Document:

Employment Agreement dated September 1, 2004

 Exhibit 10.2 
  
 STATE OF NORTH CAROLINA 
 COUNTY OF BEAUFORT

  
 EMPLOYMENT AGREEMENT 
  
 THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered
into as of the 1st day of September, 2004 (the “Effective Date”), by and between FOUNTAIN POWERBOATS, INC., a North Carolina corporation with its principal place of business in Washington, Beaufort County, North Carolina
(“Fountain”); and R. DAVID KNIGHT (“Employee”). 
  
 W I T N E S S E T H: 
  
 WHEREAS, Fountain is engaged in
the manufacture of offshore racing and fishing boats and the distribution of other marine products; and 
  
 WHEREAS, effective as of the 15th day of September, 2004 (the “Employment Date”), Fountain desires to employ Employee in the capacity of
Executive Vice President of Business Development; and 
  
 WHEREAS,
Employee, having negotiated the terms and conditions of his employment with Fountain and understanding and accepting all of the terms and conditions of such employment, desires to accept such employment; and 
  
 WHEREAS, Fountain and Employee agree that such an employment agreement is
founded and maintained upon the acceptance and observance by each of them of the terms and conditions agreed upon, and desire to reduce the terms and conditions of their employment agreement to writing. 
  
 NOW, THEREFORE, for and in consideration of the premises and the mutual
promises, covenants, agreements, and conditions hereinafter set forth, and for other good and valuable considerations, the receipt and sufficiency of which hereby are acknowledged, Fountain and Employee hereby agree as follows: 
  
 1. Employment. Fountain hereby employs Employee as its Executive Vice
President of Business Development, subject to the terms and conditions of this Agreement and under such general rules as from time-to-time may be established by Fountain. Employee shall report directly to the Chief Executive Officer
(“CEO”) of Fountain, and shall perform such duties and responsibilities as are customarily associated with the position of Executive Vice President of Business Development, including but not limited to managing the national sales
organization, enhancing dealer infrastructure, managing intra-departmental flow of business to ensure best-in-class performance to the customer network, developing new business strategies to increase company revenue while building a foundation to
increase sales volume, and any other duties and responsibilities as assigned to Employee by the CEO to prepare Employee to be able to move into the CEO position following the retirement of the current CEO. 

 2. Other Duties. In addition to the duties described in Paragraph 1, Employee may, in his own
discretion, continue to represent Fountain in the offshore racing series. Employee’s participation in these activities is done on his own accord, will not count against vacation, and will not materially interfere with his duties hereunder.
Employee will not receive any support or compensation from Fountain other than like or similar support to that which has been provided by Fountain to Employee prior to this Agreement, if any. 
  
 3. Term. Unless sooner terminated as provided in this Agreement, the
term of this Agreement and Employee’s employment under this Agreement shall commence on the Employment Date and shall end on the one-year anniversary of that date; and, on the one-year anniversary of that date and on each anniversary of that
date thereafter until terminated as hereinafter provided, shall renew for an additional term of one (1) year (each such one-year period, including the initial one-year period, to be known as the “Term of Employment”). 
  
 4. Exclusive Service. Employee’s employment under this Agreement
shall be full-time employment, and Employee shall devote Employee’s entire working time to Employee’s duties under this Agreement, and, for so long as Employee is employed by Fountain, shall not engage in any occupation that requires any
amount of Employee’s personal attention during Fountain’s regular business hours which directly or otherwise interferes with Employee’s attention to or performance of Employee’s duties and responsibilities as an Employee of
Fountain, unless Employee first obtains the prior written consent of the CEO. This Paragraph 4 shall not apply to and does not prohibit Employee’s representation of Fountain in the offshore racing series as described in Paragraph 2. 

 
 5. Compensation. 
  
 (a) Base Salary. For all services rendered by Employee under this
Agreement, Fountain shall pay to Employee a base salary in the annualized amount of One Hundred Fifty-Six Thousand and No/100 Dollars ($156,000.00) (the “Base Salary”), which Base Salary shall be paid at the rate of Three Thousand and
No/100 Dollars ($3,000.00) weekly. 
  
 (b) Signing Bonus.
Upon the execution of this Agreement by Fountain and Employee, Fountain shall pay to Employee a one-time signing bonus in the amount of Ten Thousand and No/100 Dollars ($10,000.00). 
  
 (c) Annual Bonus. 
  
