<PAGE>
                                                                    Exhibit 10.4
                              EMPLOYMENT AGREEMENT


        AGREEMENT (the "Agreement") dated this February 2, 2005 (the "Effective
Date") made by and between Presstek, Inc., a Delaware corporation, its parents,
subsidiaries, divisions, or affiliated entities, successors and assigns (the
"Employer"), and G. Michael McCarthy (the "Employee").

        WHEREAS, the Employee has been employed with the Company as Vice
President, Business Integration and has been promoted to, and is currently
employed as Senior Vice President, Operations of the Employer and both the
Employer and the Employee now wish for the Employee to continue to be employed
as Senior Vice President, Operations of the Employer; and

        WHEREAS, the Employee wishes to continue his employment with the
Employer and the Employer wishes to continue its employment of the Employee
under the terms of this Agreement on the date this Agreement is executed by the
parties as set forth above.

        NOW, THEREFORE, in consideration of the promises hereafter contained,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto AGREE as follows:

1.      Consideration. In consideration for the Employee's execution of this
Agreement, the Employer agrees that the Employee's employment shall continue as
set forth in this Agreement, the Employee shall be permitted access to the
Employer's confidential information and trade secrets and the Employee shall be
eligible to receive post-Term Severance Payments (Section 9) or the Change in
Control payment (Section 12) as set forth in this Agreement (subject to his
compliance with Sections 10 and 11 of this Agreement). The Employee understands,
acknowledges and agrees that the Employee would not receive the consideration
specified in this Section 1, except for the Employee's execution of this
Agreement and the fulfillment of the promises contained herein.

2.      Employment. Commencing from the date of this Agreement as set forth
above (the "Start Date"), the Employee shall continue his employment as Senior
Vice President, Operations of the Employer under this Agreement through the Term
of this Agreement. The Employee shall render executive, policy, operations and
other management services to the Employer as determined by the Chief Executive
Officer and President and/or Board of Directors of the Employer (the "Board")
and shall perform such other related duties as they may from time to time
reasonably direct.

3.      Employment Term. "Term," as used in this Agreement, shall refer to the
Term of this Agreement as defined in this Section. The Term of the employment
under this Agreement shall commence on the Start Date and shall initially end
three years thereafter, on the day preceding the third anniversary of the Start
Date, unless terminated sooner in accordance with the provisions hereof. The
Term of employment under this Agreement shall, on each anniversary of the Start
Date thereafter (commencing with the third anniversary of the Start Date), be

                                       1
<PAGE>

automatically extended for an additional year unless the Employer or the
Employee gives written notice to the other, at least 180 days prior to such
anniversary date, that he or it does not concur in such extension. If neither
party gives notice of non-concurrence in such extension, the Term will be
automatically extended for an additional year, unless terminated sooner in
accordance with the provisions hereof.

4.       Compensation.

        (A) Salary. The Employer agrees to pay the Employee during the Term of
this Agreement an annual base salary equal to TWO HUNDRED AND TWENTY FIVE
THOUSAND U.S. DOLLARS AND ZERO CENTS ($225,000) with the salary to be reviewed
no less than annually during the Term of this Agreement by the Board of
Directors or Compensation Committee of the Employer. The base salary of the
Employee shall not be decreased at any time during the Term of this Agreement
from the amount then in effect, unless the Employee otherwise agrees in writing.
The salary shall be payable to the Employee in accordance with the Employer's
payroll system, as determined by the Employer, but not less frequently than
monthly. All payments and benefits in this Agreement shall be subject to all
applicable federal, state and local withholding, payroll and other taxes.

        (B) Equity or Securities Compensation. Subject to the terms and
conditions of the Employer's 2003 Stock Option and Incentive Plan (the "Plan"),
the Employee shall be granted, on the Effective Date, options to purchase fifty
thousand (50,000) shares of common stock of the Employer at a price per share
equal to the fair market value of the shares on the Effective Date, such options
to be immediately exercisable on June 30, 2005. In addition, subject to the
terms and conditions of the Employer's 2003 Stock Option and Incentive Plan (the
"Plan"), and subject to the approval of the Committee (as that term is herein
defined) the Employee shall be granted, on the Effective Date, options to
purchase fifty thousand (50,000) shares of common stock of the Employer at a
price per share equal to the fair market value of the shares on the Effective
Date, such options to be exercisable as follows:

                  16,667 options exercisable on June 30, 2006;

                  16,667 options exercisable on June 30, 2007; and

                  16,666 options exercisable on June 30, 2008.

        In addition to the foregoing consideration, and subject to the
eligibility requirements that may be applicable, the Employee may be entitled to
participate during the Term in any plan or arrangement of the Employer relating
to a stock options, stock purchases, pension, thrift, or profit sharing
benefits, or other benefits under qualified or non-qualified deferred
compensation plans, group life insurance, medical coverage, education or any
other employee benefits that the Employer may, at its sole and unfettered
discretion, adopt or make available for the benefit of the Employee.

