EXHIBIT 99.1
SECOND AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
XXXXXXX X. XXXXX AND TII NETWORK TECHNOLOGIES, INC.
This AGREEMENT, this 17th day of May, 2005, by and between TII Network
Technologies, Inc., a Delaware corporation (hereinafter designated and referred
to as "Company"), and Xxxxxxx X. Xxxxx (hereinafter designated and referred to
as the "Employee").
WHEREAS, the Company and the Employee entered into an Employment Agreement,
dated as the 7th day of August, 1992, which Employment Agreement was amended and
restated as of the 1st day of August, 1997 and as of the 1st day of July, 2003;
and
WHEREAS, the Company desires to further amend various provisions of and, as
so amended, restate the existing amended and restated Employment Agreement,
while continuing the employ of the Employee as President and Chief Executive
Officer of the Company and as Vice Chairman of its Board of Directors, all in
accordance with the provisions hereinafter set forth; and
WHEREAS, the Employee is willing to so amend and restate the existing and
restated Employment Agreement and continue such employment by the Company, all
in accordance with the provisions hereinafter set forth; and
WHEREAS, the Company and the Employee agree that with the execution of this
amended and restated Employment Agreement all prior employment agreements
between the Employee and the Company are hereby terminated.
NOW, THEREFORE, in consideration of the promises and mutual covenants herein
contained, the parties hereto agree as follows:
1. Term: The term of this Agreement shall be for a period commencing on the
date hereof and ending on June 30, 2006; provided, however, on such date, and
each one (1) year anniversary thereafter, the term shall automatically be
extended for an additional period of one (1) year, unless either the Company or
the Employee shall give the other party at least three (3) months written notice
prior thereto that such party does not desire that the then term hereof be so
extended, in which event the term hereof shall not be extended beyond the then
current expiration date thereof. Notwithstanding the foregoing, this Agreement
shall be subject to earlier termination in accordance with paragraph 9.
2. Employment: Subject to the terms and conditions and for the compensation
and other benefits hereinafter set forth, the Company hereby agrees to employ
the Employee for and during the term of this Agreement as its President and
Chief Executive Officer. The Employee further agrees to serve, if so elected, as
a director and as Chairman or as Vice Chairman of the Company's Board of
Directors. The Employee's powers and duties shall be determined by the Board of
Directors of the Company (the "Board of Directors") from time to time in
accordance
with the Company's By-Laws but, in any event, shall be those of an executive
nature which are appropriate for a president and chief executive officer and, if
the Employee is elected to such positions, Chairman or Vice Chairman of the
Board. The Employee does hereby accept such employment and agrees to devote
substantially all of his full business time, attention and energy and render his
reasonable business efforts and skills to the business of the Company; provided,
however, that the Company recognizes that the Employee may pursue other
activities, such as charitable and civic activities not in competition with the
business of the Company, so long as the Employee's discharge of his duties to
such activities does not have a material adverse impact on the discharge of his
duties to the Company. The Employee shall report to the Board of Directors.
3. Compensation:
(A) Salary: During the term of this Agreement, the Company agrees to pay
the Employee, and the Employee agrees to accept, a salary of not less than Three
Hundred Thousand Dollars ($300,000) per year payable in accordance with the
Company's payment policies for executive officers, for all services rendered by
the Employee hereunder.
(B) Bonus: As additional compensation, the Company may pay the Employee
periodic bonuses as determined by the Board of Directors (or the Compensation
Committee of the Board of Directors or other committee of the Board of Directors
so authorized).
(C) Increases: The Employee's annual salary and other benefits provided
for hereunder are subject to periodic increases, but not decreases, at the
discretion of the Board of Directors (or the Compensation Committee of the Board
of Directors or other committee of the Board of Directors so authorized).
4. Expenses:
The Company shall reimburse the Employee for all reasonable and actual
business expenses incurred by him in connection with his service to the Company
upon submission by him of appropriate vouchers and expense account reports in
accordance with the Company's expense reimbursement policies.
5. Benefits:
(A) Insurance: In addition to the salary and bonus to be paid to the
Employee hereunder, the Company shall continue to maintain family medical and
dental insurance, and long term disability insurance presently maintained for
the benefit of Employee, in each case, at levels and on terms no less favorable
to the Employee than are currently in effect for the Employee. During the term
of this Agreement, in addition to any group life insurance plan or program in
which Employee is eligible to participate, the Company shall pay the premiums on
(but the Company shall not be required to pay more than $24,000 per annum) one
or more life insurance policies that Employee shall elect to acquire on his
life, with Employee to be the owner of, and have the right to designate the
beneficiaries of, such policy or policies. Such premiums shall be paid annually
at the commencement of the policy year of each policy.
