<PAGE>
                                                                   EXHIBIT 10.4


                              EMPLOYMENT AGREEMENT

         This Agreement made effective as of July 1, 2004 by and between
Private Business, Inc., a Tennessee corporation (the "Company"), and Henry M.
Baroco (the "Executive").

         In consideration of the mutual covenants contained in this Agreement,
the parties hereby agree as follows:

                                   SECTION I
                                   EMPLOYMENT

         The Company desires to employ the Executive, and the Executive agrees
to be employed by the Company upon the terms and conditions provided in this
Agreement.

                                   SECTION II
                         POSITION AND RESPONSIBILITIES

         During the Period of Employment, as such term is defined herein below,
the Executive agrees to serve as Chief Executive Officer and as a member of the
Board of Directors of the Company and to be responsible for the typical
management responsibilities expected of a chief executive officer of a
similarly-sized publicly-traded and listed company and such other
responsibilities as may be assigned to Executive by the Board of Directors of
the Company consistent with the responsibilities expected of a chief executive
officer of a similarly-sized, publicly-traded and listed company.

                                  SECTION III
                                TERMS AND DUTIES

         A.       Period of Employment.

         The period of Executive's employment under this Agreement shall begin
as of July 1, 2004, and shall continue through June 30, 2006 (the "Initial
Term"), subject to extension or termination as provided in this Agreement
("Period of Employment"). Upon expiration of the Initial Term, the Period of
Employment shall automatically extend for additional one year periods unless
either party gives written notice at least one hundred eighty (180) days in
advance of the expiration of the then current Period of Employment of such
party's intent not to extend the Period of Employment for an additional year.

         B.       Duties.

         During the Period of Employment, the Executive shall devote
substantially all of his business time, attention and skill to the business and
affairs of the Company and its subsidiaries; provided, however, that it shall
not be a violation of this Agreement for the Executive to (i) devote reasonable
periods of time to charitable and community activities and, with the approval
of the Company, industry or professional activities, and/or (ii) manage
personal business interests and investments, so long as such activities do not
interfere with the performance of the Executive's responsibilities under this
Agreement. The Executive will perform faithfully the


<PAGE>
Chief Executive Officer duties that may be reasonably assigned to him by the
Board of Directors of the Company. The Executive shall report directly to the
Board of Directors of the Company.

                                   SECTION IV
                                  COMPENSATION

         For all services rendered by the Executive in any capacity during the
Period of Employment, the Executive shall be compensated as follows:

         A.       Base Salary.

         The Company shall pay the Executive an annual base salary ("Base
Salary") of Two Hundred Seventy Five Thousand Dollars ($275,000) for the first
year of this Agreement, with increases, if any, thereafter as determined by the
Board of Directors in its sole discretion. The Base Salary shall be payable
according to the customary payroll practices of the Company, but in no event
shall the payments be made less frequently than on a monthly basis. Executive's
Base Salary in subsequent years shall not be reduced by the Company.

         B.       Annual Incentive Award.

         The Company shall pay annual incentive compensation awards to the
Executive as may be granted by the Board of Directors or the Compensation
Committee under any executive bonus or incentive plan in effect from time to
time (the "Annual Incentive Award"). Beginning with the first year of the
Agreement and continuing thereafter, the Annual Incentive Award to Executive
shall be paid pursuant to the attached Schedule A, whereby Executive's bonus
shall be calculated as a percentage of his Base Salary based upon the Company's
annual pretax net income. The entitlement to such Annual Incentive Award, if
any, shall be determined by the Board (or a committee of the Board) no later
than thirty (30) days following the filing of the Company's financial
statements for the applicable fiscal year with the Securities and Exchange
Commission. The Annual Incentive Award, if any, will be paid to the Executive
at the end of the Company's immediately succeeding payroll cycle following the
determination of the Board (or a committee of the Board).

         C.       Benefits.

         The Company shall provide Executive during the Term any additional
compensation and benefits plans or programs maintained by Company from
time-to-time in which other senior executives of Company participate on terms
comparable to those applicable to such other senior executives generally
(commensurate with Executive's position with Company). These benefits currently
consist of: four weeks annual vacation; provision of cell phone and other
electronic communications devices (including payment for monthly and usages
fees related thereto); participation in Company retirement and pension plans;
and Company paid insurance benefits described on the attached Schedule B.

