EMPLOYMENT AGREEMENT

This AGREEMENT is made November __, 2006 between American Basketball
Association, Inc., an Indiana Corporation, having its executive offices at 9421
Holliday Drive, Indianapolis, Indiana 46260 (the “Company”) and Joseph F. Newman
(the “Executive”).

RECITALS

WHEREAS, the parties desire to secure the employment of the Executive on the
terms and conditions of this Agreement.

NOW THEREFORE, in consideration of the recitals and the mutual covenants and
agreements of the parties set forth in this Agreement, the parties hereby agree
as follows:

1.

Employment and term. The Company shall employ The Executive, and The Executive
shall serve the Company as its Chief Executive Officer for a term beginning on
November ___, 2006 and ending on December 31, 2008.

2.

Duties. The Executive shall serve the Company faithfully and to the best of his
ability, devote reasonable time and energy to his employment, and use his best
efforts and ability to promote the Company’s interests. This Agreement shall not
be construed as preventing the Executive from engaging in or possessing
interests in other business ventures of every kind and description for his own
account; or from serving as a contractor, employee, director, officer, manager
or member in other business ventures of every kind and description for his own
account. The Executive also shall serve in one or more of the following
capacities: as a director of the Company, if elected by the stockholders. The
Executive shall also, subject to the provisions of paragraph 3, perform all
duties that the Board of Directors may at any time assign to him.

3.

Responsibilities. Subject to the control of the Board of Directors, The
Executive’s area of responsibility shall be that of Chief Executive Officer. The
Company shall not assign any duties to The Executive that are inconsistent with
those of Chief Executive Officer. The Executive shall be given all executive
powers and authority that are reasonably required to enable him to efficiently
discharge his duties.

4.

Compensation. The Company shall pay The Executive at an annual salary of
$160,000 as compensation for his services during the term of employment. In
addition, the Executive shall receive medical and dental insurance and other
fringe benefits provided to full-time, non-union employees of the Company.

5.

Business Expenses.   The Company shall pay or reimburse the Executive for all
ordinary and necessary business expenses which the Executive incurs in
performing his duties under this Agreement which are integrally and directly
related to the performance of the Executive’s duties

1

or which confer a direct or indirect benefit to the Executive so long as
reimbursement for such expense is generally available to all employees of the
Company on a non-discriminatory basis. Such expenses shall be paid or reimbursed
in accordance with the expense reimbursement policies of the Company in effect
from time to time.

6.

Termination of Employment

6.1

Termination Due to Death.  If the Executive dies during the Term, this Agreement
shall terminate as of the date of the Executive’s death and the Executive’s
benefits shall be determined in accordance with the survivor’s benefits,
insurance and other applicable programs of the Company then in effect.  Within
fifteen (15) days of the Executive’s death, the Company shall pay the
Executive’s designee or his estate that portion of his Salary which shall have
been earned through the termination date.  In addition, the Company shall pay to
the Executive’s estate or his designee the Salary Continuation Benefit (as
defined in Section 6.7) for a period equal to the then remaining term of this
Agreement as well as accrued performance bonuses.

6.2

Termination Due to Disability.  If the Executive suffers a Disability (as
defined in Section 6.7) during the Term, the Company shall have the right to
terminate this Agreement by giving the Executive Notice of Termination to which
has attached to it a copy of the medical opinion that forms the basis of the
determination of Disability.  The Executive’s employment shall terminate at the
close of business on the last day of the Notice Period (as defined in Section
6.7).

6.3

Upon the termination of this Agreement because of Disability, the Company shall
pay the Executive within fifteen (15) business days of the termination date that
portion of his Salary, at the rate then in effect as provided, which shall have
been earned through the termination date.  In addition, the Company shall pay to
the Executive the Salary Continuation Benefit for a period equal to the then
remaining term of this Agreement as well as accrued performance bonuses. The
Company shall provide the Executive with life, medical, dental, accident and
disability insurance coverage for the period of time that the Salary
Continuation Benefit is in place at the same coverage levels that are in effect
as of the termination date.  In lieu of the foregoing insurance coverage
benefits, the Company may pay the Executive an amount equal to the Executive’s
cost of obtaining comparable coverage.  The Executive shall also be entitled to
receive any applicable disability insurance benefits resulting from any
insurance or other employee benefit programs of the Company.

6.4

Termination by the Company for “Cause” or by the Executive Without “Good
Reason.”  At any time during the Term, the Company may terminate this Agreement
for “Cause” as defined in Section 6.7 by giving the Executive a Notice of
Termination, which has attached to it copies of the Board determination that
forms the basis of the Company’s action.  The Executive’s employment shall
terminate at the close of business on the last day of the Notice Period.

2

At any time during the Term, the Executive may terminate this Agreement without
“Good Reason” as defined in Section 6.7 hereof by giving the Board of Directors
of the Company a Notice of Termination.  The Executive’s employment by the
Company shall terminate at the close of business on the last day of the Notice
Period.

