SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
TII Industries, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
TII INDUSTRIES, INC.
1385 Akron Street
Copiague, New York 11726
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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 20, 1999
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To the Stockholders of
TII Industries, Inc.:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of TII
Industries, Inc., a Delaware corporation (the "Company"), will be held at the
Huntington Hilton, 598 Broad Hollow Road, Melville, New York, on Tuesday, April
20, 1999 at 10:30 a.m., New York time, at which the following matters are to be
presented for consideration:
1. A proposal to approve the Stock Purchase Agreement dated as of
December 31, 1998 between the Company and Alfred J. Roach
pursuant to which the Company proposes to acquire all of the
issued and outstanding capital stock of PRC Leasing, Inc. in
exchange for 1,176,213 shares of the Company's Common Stock; and
2. Such other matters as may properly come before the meeting or any
adjournments or postponements thereof.
The close of business on March 8, 1999 has been fixed as the record
date for the determination of stockholders entitled to notice of, and to vote
at, the meeting and any adjournments or postponements thereof. A list of such
stockholders will be open for examination by any stockholder for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
10 days prior to the meeting at the offices of the Company, 1385 Akron Street,
Copiague, New York.
By Order of the Board of Directors,
/s/ Dorothy Roach
Dorothy Roach,
Secretary
March 12, 1999
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE
AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN
ORDER TO ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE IS NEEDED IF MAILED IN
THE ENCLOSED ENVELOPE IN THE UNITED STATES.
<PAGE>
TII INDUSTRIES, INC.
1385 Akron Street
Copiague, New York 11726
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PROXY STATEMENT
For Special Meeting of Stockholders
To be Held on April 20, 1999
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This Proxy Statement, to be mailed to stockholders of TII Industries,
Inc., a Delaware corporation (the "Company"), on or about March 12, 1999, is
furnished in connection with the solicitation by the Board of Directors of the
Company of proxies in the accompanying form ("Proxy" or "Proxies") to be used at
a Special Meeting of Stockholders of the Company to be held on Tuesday, April
20, 1999 at 10:30 a.m., New York time, and at any adjournments or postponements
thereof (the "Meeting"). The Meeting will be held at the Huntington Hilton, 598
Broad Hollow Road, Melville, New York.
The close of business on March 8, 1999 has been fixed as the record
date (the "Record Date") for the determination of stockholders entitled to
notice of, and to vote at, the Meeting. On the Record Date, there were
outstanding 8,375,132 shares of the Company's Common Stock ("Common Stock"). The
presence of a majority of all such shares at the Meeting, in person or by proxy,
will constitute a quorum for the transaction of business at the Meeting. Each
outstanding share of Common Stock on the Record Date is entitled to one vote on
all matters to be voted on at the Meeting. The Meeting has been called to
consider a proposal to approve the Stock Purchase Agreement dated as of December
31, 1998 between the Company and Alfred J. Roach pursuant to which the Company
proposes to acquire all of the issued and outstanding capital stock of PRC
Leasing, Inc. in exchange for 1,176,213 shares of the Company's Common Stock
(the "Proposal"). Under the Company's Bylaws, business that may be transacted at
any special meeting of stockholders is limited to the purposes set forth in the
Notice of Meeting. Therefore, except for motions related thereto, including any
motion to adjourn the Meeting, only the Proposal will be considered at the
Meeting.
Proxies properly executed and received in time for the Meeting will be
voted in accordance with the specifications made thereon or, in the absence of
specification, in favor of the Proposal. The Board of Directors does not intend
to bring before the Meeting any matters or motions other than those described
above. If any other matters, including motions, come before the Meeting, it is
the intention of the persons named in the accompanying Proxy to vote such Proxy
in accordance with their judgment on such matters or motions, including any
matters dealing with the conduct of the Meeting. Proxies submitted which contain
abstentions or broker non-votes will be deemed present at the Meeting for
determining the presence of a quorum. Abstentions are considered shares entitled
to vote at the Meeting, while shares subject to broker non-votes with respect to
any matter are not considered shares entitled to vote with respect to that
matter. Therefore, abstentions will effectively be votes against the Proposal,
while broker non-votes will have no effect on the outcome of the vote on the
Proposal. Any Proxy may be revoked by the person giving it at any time prior to
the exercise of the powers conferred thereby by a written notice of revocation
to Dorothy Roach, Secretary of the Company, 1385 Akron Street, Copiague, New
York 11726, by submitting a duly executed proxy bearing a later date at the
foregoing address or at the Meeting, or by voting in person at the Meeting.
