Document:

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                                                                    Exhibit 10.1

                             NN BALL & ROLLER, INC.

                              STOCK INCENTIVE PLAN

1.       PURPOSE

         The NN Ball & Roller, Inc. Stock Incentive Plan (the "Plan") is
         designed to enable officers and key employees of NN Ball & Roller, Inc.
         (the "Company") to acquire or increase a proprietary interest in the
         Company, and thus to share in the future success of the Company's
         business. Accordingly, the Plan is intended as a means of attracting
         and retaining officers and key employees of outstanding ability and of
         increasing the identity of interests between them and the Company's
         shareholders, by providing an incentive to perform in a superior manner
         and rewarding such performance. Because the individuals eligible to
         receive Awards under the Plan will be those who are in positions to
         make important and direct contributions to the success of the Company,
         the directors believe that the grant of Awards will advance the
         interests of the Company and the shareholders.

2.       DEFINITIONS

         In this Plan document, unless the context clearly indicates otherwise,
         words in the masculine gender shall be deemed to refer to females as
         well as to males, any term used in the singular also shall refer to the
         plural, and the following capitalized terms shall have the following
         meanings:

         (a)      "Agreement" means the written agreement to be entered into by
                  the Company and the Grantee, as provided in Section 7 hereof.

         (b)      "Award" means an Option, Restricted Shares, a Right or any
                  award described in Section 13 hereof.

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     (c) "Beneficiary" means the person or persons designated in writing by the
         Grantee as his beneficiary with respect to an Award in the event of the
         Grantee's death; or, in the absence of an effective designation or if
         the designated person or persons predecease the Grantee, the Grantee's
         Beneficiary shall be the person or persons who acquire by bequest or
         inheritance the Grantee's rights in respect of an Award. In order to be
         effective, a Grantee's designation of a Beneficiary must be on file
         with the Committee before the Grantee's death. Any such designation may
         be revoked by the Grantee and a new designation substituted therefor at
         any time before the Grantee's death.

     (d) "Board of Directors" or "Board" means the board of directors of the
         Company.

     (e) A "Change in Control" shall be deemed to occur when and if any of the
         following events occurs:

                (i) the Company acquires knowledge that any "person" or "group"
         within the meaning of Section 13(d) and 14(d)(2) of the 1934 Act in a
         transaction or series of transactions has become the "beneficial
         owner," as defined in Rule 13d-3 under the 1934 Act, directly or
         indirectly, of a majority of the then outstanding voting securities of
         the Company (not including voting securities held by officers or
         directors of the Company within the meaning of Section 16 of the 1934
         Act), otherwise than through a transaction or series of transactions
         arranged by, or consummated with the prior approval of, the Board,
         except in a transaction provided for in clause (ii) hereof; or

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              (ii) the consummation of a merger or consolidation of the Company
         with, or a sale of all or substantially all of the assets of the
         Company to, another corporation unaffiliated with the Company that has
         been approved by the holders of a majority of the outstanding voting
         securities of the Company (not including any voting securities that are
         held by directors or officers of the Company within the meaning of
         Section 16 of the 1934 Act) and after which merger, consolidation or
         sale the shareholders of the Company immediately prior thereto do not
         beneficially own at least a majority of the combined voting power of
         the then outstanding voting securities entitled to vote generally in
         the election of directors of the corporation surviving such merger or
         consolidation or to which all or substantially all such assets are
         transferred.

     (f) "Code" means the Internal Revenue Code of 1986, as amended from time to
         time.

     (g) "Committee" means a committee, appointed or approved by the Board
         pursuant to Section 5(a) below, consisting of (i) prior to the
         consummation of the initial public offering, some or all of the
         directors, and (ii) after the consummation of the initial public
         offering not less than two directors each of whom is a "disinterested
         person" within the meaning of Rule 16b-3 under the 1934 Act (or any
         successor rule of similar import) or such greater number of directors
         as may be required to satisfy the requirements of Rule 16b-3 as in
         effect from time to time. To the extent that it is determined desirable
         to exempt any compensation earned under the Plan from the limitation on

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         deductions imposed by Section 162(m) of the Code and the rules and
         regulations thereunder, membership in the Committee may be limited as
         necessary to exempt such compensation from such limitation.

    (h)  "Company" means NN Ball & Roller, Inc.

    (i)  "Disability" or "Disabled" means having a total and permanent
         disability as defined in Section 22(e)(3) of the Code.

    (j)  "Fair Market Value" means, when used in connection with the Shares on a
         certain date, (1) the last sale price if Shares are listed on a
         national securities exchange, (2) if the Shares are not listed on a
         national security exchange, the last sale price (or if last sale prices
         are not disseminated, the mean of the closing bid and asked prices) as
         reported by a nationally recognized quotation reporting service then
         reporting such information or (3) if Shares are not so listed or such
         prices are not so disseminated any other appropriate method that the
         Committee deems fair and equitable.

    (k)  "Grantee" means a person to whom an Award has been granted under the
         Plan.

    (l)  "Incentive Stock Option" means an Option that complies with the terms
         and conditions set forth in Section 422(b) of the Code and is
         designated by the Committee as an Incentive Stock Option.

    (m)  "Limited Stock Appreciation Right" means a right that provides for a
         payment in accordance with Section 11 hereof.

    (n)  "1934 Act" means the Securities Exchange Act of 1934, as amended from
         time to time.

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     (o) "Nonqualified Stock Option" means an Option granted under the Plan
         other than an Incentive Stock Option.

     (p) "Option" means an option to purchase a Share or Shares under the Plan.
         Unless the context clearly indicates otherwise, the term "Option" shall
         include both Incentive Stock Options and Nonqualified Stock Options.

     (q) "Parent" means any parent corporation of the Company within the meaning
         of Section 424(e) of the Code (or a successor provision of similar
         import).

     (r) "Plan" means the NN Ball & Roller, Inc. Stock Incentive Plan, as set
         forth herein and as amended from time to time.

     (s) "Restricted Shares" means Shares granted pursuant to Section 12 hereof
         subject to such restrictions and other terms and conditions as the
         Committee shall determine in accordance with the Plan.

     (t) "Retirement" means termination of employment after the Grantee's 60th
         birthday and after the Grantee has completed five years of service
         (within the meaning of the NN Ball and Roller, Inc. Employees' Profit
         Sharing Plan) with the Company.

     (u) "Right" means a Stock Appreciation Right or a Limited Stock
         Appreciation Right. Unless the context clearly indicates otherwise, the
         term "Right" shall include both Stock Appreciation Rights and Limited
         Stock Appreciation Rights.

     (v) "Shares" means shares of the common stock, par value $0.01 per share,
         of the Company.

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     (w) "Stock Appreciation Right" means a right that provides for a payment in
         accordance with Section 10 hereof.

     (x) "Subsidiary" means any subsidiary corporation of the Company within the
         meaning of Section 424(f) of the Code (or a successor provision of
         similar import).

     (y) "Term" means the period during which a particular Option or Right may
         be exercised.

3.   ADOPTION AND DURATION OF THE PLAN

     (a) The Plan is effective as of March 2, 1994, and shall terminate ten
         years after such effective date, unless it is sooner terminated in
         accordance with Section 23 hereof. Any Award outstanding at the time
         that the Plan is terminated shall not cease to be or cease to become
         exercisable pursuant to its terms because of the termination of the
         Plan.

     (b) The Plan shall be approved either (1) by the affirmative vote of the
         holders of a majority of the outstanding Shares present in person or
         represented by proxy and entitled to vote at a meeting of the
         stockholders of the Company duly called for such purpose, or (2) by the
         written consent of the holders of a majority of the outstanding Shares
         entitled to vote (or any larger percentage of the Shares entitled to
         vote as required by the Company's Certificate of Incorporation or
         By-laws). If stockholder approval is not obtained, all Awards granted
         under the Plan shall be of no effect. No Award may be exercised,

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         and no restriction on Restricted Shares shall expire, lapse or be
         removed, prior to stockholder approval of the Plan.

4.   NUMBER AND SOURCE OF SHARES SUBJECT TO THE PLAN

     (a) The Company may grant Awards under the Plan with respect to not more
         than 500,000 Shares (subject, however, to adjustment as provided in
         Section 22 hereof), which Shares may be provided from any or a
         combination of the Company's treasury, the issuance of authorized but
         unissued Shares, and/or the purchase of outstanding Shares in the open
         market or in private transactions.

