<PAGE>

                                                                    Exhibit 10.8

                              EMPLOYMENT AGREEMENT

     THIS AGREEMENT is by and between ECOLOGY COATINGS, INC., a California
corporation (the "Company"), and ADAM S. TRACY (the "Executive") and is entered
to be effective as of November 1, 2006 (the "Effective Date").

                                    RECITALS

     WHEREAS, the Board of Directors of the Company (the "Board") has determined
that it is in the best interests of the Company and its shareholders to assure
that the Company will have the continued employment and dedication of the
Executive; and

     WHEREAS, the Board has further determined that it is desirable to provide
the Executive with compensation and benefits terms which adequately compensate
the Executive for the services he renders to the Company, and, to ensure that
such compensation and benefits are consistent with those of like executives of
other public companies.

                                    AGREEMENT

     Now, therefore, it is hereby agreed as follows:

     1. EMPLOYMENT PERIOD. The term of this Agreement shall commence as of the
Effective Date and shall expire, subject to earlier termination of employment as
hereinafter provided, on November 1, 2008 (the "Employment Period"); provided,
however, that on any day prior to and including November 1, 2008, the Employment
Period may be extended by the Company for an additional year by written notice
to the Executive. This Agreement may be terminated prior to or on the last day
of the Employment Period by (i) the Company for Cause (as defined in Section 3.2
below), (ii) the Executive for Good Reason (as defined in Section 3.3 below) or
(iii) the Company or the Executive upon thirty (30) days written notice given by
one party to the other party for any reason except Death or Disability.

     2. TERMS OF EMPLOYMENT.

          2.1 Position and Duties.

               2.1.1 Position. During the Employment Period, the Executive will
be employed in an executive capacity in the position of a Vice President of the
Company, or in other such position as designated by the Board, at its office in
Bloomfield Hills, Michigan or such other place designated by the Board.

               2.1.2 Duties.

                    2.1.2.1 During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is entitled, the
Executive will devote his full attention and time to the business and affairs of
the Company. In the position of a Vice President the Executive will report to,
and undertake such duties, tasks and responsibilities as are assigned to him by,
the Chairman or other party designated by the Chairman, or should he fail to
<PAGE>

designate such other individual, to the Board. The Executive will use his best
efforts to perform faithfully and efficiently such duties, tasks and
responsibilities.

                    2.1.2.2 While employed hereunder, the Executive agrees to
devote all of his business time, attention, skill and efforts to the faithful
and efficient performance of his duties under this Agreement; provided, however,
that the Executive may engage in the following activities so long as they are
approved in advance by the Board and do not interfere in any material respect
with the performance of Executive's duties and responsibilities hereunder: (i)
serve on corporate, civic or charitable boards or committees and (ii) deliver
lectures, fulfill speaking engagements or teach on a part-time basis at
educational institutions.

          2.2 Compensation.

               2.2.1 Base Salary. The Executive shall receive an annual base
salary of One Hundred thousand dollars 00/100 ($100,000.00) from the Effective
Date through November 1, 2008. Thereafter, the Board or the Compensation
Committee of the Board (the "Committee") may review the Executive's salary and
total cash compensation within one hundred twenty (120) days of the end of each
of the Company's fiscal years during the Employment Period to determine what, if
any, increases shall be made thereto. The base salary payable to the Executive
in any given year is hereafter referred to as the "Annual Base Salary." Any
increase in the Annual Base Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. The Annual Base Salary shall
not be reduced after any increase and the term "Annual Base Salary," as used in
this Agreement, shall refer to the Annual Base Salary as increased. The Annual
Base Salary shall in all instances be payable in twenty-four (24) equal
semi-monthly installments.

               2.2.2 Annual Bonus and Option Plans. The Executive shall also be
eligible to participate in any applicable Company bonus plan or program, stock
option, restricted stock or other plan or program in effect immediately prior to
the Effective Date, or put into effect by the Board at any time after the
Effective Date or the Amendment Effective Date.

               2.2.3 Grant of Stock Options. The Company shall issue the
Executive options to purchase one hundred fifty thousand (150,000) shares of the
Company's common stock after completion of its first private placement to
investors after the Effective Date of this Agreement. The exercise price of the
options shall be equal to the price of the common stock sold in the private
placement. The options shall vest as follows: 100% on the second anniversary of
the Effective Date. The options issued under this Section 2.2.3 have a ten-year
term from the date of their issue, and will be incentive stock options to the
extent allowable under the Internal Revenue Code and non-qualified options as to
the balance.

