Exhibit 10(a)(2)
TII INDUSTRIES, INC.
1994 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
(AS AMENDED SEPTEMBER 20, 1995, EFFECTIVE AS OF THE DATE OF THE COMPANY'S 1995
ANNUAL MEETING OF STOCKHOLDERS, WHICH AMENDMENTS WERE APPROVED BY STOCKHOLDERS
AT THE 1995 ANNUAL MEETING OF STOCKHOLDERS ON DECEMBER 6, 1995 AND SEPTEMBER 5,
2000, EFFECTIVE AS OF THE DATE OF THE COMPANY'S 2000 ANNUAL MEETING OF
STOCKHOLDERS PROVIDED SUCH AMENDMENTS ARE APPROVED BY STOCKHOLDERS AT THE 2000
ANNUAL MEETING OF STOCKHOLDERS)
1. PURPOSE OF THE PLAN
The purpose of this 1994 Non-Employee Director Stock Option Plan (the
"Plan") of TII Industries, Inc., a Delaware corporation (the "Company"), is to
make available shares of the Common Stock, par value $.01 per share, of the
Company (the "Common Stock") for purchase by Directors who are not common law
employees of the Company (the "Non-Employee Directors") and thus to attract and
retain the services of experienced and knowledgeable Non-Employee Directors for
the benefit of the Company and its stockholders and to provide additional
incentive for such Non-Employee Directors to continue to work for the best
interests of the Company and its stockholders through continuing ownership of
its Common Stock.
2. STOCK SUBJECT TO THE PLAN
Subject to the provisions of Article 10, the total number of shares
of Common Stock for which options may be granted under the Plan shall be
700,000. Shares issued under the Plan may be either authorized but unissued
shares or shares which shall have been purchased or acquired by the Company for
this or any other purpose. Such shares are from time to time to be allotted for
option and sale to Non-Employee Directors in accordance with the Plan. In the
event any option granted under the Plan shall expire, be canceled or terminate
for any reason without having been exercised in full or shall cease for any
reason to be exercisable in whole or in part, the unpurchased shares subject
thereto shall again be available for grant under the Plan.
3. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Board of Directors of the Company (the
"Board"). The Board shall, subject to the express provisions of the Plan, grant
options pursuant to the terms of the Plan; shall have the power to interpret the
Plan, correct any defect, supply any omission or reconcile any inconsistency in
the Plan; prescribe, amend and rescind rules and regulations relating to, but
not inconsistent with, the Plan; determine the terms and provisions of the
respective option agreements (which need not be identical); and make
determinations necessary or advisable for the administration of the Plan. The
determination of the Board on the matters referred to in this Article 3 shall be
conclusive. No member of the Board shall be liable for any action or
determination made in good faith with respect to the Plan or any options granted
hereunder.
4. OPTION GRANTS
Each individual who is a Non-Employee Director immediately following
the conclusion of the Company's 1994 Annual Meeting of Stockholders at which
Directors are elected shall, effective as of such date, be granted an option to
purchase 5,000 shares of Common Stock. Each individual who subsequent thereto
becomes a Non-Employee Director shall, effective as of the date such person
becomes a Non-Employee Director, be granted an option to purchase (i) 5,000
shares of Common Stock if such person becomes a Non-Employee Director prior to
the Company's 1995 Annual Meeting of Stockholders, (ii) 10,000 shares of Common
Stock if such person becomes a Non-Employee Director at or after the Company's
1995 Annual Meeting of Stockholders but prior to the Company's 2000 Annual
Meeting of Stockholders or (iii) 25,000 shares of Common Stock if such person
becomes a Non-Employee Director at or after the Company's 2000 Annual Meeting of
Stockholders. In addition, immediately following each annual meeting of
stockholders at which Directors are elected which is held subsequent to the
Company's 1994 Annual Meeting of Stockholders, each Non-Employee Director in
office immediately following the conclusion of such meeting (whether or not
elected at such meeting) shall, effective as of the date such meeting is held,
be granted an option to purchase 10,000 shares of Common Stock (25,000 shares in
the case of annual meetings held subsequent to the Company's 1999 Annual Meeting
of Stockholders); provided that an individual who becomes a Non-Employee
Director for the first time at an annual meeting of stockholders shall be
granted only one option to purchase an aggregate of 10,000 or 25,000 shares of
Common Stock, as the case may be, under this sentence and the preceding
sentence. A Director who is an employee of the Company who ceases such
relationship but remains a Director shall not be deemed to become a Non-Employee
Director unless and until he or she is serving as a Non-Employee Director
immediately following the conclusion of the next annual meeting of stockholders
at which Directors are elected (whether or not such person is elected as a
Director at such meeting).