     (b) If, and to the extent that, all or any part of an Award previously
         granted is surrendered, lapses, expires, is forfeited or is terminated
         (other than by reason of exercise in the case of an Option), in whole
         or in part, in such manner that all or some of the Shares that are the
         subject of the Award are not issued to the Grantee (and cash or any
         other form of consideration is not paid in lieu thereof pursuant to any
         tandem arrangement or otherwise), then such Shares subject to the Award
         shall again become available for the granting of Awards under the Plan
         within the limitation stated in subsection (a). Notwithstanding the
         foregoing, (i) if, while any Award is outstanding, the Grantee thereof
         receives any benefits of ownership of the Shares (such as the right to
         vote or receive dividends on Restricted Shares) or (ii) if any Shares
         previously issued under the Plan are surrendered, or any Shares
         issuable under the Plan are withheld, in payment of the exercise price
         of an Option or to satisfy tax

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         withholding obligations associated with any Award, then in each such
         case such Shares shall not again be available for Awards under the
         Plan.

5.   ADMINISTRATION OF THE PLAN

     (a) The Plan shall be administered by the Committee. The members of the
         Committee shall be appointed by the Board from time to time and shall
         serve at the pleasure of the Board.

     (b) The Committee shall adopt such rules of procedure as it may deem
         appropriate for the proper administration of the Plan and as are in
         accordance with the Certificate of Incorporation and Bylaws of the
         Company. All actions of the Committee under the Plan shall be effective
         if taken either (1) by a majority vote of the members then in office at
         a meeting duly called and held or (2) by execution of a written
         instrument signed by all of the members then in office.

     (c) The powers of the Committee shall include plenary authority to
         interpret the Plan. Subject to the provisions of the Plan, the
         Committee shall have the authority, in its sole discretion, from time
         to time: (1) to select the officers and key employees to whom Awards
         shall be granted; (2) to determine the date on which each Award shall
         be granted; (3) to prescribe the number of Shares subject to each
         Award; (4) to determine the type of each Award; (5) to determine the
         term of each Award; (6) to determine the periods during which Awards
         may be exercised and the restrictions and limitations upon exercise of
         Awards or the receipt of Shares, other property or cash thereunder; (7)
         to

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          prescribe any performance criteria pursuant to which Awards may be
          granted or may become exercisable or payable; (8) to prescribe any
          limitations, restrictions or conditions on any Award; (9) to prescribe
          the provisions of each Agreement, which shall not be inconsistent with
          the terms of the Plan; (10) to adopt, amend and rescind rules and
          regulations relating to the Plan; and (11) to make all other
          determinations and take all other actions that are necessary or
          advisable for the implementation and administration of the Plan.

6.   INDIVIDUALS ELIGIBLE TO RECEIVE AWARDS

     (a)  Awards may be granted under the Plan to officers and key employees of
          the Company or any Subsidiary, including officers or key employees who
          also serve as members of the Board. All determinations by the
          Committee as to the individuals to whom Awards shall be granted
          hereunder shall be conclusive.

     (b)  Directors who are not regular salaried employees of the Company or any
          Subsidiary shall not be eligible to receive Awards.

     (c)  A Grantee may receive more than one Award. A Grantee may not receive
          Awards with respect to more than 300,000 Shares (subject, however, to
          adjustment as provided in Section 22) in any three-year period. For
          purposes of the application of this limitation, if an Award is
          cancelled, the Shares subject to the cancelled Award shall continue to
          be counted against the maximum number of Shares for which Awards may
          be granted to the Grantee. If, after the grant of an Award, the Option
          price or purchase price

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          of the Award is reduced, the transaction shall be treated as a
          cancellation of the Award and a grant of a new Award, and both the
          Shares subject to the Award that is deemed to be cancelled and the
          Shares subject to the Award that is deemed to be granted shall reduce
          the maximum number of Shares for which Awards may be granted to the
          Grantee.

7.   AGREEMENT

     (a)  Each Award shall be evidenced by an Agreement setting forth the number
          of Shares subject to the Award or to which such Award corresponds, and
          the terms, conditions and restrictions applicable thereto.

     (b)  Appropriate officers of the Company are hereby authorized to execute
          and deliver Agreements in the name of the Company as directed from
          time to time by the Committee.

8.   INCENTIVE STOCK OPTIONS

     (a)  The Committee may authorize the grant of Incentive Stock Options to
          officers and key employees, subject to the terms and conditions set
          forth in the Plan. The Agreement relating to an Incentive Stock Option
          shall state that the Option evidenced by the Agreement is intended to
          be an "incentive stock option" within the meaning of Section 422(b) of
          the Code.

     (b)  The Term of each Incentive Stock Option shall end (unless the Option
          shall have terminated earlier under another provision of the Plan) on
          a date fixed by the Committee and set forth in the applicable
          Agreement. In no event

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          shall the Term of the Option extend beyond ten years from the date of
          grant of the Option. In the case of any Grantee who, on the date the
          Option is granted, owns (within the meaning of Section 424(d) of the
          Code) more than 10 percent of the total combined voting power of all
          classes of stock of the Company, a Parent (if any), or a Subsidiary
          (if any), the Term of the Option shall not extend beyond five years
          from the date of grant.

     (c)  To the extent that the aggregate Fair Market Value of the stock with
          respect to which Incentive Stock Options (determined without regard to
          this subsection (c)) are exercisable by any Grantee for the first time
          during any calendar year (under all stock option plans of the Company,
          its Parent (if any) and its Subsidiaries (if any)) exceeds $100,000,
          such Options shall not be Incentive Stock Options. For the purposes of
          this subsection (c), the Fair Market Value of stock shall be
          determined as of the time the Option with respect to such stock is
          granted. This subsection (c) shall be applied by taking Options into
          account in the order in which they were granted.

     (d)  The Option price per Share established by the Committee for an
          Incentive Stock Option shall not be less than the Fair Market Value of
          a Share on the date the Option is granted, except that in the case of
          an Incentive Stock Option granted to a Grantee who, on the date the
          Option is granted, owns (within the meaning of Section 424(d) of the
          Code) more than 10 percent of the total combined voting power of all
          classes of stock of the Company, a Parent (if any) or a Subsidiary (if
          any), the Option price for each Share shall not be less than 110
          percent of the Fair Market Value of a Share on the date

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          the Option is granted. In no event may an Incentive Stock Option be
          granted if the Option price per Share is less than the par value of a
          Share.

     (e)  Any Grantee who disposes of Shares purchased upon the exercise of an
          Incentive Stock Option either (1) within two years after the date on
          which the Option was granted, or (2) within one year after the
          issuance or transfer of such Shares to the Grantee, shall promptly
          notify the Company of the date of such disposition and of the amount
          realized upon such disposition.

9.   NONQUALIFIED STOCK OPTIONS

     (a)  The Committee may authorize the grant of Nonqualified Stock Options
          subject to the terms and conditions set forth in the Plan. Unless an
          Option is designated by the Committee as an Incentive Stock Option, it
          is intended that the Option will not be an "incentive stock option"
          within the meaning of Section 422(b) of the Code and, instead, will be
          a Nonqualified Stock Option. The Agreement relating to a Nonqualified
          Stock Option shall state that the Option evidenced by the Agreement
          shall not be treated as an Incentive Stock Option.

     (b)  The Term of each Nonqualified Stock Option shall end (unless the
          Option shall have terminated earlier under another provision of the
          Plan) on a date fixed by the Committee and set forth in the applicable
          Agreement. In no event shall the Term of the Nonqualified Stock Option
          extend beyond ten years from the date of grant of the Option.

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     (c)  The Option price to be paid by the Grantee for each Share purchased
          upon the exercise of a Nonqualified Stock Option shall not be less
          than the Fair Market Value of a Share on the date the Option is
          granted. In no event may a Nonqualified Stock Option be granted if the
          Option price per Share is less than the par value of a Share.

10.  STOCK APPRECIATION RIGHTS

     (a)  The Committee shall have authority, in its sole discretion, to provide
          for the grant of Stock Appreciation Rights either (i) in tandem with
          all or a portion of an Option granted under the Plan or (ii)
          independent of any Option granted under the Plan. A tandem Right shall
          be exercisable only at such times, and to such extent, as the related
          Option is exercisable. Subject to shareholder approval of the Plan as
          required by Section 3(b) above, an independent Right shall be
          exercisable at such time and to such extent as the Committee shall
          determine.

