Exhibit 10.13
DEALER FLOOR PLAN AND SECURITY
AGREEMENT
THIS DEALER FLOOR PLAN AND
SECURITY AGREEMENT (the
“Agreement”) is made as of September 28, 2007, by and
among FOUNTAIN DEALERS’ FACTORY SUPER STORE, INC., a North
Carolina corporation (“Borrower”), REGIONS BANK, an
Alabama state banking corporation (together with its successors and
assigns, “Lender”), FOUNTAIN POWERBOATS, INC., a North
Carolina corporation (“Fountain Powerboats”), and
FOUNTAIN POWERBOAT INDUSTRIES, INC., a Nevada corporation
(“Parent” and together with Fountain Powerboats, the
“Guarantors”).
WHEREAS, Borrower and Guarantors
have requested Lender to loan money to and otherwise extend credit
to Borrower to finance, inter alia, its inventory of new
vessels, watercraft, boat and boat motors (hereinafter,
“Floor Plan Credit”); and
WHEREAS, Lender has required, as a
condition to extending Floor Plan Credit that this Agreement be
executed by Borrower and Guarantors; and
WHEREAS, Lender has loaned and/or
extended credit and/or may in the future loan and/or extend credit
to Borrower by reason of the request of Borrower and in reliance
upon this Agreement;
NOW, THEREFORE, in consideration of
the foregoing, of the promises herein contained, and for other good
and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto, each intending to be
legally bound hereby, agree as follows:
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1.01
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Uniform
Commercial Code Terms
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The following terms shall have the
meanings assigned to each under the Uniform Commercial Code in
effect from time to time in the jurisdiction where Borrower and
each Guarantor, as applicable, is located (and if a different
jurisdiction, where the Collateral is located) (collectively the
“UCC”): Accounts, Chattel Paper, including Electronic
Chattel Paper, Commercial Tort Claim, Documents, Deposit Accounts,
Equipment, including Accessions, General Intangibles, including
Payment Intangibles, Goods, including Fixtures, Instruments,
Inventory, Investment Property, Letter of Credit Rights, Software,
Supporting Obligations, and Proceeds, including Non-Cash
Proceeds.
As used herein the following
capitalized terms will have the following meanings:
“ 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, (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 or (iv) such
Person’s officers, managers, directors and partners. 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 securities or otherwise.
“ Borrower ”
shall have the meaning assigned to that term in the introductory
paragraph of this Agreement.
“ Business Day ”
shall mean each day Lender is open for business except
Saturdays.
“ 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.
“ Change of Control
” shall mean and be deemed to occur if (i) Parent ceases to
own, beneficially and of record, and control 100% of the total
Capital Stock of Borrower and Fountain Powerboats, (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 Parent representing 25% or more of the combined
voting power of the then outstanding Capital stock of 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 date of this Agreement, individuals who at the
beginning of such twelve (12) month period were directors of Parent
(together with any new director whose election by 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 approved) cease for any
reason to constitute a majority of the directors of Parent then in
office, or (iv) Reginald M. Fountain, Jr. shall cease to serve as
the chief executive officer of the Credit Parties unless the Credit
Parties shall have selected a chief executive officer reasonably
satisfactory to Lender.
“ 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.
“ Collateral ”
shall have the meaning set forth in Section 5.01 hereof.
“ 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 Credit
Parties, are treated as a single employer under Section 414 of the
Code.
“ Credit Documents
” means all notes, instruments, agreements, contracts,
mortgages, deeds of trust, indentures, assignments, guarantees,
control agreements, security agreements, pledges and any and all
other instruments, agreements, documents and writings of every
kind, type and description heretofore or at any time or times
hereafter given, executed and/or delivered in order to evidence any
Obligation, to secure or support the payment or performance for any
Obligation or otherwise in connection with or relating to any
Obligations, as the same have been or may be modified, supplemented
or amended from time to time, including, without limitation, the
Note, this Agreement and the Loan Agreement.
“ Credit Parties
” shall mean Borrower and each of the Guarantors.
“ Debt Service ”
shall mean, for any period, the sum of (i) interest expense of
Borrower, plus (ii) all scheduled principal payments due on any
Indebtedness of Borrower, plus (iii) all payment obligations of
Borrower under all leases and rental agreements, plus (iv) all
payment obligations under Hedge Agreements, all for such
period.
“ Default ” shall
mean any event or condition that constitutes an Event of Default or
that, with the giving of any notice, the passage of time, or both,
would be an Event of Default.
