<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A2
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Fiscal Year Ended
December 31, 1994
Commission File Number 0-3704
NAI TECHNOLOGIES, INC.
A New York Corporation IRS Employer I.D. No. 11-
1798773
1000 Woodbury Road, Woodbury, New York 11797-2530
Telephone No. (516) 364-4433
Securities Registered Pursuant to Section 12 (g) of the
Act:
Common Stock, Par Value $0.10 Per Share
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days. YES X NO ____
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. (X)
As of March 19, 1995, 7,195,567 common shares were outstanding and the aggregate
market value of the common shares (based on the average bid and asked price of
these shares on The NASDAQ Stock Market as of March 29, 1995) of NAI
Technologies, Inc. held by non-affiliates was approximately $15 million.
Documents Incorporated by Reference: None.
Page 1 of 42 Pages
Exhibit Index on Page 13
<PAGE>
EXPLANATORY NOTE
This Form 10-K/A2 is being filed by NAI Technologies, Inc., a
New York corporation (the "Company"), as an amendment to its Annual Report on
Form 10-K for the fiscal year ended December 31, 1994 (the "Form 10-K") to
include the information required by Items 10 (Directors and Executive Officers
of the Registrant), 11 (Executive Compensation) and 12 (Security Ownership of
Certain Beneficial Owners and Management) and related exhibits which were not
included in such Form 10-K. The information required by these items was intended
to be incorporated by reference to the Company's definitive proxy statement to
be filed with the Securities and Exchange Commission pursuant to Regulation 14A
within 120 days after the fiscal year ended December 31, 1994 (or May 1, 1995).
The Company will not be filing its definitive proxy statement within that time
period.
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<PAGE>
Item 10. Directors and Executive Officers of the Registrant.
DIRECTORS OF THE COMPANY
The current members of the Board of Directors of the Company, together
with certain information furnished to the Company by each such person, are set
forth below.
Years Served
Name and Age as a Director Biographical Summary
- ------------ ------------- --------------------
Robert A. Carlson, 62 8 Mr. Carlson is President and Chief
Executive Officer of the Company.
From December 1987 until December
1989, he was President and Chief
Operating Officer of the Company.
Richard A. Schneider, 42 3 Mr. Schneider is Executive Vice
President, Treasurer and Secretary
of the Company. He was elected a
director of the Company on February
11, 1993. From October 1988 until
December 1992, he served as Vice
President - Finance, Treasurer and
Secretary of the Company.
Stephen A. Barre, 56 6 Mr. Barre is Chairman and Chief
Executive Officer of Servo
Corporation of America, a
communications and defect detection
company.
C. Shelton James, 55 6 Mr. James is Chairman of the Board
and Chief Executive Officer of
Elcotel Inc., a public
communications company. He also is
President and a director of
Fundamental Management Corporation,
an investment management company,
and is on the board of directors of
Harris Computer Systems Inc., SK
Technologies and CPSI Inc.
Walter Lipkin, 69 42 Mr. Lipkin is retired. He was a co-
founder of the Company and served as
a Vice President or Senior Vice
President and Treasurer from 1954
through 1989.
John M. May, 67 16 Mr. May is an independent
consultant. From 1975 to 1987, he
-3-
<PAGE>
was Vice President and Director of
Tower, Perrin, Inc., a management
consulting firm. He is also a
director of Olsten Corporation, a
provider of temporary employee and
health care services.
Robert D. Rosenthal, 45 10 Mr. Rosenthal is President, Chief
Executive Officer and a Director of
First Long Island Investors, Inc., a
diversified investment and financial
services company. He also is Co-
Chairman and Co-Chief Executive
Officer of the New York Islanders, a
franchise in the National Hockey
League.
EXECUTIVE OFFICERS OF THE COMPANY
The current executive officers of the Company are as follows:
Robert A. Carlson, 62, is the President and Chief Executive Officer of
the Company. From December 1987 until December 1989, he was President and Chief
Operating Officer of the Company.
Richard A. Schneider, 42, is the Executive Vice President, Treasurer and
Secretary of the Company. From October 1988 until December 1992, he served as
Vice President - Finance, Treasurer and Secretary of the Company.
SECTION 16 COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires officers, directors and beneficial owners of more than
10% of the Company's Common Stock to file reports of ownership and changes in
their ownership of the equity securities of the Company with the Securities and
Exchange Commission. Based solely on a review of the reports and representations
furnished to the Company during the last fiscal year by such persons, the
Company believes that each of these persons is in compliance with all applicable
filing requirements. Under Section 16(b) of the Exchange Act, such persons also
are required to disgorge to the Company any profit realized by any purchase and
sale, or any sale and purchase, of equity securities of the Company within any
period of less than six months. Pursuant thereto, Mr. Schneider was required to
disgorge profits totalling $5,980 based on the sale of 1,000 shares and the
purchase of 1,000 shares of the Company's Common Stock one day short of the
required six month waiting period in fiscal 1994.
-4-
<PAGE>
Item 11. Executive Compensation.
EXECUTIVE COMPENSATION
The following table sets forth all plan and non-plan compensation
awarded to, earned by or paid to the Company's Chief Executive Officer and each
of the executive officers of the Company other than the Chief Executive Officer
whose total annual salary and bonus exceeded $100,000 for each of the Company's
last three fiscal years (collectively, the "Named Executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
---------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
OTHER
ANNUAL RESTRICTED SECURITIES
COMPEN- STOCK UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL FISCAL SATION AWARD(S) OPTIONS/ PAYOUTS COMPENSATION
POSITION YEAR SALARY ($) BONUS ($) ($)(1) ($) SARS (#) ($) ($)
- --------------------------- ----- ----------- ---------- ------- ---- --------- ---- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert A. Carlson - 1994 $275,000 -- -- -- 138,983(5) -- $ 66,324(2)
President and Chief 1993 260,000 $ 68,790 -- -- 64,347 -- 69,652(2)
Executive Officer 1992 226,000 113,300 -- -- 122,919 -- 64,539(2)
Richard A. Schneider - 1994 149,000 -- -- -- 94,389(5)
Executive Vice 1993 138,000 27,380 -- -- 23,442 -- 12,426(3)
President, Treasurer 1992 118,000 36,970 -- -- 30,147 -- 13,993(3)
and Secretary -- 14,622(3)
Frank Tortorelli - 1994 144,895 -- -- -- 75,136(5) -- 5,298(4)
President, Military 1993 n/a -- -- -- -- -- --
Systems Group (6) 1992 n/a -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The aggregate amount of all perquisites and other personal benefits paid
to any Named Executive is not greater than either $50,000 or 10% of the
total of the annual salary and bonus reported for such Named Executive.
(2) Includes $51,266, $59,122 and $59,022 of life insurance premiums paid on
term life and split dollar policies by the Company on behalf of Mr.
Carlson in each of the years 1992, 1993 and 1994, respectively, as well
as $8,273, 7,909 and $7,302 of matching contributions made by the
Company under the 401(k) deferred compensation plan and $5,000, $2,621
and $0 of matching contributions made by the Company under the profit
sharing portion of such plan for the benefit of Mr. Carlson for each of
the years 1992, 1993 and 1994, respectively.
(3) Includes $6,781, $7,637 and $7,603 of life insurance premiums paid on
term life and split dollar policies by the Company on behalf of Mr.
Schneider in each of the years 1992, 1993 and 1994, respectively, as
well as $4,341, $4,166 and $4,823 of matching contributions made by the
Company under the 401(k) deferred compensation plan and $3,500, $2,190
and $0 of matching contributions made by the Company under the profit
sharing portion of such plan for the benefit of Mr. Schneider for each
of the years 1992, 1993 and 1994, respectively.
(4) Includes $818 of life insurance premiums paid on a term life policy by
the Company on behalf of Mr. Tortorelli in 1994, as well as $4,480 of
matching contributions made by the Company under the 401(k) deferred
compensation plan and $0 of contributions made by the Company under the
profit sharing portion of such plan for the benefit of Mr. Tortorelli
for 1994.
-5-
<PAGE>
(5) Options to acquire shares of the Company Common Stock that were granted
in fiscal year 1994. At the same time, options for Mr. Carlson
(102,951), Mr. Schneider (54,996) and Mr. Tortorelli (39,336) were
canceled.
(6) Mr. Tortorelli became an executive officer of the Company in fiscal
1994.
STOCK OPTIONS
The table below summarizes the options granted to the Named Executives
in 1994 and their potential realizable values.
OPTION/SAR GRANTS IN 1994
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(1)
- ----------------------------------------------------------------------------------------- -----------------------
(a) (b) (c) (d) (e) (f) (g)
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES BASE PRICE EXPIRATION
NAME GRANTED (#) IN FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- ------------------------------ ------------ -------------- ------- ----- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Robert A. Carlson -
President and Chief 36,032 7% $6.25 10 years $141,627 $358,911
Executive Officer 102,951(2) 21% $5.25 5 years $149,330 $329,979
Richard A. Schneider -
Executive Vice President 39,393 8% $4.74 10 years $117,431 $297,587
Treasurer and Secretary 54,996(2) 11% $5.25 5 years $ 79,772 $176,273
Frank Tortorelli -
President, Military Systems 35,800 7% $5.25 10 years $118,201 $299,542
Group 39,336(2) 8% $5.25 5 years $ 57,057 $126,080
</TABLE>
- --------
(1) Option price compounded annually at 5% and 10% over the ten year term
minus the exercise price times the number of shares subject to the
option.
(2) Such options were granted on May 26, 1994 in connection with the
cancellation of options granted for the same number of shares at earlier
dates. Such options become exercisable at a rate of 25% per year on the
anniversary date of the grant. All such options expire after the fifth
anniversary of the date of grant.
-6-
<PAGE>
The table below summarizes the exercise of stock options during 1994
for the Named Executives.