     (b)  Any Stock Appreciation Right shall permit the Grantee to receive, upon
          exercise of the Right, an amount (to be paid in cash, in Shares or in
          both cash and Shares, as determined by the Committee in its sole
          discretion at any time prior to or after exercise) equal in value to
          the difference between (1) the Fair Market Value on the date of
          exercise of the Shares with respect to which the Right is exercised
          and (2) either (i) the Option price of the related Option in the case
          of a Right that is related to an Option or (ii) the Fair Market Value
          of

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          a Share on the date the Right was granted in the case of a Right that
          is not related to any Option.

     (c)  With respect to Rights granted under the Plan, the Committee may
          establish such waiting periods, exercise dates and other limitations
          as it shall deem appropriate in its sole discretion, provided that (1)
          no Right that is granted in tandem with an Option may be exercised
          after the expiration of the Term of such Option and (2) the exercise
          of a Right (whether or not in tandem with an Option) for cash by a
          director or officer (within the meaning of Rule 16b-3 under the 1934
          Act) of the Company is subject to the following conditions: (A) the
          Company shall have been subject to the reporting requirements of
          Section 13(a) of the 1934 Act for at least one year prior to the
          exercise and shall have filed all reports required to be filed under
          Section 13(a) during such period, (B) the Company shall have regularly
          released for publication quarterly and annual summary statements of
          sales and earnings, (C) the Committee, which shall have sole
          discretion to approve or disapprove the election of the Grantee to
          receive cash as whole or partial settlement of the Right, approves the
          Grantee's election to receive cash after the election is made, (D) the
          exercise occurs during one of the window periods described in clause
          (e)(3) of Rule 16b-3 and (E) the Right is not exercised prior to the
          expiration of a six-month period after the date of the grant or, if
          later, stockholder approval of the Plan as provided in Section 3(b).
          In addition, the Committee may impose a prohibition on the exercise of
          Rights for such

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          period or periods as it, in its sole discretion, deems to be in the
          best interest of the Company.

     (d)  The right of a Grantee to exercise an Option shall be canceled if and
          to the extent that the Shares subject to the Option are used to
          calculate the amount to be received upon the exercise of a tandem
          Right, and the right of a Grantee to exercise a tandem Right shall be
          canceled if and to the extent that the Shares subject to the Right are
          purchased upon the exercise of the related Option or are used to
          calculate the amount to be received upon the exercise of another Right
          that is related to the Right in question.

     (e)  A tandem Right may be granted coincident with or after the grant of
          any related Option; provided that the Committee shall consult with
          counsel before granting a tandem Right after the grant of a related
          Incentive Stock Option.

11.  LIMITED STOCK APPRECIATION RIGHTS

     (a)  The Committee shall have authority, in its sole discretion, to provide
          for the grant of Limited Stock Appreciation Rights relating to all or
          a portion of any Option, whether or not a Stock Appreciation Right has
          been granted in connection with such Option, except that no Limited
          Stock Appreciation Right shall be granted in response to a Change in
          Control.

     (b)  A Limited Stock Appreciation Right shall be exercised automatically
          upon the occurrence of a Change in Control. However, no Limited Stock
          Appreciation Right shall be exercisable after the expiration of the
          Term of the tandem

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          Option and the exercise of a Limited Stock Appreciation Right by a
          director or officer (within the meaning of Rule 16b-3 under the 1934
          Act) of the Company is subject to the following conditions: (1) the
          Company shall have been subject to the reporting requirements of
          Section 13(a) of the 1934 Act for at least one year prior to the
          exercise and shall have filed all reports required to be filed under
          Section 13(a) during such period, (2) the Company shall have regularly
          released for publication quarterly and annual summary statements of
          sales and earnings, and (3) six months shall have expired since the
          date of the grant of the Limited Stock Appreciation Right or, if
          later, stockholder approval of the Plan as provided in Section 3(b).

     (c)  The amount to be received by the Grantee upon the exercise of a
          Limited Stock Appreciation Right shall be paid in cash, and shall be
          equal in amount to the number of Shares with respect to which the
          Right is exercised multiplied by the excess of:

               (1)  the higher of (i) the highest Fair Market Value of a Share
          during the period commencing on the ninetieth (90th) day preceding the
          exercise of the Right and ending on the date of exercise and (ii)
          either (A) if an event described in paragraph (i) of the definition of
          "Change in Control," above, has occurred, the highest price per Share
          paid for any Share as shown on a Schedule 13D (or any amendment
          thereto) filed pursuant to Section 13(d) of the 1934 Act by any person
          or group (as defined in that definition) whose acquisition caused the
          Change in Control to occur, or (B) if an event described in paragraph
          (ii) of the definition of "Change in Control," above,

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                  has occurred, the cash value per Share of the consideration
                  paid or to be paid pursuant to the reorganization agreement
                  (as defined in that definition) if such price is determinable
                  as of the date of exercise of the Limited Stock Appreciation
                  Rights, over

                          (2)   the Option price of the related Option.
                  Any securities or property that are part or all of the
                  consideration paid for Shares pursuant to the reorganization
                  agreement shall be valued at the higher of (i) the valuation
                  placed on such securities or property by the corporation
                  issuing securities or property in the merger or consolidation
                  or to whom the Company is selling or otherwise disposing of
                  all or substantially all of the assets of the Company and (ii)
                  the valuation placed on such securities or property by the
                  Committee.

           (d)    In the case of a Limited Stock Appreciation Right that is
                  related to an Incentive Stock Option, the amount payable under
                  subsection (c) may not exceed the difference between the Fair
                  Market Value, as of the exercise date, of the Shares with
                  respect to which the Right is exercised and the Option price
                  of the related Incentive Stock Option.

           (e)    The grant and exercise of Limited Stock Appreciation Rights
                  shall be subject to the terms and conditions set forth in
                  Sections 10(d) through 10(e).

      12.  RESTRICTED SHARES

           (a)    The Committee may authorize the grant of Restricted Shares
                  subject to the terms and conditions set forth in the Plan.
                  Subject to the provisions of this

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                  Section 12, the Committee shall determine at the time of grant
                  the size and the terms and conditions of each grant of
                  Restricted Shares, including the duration of the restrictions
                  that shall be imposed on the Restricted Shares, the dates on
                  which, or circumstances (such as the satisfaction of specified
                  performance criteria) in which, the restrictions shall expire,
                  lapse or be removed or the Restricted Shares shall be
                  forfeited, and the purchase price, if any, to be paid to the
                  Company by the Grantee (and the terms of payment thereof) for
                  the Restricted Shares. To the extent required by law, the
                  purchase price of a Restricted Share shall not be less than
                  the par value of a Share on the date of grant.

           (b)    A Grantee of Restricted Shares shall have beneficial ownership
                  of the Restricted Shares, including the right to receive
                  dividends on, and the right to vote, the Restricted Shares. A
                  certificate or certificates representing the number of
                  Restricted Shares acquired shall be registered in the name of
                  the Grantee. The Committee, in its sole discretion, shall
                  determine when the certificate or certificates shall be
                  delivered to the Grantee (or, in the event of the Grantee's
                  death, to his Beneficiary), may provide for the holding of
                  such certificate or certificates in custody by a bank or other
                  institution or by the Company itself pending their delivery to
                  the Grantee or Beneficiary, and may provide for any
                  appropriate legend to be borne by the certificate or
                  certificates referring to the terms, conditions and
                  restrictions applicable to the Restricted Shares.

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           (c)    While subject to the restrictions imposed by the Committee in
                  accordance with this Section 12, Restricted Shares shall not
                  be sold, assigned, conveyed, transferred, pledged,
                  hypothecated, or otherwise disposed of, and any attempt
                  thereto shall be ineffective. If the Grantee's continuous
                  employment with the Company or any Subsidiary shall terminate
                  for any reason, except as provided by the Committee pursuant
                  to subsection (d) below, all of the rights of the Grantee to
                  such Restricted Shares shall immediately terminate. Upon such
                  termination, the Grantee shall redeliver or cause to be
                  redelivered to the Company any certificate(s) for the Shares
                  previously delivered to the Grantee, accompanied by such
                  endorsement(s) and/or instrument(s) of transfer as may be
                  required by the Company. Upon the return of any certificate(s)
                  for such Restricted Shares, the Company shall pay to the
                  Grantee an amount in cash equal to the lesser of the aggregate
                  purchase price, if any, paid by the Grantee for the Restricted
                  Shares or the current fair market value of the Restricted
                  Shares.

