SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant /_/
Check the appropriate box:
/_/ Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/_/ Definitive Additional Materials
/_/ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
TESSCO Technologies Incorporated
________________________________________________________________________________
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
(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 Rule 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:
_____________________________________________________________________________
[_] 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: _____________________________________________________________
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[GRAPHIC OMITTED] TESSCO Technologies Incorporated
11126 McCormick Road, Hunt Valley, Maryland USA 21031
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON
August 13, 1999
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To the Shareholders of TESSCO Technologies Incorporated:
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Shareholders of
TESSCO Technologies Incorporated, a Delaware corporation, will be held at the
Company's corporate headquarters, 11126 McCormick Road, Hunt Valley, Maryland
USA, on August 13, 1999 at 10:00 a.m., local time, for the following purposes:
1. To elect two directors for a three year term ending in 2002.
2. To approve an amendment to the Company's 1994 Stock and Incentive Plan
increasing the number of shares of the Company's Common Stock
available for issuance under the Plan by 300,000.
3. To approve an amendment to the Company's 1994 Stock and Incentive Plan
permitting a limited number of shares to be issued to nonemployee
directors of the Company.
4. To approve the adoption of the Company's Team Member Stock Purchase
Plan.
5. To ratify the selection of Arthur Andersen LLP as the Company's
independent public accountants.
6. To act upon any other matter which may properly come before the Annual
Meeting or any adjournment thereof.
The Board of Directors of the Company has fixed the close of business
on June 18, 1999 as the record date for determining shareholders of the Company
entitled to notice of and to vote at the Annual Meeting. A list of shareholders
as of the record date will be available for inspection by shareholders at the
Company's corporate headquarters during business hours for a period of ten days
before the Annual Meeting.
We invite your attention to the attached Proxy Statement and to the
enclosed Annual Report of the Company for the fiscal year ended March 28, 1999.
By Order of the Board of Directors,
Janet W. Barnhill
Secretary
Hunt Valley, Maryland
July 13, 1999
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EVEN IF YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN AND DATE THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND
THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON.
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TESSCO Technologies Incorporated
11126 McCormick Road
Hunt Valley, Maryland USA 21031
------------------------------
PROXY STATEMENT
------------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed proxy is being furnished to shareholders of TESSCO
Technologies Incorporated, a Delaware corporation, in connection with the
solicitation by the Board of Directors of the Company of proxies for use at the
Annual Meeting of Shareholders to be held at the Company's corporate
headquarters, 11126 McCormick Road, Hunt Valley, Maryland, on August 13, 1999 at
10:00 a.m., local time, and at any adjournments thereof.
Solicitation
The solicitation is being made primarily by mail, but directors,
officers and employees may also engage in the solicitation of proxies by
telephone. The cost of soliciting proxies will be borne by the Company, and no
compensation will be paid by the Company in connection with the solicitation of
proxies, except that the Company may reimburse brokers, custodians, nominees and
other record holders for their reasonable out-of-pocket expenses in forwarding
proxy material to beneficial owners.
This Proxy Statement and the accompanying form of proxy are being sent
to shareholders on or about July 16, 1999.
Revocation of Proxies
A proxy may be revoked at any time before its exercise by the filing of
a written notice of revocation with the Secretary of the Company, by delivering
to the Company a duly executed proxy bearing a later date, or by attending the
Annual Meeting and voting in person. However, if you are a shareholder whose
shares are not registered in your own name, you will need additional
documentation from your record holder to vote personally at the Annual Meeting.
Voting Rights and Outstanding Shares
The Board of Directors of the Company has fixed the close of business
on June 18, 1999 as the record date for determining the shareholders of the
Company entitled to notice of and to vote at the Annual Meeting. On the record
date, the Company had outstanding 4,436,211 shares of Common Stock, $0.01 par
value per share. Each share of Common Stock entitles the holder to one vote on
each matter to be voted on at the Annual Meeting. There is no cumulative voting
for the election of directors.
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The presence, in person or by proxy, of at least a majority of the
total number of shares of Common Stock entitled to vote is necessary to
constitute a quorum at the Annual Meeting. In the event there are not sufficient
votes for a quorum or to approve any proposal at the Annual Meeting, the Annual
Meeting may be adjourned in order to permit the further solicitation of proxies.
All outstanding shares of the Company's Common Stock represented by
properly executed and unrevoked proxies received in the accompanying form in
time for the Annual Meeting will be voted. A shareholder may, with respect to
the election of directors (i) vote for the election of the named director
nominees, (ii) withhold authority to vote for all the director nominees, or
(iii) vote for the election of all director nominees other than any nominee with
respect to whom the shareholder withholds authority to vote by striking a line
through such nominee's name on the proxy. A shareholder may, with respect to
each other matter specified in the notice of meeting (i) vote "FOR" the matter,
(ii) vote "AGAINST" the matter, or (iii) "ABSTAIN" from voting on the matter.
Shares will be voted as instructed in the accompanying proxy on each matter
submitted to shareholders. If no instructions are given, the shares will be
voted FOR the election of the named director nominees, FOR both amendments to
the Company's 1994 Stock and Incentive Plan, FOR the adoption of the Team Member
Stock Purchase Plan, and FOR the ratification of the appointment of Arthur
Andersen LLP as the Company's independent public accountants.
A proxy submitted by a shareholder may indicate that all or a portion
of the shares represented by the proxy are not being voted by the shareholder
with respect to a particular matter. This could occur, for example, when a
broker is not permitted to vote Common Stock held in street name on certain
matters in the absence of instructions from the beneficial owner of the Common
Stock. These "nonvoted shares," i.e., shares subject to a proxy which are not
being voted with respect to a particular matter, will be considered shares not
present and entitled to vote on such matter, although these shares may be
considered present and entitled to vote for other purposes and will count for
purposes of determining the presence of a quorum.
The affirmative vote of a plurality of the shares of Common Stock
present in person or by proxy at the Annual Meeting and entitled to vote on the
election of directors is required to elect directors. Accordingly, if a quorum
is present at the Annual Meeting, the two persons receiving the greatest number
of votes will be elected to serve as directors. Therefore, withholding authority
to vote for a director(s) and "nonvoted shares" with respect to the election of
directors will not affect the outcome of the election of directors. The
affirmative vote of a majority of the shares of Common Stock present in person
or by proxy at the Annual Meeting and entitled to vote thereon is required to
approve each matter other than the election of directors. Under Delaware law,
abstentions with respect to matters other than the election of directors are
generally considered as shares entitled to vote and thus have the same effect as
a vote against such matter. "Nonvoted shares" with respect to such a matter will
not be considered as entitled to vote on the matter and thus will not affect the
determination of whether the matter is approved.
The Board of Directors knows of no additional matters that will be
presented for consideration at the Annual Meeting. Execution of a proxy,
however, confers on the designated proxy holders discretionary authority to vote
the shares in accordance with their best judgment on such other business, if
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any, as may properly come before the Annual Meeting or any adjournment thereof.
Proxies solicited by means of this proxy statement will be tabulated by
inspectors of election designated by the Board, who will not be employees or
directors of the Company or any of its affiliates.
PROPOSALS TO BE VOTED ON AT THE MEETING
PROPOSAL 1. Election of Directors
The Company's Bylaws provide that the Board of Directors is divided
into three classes, each class consisting, as nearly as possible, of one-third
of the total number of directors, and each class having a three-year term. Each
year the directors in one class are elected to serve for a term of three years.
The Board of Directors is currently composed of six members (including the seat
that recently became vacant by virtue of the resignation of Martin Grass, which
as discussed below will be filled by the Board of Directors as provided in the
Company's Bylaws). One class of directors, consisting of Robert B. Barnhill, Jr.
and Benn R. Konsynski, has a term of office expiring at the Annual Meeting or
until their successors are elected and qualified. Messrs. Barnhill and Konsynski
have each been nominated for a three-year term expiring at the Annual Meeting of
Shareholders in 2002 or until their successors are elected and qualified.
The persons named in the enclosed proxy intend to vote properly
executed and returned proxies FOR the election of all nominees proposed by the
Board of Directors unless authority to vote is withheld. In the event that any
nominee is unable or unwilling to serve, the persons named in the proxy will
vote for such substitute nominee or nominees as they, in their discretion, shall
determine. The Board of Directors has no reason to believe that any nominee
named herein will be unable or unwilling to serve.
Set forth below is information concerning the nominees for election and
those directors whose terms continue beyond the date of the Annual Meeting.
Nominees for Director for a Three-Year Term Expiring at the 2002 Annual Meeting.
Robert B. Barnhill, Jr., age 55, has served as President and Chief
Executive Officer of the Company since 1975, as a director since 1967, and as
Chairman of the Board since November 1993. He is the husband of Janet W.
Barnhill, Secretary of the Company. Mr. Barnhill is a director of Polk Audio,
Inc. and Provident Bankshares Corporation.
Benn R. Konsynski, Ph.D., age 48, has been a director of the Company
since November 1993. He has been the George S. Craft Professor of Business
Administration for Decision and Information Analysis at the Goizueta Business
School of Emory University since April 1992. From 1987 to April 1992, Dr.
Konsynski was a professor at the School of Business of Harvard University. He
has been a consultant to the Company since 1989.
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Directors Continuing in Office.
Directors whose term will expire at the 2000 Annual Meeting:
Morton F. Zifferer, Jr., age 51, has been a director of the Company
since November 1993. He has served as Chairman, President and Chief Executive
Officer of New Standard Corporation, a metal products manufacturer, since 1983.
Directors whose term will expire at the 2001 Annual Meeting:
Jerome C. Eppler, age 75, has been a director of the Company since
1985. He is the owner of Eppler & Company, a private financial advisor. Since
1995, Mr. Eppler has also been a principal of Olympic Capital Partners, an
investment banking firm.
Dennis J. Shaughnessy, age 52, has been a director of the Company since
1989. He has served as Managing Director of Grotech Capital Group, Inc. since
1989. Mr. Shaughnessy also currently serves on the Boards of Forensic
Technologies Incorporated, U.S. Vision, Inc. and Polk Audio, Inc.
Vacancy on Board of Directors
Effective May 25, 1999, Martin Grass, who had served on the Board of
Directors since November 1993 and whose term was to expire at the 2000 Annual
Meeting, resigned from the Board in order to devote his attention more
completely to his duties to Rite Aid Corporation, of which he is the Chairman
and Chief Executive Officer. The Board of Directors, as provided in the
Company's Bylaws, intends to fill this vacancy at its meeting following the
Annual Meeting or as shortly thereafter as is practicable. The person designated
to fill this vacancy, who will not be an officer or employee of the Company,
will serve out the remainder of Mr. Grass's term.
Board Committees and Meetings
The Board of Directors has an Audit Committee consisting of Messrs.
Eppler, Konsynski and Zifferer, and a Compensation Committee consisting of
Messrs. Shaughnessy and Zifferer. The Board of Directors does not have a
nominating committee.
The Audit Committee is primarily concerned with the effectiveness of
the audits of the Company by the Company's independent public accountants. Its
duties include recommending the selection of independent accountants, reviewing
the scope of audits conducted by them, as well as the results of their audits,
and reviewing the organization and scope of the Company's internal system of
accounting and financial controls. The Audit Committee met three times during
fiscal 1999.
