| 1.   | Employment.  The      Company agrees to continue to employ the Executive, and the Executive      agrees to continue to be employed by the Company, on the terms and      conditions set forth herein. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.   | Term of      Employment.  The employment of the Executive by the      Company as provided herein shall commence on August 21, 2006, and end on      August 20, 2007 unless further extended or sooner terminated as      hereinafter provided.  On August 20, 2007 and on August 20 of      each year thereafter, the term of the Executive’s employment hereunder      shall be extended automatically one (1) additional year, unless at least      six (6) months prior to the date of such automatic extension the Company      shall have delivered to the Executive or the Executive shall have      delivered to the Company written notice that the term of the Executive’s      employment hereunder shall not beextended. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.   | Position and      Duties.  The Executive shall serve as the Level 3 Manager      of the Company with responsibilities and authority as may from time to      time be assigned by the Chief Executive Officer and/or the Board of      Directors of the Company.  Executive agrees to perform      faithfully and industriously the duties which the Company may assign to      him. The Executive shall devote substantially all of his working time and      efforts to the business affairs of the Company, to the exclusion of all      other employment or business interest other than passive personal      investments, charitable, religious or civic      activities.  Executive may not engage, directly or indirectly,      in any other business or businesses, whether or not similar to that of the      Company, except with the consent of the Chief Executive Officer and the      Board of Directors of the Company. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 4.   | Compensation and      Benefits.  In consideration of the Executive’s      performance of his duties hereunder, the Company shall provide the      Executive with the following compensation and benefits during the term of      his employment hereunder. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | Base      Salary.  The Company shall pay to the Executive an      aggregate base salary at a rate of 155,000 Dollars ($155,000) per annum,      payable in accordance with the Company’s normal payroll      practices.  Such base salary may be increased from time to time      by the Board of Directors in accordance with the normal business practices      of the Company. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | Expenses.  The      Company, as applicable, shall promptly reimburse the Executive for all      reasonable out-of-pocket expenses incurred by the Executive in his      performance of services hereunder, including all such expenses of travel      and entertainment, provided that such expenses are incurred, accounted for      and documented in accordance with the Company’s regular policies and in      compliance with IRS Guidelines.  The Company reserves the right      to establish limits on the types or amounts of business expenses that the      Executive may incur. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | Employee      Benefits.  The Executive shall be entitled to continue to      participate in all Company employee benefit plans for which he is      eligible, subject to the rules and regulations applicable thereto, which      were in effect on the date hereof (including, but not limited to, life,      disability, and health insurance plans and programs and savings plans and      programs) as such plans may continue or be altered by the Company Board of      Directors from time to time at the Board’s  discretion. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | Vacation and Other      Absences.  The Executive shall receive reasonable and      customary vacation in each calendar year during the term of this      Agreement, in accordance with the Company's present      policies.  The Executive shall also receive all paid absences      for holidays or illnesses in accordance with the Company's applicable      plans, policies or provisions. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5.   | Termination.  Except      for the provisions of Paragraphs 7, 8, 9, 10, and 11, which shall continue      in full force and effect, this Agreement shall terminate upon the first to      occur of the following: |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | The      death of Executive; |
|-----------------|------------------------------|

| (b)   | The      permanent Disability of Executive, as defined in Paragraph      6(a)(iv); |
|-----------------|------------------------------------------------------------------------------------|

| (c)   | Termination      of Executive’s employment by Company "For Cause" as defined in      Paragraph 6(a)(i); |
|-----------------|--------------------------------------------------------------------------------------------------------------------|