AGGREGATED OPTION/SAR EXERCISES IN 1994
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FY-END (#) FY-END ($)
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) VALUE REALIZED ($) UNEXERCISABLE UNEXERCISABLE(1)
- ------------------------------------------ ------------------ -------------------- ----------------
<S> <C> <C> <C> <C>
Robert A. Carlson -
President and
Chief Executive
Officer 10,140 $34,223 47,579/166,906 $336/$0
Richard A. Schneider -
Executive Vice
President,
Treasurer and Secretary -0- $0 7,768/87,559 $86/$0
Frank Tortorelli -
President, Military
Systems Group -0- $0 4,056/58,392 $0/$0
</TABLE>
- --------
(1) Market price at December 31, 1994 minus exercise price times the number
of shares underlying the unexercised options.
-7-
<PAGE>
PENSION PLAN AND SUPPLEMENTAL RETIREMENT PLAN
Certain Company employees including the Named Executives are covered by
the Company's non-contributory Employees Pension Plan (the "Pension Plan").
Effective January 4, 1994, current accruals were frozen under the Pension Plan.
The Company also has a non-qualified Supplemental Retirement Plan in effect
which covers certain Company employees including the Named Executives other than
Mr. Tortorelli.
Typical retirement benefits as in effect on December 31, 1994 are shown
in the table below:
ESTIMATED ANNUAL NORMAL RETIREMENT PENSION AND
SUPPLEMENTAL BENEFITS FOR VARIOUS COMBINATIONS OF
SPECIFIED COMPENSATION AND YEARS OF CREDITED SERVICE
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE AT RETIREMENT
REMUNERATION 10 15 20 25 30 35
------------ ------ ------ ------ ------ ------ ----
<S> <C> <C> <C> <C> <C> <C>
$ 50,000 $ 4,610 $ 6,915 $ 9,220 $ 8,125 $ 13,830 $ 13,830
75,000 7,485 11,228 14,970 14,888 22,455 22,455
100,000 10,360 15,540 20,720 22,075 31,080 31,080
125,000 13,235 19,853 26,470 29,263 39,705 39,705
150,000 16,110 24,165 32,220 36,450 48,330 48,330
175,000 18,985 28,478 37,970 43,638 56,955 56,955
200,000 21,860 32,790 43,720 50,825 65,580 65,580
225,000 24,735 37,103 49,470 58,013 74,205 74,205
250,000 25,982 38,972 51,963 59,122 77,945 77,945
300,000 25,982 38,972 51,963 59,122 77,945 77,945
400,000 25,982 38,972 51,963 59,122 77,945 77,945
</TABLE>
The benefits shown in the table above have been computed on an
actuarial basis and are not subject to any deduction for social security or
other offset amounts. The compensation covered by the Pension Plan includes the
amounts shown in columns (c), (d) and (e) of the Summary Compensation Table.
It is estimated that Messrs. Carlson, Schneider and Tortorelli, who
have ten, six and three years of credited service, respectively, will receive
each year at normal retirement age the following total aggregate annual amounts
under the Pension Plan and the non-qualified Supplemental Retirement Plan:
$160,213, $66,818 and $3,124, respectively.
TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTS
The Company has entered into Executive Termination Agreements with
Messrs. Carlson, Schneider, Tortorelli and four other employees, which provide
for severance benefits in the event employment terminates within one year
following a change in control of the Company unless termination is on account of
death, or for cause. The agreements are renewable annually at the option of the
Company. The agreements provide severance benefits which include an amount equal
to two times annual base salary for Messrs. Carlson, Schneider and Tortorelli
(the number of years or portions thereof until Mr. Carlson's sixty-fifth
birthday times annual base salary for Mr. Carlson) and one times annual base
salary for the four other employees.
DIRECTOR COMPENSATION
During 1994, each director who was not also an officer of the Company
was paid an annual retainer of $9,000 plus a uniform fee of $1,000 for each
Board and committee meeting attended in person. During 1995, each director who
is not also an officer of the Company will be paid an annual retainer of $9,000
plus a uniform fee of $1,000 for each Board and committee meeting attended in
person. During 1994, directors who were also officers of the Company received no
remuneration for attendance at Board and committee meetings. No such
compensation is contemplated to be paid during 1995 either.
-8-
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended December 31, 1994, the members of the
Compensation Committee were John M. May (Chairman), Walter Lipkin and Robert D.
Rosenthal. During fiscal year 1994 and formerly, none of such persons was an
officer of the Company or any of its subsidiaries or had any relationship with
the Company other than serving as a director of the Company, except that Mr.
Lipkin served as a Vice President or Senior Vice President and Treasurer of the
Company from 1954 through 1989. In addition, during the fiscal year ended
December 31, 1994, no executive officer of the Company served as a director or a
member of the compensation committee of another entity, one of whose executive
officers served as a director or on the Compensation Committee of the Company.
-9-
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth information concerning persons or groups
who are known by the Company to be the beneficial owners of more than 5% of the
Company Common Stock as of March 7, 1995. The information in the table below is
based upon information furnished to the Company by such persons and statements
filed with the Securities and Exchange Commission.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF PERCENT OF
COMPANY COMMON COMPANY
NAME AND ADDRESS OF BENEFICIAL OWNER STOCK BENEFICIALLY OWNED(1) COMMON STOCK
- ------------------------------------ --------------------------- ------------
<S> <C> <C>
Lindner Fund Inc.
7711 Carondelet Avenue
Box 16900
St. Louis, MO 63105(2) . . . . . . . . . . . . . . 405,600 5.65%
C.L. King & Associates
Nine Elk Street
Albany, NY 12207(3) . . . . . . . . . . . . . . . . 451,451 6.29%
Pioneering Management Corporation
60 State Street
Boston, MA 02114(4) . . . . . . . . . . . . . . . . 451,500 6.29%
Fundamental Management Corporation
201 South Biscayne Boulevard
Suite 1450
Miami, FL 33131(5). . . . . . . . . . . . . . . . . 385,636 5.38%
</TABLE>
- --------
(1) To the knowledge of the Company, beneficial owners named in the above
table have sole voting power with respect to the shares listed opposite
their names.
(2) These shares are reportedly owned by Lindner Fund Inc., an investment
company registered under the Investment Company Act of 1940, of which
Ryback Management Corporation is the investment company adviser
registered under Section 203 of the Investment Advisers Act of 1940.
(3) These shares are reportedly owned by a passive investor. C.L. King &
Associates is the investment company adviser of such investor and is
registered under Section 203 of the Investment Advisers Act of 1940.
(4) These shares are reportedly owned by a passive investor. Pioneer
Management Corporation is the investment company adviser of such
investor and is registered under Section 203 of the Investment Advisers
Act of 1940.
(5) These shares are reportedly owned of record by several limited
partnerships formed under the laws of the State of Florida for the
purpose of investing in securities of public company issuers, of which
Fundamental Management Corporation is the sole managing general partner.
C. Shelton James, a director of the Company, is the President of
Fundamental Management Corporation. Excludes 14,793 shares of Company
Common Stock owned by Mr. James as to which shares Fundamental
Management Corporation disclaims beneficial ownership.
-10-
<PAGE>
Shares of Company Common Stock beneficially owned as of March 7, 1995
by each director, nominee for director and executive officer of the Company and
by all directors and executive officers of the Company as a group are set forth
in the following table. This table is based upon information furnished to the
Company by such persons and statements filed with the Securities and Exchange
Commission.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP OF SHARES(1)
---------------------------------
NUMBER OF SHARES OF PERCENT OF
COMPANY COMMON STOCK COMPANY
NAME BENEFICIALLY OWNED(2) COMMON STOCK(3)
- ------------------------------------------ --------------------- ------------
<S> <C> <C>
Robert A. Carlson ............................ 100,467 1.40%
Stephen Barre ................................ 17,654 *
C. Shelton James(4)........................... 14,793 *
Walter Lipkin ................................ 123,846 1.72%
John M. May .................................. 47,489 1.08%
Robert D. Rosenthal .......................... 69,700 *
Richard A. Schneider ......................... 16,812 *
Frank Tortorelli ............................. -0- *
All directors and officers
as a group (8 persons) ..................... 390,761 5.43%
</TABLE>
- --------
* Less than 1%
(1) Directors and executive officers have sole voting power and sole
investment power with respect to the shares listed opposite their names.
(2) Excludes options exercisable within 60 days of March 7, 1995 for such
persons as follows: Mr. Carlson, 68,327; Mr. Barre, 3,120; Mr. James,
7,401; Mr. Lipkin, 3,120; Mr. May, 3,120; Mr. Rosenthal, 3,120; Mr.
Schneider, 9,833; Mr. Tortorelli, 6,084; and all directors and officers
as a group, 104,125.
(3) The percentages of Company Common Stock outstanding are based on
7,195,567 shares outstanding on March 7, 1995.
(4) Excludes 385,636 shares of Company Common Stock owned of record by
several limited partnerships of which Fundamental Management
Corporation, an investment company of which Mr. James is President, is
the sole managing general partner, as to which shares Mr. James shares
voting and dispositive power.
-11-
<PAGE>
S I G N A T U R E S
--------------------
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the registrant has duly caused this Amendment No. 2 to Annual
Report on Form 10-K to be signed on its behalf by the undersigned, thereunto
duly authorized.
NAI TECHNOLOGIES, INC.
By: Richard A. Schneider
--------------------------
Richard A. Schneider
DATE: April 26, 1995 Executive Vice President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Amendment No. 2 to Annual Report on Form 10-K has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
date indicated.