        Participation in discretionary bonuses, retirement and other employee
benefit plans and fringe benefits shall not reduce the salary payable to the
Employee under this Section 4, except as provided in Section 4 (A) herein.

                                       2
<PAGE>

5.      Discretionary Bonuses. During the Term of this Agreement, the Employee
may be entitled to receive an annual cash bonus of up to 40% of the Employee's
then annual base salary, based on the Employee's contribution to the
accomplishment of key annual corporate objectives mutually determined by the
Employee and the Employer. The determination of whether to pay a discretionary
bonus, and the amount of the bonus, if any, shall be made by the Employer in its
sole and absolute discretion. During the Term of this Agreement, the Employee
also may be entitled to participate on the same terms and conditions as other
similarly situated eligible executive employees of the Employer in any other
incentive compensation and bonus programs authorized and declared by the Board
of Directors or Compensation Committee of the Employer for executive employees.
The determination of whether the Employee is eligible to participate in any such
incentive compensation and bonus programs, and the amount of incentive
compensation and bonus paid, if any, shall be made solely by the Employer. No
other compensation provided for in this Agreement shall be deemed a substitute
for the Employee's right to participate in such incentive compensation or bonus
programs when and as declared.


6.      Participation in Retirement and Employee Benefit Plans; Fringe Benefits.

        Subject to the eligibility requirements that may be applicable, the
Employee may be entitled to participate during the Term in any plan or
arrangement of the Employer relating to stock purchases, pension, thrift, or
profit sharing benefits, or other benefits under qualified or non-qualified
deferred compensation plans, group life insurance, medical coverage, education
or any other employee benefits that the Employer may adopt or make available for
the benefit of the Employee or of similarly situated executive employees
generally.

        The Employer fully reserves its rights to change, modify or discontinue
any of its stock purchase, retirement, employee benefit or other fringe benefit
plans during the Term of this Agreement in its sole and absolute discretion, and
in accordance with applicable law.

7.      Standards. The Employee shall perform his duties and responsibilities
under this Agreement in accordance with such reasonable standards as are
established from time to time by the Chief Executive Officer and President
and/or the Board of Directors of the Employer, in their respective sole and
absolute discretions.

8.      Voluntary Absences; Vacations. The Employee shall be entitled to an
annual paid vacation during the Term of this Agreement in accordance with the
Employer's policy of executives of four (4) weeks per year or such longer period
as the Board of Directors may approve or such longer periods to which the
Employee may be entitled as an employee of the Employer. The timing of paid
vacations shall be scheduled in a reasonable manner by the Employee.

9.      Termination of Employment.

        The Employee's employment with the Employer may terminate either by
either:

            (a)     termination by the Employer either (i) for Cause (as defined
                    in Section 9(a)(iii) below) or (ii) without Cause;

                                       3
<PAGE>

              (b)     termination by the Employee either for (i) Good Reason (as
                      defined in Section 9(b) below or (ii) Not Good Reason (as
                      defined in Section 9(b); or

              (c)     in the event of death or disability of the Employee.



        (a)  Termination by the Employer.

        (i) The Employer may terminate the Employee's employment at any time,
but any termination by the Employer other than termination for Cause (as defined
in Section 9(a)(iii) below) shall not prejudice the Employee's right to receive
compensation and other benefits under this Agreement, except as stated otherwise
in this Agreement. In the event of a termination for Cause, the Employee shall
have no right to receive payment, compensation or other benefits, including
payment of legal fees and expenses incurred, for any period after termination
for Cause except as otherwise required by law. Where the Employee's employment,
is terminated other than termination for Cause, the Employer shall continue to
be subject to any independent obligation to the Employee under any employee
benefit plan in which the Employee is then a participant. Where the Employee's
employment is terminated for Cause, the Employer shall have no obligation to
continue to be subject to any independent obligations to the Employee under any
employee benefit plan for which the Employee is then a participant, except as
otherwise required by law.

        (ii) In the event that the Employee's employment ceases by reason of the
Employer's termination of the Employee's employment during the Term other than
for Cause, the Employer shall be obligated in lieu and replacement of the
Employee's entitlement to any compensation and other benefits under this
Agreement pursuant to Section 9(a)(i), to make severance payments to the
Employee in an amount equal to the Employee's then current annual base salary
multiplied by a fraction, the denominator of which shall be 12 and the numerator
of which shall be the number of months remaining in the Term (collectively, the
"Severance Payments"). Notwithstanding the foregoing, if the Employee's
employment ceases by reason of the Employer's termination of the Employee's
employment other than for Cause, the amount paid in Severance Payments to the
Employee under this Section shall not be less than the Employee's annual base
salary for a period of one and one-half (1 1/2) years and shall not exceed the
Employee's then annual base salary for a period of two (2) years. The amount
paid in Severance Payments to the Employee under this Section shall be paid
after termination of employment in equal monthly installments according to the
Employer's normal payroll practices then in effect. However, if either party
provides the other party with written notice of the party's non-concurrence in
the automatic extension of the Term, as set forth in Section 3 of this
Agreement, notwithstanding the foregoing, the Employer shall make Severance
Payments under this Section for a period of one (1) year. However, if the
Employer's termination of the Employee's employment without Cause occurs in
connection with, or within one and one-half (1 1/2) years after, a "Change in
Control" as defined in Section 12(b) hereof, the amount payable to the Employee
shall be determined exclusively under Section 12(a) as limited by Section 12(c)
hereof, and the Employer shall not be required to make the payments set forth in
this Section. The Severance Payments under this Section 9(a)(ii) shall not be
reduced by any compensation

