Deed Of Trust Dated 7/25/96

EXHIBIT 10.6


Maximum Principal Indebtedness for Tennessee recording tax purposes is $6,000,000.00


This Indenture made and entered into this 25th day of July, 1996, by and between American West Trading Company, hereinafter referred to as "Borrower", in favor of Haywood A. Lane, Jr., Trustee of Wake County, North Carolina, hereinafter referred to as "Trustee" for the use and benefit of The Fidelity Bank, hereinafter referred to as "Lenders";


W I T N E S S E T H


In consideration of the funds loaned to the Borrower by the Lenders and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and in order to secure the indebtedness described below and other obligations of the Borrower hereinafter set forth. Borrower does hereby grant, bargain, sell, convey, assign, transfer, pledge and set over unto the Trustee, and the successors and assigns of the Trustee all of the following described land and interest in land, estates, easements, rights, improvements, fixtures, appliances and appurtenances (hereinafter referred to collectively as the "Premises"):


(a) All that certain tract, piece or parcel of land more particularly described on EXHIBIT A attached hereto and by this reference made a part hereof (hereinafter referred to as the "Land").


(b) All buildings, structures and improvements of every nature whatsoever now or hereafter situated on the Land, and all gas and electric fixtures, radiators, heaters, boilers, elevators and motors, plumbing and heating fixtures, carpeting and other floor coverings, water heaters, air conditioning apparatus, and appurtenances, window screens, awnings and storm sashes, which are or shall be attached to said buildings, structures or improvements, all of which are hereby declared and shall be deemed to be fixtures and accessions to the Land and a part of the Premises as between the parties hereto and all persons claiming by, through or under them, and which shall be deemed to be a portion of the security for the indebtedness herein described and to be secured by this Deed of Trust (hereinafter referred to as the "Deed of Trust").


(c) All easements, rights-of-way, strips and gores of land, vaults, streets, ways, alleys, passages, sewer rights, water rights and powers, minerals, shrubs, trees, timber and other emblements now or hereafter located on the Land or under or above the same or any part or parcel thereof, and all estates, rights, titles, interests, privileges, liberties, tenements, hereditaments, and appurtenances. 2


TO HAVE AND TO HOLD the Premises and all parts, rights, members and appurtenances thereof, to the use and benefit of Trustee and the successors-in-title and assigns of Trustee, forever; and Borrower covenants that Borrower is lawfully seized and possessed of the Premises as set out in the deraignment as to each tract and has a good right to convey the same, that the same are unencumbered except for those matters expressly set forth in EXHIBIT B attached hereto and by this reference made a part hereto, and Borrower does warrant and will forever defend the title thereto against the claims of all persons whomsoever, except as to those matters set forth in said EXHIBIT B attached hereto.


But this conveyance is made IN TRUST for the following uses and trusts, and for no other purposes, to-wit:


(a) To secure the payment of an indebtedness for borrowed money in the principal amount of Six Million Dollars ($6,000,000.00) due from Borrower, to Lenders, which Lenders have advanced, evidenced by a promissory note of even date herewith in the principal sum of Six Million Dollars ($6,000,000.00), together with interest thereon, and any extensions, modifications and/or renewals thereof and any notes given in payment of any such principal and/or interest (all of which are herein sometimes referred to as the "Note"),


(b) To secure the payment of all court costs, expenses and costs of whatever kind incident to the collection of any indebtedness secured hereby and the enforcement or protection of the lien of this conveyance, including reasonable attorney's fees.


Should the indebtedness secured by this Deed of Trust (hereinafter referred to collectively as the "Secured Indebtedness") be paid according to the tenor and effect thereof when the same shall become due and payable, and should Borrowers perform all covenants herein contained in a timely manner, then this Deed of Trust shall be canceled and released.


BORROWER HEREBY FURTHER COVENANTS AND AGREES WITH TRUSTEE AND LENDERS AS FOLLOWS:


ARTICLE I


1.01 Taxes, Liens and Other Charges.


(a) Borrower shall pay, on or before the due date thereof, all levies, license fees, permit fees and all other charges of every character whatsoever (including all penalties and interest thereon) now or hereafter levied, assessed, confirmed or imposed on, or in respect of, or which may be a lien upon the Premises, or any part thereof, or any estate, rights or interest therein, or upon the rents, issues, income or profits thereof, and shall submit to Lenders such evidence of the due and punctual payment of all such taxes, assessments and other fees and charges as Lender may require.


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b. Borrower shall pay, on or before the due date thereof, all taxes, assessments, charges, expenses, costs and fees which may now or hereafter be levied upon, or assessed or charged against, or incurred in connection with, the Note, the Secured Indebtedness, this Deed of Trust or any other instrument now or hereafter evidencing, securing or otherwise relating to the Secured Indebtedness.


c. Borrower shall pay, on or before the due date thereof, (i) all premiums on policies of insurance covering, affecting or relating to the Premises, as required pursuant to paragraph 1.03, below; (ii) all premiums on collaterally assigned life insurance policies, if any; (iii) all premiums for mortgage insurance, if this Deed of Trust and the Note are so insured; and (iv) all ground rentals, other lease rentals and other sums, if any, owing by Borrower and becoming due under any lease or rental contract affecting the Premises. Borrower shall submit to Lenders such evidence of the due and punctual payment of all such premiums, rentals and other sums as the Lender may require.


