Exhibit 10(x)
EMPLOYMENT AGREEMENT
This Employment Agreement, entered into as of the 1st day of January,
1997 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 effectiveness of this
Agreement, the prior agreement entered into by and between the Executive and the
Company, dated as of October 16, 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be superseded by this Agreement.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, effective January 1, 1997 (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 December 31, 1997, unless extended by the Executive. On or within 30 days
prior to each of January 1, 1998 and January 1, 1999, the Executive may extend
the Term for a one year period (each an "Executive Extension"). 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 4.
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 $260,000 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 the Company
shall pay to Executive bonuses as follows:
(a) $50,000 on each of January 15, 1998 and January 15,
1999, on the occurrence of an Executive Extension if the Executive
agrees to continue in his role as Chairman of the Company (the "Chairman
Bonus") until December 31, 1998 and December 31, 1999, respectively;
(b) $50,000 on each of January 15, 1998 and January 15,
1999, on the occurrence of the Executive Extension if the Executive
agrees to continue his employment as Chief Executive Officer of the
Company (the "CEO Bonus" and, together with the Chairman Bonus, the
"Bonus")until December 31, 1998 and December 31, 1999, respectively; and
(c) subject to attaining the targets set forth annually by
the Board of Directors, an annual bonus equal to fifty percent (50%) 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 (the "Company Bonus
Plan").
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.
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. 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 from time to time.
3.6. Acknowledgement. Executive acknowledges that he is entitled
to no other compensation or benefits other than those provided for in paragraphs
3.1 through 3.6 above, including, but not limited to, any compensation or
benefits Executive has received or is receiving pursuant to any prior contract
or other agreement between him and the Company.
-2-
4. Termination of Employment.
4.1. Cause. "Cause" shall mean fraud, conflict of interest,
willful malfeasance or willful misfeasance in office.
4.2. 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 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.
4.3. 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
-3-
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.
4.4.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 4.1 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 4.1 or any other event described in
Section 4.1 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 event
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
-4-
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.
4.5. 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.
4.6. 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 4.3 has expired
without the Company having corrected, to the reasonable satisfaction of the
Executive, the event or events.
4.7.Termination Without Cause; Resignation For Good Reason.
(a) Severance Amount. If, prior to the expiration of the Term,
the Executive's employment is 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 the
Executive (i) on the dates set forth in Section 3.2(a) and (b), the
Bonus and if such termination should occur prior to December 31, 1997
(ii) in a lump sum, a severance payment equal to the greater of (A) his
salary, at the
-5-
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 (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 and 3.5 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 in effect two years
after the date of the termination without Cause or resignation for Good
Reason.
4.8. 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
-6-
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. In addition, the Bonus due to the Executive
shall be paid on the dates set forth in Section 3.2 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.
5. 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.
6. 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 New York, New York. 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.
-7-
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,
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.
-8-
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
------------------------ ----------------------
Title:Executive Vice President
Treasurer and Secretary
-9-
