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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

 

FORM 8-K

 

CURRENT REPORT

 

 

 

Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): December 11, 2020

 

TESSCO Technologies Incorporated

 

(Exact name of registrant as specified in its charter)

 

Delaware   001-33938   52-0729657
(State or other jurisdiction
of incorporation)
  (Commission File Number)   (IRS Employer
Identification Number)

 

11126 McCormick Road, Hunt Valley, Maryland 21031

(Address of principal executive offices) (Zip Code)

 

(410) 229-1000

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common Stock, $0.01 par value per share   TESS   NASDAQ Global Market

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

 

 

 

Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing

 

On December 17, 2020, TESSCO Technologies Incorporated (“TESSCO” or the “Company”) notified The Nasdaq Stock Market LLC (“Nasdaq”) that, as a result of the removal of a member of the Company’s Audit Committee (the “Audit Committee”) from the Board of Directors of the Company (the “Board”), effective as of December 11, 2020, and the resignation of another member of the Audit Committee on December 16, 2020, and after giving effect to certain committee appointments for the Newly Elected Directors (as defined below), the Audit Committee consists of only two members and not at least three members as required by Nasdaq Rule 5605(c)(2)(A); and that, as a result of the removal of one member effective as of December 11, 2020, and the resignation from the Board effective December 16, 2020 of another member of the Company’s Compensation Committee (the “Compensation Committee”), the Compensation Committee no longer consists of at least two members as required by Nasdaq Rule 5605(d)(5). Under Nasdaq Rules 5605(c)(4)(B) and 5605(d)(4), the Company has until the earlier of (i) the earlier of the Company’s next annual meeting of stockholders or December 11, 2021, or (ii) within 180 days of December 11, 2020 (if the Company’s next annual meeting of stockholders is held no later than 180 days following December 11, 2020), to cure these non-compliances. The Board intends to assess all committee assignments and cure the temporary non-compliances promptly.

The disclosure in Items 5.02 and Item 5.07 of this Current Report on Form 8-K is incorporated herein by reference.

 

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

 

On December 14, 2020, the Company’s proxy solicitor, Innisfree M&A Incorporated (“Innisfree”), reported the final tally of legally valid, unrevoked consents by TESSCO stockholders delivered to the Company on December 11, 2020, with respect to the consent solicitation (the “Barnhill Consent Solicitation”) by Robert B. Barnhill, Jr. and certain affiliates (the “Barnhill Group”).

 

Removal of Directors

 

Effective as of December 11, 2020, stockholders of the Company holding a majority of the Company’s common stock, par value $0.01 per share (the “Common Stock”), acted by consent in lieu of a stockholder meeting under Section 228 of the General Corporation Law of the State of Delaware (the “DGCL”) to remove John D. Beletic from the Board. Mr. Barnhill asserted that the removal of any director had the further effect of removing both Cathy-Ann Martine-Dolecki and Ronald D. McCray. The Company determined not to challenge the validity of Mr. Barnhill’s consents. As a result, John D. Beletic, Ms. Martine-Dolecki, and Mr. McCray were removed from the Board with immediate effect.

 

Election of Directors

 

Effective as of December 11, 2020, stockholders of the Company holding a majority of the Company’s Common Stock acted by consent in lieu of a stockholder meeting under Section 228 of the DGCL to elect J. Timothy Bryan and Kathleen McLean (together, the “Newly Elected Directors”) to the Board as directors. Biographical information for the Newly Elected Directors is included on Exhibit 99.1 attached hereto and incorporated herein by reference. The Board has since appointed Mr. Bryan to serve on the Audit Committee and Ms. McLean to serve on the Board’s Nominating and Governance Committee. The Board also made the affirmative determination that (i) each of Jay G. Baitler and Mr. Bryan qualifies as an “audit committee financial expert” as such term is defined under Item 407(d)(5) of Regulation S-K under the Securities Exchange Act of 1934, as amended, and (ii) Mr. Bryan and Ms. McLean do each qualify as an “independent director” within the meaning of such term as established by the rules applicable to corporations having shares trading on the Nasdaq.