“ Default Rate ”
shall mean the Prime Rate (as defined in the Note) plus
3.00%.
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“ EBITDA ” shall
mean, for any period, the aggregate of (i) the net income (or
loss) of Borrower and its subsidiaries, as determined on
consolidated basis in accordance with GAAP, plus (ii) the sum
of depreciation, amortization of intangible assets, interest
expense, and income tax expense to the extent taken into account in
the calculation of clause (i) above, and minus
(iii) interest income to the extent taken into account in the
calculation of clause (i) above, all for such
period.
“ 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, any Credit Party or any of their subsidiaries,
within the meaning of 414(b), (c), (m) or (o) of the Code
or Section 4001 of ERISA.
“ 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 Credit Party or any ERISA Affiliate from a
Multiemployer Plan that results in liability under
Section 4201 or 4204 of ERISA, or the receipt by any Credit
Party 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 any Credit Party 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
any Credit Party 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 any
Credit Party or any ERISA Affiliate to enforce Section 515 of
ERISA, which is not dismissed within thirty (30) days;
(vi) the imposition upon any Credit Party 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 any Credit Party or any ERISA Affiliate as a result
of any alleged failure to comply with the Code or ERISA in respect
of any Plan; (vii) the engaging in or otherwise becoming
liable for a nonexempt Prohibited Transaction by Credit Party 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 Code by any fiduciary
of any Plan for which any Credit Party or any of their 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 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 any Credit Party or an ERISA Affiliate fails
to timely provide security to such Plan in accordance with the
provisions of such sections.
“ Event of Default
” shall have the meaning assigned to that term in
Section 8.02 of this Agreement.
“ Floor Plan Credit
” shall mean and include any and all extensions by Lender of
credit hereunder to, or for the benefit of, Borrower, with respect
to the finance of Borrower’s Inventory including, without
limitation, new watercraft, boat and boat motors and other
Items.
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“ Fountain Powerboats
” shall have the meaning assigned to that term in the
introductory paragraph of this Agreement.
“ GAAP ” shall
mean general accepted accounting principles in the United States of
America in effect from time to time consistently
applied.
“ Guarantors ”
shall have the meaning assigned in the introductory paragraph of
this Agreement.
“ Guaranty ”
shall mean the guaranty agreement set forth in Section 9 of
this Agreement.
“ 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 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 entered into in connection with this
Agreement to manage existing or anticipated interest rate risks and
not for speculative purposes.
“ Indebtedness ”
shall mean, as to any Person, all items of indebtedness,
obligations, or liability for borrowed money, which, in accordance
with GAAP and the practices or pronouncements relating thereto
would be included in determining liabilities as shown on the
liabilities side of the balance sheet, including, without
limitation, the Obligations and other indebtedness to Lender, now
or hereafter and howsoever evidenced, matured or unmatured,
liquidated or unliquidated, direct or contingent, joint or
several.
“ Item ” shall
mean a New Item or Used Item, as applicable.
“ Lender ” shall
have the meaning assigned to that term the introductory paragraph
of this Agreement.
“ Lien ” means
any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, or
preference, priority or other security interest or preferential
arrangement of any kind or nature whatsoever (including any
conditional sale or other title retention agreement), and any
financing lease having substantially the same economic effect as
any of the foregoing.
“ Loan Agreement
” shall mean, collectively, the Amended and Restated Loan
Agreement of even date herewith among the Guarantors and Lender, as
may be amended, modified, supplemented or restated from time to
time, and all notes, instruments, agreements, contracts, mortgages,
deeds of trust, indentures, assignments, guarantees, control
agreements, security agreements, pledges and any and all other
instruments, agreements, documents and writings of every kind, type
and description heretofore or at any time or times hereafter given,
executed and/or delivered in connection therewith, as the same have
been or may be modified, supplemented or amended from time to
time.
“ Material Adverse
Effect ” shall mean, with respect to any event, act,
condition or occurrence of whatever nature (including any adverse
determination in any litigation, arbitration, or governmental
investigation or proceeding), whether singly or in conjunction with
any other event or events, act or acts, condition or conditions,
occurrence or occurrences whether or not related, a material
adverse change in, or a material adverse effect on, (i) the
business, results of operations, financial condition, assets,
liabilities or prospects of any Credit Party or of the Credit
Parties taken as a whole, (ii) the ability of any Credit Party
to perform any of its obligations under the
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Credit Documents, (iii) the
rights and remedies of Lender under any of the Credit Documents or
(iv) the legality, validity or enforceability of any of the
Credit Documents.
