borrower covenant and agrees that, until payment in full of all Obligations of the Borrower to the Bank, the Borrower will not: 
 6.1 Fixed Charge Coverage Ratio. Permit the Fixed Charge Coverage Ratio as of the last day of any fiscal quarter, beginning with the fiscal quarter ending June 30, 2006, to be less than 1.75:1.00.

 6.2 Minimum Tangible Net Worth. Permit the Consolidated Tangible Net Worth as of the last day of any fiscal quarter, beginning with
the fiscal quarter ending September 30, 2005, to be less than the sum of (i) $6,500,000 plus (ii) 30% of Pre-Tax Income for the Parent for each fiscal year ending after September 19, 2005 (provided that Pre-Tax
Income for any such fiscal year shall be taken into account for purposes of this calculation only if positive) plus (iii) 100% of the aggregate amount of all increases in the stated capital and additional paid-in capital 
  

 29 

 accounts of the Parent, as determined on a consolidated basis in accordance with GAAP, resulting from the issuance of
equity securities (including pursuant to the exercise of options, rights or warrants or pursuant to the conversion of convertible securities) or other Capital Stock after September 19, 2005. 
 6.3 Debt to Tangible Net Worth Ratio. Permit the Debt to Tangible Net Worth Ratio as of the last day of any fiscal quarter, to be greater than
(i) for the fiscal quarter ending June 30, 2006, 3.90:1.00, and (ii) thereafter, 3.00:1.00. 
 6.4 Capital
Expenditures. Permit Capital Expenditures during any fiscal year to be greater than $2,000,000. The Bank agrees to consider any request by the Borrower that the Bank consent to Capital Expenditures in excess of the annual amounts permitted
hereunder (which request shall be accompanied by an annual budget of Capital Expenditures); provided, however, the Borrower acknowledges that the Bank may, in its sole discretion, refuse to consent to any such excess Capital
Expenditures. 
 ARTICLE VII 
 NEGATIVE COVENANTS 
 Until payment in full of all Obligations of the Borrower to the Bank, each of the Parent and the
Borrower will not, and will not permit its Subsidiaries to, without the express prior written approval of the Bank: 
 7.1 Mergers;
Consolidations. Merge or consolidate with or into any other Person, liquidate, wind up or dissolve; provided, however, that any Wholly Owned Subsidiary of the Borrower may merge or consolidate with, or be liquidated into,
(i) the Borrower (so long as the Borrower is the surviving or continuing entity) or (ii) any other Wholly Owned Subsidiary (so long as the surviving or continuing entity is a Subsidiary Guarantor), and in each case so long as no Default or
Event of Default has occurred and is continuing or would result therefrom. 
 7.2 Indebtedness. Directly or indirectly issue, assume,
create, incur or suffer to exist any Indebtedness except for: 
 (i) Indebtedness in favor of the Bank incurred under this
Agreement, the Term Loan Agreement and the other Loan Documents; 
 (ii) Indebtedness secured by Permitted Liens; 

(iii) Indebtedness under Hedge Agreements entered into in connection with this Agreement or in the ordinary course of business to
manage existing or anticipated interest rate or foreign currency risks and not for speculative purposes; 
 (iv) Indebtedness
consisting of loans from permanent insurance policies maintained on the life of Reginald M. Fountain, so long as no Default or Event of Default has occurred and is continuing or would result after giving effect thereto; and 
  

 30 

 (v) purchase money Indebtedness incurred solely to finance Capital Expenditures,
including Indebtedness in respect of Capital Lease Obligations, provided that (x) all such Indebtedness does not exceed $2,000,000 in aggregate principal amount outstanding at any time, and (y) prior to its incurrence, the Borrower
provides the Bank with a right of first refusal to provide such Indebtedness. 
 7.3 Liens and Encumbrances. Create, assume or suffer
to exist any Lien in or on any of its property, real or personal, whether now owned or hereafter acquired, except for (collectively, the “Permitted Liens”): 
 (i) Liens in favor of the Bank created by or otherwise existing under or in connection with this Agreement, the Term Loan Agreement and
the other Loan Documents; 
 (ii) Liens imposed by mandatory provisions of law of carriers, warehousemen, mechanics and
materialmen incurred in the ordinary course of business for sums not yet due and payable; 
 (iii) Liens incurred in the
ordinary course of business in connection with worker’s compensation, unemployment insurance or other forms of governmental insurance or benefits, or to secure the performance of letters of credit, bids, tenders, statutory obligations, leases
and contracts (other than for borrowed money) entered into in the ordinary course of business, provided that all such liens in the aggregate have no reasonable likelihood of causing a Material Adverse Effect; 
 (iv) Liens for current taxes, assessments or other governmental charges that are not delinquent or remain payable without any penalty or
that are being contested in good faith and with due diligence by appropriate proceedings, provided that all such liens in the aggregate have no reasonable likelihood of causing a Material Adverse Effect and, if requested by the Bank, the Parent, the
Borrower or such Subsidiary has established reserves satisfactory to the Bank with respect thereto; 
 (v) Liens of judgments,
execution, attachment or similar process which will not result or have not yet resulted in the occurrence of an Event of Default as set forth in Sections 8.1(i) or (j) hereof; 
 (vi) Liens with respect to any Realty occupied by the Parent or any of its Subsidiaries, (a) all easements, rights of way,
reservations, licenses, encroachments, variations and similar restrictions, charges and encumbrances on title that do not secure monetary obligations and do not materially impair the use of such property for its intended purposes or the value
thereof, and (b) any other Lien or exception to coverage described in mortgagee policies of title insurance issued in favor of and accepted by the Bank; and 
 (vii) Liens securing Indebtedness permitted under Section 7.2(v). 
  

