8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________

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): December 30, 2008

TII NETWORK TECHNOLOGIES, INC.

(Exact Name of Registrant as Specified in Charter)

DELAWARE

(State of Incorporation)

001-8048	66-0328885
(Commission File No.)	(IRS Employer Identification No.)

141 Rodeo Drive, Edgewood, New York	11717
(Address of Principal Executive Offices)	(Zip Code)

(631) 789-5000

(Registrant’s telephone number, including area code)

Not Applicable

(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:

o      Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o      Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o      Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o      Pre-commencement communications 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, Termination of Material Agreement.

On December 30, 2008, TII Network Technologies, Inc. (the “Company”) and JPMorgan Chase Bank, N.A. (the “Bank”) entered into an Amendment to Line of Credit Note and Credit Agreement (the “Amendment”) to implement certain amendments to the Line of Credit Note dated December 15, 2006 entered into by the Company (the “Note”) pursuant to the Credit Agreement dated as of December 15, 2006 between the Company and the Bank (the “Credit Agreement”). Under the Credit Agreement and the Note, the Company has been, and continues to be, entitled to borrow from the Bank up to $5.0 million in the aggregate at any one time outstanding, but limited to a borrowing base equal to the aggregate of (a) 80% of the book value of all Eligible Accounts (as defined) plus (b) following the deduction of a reserve amount equal to 20% of the Eligible Inventory (as defined, generally to include, with certain exceptions, inventories at the Company’s continental United States warehouse), the lesser of (i) $1.5 million or (ii) 30% of the lower of cost (determined using the first-in, first-out method of inventory accounting) or wholesale market value, as determined by the Bank, of all Eligible Inventory.

The Credit Agreement and the Note were described in the Company’s Current Report on Form 8-K dated (date of earliest reported event) December 15, 2006 filed with the Securities and Exchange Commission on December 21, 2006 and were filed as exhibits to that Report. To date, the Company has not borrowed under the Credit Agreement.

The principal amendments to the Note and the Credit Agreement effectuated by the Amendment are:

(a)       An extension of the maturity date of the Note to December 31, 2010;

(b)       A change in the interest rate applicable to CB Floating Rate Advances (formerly Prime Rate Advances) to the Bank’s prime rate plus 2.75% per annum and to LIBOR Rate Advances to a formula based on a published one month LIBOR Rate plus 4.50% per annum, with the Company being entitled to have outstanding up to five LIBOR Rate Advances and a CB Floating Rate Advance; and

(c)        An increase in the amount of Tangible Capital Funds (as defined in the Credit Agreement) that the Company is required to maintain to $35.3 million.

The Company paid a facility fee of $5,000 in connection with the Amendment.

The Amendment is annexed to this Report as Exhibit 4.1, and the foregoing discussion is qualified, in its entirety, by reference thereto.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On December 31, 2008, in order to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended and the regulations and official guidance promulgated thereunder (“Section 409A”), the Company entered into amendments with (a) Kenneth A. Paladino, President and principal executive officer of the Company, to the Employment Agreement dated as of April 3, 2008 between the Company and Mr. Paladino and (b) each person with whom the Company is a party thereto, including Jennifer E. Katsch, the Company’s Vice President – Finance and principal financial officer, and David E. Foley, a “named executive officer” in the Company’s proxy statement dated April 29, 2008, to their Termination Severance Agreements. The substantive terms of the agreements remain unchanged. The amendments primarily change the timing of various payments under those agreements. The principal change provides that, if the employee is a “specified employee” (as defined in Section 409A and determined at the time of severance from employment), the payment of any amount or provision of any benefit under the applicable agreement which is considered “deferred compensation” under Section 409A shall be deferred for six months after such termination or, if earlier, such employee’s death. Payments that otherwise would have been made during the six month period are to be accumulated and paid on the first day of the month immediately following the end of the six month period and the balance of payments, if any, are to be made as scheduled.

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In addition, in the case of Mr. Paladino, the amendment to his Employment Agreement clarifies that any outstanding stock options, which are, in general, exercisable by him for a period of one year following the termination of his employment, may not be exercised after the date such options would otherwise expire under the stock option contracts under which they are granted.

Also, on December 31, 2008, the Company adopted a policy, as required by Section 409A, to provide that expense reimbursements to non-employee directors be made as promptly as practicable following the Company’s receipt of reasonable supporting documentation therefor but, as required by Section 409A, in no event later than the end of the non-employee director’s taxable year following the non-employee director’s taxable year in which the expense is incurred.

The foregoing amendments to Mr. Paladino’s Employment Agreement, and the amendments to the Termination Severance Agreements of Ms. Katsch and Mr. Foley and the Expense Reimbursement Policy for Non-Employee Directors are annexed to this Report as Exhibits 99.1, 99.2, 99.3(b) and 99.4, respectively, and the foregoing discussion is qualified, in its entirety, by reference thereto.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits:

Exhibit Number	Description
4.1	Amendment to Line of Credit Note and Credit Agreement, dated as of December 30, 2008, between JPMorgan Chase Bank, N.A. and the Company.
99.1	Amendment, effective January 1, 2009, to Employment Agreement dated as of April 3, 2008, between the Company and Kenneth A. Paladino.
99.2	Amendment, effective January 1, 2009, to Termination Severance Agreement, dated December 15, 2006, between the Company and Jennifer E. Katsch.
99.3(a)	Termination Severance Agreement, dated February 7, 2007, between the Company and David E. Foley.
99.3(b)	Amendment, effective January 1, 2009, to Termination Severance Agreement, dated February 7, 2007, between the Company and David E. Foley.
99.4	Reimbursement Policy for Non-Employee Directors dated December 31, 2008.

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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 hereunto duly authorized.

	TII NETWORK TECHNOLOGIES, INC.
Date: January 5, 2008	By:	/s/ Jennifer E. Katsch
		Jennifer E. Katsch,
		Vice President-Chief Financial Officer

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EXHIBIT INDEX

Exhibit Number	Description
4.1	Amendment to Line of Credit Note and Credit Agreement, dated as of December 30, 2008, between JPMorgan Chase Bank, N.A. and the Company.
99.1	Amendment, effective January 1, 2009, to Employment Agreement dated as of April 3, 2008, between the Company and Kenneth A. Paladino.
99.2	Amendment, effective January 1, 2009, to Termination Severance Agreement, dated December 15, 2006, between the Company and Jennifer E. Katsch.
99.3(a)	Termination Severance Agreement, dated February 7, 2007, between the Company and David E. Foley.
99.3(b)	Amendment, effective January 1, 2009, to Termination Severance Agreement, dated February 7, 2007, between the Company and David E. Foley.
99.4	Reimbursement Policy for Non-Employee Directors dated December 31, 2008.

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EX-4

Exhibit 4.1

AMENDMENT TO LINE OF CREDIT NOTE

AND CREDIT AGREEMENT

This Amendment to Line of Credit Note and Credit Agreement is dated as of the 30^th day of December, 2008 and is by and between TII Network Technologies, Inc. (the “Borrower”) and JPMorgan Chase Bank, N.A. (the “Bank”) (the “Amendment”).

