As filed with the Securities and Exchange Commission on December 23, 1999
Registration No. 333-90197
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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TII INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 66-0328885
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1385 AKRON STREET,
COPIAGUE, NY 11726
(516) 789-5000
(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)
TIMOTHY J. ROACH, PRESIDENT
TII INDUSTRIES, INC.
1385 AKRON STREET
COPIAGUE, NY 11726
(516) 789-5000
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copy to:
RICHARD A. RUBIN, ESQ.
PARKER CHAPIN FLATTAU & KLIMPL, LLP
1211 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
(212) 704-6130
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time
to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.
<PAGE>
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box:
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering.
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
PURSUANT TO RULE 429, THE PROSPECTUS THAT FORMS A PART OF THIS REGISTRATION
STATEMENT IS A COMBINED PROSPECTUS RELATING ALSO TO 1,359,582 SHARES OF COMMON
STOCK REGISTERED UNDER REGISTRATION STATEMENT NO. 333-47105 THAT HAVE NOT BEEN
SOLD. THIS REGISTRATION STATEMENT, ALSO CONSTITUTES POST-EFFECTIVE AMENDMENT NO.
1 TO REGISTRATION STATEMENT NO. 333-47105, AND SUCH POST-EFFECTIVE AMENDMENT NO.
1 SHALL HEREAFTER BECOME EFFECTIVE CONCURRENTLY WITH THE EFFECTIVENESS OF THIS
REGISTRATION STATEMENT IN ACCORDANCE WITH SECTION 8(C) OF THE SECURITIES ACT OF
1933.
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<PAGE>
SUBJECT TO COMPLETION, DATED DECEMBER 23, 1999
PROSPECTUS
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2,672,631 SHARES
TII INDUSTRIES, INC.
COMMON STOCK
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The stockholders of TII Industries, Inc. listed on page 15 of this
prospectus may offer for sale up to 2,672,631 shares of our common stock. This
prospectus may also be used by those to whom the selling stockholders may
pledge, donate or transfer their shares and other non-sale transferees.
The selling stockholders may offer their shares through public or private
transactions, on or off the Nasdaq National Market, at prevailing market prices
or at privately negotiated prices.
Our common stock is currently quoted on the Nasdaq National Market under
the symbol "TIII." On December 22, 1999, the last reported sale price of a share
of our common stock on the Nasdaq National Market was $1-3/32.
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THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY
CONSIDER THE FACTORS DESCRIBED UNDER THE CAPTION "RISK FACTORS"
BEGINNING ON PAGE 6 OF THIS PROSPECTUS.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this prospectus is ______, 1999
<PAGE>
PROSPECTUS SUMMARY
This summary highlights some information from this prospectus. It may
not contain all of the information important to you. To understand this offering
fully and get a better understanding of our business and operations, you should
read the entire prospectus carefully, including the documents we have
incorporated by reference in the section "Where You Can Find More Information
About Us" on page 21.
Please note that references in this prospectus to "we," "our," "us" or
"TII" refer to TII Industries, Inc. and our subsidiaries, not to the selling
stockholders.
THE COMPANY
We are engaged in designing, manufacturing and marketing lightning and
surge protection systems, network interface devices and station electronics for
use in the communications industry. We sell our products to telephone operating
companies, including to all four of the Regional Bell Operating Companies,
original equipment manufacturers, cable television providers and competitive
access providers of communications services. We have been a leading supplier of
subscriber station overvoltage surge protectors to telephone companies in the
United States for over 25 years. We believe that our proprietary overvoltage
surge protectors offer superior, cost-effective performance features, including
high reliability, long life cycles and advanced protection against adverse
environmental conditions.
Our products include:
o LIGHTNING AND SURGE PROTECTORS - Overvoltage surge protectors
have been mandated in the United States by the National Electric
Code to be installed on subscriber telephone lines to prevent
injury to users and damage to their equipment due to surges
caused by lightning and other hazardous overvoltages. Overvoltage
surge protection is now also mandated under the recently amended
National Electric Code for all network powered broadband
communications conductors. Surge protectors: (i) protect the
subscribers and their equipment; (ii) reduce the subscribers'
loss of service; (iii) reduce the communications provider's loss
of revenue due to subscriber outages; and (iv) reduce the
communications provider's costs to replace or repair damaged its
owned equipment. Our gas tubes provide protection when the
voltage on a telephone line rises to a level preset in the gas
tube. If the voltage reaches that level, the gases in the tube
instantly convert to molecules bearing an electronic charge. This
momentarily disconnects the phone or other equipment from the
circuit while safely conducting the hazardous surge into the
ground. When the voltage on the service line drops to a safe
level, the gases in the tube return to their normal state,
returning the phone and other connected equipment to service. Our
gas tubes have been designed to withstand multiple high energy
overvoltage surges while continuing to operate over a long
service life with minimal failure rates. We also produce and sell
a patented gas tube coaxial cable transmission line surge
protector and solid state protectors, as well as combining solid
state protection with our gas tubes in hybrid overvoltage surge
protectors.
o NETWORK INTERFACE DEVICES - Network interface devices were
developed to establish a separation point between the telephone
companies' property and subscriber property in response to the
requirements of the Federal Communication Commission and state
public service commissions. NIDs typically also enclose
overvoltage surge protectors and various station electronic
products. We sometimes refer to network interface devices as
NIDs. To address the demand for voice, high-speed data and
interactive video services, telephone companies and other
communications providers are expanding and upgrading their
networks to accommodate the higher bandwidth necessary to
transmit these services. To meet our customers' needs, we have
introduced a broadband network interface device product line
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specifically designed to house a telephone companies' technology
of choice, whether traditional twisted pair lines or
high-bandwidth coaxial cable or fiber optic lines.
o STATION ELECTRONICS - Our station electronic products are
designed to be installed with an overvoltage surge protector,
typically within a NID. Our station electronics products include:
o maintenance termination units designed to connect with the
telephone company's central office test equipment, giving
the telephone company remote testing capabilities. By
using the remote access provided by our product, the
telephone company can determine the source of a defect or
fault before dispatching a maintenance vehicle.
o plastic housings, wire terminals, enclosures, cabinets and
various hardware products, principally for use by
telephone operating companies.
Our principal executive office is located at 1385 Akron Street,
Copiague, New York 11726 and our telephone number is (516) 789-5000.
<TABLE>
<CAPTION>
THE OFFERING
<S> <C>
Common stock offered or that may be
offered by the selling stockholders.......... 2,672,631 shares, consisting of 67,241 outstanding shares,
200,000 shares issuable upon the exercise of warrants and
2,405,390 shares issuable upon conversion of the 2,850 shares of
our Series C Convertible Preferred Stock outstanding at November
30, 1999 based on an average conversion price of $1.1848 per
share of common stock, which would have been applicable to our
Series C Convertible Preferred Stock had they all been converted
into our common stock on November 30, 1999. We refer to our
Series C Convertible Preferred Stock as Series C preferred
stock. Since the actual conversion price is the lower of $7.08
per share or 95% of the average of the closing bid prices of our
common stock during the ten consecutive trading days immediately
preceding the actual conversion date, the actual number of
shares of our common stock that may be issued upon conversion of
the Series C preferred stock will vary as the market price of
our common stock varies. The selling stockholders paid $1,000
for each share of Series C Preferred Stock they purchased.
Assuming that the market price of our common stock on the date
of the sale of the shares of our common stock received upon
conversion of the Series C Preferred Stock by the selling
stockholders remains the same as the average price upon which
conversion is based, they would receive $1,053 upon the sale of
the common stock they receive upon conversion of each share of
Series C preferred stock converted. See "Private Placement -
Conversion" on page 13 for information as to potential
antidilution and other adjustments that may affect the
conversion price. In case the market price of our common stock,
and therefore the conversion price of the Series C preferred
stock, should decline, we have registered 1,186,951 shares of
our common stock more than are covered by this prospectus.
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</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Those additional shares may only be sold by the selling stockholders
after we reflect the change in the number of shares offered by this
prospectus in a supplement to this prospectus. Should the conversion
price decline so that we are required to issue more than the 3,592,341
shares upon conversion of the 2,850 presently outstanding shares of
Series C preferred stock, we would have to register more shares (or
there would have to be an exemption available under the Securities
Act) in order for the selling stockholders to sell more shares.
Common stock outstanding on the date of
this prospectus................................... 8,832,898 shares.
Common stock outstanding after the
offering.......................................... 11,505,529 shares, assuming 2,405,390 shares are issued
upon conversion of the Series C preferred stock outstanding
on November 30, 1999.
Use of Proceeds................................... The selling stockholders will receive all of the proceeds from
the sale of the shares. Accordingly, we will not receive any
proceeds from the resale of the shares. We did receive
$4,550,000 in proceeds from the issuance of the Series C
preferred stock and the warrants. We will also receive the
exercise price of $7.03 per share to the extent the selling
stockholders elect to exercise the warrants. See "Use of
Proceeds."