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Employee agrees that it is his responsibility to locate and procure such life
insurance policies. The Employee and his dependents shall also be entitled to
participate in such other benefit plans and arrangements as are hereafter
extended to executive employees of the Company and their dependents in
accordance with the terms of such plans or arrangements.
(B) Vacation: The Employee shall be entitled to take up to four weeks of
paid vacation annually, pursuant to the Company's vacation policy, at a time or
times mutually convenient to the Company and the Employee.
6. Discoveries, etc.:
(A) The Company shall be the owner, without further consideration, of
all rights of every kind in and with respect to any reports, materials,
inventions, processes, discoveries, improvements, modifications, know-how or
trade secrets heretofore or hereafter made, discovered or conceived by the
Employee in connection with the Employee's performance of his duties pursuant to
this Agreement or relating to the business of the Company (hereinafter
designated and referred to as "Property Rights"), and the Company shall be
entitled to utilize and dispose of the Property Rights in such manner as it may
determine.
(B) The Employee agrees to and shall promptly disclose to the Company
all Property Rights (whether or not patentable) made, discovered or conceived of
by him, alone or with others, at any time during his employment with the
Company. Any such Property Rights will be the sole and exclusive property of the
Company, and the Employee will execute any assignment reasonably requested by
the Company of his right, title or interest in any such Property Rights. In
addition, the Employee will also provide the Company with any other instrument
or document reasonably requested by the Company, at the Company's expense, as
may be necessary or desirable in applying for and obtaining patents with respect
to such Property Rights in the United States or any foreign country. The
Employee also agrees to cooperate reasonably with the Company in the prosecution
or defense of any patent claims or litigation or proceedings involving
inventions, trade secrets, trademarks, service marks, secret processes,
discoveries or improvements related to the foregoing, whether or not he is
employed by the Company at the time; provided, however, if the Employee is not
employed by the Company at such time, he will be entitled to receive reasonable
compensation for his time in this regard on a per diem basis (computed by
dividing his annual salary rate in effect immediately prior to his cessation of
employment with the Company (or, if greater, at the highest annual salary rate
in effect at any time during the one-year period preceding the date of such
termination) by 242 days), as well as reimbursement of all reasonable
out-of-pocket expenses actually and reasonably incurred by him in connection
with the performance of such services. The Employee's obligation under this
subparagraph 6(B) shall continue during the Restricted Period provided for in
subparagraph 7(D) (the "Restricted Period").
(C) This paragraph 6 shall not be applicable to any inventions or
discoveries made by the Employee outside of the scope of his employment and
which are unrelated to the business of the Company.
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7. Confidential Information; Non-competition:
(A) The Employee acknowledges the time and expense incurred by the
Company and its subsidiaries in connection with developing proprietary and
confidential information in connection with their businesses and operations. The
Employee agrees that he will not, without the consent of the Board of Directors,
at any time divulge, communicate or use to the detriment of the Company or any
of its present or future subsidiaries (collectively, the "Group"), or
misappropriate in any way, any confidential information or trade secrets
relating to the Group, including, without limitation, business strategies,
operating plans, acquisition strategies and terms and conditions (including the
identities of, and any other information concerning, possible acquisition
candidates), projected financial information, market analyses, personnel
information, trade processes, manufacturing methods, know-how, customer lists
and relationships, supplier lists and relationships, or other non-public
proprietary and confidential information relating to the Group. The foregoing
shall not apply to information (i) after it is published or becomes part of the
public domain through no fault of the Employee (disclosure in his capacity as
President or Chief Executive Officer of the Company believed, in his reasonable
business judgment, to be for the benefit of the Company shall not be deemed
fault) or (ii) which is disclosed to the Employee after the Employee is no
longer employed by the Company by a third party who was not known to the
Employee to be under any obligation of confidence or secrecy to the Company with
respect to such information at the time of disclosure to the Employee.
