EARNOUT AGREEMENT

Exhibit 2.2

EARNOUT AGREEMENT

This Earnout Agreement (“ Agreement ”) is made and entered into as of June 10, 2005 by and among MICRONETICS, INC., a Delaware corporation (“ Micronetics ”); STEALTH MICROWAVE, INC., a New Jersey corporation (“ Stealth ”); the undersigned former stockholders of Stealth (collectively, the “ Sellers ”); and Stephen N. Barthelmes Sr., Stephen N. Barthelmes Jr., and Brian E. Eggleston as the representatives of the Sellers (the “ Sellers’ Committee ”).

Recitals

A. Micronetics and the Sellers have entered into a Stock Purchase Agreement dated as of June 10, 2005 (the “ Stock Purchase Agreement ”) setting forth certain terms and conditions pursuant to which Micronetics has acquired all of the issued and outstanding shares of the capital stock of Stealth (the “ Shares ”) from the Sellers.

B. Pursuant to Section 1.2(b) of the Stock Purchase Agreement, Micronetics and the Sellers agreed that the Sellers shall be entitled to earn additional contingent Purchase Price consideration in respect of the Shares which shall be payable to the Sellers upon and subject to the terms and conditions of this Agreement.

C. To induce the Sellers to sell the Shares to Micronetics and to induce the Principal Stockholders to agree to the provisions of Section 4 hereof, which the parties hereto acknowledge confers substantial benefits to Stealth, Stealth has agreed to be jointly and severally obligated hereunder for the payment of the Performance Earnouts (hereinafter defined).

D. Unless otherwise indicated herein, all terms used herein without definition shall have the same meanings as set forth in the Stock Purchase Agreement.

NOW THEREFORE, for and in consideration of the foregoing and the covenants and provisions contained herein, and intending to be legally bound hereby, Micronetics, Stealth, the Sellers and the Sellers’ Committee (collectively, the “ Parties ”), agree as follows:

1. Performance Earnouts .

1.1 With respect to the period commencing April 1, 2005 and ending March 31, 2006 (the “ First Earnout Period ”) and with respect to the period commencing April 1, 2006 and ending March 31, 2007 (the “ Second Earnout Period ”), Micronetics and Stealth shall be jointly and severally obligated to pay to the Sellers deferred payments of up to $1,800,000 for the First Earnout Period and up to $1,500,000 for the Second Earnout Period, together with all interest payable thereon as hereinafter provided (respectively, the “ Performance Earnouts ”), in cash, by wire transfer of immediately available funds to the Sellers’ Committee in accordance with their wire transfer instructions, subject to and in accordance with the provisions of this Agreement.

1.2 All amounts of the Performance Earnouts payable to the Sellers pursuant to the provisions hereof shall be allocated among the Sellers, and upon receipt by the Sellers’ Committee shall be distributed by the Sellers’ Committee to the Sellers, pro rata based upon the number of Shares being sold to the Buyer by each Seller as set forth on Exhibit 1.1 to the Stock Purchase Agreement.

1.3 (a) The Performance Earnouts will be comprised of two payments which shall be made to the Sellers Committee, for the ratable benefit of the Sellers, (i) within fifteen (15) days after the date on which the Earnout Statement for the First Earnout Period shall be deemed to be final in accordance with the provisions of Section 2.5 hereof, and (ii) within fifteen (15) days after the date on which the Earnout Statement for the Second Earnout Period shall be deemed final in accordance with the provisions of Section 2(e) hereof; provided, however, that the maximum amount of the Performance Earnouts ($3,300,000 plus applicable interest) shall be due and payable within fifteen (15) days following the occurrence of any Acceleration Event that precedes the last day of the First Earnout Period, and the maximum amount of the Performance Earnout for the Second Earnout Period ($1,500,000 plus applicable interest), shall be due and payable within fifteen (15) days following the occurrence of any Acceleration Event that precedes the last day of the Second Earnout Period (without prejudice to the Sellers’ rights to receive the Performance Earnout due for the First Earnout Period in accordance with the provisions of this Agreement). The First Earnout Period and the Second Earnout Period are hereinafter referred to individually as an “ Earnout Period ”.