<PAGE>
SECURITY HOLDINGS OF CERTAIN
STOCKHOLDERS AND MANAGEMENT
The following table sets forth information, as of the Record Date, with
respect to the beneficial ownership of the Company's Common Stock by (i) each
person (including any "group", as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934) known by the Company to own more than 5% of the
outstanding shares of the Company's Common Stock, (ii) each director of the
Company, (iii) the Company's Chief Executive Officer and each of the four most
highly compensated persons who were serving as executive officers of the Company
at the end of the Company's fiscal year ended June 26, 1998 exceeded $100,000,
and (iv) all executive officers and directors of the Company as a group. The
Company understands that, except as noted below, each beneficial owner has sole
voting and investment power with respect to all shares attributable to such
owner.
Percent
Shares of
Beneficial Owner Owned Class (1)
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Alfred J. Roach 751,600 (2) 8.9%
Route 2-Kennedy
Avenue, Guaynabo,
Puerto Rico 00657
Dorothy Roach 51,744 (3) *
Route 2-Kennedy
Avenue, Guaynabo,
Puerto Rico 00657
Timothy J. Roach 511,013 (4) 6.1%
1385 Akron Street
Copiague, NY 11726
George S. Katsarakes 20,000 *
C. Bruce Barksdale 7,998 (5) *
James R. Grover, Jr. 83,600 (6) 1.0%
Joseph C. Hogan 89,330 (7) 1.1%
William G. Sharwell 90,000 (8) 1.1%
Dare P. Johnston 0 *
James A. Roach 18,488 (9) *
All executive officers and 1,628,773 (10) 18.8%
directors as a group
(12 persons)
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(1) Asterisk indicates that the percentage is less than one percent.
Percent of Class assumes the issuance of the Common Stock issuable upon
the exercise of options (to the extent exercisable on or within 60 days
after the Record Date) held by such persons but (except for the
calculation of beneficial ownership by all executive officers and
directors as a group) by no other person or entity.
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<PAGE>
(2) Includes 40,360 shares subject to options held under the Company's
Stock Option Plans. Excludes the shares owned by Mr. Roach's wife,
Dorothy Roach, reflected below in this table, as to which shares Mr.
Roach disclaims beneficial ownership.
(3) Excludes the shares owned by Mrs. Roach's husband, Alfred J. Roach,
reflected above in this table, as to which shares Mrs. Roach disclaims
beneficial ownership.
(4) Includes 968 shares owned by Mr. Roach's wife (who has sole voting and
dispositive power with respect to the shares owned by her and as to
which Mr. Roach disclaims beneficial ownership).
(5) Includes 78 shares owned by Mr. Barksdale's children.
(6) Includes 80,000 shares subject to options held under the Company's
Stock Option Plans.
(7) Includes 89,250 shares subject to options held under the Company's
Stock Option Plans.
(8) Includes 89,400 shares subject to options held under the Company's
Stock Option Plans.
(9) Includes 1,000 shares owned by Mr. Roach's wife (who has sole voting
and dispositive power with respect to the shares owned by her and as to
which Mr. Roach disclaims beneficial ownership).
(10) Includes 299,010 shares subject to options.
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<PAGE>
PROPOSAL
PROPOSAL TO APPROVE STOCK PURCHASE AGREEMENT
BETWEEN THE COMPANY AND ALFRED J. ROACH
General
Since fiscal 1982, the Company has leased equipment from PRC Leasing,
Inc. ("PRC"), a corporation wholly-owned by Alfred J. Roach, Chairman of the
Board of Directors and a director of the Company and presently the beneficial
owner (as determined under Section 13(d)(3) of the Securities Exchange Act of
1934) of 9.0% of the Company's Common Stock (see "Security Holdings of Certain
Holders and Management"). The only activity of PRC is leasing equipment to the
Company. On July 18, 1991, as an inducement to the Company's then bank lenders
to restructure the Company's long-term bank loan, among other things, the
Company acquired certain equipment from PRC and replaced its then existing
leases with PRC with a new lease with PRC. The equipment lease (as subsequently
amended, the "Equipment Lease") has a term expiring July 17, 1999 (subject to an
automatic extension until July 17, 2001, unless terminated by either party upon
at least ninety days written notice prior to the beginning of the next scheduled
renewal period) and provides for rentals at the rate of $200,000 per year. The
Company believes that the rentals charged by PRC are comparable to the rentals
that would have been charged by unrelated leasing companies for similar
equipment.