| (d)   | Separation      From Service with the Company other than For Cause or Separation From      Service with the Company by Executive with "Good Reason" as defined in      Paragraph 6(a)(ii).  The Company reserves the right to terminate      the Executive at any time, subject to the Company's obligation to pay the      Executive Compensation as otherwise provided for herein;  or |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (e)   | Separation      From Service with the Company following a "Change in Control" as defined      in Paragraph 6(a)(iii) and as provided in Paragraph 6(d)(i);      or |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (f)   | Termination      of employment with the Company by Executive without Good Reason, provided      that Executive shall give written notice of his voluntary termination in      accordance with Paragraph 6(a)(v).  Upon receipt of notice of      intended termination given by Executive, the Company reserves the right to      terminate the Executive's employment, effective    immediately. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6.   | Compensation and      Benefits in the Event of Termination or Separation From      Service.  In the event of the termination of the      Executive’s employment or a Separation From Service, as applicable, during      the term of this Agreement or any renewal thereof, compensation and      benefits shall be paid as set forthbelow. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | Definitions.  For      purposes of this Agreement, the following terms shall have the meanings      indicated: |
|-----------------|--------------------------------------------------------------------------------------------------------------------------|

| (i)   | The      term "For Cause" shall include, but shall not be limited to (A) the      failure of the Executive to perform the Executive's duties under this      Agreement (other than as a result of physical or mental illness or      injury), which failure, if correctable, and provided it does not      constitute willful misconduct or gross negligence described in Subsection      B below, remains uncorrected for 10 days following written notice to      Executive by the President or the Board of Directors of the Company of      such breach; (B) willful misconduct or gross negligence by the Executive,      in either case that results in material damage to the business or      reputation of the Company; (C) a material breach by Executive of this      Agreement which, if correctable, remains uncorrected for 10 days following      written notice to Executive by the Board of Directors of the Company of      such breach; or (D) the Executive is convicted of a felony or any other      crime involving moral turpitude (whether or not in connection with the      performance by Executive of his duties under this    Agreement). |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (ii)   | The      term "Good Reason" shall meaneither: |
|------------------|-----------------------------------------------|

|   | (A) | assignment      to the Executive of any duties inconsistent with Executive's position      duties, responsibilities, title or office, or any other action by the      Company that results in a material diminution in the Executive's position,      authority, duties or responsibilities, excluding in each case any      assignment or action that is remedied by the Company within 10 days after      receipt of notice thereof from the Executive;or |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (B) | any      material failure by the Company to comply with this Agreement, other than      a failure that is remedied by the Company within 10 days after receipt of      notice thereof from the Executive. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (iii)   | The      term “Change in Control” shall meaneither: |
|-------------------|-----------------------------------------------------------------|