(b) Subject to the provisions of Section 1.3(a) hereof, the Performance Earnout for the First Earnout Period shall only be payable to the Sellers if the Actual Pre-Tax Income (hereinafter defined) for the First Earnout Period equals or exceeds $1,365,000 (65% of the $2,100,000 “Target” for the First Earnout Period) and the Performance Earnout for the Second Earnout Period shall only be payable to the Sellers if the Actual Pre-Tax Income for the Second Earnout Period equals or exceeds $1,527,500 (65% of the $2,350,000 “Target” for the Second Earnout Period). Subject to the foregoing, the Sellers shall be entitled to receive Performance Earnouts equal to the applicable Earnout Amount (as set forth in the Earnout Table) for the First Earnout Period and the applicable Earnout Amount (as set forth in the Earnout Table) for the Second Earnout Period, respectively, that corresponds to the amount of Actual Pre-Tax Income set forth in the Earnout Table attached hereto as E XHIBIT A (the “ Earnout Table ”) that is achieved for such Earnout Period. For the purpose of determining the applicable Earnout Amount, Actual Pre-Tax Income shall be rounded down to next 5% increment if Actual Pre-Tax Income either exceeds 100% of the Target for such Earnout Period or is a lower Percentage of Target that falls between any two of the Percentages of Target set forth on the Earnout Table.

(c) If any Performance Earnout amount or any portion thereof is not paid when due (whether when originally scheduled to be due or upon acceleration in accordance with the provisions of Section 3 hereof), interest thereon shall accrue at the rate of fifteen percent (15%) per annum from the due date to the date of payment. Payment of such interest shall be made together with the payment of the corresponding Performance Earnout amount (or any such portion thereof).

(d) “ Actual Pre-Tax Income ” means the net income of Stealth before interest and federal and state income taxes, excluding, however, the following items:

(i) the gain or loss from any sale, exchange or other disposition of assets other than in the ordinary course of business consistent with past practice;

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(ii) any gain, loss or expense incurred outside of the ordinary course of business;

(iii) any additional depreciation, amortization or other expense resulting from the write-up of any asset and any amortization of goodwill or other intangibles relating to the acquisition of the Shares by Buyer;

(iv) any expenses directly or indirectly incurred in connection with the financing of the acquisition of the Shares or any refinancing of such indebtedness or any other financing not existing prior to the Closing;

(v) any loss or expense resulting from a change in Stealth’s accounting methods, principles or practices or a change in GAAP;

(vi) any intercompany charges between the Stealth and the Buyer that have not been approved in writing by the Sellers’ Committee;

(vii) all costs associated with personnel required by Buyer to be employed by Stealth without the prior written consent of the Sellers’ Committee;

(viii) any expenses directly or indirectly incurred in connection with the acquisition of the Shares by Buyer; and

(ix) any reserves or adjustments to reserves that are not consistent with past practices of Stealth prior to the Closing.

(e) The termination of the employment of any employee or employees of Stealth shall not have any adverse effect whatsoever with respect to the Sellers’ rights under this Agreement, regardless of the time of any such termination(s) or the cause or reason (or absence of any cause or reason) for such termination(s).

2. Earnout Statement .

2.1 Unless an Acceleration Event (as defined in Section 3 hereof) shall have occurred, as promptly as practicable after the end of each Earnout Period, the Sellers’ Committee will cause an income statement of Stealth for such Earnout Period and a statement setting forth the Sellers’ Committee’s calculation of the Actual Pre-Tax Income of Stealth for such Earnout Period (collectively, as may be revised by the Sellers’ Committee’s accountants, the “ Preliminary Earnout Statement ”) to be prepared, and will cause its accountants to review (and revise if necessary) the Preliminary Earnout Statement and to prepare a report based on such Preliminary Earnout Statement and the provisions of this Agreement pertaining to the determination of Actual Pre-Tax Income, as so reviewed (and revised in necessary), setting forth its calculation of the Actual Pre-Tax Income of Stealth for such Earnout Period. As promptly as practicable, but no later than sixty (60) days after the end of such Earnout Period, the Sellers’ Committee will cause the Preliminary Earnout Statement together with the report of Stealth’s accountants as to the Actual Pre-Tax Income for such Earnout Period to be delivered to the Buyer. The income