               2.2.4 Incentive, Savings and Retirement Plans. During the
Employment Period, the Executive shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and programs
applicable generally to other executives of the Company, as the same may be
amended from time to time, but in no event shall such plans, practices, policies
and programs provide the Executive with incentive opportunities, savings
opportunities and retirement benefit opportunities, in each case, less
favorable, in the aggregate, than the most favorable of those provided by the
Company to other executives of the Company; provided,


                                       -2-

<PAGE>

however, the dollar value awarded Executive in the reasonable discretion of
management need not be equal to that awarded to all other executives.

               2.2.5 Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be eligible
for participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company (including, without
limitation, medical, prescription, dental, disability, salary continuance,
employee life, group life, accidental death and travel accident insurance plans
and programs, collectively referred to in this Section 2.2.5 as the "Welfare
Benefit Plans") to the extent applicable generally to other executives of the
Company, but in no event shall such Welfare Benefit Plans, programs provide the
Executive with benefits which are less favorable, in the aggregate, than the
most favorable of such Welfare Benefit Plans provided generally at any time
after the Effective Date to other executives of the Company. If the Executive
elects to opt out of any or all of the foregoing Welfare Benefit Plans that the
Company offers because Executive has his own coverage in such areas, the Company
will reimburse the Executive for the reasonable cost of such coverage, but only
to the extent that such cost does not exceed cost of the Company providing
coverage under its own Welfare Benefit Plans directly to the Executive.

               2.2.6 Expenses. During the Employment Period, the Executive shall
be entitled to receive prompt reimbursement for all reasonable expenses incurred
by the Executive in the conduct of Company business.

               2.2.7 Vacation. During the Employment Period, the Executive shall
be entitled to paid vacation of two weeks annually and otherwise be in
accordance with the plans, policies, programs and practices of the Company in
all respects as in effect generally at any time after the Effective Date with
respect to other executives of the Company.

               2.2.8 Bar Examination Fees. The Company shall also reimburse the
Executive for any fees related to obtaining membership to the bar of any
jurisdiction of which the Company requests the Executive to become a member.

               2.2.9 No Management Fees. In no event shall the Executive be
entitled to receive any additional compensation for serving as an officer,
director, member and/or manager of the Company or any affiliate of the Company.

     3. TERMINATION OF EMPLOYMENT.

          3.1 Death or Disability. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period. If the
Company determines in good faith that any Disability of the Executive has
occurred during the Employment Period (pursuant to the definition of Disability
set forth below), it may give to the Executive written notice in accordance with
Section 10.2, of its intention to terminate the Executive's employment. In such
event, the Executive's employment with the Company shall terminate effective on
the thirtieth (30th) day after receipt of such notice by the Executive (the
"Disability Effective Date"), provided that, within the thirty (30) days after
such receipt, the Executive shall not have returned to full-time performance of
the Executive's duties. For purposes of this Agreement, the term "Disability"
shall mean the absence of the Executive from


                                       -3-

<PAGE>

the Executive's duties with the Company on a full-time basis for one hundred
eighty (180) consecutive business days as a result of incapacity due to mental
or physical illness certified by a physician selected by the Company or its
insurers and acceptable to the Executive or the Executive's legal
representative.

          3.2 Cause. The Company may terminate this Agreement and the
Executive's employment hereunder immediately upon written notice to the
Executive for "Cause" (as hereinafter defined). For purposes of this Agreement,
the term "Cause" shall mean (i) the repeated failure or refusal of the Executive
to perform the duties, tasks, responsibilities or render the services reasonably
assigned to him from time to time by the President of the Company and/or the
Board of Directors (except during reasonable vacation periods or sick leave);
(ii) the charging or indictment of the Executive in connection with a felony or
willful misfeasance or nonfeasance; (iii) the association, directly or
indirectly, of the Executive, for his profit or financial benefit, with any
person, firm, partnership, association, entity or corporation that competes, in
any material way, with the Company; (iv) the disclosing or using of any
"Confidential Information," as defined in Section 7, "Confidential Information;
Noncompetition," at any time by the Executive, except as required in connection
with his duties to the Company, (v) the breach by the Executive of his fiduciary
duty or duty of trust to the Company, including the commission by the Executive
of an act of fraud or embezzlement against the Company, (vi) any other material
breach by the Executive of any of the terms or provisions of this Agreement or
any other agreement between the Company and the Executive, which other material
breach is not cured within thirty (30) business days of notice by the Company;
or (vii) any other action by the Executive, which, in the good faith and
reasonable determination of all of the members of the Company's Board of
Directors, has the effect of materially injuring the reputation or business of
the Company."