 (i) Sales Bonus. Employee shall be eligible for an annual sales bonus upon Fountain’s attainment of defined sales goals as set forth herein.
In the first fiscal year during this Agreement in which sales exceed Fifty-Nine Million and No/100 Dollars ($59,000,000.00), Employee is entitled to a sales bonus payment equal to 0.9% of the amount 
  

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 exceeding Fifty-Nine Million and No/100 Dollars ($59,000,000.00). For each fiscal year thereafter, Employee is entitled
to a sales bonus payment only if sales for that year exceed the amount for which Employee previously received a sales bonus. In that event, Employee would be entitled to a sales bonus payment equal to 0.9% of the amount exceeding the greatest amount
for which Employee previously received a sales bonus. 
  
 (ii)
Operating Profit Bonus. Employee shall be eligible for an annual bonus based upon Fountain’s Operating Profit, which is defined as earnings before interest and taxes (EBIT). For each fiscal year during this Agreement, Employee is
entitled to a bonus payment equal to 0.5% of Fountain’s EBIT. 
  
 (iii) Bonus payments shall be payable within sixty (60) days following the last day of the subject fiscal year. 
  
 (d) Withholding. All compensation hereunder shall be subject to customary deductions and withholding taxes and such other deductions and
withholdings as are required by law. 
  
 6. Insurance and Other
Benefits. Employee shall be eligible for such insurance and other benefits, including but not limited to participation in Fountain’s 401(k) plan, as from time-to-time may be established by Fountain for its employees, subject to the terms
and conditions (including eligibility requirements) of the applicable policy or plan. Any insurance or other benefits shall be provided only as described in applicable written policies or plans. Employee understands that the provisions of any
policies or plans may be determined only by reading the actual policy or plan documents, under which Fountain or the plan administrator, as applicable, may make certain administrative interpretations with discretion. Fountain reserves the right to
modify or terminate each policy’s or plan’s provisions and any insurance or other benefits offered under such policies and plans. 
  
 7. Vacation. Vacation leave is managed on a calendar year basis and will be advanced through December 31, 2004 on beginning employment and in full
on January 1 of each calendar year, but is accrued pro rata on a monthly basis. Employee may accrue up to a total of three weeks (fifteen (15) work days (Monday through Friday)) of vacation leave in a calendar year, subject to such general rules or
regulations as may be adopted from time-to-time by Fountain. The foregoing vacation leave shall be noncumulative, and any unused vacation leave shall be forfeited at the end of each year (12/31/05 for the period from Employment Date to 12/31/04) or
upon the termination of Employee’s employment for any reason. The time of each vacation period shall be mutually agreed upon by Employee and the CEO. Employee is permitted to use vacation leave before it is accrued. However, if, upon
termination of this Agreement, Employee has used vacation leave in excess of what he has accrued, then Employee will be required to pay back the excess vacation leave used. 
  
 8. Performance Review. Employee shall be entitled to an annual performance review, which shall be administered by the
CEO. 
  

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 9. Expenses. Fountain will reimburse Employee for reasonable bona fide business expenses incurred
by Employee in the performance of his duties and responsibilities pursuant to this Agreement. Employee shall submit appropriate receipts, vouchers, and other evidence of charges or payment to Fountain upon Fountain’s request. Reimbursement will
be handled in accordance with Fountain’s normal practices. 
  
 10. Moving Expenses. Fountain shall reimburse Employee’s reasonable bona fide moving expenses, up to Twenty Thousand and No/100 Dollars ($20,000.00), incurred by Employee to pack and move his household from Pittsboro, North
Carolina to the Washington, North Carolina area. Employee shall submit appropriate receipts, vouchers, and other evidence of charges or payment to Fountain upon Fountain’s request. Reimbursement will be handled in accordance with
Fountain’s normal practices. 
  
 11. Temporary Living
Expenses. For a period of up to 365 calendar days beginning with the Employment Date, Fountain shall provide Employee with an unfurnished apartment of Employee’s choice at either Eastbrook Apartments or Village Green Apartments, located in
Greenville, North Carolina. Fountain shall be responsible for payment of all reasonable utility expenses incurred by Employee relative to such apartment. Provided, however, that if Employee has secured a permanent residence in or around Washington,
North Carolina, prior to the end of the 365-day period then Fountain’s obligations pursuant to this Paragraph shall then immediately terminate. 
  