Signature Title Date
- --------- ----- ----
Robert A. Carlson
- --------------------- President, Chief Executive April 26, 1995
(Robert A. Carlson) Officer and Director
(Chief Executive Officer)
Stephen Barre
- --------------------- Director April 26, 1995
(Stephen Barre)
C. Shelton James
- --------------------- Director April 26, 1995
(C. Shelton James)
Walter Lipkin
- --------------------- Director April 26, 1995
(Walter Lipkin)
John M. May
- --------------------- Director April 26, 1995
(John M. May)
Robert Rosenthal
- --------------------- Director April 26, 1995
(Robert Rosenthal)
Richard A. Schneider
- --------------------- Executive Vice President, April 26, 1995
(Richard A. Schneider) CFO, Treasurer, Secretary
and Director (Chief Financial
and Accounting Officer)
-12-
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Page
Exhibit (10)
<S> <C>
(a) Executive Termination Agreement, dated as of February 9, 1995, with
Mr. Carlson 14
(b) Executive Termination Agreement, dated as of February 9, 1995, with
Mr. Schneider 18
(c) Executive Termination Agreement, dated as of February 9, 1995, with
Mr. Tortorelli 22
(d) Registration Rights Agreement, dated as of April 12, 1995, with The Bank
of New York and Chemical Bank 26
</TABLE>
-13-
<PAGE>
Exhibit 10(a)
AGREEMENT
THIS AGREEMENT dated as of the 9th day of February, 1995 (the
"Effective Date") between NAI Technologies, Inc., a New York corporation (the
"Company"), and Robert A. Carlson (the "Executive").
WHEREAS, to induce the Executive to continue in its employ the
Company desires to protect the Executive against potential adverse effects
arising as a result of the Company being sold or acquired;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants set forth in this Agreement, the Company and the Executive
agree as follows:
1. Definitions.
(a) "Cause" shall mean fraud, negligence, conflict of
interest, willful malfeasance or willful misfeasance in office.
(b) "Closing" shall mean any sale of all or substantially all
the assets, merger or business combination, or any share exchange or
share purchase by a person or group of persons acting in concert which
results in a change in ownership in excess of 50% in the record or
beneficial equity ownership of the Company (other than a
management-led leveraged buyout).
(c) "Closing Date" shall mean the earliest date on which the
events constituting the Closing occur.
(d) "Involuntary Termination" shall mean either:
(i) any termination of the Executive's employment at the
convenience of the Company during the Term hereof, but not
including either a termination for Cause or a termination
pursuant to Section l(d)(iii); or
(ii) any termination of the Executive's employment by
the Executive during the Term hereof following the occurrence
of any of the following:
(A) without the express prior written consent of the
Executive, a material diminution or limitation of the
Executive's position, duties or responsibilities with the
Company from those in existence on the Effective Date (or, if
greater, the highest permanent-assignment level in effect
thereafter) or the assignment to the Executive of duties
inconsistent with the position, duties, responsibilities or
status of the Executive as of the Effective Date (or, if
greater, the highest permanent-assignment level in effect
thereafter);
(B) any failure by the Company to pay, or any
reduction by the Company of, the base annual salary of the
Executive as in effect on the Effective Date or as the same
may be increased from time to time thereafter;
(C) the failure of the Company to provide the
Executive with the opportunity to participate, on terms no
less favorable than those existing on the Effective Date, in
any incentive benefit, bonus or compensation, insurance,
pension or other employee benefit plan of the Company in
effect on the Effective Date (or plans and benefits which are,
in the aggregate, no less favorable to the Executive than
those the Executive enjoyed on the Effective Date) unless such
failure results from the Company's termination or amendment of
any such plan in response to a change in applicable statute or
regulation, including any termination or amendment resulting
from a materially adverse alteration of the tax treatment of
any such plan to the Company or to plan participants;
provided, however, that Involuntary Termination shall not
include any reduction in such benefit by the Company on a
Company-wide basis prior to the Closing Date; or
<PAGE>
(D) the requirement by the Company that the
Executive, without the Executive's prior written consent, be
based primarily outside Long Island.
(iii) Involuntary Termination shall not include
termination due to death or to medical disability which
prevents the Executive from substantially performing his job
function, or voluntary resignation of the Executive except as
provided in Section 1(d)(ii).
(e) "Other Termination" shall mean any termination of the
Executive's employment which is not an Involuntary Termination.
(f) "Term" shall mean the period (i) commencing on (A) the
date the Board of Directors approves a sale, consolidation or merger
of the Company or all or substantially all of its stock or takes
formal action to effect any such potential sale, consolidation or
merger or (B) the date on which any person or group of persons acting
in concert takes action which results in a change in ownership in
excess of 50% in the record or beneficial ownership of the Company
except in connection with the establishment of or actions by an
employee stock ownership plan of the Company and (ii) ending on the
earlier of (A) the termination of the actions or ownership described
under clause (i), (B) the Executive's sixty-fifth birthday and (C) the
occurrence of a management-led buyout; provided, however, that if none
of the events identified in clause (i) occurs on or prior to January
31, 1996, this Agreement shall terminate unless extended for a period
of one year from the date of such extension by agreement of the
parties, in which case the Effective Date shall be deemed to be the
date of such extension.
2. Involuntary Termination. In the event of an Involuntary
Termination, the following shall apply:
(a) The Company shall provide to the Executive any payments
and benefits to which the Executive would be entitled without regard to
this Agreement.
(b) Within thirty days following the Involuntary Termination,
the Company shall pay to the Executive a payment (the "Payment") equal
to the sum of (i) the number of years or portions thereof until the
Executive's sixty-fifth birthday times the Executive's highest
permanent annual rate of base compensation during the Term hereof and
(ii) an amount equal to any incentive compensation to be earned by the
Executive in the year in which the Term commences without regard to
whether the criteria established with respect thereto are met.
(c) The Company shall continue to provide the Executive with
life insurance, long-term disability, health and dental coverage at
levels which were applicable to the Executive on the Closing Date (or,
if greater, the highest levels in effect thereafter) for a period of
two years following the Involuntary Termination or until the Executive
obtains employment and the benefits program of the subsequent employer
becomes effective, but in the cases of health and dental coverage, such
coverage shall be continued for the life of the Executive and for the
life of the Executive's spouse; provided, however, that the Company
may, without liability hereunder, terminate or amend a plan under which
such coverage was provided in response to a change in applicable
statute or regulation, including any termination or amendment resulting
from a materially adverse alteration of the tax treatment of any such
plan to the Company or to plan participants.
(d) If the Company has provided the Executive with the use of
an automobile on a continuous basis prior to the Involuntary
Termination, the Executive shall be given the option to purchase such
automobile on the terms outlined in the Company policy with respect
thereto at the value in effect two years after the date of the
Involuntary Termination.
(e) Notwithstanding any other provision to the contrary
herein, the Payment shall be reduced to the extent necessary to prevent
the Payment from constituting an "excess parachute payment" within the
meaning of section 280G(b) of the Internal Revenue Code of 1986, as
amended, if, and only if, the Board of Directors determines that such
reduction will have the likely effect of increasing the after-tax
benefit to the Executive. Such determination, and the determination of
any reduction pursuant to this paragraph, shall be based upon the
opinion of the Company's regular accounting firm.
-2-
<PAGE>
3. Other Termination. In the event of any Other Termination,
the Executive, his estate or his beneficiaries shall be entitled solely to such
benefits and payments that would exist were this Agreement not in effect at the
time of such Other Termination.
4. Nondisclosure of Confidential Information. The Executive
shall not, except as may be necessary in the discharge of duties with the
Company or as may be required by applicable law or regulations, disclose any
confidential information, knowledge or data obtained by the Executive prior to
the date of this Agreement or during the Executive's employment concerning the
Company or the business of the Company so long as such information is not
publicly available.
5. Stock Options. In the event of a Closing, all stock
options held by the Executive shall become immediately exercisable on the
Closing Date but otherwise governed by the terms and conditions therefor
applicable to such stock options.
6. Arbitration. Any controversy or claim arising out of or
relating to this Agreement or the breach of this Agreement which cannot be
resolved by the Executive and the Company shall, at the instance of either the
Executive or the Company, be submitted to arbitration in accordance with New
York law and the procedures of the American Arbitration Association. The
determination of the arbitrator shall be conclusive and binding on the Company
and the Executive and judgment may be entered on the arbitrator's award in any
court having jurisdiction.
7. Legal Expenses. The Company shall pay all reasonable costs
and expenses, including attorneys' fees and disbursements, of the Company and,
at least monthly, the Executive in connection with any legal proceedings (in the
case of the Executive any legal proceedings brought or maintained in good faith)
(including, but not limited to, arbitration), whether or not instituted by the
Company or the Executive, relating to the interpretation or enforcement of any
provision of this Agreement. The Company shall also pay prejudgment interest on
any money judgment obtained by the Executive as a result of such proceedings,
calculated at a rate per annum equal to the federal short-term rate as defined
in Section 1274(d) of the Internal Revenue Code of 1986, as in effect from time
to time, from the date that payment should have been made to the Executive under
this Agreement.
8. Assignability. The respective rights and obligations of the
Executive and the Company under this Agreement shall inure to the benefit of and
be binding upon the heirs and legal representatives of the Executive and the
successors and assigns of the Company. The Executive's rights and obligations
under this Agreement may not be assigned or alienated and any attempt to do so
by the Executive shall be void. Any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business or assets of the Company shall assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. The provisions of
this Section 8 shall continue to apply to each subsequent employer of the
Executive hereunder in the event of any subsequent merger, consolidation or
transfer of assets of such subsequent employer.
9. Severability. If any provision of this Agreement is deemed
to be invalid or unenforceable or is prohibited by the laws of the state or
place where it is to be performed, this Agreement shall be considered to be
divisible as to such provision and such provision shall be inoperative in such
state or place and shall not be part of the consideration moving from either of
the parties to the other. The remaining provisions of the Agreement, however,
shall be valid and binding and of like effect as though such provision were not
included.
10. Miscellaneous. This Agreement is to be construed and
enforced in accordance with the internal substantive laws of the State of New
York. The waiver of any breach of this Agreement by any party shall not be
construed as a waiver of any subsequent breach by any party. This Agreement may
not be changed orally, but only by an agreement in writing signed by the parties
to this Agreement.
-3-
<PAGE>
IN WITNESS WHEREOF, the Company and the Executive have
executed this Agreement as of the day and year first above written.