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 7.4 Disposition of Assets. Sell, lease, transfer, convey or otherwise dispose of any of its assets
or property, other than: 
 (i) the sale or other disposition of inventory or Cash Equivalents in the ordinary course of
business, the sale or write-off of past due or impaired accounts receivable for collection purposes (but not for factoring, securitization or other financing purposes), and the termination or unwinding of Hedge Agreements permitted hereunder;

 (ii) dividends permitted under Section 7.6; and 
 (iii) to the extent that any such action could be considered a lease or license of property, the Borrower providing access to the
Borrower’s facilities to Brunswick’s Mercury Marine Division for testing purposes and the other actions described in Section 10.4 of the Master Agreement. 
 7.5 Restricted Investments. Purchase, own, invest in or otherwise acquire, directly or indirectly, any stock, evidence of indebtedness, or other obligation or security or any interest whatsoever in any other
Person, or make or permit to exist any loans, advances or extensions of credit to, or any investment in cash or by delivery of property in, any Person (collectively, “Investments”), except for: 
 (i) Investments consisting of Cash Equivalents; 
 (ii) Investments consisting of the extension of trade credit, the creation of prepaid expenses, and the purchase of inventory, supplies,
equipment and other assets, in each case in the ordinary course of business; 
 (iii) Investments (including equity securities
and debt obligations) received in connection with the bankruptcy or reorganization of suppliers and customers and in good faith settlement of delinquent obligations of, and other disputes with, customers and suppliers arising in the ordinary course
of business; 
 (iv) Investments under Hedge Agreements entered into in connection with this Agreement or in the ordinary
course of business to manage existing or anticipated interest rate or foreign currency risks and not for speculative purposes; 
 (v) Investments in Subsidiaries existing as of the Closing Date; and 
 (vi) Investments consisting of cash in life
insurance policies insuring the life of Reginald M. Fountain, Jr. so long as such policies are collateral assigned to the Bank on documentation in form and substance to the Bank. 
 7.6 Restricted Payments. Directly or indirectly, declare or make any dividend payment, or make any other distribution of cash, property or assets,
in respect of any of its Capital Stock or any warrants, rights or options to acquire its Capital Stock, or purchase, redeem, retire or otherwise acquire for value any shares of its Capital Stock or any warrants, rights or options to acquire its
Capital Stock, or set aside funds for any of the foregoing, except that: 
 (i) the Parent and any of its Subsidiaries may
declare and make dividend payments or other distributions payable solely in its Capital Stock, in each case to the extent not prohibited under applicable Requirements of Law; 
  

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 (ii) each Wholly Owned Subsidiary of the Borrower may declare and make dividend payments
or other distributions to the Borrower or to another Subsidiary of the Borrower, in each case to the extent not prohibited under applicable Requirements of Law; 
 (iii) the Borrower may declare and make dividend payments and other distributions in cash so that the Parent may pay the obligations that
it is permitted to incur under Section 7.17; and 
 (iv) the Parent may declare and make dividend payments and
other distributions in cash (and the Borrower may make corresponding dividends and distributions to the Parent) if (A) no Default or Event of Default shall have occurred and be continuing or would result therefrom, and (B) the aggregate
amount of all such cash payments in any fiscal year do not exceed twenty-five percent (25%) of the Parent’s Consolidated Net Income for such immediately preceding fiscal year. 
 7.7 Transactions With Related Persons. Except as otherwise permitted by Sections 7.2 and 7.6, directly or indirectly make any loan
or advance to, or purchase, assume or guarantee any indebtedness to or from, any of its officers, directors, stockholders or Affiliates, or to or from any member of the immediate family of any of its officers, directors, stockholders or Affiliates,
or subcontract any operations to any Affiliate, except for travel, relocation or other reasonable expense advances to employees in the ordinary course of business; or enter into any transaction with any Affiliate, except pursuant to the reasonable
requirements of the business of such Affiliate and on terms substantially no more favorable to such Affiliate than those that such Affiliate would obtain in a comparable arms-length transaction with a Person not an Affiliate of the Borrower;
provided, however, that nothing contained in this Section 7.7 shall prohibit (x) the Borrower from leasing an airplane from Reginald M. Fountain, Jr. so long as the amount of lease payments paid by the Borrower
thereunder does not exceed $300,000 in any fiscal year, or (y) the Borrower from making lease payments to Reginald M. Fountain, Jr. for the purposes of paying rent on apartments used by the Borrower’s employees so long as such rent in not
in excess of that paid by other tenants in such apartments. 
 7.8 Sale-Leaseback Transactions. Directly or indirectly, become or
remain liable as lessee or as guarantor or other surety with respect to any lease, whether an operating lease or a Capital Lease, of any property (whether real, personal or mixed, and whether now owned or hereafter acquired) (i) that the Parent
or any of its Subsidiaries has sold or transferred (or is to sell or transfer) to a Person that is not a party to this Agreement or any of the Loan Documents or (ii) that the Parent or any of its Subsidiaries intends to use for substantially
the same purpose as any other property that, in connection with such lease, has been sold or transferred (or is to be sold or transferred) by the Parent or any of its Subsidiaries to another Person that is not a party to this Agreement or any of the
Loan Documents, in each case except for transactions otherwise expressly permitted under this Agreement. 
 7.9 Certain Amendments.
(a) Amend, modify or waive, or permit the amendment, modification or waiver of, any provision of material contract; or (b) amend, modify or change any provision of its articles or certificate of incorporation or formation, bylaws,
operating agreement or other applicable formation or organizational documents, as applicable, the terms of 
  

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 any class or series of its Capital Stock, or any agreement among the holders of its Capital Stock or any of them; in each
case other than in a manner that could not reasonably be expected to adversely affect the Bank in any material respect (provided that the Parent or the Borrower shall give the Bank notice of any such amendment, modification or change covered
by subsection (b) above, together with certified copies thereof). 
 7.10 Limitation on Certain Restrictions. Directly or
indirectly, create or otherwise cause or suffer to exist or become effective any restriction or encumbrance on (a) the ability of the Parent or any of its Subsidiaries to perform and comply with their respective obligations under the Loan
Documents or (b) the ability of any Subsidiary of the Borrower to make any dividend payment or other distribution in respect of its Capital Stock, to repay Indebtedness owed to the Borrower or any other Subsidiary, to make loans or advances to
the Borrower or any other Subsidiary, or to transfer any of its assets or properties to the Borrower or any other Subsidiary, except (in the case of clause (b) above only) for such restrictions or encumbrances existing under or by reason of
(i) this Agreement and the other Loan Documents, (ii) applicable Requirements of Law, (iii) customary non-assignment provisions in leases and licenses of real or personal property entered into by the Borrower or any Subsidiary as
lessee or licensee in the ordinary course of business, restricting the assignment or transfer thereof or of property that is the subject thereof, and (iv) customary restrictions and conditions contained in any agreement relating to the sale of
assets (including Capital Stock of a Subsidiary) pending such sale, provided that such restrictions and conditions apply only to the assets being sold and such sale is permitted under this Agreement. 
 7.11 No Other Negative Pledges. Enter into or suffer to exist any agreement or restriction that, directly or indirectly, prohibits or conditions
the creation, incurrence or assumption of any Lien upon or with respect to any part of its property or assets, whether now owned or hereafter acquired, or agree to do any of the foregoing, except for such agreements or restrictions existing under or
by reason of (i) this Agreement and the other Loan Documents, (ii) applicable Requirements of Law, (iii) any agreement or instrument creating a Permitted Lien (but only to the extent such agreement or restriction applies to the assets
subject to such Permitted Lien), (iv) customary provisions in leases and licenses of real or personal property entered into by the Parent or any Subsidiary as lessee or licensee in the ordinary course of business, restricting the granting of
Liens therein or in property that is the subject thereof, and (v) customary restrictions and conditions contained in any agreement relating to the sale of assets (including Capital Stock of a Subsidiary) pending such sale, provided that
such restrictions and conditions apply only to the assets being sold and such sale is permitted under this Agreement. 
 7.12
Partnerships. Become a partner or joint venturer in any partnership or joint venture. 
 7.13 Lines of Business. Engage in any
business other than the business in which it is currently engaged or a business reasonably related thereto, or make any material change in its business objectives. 
 7.14 Boat Collateral. With respect to any Boat Collateral, prior to the repayment in full of the Loan secured by such Boat Collateral, (a) sell, assign or transfer a manufacturer’s statement of origin
for such Boat Collateral to any Person (other than the Bank in accordance with Section 2.3), or (b) apply for, permit any other Person to apply for, or otherwise obtain a certificate of title for such Boat Collateral unless the Bank
is named as a lien holder therein. 
  