WHEREAS, on December 15, 2006 the Bank made available to the Borrower a revolving credit facility in the amount of $5,000,000 pursuant to a Credit Agreement dated December 15, 2006 between the Borrower and the Bank (the “Credit Agreement”) and evidenced by a Line of Credit Note dated December 15, 2006 from Borrower to Bank (the “Note”) and secured by a Continuing Security Agreement dated December 15, 2006 from the Borrower to the Bank (the “Security Agreement”) which was guaranteed pursuant to a Continuing Guaranty dated as of December 15, 2006 from TII Systems, Inc. to the Bank (the “Guaranty”) (the Credit Agreement, the Note, the Security Agreement, the Guaranty, and all other documents executed and delivered in connection therewith, collectively, the “Loan Documents”);

WHEREAS, the Borrower has requested that the Bank extend the maturity date set forth in the Note to which the Bank has agreed provided the Borrower enters into this Amendment;

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Borrower and the Bank hereby agree as follows:

1.         Capitalized terms not defined herein shall have the meaning set forth in the Note.

2.         The opening paragraph of the Note is hereby amended to read in its entirety as follows:

“Promise to Pay. On or before December 31, 2010, for value received, TII Network Technologies, Inc. (the “Borrower”) promises to pay to JPMorgan Chase Bank, N.A., whose address is 395 North Service Road, 3^rd Floor, Melville, New York 11747 (the “Bank”) or order, in lawful money of the United States of America, the sum of Five Million and 00/100 Dollars ($5,000,000.00) or such lesser sum as is indicated on Bank records, plus interest as provided below.”

3.         The following definitions are hereby added and/or amended and restated as set forth below:

“Adjusted LIBOR Rate” means, with respect to a LIBOR Advance for the relevant Interest Period, the sum of the Applicable Margin plus the LIBOR Rate.

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“Adjusted One Month LIBOR Rate” means, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the sum of (i) 2.50% per annum plus (ii) the quotient of (a) the interest rate determined by the Bank by reference to Reuters Screen LIBOR01, formerly known as Page 3750 of the Moneyline Telerate Service (together with any successor or substitute, the “Service”) or any successor or substitute page of the Service providing rate quotations comparable to those currently provided on such page of the Service, as determined by the Bank from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market to be the rate at approximately 11:00 a.m. London time, on such date or, if such date is not a Business Day, on the immediately preceding Business Day, for dollar deposits with a maturity equal to one (1) month divided by (b) one minus the Reserve Requirement (expressed as a decimal) applicable to dollar deposits in the London interbank market with a maturity equal to one (1) month.

“Advance” means a LIBOR Rate Advance or a CB Floating Rate Advance and “Advances” means all LIBOR Rate Advances and all CB Floating Rate Advances under this Note.

“Applicable Margin” means with respect to any CB Floating Rate Advance, 2.75% and with respect to any LIBOR Rate Advance, 4.50%.

“CB Floating Rate” shall mean a rate per annum equal to the Prime Rate, provided, that the CB Floating Rate shall never be less than the Adjusted One Month LIBOR Rate. Any change in the CB Floating Rate due to a change in the Prime Rate or the Adjusted One Month LIBOR Rate shall be effective from and including the effective date of such change in the Prime Rate or the Adjusted One Month LIBOR Rate, respectively.

“CB Floating Rate Advance” means any Advance under this Note when and to the extent that its interest rate is determined by reference to the CB Floating Rate.

“LIBOR Rate” means, with respect to the relevant Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the quotient of (a) the interest rate determined by the Bank by reference to Reuters Screen LIBOR01, formerly known as Page 3750 of the Service or any successor or substitute page of the Service providing rate quotations comparable to those currently provided on such page of the Service, as determined by the Bank from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market to be the rate at approximately 11:00 a.m. London time, on such date or, if such date is not a Business Day, on the immediately preceding Business Day, for dollar deposits with a maturity equal to the relevant Interest Period divided by (b) one minus the Reserve Requirement (expressed as a decimal) applicable to dollar deposits in the London interbank market with a maturity equal to the relevant Interest Period.

“Prime Rate” shall mean such rate of interest as is publicly announced by the Bank at its principal office from time to time as its prime rate. The Prime Rate is a variable rate and each change in the Prime Rate is effective from and including the date the change is announced as being effective. THE PRIME RATE IS A REFERENCE RATE AND MAY NOT BE THE BANK’S LOWEST RATE.

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4.         The Section of the Note entitled “Interest Rates” is hereby amended to read in its entirety as follows:

“Interest Rates. The Advance(s) evidenced by this Note may be drawn down and remain outstanding as up to five (5) LIBOR Rate Advances and/or a CB Floating Rate Advance. The Borrower shall pay interest to the Bank on the outstanding and unpaid principal amount of each CB Floating Rate Advance at the CB Floating Rate plus the Applicable Margin and each LIBOR Rate Advance at the Adjusted LIBOR Rate. Interest shall be calculated on the basis of the actual number of days elapsed in a year of 360 days. In no event shall the interest rate applicable to any Advance exceed the maximum rate allowed by law. Any interest payment which would for any reason be deemed unlawful under applicable law shall be applied to principal.”

5.         The Section of the Note entitled “Principal Payments” is hereby amended to read in its entirety as follows:

“Principal Payments. All outstanding principal and interest is due and payable in full on December 31, 2010, which is defined herein as the “Principal Payment Date”.

6.         All references in the Sections of the Note entitled “Notice and Manner of Electing Interest Rates on Advances”, “Conversion and Renewals”, “Interest Payments”, “Default Rate of Interest”, “Prepayment”, “Illegality” and “Inability to Determine Interest Rate” to a Prime Rate Advance shall hereinafter refer to a “CB Floating Rate Advance”.

7.         Section 2(a) in the Section of the Note entitled “Events of Default/Acceleration” is hereby amended to read as follows: “(a) fails to observe or perform or otherwise violates any other term, covenant, condition, or agreement (i) contained in Section 4.5 of the Credit Agreement after ten (10) days prior notice or (ii) any of the Negative Covenants contained in Section 5 of the Credit Agreement, as may be amended or modified, dated December 15, 2006, between the Borrower and the Bank (the “Credit Agreement”);”

8.         Section 10 in the Section of the Note entitled “Events of Default/Acceleration” is hereby amended to read as follows: “Any judgment in excess of $500,000.00 is entered against the Borrower or any Guarantor, or any attachment, levy, or garnishment is issued against any property of the Borrower or any Guarantor.”

9.         Section 11 in the Section of the Note entitled “Events of Default/Acceleration” is hereby deleted.

10.       The following is hereby added to Section 1.2 of the Credit Agreement:

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             “Facility Fee. The Borrower shall pay to the Bank on or prior to December 31, 2008, a facility fee equal to $5,000.00.”

11.       The following is hereby added to the end of Section 1.3 of the Credit Agreement:

“Notwithstanding anything to the contrary contained herein, the Bank will not fund against Eligible Inventory without the performance of a collateral audit and an appraisal of the Eligible Inventory, prepared at the Borrower’s expense, with all findings satisfactory to the Bank.”

12.       Section 5.2 K of the Credit Agreement is hereby amended to read in its entirety as follows:

“K.Tangible Capital Funds. Permit as of any fiscal quarter end, its Tangible Capital Funds to be less than $35,300,000.00.”

13.       Section 8.14 of the Credit Agreement is hereby amended to read in its entirety as follows:

“8.14Conflicting Terms. If this agreement is inconsistent with any provision in any other Related Documents, the Bank shall determine, in the Bank’s sole and absolute and reasonable discretion, which of the provisions shall control any such inconsistency.”

14.       The Borrower ratifies and reaffirms the Loan Documents and the Loan Documents, as hereby amended, shall remain in full force and effect.

15.       The Borrower represents and warrants that (a) the representations and warranties contained in the Credit Agreement are true and correct in all material respects as of the date of this Amendment, (b) no condition, at, or event which could constitute an event of default under the Credit Agreement, the Note or any other Loan Documents exists, and (c) no condition, event, act or omission has occurred, which, with the giving of notice or passage of time, would constitute an event of default under the Credit Agreement, the Note or any other Loan Document.

