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. Employees 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 Employees 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. Employees employment under this Agreement shall be full-time employment, and Employee shall devote Employees entire working time to Employees 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 Employees personal attention during Fountains regular business hours which directly or otherwise interferes with Employees attention to or performance of Employees 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 Employees 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).

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