                                       4
<PAGE>

which the Employee may receive for other employment with another employer
after termination of his employment with the Employer. In addition, the
Employee shall be entitled to have all existing retirement or employee benefits
of the type referred to in Section 6 hereof continued for the remainder of the
Term when the Agreement is terminated, except as otherwise required by law or
provided in the related retirement or other employee benefit plans or
agreements. Notwithstanding the foregoing, the Employer shall have no obligation
to make any contributions to any retirement plan applicable to the Employee
after the date the Employee ceases to be employed by the Employer except as may
be required by such applicable plan. Notwithstanding anything stated herein to
the contrary, and for purposes of clarity, should the Employer terminate the
Employment of the Employee for Cause, the Employee shall not be entitled to
receive Severance Payments. In the event of a retirement plan, the Employee
shall be entitled to contributions made by the Employer to the retirement plan
on the Employee's behalf prior to the date of the Employee's termination, which
have vested and for which the Employee is otherwise eligible in accordance with
the written terms of the official plan documents governing any applicable
retirement plan. The Employer shall have no obligation to make the Severance
Payments set forth in this Section unless the Employee fully complies with his
obligations under this Agreement, including, but not limited to, his obligations
under Sections 10 and 11 of this Agreement.

        (iii) References in this Agreement to "termination for Cause" shall mean
termination on account of acts or omissions of the Employee which constitute
Cause as defined below. Any determination with respect to a termination for
Cause shall require the approval of the Board of Directors of the Employer.
"Cause" shall mean any of the following:

                  (A)      conviction of a felony,

                  (B)      theft from the Employer,

                  (C)      breach of fiduciary duty involving personal profit,

                  (D)      sustained and continuous conduct by the Employee
                           which adversely affects the reputation of the
                           Employer,

                  (E)      continued failure of the Employee to substantially
                           and satisfactorily perform his duties or obligations
                           under this Agreement following twenty (20) days'
                           notice by the Employer to the Employee and a failure
                           by the Employee to correct the deficiency cited in
                           such notice (other than any such failure resulting
                           from the Employee's incapacity due to physical or
                           mental illness).

        (b)      Termination by the Employee.

        The Employee shall have no right to terminate his employment under this
Agreement prior to the end of the Term of this Agreement, unless such
termination is either for Good Reason (as described in Section 12(a) hereof) (i)
in connection with, or within one and one-half (1 1/2) years after, a Change in
Control; or (ii) approved by the Board of Directors of the Employer. For
purposes of this Agreement, the term "Not Good Reason" shall mean such
termination by the Employee of his employment for reasons other than for Good
Reason. In the

                                       5
<PAGE>

event that the Employee terminates his employment for Not Good Reason, the
Employee shall have no right to receive compensation or other benefits,
including payment of legal fees and expenses incurred, for any period after such
termination except as otherwise required by law. . Where the Employee terminates
his employment for Good Reason, the Employer shall continue to be subject to any
independent obligation to the Employee under any employee benefit plan in which
the Employee is then a participant. Where the Employee terminates his employment
for Not Good Reason, the Employer shall have no obligation to continue to be
subject to any independent obligations to the Employee under any employee
benefit plan for which the Employee is then a participant, except as otherwise
required by law.

        Notwithstanding anything stated herein to the contrary, and for
purposes of clarity, should the Employee terminate his Employment for Not Good
Reason, the Employee shall not be entitled to receive Severance Payments as
described in Section 9(a)(ii).

       (c)      Death and Disability.

        The Employee's employment under this Agreement may also cease prior to
the end of the Term of this Agreement in the event of the Employee's death or
upon the Employee becoming "Totally Disabled." For purposes of this Agreement,
"Totally Disabled" shall mean such situation where the Employee, because of
injury (the "Injury") or sickness (the "Sickness"), the Employee is unable to
perform the material duties of her regular occupation for a specified period;
and, solely due to injury or sickness, she is unable to earn more than the
percentage of their Indexed Covered Earnings (as that term is defined in the
Employer's Long-Term Disability Summary Plan Description) from working in her
regular occupation. Thereafter, "Totally Disabled" shall mean such situation
where the Employee is disabled in that her injury or sickness makes her unable
to perform the material duties of any occupation for which she may reasonably
become qualified based on education, training or experience; and solely due to
such Injury or Sickness, she is unable to earn more than the percentage of their
Indexed Covered Earnings (as that term is defined in the Employer's Long-Term
Disability Summary Plan Description). For purposes of this Agreement the
Employee shall be "Totally Disabled" as of the date he becomes entitled to
receive disability benefits under the Employer's long term disability plan. In
the event that the Employee's employment is terminated by his death or upon
becoming "Totally Disabled," the Employee or the Employee's heirs or estate (as
applicable), shall be entitled to receive (i) any accrued but unpaid salary for
services rendered to the date of termination as determined pursuant to Section
4, (ii) any vacation accrued under the Employer's policy to the date of
termination, and (iii) any accrued but unpaid expenses pursuant to Section 14 of
this Agreement. The benefits to which the Employee may be entitled upon
termination pursuant to the plans and arrangements referred to in Section 6 of
this Agreement shall be determined and paid in accordance with the terms of such
plans and arrangements.