         D.       New Stock Option Grants.

         New non-qualified stock option grants shall be made to Executive in
accordance with the terms of Schedule C.


                                       2
<PAGE>
         E.       Relocation Expenses.

         The Company shall reimburse Executive for up to Seventy Five Thousand
Dollars ($75,000) in relocation expenses associated with his relocation to the
Nashville, Tennessee greater metropolitan area. The expenses that may be
reimbursed include, but are not limited to, closing costs and realtor fees
incurred in the sale and/or purchase of a residence. The Company shall
reimburse Executive within thirty (30) days of Executive's submission of such
expenses.

                                   SECTION V
                                    BUSINESS

         The Company acknowledges and agrees that Executive shall be based in
the Nashville, Tennessee greater metropolitan area and shall on an occasional
basis perform his duties and obligations in various other geographic locations.
The Company shall reimburse the Executive for all reasonable travel,
accommodations and other expenses incurred by the Executive in connection with
the performance of his duties and obligations under this Agreement wherever
they may arise.

                                   SECTION VI
                                   DISABILITY

         A.       Effect of Disability.

         In the event of disability of the Executive during the Period of
Employment, the Company will continue to pay the Executive according to the
compensation provisions of this Agreement during the period of his disability,
until such time as Executive's long term disability insurance benefits are
available. However, in the event the Executive is disabled for a continuous
period of six (6) months after the Executive first becomes disabled, the
Company may terminate the employment of the Executive. In this case, normal
compensation will cease except for any and all payments and/or benefits to be
made available to Executive and Executive's spouse under Section XII of this
Agreement, earned but unpaid Base Salary and Annual Incentive Awards, which
awards would be payable on a prorated basis for the year in which the
disability occurred, and all other unpaid benefits to which he is otherwise
entitled under any plan, policy or program of the Company applicable to
Executive as of the date of Termination.

         B.       Obligations During Disability.

         During the period the Executive is receiving payments of either
regular compensation or disability insurance described in this Agreement and as
long as he is physically and mentally able to do so, the Executive shall
furnish information and assistance to the Company and from time to time will
make himself available to the Company to undertake assignments consistent with
his prior position with the Company and his physical and mental health. If the
Company fails to make a payment or provide a benefit required as part of the
Agreement, the Executive's obligation to fulfill information and assistance
will end.


                                       3
<PAGE>
         C.       Definition of Disability.

         The term "disability" will have the same meaning as under any
disability insurance provided pursuant to this Agreement or otherwise.

                                  SECTION VII
                                     DEATH

         In the event of the death of the Executive during the Period of
Employment, the Company's obligation to make payments under this Agreement
shall cease as of the date of death, except for any and all payments and/or
benefits to be made available to Executive and Executive's spouse under Section
XII of this Agreement, earned but unpaid Base Salary and the Annual Incentive
Award, which will be paid on a prorated basis for that year in which the death
occurred, and all other unpaid benefits to which he is otherwise entitled under
any plan, policy or program of the Company applicable to Executive as of the
date of Termination.

                                  SECTION VIII
                      EFFECT OF TERMINATION OF EMPLOYMENT

         A.       Payments Upon a Without Cause Termination.

         If the Executive's employment terminates due to a Constructive
Discharge or a Without Cause Termination, (each as defined later in Paragraph D
below), the Company shall pay (no later than thirty (30) days following such
Constructive Discharge or Without Cause Termination) the Executive in a lump
sum upon such Termination or Constructive Discharge an aggregate amount equal
to the sum of (i) one hundred fifty percent (150%) of his Base Salary as in
effect at the time of such termination, plus (ii) the average of his Annual
Incentive Awards paid for the two prior two years. Any earned but unpaid Base
Salary shall also be paid in a lump sum at the time of termination. Such
termination shall not relieve the Company of its obligations with respect to
any and all payments and/or benefits to be made available to Executive and
Executive's spouse under Section XII of this Agreement.