16.       The Borrower agrees to pay all fees and out-of-pocket disbursements incurred by the Bank in connection with this Amendment, including legal fees incurred by the Bank in the preparation, consummation, administration and enforcement of this Amendment.

17.       This Amendment shall become effective only after it is fully executed by the Borrower and the Bank.

18.       The Borrower acknowledges that as of the date of this Amendment it has no offsets with respect to all amounts owed by it to the Bank arising under or related to the Loan Documents on or prior to the date of this Amendment. The Borrower fully, finally and forever releases and discharges the Bank and its successors, assigns, directors, officers, employees, agents and representatives from any and all claims, causes of action, debts and liabilities, of whatever kind or nature, in law or in equity, whether now known or unknown to it, which it may have and which may have arisen in connection with the Loan Documents or the actions or omissions of the Bank related to the Loan Documents on or prior to the date hereof. The Borrower acknowledges and agrees that this Amendment is limited to the terms outlined above and shall not be construed as an agreement to change any other terms or provisions of the Loan Documents. This Amendment shall not establish a course of dealing or be construed as evidence of any willingness on the Bank’s part to grant other or future agreements, should any be requested.

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19.       This Amendment is a modification only and not a novation. Except for the above-quoted modification(s), the Loan Documents, any loan agreements, credit agreements, reimbursement agreements, security agreements, mortgages, deeds of trust, pledge agreements, assignments, guaranties, instruments or documents executed in connection with the Loan Documents, and all the terms and conditions thereof, shall be and remain in full force and effect with the changes herein deemed to be incorporated therein. This Amendment is to be considered attached to the Loan Documents and made a part thereof. This Amendment shall not release or affect the liability of any guarantor of the Note or credit facility executed in reference to the Loan Documents or release any owner of collateral granted as security for the Loan Documents. The validity, priority and enforceability of the Loan Documents shall not be impaired hereby. To the extent that any provision of this Amendment conflicts with any term or condition set forth in the Loan Documents, or any document executed in conjunction therewith, the provisions of this Amendment shall supersede and control. The Bank expressly reserves all rights against all parties to the Loan Documents.

20.       This Amendment shall be governed and construed in accordance with the laws of the State of New York

IN WITNESS WHEREOF, the undersigned have caused this Amendment to be executed as of the day and year first above written.

TII NETWORK TECHNOLOGIES, INC.
By:	/s/ Jennifer E. Katsch
Name:	Jennifer E. Katsch
Title:	Vice President - Finance and Chief Financial Officer
JPMORGAN CHASE BANK, N.A.
By:	/s/ Robert F. Eisen
Name:	Robert F. Eisen
Title:	Vice President

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EX-99

Exhibit 99.1

AMENDMENT TO EMPLOYMENT AGREEMENT

TO COMPLY WITH

INTERNAL REVENUE CODE SECTION 409A

THIS AMENDMENT (“Amendment”) is entered into effective as of January 1, 2009 and amends the Employment Agreement dated as of April 3, 2008 (the “Agreement”) by and between KENNETH A. PALADINO (“Executive”) and TII NETWORK TECHNOLOGIES, INC. (the “Company”).

WITNESSETH:

WHEREAS, the Company and Executive (collectively, the “Parties”) wish to amend the terms of the Agreement to comply with Section 409A of the Internal Revenue Code of 1986, as amended; and

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements hereinafter set forth, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

1. Section 5.B of the Agreement shall be amended by adding the following at the end thereof:

Any Bonus earned for any given period shall be paid to Executive in a single lump sum payment at the same time as bonuses with respect to such period are paid to executive officers of the Company, but no later than 74 days after the end of such period.

2.   Section 5.F of the Agreement shall be amended and restated in its entirety as follows:

Executive shall be entitled, in accordance with the Company’s reimbursement policies in effect from time to time, to receive reimbursement from the Company for reasonable business expenses incurred by Executive in the performance of his duties under this Agreement, provided Executive furnishes the Company with vouchers, receipts and other details of such expenses in the form reasonably required by the Company. Notwithstanding the foregoing, reimbursement to Executive of any given reimbursable expense shall be made as promptly as practicable following the Company’s receipt of such documentation but in any event no later than the end of Executive’s taxable year following Executive’s taxable year in which such expense is incurred. The amount of expenses reimbursed during one taxable year shall not affect the amount of expenses reimbursable by the Company during a subsequent taxable year, and the right to such reimbursement may not be exchanged or substituted for other forms of compensation to Executive.

3. Section 6.A(1) of the Agreement shall be amended and restated in its entirety as follows:

(1)       amounts accrued prior to the effective date of resignation or termination, which shall be paid in accordance with Sections 5.A, 5.B, 5.E or 5.F, as applicable;

4. Section 6.A(3) of the Agreement shall be amended and restated in its entirety as follows:

(3)Executive’s beneficiary and/or dependents shall be entitled, for a period of eighteen (18) months, to continuation, at the Company’s expense (with such cost of coverage to be paid by the Company no less frequently than monthly), of (i) such benefits as are at the time of Executive’s death or termination being provided to them under Section 5.D above or any replacement benefits as may be offered to other Company executive officers’ beneficiaries or dependents in accordance with the terms of such benefit plans, and (ii) any additional benefits as may be provided during such eighteen (18) month period to dependents of the Company’s executive officers in accordance with the terms of the Company’s policies and practices:

5. Section 6.A(4) of the Agreement shall be amended and restated in its entirety as follows:

(4)(i) any unpaid Bonus amount relating to periods prior to the year in which the termination occurs, plus (ii) a pro rata amount of Executive’s most recent performance Bonus paid (Bonus paid in the prior period divided by number of months in such period) for each full month of employment for Executive in the year of termination, each to be paid in accordance with Section 5.B, provided that, in the event any pro rata Bonus under subclause (ii) becomes payable on account of Executive’s termination due to Disability, such pro rata Bonus shall be paid in accordance with Section 5.B but not before the date that is at least sixty (60) days following termination of Executive’s employment on account of Disability; and provided, further that the financial results of the Company in the year of termination must be substantially similar to the financial results of the Company for the period of Executive’s most recent performance Bonus.

6. Section 6.A(5) of the Agreement shall be amended and restated in its entirety as follows:

(5)severance payments in amounts equal to, and payable in respect of, Executive’s Base Salary existing on the date of such death or termination, which payments shall continue for eighteen (18) months following such death or termination (but such severance payments shall discontinue and no longer be payable upon Executive’s taking any action contrary to his covenants provided for in Sections 7, 8 and 9), payable in regular intervals in accordance with the Company’s payroll practices as in effect from time to time (but no less frequently than monthly), with the first payment to be made on the first regularly scheduled payroll date, as applicable, on or after the date of death or the 60^th day after such termination on account of Disability. In the event of termination of Executive’s employment on account of Disability, and Executive’s death during such eighteen (18) month period, such amounts shall continue to be paid to Executive’s designated beneficiary or, in the absence of such designated beneficiary, his estate, during the balance of such eighteen (18) month period following such termination of Executive’s employment on account of Disability or such death; and

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7. Section 6.A(6) of the Agreement shall be amended and restated in its entirety as follows:

(6)Executive’s stock options shall immediately vest in full and the stock options shall be exercisable for one (1) year from the date of termination of employment, but in no event shall any such stock option be exercised after the date such stock option would otherwise have expired under the terms of the Stock Option Contract under which the option was granted.