 12. Covenants of Nonsolicitation, Noncompetition, and Nondisclosure. During the course of Employee’s employment with Fountain, Employee shall
be given access to non-public, confidential, and proprietary information pertaining to Fountain and the customers of Fountain for the purpose of furthering Fountain’s business. Fountain and Employee acknowledge that Fountain has spent and shall
spend considerable amounts of time, effort, and company resources in providing Employee with, and that Employee shall participate in the development of, confidential information relating to Fountain’s business. Such confidential information
includes, but is not limited to, customer lists and records; customer preferences and requirements; pricing, rates, and discounts; copyrights; trade secrets; inventions; patents; trademarks; proprietary information; research; specifications; design
methods; computer programs and software; marketing investigations; plans, reports, and methods of operation; and forms, policies, and procedures unique to Fountain (whether in oral or written form, on tape, microfilm, microfiche, or computer, or in
any other form) (collectively, the “Information”). Fountain and Employee agree that Fountain has a right to and does regard such Information as proprietary, and a trade secret or confidential, and has a right to protect such Information
from disclosure and misuse. 
  

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 Employee, for and in consideration of the value, security and benefits of this Agreement and the Term of
Employment hereunder covenants and agrees as follows: 
  
 (a)
Covenant of Nonsolicitation and Noncompetition. During the Term of Employment with Fountain, and for the periods and terms specified: 
  
 1. Termination without cause - for period paid and/or due to be paid; except as to any work or other relationship with the manufacturer of Donzi boats or
any entity or person related in any way with Donzi boats; 
  
 2.
Resignation - for a period of eighteen (18) months; 
  
 3.
Termination for permanent disability or cause - for a period of eighteen (18) months plus any period for which Employee is paid and/or due to be paid as a result of his termination. 
  
 Employee shall not, directly or indirectly, either for himself or for any other person or entity, other than on behalf of
Fountain, without the prior written consent of Fountain (which consent may be withheld in Fountain’s sole discretion): 
  
 (i) Solicit or be involved in any way in soliciting any business in any way related or similar to Fountain’s business from any person or business
entity who or which is a customer of Fountain, including but not limited to those customers with whom or which Employee has or had direct contact, within the Restricted Territory (as defined below); 
  
 (ii) Divert or attempt to divert any customer of Fountain, including but not
limited to those customers with whom or which Employee has or had direct contact, to any person or business entity competitive with, or engaged in business in any way related or similar to, Fountain’s business, within the Restricted Territory;

  
 (iii) Employ, or seek to employ, any employee of Fountain or
induce any such person to leave his or her employment with Fountain; or 
  
 (iv) Engage or assist any person or entity whose services are competitive with Fountain’s in any way, whether as an owner, shareholder, director, officer, partner, member, manager, employee, agent, consultant,
investor, financier, supplier, vendor, or otherwise, in (1) employment or other work similar to Employee’s employment or duties at any time during the term of Employee’s employment with Fountain, or (2) any business related or similar to
Fountain’s business to which Employee’s knowledge of the Information may be applied, within the Restricted Territory. 
  
 (b) Definition. For purposes of this Agreement, the “Restricted Territory” means the geographic area of the United States of America
including but not limited to the geographic area within a fifty (50) mile radius of any location where Fountain owns, operates, maintains or has, whether direct or by franchise or other operation, a dealership, plant, office, or facility during the
Term of Employment in effect at the time of termination of employment; and any activity by Employee or any representative of any entity with which he is connected which relates to the marine industry within the Restricted Territory shall be deemed
to be the activity of the Employee. 
  

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 (c) Covenant of Nondisclosure. Employee shall not, directly or indirectly, at any time, whether
during Employee’s employment with Fountain or after the termination of Employee’s employment with Fountain for any reason, divulge, disclose, or communicate to any person or entity, any confidential information of any kind, nature, or
description relating to Fountain’s business, including but not limited to the Information; provided, however, that Employee may disclose such information as permitted by Fountain for the limited purpose of performing Employee’s job duties,
but only to the extent authorized by Fountain, or as is required by law to be disclosed. 
  
 During Employee’s employment with Fountain or after the termination of Employee’s employment with Fountain for any reason, Employee shall not use the Information to the detriment of Fountain or its
principals, shareholders, directors, officers, or employees, in any manner competitive with Fountain, in any unlawful manner, or to interfere with or attempt to terminate or otherwise adversely affect any business relationship of Fountain.