The Compensation Committee is responsible for the overall
administration of the Company's compensation policies and practices, including
the recommendation of compensation for officers and employees of the Company and
for matters relating to compensation plans and arrangements. In addition, the
Compensation Committee approves awards under and administers the Company's 1984
Employee Incentive Stock Option Plan and 1994 Stock and Incentive Plan and
administers the Team Member Stock Purchase Plan. The Compensation Committee met
three times during fiscal 1999.
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The Board of Directors met five times during fiscal 1999. No director
has attended fewer than 75% of the total number of meetings of the Board and of
the Committees of which he was a member during fiscal 1999.
Director Compensation
At its meeting held July 15, 1997, the Board of Directors agreed that,
in lieu of fees for attendance at Board and committee meetings during the period
ending with the following year's Annual Meeting, each director who is not an
employee of the Company would be granted an option to purchase 500 shares of the
Company's Common Stock at the current market price. Accordingly, on July 15,
1997, each director who was not an employee of the Company was granted an option
to purchase 500 shares of the Company's Common Stock at the then-current market
price of $25 per share, exercisable at any time up until July 14, 2002.
Likewise, on August 14, 1998, each director who was not an employee of the
Company was granted an option to purchase 500 shares of the Company's Common
Stock at the then-current market price of $20 per share, exercisable at any time
up until August 13, 2003. In past years directors who are not employees of the
Company had received a fee of $1,000 for each Board or committee meeting
attended and a fee of $500 for participating in each telephonic meeting.
PROPOSAL 2. Approval of Amendment No. 2 to 1994 Stock and Incentive Plan
Increasing the Number of Shares Available for Issuance under the
Plan by 300,000
Introduction
The Company's 1994 Stock and Incentive Plan provides for the grant or
award of stock options, stock appreciation rights ("SARs"), restricted stock,
restricted stock units and other "performance awards," which may or may not be
denominated in shares of Common Stock or other securities of the Company. Stock
options granted under the 1994 Plan may be either "incentive stock options"
("ISOs") as defined in Section 422 of the Internal Revenue Code of 1986 or
so-called nonqualified options. The purpose of the 1994 Plan is to attract and
retain outstanding employees through the incentives of stock ownership and
monetary payments. Regular full-time employees of the Company, including
officers but excluding directors who are not employees, are eligible to receive
awards under the 1994 Plan. The 1994 Plan was approved by the Board of Directors
in January 1994 and thereafter by the shareholders. Amendment No. 1 to the Plan,
approved by the Board and adopted by the shareholders in 1996, increased the
number of shares available for award under the Plan by 239,500 to 572,500. The
Compensation Committee, with the support of the full Board of Directors, has
continued to emphasize the grant of options with performance-based,
market-driven vesting and exercise provisions.
Amendment No. 2 to 1994 Plan
As of June 18, 1999, options covering a total of 518,050 shares of
Common Stock have been granted under the 1994 Plan and have either been
exercised or remain outstanding (i.e., have not lapsed or expired). The Board
has approved an amendment to the 1994 Plan to increase the total number of
shares available for award under the Plan by 300,000 shares. If the amendment to
the Plan is approved, then (as of June 18, 1999) there will be a total of
354,450 shares available for future award under the 1994 Plan.
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The Board of Directors believes that an increase in the number of
shares available for award under the 1994 Plan is necessary to enable the
Company to attract, retain and motivate qualified executives and other key
contributors. The Company's approach to attracting and retaining talented
persons has included compensation packages that provide incentives designed to
align these persons' interests with those of the shareholders generally. The
Board believes that such a stock-option-based program has been extremely
important to its efforts to attract and retain qualified persons. During fiscal
1999, the Board granted options exercisable for 112,600 shares of Common Stock,
including options exercisable for 40,000 shares granted to the Company's Chief
Executive Officer. The Compensation Committee, with the support of the full
Board of Directors, has continued to emphasize the grant of options with
performance-based, market-driven vesting and exercise provisions. All of the
options granted to executives and other key contributors during fiscal 1999
contain such performance-based provisions, and the Committee has determined that
the vesting of all future awards will to a significant extent be conditioned on
the achievement of certain predetermined cumulative increases in the market
value of the Common Stock. In general, these market-price-vesting provisions
specify that an option will become exercisable during the first five years after
issuance only if the market price of the Common Stock (averaged over the
preceding 30 days) reaches specified levels of appreciation. (These options
become fully exercisable after five years without regard to stock price,
provided that the individual remains employed by, or associated with, the
Company.) The Board of Directors believes that granting performance-based
options more closely aligns a recipient's interest with the Company's stock
market performance.
Material Features of the 1994 Stock and Incentive Plan
The 1994 Stock and Incentive Plan is administered by the Compensation
Committee of the Board of Directors. Subject to the provisions of the 1994 Plan,
the Compensation Committee has the authority to designate participants,
determine the types of awards to be granted, the number of shares to be covered
by each award, and any other terms and conditions of the awards, including
vesting requirements. Awards generally terminate upon the earlier of (a)
termination of employment or other engagement for any reason other than death,
retirement or disability, (b) twelve months after the employee's "normal
retirement date" as defined in the Company's Retirement Savings Plan, or (c)
twelve months after the date of a recipient's death with respect to options and
SARs to the extent exercisable at the time of the recipient's death. In the
event of retirement, disability or death, any restriction applicable to a
restricted stock award or "performance award" will be removed on a pro rata
basis in accordance with the portion of the restricted period which has expired
as of the date of retirement, disability or death, as applicable. In the event
of a recipient's retirement, disability or death, the Compensation Committee
may, in its discretion, remove any restriction applicable to a performance
award. Although the Compensation Committee determines the prices at which
options and other awards may be exercised under the 1994 Plan, the exercise
price of an "incentive stock option" must be at least 100% of the fair market
value (as determined under the terms of the 1994 Plan) of a share of Common
Stock on the date of grant.
The maximum number of shares of Common Stock currently authorized for
award under the 1994 Plan is 572,500. Of this number, options for 66,735 shares
have been granted and exercised and options for 451,315 shares have been granted
and remain outstanding (i.e., have not lapsed or expired) as of June 18, 1999,
leaving only 54,450 available for award under the Plan as of that date. If
Amendment No. 2 to the Plan is approved, an additional 300,000 shares would be
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authorized for award under the 1994 Plan, bringing the total available for award
under the Plan (as of June 18, 1999) to 354,450. No awards may be made under the
1994 Plan after April 12, 2004. See "New Benefits Plan Table." In addition to
shares issuable pursuant to options granted under the 1994 Plan, there are also
options outstanding for a total of 55,550 shares of Common Stock issued under
the Company's 1984 Employee Incentive Stock Option Plan, as well as options for
a total of 205,000 shares issued outside the 1994 Plan and the 1984 Plan.
Federal Income Tax Consequences
The following is a brief summary of the U.S. federal income tax
consequences of awards made under the 1994 Plan.
Stock Options. A participant will not recognize any income upon the
grant of a stock option. A participant will recognize compensation taxable as
ordinary income, subject to income tax withholding, upon exercise of a
nonqualified stock option equal to the excess of the fair market value of the
shares purchased over their exercise price, and the Company will be entitled to
a corresponding deduction. A participant generally will not recognize income
(except for purposes of the alternative minimum tax) upon exercise of an ISO
during employment or within three months after termination of employment. If the
shares acquired by exercise of an ISO are held for the longer of two years from
the date the option was granted and one year from the date it was exercised, any
gain or loss arising from a subsequent disposition of such shares will be taxed
as long-term capital gain or loss, and the Company will not be entitled to any
deduction. If, however, such shares are disposed of within the above-described
period, then in the year of such disposition the participant will recognize
compensation taxable as ordinary income equal to the excess of the lesser of (i)
the amount realized upon such disposition and (ii) the fair market value of such
shares on the date of exercise over the exercise price, and the Company will be
entitled to a corresponding deduction.
SARs. A participant generally will not recognize any taxable income
upon the grant of a SAR. A participant will recognize compensation taxable as
ordinary income, subject to income tax withholding, upon exercise of a SAR equal
to the fair market value of any shares delivered and the amount of cash paid by
the Company upon such exercise, and the Company will be entitled to a
corresponding deduction.
Restricted Stock. A participant will not recognize taxable income at
the time of the grant of shares of restricted stock, and the Company will not be
entitled to a tax deduction at such time, unless the participant makes an
election to be taxed at the time restricted stock is granted. If such an
election is not made, the participant will recognize ordinary taxable income at
the time the restrictions lapse in an amount equal to the excess of the fair
market value of the shares at such time over the amount, if any, paid for the
shares. The amount of ordinary income recognized by a participant by making the
above-described election or upon the lapse of the restrictions is deductible by
the Company as compensation expense, except to the extent that the limit of
Section 162(m) of the Internal Revenue Code applies (as described below). In
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addition, a participant receiving dividends with respect to restricted stock for
which the above-described election has not been made and before the time the
restriction lapses, will recognize taxable compensation (subject to income tax
withholding), rather than dividend income, in an amount equal to the dividends
paid and the Company will be entitled to a corresponding deduction, except to
the extent the limit of Section 162(m) of the Code applies.
Section 162(m) of the Code. Section 162(m) of the Code generally limits
to $1 million the amount that a publicly held corporation is allowed to deduct
each year for the compensation paid to each of the corporation's chief executive
officer and the corporation's four most highly compensated officers. However,
certain types of compensation paid to such executives are not subject to the $1
million deduction limit. One such type is "performance-based" compensation. To
qualify as performance-based compensation, the following requirements must be
satisfied: (i) the performance goals must be determined by a committee
consisting solely of two or more "outside directors," (ii) the material terms
under which the compensation is to be paid, including the performance goals,
must be disclosed to and approved by a majority of the corporation's
shareholders in a separate vote before payment, and (iii) the committee must
certify that the applicable performance goals were satisfied before payment of
any performance-based compensation is made. Based on certain proposed
regulations issued by the United States Department of the Treasury which explain
these requirements, certain compensation under the 1994 Plan, such as that
payable with respect to options, SARs and restricted stock, could be subject to
the $1 million deduction limit under Section 162(m) of the Code.
New Plan Benefits Table
The following table provides certain information with respect to
options to purchase Common Stock awarded under the 1994 Stock and Incentive Plan
during fiscal 1999, specifying the amounts granted to each of the Named
Executive Officers, all current executive officers as a group, all current
directors who are not executive officers as a group, and all employees
(including all current officers who are not executive officers) as a group. The
"Dollar Value" for options granted represents the positive spread between the
exercise prices of the options and the market price of the Common Stock on June
18, 1999.