8. The first sentence of Section 6.B of the Agreement shall be amended and restated in its entirety as follows:

Subject to the provisions set forth in Section 1.O requiring notice and an opportunity to cure, the Company may, immediately and unilaterally, terminate Executive’s employment hereunder for “Cause” at any time. In the event of a Termination For Cause or Executive’s voluntary resignation from employment (other than a Resignation for Good Reason), Executive shall not be entitled to receive, and the Company shall not be obligated to pay, any Base Salary, Bonus, severance salary, exercise or retention of any rights, or any other benefits, except for (i) any unpaid Base Salary accrued prior to the effective date of termination, to be paid in accordance with the Company’s regular payroll practice, but in no event later than the 30^th day following such termination, (ii) any unpaid Bonus amounts earned for periods prior to the year in which the termination occurs, to be paid in accordance with Section 5.B, and (iii) those, if any, required to be extended by applicable law.

9.  Section 6.C(2)(a) of the Agreement shall be amended and restated in its entirety as follows:

a.         amounts accrued prior to the effective date of resignation or termination to be paid as applicable in accordance with Sections 5.A, 5.B, 5.E or 5.F;

10. Section 6.C(2)(c) of the Agreement shall be amended and restated in its entirety as follows:

c.in the event that the Company fails to renew this Agreement prior to the expiration of the initial term or any additional term of this Agreement only, (i) any unpaid Bonus amount relating to periods prior to the year in which the termination occurs, plus (ii) a pro rata amount of Executive’s most recent performance Bonus paid (Bonus paid in the prior period divided by number of months in such period) for each full month of employment for Executive in the year of termination, each to be paid in accordance with Section 5.B, provided that, such pro rata Bonus shall not be paid until the date that is at least sixty (60) days following such termination of Executive’s employment; and provided, further, that the financial results of the Company in the year of termination must be substantially similar to the financial results of the Company for the period of Executive’s most recent performance Bonus;

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11. Section 6.C(2)(d) of the Agreement shall be amended and restated in its entirety as follows:

d.         severance payments in amounts equal to, and payable in respect of, Executive’s Base Salary existing on the date of such resignation or termination, which payments shall continue to be paid, in the amounts and at the times then in effect, for eighteen (18) months following such resignation or termination (but such severance payments shall discontinue and no longer be payable upon Executive’s taking any action contrary to his covenants provided for in Sections 7, 8 and 9), payable in regular intervals in accordance with the Company’s payroll practices as in effect from time to time (but no less frequently than monthly), with the first payment to be made on the first regularly scheduled payroll date on or after the 60^th day after such resignation or termination; and

12. Section 6.C(2)(e) of the Agreement shall be amended and restated in its entirety as follows:

e.Executive’s stock options shall immediately vest in full and the stock options shall be exercisable for one (1) year from the date of termination, but in no event shall any such stock option be exercised after the date such stock option would otherwise have expired under the terms of the Stock Option Contract under which the option was granted.

13. Section 13 of the Agreement shall be amended by adding the following new subsections K and L:

K.Time of Reimbursements/In-Kind Benefits.Any reimbursement to Executive provided for under the last paragraph of Section 6.A and under Section 13.B with respect to any given reimbursable expense shall be made as promptly as practicable following the Company’s receipt of vouchers, receipts and other details of such expenses, but in any event no later than the end of Executive’s taxable year following Executive’s taxable year in which such expense is incurred. The amount of expenses to be reimbursed, or the in-kind benefits to be provided, under the last paragraph of Section 6.A or under Section 13.B, as applicable, during one taxable year shall not affect the amount of expenses reimbursable, or the in-kind benefits to be provided, by the Company during a subsequent taxable year, and the right to reimbursement or in-kind benefits may not be exchanged or substituted for other forms of compensation to Executive.

L.        409A Omnibus Provision. Notwithstanding any other provision of this Agreement, it is intended that any payment or benefit which is provided pursuant to or in connection with this Agreement which is considered to be deferred compensation subject to Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), shall be paid in a manner as would avoid the tax consequences provided under Section 409A of the Code for non-compliance therewith. If Executive is a “specified employee” (as defined in Section 409A of the Code), thenpayment of any amount or provision of any benefit under this Agreement which is considered deferred compensation subject to Section 409A of the Code shall be deferred for six (6) months after termination of Executive’s employment or, if earlier, until Executive’s death, as required by Section 409A(a)(2)(B)(i) of the Code (the “409A Deferral Period”). The payments that otherwise would have been made in the 409A Deferral Period shall be accumulated and paid in a lump sum on the first day of the month immediately following the end of the 409A Deferral Period, and the balance of the payments shall be made as otherwise scheduled. None of the Company, any of its affiliates, or any of their officers, directors, employees or representatives shall be liable to the Executive for any interest, taxes or penalties resulting from non-compliance with Section 409A of the Code.

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IN WITNESS WHEREOF, the parties hereto knowingly and voluntarily execute this Amendment this 31st day of December 2008.

TII NETWORK TECHNOLOGIES, INC.
  

By:	/s/ Jennifer E. Katsch
	Jennifer E. Katsch
Its:	Vice President - Finance
/s/ Kenneth A. Paladino
Kenneth A. Paladino

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EX-99

Exhibit 99.2

AMENDMENT TO TERMINATION SEVERANCE AGREEMENT

TO COMPLY WITH

INTERNAL REVENUE CODE SECTION 409A

THIS AMENDMENT (“Amendment”) is entered into effective as of January 1, 2009 and amends the Termination Severance Agreement dated as of December 15, 2006 (the “Agreement”) by and between Jennifer E. Katsch (“Employee”) and TII NETWORK TECHNOLOGIES, INC. (the “Company”).

WITNESSETH:

WHEREAS, the Company and Employee (collectively, the “Parties”) wish to amend the terms of the Agreement to comply with Section 409A of the Internal Revenue Code of 1986, as amended; and

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements hereinafter set forth, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows.

1. Section 2(a) of the Agreement shall be amended and restated in its entirety to read as follows:

In the event that (i) the Company shall terminate the employment of Employee for any reason other than (A) for Cause, as such term is defined below, or (B) if Employee’s employment is terminated as a result of the death of Employee or (ii) Employee shall voluntary terminate Employee’s employment with the Company but only for Good Reason, as defined below (a “Termination Event”), the Company will pay Employee an amount equal to the amount of Employee’s base salary, at the per annum rate in effect on the Termination Date (as such term is defined below), that would have been paid to the Employee if Employee’s employment had continued from the Termination Date until the day immediately preceding the six month anniversary of the Termination Date (the “Severance Period”), less the Required Deductions as defined below (the “Severance Payments”), to be paid at the times described in the following sentence. Except as otherwise provided in Section 11 below, such payments shall be made in substantially equal installments at the time of the Company’s regular pay intervals for its executive officers (but no less frequently than monthly), with the first installment to be paid on the first regularly scheduled payroll date on or after the sixtieth (60^th) day after the Termination Date and the remaining installments to be made on each subsequent payroll date for six months.

2. Section 2(b) of the Agreement shall be amended by adding the following after the first sentence thereof:

Except as otherwise provided in Section 11 below, any payments to be provided to, or on behalf of, Employee or Employee’s family pursuant to the preceding sentence shall be provided at such time(s) as required to provide the applicable coverage, but in no event less frequently than monthly.

