EX-10.10 4 exh1010.txt Exhibit 10.10 EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT dated as of the 20th day of January, 2003 between MICROWAVE CONCEPTS, INC., a Delaware corporation (hereinafter called the "Company") with offices at 20 Just Road, Fairfield, New Jersey 07004, and ANTHONY POSPISHIL, residing at the address set forth on Schedule A attached hereto (hereinafter called the "Executive"). W I T N E S S E T H WHEREAS, the Company is a wholly-owned subsidiary of Micronetics, Inc. ("Micronetics"), a Delaware corporation; WHEREAS, the Company manufactures and markets microwave products; and WHEREAS, the Company and the Executive desire to enter into an agreement to memorialize their understandings with regard to the employment of the Executive by the Company. NOW, THEREFORE, in consideration of the mutual covenants, conditions and promises contained herein, the parties hereby agree as follows: 1. Employment Term. The Company hereby agrees to employ the Executive and the Executive agrees to enter the employ of the Company on the terms and conditions set forth below for a term commencing on the date hereof (the "Commencement Date"), and terminating three years from the date hereof unless sooner terminated as herein provided or extended by mutual consent of the parties hereto (such term of this Agreement is herein referred to as the "Term"). During the Term, except with the consent of the Executive, the Company agrees to maintain an office of the Company at 20 Just Road, Fairfield, NJ, or within a 50 mile radius of the address set forth on Schedule A attached hereto, so as to not force any relocation of the Executive. 2. Duties. Subject to the authority, control and direction of the Board of Directors of the Company or President of the Company, the Executive shall be appointed Vice President and General Manager of the Company, and the Executive shall perform such duties and services commensurate with his position as Vice President and General Manager of the Company, including such duties as may from time to time be assigned to him by the President or the Board of Directors. 3. Time Requirements. The Executive agrees that he will devote substantially all of his business time and attention to the business affairs of the Company and that during the period of such employment the Executive will not, without the prior permission of the President or the Board of Directors of the Company, engage in any other business enterprise or enterprises which require more than a nominal amount of the Executive's business time or attention. The foregoing shall not prevent the purchase or ownership by the Executive of investments or securities of publicly-held companies representing less than 2% of any such companies and any other business which is not competitive and does not have any business relations with the Company or any subsidiary of the Company, provided the time or attention devoted by the Executive to such activities does not interfere with the performance of his duties hereunder. 4. Compensation. For the full, prompt and faithful performance of all of the duties and services to be performed by Executive hereunder, the Company agrees to pay, and the Executive agrees to accept, the amounts set forth below. (a) As base compensation, the Executive shall be paid at a rate set forth on paragraph (a) of Schedule B per annum (the "Base Compensation"), payable at such regular times and intervals as the Company customarily pays its employees. (b) As bonus compensation, the Company agrees to pay the Executive (the "Bonus Compensation"): (i) Regular Bonus. For the period from January 1, 2003 to December 31, 2003, the Executive shall be entitled to a bonus at a rate set forth on paragraph (b) of Schedule B attached hereto for such period. In any dispute over this amount, the determination by the independent auditors of Micronetics shall be determinative. For each year thereafter that the Agreement is effective, the Board of Directors or President of the Company agrees to review the Executive's and Company's performance. Based on such review, they or he will develop a new Regular Bonus Plan for the Executive. In establishing the new Regular Bonus Plan, the threshold of the Company's pre-tax profits may be increased, however the new Regular Bonus Plan will be no less than as set forth in this Section 4(b)(i). (ii) One-time Bonuses. The Executive shall be entitled to the following as one-time bonuses: (A) The percent set forth on paragraph (c) of Schedule B from the sale of MMICs in the inventory of Microwave Concepts, Inc., a New Jersey Corporation ("MCI") (as defined in the Asset Purchase Agreement defined below) existing on the date of the closing of Micronetics' acquisition of the assets of MCI (the "Closing"), pursuant to the Asset Purchase Agreement between Micronetics and MCI dated December 24, 2002 (the "Asset Purchase Agreement"), payable within 30 days of payment for any such sales; and (B) The percent set forth on paragraph (d) of Schedule B of any negotiated reductions in liabilities assumed by the Company at the Closing as set forth in Schedule 1.2 of the Asset Purchase Agreement, payable within 30 days of written confirmation of any such reductions. (iii) Option. The Company shall cause Micronetics to grant to the Executive a three year incentive stock option for 40,000 (15,000 exercisable after year one and two, 10,000 exercisable after year three) shares of Common Stock of Micronetics exercisable at the fair market value thereof on the date hereof pursuant to the standard option agreement of Micronetics (the "Option"). (c) The Company shall provide the Executive with health benefits on the same terms as provided to other similarly situated employees of the Company. (d) The compensation provided for herein shall be in additional to any retirement, profit sharing, insurance (including medical) or similar benefit which may at any time be payable to the Executive pursuant to any plan or policy of the Company relating to such benefits, which benefits shall be made available to the Executive on the same basis as they are made available to other similarly situated executives of the Company. 