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Exhibit
10.1
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT
AGREEMENT (this “Agreement”), dated as of
July 16, 2007 is entered into between Micronetics, Inc.
, a Delaware corporation ( the “Company”), and
David Robbins (the “Executive”).
W I T N E S S E T H
:
WHEREAS, the Company
desires to enter into this Agreement, pursuant to which the Company
will continue to employ the Executive and be assured of his
services on the terms and conditions hereinafter set forth;
and
WHEREAS, the Executive
is willing to accept such continued employment on such terms and
conditions;
NOW, THEREFORE, in
consideration of the mutual covenants and agreements set forth in
this Agreement, the Company and the Executive hereby agree as
follows:
1. Employment, Duties and
Acceptance.
a. Employment, Duties.
The Company hereby employs the Executive for the Employment Period
(as defined in Section 2 below), effective on the date hereof,
as the President and Chief Executive Officer of the Company,
subject to the supervision and direction of the Board of Directors
of the Company (the “Board”). The Executive shall have
such duties, responsibilities and authority as are customarily
required of and given to a Chief Executive Officer and such other
duties and responsibilities commensurate with such position as the
Board shall reasonably determine from time to time. Such duties,
responsibilities and authority shall include, without limitation,
full executive responsibility for the management, operation,
strategic direction, financial structure and overall conduct of the
business of the Company and its subsidiaries and affiliates. The
Executive shall report directly to the Board. Additionally, the
Company shall use its reasonable best efforts at all times during
the Employment Period to cause the Executive to be nominated to
serve, and to be elected, as a Director of the Company.
b. Acceptance. The
Executive hereby accepts such employment and agrees to render the
services described above. During the Employment Period, the
Executive agrees to serve the Company faithfully and to the best of
the Executive’s ability, to devote all of the
Executive’s business time, energy and skill to such
employment, and to use the Executive’s best efforts, skill
and ability to promote the Company’s interests.
Notwithstanding the foregoing, however, nothing in this Agreement
shall be construed as preventing the Executive from
(i) serving as a Director of other corporations not competing
with the Company in a manner that does not adversely affect his
duties under this Agreement or (ii) engaging in religious,
charitable or other community or nonprofit activities that do not
impair his ability to fulfill his duties under this Agreement. The
Executive further agrees to accept election, and to serve during
all or any part of the Employment Period, as a Director and officer
of the Company and of any subsidiary or affiliate of the Company,
without any compensation therefor other than that specified in this
Agreement, if elected or appointed to any such position by the
Stockholders or Board of Directors of the Company, or of any
subsidiary or affiliate, as the case may be.
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c. Location. The
Executive shall perform his duties primarily at the offices of the
Company in the Hudson, New Hampshire area, as the Board may
determine, subject to reasonable travel requirements outside of
this area on behalf of the Company.
2. Employment Period.
The term of this Agreement
shall commence effective as of, and retroactive to, July 1,
2007 (the “Commencement Date”) and shall terminate upon
the termination of the Executive’s employment pursuant to the
provisions of Section 4 hereof. The period between the
Commencement Date and the date of termination of the
Executive’s employment hereunder is hereinafter referred to
as the “Employment Period”.
3. Compensation; Benefits
.
a. Base Salary. The
Company shall pay to the Executive for all services to be performed
hereunder and performance of all of his obligations hereunder,
including the Executive’s compliance with the covenants
contained herein, an annual base salary (the “Base
Salary”) of $200,000, payable in accordance with the
Company’s normal salary payment schedule, as the same may be
amended from time to time. Except as specifically provided herein,
the Base Salary shall be the Executive’s total base
compensation and is inclusive of compensation received or
receivable by the Executive in respect of any other office or
employment in, or service to, the Company. The Base Salary may be
increased but not decreased at any time by the Board in its sole
discretion.
b. Bonus.