3. Section 2(d) of the Agreement shall be amended and restated in its entirety to read as follows:

In no event, however, will Employee be entitled to receive any rights, amounts, or benefits under this Agreement unless (i) Employee executes and delivers to the Company a Release and Covenant Not to Sue in the form annexed hereto as Exhibit “A” (or such other similar form as may be reasonably required by the Company in order to comply with applicable law, including with respect to job termination programs) which is not revoked by Employee and (ii) Employee is not in violation of any of the terms and provisions of this Agreement.

4. Section 2(h) of the Agreement shall be amended and restated in its entirety to read as follows:

The term “Termination Date” shall mean the date on which Employee experiences a “separation from service,” within the meaning of Section 409A of the Code, where it is reasonably anticipated that no further services will be performed by Employee after such date or that the level of bona fide services Employee would perform after that date (whether as an employee or independent contractor) would permanently decrease to no more than 20 percent of the average level of bona fide services performed by Employee over the immediately preceding 36-month period (or, if lesser, Employee’s period of service).

5. Section 6 of the Agreement shall be amended to reflect that the present principal executive offices of the Company, to which notices are presently to be sent  to the Company, are located at 141 Rodeo Drive, Edgewood, New York 11717.

6. The Agreement shall be amended by adding a new Section 11 to read as follows:

11.       409A Omnibus Provision. Notwithstanding any other provision of this Agreement, it is intended that any payment or benefit which is provided pursuant to or in connection with this Agreement which is considered to be deferred compensation subject to Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), shall be paid in a manner as would avoid the unfavorable tax consequences provided under Section 409A of the Code for non-compliance therewith. If Employee is a “specified employee” (as defined in Section 409A of the Code), thenpayment of any amount or provision of any benefit under this Agreement which is considered deferred compensation subject to Section 409A of the Code shall be deferred for six (6) months after termination of Employee’s employment or, if earlier, until Employee’s death, as required by Section 409A(a)(2)(B)(i) of the Code (the “409A Deferral Period”). The payments that otherwise would have been made in the 409A Deferral Period shall be accumulated and paid in a lump sum on the first day of the month immediately following the end of the 409A Deferral Period, and the balance of the payments shall be made as otherwise scheduled. None of the Company, any of its affiliates, or any of their officers, directors, employees or representatives shall be liable to the Employee for any interest, taxes or penalties resulting from non-compliance with Section 409A of the Code.

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Except as specifically amended hereby, the Agreement shall remain in full force and effect as prior to this Amendment.

IN WITNESS WHEREOF, the parties hereto knowingly and voluntarily execute this Amendment this 31st day of December 2008.

TII NETWORK TECHNOLOGIES, INC.
  

By:	/s/ Kenneth A. Paladino
	Kenneth A. Paladino
Its:	President
/s/ Jennifer E. Katsch
Jennifer E. Katsch

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EX-99

Exhibit 99.3(a)

AGREEMENT

AGREEMENT dated February 7, 2007 between TII NETWORK TECHNOLOGIES, INC., a Delaware corporation (together with its subsidiaries, the “Company”), and David E. Foley, an individual (“Employee”).

W I T N E S S E T H:

WHEREAS, Employee has been a valuable senior executive employee of the Company for a number of years; and

WHEREAS, the Company and Employee desire to set forth in writing certain agreements between them in the event of the termination of the employment of Employee by the Company under certain circumstances.

NOW, THEREFORE, in consideration of the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and Employee hereby agree as follows:

1. Employee at Will.

The Company and Employee hereby acknowledge and agree that Employee is an employee at will, and that the Company may terminate the employment of Employee at any time for any reason or for no reason whatsoever.

2. Severance Payments Upon Termination other than for Cause.

(a)       In the event that (i) the Company shall terminate the employment of Employee for any reason other than (A) for Cause, as such term is defined below, or (B) if Employee’s employment is terminated as a result of the death of Employee or (ii) Employee shall voluntary terminate his employment with the Company but only for Good Reason, as defined below (a “Termination Event”), the Company will continue to pay to Employee his base salary at the per annum rate in effect on the Termination Date (as such term is defined below), for a period of at least six months commencing on the Termination Date and ending on the day immediately preceding the six month anniversary of the Termination Date (the “Severance Period”), less, in each case, the Required Deductions as defined below (the “Severance Payments”). Such payments shall be made in substantially equal installments at the time of the Company’s regular pay intervals for its executive officers, or in such other manner as shall be mutually agreeable to the Company and Employee; provided that no Severance Payment that constitutes a deferral of compensation under Section 409A of the Internal Revenue Code of 1986, as amended, may be made before the date which is six months after the Termination Date (in which event all amounts that otherwise would have been paid prior to such date shall be paid in a single lump sum as of the last day of the month following such six month delay).

(b)      Upon a Termination Event, the Company, to the extent permitted under the terms of its group insurance plans, shall continue, at the Company’s cost, to maintain, the Company’s then existing group medical and other insurance for Employee and (to the extent then participating therein) his family during the Severance Period. If not so permitted then, if Employee shall elect to maintain, for himself and/or his family, group medical insurance pursuant to the federal “COBRA” law, presently 29 U.S.C. sec. 1161 et. seq., the Company will reimburse Employee for, or, at the Company’s option, the Company will pay directly, all premium costs associated therewith for the Severance Period for coverage for him and his family under the Company’s group medical insurance in effect on the Termination Date (after which the Company will allow Employee to continue such coverage at Employee’s own expense for the remainder of any COBRA continuation period pursuant to applicable law). Furthermore, any stock option granted to Employee which has not, by its express terms, vested shall be deemed to have vested upon the occurrence of a Termination Event and the exercise period under any such stock option shall be extended to a date which is the fifteenth (15^th) day of the third month following the date on which, or, if later, December 31 of the calendar year in which, the stock option otherwise would have expired in accordance with the terms of such option but, in no event after the last day of the scheduled term of such option.

(c)       The Company shall withhold, and the payments otherwise payable to Employee hereunder shall be reduced by, all applicable federal, state and local taxes, FICA, unemployment compensation taxes and other taxes, assessments and withholdings required by applicable law to be withheld (the “Required Deductions”).

(d)       In no event, however, will Employee be entitled to receive any rights, amounts, or benefits under this Agreement unless (i) he executes and delivers to the Company a Release and Covenant Not to Sue in the form annexed hereto as Exhibit “A” which is not revoked by Employee and (ii) Employee is not in violation of any of the terms and provisions of this Agreement. The first Severance Payment may be withheld by the Company until such Release and Covenant Not to Sue can no longer be, and is not, revoked by Employee.

(e)       Employee will not be required to mitigate the amount of any Severance Payments to which he might be entitled hereunder.

(f)        The term “cause” shall mean (i) a willful refusal or willful failure by Employee to perform any duties consistent with his present position with the Company which is not cured within 14 days after notice of such breach shall have been given to Employee by the Company (or within 30 days after such notice if such breach shall not be curable within 14 days after such notice and Employee shall, at all times, diligently pursue the cure of such breach within such 30-day period), (ii) the commission by Employee of an act involving moral turpitude, dishonesty, theft, misappropriation of assets, or unethical business conduct, in each case which materially impairs or harms the reputation, or is otherwise to the material detriment, of the Company, or any of its subsidiaries or affiliated corporations, or which could reasonably be expected to do so, (iii) the possession or use of illegal drugs or prohibited substances, (iv) excessive drinking which impairs Employee’s ability to perform his duties and responsibilities hereunder, (v) the conviction of Employee of, or the pleading of nolo contendere by Employee to, any felony, or a misdemeanor involving any of the acts referred to in clause (e)(ii)above, or (vi) a breach by Employee of Employee’s Employee (Confidentiality) Agreement, dated October 25, 2003, as same may hereinafter be amended, or a breach by Employee of any of the Company’s Codes of Ethics, in either case which is not which is not cured within 14 days after notice of such breach shall have been given to Employee by the Company (or within 30 days after such notice if such breach shall not be curable within 14 days after such notice and Employee shall, at all times, diligently pursue the cure of such breach within such 30-day period).