NAI TECHNOLOGIES, INC.
By: Richard A. Schneider Robert A. Carlson
------------------------------ -------------------------------
Title: Executive Vice President
----------------------------
-4-
<PAGE>
Exhibit 10(b)
AGREEMENT
THIS AGREEMENT dated as of the 9th day of February, 1995 (the
"Effective Date") between NAI Technologies, Inc., a New York corporation (the
"Company"), and Richard A. Schneider (the "Executive").
WHEREAS, to induce the Executive to continue in its employ the
Company desires to protect the Executive against potential adverse effects
arising as a result of the Company being sold or acquired;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants set forth in this Agreement, the Company and the Executive
agree as follows:
1. Definitions.
(a) "Cause" shall mean fraud, negligence, conflict of
interest, willful malfeasance or willful misfeasance in office.
(b) "Closing" shall mean any sale of all or substantially all
the assets, merger or business combination, or any share exchange or
share purchase by a person or group of persons acting in concert which
results in a change in ownership in excess of 50% in the record or
beneficial equity ownership of the Company (other than a
management-led leveraged buyout).
(c) "Closing Date" shall mean the earliest date on which the
events constituting the Closing occur.
(d) "Involuntary Termination" shall mean either:
(i) any termination of the Executive's employment at the
convenience of the Company during the Term hereof, but not
including either a termination for Cause or a termination
pursuant to Section l(d)(iii); or
(ii) any termination of the Executive's employment by the
Executive during the Term hereof following the occurrence of
any of the following:
(A) without the express prior written consent of the
Executive, a material diminution or limitation of the
Executive's position, duties or responsibilities with the
Company from those in existence on the Effective Date (or, if
greater, the highest permanent-assignment level in effect
thereafter) or the assignment to the Executive of duties
inconsistent with the position, duties, responsibilities or
status of the Executive as of the Effective Date (or, if
greater, the highest permanent-assignment level in effect
thereafter);
(B) any failure by the Company to pay, or any
reduction by the Company of, the base annual salary of the
Executive as in effect on the Effective Date or as the same
may be increased from time to time thereafter;
(C) the failure of the Company to provide the
Executive with the opportunity to participate, on terms no
less favorable than those existing on the Effective Date, in
any incentive benefit, bonus or compensation, insurance,
pension or other employee benefit plan of the Company in
effect on the Effective Date (or plans and benefits which are,
in the aggregate, no less favorable to the Executive than
those the Executive enjoyed on the Effective Date) unless such
failure results from the Company's termination or amendment of
any such plan in response to a change in applicable statute or
regulation, including any termination or amendment resulting
from a materially adverse alteration of the tax treatment of
any such plan to the Company or to plan participants;
provided, however, that Involuntary Termination shall not
include any reduction in such benefit by the Company on a
Company-wide basis prior to the Closing Date; or
<PAGE>
(D) the requirement by the Company that the
Executive, without the Executive's prior written consent, be
based primarily outside Long Island.
(iii) Involuntary Termination shall not include
termination due to death or to medical disability which
prevents the Executive from substantially performing his job
function, or voluntary resignation of the Executive except as
provided in Section 1(d)(ii).
(e) "Other Termination" shall mean any termination of the
Executive's employment which is not an Involuntary Termination.
(f) "Term" shall mean the period (i) commencing on (A) the
date the Board of Directors approves a sale, consolidation or merger
of the Company or all or substantially all of its stock or takes
formal action to effect any such potential sale, consolidation or
merger or (B) the date on which any person or group of persons acting
in concert takes action which results in a change in ownership in
excess of 50% in the record or beneficial ownership of the Company
except in connection with the establishment of or actions by an
employee stock ownership plan of the Company and (ii) ending on the
earlier of (A) the termination of the actions or ownership described
under clause (i), (B) the second anniversary of the Closing Date and
(C) the occurrence of a management-led buyout; provided, however, that
if none of the events identified in clause (i) occurs on or prior to
January 31, 1996, this Agreement shall terminate unless extended for a
period of one year from the date of such extension by agreement of the
parties, in which case the Effective Date shall be deemed to be the
date of such extension.
2. Involuntary Termination. In the event of an Involuntary
Termination, the following shall apply:
(a) The Company shall provide to the Executive any payments
and benefits to which the Executive would be entitled without regard to
this Agreement.
(b) Within thirty days following the Involuntary Termination,
the Company shall pay to the Executive a payment (the "Payment") equal
to the sum of (i) (a) if the Involuntary Termination occurs on or prior
to the first anniversary of the Closing Date, two times the Executive's
highest permanent annual rate of base compensation during the Term
hereof, or (b) if the Involuntary Termination occurs on or prior to the
second anniversary of the Closing Date, one times the Executive's
highest permanent annual rate of base compensation during the Term
hereof, and (ii) an amount equal to any incentive compensation to be
earned by the Executive in the year in which the Term commences without
regard to whether the criteria established with respect thereto are
met.
(c) The Company shall continue to provide the Executive with
life insurance, long-term disability, health and dental coverage at
levels which were applicable to the Executive on the Closing Date (or,
if greater, the highest levels in effect thereafter) for a period of
two years following the Involuntary Termination or until the Executive
obtains employment and the benefits program of the subsequent employer
becomes effective; provided, however, that the Company may, without
liability hereunder, terminate or amend a plan under which such
coverage was provided in response to a change in applicable statute or
regulation, including any termination or amendment resulting from a
materially adverse alteration of the tax treatment of any such plan to
the Company or to plan participants.
(d) If the Company has provided the Executive with the use of
an automobile on a continuous basis prior to the Involuntary
Termination, the Executive shall be given the option to purchase such
automobile on the terms outlined in the Company policy with respect
thereto at the value in effect two years after the date of the
Involuntary Termination.
(e) Notwithstanding any other provision to the contrary
herein, the Payment shall be reduced to the extent necessary to prevent
the Payment from constituting an "excess parachute payment" within the
meaning of section 280G(b) of the Internal Revenue Code of 1986, as
amended, if, and only if, the Board of Directors determines that such
reduction will have the likely effect of increasing the after-tax
benefit to the Executive. Such determination, and the determination of
any reduction pursuant to this paragraph, shall be based upon the
opinion of the Company's regular accounting firm.
-2-
<PAGE>
3. Other Termination. In the event of any Other Termination,
the Executive, his estate or his beneficiaries shall be entitled solely to such
benefits and payments that would exist were this Agreement not in effect at the
time of such Other Termination.
4. Nondisclosure of Confidential Information. The Executive
shall not, except as may be necessary in the discharge of duties with the
Company or as may be required by applicable law or regulations, disclose any
confidential information, knowledge or data obtained by the Executive prior to
the date of this Agreement or during the Executive's employment concerning the
Company or the business of the Company so long as such information is not
publicly available.
5. Stock Options. In the event of a Closing, all stock
options held by the Executive shall become immediately exercisable on the
Closing Date but otherwise governed by the terms and conditions therefor
applicable to such stock options.
6. Arbitration. Any controversy or claim arising out of or
relating to this Agreement or the breach of this Agreement which cannot be
resolved by the Executive and the Company shall, at the instance of either the
Executive or the Company, be submitted to arbitration in accordance with New
York law and the procedures of the American Arbitration Association. The
determination of the arbitrator shall be conclusive and binding on the Company
and the Executive and judgment may be entered on the arbitrator's award in any
court having jurisdiction.
7. Legal Expenses. The Company shall pay all reasonable costs
and expenses, including attorneys' fees and disbursements, of the Company and,
at least monthly, the Executive in connection with any legal proceedings (in the
case of the Executive any legal proceedings brought or maintained in good faith)
(including, but not limited to, arbitration), whether or not instituted by the
Company or the Executive, relating to the interpretation or enforcement of any
provision of this Agreement. The Company shall also pay prejudgment interest on
any money judgment obtained by the Executive as a result of such proceedings,
calculated at a rate per annum equal to the federal short-term rate as defined
in Section 1274(d) of the Internal Revenue Code of 1986, as in effect from time
to time, from the date that payment should have been made to the Executive under
this Agreement.
8. Assignability. The respective rights and obligations of the
Executive and the Company under this Agreement shall inure to the benefit of and
be binding upon the heirs and legal representatives of the Executive and the
successors and assigns of the Company. The Executive's rights and obligations
under this Agreement may not be assigned or alienated and any attempt to do so
by the Executive shall be void. Any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business or assets of the Company shall assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. The provisions of
this Section 8 shall continue to apply to each subsequent employer of the
Executive hereunder in the event of any subsequent merger, consolidation or
transfer of assets of such subsequent employer.
9. Severability. If any provision of this Agreement is deemed
to be invalid or unenforceable or is prohibited by the laws of the state or
place where it is to be performed, this Agreement shall be considered to be
divisible as to such provision and such provision shall be inoperative in such
state or place and shall not be part of the consideration moving from either of
the parties to the other. The remaining provisions of the Agreement, however,
shall be valid and binding and of like effect as though such provision were not
included.
10. Miscellaneous. This Agreement is to be construed and
enforced in accordance with the internal substantive laws of the State of New
York. The waiver of any breach of this Agreement by any party shall not be
construed as a waiver of any subsequent breach by any party. This Agreement may
not be changed orally, but only by an agreement in writing signed by the parties
to this Agreement.
-3-
<PAGE>
IN WITNESS WHEREOF, the Company and the Executive have
executed this Agreement as of the day and year first above written.
NAI TECHNOLOGIES, INC.
By: Robert A. Carlson Richard A. Schneider
------------------------------ --------------------------------
Title: President
---------------------------
-4-
<PAGE>
Exhibit 10(c)
AGREEMENT
THIS AGREEMENT dated as of the 9th day of February, 1995 (the
"Effective Date") between NAI Technologies, Inc., a New York corporation (the
"Company"), and Frank Tortorelli (the "Executive").