          3.3 Good Reason. The Executive may terminate his employment for Good
Reason at any time within ninety (90) days after the Executive first has actual
knowledge of the occurrence of such Good Reason. For purposes of this Agreement,
the term "Good Reason" shall mean:

               3.3.1 the assignment to the Executive of any duties that are not
consistent with the duties set forth in Section 2.1.2, "Duties," or any other
action by the Company that results in a material diminution in any of the
Executive's positions as set forth in Section 2.1.1, "Position," or in the
Executive's authority, duties or responsibilities, 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;

               3.3.2 any failure by the Company to comply with any of the
provisions of Section 2.2, "Compensation," other than an isolated, insubstantial
and inadvertent failure not occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Executive;

               3.3.3 any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement;


                                       -4-

<PAGE>

               3.3.4 any action taken by the Company or its Board of Directors
in connection with a "Change in Control," as defined in Section 4.5, "Change in
Control," that results in the Executive being removed as a Vice President of the
Company without the Executive's consent; or

               3.3.5 any failure by the Company to comply with and satisfy
Section 9.3.

          3.4 Notice of Termination. Any termination by the Company for Cause,
or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 10.2 of
this Agreement. For purposes of this Agreement, the term "Notice of Termination"
means a written notice that:

               3.4.1 indicates the specific termination provision in this
Agreement relied upon;

               3.4.2 to the extent applicable, sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated; and

               3.4.3 if the Date of Termination (as defined below) is other than
the date of receipt of such notice, specifies the termination date, which date
shall be not more than thirty (30) days after the giving of such notice. The
failure by the Executive or the Company to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company, respectively,
from asserting such fact or circumstance in enforcing the rights of the
Executive or the Company under this Agreement.

          3.5 Date of Termination. The term "Date of Termination" means:

               3.5.1 if the Executive's employment is terminated by the Company
for Cause, or by the Executive for Good Reason, the date of receipt of the
Notice of Termination or any later date specified therein, as the case may be;

               3.5.2 if the Executive's employment is terminated by the Company
other than for Cause or Disability, the date on which the Company notifies the
Executive of such termination; and

               3.5.3 if the Executive's employment is terminated by reason of
death or Disability, the date of death of the Executive or the Disability
Effective Date, as the case may be.

          3.6 Resignation as Director. If the Executive's employment under this
Agreement is terminated for any reason, the Executive shall, if applicable,
resign as a director of the Company and as a director, member and/or manager of
all subsidiaries or other affiliates of the Company of which Executive is a
director, member and/or manager. Such resignation will be effective (i) in the
case of a termination by the Executive pursuant to Section 1, "Employment
Agreement," or Section 3, "Termination of Employment," on the date the Executive
delivers the relevant Notice of Termination in accordance with such Sections;
(ii) in the case of a termination


                                       -5-

<PAGE>

by the Company, on the date Executive receives the relevant Notice of
Termination; and (iii) in the case of a termination for any other reason, no
later than the relevant Termination Date.

     4. OBLIGATIONS OF THE COMPANY UPON TERMINATION.

          4.1 Termination for Good Reason, Other Than for Cause, Death or
Disability. If, during the Employment Period, the Company shall terminate the
Executive's employment other than for Cause, Death or Disability, or the
Executive shall terminate employment for Good Reason, the Company shall pay to
the Executive, or Executive's beneficiary as designated by him in writing to the
Company, within thirty (30) days after the Date of Termination the aggregate of
the amounts set forth in Section 4.1.2 through Section 4.1.6 in a lump sum in
cash and shall pay the amounts due under Section 4.1.1 and Section 4.1.7 as
provided in those Sections:

               4.1.1 the amount of Annual Base Salary compensation that would be
payable to the Executive over a twelve (12) month period, provided that the
Company will pay such amount to the Executive over the period that the
compensation would have been due had the termination not occurred;

               4.1.2 any declared and accrued, but as of then unpaid, bonus or
stock options grant (whether or not vested) to which the Execute would have
received but for such termination. Additionally, any stock options owned or
granted shall be deemed immediately vested, not forfeitable, and shall be the
property of Executive, exercisable according to their terms for the balance of
the term of years of the options;

               4.1.3 any accrued vacation pay;

               4.1.4 any amounts payable pursuant to the Company's Defined
Benefit Pension Plan, 401(k) plan, including such amounts which would have
accrued (whether or not vested) if the Executive's employment had continued
after the Date of Termination for the period then remaining under this
Agreement, as it may have been renewed as provided for in Section 1, "Employment
Period";

               4.1.5 any other amounts or benefits required to be paid or
provided or which the Executive is eligible to receive under any plan, program,
policy or practice or contract or agreement of the Company (such other amounts
and benefits shall be referred to as the "Other Benefits");

               4.1.6 for the remaining term of this Agreement, as it may have
been renewed pursuant to Section 1, "Employment Period," or such longer period
as may be provided by the terms of the appropriate plan, program, practice or
policy, the Company shall continue benefits to the Executive and/or the
Executive's family at least equal to those which would have been provided to
them in accordance with Section 2.2.5, "Welfare Benefit Plans," of this
Agreement if the Executive's employment had not been terminated or, if more
favorable to the Executive, as in effect generally at any time thereafter with
respect to other executives of the Company and their families, provided,
however, that if the Executive becomes re-employed with another employer and is
eligible to receive medical or other welfare benefits under another


                                       -6-

<PAGE>

employer-provided plan, the medical and other welfare benefits described herein
shall be secondary to those provided under such other plan during such
applicable period of eligibility, and for purposes of determining eligibility
(but not the time of commencement of benefits) of the Executive for retiree
benefits pursuant to such plans, practices, programs and policies, the Executive
shall be considered to have remained employed for the remaining term of this
Agreement, as it may have been renewed pursuant to Section 1, "Employment
Period," and to have retired on the last day of such period.