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(g)       The term “Good Reason” shall mean any of the following conditions or events which condition(s) or event(s) remain in effect thirty (30) days after written notice is provided by Employee to the Company detailing such condition or event: (i) the assignment by the Company or an affiliate of the Company to Employee of any duty substantially adverse and inconsistent with the position in the Company presently held by Employee or a significant adverse alteration in the nature or status of Employee’s responsibilities or conditions of employment from those currently in effect, provided, however, that a mere change in job title which does not result in the assignment to Employee of substantially adverse and inconsistent duties or which does not constitute a significant alternation in the nature or status of Employee’s responsibilities or conditions of employment shall not constitute “Good Reason;” (ii) the Company reduces Employee’s annual salary or fails to pay or provide any material item of compensation or benefits when due; or (iii) the Company requires Employee to relocate his principal place of employment by more than 50 miles from its current location.

(h)       The term “Termination Date” shall mean the last day Employee is employed by the Company.

4. Representations.

(a)       Employee represents and warrants that he has full authority and legal capacity to execute and deliver this Agreement and perform his duties and obligations hereunder, that he has duly executed this Agreement, and that he is not under any contractual, legal or other restraint or prohibition that would restrict, prohibit or prevent Employee from performing this Agreement and his duties and obligations hereunder.

(b)       Employee acknowledges that he is free to seek advice from independent counsel with respect to this Agreement. Employee has obtained such advice and is not relying on any representation or advice from the Company or any of its officers, directors, attorneys, or other representatives regarding this Agreement, its contents or effect.

(c)       The Company represents and warrants that it has full corporate power and authority to execute and deliver this Agreement and perform its duties and obligations hereunder, that it has duly executed this Agreement, and that it is not under any contractual, legal or other restraint or prohibition that would restrict, prohibit or prevent Employer from performing this Agreement and his duties and obligations hereunder.

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5. Assignability.

This Agreement may not be assigned by Employee and all of its terms and conditions shall be binding upon and inure to the benefit of Employee and his heirs, executors, administrators, legal representatives and assigns. This Agreement may be assigned, in whole or in part, by the Company and shall be binding upon and inure to the benefit of the Company, its successors and assigns. Successors of the Company shall include, without limitation, any corporation or other entity acquiring directly or indirectly all or a substantial part of the business of the Company whether by merger, consolidation, tender, exchange or other stock acquisition, purchase, lease or other acquisition of all or substantially all of its assets, or otherwise, and such successor shall thereafter be deemed the “Company” for purposes hereof.

6. Notices.

Except as otherwise expressly provided, any notice, request, demand or other communication permitted or required to be given under this Agreement shall be in writing, shall be sent by one of the following means to Employee at 7 Burnham Court, Smithtown, New York 11787 and to the Company at its principal executive offices, presently 1385 Akron Street, Copiague, New York 11726, Attention: President (or to such other address as shall be designated hereunder by notice to the other party to receive such notice) and shall be deemed conclusively to have been given: (a) on the first business day following the day timely deposited for overnight delivery with Federal Express (or other equivalent national overnight courier service) or United States Express Mail; (b) on the fifth business day following the day duly sent by certified or registered United States mail, return receipt requested; or (c) when otherwise actually received by the addressee on a business day (or on the next business day if received after the close of normal business hours or on any non-business day), in each case with postage and delivery charges prepaid by the sender.

7. Waivers, No Cumulative Rights, Etc.

Each and every modification and amendment of this Agreement shall be in writing and signed by the parties hereto, and any waiver of, or consent to any departure from, any term or provision of this Agreement shall be in writing and signed by the party granting the waiver or consent. Any waiver or consent from either party respecting any term or provision of this Agreement shall be effective only in the specific instance and for the specific purpose for which given and shall not be deemed, regardless of frequency given, to be a further or continuing waiver or consent. The failure or delay of either party at any time or times to require performance of, or to exercise any of its powers, rights or remedies with respect to, any term or provision of this Agreement in no manner shall affect that party’s right at a later time to enforce any such term or provision.

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8. Interpretation, Headings.

The parties acknowledge and agree that the terms and provisions of this Agreement have been negotiated, shall be construed fairly as to all parties hereto, and shall not be construed in favor of or against any party (regardless of the party causing the drafting of this Agreement). The section headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

9. Severability.

The invalidity or unenforceability of any provision of this Agreement shall not affect, impair or invalidate any other provision of this Agreement.

10.   Counterparts; Facsimile Signatures; New York Governing Law; Amendments, Entire Agreement.

This Agreement may be executed in two counterpart copies, each of which may be executed by only one of the parties hereto, but both of which, when taken together, shall constitute a single agreement binding upon the parties hereto. Any signature delivered by a party by facsimile transmission shall be deemed to be an original signature hereto. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, without regard to principles of conflicts of laws that would defer to the substantive laws of another jurisdiction. This Agreement contains the entire agreement of the parties and supersedes all prior representations, agreements and understandings, oral or otherwise, between the parties with respect to the matters contained herein.

IN WITNESS WHEREOF, the Company and Employee have signed this Agreement on the date set forth on the first page of this Agreement.

TII NETWORK TECHNOLOGIES, INC.
By:	/s/ Kenneth A. Paladino

Print Name:	Kenneth A. Paladino
Print Title:	President
/s/ David E. Foley
David E. Foley

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Exhibit A

Release and Covenant Not to Sue

________________, 20[__]

[Name and Address of Employee]

Re: Separation from Employment

Dear xxxxxxxx:

This letter (“Agreement”) sets forth the agreement reached concerning the termination of your employment with TII Network Technologies, Inc. (the “Company”), including its current and former parents, subsidiaries and affiliated entities, and theft respective current and former successors, assigns, representatives, agents, attorneys, shareholders, officers, directors and employees, both individually and in their official capacities (collectively known as the “Company”).

1.         Your employment with the Company will terminate effective __________, 20[__]. The Company will also provide you with a lump-sum payment, less applicable withholdings and deductions, which represents the value of your accrued unused vacation, if any. You acknowledge and agree that your employment with the Company ends for all purposes on _________________, 20[__].

2.         In addition, in consideration for signing this Agreement and in exchange for the promises, covenants and waivers set forth herein, the Company will, provided you have executed and delivered this Agreement and have not revoked this Agreement, in either case as set forth below, provide you with the Severance Payments (net of Required Deductions), pursuant to, and as such terms are defined in, and the benefits provided in, Section 2 of that certain Severance Agreement between you and the Company, dated [DATE] (the “Severance Agreement”).