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statement to be prepared as part of each Preliminary Earnout Statement (each “ Preliminary Income Statement ”) shall (x) fairly present in all material respects the pre-tax income of Stealth for such Earnout Period in accordance with generally accepted accounting principles (“ GAAP ”) applied on a basis consistent with those used in the preparation of the income statement of Stealth for the one-year period ended December 31, 2004 as prepared by Micronetics’ auditors and previously delivered to the Sellers’ Committee (the “ December 31, 2004 Income Statement ”), (y) include line items substantially consistent with those in the December 31, 2004 Income Statement, and (z) be prepared in accordance with accounting practices consistent with those used in the preparation of the December 31, 2004 Income Statement; provided, however, that the Preliminary Income Statement shall exclude the effect of any application of so-called “push down” and purchase accounting to the transactions contemplated by the Stock Purchase Agreement. Whenever used in this Agreement, the term accounting practices includes accounting methods and policies. The cost of the preparation of each Preliminary Earnout Statement shall be borne equally by the Sellers.

2.2 The parties hereto agree that they will cooperate and assist in the preparation of the Preliminary Income Statement for each Earnout Period and the calculation of Actual Pre-Tax Income for each Earnout Period and in the conduct of the review referred to in this Section 2, including without limitation the making available to the extent necessary of books, records, work papers and personnel.

2.3 Buyer may dispute any amounts relating to Actual Pre-Tax Income reflected on (including any amounts omitted from) a Preliminary Earnout Statement; provided , however , that Buyer shall have notified the Sellers’ Committee in writing (the “ Dispute Notice ”) of the disputed items not later than the later to occur of (a) the expiration of 30 calendar days of the delivery to Buyer of the Preliminary Earnout Statement, and (b) the expiration of 100 days after March 31, 2006 or March 31, 2007, as the case may be. Each Dispute Notice shall have set forth, in such written notice, (i) the amount in dispute for each such item and (ii) the basis, in reasonable detail, for each such dispute. Whenever used in this Agreement, the term “accounting practices” includes accounting methods and policies.

2.4 Buyer’s accountants and the Sellers’ Committee’s accountants shall attempt to reconcile any items timely raised in the Dispute Notice. Any written resolution by such accountants of any such disputed amounts shall be final, binding and conclusive on the parties. If any such written resolution by such accountants does not resolve all such disputed items raised by Buyer in the Dispute Notice permitted to be raised by Section 2.3 within 10 calendar days after receipt by the Sellers’ Committee of Buyer’s Dispute Notice, the items timely raised in the Dispute Notice by Buyer permitted to be raised by Section 2.3 that remain in dispute (the “ Remaining Disputed Items ”) shall be submitted for resolution to an Independent Accounting Firm. “ Independent Accounting Firm ” means an accounting firm mutually appointed by the Sellers’ Committee and Buyer, preferably one of national reputation. Prior to its engagement, the Independent Accounting Firm shall agree to (i) resolve any Remaining Disputed Items and no others; and (ii) state in its written report referred to below that, in its good faith judgment, it has resolved all Remaining Disputed Items in accordance with the provisions of this Section 2. The written report of the Independent Accounting Firm shall be final, binding and conclusive on Buyer and Sellers. The Independent Accounting Firm shall have the privileges and immunities of arbitrators and shall act in the capacity as arbitrators in connection with the undertakings

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described above in this Section 2.4. The fees and disbursements of the Independent Account Firm shall be allocated between Buyer and the Sellers in the proportion that the amounts submitted to the Independent Account Firm that are unsuccessfully disputed (as finally determined by the Independent Account Firm) by each such party bears to the total disputed items so submitted.

2.5 Each of the respective Preliminary Earnout Statements, subject to any modifications thereto made pursuant to Section 2.4 in the event a Dispute Notice is delivered to the Sellers’ Committee within that 30-day period set forth in Section 2.4, is referred to herein as