         B.       Payments Upon a Termination for Cause or a Voluntary
                  Termination.

         If the Executive's employment terminates due to a Termination for
Cause or a Voluntary Termination or if either party to this Agreement elects
not to extend the Period of Employment, earned but unpaid Base Salary will be
paid on a pro-rated basis for the year in which the termination occurs, all
unpaid benefits to which he is otherwise entitled under any plan, policy or
program of the Company applicable to Executive through the date of Termination
will be paid to executive, and no other payments will be made by the Company to
Executive or on behalf of Executive. Notwithstanding the foregoing, such
termination shall not relieve the Company of its obligations with respect to
any and all payments and/or benefits to be made available to Executive and
Executive's spouse under Section XII of this Agreement. Upon termination of the
Executive's employment, the Period of Employment will cease as of the date of
the termination.


                                       4
<PAGE>
         C.       Treatment of Options.

         If the terms of Executive's stock options ("Options") or restricted
stock granted to the Executive under any stock option program or plan (each and
collectively, the "Plan") require Executive to exercise all such options within
a specified time period following the termination and Executive is restricted
by securities laws from selling the underlying stock within such period, then
the Board may in its sole discretion extend the exercise period until such
restrictions no longer exist.

         D.       Definitions.

         For this Agreement, the following defined terms shall have the
meanings described below:

                  1.       A "Termination for Cause" means termination of the
Executive's employment by the Company's Board of Directors, by written notice
to the Executive specifying the event(s) relied upon for such termination which
must be based on, (i) a willful refusal by Executive to substantially follow a
lawful order of the Board of Directors, subject, however, to Executive's right
to receive written notice of the order not followed by Executive and the
opportunity to promptly follow the order; (ii) Executive's willful engagement
in conduct materially injurious to the business interests of the Company or any
of its subsidiaries and affiliates as a group (as determined by the Board of
Directors in its reasonable judgment); (iii) Executive's indictment or
conviction for any felony, which in the reasonable judgment of the Board
materially affects Employee's ability to perform his duties pursuant to the
Agreement; (iv) Executive's refusal to relocate to the Nashville, Tennessee
metropolitan area; or (v) Executive's material breach of his duties,
responsibilities and obligations under this Agreement (except due to
Executive's incapacity as a result of physical or mental illness) that has not
been corrected or remedied within 60 days after Executive's receipt of written
notice from the Board specifying such breach; provided, however, (A) such cure
period may be extended if Executive is working diligently to cure such breach
and reasonably needs an extension to effect such cure, and (B) no such cure
period will be provided if, in the Board of Directors' reasonable judgment,
such breach cannot be sufficiently corrected or remedied so as to avoid any
material detriment to the Company.

                  2.       A "Constructive Discharge" means termination of the
Executive's employment by the Executive due to a failure of the Company to
fulfill its obligations under this Agreement in any material respect, including
(i) a change in geographic location of the position (provided such re-location
exceeds thirty-five (35) miles); (ii) a reduction in Executive's Base Salary;
(iii) a failure by the Company to require a successor corporation of the
Company to honor the terms of this Agreement; or (iv) any material change by
the Company in the functions, duties, or responsibilities which would reduce
the title, ranking or level, reporting lines, responsibility, importance or
scope of the Executive's position. The Executive shall provide the Company a
written notice which describes the circumstances being relied on for the
termination with respect to the Agreement within thirty (30) days after the
event giving rise to the notice. The Company will have thirty (30) days to
remedy the situation prior to the termination for Constructive Discharge.


                                       5
<PAGE>
                  3.       A "Without Cause Termination" means a termination of
the Executive's employment (a) by the Company for any reason other than a
Termination for Cause or as a result of the death or disability of Executive;
or (b) by Executive as a result of a Constructive Discharge.

                  4.       A "Voluntary Termination" means a termination of the
Executive's employment by the Executive not as a result of a Constructive
Discharge.

                                  SECTION VIII
                      OTHER DUTIES OF THE EXECUTIVE DURING
                       AND AFTER THE PERIOD OF EMPLOYMENT

         A.       Cooperation.

         The Executive will, with reasonable notice during or after the Period
of Employment, furnish information as may be in his possession and cooperate
with the Company as may reasonably be requested in connection with any claims
or legal actions in which the Company is or may become a party.