(d) In the event of the passage of any state, federal, municipal or other governmental law, order, rule or regulation, subsequent to the date hereof, in any manner changing or modifying the laws now in force governing the taxation of deeds of trust or security agreements, or debts secured thereby or the manner of collecting such taxes so as to adversely affect the Lenders; Borrower will pay any such taxes on or before the date thereof, If Borrower fails to make such prompt payment or if, in the opinion of Lenders, any such state, federal, municipal, or other governmental law, rule, order or regulation prohibits Borrower from making such payment or would penalize Borrower if Borrower makes such payment,, or if,, in the opinion of Lenders, the making of such payment might result in the imposition of interest beyond the maximum amount permitted by applicable law, then the entire balance of the Secured Indebtedness and all interest accrued thereon shall, at the option of Lenders, become immediately due and payable.


(e) Borrower shall not suffer any mechanic's, materialmen's, laborer's, statutory or other lien to be created or remain outstanding against the Premises.


1.02 Insurance.


(a) Upon the request of Lenders, Borrower shall procure for, deliver to, and maintain for the benefit of Lenders during the term of this Deed of Trust, original paid-up insurance policies of such insurance companies, in such amounts, in form and substance, and with such expiration dates as are acceptable to Lenders and containing non-contributory standard mortgagee clauses, their equivalent, or a satisfactory mortgagee loss payable endorsement in favor of Lenders, providing the following types of insurance covering the Premises and the interest and liabilities incident to the ownership, possession and operation thereof:


(i) Insurance against loss or damage by fire, lightning, windstorm, hail, explosion, riot, riot attending a strike, civil commotion, aircraft, vehicles, smoke, vandalism


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and malicious mischief and against such other hazards as, under good insurance practices, from time to time are insured against for properties or similar character and location, the amount of which insurance shall not be less than the greater of (a) the Secured Indebtedness and (b) one hundred percent (100%) of the full replacement cost of the Premises without deduction for depreciation, and which policies of insurance shall contain satisfactory replacement cost endorsements.


(b) Lenders are hereby authorized and empowered, at their option, to adjust or compromise any loss under any insurance policies maintained pursuant to this paragraph 1.03, and to collect and receive the proceeds from any such policy or policies. Each insurance company is hereby authorized and directed to make payment for all such losses directly to Lenders, instead of to Borrower and Lenders jointly. In the event any insurance company fails to disburse directly and solely to Lenders but disburses instead either solely to Borrower or to Borrower and Lenders jointly, Borrower agrees immediately to endorse and transfer such proceeds to Lenders. Upon the failure of Borrower to endorse and transfer such proceeds as aforesaid, Lenders may execute such endorsements or transfers for and in the name of Borrower, and Borrower hereby irrevocably appoints Lenders as Borrower's agent and attorney-in-fact so to do, After deducting from said insurance proceeds all of its expenses incurred in the collection and administration of such sums,, including attorney's fees. Lenders may apply the net proceeds or any part thereof, at their option, (i) to the payment of the Secured Indebtedness, whether or not due and in whatever order Lenders elect, (ii) to the repair and/or restoration of the Premises, or (iii) for any other purposes or objects for which Lenders are entitled to advance funds under this Deed of Trust, all without affecting the lien and security interest created by this Deed of Trust and any balance of such moneys then remaining shall be paid to Borrower or the person or entity lawfully entitled thereto. Lenders shall not be held responsible for any failure to collect any insurance proceeds due under the terms of any policy regardless of the cause of such failure.


(c) At least fifteen (15) days prior to the expiration date of each policy maintained pursuant to paragraph 1.03, a renewal or replacement thereof satisfactory to Lenders shall be delivered to Lenders. Borrower shall deliver to Lenders receipts evidencing the payment for all such insurance policies and renewals or replacements. The delivery of any insurance policies hereunder shall constitute an assignment of all unearned premiums as further security hereunder. In the event of the foreclosure of this Deed of Trust of any other transfer of title to the Premises in extinguishment or partial extinguishment of the Secured Indebtedness, all right, title and interest of Borrower in and to all insurance policies then in force shall pass to the purchaser or Lenders, and Lenders are hereby irrevocably appointed by Borrower to assign any such policy to said purchaser or to Lenders without accounting to Borrower for any unearned premiums thereon.


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1.03 Care of Premises.


(a) Borrower will keep the buildings, parking areas, roads and walkways, recreational facilities, landscaping, and all other improvements of any kind now or hereafter erected on the Land or any part thereof in good condition and repair, will not commit or suffer any waste and will not do or suffer to be done anything which would or could increase the risk of fire or other hazard to the Premises or any other part thereof or which would or could result in the cancellation of any insurance policy carried with respect to the Premises.