           (d)    The restrictions imposed on Restricted Shares shall lapse on
                  such date or dates and in such circumstances as the Committee
                  shall determine at the time of the grant. The Committee shall
                  provide for the acceleration of the lapse of restrictions in
                  whole or in part upon the death or Disability of the Grantee
                  or upon the occurrence of a Change in Control, which
                  provisions shall be set forth in the Agreement.
                  Notwithstanding the foregoing, in no event shall Restricted
                  Shares granted to any director or officer (within the meaning
                  of Section 16 of the 1934 Act) of the Company be transferable
                  prior to the

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                  expiration of a period of six months from the date on which
                  the Restricted Shares were granted (or, if later, within six
                  months following the date of stockholder approval of the Plan
                  as provided in Section 3(b)).

           (e)    If, after Restricted Shares are transferred to a Grantee, the
                  Grantee properly and timely elects, pursuant to Section 83(b)
                  of the Code, to include in gross income for federal income tax
                  purposes the amount determined under Section 83(b) of the
                  Code, the Grantee shall furnish to the Company a copy of his
                  completed and signed election form, and shall pay (or make
                  arrangements satisfactory to the Company to pay) to the
                  Company any federal, state or local taxes required to be
                  withheld with respect to the Shares. If the Grantee fails to
                  make such payments, the Company and its Subsidiaries shall, to
                  the extent permitted by law, have the right to deduct from any
                  payment of any kind otherwise due to the Grantee any federal,
                  state or local taxes of any kind required by law to be
                  withheld with respect to the Shares.

      13.  OTHER STOCK-BASED AWARDS

           The Committee may, from time to time, grant Awards (other than the
           Awards described in Sections 8 through 12 above) under the Plan that
           consist of, are denominated in or payable in, are valued in whole or
           in part by reference to, or otherwise are based on or related to,
           Shares, provided that such grants comply with applicable law. The
           Committee may subject such Awards to such vesting or earnout
           provisions, restrictions on transfer, and/or other restrictions on
           incidents of ownership as the Committee may determine, provided that
           such restrictions are not inconsistent

<PAGE>

                                      -21-

           with the terms of the Plan. The Committee may grant Awards under this
           Section 13 that require no payment of consideration by the Grantee
           (other than services previously rendered or, as may be permitted by
           applicable law, services to be rendered), either on the date of grant
           or the date any restriction(s) thereon are removed. Awards granted
           under this Section 13 may include, by way of example, phantom Shares,
           performance units, performance bonus awards, and other Awards that
           are payable in cash, or that are payable in cash or Shares or other
           property (at the election of the Committee or, if the Committee so
           provides, at the election of the Grantee), provided that such Awards
           are denominated in Shares, valued in whole or in part by reference to
           Shares, or otherwise based on or related to Shares.

      14.  EXERCISABILITY OF OPTIONS AND RIGHTS

           (a)    The Committee shall have authority to grant (1) Options and
                  Rights that are exercisable in full at any time during their
                  Term and (2) Options and Rights that become exercisable in
                  installments during their Term. In exercising an Option or
                  Right, the Grantee may purchase less than all of the Shares
                  available under the Option or Right. Unless the Committee
                  provides otherwise at the time of grant, no Option or Right
                  granted to a director or officer (within the meaning of
                  Section 16 of the 1934 Act) of the Company shall be
                  exercisable within six months after the date of the grant of
                  such Option or Right (or, if later, within six months
                  following stockholder approval of the Plan as provided in
                  Section 3(b)).

<PAGE>

                                      -22-

           (b)    Any Option or Right shall be exercisable in full,
                  notwithstanding the applicability of any limitation on the
                  exercise of such Option or Right (other than the six-month
                  waiting period described in the final sentence of subsection
                  (a) above if the Option or Right is subject to such a waiting
                  period and the requirement that the shareholders approve the
                  Plan) beginning on the date on which a Change in Control has
                  occurred.

      15.  EXERCISE OF OPTION OR RIGHT

           (a)    Options or Rights shall be exercised by delivering or mailing
                  to the Committee: (1) in the form and in the manner prescribed
                  by the Committee, a notice specifying the number of Shares to
                  be purchased or the number of Shares with respect to which a
                  Right shall be exercised, and (2) if an Option is exercised,
                  payment in full of the Option price for the Shares so
                  purchased by a method described in Section 18 hereof.

           (b)    Subject to Section 17(a) hereof, upon receipt of the notice of
                  exercise and payment of the Option price, the Company shall
                  promptly deliver to the Grantee (or Beneficiary) a certificate
                  or certificates for the Shares to which he is entitled,
                  without charge to him for issue or transfer tax.

           (c)    Upon the purchase of Shares under an Option or Right, the
                  stock certificate or certificates may, at the request of the
                  purchaser or recipient, be issued in his name and the name of
                  another person as joint tenants with right of survivorship.

<PAGE>

                                      -23-

      16.  EXERCISE OF OPTION OR RIGHT AFTER TERMINATION OF EMPLOYMENT

           (a)    If Grantee's employment with the Company and its Subsidiaries
                  (if any) terminates for any reason other than Retirement,
                  Disability or death, any Option or Right then held by the
                  Grantee, to the extent exercisable on such date of
                  termination, shall continue to be exercisable at any time
                  within the three-month period following such termination of
                  employment, but not after such period.

           (b)    If the Grantee's employment with the Company and its
                  Subsidiaries (if any) terminates because of Retirement, any
                  Option or Right then held by the Grantee, to the extent
                  exercisable on such date of termination, shall be exercisable
                  at any time within the 12-month period following such
                  Retirement, but not after such period; provided that an
                  Incentive Stock Option exercised more than three months
                  following Retirement shall be treated as a Nonqualified Stock
                  Option.

           (c)    If the Grantee's employment with the Company and its
                  Subsidiaries (if any) terminates because of the Grantee's
                  Disability, any Option or Right then held by the Grantee shall
                  be exercisable at any time within the 12-month period
                  following such termination of employment, but not after such
                  period.

           (d)    If a Grantee's employment with the Company and its
                  Subsidiaries (if any) terminates because of the Grantee's
                  death, or if the Grantee dies after termination of employment
                  while an Option or Right is exercisable pursuant to subsection
                  (c), above, any Option or Right held by the Grantee on the
                  date of his death shall be exercisable at any time within the
                  24-month period fol-

<PAGE>

                                      -24-

                  lowing the Grantee's death, but not after such period;
                  provided that an Incentive Stock Option exercised more than 12
                  months after the Grantee's termination of employment because
                  of Disability shall be treated as a Nonqualified Stock Option.
                  Any Option or Right held by the Grantee on the date of his
                  death may be exercised only by the Grantee's Beneficiary;
                  provided, however, that if the Grantee's Beneficiary dies
                  while the Option is exercisable pursuant to this subsection
                  (d), the executor or administrator of the Beneficiary's estate
                  may exercise the Option within the period specified in the
                  preceding sentence hereof. If the Grantee and the Grantee's
                  Beneficiary die in circumstances in which there is not
                  sufficient evidence that the two have died otherwise than
                  simultaneously, the Beneficiary shall be deemed to have
                  predeceased the Grantee.

           (e)    Notwithstanding any provision of an Option or Right that
                  provides for the exercise of the Option or Right in
                  installments, except for the six-month waiting period
                  described in the final sentence of Section 14(a) (if the
                  Option or Right is subject to such waiting period) and the
                  requirement that the shareholders approve the Plan, the Option
                  or Right shall become immediately exercisable in full upon the
                  Disability or death of the Grantee; and any Option or Right
                  that would have become immediately exercisable in full upon
                  the Grantee's Disability or death but for the application of
                  such six-month waiting period shall become immediately
                  exercisable in full upon the expiration of such six-month
                  waiting period.

<PAGE>

                                      -25-

    (f)  Notwithstanding any other provision of this Section 16, in no event
         shall an Option or Right be exercisable after the expiration date
         specified in the Agreement.