(B) For the Restricted Period under subparagraph 7(D), if any, the
Employee shall not, directly or indirectly, for himself or on behalf of any
other person, firm or entity, employ, engage or retain any person who, at any
time during the 12-month period preceding the end of the term of this Agreement,
was an employee of or consultant to any member of the Group or contact any
supplier, customer or employee or consultant from the Group for the purpose of
diverting any such supplier, customer, employee or consultant from any member of
the Group or otherwise interfering with the business relationship of any member
of the Group with any of the foregoing.
(C) For the Restricted Period under subparagraph 7(D), if any, the
Employee shall not, directly or indirectly, engage in or serve as a principal,
partner, joint venture member, manager, trustee, agent, stockholder, director,
officer or employee of, or consultant or advisor to, or in any other capacity,
or in any manner, own, control, manage, operate, or otherwise participate,
invest, or have any interest in, or be connected with, any person, firm or
entity (a "Competitor") that engages in, directly or indirectly, the manufacture
and sale of surge protector devices for the telephone industry, or any other
activity which is the same as or similar to, or competitive with, the business
of any member of the Group conducted within the 12 months preceding the end of
the term of this Agreement.
(D) The Restricted Period shall be one year (commencing on the date of
termination of the Employee's employment) in the case of (i) the Company's
termination of Employee's employment due to the Employee's Disability, pursuant
to subparagraph 9(B) or for Cause pursuant to subparagraph 9(C) or (ii) the
Employee's termination of his employment either
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by resignation without Good Reason or if the term of this Agreement expires
based on a notice from the Employee not to extend the term of this Agreement,
with the Company having the right (but not the obligation) to extend the
Restricted Period for a second year by giving the Employee notice of its
election at least 120 days prior to the beginning of such additional year, in
which event the Company shall pay to the Employee an amount equal to 50% of the
Employee's annual salary at the rate in effect immediately prior to his
cessation of employment with the Company (or, if greater, at the highest annual
salary rate in effect at any time during the one-year period preceding the date
of such termination). In the case of the Employee's termination of his
employment for Good Reason pursuant to subparagraph 9(D) or the Company's
termination of the Employee's employment for any reason (other than as a result
of the Employee's death, Disability or for Cause, pursuant to subparagraphs
9(A), 9(B) and 9(C), respectively) including, without limitation, if the term of
this Agreement expires based on a notice from the Company not to extend the term
of this Agreement, pursuant to paragraph 1, the Restricted Period shall be one
year (commencing on the date of termination of the Employee's employment) if the
Company, within fifteen (15) days of receipt of Employee's termination of
employment for Good Reason or contemporaneously with the Company's termination
of the Employee's employment (other than as a result of the Employee's death,
Disability or for Cause), elects to invoke the Restricted Period, in which event
the Company shall pay to the Employee an amount equal to the Employee's annual
salary at the rate in effect immediately prior to his cessation of employment
with the Company (or, if greater, at the highest annual salary rate in effect at
any time during the one-year period preceding the date of such termination),
with the Company having the right (but not the obligation), if it had invoked
the Restricted Period, to extend the Restricted Period for a second year by
giving the Employee notice of its election at least 120 days prior to the
beginning of such second year, in which event the Company shall pay to the
Employee an amount equal to 50% of the amount that was payable with respect to
the first year of such Restricted Period. Amounts payable for such Restricted
Periods of this subparagraph 7(D) shall be payable in equal monthly
installments, with the first such installment payable on the first day of the
month which the Restricted Period begins. All amounts under this subparagraph
7(D) shall be in addition to any amount otherwise payable under this Agreement
and shall continue to be paid regardless of whether the Employee shall die after
the Company shall have elected to invoke or extend the Restricted Period, as the
case may be.
8. Enforcement of Covenants in Paragraphs 6 and 7.
(A) The Employee acknowledges that the Restricted Period is, in light of
the circumstances under which it is effective, including any payments to be made
to him under subparagraph 7(D), reasonable, and the Company acknowledges that
such payments, to the extent required, are an essential inducement to the
Employee's agreeing to the provisions of paragraph 7. The Employee shall be
bound by paragraphs 6 and 7 (assuming full payments provided for in subparagraph
7(D) are made) to the maximum extent permitted by law, provided, however, that
the Company informs the Employee in writing within 30 days of becoming aware of
an event which the Company believes, in its reasonable judgment, is a material
violation of paragraph 6 or 7, and the basis for such judgment. Should the
Company fail to so inform the Employee of such alleged material violation in a
timely manner, but not greater than 30 days, the Company shall forfeit its
rights to claim such violation against the Employee pursuant to this paragraph.