“ Maximum Credit
” shall mean $5,000,000 or such other amount as Lender may
determine in its sole discretion. Lender may, in its sole
discretion without any obligation or requirement to do so, extend
additional credit to Borrower in excess of the Maximum Credit,
which additional credit shall be subject to the terms and
conditions of this Agreement, including the security interest
herein created, and which additional credit shall be deemed
approved and guaranteed by the Guarantors pursuant to the
Guaranty.
“ Multiemployer Plan
” shall mean any “ multiemployer plan ”
within the meaning of Section 400l(a)(3) of ERISA.
“ New Item ”
shall mean and include Borrower’s Inventory of new watercraft
or structure, other than a seaplane on the water, used or capable
of being used as a means of transportation or habituation on the
water, and all new boats and boat motors, purchased from Fountain
Powerboats, all of which shall be new, shall have never been owned
by a consumer and shall be the current type models when acquired by
Borrower.
“ Note ” shall
mean that certain promissory note of Borrower to Lender dated as of
the date hereof evidencing the Floor Plan Credit, as may be
amended, amended and restated, supplemented or otherwise modified
from time to time.
“ Obligations ”
shall mean and include the performance of the covenants and
agreements set forth herein and the payment and performance of all
of all loans, advances, indebtedness, liability and other
obligations of Credit Parties owed to Lender and/or any affiliate
of Lender, of every kind and description whether now existing or
hereafter arising including without limitation those owed to others
and acquired by Lender (by purchase, assignment or otherwise) and
whether direct or indirect, primary or as guarantor or surety,
absolute or contingent, due or to become due, liquidated or
unliquidated, matured or unmatured, whether or not secured by
additional collateral, and all liabilities and obligations in
connection with the finance or purchase of Items, including
advances to boat or boat motor manufacturers, boat auction
companies and other sellers, and all liabilities, obligations and
indebtedness arising under this Agreement, any other Credit
Document and all other instruments and agreements evidencing,
guarantying or securing any of the foregoing, and all obligations
to perform or forbear from performing acts, all amounts represented
by letters of credit now or hereafter issued by Lender for the
benefit of or at the request of any Credit Parties and all expenses
and reasonable attorneys’ fees incurred or other sums
disbursed by Lender under this Agreement, any other Credit Document
or any other document or instrument related thereto or related to
any of the foregoing or related to the preservation, realization,
enforcement and exercise of rights, powers and remedies of Lender
under the Credit Documents or related to any of the foregoing,
including but not limited to obligations owed under the
Note.
“ 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 assigned to that term in the introductory
paragraph of this Agreement.
“ 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 mean the Liens identified on Schedule 5.02(a)
attached hereto.
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“ Person ” shall
mean any individual, corporation, partnership, association, joint
stock company, trust, limited liability company or partnership,
incorporated organization, joint venture, court or government or
political subdivision or agency.
“ 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.
“ Reportable Event
” shall mean any of the events set forth in
Section 4043(b) of ERISA or the regulations
thereunder.
“ 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/sd/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.
“ 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.
“ Used Item ”
shall mean and include Borrower’s Inventory of used
watercraft or structure, other than a seaplane on the water, used
or capable of being used as a means of transportation or
habituation on the water, and all used boats and boat motors,
traded to Borrower towards the purchase of New Items.
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2.01
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Amount of
Floor Plan Credit
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a. Lender has undertaken to make
available to Borrower the Floor Plan Credit in a total maximum
amount not to exceed the Maximum Credit. Borrower understands and
acknowledges that Lender will not finance for Borrower any
merchandise or goods that do not fit the definition of
“Item”. Borrower has not requested nor does Borrower
expect Lender to ever grant and/or extend credit to it in excess of
the Maximum Credit in the aggregate at any time outstanding.
However, each Credit Party agrees and understands that the creation
or existence, from time to time, of Floor Plan Credit in an amount
in excess of the stated Maximum Credit for the purchase of Items by
sight draft, electronic funds transfer debt, automated
clearinghouse debt, or otherwise may be inadvertently or otherwise
exceeded and if done so, is hereby authorized, without notice to
any Credit Party, and shall in no way affect or impair the rights
of Lender or the obligation and liabilities of Borrower under this
Agreement to repay same in accordance with the terms of this
Agreement or of the Guarantors under the Guaranty.