NEW PLAN BENEFITS
1994 Stock and Incentive Plan (1)
<TABLE>
<CAPTION>
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Dollar Value ($) Number Exercise
(2) of Units Price($)
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<S> <C> <C> <C>
Robert B. Barnhill, Jr. 47,400 40,000 18.38-24.63
Gerald T. Garland 12,250 7,000 19.75
Richard A. Guipe -- -- --
Brian K. Hedlund -- -- --
Mary Lynn Schwartz 52,500 30,000 19.75
All Executive Officers as a Group 136,250 84,000 18.00-19.75
Nonemployee Directors as a Group (3) -- -- --
All Employees (other than Executive Officers)
as a Group 73,372 28,600 17.38-22.00
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</TABLE>
(1) Except for the options issued to nonemployee directors (which are
currently exercisable in full), none of these options are currently
vested or eligible to be exercised. Such options vest and become
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exercisable no earlier than the second anniversary of the date awarded
and then only in accordance with performance-based vesting schedules
requiring certain predetermined cumulative appreciation in the market
value of the Common Stock. Notwithstanding, each option will become
exercisable five years after the date of grant without regard to such
criteria, as long as recipient is still employed by the Company.
(2) Based upon $21.50 per share, the closing sale price of the Common
Stock, as reported on the Nasdaq Stock Market, on June 18, 1999.
(3) As noted above, options to acquire 500 shares at the then-current
market price of $20.00 per share were granted to each of the five
nonemployee directors of the Company in August 1998 in lieu of fees for
attendance at Board and committee meetings. These options are
exercisable immediately. Based upon $21.50 per share, the closing sale
price of the Common Stock, as reported on the Nasdaq Stock Market, on
June 18, 1999, the aggregate Dollar Value of these options was $3,750.
Amendment of 1994 Plan
In general, the Board of Directors may amend the 1994 Plan in any
respect that does not adversely affect an award granted and then outstanding
under the 1994 Plan. Shareholder approval, however is required for any amendment
that (i) except in limited circumstances, increases the maximum number of shares
for which awards may be made under the Plan, (ii) reduces the exercise price at
which options may be granted or otherwise materially increases the benefits
accruing to participants under the Plan, or (iii) materially modifies the
requirements as to eligibility for participation in the Plan.
Unless marked to the contrary, the shares represented by the enclosed
proxy, if properly executed and returned, will be voted FOR the approval of the
amendment to the 1994 Stock and Incentive Plan to increase by 300,000 the
aggregate number of shares authorized for award under the 1994 Plan.
PROPOSAL 3. Approval of Amendment No. 3 to 1994 Stock and Incentive Plan
Permitting the Issuance of up to 50,000 Shares to Nonemployee
Directors
The Board of Directors has concluded that, in order to attract and
retain qualified individuals to serve on the Company's Board of Directors, and
in particular to fill the current vacancy on the Board, it is necessary to be
able to grant one or more options to acquire shares of the Company's Common
Stock to such individuals. In the Board's view, however, the aggregate number of
shares that should be available for this purpose should be limited to 50,000 and
grants should be made only upon the concurrence of a disinterested majority of
the entire Board of Directors. It is anticipated that any such options will
contain performance-based, market-driven exercise provisions similar to those
contained in options granted to employees under the 1994 Plan.
Options granted to nonemployee directors would not, under current law,
qualify for the potentially favorable tax treatment afforded "incentive stock
options."
Unless marked to the contrary, the shares represented by the enclosed proxy, if
properly executed and returned, will be voted FOR the approval of the amendment
to the 1994 Stock and Incentive Plan to permit the issuance of up to 50,000
shares to nonemployee directors.
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PROPOSAL 4. Approval of Team Member Stock Purchase Plan
Introduction
Effective February 1, 1999, the Board of Directors has adopted -
subject to approval by the shareholders - the TESSCO Technologies Incorporated
Team Member Stock Purchase Plan. The purpose of the Stock Purchase Plan, which
is intended to qualify as an "employee stock purchase plan" under section 423 of
the Internal Revenue Code, is to provide a method for eligible employees of the
Company to acquire a proprietary interest in the Company through the purchase of
shares of the Company's Common Stock. "Eligible employees" generally include all
persons employed on a full-time basis or on a part-time basis for at least
twenty hours per week who have been employed by the Company for at least one
year (or such shorter period as may be necessary for eligibility to participate
in the Company's 401(k) Retirement Savings Plan). Directors of and consultants
to the Company who are not employees are not eligible. Also ineligible is any
employee who immediately after the grant of shares under the Stock Purchase Plan
would own shares or options to purchase shares constituting five percent or more
of the Company's Common Stock. The Stock Purchase Plan becomes effective only if
it is approved by the shareholders on or before February 1, 2000. The maximum
number of shares that may be purchased under the Plan is 200,000.
Material Features of the Stock Purchase Plan
The Stock Purchase Plan enables each eligible employee to elect to
defer a percentage of his or her qualifying compensation (generally including
base salary or draw and any monthly variable compensation but excluding
quarterly or annual variable compensation such as bonuses) through payroll
deductions and use the deferred amount to purchase shares of the Company's
Common Stock. The price for the shares is a percentage established in advance by
the Compensation Committee - ranging from 85 percent to 100 percent of the
lesser of the market price of the Company's Common Stock on the first trading
day of the "offer period" and the last trading day of the "offer period." The
actual number of shares acquired is determined by dividing the amount available
in the employee's deferral account by the applicable price per share and
rounding to the nearest whole number of shares.
Eligible employees are afforded the opportunity to participate two
times each year, on the first trading days after March 1 and September 1.
Participation in the Plan in any given six-month "offer period" is optional with
each eligible employee. The total value of the shares that an employee may be
entitled to acquire in any calendar year, however, cannot exceed $25,000 (based
on the market price of the Common Stock on the first trading day of the relevant
offer period). A participant may terminate his or her payroll deductions and
withdraw from the Plan at any time before the end of a particular six-month
offer period, in which case the deferred amount is simply paid over to the
employee. Withdrawal from the Plan for a particular offer period does not
prevent the employee from electing to participate in a subsequent offer period.
-10-
<PAGE>
Shares acquired by an employee under the Plan must be delivered to and
held by the Plan's administrative agent for at least eighteen months after the
end of the offer period. Although the employee is treated as the owner of record
of the shares during this period, the employee may not sell or otherwise dispose
of the shares during this period.
The Stock Purchase Plan, like the 1994 Stock and Incentive Plan, is
administered by the Compensation Committee of the Board of Directors. Subject to
the express provisions of the Stock Purchase Plan, the Committee has plenary and
conclusive authority to interpret the Plan's provisions, to adopt rules and
regulations for administering the Plan, and to make any other determinations in
connection with the administration of the Plan.
Federal Income Tax Consequences
The amount that an eligible employee elects to defer through payroll
deductions which is used to purchase shares under the Stock Purchase Plan is not
excludable from the employee's income for federal income tax purposes. The
employee does not recognize income upon purchase of the shares, even if the
price paid for the shares is less than their fair market value at the beginning
or the end of the six-month offer period. Shares are retained by the Plan's
administrative agent for at least eighteen months after the end of the offer
period and cannot be disposed of during this time. Any disposition thereafter
results in capital gain or loss to the employee, with one exception. As noted
above, the Compensation Committee may (in advance of any particular offer
period) establish the price for shares to be issued for the offer period at 85
percent to 100 percent of the lesser of the shares' market value on the first
trading day of the offer period and their market value on the last trading day
of the offer period. If the percentage at which the Compensation Committee
determined to issue the shares being disposed of was less than 100 percent, then
any gain recognized on the disposition of the shares is treated as ordinary
income to the extent of this "bargain element." Regardless of whether the
employee recognizes ordinary income on the transaction, however, the Company is
not entitled to any deduction for compensation expense.
Amendment of Team Member Stock Purchase Plan
In general, the Board of Directors may terminate the Stock Purchase
Plan or amend the Plan in any respect that does not adversely affect the rights
of an employee who has elected to participate for the then-current offer period.
Shareholder approval, however is required for any amendment that (i) except in
limited circumstances, increases the maximum number of shares available under
the Plan or (ii) amends the requirements as to eligibility for participation in
the Plan.
Unless marked to the contrary, the shares represented by the enclosed
proxy, if properly executed and returned, will be voted FOR the approval of the
Team Member Stock Purchase Plan
PROPOSAL 5. Ratification of Independent Public Accountants
The Board of Directors has selected the firm of Arthur Andersen LLP to
serve as independent public accountants for the fiscal year ending March 26,
2000, subject to the ratification of such appointment by the shareholders.
Representatives of Arthur Andersen LLP are expected to be present at the Annual
-11-
<PAGE>
Meeting. They will have the opportunity to make a statement if they desire to do
so and are expected to be available to respond to appropriate questions.
Unless marked to the contrary, the shares represented by the enclosed
proxy, if properly executed and returned, will be voted FOR the ratification of
the appointment of Arthur Andersen LLP as the independent public accountants of
the Company for the fiscal year ending March 26, 2000.
-12-
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The following table sets forth information regarding the ownership of
Common Stock of the Company as of June 18, 1999 by (i) all shareholders known by
the Company to beneficially own more than five percent of the Common Stock, (ii)
each of the directors and nominees for director, and (iii) all directors and
executive officers as a group.
- --------------------------------------------------------------------------------
Name of Amount and Nature Percent
Beneficial Owner of Beneficial Ownership of Class
- --------------------------------------------------------------------------------
Directors and
Nominees for Director:
Robert B. Barnhill, Jr. (2) .......... 1,087,792 24.5
Jerome C. Eppler (3)(4) .............. 21,000 *
Martin L. Grass (4) .................. 31,000 *
Benn R. Konsynski, Ph.D. (4) ......... 31,000 *
Dennis J. Shaughnessy (4) ............ 21,275 *
Morton F. Zifferer, Jr. (4) .......... 31,000 *
All directors and executive
officers as a group (16 persons)(5). . 1,247,953 28.1
Principal Shareholders:
GeoCapital, LLC (6) .................. 436,000 9.8
Nicholas Company, Inc. (7) ........... 385,500 8.7
- --------------------------------------------------------------------------------
* Less than 1% of the outstanding Common Stock.
(1) Unless otherwise noted, each person exercises sole (or shares with a
spouse or other immediate family member) voting and dispositive power
as to the shares reported. Persons are deemed to beneficially own
shares which they have the right to acquire beneficial ownership of
within 60 days. Shares subject to options exercisable with 60 days are
deemed outstanding for computing the percentage of the outstanding
shares held by the person holding such options, but not for computing
the percentage of shares held by any other person.
(2) Includes 150,000 shares held by Mr. Barnhill's spouse and children;
232,400 shares subject to currently exercisable stock options; and
10,000 shares held by a private charitable foundation of which Mr.
Barnhill and his spouse are the sole directors. Mr. Barnhill disclaims
beneficial ownership over the shares held by the foundation. Mr.
Barnhill's address is 11126 McCormick Road, Hunt Valley, Maryland
21031.
(3) Includes 20,000 shares held by a trust under which Mr. Eppler is sole
beneficiary.
(4) Includes 1,000 shares subject to a currently exercisable stock option.
(5) Includes 269,245 shares subject to currently exercisable stock options.
(6) Derived from Amendment No. 2 to Schedule 13G filed by GeoCapital LLC
("GeoCapital") on February 10, 1999. GeoCapital's address is 767 Fifth
Avenue, New York, N.Y. 10153.
(7) Derived from Amendment No. 1 to Schedule 13G filed by Albert O.
Nicholas, Nicholas Company, Inc., and Nicholas Limited Edition, Inc.