WHEREAS, to induce the Executive to continue in its employ the
Company desires to protect the Executive against potential adverse effects
arising as a result of the Company being sold or acquired;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants set forth in this Agreement, the Company and the Executive
agree as follows:
1. Definitions.
(a) "Cause" shall mean fraud, negligence, conflict of
interest, willful malfeasance or willful misfeasance in office.
(b) "Closing" shall mean any sale of all or substantially all
the assets, merger or business combination, or any share exchange or
share purchase by a person or group of persons acting in concert which
results in a change in ownership in excess of 50% in the record or
beneficial equity ownership of the Company (other than a
management-led leveraged buyout).
(c) "Closing Date" shall mean the earliest date on which the
events constituting the Closing occur.
(d) "Involuntary Termination" shall mean either:
(i) any termination of the Executive's employment at the
convenience of the Company during the Term hereof, but not
including either a termination for Cause or a termination
pursuant to Section l(d)(iii); or
(ii) any termination of the Executive's employment by the
Executive during the Term hereof following the occurrence of
any of the following:
(A) without the express prior written consent of the
Executive, a material diminution or limitation of the
Executive's position, duties or responsibilities with the
Company from those in existence on the Effective Date (or, if
greater, the highest permanent-assignment level in effect
thereafter) or the assignment to the Executive of duties
inconsistent with the position, duties, responsibilities or
status of the Executive as of the Effective Date (or, if
greater, the highest permanent-assignment level in effect
thereafter);
(B) any failure by the Company to pay, or any
reduction by the Company of, the base annual salary of the
Executive as in effect on the Effective Date or as the same
may be increased from time to time thereafter;
(C) the failure of the Company to provide the
Executive with the opportunity to participate, on terms no
less favorable than those existing on the Effective Date, in
any incentive benefit, bonus or compensation, insurance,
pension or other employee benefit plan of the Company in
effect on the Effective Date (or plans and benefits which
are, in the aggregate, no less favorable to the Executive
than those the Executive enjoyed on the Effective Date)
unless such failure results from the Company's termination or
amendment of any such plan in response to a change in
applicable statute or regulation, including any termination
or amendment resulting from a materially adverse alteration
of the tax treatment of any such plan to the Company or to
plan participants; provided, however, that Involuntary
Termination shall not include any
<PAGE>
reduction in such benefit by the Company on a Company-wide
basis prior to the Closing Date; or
(D) the requirement by the Company that the
Executive, without the Executive's prior written consent, be
based primarily at a location other Longmont, Colorado.
(iii) Involuntary Termination shall not include
termination due to death or to medical disability which
prevents the Executive from substantially performing his job
function, or voluntary resignation of the Executive except as
provided in Section 1(d)(ii).
(e) "Other Termination" shall mean any termination of the
Executive's employment which is not an Involuntary Termination.
(f) "Term" shall mean the period (i) commencing on (A) the
date the Board of Directors approves a sale, consolidation or merger
of the Company or all or substantially all of its stock or takes
formal action to effect any such potential sale, consolidation or
merger or (B) the date on which any person or group of persons acting
in concert takes action which results in a change in ownership in
excess of 50% in the record or beneficial ownership of the Company
except in connection with the establishment of or actions by an
employee stock ownership plan of the Company and (ii) ending on the
earlier of (A) the termination of the actions or ownership described
under clause (i), (B) the first anniversary of the Closing Date and
(C) the occurrence of a management-led buyout; provided, however, that
if none of the events identified in clause (i) occurs on or prior to
January 31, 1996, this Agreement shall terminate unless extended for a
period of one year from the date of such extension by agreement of the
parties, in which case the Effective Date shall be deemed to be the
date of such extension.
2. Involuntary Termination. In the event of an Involuntary
Termination, the following shall apply:
(a) The Company shall provide to the Executive any payments
and benefits to which the Executive would be entitled without regard to
this Agreement.
(b) Within thirty days following the Involuntary Termination,
the Company shall pay to the Executive a payment (the "Payment") equal
to the sum of (i) two times the Executive's highest permanent annual
rate of base compensation during the Term hereof and (ii) an amount
equal to any incentive compensation to be earned by the Executive in
the year in which the Term commences without regard to whether the
criteria established with respect thereto are met.
(c) The Company shall continue to provide the Executive with
life insurance, long-term disability, health and dental coverage at
levels which were applicable to the Executive on the Closing Date (or,
if greater, the highest levels in effect thereafter) for a period of
two years following the Involuntary Termination or until the Executive
obtains employment and the benefits program of the subsequent employer
becomes effective; provided, however, that the Company may, without
liability hereunder, terminate or amend a plan under which such
coverage was provided in response to a change in applicable statute or
regulation, including any termination or amendment resulting from a
materially adverse alteration of the tax treatment of any such plan to
the Company or to plan participants.
(d) If the Company has provided the Executive with the use of
an automobile on a continuous basis prior to the Involuntary
Termination, the Executive shall be given the option to purchase such
automobile on the terms outlined in the Company policy with respect
thereto at the value in effect two years after the date of the
Involuntary Termination.
(e) Notwithstanding any other provision to the contrary
herein, the Payment shall be reduced to the extent necessary to prevent
the Payment from constituting an "excess parachute payment" within the
meaning of section 280G(b) of the Internal Revenue Code of 1986, as
amended, if, and only if, the Board of Directors determines that such
reduction will have the likely effect of increasing the after-tax
benefit to the Executive. Such determination, and the determination of
any reduction pursuant to this paragraph, shall be based upon the
opinion of the Company's regular accounting firm.
-2-
<PAGE>
3. Other Termination. In the event of any Other Termination,
the Executive, his estate or his beneficiaries shall be entitled solely to such
benefits and payments that would exist were this Agreement not in effect at the
time of such Other Termination.
4. Nondisclosure of Confidential Information. The Executive
shall not, except as may be necessary in the discharge of duties with the
Company or as may be required by applicable law or regulations, disclose any
confidential information, knowledge or data obtained by the Executive prior to
the date of this Agreement or during the Executive's employment concerning the
Company or the business of the Company so long as such information is not
publicly available.
5. Stock Options. In the event of a Closing, all stock
options held by the Executive shall become immediately exercisable on the
Closing Date but otherwise governed by the terms and conditions therefor
applicable to such stock options.
6. Arbitration. Any controversy or claim arising out of or
relating to this Agreement or the breach of this Agreement which cannot be
resolved by the Executive and the Company shall, at the instance of either the
Executive or the Company, be submitted to arbitration in accordance with New
York law and the procedures of the American Arbitration Association. The
determination of the arbitrator shall be conclusive and binding on the Company
and the Executive and judgment may be entered on the arbitrator's award in any
court having jurisdiction.
7. Legal Expenses. The Company shall pay all reasonable costs
and expenses, including attorneys' fees and disbursements, of the Company and,
at least monthly, the Executive in connection with any legal proceedings (in the
case of the Executive any legal proceedings brought or maintained in good faith)
(including, but not limited to, arbitration), whether or not instituted by the
Company or the Executive, relating to the interpretation or enforcement of any
provision of this Agreement. The Company shall also pay prejudgment interest on
any money judgment obtained by the Executive as a result of such proceedings,
calculated at a rate per annum equal to the federal short-term rate as defined
in Section 1274(d) of the Internal Revenue Code of 1986, as in effect from time
to time, from the date that payment should have been made to the Executive under
this Agreement.
8. Assignability. The respective rights and obligations of the
Executive and the Company under this Agreement shall inure to the benefit of and
be binding upon the heirs and legal representatives of the Executive and the
successors and assigns of the Company. The Executive's rights and obligations
under this Agreement may not be assigned or alienated and any attempt to do so
by the Executive shall be void. Any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business or assets of the Company shall assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. The provisions of
this Section 8 shall continue to apply to each subsequent employer of the
Executive hereunder in the event of any subsequent merger, consolidation or
transfer of assets of such subsequent employer.
9. Severability. If any provision of this Agreement is deemed
to be invalid or unenforceable or is prohibited by the laws of the state or
place where it is to be performed, this Agreement shall be considered to be
divisible as to such provision and such provision shall be inoperative in such
state or place and shall not be part of the consideration moving from either of
the parties to the other. The remaining provisions of the Agreement, however,
shall be valid and binding and of like effect as though such provision were not
included.
10. Miscellaneous. This Agreement is to be construed and
enforced in accordance with the internal substantive laws of the State of New
York. The waiver of any breach of this Agreement by any party shall not be
construed as a waiver of any subsequent breach by any party. This Agreement may
not be changed orally, but only by an agreement in writing signed by the parties
to this Agreement.
-3-
<PAGE>
IN WITNESS WHEREOF, the Company and the Executive have
executed this Agreement as of the day and year first above written.
NAI TECHNOLOGIES, INC.
By: Robert A. Carlson Frank Tortorelli
------------------------------ -------------------------------
Title: President
---------------------------
-4-
<PAGE>
EHIBIT 10(d)
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of April 12, 1995, between
NAI TECHNOLOGIES, INC., a New York corporation (the "Company"), THE BANK OF NEW
YORK, a New York banking corporation ("BNY"), and CHEMICAL BANK, a New York
banking corporation ("Chemical"; each of Chemical and BNY shall hereinafter be
referred as a "Holder" and together as the "Holders").
RECITALS:
The parties hereto are parties to an Amended and Restated Credit
Agreement, dated as of April 12, 1995, among, inter alia, the Company and the
Holders (the "Credit Agreement").
Pursuant to the Credit Agreement, the Company is issuing,
contemporaneously therewith, to the Holders an aggregate of 250,000 shares of
the Company's Shares (as hereinafter defined).
THE PARTIES HERETO AGREE AS FOLLOWS:
1. Certain Definitions. Capitalized terms used herein which are not
otherwise defined herein and which are defined in, or by reference in, the
Credit Agreement shall have the meanings given therein. For the purposes of this
Agreement, the following terms shall have the following meanings:
"Agreement" shall mean this Registration Rights Agreement, as the
same may be amended, modified or supplemented from time to time.