6.5

Within fifteen (15) business days after such termination date, the Company shall
pay the Executive that portion of his Salary, which shall have been earned
through the termination date. In addition, the Company shall pay to the
Executive the Salary Continuation Benefit for a period equal to the then
remaining term of this Agreement as well as accrued performance bonuses.

Termination by the Company Without “Cause” or by the Executive for “Good
Reason.”  At any time during the Term, the Board of Directors of the Company may
terminate this Agreement without Cause by giving the Executive a Notice of
Termination, and the Executive’s employment by the Company shall terminate at
the close of business on the last day of the Notice Period.

At any time during the Term, the Executive may terminate this Agreement with
“Good Reason” by giving the Company a Notice of Termination which describes the
actions, events or beliefs that form the basis of the Executive’s action.  The
Executive’s employment shall terminate at the close of business on the last day
of the Notice Period.

Within five (5) business days after such termination date, the Company shall pay
to the Executive that portion of his Salary which shall have been earned through
the termination date. In addition, the Company shall pay to the Executive the
Salary Continuation Benefit for a period equal to the then remaining term of
this Agreement.  The Company shall provide the Executive with life, medical,
dental, accident and disability insurance coverage for the period of time that
the Salary Continuation Benefit is in place at the same coverage levels that are
in effect as of the termination date.  In lieu of the foregoing insurance
coverage benefits, the Company may pay the Executive an amount equal to the
Executive’s cost of obtaining comparable coverage.

6.6

Termination by the Executive Upon Retirement.  At any time during the Term, the
Executive may terminate this Agreement by giving the Company Notice of
Termination advising the Company that he intends to voluntarily retire in
accordance with the Company’s retirement policies on a date specified in the
Notice of Termination.  The Executive’s employment shall terminate on the date
specified in the Notice of Termination.

6.7

Within fifteen (15) business days after such termination date, the company shall
pay the Executive that portion of his salary which shall have been earned
through the termination date.  In addition, the Company shall pay to the
Executive the Salary Continuation Benefit for a period equal to the then
remaining term of this Agreement as well as accrued performance bonuses.

Definitions

3

6.7.1

“Cause” means (a) the willful and continued failure of the Executive to perform
substantially the Executive’s duties owed to the Company after a written demand
for substantial performance is delivered to the Executive which specifically
identifies the nature of such non-performance, (b) the willful engaging by the
Executive in gross misconduct significantly and demonstrably injurious to the
Company, or (c) conduct by the Executive in the course of his or his employment
which is a felony or fraud that results in material harm to the Company.  No act
or omission on the part of the Executive shall be considered “willful” unless it
is done or omitted in bad faith or without reasonable belief that the action or
omission was in the best interests of the Company.  Notwithstanding the
foregoing, the Executive shall not be deemed to have been terminated for Cause
without (i) reasonable notice to the Executive setting forth the reasons for the
Company’s intention to terminate for Cause, (ii) an opportunity for the
Executive, together with his counsel, to be heard before the Board of Directors,
and (iii) delivery to the Executive of a Notice of Termination from the Board of
Directors finding that in the good faith opinion of three-quarters (3/4) of the
Board of Directors the Executive was guilty of conduct set forth in clause (a),
(b) or (c) above and specifying the particulars thereof in detail.

6.7.2

“Disability” means the inability, in the written opinion of a licensed physician
chosen by the Board of Directors, of the Executive, because of injury, illness,
disease or bodily or mental infirmity to perform a substantial portion of his
ordinary duties and that this condition has existed for at least six months and
will more probably than not extend for an additional six months into the future.

6.7.3

“Good Reason” means:

6.7.3.1

without the Executive’s express written consent and excluding for this purpose
an isolated, insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of notice thereof given
by the Executive, (i) the assignment to the Executive of any duties inconsistent
in any respect with the Executive’s position, authority, duties or
responsibilities as contemplated by Section 3, (ii) any other action by the
Company which results in a significant diminution in such position, authority,
duties or responsibilities, or (iii) any failure by the Company to comply with
any of the provisions of Section 4;

6.7.3.2

any requirement for the Executive to relocate outside of the metropolitan area
of his current residence or any relocation of the principal executive office of
the Company outside of Indianapolis, Indiana; or

6.7.3.3

any breach of any other material provision of this Agreement.

6.7.4

“notice of Termination” means a written notice delivered by one party notifying
the other party of the notifying party’s intention to terminate the Executive’s
employment pursuant to this Agreement.  A Notice of Termination shall not be

4

effective unless (a) it specifies the specific provision of Section 6 which
forms the basis of the proposed termination; (b) sets forth a proposed
termination date not less than fifteen (15) calendar days from the sending of
the Notice of Termination, and (c) otherwise complies with the requirements of
this Agreement.

6.7.5

“Notice Period” means the period between the sending of the Notice of
Termination and the proposed termination date set forth in such Notice.

6.7.6

“Salary Continuation Benefit” means an annual amount equal to the sum of:  (a)
the highest annualized Salary of the Executive in effect at any time within
three (3) years prior to the date of termination. An amount equal to one-twelfth
of the Salary Continuation Benefit shall be paid to the Executive or his
designee on the first day of each calendar month.

7.