Risk Factors................................. The securities offered under this prospectus involve a high
degree of risk. You should carefully consider the factors
beginning on the following page.
</TABLE>
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<PAGE>
FORWARD-LOOKING STATEMENTS
Some of the information in this prospectus and in the documents we have
incorporated by reference, may contain forward-looking statements. Such
statements can be generally identified by the use of forward-looking words like
as "may," "should," "plan," "expect," "anticipate," "intend," "estimate,"
"potential," "believe" or other similar words and the negative of those words.
These statements discuss future expectations or state other "forward-looking"
information. When considering those statements, you should keep in mind the risk
factors and other cautionary statements in this prospectus and in the documents
we have incorporated by reference. The risk factors discussed below and other
factors noted in this prospectus and the documents which we have incorporated by
reference could cause our actual results to differ materially from those
contained in any forward-looking statements.
RISK FACTORS
BEFORE YOU BUY SHARES OF OUR COMMON STOCK, YOU SHOULD BE AWARE THAT
THERE ARE VARIOUS RISKS ASSOCIATED WITH THAT PURCHASE, INCLUDING THOSE DESCRIBED
BELOW. YOU SHOULD CONSIDER CAREFULLY THESE RISK FACTORS, TOGETHER WITH ALL OF
THE OTHER INFORMATION IN THIS PROSPECTUS AND THE DOCUMENTS WE HAVE INCORPORATED
BY REFERENCE IN THE SECTION "WHERE YOU CAN FIND MORE INFORMATION ABOUT US"
BEFORE YOU DECIDE TO PURCHASE SHARES OF OUR COMMON STOCK. IF ANY OF THE RISKS
DISCUSSED BELOW OR IN OUR OTHER SEC FILINGS OCCUR, OR IF UNFORESEEN EVENTS
OCCUR, OUR BUSINESS, FINANCIAL CONDITION OR RESULTS OF OPERATIONS COULD BE
MATERIALLY AND ADVERSELY AFFECTED. IN THAT EVENT, THE MARKET PRICE OF OUR COMMON
STOCK COULD DECLINE, IN WHICH CASE THE VALUE OF YOUR INVESTMENT MAY DECLINE AS
WELL.
WE CANNOT ASSURE YOU THAT WE CAN REVERSE OUR RECENT HISTORY OF LOSSES
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We have reported the following net losses applicable to common
stockholders for the last three fiscal years:
Fiscal Year Ended:
June 27, 1997 $ 856,000
June 26, 1998 $5,142,000
June 25, 1999 $6,402,000
Quarter Ended:
September 24, 1999 $ 587,000
Our results of operations were affected by several factors in our 1997,
1998 and 1999 fiscal years.
CERTAIN FACTORS AFFECTING FISCAL 1997 RESULTS.
During fiscal 1997, Access Network Technologies, a joint venture
between Lucent Technologies, Inc. and Raychem Corporation, was dissolved. We had
entered into a strategic agreement with ANT in 1995 to develop and manufacture
advanced overvoltage surge protectors. While we and Raychem have continued to
manufacture and market the products without the participation of Lucent, the
dissolution of ANT caused us to increase our allowance for the inventory that
was produced for ANT and to put into effect certain measures to reduce costs.
The cost reduction measures included a reduction of personnel, the movement of
certain production processes to our facility in the Dominican Republic, the
outsourcing of certain manufacturing steps, the realignment of our sales and
marketing force and the discontinuance of certain lower margin products. These
actions resulted in non-recurring charges of $3.0 million.
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CERTAIN FACTORS AFFECTING FISCAL 1998 RESULTS.
To meet our customers' needs, we introduced a line of broadband NIDs
with features and functionality that we believe were instrumental in our winning
major contracts in July and September of 1997 with a Regional Bell Operating
Company and an independent telecommunications company, respectively, each of
which was a preexisting unaffiliated customer. For strategic purposes, we
accepted orders under one of these contracts that we believed we could fulfill
under an aggressive delivery time schedule that mandated us to seek to
accelerate production.
Beginning in the fourth quarter of fiscal 1997 and continuing through fiscal
1998, we incurred additional manufacturing expenses in gearing up toward the
accelerated production of our new broadband NID product line, compounded, in the
second quarter of fiscal 1998, by production disruptions as we sought to meet
the customers' requested delivery schedules. While we resolved most of the
production disruption issues toward the end of the second quarter, during the
third and fourth quarters of fiscal 1998, we continued to experience certain
yield losses, costs associated with outsourcing the production of certain
injection molded parts and added costs to air freight products to meet customer
delivery requirements.
CERTAIN FACTORS AFFECTING FISCAL 1999 RESULTS.
During the fourth quarter of fiscal 1999, we initiated a strategic
operations re-alignment in an effort to enhance operating efficiencies and
reduce costs. These results are expected to be achieved through outsourcing a
significant portion of our production, closing our Dominican Republic facility,
workforce reductions and other cost-saving measures throughout TII. Under this
plan, we expect to reduce our workforce from approximately 1,165 employees as of
April 1999 to approximately 250 by the end of fiscal 2000, including reductions
resulting from the completion of the sale of non-core businesses. As a result,
we recorded a charge to earnings of $6.0 million in fiscal 1999.
This charge was partially offset by two non-recurring gains:
o On September 21 and 22, 1998, our principal operating
facilities in Puerto Rico and the Dominican Republic,
respectively, sustained significant inventory, equipment and
facility damages as a result of Hurricane Georges. In
addition, as a result of the storm, we experienced
production stoppages during the beginning of the second
quarter of fiscal 1999 and periods of less than full
production continuing into the fiscal 1999 third quarter.
Damaged inventory, business interruption losses, fees
payable to our insurance advisors, losses to plant and
equipment and other expenses incurred totaled $17.9 million.
We received insurance payments of $19.3 million with respect
to the losses sustained, including lost profits.
Accordingly, insurance proceeds, net of hurricane losses and
expenses, resulted in a gain of $1.4 million in fiscal 1999.
o In order to focus on our core business, we sold
substantially all of the assets of our fiber optic
subsidiary, TII-Ditel, Inc., in March 1999 for $5.3 million,
resulting in a gain of $2.2 million.
WE COULD LOSE OUR EXISTING CREDIT FACILITY IF OUR TANGIBLE NET WORTH DECLINES
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We currently have a credit facility in the amount of $7.7 million,
consisting of a $1.7 million term loan and a $6.0 million revolving credit
facility. The revolving credit facility is limited by a borrowing base equal to
85% of eligible accounts receivable and 50% of eligible inventory, subject to
reserves. At September 24, 1999, only the $1.7 million term loan was
outstanding. The scheduled maturity date of the term loan is March 31, 2003 and
of any revolving credit loans will be April 30, 2003.
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The credit facility requires us to maintain a tangible net worth of
$21.0 million. As of September 24, 1999, our tangible net worth was
approximately $26.3 million. If operating losses continue or increase or if we
are required to redeem any significant amount of Series C preferred stock, we
may cease to be in compliance with the tangible net worth covenant. In that
event, if we are unable to obtain a waiver or amendment of the covenant, we may
be unable to borrow under the credit facility and may have to immediately repay
all loans then outstanding under the facility. If the credit facility is not
available, or if the amount we may borrow under it is not sufficient for our
needs, we may require financing from other sources. Our inability to obtain the
financing could have a material adverse effect on our business, results of
operations and financial condition.
RISKS ASSOCIATED WITH SERIES C PREFERRED STOCK
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CONVERSION COULD DILUTE THE EARNINGS PER SHARE AND BOOK VALUE PER SHARE OF OUR
COMMON STOCK.
To date, we have issued a total of 1,187,659 shares of common stock
with respect to the conversion of 2,150 shares of Series C preferred stock (at
an average conversion price of $1.81 per share). The Series C preferred stock is
convertible at the option of their holders at the lower of $7.08 per share or
95% of the average of the closing bid prices of our common stock during the ten
consecutive trading days immediately preceding the conversion date. There
remains outstanding 2,850 shares of Series C preferred stock.
Issuances of common stock upon conversion of Series C preferred stock
will reduce the voting power and interest in our equity of other outstanding
common stock, the degree of which dilution will depend on the number of shares
of common stock we are required to issue. Furthermore, the conversion of Series
C preferred stock at an average conversion price of less than $2.75 per share
(the book value of our common stock as of September 24, 1999) will reduce the
book value attributable to our other outstanding common stock.
REDEMPTION WOULD RESULT IN A REDUCTION IN OUR CASH AND NET WORTH AND POSSIBLE
LOSS OF OUR CREDIT FACILITY.