  
 13. Copyrights, Trademarks, Patents, Etc. Any
inventions or other intellectual property created, developed, designed, engineered, manufactured, or produced by Employee at any time during the term of this Agreement, whether or not copyrighted, trademarked, regarded as a trade secret or
proprietary, or patented, and any copyrights, trademarks, patents, or proprietary interests thereon or related thereto, are and shall be the exclusive property of Fountain. Without additional compensation, Employee shall assign promptly to Fountain
all of Employee’s right, title, and interest in and to any and all copyrights, trademarks, trade secrets, inventions, letters patent, applications for letters patent, and trade dress, whether or not subject to state or federal trademark,
together with all documentation and information related thereto, which are acquired by Employee during the Term of Employment, and: 
  
 (a) are related to the then current products or services and activities of or product or service development by Fountain; 
  
 (b) are developed or made with the use of Fountain’s facilities,
equipment, materials, personnel, trade secrets, or the Information; or 
  
 (c) result from any work performed by Employee for Fountain. 
  
 Fountain shall have all rights thereto subject only to such rights of Employee as expressly are provided by law. Employee shall disclose promptly to Fountain any such copyrights, trademarks, trade secrets, inventions, letters patent,
applications for letters patent, and trade dress, and, at the request and expense of Fountain, shall assist Fountain and its agents in applying for letters patent or registration thereon in every jurisdiction designated by Fountain, and shall
execute all documentation necessary to obtain such patents and registrations in the name of Fountain. 
  

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 14. Termination. 
  
 (a) Termination by Employee. The Term of Employment and the Employee’s employment under this Agreement may be
terminated at any time by Employee upon ninety (90) days’ written notice to Fountain. Upon such termination, Employee shall be entitled to receive Base Salary compensation earned under this Agreement through the effective date of such
termination and, thereafter, Fountain shall have no further obligations hereunder. 
  
 (b) Death or Permanent Disability. The Term of Employment and Employee’s employment under this Agreement automatically shall be terminated upon his death or permanent disability during the Term of
Employment. Upon any termination for Employee’s death, Employee’s estate shall be entitled to receive any Base Salary compensation Employee shall have earned prior to the date of termination but which remains unpaid. Upon any termination
for the Employee’s permanent disability, Employee shall be entitled to receive any Base Salary compensation the Employee shall have earned prior to the date of termination but which remains unpaid and the Employee’s normal Base Salary
compensation for a period of ninety (90) days following the date of termination. “Permanent disability” shall mean physical or mental impairment such that Employee is rendered incapable of performing his normal and regular employment
duties for a period of three (3) consecutive months, or for shorter periods aggregating three (3) months during any twelve (12) month period. Employee agrees to submit to such medical examinations as may be requested by Fountain with regard to the
issue of permanent disability hereunder, with the effective date thereof to be determined by Fountain. 
  
 (c) Termination by Fountain for Cause. The Term of Employment and Employee’s employment under this Agreement may be terminated by Fountain at
any time for cause (as provided below). For purposes of this paragraph, Fountain shall have “cause” to terminate the Term of Employment and Employee’s employment upon: 
  
 (i) A determination by Fountain, in good faith, that Employee (A) has breached in any material respect any of the terms or
conditions of this Agreement or any Fountain policy; (B) has failed in any material respect to perform or discharge his duties or responsibilities of employment in the manner provided herein; or (C) is engaging or has engaged in conduct involving
moral turpitude, willful misconduct, or conduct which is detrimental in any material respect to the standing, reputation, or business prospects of Fountain or which has had, or likely will have, a material adverse effect on Fountain’s business
or reputation; 
  
 (ii) The commission by Employee during the
Term of Employment of a felony involving dishonesty, willful misconduct or breach of trust or any act of fraud, embezzlement, theft, or personal dishonesty (whether or not such act or charge results in criminal indictment, charges, prosecution, or
conviction); or 
  
 (iii) Employee’s use of any addictive
drug (except pursuant to the direction of a physician) or use of any controlled substance, as defined at 21 U.S.C. § 802 and listed on Schedules I through V of 21 U.S.C. § 812, as revised from time-to-time, or as defined by other federal
or state laws or regulations. 
  

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 (d) Payment Upon Termination for Cause. In the event Employee is terminated for cause for the
reasons set forth in Paragraph 14(c)(i)(A) and/or 14(c)(i)(B) above, Employee shall be entitled to receive (1) compensation earned under this Agreement through the effective date of such termination, and (2) a lump sum amount equal to three (3)
months of Employee’s Base Salary (as defined above). In the event Employee is terminated for cause for the reasons set forth in Paragraphs 14(c)(i)(C), 14(c)(ii) or 14(c)(iii) above, Employee shall be entitled only to Base Salary compensation
earned under this Agreement through the effective date of such termination and, thereafter, Fountain shall have no further obligations hereunder. 
  