        (d) The Employer shall have no obligation to make the payments set forth
herein if the Employee is in material breach of the Employee's obligations under
this Agreement. The Employee shall be obligated to execute a general release of
claims in favor of the Employer, its current and former parents, subsidiaries,
subdivisions, divisions, shareholders, Board of Directors, or affiliated
entities or persons, and the current and former directors, officers, employees
and agents of the Employer, in a form acceptable to the Employer (the
"Release"), as a condition to receiving the Severance Payments described above.

                                       6
<PAGE>

10.      Confidential Information and Non-Competition.

        (a) "Confidential Information" shall mean trade secrets or confidential
information relating to the Employer, its customers, affiliates and their
respective businesses, including, but not limited to, the identity of the
Employer's customers; the entity of distributors and suppliers of the Employer;
the identity of representatives responsible for entering into contracts with the
Employer; specific customer, distributor and supplier needs and requirements;
the details of contracts and proposals between the Employer and its customers,
distributors and suppliers; selling and marketing strategies, prices, costs, and
profit margins; the names, addresses and other contact information of purchasing
agents, vendors or other entities; purchasing techniques, methods, procedures
and processes, manufacturing and production techniques, methods, procedures and
processes; other techniques, methodologies and processes used by the Employer in
the conduct of its business; techniques, methods, procedures, know-how,
show-how, prototypes and technical specifications; computer data, software,
software codes, computer models, research projects, data processing and other
programs; production and manufacturing equipment and operating practices;
information with respect to products and product formulae, designs, plans for
future business, new business, products or other developments; new or innovative
ideas, customer proposals, marketing plans and ideas, future developments or
strategies; information pertaining to research and development, acquisitions or
divestitures, marketing and sales, cost cutting, revenue generation, or other
matters concerning the Employer's planning and strategy; and other nonpublic
financial and other information of the Employer disclosed to or known by the
Employee as a consequence of or through the Employee's employment (or other
service relationship) with the Employer (including information conceived,
originated, discovered or developed by the Employee), which information is not
generally known in the relevant trade or industry or public knowledge. The
Employee acknowledges and agrees that the Confidential Information is not
generally known or available to the public, but has been developed, compiled or
acquired by the Employer at its great effort and expense. Confidential
Information can be in any form: oral, written or machine readable, including
electronic files.

        (b) The Employee acknowledges and agrees that the Employer is engaged in
a highly competitive business and that its competitive position depends upon its
ability to maintain the confidentiality of the Confidential Information and
Trade Secrets which were developed, compiled and acquired by the Employer at its
great effort and expense. The Employee further acknowledges and agrees that any
disclosure, divulging, revelation or use of any of the Confidential Information,
other than in connection with the Employer's business or as specifically
authorized by the Employer, will be highly detrimental to the Employer, and that
serious loss of business and goodwill and pecuniary damage may result therefrom.
During the Employee's employment with the Employer and thereafter, the Employee
shall hold for the benefit of the Employer, and not for the Employee's own
benefit or disclosure to third parties, all Confidential Information relating to
the Employer and its business, including all Confidential Information of
customers of the Employer (i) obtained by the Employee during the Employee's
employment with the Employer and (ii) not otherwise public knowledge or
generally known in the trade or industry. The Employee shall not, without the
prior written consent of the Employer, unless compelled pursuant to the order of
a court or other governmental or legal body having jurisdiction over such
matter, communicate or divulge any such Confidential Information to anyone other
than the Employer and those designated by it. In the event the Employee is

                                       7
<PAGE>

compelled by order of a court or other governmental or legal body to communicate
or divulge any such Confidential Information to anyone other than the Employer
and those designated by it, the Employee shall promptly notify the Employer of
any such order and the Employee shall cooperate fully with the Employer in
protecting such information to the extent possible under applicable law and will
only disclose that portion of the Confidential Information necessary to satisfy
any such order.

        (c) Upon termination of the Employee's employment with the Company, or
at any time the Company requests, all equipment, property, documents, files,
records, notes, memoranda, designs, reports, price lists, cost sheets,
prototypes, blue prints, technical specifications, estimates, databases, home
office equipment, automobiles, computer equipment, computer files, computer
programs, plans, other documents, and all other property and Confidential
Information of the Employer (including all copies in all forms in the Employee's
possession or control), whether prepared by the Employee solely or jointly with
others, shall be left with or promptly returned to the Employer and shall at all
times be the property of the Employer.