We have registered a total of 3,859,582 shares of common stock under
the Securities Act of 1933 for resale upon conversion of the 2,850 remaining
outstanding shares of Series C preferred stock (this will cover all shares of
Series C preferred stock which were outstanding at November 30, 1999 as long as
their average conversion price is not less than $.79 per share). However, only
2,405,390 of those shares can be sold until we file a supplement to this
prospectus to reflect the additional number of shares estimated to be sold.
The holders of Series C preferred stock may require us to redeem any
shares of Series C preferred stock if:
o we fail to maintain our listing on Nasdaq's National Market
System or the New York or American Stock Exchanges (see "Risks
Associated with the Ownership of Our Comon Stock"),
o we fail to maintain the effectiveness of the registration
statements of which this prospectus forms a part for, in general,
a period of ten consecutive trading days,
o we do not comply with requests for conversion of any Series C
preferred stock,
o we engage in a merger, consolidation or other business
combination with and into another company,
o we sell or transfer all or substantially all of our assets, or
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o a purchase or exchange offer is made and accepted by the holders
of more than 50% of our outstanding shares of common stock.
The redemption price per share of Series C preferred stock will be
equal to the greater of $1,150 per share of Series C preferred stock or the
closing bid price at specified times of the shares of our common stock which we
would otherwise have issued upon conversion of the Series C preferred stock we
redeem.
Redemptions of Series C preferred stock will result in a utilization of
our existing cash since our existing bank credit facility prohibits us from
borrowing for that purpose and will also reduce our net worth which could cause
us to lose our existing bank credit facility (see "-- We Could Lose Our Existing
Credit Facility if Our Tangible Net Worth Declines").
RISKS ASSOCIATED WITH CUSTOMERS AND CUSTOMER AGREEMENTS
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OUR DEPENDENCE UPON KEY CUSTOMERS AND LACK OF LONG TERM COMMITMENTS WITH THEM
MAKES IT EASIER FOR THOSE CUSTOMERS TO CEASE OR REDUCE PURCHASES FROM US.
The U.S. telephone industry is highly consolidated, with the four
Regional Bell Operating Companies and GTE Corporation servicing over 85% of all
subscriber lines. Currently, all four Regional Bell Operating Companies have
designated one or more of our overvoltage surge protectors for use at certain of
their subscriber station locations. Direct sales to the Regional Bell Operating
Companies, their distributors and original equipment manufacturers have
historically accounted for a substantial majority of our net sales.
In most instances, our sales are made under open purchase orders
received from time to time from our customers under master supply contracts
which cover one or more of our products. Some of those contracts permit the
customer to terminate the contract due to (i) the availability of more advanced
technology or (ii) our inability to deliver a product that meets the
specifications on time. Although most of our master supply contracts control
terms such as the purchase price, they do not establish minimum purchase
commitments.
Certain supply contracts provide that the customer may terminate the
contract at any time upon notice.
The loss of one or more Regional Bell Operating Company as purchasers
of our products, or a substantial decrease in the orders received from those
purchasers, could have a material adverse effect on our business, results of
operations and financial condition.
WE HAVE CERTAIN CONTRACTUAL LIMITATIONS ON PRICE INCREASES, WHICH COUPLED WITH
PRICING PRESSURES, COULD ADVERSELY AFFECT OUR GROSS PROFIT MARGINS.
Pricing pressures in the markets in which we operate are intense due in
part to the consolidation of various telephone companies and their resulting
purchasing power. Our master contracts generally prohibit us from increasing the
price of our products to be sold under the contract for stated periods of time.
Accordingly, any significant increase in our costs during those periods, without
offsetting price increases, could adversely effect our gross profit margins. In
addition, some of our contracts with the Regional Bell Operating Companies
contain declining price provisions which also could adversely affect our gross
margins if we cannot achieve corresponding reductions in unit manufacturing
costs.
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RISKS ASSOCIATED WITH THE OVERVOLTAGE SURGE PROTECTORS INDUSTRY
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TECHNOLOGICAL CHANGES, AS IT PERTAINS TO OUR OVERVOLTAGE SURGE PROTECTORS, COULD
RENDER THEM OBSOLETE.
Our overvoltage surge protectors are based principally on gas tube
technology. Solid state surge protectors have been developed for use in the
telecommunications industry as a competitive technology to gas tubes. While
solid state overvoltage surge protectors are faster at reacting to surges, gas
tube overvoltage surge protectors have generally remained the surge protection
technology of choice by most telephone companies because of the gas tube's
ability to withstand significantly higher energy surges than solid state
overvoltage surge protectors. However, as communications equipment becomes more
complex, the speed of the protector in reacting to a surge may be perceived to
be more critical than its energy handling capabilities. Also, solid state
protectors can be combined with gas tubes into a hybrid overvoltage surge
protector module. While hybrid surge protectors are generally more expensive and
complex than gas tube surge protectors, the hybrid unit can provide the speed of
a solid state unit with the energy handling capability of a gas tube unit.
Although we have developed solid state and hybrid surge protectors, the
development by competitors of similar products with increased energy handling
capabilities, or the development of lower cost, more reliable hybrid surge
protectors, could adversely effect our sales.
NEW PRODUCT INTRODUCTIONS BY US AND EVOLVING INDUSTRY STANDARDS COULD BE COSTLY
AND AFFECT OUR RELATIONSHIP WITH CUSTOMERS.
We continually seek to improve our existing products and develop new
products and enhancements to meet the needs of our customers and the
marketplace. However, we cannot assure you that we will be able to respond
timely to changing industry and customer needs. The market for our products is
characterized by changing technology, evolving industry standards, changes in
customer requirements, and product introductions and enhancements.
Our success will depend, in large measure, upon our ability to timely:
o identify and develop new, competitively priced products to
keep pace with changes in technology and customer
preferences,
o enhance our current product offerings, and
o develop new products that address our customers' needs for
additional functionality and new technologies.
In addition, product development cycles can be lengthy and are subject
to changing requirements and unforeseen factors which can result in delays.
Also, new products or features may contain defects that, despite testing, are
discovered only after a product has been installed and used by customers. Such
delays, undetected defects or product recalls could have a material adverse
effect on our business, results of operations and financial condition.
WE FACE SIGNIFICANT COMPETITION
-------------------------------
We are subject to significant competition with respect to all of our
products. Specifically, a substantial portion of our overvoltage surge
protectors are used in network interface devices which are manufactured by our
competitors. Some of those competitors also market overvoltage surge protectors
and station electronics.
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The Telecommunications Act of 1996 permits the Regional Bell Operating
Companies, which are presently the principal users of our products, to
manufacture telecommunications equipment. Accordingly, they could decide to
manufacture and supply their own network interface devices rather than purchase
them from outside suppliers. Most of our competitors and many of those who could
enter the market in which we operate are well-established suppliers to the
telephone companies. In addition, most are, or are part of, large corporations
which have substantially greater assets, financial resources and larger sales
forces, manufacturing facilities and research and development staffs than we
have. As a result, the entry of any of those companies into the overvoltage
surge protector market could reduce our sales.
RISKS ASSOCIATED WITH OUR MANUFACTURING PROCESS AND INTERNAL OPERATIONS
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OFFSHORE MANUFACTURING POSES A NUMBER OF RISKS.
Until recently we had been producing all our overvoltage surge
protectors, NIDs and station electronics at our facilities in Puerto Rico and
the Dominican Republic. As a result of a strategic operations review, in an
effort to enhance operating efficiencies and reduce costs, we determined to
outsource a significant portion of our production. While we continue to produce
our gas tubes at our facility in Puerto Rico, we have retained a United States
company operating in China to be the principal manufacturer of our products. As
the outsourcing of production increases in the future under our operations
re-alignment, our dependency on our contract manufacturer will increase. As a
result, we are subject to risks of doing business outside the United States,
including the potential delays and added delivery expenses in meeting rapid
delivery schedules of our customers. In addition, the production of products in
China could subject us to risks arising from:
o potential U.S. government sanctions, like embargoes and
restrictions on importation,
o potential currency fluctuations,
o potential labor unrest and political instability,
o potential restrictions on the transfer of funds,
o export duties and quotas, and
o U.S. customs and tariffs.
Furthermore, production in Puerto Rico has in the past, and could in
the future, be interrupted by the effects of hurricanes.
WE ARE DEPENDENT UPON SUPPLIERS, THE LOSS OF WHOM COULD RESULT IN DELAYS, AFFECT
OUR ABILITY TO OBTAIN COMPONENTS AND INCREASE PRICES TO US.
We have no orders with suppliers of components utilized in the
manufacture of our products with delivery scheduled later than a year from now.
Although we believe that substantially all raw materials we use will continue to
be available to us in adequate quantities at competitive prices, we cannot
assure you that we will not experience delays in delivery, the absence of
components or supplies or increases in prices in the future.