 (e) Termination by Fountain without Cause. The Term of Employment and Employee’s employment under this Agreement may be terminated by
Fountain without cause at any time upon thirty (30) days’ written notice to Employee. Upon such termination by Fountain of Employee, Employee shall be entitled to receive (1) compensation earned under this Agreement through the effective date
of such termination, and (2) a lump sum amount equal to Employee’s Base Salary (as defined above) for one year. 
  
 15. Change in Control. 
  
 (a) If at the effective time of, or any time within twelve (12) months following, a “Change in Control” (as defined below): 
  
 (i) Fountain terminates Employee’s employment other than for
“Cause” (as defined in Paragraph 14(c) above), or 
  
 (ii) a “Termination Event” (as defined below) occurs and, thereafter, Employee voluntarily terminates his own employment with Fountain in the manner described below, 
  
 then (subject to the limitations set forth herein) Employee shall be entitled to receive from Fountain, and Fountain shall be obligated to
pay or cause to be paid to Employee, an amount equal to 2.99 multiplied by Employee’s annual base salary rate in effect at the time the Change in Control became effective or in effect at the time the termination of Employee’s employment
becomes effective, whichever is greater. In the case of a termination of Employee’s employment described in Paragraph 15(a)(i) above, the payments provided for in this Paragraph 15 shall be in lieu of and not in addition to the payments of Base
Salary provided for in Paragraph 14 above. 
  
 (b) For purposes
of this Agreement, a “Change in Control” shall be deemed to have occurred if: 
  
 (i) after the Effective Date, any “Person” (as such term is defined in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as amended), 
  

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 directly or indirectly, acquires beneficial ownership of voting stock, or acquires irrevocable proxies or any combination
of voting stock and irrevocable proxies, representing more than 50% of any class of voting securities of Fountain, or in any manner acquires control of the election of a majority of the directors of Fountain; or 
  
 (ii) Fountain consolidates or merges with or into another corporation, or
otherwise is reorganized, where Fountain is not the resulting or surviving corporation in such transaction; or 
  
 (iii) all or substantially all Fountain’s assets are sold or otherwise transferred to or acquired by any other corporation, association or other
person, entity or group. 
  
 However, a transaction or event
shall not be considered a Change in Control if, prior to the consummation or occurrence of such transaction or event, Fountain and Employee agree in writing that the same shall not be treated as a Change in Control for purposes of this Agreement.

  
 (c) For purposes of this Paragraph 15, all references to
Fountain shall include any “Successor” (as defined below) to Fountain which shall have assumed and become liable for Fountain’s obligations hereunder (whether such assumption is by agreement, operation of law or otherwise).
“Successor” refers to any Person or entity (corporate or otherwise) into which Fountain (or any such Successor) shall be merged or consolidated or to which all or substantially all Fountain’s (or any such Successor’s) assets
shall be transferred in any manner. 
  
 (d) For purposes of this
Paragraph 15, a “Termination Event” shall be deemed to have occurred if, at the effective time of or within twelve (12) months following a Change in Control, and without his express written consent: 
  
 (i) Employee’s annual Base Salary rate is reduced below the annual
rate in effect as of the effective date of the Change in Control or as the same shall have been increased from time to time following such effective date; or 
  
 (ii) Employee’s life insurance, medical or hospitalization insurance, disability insurance or similar plans or benefits (including any retirement
plan) being provided by Fountain to Employee as of the effective date of the Change in Control are reduced in their level, scope or coverage, or any such insurance, plans or benefits are eliminated without being replaced with substantially similar
plans or benefits, unless such reduction or elimination applies proportionately to all salaried employees of Fountain who participated in such plans or benefits prior to such Change in Control; 
  
 (iii) Employee is transferred to a job location which is more than 30 miles
(by most direct highway route) from his principal work location at the effective date of the Change in Control; or 
  

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 (iv) (A) if Fountain continues to exist as a separate entity following the Change in Control,
Employee’s position is changed such that he no longer serves as Executive Vice President of Business Development or such title and responsibility level which he has at the time of the Change in Control, or (B) if as a result of the Change in
Control, Fountain no longer exists as a separate entity, Employee is not designated as and does not serve as an executive officer of Fountain’s Successor; or if he does not report directly to the Successor’s Chairman, President or Chief
Executive Officer; or if his duties, pay and/or responsibilities and/or working conditions are reduced or negatively modified. 
  
 (e) If Employee’s employment is terminated by Fountain without Cause prior to the effective time of a Change in Control but following the date on
which Fountain’s Board of Directors takes action to approve an agreement (including any definitive agreement or an agreement in principle) relating to the Change in Control, then, for purposes of this Agreement, such termination of employment
shall be deemed to have occurred at the effective time of the Change in Control. 
  