5. OPTION PRICE
The exercise price at which shares of the Common Stock may be
purchased pursuant to options granted under the Plan shall be 100% of the fair
market value of the Common Stock on the date an option is granted, but not less
than the par value of the Common Stock. The fair market value of the Common
Stock on any day shall be (a) if actual sales price information is generally
reported for the Common Stock on its principal market, the closing price,
regular way, of the Common Stock on such day (or last day of trade prior to such
day if not traded on such day) as reported by such market or on a consolidated
tape reflecting transactions on such market, (b) if actual sales price
information is not generally reported for the Common Stock on its principal
market, the mean between the highest bid and lowest asked prices for the Common
Stock on such day (or the last day quoted prior to such day if not quoted on
such day) as reported by on the National Association of Securities Dealers
(including under its OTC Bulletin Board Service), National Quotation Bureau
Incorporated or a similar organization, or (c) if neither of the above are
applicable, the mean between the then current highest independent bid and lowest
independent asked prices for the Common Stock, determined by the Board (the
determination of which shall be conclusive) on the basis of reasonable inquiry.
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6. TERM OF EACH OPTION
The term of each option (including each option granted prior to the
Company's 1995 Annual Meeting of Stockholders) shall be ten years (the
"Scheduled Expiration Date"), subject to earlier termination as provided in the
Plan.
7. EXERCISE OF OPTIONS
(a) Subject to the provisions of Article 9, each option granted under
the Plan (including each option granted prior to the Company's 1995 Annual
Meeting of Stockholders) shall be fully exercisable at any time or times during
its term. A Non-Employee Director purchasing less than the number of shares
available to him or her in any period under the option may purchase any such
unpurchased shares in any subsequent period of the option term.
(b) The option shall not be exercisable at any time in an amount less
than 100 shares (or the remaining shares then covered by and purchasable under
the option if less than 100 shares). In no case may a fraction of a share be
exercised, purchased or issued under the Plan.
(c) The purchase price of the shares as to which an option shall be
exercised shall be paid in full in cash or by check at the time of exercise. In
addition, the Non-Employee Director shall pay to the Company in cash, upon
demand, the amount, if any, which the Company determines is necessary to satisfy
its obligation to withhold federal, state and local income and other taxes or
other amounts incurred by reason of the grant or exercise of the option.
(d) An option (or any part thereof), to the extent then exercisable,
shall be exercised by giving written notice to the Company at its principal
office, specifying the number of shares of Common Stock as to which such option
is being exercised and accompanied by payment in full of the aggregate exercise
price therefor.
(e) A Non-Employee Director entitled to receive shares of Common Stock
upon the exercise of an option shall not have the rights of a stockholder with
respect to such shares of Common Stock until the date of issuance of a stock
certificate to him or her for such shares.
(f) Nothing in the Plan or in any option granted under the Plan shall
confer on any Non-Employee Director any right to continue as a director of the
Company.
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8. NON-TRANSFERABILITY OF OPTIONS
No option granted under the Plan shall be transferable other than by
will or the laws of descent and distribution by the Non-Employee Director or his
or her legal representatives, and may be exercised during the Non-Employee
Director's lifetime only by him or her. Except to such extent, options may not
be assigned, transferred, pledged, hypothecated or disposed of in any way
(whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar process.