RISKS ASSOCIATED WITH THE YEAR 2000 ISSUE
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We have been implementing a program, the objective of which is to
ensure that the Company is not adversely affected by "Date Discontinuity"
problems in computers, software and embedded processors during the transition
from 1999 to 2000 and as a result of 2000 being a leap year. Date discontinuity
occurs when time as expressed by a system or its software does not move forward
successfully in line with true time. The most commonly known manifestation of
this occurs in systems that recognize years as two digits and, when moving from
'99' to '00', recognize '00' as 1900 or fail altogether.
-10-
<PAGE>
Work was divided into the following key stages: (1) inventory of
hardware, software and embedded systems, (2) analysis of compliance, (3)
defining and planning of solutions, (4) implementation and testing of solutions,
(5) confirmation of major suppliers' and customers' state of readiness, (6)
contingency planning. Steps 1, 2, 3, 5 and 6 are complete. Step 4 is
substantially complete, with the Company's enterprise wide manufacturing and
accounting system, operating systems, servers and the majority of personal
computers brought into Year 2000 compliance. Some testing and additional minor
remediation programs are in progress and are expected to be completed by the end
of November 1999. Further testing will continue throughout the remaining two
months of calendar 1999. A contingency plan has been developed and is
continually reviewed to ensure all relevant issues are considered. The Company
believes it is in full Year 2000 readiness for its critical systems, and that by
the end of November 1999 it will be for all its systems. The Company will
continue to monitor all areas through January 2000 and beyond.
The estimated total cost of achieving Year 2000 compliance is
approximately $1,050,000 of which approximately $950,000 has been spent through
September 24, 1999.
The most reasonably likely worst case scenario of a Year 2000
compliance failure by us or our suppliers is an event that would disrupt our
procurement process and impact production and product delivery to customers. We
plan to build up inventory levels and have requested key suppliers to do the
same. In addition, we are working with our suppliers to minimize the possibility
of such an event occurring and, through our contingency planning, to mitigate
the consequences. However, if we or our suppliers, distributors or others with
whom we conduct business are unable to identify and address the system issues
related to the Year 2000 risk on a timely basis, there could be a material
adverse effect on our business, results of operations and financial condition.
RISKS ASSOCIATED WITH THE OWNERSHIP OF OUR COMMON STOCK
-------------------------------------------------------
WE DO NOT ANTICIPATE PAYING DIVIDENDS.
We intend to retain any future earnings for use in our business. As a
result, we do not anticipate paying any cash dividends in the foreseeable
future. In addition, our credit facility prohibits us from declaring and paying
any dividends.
THE PRICE OF OUR STOCK MAY CONTINUE TO BE VOLATILE.
The market price of our common stock has been at times, and may in the
future be, subject to wide fluctuations. Factors that may adversely affect the
market price of our common stock include, among other things:
o quarter to quarter variations in operating results,
o the occurrence of events that affect or could affect our operating
results,
o changes in earnings estimates by analysts,
o announcements regarding technological innovations or new products,
o announcements of gains or losses of significant customers or contracts,
o prospects in the communications industry,
o changes in the regulatory environment,
o market conditions, and
o the sale or attempted sale of large amounts of our common stock into
the public markets.
THERE IS NO ASSURANCE OF THE CONTINUED NASDAQ LISTING OF OUR COMMON STOCK.
Although we are currently in compliance with the Nasdaq National Market
continuing listing requirements, we cannot assure you that our common stock will
continue to be quoted on Nasdaq.
-11-
<PAGE>
Among other things, our common stock is required to have a minimum bid price of
at least $1.00 per share except during certain limited periods. On December 22,
1999, the last reported sale price of our common stock on the Nasdaq National
Market was $1-3/32. If we fail to maintain a Nasdaq listing, our securities will
likely be traded on the OTC Bulletin Board. As a result, the market value of our
common stock could decline and stockholders may find it more difficult to
dispose of, or to obtain accurate quotations as to the market value of, our
common stock.
THE PRICE OF YOUR STOCK MAY BE ADVERSELY AFFECTED BY THE SALE OF SHARES ELIGIBLE
FOR FUTURE SALE.
Sales of a substantial number of shares of our common stock in the
public market could adversely affect the market price for our common stock. In
addition to the shares covered by this prospectus, as of November 30, 1999,
there are 8,013,213 shares of our outstanding common stock which may either be
sold without restriction under the Securities Act or through the delivery of an
available prospectus. Our remaining 819,685 outstanding shares at that date may
be sold subject to compliance with the volume and other limitations of Rule 144
under the Securities Act. We have also registered the maximum additional number
of shares of our common stock that we presently estimate we may be required to
issue in the future upon conversion of our Series C preferred stock and all
shares that are issuable upon exercise of outstanding warrants we have issued
and that are issuable upon exercise of options we have granted, and may in the
future grant, under our stock option plans. See "Shares Eligible for Future
Sale."
THE ANTI-TAKEOVER PROVISIONS IN OUR CERTIFICATE OF INCORPORATION AND UNDER
DELAWARE LAW MAY DISCOURAGE OR PREVENT TAKEOVER OFFERS WHICH COULD INCREASE THE
PRICE OF OUR STOCK IF THOSE PROVISIONS DID NOT EXIST.
Our certificate of incorporation and the Delaware Corporation Law
contain provisions that, while intended to enable our Board of Directors to
maximize stockholder value, could discourage or prevent any attempts by
outsiders to obtain control of us through mergers, tender offers, proxy contests
and other means and could prevent or delay changes in our management. Generally,
attempts to obtain control of a company results in stockholders obtaining a
premium above the market price of a company's stock before the attempt is made.
These provisions include the following which are described in greater detail
under the caption "Description of Capital Stock":
o A Shareholder Rights Plan;
o The ability to issue preferred stock with terms fixed by our
Board of Directors at the time of their issuance without further
stockholder authorization;
o A supermajority vote to authorize certain transactions;
o A classified Board of Directors;
o A requirement that directors may be removed only by stockholders
for cause;
o The benefits of Delaware's "anti-takeover" statutory provisions.
USE OF PROCEEDS
The selling stockholders will receive all net proceeds from the sale of
the shares offered by this prospectus. Accordingly, we will not receive any
proceeds from the resale of the shares.
However, we received net proceeds of $4,550,000 from the private
placement of our Series C preferred stock and the warrants issued to the
purchasers of our Series C preferred stock. Of those proceeds, we used
approximately $3,000,000 to purchase equipment and leasehold improvements to
increase our manufacturing capacity to support awarded contracts. We used the
balance of the net proceeds for working capital.
We will also receive the exercise price of $7.03 per share of common
stock issued to the extent the warrants are exercised. We intend to use those
proceeds, if any, for working capital.
-12-
<PAGE>
We have agreed to bear the expenses incident to the registration of the
shares, other than selling discounts and commissions and the fees and expenses
of the selling stockholders' warrants in excess of $2,000.
SHARES ELIGIBLE FOR FUTURE SALE
Of our 8,832,898 outstanding shares of common stock as of November 30,
1999, 7,445,972 shares were freely tradeable without restriction under the
Securities Act of 1933, 67,241 shares can be sold by delivering this prospectus,
and 500,000 shares can be sold by delivering a prospectus under another
registration statement. The remaining 819,685 outstanding shares of our common
stock are owned by persons who may be deemed to be our "affiliates" and are
presently eligible for sale under Rule 144, subject to Rule 144's volume and
other limitations.
We have also registered, for possible future issuance under the
Securities Act:
o 2,988,200 shares of common stock subject to our stock option plans
(of which 2,457,741 shares were subject to outstanding options as
of November 30, 1999). Any of those shares issued upon the
exercise of options by persons who are not our affiliates will be
freely tradeable upon issuance and any of those shares issued to
our affiliates will be eligible for sale under Rule 144 without
any further holding period but subject to certain volume and other
limitations.
Furthermore, we have registered for potential resale:
o 3,592,341 shares of our common stock which may be issued upon
conversion of our 2,850 outstanding shares of Series C preferred
stock (see "Private Placement"),
o 200,000 shares of our common stock upon the exercise of warrants
held by the holders of our Series C preferred stock (see "Private
Placement"), and
o 10,000 shares of our common stock subject to issuance upon the
exercise of warrants issued in July 1996 to purchase those shares
until July 15, 2001 at an exercise price of $6.15 per share (all
of those warrants were issued to a broker-dealer for financial
advisory and consulting services and were transferred by that firm
to various of its employees).
In addition, 300,000 shares, issuable upon conversion of convertible
indebtedness issued in 1991 to an unaffiliated third party, will, if and when
converted, be eligible for immediate sale under paragraph (k) of Rule 144
without any volume or other limitation.