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(i) |
In addition to the Base Salary described in Section 3(a)
above, the Company shall pay to the Executive, in cash, a Bonus
(the “Bonus”) in respect of each Bonus Determination
Period (as hereinafter defined) during the Employment Period
(subject, in the event of the termination of his employment, to the
provisions of Section 4(e) hereof) in an amount equal to the
sum of: |
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(A) |
Three percent (3%) of the Income Before Taxes of the
Company (as hereinafter defined) for each Bonus Determination
Period; plus |
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(B) |
Five Percent (5%) of the excess (if any) of the Income
Before Taxes of the Company for each Bonus Determination Period
over the Income Before Taxes of the Company for the same period in
the immediately preceding fiscal year. |
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(ii) |
For purposes
of this Agreement, the term “Bonus Determination
Period” shall mean (A) each full fiscal year of the
Company during the Employment Period, commencing with the fiscal
year beginning on April 1, 2007 and ending on March 31,
2008 (an “Annual Bonus Period”), (B) any period of
less than a full fiscal year during the Employment Period, which
period shall commence on the first day of the then current fiscal
year and end on the last day of the calendar month immediately
preceding the calendar month in which the date of termination of
the Executive’s employment shall fall (the “Stub
Period”), in respect to which period the Executive shall be
entitled to receive a Bonus pursuant to the provisions of Sections
4(e)(v)(C) and 4(e)(vi)(C) of this Agreement following the
termination of the Executive’s employment without
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cause or for “Good
Reason” (as hereinafter defined) and (C) the period of
six months ending on the last day of the calendar month immediately
preceding the calendar month in which the date of termination of
the Executive’s employment shall fall (the “Additional
Stub Period”) in respect to which the Executive shall be
entitled to receive an additional Bonus pursuant to the provisions
of Sections 4(e)(v)(D) and 4(e)(vi)(D) of this Agreement following
the termination of the Executive’s employment without cause
or for “Good Reason” (as hereinafter
defined).
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(iii) |
For purposes of this Agreement, the term “Income Before
Taxes of the Company” for each full fiscal year of the
Company during the Employment Period shall be the “income
before provision for income taxes” of the Company as
reflected on the Micronetics and Subsidiaries Consolidated
Statements of Income contained in the Company’s Annual Report
on Form 10KSB or Form 10K, as the case may be, determined in
accordance with accounting principles generally accepted in the
United States applied on a basis consistent with the manner in
which such principles have theretofore been applied, adjusted to
eliminate the effect of (A) gains and losses on acquisitions
and dispositions of assets outside the ordinary course of business;
(B) extraordinary items of income, gain, loss or expense (as
so characterized by generally accepted accounting principles
applied on a consistent basis); and (C) the accrual of any
Bonus under this Agreement in respect of the Bonus Determination
Period in question. For any Bonus Determination Period of less than
a full fiscal year, the “Income Before Taxes of the
Company” for such period shall be the “income before
provision for income taxes” of the Company for such Bonus
Determination Period, as so adjusted, determined upon the same
basis and in the same manner as the determination of such amount
for each full fiscal year of the Company. The calculation of the
Income Before Taxes of the Company shall include, among other
charges and expenses, appropriate deductions for stock compensation
and interest expense. |
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(iv) |
The determination of the Bonus for any Bonus Determination
Period shall be made by the Chief Financial Officer of the Company
(the “CFO”) and approved by the Compensation Committee
of the Board (the “Compensation Committee”) as soon as
may be practicable after the end of the applicable Bonus
Determination Period but no later than ninety (90) days after
the end of the Bonus Determination Period set forth in
Section 3(b)(ii)(A) above, and no later than 45 days after the
end of each of the Bonus Determination Periods set forth in
Sections 3(b)(ii)(B) and 3(b)(ii)(C) above. Upon the approval of
the applicable Bonus by the Compensation Committee, the CFO shall
deliver a copy of such determination to the Executive and, absent
manifest error, such determination shall be final and binding on
the parties. Subject to Sections 4(e)(vi) and 4(e)(viii), the Bonus
shall be payable by the Company in full within fifteen
(15) days after a copy of the determination of the amount
thereof has been delivered to the Executive. |
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(v) |
To the extent
the same shall not have been paid as of the date hereof, the
Executive shall continue to be entitled to receive a bonus in
respect of the Company’s fiscal year ended March 31,
2007, in accordance with the existing bonus program for the
Executive previously agreed upon between the Company and the
Executive for such fiscal year, which shall be calculated and paid
in
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accordance with the
provisions of such previously agreed upon bonus program, and the
Executive will not be entitled to a Bonus in respect of such fiscal
year pursuant to this Agreement.