        (d) The Employee acknowledges and agrees that the Employer is engaged in
a highly competitive business, and by virtue of the Employee's position and
responsibilities with the Employer, and the Employee's access to Confidential
Information, the Employee's engaging in any business which is directly or
indirectly competitive with the Employer will cause it great and irreparable
harm. During the period of employment as an officer and/or employee of the
Employer, the Employee will devote his available business time and best efforts
to promoting and advancing the business of the Employer. During the Term of this
Agreement and for the duration of the Severance Payments made to the Employee in
accordance with Section 9, or in the event of a Change in Control in accordance
with Section 12 for a period of two (2) years, the Employee agrees that he or
she will not, in any jurisdiction around the world in which the Employer
conducts business, whether alone or as a partner, officer, director, consultant,
agent, employee or stockholder of any company or other commercial enterprise,
engage in any business or other commercial activity which is or may be
competitive with the products and services being designed, conceived, marketed,
distributed or developed by the Employer at the time of termination of such
employment, unless written approval is obtained from the Company's Board of
Directors. Notwithstanding the foregoing, if either party provides the other
party with written notice of the non-concurrence in the automatic extension of
the Term, as set forth in Section 3 of this Agreement, the duration of the
restriction in this Section 12(d) shall be for the duration of the Term and for
a period of one (1) year from the date of expiration of the Term. For purposes
of this Section, competitive products and services shall be defined to mean
non-photographic imaging, computer-to-plate, direct-to-press, thermal laser or
chemistry-free printing plate technology products and services, or any other
products and services substantially similar to the products and services
designed, conceived, marketed, distributed or developed by the Employer at the
time of termination of the Employee's employment. The Employee acknowledges,
understands and agrees that accepting such competitive employment would cause
him to inevitably use, misappropriate and disclose the Employer's Confidential
Information which the Employee came to learn during his employment with the
Employer.

        (e) The Employee acknowledges and agrees that during the course and
solely as a result of the Employee's employment with the Employer, the Employee
has and will become

                                       8
<PAGE>

aware of some, most or all of the customers of the Employer, their names and
addresses, their representatives responsible for engaging the services of the
Employer and their specific needs and requirements. The Employee further
acknowledges and agrees that the loss of such customers will cause the Employer
serious loss of business and will be detrimental to the Employer's goodwill and
will cause great and irreparable harm. During the Term of this Agreement and for
a period of two (2) years after termination of employment (for any reason
whatsoever), the Employee will not directly or indirectly either for himself or
for any other person or commercial enterprise (1) divert or take away, or
attempt to divert or take away, any of the Employer's customers or business in
existence at the time of termination of such employment that the Employee had
contact with, for whom the Employee performed services during his employment
with the Employer and/or that were made known to the Employee by the Employer
during his employment with the Employer; and/or (2) solicit or attempt to
solicit, ask for, accept, or seek to do business with, for the purpose or effect
of engaging in competition with the Employer, any of the Employer's customers or
business in existence at the time of termination of such employment with whom
the Employee had contact, for whom the Employee performed services during his
employment with the Employer and/or that were made known to the Employee by the
Employer during his employment.

        (f) The Employee acknowledges and agrees that during the course and
solely as a result of the Employee's employment with the Employer, the Employee
has and will become aware of some, most or all of the employees of the Employer,
and has and will acquire knowledge of their qualifications, skills, abilities,
salaries, commissions, benefits and other matters with respect to such employees
not generally known to the public. The Employee further acknowledges and agrees
that any solicitation, luring away or hiring of such employees of the Employer
will cause serious loss of business and will be detrimental to the Employer's
goodwill and will cause great and irreparable harm. During the Term of this
Agreement and for a period of two (2) years after termination of employment (for
any reason whatsoever), the Employee will not directly or indirectly either for
himself or for any other person or commercial enterprise (1) solicit or induce
any employee to terminate his or her employment relationship with the Employer,
and/or (2) recruit, attempt to recruit, hire, or attempt to hire any employee of
the Employer other than on behalf of the Employer.

        (g) The Employee hereby acknowledges and agrees that the type and
periods of restrictions imposed in Sections 10(a) through 10(f) of this
Agreement are fair and reasonable and are reasonably required for the protection
of the Employer's Confidential Information and the goodwill associated with the
business of the Employer. Further, the Employee acknowledges and agrees that the
restrictions imposed in Sections 10(a) through 10(f) will not prevent him from
obtaining suitable employment after his employment with the Employer ceases or
from earning a livelihood. The Employee hereby acknowledges, agrees and
understands that he would not be entitled to the Severance Payments (as
described in Section 9(a)(ii)) or the Change in Control payment (as described in
Section 12(a)), except for his agreement to fulfill his obligations under
Sections 10(a) through 10(f) and Section 11 of this Agreement.

