EXHIBIT 99.3
TII NETWORK TECHNOLOGIES, INC.
1998 STOCK OPTION PLAN
INCENTIVE STOCK OPTION CONTRACT
THIS INCENTIVE STOCK OPTION CONTRACT entered into as of September 13, 2005
between TII NETWORK TECHNOLOGIES, INC., a Delaware corporation (the "Company"),
and Xxxxxxx X. Xxxxxxxx (the "Optionee").
W I T N E S S E T H:
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1. The Company, in accordance with the allotment made by the Compensation
Committee of the Company's Board of Directors (the "Committee") and subject to
the terms and conditions of the 1998 Stock Option Plan of the Company (the
"Plan"), grants to the Optionee an option to purchase an aggregate of 150,000
shares of the Common Stock, $.01 par value per share, of the Company ("Common
Stock") at an exercise price of $1.50 per share, being at least equal to the
fair market value of such shares of Common Stock on the date hereof. This option
is intended to constitute an incentive stock option within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
although the Company makes no representation or warranty as to such
qualification.
2. The term of this option shall be ten years from the date hereof,
subject to earlier termination as provided in the Plan. However, this option
shall not be exercisable until September 13, 2006, at which time it shall become
exercisable as to 30,000 shares of Common Stock, and as to an additional 30,000
shares of Common Stock on each of the next four anniversaries of the date
hereof. The right to purchase shares of Common Stock under this option shall be
cumulative, so that if the full number of shares purchasable in a period shall
not be purchased, the balance may be purchased at any time or from time to time
thereafter, but not after the expiration of the option. Notwithstanding the
foregoing, in no event may a fraction of a share of Common Stock be purchased
under this option.
3. This option shall be exercised by giving written notice to the Company
at its then principal office, presently 0000 Xxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx
00000, Attention: Vice President - Administration, stating that the Optionee is
exercising the option hereunder, specifying the number of shares being purchased
and accompanied by payment in full of the aggregate purchase price therefor (a)
in cash or by certified check, (b) with previously acquired shares of Common
Stock which have been held by the Optionee for at least six months valued as
provided in the Plan, or (c) a combination of the foregoing.
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4. The Company and/or any Subsidiary may withhold cash and/or shares of
Common Stock to be issued to the Optionee in the amount which the Company
determines is necessary to satisfy its obligation to withhold taxes or other
amounts incurred by reason of the grant or exercise of this option or the
disposition of the underlying shares of Common Stock. Alternatively, the Company
may require the Optionee to pay the Company such amount in cash promptly upon
demand.
5. In the event of any disposition of the shares of Common Stock acquired
pursuant to the exercise of this option within two years from the date hereof or
one year from the date of transfer of such shares to him, the Optionee shall
notify the Company thereof in writing within 30 days after such disposition. In
addition, the Optionee shall provide the Company on demand with such information
as the Company shall reasonably request in connection with determining the
amount and character of the Optionee's income, the applicable deduction and the
obligation to withhold taxes or other amount incurred by reason of such
disqualifying disposition, including the amount thereof. The Optionee shall pay
the Company and/or the Subsidiary, as the case may be, in cash on demand the
amount, if any, which the Company determines is necessary to satisfy such
withholding obligation.
6. Notwithstanding the foregoing, this option shall not be exercisable by
the Optionee unless (a) a Registration Statement under the Securities Act of
1933, as amended (the "Securities Act") with respect to the shares of Common
Stock to be received upon the exercise of this option shall be effective and
current at the time of exercise or (b) there is an exemption from registration
under the Securities Act for the issuance of the shares of Common Stock upon
such exercise. The Optionee hereby represents and warrants to the Company that,
unless such a Registration Statement is effective and current at the time of
exercise of this option, the shares of Common Stock to be issued upon the
exercise of this option will be acquired by the Optionee for his own account,
for investment only and not with a view to the resale or distribution thereof.