| (A)   | A      person, corporation, entity or group (1) makes a tender or exchange offer      for the issued and outstanding voting stock of the Company and      beneficially owns fifty percent (50%) or more of the issued and      outstanding voting stock of the Company after such tender or exchange      offer, or (2) acquires, directly or indirectly, the beneficial ownership      of fifty percent (50%) or more of the issued and outstanding voting stock      of the Company in a single transaction or a series of transactions (other      than any person, corporation, entity or group for which a Schedule 13G is      on file with the Securities and Exchange Commission, so long as such      person, corporation, entity or group has beneficial ownership of less than      fifty percent (50%) of the issued and outstanding voting stock of the      Company); or |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (B)   | The      Company is a party to a merger, consolidation or similar transaction and      following such transaction, fifty percent (50%) or more of the issued and      outstanding voting stock of the resulting entity is not beneficially owned      by those persons, corporations or entities that constituted the      stockholders of the Company immediately prior to the transaction;      or |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (C)   | The      Company sells fifty percent (50%) or more of its assets to any other      person or persons (other than an affiliate or affiliates of the Company);      or |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (D) | Individuals  who,      as of the date hereof, constitute the Board (the "Incumbent Board") cease      for any reason to constitute at least seventy-five percent (75%) of the      Board of Directors of the Company; provided, however, that any individual      becoming a director subsequent to the date hereof, whose election or      nomination was approved by a majority of the directors than comprising the      Incumbent Board, shall be considered a member of the Incumbent Board, but      not including any individual whose initial board membership is a result of      an actual or threatened election contest (as that term is used in Rule      14a-11 promulgated under the Securities Act of 1934, as amended) or an      actual or threatened solicitation of proxies or consents by or on behalf      of a party other than the Board. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (iv)   | The      term “Disability” shall mean the Executive’s failure to satisfactorily      perform his regular duties on behalf of the Company on a full-time basis      for one hundred and twenty (120) days during any three hundred and sixty      (360) day period, by reason of the Executive’s incapacity due to physical      or mental illness. |
|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (v)   | The      term “Notice of Termination” shall mean a written notice which shall      include the specific termination provision under this Agreement relied      upon, and shall set forth in reasonable detail the facts and circumstances      claimed to provide a basis for termination of the Executive’s      employment.  Any purported termination of the Executive’s      employment hereunder by action of either party shall be communicated by      delivery of a Notice of Termination to the other party.  Any      termination by Executive of his employment without Good Reason shall be      made on not less than 14 days'notice. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (vi)   | The      term “Separation From Service” shall have the meaning contemplated in      guidance issued by the U. S. Department of the Treasury for purposes of      applying the provisions of Section 409A of the Internal Revenue      Code. |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | Separation From      Service By Company Not For Cause Or By Executive With Good Reason Prior To      A Change Of Control.  In the event Executive incurs a      termination of employment by action of the Company without Cause prior to      a Change of Control, or by the Executive with Good Reason prior to a      Change in Control, then upon a Separation From Service the Executive shall      be entitled to receive:  (1) The annual salary due to him      through the date of termination of his employment which occurs in      connection with the Separation From Service.  In addition,      Executive shall be entitled to receive a lump sum amount equal to his      Annual Salary in effect on the date of termination of his employment which      occurs in connection with the Separation From Service, payable (except as      provided in Paragraph 6(e)) within seventy-five (75) days of said      Separation From Service.  (2) Any vested rights of Executive      shall be paid to Executive in accordance with the Company's plans,      programs or policies.  (3) The Company shall promptly reimburse      Executive for any and all reimbursable business expenses (to the extent      not already reimbursed) upon Executive's properly accounting for the      same.  (4) The Company shall (except as provided in Paragraph      6(e)) promptly reimburse Executive for Executive's payment of the COBRA      premium required in order to continue coverage for Executive and his      family under the Company's existing benefit plans until the first      anniversary of the date the COBRA continuation period begins or until      Executive becomes eligible for similar coverage under the terms of new      employment undertaken by Executive, whichever first occurs; and provided      further, that the terms of the Company's benefit plans shall be subject to      amendment during such period, to the extent that such amendments are      applicable to the executive officers of the Company    generally. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (c)   | Termination By The      Company For Cause Or By The Executive Without Good      Reason.  In the event the Executive’s employment      hereunder is terminated (A) by action of the Company for Cause; (B) by      action of the Executive without Good Reason; or (C) by reason of the      Executive’s death, Disability or retirement, the following compensation      and benefits shall be paid and provided the Executive (or his      beneficiary):: |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (1)   | The      Executive’s annual salary provided under Paragraph 5(a) through the date      of termination, at the annual rate in effect at the time the Notice of      Termination is given (or death occurs), to the extent unpaid prior to such      Date of Termination; |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Any      vested rights of Executive shall be paid to Executive or in accordance      with the Company's plans, programs or policies.  Without      limiting the foregoing, in the event of the termination of Executive's      employment due to death or disability, the rights and benefits of      Executive (or his designated beneficiary or representatives, as      applicable) under any Company life, health and long-term disability plans      and policies shall be determined in accordance with the terms and      provisions of such plans and policies;and |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)   | The      Company shall promptly reimburse Executive for any and all reimbursable      business expenses (to the extent not already reimbursed) upon Executive's      properly accounting for the same. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | Separation From      Service Following a Change ofControl |
|-----------------|-----------------------------------------------------------|