PRIVATE PLACEMENT
On January 26, 1998, we completed the private placement of 5,000 shares
of our Series C convertible preferred stock and warrants to purchase an
aggregate of 200,000 shares of our common stock to the selling stockholders, two
of whom are qualified institutional buyers and the other three of whom are
accredited investors, for an aggregate purchase price of $5,000,000. To date,
those investors have converted 2,150 shares of the Series C preferred stock into
1,187,659 shares of our common stock. They advise us that, as of November 30,
1999, they have sold 1,120,418 of those shares of common stock. The exact number
of shares of our common stock they may acquire upon conversion of the remaining
2,850 shares of Series C preferred stock and sell depends upon the market price
of our common stock at the time they convert our Series C preferred stock.
The following is a brief description of the Series C preferred stock
and warrants and is qualified by reference to the Certificate of Designation for
the Series C preferred stock and the form of warrant for
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<PAGE>
a complete description of the terms of those securities. Both documents are
exhibits to the registration statements of which this prospectus forms a part.
Dividends
---------
The Series C preferred stock bear no dividends.
Liquidation
-----------
The Series C preferred stock has a liquidation preference of $1,150 per
share.
Voting
------
The Series C preferred stock has no voting rights, except as required
by the Delaware General Corporation Law and with respect to: (a) any changes to
the Certificate of Designation or our Certificate of Incorporation which would
amend, alter, change or repeal any of the powers, designations, preferences and
rights of the Series C preferred stock; and (b) any issuance of any additional
Series C preferred stock.
Conversion
----------
A holder may convert, in any thirty-day period, up to one-third of the
aggregate number of Series C preferred shares purchased by the initial holder of
the shares being converted, subject to acceleration in certain instances.
The Series C preferred stock is currently convertible at a conversion
price equal to the lower of:
o $7.08 per share, or
o 95% of the average of the closing bid prices of our common stock
during the ten consecutive trading days immediately preceding the
conversion date of the Series C preferred stock.
The conversion prices are subject to reduction based upon periods of
time that sales of shares of common stock underlying the Series C preferred
stock cannot be made under a registration statement.
The fixed conversion price of $7.08 per share is also subject to anti-
dilution adjustments with respect to:
o the issuances of common stock, or the issuance of securities which
are exercisable into, exchangeable for or convertible into common
stock, for a consideration (including amounts receivable upon
exercise, exchange or conversion) below $7.08 per share (as it may
be adjusted),
o subdivisions or combination of our common stock, and
The variable conversion price is subject to reduction in the event of
our issuance of another variable price security.
We are subject to potential penalties in the event we fail to timely
permit conversion of Series C preferred shares.
Compulsory Conversion
---------------------
Unless converted by the holder or redeemed by us, the Series C
preferred stock will be automatically converted into common stock on January 26,
2003, subject to possible delay in certain
-14-
<PAGE>
circumstances. We may also require conversion of the Series C preferred shares
at any time on or after January 26, 2001.
REDEMPTION POSSIBILITY
- ----------------------
If we cannot issue common stock for any reason, or fail to have
sufficient shares issuable upon conversion of our Series C preferred stock
registered under the Securities Act of 1933 for resale, we are to issue as many
shares of common stock as we are able to issue without violating any
restriction. The holder of unconverted Series C preferred shares may, among
other things, require us to redeem those Series C preferred stock which we are
unable to convert at a redemption price equal to the greater of $1,150 per share
or the closing bid price on the proposed conversion date of the common stock
which would have otherwise been issued upon conversion of the Series C preferred
stock.
The Series C preferred stock is also redeemable, at the option of the
holders, at a price equal to the higher of $1,150 or the then closing bid price
of the underlying shares of our common stock in the event of:
o business combinations,
o the sale of substantially all of our assets,
o purchase, tender or exchange offer for more than 50% of our common
stock,
o our failure to maintain the effectiveness of the registration
statements for specified periods of time,
o our failure to maintain the listing of our common stock on the Nasdaq
National Market, the American Stock Exchange or the New York Stock
Exchange, or
o our failure to effectuate a required conversion of Series C preferred
stock.
Warrants
--------
The warrants are exercisable until January 25, 2001 at an exercise
price equal to approximately $7.03 per share, subject to adjustment in the event
of stock splits, dividends, combinations, reclassifications, recapitalizations
or like capital adjustments.
Registration of Underlying Shares
---------------------------------
We have filed two registration statements covering the resale by the
selling stockholders of 4,780,000 shares issuable upon conversion of the Series
C preferred stock (1,187,659 of which have been issued to, and 1,120,418 have
been sold by, the selling stockholders as of November 30, 1999) and 200,000
shares they may acquire upon the exercise of the warrants should they choose to
do so. We agreed to maintain the effectiveness of the registration statements
until all shares of common stock issued upon conversion of the Series C
preferred stock and exercise of the warrants are sold or until they may be sold
without registration under paragraph (k) of Rule 144 under the Securities Act.
We also agreed to permit, with some exceptions, the investors to join in other
registration statements we file in the future. We will bear all expenses in
connection with any registration, other than underwriting discounts and
commissions, fees and disbursements of investment bankers for the investors and
the fees and expenses of counsel to the selling stockholders in excess of
$2,000.
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<PAGE>
SELLING STOCKHOLDERS
The following table contains information regarding the selling
stockholders' ownership of shares of our common stock as of November 30, 1999
(based on the assumption in footnote (1) of the table), and as adjusted to
reflect the sale of the shares covered by this prospectus. This prospectus may
be used by the selling stockholders and those to whom they may pledge, donate or
transfer their shares and other non-sale transferees.
<TABLE>
<CAPTION>
Shares of Common Shares of Common Stock
Stock Beneficially Shares of to be Owned
Owned Prior to Common Stock to after Offering
Name Offering (1) be Sold (2) --------------
- ------------------------------------ ---------------------------------------- Number Percent
------ -------
<S> <C> <C> <C> <C>
Leonardo, L.P. (2) 2,302,083 (3) 2,302,083 0 --
GAM Arbitrage Investment, Inc. (2) 104,117 (4) 104,117 0 --
AG Super Fund International Partners, L.P. (2) 96,568 (5) 96,568 0 --
Raphael, L.P. (2) 103,663 (6) 103,663 0 --
Ramius Fund, Ltd. (7) 66,200 (8) 66,200 0 --
--------------- ----------- --------- -------
Total 2,672,631 2,672,631 0 --
</TABLE>
(1) Based on the assumption that (a) all of the warrants held by each selling
stockholder are exercised and (b) all Series C preferred stock outstanding
at November 30, 1999 held by each selling stockholder are converted into
the estimated number of shares issuable upon conversion of the Series C
preferred stock on that date (based on an average conversion price of
$1.1848 per share of common stock, which would have been applicable to our
Series C preferred Stock had they all been converted into our common stock
on November 30, 1999). Since the actual conversion price is likely to be
95% of the average of the closing bid prices of our common stock during the
ten consecutive trading days immediately preceding the actual conversion
date, the actual number of shares of common stock that may be issued upon
conversion of Series C preferred stock will vary as the market price of our
common stock varies. We have therefore registered in the registration
statements of which this prospectus forms a part more shares in case the
actual number of shares issuable upon conversion of Series C preferred
stock increases. Those additional shares may only be sold by the selling
stockholders after we reflect the change in the number of shares offered in
a supplement to this prospectus. To the extent we would be obligated to
issue more shares than are covered by the registration statements, we may
be required to redeem the Series C preferred stock submitted for conversion
unless we register additional shares of common stock for resale. See
"Private Placement."
(2) Angelo, Gordon & Co., L.P. ("Angelo Gordon"), is a general partner of
Leonardo, L.P., AG Super Fund International Partners, L.P. and Raphael,
L.P., and is the investment advisor of GAM Arbitrage Investment, Inc.
(collectively, the "Angelo Gordon Entities") and consequently has voting
control and investment discretion over securities held by the Angelo Gordon
Entities. The ownership information for each of the Angelo Gordon Entities
does not include the owenrship information for the other Angelo Gordon
Entities. Angelo Gordon and each of the Angelo Gordon Entities disclaim
beneficial ownership of the shares held by the other Angelo Gordon
Entities. Mr. John M. Angelo, the Chief Executive Officer of Angelo Gordon,
and Mr. Michael R. Gordon, the Chief Operating Officer of Angelo Gordon,
are the sole general partners of A.G. Partners, L.P., the sole general
partner of Angelo Gordon. As a result, Mr. Angelo and Mr. Gordon may be
considered beneficial owners of any shares deemed to be beneficially owned
by Angelo Gordon.
(3) Represents (i) 52,093 shares owned as a result of the previous conversion
of Series C preferred stock, (ii) 2,109,900 shares issuable upon conversion
of 2,500 shares of Series C preferred stock and (iii) 140,000 shares
issuable upon the exercise of a warrant.
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<PAGE>
(4) Represents (i) 7,717 shares owned as a result of the previous conversion of
Series C preferred stock, (ii) 84,400 shares issuable upon conversion of
100 shares of Series C preferred stock and (iii) 12,000 shares issuable
upon the exercise of a warrant.