         B.       Confidential Information.

         The Executive recognizes and acknowledges that all information
pertaining to the affairs, business, clients, customers or other relationships
of the Company, as hereinafter defined, is confidential and is a unique and
valuable asset of the Company. Access to and knowledge of this information are
essential to the performance of the Executive's duties under this Agreement.
The Executive will not during the Period of Employment or for an eighteen (18)
month period thereafter except to the extent reasonably necessary in
performance of the duties under this Agreement, give to any person, firm,
association, corporation or governmental agency any confidential information
concerning the affairs, business, clients, customers or other relationships of
the Company except as required by law. The Executive will not make use of this
type of confidential information for his own purposes or for the benefit of any
person or organization other than the Company. The Executive will also use his
best efforts to prevent the disclosure of this information by others. All
records, memoranda, and similar documents relating to the business of the
Company whether made by the Executive or otherwise coming into his possession
are confidential and will remain the property of the Company. For purposes of
this Agreement "confidential information" does not include (i) information that
is or becomes generally available to the public other than as a result of
disclosure by Executive or by another party in violation of a similar
obligation of confidentiality, (ii) information that is or becomes available to
Executive on a non-confidential basis from a source not subject to a
confidentiality obligation to Company, (iii) information that was in
Executive's possession on a non-confidential basis prior to Company's
disclosure to Executive, or (iv) information that is independently developed by
Executive without the use of the confidential information after the Term.

         C.       Protection of Company Business Interests.

         During the Period of Employment and for a eighteen (18) month period
following termination of the Period of Employment, so long as the Company is in
compliance in all


                                       6
<PAGE>
material respects with its obligations under the Agreement: (i) the Executive
without prior express written approval by the Board of Directors of the Company
shall not directly or indirectly own or hold any Proprietary Interest (as
defined below) in or be employed by or receive compensation from any party
engaged in competition with the business of the Company or the Company's
product lines as they existed upon termination of the Period of Employment;
(ii) the Executive without express prior written approval from the Board of
Directors, will not solicit any of the then current clients of the Company or
discuss with any employee of the Company information related to the operation
of any business intended to compete with the Company; and (iii) the Executive
will not directly or indirectly hire any employee of the Company during the
period while such person is an employee of the Company or for a period of six
(6) months thereafter or solicit or encourage any such employee to leave the
employ of the Company. For the purposes of the Agreement, a "Proprietary
Interest" means legal or equitable ownership, whether through stock holdings or
otherwise, of a debt or equity interest (including options, warrants, rights
and convertible interests) in a business firm or entity, other than ownership
of less than 5% of any class of equity interest in a publicly-held company. The
Executive acknowledges that the covenants contained herein are reasonable as to
geographic and temporal scope.

         D.       Non-Disparagement.

         During the Period of Employment and following termination of the
Period of Employment, the Executive shall not disparage, verbally or in
writing, the Company or any of its employees, officers, or directors.

         E.       Remedies.

         The Executive acknowledges that his breach or threatened or attempted
breach of any provision of Section IX would cause irreparable harm to the
Company not compensable in monetary damages and that the Company shall be
entitled, in addition to all other applicable remedies, to a temporary and
permanent injunction and a decree for specific performance of the terms of
Section IX without being required to prove damages or furnish any bond or other
security.

         F.       Effect of Breach by the Company.

         The Executive shall not be bound by the provisions of Section IX in
the event of the default by the Company in its obligations under this Agreement
that are to be performed upon or after termination of this Agreement that has
not been corrected or remedied within thirty (30) days after Company's receipt
of written notice from the Executive specifying such default.

         G.       Scope of Restrictions.

         If the period of time or other restrictions specified in this Section
should be adjudged unreasonable at any proceeding, then the period of time or
such other restrictions shall be reduced by the elimination or reduction of
such portion thereof so that such restrictions may be enforced in a manner
adjudged to be reasonable.