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(B) Upon receipt of such notification, Employee shall have thirty (30)
days to either cure such material violation or inform the Company in writing of
his disagreement of the Company's judgment. Should the Company and the Employee
be unable to reach agreement that a material violation has occurred or that the
material violation was cured, such dispute shall be taken to Arbitration,
pursuant to paragraph 12. During such Arbitration the Company shall continue to
make all payments to Employee contemplated under this Agreement, including but
not limited to payment under paragraph 7.
(C) The parties further agree that, if any of the provisions hereof
shall for any reason be held to be excessively broad as to duration,
geographical scope, property or subject matter, such provision shall be
construed by limiting and reducing it so as to be enforceable to the maximum
extent compatible with the applicable law.
(D) The Employee acknowledges that the remedy at law for any material
violation of the provisions of paragraphs 6 and 7 would be inadequate.
Therefore, the Employee agrees and consents that if he materially violates, or
is found through the Arbitration process to be violating, the provisions of
paragraph 6 or 7, the Company, in addition to any other rights and remedies
available under this Agreement or otherwise, shall be entitled to an injunction
to be issued or specific performance to be required restricting the Employee
from committing or continuing any such material violation.
9. Termination:
(A) Death:
(a) In the event of the Employee's death during the term of his
employment, the Employee's designated beneficiary or, in the absence of such
beneficiary designation, his estate, shall be entitled to payment of all
compensation accrued through the date of death and a continuation of the
Employee's annual salary at the rate in effect immediately prior to his death
(or, if greater, at the highest annual salary rate in effect at any time during
the one-year period preceding the Employee's date of death) for a period of one
year from the date of death. In addition, the Employee's beneficiary and/or
dependents shall be entitled, for the same one-year period, to continuation, at
the Company's expense, of such benefits as are at the time of the Employee's
death being provided to them under subparagraph 5(A) hereof and any additional
benefits as may be provided during such one-year period to dependents of the
Company's executive officers in accordance with the terms of the Company's
policies and practices. In addition, any stock option granted to the Employee
which has not, by its express terms, vested shall be deemed to have vested as of
the date of his death and shall thereafter be exercisable by the Employee's
beneficiary or estate for the maximum period of time allowed for exercise
thereof under the terms of such option but not less than six months following
the Employee's date of death.
(b) In the event of Employee's death, the Company shall use its best
efforts to assist Employee's designated beneficiary, or, in the absence of such
beneficiary designation, his estate, in all matters related to the benefits
discussed in this subparagraph 9(A)
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and subparagraph 5(A), including, but not limited to, the filing and pursuit of
all claims under related insurance policies, rights under stock options and
claims with the government, if any.
(B) Disability:
(a) In the event the Employee shall suffer a Disability (as defined
below) for a period of at least six consecutive months or nine months in the
aggregate in any 12-consecutive month period, the Company shall have the option
at any time thereafter to notify the Employee in writing of the Company's
election to terminate the Employee's employment hereunder for Disability. Such
termination will become effective on the date fixed by the Board of Directors in
a written notice of termination to the Employee (but not less than 30 days after
such notice is given), unless the Employee shall have returned to perform his
duties prior to the effective date of such termination. The Employee's
compensation, as provided for hereunder, shall continue to be paid during any
period of Disability prior to and including the effective date of the
termination of the Employee's employment for Disability and the Employee shall
be entitled to (x) a continuation of the Employee's annual salary (at the rate
in effect immediately prior to his termination by reason of Disability or, if
greater, at the highest annual salary rate in effect at any time during the
two-year period preceding the date of termination by reason of Disability) from
the date of termination of employment to the expiration of two years from the
date of such termination for Disability (in the event of the Employee's death
during such two-year period, Employee's designated beneficiary or, in the
absence of such designated beneficiary, his estate, shall be entitled to receive
such payments for the balance of such two-year period) and (y) any payments
required if the Company elects to extend the one-year Restricted Period pursuant
to subparagraph 7(D) (if the Employee shall die prior to the expiration of the
Restricted Period, and the Company may have theretofore elected to extend the
Restricted Period, the Employee's designated beneficiary or, in the absence of
such beneficiary, his estate, shall be entitled to receive such payments). Such
termination shall not affect or impair any right the Employee may have under any
policy of long-term disability insurance or benefits then maintained on his
behalf by the Company. In addition, for a period of two years following
termination of the Employee's employment for Disability, the Employee and his
dependents, as the case may be, shall continue to receive the benefits set forth
under subparagraph 5(A) hereof, as well as any additional benefits as may be
provided during such two-year period to executive employees or their dependents
during such period in accordance with the terms of the Company's policies and
practices. Any stock option granted to the Employee which has not, by its
express terms, vested shall be deemed to have vested on the date of such
termination of employment and shall thereafter be exercisable by the Employee,
his beneficiary, conservator or estate, as applicable, for the maximum period of
time allowed for exercise thereof under the terms of such option but not less
than six months following the termination of Employee's employment pursuant to
this subparagraph (B).