"Commission" shall mean the United States Securities and Exchange
Commission, or any other federal agency then administering the Securities Act
and the Exchange Act.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute then in effect, and a reference to a
particular section thereof shall be deemed to include a reference to the
comparable section, if any, of any such similar federal statute.
"Person" shall mean any natural person, corporation, limited liability
company, business trust, joint venture, association, company, partnership or
government, or agency or political subdivision thereof.
"Prospectus" shall mean the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement and all other amendments and
supplements to the prospec-
<PAGE>
tus, including any post-effective amendments and all materials incorporated by
reference in the prospectus.
"Registrable Securities" shall mean the 250,000 shares of Common Stock
issued pursuant to the Credit Agreement and any securities issued in exchange
for or substitution of any thereof or as a result of a stock split or as a
dividend or other distribution in respect of any thereof. As to any particular
Registrable Securities, once issued, such securities shall cease to be
Registrable Securities when (i) a registration statement with respect to the
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such registration
statement, (ii) they shall have been disposed of pursuant to Rule 144 (or any
successor provision) under the Securities Act, (iii) they shall have been
otherwise transferred, new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent disposition of them shall not require registration or qualification
of them under the Securities Act or any similar state law then in force (and the
Holder thereof shall have received an opinion of independent counsel for the
Company reasonably satisfactory to the Holder to the foregoing effects), or (iv)
they shall have ceased to be outstanding.
"Registration Expenses" shall mean all of the costs and expenses of
each Registration hereunder, and filing fees, fees and expenses of compliance
with securities or blue sky laws (including reasonable fees and disbursements of
counsel in connection with blue sky qualifications of the Registrable
Securities), rating agency fees, National Association of Securities Dealers
(NASD) fees for review of underwriting agreements, printing expenses (including
expenses of printing the Prospectus), messenger and delivery expenses, the fees
and expenses incurred in connection with the listing of the securities to be
registered on each securities exchange on which the Shares are then listed or
proposed to be listed, and fees and disbursements of counsel for the Company and
its independent certified public accountants (including the expenses of any
special audit or cold comfort letters required by or incident to such
performance), Securities Act liabilities insurance (if the Company elects to
obtain such insurance), the fees and expenses of any special experts retained by
the Company in connection with such Registration, reasonable fees and expenses
of one counsel (who shall be selected by the Holders) for the Holders incurred
in connection with each Registration hereunder and any reasonable out-of-pocket
expenses of the Holders (or the agents who manage their accounts) excluding any
travel costs and counsel fees except as set forth above (but not including any
underwriting fees, discounts or commissions attributable to the sale of
Registrable Securities).
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"Registration Statement" shall have the meaning assigned to such term
in Section 4(a) of this Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute then in effect, and a reference to a particular
section thereof shall be deemed to include a reference to the comparable
section, if any, of any such similar federal statute.
"Selling Holder" shall mean a Holder who is selling Registrable
Securities pursuant to a Registration.
"Shares" shall mean shares of the Company's authorized common stock,
par value $.10 per share, as constituted on the Closing Date and any securities
into which such shares may thereafter be changed.
2. Piggyback Registration Rights.
(a) Right to Piggyback. Subject to the last sentence of this subsection
(a), whenever the Company proposes to register any Shares (or securities
convertible into or exchangeable or exercisable for Shares) under the
Securities Act for its own account or for the account of Persons exercising
demand registration rights other than pursuant to Section 3 below, other
than under a Registration Statement on Form S-4, Form S-8 or any successor
form or filed in connection with an exchange offer or an offering of
securities solely to the Company's existing employees or securityholders (a
"Piggyback Registration"), the Company will give prompt written notice to
all Holders of its intention to effect such a Registration and will use its
best efforts, subject to Section 2(b) below, to include in such Piggyback
Registration all Registrable Securities with respect to which the Company
has received written requests for inclusion therein within 15 Business Days
after receipt of the Company's notice. Except as may otherwise be provided
in this Agreement, Registrable Securities with respect to which such request
for Registration has been received will be registered by the Company and
offered to the public on the same terms and subject to the same conditions
applicable to the Piggyback Registration to be sold by the Company or by the
other Persons selling under such Piggyback Registration. Notwithstanding the
foregoing, the Company shall have the right to postpone or withdraw any
Registration effected pursuant to this Section 2(a).
(b) Priority on Piggyback Registrations. If a Piggyback Registration
relates to an underwritten offering and the managing underwriter or
underwriters advise the Company in writing that in its or their opinion the
number of securities proposed to be sold in a Piggyback Registration exceeds
the number which can be sold in such offering within a price range
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acceptable to the Company or the other Persons exercising demand
registration rights, the Company will include in such Piggyback Registration
the number of securities which, in the opinion of such underwriter or
underwriters, can be sold within such price range, which securities shall be
allocated as follows: (x) first, the securities proposed to be sold by other
Persons exercising demand registration rights granted on or prior to the
Closing Date, (y) second, Registrable Securities held by Holders who have
made requests to be included in such Piggyback Registration (pro rata among
the Holders who have requested their Registrable Securities to be included
therein), together with any other securities requested to be included in
such Piggyback Registration by other holders, pro rata among the Holders of
Registerable Securities to be included therein and the other holders of such
other securities requested to be included in such Piggyback Registration,
and (z) third, the securities the Company proposes to sell.
(c) Underwriting. If a Piggyback Registration for which the Company
gives notice is for a registered public offering involving an underwriting,
the Company shall so advise the Holders in the notice given pursuant to
Section 2(a), which notice shall include the name of the managing
underwriter or underwriters. In such event, the right of any Holder to
Piggyback Registration pursuant to this Section 2 shall be conditional upon
such Holder's participation in such underwriting with respect to all of its
securities included in such Piggyback Registration.
3. Demand Registration Rights.
(a) Right to Demand. At any time before the expiration of five years
from the date of original issuance of the Registrable Securities, each
Holder may make one written request and both Holders may jointly make one
written request (provided in each case no Holder has registered Registrable
Securities pursuant to Section 2 above within 120 days prior to such
request) to the Company for registration with the Commission under and in
accordance with the provisions of the Securities Act of not less than 50% of
the Registrable Securities (a "Demand Registration"). Notwithstanding any
thing to the contrary contained herein, the Company shall not be required to
effect more than three Demand Registrations hereunder. Unless expressly
agreed to by the Holders, no securities of the Company or of any other
Person other than Registrable Securities shall be included in a Demand
Registration.
(b) Priority on Demand Registrations. If the managing underwriter or
underwriters of a Demand Registration (or in the case of a Demand
Registration not being underwritten, the
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<PAGE>
Holders) advise the Company in writing that in its or their opinion the
number of Registrable Securities proposed to be sold in such Demand
Registration exceeds the number which can be sold in such offering, the
Company will include in such Demand Registration only the number of
Registrable Securities which, in the opinion of such underwriter or
underwriters (or the Holders, as the case may be), can be sold in such
offering on a pro rata basis.
(c) Selection of Underwriters. If any Demand Registration is an
underwritten offering, the Holders will select a managing underwriter or
underwriters to administer the offering which managing underwriter or
underwriters shall be of nationally recognized standing and shall be
reasonably acceptable to the Company.