11. Assignment of Inventions. The Employee expressly understands and agrees that
any and all right or interest he may obtain in any designs, trade secrets,
technical specifications and technical data, know-how and show-how, customer and
vendor lists, marketing plans, pricing policies, inventions, concepts, ideas,
works of authorship, documentation, formulae, data,

                                       9
<PAGE>

designs, techniques, discoveries, improvements or intellectual property rights
of any kind or any interest therein (whether or not patentable or registrable
under copyright, trademark or similar statutes (including, but not limited to,
the Semiconductor Chip Protection Act) or subject to analogous protection) that
he, whether alone or jointly with others, authors, conceives, devises, develops,
reduces to practice, or otherwise obtains during the Employee's employment with
the Employer, and that (i) relate to or arise out of his employment with the
Employer; (ii) relate to the Employer's present or planned business or any of
the products or services being designed, conceived, developed, marketed,
manufactured or distributed by the Employer or that may be used in relation
therewith; (iii) result from the use of premises or personal property (whether
tangible or intangible) owned, leased or contracted for or by the Employer; (iv)
result from activities engaged in during the Employer's time; and/or (v) result
from use of Confidential Information of the Employer whether such use occurred
prior to or during the Employee's employment with the Employer (the
"Inventions"), are and shall immediately become the sole and absolute property
of the Employer and its assigns, as works made for hire or otherwise.

        The Employee hereby assigns to the Employer the sole and exclusive right
to such Inventions. The Employee agrees that he will promptly disclose to the
Employer any and all such Inventions, and that, upon request of the Employer,
the Employee will execute and deliver any and all documents or instruments and
take any other action which the Employer shall deem necessary to assign to and
vest completely in the Employer, to perfect trademark, copyright and patent
protection with respect to, or to otherwise protect the Employer's trade secrets
and proprietary interest in such Inventions. The Employer agrees to pay any and
all copyright, trademark and patent fees and expenses or other costs incurred by
the Employee for any assistance rendered to the Employer pursuant to this
Section.

        In the event the Employer is unable, after reasonable effort, to secure
the Employee's signature on any letters, patent, copyright or other analogous
protection relating to an Invention, the Employee hereby irrevocably designates
and appoints the Employer and any of its officers as his agent and
attorney-in-fact, to act for and on his behalf and stead to execute and file any
such application or applications and to do all other lawfully permitted acts to
further the prosecution and issuance of letters patent, copyright or other
analogous protection thereon with the same legal force and effect as if executed
by the Employee. The obligations in this Section shall continue beyond the
termination of the Employee's employment.

12.      Change in Control.

        (a) (i) If during the Term of this Agreement there is a Change in
Control of the Employer, and the Employee's employment with the Employer is
terminated involuntarily (other than for Cause), or voluntarily for Good Reason
(as defined below), in connection with or within one and one-half (1 1/2) years
after such Change in Control, then the Employee shall be entitled to receive a
lump sum cash payment as provided in Section 12(a)(ii) below. The Employer shall
have no obligation to make the payment set forth in this Section unless the
Employee fully complies with his obligations under this Agreement, including,
but not limited to, his obligations under Sections 10 and 11 of this Agreement.
The Employer shall have no obligation to make the payment set forth in this
Section in the event of the Employee's death or upon Employee becoming "Totally
Disabled" (as described in Section 9(a)(c)) on the date of a Change in Control
or within one and one-half (1 1/2) years after such Change in Control. In such
event, the

                                       10
<PAGE>

payments and benefits, if any, to which the Employee may be entitled shall be
determined in accordance with Section 9(c) of this Agreement. (ii) Subject to
Section 12(c) hereof, the lump sum cash payment (the "Payment") shall be in an
amount equal to three (3) times the Employee's average annual base salary paid
to the Employee by the Employer over the five (5) most recent years ending prior
to such Change in Control of the Employer (or such portion of such period during
which the Employee was a full-time employee of the Employer), less one dollar.
In addition, in the event of a Change in Control, all existing options that have
been granted to the Employee shall be subject to immediate vesting.

        (iii) As used herein, the term "Good Reason" means, unless previously
consented to in writing by the Employee, the occurrence of any one of the
following:

             (A) the assignment to the Employee of duties and responsibilities
that are not at least substantially equivalent to the Employee's duties and
responsibilities with the Employer immediately prior to such Change in Control;

             (B) the failure to continue the Employee in a position and title
that is at least substantially equivalent to the position held by the Employee
with the Employer immediately prior to such Change in Control, except in
connection with the termination of the Employee's employment for Cause or as a
result of death or permanent disability;

             (C) a reduction in or failure to pay currently total annual cash
compensation in an amount equal to or greater than the sum of (i) the Employee's
salary at the highest annual rate in effect during the 12-month period
immediately prior to such Change in Control, and (ii) the bonus paid to
similarly situated employees pursuant to the acquiring Employer's executive
bonus plan for the fiscal year ending immediately prior to such Change in
Control;

             (D) the Employee's benefits under any employee benefit or welfare
plan of the acquiring Employer are less, or are reduced to less (subject to
Employer's right to provide equivalent benefits in cash or otherwise in kind),
other than reductions mandated by a change in law, than the benefits of
similarly situated employees under any employee benefit or welfare plan of the
acquiring Employer in effect immediately prior to such Change in Control;

             (E) the Employee is reassigned to a place of business which is more
than thirty-five (35) miles from a major city in the United States as defined by
the twenty-six (26) Standard Metropolitan Statistical Areas; or

             (F) any material breach by the Employer of this Agreement.

