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): January 6, 1998
TII INDUSTRIES, 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)
(516) 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)
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ITEM 5. OTHER EVENTS
(a) On January 6, 1998, the Company issued a press release in
which it announced that, effective January 19, 1998, George S. Katsarakes will
join the Company as Executive Vice President and Chief Operating Officer,
reporting directly to Timothy J. Roach, President and Chief Executive Officer.
(b) On January 7, 1998, the Securities and Exchange Commission
granted the Company's request to withdraw Registration Statement No. 333-38467
which the Company had filed to register shares of its Common Stock for a
proposed underwritten public offering. The Company had announced the
postponement of the proposed offering in November 1997.
(c) On January 12, 1998, the Company entered into a Seventh
Amendment and Waiver to its Revolving Credit Agreement dated January 31, 1995
(as previously amended and as so amended, the "Revolving Credit Agreement") with
The Chase Manhattan Bank (formerly known as Chemical Bank (the "Bank") in order
to (i) shorten the maturity of the loan facility to December 31, 1998 (subject
to earlier termination in certain events), (ii) fix the availability under the
loan facility (for the duration of the loan facility) at $1,500,000 (in lieu of
$2,800,000 in availability at January 12, 1998, reducing by $400,000 at the end
of each calendar quarter thereafter), (iii) adjust the interest rate (to the
Bank's prime rate, through February 28, 1998, and, thereafter, to its prime rate
plus one percent per annum), applicable to borrowings under the loan facility,
(iv) waive any default that may have occurred by reason of any loss sustained by
the Company for its fiscal quarter and four fiscal quarters ended December 26,
1997 provided that such net loss (excluding any extraordinary gains) did not
exceed $2,500,000 and $5,200,000, respectively, and (v) delete the debt service
ratio maintenance covenant. In addition, said Seventh Amendment and Waiver
permits (notwithstanding a provision to the contrary in the Revolving Credit
Agreement) the Company to incur a loss (y) for the fiscal quarter and four
fiscal quarters ending March 27, 1998 provided any such loss (excluding any
extraordinary gains) for such quarter does not exceed $100,000 and any such loss
for such four fiscal quarters does not exceed $2,900,000, and (z) for any three
fiscal quarters in the four fiscal quarter period ending June 26, 1998 provided
that the net loss sustained for the four quarters ending June 26, 1998 does not
exceed $2,700,000.
In conjunction therewith, the Company also amended its Master Lease
Purchase Agreement (as amended, the "Lease Agreement") dated January 12, 1996
with Chase Equipment Leasing Inc. (as assignee of ChemLease Worldwide, Inc.) to
amend the monthly payments due thereunder commencing March 1, 1998 and to
provide for a contemporaneous termination of the Lease Agreement with the
Revolving Credit Agreement (which, if terminated on December 31, 1998, would
require the payment by the Company on that date of $989,251 plus any unpaid
monthly lease payments and other amounts accrued under the Lease Agreement). The
Lease Agreement provides that the financial covenants related to any credit
facility provided by the Bank shall also apply to the Lease Agreement.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired:
None.
(b) Exhibits.
4.1 Seventh Amendment and Waiver dated as of January 12, 1998
to the Revolving Credit Agreement dated January 31, 1995
among TII International, the Company and Chase Manhattan
Bank (as successor to Chemical Bank).
SIGNATURES
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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 INDUSTRIES, INC.
Dated: January 21, 1998 By: /s/ Timothy J. Roach
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Timothy J. Roach, President
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EXHIBIT INDEX
EXHIBIT NO.
4.1 Seventh Amendment and Waiver dated as of 6
January 12, 1998 to the Revolving Credit
Agreement dated January 31, 1995 among TII
International, the Company and Chase Manhattan
Bank (as successor to Chemical Bank).
