Exhibit 1
NAI TECHNOLOGIES, INC.
2405 Trade Centre Avenue
Longmont, Colorado 80503
May 9, 1996
Mr. Charles S. Holmes
P.O. Box 2850
Southampton, New York 11969
Re: NAI Technologies, Inc. 12%
Convertible Subordinated
Promissory Notes
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Dear Charlie:
Reference is made to the 12% Convertible Subordinated
Promissory Note due 2001 of NAI Technologies, Inc. (the "Company") in the
aggregate unpaid principal amount of $2,000,000 (the "Note") held by you. In
consideration of your converting such Note into 1,000,000 shares (the
"Conversion Shares") of common stock, par value $.10 per share (the "Common
Stock"), of the Company as provided in Section 6 of the Note which will enable
the Company to achieve recompliance with the Net Tangible Asset Requirement of
The Nasdaq Stock Market ("Nasdaq"), the Company agrees to immediately grant you
warrants to purchase 300,000 shares of Common Stock at any time and from time to
time on or before February 15, 2002 at an exercise price of $3.00 per share,
subject to adjustment in certain events. Such warrants will not contain the
EBITDA adjustment to the exercise price but will otherwise be similar to the
warrants purchased by you with your Note and will be delivered to you as soon as
practicable.
If the foregoing is acceptable to you, please so indicate by
signing your name in the space provided below.
Very truly yours,
NAI TECHNOLOGIES, INC.
By: /s/ Robert A. Carlson
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Robert A. Carlson
Chairman and Chief
Executive Officer
Accepted and agreed as of
the date first above written:
/s/ Charles S. Holmes
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Charles S. Holmes
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