SIXTH AMENDMENT AND WAIVER dated as of October 17, 1997
to the Revolving Credit Loan Agreement dated January 31,
1995 (the "Agreement"), as amended by the First
Amendment dated as of August 3, 1995, the Second
Amendment and Waiver dated as of November 10, 1995,
Amendment of Revolving Credit Loan Agreement dated
December 27, 1995, the Fourth Amendment and Waiver dated
as of May 2, 1997, and the Fifth Amendment and Waiver
dated as of September 23, 1997 (the Agreement together
with each of the amendments, the "Loan Agreement") among
TII International, Inc., a Delaware Corporation with
offices at 0000 Xxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000
(the "Borrower"), TII Industries, Inc., a Delaware
corporation with offices at 0000 Xxxxx Xxxxxx, Xxxxxxxx,
Xxx Xxxx 00000 ("Industries") and The Chase Manhattan
Bank (f/k/a Chemical Bank), a New York State Banking
corporation with offices at 000 Xxxxx Xxxxxxx Xxxx,
Xxxxx 000, Xxxxxxxx, Xxx Xxxx 00000 (the "Bank") and to
the Master Lease Purchase Agreement Number 00009, dated
January 12, 1998, as amended by a letter dated February
1, 1996 (the "Lease Agreement") by and between the
Borrower and Chase Equipment Leasing, Inc. (f/k/a
ChemLease Worldwide, Inc.) ("Leasing"). Capitalized
terms used but not otherwise defined herein shall have
the meanings set forth in the Loan Agreement.
WHEREAS, the Lease Agreement provides that the financial covenants
contained in any credit facility provided by the Bank to the Borrower shall
apply to the Lease Agreement as continuing covenants; and
WHEREAS, the Borrower and Industries have requested and the Bank and
Leasing have each agreed, subject to the terms and conditions of this Sixth
Amendment and Waiver, to amend and waive compliance with certain provisions of
the Loan Agreement and the Lease Agreement (by incorporation) to reflect
requests made by the Borrower to the Bank and Leasing in the manner hereafter
set forth;
NOW, THEREFORE, In consideration of the premises and of other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Waiver of and Amendment to Article 7, Negative Covenant, Section
7.16.
Compliance with Section 7.16 of the Loan Agreement is hereby waived
for the Fiscal Quarter ending September 26, 1997, provided that the
Consolidated Net Loss during such Fiscal Quarter does not exceed
Five Hundred Thousand and No/100 Dollars ($500,000). The Borrower,
Industries and the Subsidiaries will be permitted to Incur (i) a
Consolidated
Net Loss for fiscal Quarter ending December 26, 1997 provided that
such loss for such Fiscal Quarter does not exceed Five Hundred
Thousand and No/100 Dollars ($500,000) and (ii) a Consolidated Net
Loss (excluding extraordinary gains) for four Fiscal Quarters in the
four Fiscal Quarter period ending March 27, 1998; and two Fiscal
Quarters in the four Fiscal Quarter period ending June 26, 1998.
2. Waiver of and Amendment to Article 7, Negative Covenants. Section
7.17 Debt Service Ratio.
Compliance with Section 7.17 of the Loan Agreement is hereby waived
for the Fiscal Quarter ending September 26, 1997 to permit the Debt Service
Ratio of Industries and its subsidiaries to be no less than -0.6 to 1 for such
Fiscal Quarter. The Borrower, Industries and the Subsidiaries will be permitted
to have a Debt Service Ratio of not less than (i) -0.7 to 1 for the Fiscal
Quarter ending December 26, 1997; (ii) -0.7 to 1 for the Fiscal Quarter ending
March 27, 1998 and (iii) -0.1 to 1 for the Fiscal Quarter ending June 26, 1998.
3. Amendment to Article 8. Events of Default. Section 8.01(n).
Section 8.01(n) is hereby deleted in its entirety and replaced with
the following:
(n) (i) the Xxxxx Family Member shall cease to own 7.5%
of all voting stock in Industries, or (ii) Xxxxxxx X.
Xxxxx shall cease to actively manage the day-to-day
operations of the Borrower and the Guarantors;
4. Amendment to Article 6. Affirmative Covenants applicable to the
Loans.