(b) "Disability," as used herein, shall mean the inability of the
Employee, due to physical or mental illness, injury or disease to substantially
perform his normal duties as President and Chief Executive Officer. If the
Employee and the Company shall disagree as to whether the Employee is Disabled
pursuant to this definition, then such dispute shall be taken to Arbitration
pursuant to paragraph 12. During such Arbitration process the Company shall
continue to make all compensation payment and retain all benefits due Employee
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contemplated under this Agreement and the Employee shall retain all authorities
granted him under this Agreement.
(c) In the event of Employee's Disability, the Company shall use its
Best Efforts to assist Employee and his dependents in the payment in a timely
manner of all compensation and other benefits discussed in this subparagraph
9(B), including, but not limited to, the filing and pursuit of all claims under
related insurance policies, rights under stock options and all such assistance
as may be requested in filing for disability claims with the government.
(C) By the Company For Cause:
(a) The Company shall have the right, before the expiration of the
term of this Agreement, to terminate the Employee's employment and to discharge
the Employee for cause (hereinafter "Cause"), in which event all compensation to
Employee shall cease to accrue upon such discharge. For the purposes of this
Agreement, the term "Cause" shall mean and be limited to (i) the Employee's
conviction of a felony involving moral turpitude; and (ii) the continued and
willful failure by the Employee to substantially and materially perform his
duties hereunder (which shall not include any business judgment made in good
faith by the Employee) which failure is not cured in accordance with (b) below.
(b) In the event the Company intends to discharge Employee for
Cause, the Board of Directors shall provide the Employee with reasonable notice
(but not less than 30 days) of its intention to effect a termination for Cause.
Any such notice shall be in writing and shall specify the grounds for the
existence of Cause, and provide the Employee with an opportunity of not less
than 30 days following his receipt of such notice to either cure the grounds for
termination, or dispute the Cause. Should the Employee dispute the Cause for
termination and should the Company and the Employee be unable to resolve the
dispute, such dispute shall be taken to binding Arbitration, pursuant to
paragraph 12. During such Arbitration process the Company shall continue to make
all compensation payment and retain all benefits due Employee contemplated under
this Agreement and the Employee shall retain all authorities granted him under
this Agreement.
(c) If the Employee does not dispute the Cause, or if the
Arbitration process determines that there is sufficient Cause for termination
and, thereafter, if Employee does not in a timely manner (but not greater than
30 days) cure such Cause, the Company may elect to terminate the Employee's
employment for Cause under subparagraph (C)(a) above, such termination shall
become effective five days after the Company gives written notice of such
termination to the Employee.
(d) In the event of a termination of the Employee's employment for
Cause in accordance with the provisions this subparagraph 9(C), the Company
shall have no further obligation to the Employee, except for the payment of all
compensation accrued through the date of termination of the Employee's
employment, any other benefits to which he or his dependents may be entitled by
law and the payments required if the Company elects to extend the one-year
Restricted Period pursuant to subparagraph 7(D).