          4.2 Death. If the Executive's employment is terminated by reason of
the Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement, other than for (i) payment of any death benefit
compensation under other contracts; (ii) payment of the amounts due under the
term life insurance policy described in Section 2.2.4, "Incentive Savings and
Retirement Plans"; (iii) full vesting and non-forfeiture of stock options
granted to Executive; and (iv) the timely payment or provision of Other
Benefits. Such amounts shall be paid to the Executive's estate or beneficiary,
as applicable, in a lump sum in cash within thirty (30) days of the Date of
Termination. The term "Other Benefits" as utilized in this Section 4.2 shall
include, without limitation, and the Executive's estate and/or beneficiaries
shall be entitled to receive, benefits at least equal to the most favorable
benefits provided by the Company to the estates and beneficiaries of other
executives of the Company under such plans, programs, practices and policies
relating to death benefits, if any, as in effect with respect to other
executives and their beneficiaries at any time during the one hundred twenty
(120) day period immediately preceding the Effective Date or, if more favorable
to the Executive's estate and/or the Executive's beneficiaries, as in effect on
the date of the Executive's death with respect to other executives of the
Company and their beneficiaries.

          4.3 Disability. If the Executive's employment is terminated by reason
of the Executive's Disability under Section 3.1, "Death or Disability," during
the Employment Period, this Agreement shall terminate without further
obligations to the Company, other than for the timely payment or provision of
(i) Base Salary through the Termination Date; (ii) accrued bonus through the
Termination Date; (iii) payment of pension, 401(k), and Other Disability
Benefits; (iv) full vesting and non-forfeiture of stock options; and (v) the
receipt of fully-paid Welfare Benefit Plans under Section 2.2.5, "Welfare
Benefit Plans," for the balance of the term of this Agreement. In addition, the
Executive shall be paid for the term of this Agreement at regular pay periods
that amount equal to the difference between his Annual Base Salary and the
disability insurance payment received by the disabled Executive under the
Company's disability insurance program, if any. The term "Other Benefits" as
utilized in this Section 4.3 shall include, and the Executive shall be entitled
after the Disability Effective Date to receive, disability and other benefits at
least equal to the most favorable of those generally provided by the Company to
disabled executives and/or their families in accordance with such plans,
programs, practices and policies relating to disability, if any, as in effect
generally with respect to other executives and their families at any time during
the one hundred twenty (120) day period immediately preceding the Effective Date
or, if more favorable to the Executive and/or the Executive's family, as in
effect at any time thereafter generally with respect to other executives of the
Company and their families.


                                       -7-

<PAGE>

          4.4 Termination by the Company for Cause; and Termination by the
Executive for Other than for Good Reason. If the Executive's employment shall be
terminated for Cause during the Employment Period, this Agreement shall
terminate without further obligations to the Company other than the obligation
to pay to the Executive: (i) the Annual Base Salary through the Date of
Termination; (ii) the amount of any compensation previously deferred by the
Executive; and (iii) Other Benefits under Sections 4.2, "Death," and Section
4.3, "Disability," in each case to the extent therefore unpaid. If the Executive
voluntarily terminates employment during the Employment Period, excluding a
termination for Good Reason by the Executive, this Agreement shall terminate
without further obligations to the Company, other than for items (i), (ii) and
(iii) of this paragraph, accrued but unpaid vacation leave, and the timely
payment or provision of Other Benefits. In such case, all accrued obligations
shall be paid to the Executive in a lump sum in cash within thirty (30) days of
the Date of Termination. A termination of the Executive by the Company for Cause
or a termination by the Executive for other than Good Reason shall not affect
the status of any vested stock options.

          4.5 Change in Control. If, during the term of this Agreement and
within one year after a "Change in Control," as defined below, the Company shall
terminate the Executive's employment other than for Cause, Death or Disability
or the Executive shall terminate employment for Good Reason, the Company shall
(i) pay to the Executive the amount of compensation that would have been payable
to the Executive over the period then remaining under this Agreement and on the
same schedule as such payments would have been due had the termination not
occurred, provided that the Company shall pay the Executive for a minimum of
twelve (12) months on this basis; and (ii) cause all stock options issued to the
Executive that have not vested as of the termination to be immediately vested.