(5) Represents (i) 168 shares owned as a result of the previous conversion of
Series C preferred stock, (ii) 84,400 shares issuable upon conversion of
100 shares of Series C preferred stock and (iii) 12,000 shares issuable
upon the exercise of a warrant.
(6) Represents (i) 7,263 shares owned as a result of the previous conversion of
Series C preferred stock, (ii) 84,400 shares issuable upon conversion of
100 shares of Series C preferred stock and (iii) 12,000 shares issuable
upon the exercise of a warrant.
(7) AG Ramius Partners, LLC ("AG Ramius") is the investment advisor to Ramius
Fund, Ltd. ("Ramius Fund"), and consequently has voting control and
investment discretion over securities held by Ramius Fund. AG Ramius Fund
disclaims beneficial ownership of the shares held by Ramius Fund. Mr. John
M. Angelo and Mr. Michael Gordon are sole general partners of AG Partners,
L.P., the sole general partner of Angelo Gordon (which is the investment
managing member of AG Ramius). As a result, Mr. Angelo and Mr. Gordon may
be considered beneficial owners of any shares deemed to be beneficially
owned by AG Ramius.
(8) Represents (i) 42,200 shares issuable upon conversion of 50 shares of
Series C preferred stock and (ii) 24,000 shares issuable upon the exercise
of a warrant.
Other than being investors in our January 1998 private placement, none of
the selling stockholders have been affiliated with us or have had any material
relationship with us during the past three years.
PLAN OF DISTRIBUTION
The selling stockholders and their pledgees, donees, transferees and
other subsequent holders of the shares covered by this prospectus may offer
their shares at various times in or more of the following transactions:
o in or off the over-the-counter market; or
o in privately negotiated transactions
The shares may be sold:
o at prevailing market prices at the time of sale;
o at prices related to those prevailing market prices;
o at negotiated prices; or
o at fixed prices.
The transactions in the shares may be effected by one or more of the
following methods:
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
o purchases by a broker or dealer as principal, and the resale by that
broker or dealer for its account under to this prospectus, including
resale to another broker or dealer;
-17-
<PAGE>
o block trades in which the broker or dealer will attempt to sell the
shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction; or
o negotiated transactions between selling stockholders and purchasers
without a broker or dealer.
In connection with the distribution of their shares or otherwise, the
selling stockholders may enter into hedging transactions with broker-dealers or
other financial institutions. In connection with hedging transactions,
broker-dealers or other financial institutions may engage in short sales of our
common stock in the course of hedging the positions they assume with selling
stockholders. The selling stockholders may also sell our common stock short and
redeliver the shares to close out the short positions. The selling stockholders
may also enter into option or other transactions with broker-dealers or other
financial institutions which require the delivery to the broker-dealer or other
financial institution of shares of our common stock offered hereby, which shares
those broker-dealers or other financial institutions may resell pursuant to this
prospectus (as supplemented or amended to reflect such transaction). The selling
stockholders may also pledge their shares to a broker-dealer or other financial
institution, and, upon a default, that broker-dealer or other financial
institution may effect sales of the pledged shares pursuant to this prospectus
(as supplemented or amended to reflect that transaction).
The selling stockholders and any broker-dealers or other persons acting
on the behalf of parties that participate in the distribution of the shares may
be deemed to be underwriters. If so, any commissions or profits they receive on
the resale of the shares may be deemed to be underwriting discounts and
commissions under the Securities Act.
The selling stockholders may also sell the shares under Rule 144 instead
of under this prospectus, if Rule 144 is available for those sales.
As of the date of this prospectus, we are not aware of any agreement,
arrangement or understanding between any broker or dealer and any of the selling
stockholders with respect to the offer or sale of the shares under to this
prospectus.
We have advised the selling stockholders that during the time each is
engaged in distributing shares covered by this prospectus, each must comply with
the requirements of the Securities Act of 1933 and Rule 10b-5 and Regulation M
under the Securities Exchange Act of 1934. Under those rules and regulations,
they:
o may not engage in any stabilization activity in connection with our
securities;
o must furnish each broker which offers common stock covered by this
prospectus with the number of copies of this prospectus which are
required by each broker; and
o may not bid for or purchase any of our securities or attempt to
induce any person to purchase any of our securities other than as
permitted under the Securities Exchange Act of 1934.
While the selling stockholders are not restricted in selling shares
during any periods of time, no selling stockholder may, in any thirty-day
period, convert more than one-third of the number of shares of Series C
preferred stock purchased by it in the private placement.
In the registration rights agreements we executed in connection with the
private placement we agreed to indemnify and hold harmless each selling
stockholder against liabilities, including liabilities under the Securities Act
of 1933, which may be based upon, among other things, any untrue statement or
alleged untrue statement of a material fact or any omission or alleged omission
of a material fact, unless made or omitted in reliance upon written information
provided to us by that selling stockholder. We have agreed to bear the expenses
incident to the registration of the shares, other than selling discounts and
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<PAGE>
commissions, fees and disbursements of investment bankers and the fees and
expenses of counsel to the selling stockholders in excess of $2,000.
DESCRIPTION OF CAPITAL STOCK
GENERAL
Our authorized capital consists of 30,000,000 shares of common stock,
$.01 par value per share, and 1,000,000 shares of preferred stock, $1.00 par
value per share. As of November 30, 1999, there were 8,832,898 shares of our
common stock and 2,850 shares of our Series C preferred stock issued and
outstanding, as discussed under "Private Placement," above. We have also
authorized a series of 30,000 shares of our preferred stock, called Series D
junior participating preferred stock, which may be issued pursuant to our
Shareholder Rights Plan discussed below.
COMMON STOCK
Each holder of common stock is entitled to one vote per share on all
matters submitted to a vote of stockholders. Subject to the rights of holders of
preferred stock, the holders of common stock are entitled to receive dividends
when, as and if declared by our Board of Directors. In the event of the
liquidation, dissolution or winding up of our operations, the holders of common
stock are entitled to share ratably in all assets remaining after the payment of
liabilities and any liquidation preference of our preferred stock. The shares of
common stock do not have any preemptive or other subscription rights, conversion
rights or redemption or sinking fund provisions. All of our shares of common
stock presently issued and outstanding are fully paid and non-assessable.
PREFERRED STOCK
Our preferred stock is issuable in one or more series from time to time
at the discretion of the Board of Directors. The Board is authorized, with
respect to each series, to fix its designation, powers, preferences (including
with respect to dividends and on liquidation), rights (including voting,
dividend, conversion, sinking fund and redemption rights) and limitations.
Shares of preferred stock issued by action of the Board of Directors could be
utilized as a method of making it more difficult for a party to gain control of
us without the approval of our Board of Directors.
SHAREHOLDER RIGHTS PLAN
On May 7, 1998, our Board of Directors adopted a shareholder rights plan.
Under the rights plan, we distributed one preferred stock purchase right to each
holder of record of common stock at the opening of business on May 21, 1998.
Each right entitles stockholders to buy one one-thousandth of a share of Series
D junior participating preferred stock at a purchase price of $30 per one
one-thousandth of a share of Series D junior participating preferred stock. The
rights do not become exercisable until a person or group acquires 20% or more of
our common stock or announces a tender offer which would result in that person
or group owning 20% or more of our common stock. Each right will entitle its
holder (other than the acquirer) to purchase, at a purchase price of $30, a
number of shares of common stock having a market value of $60. The rights also
entitle holders to purchase shares of an acquirer's common stock. The rights may
be redeemed upon action by our Board of Directors or exchanged for shares of our
common stock. The terms of the rights are set forth in a Rights Agreement
between us and Harris Trust Company of Chicago, as Rights Agent, which has been
filed as an exhibit to the registration statements of which this prospectus
forms a part. The rights expire on May 15, 2008 (unless extended).
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<PAGE>
CERTAIN PROVISIONS OF OUR CERTIFICATE OF INCORPORATION AND BY-LAWS
Supermajority Vote for Certain Transactions
-------------------------------------------
Our Certificate of Incorporation requires the affirmative vote of the
holders of at least 75% of the outstanding shares of our capital stock entitled
to vote thereon to authorize the following:
(1) any merger or consolidation of us or any of our subsidiaries with or
into any other corporation;
(2) any sale, lease or exchange by us of all or substantially all of our
assets and those of our subsidiaries taken as a whole; and
(3) our dissolution.
The supermajority voting requirement applies in a transaction described
in (1) and (2) only if, as of the record date for determining stockholders
entitled to vote on the matter, the other party to the transaction beneficially
owns 10% or more of our outstanding capital stock entitled to vote in the
election of directors or who beneficially owned at least 10% of our voting
capital stock at December 3, 1979. The supermajority voting requirement does not
apply to a transaction with a person or entity who became a 10% beneficial owner
after our Board of Directors approved the transaction described in (1) or (2)
above or, as to our dissolution, if the dissolution is substantially consistent
with the approved transaction or with a person or entity who beneficially owned
at least 10% of our voting capital stock at December 3, 1979.