In any event, the Optionee will notify the Company of any proposed resale of the
shares of Common Stock issued to him upon exercise of this option. If (i) the
Optionee is an "affiliate" of the Company within the meaning of the Securities
Act at the time of any such resale or (ii) at the time of exercise of this
option the shares issued were not subject to a current and effective
Registration Statement under the Securities Act covering their issuance, then
any subsequent resale or distribution of shares of Common Stock by the Optionee
will be made only pursuant to (x) a Registration Statement under the Securities
Act which, at the time of resale, is effective and current with respect to the
Optionee's sale of shares of Common Stock being sold, or (y) a specific
exemption from the registration requirements of the Securities Act, but in
claiming such exemption, the Optionee shall, prior to any offer of sale or sale
of such shares of Common Stock, provide the Company (unless waived by the
Company) with a favorable written opinion of counsel, in form and substance
satisfactory to the Company, as to the applicability of such exemption to the
proposed sale or distribution. Such representations and warranties shall also be
deemed to be made by the Optionee upon each exercise of this option. Nothing
herein shall be construed as requiring the Company to register the shares
subject to this option under the Securities Act.
7. Notwithstanding anything herein to the contrary, if at any time the
Company shall determine, in its discretion, that the listing or qualification of
the shares of Common Stock
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subject to this option on any securities exchange or under any applicable law,
or the consent or approval of any governmental regulatory body, is necessary or
desirable as a condition to, or in connection with, the granting of an option or
the issue of shares of Common Stock hereunder, this option may not be exercised
in whole or in part unless such listing, qualification, consent or approval
shall have been effected or obtained free of any conditions not acceptable to
the Company.
8. The Company may affix appropriate legends upon the certificates for
shares of Common Stock issued upon exercise of this option and may issue such
"stop transfer" instructions to its transfer agent in respect of such shares as
it determines, in its discretion, to be necessary or appropriate to (a) prevent
a violation of, or to perfect an exemption from, the registration requirements
of the Securities Act, (b) implement the provisions of the Plan or this Contract
or any other agreement between the Company and the Optionee with respect to such
shares of Common Stock, or (c) permit the Company to determine the occurrence of
a "disqualifying disposition," as described in Section 421(b) of the Code, of
the shares of Common Stock transferred upon the exercise of this option.
9. Nothing in the Plan or herein shall confer upon the Optionee any right
to continue in the employ of the Company, any Parent or any of its Subsidiaries,
or interfere in any way with any right of the Company, any Parent or its
Subsidiaries to terminate such employment at any time for any reason whatsoever
without liability to the Company, any Parent or any of its Subsidiaries.
10. The Company and the Optionee agree that they will both be subject to
and bound by all of the terms and conditions of the Plan, receipt of a copy of
which is acknowledged by the Optionee and is made a part hereof. Any capitalized
term not defined herein shall have the meaning ascribed to it in the Plan. In
the event of a conflict between the terms of this Contract and the terms of the
Plan, the terms of the Plan shall govern.
11. The Optionee represents and agrees that he will comply with all
applicable laws relating to the Plan and the grant and exercise of this option
and the disposition of the shares of Common Stock acquired upon exercise of the
option, including without limitation, federal and state securities and "blue
sky" laws.
12. This option is not transferable by the Optionee otherwise than by will
or the laws of descent and distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
13. This Contract shall be binding upon and inure to the benefit of any
successor or assign of the Company and to any heir, distributee, executor,
administrator or legal representative entitled to the Optionee's rights
hereunder.
14. This Contract shall be governed by, and construed and enforced in
accordance with, the laws of the State of Delaware, without regard to the
conflicts of law rules thereof.
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15. The invalidity or illegality of any provision herein shall not affect
the validity of any other provision.
16. The Optionee agrees that the Company may amend the Plan and the
options granted to the Optionee under the Plan, subject to the limitations
contained in the Plan.
IN WITNESS WHEREOF, the parties hereto have executed this Contract as of
the day and year first above written.
TII NETWORK TECHNOLOGIES, INC.
By: /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx, President
/s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx, Optionee
00 Xxxxxx Xxxx
Xxxx Xxxxx, XX 00000
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Address
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