Exhibit 10.3
EMPLOYMENT AGREEMENT
This Employment Agreement, entered into as of the 16th day of
October, 1995 by and between NAI Technologies, Inc., a New York corporation (the
'Company'), and Xxxxxx X. Xxxxxxx (the 'Executive').
1. Termination of Prior Agreement. Upon the execution of this
Agreement, the prior agreement entered into by and between the Executive and the
Company, dated as of February 5, 1995, shall be terminated in all respects and
be superseded by this Agreement.
2. Employment and Duties.
2.1. Duties. Upon the terms and conditions herein set forth,
the Company employs the Executive, and the Executive hereby agrees to serve as
Chairman and Chief Executive Officer ('CEO'), effective October 16, 1995 (the
'Effective Date'). The Executive shall devote his best efforts to such duties
with the Company as the Board of Directors may direct.
2.2. Term. The term of the Executive's employment under this
Agreement (the 'Term') shall commence on the Effective Date and shall continue
until November 30, 1997. Thereafter, the Term may be extended by mutual consent
of the Company and the Executive. Nothing in this Section 2.2, however, shall
limit the right of the Company or the Executive to terminate the Executive's
employment hereunder on the terms and conditions set forth in Section 5.
3. Compensation and Other Benefits. Subject to the provisions of
this Agreement, the Company shall pay and provide the following compensation and
other benefits for services rendered during the Term:
3.1. Salary. During the Term, the Executive shall be paid
salary at a rate of $214,500 per annum ('Salary'), payable in substantially
equal installments (not less frequently than monthly) in accordance with the
Company's regular payroll practices.
3.2. Incentive Compensation. In addition to Salary, and
subject to attaining the targets set forth annually by the Board of Directors,
the Company shall pay to Executive an annual bonus (the 'Bonus') equal to one
hundred percent (100%) of Salary in a lump sum not later than March
31 of the year following the applicable year. This Bonus shall be paid in
accordance with the terms of the Company's short-term incentive bonus program.
3.3. Additional Benefits. At all times during the Term,
Executive shall be eligible and participate in all employee benefit programs or
plans now or hereafter provided for by the Company for its executive officers in
accordance with the provisions, terms and any limitations thereof, including,
without limitation, life insurance, health, disability and other fringe benefit
plans. Any benefits that are vested as of the Effective Date, including any
pension benefits described in Section 3.5, Executive's rights to retiree medical
benefits, and Executive's rights to the continution of the split dollar
insurance plan with respect to Executive, shall not be affected by this
Agreement.
3.4. Vacation. Executive shall be entitled to four (4) weeks
of paid vacation for each twelve-month period of employment during the Term.
3.5. Pension. The Executive shall continue to participate in
the Company's basic and supplemental retirement plans, and shall be credited
with all prior service for purposes of vesting and determining the Executive's
benefit under such plans.
3.6. Automobile Allowance. The Company shall provide Executive
with the use of a Company car and shall pay or reimburse Executive for all
reasonable expenses incurred in connection with such car for repairs, fuel,
maintenance and insurance, in accordance with the Company's automobile use
policy as established by the Board of Directors.
4. Stock Options. Effective October 16, 1995, the Executive shall be
granted options to purchase two hundred and fifty thousand (250,000) shares of
Common Stock of the Company at a per share exercise price of two dollars and
fifty cents ($2.50) (the 'Stock Options'). All prior options granted to the
Executive by the Company are hereby canceled and are no longer of any force or
effect. The Stock Options shall vest during the periods of the Executive's
continued employment with the Company as follows:
On or after twelve (12)
months from the Effective Date: 125,000 shares
On or after twenty (24)
months from the Effective Date: 125,000 shares
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The right of exercise shall be cumulative. All such options, to the extent
exercisable, must be exercised within six (6) years of the date hereof, and
shall be in the form of the Company's standard stock option agreements.