17. CONDITIONS ON AWARDS

    (a)  The grant or exercise of an Award and the distribution of Shares or
         cash under the Plan shall be subject to the condition that if at any
         time the Company shall determine (in accordance with the provisions of
         the following sentence) that it is necessary as a condition of, or in
         connection with, such grant, exercise or distribution (1) to satisfy
         withholding tax or other withholding liabilities, (2) to effect the
         listing, registration or qualification on any securities exchange, on
         any quotation system, or under any federal, state or local law, of any
         Shares otherwise deliverable in connection with such grant, exercise or
         distribution or (3) to obtain the consent or approval of any regulatory
         body, then in any such event such grant, exercise or distribution shall
         not be effective unless such withholding, listing, registration,
         qualification, consent or approval shall have been effected or obtained
         free of any conditions not acceptable to the Company in its reasonable
         and good faith judgment. In seeking to effect or obtain any such
         withholding, listing, registration, qualification, consent or approval,
         the Company shall act with all reasonable diligence. Any such
         postponement or limitation affecting the right to exercise an Award or
         the grant or distribution of an Award, Shares or cash shall not extend
         the time within which the Award may be granted or exer-

<PAGE>

                                      -26-

         cised or the Shares or cash distributed, unless the Company and the
         Grantee choose to amend the terms of the Award to provide for such an
         extension; and neither the Company, nor any of its directors or
         officers shall have any obligation or liability to the Grantee or to a
         Beneficiary by reason of any such postponement or limitation.

    (b)  All Awards granted under the Plan shall be nontransferable other than
         by will or by the laws of descent and distribution, and an Award may be
         exercised during the lifetime of the Grantee only by him.

18. PAYMENT FOR AWARD

    Any exercise or purchase price of an Award may be payable, at the discretion
    of the Committee, by any one or a combination of the following methods: (1)
    by money order, cashier's check or certified check; (2) by having the
    Company withhold Shares otherwise deliverable to the Grantee or by the
    tender of other Shares to the Company; or (3) unless the Committee expressly
    provides otherwise (at the time of grant in the case of Incentive Stock
    Option or at any time prior to exercise or purchase in the case of any other
    Award) by cash payment made by the Grantee's broker pursuant to the
    Grantee's instructions (and, if so instructed by the Grantee, cash payment
    by the Grantee's broker of the amount of any taxes to be withheld in
    connection with the exercise), accompanied by the Grantee's irrevocable
    instructions to the Company to deliver the Shares issuable upon exercise of
    the Award promptly to the broker for the Grantee's account; provided that,
    in the case of any director or officer (within the meaning of Section 16 of
    the 1934 Act) of the Company, such

<PAGE>

                                      -27-

    exercise would not subject the Grantee to short-swing profit recovery
    provision of Section 16(b) of the 1934 Act. Shares tendered in satisfaction
    of the exercise or purchase price shall be valued at their Fair Market Value
    on the date of tender. The Committee shall determine acceptable methods for
    tendering Shares to exercise an Award under the Plan, and may impose such
    limitations and prohibitions on the use of Shares to exercise Awards as it
    deems appropriate. The date of exercise of an Award shall be deemed to be
    the date on which the notice of exercise and payment of the Option price are
    received by the Committee or, if such notice of exercise and payment are
    mailed in the United States and the United States Postal Service has stamped
    its postmark thereon, then on the date of such postmark.

19. TAX WITHHOLDING

    (a)  The Company shall have the right to collect an amount sufficient to
         satisfy any federal, state and/or local withholding tax requirements
         that might apply with respect to any Award (including, without
         limitation, the exercise of an Option or Right, the disposition of
         Shares, or the grant or distribution of Shares or cash) in the manner
         specified in subsection (b) or (c) below. Alternatively, a Grantee may
         elect to satisfy any such withholding tax requirements in the manner
         specified in subsection (d) or (e) below to the extent permitted
         therein.

    (b)  The Company shall have the right to require Grantees to remit to the
         Company in cash an amount sufficient to satisfy any such withholding
         tax requirements.

<PAGE>

                                      -28-

    (c)  The Company and any Subsidiary also shall, to the extent permitted by
         law, have the right to deduct from any payment of any kind (whether or
         not related to the Plan) otherwise due to a Grantee any such taxes
         required to be withheld.

    (d)  If the Committee in its sole discretion approves, a Grantee may
         irrevocably elect to have any withholding tax obligation satisfied by
         (i) having the Company withhold Shares otherwise deliverable to the
         Grantee with respect to the Award, or (ii) delivering other Shares to
         the Company; provided that, to the extent necessary for a director or
         an officer (within the meaning of Section 16 of the 1934 Act) of the
         Company to obtain exemption from the short-swing profit recovery
         provisions of Section 16(b) of the 1934 Act, any such election either
         (i) shall be made by an irrevocable election made at least six months
         before the date on which the amount of the tax to be withheld is
         determined or (ii) is subject to the following conditions: (A) the
         Company shall have been subject to the reporting requirements of
         Section 13(a) of the 1934 Act for at least one year prior to the
         election and shall have filed all reports required to be filed under
         Section 13(a) during such period, (B) the Company shall have regularly
         released for publication quarterly and annual summary statements of
         sales and earning, (C) the Committee, which shall have sole discretion
         to approve or disapprove such election, approves the election after the
         election is made, (D) the election occurs during (or in advance to take
         effect during) one of the window periods described in clause (c)(3) of
         Rule 16b-3 and (E) the election does not occur prior to the expiration

<PAGE>

                                      -29-

         of a six-month period after the date of the grant of the Award or, if
         later, stockholder approval of the Plan as provided in Section 3(b).

    (e)  If permitted by the Committee, a Grantee may elect to have any
         withholding tax obligation satisfied in the manner described in Section
         18(3), to the extent permitted therein.

20. FRACTIONAL SHARES

    No fractional Shares shall be issued pursuant to the Plan or any Award. The
    Committee shall determine whether cash, other securities, or other property
    shall be paid or transferred in lieu of fractional Shares, or whether
    fractional Shares or any rights thereto shall be cancelled, terminated or
    otherwise eliminated.

21. SHAREHOLDER RIGHTS

    (a)  No Award shall confer upon a Grantee any rights of a shareholder unless
         and until Shares are actually issued to him.

    (b)  Subject to any required action by the Company's shareholders, if the
         Company shall be a party to any merger, consolidation or reorganization
         in which Shares are changed or exchanged, a Grantee holding an
         outstanding Award shall be entitled to receive, upon the exercise of
         such Award, the same consideration that a holder of the same number of
         Shares that are subject to the Award is entitled to receive pursuant to
         such merger, consolidation or reorganization.

<PAGE>

                                      -30-

22. ADJUSTMENT FOR CHANGES IN CAPITALIZATION

    In addition to the provisions of Section 21(b) above, in the event of (i)
    any change in the Shares through merger, consolidation, reorganization,
    recapitalization, or otherwise, (ii) any dividend on the Shares that is
    payable in such Shares, or (iii) a stock split or a combination of Shares,
    then, in any such case, the aggregate number and type of Shares available
    for Awards, the number and type of Shares subject to outstanding Awards, the
    purchase or exercise price per Share of each outstanding Award and the
    number of Shares with respect to which Awards may be granted to a Grantee
    within any three-year period, shall be adjusted by the Committee as it deems
    equitable in its sole and absolute discretion to prevent substantial
    dilution or enlargement of the rights of the Grantees, subject to any
    required action by the shareholders of the Company; and provided that with
    respect to Incentive Stock Options, no such adjustment shall be required to
    the extent that such adjustment would cause such Options to violate Section
    422(b) of the Code.

23. TERMINATION, SUSPENSION OR MODIFICATION OF PLAN

    The Board of Directors may at any time terminate, suspend or modify the
    Plan, except that the Board shall not, without the approval of the holders
    of a majority of the Company's outstanding Shares present in person or
    represented by proxy and entitled to vote at a meeting of the stockholders
    of the Company duly called for such purpose or by the written consent of the
    holders of a majority of the outstanding Shares entitled to vote (or any
    larger percentage of the Shares entitled to vote as required by the
    Company's Certificate of Incorporation or By-laws), (a) change the

<PAGE>

                                      -31-

    class of persons eligible for Awards; (b) change the exercise or purchase
    price of Awards (other than through adjustment for changes in capitalization
    as provided in Section 22 hereof); (c) increase the maximum duration of the
    Plan; (d) materially increase the benefits accruing to participants under
    the Plan; or (e) materially increase the number of securities that may be
    issued under the Plan. No termination, suspension, or modification of the
    Plan shall adversely affect any right acquired by any Grantee or by any
    Beneficiary, under the terms of any Award granted before the date of such
    termination, suspension or modification, unless such Grantee or Beneficiary
    shall consent; but it shall be conclusively presumed that any adjustment for
    changes in capitalization in accordance with Section 22 hereof does not
    adversely affect any such right.