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 7.15 Fiscal Year. Change its fiscal year or its method of determining fiscal quarters. 

7.16 Accounting Changes. Other than as permitted pursuant to Section 1.2, make or permit any material change in its accounting
policies or reporting practices, except as may be required by GAAP. 
 7.17 Additional Covenants of the Parent. The Parent will comply
with the following: 
 (a) The Parent will not incur, create, assume or suffer to exist any Indebtedness or Lien, except for the Indebtedness
created by the Loan Documents and Liens created by the Loan Documents. 
 (b) The Parent will not conduct, transact or otherwise engage, or
commit to transact, conduct or otherwise engage, in any business or operations including owning, leasing, managing or otherwise operating any assets or properties, or make any investments, loans or advances to any Person other than the following:

 (i) the ownership of Capital Stock in the Borrower and the exercise of rights and performance of obligations in connection
therewith; 
 (ii) the entry into, and exercise of rights and performance of obligations in respect of this Agreement and any
other Loan Document to which it is or may become a party; 
 (iii) the performance of obligations under and in compliance with
its the articles or certificate of incorporation and bylaws, and any applicable law, ordinance, regulation, rule, order, judgment, decree or permit (including the securities laws), including without limitation as a result of or in connection with
the activities of its Subsidiaries; 
 (iv) the performance of obligations under the Master Agreement; 
 (v) the incurrence and payment of legal and accounting fees, nominal expenses for corporate overhead and any taxes for which it may be
liable; and 
 (vi) other activities reasonably incidental or related to the foregoing. 
  

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 ARTICLE VIII 
 EVENTS OF DEFAULT; REMEDIES 
 8.1 Events of Default. The occurrence of any one or more of the
following events shall constitute an Event of Default hereunder: 
 (a) The Parent or the Borrower, as the case may be, shall fail to observe
or perform any covenant, restriction or agreement contained in this Agreement, including without limitation the failure to pay when due any principal amount or any interest, fees or other charges payable under this Agreement, the Note or under any
other Loan Document, for fifteen (15) days after the earlier of (i) the executive management or board of directors of the Parent or the Borrower obtaining knowledge of such failure, or (ii) the Parent or the Borrower receiving written
notice of such failure from the Bank; 
 (b) Any representation, warranty, certification or statement made or deemed made by the Parent or
the Borrower in Article IV of this Agreement, in any other Loan Document or in any certificate, financial statement or other document delivered pursuant to this Agreement or any other Loan Document, shall prove to have been incorrect in any
material respect when made or deemed made; 
 (c) The occurrence and continuance of any default or event of default on the part of the Parent
or any of its Subsidiaries (including specifically, but without limitation, defaults due to non-payment) under the terms of any agreement, document or instrument pursuant to which the Parent or any of its Subsidiaries has incurred any Indebtedness
for money borrowed in excess of $1,000,000, which default would permit acceleration of such indebtedness; 
 (d) The occurrence and
continuance of any default or event of default under any of the other Loan Documents, the Term Loan Agreement or under any other agreement between the Borrower and the Bank; 
 (e) Any Security Document to which the Parent or any of its Subsidiaries is now or hereafter a party shall for any reason cease to be in full force and
effect or cease to be effective to give the Bank a valid and perfected security interest in and Lien upon the collateral purported to be covered thereby, subject to no Liens other than Permitted Liens, in each case unless any such cessation occurs
in accordance with the terms thereof or is due to any act or failure to act on the part of the Bank; or the Parent or any such Subsidiary shall assert any of the foregoing; or the Parent shall deny or disaffirm its obligations under the Parent
Guaranty; 
 (f) The Parent or any Subsidiary (i) files a petition for relief under the Bankruptcy Code or any other insolvency law or
seeking to adjudicate it bankrupt or insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief
of debtors or fails to file an answer or other pleading denying the material allegations of any such proceeding filed against it, (ii) takes any corporate action to authorize or effect any of the foregoing actions, (iii) generally fails to
pay, or admits in writing its inability to pay, its debts as such debts become due; (iv) shall apply for, seek or consent to, or acquiesce in, the appointment of a custodian, receiver, trustee, examiner, liquidator or similar official for it or
for any material portion of its assets; or (v) makes an assignment for the benefit of creditors; 
 (g) Failure of the Parent or any
Subsidiary within thirty (30) days after the commencement of any proceeding against it seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or
regulation, to have such proceeding dismissed, or to have all orders or proceedings 
  

 36 

 thereunder affecting the operations or the business of the Parent or such Subsidiary stayed, or failure of the Parent or
such Subsidiary within thirty (30) days after the appointment, without its consent or acquiescence, of any custodian, receiver trustee, examiner, liquidator or similar official for it or for any material portion of its assets, to have such
appointment vacated; 
 (h) The Parent or the Borrower ceases to be Solvent, or ceases to conduct its business substantially as now conducted
or is enjoined, restrained or in any way prevented by court order from conducting all or any material part of its business affairs; 
 (i)
The entry of one or more judgments or orders for the payment of money in excess of $1,000,000 in the aggregate against the Parent or any of its Subsidiaries and such judgment(s) or order(s) shall continue unsatisfied, unbonded and unstayed for a
period of sixty (60) days or in any event later than five days prior to the date of any proposed sale thereunder; 
 (j) The issuance of
a writ of execution, attachment or similar process against the Parent or any of its Subsidiaries which shall not be dismissed, stayed, discharged or bonded within sixty (60) days after the executive management or board of directors of the
Parent or the Borrower obtaining knowledge thereof or in any event later than five days prior to the date of any proposed sale thereunder; 
 (k) Any ERISA Event or any other event or condition shall occur or exist with respect to any Plan or Multiemployer Plan and, as a result thereof, together with all other ERISA Events and other events or conditions then existing, the Parent
and its ERISA Affiliates have incurred or would be reasonably likely to incur liability to any one or more Plans or Multiemployer Plans or to the PBGC (or to any combination thereof) in excess of $1,000,000; 
 (l) Any one or more licenses, permits, accreditations or authorizations of the Parent or any of its Subsidiaries shall be suspended, limited or
terminated or shall not be renewed, or any other action shall be taken, by any Governmental Authority in response to any alleged failure by the Parent or any of its Subsidiaries to be in compliance with applicable Requirements of Law, and such
action, individually or in the aggregate, if the event giving rise to such action is not remediated within thirty (30) days of notice of any of the foregoing events, would be reasonably likely to have a Material Adverse Effect; or 