("Nicholas") on February 23, 1999. Nicholas' address is 700 North Water
Street, Milwaukee, Wisconsin 53202.
-13-
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Executive Compensation
The following table summarizes the compensation awarded to, earned by,
or paid to the Company's Chief Executive Officer during fiscal 1999, 1998 and
1997 and the other executive officers for whom such reporting is required during
fiscal 1999 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Long-Term
Annual Compensation Compensation
- ----------------------------------------------------------------------------------------------------------------------------------
Name and Fiscal Options All Other
Principal Position Year Salary ($) Bonus ($)(1) (# of Shares) Compensation ($)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Robert B. Barnhill Jr., 1999 240,000 -- 40,000 31,954(2)
Chairman of the Board, 1998 240,000 -- 40,000 30,868(2)
President and Chief Executive 1997 240,000 13,272 40,000 32,474(2)
Officer
Gerald T. Garland, 1999 196,069 -- 7,000 1,125(3)
Treasurer, Vice President and 1998 175,000 -- 7,000 561(3)
Chief Financial Officer 1997 175,000 9,155 3,000 2,332(3)
Richard A. Guipe, 1999 170,000 -- -- 1,020(3)
Vice President and Unit 1998 170,000 -- -- 22,955(4)
Director - Wireless Network 1997 147,739 -- 20,000 --
Provider and Self-Maintained
User Markets
Brian K. Hedlund, 1999 111,539 28,000 -- 194(3)
Vice President and Unit 1998 61,539 13,334 15,000 26,668(5)
Director - TESSCO Service
Solutions
Mary Lynn Schwartz, 1999 133,853 -- 30,000 --
Vice President and Chief 1998 36,547 3,000 15,000 --
Administrative Officer
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents bonuses paid pursuant to the Company's Value Share Program,
described below.
(2) Includes (i) premiums in the amount of $12,500 for a life insurance
policy; (ii) premiums in the amount of $17,995 for a split-dollar life
insurance policy arrangement with the Company; and (iii) $1,979, $373
and $1,459 allocated to Mr. Barnhill's Retirement Savings Plan account
in fiscal 1997, 1998, and 1999, respectively. Does not include a
contribution by the Company of $40,995, $47,377 and $40,995 for 1997,
1998 and 1999, respectively, to a supplemental executive retirement
plan for Mr. Barnhill. See "Employment Agreement."
(3) Represents amounts allocated to the Retirement Savings Plan accounts of
Messrs. Garland, Guipe, and Hedlund.
(4) Represents relocation expenses of $22,406 and an allocation to
Mr. Guipe's Retirement Savings Plan account of $549.
(5) Represents relocation expenses.
-14-
<PAGE>
Employment Agreement
In March 1994, the Company entered into an employment agreement with
Mr. Barnhill pursuant to which the Company continued his employment as Chairman
of the Board, President and Chief Executive Officer. Pursuant to the employment
agreement, Mr. Barnhill receives a minimum annual base salary of $240,000 and is
entitled to bonuses in accordance with the Company's incentive compensation
plan. The employment agreement has an initial term of three years, and, unless
the Board of Directors notifies Mr. Barnhill otherwise before the end of any
calendar year, the term of the agreement automatically renews daily for the
succeeding three-year period.
The employment agreement also provides for the establishment of a
supplemental executive retirement plan, which will provide Mr. Barnhill with a
$75,000 annual pension benefit payable on Mr. Barnhill's retirement, termination
of employment for reasons other than cause (as defined in the employment
agreement) or attainment of age 62. The employment agreement also provides for
(i) a $2,000,000 split-dollar life insurance policy on Mr. Barnhill and his
spouse, who serves as the Company's Secretary, and (ii) a long-term disability
policy providing Mr. Barnhill with a benefit equal to not less than 70% of his
annual base salary.
The employment agreement provides that in the event of the termination
of Mr. Barnhill's employment for certain reasons, including death, disability or
a termination resulting from a change in control of the Company (as defined in
the employment agreement), Mr. Barnhill would be paid, when and as due, the
total salary payable to him for the next three years, plus bonuses to which he
would have been entitled had he remained in the employ of the Company during the
three-year period. In addition, Mr. Barnhill would be entitled to receive the
employee benefits he would have received during such three-year period or an
after-tax payment in an amount equal to the value of such benefits.
In addition, in January 1996 the Company adopted a stock compensation
program for the Chief Executive Officer, pursuant to which Mr. Barnhill is each
quarter granted an option to purchase 10,000 shares of Common Stock. All of
these options are subject to performance-based vesting schedules which generally
condition exercisability during the first five years on the achievement of
predetermined increases in the value of the Company's Common Stock. After five
years the options become fully exercisable, provided that Mr. Barnhill is still
employed by the Company. See "Compensation Committee Report on Executive
Compensation."
Retirement Savings Plan
The Company maintains a Retirement Savings Plan, a profit-sharing plan
qualified under Section 401(k) of the Internal Revenue Code which covers
substantially all employees. Under the Retirement Savings Plan, participants are
permitted to make salary reduction contributions equal to a percentage of annual
salary with matching contributions made by the Company on a discretionary basis.
The Company may make additional discretionary profit-sharing contributions. The
Company's contributions to the Retirement Savings Plan during fiscal 1999
totaled $44,944.
-15-
<PAGE>
Stock-Based Compensation Plans
As discussed above (see "PROPOSAL 2. Approval of Amendment No. 2 to
1994 Stock and Incentive Plan Material Features of the 1994 Stock and Incentive
Plan"), the Company's 1994 Stock and Incentive Plan provides for the grant or
award to regular full-time employees (including officers but excluding directors
who are not employees) of stock options, stock appreciation rights, restricted
stock, restricted stock units and other performance awards, which may be
denominated in shares of Common Stock or other securities of the Company. The
maximum number of shares of Common Stock currently authorized for award under
the 1994 Plan is 572,500, of which options for 66,735 shares have been granted
and exercised and options for 451,315 shares have been granted and remain
outstanding (i.e., have not lapsed or expired) as of June 18, 1999, leaving only
54,450 available for award under the Plan as of that date. If, as set forth
above, Amendment No. 2 to the Plan is approved, an additional 300,000 shares
would be authorized for award under the 1994 Plan, bringing the total available
for award under the Plan (as of June 18, 1999) to 354,450. No awards may be made
under the 1994 Plan after April 12, 2004.
In addition to the 1994 Stock and Incentive Plan, the Company maintains
the 1984 Employee Incentive Stock Option Plan, which provides for the grant of
options to acquire up to an aggregate of 401,250 shares of Common Stock. As of
June 18, 1999, options to acquire 55,550 shares were outstanding, all of which
were fully exercisable and all of which had an exercise price of $12.00 per
share. No additional shares are available for award under the 1984 Plan.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Potential Realizable
Value at Assumed
Annual Rate of Stock
Price Appreciation
Individual Grants for Term(1)
- -----------------------------------------------------------------------------------------------------------------------
Number of Percent of
Securities Total Options
Underlying Granted to Exercise or
Options Granted Employees in Base Price
Name (#) Fiscal 1999 ($/Share) Expiration Date 5% 10%
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert B. Barnhill, Jr. 10,000(2) 8.9% $20.000 April 29, 2008 125,779 318,748
10,000(2) 8.9% $18.375 July 30, 2008 115,559 292,850
10,000(2) 8.9% $24.625 October 29, 2008 154,865 392,459
10,000(2) 8.9% $21.375 January 28, 2009 134,426 340,662
Gerald T. Garland 7,000(2) 6.2% $19.750 June 30, 2004 86,945 220,335
Richard A. Guipe -- -- --
Brian K. Hedlund -- -- --
Mary Lynn Schwartz 30,000(2) 26.6% $19.750 June 30, 2004 372,620 944,292
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Potential Realizable Values are based on an assumption that the stock
price of the Common Stock on the date of grant equals the exercise price
shown for each particular option grant and appreciates at the annual rate
shown (compounded annually) from the date of grant until the end of the
term of the option. These amounts are reported net of the option exercise
price, but before any taxes associated with exercise or subsequent sale
of the underlying stock. The actual value, if any, an option holder may
realize will be a function of the extent to which the stock price exceeds
the exercise price on the date the option is exercised and also will
depend on the option holder's continued employment through the vesting
period. The actual value to be realized by the option holder may be
greater or less than the values estimated in this table.
-16-
<PAGE>
(2) These options, which were issued under the Company's 1994 Stock and
Incentive Plan, become exercisable according to a performance-based
vesting schedule on or after the second anniversary of date of grant only
if the Common Stock has achieved certain predetermined cumulative
increases in market value. Notwithstanding, each option will become
exercisable five years after the date of grant, provided the recipient is
still employed by the Company.
The following table sets forth information with respect to option
exercises by and year-end values during fiscal 1999 for the Named Executive
Officers.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Number of Securities
Underlying
Unexercised Value of Unexercised
Options at In-the-Money Options
Fiscal Year-end at Fiscal Year-end
- ----------------------------------------------------------------------------------------------------------------------
Shares Acquired Exercisable/ Exercisable/
Name on Exercise Value Realized Unexercisable Unexercisable (1)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert B. Barnhill, Jr. -- -- 232,400/135,600 $2,158,360/84,340
Gerald T. Garland 9,010 $90,100 18,745/ 20,500 $172,078/52,500
Richard A. Guipe -- -- -- / 20,000 -- / -
Brian K. Hedlund -- -- -- / 15,000 -- / -
Mary Lynn Schwartz -- -- -- / 45,000 -- /82,500
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Value is based on the difference between the stock option exercise price
and the closing price of the Company's Common Stock on the Nasdaq Stock
Market on March 26, 1999 of $21.50 per share.
Compensation Committee Report on Executive Compensation
The Board of Directors has delegated to the Compensation Committee
responsibility for developing and administering programs for compensating the
Company's executive officers. The entire Board also approves the Committee's
compensation recommendations with respect to salaries and bonuses of executive
officers. The Committee, which currently consists of Messrs. Shaughnessy and
Zifferer and which until his recent resignation included Mr. Grass (none of whom
are officers or employees of the Company), believes that the Company's success
is attributable in large part to the management and leadership efforts of its
executive officers. The Company's management team has substantial experience in
the distribution industry in general and the wireless communications industry in
particular. Mr. Barnhill, the Chairman of the Board, President and Chief
Executive Officer of the Company, has been instrumental in the Company's
business success. The Company and the Compensation Committee intend to maintain
compensation policies, plans and programs that will attract and retain executive
officers who can enhance shareholder value. Generally speaking, the Compensation
Committee seeks to use the same policies and guidelines in determining the
compensation to be paid to its executive officers as it uses for the Company's
other employees and other key contributors to the Company's success.