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(D) By the Employee for Good Reason:
The Employee shall have the right to terminate his employment at any
time during the term of this Agreement for "good reason" (hereinafter "Good
Reason"). The term "Good Reason" shall mean:
(a) A "Change of Control" of the Company. For purposes hereof, a
"Change in Control" shall be deemed to have occurred:
(i) when any "person" or "group" (as such term is defined in
Sections 3(a)(9) and 13(d)(3), respectively, of the Act), other than Employee or
a group of which Employee voluntarily is a member, becomes a beneficial owner
(within the meaning of Rule 13d-3 promulgated under the Act), directly or
indirectly, of twenty percent (20%) or more of either (x) the then outstanding
shares of the Company's common stock or (y) securities of the Company
representing twenty percent (20%) or more of the combined voting power of the
Company's then outstanding securities having the right to vote generally in the
election of directors provided, however, that the following acquisitions shall
not constitute a Change in Control: (x) any acquisition by the Company or any of
its subsidiaries, (y) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any of its subsidiaries or (z)
any acquisition by any corporation with respect to which, following such
acquisition, more than 60% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or indirectly, by
all of substantially all of the persons who were the beneficial owners,
respectively, of stockholders of the Company immediately prior to such
acquisition in substantially the same proportions as their ownership of stock of
the Company immediately prior to such acquisition;
(ii) when individuals who are members of the Company's Board of
Directors as of the date hereof (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board of Directors; provided, however,
that any individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's stockholders, was approved
by a vote of at least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of either an actual or
threatened solicitation of proxies or consents not by or on behalf of at least a
majority of the Incumbent Board; or
(iii) when the stockholders of the Company approve a
reorganization, merger or consolidation of the Company which results in the
outstanding common stock or voting securities of the Company outstanding
immediately prior thereto do not, following such reorganization, merger or
consolidation, represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least 80% of the combined
voting power of the voting securities of the Company or such surviving entity
outstanding immediately after such reorganization, merger or consolidation in
substantially the same proportions as their ownership, immediately prior to such
reorganization, merger or
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consolidation; or
(iv) when the stockholders of the Company approve a plan of
complete liquidation of the Company; or
(v) when the stockholders of the Company approve an agreement
for the sale or other disposition by the Company of all or substantially all of
the Company's assets in a transaction in which the holders of the outstanding
common stock or voting securities of the Company outstanding immediately prior
thereto do not, following such sale or disposition, represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 80% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such sale or disposition.
Employee may terminate his employment at any time after a Change in
Control for Good Reason, if Employee makes, in his reasonable judgment, a
determination that such Change in Control has caused Employee to be unable to
effectively carry out the authorities, powers, functions or duties attached to
his position with the Company as constituted immediately prior to the Change in
Control, which situation is not remedied within thirty (30) calendar days after
receipt by the Company of written notice from Employee of such determination;
(b) notice by the Company, pursuant to paragraph 1, of the Company's
desire not to extend the Employment Agreement, for any reason, except Employee's
death, Employees Disability or Cause, as discussed in subparagraphs 9(A), 9(B)
and 9(C), respectively;
(c) the failure to elect or appoint, or re-elect or re-appoint, the
Employee to, or removal or attempted removal of the Employee from, his position
as President and Chief Executive Officer of the Company (except in connection
with the proper termination of the Employee's employment by the Company by
reason of death, Disability or Cause); or the assignment to the Employee of any
duties inconsistent with the status of the Employee's office and/or position
with the Company or an adverse change in the nature or scope of the authorities,
powers, functions or duties, or the willful delay by the Company for more than
ten (10) business days in the payment to Employee, when due, of any part of his
compensation;
(d) a reduction in the Employee's salary or benefits (other than a
discretionary bonus under subparagraph 3(B) above);
(e) the Company's failure or refusal to perform any obligations
required to be performed by it in accordance with this Agreement after a
reasonable (not less than 10 days) notice by Employee and an opportunity to cure
same;
(f) a failure by the Company to obtain the assumption of, and
agreement to perform, this Agreement by any successor to the Company; or
(g) a change in the location at which substantially all of the
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Employee's duties with the Company are to be performed to a location that is not
on Long Island, New York, where the Employee is currently performing
substantially all of his duties.
An election by the Employee to terminate his employment for Good Reason
under the provisions of this subparagraph 9(D) shall not be deemed a voluntary
termination of employment of the Employee for the purpose of interpreting the
provisions of any of the Company's employee benefit plans, programs, or
policies. The Employee's right to terminate his employment for Good Reason shall
not be affected by his illness or incapacity, whether physical or mental, unless
the Company shall at the time be entitled to terminate his employment under
paragraph 9(B) of this Agreement.
In the event of termination of Employee's employment by Employee for
Good Reason, pursuant to this subparagraph 9(D), the Employee shall be entitled
to severance payments pursuant to subparagraph 9(F) and the payments required if
the Company elects to impose and, if imposed, extend, the Restricted Period
under subparagraph 7(D).
