EXHIBIT: 10.16


 


AML COMMUNICATIONS, INC.


EMPLOYMENT AGREEMENT


 


This Employment Agreement (“Agreement”) is made and entered into as of
June 18, 2004 (the “Effective Date”) by and between AML Communications,
Inc., a Delaware corporation (“Company”) and Dr. Franco Sechi (the
“Executive”), based on the following facts:


 


A.                                   Executive
was a founder of Microwave Power, Inc., a California corporation (“MPI”).


 


B.                                     Company,
a subsidiary of the Company, the Executive and MPI have entered into an
Agreement of Merger (“Merger Agreement”) to which the form of this Employment
Agreement is attached as Exhibit C.


 


C.                                     Company
desires to employ Executive as an employee.


 


Based on the foregoing facts and circumstances and for good and
valuable consideration, Company and Executive agree as follows:


 


1.                                       Employment.


 


1.1                                 Company
hereby employs Executive at its location in Santa Clara, California, on a full
time basis to perform duties as Company and Executive shall agree and as may be
reasonably assigned by the President or the Board of Directors of Company
consistent therewith.


 


1.2                                 Executive
shall perform his duties on a full time basis and shall render  his services to the Company in a faithful,
diligent and competent manner.


 


1.3                                 Unless
sooner terminated pursuant to the provisions of this Agreement, Company shall
employ Executive commencing on the Effective Date which term shall continue
until the second year anniversary of the Effective Date (the “Initial Term”);
provided however this Agreement shall be automatically renewed on the second
anniversary of the Effective Date unless either party gives notice otherwise at
lease 90 days prior to such anniversary of the Effective Date.  This Agreement may be sooner terminated as
provided herein.


 


1.4                                 The
term of employment shall be terminated by the death or disability of
Executive.  Disability shall mean the
inability of Executive to provide the services specified in this Section 1
for a period of four (4) consecutive months. 
In the event of termination pursuant to this Section 1.4, Company
shall pay to Executive (or  his estate):
(a) any accrued Base Salary as of the termination date to the extent not
theretofore paid; (b) any accrued vacation pay as of the termination date to
the extent not theretofore paid; and (c) any unreimbursed business expenses of
Executive.


 


1.5                                 In
the event that the employment of Executive is terminated by the Company without
Cause, the Company shall pay to Executive: 
(a) any accrued Base Salary as of the termination date to the extent not
theretofore paid; (b) any accrued vacation pay as of the termination date to
the extent not theretofore paid; (c) any unreimbursed business expenses of
Executive; and (d) if such termination occurs during the Initial Term,  his salary from such termination date until
the end of the Initial Term  (the
“Severance Compensation”).  The
Executive shall have no obligation to seek employment and there shall be no
offset of the Severance Compensation. 
The Severance Compensation is the only amount which Executive shall
receive in the event Executive’s employment is terminated without Cause.


 


1

















 


1.6                                 As
used in this Agreement, the term “Cause” shall mean and refer to a belief by
Company, founded upon fair and honest reasons, that good cause exists for
Executive’s termination including, but not limited to, a good faith belief that
any of the following events have taken place:


 


(a)                                  the
breach of this Agreement, after written notice specifying the breach and the
failure of Executive to cure such breach within 30 days of the receipt of such
written notice;


 


(b)                                 the
commission of any unlawful job related act or wrongful act involving moral
turpitude by Executive;


 


(c)                                  the
refusal or failure of Executive to perform his duties as an employee of the
Company consistent with this Agreement, so long as the Company shall have first
given Executive a written notice specifying the refusal or failure, and
Executive shall have failed to cure such refusal or failure within 30 days of
the receipt of such written notice;


 


(d)                                 continuing
insubordination by Executive for a period of more than 7 days after written
notice specifying such insubordination with respect to the direction of
Executive by the President or the Board of Directors of the Company;


 


1.7                                 In
the event of termination for Cause or voluntary termination by Executive,
Company shall pay to Executive (a) any accrued Base Salary as of the
termination date to the extent not theretofore paid; (b) any accrued vacation
pay as of the termination date to the extent not theretofore paid; and (c) any
unreimbursed business expenses of Executive.


 


2.                                       Compensation
and Expenses.


 


2.1                                 As
compensation for all services rendered by Executive to Company, Executive shall
receive an annual salary of $113,000 (the “Base Salary”), paid on the regular
pay dates of Company during the period of his employment.  In addition, Executive shall receive a 10%
of Base salary as bonus upon achieving goals of financial performance agreed
annually by the Company and the Executive. Executive may also be eligible for
corporate bonuses as determined in the sole discretion of the Chief Executive
Officer or the Board of Directors of Company.