               4.5.1 The term "Change in Control" shall mean an event or the
last of a series of related events by which:

               4.5.2 the Company merges or consolidates with or into another
entity or completes any other corporate reorganization, if more than fifty
percent (50%) of the combined voting power of the continuing or surviving
entity's securities outstanding immediately after such merger, consolidation or
other reorganization is owned by persons who were not stockholders of the
Company immediately prior to such merger, consolidation or other reorganization;
or

               4.5.3 the Company sells, transfers or otherwise disposes of all
or substantially all of the consolidated assets of the Company or its
subsidiaries and the Company does not own stock in the purchaser or purchasers
having more than fifty percent (50%) of the voting power in elections for
directors; or

               4.5.4 the composition of the Board changes, as a result of which
fewer than one half of the incumbent directors are directors who either:

                    (i)  had been directors of the Company twenty-four (24)
                         months prior to such change; or

                    (ii) were elected, or nominated for election, to the Board
                         with the affirmative votes of at least a majority of
                         the directors who had


                                       -8-

<PAGE>

                         been directors of the Company twenty-four (24) months
                         prior to such change and who were still in office at
                         the time of the election or nomination.

A transaction shall not constitute a Change of Control if (i) its sole purpose
is to change the state of the Company's incorporation or to create a holding
company that will be owned in substantially the same proportions by the Persons
who held the Company's securities immediately before such transaction or (ii)
the Company acquires another corporation or entity through the purchase or other
acquisition of control of the voting stock or assets of such corporation or
entity; or

               4.5.5 any Person acquires direct or indirect beneficial ownership
of more than thirty-three percent (33%) of the voting power of the Company,
whether in a single transaction or a series of transactions.

               4.5.6 As used in this Agreement, a "Person" means any "person,"
as that term is used in Sections 13(d) and 14(d) of the Securities Exchange Act
of 1934, as amended, together with all of that person's "affiliates" and
"associates," as those terms are defined in Rule 12b-2 of such Act.

          4.6 Life Insurance and Health Plan Coverage. If, during the term of
this Agreement, the Executive's employment terminates for any reason other than
for Cause, the Company shall provide the Executive coverage for a continuation
period beginning on the Effective Date and ending on the earlier of (i) balance
of the Employment Period plus six (6) months, but not more than a total of one
(1) year; or (ii) the date of the Executive's death. During the Continuation
Period, the Executive (and, where applicable, the Executive's dependents) shall
be entitled to continue participation in the group term life insurance plan and
in the health care plan for employees maintained by the Company as if the
Employee were still an employee of the Company. The coverage provided under this
Section 4.6. shall run concurrently with and shall be offset against any
continuation coverage under Part 6 of Title I of the Employee Retirement Income
Security Act of 1974, as amended. Where applicable, the Executive's compensation
for purposes of such plans shall be deemed to be equal to the Executive's
compensation (as defined in such plans) in effect on the date of the employment
termination. To the extent that the Company finds it undesirable to cover the
Executive under the group life insurance and health plans of the Company, the
Company shall provide the Executive (at its own expense) with the same level of
coverage under individual policies or if the Executive has elected to provide
his own coverage under the foregoing plans as contemplated by Section 2.2.5,
"Welfare Benefit Plans," the Company will reimburse the Executive for the cost
of such coverage for the same term provided in the first sentence of this
Section 4.6 and at the same rate as the Company had done prior to the
termination.

     5. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any plan, program,
policy or practice provided by the Company and for which the Executive may
qualify, nor, subject to Section 4, "Obligations of the Company Upon
Termination," shall anything herein limit or otherwise affect such rights as the
Executive may have under any other contract or agreement with the Company.
Amounts which are vested benefits or which the Executive is otherwise entitled
to receive under


                                       -9-

<PAGE>

any plan, policy, practice or program of or any contract or agreement with the
Company at or subsequent to the Date of Termination shall be payable in
accordance with such plan, policy, practice or program or contract or agreement
except as explicitly modified by this Agreement. Executive is currently a party
to, and in the future may be a party to other, employment arrangements,
agreements, and incentive plans, including but not limited to, a death benefit
plan, stock option agreements, and a change of control agreement. This Agreement
shall not supersede any of the terms or conditions of such other agreements. To
the extent of any inconsistency in these agreements, the agreements shall be
interpreted and applied in the way to confer upon the Executive the greatest
benefits. The agreements shall be read and applied consistent with each other,
but in the event of a conflict, the terms most favorable to the Executive will
be applied from the various provisions of the agreements in the aggregate.