(m) There shall occur a Change in Control. 
 8.2 Remedies. Upon the occurrence and during the continuance of any Event of Default: 
 (a) Acceleration of
Indebtedness. The Bank may, in its sole discretion, (i) declare all or any part of the Obligations immediately due and payable, whereupon such Obligations shall become immediately due and payable without presentment, demand, protest, notice
or legal process of any kind, all of which are hereby expressly waived by the Borrower; provided, however, that all Obligations shall automatically become due and payable upon the occurrence of an Event of Default under Sections
8.1(e) or (g); and (ii) pursue all other remedies available to it by contract, at law or in equity, including but not limited to its rights under the Security Documents. 
  

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 (b) Right of Set-off. The Bank may, and is hereby authorized by the Borrower, at any time and from
time to time, to the fullest extent permitted by applicable laws, without advance notice to the Borrower (any such notice being expressly waived by the Borrower), set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and any other indebtedness at any time owing by the Bank or any of its Affiliates to or for the credit or the account of the Borrower against any or all of the Obligations of the Borrower under this Agreement
or the other Loan Documents now or hereafter existing, whether or not such obligations have matured. The Bank agrees promptly to notify the Borrower after any such set-off or application; provided, however, that the failure to give
such notice shall not affect the validity of such set-off and application. 
 (c) Rights and Remedies Cumulative; Non-Waiver; etc. The
enumeration of the Bank’s rights and remedies set forth in this Agreement is not intended to be exhaustive and the exercise by the Bank of any right or remedy shall not preclude the exercise of any other rights or remedies, all of which shall
be cumulative, and shall be in addition to any other right or remedy given hereunder, under the other Loan Documents or under any other agreement between the Borrower and the Bank or that may now or hereafter exist in law or in equity or by suit or
otherwise. No delay or failure to take action on the part of the Bank in exercising any right, power or privilege shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or privilege preclude other or
further exercise thereof or the exercise of any other right, power or privilege or shall be construed to be a waiver of any Event of Default. No course of dealing between the Borrower and the Bank or their agents or employees shall be effective to
change, modify or discharge any provision of this Agreement or any of the other Loan Documents or to constitute a waiver of any Event of Default. 
 ARTICLE IX 
 GUARANTY 
 9.1 The Parent Guaranty. 
 (a) In order to induce the Bank to enter into this Agreement, the Parent
hereby unconditionally and absolutely guarantees to the Bank as primary obligor and not merely as surety, the full and prompt payment and performance when due, whether at stated maturity, acceleration or otherwise, of (i)(A) the Loans by the
Borrower under this Agreement and pursuant to the Note and the other Loan Documents, including, without limitation, all principal of and interest on the Loans, all fees, expenses, indemnities and other amounts payable by the Borrower under this
Agreement or any other Loan Document (including interest accruing after the filing of a petition or commencement of a case by or with respect to the Borrower seeking relief under any applicable federal and state laws pertaining to bankruptcy,
reorganization, arrangement, moratorium, readjustment of debts, dissolution, liquidation or other debtor relief, specifically including, without limitation, the Bankruptcy Code and any fraudulent transfer and fraudulent conveyance laws, whether or
not the claim for such interest is allowed in such proceeding), and (B) all obligations of the Borrower to the Bank under any swap agreements (as defined in 11 U.S.C. § 101, as in effect from time to time), and (ii) all reasonable
costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses) incurred or paid by the Bank in connection with any suit, action or proceeding to enforce or protect any of its 
  

 38 

 rights hereunder (collectively, “Guaranteed Obligations”). If any or all of the Guaranteed Obligations
becomes due and payable hereunder, the Parent unconditionally promises to pay such indebtedness to the Bank, on order, or demand, together with any and all reasonable expenses which may be incurred by the Bank in collecting any of the Guaranteed
Obligations. 
 (b) Notwithstanding any provision to the contrary contained herein or in any other of the Loan Documents, to the extent the
obligations of the Parent shall be adjudicated to be invalid or unenforceable for any reason (including, without limitation, because of any applicable state or federal law relating to fraudulent conveyances or transfers) then the obligations of the
Parent hereunder shall be limited to the maximum amount that is permissible under applicable law (whether federal or state and including, without limitation, the Bankruptcy Code). 
 9.2 Guaranty Unconditional. The obligations of the Parent hereunder shall arise absolutely and unconditionally when an initial Loan has been made
by the Bank to the Borrower and shall be a continuing, absolute and unconditional guaranty that remains in full force and effect until all of the Guaranteed Obligations shall have been paid in full and the period during which any payment of the
Guaranteed Obligations to the Bank could be recovered as an avoidable preference under 11 U.S.C. § 547, or any successor provision thereof, has expired. The Parent agrees that to the extent all or part of any payment of the Guaranteed
Obligations is subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, receiver or any other party, then, to the extent of such avoidance or repayment, the obligation or part thereof
intended to be satisfied shall be revived and reinstated and continue in full force and effect as if said payment had not been made. 
 9.3
Nature of Liability. The liability of the Parent hereunder is exclusive and independent of any security for or other guaranty of the indebtedness of the Borrower and the Parent’s liability hereunder shall not be affected or impaired by
(a) any direction as to application of payment by the Borrower or by any other party, or (b) any other continuing or other guaranty, undertaking or maximum liability of a guarantor or of any other party as to the indebtedness of the
Borrower, or (c) any payment on or in reduction of any such other guaranty or undertaking, or (d) any dissolution, termination or increase, decrease or change in personnel by the Borrower, or (e) any payment made to the Bank on the
indebtedness which such Bank repays to the Borrower pursuant to court order in any bankruptcy, reorganization, arrangement, moratorium or other debtor relief proceeding, and the Parent waives any right to the deferral or modification of its
obligations hereunder by reason of any such proceeding. Notwithstanding anything to the contrary in this Agreement, the aggregate liability of the Parent under the Loan Documents shall not exceed the aggregate amount of the Guaranteed Obligations.