 

Director Resignations

 

On December 16, 2020, Morton F. Zifferer, Jr. honored his commitment to resign from the Board upon the conclusion of the Barnhill Consent Solicitation and resigned from the Board, effective immediately. Mr. Zifferer’s resignation from the Board is not the result of any disagreement with the Company on any matter relating to its operations, policies or practices, but instead is a continuation of the Board’s ongoing evolution and refreshment process that is focused on identifying and appointing individuals with the right skills and experience necessary to build lasting Company value, as well as to increase diversity amongst the members of the Board.

 

The disclosure in Item 5.07 of this Current Report on Form 8-K is incorporated herein by reference.

 

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Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year

 

Effective as of December 11, 2020, stockholders of the Company holding a majority of the Company’s Common Stock acted by consent in lieu of a stockholder meeting under Section 228 of the DGCL to (i) repeal any provision of the Sixth Amended and Restated By-Laws of the Company, as amended (the “Bylaws”), adopted after August 7, 2020 without the approval of stockholders; and (ii) repeal the Third Amendment to the Bylaws by amending Section 1.2 of the Bylaws to reduce the percentage of stockholders that may cause the Company to call a special meeting of stockholders to holders of 25% of the votes outstanding and entitled to vote at a special meeting (such amendment, the “Bylaw Amendment”). There were no provisions of the Bylaws adopted after August 7, 2020 without stockholder approval so Proposal No. 3 (as defined below) had no effect.

 

The description of the Bylaw Amendment is qualified in its entirety by reference to Exhibit 3.1 attached hereto, which is incorporated herein by reference. The disclosure in Item 5.07 of this Current Report on Form 8-K is also incorporated herein by reference.

 

Item 5.07 Submission of Matters to a Vote of Security Holders.

 

On December 14, 2020, the Company’s proxy solicitor, Innisfree, reported the final tally of legally valid, unrevoked consents by TESSCO stockholders delivered to the Company on December 11, 2020, with respect to the Barnhill Consent Solicitation. Under Section 228 of the DGCL, the Barnhill Proposals became effective if legally valid, unrevoked consents signed by the holders of a majority of the outstanding shares of the Company’s Common Stock entitled to vote at a meeting of stockholders, as of the close of business on the record date, October 13, 2020 (the “Record Date”), were delivered to the Company within 60 days of the earliest dated written consent delivered to the Company. The Barnhill Proposals provided for the removal of five members of the Board (“Proposal No. 1”), the election of the Barnhill Group’s four nominees to serve as directors of the Company (“Proposal No. 2”), the repeal of any post-August 7, 2020 amendments to the Bylaws (“Proposal No. 3”), and amending the Third Amendment to the Bylaws to make the percentage of votes required to request the calling of a special meeting 25% of the Common Stock outstanding (“Proposal No. 4”). As of the close of business on the Record Date, there were 8,760,562 shares of Common Stock outstanding.

 

Based on the tabulation of Innisfree, set forth below is the final tally of unrevoked consents delivered to the Company with respect to the Barnhill Proposals.

 

Proposal No. 1 – Removal of Directors. This proposal was not approved with respect to the removal of Messrs. Baitler, Gaffney, Shaughnessy, and Zifferer and was approved with respect to the removal of Mr. Beletic based on the following results from Innisfree. Mr. Barnhill asserted that the removal of any director had the further effect of removing both Cathy-Ann Martine-Dolecki and Ronald D. McCray. The Company determined not to challenge the validity of Mr. Barnhill’s consents. As a result, Mr. Beletic, Ms. Martine-Dolecki, and Mr. McCray were removed from the Board.

 

Director   Unrevoked Consents     Withhold     Abstain  
John D. Beletic     5,959,391       3,755       1,555  
Jay G. Baitler     4,250,152       1,712,994       1,555  
Paul J. Gaffney     4,191,179       1,771,967       1,555  
Dennis J. Shaughnessy*     4,191,179       1,771,967       1,555  
Morton F. Zifferer, Jr.     4,191,179       1,771,967       1,555  

 

* Mr. Shaughnessy resigned from the Board, effective November 9, 2020. Thus, a consent in favor of Mr. Shaughnessy would only have the effect of consenting to removing Ms. Martine-Dolecki and Mr. McCray from the Board.