|   | (i) | Severance      Benefits.  In the event that Executive incurs a      termination of employment coincident with or followed by a Separation From      Service, in either event within two (2) years following a "Change of      Control" (as defined in Paragraph 6(a)(iii)) and such      termination or Separation From Service is either (i) Without Cause (as      defined below), or (ii) is a      Constructive Termination (as defined below), Executive shall receive, in      addition to all compensation due and payable to or accrued for the benefit      of Executive: |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (A) | a      lump sum payment equal to an amount set forth on Schedule A to      this Agreement ("Severance Payment").  The Severance payment      shall be made by wire transfer or immediately available funds to an      account designated by Executive within seven (7) business days following      the date of the Separation From Service, except as provided in Paragraph      6(e) with respect to payments to Specified  Employees; |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (B) | a      payment equal to the annual bonus to which Executive would have been      entitled but for Executive's termination of employment in connection with      the Separation From Service, for the year of Executive's termination;      pro-rated for the portion of the year during which he was employed by the      Company (“Pro-rated Bonus”).  The Pro-rated Bonus shall be      payable to Executive within seventy-five (75) days following Executive's      Separation From Service, except as provided in Paragraph 6(e);      and |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   |  (C) | for      a period of twelve months after such termination (the "Coverage Period"),      medical, dental, prescription drug, life, accidental death and disability      insurance coverage substantially similar to the coverage which Executive      was receiving or entitled to receive immediately prior to the date of the      termination of Executive's employment ("Insurance Benefits”), to the      extent permitted by the terms of each particular existing benefit plan      and, if not so permitted, the Company shall, except as provided in      Paragraph 6(e),  promptly reimburse Executive for Executive's      payment of the COBRA premium required in order to continue coverage for      Executive and his family under the Company's existing benefit      plans.  Notwithstanding the foregoing, Executive shall not be      entitled to receive the Insurance Benefits (or a portion thereof) to the      extent that Executive obtains other employment that provides equal or      greater benefits during the CoveragePeriod. |
|--------|-----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | (A) | Notwithstanding      anything to the contrary set forth in this Agreement, in no event shall a      Severance Benefit payable pursuant to this Paragraph 6(d) exceed an amount      equal to the lesser of (i) 2.99 times the "base amount" (as defined in      Section 280G(b)(3) of the Internal Revenue Code) of Executive's      compensation, or (ii) such other amount which would constitute a      "parachute payment" (as defined in Section 280G of the      Code).  In the event that it shall be determined that any      Severance Benefit to Executive (whether paid or payable or distributed or      distributable) would be subject to the excise tax imposed by Section 4999      of the Code, or any successor provision thereto (the "Excise Tax"), then      Executive shall be entitled to receive from the Company an additional      payment (the "Gross-Up Payment”) in an amount such that the net amount of      the Severance Benefit and the Gross-Up Payment retained by the Executive      after calculation and deduction of all Excise Taxes (including any      interest or penalties imposed with respect to such taxes) or the Gross-Up      Payment provided for in this Section, and taking into account any lost or      reduced tax deductions on account of the Gross-Up payment, shall be equal      to the Severance Benefit. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (B) | Executive      shall notify the Company in writing of any claim by the Internal Revenue      Service that, if successful, would require the payment by the Company of      the Gross-Up Payment.  Such notification shall be given as soon      as practicable after Executive is informed in writing of such claim and      shall apprise the Company of the nature of such claim and the date on      which such claim is requested to be paid.  Executive shall not      pay such claim prior to the expiration of the 30-day period following the      date on which Executive gives such notice to the Company (or such shorter      period ending on the date that any payment of taxes, interest and/or      penalties with respect to such claim is due).  If the Company      notifies Executive in writing prior to the expiration of such period that      it desires to contest such claim, Executive  shall: |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (1) | give      the Company any information reasonably requested by the Company relating      to such claim; |
|--------|-----|--------------------------------------------------------------------------------------------------------|

|   | (2) | take      such action in connection with contesting such claim as the Company shall      reasonably request in writing from time to time, including, without      limitation, accepting legal representation with respect to such claim by      an attorney reasonably selected by theCompany; |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | (3) | cooperate      with the Company in good faith in order to effectively contest such claim;      and |
|--------|-----|----------------------------------------------------------------------------------------------------|

|   | (4) | permit      the Company to participate in any proceedings relating to such      claims; |
|--------|-----|-----------------------------------------------------------------------------------------|

