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Form 8-K TESSCO TECHNOLOGIES INC For: May 26

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May 26, 2015 5:16 PM EDT
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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): May 26, 2015

TESSCO Technologies Incorporated
(Exact name of registrant as specified in its charter)

Delaware
0-24746
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))

ITEM 5.02. Departures of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

Effective May 26, 2015, pursuant to a mutually agreed Letter Agreement (the “Letter Agreement”) of even date, Said Tofighi ceased to serve as Senior Vice President of Global Manufacturer Supply Chains and Ventev Innovations of TESSCO Technologies Incorporated (“TESSCO” or the “Company”). Mr. Tofighi will remain employed by the Company in a transitional role until August 28, 2015, when his employment with the Company will terminate.

In order to expedite the implementation of this mutual decision, and also after consideration of Mr. Tofighi’s undertakings pursuant to the Letter Agreement, and his more than 20 years of service and enormous contributions to TESSCO from its earliest days as a public company, TESSCO and Mr. Tofighi have agreed, pursuant to the Letter Agreement, to a severance arrangement as generally described below.

The parties have agreed that Mr. Tofighi will receive a severance payment equal to 1.00 times his current base salary ($345,000) to be paid in two equal installments, the first on August 28, 2015 and the second on April 1, 2016, assuming certain conditions are satisfied. These include the delivery by Mr. Tofighi of a release, and his not accepting any executive or senior management position (regardless of whether it is competitive with the Company), and not engaging in any business competitive with the Company, through February 28, 2016.

Mr. Tofighi has also agreed that he will not be entitled to any “Value Share” payment that he otherwise may have been entitled to for fiscal 2016, and that he is entitled to receive only previously earned Performance Shares that are distributable prior to termination of his employment on August 28, 2015. He will not be entitled to receive any Performance Shares that might have otherwise become distributable to him after that date. Accordingly, and assuming his employment terminates on August 28, 2015 and the non- occurrence of an event resulting in accelerated vesting of outstanding PSUs, an aggregate of 5,768 Performance Shares will then be forfeited.

Because of the mutual agreement as to the change in Mr. Tofighi’s title and responsibilities, and as to termination of his employment, there will be no termination of Mr. Tofighi’s employment by the Company without Cause, nor by Mr. Tofighi for Good Reason, as those terms are used in the previously existing Severance and Restrictive Covenant Agreement, dated February 9, 2009, between the Company and Mr. Tofighi (the “2009 Severance Agreement”). Under the terms of the 2009 Severance Agreement, upon a termination of his employment by the Company without Cause or by him for Good Reason, Mr. Tofighi would have been entitled to, among other things, payment of 1.65 times his current base salary. In addition, under such circumstances, he would have been entitled to acceleration and distribution of all 5,768 Performance Shares previously earned by him, but not yet otherwise vested.

The 2009 Severance Agreement, and Mr. Tofighi’s obligations thereunder, otherwise remain in effect, as modified by the Letter Agreement. The 2009 Severance Agreement includes termination obligations and provides for a one year restriction period, which will commence August 28, 2015.

The foregoing description does not purport to be complete and is qualified in its entirety by reference to the full text of the Letter Agreement and 2009 Severance Agreement. A copy of the Letter Agreement is filed as Exhibit 10.1 to this Current Report on Form 8-K.
2
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

(a) Financial Statements of Businesses Acquired.

None.

(b) Pro Forma Financial Information.

None.

(d) Exhibits.


Exhibit No.
Description
 
Letter Agreement, dated as of May 26, 2015, by and between TESSCO Technologies Incorporated and Said Tofighi
 
Information presented in this Current Report on Form 8-K may contain forward-looking statements and certain assumptions upon which such forward-looking statements are in part based. Numerous important factors, including those factors identified in the TESSCO Technologies Incorporated Annual Report on Form 10-K and other of the Company's filings with the Securities and Exchange Commission, and the fact that the assumptions set forth in this Current Report on Form 8-K could prove incorrect, could cause actual results to differ materially from those contained in such forward-looking statements.
3
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 Spitulnik.
 
Aric Spitulnik.
 
Senior Vice President and Chief Financial Officer
   
   
 
Dated: May 26, 2015

 
4
 
Exhibit 10.1
 
 
[LETTERHEAD OF TESSCO TECHNOLOGIES INCORPORATED]

May 26, 2015

Mr. Said Tofighi
[Address on File]

Dear Said:

Following up on our discussions, this letter sets forth our agreement regarding your departure from TESSCO, including the period of transition and the amendment of the terms of your Severance and Restrictive Covenant Agreement dated February 9, 2009 (the “2009 Severance Agreement”).

1.        Your departure from TESSCO culminates our recent discussions about your current and future interests and activities and balancing these interests with the needs of TESSCO’s business. As such, it represents a mutual decision to separate and, strictly speaking, it is neither a termination of your employment without Cause by TESSCO nor a resignation (either with or without Good Reason) on your part, as those terms are used in the 2009 Severance Agreement. In other words, the 2009 Severance Agreement does not squarely address the situation.

2.        In particular, as we have discussed and you have acknowledged, TESSCO is not obligated to make any severance payments to you under Section 3.3 of the 2009 Severance Agreement as a consequence of your departure. By the same token, however, in order to expedite the implementation of our mutual decision to separate and in consideration of your undertakings as described below, and in view of your more than 20 years of service and enormous contributions to TESSCO from its earliest days as a public company, TESSCO will make the payments and provide the benefits described in paragraph 3 (subject to the conditions stated there).