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b. Borrower agrees that the maximum
amount of Floor Plan Credit to be advanced for any specific New
Item will not exceed the lesser of (i) such Item’s
manufacturer’s invoiced price, (ii) the fair market
value of the Item, or such other reasonable amount as determined by
Lender as the value for such Item, as would reasonably be
determined as the price of a similar type of good between a
manufacturer and dealer of such types of goods and (iii) the
cost of manufacturing such Item by Fountain Powerboats.
c. Borrower agrees that the maximum
amount of Floor Plan Credit to be advanced for any specific Used
Item will not exceed the lesser of (i) 70% of the value of the
Used Item listed in the current used boat ABOS guide, (ii) the
amount another dealer or wholesaler has agreed to pay for such Used
Item and (iii) the fair market value of the Item, or such
other reasonable amount as determined by Lender as the value for
such Item, as would reasonably be determined as the price of a
similar type, age and condition of used boat between dealers of
such types of goods. Borrower agrees that the maximum amount of
Floor Plan Credit to be advanced for all Used Items at any one time
will not exceed $2,000,000.
d. Borrower hereby promises to pay
in full to Lender the amount of all Obligations, including the
principal amount of all Floor Plan Credit advances, together with
accrued interest, fees and other amounts due thereon, all in
accordance with the terms of the Credit Documents. To the extent
that Floor Plan Credit advances are re-paid, the Floor Plan Credit
may be reborrowed. Lender reserves the right to refuse to make an
advance of Floor Plan Credit at its election without notice, with
or without cause.
Borrower agrees that in all cases,
the proceeds of all Floor Plan Credit by Lender will only be used
to enable Borrower to acquire ownership of, or rights in, Inventory
consisting of Items. In order for Borrower to request an advance of
Floor Plan Credit, Borrower will give Lender written notice (a
“Notice of Borrowing”) no later than 11:00 a.m.
Atlanta, Georgia time at least one (1) Business Day prior to
the requested advance. Each Notice of Borrowing shall be
irrevocable and shall (i) specify the aggregate advance of
Floor Plan Credit requested, (ii) specify the requested date
for the making of such advance, which shall be a Business Day,
(iii) attach the manufacturer’s statement of origin for
the Item to be refinanced or acquired by such advance of Floor Plan
Credit, (iv) include a description with serial number of such
Item, and (v) include a reasonably detailed summary of the
cost associated with such Item, including, for any Used Item, a
copy of the evaluation form used in the determination of the value
of such Used Item. Each Notice of Borrowing delivered hereunder
shall be deemed a representation and warranty by Borrower, binding
upon Borrower that all conditions precedent to such advances under
Section 4.02 are satisfied as of the date of such request and
as of the date of such advance of Floor Plan Credit.
Notwithstanding anything herein to the contrary, Borrower
acknowledges and agrees that Lender, at its election, in its sole
discretion, may make and/or maintain arrangements for payment for
Items shipped to Borrower by Fountain Powerboats without any order
or directions from Borrower, other than this Agreement. Lender may
make any such arrangements as are satisfactory to Lender, in its
sole discretion, and satisfactory to Fountain Powerboats for such
Items, without any order or directions from Borrower, other than
this Agreement, when and to the extent Lender is prepared to extend
Floor Plan Credit to Borrower for the purchase of such Items, and
all such payments, howsoever evidenced, shall be subject to the
terms of this Agreement. When Borrower acquires Items by way of
drafts drawn on Lender or checks drawn by Lender in accordance with
Section 2.03, or otherwise by Floor Plan Credit Advances,
Borrower grants to Lender, and Lender shall have a purchase money
security interest in, the Items so acquired. This purchase money
security interest is in addition to the other forms of security
that Lender has in such Items.
To facilitate the financing of Items
ordered by Borrower, Borrower acknowledges and agrees that advances
of Floor Plan Credit made hereunder by Lender may be evidenced
solely by drafts (including, but not limited to, electronic drafts)
drawn on Lender by Fountain Powerboats or by checks drawn by Lender
to pay such
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drafts and Lender’s books and
records relating to such advances shall, in the absence of manifest
error, be conclusive. Borrower hereby agrees to reimburse Lender
for any and all drafts or checks so drawn. Either the original
draft or check or any copy or facsimile thereof, or Lender’s
books and records relating thereto, shall constitute prima facie
evidence of such Obligations in any action or suit for collection
thereof or otherwise, and shall be legal and sufficient evidence of
production of any note or other instrument or document evidencing
Obligations to Lender.
