SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 14, 2005
TII NETWORK TECHNOLOGIES, INC.
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(Exact Name of Registrant as Specified in Charter)
DELAWARE
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(State of Incorporation)
1-8048 66-0328885
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(Commission File No.) (IRS Employer Identification No.)
1385 Akron Street, Copiague, New York 11726
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(Address of Principal Executive Offices) (Zip Code)
(631) 789-5000
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(Registrant's telephone number, including area code)
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[_] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[_] Pre-commencement communication pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[_] Pre-commencement communication pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
The following discussions are qualified in their entirety by reference
to the exhibits to this report:
(a) The Company has entered into agreements, dated October 14, 2005,
with each of Kenneth A. Paladino, Vice President - Finance, Chief Operating
Officer, Chief Financial Officer and Treasurer, Virginia M. Hall, Vice President
- - Administration and Contract Administration and Secretary, and Nisar A.
Chaudhry, Vice President - Engineering and Chief Technology Officer, providing
that, in the event the Company should terminate the employment of the officer
(other than for cause, as defined, (including a breach of his or her
confidentiality agreement with the Company) or as a result of his or her death),
or if the officer voluntarily terminates his or her employment for good reason
(in general, adverse changes in his or her responsibilities or conditions of
employment, reductions in compensation or a requirement to relocate his or her
principal place of employment by more than 50 miles), the officer will be
entitled to at least six months severance pay, the continuation, at the
Company's cost, of then existing group medical and other insurance for the
officer and his or her family for the six-month period or, if not permitted, the
payment of COBRA premium costs during such six month period, and for the
acceleration of vesting of all stock options held by the officer and an
extension of the exercise period thereof to the fifteenth day of the third month
following the date on which, or if later, December 31 of the calendar year in
which, the option would otherwise have expired. None of such officers are a
party to an employment agreement with the Company.
(b) Non-employee directors of the Company currently receive a fee of
$1,000 for each meeting of the Board attended in person, members of committees
of the Board receive a fee of $500 for each committee meeting attended, and
reimbursement for their reasonable travel and other expenses incurred in
attending Board and committee meetings, as well as options under the 2003
Company's Non-Employee Director Stock Option Plan. On October 14, 2005, the
Board authorized a change in the compensation payable to non-employee directors
so that, commencing with the organizational meeting of the Board of Directors
immediately following the 2005 Annual Meeting of Stockholders scheduled to be
held in December 2005 (the "Meeting"), each non-employee director is to receive
(i) a cash retainer at the rate of $10,000 per annum ($25,000 in the case of the
non-executive Chairman of the Board), which shall be payable quarterly, provided
that, subject to approval by the Company's stockholders at the Meeting, such
non-employee director may, in lieu of such retainer, elect, at or prior to the
applicable annual meeting of stockholders, to receive $11,750 ($29,400 in the
case of the non-executive Chairman of the Board) of the Company's Common Stock
(valued at the fair market value of the Company's Common Stock on the date of
the applicable annual meeting of stockholders of the Company, such fair market
value to be determined in the same manner as determined under the Company's 2003
Non-Employee Director Stock Option Plan), which shares shall be subject to
forfeiture in the event such non-employee director resigns or is removed for
cause preceding the next annual meeting of stockholders of the Corporation, (ii)
a fee of $1,000 for each meeting of the Board attended, (iii) a fee of $500 for
each member of the Board's Audit, Compensation and Nominating/Governance
Committees (except that the Chairman of those Committees will receive a fee of
$1,000) and $1,000 for each member of the Board's new Executive Advisory
Committee (except that the Chairman of the Executive Advisory Committee will
receive
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$2,000) for each meeting of the applicable committee attended and (iv)
reimbursement for their reasonable travel and other expenses incurred in
attending Board and committee meetings.