(E) Resignation: In the event the Employee resigns without Good Reason
prior to the expiration of the Agreement hereof, the Employee shall be entitled
to receive only compensation accrued through such resignation date, such
benefits to which he is entitled by law and the payments required if the Company
elects to extend the one-year Restricted Period pursuant to subparagraph 7(D).
(F) Severance:
(a) If the Employee's employment hereunder shall be terminated by:
(i) the Company for any reason other than the Employee's death, Disability or
for Cause or (ii) by the Employee for Good Reason, Employee shall thereupon be
entitled to receive as severance pay, in a lump sum, an amount equal to two (2)
times the sum of the Employee's annual salary rate in effect immediately prior
to his cessation of employment with the Company (or, if greater, the highest
annual salary rate in effect at any time during the one-year period preceding
the date of such termination) and all bonuses paid or payable in respect of the
Company's most recent fiscal year ended prior to the date of such termination
(or, if greater, the bonuses paid in respect of the Company's current fiscal
year or next most recent fiscal year ended prior to the date of such
termination). In addition, during the two-year period following the date of such
termination, the Employee and his dependents shall continue to receive the
benefits set forth in subparagraph 5(A) hereof, as well as any additional
benefits as may be provided to executive officers or their dependents during
such period in accordance with the Company's policies and practices. The
Employee shall also be entitled to receive the payments required if the Company
elects to impose and, if imposed, extend the Restricted Period under
subparagraph 7(D). Furthermore, any stock options granted to the Employee which
has not, by its express terms, vested shall be deemed to have vested on the date
of such termination of employment, and shall thereafter be exercisable for the
maximum period of time allowed for exercise thereof under the terms of such
option, assuming that the Employee's employment with the Company had been
terminated by the Company other than for Cause or by the Employee for Good
Reason but for not less than six months following such termination of Employee's
employment.
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(b) Notwithstanding any other provision of this paragraph 9, if it
is determined that part or all of the compensation or benefits to be paid to the
Employee under this Agreement in connection with the Employee's termination of
employment, or under any other plan, arrangement or agreement, constitutes a
"parachute payment" under section 280G(b)(2) of the Internal Revenue Code of
1986, as amended, then, the amount constituting a parachute payment, which would
otherwise be payable to or for the benefit of the Employee, shall be reduced,
but only to the extent necessary, so that such amount would not constitute a
parachute payment. Any determination that a payment constitutes a parachute
payment shall be made as promptly as practicable (but no more than 30 days)
following the Employee's termination of employment by the independent public
accountants that audited the Company's financial statements for the fiscal year
preceding the year in which Employee's employment was terminated, whose
determination shall be final and binding in all cases. Unless the Employee
receives notice that a payment (or payments) will constitute a parachute payment
within 30 days of the date the Employee's employment terminates hereunder, no
payment (or payments) shall be deemed to constitute a parachute payment. If the
determination made pursuant to this subparagraph (b) results in a reduction of
the payments that would otherwise be paid to the Employee, the Employee may
elect, in his sole discretion, which and how much of any particular entitlement
shall be eliminated or reduced (giving effect to any payments and benefits that
may have been received prior to such termination) and shall advise the Company
in writing of his election within 10 days of the determination of the reduction
in payments. If no such election is made by the Employee within such 10-day
period, the Company shall determine which and how much of any entitlement shall
be eliminated or reduced and shall notify the Employee promptly of such
determination. Within 10 days following such determination and the elections
hereunder, the Company shall pay to, or distribute to or for the benefit of, the
Employee such amounts as are then due to the Employee under this Agreement and
shall timely pay to, or distribute to or for the benefit of, the Employee in the
future such amounts as become due to the Employee under this Agreement.
(G) Extension of Benefits: Any extension of benefits following the
termination of employment provided for herein shall be deemed to be in addition
to, and not in lieu of, any period for benefits continuation provided for by law
at the Company's, the Employee's or his dependents' expense.
10. Indemnification: The Company hereby agrees to indemnify and hold the
Employee harmless to the extent of any and all claims, suits, proceedings,
damages, losses or liabilities incurred by the Employee and arising out of any
acts or decisions done or made in the authorized scope of his employment
hereunder. The Company hereby agrees to pay all expenses, including reasonable
attorney's fees, actually and reasonably incurred by the Employee in connection
with the defense of any such action, suit or proceeding and in connection with
any appeal thereon, including the cost of court settlements. Nothing contained
herein shall entitle the Employee to indemnification by the Company in excess of
that permitted under applicable law or limit or preclude the Employee's
entitlement to indemnification under the Company's Certificate of Incorporation,
By-Laws, statute, common law or any other contract or insurance to which the
Employee or the Company may now or in the future be parties, or to which the
Employee may be or may become a third party beneficiary. This paragraph 10 shall
survive the termination of this Agreement.