 (f) Amounts payable pursuant to this Paragraph 15 shall be paid in thirty-six (36) equal monthly payments which shall commence not later than the 45th day following the Termination Date and be made on the same day of
each consecutive month thereafter until all such monthly payments have been paid. For purposes of this Agreement, the “Termination Date” will be the effective date of the termination of Employee’s employment which gives rise to
Fountain’s payment obligation under this Paragraph 15. 
  
 (g) In order to become entitled to any payments under Paragraph 15(a)(ii) above, Employee must effectively terminate his employment with Fountain within ninety (90) days from the date of occurrence of the Termination Event which gives rises
to his right to terminate. A Termination Event shall be deemed to have occurred on the date such action or event is implemented or takes effect or, if later, on the date on which notice of the action or event is given to Employee. The Termination
Date of Employee’s termination of employment following a Termination Event shall be the date of delivery by Employee to Fountain (or to any Successor) of a written notice of termination which describes the Change in Control and Termination
Event which have occurred. If Employee does not so terminate his employment with Fountain within such ninety (90) day period following the occurrence of a Termination Event, then he thereafter shall have no rights hereunder with respect to that
Termination Event but shall retain rights, if any, hereunder with respect to any other Termination Event occurring within twelve (12) months following the Change in Control and as to which such notice period has not expired. 
  
 (h) It is the intent of the parties hereto that all payments made pursuant
to this Agreement be deductible by Fountain for federal income tax purposes and not result in the imposition of an excise tax on Employee. Notwithstanding anything contained in this Agreement to the contrary, any payments to be made to or for the
benefit of Employee which are deemed to be “parachute payments” as that term is defined in Section 280G of the Internal 
  

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 Revenue Code of 1986, as amended (the “Code”), shall be modified or reduced to the extent (but only to the
extent) which, upon the advice of Fountain’s independent certified public accountants, Fountain’s Board of Directors in good faith deems to be necessary to avoid the imposition of excise taxes on Employee under Section 4999 of the Code and
the disallowance of a deduction to Fountain under Section 280G(a) of the Code. 
  
 (i) Notwithstanding anything contained herein to the contrary, it is expressly understood and agreed by Employee that Employee shall not be entitled to any payments under this Agreement in the event (i) Fountain
terminates Employee’s employment for Cause, or (ii) Employee voluntarily terminates his employment with Fountain other than as provided in Paragraph 15(a)(ii) above, or (iii) Employee’s employment with Fountain terminates or is terminated
due to his death or Retirement. 
  
 16. Waiver. The failure
of a party to insist upon the strict performance of any of the terms and conditions of this Agreement, or the waiver by a party of any breach or default of any of the terms and conditions of this Agreement, shall not be construed as thereafter
waiving any terms and conditions, but the same shall continue and remain in full force and effect as if no forbearance or waiver had occurred. No such waiver shall be enforceable unless in writing and signed by the party to be charged therewith.

  
 17. Modification and Amendment. The terms of this
Agreement may not be amended or modified except by a written agreement duly executed by both parties. 
  
 18. Severability. If any of the terms, covenants, conditions, and agreements of this Agreement for any reason shall be held to be invalid, illegal,
or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any of the other terms, covenants, conditions, and agreements of this Agreement, and any terms, covenants, conditions, and agreements of this
Agreement thereafter shall be construed as if such invalid, illegal, or unenforceable terms, covenants, conditions, and agreements never were contained in this Agreement. 
  
 19. Binding Effect; Assignment. This Agreement shall be binding upon and inure to the benefit of Fountain and
Employee, their respective subsidiaries, affiliates, members, directors, officers, successors and assigns, heirs, legatees, executors, administrators, and personal representatives, as applicable; provided, however, that the agreements
of Employee are personal to Employee, and Employee shall not assign Employee’s obligations, responsibilities, and benefits hereunder. Fountain shall have the right to assign its obligations, responsibilities, or benefits hereunder. 

 
 20. Paragraph Headings. The paragraph headings are for convenience
of reference only and shall not be construed as terms of this Agreement. 
  
 21. Governing Law. This Agreement is executed in Beaufort County, North Carolina, and the parties hereto agree that, without regard to principles of conflicts of laws, the 
  

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 internal laws of the State of North Carolina and applicable federal law shall govern and control the validity,
interpretation, performance, and enforcement of this Agreement. Any action relating to this Agreement shall be instituted and prosecuted only in the courts of Beaufort County, North Carolina, or the federal district courts of the Eastern District of
North Carolina, and each party consents to the personal jurisdiction of said courts and waives any right or defense relating to such venue and jurisdiction. 
  