In November 1998, the Company determined that, since it would require
the equipment then subject to the Equipment Lease (the "Equipment") for a
long-term, instead of continuing to lease the Equipment, it would be in the
Company's best interests to purchase the Equipment. Accordingly, the Company
commissioned an appraisal of the Equipment from a certified appraiser, who
calculated the fair market value of the Equipment to be $2.2 million.
As a result, the Company entered into a Stock Purchase Agreement, dated
as of December 31, 1998, with Alfred J. Roach ("Agreement") to acquire all of
the outstanding shares of capital stock of PRC in exchange for the issuance by
the Company of an aggregate of 1,176,213 shares of the Company's Common Stock
(the "Shares"), being equal to the $2.2 million appraised value of the Equipment
divided by the $1.875 closing price of the Company's Common Stock on December
31, 1998 on The Nasdaq Stock Market's National Market.
The Company's entering into the Agreement was unanimously authorized by
both the Audit Committee of the Board of Directors and the full Board.
Completion of the transactions is subject to, among other things, the approval
by the Company's stockholders.
The Agreement
The following is a brief summary of certain provisions of the Agreement
and is qualified in its entirety by reference to the full text of the Agreement,
a copy of which is attached as Annex 1 to this Proxy Statement and is
incorporated herein by reference. Capitalized terms used and not defined below
have the meanings given to them in the Agreement.
If the Agreement is approved and the other conditions to completion of
the transactions contemplated by the Agreement are satisfied, it is currently
anticipated that the sale of PRC to the Company will be completed as soon as
practicable following the Meeting.
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<PAGE>
Conditions to Closing
In addition to obtaining the stockholder vote being requested in this
Proxy Statement, it is a condition to the obligations of the Company (unless
waived by the Company) that, at the time of the closing, the representations and
warranties of Mr. Roach made in the Agreement continue to be true and correct in
all material respects; that Mr. Roach shall have performed all obligations
required to be performed by him; that the Equipment shall not have been
adversely affected in any material way, including, without limitation, as a
result of any fire, accident or other casualty, whether insured against or not;
that no preliminary or permanent injunction or other order that prevents the
consummation of the transactions contemplated by the Agreement shall be in
effect nor shall any lawsuit have been brought therefor; that all documents
required to be delivered by Mr. Roach shall have been delivered; and that all
requisite consents and approvals that the Company reasonably deems necessary
shall have been obtained.
In addition to obtaining the stockholder vote being requested in this
Proxy Statement, it is a condition to the obligations of Mr. Roach (unless
waived by Mr. Roach) that, at the time of the closing, the representations and
warranties of the Company made in the Agreement continue to be true and correct
in all material respects; that the Company shall have performed all obligations
required to be performed by it; that there shall be no adverse change in the
condition (financial or otherwise, properties, assets or prospects of the
Company and its subsidiaries taken as a whole; that no preliminary or permanent
injunction or other order that prevents the consummation of the transactions
contemplated by the Agreement shall be in effect nor shall any lawsuit have been
brought therefor; that all documents required to be delivered by the Company
shall have been delivered; and that all requisite consents and approvals that
Mr. Roach requires shall have been obtained.
Representations and Warranties
Mr. Roach and the Company have made certain representations and
warranties in the Agreement to induce the other to enter into the Agreement and
consummate the transactions contemplated by the Agreement.
The representations of the Company relate to, among other things, its
organization; good standing; power and authority to enter into the Agreement and
perform the obligations to be performed by it under the Agreement; the binding
effect of the Agreement on it; required third party consents; the absence of
conflicts with corporate documents, agreements and laws applicable to the
Company; that the Company has not incurred any liability for finders', brokerage
or agents' fees or commissions in connection with the Agreement; its compliance
with the rules of, and accuracy of the filings with, the Securities and Exchange
Commission; and as to its financial statements.
The representations of Mr. Roach relate to, among other things, the
organization, good-standing and capitalization of PRC; Mr. Roach's power and
authority to enter into the Agreement and perform the obligations to be
performed by him under the Agreement; the binding effect of the Agreement on
him; and the absence of conflicts with documents, agreements and laws applicable
to Mr. Roach and PRC; required third party consents; PRC's title to the
Equipment; that neither Mr. Roach nor PRC has incurred any liability for
finders', brokers' or agents' fees or commissions in connection with the
Agreement; as to the financial statements of PRC for the year ended December 31,
1998 and the interim financial statements to be delivered to the Company with
respect to 1999; the completeness of PRC's books and records; the absence of
undisclosed liabilities and certain events, including a covenant that PRC will
not conduct any business other than leasing the Equipment to the Company
pursuant to the Equipment Lease; the absence of litigation against PRC and its
assets; that PRC has paid all taxes
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<PAGE>
applicable to it; and that PRC is in compliance in all material respects with
all applicable laws, rules and regulations.