3.         In consideration of the payment described in paragraph 2 above, and for other good and valuable consideration, you hereby release and forever discharge, and by this instrument release and forever discharge, the Company from all debts, obligations, promises, covenants, agreements, contracts, endorsements, bonds, controversies, suits, actions, causes of action, judgments, damages, expenses, claims or demands, in law or in equity, which you ever had, now have, or which may arise in the future, regarding any matter arising on or before the date of your execution of this Agreement, including but not limited to all claims (whether known or unknown) regarding your employment at or termination of employment from the Company, any contract (express or implied), any claim for equitable relief or recovery of punitive, compensatory, or other damages or monies, attorneys’ fees, any tort, and all claims for alleged discrimination based upon age, race, color, sex, sexual orientation, marital status, religion, national origin, handicap, disability, or retaliation, including any claim, asserted or unasserted, which could arise under Title VII of the Civil Rights Act of 1964; the Equal Pay Act of 1963; the Age Discrimination in Employment Act of 1967; the Older Workers Benefit Protection Act of 1990; the Americans With Disabilities Act of 1990; the Civil Rights Act of 1866, 42 U.S.C. § 1981; Employee Retirement Income Security Act of 1974; the Family and Medical Leave Act of 1993; the Civil Rights Act of 1991; the Worker Adjustment and Refraining Notification Act of 1988; the New York State Human Rights Law; the New York City Human Rights Law; and any other federal, state or local laws, rules or regulations, whether equal employment opportunity laws, rules or regulations or otherwise, or any right under any pension, welfare, or stock plans, provided, however, that there shall be expressly excluded from this Release and Covenant Not to Sue any and all claims that may arise under the Severance Agreement. This Agreement may not be cited as, and does not constitute any admission by the Company of, any violation of any such law or legal obligation with respect to any aspect of your employment or termination therefrom.

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4.         You represent and agree that you have not filed any lawsuits against the Company or filed or caused to be filed any charges or complaints against the Company with any municipal, state or federal agency charged with the enforcement of any law. Pursuant to and as a part of your release and discharge of the Company, as set forth herein, with the sole exception of your right to bring a proceeding pursuant to the Older Workers Benefit Protection Act to challenge the validity of your release of claims pursuant to the Age Discrimination in Employment Act, you agree, not inconsistent with EEOC Enforcement Guidance On Non-Waivable Employee Rights Under EEOC-Enforced Statutes dated April 11, 1997 and, to the fullest extent permitted by law, not to sue or file a charge, complaint, grievance or demand for arbitration against the Company in any forum or assist or otherwise participate willingly or voluntarily in any claim, arbitration, suit, action, investigation or other proceeding of any kind which relates to any matter that involves the Company, and that occurred up to and including the date of your execution of this Agreement, unless required to do so by court order, subpoena or other directive by a court, administrative agency, arbitration panel or legislative body, or unless required to enforce this Agreement. To the extent any such action may be brought by a third party, you expressly waive any claim to any form of monetary or other damages, or any other form of recovery or relief in connection with any such action. Nothing in the foregoing paragraph shall prevent you (or your attorneys) from (i) commencing an action or proceeding to enforce the Severance Agreement or (ii) exercising your right under the Older Workers Benefit Protection Act of 1990 to challenge the validity of your waiver of ADEA claims set forth in paragraph 3 of this Agreement.

5.         You represent, warrant and acknowledge that the Company owes you no wages, commissions, bonuses, sick pay, personal leave pay, severance pay, vacation pay or other compensation or benefits or payments or form of remuneration of any kind or nature, other than that specifically provided for in this Agreement.

6.         Neither you nor the Company will disparage or criticize the other, or issue any communication, written or otherwise, that reflects adversely on or encourages any adverse action against the other, including, without limitation, disclosing any claims that have been or could have been raised against the other, except if testifying truthfully under oath pursuant to any lawful court order or subpoena or otherwise responding to or providing disclosures required by law.

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7.         You hereby acknowledge that you will continue to be bound by your Employee (Confidentiality) Agreement, dated July 19, 1989, between you and the Company, as same has been amended. You hereby confirm that you have delivered to the Company and retained no copies of any written materials, data, software, files, records and documents (including those that are electronically stored) made by you or coming into your possession during the course of your employment with the Company that related to the business of the Company or any subsidiary of the Company. You further confirm that you have delivered to the Company any and all property (including, without limitation, Company credit cards) and equipment of the Company (including, without limitation, laptop and other computers, etc.) which may have been in your possession.

8.         Upon service on you, or anyone acting on your behalf, of any subpoena, order, directive or other legal process requiring you to engage in conduct encompassed within paragraphs 6 or 7 of this Agreement, you or your attorney shall immediately notify the Company of such service and of the content of any testimony or information to be provided pursuant to such subpoena, order, directive or other legal process and within two (2) business days send to the President of the Company via overnight delivery (at the Company’s expense) a copy of said documents served upon you.

9.         You agree that you will reasonably assist and cooperate with the Company in connection with the defense or prosecution of any claim that may be made against or by the Company, or in connection with any ongoing or future investigation or dispute or claim of any kind involving the Company, including any proceeding before any arbitral, administrative, judicial, legislative, or other body or agency, including testifying in any proceeding to the extent such claims, investigations or proceedings relate to services performed or required to be performed by you, pertinent knowledge possessed by you, or any act or omission by you. You further agree to perform all acts and execute and deliver any documents that may be reasonably necessary to carry out the provisions of this paragraph.

10.       This Agreement and the provisions of your Severance Agreement setting forth your obligations following your termination of employment constitute the entire agreement between the Company and you, and supersedes and cancels all prior and contemporaneous written and oral agreements between the Company and you. You affirm that, in entering into this Agreement, you are not relying upon any oral or written promise or statement made by anyone at any time on behalf of the Company.

11.       This Agreement is binding upon the parties hereto and theft successors, assigns, heirs, executors, administrators and legal representatives.

12.       If any of the provisions, terms or clauses of this Agreement is declared illegal, unenforceable or ineffective in a legal forum, those provisions, terms and clauses shall be deemed severable, such that all other provisions, terms and clauses of this Agreement shall remain valid and binding upon both parties.

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13.       Without detracting in any respect from any other provision of this Agreement:

a.         You, in consideration of the payments and benefits provided to you as described in paragraph 2 of this Agreement, agree and acknowledge that this Agreement constitutes a knowing and voluntary waiver of all rights or claims you have or may have against the Company as set forth herein, arising on or before the date of your execution of this Agreement, including, but not limited to, all rights or claims arising under the Age Discrimination in Employment Act of 1967, as amended (“ADEA”), including, but not limited to, all claims of age discrimination in employment and all claims of retaliation in violation of the ADEA; and you have no physical or mental impairment of any kind that has interfered with your ability to read and understand the meaning of this Agreement or its terms, and that you are not acting under the influence of any medication or mind-altering chemical of any type in entering into this Agreement.

b.         You understand that, by entering into this Agreement, you do not waive rights or claims that may arise after the date of your execution of this Agreement, including without limitation any rights or claims that you may have to secure enforcement of the terms and conditions of this Agreement.

c.         You agree and acknowledge that the consideration provided to you under Section 2 of this Agreement is in addition to anything of value to which you are already entitled.

d.         The Company hereby advises you to consult with an attorney prior to executing this Agreement.

e.         You acknowledge that you were informed that you had at least twenty-one (21) days in which to review and consider this Agreement, and to consult with an attorney regarding the terms and effect of this Agreement.

14.       The Company agrees that you may revoke this Agreement within seven (7) days from the date you sign this Agreement, in which case this Agreement shall be null and void and of no force or effect on either the Company or you. Any revocation must be in writing and received by the Company by 5:00 p.m. on or before the seventh day after this Agreement is executed by you. Such revocation must be sent to the undersigned at the Company.

15.       This Agreement may not be changed or altered, except by a writing signed by the Company and you. This Agreement is entered into in the State of New York, and the laws of the State of New York will apply to any dispute concerning it, excluding the conflict-of-law principles thereof that would defer to the laws of another jurisdiction.