Classification of Board of Directors and Removal of Directors
-------------------------------------------------------------
Our Certificate of Incorporation and By-laws divide the Board of
Directors into three classes, designated Class I, Class II and Class III. Each
class is to be as nearly equal in number as possible. At each annual meeting of
stockholders, directors are elected to succeed those in the class whose terms
then expire. Each elected director serves for a term expiring at the third
annual meeting of stockholders after the director's election, and until the
director's successor is elected and qualified. As a result, directors elected
stand for election only once in three years. Our Certificate of Incorporation
and By-laws also provide that directors may be removed only for cause by
stockholders.
Votes Required to Amend the Provisions on Supermajority Votes and Removal of
----------------------------------------------------------------------------
Directors.
----------
Our Certificate of Incorporation and By-laws provide that the affirmative
vote of the holders of at least 75% of our outstanding voting stock is required
to make, alter or repeal, or to adopt any provision inconsistent with, the
supermajority voting requirements for transactions and the provisions for the
classified board of directors and removal of directors.
DELAWARE BUSINESS COMBINATION PROVISIONS
As a Delaware corporation, we are subject to Section 203 of the Delaware
General Corporation Law which regulates large accumulations of shares, including
those made by tender offers. Section 203 may have the effect of significantly
delaying a purchaser's ability to acquire our organization if that acquisition
is not approved by our Board of Directors before the purchaser becomes an
"Interested Stockholder."
In general, Section 203 prevents an "Interested Stockholder" from
engaging in a "Business Combination" with a Delaware corporation for three years
following the date that person became an Interested Stockholder. For purposes of
Section 203, the term "Interested Stockholder" is defined generally as a person
owning 15% or more of a corporation's outstanding voting stock. The term
"Business Combination" is defined broadly to include:
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o mergers and other transactions with or caused by the Interested
Stockholder;
o sales or other dispositions to the Interested Stockholder (except
proportionately with the corporation's other stockholders) of
assets of the corporation or a subsidiary equal to 10% or more of
the aggregate market value of the corporation's consolidated
assets or our outstanding stock;
o the issuance or transfer by the corporation or a subsidiary of
stock of the corporation or the subsidiary to the Interested
Stockholder (except for transfers in a conversion or exchange or a
pro-rata distribution or certain other transactions, none of which
increase the Interested Stockholder's proportionate ownership of
any class or series of the corporation's or the subsidiary's
stock); or
o receipt by the Interested Stockholder (except proportionately as a
stockholder), directly or indirectly, of any loans, advances,
guarantees, pledges or other financial benefits provided by or
through the corporation or a subsidiary.
The three-year moratorium imposed on Business Combinations by Section
203 does not apply if:
(a) before the date on which a stockholder becomes an Interested
Stockholder, the target's board of directors approves either the
Business Combination or the transaction that resulted in the
person becoming an Interested Stockholder,
(b) the Interested Stockholder owns 85% of the corporation's voting
stock upon consummation of the transaction that made him or her an
Interested Stockholder (excluding from the 85% calculation shares
owned by directors who are also officers of the corporation and
shares held by employee stock plans which do not permit employees
to decide confidentially whether to accept a tender or exchange
offer); or
(c) on or after the date a person becomes an Interested Stockholder,
the target's board of directors approves the Business Combination,
and it is also approved at a stockholder meeting by two-thirds of
the voting stock not owned by the Interested Stockholder.
The restrictions described above also do not apply to Business
Combinations proposed by an Interested Stockholder following the announcement or
notification of extraordinary transactions involving the corporation and a
person who had not been an Interested Stockholder during the previous three
years or who became an Interested Stockholder with the approval of a majority of
the corporation's directors.
ANTI-TAKEOVER EFFECTS
The provisions of our Certificate of Incorporation and By-laws
described above and the effects of Section 203 of the Delaware General
Corporation Law could discourage potential acquisition proposals and could delay
or prevent a change in control of our company. These provisions are intended to
enhance the continuity and stability of our Board of Directors and the policies
formulated by the Board of Directors and to discourage some types of
transactions that may involve an actual or threatened change in control of our
company. These provisions are also designed to reduce our vulnerability to an
unsolicited acquisition proposal and to discourage tactics that may be used in
proxy fights. However, those provisions may discourage or prevent third parties
from making offers for our shares. As a result, the market price of the common
stock may not benefit from any premium that might occur in anticipation of a
threatened or actual change in control. Such provisions also may have the effect
of preventing or delaying changes in our management.
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INDEMNIFICATION
We indemnify our officers and directors to the fullest extent permitted
under Delaware law against all liabilities incurred in connection with their
service to us.
TRANSFER AGENT AND REGISTRANT
The transfer agent and registrar for our common stock is Harris Trust
Company of New York, Wall Street Plaza, 88 Pine Street, New York, New York
10005.
LEGAL MATTERS
The validity of the shares of common stock being offered will be passed
upon for us by Parker Chapin Flattau & Klimpl, LLP.
EXPERTS
The audited consolidated financial statements, including the related
notes thereto, incorporated by reference in this prospectus and elsewhere in the
registration statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report with respect thereto. Such
financial statements and report are incorporated by reference herein in reliance
upon the authority of said firm as experts in accounting and auditing in giving
said reports.
WHERE YOU CAN FIND MORE INFORMATION ABOUT US
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any document we file at the SEC's public reference rooms in Washington, D.C.,
New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330
for further information on the public reference rooms. Our SEC filings are also
available to the public over the Internet at the SEC's Website at
"http://www.sec.gov."
We have filed with the SEC two registration statements on Form S-3 to
register the shares of common stock being offered. This prospectus is a combined
prospectus under those registration statements. As permitted by the SEC's rules,
this prospectus does not contain all the information included in the
registration statements. For further information with respect to us and our
common stock, you should refer to the registration statements (SEC File numbers
333-47105 and 333-90197) and to the exhibits and schedules filed as part of
those registration statements, as well as the documents listed below. You can
review and copy the registration statements, their exhibits and schedules, as
well as the documents listed below, at the public reference facilities
maintained by the SEC as described above. The registration statements, including
their exhibits and schedules, are also available on the SEC's Website.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update or supersede this information. We incorporate
by reference the documents listed below and any future filings we will make with
the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934 (File No. 1-8048) before our filing a post-effective amendment to the
registration statements which indicates that all securities offered under this
prospectus have been sold or which deregisters all securities remaining unsold:
o Annual Report on Form 10-K for the fiscal year ended June 25, 1999;
o Quarterly Report on Form 10-Q for the fiscal quarter ended September
24, 1999; and
o The description of our common stock contained in the Registration
Statement on Form 8-A filed on November 3, 1980, including all
amendments or reports filed for the purpose of updating that
description.
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This prospectus and the reports we incorporate by reference may contain
summaries of contracts or other documents. Because they are summaries, they will
not contain all of the information that may be important to you. If you would
like complete information about a contract or other document, you should read
the copy filed as an exhibit to the registration statements or to the reports we
incorporate by reference.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Mr. Paul G. Sebetic
Vice President - Finance
TII Industries, Inc.
1385 Akron Street
Copiague, New York 11726
(516) 789-5000
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<S> <C>
======================================================== ========================================================
WE HAVE NOT AUTHORIZED ANYONE TO GIVE ANY 2,672,631 Shares
INFORMATION OR TO REPRESENT ANYTHING NOT CONTAINED IN
THIS PROSPECTUS. YOU MUST NOT RELY ON ANY
UNAUTHORIZED INFORMATION. THIS PROSPECTUS DOES NOT
OFFER TO SELL OR BUY ANY SHARES IN ANY JURISDICTION TII INDUSTRIES, INC.
WHERE IT IS UNLAWFUL. THE INFORMATION IN THIS
PROSPECTUS IS CURRENT ONLY AS OF ITS DATE. YOU SHOULD
NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS
PROSPECTUS IS ACCURATE AS OF ANY OTHER DATE, AND Common Stock
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER WILL CREATE AN IMPLICATION TO THE
CONTRARY.