4. Registration Procedures. With respect to any Registration, the
Company will (subject to Section 11 below) promptly:
(a) prepare and file with the Commission a Registration Statement (a
"Registration Statement") which includes the Registrable Securities and use
its best efforts to cause such Registration Statement to become effective as
promptly as practicable; provided that before filing a Registration
Statement or any amendments thereto of any Prospectus, the Company will
furnish to one counsel selected by the Holders of the Registrable Securities
covered by such Registration Statement and the underwriters, if any, draft
copies of all such documents proposed to be filed at least 5 Business Days
prior thereto, which documents will be subject to the reasonable review of
such counsel and underwriters, and the Company will not file any
Registration Statement or amendment thereto or any Prospectus to which
Holders of a majority of the Registrable Securities covered by a Demand
Registration, shall reasonably object (provided that nothing herein shall
prevent the Company from making a timely filing of any report required to be
filed by it pursuant to the Exchange Act in such form as it determines is
appropriate) and will notify each Holder of the Registrable Securities of
any stop order issued or threatened by the Commission in connection
therewith and take all reasonable actions required to prevent the entry of
such stop order or to remove it if entered;
(b) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be necessary
to keep the Registration Statement effective for a period of not less than
four months (or such shorter period which will terminate when all
Registrable Securities covered by such Registration Statement have been sold
or withdrawn, but not prior to the expiration of any applicable period
referred to in Section 4(3) of the Securities Act and Rule 174 thereunder,
if applicable); cause the Prospectus to
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<PAGE>
be supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the Securities Act; and
comply with the provisions of the Securities Act applicable to it with
respect to the disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the intended
methods of disposition by the sellers thereof set forth in such Registration
Statement or Prospectus supplement;
(c) furnish to any Holder holding Registrable Securities included in
such Registration Statement and the underwriter or underwriters, if any, at
least one signed copy of the Registration Statement and any post-effective
amendment thereto, upon request, and such number of conformed copies thereof
and such number of copies of the Prospectus (including each preliminary
Prospectus), and any documents incorporated by reference therein, as such
Holder or underwriter may reasonably request in order to facilitate the
disposition of the Registrable Securities being sold by such Holder (it
being understood that the Company consents to the use of the Prospectus by
each Holder holding Registrable Securities covered by the Registration
Statement and the underwriter or underwriters, if any, in connection with
the offering and sale of the Registrable Securities covered by the
Prospectus);
(d) notify each Holder holding Registrable Securities included in such
Registration Statement, at any time when a Prospectus relating thereto is
required to be delivered under the Securities Act, when the Company becomes
aware of the happening of any event as a result of which the Prospectus
included in such Registration Statement (as then in effect) contains any
untrue statement of a material fact or omits to state a material fact
necessary to make the statements therein (in the case of the Prospectus or
any preliminary Prospectus, in light of the circumstances under which they
were made) not misleading and, as promptly as practicable thereafter,
prepare and file with the Commission and make available a supplement or
amendment to such Prospectus so that, as thereafter delivered to the
purchasers of such Registrable Securities, such Prospectus will not contain
any untrue statement of a material fact or omit to state material fact
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading;
(e) use its best efforts to cause all Registrable Securities to be
listed, by the date such Registrable Securities cease to be Registrable
Securities as a result of Registration or otherwise, on each securities
exchange on which the Shares are then listed or proposed to be listed, if
any;
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(f) make generally available to its security holders an earnings
statement satisfying the provisions of Section 11(a) of the Securities Act
no later than 45 days after the end of the 12-month period beginning with
the first day of the Company's first fiscal quarter commencing after the
effective date of the Registration Statement, which earnings statement shall
cover said 12-month period; provided, however, that in the event that the
first day of the Company's first fiscal quarter commencing after the
effective date of the Registration Statement shall also be the first day
of the Company's fiscal year, such earnings statement shall be made
generally available no later than 90 days after the end of such 12-month
period;
(g) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of the Registration Statement at the earliest
possible moment;
(h) if requested by the managing underwriter or underwriters or any
Holder holding Registrable Securities covered by the Registration Statement
promptly incorporate in a Prospectus supplement or post-effective amendment
such information as the managing underwriter or underwriters or such Holder
requests to be included therein with respect to the number of Registrable
Securities being sold by such Holder to such underwriter or underwriters,
the purchase price being paid therefor by such underwriter or underwriters
and with respect to any other terms of the underwritten offering of the
Registrable Securities to be sold in such offering; and promptly make all
required filings of such Prospectus supplement or post-effective amendment;
(i) as promptly as practicable after filing with the Commission of any
document which is incorporated by reference into a Registration Statement,
deliver a copy of such document to each Holder holding Registrable
Securities covered by such Registration Statement;
(j) on or prior to the date on which the Registration Statement is
declared effective, use its best efforts to register or qualify, and
cooperate with the Holders holding Registrable Securities included in such
Registration Statement, the underwriter or underwriters, if any, and their
counsel, in connection with the registration or qualification of the
Registrable Securities covered by the Registration Statement for offer and
sale under the securities or blue sky laws of each state and other
jurisdiction of the United States as any such Holder or underwriter
reasonably requests in writing, to use its best efforts to keep each such
registration or qualification effective, including through new filings, or
amendments or renewals, during the period such Registration Statement is
required to be kept effective
7
<PAGE>
pursuant to Section 4(b) hereof and to do any and all other acts or things
necessary or advisable to permit the disposition in all such jurisdictions
of the Registrable Securities covered by the applicable Registration
Statement;
(k) cooperate with the Holders holding Registrable Securities covered
by the Registration Statement and the managing underwriter or underwriters,
if any, to facilitate the timely preparation and delivery of certificates
(not bearing any restrictive legends) representing Registrable Securities to
be sold under the Registration Statement and enable such securities to be in
such denominations and registered in such names as the managing underwriter
or underwriters, if any, or Holders may request;
(l) use its best efforts to cause the Registrable Securities covered by
the Registration Statement to be registered with or approved by such other
governmental agencies or authorities within the United States as may be
necessary to enable the Selling Holders thereof or the underwriter or
underwriters, if any, to consummate the disposition of such Registrable
Securities;
(m) enter into such customary agreements (including an underwriting
agreement in customary form) and take all such other actions as the Holders
of a majority of the Registrable Securities being sold or the underwriters
retained by Holders participating in an underwritten public offering, if
any, reasonably request in order to expedite or facilitate the disposition
of such Registrable Securities;
(n) make available for inspection by any Holder of Registrable
Securities included in such Registration Statement, any underwriter
participating in any disposition pursuant to such Registration Statement,
and any attorney, accountant or other agent retained by any such seller or
underwriter (collectively, the "Inspectors"), all financial and other
records, pertinent corporate documents and properties of the Company and
its direct and indirect subsidiaries (collectively the "Records") as shall
be reasonably necessary to enable them to exercise their due diligence
reasonably, and cause the Company's officers, directors and employees to
supply all information reasonably requested by any such Inspectors in
connection with such Registration Statement; provided, that the Records
which the Company determines, in good faith, to be confidential and which it
notifies the Inspectors are confidential shall not be disclosed to the
Inspectors unless (x) the disclosure of such Records is necessary to avoid
or correct a misstatement or omission in the Registration Statement or (y)
the release of such Records is ordered pursuant to a subpoena or other order
from a court of competent jurisdiction; provided, however, that any
8
<PAGE>
decision not to disclose information pursuant to clause (x) shall be made
after consultation with counsel for the Company, and each Holder of
Registrable Securities included in such Registration Statement agrees that
it will, upon learning that disclosure of such Records is sought in a court
of competent jurisdiction, give notice to the Company and allow the Company,
at the Company's expense, to undertake appropriate action to prevent
disclosure of the Records deemed confidential; and
(o) use its best efforts to obtain a cold comfort letter from the
Company's independent public accountants and an opinion of outside counsel
to the Company, each in customary form and covering such matters of the type
customarily covered by cold comfort letters or opinions of counsel, as the
case may be, as the Holders of a majority of the Registrable Securities
being sold reasonably request.
Each Holder, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 4(d), will forthwith
discontinue disposition of the Registrable Securities until such Holders'
receipt of the copies of the supplemented or amended Prospectus contemplated by
Section 4(d) or until it is advised in writing (the "Advice") by the Company
that the use of the Prospectus may be resumed, and has received copies of any
additional or supplemental filings which are incorporated by reference in the
Prospectus, and, if so directed by the Company, such Holder will, or will
request the managing underwriter or underwriters, if any, to deliver to the
Company all copies, other than permanent file copies then in such Holder's
possession, of the Prospectus covering such Registrable Securities at the time
of receipt of such notice. In the event the Company shall give any such notice,
the time period mentioned in Section 4(b) shall be extended by the number of
Business Days during the period from and including the date of the giving of
such notice to and including the date when each Selling Holder covered by such
Registration Statement shall have received the copies of the supplemented or
amended Prospectus contemplated by Section 4(d) or the Advice.
Each Holder shall furnish to the Company such information regarding the
Registrable Securities held by it and the intended method of disposition thereof
and other information concerning the Holder as the Company shall reasonably
request and as shall be required in connection with the Registration Statement
to be filed by the Company.
5. Holdback Arrangements.
(a) Restrictions on Public Sale by Holder of Registrable Securities. To
the extent not inconsistent with applicable law, each Holder whose
Registrable Securities are included in an underwritten Registration agrees
not to effect any public
9
<PAGE>
sale or distribution of the securities being registered or a similar
security of the Company, or any securities convertible into or exchangeable
or exercisable for such securities, including a sale pursuant to Rule 144 or
Rule 144A under the Securities Act, during the 14 days prior to, and during
and not exceeding 90 days after the effective date of such Registration
Statement as may be reasonably requested by the managing underwriter or
underwriters, except as part of such Registration Statement.
(b) Restrictions on Public Sale by the Company. The Company agrees (x)
not to effect any public sale or distribution of any securities similar to
those being registered, or any securities convertible into or exchangeable
or exercisable for such securities (other than any such sale or distribution
of such securities in connection with any merger or consolidation
involving the Company or a subsidiary thereof or the acquisition by the
Company or a subsidiary thereof of the capital equity or substantially all
of the assets of any other Person or with respect to any employee benefit or
stock plan), during the 14 days prior to, and during such period not
exceeding 90 days after the effective date of any Registration Statement
except as part of such Registration Statement; and (y) that any agreement
entered into after the date of this Agreement pursuant to which the Company
issues or agrees to issue any privately placed securities (which securities
shall be subject to the provisions of Section 2(b)) shall contain a
provision under which holders of such securities agree not to effect any
public sale or distribution of any such securities during the period
described in (x) above, in each case including a sale pursuant to Rule 144
or Rule 144A under the Securities Act (except as part of any such
registration, if permitted); provided, however, that the provision of this
Section 5(b) shall not prevent the conversion or exchange of any securities
pursuant to their terms as in effect prior to the commencement of such
period into or for other securities.
(c) Other Registrations. If the Company has previously filed a
Registration Statement with respect to Registrable Securities, and if such
previous registration has not been withdrawn or abandoned, the Company will
not file or cause to be effective any other registration of any of the
Shares (or securities convertible into or exchangeable or exercisable for
the Shares) under the Securities Act (except on Form S-4 or S-8 or any
successor forms or filed in connection with an exchange after or an offering
of securities solely to the Company's existing employees or security
holders), whether on its own or at the request of any holder or holders of
the Shares (or securities convertible into or exchangeable or exercisable
for the Shares), until a period of at least 120 days has elapsed from the
effective date of such previous registration (provided that in the case of a
Demand
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Registration such period shall commence on the date the Company is first
served the notice of demand registration and shall continue until at least
ninety (90) days have elapsed from the effective date of such Demand
Registration).
6. Indemnification; Contribution.
(a) Indemnification by the Company. The Company agrees to indemnify and
hold harmless each Selling Holder of Registrable Securities, its officers,
directors and agents and each Person, if any, who controls such Holder
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act (each an "Indemnitee") from and against any and all losses,
claims, damages, liabilities and expenses (including reasonable attorneys'
fees and costs of investigation) arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus, or arising out of or based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or expenses
arise out of or are based upon information with respect to such Indemnitee
furnished in writing to the Company by such Indemnitee expressly for use
therein. It is agreed that the indemnification agreement contained in this
Section 6(a) shall not apply to amounts paid in settlement of any such loss,
claim, damage or liability if such settlement is effected without the
consent of the Company (which consent has not been unreasonably withheld.
The Company also agrees to indemnify any underwriters on substantially the
same basis as that of the indemnification of the Selling Holders provided in
this Section 6(a).