5. Vacation. The Executive shall be entitled to three weeks of paid vacation per year during the Term, which shall be taken at such time or times as shall be mutually determined by the Company and the Executive. 6. Death. In the event of the death of the Executive during the Term or any extension thereof, the employment of the Executive hereunder shall terminate and come to an end on the last day of the month following the death of the Executive. The estate of the Executive (or such persons as the Executive shall designate in writing) shall be entitled to receive, and the Company agrees to pay, the Base Compensation of the Executive up to the end of the month in which such death occurs. The Company and the Executive agree to negotiate the amount of Bonus Compensation for such year and pay that as directed by the estate of the Executive. In addition, the vested portion of the Option will be exercisable to the estate of the Executive for 90 days following the death of the Executive. 7. Disability. In the event that the Executive shall, because of illness or incapacity, physical or mental, be unable to perform the duties and services to be performed by him hereunder for a consecutive period of three months, or six months during any twelve month period, the Company may terminate the employment of the Executive hereunder after the expiration of such period. The Executive shall be entitled to receive his Base Compensation and Bonus Compensation (including the vested portion of the Option for 90 days after such termination) earned through the date of such termination. 8. Administration; Expenses. The Executive shall report to the President and the Board of Directors of the Company, or to a person designated by the Board of Directors, at such intervals as may be determined from time to time. The Executive shall be reimbursed by the Company for all expenses reasonably incurred by him on behalf of the Company in accordance with the Company's standard policies with respect thereto. 9. Restrictive Covenants. 9.1 Inventions. Any program, discovery, process, design, invention or improvement which the Executive makes or develops during his employment by the Company, whether or not during regular working hours or in connection with the Company's business or research activities as then conducted or contemplated, shall belong to the Company and shall be promptly disclosed to the Company. During the Executive's employment and for a period of two years thereafter, the Executive shall, without additional compensation, execute and deliver to the Company any instruments of transfer and take such other action as the Company may request to carry out the provisions of this Section 9.1, including without limitation, filing, at the Company's expense, patent applications for anything covered by this Section 9.1 and the prompt assignment of the same to the Company. 9.2 Covenant Not to Compete. The Executive covenants and agrees that for a period of twelve (12) months following the termination of his employment with the Company other than as a result of a breach of this Agreement by the Company, he shall not, without the prior written consent of the Company which shall not be unreasonably withheld in the sole discretion of the Company, directly or indirectly compete with the Company in the microwave control components marketplace or in any other business in which the Company may at such time be engaged, nor induce any person associated with or employed by the Company or any subsidiary of the Company, to leave the employ of or terminate his association with the Company, or any subsidiary of the Company, or solicit the employment of any such person on his own behalf or on behalf of any other business enterprise. In the event of termination of this Agreement by virtue of a breach by the Company pursuant to a final judgment by a court of competent jurisdiction, the aforesaid covenant will not be applicable. The Company designates David Robbins to make the decisions as to whether the Company should consent pursuant to this paragraph. 9.3 Nondisclosure. The Executive covenants and agrees for a period of two years following the termination of his employment with the Company, he will not, directly or indirectly, during or after the term of employment disclose to any person not authorized by the Company to receive or use such information, except for the sole benefit of the Company, any of the Company's confidential or proprietary data, information, designs, styles, or techniques, including customer lists. Notwithstanding the foregoing, this applies solely to information that is not generally known to anyone other than the Company, its Board of Directors or its employees. 