3.        TESSCO will pay you a severance amount equal to 100% of your annual base salary (which is $345,000), in two installments of $172,500 (less applicable taxes and such other amounts as we are authorized or required by law to deduct). As noted below, your agreed departure date is August 28, 2015. Consequently, these payments will be made to you on August 28, 2015 (your last day as a TESSCO employee) and on April 1, 2016, subject to the following conditions:

A. Not later than August 1, 2015, you have executed and delivered (and do not thereafter revoke) the General Release attached as Exhibit 1 to this letter agreement (which, regardless of when it is executed and delivered, will be deemed effective on and as of August 28, 2015);

B. Between the date of this letter and August 28, 2015, your employment is not terminated for “Cause” within the meaning of subsection (a), (c), (d), or (e) of Section 2.2 of the 2009 Severance Agreement (but not subsection (b) of that Section, which is hereby deleted);
Mr. Said Tofighi
May 26, 2015
 Page 2
 
C. From August 28 through and including February 28 , 2016, you have not accepted a position as, or served as or performed any of the material duties of, an executive or senior management employee of any business enterprise (regardless of whether that business enterprise competes to any extent with TESSCO); and

D. From August 28 through and including February 28, 2016, you have continued to abide by all of the restrictions and obligations under 2009 Severance Agreement (as amended by this letter agreement), including those set forth in Section 3.7 and Section 4 of the 2009 Severance Agreement (as well as any other post-employment obligations you may have under the TESSCO Code of Conduct).

Of course, the restriction in paragraph C above is not intended (1) to preclude you in any way from being involved (in a leadership capacity or otherwise) in the activities of any nonprofit charitable, educational, or religious organization, (2) to otherwise limit you in pursuing charitable and philanthropic endeavors, (3) to prohibit you from serving on the board of or as a consultant to a business enterprise that does not in any way compete with TESSCO, provided you are not employed full-time by such enterprise, or (4) to prohibit you from the continued ownership or management of, or employment by, the business of which you currently are (and have since 2011 been) a partial owner in conducting its usual business activities of owning, managing, leasing, and selling real estate.

4.        As noted above, we have agreed that your last day as a TESSCO employee will be August 28, 2015. During the period from the date of this letter through August 28, we will work together to wind down your efforts and transition your duties and responsibilities. You will continue to receive 100% of your current base salary (and your employee benefits) through the end of this period, i.e., through August 28. (You will also be entitled to and will receive in the first payroll after your termination date your accrued but unused paid time off in accordance with TESSCO’s normal policies.) As part of this transition, we have agreed that you will step down as Senior Vice President of Global Manufacturer Supply Chain & Ventev Innovations effective as of the date of your signature on this letter, and during this period we will be realigning your duties and responsibilities as we determine appropriate to achieve an orderly and efficient transition.

5.        The payments described in paragraph 3 above are in lieu of any and all payments or benefits to which you might otherwise be entitled by reason of your separation from TESSCO (whether under the 2009 Severance Agreement or any other plan, agreement, arrangement, or understanding), other than vested benefits to which you are entitled under TESSCO’s qualified retirement plans and your rights to continuation coverage under COBRA. Although you will be entitled to 100% of your current base salary plus your existing benefits through August 28, 2015, i.e., your last day as a TESSCO employee, you will not be eligible for or entitled to participate in or receive any benefit from TESSCO’s Value Share Program for Fiscal Years 2016 or 2017. Should you predecease the date or dates on which the amounts described in paragraph 3 become payable, those amounts will be paid to your estate or other successor in interest (subject, of course, to your prior compliance with the conditions stated in paragraph 3).
Mr. Said Tofighi
May 26, 2015
 Page 3
 
6.        This letter is not intended to modify the terms of your Performance Stock Unit Agreements in any way. Because you were still employed by TESSCO on May 1, 2015, you were entitled to receive any previously earned Performance Shares (including any that were earned for the Fiscal Year 2015) that were otherwise distributable on or about that date. However, you will not be eligible to earn any Performance Shares for the Fiscal Year 2016, nor will you be entitled to receive any Performance Shares earned for prior Fiscal Years that might otherwise become distributable (or “vested”) after the May 2015 distribution date, all of which will be forfeited (except and to the extent that any such previously earned Performance Shares may, in accordance with the terms of the applicable Performance Stock Unit Agreements, become distributable to you either because a “Change in Control” occurs, or because there is a termination of your employment on account of “Disablity” or by reason of death, between the date of this letter and August 28, 2015). Because your departure is the result of a mutual decision to separate, you acknowledge that it is not the result of, nor will it be treated as, either a termination of your employment by TESSCO or a termination of your employment by you with Good Reason, as those terms are used in your Performance Stock Unit Agreements.

7.        Finally, although the provisions of this letter supersede in all respects the provisions in Section 3 of the 2009 Severance Agreement regarding any rights you may have to payments or benefits by virtue of the termination of your employment, the 2009 Severance Agreement otherwise remains in effect. In particular, you continue to be bound by your obligations under Section 3.7 (Termination Obligations) and Section 4 (Restrictive Covenants) of the 2009 Severance Agreement, which remain in full force and effect, enforceable by TESSCO in accordance with their terms. For this purpose, your “Date of Termination” will mean August 28, 2015 and “Restriction Period” will mean the one-year period beginning on that date and ending on August 28, 2016.

Said, if the above fully and accurately sets forth our understanding, please so confirm by signing and returning to me a copy of this letter.

   
Very truly yours,
     
   
/s/Robert B. Barnhill, Jr.
     
   
Robert B. Barnhill, Jr.
   
Chairman, President, and CEO

CONFIRMED AND AGREED:

/s/ Said Tofighi
SAID TOFIGHI
Date: May 26, 2015
 

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