 9.4 Independent Obligation. The obligations of the Parent hereunder is independent of the obligations of any other guarantor or the
Borrower, and a separate action or actions may be brought and prosecuted against the Parent whether or not action is brought against any other guarantor or the Borrower and whether or not any other guarantor or the Borrower is joined in any such
action or actions. 
 9.5 Authorization. The Parent authorizes the Bank without notice or demand (except as shall be required by
applicable statute and cannot be waived), and without affecting or impairing its liability hereunder, from time to time to (a) renew, compromise, extend, increase, 
  

 39 

 accelerate or otherwise change the time for payment of, or otherwise change the terms of the indebtedness or any part
thereof in accordance with this Agreement, including any increase or decrease of the rate of interest thereon, (b) take and hold security from any guarantor or any other party for the payment of this Parent Guaranty or the indebtedness and
exchange, enforce waive and release any such security, (c) apply such security and direct the order or manner of sale thereof as the Bank in its discretion may determine and (d) release or substitute any one or more endorsers, guarantors,
the Borrower or other obligors. 
 9.6 Reliance. It is not necessary for the Bank to inquire into the capacity or powers of the
Borrower or any guarantor or the officers, directors, members, partners or agents acting or purporting to act on its behalf, and any indebtedness made or created in reliance upon the professed exercise of such powers shall be guaranteed hereunder.

 9.7 Waiver. 
 (a) The
Parent waives any right (except as shall be required by applicable statute and cannot be waived) to require the Bank to (i) proceed against the Borrower, any other guarantor or any other party, (ii) proceed against or exhaust any security
held from the Borrower, any other guarantor or any other party, or (iii) pursue any other remedy in the Bank’s power whatsoever. The Parent waives any defense based on or arising out of any defense of the Borrower, any other guarantor or
any other party other than payment in full of the indebtedness, including without limitation any defense based on or arising out of the disability of the Borrower, any other guarantor or any other party, or the unenforceability of the indebtedness
or any part thereof from any cause, or the cessation from any cause of the liability of the Borrower other than payment in full of the indebtedness. The Bank may, at its election, foreclose on any security held by the Bank by one or more judicial or
non-judicial sales, whether or not every aspect of any such sale is commercially reasonable (to the extent such sale is permitted by applicable law), or exercise any other right or remedy the Bank may have against the Borrower or any other party, or
any security, without affecting or impairing in any way the liability of the Parent hereunder except to the extent the indebtedness has been paid. The Parent waives any defense arising out of any such election by the Bank, even though such election
operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy of the Parent against the Borrower or any other party or any security. 
 (b) The Parent waives all presentments, demands for performance, protests and notices, including without limitation notices of nonperformance, notice of protest, notices of dishonor, notices of acceptance of this
Parent Guaranty, and notices of the existence, creation or incurring of new or additional indebtedness. The Parent assumes all responsibility for being and keeping itself informed of the Borrower’s financial condition and assets, and of all
other circumstances bearing upon the risk of nonpayment of the indebtedness and the nature, scope and extent of the risks which the Parent assumes and incurs hereunder, and agrees that the Bank shall not have any duty to advise the Parent of
information known to it regarding such circumstances or risks. 
 (c) The Parent hereby agrees it will not exercise any rights of subrogation
which it may at any time otherwise have as a result of this Parent Guaranty (whether contractual, under Section 509 of the U.S. Bankruptcy Code, or otherwise) to the claims of the Bank against the 
  

 40 

 Borrower or any other guarantor of the indebtedness of the Borrower owing to the Bank (collectively, the “Other
Parties”) and all contractual, statutory or common law rights of reimbursement, contribution or indemnity from any Other Party which it may at any time otherwise have as a result of this Parent Guaranty until such time as all of the
Guaranteed Obligations shall have been paid in full. The Parent hereby further agrees not to exercise any right to enforce any other remedy which the Bank now has or may hereafter have against any Other Party, any endorser or any other guarantor of
all or any part of the indebtedness of the Borrower and any benefit of, and any right to participate in, any security or collateral given to or for the benefit of the Bank to secure payment of the indebtedness of the Borrower until such time as all
of the Guaranteed Obligations shall have been paid in full. 
 9.8 Application; Set-Off (a) The Parent agrees that, upon the failure of the
Borrower to pay any Guaranteed Obligations when and as the same shall become due (whether at the stated maturity, by acceleration or otherwise), and without limitation of any other right or remedy that the Bank may have at law, in equity or
otherwise against the Parent, the Parent will, subject to the provisions of Section 9.1(b), forthwith pay or cause to be paid to the Bank, an amount equal to the amount of the Guaranteed Obligations then due and owing as aforesaid.

 (b) All payments made hereunder shall be applied upon receipt as follows: 
 (i) first, to the payment of all reasonable costs and expenses owing to the Bank pursuant to Section 9.1(a)(ii); 

(ii) second, after payment in full of the amounts specified in clause (i) above, to the payment of the other Guaranteed
Obligations owing to the Bank Section 9.1(a)(i); and 
 (iii) third, after payment in full of the amounts
specified in clauses (i) and (ii) above, and following the termination of this Parent Guaranty, to the Guarantors or any other Person lawfully entitled to receive such surplus. 
 (c) In addition to all other rights and remedies available under the Loan Documents or applicable law or otherwise, upon and at any time after the
occurrence and during the continuance of any Event of Default, the Bank may, and is hereby authorized by the Parent, at any such time and from time to time, to the fullest extent permitted by applicable law, without presentment, demand, protest or
other notice of any kind, all of which are hereby knowingly and expressly waived by the Parent, to set off and to apply any and all deposits (general or special, time or demand, provisional or final) and any other property at any time held
(including at any branches or agencies, wherever located), and any other indebtedness at any time owing, by the Bank to or for the credit or the account of the Parent against any or all of the obligations of the Parent to the Bank hereunder now or
hereafter existing, whether or not such obligations may be contingent or unmatured, the Parent hereby granting to the Bank a continuing security interest in and Lien upon all such deposits and other property as security for such obligations. The
Bank agrees to notify the Parent promptly after any such set-off and application; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application. 
  