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YOU EXPRESSLY ACKNOWLEDGE, REPRESENT, AND WARRANT THAT YOU HAVE READ THIS AGREEMENT CAREFULLY; THAT YOU FULLY UNDERSTAND THE TERMS, CONDITIONS, AND SIGNIFICANCE OF THIS AGREEMENT; THAT THE COMPANY HAS ADVISED YOU TO CONSULT WITH AN ATTORNEY CONCERNING THIS AGREEMENT; THAT YOU HAVE HAD A FULL OPPORTUNITY TO REVIEW THIS AGREEMENT WITH AN ATTORNEY; THAT YOU UNDERSTAND THAT THIS AGREEMENT HAS BINDING LEGAL EFFECT; AND THAT YOU HAVE EXECUTED THIS AGREEMENT FREELY, KNOWINGLY AND VOLUNTARILY.

PLEASE READ CAREFULLY. THIS AGREEMENT HAS IMPORTANT LEGAL CONSEQUENCES.

TII NETWORK TECHNOLOGIES, INC.

By:

Name: xxxxxxxxxxxxxxxxxx

Title: xxxxxxxxxxxxxx

Date: _________________ 20[__]

AGREED:

Name

Date:________________

On this____ day of ___________ 20[__] before me personally came ________________, to me known to be the individual described in the foregoing instrument, who executed the foregoing instrument in my presence, and who duly acknowledged to me that he executed the same.

Notary Public

You must sign and return this Agreement to the Company no later than 5:00 p.m. on the 21st day following receipt of this document or irrevocably lose the opportunity to receive the consideration detailed herein.

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EX-99

Exhibit 99.3(b)

AMENDMENT TO TERMINATION SEVERANCE AGREEMENT

TO COMPLY WITH

INTERNAL REVENUE CODE SECTION 409A

THIS AMENDMENT (“Amendment”) is entered into effective as of January 1, 2009 and amends the Termination Severance Agreement dated as of February 7, 2007 (the “Agreement”) by and between David E. Foley (“Employee”) and TII NETWORK TECHNOLOGIES, INC. (the “Company”).

WITNESSETH:

WHEREAS, the Company and Employee (collectively, the “Parties”) wish to amend the terms of the Agreement to comply with Section 409A of the Internal Revenue Code of 1986, as amended; and

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements hereinafter set forth, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows.

1. Section 2(a) of the Agreement shall be amended and restated in its entirety to read as follows:

In the event that (i) the Company shall terminate the employment of Employee for any reason other than (A) for Cause, as such term is defined below, or (B) if Employee’s employment is terminated as a result of the death of Employee or (ii) Employee shall voluntary terminate Employee’s employment with the Company but only for Good Reason, as defined below (a “Termination Event”), the Company will pay Employee an amount equal to the amount of Employee’s base salary, at the per annum rate in effect on the Termination Date (as such term is defined below), that would have been paid to the Employee if Employee’s employment had continued from the Termination Date until the day immediately preceding the six month anniversary of the Termination Date (the “Severance Period”), less the Required Deductions as defined below (the “Severance Payments”), to be paid at the times described in the following sentence. Except as otherwise provided in Section 11 below, such payments shall be made in substantially equal installments at the time of the Company’s regular pay intervals for its executive officers (but no less frequently than monthly), with the first installment to be paid on the first regularly scheduled payroll date on or after the sixtieth (60^th) day after the Termination Date and the remaining installments to be made on each subsequent payroll date for six months.

2. Section 2(b) of the Agreement shall be amended by adding the following after the first sentence thereof:

Except as otherwise provided in Section 11 below, any payments to be provided to, or on behalf of, Employee or Employee’s family pursuant to the preceding sentence shall be provided at such time(s) as required to provide the applicable coverage, but in no event less frequently than monthly.

3. Section 2(d) of the Agreement shall be amended and restated in its entirety to read as follows:

In no event, however, will Employee be entitled to receive any rights, amounts, or benefits under this Agreement unless (i) Employee executes and delivers to the Company a Release and Covenant Not to Sue in the form annexed hereto as Exhibit “A” (or such other similar form as may be reasonably required by the Company in order to comply with applicable law, including with respect to job termination programs) which is not revoked by Employee and (ii) Employee is not in violation of any of the terms and provisions of this Agreement.

4. Section 2(h) of the Agreement shall be amended and restated in its entirety to read as follows:

The term “Termination Date” shall mean the date on which Employee experiences a “separation from service,” within the meaning of Section 409A of the Code, where it is reasonably anticipated that no further services will be performed by Employee after such date or that the level of bona fide services Employee would perform after that date (whether as an employee or independent contractor) would permanently decrease to no more than 20 percent of the average level of bona fide services performed by Employee over the immediately preceding 36-month period (or, if lesser, Employee’s period of service).

5. Section 6 of the Agreement shall be amended to reflect that the present principal executive offices of the Company, to which notices are presently to be sent to the Company, are located at 141 Rodeo Drive, Edgewood, New York 11717.

6. The Agreement shall be amended by adding a new Section 11 to read as follows:

11.       409A Omnibus Provision. Notwithstanding any other provision of this Agreement, it is intended that any payment or benefit which is provided pursuant to or in connection with this Agreement which is considered to be deferred compensation subject to Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), shall be paid in a manner as would avoid the unfavorable tax consequences provided under Section 409A of the Code for non-compliance therewith. If Employee is a “specified employee” (as defined in Section 409A of the Code), thenpayment of any amount or provision of any benefit under this Agreement which is considered deferred compensation subject to Section 409A of the Code shall be deferred for six (6) months after termination of Employee’s employment or, if earlier, until Employee’s death, as required by Section 409A(a)(2)(B)(i) of the Code (the “409A Deferral Period”). The payments that otherwise would have been made in the 409A Deferral Period shall be accumulated and paid in a lump sum on the first day of the month immediately following the end of the 409A Deferral Period, and the balance of the payments shall be made as otherwise scheduled. None of the Company, any of its affiliates, or any of their officers, directors, employees or representatives shall be liable to the Employee for any interest, taxes or penalties resulting from non-compliance with Section 409A of the Code.

2

Except as specifically amended hereby, the Agreement shall remain in full force and effect as prior to this Amendment.

IN WITNESS WHEREOF, the parties hereto knowingly and voluntarily execute this Amendment this 31st day of December 2008.

TII NETWORK TECHNOLOGIES, INC.
  

By:	/s/ Kenneth A. Paladino
	Kenneth A. Paladino
Its:	President
/s/ David E. Foley
David E. Foley

3

EX-99

Exhibit 99.4

TII NETWORK TECHNOLOGIES, INC.

REIMBURSEMENT POLICY

FOR

NON-EMPLOYEE DIRECTORS

Each non-employee director of TII Network Technologies, Inc. (the “Corporation”) shall be entitled to receive reimbursement from the Corporation for reasonable travel and other business expenses incurred by such non-employee director in attending the Corporation’s Board of Director’s (the “Board”) meetings and meetings of the Board’s Audit, Compensation and Nominating/Governance Committees, provided the non-employee director furnishes the Corporation with vouchers, receipts and other details of such expenses in the form reasonably required by the Corporation. Notwithstanding the foregoing, reimbursement to a non-employee director of any given reimbursable expense shall be made as promptly as practicable following the Corporation’s receipt of such documentation, but in any event no later than the end of the non-employee director’s taxable year following the non-employee director’s taxable year in which such expense is incurred. The amount of expenses reimbursed during one taxable year shall not affect the amount of expenses reimbursable by the Corporation during a subsequent taxable year, and the right to such reimbursement may not be exchanged or substituted for other forms of compensation to the non-employee director.

TII TECHNOLOGIES, INC.
By:	/s/ Jennifer E. Katsch
Its:	Vice President - Finance and Chief Financial Officer
Date:	12/31/08