Borrower’s execution of the
Note and/or any other instrument for the amount of the Maximum
Credit extended by Lender to Borrower from time to time hereunder
shall be deemed evidence of Borrower’s obligation to pay
Lender. However, in no event will delivery of an instrument
evidencing an obligation to pay Lender be considered actual payment
neither to Lender, nor in limitation of Borrower’s
Obligations hereunder for amounts in excess of the Maximum Credit
unless actual payment be made to Lender in reduction of such
Obligations. Either the original or any copy or facsimile of such
Note shall constitute prima facie evidence of the Obligations to
Lender in any action or suit for collection thereof or otherwise,
and shall be legal and sufficient evidence of production of such
Note or other instrument or document.
Lender may charge Borrower a service
fee monthly of $4.00 for each and every Item (on a per Item basis)
financed by Floor Plan Credit. The service fee is a collective term
which refers to all per Item charges, including, but not limited
to, the following: (i) a per Item fee for maintaining
arrangements for payment for Items shipped and/or delivered to
Borrower; and (ii) a per Item fee for appraising, examining
and/or verifying the Inventory of Items that Lender is financing.
The service fee does not include interest or late payment
fees.
Borrower agrees to pay Lender
interest monthly on the entire unpaid principal balance of the
amounts advanced from time to time hereunder at the rate set forth
in the Note. All interest, at the option of Lender, shall be
computed and charged for the actual number of days elapsed on the
basis of a year consisting of 365 or 366 days, as
applicable.
From the date Lender first advances
Floor Plan Credit with respect to any New Item until repayment in
full of such Floor Plan Credit, Borrower shall pay Lender a
principal reduction of the amount so financed with Floor Plan
Credit for the New Item equal to payment of five percent
(5%) of the initial advance for such New Item per month once
the New Item has been in inventory of Borrower for six
(6) months. If an advance of Floor Plan Credit for a New Item
is not repaid in full within nine (9) months from the date of
such advance, Borrower shall pay to Lender the amount of all sums
advanced for such New Item, less any sums paid by Borrower to
Lender and applied by Lender against such amount financed with
Floor Plan Credit for such New Item.
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From the date Lender first advances
Floor Plan Credit with respect to any Used Item until repayment in
full of such Floor Plan Credit, Borrower shall pay Lender a
principal reduction of the amount so financed with Floor Plan
Credit for the Used Item equal to payment of twenty-five percent
(25%) of the initial advance for such Used Unit per month once
the Used Item has been in inventory of Borrower for four
(4) months. If an advance of Floor Plan Credit for a Used Item
is not repaid in full within eight (8) months from the date of
such advance, Borrower shall pay to Lender the amount of all sums
advanced for such Used Item, less any sums paid by Borrower to
Lender and applied by Lender against such amount financed with
Floor Plan Credit for such Used Item.
Borrower agrees to repay Lender the
amount of such Item financed with Floor Plan Credit, less any sums
paid by Borrower to Lender and applied by Lender against such
amount financed with Floor Plan Credit for such Item, immediately,
but in no event later than five (5) Business Days of the date
that Borrower sells, transfers, leases and/or delivers any such
Item to a third party. Until so paid, Borrower shall hold the
proceeds in trust for Lender. If requested by Lender, Borrower
shall maintain a separate bank account with Lender into which all
cash proceeds of sales, leases or other dispositions of Items will
be deposited.
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d.
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Excess of
Maximum Credit
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In the event that, at any time, the
aggregate amount of all advances of Floor Plan Credit outstanding
hereunder shall exceed the Maximum Credit, Borrower will
immediately prepay the outstanding principal amount of the Floor
Plan Credit in the amount of such excess.
At any time and from time to time,
Borrower shall have the right to prepay any advances of Floor Plan
Credit outstanding, in whole or in part, without premium or
penalty, upon written notice given to Lender not later than
11:00 a.m. Atlanta, Georgia time, one (1) Business Day
prior to each intended prepayment of any portion of any Floor Plan
Credit.
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3.04
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Billing and
Payment Due
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Lender may provide Borrower on a
date Lender selects, all in Lender’s sole discretion, monthly
periodic statements to Borrower for interest or other charges, and
for repayment of any principal amounts due. All amounts set forth
upon the monthly periodic statements are due upon receipt. Payment
for such periodic amounts shall be past due after the 15th day of
the month immediately following the month for which the periodic
statement covers. Such monthly periodic statements may include any
amounts owing to Lender, including, but not limited to, principal,
interest, service fees, mandatory principal reductions, insurance
premiums and/or any other amounts or Obligations due Lender. The
fact that Lender may send a monthly periodic statement in no way
relieves Borrower from the responsibility for principal reductions,
as set forth in Section 3.03 hereof, or payments of other
amounts due hereunder. In the absence of manifest error, the
amounts owing to Lender set forth on such monthly statements shall
be deemed conclusive, unless Borrower notifies Lender in writing of
any correction or objection thereto within thirty
(30) calendar days of receipt thereof.