(b) Conduct of Indemnification Proceedings. If any action or proceeding
(including any governmental investigation) shall be brought or asserted
against any Selling Holder (or its officers, directors or agents) or any
Person controlling any such Selling Holder in respect of which indemnity
may be sought from the Company, the Company shall be permitted to assume the
defense of such claim, unless in the reasonable judgment of such Indemnitee
a conflict of interest may exist between such Indemnitee and the Company
with respect to such claim or differing or additional defenses may be
available to such Indemnitee. If defense of a claim is assumed by the
Company, Indemnitees shall not be liable for any settlement of such action
or proceedings effected without their prior written consent. The Company
will not consent to entry of any judgment or enter into any settlement which
does not include as an unconditional term thereof the giving by the claimant
or plaintiff to such Indemnitee of a release from all liability in respect
of such claim or litigation. If the Company is not
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entitled to, or elects not to, assume the defense of a claim, it will not be
obligated to pay the fees and expenses of more than one counsel for the
Indemnitees as a group with respect to such claim in each jurisdiction in
which a claim is brought, unless in the reasonable judgment of any
Indemnitee a conflict of interest may exist between such Indemnitee and any
other Indemnitee with respect to such claim or differing or additional
defense may be available to such Indemnitee, in which event the Company
shall be obligated to pay the fees and expenses of such additional counsel
or counsels. Any Selling Holder entitled to indemnification hereunder agrees
to give prompt written notice to the Company after the receipt by such
Selling Holder of any written notice of the commencement of any action,
suit, proceedings or investigation or threat thereof made in writing for
which such Selling Holder may claim indemnification or contribution pursuant
to this Agreement; provided, however, that failure to give such notice shall
not limit the Indemnitee's right to indemnification or contribution
hereunder unless and to the extent that the Company did not otherwise learn
of such action and such failure results in the forfeiture by it of
substantial rights and defenses.
(c) Indemnification by Holders of Registrable Securities. Each Selling
Holder agrees to indemnify and hold harmless the Company, and the other
Selling Holders and each of their respective directors, officers and agents
and each Person, if any, who controls the Company or any other Selling
Holder within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Company to such Selling Holder but only with respect to information
furnished in writing by such Selling Holder with respect to such Selling
Holder which contained a material misstatement of fact or omission of a
material fact expressly for use in any Registration Statement or any
amendment thereto or any Prospectus, or any preliminary Prospectus relating
to the Registrable Securities. In case any action or proceeding shall be
brought against the Company, any other Selling Holder or any of their
respective directors, officers or agents, or any such controlling Person, in
respect of which indemnity may be sought against such Selling Holder, such
Selling Holder shall have the rights and duties given to the Company, and
the Company, each other Selling Holder or each of their respective
directors, officers, or agents or such controlling Person shall have the
rights and duties given to such Selling Holder, by Section 6(b).
(d) Contribution. If the indemnification provided for in this Section 6
is unavailable to the Company, the Selling Holders or the underwriters in
respect to any losses, claims, damages, liabilities or judgments referred to
herein, then
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each such indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages, liabilities and judgments
in such proportion as is appropriate to reflect the relative fault of the
indemnifying parties and indemnified parties in connection with such
statements or omissions which resulted in the losses, claims, damages,
liabilities or judgments, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and
indemnified parties shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission of alleged omissions to state a material fact relates to
information supplied by such party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Selling Holders agree that it would not be just and
equitable if contribution pursuant to this Section 6(d) were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities, or judgments referred to
in the immediately preceding paragraph shall be deemed to include, subject
to the limitation set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. No Person guilty of fraudulent
misrepresentations (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any Person who was not guilty of
such fraudulent misrepresentations. For the purposes of this Section 6(d),
each director of the Company, each officer who signed the Registration
Statement and each Person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act shall have the same rights to
contribution as the Company.
7. Participation in Underwritten Registrations. No Holder may
participate in any underwritten Registration hereunder (which shall be conducted
in accordance with the provisions of Section 2(b) or 3) unless such Holder (i)
agrees to sell such Holder's Registrable Securities on the basis provided in any
underwriting arrangements (approved by the applicable Holders as provided
herein) and (ii) completes and executes all questionnaires, powers of attorneys,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements and these registration rights.
8. Rule 144. The Company covenants that it will file any reports
required to be filed by it under the Securities Act and
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the Exchange Act and the rules and regulations adopted by the Commission
thereunder (or, if the Company is not required to file such reports, it will,
upon the request of the Holders, make publicly available other information so
long as necessary to permit sales under Rule 144 under the Securities Act), that
it will take such further action as the Holders may reasonably request, all to
the extent required from time to time to enable Holders to sell Registrable
Securities without registration under the Securities Act within the limitations
of the exemptions provided by (i) Rule 144 under the Securities Act, as such
rule may be amended form time to time, or (ii) any similar rule or regulation
hereafter adopted by the Commission. Upon the request of any Holder, the Company
will deliver to such Holder a written statement as to whether it has complied
with the requirements of this Section 8.
9. Other Registration Rights. Except for registration rights granted to
other Persons on or prior to the Closing Date, the Company will not grant any
Person any demand or piggyback registration rights with respect to the Shares
(or securities convertible into or exchangeable or exercisable for Shares) other
than registration rights ("new rights") that (i) would not be inconsistent with
the terms of this Section 9 and (ii) do not provide that the Holders have a
piggyback right upon the exercise of such new rights and shall be included in
the registration statement and on an equal basis with the securities being
registered pursuant to the exercise of the new rights.
10. Registration Expenses. The Registration Expenses related to any
Demand Registration or Piggyback Registration shall be borne solely by the
Company.
11. Stand-Off and Special Audit.
(a) Stand-Off. If at the time of any request for a Demand Registration
pursuant to Section 3, the Company (i) is engaged or has fixed plans to
engage, within 30 days of the time of the request, in a registered public
offering as to which the Holders may, pursuant to Section 2, include all
Registrable Securities proposed to be sold by them, and which in fact
becomes effective within 90 days after the request, or (ii) is engaged in
any other activity which, in the good faith determination of the Company's
board of directors, would be adversely affected by the Demand Registration
to the material detriment of the Company, then the Company may at its option
direct that such request be delayed for a period not to exceed six months
from the effective date of such offering or the date of commencement of such
other material activity, as the case may be.
(b) Provisions for Special Audit. In the event that a special audit of
the Company's financial statements would be required to effect a
Registration pursuant to Section 3, the
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Company shall promptly notify the Holders requesting Registration that a
special audit is required. In such event, the Holders who initiated the
Demand Registration shall have the right to either (i) withdraw such request
for Registration, in which case the request shall not count as a Demand
Registration to which the Holders are entitled under this Agreement or
(ii) pay the expenses of conducting the special audit.
12. Public Trading Market. Until the earlier of (a) three years after
the date hereof or (b) the date on which there are no Registrable Securities,
the Company shall use its best efforts to maintain a public trading market for
its Shares.
13. Restriction on Resale. Unless otherwise agreed by the Company,
until the earlier of (a) three years after the date hereof or (b) the date on
which there are no Registrable Securities, the Holders will not resell the
Registrable Securities without registration under the Securities Act, compliance
with Rule 144, or an opinion of counsel for such holder, addressed to the
Company, to the effect that no such registration is required.
14. Miscellaneous.
(a) Amendments and Waivers. This Agreement may not be amended without
the written consent of the parties hereto.
(b) Successors and Assigns. The Holder shall not assign any of its
rights or obligations under this Agreement except to (i) an Affiliate (as
such term is defined in Section 1.01 of the Credit Agreement) of the Holder
or (ii) anyone who purchases at least 40,000 of the Registrable Securities
from the Holder prior to the filing of a Registration Statement pursuant to
Section 2 or 3 hereof. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
permitted assigns. No other person shall acquire or have any rights under or
by virtue of this Agreement.
(c) Notices. All notices and other communications provided for
hereunder shall be given and shall be effective as provided in the Credit
Agreement.
(d) Descriptive Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise effect the
meaning of terms contained herein.
(e) Severability. In the event that any one or more of the provisions,
paragraphs, words, clauses, phrases or sentences contained herein, or the
application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of such provision, paragraph, word, clause,
15
<PAGE>
phrase or sentence in every other respect and of the remaining provisions,
paragraphs, words, clauses, phrases or sentences hereof shall not be in any
way impaired, it being intended that all rights, powers and privileges of
the parties hereto shall be enforceable to the fullest extent permitted by
law.
(f) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same instrument, and it shall not be necessary
in making proof of this Agreement to produce or account for more than one
such counterpart.
(g) Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York.
(h) Remedies. The Company acknowledges that monetary damages will not
be adequate compensation for any loss incurred by reason of a breach by it
of the provisions hereof and agrees, to the fullest extent permitted by law,
to waive the defense of adequacy of legal remedies in any action for
specific performance hereof.
(i) Merger, etc. If, directly or indirectly, (i) the Company shall
merge with and into, or consolidate with, any other Person, (ii) any Person
shall merge with and into, or consolidate with, the Company and the Company
shall be the surviving corporation of such merger or consolidation and, in
connection with such merger or consolidation, all or part of the Registrable
Securities shall be changed into or exchanged for stock or other securities
of any other Person, then, in each such case, proper provision shall be made
so that such Person shall be bound by the provisions of this Agreement and
the term "Company" shall thereafter be deemed to refer to such Person.
(j) Other Agreements. The Company shall not enter into any agreement
inconsistent with any of the provisions hereof.
IN WITNESS WHEREOF, each of the undersigned has caused this Agreement
to be executed on its behalf as of the date first written above.
NAI TECHNOLOGIES, INC.
By Richard A. Schneider
---------------------------------
Title Executive Vice President
------------------------------
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THE BANK OF NEW YORK
By J. B. Lifton
---------------------------------
Title Vice President
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CHEMICAL BANK
By Kathryn A. Duncan
---------------------------------
Title Vice President
------------------------------
17