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SEVENTH AMENDMENT AND WAIVER dated as of
January 12, 1998 to the Revolving Credit Loan
Agreement dated January 31, 1995 (the
"Agreement"), as amended by the First Amendment
dated as of August 3, 1995, the Second
Amendment and Waiver dated as of November 10,
1995, Amendment of Revolving Credit Loan
Agreement dated December 27, 1995, the Fourth
Amendment and Waiver dated as of May 2, 1997,
the Fifth Amendment and Waiver dated as of
September 23, 1997 and the Sixth Amendment and
Waiver dated as of October 17, 1997 (the
Agreement together with each of the amendments,
the "Loan Agreement") among TII International,
Inc., a Delaware Corporation with offices at
1385 Akron Street, Copiague, New York 11726
(the "Borrower"), TII Industries, Inc., a
Delaware corporation with offices at 1385 Akron
Street, Copiague, New York 11726 ("Industries")
and The Chase Manhattan Bank (f/k/a Chemical
Bank), a New York State Banking corporation
with offices at 395 North Service Road, Suite
302, Melville, New York 11747 (the "Bank") and
to the Master Lease Purchase Agreement Number
00009, dated January 12, 1996, as amended by a
letter dated February 1, 1996 (the "Lease
Agreement") by and between the Borrower and
Chase Equment Leasing, Inc. (f/k/a ChemLease
Worldwide, Inc.) ("Leasing"). Capitalized terms
used but not otherwise defined herein shall
have the meanings set forth in the Loan
Agreement.
WHEREAS, the Lease Agreement provides that the financial covenants
contained in any credit facility provided by the Bank to the Borrower shall
apply to the Lease Agreement as continuing covenants; and
WHEREAS, the Borrower and Industries have requested and the Bank and
Leasing have each agreed, subject to the terms and conditions of this Seventh
Amendment and Waiver, to amend and waive compliance with certain provisions of
the Loan Agreement and the Lease Agreement (by incorporation) to reflect
requests made by the Borrower to the Bank and Leasing in the manner hereafter
set forth;
NOW, THEREFORE, in consideration of the premises and of other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
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1. AMENDMENT OF COMMITMENT.
The Commitment is hereby amended and reduced to One Million Five
Hundred Thousand Dollars ($1,500,000).
2. AMENDMENT OF MATURITY DATE.
Paragraph (qq) of Article I of the Loan Agreement is hereby amended
and restated, in its entirety, as follows:
(qq) "Maturity Date" shall mean the earlier of
(1) December 31, 1998 or (2) the date on which the
Commitment is reduced to $0 pursuant to Section 2.06.
3. AMENDMENT OF INTEREST RATE.
Notwithstanding any provision of the Loan Agreement to the contrary,
effective on the effective date of this Seventh Amendment and Waiver,
the Revolving Credit Note shall bear interest on the Principal
Balance at the following rate:
Through February 28, 1998 Prime Rate
Commencing March 1, 1998 Prime Rate plus one percent (1%)
4. AUTOMATIC REDUCTION OF COMMITMENT.
Paragraph (a) of Section 2.06 of the Loan Agreement (Reduction of
Commitment) is hereby deleted in its entirety.
5. WAIVER OF AND AMENDMENT TO ARTICLE 7, NEGATIVE COVENANT, SECTION
7.16.
Compliance with Section 7.16 of the Loan Agreement is hereby waived
for the Fiscal Quarter ending December 26, 1997, provided that the
Consolidated Net Loss (excluding extraordinary gains) during such
Fiscal Quarter does not exceed Two Million Five Hundred Thousand
Dollars ($2,500,000). The Borrower, Industries and the Subsidiaries
will be permitted to incur a Consolidated Net Loss (excluding
extraordinary gains) for four Fiscal Quarters in the four Fiscal
Quarter period ending December 26, 1997, provided that the aggregate
Consolidated Net Loss for said four Fiscal Quarters does not exceed
Five Million Two Hundred Thousand Dollars ($5,200,000); for four
Fiscal Quarters in the four Fiscal Quarter period ending March 27,
1998, provided that the Consolidated Net Loss (excluding
extraordinary gains) during the Fiscal Quarter ending March 27, 1998
does not exceed One Hundred Thousand Dollars ($100,000), and provided
further that the aggregate Consolidated Net Loss for said four Fiscal
Quarters does not exceed Two Million Nine Hundred Thousand
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Dollars ($2,900,000); and for three Fiscal Quarters in the four
Fiscal Quarter period ending June 26, 1998, provided that the
aggregate Consolidated Net Loss for said four Fiscal Quarter period
does not exceed Two Million Seven Hundred Thousand Dollars
($2,700,000).