If any amount due hereunder or under
the Note or any other Obligation is not paid when due, such amounts
shall bear interest from the date when due until paid in full at
the Default Rate.
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3.05
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Application
of Payments
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a.
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Allocation of
Principal Reduction Payments.
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All payments in accordance with
Sections 3.03(a), 3.03(b) or 3.03(c) will be applied directly to
principal of Floor Plan Credit advanced, if Borrower designates
such payment as a “Principal Reduction” and specifies
the Item(s) (by serial number) for which the principal reduction
should be allocated.
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b.
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Allocation of
Other Payments.
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All payments received by Lender from
or to the benefit of Borrower that are not properly designated as a
“Principal Reduction” and specified an Item (as set
forth in Section 3.5) shall first be applied to interest, then
to insurance placed and paid by Lender (if any), then to other fees
and expenses (if any), then to principal of Floor Plan Credit
advanced for Items, to such Items as Lender determines in its sole
discretion, then to any and all other Obligations.
All payments of principal, interest
and fees and all other amounts to be made by Borrower pursuant to
this Agreement or the Note with respect to any Floor Plan Credit or
fees relating thereto or with respect to any other Obligation 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 Lender’s net income,
(ii) franchise taxes imposed on Lender by the jurisdiction
under the laws of which Lender is organized or any political
subdivision thereof, and (iii) taxes imposed on Lender’s
income. In the event that Borrower is required by applicable law to
make any such withholding or deduction of taxes with respect to any
Floor Plan Credit or fee or other amount or Obligation, Borrower
shall pay such deduction or withholding to the applicable taxing
authority, shall promptly furnish to Lender all receipts and other
additional amounts as may be necessary in order that the amount
received by Lender after the required withholding or other payment
shall equal the amount Lender would have received had no such
withholding or other payment been made.
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4.01
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Conditions
Precedent to Effectiveness
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The obligations of Lender to make
the initial advance of Floor Plan Credit hereunder is subject to
the receipt by Lender of the following in form and substance
reasonably satisfactory to Lender:
a. this Agreement duly executed and
delivered by the Credit Parties;
b. the Note duly executed and
delivered by Borrower;
c. certificates of the Secretary of
each of the Credit Parties, attaching and certifying copies of its
articles of incorporation and bylaws and of the resolutions of its
board of directors authorizing the execution, delivery and
performance of the Credit Documents to which it is a party and
certifying the name, title and true signature of each officer of
the Credit Parties executing the Credit Documents to which it is a
party;
d. certified copies of the articles
of incorporation or other charter documents of the Credit Parties,
together with certificates of good standing or existence, as may be
available from the Secretary of State of the jurisdiction of
incorporation of the Credit Parties and each other jurisdiction
where such Credit Parties are required to be qualified to do
business as a foreign corporation;
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e. an opinion of counsel of
(A) Ward and Smith, P.A., counsel to Borrower and Fountain
Powerboats, and (B) McDonald Carano Wilson, LLP, special
Nevada counsel to Parent, each addressed to Lender and in form and
substance satisfactory to Lender;
f. a certificate, signed by the
president, the chief executive officer or the chief financial
officer of each Credit Party, certifying that (i) all
representations and warranties of the Credit Parties contained in
this Agreement and the other Credit Documents are true, correct and
complete as of the closing date, (ii) no Default has occurred
and is continuing, (iii) no Material Adverse Effect has
occurred since June 30, 2006, 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 4.01 have been satisfied or waived as required
hereunder;
g. payment by Borrower (i) to
Lender, of the fees required to be paid to it on the closing date,
and (ii) of all other fees and reasonable expenses required
hereunder or under any other Credit 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 Credit
Documents;
h. certified copies of requests for
information or copies (Form UCC-11), or equivalent reports as
of a recent date, listing all effective financing statements that
name the Credit Parties as debtor and that are filed in the
jurisdictions in which each such Person is “located”
(within the meaning of the UCC), together with copies of such other
financing statements that name the each of the Credit Parties as
debtor;
i. certificates of insurance
complying with the requirements of Section 5.02(e);
and
j. such other approvals, consents,
agreements, certificates, legal opinions or documents as Lender
shall reasonably request.