The Company seeks to design a compensation package that will achieve
the following principal objectives:
-17-
<PAGE>
o provide the Company's executives with total compensation that is
sufficiently competitive to attract and retain high-quality people. In
general, this involves establishing an individual's base salary in
light of that individual's responsibilities, experience, personal
performance and contribution to the Company's overall performance. The
base salary and performance-based incentives are designed to establish
an individual's total compensation at a level that competes favorably
with the overall pay levels of comparable companies (i.e., companies
comparable in size and with business operations similar to those of
the Company) and to reward outstanding performance.
o link a significant portion of annual compensation to performance-
based incentives. This is done primarily by means of the Company's
Value Share Program and the grant of stock options with
performance-based vesting and exercise features. All stock options
granted during fiscal 1999 condition vesting during the first five
years on the achievement of certain predetermined cumulative increases
in the market value of the Common Stock. The Board of Directors, upon
the recommendation of the Committee, has determined to continue such
performance-based and market-driven practices in the future in order
for an option to vest in whole or in part during the first five years
after grant. All options will vest after five years and will remain
exercisable until expiration, which generally ranges from six to ten
years after the grant date, provided that the individual remains
employed by, or associated with, the Company.
o provide long-term incentives that are consistent with the Company's
strategic goals and the creation of shareholder value. This is done
through the grant of stock options.
o structure the compensation program to be viewed favorably by the
Company's shareholders, employees, the financial community, and the
general public.
The Internal Revenue Code places limits on the amount of
non-performance-based compensation paid to executive officers that may be
deducted by the Company for federal income tax purposes. The Company intends to
structure compensation programs to minimize the portion of any executive
compensation that is not deductible for federal income tax purposes.
The Committee annually reviews each executive officer's compensation,
including the compensation levels of the Company's Chairman, President and Chief
Executive Officer. When reviewing compensation, the Committee considers
individual and corporate performance, levels of responsibility, prior
experience, breadth of knowledge and competitive pay practices with respect to
salary. The Chief Executive Officer's base compensation level is determined
pursuant to an employment agreement between the Company and the Chief Executive
Officer, effective as of April 1994. Under the employment agreement, the Chief
Executive Officer's base salary was set at $240,000 for fiscal 1997, 1998, and
-18-
<PAGE>
1999, which the Committee believes to be slightly less than the base salaries
paid by comparable companies to their chief executive officers. Salaries for the
other Named Executive Officers are established based on the principles discussed
with respect to the Chief Executive Officer.
The bonuses paid to the Named Executive Officers, including the Chief
Executive Officer, are determined pursuant to the Company's Value Share Program.
This program is designed to provide rewards based upon the improvement in the
Company's earnings and other measures. The Value Share Program provides for
specific budgets and goals in several performance areas. A portion of the
bonuses is withheld each quarter and reduced or eliminated in the event that
future performance does not meet certain budget or goal parameters.
In early 1996 the Company adopted a stock compensation program for the
Chief Executive Officer. This program provides for quarterly grants of options
to purchase 10,000 shares of Common Stock to Mr. Barnhill beginning on February
29, 1996. These options, which are granted pursuant to the Company's 1994 Stock
and Incentive Plan, are granted at an exercise price at least equal to the fair
market value of the Common Stock on the date of grant and are subject to other
terms and conditions typically contained in options granted under the 1994 Plan.
Each option will become vested and exercisable only if the market price of the
Common Stock achieves certain predetermined cumulative increases in value,
commencing two years from the date of grant. The Committee believes that this
program is in the best interests of the Company because it combines the
attributes of a traditional stock option plan with those of a long-term
incentive plan. The program provides such incentives by conditioning vesting
within the first five years after an option is granted on attainment of
significant stock price appreciation.
In addition to salary and Value Share awards, under this stock
compensation program Mr. Barnhill received, in fiscal 1999, awards of options
for 40,000 shares at exercise prices ranging from $18.375 to $24.625 per share.
These option prices equaled or exceeded the fair market value of a share of
Common Stock on the date of each grant. Any vesting of these options occurs over
time and, during the first five years after the date of the grant, is
conditioned upon the achievement of certain predetermined cumulative increases
in the market value of the Common Stock. Each option, however, becomes fully
exercisable without regard to market value after five years, as long as Mr.
Barnhill remains associated with the Company.
During fiscal 1999, the Committee also granted options to purchase
44,000 shares of Common Stock to other executive officers, all of which
contained performance-based vesting provisions. The awards made to the other
executive officers also were granted to provide further incentives to increase
shareholder value and were deemed by the Committee to be appropriate in light of
the officers' expected contributions to the Company's performance. The Committee
has noted that revenues have increased by an average of 22% annually from fiscal
1993 to fiscal 1999, with net income increasing by an average of 20% annually
from fiscal 1993 to fiscal 1999. The Committee intends to continue to recommend
stock-based compensation awards as a significant part of the Company's overall
compensation program.
-19-
<PAGE>
Compensation Committee
Dennis J. Shaughnessy Morton F. Zifferer, Jr.
-20-
<PAGE>
PERFORMANCE MEASUREMENT COMPARISON
The chart set forth below shows the value of an investment of $100 on
September 28, 1994 in each of the Company's Common Stock, the Russell 2000 index
and a peer group index for the period September 28, 1994 to March 31, 1999. All
values assume reinvestment of the pre-tax value of dividends.
Comparison of Cumulative Total Return
Value of Investment of $100 on September 28, 1994
TESSCO Russell 2000 Peers
9/28/94 100.0000 100.0000 100.0000
12/31/94 136.4583 98.4119 128.2152
3/31/95 145.8333 102.5039 132.4521
6/30/95 151.0417 111.4898 143.9621
9/30/95 216.6667 122.0047 160.4993
12/31/95 237.5000 123.4237 146.8785
3/31/96 239.5833 130.0197 153.0265
6/30/96 304.1667 136.2461 156.6725
9/30/96 347.9167 136.1596 165.0019
12/31/96 306.2500 142.5354 210.8660
3/31/97 154.1667 137.1659 180.5304
6/30/97 180.2083 155.8058 252.7529
9/30/97 231.2500 178.3884 336.1135
12/31/97 150.0000 171.7846 212.9982
3/31/98 144.7917 188.9465 257.1236
6/30/98 164.5833 179.7917 224.1563
9/30/98 171.8750 142.9206 123.0993
12/31/98 189.5833 165.8648 216.9782
3/31/99 176.0417 156.3011 119.4662
The peer group consists of the following companies engaged in retail
and/or wholesale product distribution: Fastenal Co., Cellstar Corporation,
Brightpoint, Inc., Andrew Corporation and Micro Warehouse, Inc. All of these
companies were publicly traded as of March 28, 1999.
Viking Office Products, Inc. is no longer included in the peer group
because its stock was acquired in 1998 by Office Depot, Inc. and is no longer
publicly traded. Excluding Viking from the peer group in prior years would have
been immaterial in the presentation of the return of the peer group.
-21-
<PAGE>
ADDITIONAL INFORMATION
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than ten percent of a registered class of
the Company's equity securities, to file reports of ownership and changes in
ownership with the SEC and provide the Company with copies of such reports.
The Company has reviewed such reports received by it and written
representations from directors and executive officers. Based solely on that
review, the Company believes that during fiscal year 1999 all filing
requirements were complied with.
Shareholder Proposals for the 2000 Annual Meeting
Any shareholder proposal intended for inclusion in the proxy material
for the 2000 Annual Meeting of Shareholders must be received in writing by the
Company, at the address set forth on the first page of this Proxy Statement, on
or before March 15, 2000. Any such proposal will be subject to Exchange Act Rule
14a-8.
Other Matters
As of the date of this Proxy Statement, the Board of Directors of the
Company knows of no other business that will be presented for consideration at
the Annual Meeting. Execution of a proxy, however, confers on the designated
proxy holders discretionary authority to vote the shares in accordance with
their best judgment on such other business, if any, that may properly come
before the Annual Meeting or any adjournments thereof.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON RECEIVING THIS
PROXY STATEMENT, UPON THE WRITTEN REQUEST OF SUCH PERSON, A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND
SCHEDULES THERETO, REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION FOR THE FISCAL YEAR ENDED MARCH 28, 1999. WRITTEN REQUESTS FOR A COPY
OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K SHOULD BE DIRECTED TO JANET W.
BARNHILL, SECRETARY, 11126 McCORMICK ROAD, HUNT VALLEY, MARYLAND 21031.
By Order of the Board of Directors,
/s/ Janet W. Barnhill
--------------------------
Janet W. Barnhill
Secretary
July 13, 1999
-22-
<PAGE>
- NOTES -
-23-
<PAGE>
APPENDIX 1
TESSCO TECHNOLOGIES INCORPORATED
1994 STOCK AND INCENTIVE PLAN
Section 1. Purpose
The purpose of the TESSCO Technologies Incorporated 1994 Stock
and Incentive Plan (the "Plan") is to attract and retain outstanding individuals
as Key Employees of TESSCO Technologies Incorporated (the "Company") and its
Affiliates and to motivate such individuals to achieve the long-term performance
goals of the Company by providing incentives to such individuals in the form of
stock ownership or monetary payments based on the value of the capital stock of
the Company or its financial performance, or both, on the terms and conditions
set forth herein.
Section 2. Definitions
As used in the Plan and unless the context clearly indicates
otherwise, the following terms shall have the respective meanings set forth
below:
(a) "Affiliate" shall mean any entity that is controlled
directly or indirectly by the
Company.
(b) "Award" shall mean any Option, Stock Appreciation Right,
Restricted Stock, Restricted Stock Unit or Performance Award granted under the
Plan.
(c) "Award Agreement" shall mean any written agreement,
contract or other instrument or document evidencing any Award granted under the
Plan.
(d) "Beneficiary" shall mean the person designated by the
Participant, on a form provided by the Company, to exercise the Participant's
rights in accordance with Section 7(f) of the Plan in the event of death or, if
no such person is designated, the estate or personal representative of such
Participant.
(e) "Board of Directors" shall mean the Board of Directors of
the Company.
(f) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(g) "Commission" shall mean the United States Securities and
Exchange Commission or any successor agency.
(h) "Committee" shall mean the Compensation Committee of the
Board of Directors. The Committee shall be composed of two or more directors,
all of whom shall be "disinterested persons" within the meaning of Rule l6b-3
and "outside directors" within the meaning of Section 162(m) (4) (C) of the Code
and any regulations issued thereunder.
(i) "Disability" shall mean a total and permanent disability
within the meaning of the Company's [long term disability] Plan.
(j) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
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(k) "Fair Market Value" shall mean, with respect to any
property (excluding the Shares or other securities), the fair market value of
such property determined by such methods or procedures as shall be established
from time to time by the Committee, and with respect to any Shares or other
securities, the last reported sale price of the Shares or other securities on
any national securities exchange or quotation system providing such information
on the day prior to the date of the determination or, if not listed on any such
exchange or quotation system, the average of the bid and asked prices of the
Shares or other securities as reported by the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") as of the day prior to the date of
the determination of the fair market value or, if not listed on NASDAQ, the fair
market value of the Shares or other securities as of the day prior to the date
of such determination as determined in good faith by the Board of Directors or
the Committee.
(1) "Incentive Stock Option" shall mean an Option granted
under Section 7(a) of the Plan that is intended to meet the requirements of
Section 422 of the Code or any successor provision thereto.
(m) "Key Employee" shall mean any officer or other employee of
the Company or of any Affiliate who is described in Section 6.
(n) "Non-Qualified Option" shall mean an Option granted under
Section 7(a) of the Plan that is not intended to be an Incentive Stock Option.
(o) "Option" shall mean an Incentive Stock Option or a
Non-Qualified Stock Option.