     6. FULL SETTLEMENT; LEGAL FEES. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall be subject to any set-off, counterclaim, recoupment, defense or
other claim, right or action that the Company may have against the Executive. In
no event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and except as specifically provided in
Section 4.1.6, such amounts shall not be reduced whether or not the Executive
obtains other employment. Provided that the Executive is the prevailing party,
the Company will reimburse the Executive to the full extent permitted by law,
all legal fees and expenses that the Executive may reasonably incur as a result
of any contest by the Company, the Executive or others of the validity or
enforceability of, or liability or entitlement under, any provision of this
Agreement or any guarantee of performance thereof (whether such contest is
between the Company and the Executive or between either of them and any third
party, and including as a result of any contest by the Executive about the
amount of any payment pursuant to this Agreement), plus in each case interest on
any delayed payment at the applicable Federal rate ("Applicable Federal Rate")
provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of 1986, as
amended (the "Code").

     7. CONFIDENTIAL INFORMATION; NONCOMPETITION.

          7.1 Nondisclosure. The Executive shall hold in fiduciary capacity for
the benefit of the Company all secret, proprietary or Confidential Information,
knowledge or data relating to the Company and its businesses, which shall have
been obtained by the Executive during the Executive's employment by the Company.
During the period the Executive is employed with the Company, and after
termination of the Executive's employment with the Company, the Executive shall
not, without the prior written consent of the Company or as may otherwise be
required by law or legal process, communicate or divulge any such information,
knowledge or data to anyone other than the Company and those designated by it.
The restrictions set forth in this Section 7 will not apply to information which
is generally known to the public or in the trade, unless such knowledge results
from an unauthorized disclosure by the Executive or representatives of the
Executive in violation of this Agreement. This exception will not affect the
application of any other provisions of this Agreement to such information in
accordance with the terms of such provision. All documents and tangible things
embodying or containing Confidential Information are the Company's exclusive
property. The Executive will


                                      -10-

<PAGE>

protect the confidentiality of their content and will return all copies,
facsimiles and specimens of them and any other form of Confidential Information
in the Executive's possession, custody or control to the Company before leaving
the employment with the Company.

          7.2 Definition of Confidential Information. The term "Confidential
Information" includes all information of any nature and in any form which at the
time or times concerned is not generally known to the public, other than by act
or acts of an employee not authorized by Company to disclose such information,
and which relates to any one or more of the aspects of the present and past
business of Company or any of its predecessors, including, but not limited to,
patents and patent applications, inventions and improvements, whether patentable
or not, development projects, policies, processes, formulas, techniques,
know-how and other facts relating to sales, advertising, franchising,
promotions, financial matters, customers, customer lists, customer purchases or
requirements, licenses or trade secrets.

          7.3 Competition. During the term of the Executive's employment with
the Company, and for the period during which he receives compensation from the
Company under Section 4.1.1 after the termination of his employment with the
Company, the Executive will not, directly or indirectly, engage, participate or
invest in or be employed by any business anywhere in the world which:

               7.3.1 develops or manufactures products that are competitive with
or similar to products developed or manufactured by the Company; or

               7.3.2 distributes, markets or otherwise sells products
manufactured by others which are competitive with or similar to products
distributed, marketed or sold by the Company; or provides services which are
competitive with or similar to services provided by the Company, including, in
each case, any products or services the Company has under development or which
are the subject of active planning at any time during the term of the
Executive's employment.

          The foregoing restriction shall apply regardless of the capacity in
which the Executive engages or engaged, participates or participated, or invests
or invested in or is employed by a given business, whether as owner, partner,
shareholder, consultant, agent, Executive, co-venturer or otherwise. In
addition, during the term of the Executive's employment with the Company, and
for a period of twelve (12) months thereafter, the Executive will not, directly
or indirectly, without the prior written consent of the Company, solicit for
hire with any business any person who is employed by the Company at such time or
was employed by the Company within the preceding twelve (12) months. The
provisions of this Section 7 shall not prevent the Executive from acquiring or
holding publicly traded stock or other publicly traded securities of a business,
so long as the Executive's ownership does not exceed ten percent (10%) of the
outstanding securities of such company of the same class as those held by the
Executive or from engaging in any activity or having an ownership interest in
any business that is reviewed by the Board. The Executive understands that the
restrictions set out in this Section 7 are intended to protect the Company's
interest in its secret, proprietary or Confidential Information and established
customer relationships and goodwill, and agrees that such restrictions are
reasonable and appropriate for this purpose.


                                      -11-

<PAGE>

          7.4 Damages. The Executive agrees that it would be difficult to
measure any damages caused to the Company which might result from any breach by
the Executive of the promises set forth in this Agreement, and that in any event
money damages would be an inadequate remedy for any such breach. Accordingly,
the Executive agrees that in the case of breach, or proposed breach, of any
portion of this Agreement, the Company shall be entitled, in addition to all
other remedies that it may have, to an injunction or other appropriate equitable
relief to restrain any such breach without showing or proving any actual damage
to the Company.