                                       7
<PAGE>
                                   SECTION IX
                          INDEMNIFICATION, LITIGATION

         The Company shall indemnify the Executive to the fullest extent
permitted by the laws of the state of incorporation in effect at that time, or
certificate of incorporation and bylaws of the Company whichever affords the
greater protection to the Executive. The Executive will be entitled to any
insurance proceeds related to any award, or any fees or expenses incurred by
Executive in connection with any action, suit or proceeding brought by a
third-party to which he may be made a party by reason of being a director or an
officer of the Company. The Company will use its best efforts to obtain
directors and officers liability insurance covering the Executive in an amount
and with terms and provisions reasonably acceptable to Executive. In the event
the Company obtains such insurance for any employee, officer, director or
affiliate, the Company shall cause such insurance to cover Executive.

                                   SECTION X
                               CHANGE IN CONTROL

         A.       Effect of Change-in-Control.

         In the event there is a Change in Control (as defined below) and the
obligations of this Agreement are not assumed, the Company shall pay the
Executive the amounts that would be due under this Agreement as if a "Without
Cause Termination" had occurred.

         B.       Definition of Change-in-Control.

         A "Change in Control" shall be deemed to have occurred if (i) a tender
offer shall be made and consummated for the ownership of more than fifty
percent (50%) of the outstanding voting securities of the Company, (ii) the
Company shall be merged or consolidated with another corporation or entity and
as a result of such merger or consolidation less than seventy-five percent
(75%) of the outstanding voting securities of the surviving or resulting
corporation or entity shall be owned in the aggregate by the former
shareholders of the Company, as the same shall have existed immediately prior
to such merger or consolidation, (iii) the Company shall sell all or
substantially all of its assets to another corporation or entity which is not a
wholly-owned subsidiary, or (iv) a person, within the meaning of Section
3(a)(9) or of Section 13 (d)(3) (as in effect on the date hereof) of the
Securities and Exchange Act of 1934 ("Exchange Act")), shall acquire more than
fifty percent (50%) of the outstanding Voting securities of the Company
(whether directly, indirectly, beneficially, or of record). For purposes
hereof, ownership of voting securities shall take into account and shall
include ownership as determined by applying the provisions of Rule 13 d-3
(d)(1)(i) (as in effect on the date hereof) pursuant to the Exchange Act.

         C.       Excise Tax Indemnification.

         If the Internal Revenue Service asserts, or if Executive or the
Company is advised in writing by a nationally recognized accounting firm, that
any payment in the nature of compensation to, or for the benefit of, Executive
from the Company (or any successor in interest) constitutes an "excess
parachute payment" under section 280G of the Internal Revenue Code, whether
paid pursuant to this Agreement or any other agreement, and including property


                                       8
<PAGE>
transfers pursuant to securities and other employee benefits that vest upon a
change in the ownership of effective control of the Company (collectively, the
"Excess Parachute Payments") the Company shall pay to Executive, on demand, a
cash sum sufficient (on a grossed-up basis) to indemnify Executive and hold
him harmless from the following (the "Tax Indemnity Payment"):

                  (i)      The amount of excise tax under section 4999 of the
Internal Revenue Code on the entire amount of the Excess Parachute Payments and
all Tax Indemnity Payments to Executive pursuant to this subsection C;

                  (ii)     The amount of all estimated local, state, and
federal income taxes on all Tax Indemnity Payments to Executive pursuant to
this subsection C (determined in each case at the highest marginal tax rate);
and

                  (iii)    The amount of any fines, penalties, or interest that
have been or potentially will be, assessed in respect of any excise or income
tax described in the preceding clauses (i) or (ii); so the amounts of Excess
Parachute Payments received by Executive will not be diminished by an excise
tax imposed under section 4999 of the Internal Revenue Code or by any local,
state, or federal income tax payable in respect of the Tax Indemnity Payments
received by Executive pursuant to this subsection C.

                                   SECTION XI
                               WITHHOLDING TAXES

         The Company may directly or indirectly withhold from any payments
under this Agreement all federal, state, city or other taxes that shall be
required pursuant to any law or governmental regulation.