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 ARTICLE X 
 MISCELLANEOUS 
 10.1 Costs, Expenses and Taxes. The Borrower agrees to pay on demand all
reasonable out-of-pocket expenses of the Bank, including reasonable fees and disbursements of counsel, in connection with: (i) the preparation, execution, delivery, and filing, if required of this Agreement and the other Loan Documents,
(ii) any amendments, supplements, consents or waivers hereto or to the Loan Documents, and (iii) the administration or enforcement of this Agreement and the other Loan Documents. In addition, the Borrower shall pay any and all stamp and
other taxes and fees payable or determined to be payable in connection with the execution, delivery, filing and recording of this Agreement and the other Loan Documents and agrees to save the Bank harmless from and against any and all liabilities
with respect to or resulting from any delay in paying or omission to pay such taxes and fees. It is the intention of the parties hereto that the Borrower shall pay amounts referred to in this Section directly. In the event the Bank pays any of the
amounts referred to in this Section directly, the Borrower will reimburse the Bank for such advances and interest on such advance shall accrue until reimbursed at the Default Rate. 
 10.2 Indemnification. From and at all times after the date of this Agreement, and in addition to all of the Bank’s other rights and remedies
against the Borrower, the Borrower agrees to indemnify, defend and hold harmless the Bank and its directors, officers, employees, agents, successors, assigns and affiliates from and against the following (collectively “Costs”): any
and all claims, losses, damages, actions, suits, inquiries, investigations, administrative proceedings, judgments, liens, liabilities, penalties, fines, amounts paid in settlement, requirements of Governmental Authorities, punitive damages,
interest, damages to natural resources and other costs and expenses of any kind or nature whatsoever (including without limitation reasonable attorneys’ fees and expenses and court costs and fees) arising in any manner, directly or indirectly,
out of or by reason of (a) the negotiation, preparation, execution or performance of this Agreement or the other Loan Documents, or any transaction contemplated herein or therein, whether or not the Bank or any other party protected under this
Section is a party to any action, proceeding or suit in question, or the target of any inquiry or investigation in question; provided, however, that no indemnified party shall have the right to be indemnified hereunder for any
liability resulting from the willful misconduct or gross negligence of such indemnified party (as finally determined by a court of competent jurisdiction), (b) any breach of any of the covenants, warranties or representations of the Borrower
hereunder or under any other Loan Document, (c) any lien or charge upon amounts payable hereunder by the Borrower to the Bank or any taxes, assessments, impositions and other charges in respect of the collateral secured by the Security
Documents, (d) damage to property or any injury to or death of any person that may be occasioned by any cause whatsoever pertaining to any such collateral or the use thereof, (e) any violation or alleged violation of any Environmental Law,
federal or state securities law, common law, equitable requirement or other legal requirement by the Borrower or with respect to any property owned, leased or operated by the Borrower (in the past, currently or in the future), or (f) any
presence, generation, treatment, storage, disposal, transport, movement, release, suspected release or threatened release of any Hazardous Material on, in, to or from any property (or any part thereof including without limitation the soil and
groundwater thereon and thereunder) owned, leased or operated by the Borrower (in the past, currently or in the future). 
  

 42 

 All Costs shall be additional Obligations of the Borrower under this Agreement, shall be payable on demand to the party
to be indemnified, and shall be secured by the lien of the Security Documents. 
 10.3 Waiver of Jury Trial. AS PART OF THE
CONSIDERATION FOR NEW VALUE THIS DAY RECEIVED, THE BORROWER HEREBY CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING WITHIN THE STATE OF NORTH CAROLINA FOR ANY ACTION TO WHICH THE BORROWER AND THE BANK ARE PARTIES. TO
THE EXTENT PERMITTED BY LAW, THE BORROWER WAIVES TRIAL BY JURY AND WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED ON LACK OF JURISDICTION OR IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY ACTION INSTITUTED HEREUNDER
OR UNDER ANY OF THE OTHER LOAN DOCUMENTS, OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, OR ANY OTHER PROCEEDING TO WHICH THE BANK IS A PARTY, INCLUDING ANY ACTIONS BASED UPON, ARISING OUT OF OR IN
CONNECTION WITH ANY COURSE OF CONDUCT, COURSE OF DEALING OR STATEMENT (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE BANK OR THE BORROWER CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. NOTHING IN THIS
SECTION SHALL AFFECT THE RIGHT OF THE BANK TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION THAT HAS JURISDICTION OVER THE BORROWER. 
 10.4 Waiver of Automatic or Supplemental Stay. In the event that a petition for relief under any chapter of the Bankruptcy Code is filed by or
against the Borrower, the Borrower promises and covenants that it will not seek a supplemental stay pursuant to Bankruptcy Code §§ 105 or 362 or any other relief pursuant to Bankruptcy Code § 105 or any other provision of the
Bankruptcy Code, whether injunctive or otherwise, which would stay, interdict, condition, reduce or inhibit the Bank’s ability to enforce any rights it has, at law or in equity, to collect the Obligations from any Person other than the
Borrower. 
 10.5 Notices. All demands, notices, approvals, consents, requests, and other communications hereunder shall be in writing
and shall be deemed to have been given when the writing is delivered, if given or delivered by hand, overnight delivery service or facsimile transmitter (with confirmed receipt), or five (5) days after being mailed, if mailed, by first class,
registered or certified mail, postage prepaid, to the address or telecopy number set forth below: 
  

			
	 Party
	 	 Address

	 Borrower
	 	 Fountain Powerboats, Inc.

		 	 1653 Whichard’s Beach Road

		 	 Washington, North Carolina 27889

		 	 Attention: Reginald M. Fountain, Jr.

		 	 Telephone: (252) 975-2000

		 	 Fax: (252) 975-0750

		
	 Bank
	 	 Regions Bank

		 	 6805 Morrison Boulevard, Suite 100

		 	 Charlotte, North Carolina

		 	 Attention: Kemp Simmons

		 	 Telephone: (704) 770-3604

		 	 Fax: (704) 362-3594

  