        (iv) Payment under this Section 12(a) shall be in lieu of any amount
owed to the Employee as severance payments for termination without Cause under
Section 9(a) hereof. However, payment under this Section 12(a) shall not be
reduced by any compensation which the Employee may receive from other employment
with another employer after termination of his employment with the Employer. The
Employer shall have no obligation to make any contributions to any retirement
plan that may be applicable to the Employee after a Change in Control of the
Employer. The Employee shall be entitled to contributions made by the Employer
to any retirement plan that may be applicable to the Employee on the Employee's
behalf prior to a Change in Control of the Employer, which have vested and for
which the Employee is

                                       11
<PAGE>

otherwise eligible in accordance with the written terms of the official plan
documents governing any applicable retirement plan.

        (b) A "Change in Control of the Employer," for purposes of this
Agreement, shall be deemed to have taken place if as the result of, or in
connection with, any cash tender or exchange offer, merger, or other business
combination, sale of assets or contested election, or any combination of the
foregoing transactions, the persons who were directors of the Employer before
such transaction shall cease to constitute a majority of the Board of Directors
of the Employer or any successor institution.

        (c) Notwithstanding any other provisions of this Agreement or of any
other agreement, contract, or understanding heretofore or hereafter entered into
by the Employee with the Employer, except an agreement, contract, or
understanding hereafter entered into that expressly modifies or excludes
application of this Section 12(c) ("Other Agreements"), and notwithstanding any
formal or informal plan or other arrangement heretofore or hereafter adopted by
the Employer for the direct or indirect provision of compensation to the
Employee (including groups or classes of participants or beneficiaries of which
the Employee is a member), whether or not such compensation is deferred, is in
cash, or is in the form of a benefit to or for the Employee (a "Benefit Plan"),
the Employee shall not have any right to receive any payment or other benefit
under this Agreement, any Other Agreement, or any Benefit Plan if such payment
or benefit, taking into account all other payments or benefits to or for the
Employee under this Agreement, all Other Agreements, and all Benefit Plans,
would cause any payment to the Employee under this Agreement to be considered a
"parachute payment" within the meaning of Section 280G(b)(2) of the Internal
Revenue Code as then in effect (a "Parachute Payment"), as determined by a
nationally recognized accounting firm selected by the Board. In the event that
the receipt of any such payment or benefit under this Agreement, any Other
Agreement, or any Benefit Plan would cause the Employee to be considered to have
received a Parachute Payment under this Agreement, then the Employee shall have
the right, in the Employee's sole discretion, to designate those payments or
benefits under this Agreement, any Other Agreements, and/or any Benefit Plans,
which should be reduced or eliminated so as to avoid having the payment to the
Employee under this Agreement be deemed to be a Parachute Payment.

        (d) The Employer shall have no obligation to make the payments set forth
herein if the Employee is in material breach of the Employee's obligations under
this Agreement. The Employee shall be obligated to execute a general release of
claims in favor of the Employer, its current and former parents, subsidiaries,
subdivisions, divisions, shareholders, Board of Directors, or affiliated
entities or persons, and the current and former directors, officers, employees
and agents of the Employer, in a form acceptable to the Employer (the
"Release"), as a condition to receiving the payments set forth in this Section.

13. Remedies. The Employee acknowledges and agrees that compliance with the
covenants set forth in this Agreement is necessary to protect the business and
goodwill of the Employer and that any breach of Sections 10 through 11 of this
Agreement will result in irreparable and continuing harm to the Employer, for
which money damages may not provide adequate relief. Accordingly, in the event
of any breach or anticipatory breach of Sections 10 and 11 by the Employee, the
Employer and the Employee agree that the Employer shall be entitled to the
following particular forms of relief as a result of such breach, in addition to
any remedies

                                       12
<PAGE>

otherwise available to it at law or equity: (a) injunctions, whether temporary,
preliminary or permanent, enjoining or restraining such breach or anticipatory
breach, and the Employee hereby consents to the issuance thereof forthwith and
without bond by any court of competent jurisdiction; and (b) recovery of all
reasonable sums and costs, including attorneys' fees, incurred by the Employer
to enforce the provisions of Sections 10 and 11.

14. Expenses; Automobile Allowance.

   (a) The Employee is authorized to incur, during the Term of this Agreement,
reasonable expenses for promoting the business of the Employer, including
without limitation expenses for entertainment, travel and similar items. The
Employer will promptly reimburse the Employee for all such expenses, upon the
presentation by the Employee, from time to time, of an itemized account of such
expenses.