 


2.2                                 On
each of the first and second anniversary of the Effective Date, and if
Executive is employed by the Company at that time, Company shall grant to
Executive incentive stock options under the Company’s Stock Incentive Plan, a
copy of which is attached hereto as Exhibit A, to purchase 25,000 shares of the
Company’s common stock, vesting over a three year period.  The terms and conditions of such incentive
stock options shall be set forth on the Company’s standard form stock option
agreement.  Any non-renewal of this
Agreement or a termination of Executive’s employment without Cause shall
constitute “normal retirement” for purposes of Executive’s stock option
agreement.


 


2.3                                 Upon
presentation of properly completed expense statements on the Company’s expense
report forms, Company shall pay or reimburse Executive for all reasonable
expenses incurred or paid by his during his employment pursuant to this
Agreement.  As used in this
Section 2.3, the term “reasonable” shall mean that such expenses are
consistent with those of executives in comparable positions with the Company.


 


2.4                                 Executive
shall be entitled to the same benefits as other executives in comparable
positions with the Company, including paid vacation and such other benefits as
Company in its sole discretion provides. 
For purposes of determining the level of benefits, Executive shall be
credited with Executive’s years of service with MPI.  In addition, Executive shall receive $200 per month for
Executive’s Medicare premium.


 


2

















 


3.                                       Restrictive
Covenants.


 


3.1                                 Introductory
Facts.


 


(a)                                  Executive
was President and a major shareholder of MPI which was acquired by the Company
pursuant to the Merger Agreement (the “Acquisition”).  Executive received 
495,904 shares of the Company’s common stock as consideration for such
acquisition.  In conjunction with the Acquisition,
the Company acquired all of MPI’s assets, including its goodwill.  Executive acknowledges that MPI was engaged
in the business of building microwave power amplifiers (the “Business”).  Executive further acknowledges that MPI has
customers throughout the United States, Japan, the European Union, China and
Korea and that the production, promotion, marketing and sales of the Business
was conducted in the United States, Japan, the European Union, China and Korea.


 


(b)                                 The
covenants set forth herein are an integral part of the consideration for the
transactions contemplated by the Merger Agreement and the Company would not
enter into the Merger Agreement but for Executive entering into an employment
agreement containing the covenants set forth in Section 3 of this
Agreement (the “Covenants”).  Executive
acknowledges that his receipt of consideration for the Acquisition contemplated
by the Merger Agreement is adequate consideration for Executive entering into
this Agreement and the Covenants set forth herein.  Executive further acknowledges that Executive’s entry into this
Agreement and the Covenants set forth herein are a required part of the
Acquisition contemplated by the Merger Agreement.  The Covenants are intended to protect the goodwill of MPI’s Business.  Executive acknowledges and agrees that the
sale of all of his shares in MPI as part of the Acquisition constituted a “sale
of goodwill” as defined by California Business & Professions Code
§ 16601. As such, Executive acknowledges and agrees that the Covenant Not
to Compete set forth in Section 3.2 below is exempt from the restriction
set forth in California Business & Professions Code § 16600.


 


(c)                                  Executive,
together with the other selling shareholders, have owned and controlled MPI and
Executive has intimate knowledge of the Trade Secrets and Confidential
Information (as defined below) of MPI. In addition, as an executive of the
Company, Executive will be provided or will develop certain Trade Secrets and
Confidential Information of the Company.  All such Trade Secrets and Confidential Information shall be owned
exclusively by the Company following the date hereof.  “Confidential Information” is non-public information pertaining
to the Business of MPI being transferred to the Company, which has been known
to Executive as a result of his ownership interest in and employment of MPI and
information about the Company which is provided to Executive or other employees
or agents of the Company by the Company, or developed by Executive or other
employees or agents of the Company in the scope of their employment or agency,
and obtained by Executive as a result of employment.  To the fullest extent consistent with the foregoing and permitted
by law, Confidential Information also (a) includes, without limitation, the
terms of this Agreement, any and all data or information relating to the
Business as conducted by MPI, financial affairs of MPI, information not
generally known to the public concerning the identity of MPI’s customers and
prospective customers, needs of MPI’s customers, MPI’s product specifications,
names of key employees of MPI, future development of the business of MPI and
the Company, MPI’s methods of operation, MPI’s marketing techniques, MPI’s sale
prices and profit margins, MPI’s business plans, MPI’s financial statements,
MPI’s personnel data, and MPI’s business projections, and (b) does not include
matters which constitute Trade Secrets. The term “Trade Secrets” shall have the
broadest meaning as defined by applicable law Notwithstanding anything to the
contrary above in this subsection (c), Executive may use any technical or
scientific know-how of Executive solely in a manner which is not competitive
with the Company or AML Holdings, LLC, provided that such use will not cause
the Company or AML Holdings, LLC to lose or waive any of its rights in or to
any Confidential Information or Trade Secrets but so long as Executive uses the
know-how in a manner which maintains its confidentiality such use shall not
constitute a loss or waiver.