(p) "Participant" shall mean a Key Employee who is designated
to be granted or has received an Award under the Plan.
(q) "Performance Award" shall mean any Award granted under
Section 7(d) of the Plan.
(r) "Person" shall mean any individual, corporation,
partnership, limited liability company, association, joint-stock company, trust,
unincorporated organization or government or political subdivision thereof.
(s) "Released Securities" shall mean Restricted Stock with
respect to which all applicable restrictions have expired, lapsed or been
waived.
(t) "Restricted Stock" shall mean any Shares granted and
issued under Section 7(c) of the Plan.
(u) "Restricted Stock Unit" shall mean any Award granted under
Section 7(c) of the Plan that is denominated in Shares.
(v) "Restriction Period" shall mean, with respect to
Restricted Stock or Restricted Stock Units, that period of time determined by
the Committee pursuant to Section 7 (c).
(w) "Retirement" shall mean termination of a Participant's
employment with the Company or any Affiliate at his or her "normal retirement
date" as defined in the Company's Retirement Savings Plan or any successor plan.
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(x) "Termination" shall mean any resignation or discharge from
employment with the Company or any Affiliate except in the event of Disability,
Retirement or death.
(y) "Rule 16b-3" shall mean Rule 16b-3 promulgated by the
Commission under the Exchange Act or any successor rule or regulation thereto.
(z) "Shares" shall mean shares of the Common Stock of the
Company and such other securities or property as may become the subject of
Awards or become subject to Awards pursuant to an adjustment made under Section
8 of the Plan.
(aa) "Stock Appreciation Right" shall mean any Award granted
under Section 7(b) of the Plan.
Section 3. Effective Date; Stockholder Approval; Termination
(a) Effective Date and Stockholder Approval. Subject to the
approval of the Plan by the holders of a majority of the outstanding shares of
the Common Stock of the Company, with such approval obtained in accordance with
Rule l6b-3, the Plan shall be effective as of ___________ , 1994.
(b) Termination. No Award shall be granted under the Plan
after _________________, 2004; provided, however, that any Award theretofore
granted may extend beyond such date unless expressly provided otherwise herein
or in the applicable Award Agreement; provided further, to the extent set forth
in Section 8 hereof, the authority of the Committee to amend, alter, adjust,
suspend, discontinue or terminate any such Award or to waive any conditions or
restrictions with respect to any such Award, and the authority of the Board of
Directors to amend the Plan, shall extend beyond such date.
Section 4. Administration
The Plan shall be administered by the Committee; provided,
however, that if at any time the Committee shall not be in existence, the
functions of the Committee as specified in the Plan shall be exercised by those
members of the Board of Directors who qualify as "disinterested persons" under
Rule l6b-3 and as "outside directors" under Section 162(m)(4)(C) of the Code and
any regulations issued thereunder.
Subject to the terms of the Plan and applicable law, the
Committee shall have full power and authority with respect to the Plan,
including, without limitation, the power to:
(i) designate Participants;
(ii) determine the types of Awards to be granted to each
Participant under the Plan;
(iii) determine the number of Shares to be covered by (or with
respect to which payments, rights or other matters are to be calculated in
connection with) Awards;
(iv) determine the terms and conditions of any Award;
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(v) determine whether, to what extent, under what
circumstances and the method by which Awards may be settled or exercised in
cash, Shares, other securities, other Awards or other property, or cancelled,
forfeited or suspended;
(vi) determine whether, to what extent and under what
circumstances cash, Shares, other securities, other Awards, other property and
other amounts payable with respect to an Award shall be deferred either
automatically or at the election of the holder thereof or of the Committee;
(vii) interpret and administer the Plan and any instrument or
agreement relating to, and any Award made under, the Plan (including, without
limitation, any Award Agreement);
(viii) establish, amend, suspend and waive such rules and
regulations and appoint such agents as it shall deem appropriate for the proper
administration of the Plan; and
(ix) make any other determination and take any other action
that the Committee deems necessary or desirable for the administration of the
Plan.
Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations and other decisions under or with
respect to the Plan, or any Award, shall be within the sole discretion of the
Committee, may be made at any time, and shall be final, conclusive and binding
upon all Persons, including the Company, any Affiliate, any Participant, any
holder or Beneficiary of any Award, any stockholder and any employee of the
Company or of any Affiliate.
Section 5. Grants of Awards; Shares Available for Award
(a) The Committee may, from time to time, grant Awards to one
or more Participants; provided, however, that:
(i) subject to any adjustment pursuant to Section 8,
the aggregate number of Shares available with respect to which Awards may be
granted under the Plan shall be 100,000;
(ii) to the extent that any Shares covered by an
Award granted under the Plan, or to which any Award relates, are forfeited
(prior to the payment of dividends or the exercise by the holder of other
indicia of ownership of the Shares or other property issuable or payable with
respect to the Award), or if an Award otherwise terminates, expires or is
cancelled prior to the delivery of all of the Shares or of other consideration
issuable or payable pursuant to such Award, then the number of Shares counted
against the number of Shares available under the Plan in connection with the
grant of such Award, to the extent of any such forfeiture, termination,
expiration or cancellation, shall again be available for granting of Awards
under the Plan;
(iii) Shares which have been issued, or any other
shares of the capital stock of the Company, which a Participant tenders to the
Company in satisfaction of income and payroll tax withholding obligations or in
satisfaction of the exercise price of any Award shall remain authorized and
shall again be available for the purposes of the Plan; provided, however, that
any such previously issued Shares, or such other shares, shall not be the
subject of any grant under the Plan to any officer of the Company, or other
individual, who, at the time of such grant, is subject to the short-swing
trading provisions of Section 16 of the Exchange Act; and
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(iv) any Shares ceasing to be subject to an Award due
to the exercise of an Award or expiration of a Restriction Period shall no
longer be available for granting of an Award hereunder.
(b) For purpose of this Section 5:
(i) if an Award is denominated in Shares, the number
of Shares covered by such Award, or to which such Award relates, shall be
counted on the date of grant of such Award against the number of Shares
available for granting Awards under the Plan; and
(ii) if an Award is not denominated in Shares, a
number of Shares shall be counted on the date of grant of such Award against the
number of Shares available for granting Awards under the Plan equal to the
quotient of the Fair Market Value (calculated as of the date of grant) of the
maximum amount of cash or other consideration payable pursuant to such Award,
divided by the Fair Market Value of one Share on the date of grant.
(c) Any Shares delivered by the Company pursuant to an Award
may consist, in whole or in part, of authorized and unissued Shares or of
treasury Shares. In determining the size of any Award, the Committee may take
into account a Participant's responsibility level, performance, potential, cash
compensation level, the Fair Market Value of the Shares at the time of the Award
and such other considerations as it deems appropriate.
Section 6. Eligibility
Any Key Employee, including any executive officer or
employee-director of the Company or any Affiliate, who is not a member of the
Committee and who, in the opinion of the Committee, contributes to the continued
growth, development and financial success of the Company or an Affiliate shall
be eligible to be designated as a Participant.
Section 7. Awards
(a) Options. The Committee is hereby authorized to grant
Options to Participants in the form of either Non-Qualified Stock Options or
Incentive Stock Options with the terms and conditions set forth in this Section
7 and with such additional terms and conditions, in either case not inconsistent
with the provisions of the Plan, as the Committee shall determine.
Notwithstanding any other provision of the Plan, no Participant shall receive in
any one calendar year Options for more than 50,000 Shares.
(i) Limitations on Incentive Stock Options.
(A) In the event the Committee grants Incentive
Stock Options, the aggregate Fair Market
Value (determined at the time the Options
are granted) of any such Options which shall
be first exercisable (i.e. vest) by any one
Participant during any calendar year under
this and all other plans of the Company and
any Affiliate shall not exceed $100,000, or
such other limitation as may be provided in
the Code.
(B) The grant of Options hereunder shall be
subject to guidelines adopted by the
Committee with respect to the timing and
size of such Options. In addition, the
Committee may in its discretion
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provide that an Option may not be exercised
in whole or in part for any period or
periods specified by the Committee. The
right of a participant to exercise an Option
shall be cancelled if and to the extent that
Shares covered by such Option are used to
calculate amounts received upon exercise of
a related Stock Appreciation Right. In the
discretion of the Committee, the Company may
agree to repurchase Options for cash.
(C) The terms of any Incentive Stock Option
granted under the Plan shall comply in all
respects with the provisions of Section 422
of the Code, or any successor provision
thereto, and any regulations promulgated
thereunder.
(ii) Exercise Price. The exercise price per Share
purchasable under an Option shall be determined by the Committee; provided,
however, that the exercise price of an Incentive Stock Option shall not be less
than the Fair Market Value of a Share on the date of grant of such Option (or,
if the Committee so determines, in the case of any Option granted in tandem with
or in substitution for another Award or any outstanding award granted under any
other plan of the Company, on the date of grant of such other Award or award).
(iii) Option Term. The term of each Option shall be
fixed by the Committee; provided, however, that in no event shall the term of
any Incentive Stock Option exceed a period of ten years from the date of its
grant.
(iv) Exercisability and Method of Exercise. Except
for such limitations as may be set forth herein, an Option shall become
exercisable in such manner and within such period or periods and in such
installments or otherwise as shall be determined by the Committee and set forth
in the Award Agreement evidencing the Option. The Committee also shall determine
the method or methods by which, and the form or forms in which, payment of the
exercise price with respect to any Option may be made or deemed to have been
made.
(b) Stock Appreciation Rights. The Committee is hereby
authorized to grant Stock Appreciation Rights to Participants. Subject to the
terms of the Plan and any applicable Award Agreement, a Stock Appreciation Right
granted under the Plan shall confer on the holder thereof a right to receive,
upon exercise thereof, the excess of (i) the Fair Market Value of one Share on
the date of exercise or, if the Committee shall so determine in the case of any
such right other than one related to any Incentive Stock Option, at any time
during a specified period before or after the date of exercise, over (ii) the
grant price of the right as specified by the Committee, which shall not be less
than the Fair Market Value of one Share on the date of grant of the Stock
Appreciation Right (or, if the Committee so determines, in the case of any Stock
Appreciation Right granted in tandem with or in substitution for another Award
or any outstanding award granted under any other plan of the Company, on the
date of grant of such other Award or award). Subject to the terms of the Plan
and any applicable Award Agreement, the grant price, term, methods of exercise,
methods of settlement and any other terms and conditions of any Stock
Appreciation Right shall be as determined by the Committee. The Committee may
impose such conditions or restrictions on the exercise of any Stock Appreciation
Right as it may deem appropriate, including, without limitation, restricting the
time of exercise of the Stock Appreciation Right to specified periods as may be
necessary to satisfy the requirements of Rule 16b-3. Notwithstanding any other
provision of the Plan, no Participant shall receive in any one calendar year
Stock Appreciation Rights in respect to more than 50,000 Shares.
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(c) Restricted Stock and Restricted Stock Units.
(i) Issuance. The Committee is hereby authorized to
grant Awards of Restricted Stock and Restricted Stock Units to Participants,
such Awards, including the total number of Shares to which they pertain, to be
evidenced by an Award Agreement.
