**EXHIBIT 4.10****EMPLOYMENT AGREEMENT**     **THIS AGREEMENT**made as of the 31st day of December 2004,**B E T W E E N**:**SAM FUDA,**of the City of Toronto in the Province of Ontario,(hereinafter called the “Employee”)**OF THE FIRST PART**,- and -**MICROMEM TECHNOLOGIES INC**., a corporation incorporated under thelaws of Ontario(hereinafter called the “Corporation”)**OF THE SECOND PART**,     **NOW THEREFORE THIS AGREEMENT WITNESSES**that in consideration of the mutual covenants andagreements herein contained and other good and valuable consideration (the receipt and sufficiencywhereof are hereby acknowledged by both of the parties hereto), it is agreed by and between theparties hereto as follows:1. **Employment of the Employee**     Subject to the terms and conditions of this Agreement, the Corporation hereby employs theEmployee, and the Employee hereby accepts such employment, to perform the duties described inSection 2 of this Agreement. The Employee’s title shall be Executive Chairman and the Employeeshall report to the Corporation’s board of directors (“Board”).2. **Duties**     The Employee shall perform the following duties and such other duties as may from time to timebe determined by or assigned to him by the Board: (a) on request, providing advice and assistance to the Corporation and itssubsidiaries in connection with the development, promotion, sale and license of theirproducts and services, including without limitation assisting with negotiations withprospective purchasers, manufacturers and licensees of the MAGRAM (TM) technology;  (b) advising the Board and the Corporation’s senior management with respect to theCorporation’s compliance with corporate and securities laws, rules and
1

 
   regulations in Canada and those of any trading system or stock exchange upon which theCorporation’s shares may become listed;  (c) providing financial and investment advice to the Corporation’s board ofdirectors and senior management with respect to structuring of the Corporation’s equityfunding by private placement and/or public offering including without limitationassistance with raising debt and/or equity capital; and  (d) such other services as the Corporation and the Employee may from time to timeagree.     During the term of this Agreement, the Employee shall faithfully serve the Corporation andshall use his best efforts to promote the interests of the Corporation and shall devote suchportion of his working time to the business and affairs of the Corporation as the Employee shalldeem necessary to carry out his responsibilities as required under this Agreement.3. **Employee Remuneration**3.1 For the purposes of this Agreement, “Market Value of the Common Shares” means, with respectto a particular day, an amount equal to the product of the number of common shares of theCorporation (herein the “Common Shares”) outstanding at the close of trading on the lasttrading day immediately prior to the particular day multiplied by the simple average of theclosing price of the issued Common Shares for the last ten (10) trading days immediately priorto the particular day.3.2 In consideration of the performance by the Employee of his duties under this Agreement, theCorporation shall pay to the Employee remuneration as follows: (a) on January 1, 2006 (a “Payment Date”) an amount equal to three percent (3%) ofthe amount by which the Market Value of the Common Shares on January 1, 2006, exceedsthe Market Value of the Common Shares on January 1, 2005; and (b) on each of January 1, 2007, January 1, 2008, and January 1, 2009 (each a“Payment Date”) an amount equal to three percent (3%) of the year over year increase inthe market value of the Common Shares.       **Valuation** **Calendar Year in Respect of** Amount of Compensation ($):**Date:** **which Compensation being**    **Calculated**         January 1, 2006  2005  3% x (Market Valuation onJanuary 1, 2006 minusMarket Valuation onJanuary 1, 2005)       January 1, 2007  2006  3% x (Market Valuation onJanuary 1, 2007 minusMarket Valuation onJanuary 1, 2006)       January 1, 2008  2007  3% x (Market Valuation onJanuary 1, 2008 minusMarket Valuation onJanuary 1, 2007)       January 1, 2009  2008  3% x (Market Valuation onJanuary 1, 2009 minusMarket Valuation onJanuary 1, 2008)
2