 

 

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Proposal No. 2 – Election of Barnhill’s Nominees. This proposal was not approved with respect to the election of Ms. Boss and Mr. Diercksen and was approved with respect to the election of Mr. Bryan and Ms. McLean based on the following results from Innisfree.

 

Nominee   Unrevoked Consents     Withhold     Abstain  
Emily Kellum (Kelly) Boss     4,251,363       1,711,783       1,555  
J. Timothy Bryan     5,901,629       61,517       1,555  
John W. Diercksen     4,192,390       1,770,756       1,555  
Kathleen McLean     5,960,602       2,544       1,555  

 

Proposal No. 3 – Repeal Bylaws adopted after August 7, 2020. This proposal was approved based on the following results from Innisfree.

 

Unrevoked Consents     Withhold     Abstain  
5,956,237     3,755     4,055  

 

Proposal No. 4 – Repeal Third Amendment to the Bylaws. This proposal was approved based on the following results from Innisfree.

 

Unrevoked Consents     Withhold     Abstain  
5,955,891     3,755     5,055  

 

Item 8.01 Other Events.

 

On December 14, 2020, the Company issued a press release (the “Press Release”) relating to the preliminary tally of the consents delivered pursuant to the Barnhill Consent Solicitation. A copy of the Press Release is filed as Exhibit 99.2 to this Current Report on Form 8-K and incorporated herein by reference.

 

The disclosure in Item 5.07 of this Current Report on Form 8-K is incorporated herein by reference.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit No.   Description
3.1   Fourth Amendment to the Sixth Amended and Restated By-Laws of TESSCO Technologies Incorporated.
99.1   Biographical Information for Newly Elected Directors
99.2   Press release of TESSCO Technologies Incorporated, dated December 14, 2020.
104   Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

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SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  TESSCO Technologies Incorporated
   
  By: /s/ Aric M. Spitulnik
    Aric M. Spitulnik
    Senior Vice President, Chief Financial Officer, and Corporate Secretary
   
    Dated: December 17, 2020

 

 

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Exhibit 3.1

 

Fourth Amendment to Sixth Amended and Restated By-Laws of
TESSCO Technologies Incorporated

 

(Adopted by stockholders as of December 11, 2020)

 

The first sentence of Section 1.2 of the Sixth Amended and Restated By-Laws now reads as follows:

 

“Special meetings of the stockholders may be called at any time by the Chairman of the Board, the President (or, in the absence or disability of the President, by any Vice President) or by the Board of Directors, and shall be called by the President at the request in writing of the holders of shares of stock of all classes representing 25% of the aggregate number of votes possessed by the shares of stock of all classes then issued, outstanding and entitled to vote at such meeting.”

Exhibit 99.1

 

Biographical information and business experience for each of J. Timothy Bryan and Kathleen McLean is set forth below.

 

Newly Elected Directors

 

J. Timothy Bryan, age 59, Mr. Bryan has served as the Chief Executive Officer of NRTC, a cooperative serving more than 1,500 rural utilities and affiliates in 48 states, from 2011 to present. Prior to NRTC, Mr. Bryan served as the Chief Executive Officer of ICO Global Communications, a next generation satellite and terrestrial wireless company, during the period when the domestic portion of ICO was sold to DISH Networks for $1.4 billion. Prior to ICO, Mr. Bryan served as the Chief Financial Officer of Craig McCaw’s Eagle River Holdings. Mr. Bryan also served as the President of United Pan Europe Communications (UPC), now Liberty Global, which was the largest private cable/telecom provider in Europe, and as Chief Financial Officer of UnitedGlobalCom, also now Liberty Global. Before that Mr. Bryan was the Vice President/Finance and Treasurer of Jones Financial Group and Jones Intercable (now part of Comcast), which at the time was one of the ten largest domestic cable television operators. Mr. Bryan began his career in banking, including as the Vice President and Manager of the Communications Division at NationsBank Corporation, now Bank of America. Mr. Bryan has served on the Board of Directors of Nextel Communications, Clearwire Communications, OpenTV (a Liberty Media affiliate), Telekabel, ICO, A2000, and UPC. He has served on the boards of the Samaritan Institute and the Jekyll Island Foundation as well. From August 2012 to August 2015, Mr. Bryan served on the Board of Directors of FirstNet, a national wireless network to be constructed for use by the nation’s first responders, after appointment by the Secretary of the United States Department of Commerce. He chaired the Finance Committee of the Board for FirstNet. Mr. Bryan recently completed service on the Board of Directors of Arris International (a global company engaged in the manufacture and sale of broadband, wireless, and video equipment) upon its sale to CommScope for $7.4 billion in March 2019. Mr. Bryan graduated from Duke University in 1983.