Indemnification
Mr. Roach has agreed to indemnify and hold the Company harmless from
any liabilities or obligations of PRC other than those reflected on financial
statements of PRC or otherwise disclosed in the Agreement and with respect to
any material breach of any representation or warranty or other agreement made by
him in the Agreement. The Company has agreed to indemnify and hold Mr. Roach
harmless from liabilities and obligations of PRC reflected on PRC's financial
statements or otherwise disclosed to the Company in the Agreement, with respect
to PRC's business subsequent to the closing and with respect to any material
breach of any representation or other agreement made by the Company in the
Agreement.
Registration Rights
The Company has agreed to register the Shares, on up to three
occasions, subject to certain limitations, under the Securities Act of 1933, as
amended (the "Securities Act"), in order to permit the offer and sale from time
to time of the Shares covered by the applicable registration statement by the
holders thereof while the registration statement is in effect and current. The
registration rights afforded cease as to any of the Shares upon their sale
pursuant to a registration statement or Rule 144 under the Securities Act ("Rule
144") or at such time as they may, in the opinion of counsel to the Company, be
sold by the holder thereof under Rule 144 without regard to the volume or other
limitations of Rule 144. The Company has agreed to bear all expenses incurred in
connection with the registration of the Shares, including the fees and expenses
of the Company's counsel and accountants, expenses in connection with the
preparation and filing of the registration statement and registration or
qualification of the Shares under applicable state securities laws, and the fees
and disbursements of one counsel selected by the holders of a majority of the
Shares to review the registration statement. The holders are to bear all selling
discounts, commissions and brokerage commissions. The Company has agreed to
indemnify and hold harmless each holder of Shares against liabilities to which
such holder may become subject by reason of any untrue statement or alleged
untrue statement of a material fact, or the omission or alleged omission to
state a material fact, in a registration statement, except in certain cases,
including if the liability arises out of, or is based upon and made in reliance
and conformity with, information provided by the holder specifically for use in
connection with the registration statement, in which case, the applicable holder
is to so indemnify and hold harmless the Company.
Reasons for Seeking Stockholder Approval
The Shares will represent, based upon the number of shares of Common
Stock outstanding on the Record Date, approximately 12.3% of the Company's
outstanding Common Stock after giving effect to the issuance of the Shares. Mr.
Roach currently owns approximately 8.5% of the Company's outstanding Common
Stock on the Record Date and, including the portion of options to purchase
Common Stock exercisable within 60 days after the Record Date, beneficially owns
approximately 8.9% of the Company's Common Stock. If the Agreement is approved,
and the transactions contemplated by the Agreement are consummated, Mr. Roach
would own approximately 19.8% of the Company's Common Stock and, including such
portion of options, would beneficially own 20.2% of the Company's Common Stock
(assuming no other shares of Common Stock were issued by the Company after the
Record Date).
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<PAGE>
The rules of the Nasdaq Stock Market requires the Company to obtain
stockholder approval of the Stock Purchase Agreement since Mr. Roach is an
officer, director, officer and has a greater than 5% interest in PRC and the
transaction involves the issuance by the Company of 5% or more of its Common
Stock. If the Agreement is not approved by stockholders, or the other conditions
to closing are not fulfilled or waived, the Stock Purchase Agreement will not be
consummated and the Equipment Lease will remain in full force and effect (see
"--Effect on the Equipment Lease").
Effect on the Equipment Lease
The Agreement provides that the Equipment Lease is to remain in full
force and effect, except that no rental payments need by made for periods after
December 31, 1998 unless the stockholder approval is not obtained. If
stockholders do not approve the Agreement, the Company is to pay all rental and
other payments it would otherwise have been required to make in a lump sum no
later than 10 days after the earlier of (i) the date stockholders shall have
voted against such approval, (ii) the Company shall have abandoned any attempt
to obtain stockholder approval or (iii) June 30, 2000.