24. APPLICATION OF PROCEEDS

    The proceeds received by the Company from the sale of Shares (including
    Restricted Shares) under the Plan shall be used for general corporate
    purposes.

25. UNFUNDED PLAN

    The Plan shall be unfunded. Neither the Company nor any Subsidiary shall be
    required to segregate any assets that may be represented by any Awards, and
    neither the Company nor any Subsidiary nor the Board shall be deemed to be a
    trustee of any amounts to be paid under any Award. Any liability of the
    Company or any Subsidiary to pay any Grantee or Beneficiary with respect to
    an Award shall be based solely upon any contractual obligations created
    pursuant to the provisions of the Plan

<PAGE>

                                      -32-

    and the applicable Agreement; no such obligation shall be deemed to be
    secured by any pledge of, or encumbrance on, any property of the Company or
    a Subsidiary.

26. GENERAL PROVISIONS

    The grant of an Award at any time shall not give the Grantee any right to
    similar grants at any other time or any right to be retained in the employ
    of the Company or its Subsidiaries.

27. GOVERNING LAW

    The Plan shall be governed and its provision construed, enforced and
    administered in accordance with the laws of Delaware (excluding the conflict
    of law provisions thereof), except to the extent that such laws may be
    superseded by any federal law.

<PAGE>

                                    NN, INC.

                        INCENTIVE STOCK OPTION AGREEMENT

                                 pursuant to the

                              STOCK INCENTIVE PLAN

                  THIS AGREEMENT, dated as of _____________________ by and
between NN, Inc., a Delaware corporation (the "Company"), and __________ of 2000
Waters Edge Drive, Building C, Suite 12, Johnson City, TN 37604 (the "Grantee").

                                WITNESSETH THAT:

                  WHEREAS, the Grantee is employed by the Company and serves as
the ____________________ thereof;

                  WHEREAS, the Company desires to reward the Grantee's superior
performance and to provide the Grantee with inducements to continue in the
employ of the Company and to continue to perform in a superior manner;

                  WHEREAS, the Company has adopted the NN, Inc. Stock Incentive
Plan (the "Plan"), authorizing the grant of Awards by the Company to officers
and key employees;

                  WHEREAS, the Committee referred to in the Plan (the
"Committee"), pursuant to authority vested in it by the Company's Board of
Directors, has approved the granting to the Grantee of an Incentive Stock Option
(the "Option") to purchase shares of the Company's common stock, par value $.01
per share ("Shares"), upon the terms and subject to the conditions set forth
hereinafter and in the Plan; and

                  WHEREAS, the Company desires to grant the Option to the
Grantee and to memorialize the terms and conditions thereof;

<PAGE>

                                      -2-

                  NOW, THEREFORE, in consideration of the above-mentioned
premises and the covenants and agreements contained herein, the Company and the
Grantee, intending to be legally bound, hereby agree as follows:

                       SECTION 1: Incentive Stock Option

                  1.1 Pursuant to the Plan and this Incentive Stock Option
Agreement (the "Agreement"), the Company hereby grants to the Grantee, effective
as of the date of this Agreement, an Option to purchase an aggregate of
__________ Shares at the Option price per Share described in Section 1.2 hereof
and pursuant to the terms and conditions set forth in the Plan and this
Agreement. Any capitalized terms used herein and not defined herein have the
respective meanings ascribed to them in the Plan.

                  1.2 The Option exercise price per share with respect to the
Shares covered by this Agreement shall be equal to ____________________________
($__________), such amount equaling one hundred percent of the Fair Market Value
of each Share on the date of grant of the Option. Upon exercise of the option,
in whole or in part, this Option price shall be payable to the Company in
accordance with Section 2.1 hereof.

                  1.3 The date of grant of the Option is _____________________.

                  1.4 Subject to the provisions of Section 1.7 hereof, the
Option is intended to be an Incentive Stock Option within the meaning of section
422 of the Code.

                  1.5 Subject to Sections 1.6 and 3 hereof, the Option shall be
exercisable from and after each initial exercisability date set forth below with
respect to the indicated number of Shares:

<PAGE>

                                      -3-

===============================================================================
                                               Number of Shares for Which
       Initial Exercisability Date      the Option Becomes First Exercisable on
       ---------------------------                               --------------
                                                      Such Date
                                                      ---------
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------

-------------------------------------------------------------------------------

===============================================================================

The Grantee at any time may purchase less than the full number of Shares for
which the option is then exercisable. Shares not purchased in earlier periods
shall accumulate and be available for purchase in later periods within the Term
of the Option.

                  1.6 Notwithstanding the application of any limitation on the
exercise of the Option, the Option shall be exercisable in full immediately
following the date on which a Change in Control has occurred if the Grantee's
employment with the Company and its Subsidiaries has not terminated prior to the
date on which the Change in Control occurred; provided, however, that the Option
shall not be exercisable at any time during the six-month period following the
date of this Agreement; and further provided, that nothing in this Section 1.6
shall extend the Term of the Option or have any effect other than to accelerate
the date on which the Option becomes exercisable in full.

                  1.7 To the extent that the aggregate Fair Market Value of the
stock with respect to which Incentive Stock Options (determined without regard
to this Section 1.7) are exercisable by the Grantee for the first time during
any calendar year (under all stock option plans of the Company, its Parent and
its Subsidiaries) exceeds $100,000, such Options are not Incentive Stock
Options. For the purposes of this Section 1.7, the Fair Market Value of stock
shall be determined as of the time the option with respect to such stock is
granted. This Section 1.7 shall be applied by taking options into account in the
order in which they were granted. To

<PAGE>

                                      -4-

the extent that the Option is to become exercisable for the first time during
any calendar year with respect to a number of Shares that exceeds the foregoing
limitation, the Option shall be considered to consist of (i) an Incentive Stock
Option to acquire the maximum number of Shares permitted under this Section 1.7
and (ii) a Nonqualified Stock Option to acquire the excess Shares on the same
terms described in this Agreement.

                  1.8 The Term of the Option shall continue until the tenth
anniversary of the grant of the Option. The Option shall terminate (if not
sooner terminated in accordance with the provisions of the Plan or the other
provisions hereof) and shall no longer be exercisable after such tenth
anniversary.

                       SECTION 2: Exercise and Withholding

                  2.1 The Grantee may exercise the Option in respect of Shares
on and after the appropriate dates set forth in Section 1.5 above (and before a
date or event of termination or cancellation) in whole at any time, or in part
from time to time. The Grantee shall give the Company written notice to exercise
the option in whole or in a specified part. Such notice shall specify the number
of Shares to be purchased and shall be accompanied by full payment for the
Shares then being purchased, which payment may be made in any of the following
ways: (a) delivering a money order, cashier's check or certified check payable
to the order of the Company; (b) delivering Shares to the Company; (c) subject
to limitations imposed by the Plan and the Committee, a cash payment by
Grantee's broker pursuant to the Grantee's instruction; or (d) combination
thereof. The notice also shall be accompanied by such agreement, statement, or
other evidence as the Committee may require in order to satisfy itself that the
issuance of the Shares being purchased pursuant to such exercise and any
subsequent resale thereof will be in compliance with applicable laws and
regulations relating to the issuance and sale of securities, including the
provisions of the Securities Act of 1933 and regulations promulgated thereunder.

<PAGE>

                                      -5-

Any Shares surrendered as payment in exercise of the Option shall be valued at
their Fair Market Value on the date of exercise. The exercise shall be deemed to
occur (a) on the date that the notice of exercise and, if applicable, the money
order, cashier's check, certified check, cash and/or Shares are received at the
office of the Chief Financial Officer of the Company, or at such other location
as may be established in accordance with Section 4.5 hereof or (b) if such
notice of exercise and payment are mailed in the United States and the United
States Postal Service has stamped its postmark thereon, then on the date of such
postmark.

                  2.2 In each case where the Grantee shall exercise the option,
in whole or in part, the Company shall notify the Grantee of the amount of
income or employment tax, if any, that must be withheld under federal and, where
applicable, state and local law by reason of such exercise. It shall be a
condition to any delivery of Shares hereunder that provision satisfactory to the
Company shall have been made for payment of any taxes required to be paid or
withheld pursuant to any applicable law or regulations. The Grantee may
irrevocably elect to have any withholding tax obligation satisfied (a) by a
money order, cashier's check or certified check payable to the order of the
Company; (b) by having the Company withhold Shares otherwise deliverable to the
Grantee with respect to the exercise of the Option; (c) by delivering Shares to
the Company; (d) subject to limitations imposed by the Plan and the Committee,
by a cash payment by the Grantee's broker pursuant to the Grantee's instruction;
or (e) by a combination thereof; provided that the Committee may disapprove, or
impose conditions upon, any such election.

