Exhibit 10.18
AMENDED AND RESTATED SECURITY
AGREEMENT
THIS AMENDED AND RESTATED SECURITY
AGREEMENT, dated as of November 16, 2007 (“Security
Agreement”), is made by 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 FOUNTAIN
DEALERS’ FACTORY SUPER STORE, INC., a North Carolina
corporation (the “Affiliate Guarantor,” and together
with the Borrower and the Parent, the “Pledgors”), in
favor of REGIONS BANK, an Alabama chartered bank with offices in
Charlotte, North Carolina (the “Bank”). Except as
otherwise provided herein, capitalized terms used herein without
definition shall have the meanings given to them in the Loan
Agreement referred to below.
BACKGROUND
STATEMENT
A. The Borrower, the Parent, the
Affiliate Guarantor and the Bank are parties to a First Amended and
Restated Loan Agreement, dated as of even date herewith (as
amended, modified or supplemented from time to time, the
“Loan Agreement”), providing for the availability of a
$14,500,000 Term Loan and a $2,000,000 Revolving Credit
(collectively, the “Loans”) to the Borrower upon the
terms and conditions set forth therein.
B. As a condition to making the
Loans to the Borrower, the Parent and Affiliate Guarantor have
guaranteed to the Bank the payment in full of the Obligations under
the Loan Agreement and the other Loan Documents.
C. It is a further condition to the
making of the Loans to the Borrower that the Pledgors shall have
agreed, by executing and delivering this Agreement, to secure the
payment in full of their respective obligations under the Loan
Agreement and the other Loan Documents. The Bank is relying on this
Agreement in its decision to extend credit to the Borrower under
the Loan Agreement, and would not enter into the Loan Agreement
without the execution and delivery of this Agreement by the
Pledgors.
D. The Pledgors will obtain benefits
as a result of the making of the Loans to the Borrower, which
benefits are hereby acknowledged, and, accordingly, desire to
execute and deliver this Agreement.
STATEMENT OF
AGREEMENT
NOW, THEREFORE, in consideration of
the foregoing, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
Pledgors and the Bank, for themselves, their successors and
assigns, hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms . In
addition to the terms defined elsewhere in this Security Agreement,
the following terms shall have the meanings set forth
below:
“ Accounts ” or
“ Accounts Receivable ” means all of the
Pledgors’ accounts, as defined in the Uniform Commercial
Code, now owned or hereafter acquired or arising, and all of the
Pledgors’ present or future accounts receivable, rights to
payment for goods sold or leased, or to be sold or to be leased, or
for services rendered or to be rendered, all present and future
receivables, all health-care insurance receivables, book debts,
notes, bills, drafts, acceptances, choses in action, tangible
chattel paper, instruments and documents, together with all
proceeds thereof, and all monies due or to become due thereon, and
all returned or repossessed goods. The term “Accounts
Receivable” also includes all of the Pledgors’ rights,
remedies, security interests and liens in, to and in respect of
Accounts Receivable, present and future, including without
limitation, rights of stoppage in transit, replevin, repossession
and reclamation and other rights and remedies of an unpaid vendor,
lienor or secured party, guaranties or other contracts of
suretyship with respect to any Account Receivable, deposits or
other security for the obligation of any debtor or obligor in any
way obligated on or in connection with any Account Receivable, and
credit and other insurance, and all proceeds of the foregoing and
all proceeds of any insurance on the foregoing, and, to the extent
permitted by applicable law, all of the Pledgors’ right,
title and interest, present and future, in, to and in respect of
all goods relating to, or which by sale have resulted in, Accounts
Receivable, including without limitation all goods described in
invoices or other documents or instruments with respect to, or
otherwise representing or evidencing, any Account Receivable, and
all returned, reclaimed or repossessed goods, and all proceeds of
the foregoing and all proceeds of any insurance on the foregoing,
together with all customer lists, books and records, ledger and
account cards, computer tapes, disks, printouts and records,
whether now in existence or hereafter created, relating to Accounts
Receivable.
“ Collateral ”
means and includes all of the Pledgors’ Accounts Receivable,
Equipment, General Intangibles, Inventory, and Other Assets and all
other similar articles of personal property of any of the Pledgors
now or hereafter held or received by, in transit to, or in the
possession or control of any of the Pledgors or the Bank, and any
substitutions or replacements thereof and any products and proceeds
thereof, including without limitation, insurance proceeds.