 43 

 The Borrower or the Bank may, by notice given hereunder, designate any further or different addresses or telecopy numbers
to which subsequent demands, notices, approvals, consents, requests or other communications shall be sent or persons to whose attention the same shall be directed. 
 10.6 Continuing Obligations. All agreements, representations and warranties contained herein or made in writing by or on behalf of the Borrower in connection with the transactions contemplated hereby shall
survive the execution and delivery of this Agreement and the other Loan Documents. The Borrower further agrees that to the extent the Borrower makes a payment to the Bank, which payment or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee, receiver or any other party under any bankruptcy, insolvency or other similar state or federal statute, or principle of equity, then, to the extent of such repayment by the
Bank, the Obligation or part thereof intended to be satisfied by such payment shall be revived and continued in full force and effect as if such payment had not been received by the Bank. 
 10.7 Controlling Law. This Agreement has been executed, delivered and accepted at, and shall be deemed to have been made in, North Carolina and
shall be interpreted in accordance with the internal laws (as opposed to conflicts of laws provisions) of the State of North Carolina. 
 10.8 Successors and Assigns. This Agreement shall be binding upon the Borrower and its successors and assigns and all rights against the Borrower arising under this Agreement shall be for the sole benefit of the Bank. 
 10.9 Assignment and Sale. The Borrower may not sell, assign or transfer this Agreement or any of the other Loan Documents or any portion hereof or
thereof, including without limitation the Borrower’s rights, title, interests, remedies, powers, and duties hereunder or thereunder. The Bank may assign or sell a participation interest in all or any portion of any Loan to one or more other
financial institutions. 
 10.10 Entire Agreement. THIS AGREEMENT AND THE DOCUMENTS AND INSTRUMENTS EXECUTED AND DELIVERED
CONTEMPORANEOUSLY HEREWITH EMBODY THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES HERETO AND SUPERSEDE ALL PRIOR AGREEMENTS AND UNDERSTANDINGS OF SUCH PERSONS, VERBAL OR WRITTEN, RELATING TO THE SUBJECT MATTER HEREOF, INCLUDING, BUT NOT
LIMITED TO, THE COMMITMENT LETTERS TO THE BORROWER FROM THE BANK DATED APRIL 10, 2006. THIS AGREEMENT AND THE DOCUMENTS AND INSTRUMENTS EXECUTED IN CONNECTION HEREWITH REPRESENT THE FINAL AGREEMENT 
  

 44 

 BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. 
 10.11 Amendment. Any provision of this Agreement or any
other Loan Document to which the Borrower is a party may be amended if such amendment is in writing and is signed by the Borrower and the Bank. In connection with any amendment entered into in accordance with this Section, the Borrower shall pay to
the Bank a fee to be negotiated between the Borrower and the Bank. Payment of such fee by the Borrower to the Bank shall be a condition precedent to the effectiveness of such amendment and shall be due on the date such amendment is signed by the
Bank. 
 10.12 Severability. In the event that any provision of this Agreement shall be determined to be invalid or unenforceable by
any court of competent jurisdiction, such determination shall not invalidate or render unenforceable any other provision hereof. 
 10.13
Counterparts. This Agreement may be executed in several counterparts, each of which shall be an original and all of which, together shall constitute but one and the same instrument. 
 10.14 Captions. The captions to the various sections and subsections of this Agreement have been inserted for convenience only and shall not limit
or affect any of the terms hereof. 
 10.15 Consent Under Term Loan Agreement. Subject to satisfaction of the conditions precedent set
forth in Article III hereof, the Bank, in its capacity as the lender under the Term Loan Agreement, hereby (i) consents to the issuance of the Loans hereunder and (ii) agrees that the issuance of the Loans hereunder shall be deemed
to be permitted indebtedness pursuant to Section 7.2 of the Term Loan Agreement. 
  

 45 

 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered by their respective duly authorized officers as of the date first above written. 
  

			
	 BORROWER:

	
	 FOUNTAIN POWERBOATS, INC.

		
	By:	 	 /s/ Reginald M. Fountain, Jr.

	Name:	 	Reginald M. Fountain, Jr.
	Title:	 	President
	
	PARENT GUARANTOR:
	
	FOUNTAIN POWERBOAT INDUSTRIES, INC.
		
	By:	 	 /s/ Reginald M. Fountain, Jr.

	Name:	 	Reginald M. Fountain, Jr.
	Title:	 	President
	
	BANK:
	
	REGIONS BANK
		
	By:	 	 /s/ Kemp Simmons

	Name:	 	Kemp Simmons
	Title:	 	Senior Vice President

 Signature Page to Loan AgreementFirst Amd. to Deed of Trust, Assn of Rents, Sec Agreement

 Exhibit 10.2 
 FIRST AMENDMENT TO DEED OF TRUST, ASSIGNMENT OF RENTS, 
 SECURITY AGREEMENT AND FINANCING STATEMENT

 NORTH CAROLINA, BEAUFORT COUNTY 
 THIS FIRST AMENDMENT TO DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FINANCING STATEMENT (this “Amendment”) is made and entered into as of July 12, 2006, by and among FOUNTAIN POWERBOATS,
INC., a North Carolina corporation, whose address is 1653 Whichard’s Beach Road, Washington, North Carolina 27889, and whose organizational identification number is 0055124 (hereinafter called “Grantor”), EDMUND
HAWES, a resident of North Carolina, whose address is 6805 Morrison Boulevard, Suite 100, Charlotte, North Carolina 28211 (hereinafter called “Trustee”), and REGIONS BANK, an Alabama chartered bank, whose address is 6805
Morrison Boulevard, Suite 100, Charlotte, North Carolina 28211 (hereinafter called “Beneficiary”). 
 RECITALS:

 A. Grantor and Beneficiary are parties to a Loan Agreement, dated as of September 19, 2005, pursuant to which Beneficiary made
available to Grantor a term loan in the principal amount of $16,500,000 as evidenced by a promissory note dated as of even date therewith, from Grantor and payable to Beneficiary. The obligations of Grantor under the Term Loan Agreement are secured
by, among other things, a Deed of Trust, Assignment of Rents, Security Agreement and Financing Statement dated as of September 19, 2005 (the “Deed of Trust”) from Grantor to Trustee, which Deed of Trust was recorded on
September 19, 2005, in Book 1477, Page 854, in the office of the Beaufort County Register of Deeds. Except as otherwise provided herein, capitalized terms used herein without definition shall have the meanings given to them in the Deed of
Trust. 
 B. Grantor has requested an additional non-revolving line of credit from Beneficiary in order to finance the construction of new
boats to be used by Grantor. Pursuant to the Grantor’s request, Grantor and Beneficiary have entered into a Loan Agreement, dated as of even date herewith (as amended, modified, restated or supplemented from time to time, the
“Non-Revolving Loan Agreement”), pursuant to which Beneficiary made available to Grantor a non-revolving line of credit in the principal amount of $5,000,000 as evidenced by a promissory note dated as of even date therewith, from
Grantor and payable to Beneficiary. 
 C. Grantor and Beneficiary have agreed to amend the Deed of Trust pursuant to this Amendment to secure
the payment and performance of obligations arising under the Non-Revolving Loan Agreement and the other Loan Documents (as defined in the Non-Revolving Loan Agreement). The Deed of Trust, as amended by this Amendment, and as hereafter amended,
modified, restated, supplemented, extended or renewed from time to time, is hereinafter referred to as the “Deed of Trust.” 