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4.02
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Conditions
Precedent to Future Advances
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The obligation of Lender to make any
future advance of Floor Plan Credit is subject to the satisfaction
of the following conditions:
a. Lender shall have received a
Notice of Borrowing in accordance with
Section 2.02;
b. at the time of and immediately
after giving effect to such advance, no Event shall
exist;
c. all representations and
warranties of the Credit Parties set forth in the Credit Documents
shall be true and correct in all material respects on and as of the
date of such advance, in each case before and after giving effect
thereto;
d. Lender shall have received such
other documents, certificates, information or legal opinions as it
may reasonably request, all in form and substance reasonably
satisfactory to Lender;
e. each of the conditions precedent
set forth in any other Credit Document shall have been and shall
remain satisfied;
f. no event shall have occurred and
no condition shall exist which has or could be reasonably expected
to have a Material Adverse Effect on the Credit Parties;
and
g. no action, proceeding,
investigation, regulation or legislation shall have been
instituted, threatened or proposed before any court, governmental
agency or legislative body to enjoin, restrain or
prohibit,
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or to obtain damages in respect of
or which is related to or arises out of, this Agreement or any of
the other Credit Documents or the consummation of the transactions
contemplated hereby or thereby.
The making of each advance shall be
deemed to constitute a representation and warranty by the Credit
Parties on the date thereof as to the matters specified in
paragraphs (a) through (g) of this
Section 4.02.
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4.03
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Waiver of
Conditions Precedent.
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If Lender funds any Floor Plan
Credit hereunder prior to the fulfillment of any of the conditions
precedent set forth in this Section 4, the making of such
Floor Plan Credit shall constitute only an extension of time for
the fulfillment of such condition and not a waiver thereof, and
Borrower shall thereafter use its best efforts to fulfill each such
condition within thirty (30) days after the making of such
Floor Plan Credit.
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5.
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LENDER’S SECURITY; LENDER’S RIGHT OF
SET OFF; LENDER’S OTHER PROTECTION
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To secure all Obligations of the
Credit Parties, each Credit Party hereby grants to Lender a first
priority lien and security interest in the following described
properties, whether now owned or hereafter acquired, or in which
such Credit Party has an interest (including but not limited to,
those which are now or hereafter in the possession or control of
Lender or in transit by mail or carrier to or in the possession of
any third party acting on behalf of Lender, without regard to
whether Lender received the same in pledge, for safekeeping, as
agent for collection or transmission or otherwise or whether Lender
had conditionally released the same, and the proceeds thereof, all
rights to payment from, and all claims against Lender), by way of
replacement, substitution, addition or otherwise, together with all
additions and accessions thereto and all proceeds thereof (the
“Collateral”):
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a.
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All Inventory,
including but not limited to, all vessels, watercraft, boats and
boat motor, parts, and accessories for any of the foregoing,
together with additions and accessions thereto including products
of and accessions to inventory, packing and shipping materials, and
all documents of title, whether negotiable or non-negotiable,
representing any of the foregoing;
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b.
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All Goods,
including all Fixtures located on the real property identified on
Schedule 5.01 attached hereto whose record owner is set forth on
such Schedule 5.01;
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c.
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All Chattel
Paper, including Electronic Chattel Paper;
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d.
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All Accounts,
whether or not earned by performance, including any right to
payment of goods leased or for services and rights under contracts
with manufacturers of vessels and vehicles of whatsoever nature
including dealer holdbacks, payments for warranty work, bonuses,
rebates, incentives and credits;
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e.
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All Documents
and documents of title, including without limitation certificates
of title and certificates of origin for Items;
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h.
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All Investment
Property;
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i.
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All General
Intangibles, including without limitation, Payment Intangibles,
choses in action, causes of action, licenses, franchises, tax
refunds, copyrights, service marks, trademarks, trade names, trade
secrets, patents, goodwill and all other intellectual and
intangible property of any kind;
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j.
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All Equipment,
including without limitation, vessels, boats and boat
motors;
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k.
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All furniture,
furnishings, computer system components, Software, peripherals,
licenses, and other personal property of any kind or
character;
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l.
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All Letter of
Credit Rights;
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m.
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All Supporting
Obligations;
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n.
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All Commercial
Tort Claims;
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o.
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All products
and Proceeds (including Noncash Proceeds) of, additions and
accessions to, replacements of, insurance or condemnation proceeds
of, property received wholly or partly in trade or exchange for,
and Documents covering, any of the foregoing, including without
limitation insurance proceeds, Chattel Paper, Goods, including
without limitation vessels, boats, boat motors or other goods
received in trade, contract rights, Accounts, whether or not earned
by performance, Documents, Instruments, General Intangibles,
claims, claims for loss or damage to any property, unearned
insurance premiums, money, negotiable instruments, other
Instruments for the payment of money, Investment Property, Deposit
Accounts, Chattel Paper, security agreements, securities, drafts,
Documents, and the Proceeds of such Proceeds; and
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p.