Required Vote
The affirmative vote of a majority of the shares of Common Stock
present in person or represented by proxy at the Meeting and entitled to vote on
the Proposal is required to approve the Proposal. The Board of Directors
recommends a vote FOR approval of the Proposal.
MISCELLANEOUS
Stockholder Proposals
From time to time stockholders may present proposals which may be
proper subjects for inclusion in the proxy statement and form of proxy related
to that meeting. In order to be considered, such proposals must be submitted in
writing on a timely basis. Stockholder proposals intended to be included in the
Company's proxy statement and form of proxy relating to the Company's 1999
Annual Meeting of Stockholders must be received by July 9, 1999. Any such
proposals, as well as any questions relating thereto, should be directed to the
Secretary of the Company, 1385 Akron Street, Copiague, New York 11726. As to any
proposals intended to be presented by a stockholder, without inclusion in the
Management's proxy statement and form of proxy for the Company's next Annual
Meeting, the proxies named in the Management's form of proxy for that meeting
will be entitled to exercise discretionary authority on that proposal unless the
Company receives notice of the matter on or before September 22, 1999. However,
even if such notice is timely received, such proxies may nevertheless be
entitled to exercise discretionary authority on that matter to the extent
permitted by Securities and Exchange Commission regulations.
Solicitation of Proxies
The cost of solicitation of Proxies, including the cost of reimbursing
banks, brokers and other nominees for forwarding proxy solicitation material to
the beneficial owners of shares held of record by them and seeking instructions
from such beneficial owners, will be borne by the Company. Proxies may be
solicited without extra compensation by certain officers, directors and regular
employees of the Company by mail and, if determined to be necessary, by
telephone, telecopy, telegraph or personal interview. The Company has retained
W.F. Doring
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<PAGE>
& Co., Inc., 150 Bay Street, Jersey City, New Jersey 07302 to aid in the
solicitation of Proxies. For its services, W.F. Doring & Co., Inc. will receive
a fee of $2,500 plus reimbursement for certain out-of-pocket expenses.
By Order of the Board of Directors,
Dorothy Roach,
Secretary
March 12, 1999
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<PAGE>
PROXY PROXY
TII INDUSTRIES, INC.
Proxy for Special Meeting of Stockholders - April 20, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints, as proxies for the undersigned,
TIMOTHY J. ROACH and VIRGINIA M. HALL, or either of them, with full power of
substitution, to vote all shares of the capital stock of TII Industries, Inc.
(the "Company") which the undersigned is entitled to vote at the Annual Meeting
of Stockholders of the Company to be held on Tuesday, April 20, 1999, at 10:30
a.m., New York time, at the Huntington Hilton, 598 Broad Hollow Road, Melville,
New York, receipt of Notice of which meeting and the Proxy Statement
accompanying the same being hereby acknowledged by the undersigned, and at any
adjournments or postponements thereof, upon the matters described in the Notice
of Meeting and Proxy Statement and upon such other business as may properly come
before the meeting or any adjournments or postponements thereof, hereby revoking
any proxies heretofore given.
EACH PROPERLY EXECUTED PROXY WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATIONS MADE ON THE REVERSE SIDE HEREOF. WHERE NO DIRECTION TO VOTE ON A
SPECIFIC MATTER IS GIVEN, THE PROXIES WILL BE DEEMED AUTHORIZED TO VOTE FOR THE
PROPOSAL AND WILL BE DEEMED TO GRANT AUTHORITY TO VOTE ON SUCH OTHER MATTERS
THAT MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENTS OR POSTPONEMENTS
THEREOF.
PLEASE SIGN, DATE AND MAIL THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side)
<PAGE>
TII INDUSTRIES, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. |_|
A vote FOR the Proposal is recommended by the Board of Directors.
1. To approve the Stock Purchase Agreement, FOR AGAINST ABSTAIN
dated as of December 31, 1998 between the |_| |_| |_|
Company and Alfred J. Roach.
2. To vote upon such other matters that may AUTHORITY AUTHORITY
properly come before the meeting GRANTED WITHHELD
|-| |-|
Dated _____ , 1999
Signature(s)
----------------------------------------
NOTE: Please sign your name or names
exactly as set forth hereon. If signing
as attorney, executor, administrator,
trustee or guardian, please indicate the
capacity in which you are acting.
Proxies executed by corporations should
be signed by a duly authorized officer
and should bear the corporate seal.
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o FOLD AND DETACH HERE o
YOUR VOTE IS IMPORTANT.
PLEASE SIGN, DATE AND MAIL THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