 


3

















 


(d)                                 MPI’s
sales occur throughout the United States and in many foreign countries.  If the Covenants were limited to the State
of California, its scope would not be sufficient to protect the interests of
the Company.


 


These introductory facts are a part of the Covenants and shall be used
in construing and interpreting it. 
Based on the foregoing facts, Executive agrees as set forth in this
Section 3.


 


3.2                                 Covenant
Not to Compete.


 


During the term of employment with the Company and for a period of two
years after the termination of employment with the Company, Executive will not,
directly or indirectly (including in association with his family members or
relatives), as an employee, sole proprietor, partner, equity holder, officer,
director, agent, consultant or other advisor, member or otherwise, carry on any
activities competitive with the Company with respect to the Business in the
United States, Japan, the European Union, China and Korea.


 


3.3.                              Covenant
Not to Solicit Customers.


 


During the term of employment with the Company and for a period of two
years after the termination of employment with the Company, Executive will not,
other than for or on behalf of the Company, solicit, approach or sell any
products or services competitive with the Business to any customer on the list
of customers of MPI attached as Exhibit B and incorporated by reference;
such list to be amended from time to time by the Company to include new
customers.  For avoidance of doubt,
nothing contained in this Section 3 shall prohibit Executive from
providing consulting services to customers of MPI in fields or product lines
other than the Business.


 


3.4                                 Covenant
Not to Disclose or Use Confidential Information & Trade Secrets.


 


During the term of employment with the Company and for the longest
period permitted by applicable law, Executive will not disclose or use for the
benefit of himself or any other person or entity, other than the Company or its
designees, any Trade Secret or Confidential Information of MPI or the Company,
except as otherwise known to the public at the time of such use, or except to
the extent that such Confidential Information or Trade Secret constitutes a
general body of knowledge about the Business.


 


3.5                                 Covenant
Against Derogatory Remarks and Interference.


 


During the term of employment with the Company and for a period of two
years after the termination of employment with the Company, Executive will not,
directly or indirectly, as an employee, sole proprietor, partner, shareholder,
officer, director, agent, consultant or other advisor, member or otherwise,
make any derogatory comments concerning the business of the Company.


 


3.6                                 Irreparable
Injury.


 


Executive acknowledges that the violation by Executive of any of the
provisions of Sections 3.2, 3.3, 3.4 and 3.5 of this Agreement will result in
irreparable injury to the Company and that the Company shall be entitled to (i)
the issuance of a temporary restraining order, (ii) a preliminary injunction
and (iii) a permanent injunction to prohibit either the continuation or another
breach of Sections 3.2, 3.3, 3.4 or 3.5 of this Agreement.


 


4

















 


3.7                                 Monetary
Damages.


 


Notwithstanding any provision of this Agreement, the Company may seek and
obtain monetary damages according to proof for any breach of the Covenants by
Executive.


 


3.8                                 Inventions.


 


All inventions (including any contribution, improvement, ideas and
discoveries, whether or not subject to patent protection) made by Executive during
his employment by the Company, and which are related to the business of the
Company, shall belong to the Company. 
Executive shall promptly disclose such inventions to the Company and
perform all actions reasonably requested by the Company in support of his
invention and of the ownership thereof by the Company.


 


4.                                       Notices.


 


All notices, requests, consents and other communications required or
permitted to be given hereunder, shall be in writing and shall be given by
commercial courier service providing proof of delivery to the parties at the
following address (and all such notices shall be effective upon receipt):


 


If to the Company:


 


AML Communications, Inc.