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All books and
records (including customer lists), paper and electronic, files,
computer programs, computer software, data processing records and
correspondence in any way related to any of the
foregoing.
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Each Credit Party hereby agrees to
execute and deliver to Lender and, as applicable, authorizes Lender
to execute, deliver and file, any security agreements, control
agreements, deeds of trust, mortgages, UCC Financing Statements,
UCC Financing Statement Amendments, documents of title and/or other
documents deemed necessary or advisable by Lender in order to
protect, continue or perfect the security interest or lien or title
in all or any part of the Collateral (and the Credit Parties,
jointly and severally, agree to pay all costs and expenses of
recording same). This document shall constitute a security
agreement under the UCC, and in addition to having all of the other
legal rights and remedies under this Agreement, under law and in
equity, Lender shall also have all rights and remedies of a secured
party under the UCC.
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5.02
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Representations, Warranties and Covenants with
Respect to Collateral
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Each of the Credit Parties warrants,
represents and covenants to Lender that:
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a.
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The Credit
Parties have good and marketable title to the Collateral and all
assets reflected on the most recent balance sheets submitted to
Lender, free and clear from all Liens of any kind, except for:
(i) current taxes and assessments not yet due and payable,
(ii) assets previously disposed of in the ordinary course of
business, (iii) any security interests, pledges, assignments
or mortgages granted to Lender to secure the repayment or
performance of the Obligations, (iv) Liens created pursuant to
the Loan Agreement; (v) real property subject to mortgage
indebtedness in favor of Lender; and (vi) Permitted
Liens.
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b.
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Except for the
security interest hereby granted and the security interest granted
in any other Credit Document and the Permitted Liens, the Credit
Parties are, and as to Collateral acquired after date hereof, will
be, the owners of the Collateral free and clear from any taxes,
Lien, security interest or encumbrance, other than in favor of
Lender. The Collateral now is and shall always be kept in good
repair and safe condition, and the Credit Parties shall defend the
Collateral against all other claims and demands whatsoever, and
shall indemnify, hold harmless and defend Lender from all damages,
losses and attorney’s fees in connection therewith, including
any advances by Lender to preserve and protect the Collateral.
Except for Inventory shipped to Fountain Powerboats’ and
Borrower’s customers in the ordinary course of business, the
Credit Parties are in exclusive possession of the
Collateral.
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c.
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The Credit
Parties shall not sell, contract to sell, lease, encumber, or
otherwise transfer the Collateral (other than Inventory sold in the
ordinary course of business) until the Obligations have been paid
and performed in full, the Credit Parties acknowledging nonetheless
that Lender has a security interest in the proceeds of such
Collateral.
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d.
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Except for
financing statements filed to perfect Permitted Liens, there is no
financing statement now on file, or secured interest or lien shown
on any certificate of title, covering or related to any of the
Collateral of the Credit Parties or in which any Credit Party is
named as or signs as a debtor. Without the prior written consent of
Lender, no Credit Party will execute or permit the filing of any
such financing statement, or indication of security interest or
lien on any such certificate of title, except for financing
statements or indication of security interest or lien on any such
certificate of title, filed in connection with the Credit
Documents.
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e.
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The Credit Parties shall keep all
the Collateral fully insured, by financially sound and reputable
insurers acceptable to Lender, against loss and/or damage by fire,
windstorm, water, theft, malicious mischief, and extended coverage
in such amounts and by such companies as shall be acceptable to
Lender, in each case authorized to do business in the jurisdiction
where the Collateral is located. The Credit Parties shall maintain
such other insurance to such extent and against such risks,
including public liability, fire and other risks insured against by
extended coverage as is customary with Persons in the same or
similar businesses. The Credit Parties shall furnish certificates
or other evidences of such insurance coverage to Lender upon
Lender’s request. Such policies of insurance or certificates
evidencing such policies shall be delivered by the Credit Parties
to Lender. All such policies shall contain a loss payable clause,
in a form satisfactory to Lender, naming Lender as loss payee as
its interest may appear. Unless written consent to the contrary is
first obtained from Lender, all proceeds payable under any such
policy shall be payable in any event to Lender. Each such policy of
insurance or endorsement shall contain a clause requiring the
insurer t
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