---------------------
TABLE OF CONTENTS
---------------------
--------------------
PROSPECTUS
--------------------
Page
----
Prospectus Summary..................................2
Forward-Looking Statements..........................5
Risk Factors........................................5
Use of Proceeds....................................12
Shares Eligible for Future Sale....................13 ________ __, 1999
Private Placement..................................13
Selling Stockholders ..............................16
Plan of Distribution...............................17
Description of Capital Stock.......................19
Legal Matters......................................22
Experts ...........................................22
Where You Can Find More
Information About Us..........................22
======================================================== ========================================================
</TABLE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
--------------------------------------
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
It is estimated that the following expenses will be incurred in connection
with the proposed offering hereunder. We will bear all of the following
expenses:
Registration fee - Securities and Exchange Commission $ 803.60
Nasdaq Listing Fees 17,500.00
Legal fees and expenses 7,500.00
Accounting fees and expenses 2,500.00
Printing and engraving expenses 1,000.00
Miscellaneous
696.40
--------------
Total $ 30,000.00
- ---------------------
(1) All expenses relate solely to this registration statement and are in
addition to expenses for the private placement and Registration
Statement No. 333-47105.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware
provides, in general, that a corporation incorporated under the laws of the
State of Delaware, like the registrant, may indemnify any person who was or is a
party, or is threatened to be made a party, to any threatened, pending or
completed action, suit or proceeding , whether civil, criminal, administrative
or investigative (other than a derivative action by or in the right of the
corporation) by reason of the fact that the person is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by that person in
connection with such action, suit or proceeding if such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe such person's conduct was
unlawful. In the case of a derivative action, a Delaware corporation may
indemnify any such person against expenses (including attorneys' fees) actually
and reasonably incurred by such person in connection with the defense or
settlement of such action or suit if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
court determines such person is fairly and reasonably entitled to indemnity for
such expenses. Article XII of the registrant's By-laws provides that the
registrant shall so indemnify such persons. In addition, Article 12 of the
registrant's Restated Certificate of Incorporation, as amended, provides, in
general, that no director of the registrant shall be personally liable to the
registrant or any of its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders; (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (iii) under Section 174 of the DGCL (which provides
that, under certain circumstances, directors may be jointly and severally liable
for willful or negligent violations of the DGCL provisions regarding the payment
of dividends or stock repurchases or redemptions), as the same exists or
hereafter may be amended; or (iv) for any transaction from which the director
derived an improper personal benefit.
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ITEM 16. EXHIBITS:
--------
Exhibit Number Description
- -------------- -----------
<S> <C>
4.1(a) Restated Certificate of Incorporation of TII, as filed with the
Secretary of State of the State of Delaware on December 10, 1996.
Incorporated by reference to Exhibit 3 to the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended December 27,
1996 (File No. 1-8048).
4.1(b) Certificate of Designation, as filed with the Secretary of State
of the State of Delaware on January 26, 1998. Incorporated by
reference to Exhibit 4.1 to the Company's Report on Form 8-K
dated (date of earliest event reported) January 26, 1998. (File
No. 1-8048). Certificate of Designation, as filed with the
Secretary of State of the State of Delaware on
4.1(c) May 15, 1998. Incorporated by reference to Exhibit 4.1 to the
Company's Report on Form 8-K dated (date of earliest event
reported) May 7, 1998 (File No. 1-8048). By-laws of TII, as
amended. Incorporated by reference to Exhibit 4.02 to Amendment
No. 1 to
4.2 the Company's Registration Statement on Form S-3 (File No.
33-64980).
4.3 Rights Agreement, dated as of May 15, 1998, between TII and
Harris Trust of Chicago. Incorporated by reference to Exhibit 4.1
to the company's Current Report on Form 8-K dated (date of
earliest event reported) May 7, 1998 (File No. 1-8048).
+5 Opinion of Parker Chapin Flattau & Klimpl, LLP as to the legality
of the common stock being offered and consent.
*23.1 Consent of Arthur Andersen LLP.
+23.2 Consent of Parker Chapin Flattau & Klimpl, LLP (included in
Exhibit 5).
+24 Powers of Attorney of certain officers and directors of TII
(included in the signature page, page II-4).
99.1 Form of warrant issued to the investors in TII's January 26, 1998
private placement. Incorporated by reference to Exhibit 99.1 to
TII's Current Report on Form 8-K (date of earliest event
reported) January 26, 1998 (File No. 1-8048).
99.2 Securities Purchase Agreement dated as of January 26, 1998 by and
among TII and the investors in TII's January 26, 1998 private
placement. Incorporated by reference to Exhibit 99.2 to TII's
Current Report on Form 8-K (date of earliest event reported)
January 26, 1998 (File No. 1-8048).
99.3 Registration Rights Agreement dated as of January 26, 1998 by and
among the company and the investors in TII's January 26, 1998
private placement. Incorporated by reference to Exhibit 99.3 to
TII's Current Report on Form 8-K (date of earliest event
reported) January 26, 1998 (File No. 1-8048).
</TABLE>
- -------------
* Filed herewith.
+ Filed with the initial filing of this Registration Statement.
All other exhibits are incorporated by reference to the indicated exhibit in the
indicated filing .
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
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(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate,
represent a fundamental change in the information set
forth in the Registration Statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in
the Registration Statement or any material change to
the information in this Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant under
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of those securities at the time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report under Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of those securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant under the Registrant's By-Laws, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against those liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by the director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
that indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of that
issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Amendment to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Town of Copiague, State of New York, on the
23rd day of December, 1999.
TII INDUSTRIES, INC.
By: /s/ Timothy J. Roach
-------------------------------------
Timothy J. Roach, President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the following
persons in the capacities indicated on the 23rd day of December, 1999.
<TABLE>
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Signature Title
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<S> <C>
* Alfred J. Roach
-------------------------------------
Alfred J. Roach Chairman of the Board
/s/ Timothy J. Roach President (Chief Executive Officer)
------------------------------------- and Director
Timothy J. Roach
/s/ Paul G. Sebetic Vice President - Finance (Chief
------------------------------------- Financial and Accounting Officer
Paul G. Sebetic
*C. Bruce Barksdale Director
-------------------------------------
C. Bruce Barksdale
/s/ George S. Katsarakes Director
-------------------------------------
George S. Katsarakes
* James R. Grover, Jr. Director
-------------------------------------
James R. Grover, Jr.
*Joseph C. Hogan Director
-------------------------------------
Joseph C. Hogan
------------------------------------- Director
Dorothy Roach
*William G. Sharwell Director
-------------------------------------
William G. Sharwell
*By /s/ Timothy J. Roach
-------------------------------------
Timothy J. Roach,
Attorney-in-fact
</TABLE>
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EXHIBIT INDEX
-------------
4.1(a) Restated Certificate of Incorporation of TII, as filed with the
Secretary of State of the State of Delaware on December 10, 1996.
Incorporated by reference to Exhibit 3 to the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended December 27,
1996 (File No. 1-8048).
4.1(b) Certificate of Designation, as filed with the Secretary of State
of the State of Delaware on January 26, 1998. Incorporated by
reference to Exhibit 4.1 to the Company's Report on Form 8-K
dated (date of earliest event reported) January 26, 1998. (File
No. 1-8048). Certificate of Designation, as filed with the
Secretary of State of the State of Delaware on
4.1(c) May 15, 1998. Incorporated by reference to Exhibit 4.1 to the
Company's Report on Form 8-K dated (date of earliest event
reported) May 7, 1998 (File No. 1-8048). By-laws of TII, as
amended. Incorporated by reference to Exhibit 4.02 to Amendment
No. 1 to
4.2 the Company's Registration Statement on Form S-3 (File No.
33-64980).
4.3 Rights Agreement, dated as of May 15, 1998, between TII and
Harris Trust of Chicago. Incorporated by reference to Exhibit 4.1
to the company's Current Report on Form 8-K dated (date of
earliest event reported) May 7, 1998 (File No. 1-8048).
+5 Opinion of Parker Chapin Flattau & Klimpl, LLP as to the legality
of the common stock being offered and consent.
*23.1 Consent of Arthur Andersen LLP.
+23.2 Consent of Parker Chapin Flattau & Klimpl, LLP (included in
Exhibit 5).
+24 Powers of Attorney of certain officers and directors of TII
(included in the signature page, page II-4).
99.1 Form of warrant issued to the investors in TII's January 26, 1998
private placement. Incorporated by reference to Exhibit 99.1 to
TII's Current Report on Form 8-K (date of earliest event
reported) January 26, 1998 (File No. 1-8048).
99.2 Securities Purchase Agreement dated as of January 26, 1998 by and
among TII and the investors in TII's January 26, 1998 private
placement. Incorporated by reference to Exhibit 99.2 to TII's
Current Report on Form 8-K (date of earliest event reported)
January 26, 1998 (File No. 1-8048).
99.3 Registration Rights Agreement dated as of January 26, 1998 by and
among the company and the investors in TII's January 26, 1998
private placement. Incorporated by reference to Exhibit 99.3 to
TII's Current Report on Form 8-K (date of earliest event
reported) January 26, 1998 (File No. 1-8048).
- -------------
* Filed herewith.
+ Filed with the initial filing of this Registration Statement.
All other exhibits are incorporated by reference to the indicated exhibit in the
indicated filing .
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated September 15, 1999,
included in TII Industries, Inc.'s Form 10-K for the year ended June 25, 1999,
and to all references to our firm included in this registration statement.
/s/ ARTHUR ANDERSEN LLP
San Juan, Puerto Rico,
December 22, 1999