Excess Parachute Payment Provisions

7.1

Additional Payments.  Anything in this Agreement to the contrary
notwithstanding, in the event that it shall be determined that any payment or
distribution by the Company to or for the benefit of the Executive (whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise) (a “Payment”) would be subject to the excise tax imposed
by Sections 280G and 4999 of the Code, or that any interest or penalties are
incurred by the Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, being hereinafter collectively
referred to as the “excise Tax”), then the Executive shall be entitled to
receive an additional payment (the “Gross-Up Payment”) in an amount equal to
such that after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes and Excise Tax) imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payments.

7.2

Other Provisions.  Notwithstanding the provisions of Section 7.1, all
determinations required to be made under this Section 7.2, including whether and
when the Gross-Up Payment is required and the amount of such Gross-Up Payment
including any determination of the parachute payments under Code Section
280G(b)(2), and the assumptions to be utilized in arriving at such
determinations shall be made by a nationally recognized certified public
accounting firm that is mutually selected by the Executive and the Company (the
“Accounting Firm”) which shall provide detailed supporting calculations both to
the Company and the Executive within 15 business days of the receipt of notice
from the Executive that there has been a Payment, or such earlier time as is
requested by the Company.  All fees and expenses of the Accounting Firm shall be
borne solely by the Company.  Any Gross-Up Payment shall be paid by the Company
to the Executive within five days of the receipt of the Accounting Firm’s
determination.  Any determination by the Accounting Firm shall be binding upon
the Company and the Executive.  As a result of uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that the Gross-Up Payment made will
have been an amount less than the Company should have paid pursuant to this
Section 7 (the “Underpayment”).  In the event that the Executive thereafter is
required to

5

make a payment of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive.  The obligations of the parties
under this Section 7 shall indefinitely survive the termination of the
Executive’s employment with the Company and the termination of this Agreement.

8.

Binding effect. This Agreement shall be binding upon and inure to the benefit of
the parties, their respective legal representatives, and any successor of the
Company, which shall be deemed substituted for the Company under the terms of
this Agreement. As used in this Agreement, the term “successor” shall include
any person, firm, Company or other business entity which at any time, whether by
merger, purchase or otherwise, acquires all or substantially all of the
Company’s assets or business.

9.

Elective positions. Nothing contained in this Agreement shall be construed to
abrogate, limit or affect the powers, rights and privileges of the Board of
Directors to remove The Executive as Chairman of the Board, President or Chief
Executive Officer of the Company, with or without cause. Similarly, nothing in
this Agreement shall prevent the Board of Directors from electing or appointing
a person other than The Executive as Chairman of the Board, President, or Chief
Executive Officer, as provided by law and the Company’s Bylaws.

10.

Review.  The terms of this agreement have been review and approved by a member
of the Board of Directors of the Company who is independent under the standards
applicable to the Company

11.

Arbitration. If the parties should disagree as to any matter under this
Agreement, the dispute shall be arbitrated in the following manner: The party
desiring arbitration shall serve upon the other party, by registered or
certified mail, return receipt requested, a written demand that the dispute be
submitted to arbitration. Within five days after the service of such demand,
each of the parties shall appoint an arbitrator and serve written notice by
registered or certified mail, return receipt requested, of the appointment upon
the other party. If either party falls within the specified time to appoint an
arbitrator and to serve notice of appointment, the other party shall be entitled
to appoint both arbitrators. The two arbitrators selected by the parties shall
select a third neutral arbitrator. The decision of any two arbitrators in
writing under oath shall be binding upon the parties and, unless extended in
writing by the parties, such decision shall be made within thirty days following
the close of the hearing. Each party shall pay the fees and expenses of the
chosen arbitrator, and shall pay one-half of the fees and expenses of the third
arbitrator. Except as modified herein, the arbitration law of the State of
Indiana shall govern with respect to this Paragraph.

12.

Entire agreement. This Agreement supersedes all other agreements previously made
between the parties relating to its subject matter. There are no other
understandings or agreements.

13.

Notice. Any notice to be delivered under this Agreement shall be given in
writing and delivered, personally or by certified mail, return receipt
requested, postage prepaid, addressed to the Company or The Executive at their
last known addresses.

14.

Non-waiver. No delay or failure by either party to exercise any right under this
Agreement, and no partial or single exercise of that right, shall constitute a
waiver of that or any other right.

6

15.

Headings. Headings in this Agreement are for convenience only and shall not be
used to interpret or construe its provisions.

16.

Governing law. This Agreement shall be construed in accordance with and governed
by the laws of the State of Indiana.

17.

Counterparts. This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original but all of which together shall constitute
one and the same instrument.

In witness whereof, American Basketball Association, Inc has caused this
Agreement to be executed in its corporate name by its President and attested to
by its Secretary, who have been thereunto duly authorized, and Joseph F. Newman
has hereunto set his hand and seal, as of the day and year first above written.

Independent Director

American Basketball Association, Inc

By: _______________________

     Joseph F. Newman, its President

Attest:

By: __________________________

      Richard P. Tinkham, Jr., its Secretary

Joseph F. Newman

________________

Joseph F. Newman

7