 

Kathleen McLean, age 60, has extensive experience in consulting, technology, telecommunications, and customer service for public companies. Since July 2016, Ms. McLean has been a consultant and coach for senior executives in global corporations. From June 2013 to June 2016, Ms. McLean served as Senior Vice President, Chief Information Officer and Chief Customer Officer for ADT Inc., a leading provider of electronic security, interactive home and business automation and monitoring services for residences and small businesses in the United States and Canada. Prior to joining ADT, Ms. McLean served as Chief Revenue Officer and Chief Information Officer at FairPoint Communications, Inc.; and in senior leadership positions at Verizon Communications, Inc. in technology, sales, and service. Ms. McLean is a Governance Fellow of the National Association of Corporate Directors. Ms. McLean holds a Bachelor of Science in International Economics from Georgetown University.

Exhibit 99.2

 

 

TESSCO Announces Receipt of Consents from Robert J. Barnhill, Jr.

 

HUNT VALLEY, MD, December 14, 2020— TESSCO Technologies Incorporated (NASDAQ: TESS), a leading value-added distributor and solutions provider for the wireless industry, today confirmed that Robert B. Barnhill, Jr. has delivered the consents from shareholders with respect to his effort to remove the majority of its directors and elect four new directors.

 

According to the materials delivered to the Company, the proposal naming John D. Beletic for removal has received sufficient support to be effective. None of the other proposals to remove named directors received sufficient shareholder support to become effective. The materials further assert that the technical language of the proposal to remove Mr. Beletic also implicates the removal of two directors who joined the Board in early November, Cathy-Ann Martine-Dolecki and Ronald D. McCray. Accordingly, Mr. Beletic, Ms. Dolecki and Mr. McCray have been removed from the Board.

 

In addition, J. Timothy Bryan and Kathleen McLean have been elected to the Board, and the other proposals that were the subject of the consent solicitation became effective. A report on Form 8-K confirming the final vote will be filed in due course.

 

The Special Committee of the Board of Directors notes that Ms. Dolecki and Mr. McCray are well qualified and have served as outstanding board members for TESSCO. In the Special Committee’s engagements with a substantial number of shareholders and proxy advisor firms, the committee received favorable comments about their expertise and their ability to contribute meaningfully to the success of the Company. Based on these conversations, the Special Committee strongly believes that the consents that precipitated their removal are solely the result of the technical language of the proposal.

 

Sandip Mukerjee, President and Chief Executive Officer of TESSCO, provided the following statement:

 

“On behalf of the full Board and TESSCO’s employees and stakeholders, I welcome Mr. Bryan and Ms. McLean to the Board. I look forward to getting to know them and to having them contribute to TESSCO’s success. I also want to thank John Beletic for his years of dedication to TESSCO.”

 

About TESSCO Technologies Incorporated (NASDAQ: TESS)

 

TESSCO Technologies, Inc. (NASDAQ: TESS) is a value-added technology distributor, manufacturer, and solutions provider serving commercial and retail customers in the wireless infrastructure and mobile device accessories markets. The company was founded more than 30 years ago with a commitment to deliver industry-leading products, knowledge, solutions, and customer service. TESSCO supplies more than 46,000 products from 350 of the industry’s top manufacturers in mobile communications, Wi-Fi, Internet of Things (“IoT”), wireless backhaul, and more. TESSCO is a single source for outstanding customer experience, expert knowledge, and complete end-to-end solutions for the wireless industry. For more information, visit www.TESSCO.com.