                                  SECTION XII
                           EFFECTIVE PRIOR AGREEMENTS

         This Agreement contains the entire understanding between the Company
and Executive with respect to the subject matter and supersedes any and all
prior employment or severance agreements between the Company, and its
affiliates, and the Executive. Notwithstanding the foregoing, the Company and
Executive both hereby agree to the following and acknowledge that the following
obligations shall survive termination of the Period of Employment:

         A.       The Company shall pay Executive the Four Hundred Sixty Five
Thousand Dollar ($465,000) due to Executive under the 2003 amendment to
Executive's prior employment agreement by paying to Executive the sum of Twenty
Thousand Dollars ($20,000) per month beginning June 1, 2004, and continuing on
the first day of each month thereafter for twenty three (23) months, with the
balance of Five Thousand Dollars ($5,000) due on May 1, 2006.

         B.       For the period from the Termination Date, which includes
termination for any reason including death and disability, until the date
Executive reaches the age sixty-five (65) (or, with respect to benefits
provided to Executive's spouse, until the date Executive's spouse reaches the
age sixty-five (65)) (the "Continuation Period"), the Company shall at its
expense on behalf of the Executive and his spouse arrange for the continuation
of the insurance benefits as described


                                       9
<PAGE>
on Schedule B. Nothing provided herein shall be construed to limit Executive's
post-employment continuation rights under COBRA, and to the extent any such
benefits are continued pursuant to COBRA, the Company shall periodically
reimburse Executive for his out-of-pocket premiums for benefits continued
pursuant to COBRA. The Company's obligation hereunder with respect to the
foregoing benefits shall be limited to the extent that the Executive obtains
any such benefits pursuant to a subsequent employer's benefit plans, in which
case the Company may reduce the coverage of any benefits it is required to
provide the Executive hereunder as long as the aggregate coverages and benefits
of the combined benefit plans is no less favorable to the Executive than the
coverages and benefits required to be provided hereunder. This Paragraph shall
not be interpreted so as to limit any benefits to which the Executive or his
dependents or beneficiaries may be entitled under any of the Company's employee
benefit plans, programs or practices following the Executive's termination of
employment, including without limitation, retiree medical and life insurance
benefits.

                                  SECTION XIII
              ASSIGNMENT; CONSOLIDATION, MERGER OR SALE OF ASSETS

         Neither Company nor Executive may assign any rights or delegate any
obligations under this Agreement without the prior written consent of the other
party; provided that nothing in this Agreement shall preclude the Company from
consolidating or merging into or with, or transferring all or substantially all
of its assets to, another corporation or entity and to assign this Agreement
and all obligations and undertakings of the Company hereunder in connection
therewith without the consent of Executive. Upon such a Consolidation, Merger
or Sale of Assets, the term "the Company" as used will mean the other
corporation or entity and this Agreement shall continue in full force and
effect. This Section XIII is not intended to modify or limit the rights of the
Executive hereunder, including without limitation, the rights of Executive
under Section X.

                                  SECTION XIV
                                  MODIFICATION

         This Agreement may not be modified or amended except in writing signed
by the parties. No term or condition of this Agreement will be deemed to have
been waived except in writing by the party charged with waiver. A waiver shall
operate only as to the specific term or condition waived and will not
constitute a waiver for the future or act on anything other than that which is
specifically waived.

                                   SECTION XV
                           GOVERNING LAW; ARBITRATION

         This Agreement has been executed and delivered in the State of
Tennessee its validity, interpretation, performance and enforcement shall be
governed by the laws of that state.

         Any dispute among the parties hereto shall be settled by arbitration
in Nashville, Tennessee in accordance with the rules then obtaining of the
American Arbitration Association and judgment upon the award rendered may be
entered in any court having jurisdiction thereof.


                                      10
<PAGE>
                                  SECTION XVI
                                    NOTICES

         All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been made when delivered or
mailed first-class postage prepaid by registered mail, return receipt
requested, or when delivered if by hand, overnight delivery service or
confirmed facsimile transmission, to such addresses as may have been furnished
by one party to the other party in writing.

                                  SECTION XVII
                               BINDING AGREEMENT

         This Agreement shall be binding on the parties' successors, heirs and
assigns.


                                      11
<PAGE>
         IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.


                                        PRIVATE BUSINESS, INC.