     8. DISPUTE RESOLUTION. If there shall be any dispute between the Company
and the Executive (i) in the event of any termination of the Executive's
employment by the Company, provided such termination was not for Cause, or (ii)
otherwise arising out of this Agreement, the dispute will be resolved in
accordance with the dispute resolution procedures set forth in Exhibit A
attached to this Agreement, the provisions of which are incorporated as a part
of this Agreement, and the parties of this Agreement agree that such dispute
resolution procedures will be the exclusive method for resolution of disputes
under this Agreement; provided, however, that (a) either party may seek
preliminary judicial relief if, in such party's judgment, such action is
necessary to avoid irreparable injury during the pendency of such procedures,
and (b) nothing in Exhibit A will prevent either party from exercising the
rights of termination set forth in this Agreement. IT IS EXPRESSLY UNDERSTOOD
THAT BY SIGNING THIS AGREEMENT, WHICH INCORPORATES BINDING ARBITRATION, THE
COMPANY AND EXECUTIVE AGREE, EXCEPT AS SPECIFICALLY PROVIDED OTHERWISE IN
SECTION 7, "CONFIDENTIAL INFORMATION; NONCOMPETITION," AND THIS SECTION 8, TO
WAIVE COURT OR JURY TRIAL AND TO WAIVE PUNITIVE, STATUTORY, CONSEQUENTIAL, AND
ANY DAMAGES, OTHER THAN COMPENSATORY DAMAGES.

     9. SUCCESSORS.

          9.1 This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assigned by the Executive otherwise
than by will or the laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by the Executive's legal representatives.

          9.2 This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.

          9.3 The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, the term "Company" shall mean the
Company as defined above and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.


                                      -12-

<PAGE>

     10. MISCELLANEOUS.

          10.1 This Agreement shall be governed by and construed in accordance
with the laws of the State of Michigan, without reference to principles of
conflict of laws. The captions of this Agreement are set forth for convenience
only and shall have no separate force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.

          10.2 All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:

                    If to the Executive:

                    Adam S. Tracy
                    511 Jacob Way, Suite 203
                    Rochester, Michigan 48307

                    If to the Company:

                    Ecology Coatings, Inc.
                    ATTN: President
                    35980 Woodward Avenue, Suite 200
                    Bloomfield Hills, Michigan 48304

                    With a copy to:

                    Chairman - Compensation Committee of
                    the Board of Directors
                    c/o Ecology Coatings, Inc.
                    35980 Woodward Avenue, Suite 200
                    Bloomfield Hills, Michigan 48304

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

          10.3 The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.

          10.4 The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.

          10.5 The failure of the Executive or the Company to insist upon strict
compliance with any provision hereof or any other provision of this Agreement or
the failure to assert any right the Executive or the Company may have hereunder,
including, without


                                      -13-

<PAGE>

limitation, shall not be deemed to be a waiver of such provision or right or any
other provision or right of this Agreement, except that if the Executive chooses
to terminate employment for Good Reason pursuant to Section 3.3, "Good Reason,"
and complies with the provisions of Section 3, "Termination of Employment," the
Executive shall only be entitled to compensation and benefits applicable to such
event of termination.

     IN WITNESS WHEREOF, pursuant to the authorization from its Compensation
Committee and Board of Directors, the Company has caused this Agreement to be
executed in its name on its behalf, as of the dates first above written.

                                        COMPANY:

                                        ECOLOGY COATINGS, INC.


                                        By /s/ Richard D. Stromback
                                           -------------------------------------
                                           Richard D. Stromback
                                        Its Chairman


                                        EXECUTIVE:


                                        By /s/ Adam S. Tracy
                                           -------------------------------------
                                           Adam S. Tracy, Esq.


                                      -14-

<PAGE>

                                    EXHIBIT A

                          DISPUTE RESOLUTION PROCEDURES

     1. If a controversy arises that is covered by Section 8, "Dispute
Resolution," of the Agreement, then not later than twelve (12) months from the
date of the event that is the subject of dispute either party may serve on the
other a written notice specifying the existence of such controversy and setting
forth in reasonably specific detail the grounds of the notice ("Notice of
Controversy"); provided that, in any event, the other party will have at least
thirty (30) days from and after the date of the Notice of Controversy to serve a
written notice of any counterclaim ("Notice of Counterclaim"). The Notice of
Counterclaim will specify the claim or claims in reasonably specific detail. If
the Notice of Controversy or the Notice of Counterclaim, as the case may be, is
not served within the applicable period, the claim set forth therein will be
deemed to have been waived, abandoned and rendered unenforceable.