9. TERMINATION OF SERVICES ON THE BOARD OF DIRECTORS
(a) In the event that a Non-Employee Director to whom an option
(including an option granted prior to the Company's 1995 Annual Meeting of
Stockholders) has been granted under the Plan shall cease to serve on the Board
for any reason (including as a result of not being re-elected to the Board),
other than by reason of his or her death or disability (as that term is defined
in paragraph (d) of this Article 9), such option may be exercised in whole or in
part by the Non-Employee Director, at any time within one year after such
cessation of service but not thereafter, and in no event after the Scheduled
Expiration Date; provided, however, that if his or her service on the Board
shall have been terminated for cause or if he or she resigns without the consent
of a majority of the remaining members of the Board, his or her options shall
terminate immediately.
(b) If a Non-Employee Director to whom an option has been granted under
the Plan shall cease to serve on the Board by reason of disability, the option
may be exercised in whole or in part by the Non-Employee Director at any time
within one year after such cessation of service but not thereafter, and in no
event after the Scheduled Expiration Date.
(c) If a Non-Employee Director to whom an option has been granted under
the Plan shall die while he or she is serving on the Board, such option may be
exercised in whole or in part by the legatee or legatees of such option under
the Non-Employee Director's last will, or by his or her personal representatives
or distributees, within one year after the date of his or her death to the
extent the option is exercisable on the date of his or her death, but not
thereafter, and in no event after the Scheduled Expiration Date.
(d) For the purpose of this Article 9, "disability" shall mean
permanent and total disability within the meaning of Section 22(e)(3) of the
Internal Revenue Code of 1986, as amended, as reasonably determined by the
Board. The Non-Employee Director as to whom such determination is being made
shall not participate in the Board's deliberation or vote in making such
determination.
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10. ADJUSTMENT OF AND CHANGES IN COMMON STOCK
(a) In the event of any change in the outstanding Common Stock by
reason of a stock dividend, stock split, stock combination, recapitalization,
merger in which the Company is the surviving corporation, reorganization or the
like, the aggregate number and kind of shares subject to the Plan, the number
and kind of shares to be granted initially and annually, and the aggregate
number and kind of shares subject to each outstanding option and the exercise
price thereof shall be adjusted by the Board in a manner similar to the
antidilution adjustments made under the Company's employee stock option plans.
(b) In the event of (i) the liquidation or dissolution of the Company,
(ii) a merger or consolidation in which the Company is not the surviving
corporation, or (iii) any other capital reorganization in which more than 50% of
the shares of Common Stock of the Company are exchanged, outstanding options
shall terminate, unless other provision is made therefor in the transaction
(which provision shall be made in a manner similar as made for options granted
under the Company's employee stock option plans).
11. COMPLIANCE WITH SECURITIES LAWS
(a) It is a condition to the exercise of any option that either (i) a
Registration Statement under the Securities Act of 1933, as amended, or any
succeeding act (collectively, the "Securities Act"), with respect to its
underlying shares shall be effective and current at the time of exercise of the
option or (ii) in the opinion of counsel to the Company, there shall be an
exemption from registration under the Securities Act for the issuance of shares
of Common Stock upon such exercise. Nothing herein shall be construed as
requiring the Company to register shares subject to the Plan for issuance or for
resale.
(b) In connection with fulfilling the condition set forth in clause
(a)(ii) of this Article 11, the Company may require a Non-Employee Director, as
a condition to the exercise of an option, to execute and deliver to the Company
representations and warranties, in form and substance satisfactory to counsel to
the Company, that (i) the shares of Common Stock to be issued upon the exercise
of the option are being acquired by the Non-Employee Director for his or her own
account, for investment only and not with a view to the resale or distribution
thereof, all within the meaning of the Securities Act, and (ii) any subsequent
resale or distribution of shares of Common Stock by such Non-Employee Director
will be made only pursuant to (x) a Registration Statement under the Securities
Act which is effective and current with respect to the shares of Common Stock
being sold at the time of sale or (y) a specific exemption from the registration
requirements of the Securities Act, but in claiming such exemption, the
Non-Employee Director shall, prior to any offer or sale or distribution of such
shares of Common Stock, provide the Company with a favorable written opinion of
counsel, in form and substance satisfactory to counsel to the Company, as to the
applicability of such exemption to the proposed sale or distribution. The
Company may endorse such legend or legends upon the certificates for shares of
Common Stock issued upon exercise of an option under the Plan, and may issue
such
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"stop transfer" instructions to its transfer agent in respect of such shares, as
it determines, in its discretion, to be necessary or appropriate to prevent a
violation of, or to perfect an exemption from, the registration requirements of
the Securities Act.