| (e)   | Payments to Specified      Employees.   Notwithstanding the foregoing      provisions which normally require payment of certain elements of      compensation within a stated period after a Separation From Service, in no      event shall any payment to a Specified Employee of compensation which is      subject to Internal Revenue Code Section 409A be made prior to the date      which is six (6) months and one (1) day after the date of such Separation      From Service.  Any amount otherwise required to be paid within      such payment suspension period shall be paid in a lump sum on the date the      suspension period lapses or, if such date is not a regular business day of      the Company, on the first regular business day of the Company which      follows the expiration of the payment suspension  period. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (f)   | Continuation of      Benefits.  Following the termination of Executive’s      employment hereunder, the Executive shall have the right to continue in      the Company’s group health insurance plan or other Company benefit program      as may be required by COBRA or any other federal or state law or      regulation. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |               (g) | Limit on Company      Liability.  Except as expressly set forth in this      Paragraph 6, the Company shall have no obligation to Executive under this      Agreement following a termination of Executive's employment with the      Company.  Without limiting the generality of the provision of      the foregoing sentence, the Company shall not, following a termination of      Executive's employment with the Company, have any obligation to provide      any further benefit to Executive or make any further contribution for      Executive's benefit except as provided in this paragraph  6. |
|--------|-----------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 7.   | Disclosure of      Confidential Information.  The Company has developed      confidential information, strategies and programs, which include customer      lists, prospects, lists, expansion and acquisition plans, market research,      sales systems, marketing programs, computer systems and programs, product      development strategies, manufacturing strategies and techniques, budgets,      pricing strategies, identity and requirements of national accounts,      customer lists, methods of operating, service systems, training programs      and methods, other trade secrets and information about the business in      which the Company is engaged that is not known to the public and gives the      Company an opportunity to obtain an advantage over competitors who do not      know of such information (collectively, "Confidential      Information").  In performing duties for the Company, Executive      regularly will be exposed to and work with Confidential      Information.  Executive acknowledges that such Confidential      Information is critical to the Company's success and that the Company has      invested substantial sums of money in developing the Confidential      Information.  While Executive is employed by the Company and      after such employment ends for any reason, Executive will never reproduce,      publish, disclose, use, reveal, show or otherwise communicate to any      person or entity any Confidential Information unless specifically directed      by the Company to do so in writing.  Executive agrees that      whenever Executive's employment with the Company ends for any reason, all      documents containing or referring to Confidential Information as may be in      Executive's possession or control will be delivered by Executive to the      Company immediately, with no request being  required. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8.   | Non-Interference with      Personnel Relations.  While Executive is employed by the      Company and for twenty-four (24) months after such employment ends for any      reason, Executive acting either directly or indirectly, or through any      other person, firm, or corporation, will not hire contract with or employ      any employee of the Company or induce or attempt to induce or influence      any employee of the Company to terminate employment with the      Company.  However, this provision shall not apply to Executive      in the case of the solicitation of his or her immediate family      members. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 9.   | Non-Competition.  While      Executive is employed by the Company and for twenty-four (24) months after      such employment ends for any reason, Executive will not, directly or      indirectly, or through any other person, firm or corporation (i) be      employed by, consult for, have any ownership interest in or engage in any      activity on behalf of any competing business, or (ii) call on, solicit or      communicate with any of the Company's customers (whether actual or      potential) for the purpose of selling precision steel balls and rollers      and other related items to such customer other than for the benefit of the      Company.  As used in this Agreement, the term "competing      business" means a business that is a manufacturer and supplier of      precision steel balls and rollers to anti-friction bearing manufacturers      (excluding any ball and roller manufacturers who manufacture such products      for use in their business or the business of their affiliates and do not      supply such products to third parties) and the term "customer" means any      customer (whether actual or potential) with whom Executive or any other      employee of the Company had business contact on behalf of the Company      during the eighteen (18) months immediately before Executive's employment      with the Company ended.  Notwithstanding the foregoing, this      paragraph shall not be construed to prohibit Executive from owning less      than five percent (5%) of the outstanding securities of a corporation      which is publicly traded on a securities exchange or      over-the-counter. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.   | Notification to      Subsequent Employers.  Executive grants the Company the      right to notify any future employer or prospective employer of Executive      concerning the existence of and terms of this Agreement and grants the      Company the right to provide a copy of this Agreement to any such      subsequent employer or prospectiveemployer. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 11.   | Company Proprietary      Rights. |
|-----------------|----------------------------------|