(b) Borrower will not remove, demolish or alter the structural character of any improvement located on the Land without the written consent of Lenders.


(c) If the Premises or any part thereof is damaged by fire or any other cause, Borrower will give immediate written notice thereof to Lenders.


(d) Lenders or their representative are hereby authorized to enter upon and inspect the Premises at any time during normal business hours,


(e) Borrower will promptly comply with all present and future laws, ordinances, rules and regulations of any governmental authority affecting the Premises or any part thereof.


(f) If all or any part of the Premises shall be damaged by fire or other casualty,, Borrower will promptly restore the Premises to the equivalent of its original condition; and if a part of the Premises shall be damaged through condemnation, Borrower will promptly restore, repair or alter the remaining portions of the Premises in a manner satisfactory to Lenders, Notwithstanding the foregoing, Borrower shall not be obligated to restore unless in each instance, Lenders agree to make available to Borrower (pursuant to a procedure satisfactory to Lenders) any net insurance or condemnation proceeds actually received by Lenders hereunder in connection with such casualty loss or condemnation, to the extent such proceeds are required to defray the expense of such restoration; provided, however, that the insufficiency of any such insurance or condemnation proceeds to defray the entire expense of restoration shall in no way relieve Borrower of its obligation to restore. In the event all or any portion of the Premises shall be damaged or destroyed by fire or other casualty or by condemnation, Borrower shall promptly deposit with Lenders a sum equal to the amount by which the estimated cost of the restoration of the Premises (as determined by Lenders in their good faith judgment) exceeds the actual net insurance or condemnation proceeds with respect to such damage or destruction.


1.04 Expenses. Borrower will pay or reimburse Lenders, upon demand therefore, for all attorney's fees, costs and expenses incurred by Lenders in any suit, action, legal proceeding or dispute of any kind in which Lenders are made a party or appears as plaintiff or defendant, affecting the Secured Indebtedness, this Deed of Trust or the interest created herein, or the Premises, including, but not limited to, the exercise of the power of sale contained in this


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Deed of Trust, any condemnation action involving the Premises or any action to protect the security hereof, and any such amounts paid by Lenders shall be added to the Secured Indebtedness and shall be secured by this Deed of Trust.


1.05 Subrogation. To the full extent of the Secured Indebtedness, Lenders are hereby subrogated to the liens, claims and demands, and to the rights of the owners and holders of each and every lien, claim, demand and other encumbrances on the Premises which are paid or satisfied, in whole or in part, out of the proceeds of the Secured Indebtedness, and the respective liens, claims, demands and other encumbrances shall be, and each of them is hereby preserved and shall pass to and be held by Lenders as additional collateral and further security for the Secured Indebtedness, to the same extent they would have been preserved and would have been passed to and held by Lenders had they been duly and legally assigned, transferred, set over and delivered unto Lenders by assignment, notwithstanding the fact that the same may be satisfied and canceled of record.


1.06 Limit of Validity. If from any circumstances whatsoever, fulfillment of any provision of this Deed of Trust or of the Note, at the time performance of such provision shall be due, shall involve transcending the limit of validity presently prescribed by any applicable usury statute or any other applicable law, with regard to obligations of like character and amount, then, ipso facto, the obligation to be fulfilled shall be reduced to the limit of such validity, so that in no event shall any exaction be possible under this Deed of Trust or under the Note that is in excess of the current limit of such validity, but such obligation shall be fulfilled to the limit of such validity. The provision of paragraph 1.07 shall control every other provision of this Deed of Trust and of the Note.


1.07 Legal Actions. In the event that Lenders are made a party, either voluntarily or involuntarily, in any action or proceeding affecting the Premises, the Note, the Secured Indebtedness, or the validity or priority of this Deed of Trust, then, Borrower shall immediately, upon demand, reimburse Lenders for all costs, expenses and liabilities incurred by Lenders by reason of any such action or proceeding, including reasonable attorneys fee, and any such amounts paid by Lenders shall be added to the Secured Indebtedness and shall be secured by this Deed of Trust.


ARTICLE II


2.01 Events of Default. The terms "default," "Event of Default" or "Events of Default," wherever used in this Deed of Trust, shall mean any one or more of the following events:


(a) Failure by Borrower to pay as and when due and payable any portion of the Secured Indebtedness; or


(b) Failure by Borrower duly to observe or perform any other term, covenant, condition or agreement of this Deed of Trust; or


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(c) The occurrence of a default or event of default under any agreement now or hereafter evidencing, securing or otherwise relating to the Note or the Secured Indebtedness, including, without limiting the foregoing, any Loan Agreement of even date herewith between Borrower and Lenders; or


(d) Any warranty of Borrower contained in this Deed of Trust or in any other instrument,, document, transfer, conveyance, assignment or loan agreement given by Borrower with respect to the Secured Indebtedness, proving to be untrue or misleading in any material respe ...