(c) On October 14, 2005, the Company's Board of Directors, upon the
recommendation of the Board's Compensation Committee, adopted a bonus plan for
fiscal 2006 covering Timothy J. Roach, the Company's President and Chief
Executive Officer, Kenneth A. Paladino, Vice President - Finance, Chief
Operating Officer, Chief Financial Officer and Treasurer, Virginia M. Hall, Vice
President - Administration and Contract Administration and Secretary, and Nisar
A. Chaudhry, Vice President - Engineering and Chief Technology Officer and
certain other key employees. The bonus plan is designed to provide incentive for
performance upon meeting pre-established goals in fiscal 2006. The plan
establishes a bonus pool base equal to a percentage of each participant's base
salary (which percentage in the case of Timothy J. Roach is 60%, Kenneth A.
Paladino is 50%, and Virginia M. Hall and Nisar A. Chaudhry is 30%). The
aggregate bonus pool base is then allocated by the Compensation Committee among
various targets established by the Committee with varying weights totaling 100%
for fiscal 2006. The targets are pre-established levels of consolidated
revenues, revenues from emerging market product sales, net income and cash flow,
with weights aggregating 80%, and a 20% discretionary factor. The actual bonus
pool will be determined by multiplying the bonus pool base established for each
target (except the discretionary component) by the percentage by which the
target is met (with no bonus included in the pool related to a target unless
that target is met at least an 80% level and a maximum of 120% of the bonus pool
base if the target is exceeded by 20%). The Compensation Committee will
determine the bonus pool for the discretionary component. The Compensation
Committee, with input from the Audit Committee may (but need not) make
adjustments in determining if a target has been met for, among other things,
corporate transactions (such as acquisitions, divestitures and reorganizations),
non-budgeted or unusual expenditures, gains or losses caused by strategic
decisions and the effects of changes in accounting principles, extraordinary or
non-recurring charges and unusual events and other items that were factors in
establishing target levels but were not contemplated at the time the targets
were established or that may be outside the control of the participants. The
maximum amount of the bonus pool may not exceed 25% of the Company's earnings
before income taxes and before deducting bonuses payable under the plan. The
bonus pool so determined is allocated among plan participants pro rata to the
bonus pool base attributable to the respective participants. If a participant
voluntarily terminates his or her employment with the Company or if his or her
employment is terminated for cause prior to the payment of the bonus, the
participant forfeits his or her bonus. Bonuses are pro rated in the event of
termination of employment by reason of death or disability or if the Company
terminates the participant's employment other than for cause during the
Company's fiscal year. Any amounts forfeited or not earned by a participant are
not reallocated to other participants.
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ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired: None
(b) Pro Forma Financial Information: None
(c) Exhibits:
99.1 Termination Severance Agreement, dated October 14,
2005, between the Company and Kenneth A. Paladino.
99.2 Termination Severance Agreement, dated October 14,
2005, between the Company and Virginia M. Hall.
99.3 Termination Severance Agreement, dated October 14,
2005, between the Company and Nisar A. Chaudhry.
99.4 Resolution of the Board of Directors adopted on
October 14, 2005 amending the cash compensation
payable to non-employee directors.
99.5 TII Network Technologies, Inc.'s 2006 Incentive Bonus
Plan.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TII NETWORK TECHNOLOGIES, INC.
Date: October 20, 2005 By: /s/ Timothy J. Roach
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Timothy J. Roach,
President and Chief Executive Officer
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EXHIBIT INDEX
Exhibit
Number Description
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99.1 Termination Severance Agreement, dated October 14, 2005, between the
Company and Kenneth A. Paladino.
99.2 Termination Severance Agreement, dated October 14, 2005, between the
Company and Virginia M. Hall.
99.3 Termination Severance Agreement, dated October 14, 2005, between the
Company and Nisar A. Chaudhry.
99.4 Resolution of the Board of Directors adopted on October 14, 2005
amending the cash compensation payable to non-employee directors.
99.5 TII Network Technologies, Inc.'s 2006 Incentive Bonus Plan.
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