|   | (a) | Company to Retain      Rights.  Executive agrees that all right, title and      interest of every kind and nature whatsoever in and to copyrights,      patents, ideas, business or strategic plans and concepts, studies,      presentations, creations, inventions, writings, properties, discoveries      and all other intellectual property conceived by Executive during the term      of this Agreement and pertaining to or useful in or to (directly or      indirectly) the activities of the Company (collectively, "Company      Intellectual Property") shall become and remain the exclusive property of      the Company, and Executive shall have no interest  therein. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | Further      Assurances.  At the request of the Company, Executive      shall, at the Company's expense but without additional consideration,      execute such documents and perform such other acts as the Company may deem      necessary or appropriate to vest in the Company or its designee such title      as Executive may have to all Company Intellectual Property in which      Executive may be able to claim any rights by virtue of his employment      under this Agreement. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | Return of      Material.  Upon the termination of the Executive's      employment under this Agreement, the Executive will promptly return to the      Company all copies of information protected by Paragraph 11(a) hereof      which are in his possession, custody or control, whether prepared by him      or others, and the Executive agrees that he shall not retain any of      same. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 12.   | Representation and      Warranty of Executive.  Executive represents and warrants      to the Company that he is not now under any obligation, of a contractual      nature or otherwise, to any person, partnership, company or corporation      that is inconsistent or in conflict with this Agreement or which would      prevent, limit or impair in any way the performance by him of his      obligations hereunder. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 13.   | Withholding.  Any      provision of this Agreement to the contrary notwithstanding, all payments      made by the Company hereunder to the Executive or his estate or      beneficiaries shall be subject to the withholding of such amounts, if any,      relating to tax and other payroll deductions as the Company may reasonably      determine should be withheld pursuant to any applicable law or      regulation.  In lieu of withholding such amounts, the Company      may accept other provisions, provided that it has sufficient funds to pay      all taxes required by law to be withheld in respect of any or all such      payments. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 14.   | Mitigation.  The      Company's obligation to make the payments provided for in this Agreement      and otherwise to perform its obligations hereunder shall not be affected      by any set-off, counterclaim, recoupment, defense or other claim, right or      action which the Company may have against Executive or      others.  In no event shall Executive be obligated to seek other      employment or take any other action by way of mitigation of the amounts      payable to Executive under any of the provisions of this agreement and      such amounts shall not be reduced whether or not Executive obtains other      employment. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 15.   | Notices.  All      notices, requests, demands and other communications provided for by this      Agreement shall be in writing and shall be sufficiently given if and when      mailed in the continental United States by registered or certified mail,      or personally delivered to the party entitled thereto, at the address      stated below or to such changed address as the addressee may have given by      a similar notice: |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  To      the Company: |   |  President                         |
|----------------------------|--------|-----------------------------------------|
|                       |   |  NN,      Inc.                     |
|                       |   |  2000      Waters Edge Drive       |
|                       |   |  Johnson      City, TN  37604 |
|                       |   |                                    |
| To      the Executive:     |   | Jeffrey      H. Hodge                   |
|                       |   | _______________                         |
|                       |   | _______________                         |
|                       |   |                                    |