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c. Vacation . The
Executive shall be entitled to four (4) weeks paid vacation
during each fiscal year of the Company to be taken at such time or
times as the Executive may reasonably determine, consistent with
the needs of the Company. Any vacation time not taken during any
fiscal year of the Company shall be forfeited and shall not be
carried forward into the following fiscal year.
d. Fringe Benefits.
During the Employment Period, the Executive shall be entitled to
all benefits for which the Executive shall be eligible under any
qualified pension plan, 401(k) plan, sick leave, group medical
insurance or other so-called “fringe” benefit plans
which the Company provides to its employees generally, together
with executive benefits for the Executive, as from time to time in
effect for officers of the Company generally, subject in all
respects to the terms, conditions and qualifications of such
plans.
e. Options. All stock
options previously granted to the Executive shall remain in full
force and effect in accordance with their terms and this Agreement
is not intended to modify any of such options in any respect. The
Executive shall continue to be eligible to be awarded additional
stock options, restricted stock and other equity and cash incentive
awards under Company plans and other arrangements or agreements as
shall be approved from time to time by the Board.
f . Reimbursement of
Business Expenses. During the Employment Period, upon
submission of proper invoices, receipts or other supporting
documentation satisfactory to the Company, the Executive shall be
reimbursed by the Company for all reasonable business expenses
actually and necessarily incurred by the Executive on behalf of the
Company in connection with the performance of services under this
Agreement.
g. Car Allowance.
During the Employment Period, the Company shall pay to the
Executive a car allowance in the amount of $500.00 per
month.
h. Legal Fees . The
Company shall pay all reasonable attorneys’ fees incurred by
the Executive in connection with the negotiation, preparation and
execution of this Agreement.
4. Employment Termination. The
Executive’s employment shall terminate upon the following
terms and conditions:
a. Death or Permanent
Disability . If the Executive dies or becomes permanently
disabled, the Executive’s employment shall terminate
effective at the end of the calendar month during which his death
occurs or when his disability is deemed to have become permanent.
If the Executive is unable to substantially perform all of his
normal duties for the Company in the usual and customary fashion
because of illness or incapacity (whether physical or mental) for
90 or more days (whether or not consecutive) out of any 365
consecutive days, his disability shall be deemed to have become
permanent.
b. Cause . If a
majority of the members of the Board then in office votes to
terminate the Executive’s employment for Cause, the
Executive’s employment shall terminate and the Executive
shall be removed from office effective on the date specified in the
resolutions adopted by the Board to effect the termination of the
Executive’s employment for Cause. For purposes of this
Agreement, termination of the Executive’s employment shall be
deemed for Cause only if such termination is the direct result
of:
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(i) |
the Executive’s misappropriation of the Company’s
funds or property, or fraud on the part of the
Executive; |
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(ii) |
the Executive’s conviction of, or plea of guilty or no
contest to, any felony under the laws of the United States or any
State or political subdivision thereof; |
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(iii) |
a material breach of this Agreement by the Executive,
provided that the Executive has first been given written
notice describing such breach in reasonable detail, and within
thirty (30) days he has not remedied the same; |
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(iv) |
The Executive uses illegal drugs or chronically abuses legal
drugs or alcohol or conducts business under the undue influence of
drugs or alcohol or his abuse of drugs or alcohol adversely affects
his ability to perform his duties, which the Executive shall not
have cured after reasonable notice and a reasonable opportunity to
cure; |
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(v) |
The Executive’s engaging in an act of sexual harassment
or discrimination prohibited by the laws of the United States or a
state in which the Company’s offices are located or in which
the Company conducts business, or any other conduct taken or
omitted in bad faith which is significantly detrimental to the
Company; |
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(vi) |
any determination by the Securities and Exchange Commission, or
any other regulatory agency or court, that the Executive has
committed a violation of federal or state securities laws or
regulations thereunder, or of the Sarbanes Oxley Act or regulations
thereunder. |
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(vii) |
any other action or omission constituting gross negligence or
willful misconduct by the Executive, in the performance of his
duties hereunder. |
c. Good Reason Employment
Termination. The Executive may terminate his employment for
Good Reason at any time during the Employment Period by written
notice to the Company given not more than fifteen (15) days
after the occurrence of the event constituting Good Reason. Such
notice shall state an effective date no earlier than fifteen
(15) days after the date it is given. Except for the
termination by the Executive of his employment pursuant to the
provisions of Section 4(c)(vi) below (as to which the Company
shall not have the right to cure or dispute the Executive’s
reasons therefor), the Company shall have thirty (30) days
from the receipt of such notice within which to cure or dispute in
good faith the reasons set forth in such notice. If not timely
cured or disputed in good faith, termination by the Executive of
his employment for Good Reason shall be treated as termination by
the Company without Cause.