9.4 If any term of this Article 9 is found by any court having jurisdiction to be too broad, then and in that case, such term shall nevertheless remain effective, but shall be considered amended (as to the time or area or otherwise, as the case may be) to a point considered by said court as reasonable, and as so amended shall be fully enforceable. 9.5 In the event that the Executive shall violate any provision of this Agreement (including but not limited to the provisions of this Article 9) the Executive hereby consents to the granting of a temporary or permanent injunction against him by any court of competent jurisdiction prohibiting him from violating any provision of this Agreement. In any proceeding for an injunction, the Executive agrees that his ability to answer in damages shall not be a bar or interposed as a defense to the granting of such temporary or permanent injunction against the Executive. The Executive further agrees that the Company will not have an adequate remedy at law in the event of any breach by Executive hereunder and that the Company will suffer irreparable damage and injury if the Executive breaches any of the provisions of this Agreement. 10. Termination for Cause. The Company may terminate the Executive's employment without liability (other than for payments accrued to the date of termination) if the Executive's employment is terminated "for cause". The term "for cause" shall, for the purposes of this Agreement, mean (i) a material breach by the Executive of the provisions of this Agreement, (ii) the commission by the Executive of a fraud against the Company or the conviction of the Executive for aiding or abetting, or the commission of, a felony or of a fraud or a crime involving moral turpitude or a business crime, (iii) the knowing possession or use of illegal drugs or prohibited substances, the excessive drinking of alcoholic beverages which impairs the Executive's ability to perform his duties hereunder, (iv) being under the influence of such drugs, substances or alcohol during the Executive's hours of employment (except for Company functions at which alcohol use is tolerated), or (v) any material violation of the Company's corporate policies described in the Company's employee handbook, which handbook may supplemented or amended by the Company from time to time, a copy of which has been provided to the Executive. In the event of such termination for cause, Executive shall be entitled to receive his Base Compensation and Bonus Compensation earned through the date of such termination. 11. No Impediments. The Executive warrants and represents that he is free to enter into this Agreement and to perform the services contemplated thereby and that such actions will not constitute a breach of, or default under, any existing agreement. 12. No Waiver. The failure of any of the parties hereto to enforce any provision hereof on any occasion shall not be deemed to be a waiver of any preceding or succeeding breach of such provision or of any other provision. 13. Entire Agreement. This Agreement constitutes the entire agreement and understanding of the parties hereto and no amendment, modification or waiver of any provision herein shall be effective unless in writing, executed by the party charged therewith. 14. Governing Law. This Agreement shall be construed, interpreted and enforced in accordance with and shall be governed by the laws of the State of New Jersey applicable to agreements to be wholly performed therein. 15. Binding Effect. This Agreement shall bind and inure to the benefit of the parties, their successors and assigns. 16. Assignment and Delegation of Duties. This Agreement may not be assigned by the parties hereto except that the Company shall have the right to assign this Agreement in connection with a sale or transfer of all or substantially all of its assets, a merger or consolidation. This Agreement is in the nature of a personal services contract and the duties imposed hereby are non- delegable. 17. Ratifies Obligations of Asset Purchase Agreement. The Executive is aware of, understands, agrees and consents to his obligations under the Asset Purchase Agreement, especially Section 2.14 of the Asset Purchase Agreement. 18. Paragraph Headings. The paragraph headings herein have been inserted for convenience of reference only and shall in no way modify or restrict any of the terms or provisions hereof. 19. Notices. Any notice under the provisions of this Agreement shall be given by registered or certified mail, return receipt requested, directed to the addresses set forth above, unless notice of a new address has been sent pursuant to the terms of this paragraph. 20. Unenforceability; Severability. If any provision of this Agreement is found to be void or unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement, shall, nevertheless, be binding upon the parties with the same force and effect as though the unenforceable part has been severed and deleted. 21. Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be deemed to be duplicate originals. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written. MICROWAVE CONCEPTS, INC. By:/s/Richard S. Kalin --------------------- (Authorized Officer) /s/Anthony Pospishil ----------------------- ANTHONY POSPISHIL