Notwithstanding anything contained herein to the contrary, if: (a) the
Executive's employment is terminated by the Company without Cause, or he resigns
for Good Reason, all Stock Options will be 100% vested and will extend for one
year after such termination or resignation; and (b) the Executive's employment
is terminated by the Company for Cause, or he resigns without Good Reason, all
Stock Options will terminate thirty (30) days after such termination or
resignation.
5. Termination of Employment.
5.1. Cause. 'Cause' shall mean fraud, negligence, conflict of
interest, willful malfeasance or willful misfeasance in office.
5.2. Good Reason. 'Good Reason' shall mean:
(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); or
(b) any failure by the Company to pay, or any reduction by the
Company of, the base Salary of the Executive as in effect on the
Effective Date or as the same may be increased from time to time
thereafter; or
(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
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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 Good
Reason shall not include any reduction in such benefit by the Company
on a Company-wide basis.
5.3. Notice of Good Reason.
Unless the Executive provides written notification of his
intention to resign within twenty (20) business days after the Executive knows
or has reason to know of the occurrence of any such event constituting Good
Reason, the Executive shall be deemed to have consented thereto and such event
shall no longer constitute Good Reason for purposes of this Agreement. If the
Executive provides such written notice to the Company, the Company shall have
twenty (20) business days from the date of receipt of such notice to effect a
cure of the event described therein and, upon cure thereof by the Company to the
reasonable satisfaction of the Executive, such event shall no longer constitute
Good Reason for purposes of this Agreement.
5.4. Termination For Cause; Resignation
Without Good Reason.
(a) Rights on Termination. If, prior to the expiration of the
Term, the Executive's employment is terminated by the Company for Cause
or the Executive resigns from this employment without Good Reason, the
Executive shall be entitled to payment of his Salary accrued through
the date of such termination or resignation, plus any accrued but
unpaid vacation benefits. Except as may be provided by law or expressly
provided under the term of any plan or arrangement applicable to the
Executive, the Executive shall have no right under this Agreement or
otherwise to receive any other compensation or benefits, or to
participate in any other plan, arrangement or benefit, with respect to
future periods after such termination or resignation of Effective.
(b) Notice of Termination for Cause. Termination of the
Executive's employment for Cause shall be communicated by delivery to
the Executive of a copy of a resolution duly adopted by the Board
finding that in the good faith opinion of the Board an event
constituting Cause for termination in accordance with Section 5.1 has
occurred and specifying the particulars thereof (a 'Notice of
Termination'). In the event of termination for Cause as a consequence
of the events described in Section 5.1 or any other event described
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in Section 5.1 that the Board determines in good faith is not
susceptible of cure, the effective date of termination shall be the
date of the Notice of Termination or such later date as may be
specified in such notice. In the event the Executive's employment is
terminated for Cause (unless the Board has determined in good faith
that the relevant giving rise to Cause is not susceptible of cure), the
Executive shall have twenty (20) business days from the date of receipt
of such Notice of Termination to effect a cure of the event described
therein and, upon cure thereof by the Executive to the reasonable
satisfaction of the Board, such event shall no longer constitute Cause
for purposes of this Agreement. The effective date of termination for
Cause that has been subject to a cure period as described in the
immediately preceding sentence which did not result in a cure to the
reasonable satisfaction of the Board shall be the date immediately
succeeding the last date of the twenty (20) business day cure period.
(c) Notice of Resignation Without Good Reason.
The date of resignation by the Executive without Good Reason
shall be the date specified in a written notice of resignation from the
Executive to the Company. The Executive shall provide at least sixty
(60) days' advance written notice of resignation.
5.5. Notice of Termination Without Cause.
The date of termination of employment without Cause shall be
the date specified in a written notice of termination to the Executive, provided
that the Company shall provide at least twenty (20) business days' written
notice of such termination.