(c) The Company may also require, as a further condition to the
exercise of an option, in whole or in part, that the shares of Common Stock
underlying such option or the Plan be specifically listed on the securities
markets on which the Company's Common Stock is traded and be registered or
qualified under any applicable state securities laws, and that the consent or
approval of any governmental regulatory body, which the Company deems necessary
or desirable as a condition to the exercise of such option or the issue of
shares thereunder, shall have been effected or obtained free of any conditions
requiring the Company to qualify as a foreign corporation or to execute a
general consent to service of process in any jurisdiction wherein it has not
already done so and free of any other conditions not customarily imposed by a
securities exchange, law or governmental regulatory body in connection with such
listing, qualification, consent or approval.
12. AMENDMENT AND TERMINATION
The Board may amend, suspend or terminate the Plan or any portion
thereof at any time except that, to the extent required by Rule 16b-3 ("Rule
16b-3") promulgated under the Securities Exchange Act of 1934 (the "Exchange
Act") or other applicable law: (a) no provision of the Plan relating to the
amount or exercise price of shares of Common Stock subject to options to be
granted under the Plan or the timing of grants may be amended more than once
every six months other than to comport with changes in the Internal Revenue Code
of 1986, as amended, the Employee Retirement Income Security Act of 1974, as
amended, or the rules and regulations under either statute (including successor
statutes and rules and regulations thereunder) and (b) the Board may not,
without the approval of the Company's stockholders within 12 months after the
date of adoption of any such amendment or amendments, make any alteration or
amendment thereof which (i) makes any change in the class of eligible
participants as determined in accordance with Articles 1 and 4 hereof; (ii)
increases the total number of shares of Common Stock for which options may be
granted under the Plan except as provided in Article 10 hereof; (iii) decreases
the option exercise price provided in Article 5 hereof except as provided in
Article 10 hereof; or (iv) materially increases the benefits accruing to
participants under the Plan within the meaning of Rule 16b-3. No amendment shall
adversely affect the rights under any then outstanding option without the
consent of the holder thereof.
13. STOCK OPTION CONTRACTS
Each option shall be evidenced by an appropriate contract which shall
be duly executed by the Company and the Non-Employee Director, and shall contain
such terms and conditions not inconsistent with the Plan as may be determined by
the Board.
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14. DUTIES OF THE COMPANY
The Company shall, at all times during the term of each option,
reserve and keep available for issuance or delivery such number of shares of
Common Stock as will be sufficient to satisfy the requirements of all options at
the time outstanding, shall pay all original issue taxes with respect to the
issuance or delivery of shares pursuant to the exercise of such options and all
other fees and expenses necessarily incurred by the Company in connection
therewith.
15. EFFECTIVE PERIOD
The Plan shall become effective on September 14, 1994, the date of its
adoption by the Board of Directors; provided, however that if the Plan is not
approved within 12 months thereof by the favorable vote then required for such
action under the Delaware General Corporation Law at a meeting to be held to
consider such approval, the Plan and any options granted under the Plan will be
null and void and of no further effect. No options may be granted under the Plan
after September 13, 2004. Options outstanding on or prior to such date shall,
however, in all respects continue subject to the Plan. The amendments to the
Plan authorized by the Board on September 20, 1995 shall be effective on the
date of the Company's 1995 Annual Meeting of Stockholders provided it is
approved by stockholders at such meeting and the amendments to the Plan
authorized by the Board of September 5, 2000 shall be effective on the date of
the Company's 2000 Annual Meeting of Stockholders provided they are approved by
stockholders at such meeting. If the amendments are not approved, the Plan as it
exists prior to such amendments shall continue in full force and effect.
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