   (b) During the Term of this Agreement, the Employer shall buy or lease a
full size luxury vehicle of the Employer's choosing for the Employee's exclusive
use and/or, at the Employee's option, provide the Employee with a monthly
automobile allowance in an amount sufficient to pay the Employee's costs for the
purchase or lease of such a vehicle, and the Employer shall reimburse the
Employee (upon submission by him of reasonably itemized accounts thereof) for
all maintenance, repairs, insurance, gasoline, tolls, parking and other
reasonable upkeep and related expenses on such vehicle.

15. Legal Expenses. The Employer shall indemnify and hold harmless the Employee
from and against any and all reasonable costs and liabilities, including without
limitation reasonable attorneys' fees, arising out of or in connection with
becoming, being or having been an officer or director of the Employer, except in
relation to matters as to which the Employee shall be finally adjudged not to
have acted in good faith in the reasonable belief that his action or failure to
act was in the best interest of the Employer.

16. Successors and Assigns; Assumption by Successors. All rights hereunder shall
inure to the benefit of the parties hereto, their personal or legal
representatives, heirs, successors or assigns. This Agreement may not be
assigned or pledged by the Employee. The Employer will require any successor
(whether direct or indirect, by purchase, assignment, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Employer in any consensual transaction expressly to assume this Agreement and to
agree to perform hereunder in the same manner and to the same extent that the
Employer would be required to perform if no such succession had taken place.
References herein to the Employer will be understood to refer to the successor
or successors of the Employer, respectively.

17. Other Contracts. The Employee shall not, during the Term of this Agreement,
have any other paid employment (other than with a subsidiary or affiliate of the
Employer), except with the prior approval of the Board of Directors of the
Employer.

18. Entire Agreement. This Agreement constitutes the entire agreement between
the parties with respect to the subject matter contained herein, and supersedes
all prior employment agreements and understandings, whether written or oral,
except for the Employer's Code of Business Conduct and Ethics, Corporate
Communications Disclosure Procedures ,Insider

                                       13
<PAGE>

Trading Policy Statement, and 2003 Stock Option and Incentive Plan, which shall
remain in full force and effect, each of which are incorporated herein by
reference.

19. Amendments or Additions. There are currently no oral representations,
agreements or understandings which affect the enforceability of this Agreement,
and no alteration or variation of the terms of this Agreement can be valid
unless made in writing and signed by both parties, wherein specific reference is
made to this Agreement.

20. Section Headings. The section headings used in this Agreement are included
solely for convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.

21. Severability. Each promise and provision contained in this Agreement shall
be enforceable independently of every other promise and provision in this
Agreement. If any provision contained in this Agreement is determined to be
partially or totally invalid or unenforceable in any respect, such determination
shall not affect any other provision of this Agreement, but this Agreement shall
be considered divisible as to such provision which shall become null and void,
leaving the remainder of this Agreement in full force and effect.

22. Governing Law. This Agreement shall be governed by the laws of the United
States where applicable and otherwise by the laws of the State of New Hampshire,
without giving effect to the conflicts of laws principles thereof.

23. Arbitration of Disputes and Jury Waivers.

        (a) The parties hereto agree to arbitrate any dispute, claim, or
controversy ("claim") against each other arising out of the cessation of the
Employee's employment, any claim of unlawful discrimination or harassment that
might or did arise during or as a result of the Employee's employment which
could have been brought before an appropriate government administrative agency
or in an appropriate court, including but not limited to claims of age
discrimination under the Age Discrimination in Employment Act of 1967, as
amended, as well as any claim or controversy arising under this Agreement. The
Arbitration shall be arbitrated by one arbitrator in accordance with the
National Rules for the Resolution of Employment Disputes of the American
Arbitration Association. The decision or award of the arbitration shall be final
and binding upon the parties. Any arbitral award may be entered as a judgment or
order in any court of competent jurisdiction. Any claims under Sections 10 and
11 of this Agreement shall not be subject to arbitration, but shall be subject
to the remedies set forth in Section 13 hereof.

        (b) If for any reason this arbitration provision is declared
unenforceable, the Employee agrees to waive any right he may have to a jury
trial with respect to any dispute or claim against the Employer relating to this
Agreement, his employment, termination or any terms and conditions of
employment, including, but not limited to claims of age discrimination under the
Age Discrimination in Employment Act of 1967, as amended.

        (c) The Employee has been advised of his right to consult with counsel
regarding this Agreement. The Employee's acceptance of this Agreement can be
revoked any time within seven (7) days of signing this Agreement, but such
revocation must be signed and in

                                       14
<PAGE>

writing. The Employee has been afforded at least twenty-one (21) days to
consider this Agreement.

                           [Signature page to follow.]

                                       15
<PAGE>

                  IN WITNESS WHEREOF, the parties have knowingly and voluntarily
executed this Agreement this 2nd day of February, 2005.

                                      PRESSTEK, INC. (the "Employer")


                                      By: /s/ Edward J. Marino
                                          --------------------------
                                          EDWARD J. MARINO
                                          Chief Executive Officer and President


                                          /s/ G. Michael McCarthy
                                          --------------------------
                                          G. MICHAEL MCCARTHY
                                          (the "Employee")

                                       16