1000 Avenida Acaso


Camarillo, CA 93012


Attn: Jacob Inbar


Fax: 805-484-2191


 


with a copy to:


 


Richardson & Patel LLP


10900 Wilshire Blvd. Suite 500


Los Angeles, California  90024


Attention:  Kevin K. Leung


 


If to Executive:


 


Dr. Franco Sechi


3350 Scott Boulevard, Building 25


Santa Clara, CA  95054


 


5.                                       Severability.  If a judicial determination is made that any
of the provisions of this Agreement constitute an unreasonable or otherwise
unenforceable restriction against Executive, said provision shall be rendered
void without rendering unenforceable any other restrictions under this
Agreement.  Moreover, the Company shall
be entitled to recover monetary damages as a result of the breach of any
provision hereof by Executive.  The time
period during which the prohibitions set forth in this Agreement shall apply
shall be tolled and suspended for a period equal to the aggregate quantity of
time during which there is pending litigation over the enforceability or
applicability of this Agreement.


 


6.                                       Indemnification.  Executive hereby agrees to indemnify and
defend the Company and to hold the Company harmless from and against any and
all actual losses, liabilities, damages, deficiencies, costs (including,
without limitation, court costs), and expenses (including, without limitation,
attorneys’ fees) incurred by the Company and arising out of or due to any
breach of any representation, warranty, covenant or agreement of Executive
contained in this Agreement.  The
Company hereby agrees to indemnify and defend Executive and to hold Executive
harmless from and against any and all actual losses, liabilities, damages,


 


5

















 


deficiencies, costs (including, without limitation, court costs), and
expenses (including, without limitation, attorneys’ fees) incurred by Executive
and arising out of or due to any breach of any representation, warranty,
covenant or agreement of Company contained in this Agreement.


 


7.                                       Miscellaneous


 


7.1                                 Binding
Effect.  This Agreement shall inure
to the benefit of and shall be binding upon Executive and his personal
representatives, heirs, beneficiaries and assigns and the Company and its
successors and assigns.


 


7.2                                 Governing
Law.  This Agreement shall be deemed
to be made in, and in all respects shall be interpreted, construed and governed
by and in accordance with, the laws of the State of California.


 


7.3                                 Headings.  The section and paragraph headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.


 


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


 


7.5                                 Entire
Agreement.  This Agreement is
intended by the parties hereto to be the final expression of their agreement with
respect to the subject matter hereof and is the complete and exclusive
statement of the terms thereof notwithstanding any representation, statement or
agreement to the contrary heretofore made. 
This Agreement may be modified only in writing, signed or initialed by
each of the parties hereto.


 


7.6                                 Gender.  Whenever the context so requires, the gender
of any pronoun shall be deemed to include the other genders.


 


7.7                                 CERTIFICATION
OF EXECUTIVE.  EXECUTIVE CERTIFIES
THAT HE (1) HAS RECEIVED A COPY OF THIS AGREEMENT FOR REVIEW AND STUDY BEFORE
BEING ASKED TO EXECUTE IT; (2) HAS READ THIS AGREEMENT CAREFULLY; (3) HAS HAD
SUFFICIENT OPPORTUNITY BEFORE THE AGREEMENT WAS EXECUTED TO ASK QUESTIONS ABOUT
THE PROVISIONS OF THE AGREEMENT AND RECEIVED SATISFACTORY ANSWERS; (4) HAS HAD
SUFFICIENT OPPORTUNITY BEFORE THE AGREEMENT WAS EXECUTED TO SEEK INDEPENDENT
COUNSEL; (5) HAS RECEIVED A COPY OF THE AGREEMENT; AND
(6) UNDERSTANDS HIS RIGHTS AND OBLIGATIONS UNDER THE AGREEMENT.


 


6

















 


IN WITNESS WHEREOF, Executive and Company have executed this Agreement
as of the date stated above.


 


	
  “Company”

  	
  “Executive”

  
	
   

  	
   

  
	
  AML Communications,

  a Delaware corporation

  	
  By:

  	
  /s/ Dr. Franco Sechi

  
	
   

  	
   

  	
  Dr. Franco Sechi

  
	
   

  	
   

  
	
  By:

  	
  /s/ Jacob Inbar

  	
   

  	
   

  
	
   

  	
  Jacob Inbar

  	
   

  
	
   

  	
  President and Chief Executive Officer

  	
   

  
					



 


7

















 


EXHIBIT A


 


STOCK INCENTIVE PLAN


 


8

















 


EXHIBIT B


 


CUSTOMER LIST


 


9