-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, PyRH5eQ8DV+VirG8U9tpIknqbTEOuiD2EYhthcWz/fVG2tIei0bjU3DXGosMKUIf Oi44Dvh0O/RkBazM5bSY7Q== 0000950117-95-000124.txt : 19950501 0000950117-95-000124.hdr.sgml : 19950501 ACCESSION NUMBER: 0000950117-95-000124 CONFORMED SUBMISSION TYPE: 10-K405/A PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950428 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NAI TECHNOLOGIES INC CENTRAL INDEX KEY: 0000072575 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER TERMINALS [3575] IRS NUMBER: 111798773 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405/A SEC ACT: SEC FILE NUMBER: 000-03704 FILM NUMBER: 95532961 BUSINESS ADDRESS: STREET 1: 1000 WOODBURY RD STREET 2: SUITE 412 CITY: WOODBURY STATE: NY ZIP: 11797-2530 BUSINESS PHONE: 5163644433 MAIL ADDRESS: STREET 2: 1000 WOODBURY ROAD STE 412 CITY: WOODBURY STATE: NY ZIP: 11797-2530 FORMER COMPANY: FORMER CONFORMED NAME: NORTH ATLANTIC INDUSTRIES INC DATE OF NAME CHANGE: 19920703 10-K405/A 1 NAI 10-K-A, AM#2 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 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. -2- 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- 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- 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 $100,000 for each of the Company's last three fiscal years (collectively, the "Named Executives"). SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION --------------------------------- ANNUAL COMPENSATION AWARDS PAYOUTS -------------------------------------------------------------------- (a) (b) (c) (d) (e) (f) (g) (h) (i) OTHER ANNUAL RESTRICTED SECURITIES COMPEN- STOCK UNDERLYING LTIP ALL OTHER NAME AND PRINCIPAL FISCAL SATION AWARD(S) OPTIONS/ PAYOUTS COMPENSATION POSITION YEAR SALARY ($) BONUS ($) ($)(1) ($) SARS (#) ($) ($) - --------------------------- ----- ----------- ---------- ------- ---- --------- ---- ----------- 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 -- -- -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------------
(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 $0 of contributions made by the Company under the profit sharing portion of such plan for the benefit of Mr. Tortorelli for 1994. -5- (5) Options to acquire shares of the Company Common Stock that were granted in fiscal year 1994. At the same time, options for Mr. Carlson (102,951), Mr. Schneider (54,996) and Mr. Tortorelli (39,336) were canceled. (6) Mr. Tortorelli became an executive officer of the Company in fiscal 1994. STOCK OPTIONS The table below summarizes the options granted to the Named Executives in 1994 and their potential realizable values. OPTION/SAR GRANTS IN 1994
POTENTIAL REALIZABLE VALUE AT ASSUMED ANNUAL RATES OF STOCK PRICE APPRECIATION INDIVIDUAL GRANTS FOR OPTION TERM(1) - ----------------------------------------------------------------------------------------- ----------------------- (a) (b) (c) (d) (e) (f) (g) NUMBER OF % OF TOTAL SECURITIES OPTIONS/SARS UNDERLYING GRANTED TO EXERCISE OR OPTIONS/SARS EMPLOYEES BASE PRICE EXPIRATION NAME GRANTED (#) IN FISCAL YEAR ($/SH) DATE 5% ($) 10% ($) - ------------------------------ ------------ -------------- ------- ----- ------- --------- 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 $126,080
- -------- (1) Option price compounded annually at 5% and 10% over the ten year term minus the exercise price times the number of shares subject to the option. (2) Such options were granted on May 26, 1994 in connection with the cancellation of options granted for the same number of shares at earlier dates. Such options become exercisable at a rate of 25% per year on the anniversary date of the grant. All such options expire after the fifth anniversary of the date of grant. -6- The table below summarizes the exercise of stock options during 1994 for the Named Executives. AGGREGATED OPTION/SAR EXERCISES IN 1994 AND FY-END OPTION/SAR VALUES
(a) (b) (c) (d) (e) NUMBER OF SECURITIES VALUE OF UNDERLYING UNEXERCISED UNEXERCISED IN-THE-MONEY OPTIONS/SARS AT OPTIONS/SARS AT FY-END (#) FY-END ($) SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/ NAME ON EXERCISE (#) VALUE REALIZED ($) UNEXERCISABLE UNEXERCISABLE(1) - ------------------------------------------ ------------------ -------------------- ---------------- 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
- -------- (1) Market price at December 31, 1994 minus exercise price times the number of shares underlying the unexercised options. -7- 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
YEARS OF CREDITED SERVICE AT RETIREMENT REMUNERATION 10 15 20 25 30 35 ------------ ------ ------ ------ ------ ------ ---- $ 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
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- 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- 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.
NUMBER OF SHARES OF PERCENT OF COMPANY COMMON COMPANY NAME AND ADDRESS OF BENEFICIAL OWNER STOCK BENEFICIALLY OWNED(1) COMMON STOCK - ------------------------------------ --------------------------- ------------ 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%
- -------- (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- 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.
BENEFICIAL OWNERSHIP OF SHARES(1) --------------------------------- NUMBER OF SHARES OF PERCENT OF COMPANY COMMON STOCK COMPANY NAME BENEFICIALLY OWNED(2) COMMON STOCK(3) - ------------------------------------------ --------------------- ------------ 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%
- -------- * 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- 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- INDEX TO EXHIBITS
Page Exhibit (10) (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
-13- EX-10 2 EXHIBIT 10(A) 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 (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- 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- 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- EX-10 3 EXHIBIT 10(B) 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 (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- 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- 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- EX-10 4 EXHIBIT 10(C) 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 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- 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- 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- EX-10 5 EXHIBIT 10(D) 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- 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). 2 "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 3 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 4 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 5 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; 6 (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 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 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 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 10 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 11 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 12 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 13 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 14 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 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 ------------------------------ 16 THE BANK OF NEW YORK By J. B. Lifton --------------------------------- Title Vice President ------------------------------ CHEMICAL BANK By Kathryn A. Duncan --------------------------------- Title Vice President ------------------------------ 17 -----END PRIVACY-ENHANCED MESSAGE-----