Article 6. Of the Loan Agreement is hereby amended by the addition
of the following section:
Section 6.16. Equity Offering. Borrower, Industries and
the Subsidiaries agrees that in the event that Borrower,
Industries and/or the Subsidiaries complete one or more
equity offering (whether private or public or a
combination thereof) in an amount equal to or greater
than $3,500,000 in the aggregate (collectively, the
"Equity Offering") the Bank and the Borrower, Industries
and the Subsidiaries will agree to a modification of the
existing negative covenants contained in Article 7 of
this Loan Agreement to reflect the equity raised as a
result of the Equity Offering, provided that if no
agreement is reached within 45 days following completion
of the Equity Offering, the Bank, in its sole
discretion, may terminate the commitment and declare all
amounts outstanding pursuant to this Loan Agreement, the
Note and the other Financing Documents to be immediately
due and payable. The Bank may require another such
modification for each Equity Offering that occurs after
such a modification.
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Expenditures
Section 7.09 shall be modified by adding the following language to
the end of the existing covenant:
except that during fiscal years ending June 26, 1998 and
June 25, 1999, the Borrower, Industries and the
Subsidiaries shall be permitted to make capital
expenditures (including capital leases) for property,
plant, machinery and equipment in an amount not to
exceed $10,000,000 in the aggregate during such Fiscal
Years, provided that (i) the capital expenditures
incurred during Fiscal Year ending June 26, 1998 shall
not exceed $6,000,000 and (ii) the Equity Offering is
completed by December 26, 1997, and raises gross
proceeds (before discounts, commissions and expenses) of
at least $7,000,000.
THIS SIXTH AMENDMENT AND WAIVER shall be construed and enforced in
accordance with the laws of the State of New York.
Except as expressly amended or waived hereby, the Loan Agreement and
the Lease Agreement shall remain in full force and affect in accordance with the
original terms thereof. This Sixth Amendment and Waiver herein is limited
specifically to the matters set forth above and does not constitute directly or
by implication a waiver or amendment of any other provision of the Loan
Agreement or the Lease Agreement or any breach, default or Event of Default
which may occur or may have occurred under the Loan Agreement or the Lease
Agreement.
The Borrower and Industries hereby represent and warrant that, after
giving effect to this Sixth Amendment and Waiver, no Event of Default or
defaults exists under the Loan Agreement, the Lease Agreement or any other
related documents.
THIS SIXTH AMENDMENT AND WAIVER may be executed in any number of
counterparts, each of which shall constitute an original but all of which, when
taken together, shall
constitute but one Sixth Amendment and Waiver.
THIS SIXTH AMENDMENT AND WAIVER shall become effective when duly
executed counterparts hereof which, when taken together bear the signatures of
each of the parties hereto
shall have been delivered to the Bank and Leasing.
IN WITNESS WHEREOF, the Borrower, Industries, the Bank and Leasing
have caused
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this Sixth Amendment and Waiver to be duly executed by their duly authorized
officers all as of the date and year first above written.
TII INTERNATIONAL, INC.
BY: /s/ Xxxx X. Xxxxxxx
-------------------------------------
Xxxx X. Xxxxxxx, Vice President
TII INDUSTRIES, INC.
BY: /s/ Xxxx X. Xxxxxxx
-------------------------------------
Xxxx X. Xxxxxxx, Vice President
THE CHASE MANHATTAN BANK
BY: /s/ Xxxxxxxxxxx X. Xxxxxxxxx
-------------------------------------
Xxxxxxxxxxx X. Xxxxxxxxx, Vice President
CHASE EQUIPMENT LEASING, INC.
BY: /s/ Xxxxxxx X. Masalitis
-------------------------------------
Xxxxxxx X. Masalitis, Vice President
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CONSENT
The undersigned, as Guarantors of the obligations of TII
International, Inc. Hereby Consent to the execution and delivery by TII
International, Inc. and TII Industries, Inc. of this Sixth Amendment and Waiver
and hereby confirm that they remain fully bound by the terms of the Joint and
Several Guaranty of Payment dated January 31, 1995 to which they are a party.
TII INTERNATIONAL, INC.
BY: /s/ Xxxx X. Xxxxxxx
-------------------------------------
Xxxx X. Xxxxxxx, Vice President
TII INDUSTRIES, INC.
BY: /s/ Xxxx X. Xxxxxxx
-------------------------------------
Xxxx X. Xxxxxxx, Vice President
TII DITEL, INC.
BY: /s/ Xxxx X. Xxxxxxx
-------------------------------------
Xxxx X. Xxxxxxx, Vice President
TII CORPORATION
BY: /s/ Xxxx X. Xxxxxxx
-------------------------------------
Xxxx X. Xxxxxxx, Vice President
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TELECOMMUNICATIONS INDUSTRIES, INC.
BY: /s/ Xxxx X. Xxxxxxx
-------------------------------------
Xxxx X. Xxxxxxx, Vice President
TII DOMINICANA, INC.
BY: /s/ Xxxx X. Xxxxxxx
-------------------------------------
Xxxx X. Xxxxxxx, Vice President
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