     2. For a three (3) week period following receipt of the Notice of
Controversy or the Notice of Counterclaim, as the case may be, the parties will
make a good faith effort to resolve the dispute through negotiation ("Period of
Negotiation"). Neither party will take any action during the Period of
Negotiation to initiate arbitration proceedings.

     3. If the parties agree during the Period of Negotiation to mediate the
dispute, then the Period of Negotiation will be extended by an amount of time to
be agreed upon by the parties to permit such mediation. In no event, however,
may the Period of Negotiation be extended by more than five weeks or, stated
differently, in no event may the Period of Negotiation be extended to encompass
more than a total of eight weeks.

     4. If the parties agree to mediate the dispute but are thereafter unable to
agree within a week on the format and procedures for the mediation, then the
effort to mediate will cease, and the period of Negotiation will terminate four
weeks from the Notice of Controversy or the Notice of Counterclaim, as the case
may be.

     5. Following the termination of the Period of Negotiation, the dispute,
including the main claim and counterclaim, if any, will be settled by
arbitration, governed by the Federal Arbitration Act, 9 U.S.C. Section 1 et seq.
("FAA"), and judgment upon the award may be entered in any court having
jurisdiction. The format and procedures of the arbitration are set forth below
(referred to below as the "Arbitration Agreement").

     6. A notice of intention to arbitrate ("Notice of Arbitration") will be
served within forty-five (45) days of the termination of the Period of
Negotiation. If the Notice of Arbitration is not served within this period, the
claim set forth in the Notice of Controversy or the Notice of Counterclaim, as
the case may be, will be deemed to have been waived, abandoned and rendered
unenforceable.

     7. The arbitration, including the Notice of Arbitration, will be governed
by the Commercial Rules of the American Arbitration Association ("AAA") in
effect on the date of the Notice of Arbitration, except that the terms of this
Arbitration Agreement will control in the

<PAGE>

event of any difference or conflict between such Rules and the terms of this
Arbitration Agreement.

     8. The arbitrator will reach a decision on the merits on the basis of
applicable legal principles as embodied in the law of the State of Michigan. The
arbitration hearing will take place in Detroit, Michigan.

     9. There will be one arbitrator, regardless of the amount in controversy.
The arbitrator selected, in order to be eligible to serve, will be a lawyer in
Detroit, Michigan with at least fifteen (15) years experience specializing in
either general commercial litigation or general corporate and commercial
matters. In the event the parties cannot agree on a mutually acceptable single
arbitrator from the list submitted by the AAA, the AAA will appoint the
arbitrator who will meet the foregoing criteria.

     10. At the time of appointment and as a condition of the appointment, the
arbitrator will be apprised of the time limitations and other provisions of this
Arbitration Agreement and will indicate such dispute resolver's agreement to the
Tribunal Administrator to comply with such provisions and time limitations.

     11. During the thirty (30) day period following appointment of the
arbitrator, either party may serve on the other a request for limited numbers of
documents directly related to the dispute. Such documents will be produced
within seven (7) days of the request.

     12. Following the thirty-day period of document production, there will be a
forty-five (45) day period during which limited depositions will be permissible.
Neither party will take more than five (5) depositions, and no deposition will
exceed three (3) hours of direct testimony.

     13. Disputes as to discovery or prehearing matters of a procedural nature
will be promptly submitted to the arbitrator pursuant to telephone conference
call or otherwise. The arbitrator will make every effort to render a ruling on
such interim matters at the time of the hearing (or conference call) or within
five (5) business days thereafter.

     14. Following the period of depositions, the arbitration hearing will
promptly commence. The arbitrator will make every effort to commence the hearing
within thirty (30) days of the conclusion of the deposition period and, in
addition, will make every effort to conduct the hearing on consecutive business
days to conclusion.

     15. An award will be rendered, at the latest, within nine (9) months of the
date of the Notice of Arbitration and within thirty (30) days of the close of
the arbitration hearing. The award will set forth the grounds for the decision
(findings of fact and conclusions of law) in reasonably specific detail. The
award will be final and nonappealable except as provided in the FAA and except
that a court of competent jurisdiction will have the power to review whether, as
a matter of law, based upon the findings of fact by the arbitrator, the award
should be confirmed or should be modified or vacated in order to correct any
errors of law made by the arbitrator. Such judicial review will be limited to
issues of law, and the parties agree that the findings of fact made by the
arbitrator will be final and binding on the parties and will serve as the facts
to be relied upon by the court in determining the extent to which the award
should be confirmed, modified or vacated.


                                       -2-

<PAGE>

     The award may only be made for compensatory damages, and if any other
damages (whether exemplary, punitive, consequential, statutory or other) are
included, the award will be vacated and remanded, or modified or corrected, as
appropriate to promote this damage limitation.


                                       -3-