Notwithstanding the foregoing, “Collateral” shall not
include the Parent’s treasury stock.
“ Equipment ”
means all of the Pledgors’ equipment, as defined in the
Uniform Commercial Code, now owned or hereafter acquired, and
includes, without limitation, all machinery, equipment, Mobile
Goods, computer equipment and software, accessions, accessories,
additions, parts, supplies, apparatus, appliances, tools, patterns,
dies, cylinders, molds, blueprints, fittings, furniture, fixtures,
office equipment and office furnishings of every kind and
description, wherever located, and all proceeds, including
insurance proceeds, thereof.
“ General Intangibles
” means all general intangibles, as defined in the Uniform
Commercial Code, now existing or hereafter owned, acquired or
arising, in which any of the Pledgors now has or hereafter acquires
any rights, and all contracts and contract rights, but excluding
contracts of any of the Pledgors that by their express terms are
void or voidable upon the pledge or assignment thereof, unless
consent has been obtained for the pledge or assignment thereof,
causes of action, things in action, corporate or business records,
inventions, designs, patents, patent applications, trademarks,
trademark registrations and applications, goodwill, goodwill
associated with trademarks, trade names, trade secrets, trade
processes, copyrights, copyright registrations and applications,
licenses, permits, franchises, customer lists, computer programs,
all claims under guaranties, tax refund claims, rights and claims
against carriers and shippers, leases, claims under
mechanics’ and materialmen’s liens, claims under
insurance
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policies, all rights to indemnification or
contribution, whether arising by contract or otherwise, and all
other intangible personal property of similar kind and nature,
together with any and all extensions, modifications, amendments and
renewals, and all proceeds of any and all of the foregoing, as
applicable.
“ Inventory ”
means all of Pledgors’ inventory, as defined in the Uniform
Commercial Code, wherever located, now owned or hereafter held or
acquired, and all goods manufactured, acquired or held for sale or
lease, all raw materials, work-in-process and finished goods, all
supplies, goods, incidentals, office supplies, packaging materials
and any and all items used or consumed in the operation of the
business of any of the Pledgors or that may contribute to finished
goods or to the sale, promotion and shipment thereof, in which any
of the Pledgors now or at any time hereafter may have an interest,
whether or not the same is in transit or in the constructive,
actual or exclusive occupancy or possession of any of the Pledgors
or is held by any of the Pledgors or by others for any of the
Pledgors’ account, and all proceeds, including insurance
proceeds, thereof.
“ Mobile Goods ”
shall mean, collectively, all of the Pledgors’ motor
vehicles, watercraft, tractors, trailers, aircraft, rolling stock,
and other like property, whether or not the title thereto is
governed by a certificate of title or ownership, in each case
whether now owned or existing or hereafter acquired.
“ Other Assets ”
means all of the Pledgors’ personal property, wherever
located, now owned or hereafter acquired, except for Accounts
Receivable, Equipment, General Intangibles, and Inventory and, to
the extent not covered or not specifically included in Accounts
Receivable, Equipment, General Intangibles, and
Inventory.
1.2 UCC Terms . Unless
otherwise defined herein, or unless the context otherwise requires,
all terms used herein which are defined in the North Carolina
Uniform Commercial Code (the “UCC”) shall have the
meanings therein stated.
1.3 Capitalized Terms . All
capitalized terms not defined herein shall have the meanings given
to them in the Loan Agreement.
ARTICLE II
CREATION OF SECURITY
INTEREST
2.1 Pledge and Grant of Security
Interest . Each Pledgor hereby pledges, assigns and delivers to
the Bank and grants to the Bank a Lien upon and security interest
in all of its right, title and interest in and to the
Collateral.