5.6. Notice of Resignation for Good Reason.
The date of resignation for Good Reason shall be the date
specified in a written notice of resignation from the Executive to the Company,
provided, however, that no such written notice shall be effective unless the
twenty (20) business day cure period specified in Section 5.3 has expired
without the Company having corrected, to the reasonable satisfaction of the
Executive, the event or events.
5.7. Termination Without Cause;
Resignation For Good Reason.
(a) Severance Amount. If, prior to the expiration
of the Term, the Executive's employment is
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terminated by the Company without Cause, or the Executive resigns from
his employment for Good Reason, the Company shall pay to the Executive
his Salary accrued up to and including the effective date of such
termination or resignation, plus a pro rata share of unused vacation
for the full year plus a pro rata bonus under the Company Bonus Plan,
if the Board in its sole discretion so determines, all in a lump sum.
In addition, the Company shall pay to the Executive a severance payment
equal to the greater of (A) his salary, at the rate in effect at time
of such termination or resignation, for the remainder of the Term and
(B) one year's salary, at the rate in effect at the time of such
termination or resignation, in a lump sum (the 'Severance Amount').
(b) Other Benefits. In the event of the Executive's
termination without Cause or his resignation for Good Reason, the
Executive shall continue to participate on the same terms and
conditions as in effect immediately prior to such termination or
resignation in each pension, life insurance, health, disability and
other fringe benefit plan or program provided to the Executive pursuant
to Sections 3.3, 3.5 and 3.6 at the time of such termination or
resignation until the earlier of (A) six (6) months following the date
of such termination or resignation or, if the Executive is required to
elect such benefits immediately following such termination or
resignation, twelve (12) months following the date of such termination
or resignation and (B) such time as the Executive is eligible to be
covered by a comparable program of a subsequent employer. The Executive
agrees to notify the Company promptly if he becomes eligible to
participate in any pension or other benefit plans, programs or
arrangements of another employer. Notwithstanding anything contained
herein to the contrary, the Company shall have no obligation to
continue to maintain any plan or program solely as a result of the
provisions of this Agreement nor provide any level of benefits if
applicable law either prevents the Executive from participating in any
such plan or program or would cause the Company to suffer any loss of
tax benefits as a consequence of the Executive's continued
participation during the Term.
(c) Automobile: If the Company has provided the Executive with
the use of an automobile on a continuous basis prior to the termination
without Cause or resignation for Good Reason, 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
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in effect two years after the date of the termination without Cause or
resignation for Good Reason.
5.8. Termination Due to Death or Disability.
(a) In the event of the Executive's disability, as hereinafter
defined, or death, the Company shall be entitled to terminate his
employment. If the Executive's employment shall terminate due to
disability or death, any Salary earned by the Executive up to the date
of such termination and any pro rata bonus to that date shall be paid
to the Executive or his estate, as appropriate.
(b) As used herein, the term 'disability' shall mean physical
or mental disability as a result of which the Executive is unable to
perform his duties hereunder on substantially a full-time basis for any
period of four (4) consecutive months. Any dispute as to whether or not
the Executive is so disabled shall be resolved by a physician,
reasonably acceptable to the Executive and the Board, whose
determination shall be final and binding upon both the Executive and
the Company.
6. Nondisclosure of Confidential Information. The Executive shall be
bound by the confidentiality policy of the Company. 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.
7. Arbitration. Any controversy or claim arising out of or relating to
this Agreement or the breach of this Agreement that 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, with all hearings to be
conducted in Colorado. 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.
8. 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
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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.
9. 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 9 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.
10. 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.
11. Miscellaneous. This Agreement is to be construed and enforced in
accordance with the internal substantive laws of the State of New York,
irrespective of the principles of conflicts of law. 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.
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IN WITNESS WHEREOF, the Company and the Executive have
executed this Agreement as of the day and year first above written.
NAI TECHNOLOGIES, INC. XXXXXX X. XXXXXXX
By: /s/ Xxxxxxx X. Xxxxxxxxx /s/ Xxxxxx X. Xxxxxxx
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Title: Executive Vice President
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