 22. Entire Agreement. This Agreement contains the entire agreement and understanding between Fountain and Employee with regard to the subject
matter hereof, and there are no oral understandings, terms, or conditions, and neither party has relied upon any representation, express or implied, not contained herein. All prior negotiations and understandings are merged in this Agreement.

  
 IN WITNESS WHEREOF, Fountain has caused this Agreement to be
executed in its corporate name in such form as to be binding, and Employee has executed this Agreement by subscribing his name and adopting as his seal the typewritten word “SEAL” appearing beside his name, all effective as of the
Effective Date. 
  

							
	 	 	FOUNTAIN POWERBOATS, INC.
			
	 	 	By:	 	 /s/ R. M. Fountain, Jr.

	 	 	Its:	 	  

	 	 
			
	 	 	 /s/ R. David Knight

	 	(SEAL)
	 	 	R. DAVID KNIGHT	 	 

  

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 STATE OF NORTH CAROLINA 
 COUNTY OF BEAUFORT 
  
 FIRST AMENDMENT TO EMPLOYMENT
AGREEMENT 
  
 THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (the
“First Amendment”) made and entered into as of the 18th day of October, 2004, by and between FOUNTAIN POWERBOATS, INC., a North Carolina corporation with its principal place of business in Washington, Beaufort County, North Carolina
(“Fountain”) and R. DAVID KNIGHT (“Employee). 
  
 W
I T N E S S E T H: 
  
 WHEREAS, Fountain and Employee previously
entered into an Employment Agreement dated September 1, 2004, (the “Agreement”); and 
  
 WHEREAS, Fountain and the Employee now desire to modify the terms of the Agreement, and mutually have agreed to enter into this First Amendment to evidence their understanding of the modified terms. 
  
 NOW, THEREFORE, for and in consideration of the mutual promises between the
parties hereto and other good and valuable considerations, the receipt and sufficiency of which hereby are acknowledged, Fountain and Employee do agree as follows: 
  

	 	1.	The Agreement is hereby amended by this First Amendment as follows: 

  
 A. Paragraph 14(e) of the Agreement, entitled “TERMINATION BY FOUNTAIN WITHOUT CAUSE,” shall be amended to provide that: 
  
 “The Term of Employment and Employee’s employment under this
Agreement may be terminated by Fountain without cause at any time upon thirty (30) days’ written notice to Employee. Upon such termination by Fountain of Employee, Employee shall be entitled to receive (1) compensation earned under this
Agreement through the effective date of such termination, and (2) the amount equal to Employee’s Base Salary (as defined above) for one year, payable over a period of one year in weekly installments.” 
  

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 2. All of the remaining terms and conditions for the Agreement that are not expressly amended by this
First Amendment shall remain in full force and effect. 
  
 IN
TESTIMONY WHEREOF, Fountain has caused this First Amendment to be executed in its corporate name in such form as to be binding, and Employee has executed this Agreement by subscribing his name and adopting as his seal the typewritten word
“SEAL” appearing beside his name, all effective as of the day and year first above written. 
  

			
	FOUNTAIN POWERBOATS, INC.
		
	By:	 	 /s/ R. M. Fountain, Jr.

	Its:	 	  

	
	EMPLOYEE
	
	 /s/ R. David Knight

	R. DAVID KNIGHT

  

 14Three Year Incentive Plan May 31, 2006

 Exhibit 10.1 
  
 Three Year Incentive Plan for the Three Consecutive Fiscal Year Periods Ending May, 31, 2006. 

 THREE YEAR INCENTIVE PLAN 
 FOR THE THREE CONSECUTIVE FISCAL YEAR PERIODS 
 ENDING MAY 31, 2006

  

	1.	PURPOSE: 

  
 This Plan and subsequent Plans are created for these reasons: 
  

	 	A.	To create a focus for Plan participants that mirrors the interest of the Company’s stockholders. 

  

	 	B.	Focus Plan participants on medium-term growth and profitability. 

  

	 	C.	Provide an incentive necessary to retain and recruit top-quality executives. 

  

	 	D.	Provide an opportunity for Plan participants to accumulate estate building capital. 

  

	2.	PERFORMANCE PERIOD: 

  
 The three consecutive fiscal years beginning June 1, 2003. 
  

	3.	PARTICIPANTS: 

  
 Participants in this Plan will be designated by one or more resolutions adopted by the Compensation Committee and such participation will be evidenced by
a Participant Designation Agreement executed and delivered in accordance with the requirements of Section 8 of this Plan. 
  