 
The Corporation may at its option satisfy the said remuneration, (i) on the relevantPayment Date by cheque or bank draft payable to or to the order of the Employee or by way ofelectronic transfer of immediately available funds to such bank account as the Employee mayin writing direct, or (ii) within 30 days of the relevant Payment Date by the issuance ordelivery to the Employee of that number of Common Shares determined in accordance with thefollowing formula, provided that the said remuneration may be paid in whatever proportion ofcash or Common Shares as the Corporation may determine in its discretion:       N = B/ATP       Where:         N = the number of Common Shares to be issued or delivered to Employee       B = the amount of the remuneration to be paid in Common Shares       / = divided by       ATP = the simple average of the closing price of the Common Shares forthe last ten (10) trading days immediately prior to the relevant Payment DateProvided, however, that the Corporation may only avail itself of the option undersubparagraph (ii), above, to satisfy a portion of the remuneration to the Employee by theissuance of Common Shares if and only if the Common Shares may be, at the time of issue tothe Employee or as soon as reasonably practicable thereafter, freely traded by the Employeeon the open market save and except that the Common Shares so issued will be subject to anyapplicable resale restrictions in the U.S.A.3.3 The Corporation shall at its sole expense take all necessary corporate action to ensure thatany Common Shares required to be issued or delivered to the Employee pursuant to Section 3.2hereof are duly issued to the Employee as fully paid and non-assessable shares and arerecorded on the books of the Corporation in the name of the Employee.3.4 The Corporation and the Employee acknowledge that they have reviewed and assessed the valueto the Corporation of the services to be performed by the Employee for and on behalf of theCorporation under this Agreement and the Corporation and the Employee have determined that thesaid remuneration is fair and reasonable.3.5 The Corporation shall at its sole expense do all things and take all necessary actions toensure that all applicable laws, rules and regulations are complied with in connection withthe issuance or delivery to the Employee of any of its Common Shares hereunder includingwithout limitation obtaining all required authorizations, permits, and approvals of, andcausing all other required actions to be taken by, or filings made with or notices deliveredto any governmental agency or authority, regulatory body, court, tribunal or other similarauthority having jurisdiction. Notwithstanding Section 3.2 hereof, if the Corporation cannotsatisfy the provisions of the foregoing sentence on or prior to the date on which theCorporation would otherwise be required under Section 3.2 to issue or deliver to the Employeeany of its Common Shares then the Corporation shall satisfy that portion of the remunerationdue to the Employee under Section 3.2 which it would have satisfied with such Common Shares bycheque or bank draft payable to or to the order of
3

 
  the Employee or by way of electronic transfer of immediately available funds to such bankaccount as the Employee may in writing direct.3.6 The parties acknowledge that the Corporation will be obliged to comply with all withholdingtax requirements from time to time applicable under the *Income Tax Act*(Canada).3.7 Notwithstanding anything herein otherwise contained in the event that on any Payment Datewhen there has been no year over year increase in the Market Value of the Common Shares thenwith respect to that Payment Date the Corporation will pay to the Employee as compensation forthe prior year, an amount of CDN $150,000 (One Hundred and Fifty Thousand Dollars) by cheque,bank draft or electronic transfer, as directed by the Employee, provided that the said amountaforesaid may be paid in whatever proportion of cash or Common Shares as the Employee in itsdiscretion may determine. The value of the Common Shares will be determined in accordancewith Section 3.1 hereof. The compensation referred to in this Section 3.7 shall be paidwithin thirty (30) days of the referable Payment Date. In addition, the Employee shall beentitled to be reimbursed by the Corporation for reasonable expenses incurred by the Employeeon behalf of the Corporation in carrying out his duties hereunder.3.8 Notwithstanding anything herein otherwise contained, in no event will the number of CommonShares issued to the Employee under this agreement exceed Two (2) million shares. Thislimitation will not limit the entitlement of the Employee to be fully compensated as requiredhereunder in cash, money order or electronic transfer and shall only relate to theCorporation’s option to compensate with Common Shares.4. **Term of Agreement**     This Agreement shall commence on the Effective Date and shall terminate on the close ofbusiness on September 30, 2009 (the “Term”), unless earlier terminated as herein provided. TheTerm may be extended by mutual written agreement of the parties hereto.5. **Termination of Agreement by the Corporation**     Notwithstanding Section 4 hereof, the Corporation shall have the right to terminate thisAgreement and the Employee’s employment hereunder forthwith upon written notice to the Employee atany time following the death or disability of the Employee. The Employee shall for this purpose bedeemed to be disabled in the event that he should be unable to perform any of his employment dutieson behalf of the Employee hereunder by reason of physical incapacity, mental disease or afflictionduring any 12 or more weeks during any consecutive 12 month period.6. **Termination of Agreement by the Employee**     Notwithstanding Section 4 hereof, the Employee may terminate this Agreement and his employmenthereunder: (a) forthwith on written notice to the Corporation if the Corporation fails tosatisfy the payment of any remuneration due to the Employee under Section 3 hereof onor prior to the date required therefor and such default continues for a period of ten(10) days after written notice thereof to the Corporation; or
4