2.2 Security for Secured
Obligations . This Agreement and the Collateral secure the full
and prompt payment, at any time and from time to time as and when
due (whether at the stated maturity, by acceleration or otherwise),
of all liabilities and obligations of each Pledgor, whether now
existing or hereafter incurred, created or arising and whether
direct or indirect, absolute or contingent, due or to become due,
under, arising out of or in connection with the Loan Agreement,
this Agreement, or any of the other Loan Documents to which it is
or hereafter becomes a party, or any Hedge Agreement required or
permitted under the Loan Agreement and to which the Borrower and
the Bank are parties, including, without limitation, (i) in
the case of the Borrower, all obligations, including, without
limitation, all principal of and interest on the
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Loans, all fees, expenses, indemnities and other
amounts payable by the Borrower under the Loan 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 all obligations of the Borrower to the Bank under
any Hedge Agreement required or permitted under the Loan Agreement
and to which the Borrower and the Bank are parties, and
(ii) in the case of the Parent and Affiliate Guarantor, all of
its liabilities and obligations under the Guaranty; and in each
case under (i) and (ii) above, (a) all such
liabilities and obligations that, but for the operation of the
automatic stay under Section 3 62(a) of the Bankruptcy
Code, would become due, and (b) all fees, costs and expenses
payable by such Pledgor under Section 6.1 (the
liabilities and obligations of the Pledgors described in this
Section 2.2, collectively, the “Secured
Obligations”).
2.3 Security Interests
Absolute . All rights of the Bank and security interests
hereunder, and all obligations of each Pledgor hereunder, shall be
absolute and unconditional and, without limiting the generality of
the foregoing, shall not be released, discharged or otherwise
affected by:
(i) any extension, renewal,
settlement, compromise or waiver in respect of any Secured
Obligation, the Notes or any other document evidencing or securing
such Secured Obligation, by operation of law or
otherwise;
(ii) any modification or amendment
or supplement to the Loan Agreement, the Notes or any other
document evidencing or securing any Secured Obligation;
(iii) any non-perfection or
invalidity of any direct or indirect security for any Secured
Obligation;
(iv) any insolvency, bankruptcy,
reorganization or other similar proceeding affecting the Borrower
or its assets or any resulting disallowance, release or discharge
of all or any portion of the Secured Obligations;
(v) the existence of any claim,
set-off or other right which any Pledgor may have at any time
against the Borrower, the Bank or any other corporation or person,
whether in connection herewith or any unrelated transactions;
provided , that nothing herein shall prevent the assertion
of any such claim by separate suit or compulsory
counterclaim;
(vi) any invalidity or
unenforceability relating to or against the any Pledgor for any
reason of any Secured Obligation, or any provision of applicable
law or regulation purporting to prohibit the payment by any Pledgor
of the Secured Obligations;
(vii) any failure by the Bank
(A) to file or enforce a claim against any Pledgor (in a
bankruptcy or other proceeding), (b) to give notice of the
existence,
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creation or incurring by the
Borrower of any new or additional indebtedness or obligation under
or with respect to the Secured Obligations, (c) to commence
any action against any Pledgor, (d) to disclose to the Parent
any facts which the Bank may now or hereafter know with regard to
the Borrower or (e) to proceed with due diligence in the
collection, protection or realization upon any collateral securing
the Secured Obligations; or
(viii) any other act or omission to
act or delay of any kind by any Pledgor or the Bank or any other
corporation or person or any other circumstance whatsoever which
might, but for the provisions of this clause, constitute a legal or
equitable discharge of each Pledgor’s obligations
hereunder.
ARTICLE III
REPRESENTATIONS AND
WARRANTIES
Each Pledgor hereby represents and
warrants as follows:
3.1 Ownership of Collateral .
Each Pledgor owns, or has valid rights as a lessee or licensee with
respect to, all Collateral purported to be pledged by it hereunder,
free and clear of any Liens except for the Liens granted to the
Bank pursuant to the Security Documents, and except for other
Permitted Liens. No security agreement, financing statement or
other public notice with respect to all or any part of the
Collateral is on file or of record in any government or public
office, and no Pledgor has filed or consented to the filing of any
such statement or notice, except (i) Uniform Commercial Code
financing statements naming the Bank as secured party, and
(ii) as may be otherwise permitted by the Loan
Agreement.
3.2 Security Interests;
Filings . This Agreement, together with (i) the filing,
with respect to each Pledgor, of duly completed and executed
Uniform Commercial Code financing statements naming such Pledgor as
debtor, the Bank as secured party, and describing the Collateral,
in the jurisdictions set forth with respect to such Pledgor on
Schedule I hereto (which filing is hereby authorized by such
Pledgor), (ii) to the extent required by applicable law, the
filing, with respect to each relevant Pledgor, of duly completed
and executed assignments with the U.S. Copyright Office or the U.S.