	4.	ADMINISTRATION: 

  

	 	A.	The Compensation Committee of the Board of Directors approves the Plan. 

  

	 	B.	The Compensation Committee may, in its sole discretion, add or delete acquired or divested operations to further the intent of this Plan. 

  

	5.	MINIMUM AWARD HURDLE: 

  

	 	A.	Achievement of an award is dependent on attainment of a three (3) year consolidated average return-on-assets (ROA) equal to or greater than ten percent (10%).

  

	 	B.	Average ROA for each performance period means the average of adjusted earnings before interest and taxes (EBIT) of the Company as a percentage of the average adjusted operating
assets, rounded to the nearest one-tenth (1/10) of one percent (1%). Adjusted EBIT is defined as EBIT as reported in the Company’s consolidated financial statements exclusive of any profit or loss considered to be extraordinary (such as
the sale of a major 

 operating facility), inclusive of incentive award payments under this Plan, and adjusted to treat assets
on operating leases as owned assets. Adjusted operating assets are defined as operating assets adjusted to treat assets leased pursuant to operating leases as owned assets. A fiscal year’s “average adjusted operating assets” is the
sum of its four fiscal quarter averages divided by four. A “fiscal quarter average” is the sum of the beginning and ending adjusted operating asset balances of a quarter divided by two. The “average adjusted operating assets” for
the performance period is the three fiscal years’ average adjusted operating assets divided by three. 
  

	6.	INDIVIDUAL PARTICIPATION: 

  

	 	A.	Those who are selected for participation in this Plan during the performance award period may (if so indicated at the time of their selection) have their award pro-rated.

  

	 	B.	Except as otherwise directed by the Compensation Committee, in its sole discretion, participants must be employed by the Company at the end of the incentive period (May 31, 2006) to
be eligible for an award payment. Selection for participation in this Plan is not a guarantee of employment, continued employment or compensation. 

  

	7.	AWARDS 

  
 If a payment is made under this Plan: 
  

	 	A.	The award percentage will be based on the preceding three year ROA for the Company and is calculated as a percentage of base salary at time of award. 

  

	 	B.	All taxes and other deductions required by law will be withheld. 

  

	 	C.	Awards will be paid as soon as practicable following the approval of the Company’s financial statements for the fiscal year ended May 31, 2006. In the event that payment
of an award to a “covered employee” within the meaning of section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), would not be deductible by the Company pursuant to section 162(m) of the Code, then payment
of the amount of such award which is not deductible will automatically be deferred, with interest equivalent to U.S. Treasury Bills, up to earliest of (i) April 30th of the first year in which the Company reasonably anticipates that the
deduction of the payment of the amount will not be limited or eliminated by application of section 162(m) of the Code or (ii) the date which is six months and one day following the covered employee’s termination of employment. The intent
of clause (i) of the immediately preceding sentence is to permit partial payments of deferred amounts to the extent the deduction of the partial payment is not limited or eliminated by section 162(m) of the Code. Amounts deferred pursuant to
this Section 7.C will be held by the Company in a “Rabbi Trust” to be established for the benefit of applicable participants. 

  

 2 

	 	D.	Future awards under and amendments and exceptions to this Plan must be approved by the Compensation Committee of the Board of Directors. 

  

	8.	DESIGNATION OF PARTICIPANTS 

  
 Upon a participant being designated by the Compensation Committee to participate in this Plan, the President and/or any Vice President of the Company are
directed to execute and deliver a Participant Designation Agreement that (i) references this Plan, (ii) identifies the participant, (iii) sets forth the date on which the Compensation Committee selected the participant for
participation and (iv) states whether the level of participation of the participant will (in accordance with the resolutions adopted by the Compensation Committee) be prorated (and if prorated, the amount of such proration). 
  

	9.	AWARD SCHEDULE 

  
 Three-Year Incentive Plan 
 For The Three Consecutive Fiscal Year Periods 
 Ending May 31, 2006 
  

			
	 Three-Year Average ROA

	 	 Award as a % of Base Pay

	10%	 	50%
	11%	 	60%
	12%	 	70%
	13%	 	85%
	14%	 	100%
	15%	 	120%
	16% or >	 	140%

  
 The
President and Chief Executive Officer award will be 50% greater than the awards above. 
  
 Executed at the direction of the Compensation Committee of the Board of Directors to evidence its approval of this Plan: 
  

			
	  

	  	

	Tommy A. Valenta	  	Date
	President and Chief Executive Officer	  	 

  

 3

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