For purposes of this Agreement,
“Good Reason” shall mean and include any of the
following:
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(i) |
the assignment to the Executive of any duties inconsistent with
the Executive’s position (including status), authority or
material responsibilities; or the removal, or a reduction in the
nature or scope, of the Executive’s authority, duties, powers
or material responsibilities; |
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(ii) |
a reduction in the Executive’s offices or titles, a
failure to elect the Executive to any positions, including as a
member of the Board, held by the Executive on the date hereof; or
the interposition of any committee, group or person in the
Company’s reporting structure such that the Executive ceases
to report directly and solely to the Board; |
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(iii) |
a reduction in the Executive’s Base Salary or a reduction
or elimination of any other material element of the
Executive’s compensation as in effect on the date hereof (it
being agreed that a reduction in the amount of the
Executive’s bonus as a result of any reduction in the
Company’s Income Before Taxes below that of any prior
corresponding Bonus Determination Period shall not constitute such
a reduction of any other material element of the Executive’s
compensation); |
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(iv) |
a reduction in the Executive’s “fringe”
benefits of the type described in Section 3(d) as in effect on
the date hereof, except for such a reduction as shall be generally
applicable to substantially all of the Company’s senior
executives; |
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(v) |
the failure by the Company to make any payment required to be
paid to the Executive hereunder or to comply with any of the other
material provisions of this Agreement; and |
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(vi) |
the occurrence of a Change in Control of the Company within the
prior one hundred eighty (180) days. |
For purposes of this Agreement, a
“Change of Control” shall mean and include any of the
following:
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(i) |
a merger or consolidation of the Company with or into any other
corporation or other business entity (except one in which the
holders of capital stock of the Company immediately prior to such
merger or consolidation continue to hold at least a majority of the
outstanding securities having the right to vote in an election of
the Board (“Voting Stock”) of the surviving
corporation); |
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(ii) |
a sale, lease, exchange or other transfer (in one transaction
or a related series of transactions) of all or substantially all of
the Company’s assets; |
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(iii) |
the acquisition by any person or any group of persons (other
than the Company, any of its direct or indirect subsidiaries, or
any trustee, fiduciary or other person or entity holding securities
under any employee benefit plan or trust of the Company or any of
its direct or indirect subsidiaries) acting together in any
transaction or related series of transactions, of such number of
shares of the Company’s Voting Stock as causes such person,
or group of persons, to own beneficially, directly or indirectly,
as of the time immediately after such transaction or series of
transactions, 50% or more of the combined voting power of the
Voting Stock of the Company other than as a result of an
acquisition of securities directly from the Company, or solely as a
result of an acquisition of securities by the Company which by
reducing the number of shares of the Voting Stock outstanding
increases the proportionate voting power represented by the Voting
Stock owned by any such person or group of persons to 50% or more
of the combined voting power of such Voting Stock; |
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(iv) |
a change in the composition of the Board following a tender
offer or proxy contest, as a result of which persons who,
immediately prior to such tender offer or proxy contest,
constituted the Board shall cease to constitute at least a majority
of the members of the Board; and |
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(v) |
any liquidation, dissolution or winding up of the Company
(whether voluntary or involuntary). |
d. Employment Termination
Without Cause or Good Reason. The Company may terminate the
Executive’s employment under this Agreement without Cause at
any time during the Employment Period by ten (10) days’
advance written notice to the Executive. The Executive may
terminate t
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