                                        By: /s/ Gerard M. Hayden, Jr.
                                            -----------------------------------
                                        Title: Chief Financial Officer
                                               --------------------------------


                                        EXECUTIVE:

                                        /s/ Henry M. Baroco
                                        ---------------------------------------
                                        Henry M. Baroco


                                      12
<PAGE>
                                  SCHEDULE A

                                 BONUS SCHEDULE

                 EXECUTIVE'S BONUS CALCULATION FOR FISCAL 2004


<TABLE>
<CAPTION>
ACTUAL $ OF COMPANY PRETAX                              BONUS (AS PERCENTAGE OF SALARY)
  NET INCOME(1) IN 2004                                    TO BE PAID TO EXECUTIVE

<S>                                                     <C>
    if less than $3,218,850                                         0%
if between $3,218,850 and $3,830,707                               33%
if between $3,830,707 and $4,442,563                               75%
if between $4,442,563 and $5,972,204                              100%
   if greater than $5,972,204                                     125%
</TABLE>

                 EXECUTIVE'S BONUS CALCULATION FOR FISCAL 2005

<TABLE>
<CAPTION>
ACTUAL $ OF PRETAX                                    BONUS (AS A PERCENTAGE OF
NET INCOME IN 2005                                 SALARY) TO BE PAID TO EXECUTIVE

<S>                                                <C>
if Pretax Net Income for 2005 is below
   80% of Budgeted Amount(2)                                     0%
if Pretax Net Income for 2005 is between
   80% and 90% of Budgeted Amount                               33%
if Pretax Net Income for 2005 is between
   90% and 100% of Budgeted Amount                              75%
if Pretax Net Income for 2005 is
   between 100% and 125% of Budgeted
               Amount                                          100%
          Greater than 125%                                    150%
</TABLE>


Executive's bonus calculation after fiscal 2005 shall be based upon the
foregoing formula, pro rated for partial years as appropriate.

---------
(1)      For purposes of this Schedule A, Pretax Net Income shall mean the
         actual pretax net income of the Company for the fiscal year after
         giving effect to payments of Executive's bonus payment as provided for
         in this Agreement. The targets are based upon budgeted amounts for
         fiscal 2004 less $1,676,000 of one-time charges related to the January
         2004 Lightyear transaction.

(2)      The Budgeted Amount shall be an amount determined by the Company's
         Board of Directors following Fiscal 2004.


                                      13
<PAGE>
                                   SCHEDULE B

                       DESCRIPTION OF INSURANCE BENEFITS

During the Period of Employment or as otherwise agreed to the Company will
continue to provide and pay the insurance premiums listed below:

PLAN                                                      COVERED
                                                          PERSONS

Medical -- BuyUp Plan                                   Employee + 1
(Company pays deductibles)

Dental                                                  Employee + 1
(Company pays deductibles)

Vision                                                  Employee + 1
(Company pays deductibles)

Short Term Disability, Long Term
Disability, AD & D, Group Life                          Employee Only
(Company pays deductibles)

Supplemental Income Protection
(Company pays deductibles)                              Employee Only

Voluntary Benefit -- Accident,
Cancer, Hospital & Intensive
Care                                                    Employee + 1
(Company pays deductibles)


                                      14
<PAGE>
                                   SCHEDULE C

                               NEW OPTION GRANTS

The Compensation Committee has adopted, and the Company's shareholders have
approved a new stock option plan (the "Stock Option Plan"). Pursuant to the
Stock Option Plan, the Company will issue to Executive immediately following
approval of this Employment Agreement, an option to purchase one hundred
thousand (100,000) shares of common stock with a fair market value exercise
price. Executive's options will not vest until the seventh anniversary of the
grant and only then if Executive is still employed by the Company or its
successor; provided, however, that in each of the first five years of the
option term, Executive shall receive accelerated vesting with respect to twenty
thousand (20,000) options if (but only if) the Company achieves pre-determined
profitability levels as established by the Board of Directors in its sole
discretion sufficient to result in a payout of 100% of the cash bonus in
Executive's employment contract. Vesting of the options shall not be
accelerated upon a change-in-control transaction, and the Company shall cause
any successor to the Company in a change-in-control transaction to assume the
Company's obligations thereunder. In the event that Executive's employment
under this Agreement is terminated, such options may be exercised, to the
extent then vested and not previously exercised, in accordance with the
provisions of the Stock Option Plan.


                                       15