(ii) Restrictions. Shares of Restricted Stock and
Restricted Stock Units shall be issued in the name of the Participant without
payment of consideration, and shall be subject to such restrictions as the
Committee may impose (including, without limitation, a Restriction Period, any
limitation on the right to vote a Share of Restricted Stock or the right to
receive any dividend or other right or property), which restrictions may lapse
separately or in combination at such time or times, in such installments or
otherwise, as the Committee may deem appropriate. Different Restricted Stock or
Restricted Stock Unit Awards may have different Restriction Periods.
(iii) Registration. Any Restricted Stock granted
under the Plan may be evidenced in such manner as the Committee may deem
appropriate, including, without limitation, book-entry registration or issuance
of a stock certificate or certificates. In the event any stock certificate is
issued to evidence Shares of Restricted Stock granted under the Plan, such
certificate shall be registered in the name of the Participant and shall bear an
appropriate legend (as determined by the Committee) referring to the terms,
conditions and restrictions applicable to such Restricted Stock. Upon completion
of the applicable Restriction Period, the related restriction or restrictions
upon the Award shall expire and new certificates representing the Award shall be
issued without the applicable restrictive legend described herein. Such Shares
shall be delivered in accordance with the terms and conditions of such
Participant's Award Agreement.
(d) Performance Awards. The Committee is hereby authorized to
grant Performance Awards to Participants. Subject to the terms of the Plan and
any applicable Award Agreement, a Performance Award granted under the Plan (i)
may be denominated or payable in cash, Shares (including, without limitation,
Restricted Stock), other securities, other Awards or other property and (ii)
shall confer on the holder thereof rights valued as determined by the Committee
and payable to, or exercisable by, the holder of the Performance Award, in whole
or in part, upon the achievement of such performance goals during such
performance periods as the Committee shall establish. Subject to the terms of
the Plan, the Committee shall establish performance goals to be achieved during
any performance period, the length of any performance period, the amount of any
Performance Award granted, and the amount of any payment or transfer to be made
pursuant to any Performance Award.
(e) Code Section 162(m) Requirements. The Committee in its
sole discretion shall determine whether Awards made pursuant to the Plan shall
be designed to meet the requirements of performance-based compensation within
the meaning of Section 162(m) of the Code and any regulations issued thereunder.
(f) Termination, Retirement, Disability and Death. In the
event a Participant ceases employment with the Company or any Affiliate prior to
exercise of the Participant's Option or Stock Appreciation Right, prior to the
lapse of any Restriction Period or prior to the achievement of any performance
goals or lapse of any performance period, such Award shall be subject to the
following provisions:
(i) Termination. If the Termination is at the
Company's request for gross misconduct by the Participant, the Participant's
Award shall be forfeited immediately. If the Termination is at the Participant's
request, or at the Company's request for reasons other than
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gross misconduct, the Award shall be forfeited immediately unless the Committee
in its discretion decides that an Option or Stock Appreciation Right shall be
exercisable and the extent to which it shall be exercisable, or decides to
remove any restrictions applicable to Restricted Stock, Restricted Stock Units
or Performance Awards.
(ii) Retirement. In the event of Retirement, Options
and Stock Appreciation Rights must be exercised within 12 months (or such lesser
period as the Code may require) of the Participant's "normal retirement date" as
defined in the Company's Retirement Savings Plan or any successor plan, any
restriction applicable to a Restricted Stock Award shall be removed pro rata, in
accordance with the portion of the Restriction Period which has expired upon
such Retirement, and any restriction applicable to any Performance Award may be
removed in the discretion of the Committee.
(iii) Disability. Upon a Participant's Disability,
the Participant's Options and Stock Appreciation Rights shall be exercisable,
any restriction applicable under a Restricted Stock Award shall be removed on a
pro rata basis in accordance with the portion of the Restriction Period expired
as of the date of Disability, as such date is determined by/under ________, and
any restriction applicable under a Performance Award may be removed in the
discretion of the Committee.
(iv) Death. If the Participant shall die while in the
employment of the Company or any Affiliate or within the period of time after
Retirement during which the Participant would have been entitled to exercise his
Options and Stock Appreciation Rights, the Participant's Beneficiary shall have
the right to exercise such Options and Stock Appreciation Rights within 12
months from the date of the Participant's death to the extent the Participant
was entitled to exercise the same immediately prior to the Participant's death.
Any restriction applicable under a deceased Participant's Restricted Stock Award
shall be removed on a pro rata basis in accordance with the portion of the
Restricted Period which had expired as of the date of death, and any restriction
applicable under a deceased Participant's Performance Award may be removed in
the discretion of the Committee.
(g) Election to Recognize Income. If a Participant makes an
election in a timely manner pursuant to Section 83(b) of the Code to recognize
income for tax purposes when an Award is first made, the Participant shall
notify the Company within 10 days of the making of such election.
(h) General.
(i) Award Agreements. Each Award granted under the
Plan shall be evidenced by an Award Agreement in such form as shall have been
approved by the Committee.
(ii) Awards May Be Granted Separately or Together.
Awards may be granted either alone or in addition to, in tandem with, or in
substitution for any other Award or any award granted under any other plan of
the Company or any Affiliate. Awards granted in addition to or in tandem with
other Awards, or in addition to or in tandem with awards granted under any other
plan of the Company or any Affiliate, may be granted either at the same time as
or at a different time from the grant of such other Awards or awards.
(iii) Forms of Payment Under Awards. Subject to the
terms of the Plan and of any applicable Award Agreement, payments or transfers
to be made by the Company or
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any Affiliate upon the grant, exercise or payment of an Award may be made in
such form or forms as the Committee shall determine, including, without
limitation, cash, Shares, other securities, other Awards or other property, or
any combination thereof, and may be made in a single payment or transfer, in
installments or on a deferred basis, in each case in accordance with rules and
procedures established by the Committee. Such rules and procedures may include,
without limitation, provisions for the payment or crediting of interest in
installments or deferred payments.
(iv) Limits on Transfer of Awards. No Award (other
than Released Securities), and no right under any such Award, shall be
assignable, alienable, saleable or transferable by a Participant otherwise than
by will or by the laws of descent and distribution (or, in the case of an Award
of Restricted Stock, to the Company); provided, however, that, if so determined
by the Committee, a Participant may, in the manner established by the Committee,
designate a Beneficiary to exercise the rights of the Participant, and to
receive any property distributable with respect to any Award upon the death of
the Participant. Each Award, and each right under any Award, shall be
exercisable, during the Participant's lifetime, only by the Participant or, if
permissible under applicable law, by the Participant's guardian or legal
representative. No Award (other than Released Securities) , and no right under
any such Award, may be pledged, alienated, attached or otherwise encumbered, and
any purported pledge, alienation, attachment or encumbrance thereof shall be
void and unenforceable against the Company or any Affiliate.
(v) Term of Awards. Except as otherwise provided
herein, the term of each Award shall be for such period as may be determined by
the Committee.
(vi) Share Certificates and Representation by
Participants. All certificates for Shares or other securities delivered under
the Plan pursuant to any Award or the exercise thereof shall be subject to such
stop transfer orders and other restrictions as the Committee may deem advisable
under the Plan or the rules, regulations and other requirements of the
Commission, any stock exchange or other market upon which such Shares or other
securities are then listed or traded, and any applicable federal or state
securities laws, and the Committee may cause a legend or legends to be inscribed
upon any such certificate(s) to make appropriate reference to such restrictions.
The Committee may require each Participant or other Person who acquires Shares
or other securities under the Plan to represent to the Company in writing that
such Participant or other Person is acquiring the Shares or other securities
without a view to the distribution thereof.
(a) Amendments to the Plan. The Board of Directors may amend,
alter, suspend, discontinue or terminate the Plan; provided, however, that no
amendment, alteration, suspension, discontinuation or termination of the Plan
shall in any manner (except as otherwise provided in this Section 8) adversely
affect any Award granted and then outstanding under the Plan, without the
consent of the respective Participant; provided further, however, that,
notwithstanding any other provision of the Plan or any Award Agreement, without
the approval of the stockholders of the Company, no such amendment, alteration,
suspension, discontinuation or termination shall be made that would:
(i) increase the total number of Shares available for
Awards under the Plan, except as provided in Section 8(c) hereof;
(ii) materially increase the benefits accruing to
Participants under the Plan; or
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(iii) materially modify the requirements as to
eligibility for participation in the
Plan.
(b) Amendments to Awards. The Committee may, in whole or in
part, waive any conditions or other restrictions with respect to, and may amend,
alter, suspend, discontinue or terminate, any Award granted under the Plan,
prospectively or retroactively, but no such action shall impair the rights of
any Participant without the Participant's consent, except as provided in Section
8(c) and (d) hereof.
(c) Certain Adjustments of Awards.
(i) In the event the Company or any Affiliate shall
assume outstanding employee awards or the right or obligation to make future
such awards in connection with the acquisition of another business or business
entity, the Committee may make such adjustments in the terms of Awards, not
inconsistent with the terms of the Plan, as it shall deem appropriate in order
to achieve reasonable comparability or other equitable relationship between the
assumed awards and the Awards granted under the Plan, as so adjusted.
(ii) In the event that the Committee shall determine
that any dividend or other distribution (whether in the form of cash, Shares,
other securities or other property), recapitalization, stock split, reverse
stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase or exchange of Shares or other securities of the
Company, issuance of warrants or other rights to purchase Shares or other
securities of the Company, or other similar corporate transaction, change in
applicable laws, regulations or financial accounting principles or other event
affects the Shares, such that an adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee may, in such manner as it may deem equitable, adjust any or all of:
(A) the number and type of Shares (or other securities or property) which
thereafter may be made the subject of Awards under the Plan; (B) the number and
type of Shares (or other securities or property) subject to outstanding Awards;
and (C) the grant, purchase or exercise price with respect to any Award, or, if
deemed appropriate, make provision for a cash payment to the holder of an
outstanding Award; provided, however, in each case, that with respect to Awards
of Incentive Stock Options, no such adjustment shall be authorized to the extent
that such authority would cause the Plan to violate Section 422(b)(1) of the
Code or any successor provision thereto; provided further, however, that the
number of Shares subject to any Award denominated in Shares shall always by a
whole number.
(d) Correction of Defects, Omissions and Inconsistencies. The
Committee may correct any defect, supply any omission or reconcile any
inconsistency in any Award or Award Agreement in the manner and to the extent it
shall deem desirable to carry the Plan into effect.
Section 9. General Provisions
(a) No Rights to Awards. No Key Employee, Participant or other
Person shall have any claim to be granted any Award under the Plan, and there is
no obligation for uniformity of treatment of Key Employees, Participants or
holders or Beneficiaries of Awards under the Plan. The terms and conditions of
Awards need not be the same with respect to each Participant.
(b) Withholding. No later than the date as of which an amount
first becomes includible in the gross income of a Participant for federal income
tax purposes with respect to any Award under the Plan, the Participant shall pay
to the Company, or make arrangements
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satisfactory to the Company regarding the payment of, any federal, state, local
or foreign taxes of any kind required by law to be withheld with respect to such
amount. Unless otherwise determined by the Committee, withholding obligations
arising with respect to Awards under the Plan may be settled with Shares (other
than Restricted Stock), including Shares that are part of, or are received upon
exercise of, the Award that gives rise to the withholding requirement. The
obligations of the Company under the Plan shall be conditioned on such payment
or arrangements, and the Company and any Affiliate shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment
otherwise due to the Participant. The Committee may establish such procedures as
it deems appropriate for the settling of withholding obligations with Shares,
including, without limitation, the establishment of such procedures as may be
necessary to satisfy the requirements of Rule 16b-3.