 NOW, THEREFORE, for and in consideration of the mutual covenants herein contained, and other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of the parties hereto agrees as follows: 
 1. Amendments to Deed of Trust. 
 (a) The first paragraph of the Recitals beginning with the letter
“A” in the Deed of Trust is restated in its entirety to read as follows: 
 A. Grantor is indebted to Beneficiary in the sum
of up to Twenty-One Million Five Hundred Thousand and No/100 Dollars ($21,500,000.00), pursuant to (i) a Loan Agreement, dated as of September 19, 2005, (as amended, modified, restated or supplemented from time to time, the “Term
Loan Agreement”), pursuant to which Beneficiary made available to Grantor a term loan in the principal amount of $16,500,000 (the “Term Loan”) as evidenced by a promissory note dated as of even date therewith, from Grantor
and payable to Beneficiary (as the same may be amended, modified, replaced, restated, supplemented, extended, or renewed from time to time, the “Term Note”), and (ii) a Loan Agreement, dated as of July 12, 2006 (as
amended, modified, restated or supplemented from time to time, the “Non-Revolving Loan Agreement” and, together with the Term Loan Agreement, the “Loan Agreement”), pursuant to which Beneficiary made available to
Grantor a non-revolving line of credit in the principal amount of $5,000,000 (the “Non-Revolving Loan” and, together with the Term Loan, the “Loan”) as evidenced by a promissory note dated as of even date therewith,
from Grantor and payable to Beneficiary (as the same may be amended, modified, replaced, restated, supplemented, extended, or renewed from time to time, the “Non-Revolving Note” and, together with the Term Note, the
“Note”). 
 (b) All references to the “Loan,” the “Loan Agreement,” and the
“Note” in the Deed of Trust shall be deemed to refer to the “Loan,” the “Loan Agreement,” and the “Note” as defined in this Amendment. 
 (c) The following paragraph is hereby added to the Deed of Trust immediately following paragraph #33: 
 34. Future Advances. This Deed of Trust is given to secure all present and future obligations of the Grantor to the Beneficiary. The period in
which future obligations may be incurred and secured by this Deed of Trust is the period between the date hereof and 15 years from the date hereof. The amount of present obligations secured by this Deed of Trust is $16,500,000, and the maximum
principal amount, including present and future obligations, which may be secured by this Deed of Trust at any one time is $21,500,000. Any 
  

 2 

 additional amounts advanced by the Beneficiary pursuant to the provisions of this Deed of Trust shall
be deemed necessary expenditures for the protection of the security. The Grantor need not sign any instrument or notation evidencing or stipulating that future advances are secured by this Deed of Trust. 
 2. Ratification. Except as expressly amended herein, the Deed of Trust is hereby ratified and confirmed by the parties and all the
terms, provisions and conditions thereof shall be and remain in full force and effect, and this Amendment and all of its terms, provisions and conditions shall be deemed to be a part of the Deed of Trust 
 3. Governing Law. This Amendment is entered into under the laws of the State of North Carolina, and those laws shall govern the
construction and enforcement hereof. 
 4. Entire Agreement; Modification. This Amendment embodies the entire agreement
and understanding among the parties hereto relating to the subject matter hereof, and supersedes all prior agreements and understandings relating to such subject matter. This Amendment may not be amended orally, but only by an agreement in writing
signed by each of the parties hereto. 
 5. Captions. The captions set forth at the beginning of the various paragraphs
of this Amendment are for convenience only and shall not be used to interpret or construe the provisions of this Amendment. 
 6.
Severability. To the extent any provision of this Amendment is prohibited by or invalid under the applicable law of any jurisdiction, such provision shall be ineffective only to the extent of such prohibition or invalidity and only in any
such jurisdiction, without prohibiting or invalidating such provision in any other jurisdiction or the remaining provisions of this Amendment in any jurisdiction. 
 7. Successors and Assigns. This Amendment shall be binding upon, inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto. 
 8. Counterparts; Effectiveness. This Amendment may be executed in counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. 
  

 3 

 IN WITNESS WHEREOF, Grantor, pursuant to duly adopted resolutions of the board of directors of
Grantor, has caused this Amendment to be executed as of the day and year first above written. 
  

			
	GRANTOR:
	
	FOUNTAIN POWERBOATS, INC., a North Carolina corporation
		
	By:	 	 /s/ Reginald M. Fountain, Jr.

	Name:	 	Reginald M. Fountain, Jr.
	Title:	 	President

 STATE OF North Carolina 
 COUNTY OF Beaufort 
 I, Stanley M. Sams, a Notary Public of the County and State aforesaid,
certify that Reginald M. Fountain, Jr. personally came before me this day and acknowledged that he is President of Fountain Powerboats, Inc., a North Carolina corporation (the “Company”), and that he, as President, being authorized
to do so, executed the foregoing on behalf of the Company. And the said President acknowledged the said writing to be the act and deed of the Company. 
 Witness my hand and official stamp or seal, this the 12th day of July, 2006. 
  

			
	My Commission Expires:	  	 /s/ Stanley M. Sams

		  	Notary Public
	August 14, 2010	  	
		  	 Stanley M. Sams

	[Notary Seal]	  	Notary’s printed or typed name

 Signature Page 
 to First Amendment to Deed of Trust 

			
		 	TRUSTEE:
		
		 	 /s/ Edmund Hawes

	Name:	 	EDMUND HAWES

 STATE OF North Carolina  
 COUNTY OF Union 
 I, Lana Aumer, a Notary Public for the County and State aforesaid, certify that
Edmund Hawes personally appeared before me this day and acknowledged the due execution of the foregoing instrument. 
 Witness my hand and
official stamp or seal, this the 11th day of July, 2006. 
  

			
	My Commission Expires:	    	 /s/ Lana Aumer

		    	Notary Public
	August 21, 2009	    	
		    	 Lana Aumer

	[Notary Seal]	    	Notary’s printed or typed name

 Signature Page 
 to First Amendment to Deed of Trust 

			
	 BENEFICIARY:

	
	 REGIONS BANK

		
	By:	 	 /s/ Kemp Simmons

	Name:	 	Kemp Simmons
	Title:	 	Senior Vice President

 STATE OF North Carolina  
 COUNTY OF Union  
 I, Lana Aumer, a Notary Public of the County and State
aforesaid, certify that Kemp Simmons personally came before me this day and acknowledged that he is a Senior Vice President of Regions Bank, an Alabama chartered bank, and that he, as Senior Vice President, being authorized to do so, executed the
foregoing on behalf of Regions Bank. And the said Senior Vice President acknowledged the said writing to be the act and deed of Regions Bank. 
 Witness my hand and official stamp or seal, this the 11th day of July, 2006. 
  

			
	My Commission Expires:	  	 /s/ Lana Aumer

		  	Notary Public
	August 21, 2009	  	
		  	 Lana Aumer

	[Notary Seal]	  	Notary’s printed or typed name

 Signature Page 
 to First Amendment to Deed of Trust

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