Patent and Trademark Office, and (iii) as to Mobile Goods, not
including Inventory, covered by a certificate of title or
ownership, the notation of the Bank’s security interest
therein on the applicable certificates of title or ownership,
creates, and at all limes shall constitute, a valid and perfected
security interest in and Lien upon the Collateral in favor of the
Bank, to the extent a security interest therein can be perfected by
such filings or possession, as applicable, superior and prior to
the rights of all other Persons therein (except for Permitted
Liens).
3.3 Locations .
Schedule II lists, as to each Pledgor, (i) its exact
legal name, (ii) the jurisdiction of its incorporation or
organization, its federal tax identification number, and (if
applicable) its organizational identification number,
(iii) the addresses of its chief executive office and each
other place of business, and (iv) the address of each location
at which any Equipment or Inventory owned by such Pledgor is kept
or maintained, in each instance except for any new locations
established in accordance with the provisions of Section
4.2. No Pledgor presently conducts business under any prior
or other corporate or company name or under any trade or fictitious
names, except as indicated beneath its name on Schedule II,
and no Pledgor
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has entered into any contract or granted any
Lien within the past five years under any name other than its legal
corporate name or a trade or fictitious name indicated on
Schedule II.
3.4 Authorization; Consent .
The execution, delivery and performance by each Pledgor of this
Security Agreement require no action by or in respect of, or filing
with, any Governmental Authority and do not contravene, or
constitute (with or without the giving of notice or lapse of time
or both) a default under, any provision of applicable law or of any
agreement, judgment, injunction, order, decree or other instrument
binding upon or affecting each Pledgor.
3.5 No Restrictions . There
are no statutory or regulatory restrictions, prohibitions or
limitations on any Pledgor’s ability to grant to the Bank a
Lien upon and security interest in the Collateral pursuant to this
Agreement or (except for the provisions of the federal
Anti-Assignment Act and Anti-Claims Act, as amended) on the
exercise by the Bank of its rights and remedies hereunder
(including any foreclosure upon or collection of the Collateral),
and there are no contractual restrictions on any Pledgor’s
ability so to grant such Lien and security interest.
3.6 Accounts. Each Account is
(i) a bona fide, valid and legally enforceable indebtedness of
the account debtor according to its terms, arising out of or in
connection with the sale, lease or performance of goods or services
by the Pledgors or any of them, (ii) to the knowledge of the
Pledgors, or except as disclosed in writing to the Bank, subject to
no offsets, discounts, counterclaims, contra accounts or any other
defense of any kind and character, other than warranties and
discounts customarily given by the Pledgors in the ordinary course
of business and warranties provided by applicable law,
(iii) to the extent listed on any schedule of Accounts at any
time furnished to the Bank, a true and correct statement of the
amount actually and unconditionally owing thereunder, maturing as
stated in such schedule and in the invoice covering the transaction
creating such Account, and (iv) not evidenced by any other
instrument; or if so, such other instrument (other than invoices
and related correspondence and supporting documentation) shall
promptly be duly endorsed to the order of the Bank and delivered to
the Bank to be held as Collateral hereunder. Except as set forth on
Schedule 3.6 attached hereto, to the knowledge of each Pledgor,
there are no facts, events or occurrences that would in any way
impair the validity or enforcement of any Accounts except as set
forth above.
3.7 Documents of Title . No
bill of lading, warehouse receipt or other document or instrument
of title is outstanding with respect to any Collateral other than
Mobile Goods and other than Inventory in transit in the ordinary
course of business to a location set forth on Schedule II or
to a customer of a Pledgor.
ARTICLE IV
COVENANTS
Each Pledgor agrees that so long as
any Secured Obligation remains unpaid:
4.1 Use and Disposition of
Collateral . So long as no Event of Default shall have occurred
and be continuing, each Pledgor may, in any lawful manner not
inconsistent with the provisions of this Agreement and the other
Loan Documents, use, control and manage the Collateral in the
operation of its businesses, and receive and use the income,
revenue and profits arising therefrom and the Proceeds thereof, in
the sa