6. DELETION OF SECTION 7.17, DEBT SERVICE RATIO.
Section 7.17 of the Loan Agreement (Debt Service Ratio) is hereby
deleted in its entirety.
THIS SEVENTH AMENDMENT AND WAIVER shall be effective ONLY upon
payment by the Borrower of (A) a $50,000 restructuring fee to the Bank, and (B)
all fees and expenses, including but not limited to attorneys' fees and
disbursements, incurred by the Bank in connection with this Seventh Amendment
and Waiver, all prior amendments and waivers, all proposed modifications of the
Financing Documents, whether or not consummated, and a certain First Amendment
of Lease related to the Lease Agreement. As of the date hereof, said attorneys'
fees and disbursements totaled $32,200.00.
THIS SEVENTH AMENDMENT AND WAIVER shall be construed and enforced in
accordance with the laws of the State of New York.
Except as expressly amended or waived hereby, the Loan Agreement and
the Lease Agreement shall remain in full force and effect in accordance with the
original terms thereof, as previously amended. This Seventh Amendment and Waiver
herein is limited specifically to the matters set forth above and does not
constitute directly or by implication a waiver or amendment of any other
provision of the Loan Agreement or the Lease Agreement or any breach, default or
Event of Default which may occur or may have occurred under the Loan Agreement
or the Lease Agreement.
The Borrower and Industries hereby represent and warrant that, after
giving effect to this Seventh Amendment and Waiver, no Event of Default or
default exists under the Loan Agreement, the Lease Agreement or any other
related documents.
THIS SEVENTH AMENDMENT AND WAIVER may be executed in any number of
counterparts, each of which shall constitute an original but all of which, when
taken together, shall constitute but one Seventh Amendment and Waiver.
THIS SEVENTH AMENDMENT AND WAIVER shall become effective when the
conditions set forth above have been fulfilled and when duly executed
counterparts hereof which, when taken together bear the signatures of each of
the parties hereto shall have been delivered to the Bank and Leasing.
IN WITNESS WHEREOF, the Borrower, Industries, the Bank and Leasing
have caused this Seventh Amendment and Waiver to be duly executed by their duly
authorized officers all as of the date and year first above written.
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TII INTERNATIONAL, INC.
BY: /S/ PAUL G. SEBETIC
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Paul G. Sebetic, Vice President
TII INDUSTRIES, INC.
BY: /S/ PAUL G. SEBETIC
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Paul G. Sebetic, Vice President
THE CHASE MANHATTAN BANK
BY: /S/ CHRISTOPHER G. ZIMMERMAN
Christopher G. Zimmermann, Vice President
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CHASE EQUIPMENT LEASING, INC.
BY: /S/ DANIEL J. QUINLISK
Daniel J. Quinlisk, Second Vice President
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CONSENT
The undersigned, as Guarantors of the obligations of TII
International, Inc. hereby Consent to the execution and delivery by TII
International, Inc. and TII Industries, Inc. of this Seventh Amendment and
Waiver and hereby confirm that they remain fully bound by the terms of the Joint
and Several Guaranty of Payment dated January 31, 1995 to which they are a
party.
TII INTERNATIONAL, INC.
BY: /S/ PAUL G. SEBETIC
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Paul G. Sebetic, Vice President
TII INDUSTRIES, INC.
BY: /S/ PAUL G. SEBETIC
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Paul G. Sebetic, Vice President
TII DITEL, INC.
BY: /S/ PAUL G. SEBETIC
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Paul G. Sebetic, Vice President
TII CORPORATION
BY: /S/ PAUL G. SEBETIC
Paul G. Sebetic, Vice President
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TELECOMMUNICATIONS INDUSTRIES, INC.
BY: /S/ PAUL G. SEBETIC
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Paul G. Sebetic, Vice President
TII DOMINICANA, INC.
BY: /S/ PAUL G. SEBETIC
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Paul G. Sebetic, Vice President
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