 

Forward-Looking Statements

 

This release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts contained herein, including statements regarding our future results of operations and financial position, strategy and plans and future prospects, and our expectations for future operations, are forward-looking statements. These forward-looking statements are based on current expectations and analysis, and actual results may differ materially from those projected. These forward-looking statements may generally be identified by the use of the words “may,” “will,” “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “seeks,” “believes,” “estimates,” and similar expressions, but the absence of these words or phrases does not necessarily mean that a statement is not forward-looking. These forward-looking statements are only predictions and involve a number of risks, uncertainties and assumptions, many of which are outside of our control. Our actual results may differ materially and adversely from those described in or contemplated by any such forward-looking statement for a variety of reasons, including those risks identified in our most recent Annual Report on Form 10-K and other periodic reports filed with the Securities and Exchange Commission (the “SEC”), under the heading “Risk Factors” and otherwise. Consequently, the reader is cautioned to consider all forward-looking statements in light of the risks to which they are subject. For additional information with respect to risks and other factors which could occur, see TESSCO’s Annual Report on Form 10-K for the year ended March 29, 2020, including Part I, Item 1A, “Risk Factors” therein, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other securities filings with the SEC that are available at the SEC’s website at www.sec.gov and other securities regulators.

 

 

 

We are not able to identify or control all circumstances that could occur in the future that may materially and adversely affect our business and operating results. Without limiting the risks that we describe in our periodic reports and elsewhere, among the risks that could lead to a materially adverse impact on our business or operating results are the following: the impact and results of the consent solicitation and other activism activities by Robert B. Barnhill, Jr. and certain other participants in his consent solicitation and/or other activist investors, termination or non-renewal of limited duration agreements or arrangements with our vendors and affinity partners that are typically terminable by either party upon several months or otherwise relatively short notice; loss of significant customers or relationships, including affinity relationships; loss of customers either directly or indirectly as a result of consolidation among large wireless services carriers and others within the wireless communications industry; the strength of our customers’, vendors’ and affinity partners’ business; negative or adverse economic conditions, including those adversely affecting consumer confidence or consumer or business spending or otherwise adversely impacting our vendors or customers, including their access to capital or liquidity, or our customers’ demand for, or ability to fund or pay for, the purchase of our products and services; our dependence on a relatively small number of suppliers and vendors, which could hamper our ability to maintain appropriate inventory levels and meet customer demand; changes in customer and product mix that affect gross margin; effect of “conflict minerals” regulations on the supply and cost of certain of our products; failure of our information technology system or distribution system; system security or data protection breaches; technology changes in the wireless communications industry or technological failures, which could lead to significant inventory obsolescence and/or our inability to offer key products that our customers demand; third-party freight carrier interruption; increased competition from competitors, including manufacturers or national and regional distributors of the products we sell and the absence of significant barriers to entry which could result in pricing and other pressures on profitability and market share; our relative bargaining power and inability to negotiate favorable terms with our vendors and customers; our inability to access capital and obtain financing as and when needed; transitional and other risks associated with acquisitions of companies that we may undertake in an effort to expand our business; claims against us for breach of the intellectual property rights of third parties; product liability claims; our inability to protect certain intellectual property, including systems and technologies on which we rely; our inability to hire or retain for any reason our key professionals, management and staff; health epidemics or pandemics or other outbreaks or events, or national or world events or disasters beyond our control; and the possibility that, for unforeseen or other reasons, we may be delayed in entering into or performing, or may fail to enter into or perform, anticipated contracts or may otherwise be delayed in realizing or fail to realize anticipated revenues or anticipated savings.

 

The above list should not be construed as exhaustive and should be read in conjunction with our other disclosures, including but not limited to the risk factors described in our most recent Annual Report on Form 10-K and other periodic reports filed with the SEC, under the heading “Risk Factors” and otherwise. Other risks may be described from time to time in our filings made under the securities laws. New risks emerge from time to time. It is not possible for our management to predict all risks.

 

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. In addition, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. Any forward-looking statement made by us in this press release speaks only as of the date on which it is made. We disclaim any duty to update any of these forward-looking statements after the date of this press release to confirm these statements to actual results or revised expectations.

 

Contacts

 

Cindy King, TESSCO
+1 410 229 1161 or kingc@TESSCO.com

Media
Jeff Kauth / Aiden Woglom
Joele Frank Wilkinson Brimmer Katcher
(212) 355-4449

Investors
Larry Miller / Gabrielle Wolf
Innisfree M&A Incorporated
Phone: (212) 750-5833