| 16.   | Successors:  Binding      Agreement.  The Company shall 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, by agreement in the form and substance satisfactory to the      Executive, to expressly assume 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.  Failure of      the Company to obtain such agreement prior to the effectiveness of any      such succession shall be a breach of this Agreement.  For      purposes of this Agreement, “Company” shall include any successor to its      business and/or assets as aforesaid which executes and delivers the      agreement provided for in this Section or which otherwise becomes bound by      all the terms and provisions of this Agreement by operation of      law. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 17.   | Modification, Waiver      or Discharge.  No provision of this Agreement may be      modified or discharged unless such modification or discharge is authorized      by the Board of Directors of the Company and is agreed to in writing,      signed by the Executive and by an officer of the Company duly authorized      by the Board.  However, the Company may unilaterally revise the      provisions of this Agreement governed by the provisions of Internal      Revenue Code Section 409A in order to make the Agreement compliant      therewith.  No waiver by either party hereto of any breach by      the other party hereto of any condition or provision of this Agreement to      be performed by such other party will be deemed a waiver of similar or      dissimilar provisions or conditions at the time or at any time or at any      prior or subsequent time. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 18.   | Entire      Agreement.  This Agreement constitutes the entire      understanding of the parties hereto with respect to its subject matter and      supersedes all prior agreements between the parties hereto with respect to      its subject matter, including, but not limited to, all employment      agreements, change of control agreements, non-competition agreements or      any other agreement related to Executive's employment with the Company;      provided, however, nothing herein shall affect the terms of the      Indemnification Agreement entered into between the Company and Executive      dated May 15, 2006, which shall continue and remain in full force and      effect. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 19.   | Governing      Law.  The validity, interpretation, construction and      performance of this Agreement shall be governed by the laws of the State      of Tennessee to the extent federal law does not  apply. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 20.   | Resolution of      Disputes.  Any dispute or claim arising out of or      relating to this Agreement shall be settled by final and binding      arbitration in Johnson City, Tennessee in accordance with the Commercial      Arbitration rules of the American Arbitration Association, and judgment      upon the award rendered by the arbitrators may be entered in any court      having jurisdiction thereof.  The fees and expenses of the      arbitration panel shall be equally borne by the Company and      Executive.  Each party shall be liable for its own costs and      expenses as a result of any dispute related to this    Agreement. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 21.   | Validity.  The      invalidity or unenforceability of any provision of this Agreement shall      not affect the validity or enforceability of the other provisions of this      Agreement, which latter provisions shall remain in full force and      effect. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 22.   | No Adequate Remedy At      Law; Costs to Prevailing Party.  The Company and the      Executive recognize that each party may have no adequate remedy at law for      breach by the other of any of the agreements contained herein, and      particularly a breach of Paragraphs 7, 8, 9, or 11, and, in the event of      any such breach, the Company and the Executive hereby agree and consent      that the other shall be entitled to injunctive relief or other appropriate      remedy to enforce performance of such  agreements. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 23.   | Non-Assignability.  This      Agreement, and the rights and obligations of the parties hereunder, are      personal and neither this Agreement, nor any right, benefit or obligation      of either party hereto, shall be subject to voluntary or involuntary      assignment, alienation  or transfer, whether by operation of law      or otherwise, without the prior written consent of the other party;      provided, however, that the Company may assign this Agreement in      connection with a merger or consolidation involving the Company or a sale      of substantially all of its assets to the surviving corporation or      purchaser, as the case may be, so long as such assignee assumes the      Company's obligations hereunder. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 24.   | Headings.  The      section headings contained in this Agreement are for convenience of      reference only and will not be deemed to control or affect the meaning or      construction of any provision of this Agreement.  Reference to      Paragraphs are to Paragraphs in thisAgreement. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 25.   | Counterparts.  This      Agreement may be executed in one or more counterparts, each of which shall      be deemed to be an original, but of which together will constitute one and      the same instrument. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|    |   |   |  NN,      INC.                                                                       |
|---------|--------|--------|-------------------------------------------------------------------------------------------|
|    |   |   |                                                                                      |
|    |   |   |                                                                                      |
|    |   |   | By:       /s/Roderick R.      Baty                                                   |
|    |   |   |               Roderick      R. Baty, Chairman/CEO |
| Attest: |   |   |                                                                                      |
|    |   |   |                                                                                      |
|    |   |   | EXECUTIVE:                                                                                |
|    |   |   |                                                                                      |
|    |   |   |                                                                                      |
|    |   |   |              /s/Jeffrey H.    Hodge                    |
|    |   |   |              Jeffrey H. Hodge                          |
|    |   |   |                                                                                      |

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