ENGINE SUPPLY AGREEMENT

EXHIBIT 10.18

ENGINE SUPPLY AGREEMENT

This Agreement, dated as of July 17, 2003, is entered into among Reginald M. Fountain, Jr. (hereinafter “RMF”), Fountain Powerboat Industries, Inc., a Nevada corporation (hereinafter “FPII”), Fountain Powerboats, Inc., a North Carolina corporation (“Company”), and the Mercury Marine division (hereinafter “Mercury”) of Brunswick Corporation, a Delaware corporation (hereinafter “Brunswick”).

WHEREAS, Mercury manufactures and sells Mercury and MerCruiser marine engine products;

WHEREAS, Company is a wholly-owned subsidiary of FPII;

WHEREAS, Company is a boat builder and installs Mercury and MerCruiser products in its boats for resale to the high-performance offshore boat market;

WHEREAS, RMF is a boat builder, competitive driver and motor sports celebrity in saltwater fishing and national and world championship offshore powerboat racing, and has name recognition associated with high-performance boating and powerboat racing;

WHEREAS, RMF also is President and Chief Executive Officer and a major stockholder of FPII and Company desires to have RMF provide certain services to Mercury in exchange for Mercury entering into this Agreement; and

WHEREAS, Brunswick is guaranteeing (the “Guaranty”) a loan (the “Loan”) made to Company, as contemplating by that certain Master Agreement, dated July 17, 2003, by and between Brunswick, RMF, Company and FPII.

NOW, THEREFORE, the parties have agreed as follows:

ARTICLE I

TERM; CONFIDENTIALITY

ARTICLE II

PURCHASE REQUIREMENTS OF COMPANY; PRODUCT MODIFICATION

(i) Company may purchase from other parties products in categories which Mercury does not manufacture, (ii) Company may purchase from other parties Products which are unavailable from Mercury due to production shortages, (iii) Company shall not be required to purchase from Mercury Products that Company also manufactures as of the date hereof, other than engines and drives and (iv) Company shall not be required to purchase from Mercury remote controls, throttle and shift cables, propellers and other accessories to the extent technically infeasible or qualitatively inadequate for the boat for which they are intended. For purposes of this Agreement, Products will be considered “unavailable” if Mercury is unable to provide such properly forecasted Products within 30 days of scheduled delivery thereof. If Mercury becomes aware that it will be unable to meet a scheduled delivery of Products, Mercury shall notify Company as soon as reasonably practicable that it will not be able to make such delivery. (Mercury reserves the right to allocate Products among Company and Mercury’s other customers on a pro rata basis in accordance with Mercury’s stated policies regarding such matters.)

ARTICLE III

PROMOTIONAL ACTIVITIES

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ARTICLE IV

PRICES; PAYMENT TERMS, WARRANTY

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ARTICLE V

EVENTS OF DEFAULT

(a)(i) FPII or Company becomes insolvent or takes or fails to take any action which constitutes an admission of inability to pay its debts as they mature; (ii) FPII or Company makes a general assignment for the benefit of creditors or to an agent authorized to liquidate any substantial amount of its assets; (iii) FPII or Company becomes the subject of an “order of relief” within the meaning of the United States Bankruptcy Code, whether voluntarily or involuntarily; (iv) bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings are instituted by or against FPII or Company; or (v)

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FPII or Company applies for or consents to the appointment of a receiver trustee or liquidation for any of its assets or properties;

(b) FPII or Company ceases to exist; or

(c) FPII or Company or RMF fails to perform any material obligation owed to Mercury under this Agreement, any applicable Program, or under any other supply or purchase agreement; provided that such failure to perform continues for a period of 30 days following receipt of written notice from Mercury which notice identifies such failure.

(a)(i) Mercury becomes insolvent or takes or fails to take any action which constitutes an admission of inability to pay its debts as they mature; (ii) Mercury makes a general assignment for the benefit of creditors or to an agent authorized to liquidate any substantial amount of its assets; (iii) Mercury becomes the subject of an “order of relief” within the meaning of the United States Bankruptcy Code, whether voluntarily or involuntarily; (iv) bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings are instituted by or against Mercury; or (v) Mercury applies for or consents to the appointment of a receiver trustee or liquidation for any of its assets or properties;

(b) Mercury ceases to exist; or

(c) Mercury fails to perform any material obligation owed to FPII or Company under this Agreement; provided that such failure to perform continues for a period of 30 days following receipt of written notice from FPII or Company, as the case may be, which notice identifies such failure.

ARTICLE VI

MISCELLANEOUS PROVISIONS

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Notices shall be addressed as follows:

If to Mercury, to:

Mercury Marine

W6250 West Pioneer Road

P.O. Box 1939

Fond du Lac, Wisconsin 54935

Facsimile: 920 ###-###-####

Attention: General Counsel

If to FPII, Company or RMF, to:

Reginald M. Fountain, Jr.

Fountain Powerboats Inc.

1653 Whichard’s Beach Road

P.O. Drawer 457

Washington, North Carolina 27889

Attn: Corporate Secretary

Facsimile Number: 919 ###-###-####

provided, that if any party shall have designated a different address by notice to the others, then to the last address so designated.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in duplicate in the manner appropriate to each the day and year first written above.

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