 
 (b) forthwith on written notice to the Corporation if, (i) the Corporation isdissolved; (ii) the Corporation admits in writing its inability generally to pay itsdebts as they become due; (iii) the Corporation makes a general assignment, arrangementor composition with or for the benefit of its creditors; (iv) the Corporationinstitutes or has instituted against it a proceeding seeking a judgment of insolvencyor bankruptcy or any other relief under any bankruptcy or insolvency law or othersimilar law affecting creditors’ rights, or a petition is presented for the winding-up,liquidation or dissolution of the Corporation; (vi) the Corporation seeks, consents toor becomes subject to the appointment of an administrator, receiver, trustee, custodianor other similar official for it or for all or substantially all its assets (regardlessof whether any other event described in this paragraph (b) has occurred); (vii) anyexecution, distress or other enforcement process, whether by court order or otherwise,becomes enforceable against all or substantially all of its assets which execution,distress or other process is not dismissed, discharged, stayed or restrained in eachcase within 30 days of the commencement, institution or presentation thereof, or (viii)the Corporation takes any action in furtherance of, or indicating its consent to,approval of, or acquiescence in, any of the foregoing. (viii) the Common Shares maynot be freely traded on the open market, subject to any resale restrictions in theU.S.A. as referred to in Section 3.2.7. **Effect of Termination**7.1 Upon the termination of this Agreement pursuant to Section 5 or 6 hereof and for morecertainty the Employee’s employment by the Corporation shall cease and the Employee shall haveno further obligation to perform his duties as an employee of the Corporation.Notwithstanding the termination of this Agreement for any reason, the provisions of Section7.2 and each of Sections 8 to 13 of this Agreement shall survive the termination of thisAgreement. Without limiting the foregoing, the termination of this Agreement shall not affector prejudice any rights or obligations which have accrued or arisen under this Agreement priorto the time of termination and those rights and obligations shall survive the termination ofthis Agreement.7.2 Notwithstanding any other provision of this Agreement, in the event that this Agreement isterminated by the Corporation other than in accordance with Section 5 hereof, the Corporationshall forthwith pay to the Employee: (a) if the date of termination occurs on or after January 1, 2006, an amountcalculated as follows:       A = N * F       Where:         A = the amount to be paid by the Corporation to the Employee       N = the remuneration otherwise calculated and payable to theEmployee under Section 3 hereof as at the first Payment Date immediatelypreceding the date of termination of this Agreement
5

 
            * = multiplied by       F = the number of Payment Dates remaining in the Term andfollowing the date of termination of this Agreement had this Agreement not beenterminated prior to the last day of the Term; or (b) if the date of termination occurs prior to January 1, 2006, an amountcalculated as follows:            A = 2/100 * (MT — ME) * 4       Where:         A = the amount to be paid by the Corporation to the Employee       * = multiplied by       MT = the Market Value of the Common Shares on the date of termination       ME = the Market Value of the Common Shares on January 1, 2005.The Corporation shall satisfy the said remuneration on the date of termination of thisAgreement by cheque or bank draft payable to or to the order of the Employee or by way ofelectronic transfer of immediately available funds to such bank account as the Employee mayin writing direct, or by way of the issue of Common Shares to the Employee determined in themanner set out in Section 3.1. provided that the said remuneration may be paid in whateverproportion of cash or Common Shares as the Corporation may determine in its discretion.7.3 Notwithstanding any other provision of this Agreement, if this Agreement is terminated at anytime during the Term by the Corporation pursuant to Section 5 hereof or by the Employeepursuant to Section 6 hereof, the Corporation shall pay to the Employee an amount calculatedas follows: (a) if the effective date of the termination occurs prior to January 1, 2006, anamount equal to two percent of the amount by which the Market Value of the CommonShares on the date which is sixty (60) days after the date of the giving of the writtennotice giving rise to the termination exceeds the Market Value of the Common Shares onJanuary 1, 2005; and (b) if the effective date of the termination occurs on or after January 1, 2006, anamount equal to two percent of the amount by which the Market Value of the CommonShares on the date which is sixty (60) days after the date of the giving of the writtennotice giving rise to the termination exceeds the Market Value of the Common Shares onthe immediately preceding Payment Date.The Corporation shall satisfy the said amount on the date which is sixty (60) days after the dateof the giving of the written notice giving rise to the subject termination of this Agreement bycheque or bank draft payable to or to the order of the Employee or by way of electronic transfer ofimmediately available funds to such bank account as the Employee may in writing direct.
6