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11. Mitigation: The Employee shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other employment or
otherwise, nor shall the amount of any payment provided for in this Agreement be
reduced by any compensation earned by the Employee as the result of employment
by another employer after the date of his termination or otherwise.
12. Arbitration: In the event any dispute shall arise between Employee and
Company with respect to any of the terms and conditions of this Agreement or
default thereunder, then such dispute shall be submitted and finally settled by
arbitration which shall be held in New York, pursuant to the prevailing Rules of
the American Arbitration Association. The arbitrators shall include one nominee
of the Company and one nominee of the Employee and a third person jointly
selected by said nominees. In the event the respective nominees of the Company
and the Employee are unable to jointly select such third person, then the
Company and the Employee shall request the American Arbitration Association at
New York to designate the third arbitrator. As soon as the arbitrators are
appointed, a meeting will be held between the arbitrators and the parties to
schedule all activities necessary to present the dispute to the arbitrators for
their decision on an expedited basis with the goal of resolving the dispute. The
arbitration award shall be given in writing within three months after selection
of the third arbitrator; shall be final and binding on the parties with respect
to the subject matter in controversy and shall be enterable in any court having
jurisdiction over the parties. The Company shall bear the expenses in such
arbitration, including attorney fees.
13. Waiver: Any waiver by either party of a breach of any provision of this
Agreement shall not operate as or be construed as a waiver of any subsequent
breach hereof or of any other provision of this Agreement.
14. Governing Law: The validity of this Agreement or of any of the
provisions hereof shall be determined under and in accordance with the laws of
the State of New York, without regard to the principles of conflicts of law.
15. Notice: Any notice required to be given pursuant to the provisions of
this Agreement shall be in writing and shall be delivered in person, by Express
Mail, Federal Express or other recognized overnight national courier service or
by registered or certified mail to the respective parties at, in the case of
notices to the Company, at its then principal executive offices (Attention:
Chief Financial Officer with a copy to the Chairman of the Board of Directors
and a copy to the Chairman of the Compensation Committee); and, in the case of
notices to the Employee, at his residence address then reflected in the
personnel records of the Company (or such other address as the party to receive
notices has given by notice hereunder to the other party). Any such notice by
personal delivery shall become effective upon receipt, by Express Mail or
overnight courier service shall become effective on the scheduled day of
delivery by such service and by registered or certified mail shall become
effective five business days after mailed.
16. Assignment: This Agreement shall be binding upon the Company, its
successors (including any transferee of the goodwill of the Company) or assigns.
No provision of this
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Agreement may be assigned by the Employee, except that an action to enforce this
Agreement may be brought by Employee's legal representative, estate and heirs.
17. Miscellaneous: This Agreement contains the entire understanding between
the parties hereto relating to the subject matter hereof and supersedes all
other oral and written agreements or understandings between them. No
modification or addition hereto or waiver or cancellation of any provision shall
be valid except by a writing signed by the party to be charged therewith.
18. Obligations of a Continuing Nature: It is expressly understood and
agreed that the covenants, agreements and restrictions undertaken by or imposed
on the Employee or the Company hereunder which are stated to exist or continue
after termination of the Employee's employment with the Company shall exist and
continue in accordance with their terms for the respective periods of time set
forth herein.
19. Severability: The parties agree that if any of the covenants, agreements
or restrictions contained herein is held to be invalid by any court of competent
jurisdiction, such holding will not invalidate any of the other covenants,
agreements and/or restrictions herein contained and such invalid provisions
shall be severable so that the invalidity of any such provision shall not
invalidate any others.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first above written.
TII Network Technologies, Inc.
By: /s/ Xxxxxxx X. Xxxxxxxx /s/ Xxxxxxx X. Xxxxx
------------------------ ------------------------
Xxxxxxx X. Xxxxxxxx Xxxxxxx X. Xxxxx
Vice President-Finance
Chief Financial Officer
By: /s/ R. Xxxx Xxxxxxx
------------------------
R. Xxxx Xxxxxxx
Chairman Compensation Committee
of the Board of Directors
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