                  2.3 As soon as practicable after each exercise of the Option
and compliance by the Grantee with all applicable conditions, including any
payments that may be required by the Company pursuant to Sections 2.1 and 2.2
hereof, the Company shall mail or deliver or cause

<PAGE>

                                      -6-

to be mailed or delivered to the Grantee a stock certificate or certificates
registered in the name of the Grantee for the number of Shares that the Grantee
shall be entitled to receive upon such exercise under the provisions of this
Agreement.

                  2.4 If the Grantee exercises all or a portion of this Option
and the Grantee sells, transfers, assigns or otherwise disposes of Shares
acquired by the exercise of this Option within two (2) years after the date the
Option was granted or within one (1) year after the date of such exercise, the
Grantee shall promptly notify the Company of the date of such disposition and of
the amount realized upon such disposition and shall provide (in a manner
satisfactory to the Company) for payment to the Company of the amounts, if any,
necessary to satisfy any applicable federal, state and local tax withholding
requirements imposed by reason of such sale, transfer, assignment or other
disposition. To the extent the Grantee does not otherwise satisfy any
withholding obligation with respect to the disposition, the Company and any
Subsidiary shall, to the extent permitted by law, have the right to deduct from
any payment of any kind (whether or not related to the Plan) otherwise due to
the Grantee any such taxes required to be withheld.

                      SECTION 3: Termination of Employment

                  3.1 If the Grantee's employment with the Company terminates
for any reason other than Retirement, Disability or death, the Option shall
continue to be exercisable at any time within the three-month period following
such termination of employment, but not after such period. The Option shall not
become exercisable with respect to any Shares for which it was not exercisable
on the date of such termination of employment. For purposes of this Section 3,
references to employment with the Company shall be deemed to include employment
with any Subsidiary.

<PAGE>

                                      -7-

                  3.2 If the Grantee's employment with the Company terminates
because of Retirement, the Option shall continue to be exercisable at any time
within the 12-month period following such Retirement, but not after such period
(unless otherwise provided in Section 3.4 below); provided that the option will
be treated as a Nonqualified Stock Option if it is exercised more than three
months following Retirement. The Option shall not become exercisable with
respect to any Shares for which it was not exercisable on the date of
Retirement.

                  3.3 If the Grantee's employment with the Company terminates
because of the Grantee's Disability, the Option shall (a) become immediately
exercisable in full as of the date of such termination, and (b) be exercisable
at any time within the 12month period following such termination of employment,
but not after such period (unless otherwise provided in Section 3.4 below);
provided, however, that the Option shall not be exercisable at any time during
the six-month period following the date of this Agreement.

                  3.4 If Grantee's employment with the Company terminates
because of the Grantee's death, the Option shall become immediately exercisable
in full as of the date of termination of employment; provided, however, that the
option shall not be exercisable at any time during the six-month period
following the date of this Agreement. If the Grantee's employment with the
Company terminates because of the Grantee's death, or if the Grantee dies within
12 months after termination of employment while the Option is exercisable
pursuant to Section 3.3, above, the Option shall be exercisable at any time
within the 24-month period following the Grantee's death, but not after such
period; provided, however, that the Option shall be treated as a Nonqualified
Stock Option if the Option is exercised more than 12 months after the Grantee's
termination of employment because of Disability. If the Grantee's employment
with the Company terminates due to Retirement and the Grantee subsequently dies
within 12

<PAGE>

                                      -8-

months after termination of employment while the option is exercisable pursuant
to Section 3.2, above, the Option, to the extent it is exercisable on the date
of the Grantee's Retirement, shall be exercisable at any time within the
24-month period following the Grantee's death, but not after such period;
provided that the Option will be treated as a Nonqualified Stock Option if it is
exercised more than three months following the date of the Grantee's Retirement.

                  3.5 After the Grantee's death, the Option may be exercised
only by the Grantee's Beneficiary; provided, however, that if the Grantee's
Beneficiary dies within 24 months after the Grantee's death, the executor or
administrator of the Beneficiary's estate may exercise the Option within such
24-month period. If the Grantee has effectively designated a Beneficiary in
writing pursuant to the Plan and the Grantee and such designated Beneficiary die
in circumstances in which there is not sufficient evidence that the two have
died otherwise than simultaneously, the designated Beneficiary shall be deemed
to have predeceased the Grantee.

                  3.6 Any exercise by a Beneficiary of Options issued and
delivered hereunder shall be subject to all of the terms and conditions
contained in Section 2 of this Agreement.

                  3.7 Notwithstanding any other provision of this Section 3, in
no event shall the option be exercisable after the expiration date specified in
Section 1.8 of this Agreement.

                            SECTION 4: Miscellaneous

                  4.1 The Option granted hereunder shall not be transferable
(other than to a Beneficiary upon the death of the Grantee) and is exercisable
during the Grantee's lifetime only by the Grantee.

                  4.2 The Grantee shall be entitled to the privilege of stock
ownership with respect to Shares subject to this Option only with respect to
such Shares as are issued or delivered to the Grantee hereunder.

<PAGE>

                                      -9-

                  4.3 In the event of a stock dividend, stock split, combination
of Shares, recapitalization or other similar capital change, the number and kind
of Shares subject to the Option, the Option price and the other relevant
provisions of this Agreement shall be appropriately adjusted as provided in
Section 22 of the Plan.

                  4.4 Nothing contained in this Agreement shall be deemed by
implication or otherwise to impose any limitation on any right of the Company or
any Subsidiary to terminate the Grantee's employment at any time.

                  4.5 Any notice to be given hereunder by the Grantee shall be
either hand-delivered to the office of the Chief Accounting Officer of the
Company or sent by mail addressed to the Company to the attention of the Chief
Accounting Officer, 2000 Waters Edge Drive, Johnson City, TN 37604. Any notice
by the Company to the Grantee shall be either sent by mail addressed to the
Grantee at the address shown on page 1 hereof or hand-delivered personally to
the Grantee. Either party may, by written notice given to the other in
accordance with the provisions of this Section, change the address to which
subsequent notices shall be sent.

                  4.6 The Option is granted pursuant to the Plan. The grant of
the Option is subject to all the terms and provisions of the Plan, which are
hereby incorporated into this Agreement by reference and are made a part of this
Agreement. For the convenience of the Grantee, certain but not all of the
provisions of the Plan also are summarized or elaborated upon in this Agreement.
Each and every provision of this Agreement shall be administered, interpreted,
and construed so that the Option shall conform to the provisions of the Plan.
Any provisions of this Agreement that cannot be so administered, interpreted, or
construed shall be disregarded.

<PAGE>

                                      -10-

                  4.7 The Grantee hereby acknowledges receipt of a copy of the
Plan and further agrees to be bound by all of the terms and provisions thereof
and by all actions, pursuant to the Plan, of the Committee thereunder and of the
Company's Board of Directors. Whenever the word "Grantee" is used herein in a
context where the provision should logically be construed to apply to the
Grantee's Beneficiary, the word "Grantee" shall be deemed to include such
Beneficiary.

                  4.8 The Option shall not be exercisable in whole or in part
and no certificates representing Shares subject to the Option shall be delivered
if, at any time, the Company determines, in its discretion, that it is necessary
as a condition of, or in connection with, such exercise (or the delivery of
Shares thereunder):

                  (a) to satisfy withholding tax or other withholding
                  liabilities;

                  (b) to effect the listing, registration or qualification on
                  any securities exchange, or any quotation system, or under any
                  federal, state or local law, of any Shares otherwise
                  deliverable in connection with such exercise; or

                  (c) to obtain the consent or approval of any regulatory body;

unless such withholding, listing, registration, qualification, compliance,
consent or approval shall have been effected or obtained free of any conditions
not acceptable to the Company in its reasonable and good faith judgment.

                  The Company shall act with all reasonable diligence to obtain
any such approval or consent and to effect compliance with any such applicable
law, regulation, order, withholding, or listing, registration or qualification
requirement, and the Grantee or other person entitled to exercise the Option
shall take any action reasonably requested by the Company in such connection.