 
8. **Confidential Information**     The Employee acknowledges that in the course of the Employee carrying out, performing andfulfilling his employment duties to the Corporation he will have access to and will be entrustedwith detailed information which is confidential to the Corporation and its subsidiaries, includingwithout limitation financial information, shareholder lists, agreements, correspondence anddocumentation to, from, and regarding financiers and prospective financiers, auditors, legalcounsel and professional advisors, joint venture partners and prospective joint venture partners,brokers, vendors of properties of any kind, patents, trade secrets and know-how, marketing andbusiness plans and price lists, information concerning current and prospective customers andsuppliers, and present and contemplated products, techniques and other services (collectively the“Confidential Information”). Notwithstanding the foregoing, “Confidential Information” does notinclude the following information: (a) information which is in the public domain when it is received by or becomesknown to Employee or which subsequently enters the public domain through no fault ofEmployee (but only after it enters the public domain);  (b) information which is already known to Employee at the time of its disclosure toEmployee by the Corporation or its subsidiaries and is not the subject of an obligationof confidence of any kind;  (c) information which is received by Employee without an obligation of confidenceof any kind from a third party who Employee had no reason to believe was not lawfullyin possession of such information free of any obligation of confidence of any kind, butonly until Employee subsequently comes to have reason to believe that such informationwas subject to an obligation of confidence of any kind when originally received; and  (d) information which is not subject to an obligation of confidence of any kindwhen released, disclosed, made available or communicated by the Corporation or itssubsidiaries to a third party.Employee acknowledges that all Confidential Information is proprietary to the Corporation and itssubsidiaries. Except as required by law, rule, regulation, or court order, Employee agrees to keepall Confidential Information in strict confidence and not to make use of Confidential Informationother than for the exercise of rights or the performance of obligations under this Agreement, andnot to release, disclose, communicate it or make it available to any person other than inconnection with the exercise of rights or the performance of obligations under this Agreement orany other agreement between Corporation and Employee.The Employee shall deliver to the Corporation, upon termination of this Agreement, or upon request,all documents, financial statements and information, memoranda, notes, reports, records, reports,manuals, price lists, correspondence, shareholder lists, customer lists, order forms, drawings andother documents (and all copies thereof, whether in hard copy or in machine readable form) relatingto the business of the Corporation and its subsidiaries and all assets and properties of theCorporation referenced therein, which he may then have in his possession or have under his control.The Employee agrees that all restrictions contained in this clause are reasonable and valid in thecircumstances and all defenses to the strict enforcement thereof by the Corporation are herebywaived by the Employee.
7

 
9. **Non-Competition/Non-Solicitation**     The Employee agrees that during the Term or any renewal or extension thereof and for a periodof 3 years after the termination of this Agreement, he shall not, directly or indirectly, withoutthe prior written consent of the Corporation, be employed by, or act as a director or officer of,or provide advice or financial assistance to, or otherwise engage in, any business that competeswith the business of the Corporation or solicit or attempt to solicit away from the Corporation anyexisting or prospective shareholders, investors, suppliers, employees, customers, clients,investors, joint venture partners or vendors of properties of any kind, or acquisition or mergercandidates of the Corporation.10. **Validity of Covenants**     If any covenant or provision herein is determined to be void or unenforceable in whole or inpart, it shall not be deemed to affect or impair the validity of any other covenant or provisionand the covenants and provisions herein are hereby declared to be separate and distinct. TheEmployee hereby agrees that all restrictions in this Agreement are reasonable and valid and alldefenses to the strict enforcement thereof by the Corporation are hereby waived by the Employee.11. **Injunctive Relief**     The Employee acknowledges that the breach of any of the provisions of Section 8 or 9 hereofwould cause serious and irreparable harm to the Corporation which could not adequately becompensated for in damages, thus in addition to any other remedy available in respect of the breachof the said provisions of this Agreement by the Employee, including anticipatory or threatenedbreach, afforded to the Corporation by law, the Corporation shall be entitled to injunctive relieffrom any court of competent jurisdiction without having to post bond or other security and withoutshowing or proving any actual damage to the Corporation.12. **Indemnity**     The Corporation agrees to indemnify and hold the Employee harmless from and against any andall expenses, losses, claims, actions, damages or liabilities, whether joint or several (includingthe aggregate amount paid in reasonable settlement of any actions, suits, proceedings or claims),and the reasonable fees and expenses of its counsel that may be incurred in advising with respectto and/or defending any claim that may be made against the Employee to which the Employee maybecome subject or otherwise involved in any capacity under any statute or common-law or otherwiseinsofar as such expenses, losses, claims, damages, liabilities or actions arise out of or arebased, directly, or indirectly, upon the Employee fulfilling his obligations to the Corporationpursuant to this Agreement, provided that: (a) the Employee has acted honestly and in good faithwith a view to the best interests of the Corporation and he has not acted negligently; and (b) inthe case of a criminal or a administrative action or proceeding that is enforced by a monetarypenalty, the Employee had reasonable grounds for believing that his conduct was lawful.13. **Notice**     Any notice in writing required to or permitted to be given by one party to the other shall besufficiently given if delivered personally or mailed by registered mail, postage prepaid, asfollows:
8

 
 (a) if to the Employee, to:Sam Fuda