<PAGE>

                                      -11-

                  4.9  This Agreement shall be governed by, and its provisions
construed in accordance with, the laws of Delaware (irrespective of the conflict
of laws provisions thereof), except to the extent that such laws may be
superseded by any federal law.

                  4.10 Any amendment of this Agreement must be in writing and
duly signed by the Company and the Grantee. This Agreement may not be modified
orally.

<PAGE>

                                      -12-

                  IN WITNESS WHEREOF, NN, Inc. has caused this Agreement to be
executed in its corporate name, and the Grantee has executed the same in
evidence of the Grantee's acceptance hereof, under the terms and conditions
herein set forth, as of the day and year first above written.

                                      NN, Inc.

                                      By____________________________________
                                        Chief Accounting Officer:

                                      GRANTEE

                                      ______________________________________
                                          _______________________<PAGE>

                                                                    Exhibit 10.4

                  NON-COMPETITION AND CONFIDENTIALITY AGREEMENT

     THIS NON-COMPETITION AND CONFIDENTIALITY AGREEMENT ("Agreement") is made as
of __________, ______, by __________________________________ ("Employee") in
favor of NN Ball & Roller, Inc., a Delaware corporation (the "Company").

                                   WITNESSETH

     WHEREAS, the Company manufactures and supplies precision steel balls and
rollers to anti-friction bearing manufacturers, automotive original equipment
manufacturers and the automotive aftermarket, the gas and mining industries,
producers of drilling bits for oil, gas, and water wells and producers of
stainless steel valves and pumps (the "Business"), and its customers are located
in more than 25 different countries;

     WHEREAS, Employee is an employee "at will" with the Company and currently
holds a management or executive position with the Company;

     WHEREAS, the Company is requiring that the Employee, as a condition to and
in consideration of his continued employment, enter into this Agreement; and

     WHEREAS, the Employee desires to enter into this Agreement in order to
maintain his employment with the Company.

     NOW, THEREFORE, in consideration of the foregoing premises, the continued
employment of the Employee and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Employee hereby
agrees with the Company as follows:

     1.   Term. For purposes of this Agreement, the "Term" shall mean the period
commencing on the date hereof and continuing through the second anniversary of
the date of the Employee's termination of employment with the Company for any
reason.

     2.   Covenant Not to Compete.

     2.1  Employee's Knowledge. Employee acknowledges and agrees that he
occupies a position of trust and confidence with Company and, in the course of
his engagement with the Company, has become and will continue to become familiar
with proprietary and confidential information concerning the Company. Employee
acknowledges and agrees that his services are of a special, unique and
extraordinary value to the Company and that the Company would be irreparably
damaged if Employee were to provide similar services to any person or entity in
violation of the provisions of this Agreement.

<PAGE>

                                      -2-

     2.2  Non-Compete. Employee hereby agrees that, during the Term, he shall
not, directly or indirectly, as employee, agent, consultant, stockholder,
director, co-partner or in any other individual or representative capacity, own,
operate, manage, control, engage in, invest in or participate in any manner in,
act as a consultant or advisor to, render services for (alone or in association
with any person, firm, corporation or entity), or otherwise assist any person or
entity that engages in or owns, invests in, operates, manages or controls any
venture or enterprise that competes in the Business anywhere in the world (the
"Territory"); provided, however, that nothing contained herein shall be
construed to prevent Employee from investing in the stock of any competing
corporation listed on a national securities exchange or traded in the
over-the-counter market, but only if Employee is not involved in the business of
said corporation and if Employee does not own more than an aggregate of two (2%)
percent of the stock of such corporation.

     2.3  Non-Solicitation. Without limiting the generality of the provisions of
Section 2.2 above; Employee hereby agrees that during the Term he will not,
directly or indirectly, solicit (or participate as employee, agent, consultant,
stockholder, director, partner or in any other individual or representative
capacity in any business which solicits), business from any person, firm,
corporation or other entity that is a customer of the Company at the time of
such solicitation, or from any successor in interest to any such person, firm,
corporation or other entity, for the purpose of securing business or contracts
relating to the Business.

     2.4  Interference with Relationships. During the Term, Employee shall not,
directly or indirectly, as employee, agent, consultant, stockholder, director,
co-partner or in any other individual or representative capacity: (a) employ or
engage, or solicit for employment or engagement, any person employed or engaged
by the Company, or otherwise seek to influence or alter any such person's
relationship with the Company, or (b) solicit or encourage any customer of the
Company to terminate or otherwise alter his, her or its relationship with the
Company.

     3.   Confidential Information. (a) During the Term and at all times
thereafter, Employee shall keep secret and retain in strictest confidence, and
shall not, without the prior written consent of the Company, furnish, make
available or disclose to any third party or use for the benefit of himself or
any third party, any "Confidential Information." As used in this Agreement,
Confidential Information shall mean any information held in confidence by the
Company and not freely available to the public which gives the Company an
advantage over competitors in the Business, including, without

<PAGE>

                                       -3-

limitation, sales or earnings figures, personnel matters, supplier and customer
data and information relating to the Company's manufacturing processes,
equipment and customer servicing methods; provided, however, that Confidential
Information shall not include any information which otherwise is in the public
domain or becomes known in the ball and roller industry through no wrongful act
on the part of Employee. Employee acknowledges that the Confidential Information
is vital, sensitive, confidential and proprietary to the Company.

          (b) Employee hereby represents and warrants to the Company that  at
all times prior to the date hereof he has kept secret and retained in strictest
confidence, and has not furnished, made available or disclosed to any third
party or used for the benefit of himself or any third party, any Confidential
Information.

     4.   Judicial Modification. If any court of competent jurisdiction shall at
any time deem the Term or any covenant contained herein too lengthy, or the
Territory too extensive, the other provisions of this Agreement shall
nevertheless stand, the Term shall be deemed to be the longest period
permissible by law under the circumstances and the Territory shall be deemed to
comprise the largest territory permissible by law under the circumstances. The
court in each case shall reduce the time period and/or Territory to permissible
duration or size.

     5.   Remedies. Employee acknowledges and agrees that the covenants set
forth in the Agreement are reasonable and necessary for the protection of the
Company's business interests, that irreparable injury will result to the Company
if Employee breaches any of the terms of said covenants, and that in the event
of Employee's actual or threatened breach of any such covenant, the Company will
have no adequate remedy at law. Employee accordingly agrees that in the event of
any actual or threatened breach by him of any of the covenants contained herein,
the Company shall be entitled to immediate temporary injunctive and other
equitable relief, without bond and without the necessity of showing actual
monetary damages, subject to hearing as soon thereafter as possible. Nothing
contained herein shall be construed as prohibiting the Company from pursing any
other remedies available to it for such breach or threatened breach, including
the recovery of any damages which it is able to prove.

     6.   Condition of Employment. The Company shall have no obligation to
retain the Employee in its employ as a result of this Agreement, there shall be
no inference as to the length of employment implied hereby, and the Company
reserves the

<PAGE>

                                      -4-

same rights to terminate the employment of the Employee as existed prior to the
date hereof.

     7.   Miscellaneous. This Agreement sets forth the entire agreement and
understanding of the parties hereto with respect to the subject matter hereof
and supersedes any other agreements between the parties, written or oral,
relating to the subject matter hereof. No amendment or modification of this
Agreement and no waiver by any party of the breach of any covenant contained
herein shall be binding unless executed in writing by the party against whom
enforcement of such amendment, modification or waiver is sought. This Agreement
may be executed in two or more counterparts, each of which shall be deemed an
original without production of the others. This Agreement shall be governed by
and construed in accordance with the laws of the State of Tennessee, without
regard to its choice of law provisions. In the event any provision or portion of
any provision of this Agreement is held invalid or unenforceable by a court of
competent jurisdiction as applied to any fact or circumstance, the remaining
provisions and portions of this Agreement and the same provision as applied to
any other fact or circumstance shall not be affected or impaired thereby, and
shall remain valid and enforceable. The terms "he", "his", and "him" are used
herein generically for convenience only, and may, as appropriate, be considered
to represent the terms "she", "hers" and "her".

     IN WITNESS WHEREOF, the Employee has caused this agreement to be duly
executed in favor of the Company on the day and year first above written.

                                           By:__________________________________
                                              Employee
ACKNOWLEDGED

NN BALL & ROLLER, INC.

By:_______________________________

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