(c) Acceleration. Except as otherwise provided hereunder, the
Committee may, in its discretion, accelerate the time at which an outstanding
Award granted hereunder may be exercised. With respect to Restricted Stock, in
the event of a public tender offer for all or any portion of the Shares of the
Company, or in the event that any proposal to merge or consolidate the Company
with another entity is submitted to the stockholders of the Company for a vote,
the Committee, in its sole discretion, may shorten or eliminate the Restriction
Period consistent with the best interests of the Company.
(d) No Right to Employment. The grant of an Award shall not be
construed as giving a Participant the right to be retained in the employ of the
Company or any Affiliate. Further, the Company or any Affiliate may at any time
dismiss a Participant from employment, free from any liability or any claim
under the Plan, unless otherwise expressly provided in the Plan or in any Award
Agreement.
(e) Unfunded Status of the Plan. Unless otherwise determined
by the Committee, the Plan shall be unfunded and shall not create (or be
construed to create) a trust or a separate fund or funds. The Plan shall not
establish any fiduciary relationship between the Company and any Participant or
other Person. To the extent any Person holds any right by virtue of the grant of
an Award under the Plan, such right (unless otherwise determined by the
Committee) shall be no greater than the right of an unsecured general creditor
of the Company.
(f) Government and Other Regulations. The obligation of the
Company to make payment of Awards in Shares or otherwise shall be subject to all
applicable laws, rules and regulations, and to such approvals by any government
agencies as may be required. If Shares awarded hereunder may in certain
circumstances be exempt from registration under the Securities Act of 1933, the
Company may restrict its transfer in such manner as it deems advisable to ensure
such exempt status.
(g) Indemnification. The Company shall indemnify and hold
harmless each individual who is or at any time serves as a member of the
Committee against and from:
(i) any loss, cost, liability or expense that may be
imposed upon or reasonably incurred by such individual in connection with or
resulting from any claim, action, suit or proceeding to which such individual
may be a party or in which such individual may be involved by reason of any
action or failure to act under the Plan; and
(ii) any and all amounts paid by such individual in
satisfaction of judgment in any such action, suit or proceeding relating to the
Plan.
Each individual covered by this indemnification shall
give the Company an opportunity, at its own expense, to handle and defend the
same before such individual
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undertakes to handle and defend it on such individual's own behalf. In addition,
such individuals shall also be entitled to any other rights of indemnification,
which such individuals may have under the certificates of incorporation or
by-laws of the Company or any Affiliate, as a matter of law, or otherwise, or of
any power that the Company or any Affiliate may have to indemnify such
individual or hold such individual harmless.
(h) Governing Law. The validity, construction and effect of
the Plan, and any rules and regulations relating to the Plan, shall be
determined in accordance with the laws of the State of Delaware and applicable
federal law.
(i) Severability. If any provision of the Plan, any Award
Agreement or any Award is or becomes or is deemed to be invalid, illegal or
unenforceable in any jurisdiction, or as to any Person or Award, or would
disqualify the Plan, any Award Agreement or any Award under any law deemed
applicable by the Committee, such provision shall be construed or deemed amended
to conform to applicable laws, or, if it cannot be so construed or deemed
amended without, in the determination of the Committee, materially altering the
intent of the Plan, the Award Agreement or the Award, such provision shall be
stricken as to such jurisdiction, Person or Award, and the remainder of the
Plan, such Award Agreement and such Award shall remain in full force and effect.
(j) No Fractional Shares. No fractional Shares shall be issued
or delivered pursuant to the Plan, any Award Agreement or any Award, and the
Committee shall determine whether cash, other securities or other property shall
be paid or transferred in lieu of any fractional Shares, or whether such
fractional Shares or any rights thereto shall be canceled, terminated or
otherwise eliminated.
(k) Headings. Headings are given to the sections and
subsections of the Plan solely as a convenience to facilitate reference. Such
headings shall not be deemed in any way material or relevant to the construction
or interpretation of the Plan or any provision thereof.
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TESSCO TECHNOLOGIES INCORPORATED
1994 STOCK AND INCENTIVE PLAN
Amendment No. 1
(Approved July 1996)
Notwithstanding any other provision of the Plan as heretofore amended, the
aggregate number of Shares available with respect to which Awards may be granted
is hereby increased by 239,500 to 572,500.
<PAGE>
TESSCO TECHNOLOGIES INCORPORATED
1994 STOCK AND INCENTIVE PLAN
Proposed Amendment No. 2
(Submitted for Approval at Annual Meeting to be held August 13, 1999)
Notwithstanding any other provision of the Plan as heretofore amended, the
aggregate number of Shares available with respect to which Awards may be granted
is hereby increased by 300,000 to 872,500.
<PAGE>
APPENDIX 2
TESSCO TECHNOLOGIES INCORPORATED
TEAM MEMBER STOCK PURCHASE PLAN
Effective February 1, 1999
TESSCO TECHNOLOGIES INCORPORATED
TEAM MEMBER STOCK PURCHASE PLAN
<PAGE>
TABLE OF CONTENTS
ARTICLE I
1.1 PURPOSE OF PLAN .....................................................1
ARTICLE II DEFINITIONS
2.1 ADMINISTRATIVE AGENT.................................................1
2.2 COMMITTEE............................................................1
2.3 COMPENSATION.........................................................1
2.4 FAIR MARKET VALUE....................................................1
2.5 OFFER DATE...........................................................1
2.6 OFFER PERIOD.........................................................2
2.7 OFFERING TERMINATION DATE............................................2
2.8 OPTION PERCENTAGE....................................................2
2.9 OPTION VALUE.........................................................2
2.10 PARTICIPANT..........................................................2
2.11 PLAN ADMINISTRATOR...................................................2
2.12 TEAM MEMBER..........................................................2
2.13 TRADING DAY..........................................................2
ARTICLE III ELIGIBILITY AND PARTICIPATION
3.1 INITIAL ELIGIBILITY..................................................2
3.2 LEAVE OF ABSENCE.....................................................2
3.3 RESTRICTIONS ON PARTICIPATION........................................2
3.4 COMMENCEMENT OF PARTICIPATION........................................3
ARTICLE IV OFFERINGS
4.1 NUMBER OF SHARES TO BE OFFERED.......................................3
4.2 OFFER PERIODS........................................................3
ARTICLE V PAYROLL DEDUCTIONS
5.1 AMOUNT OF DEDUCTION..................................................4
5.2 PARTICIPANT'S ACCOUNT................................................4
5.3 CHANGES IN PAYROLL DEDUCTIONS........................................4
5.4 LEAVE OF ABSENCE.....................................................4
ARTICLE VI GRANTING OF OPTION
6.1 NUMBER OF OPTION SHARES..............................................4
6.2 OPTION PRICE.........................................................5
<PAGE>
ARTICLE VII GRANTING OF OPTION
7.1 AUTOMATIC EXERCISE...................................................5
7.2 FRACTIONAL SHARES....................................................5
7.3 TRANSFER OF OPTION...................................................5
7.4 DELIVERY OF STOCK....................................................5
7.5 WITHDRAWAL OF ACCOUNT................................................6
ARTICLE VIII WITHDRAWAL
8.1 IN GENERAL...........................................................6
8.2 EFFECT ON SUBSEQUENT PARTICIPATION...................................6
8.3 TERMINATION OF EMPLOYMENT............................................6
8.4 TERMINATION OF EMPLOYMENT DUE TO DEATH...............................6
ARTICLE IX INTEREST
9.1 PAYMENT OF INTEREST..................................................7
ARTICLE X STOCK
10.1 MAXIMUM SHARES.......................................................7
10.2 PARTICIPANT'S INTEREST IN OPTION STOCK...............................7
10.3 REGISTRATION OF STOCK................................................7
10.4 DISPOSITION OF STOCK.................................................7
ARTICLE XI ADMINISTRATION
11.1 APPOINTMENT OF COMMITTEE.............................................7
11.2 AUTHORITY OF COMMITTEE...............................................8
11.3 RULES GOVERNING THE ADMINISTRATION OF THE COMMITTEE..................8
ARTICLE XII MISCELLANEOUS PROVISIONS
12.1 DESIGNATION OF BENEFICIARY...........................................8
12.2 TRANSFERABILITY......................................................8
12.3 USE OF FUNDS.........................................................9
12.4 ADJUSTMENT UPON CHANGES IN CAPITALIZATION............................9
12.5 AMENDMENT AND TERMINATION............................................9
12.6 EFFECTIVE DATE.......................................................9
12.7 NO EMPLOYMENT RIGHTS................................................10
12.8 EFFECT ON PLAN......................................................10
12.9 GOVERNING LAW.......................................................10
<PAGE>
TESSCO TECHNOLOGIES INCORPORATED
TEAM MEMBER STOCK PURCHASE PLAN
ARTICLE I
PURPOSE OF PLAN
1.1 PURPOSE OF PLAN. This TESSCO Technologies Incorporated
Team Member Stock Purchase Plan (the "Plan") is intended to provide a method
whereby eligible Team Members of TESSCO Technologies Incorporated (hereinafter
referred to, unless the context otherwise requires, as the "Company") will have
an opportunity to acquire a proprietary interest in the Company through the
purchase of shares of the common stock of the Company. It is the intention of
the Company to have the Plan qualify as an "employee stock purchase plan" under
Section 423 of the Internal Revenue Code of 1986, as amended (the "Code"). The
provisions of the Plan shall be construed so as to extend and limit
participation in a manner consistent with the requirements of that Section of
the Code.
ARTICLE II
DEFINITIONS
2.1 ADMINISTRATIVE AGENT means the registered broker dealer
hired by the Company to assist in the administration of the Plan.
2.2 COMMITTEE means the individuals described in Article XI.
2.3 COMPENSATION means base salary or draw and monthly
variable compensation (if any) paid in each Offer Period. Compensation does not
include quarterly or annual variable compensation, overtime, severance pay, pay
in lieu of vacation, imputed income for income tax purposes, patent and award
fees, awards and prizes, back pay awards, reimbursement of expenses and living
allowances, educational allowances, expense allowances, disability benefits
under any insurance program, fringe benefits, deferred compensation,
compensation under the Company's stock plans, amounts paid for services as an
independent contractor, or any other form of compensation excluded by the
Committee in its discretion. Compensation shall be determined before giving
effect to any salary reduction agreement pursuant to a qualified cash or
deferred arrangement within the meaning of Section 401(k) of the Code or to any
similar salary reduction agreement pursuant to any cafeteria plan (within the
meaning of Section 125 of the Code).
2.4 FAIR MARKET VALUE means the average of the closing bid and
asked prices of the Company's common stock as reported by the Nasdaq System.
2.5 OFFER DATE means the date described in Section 4.2.
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2.6 OFFER PERIOD means the period described in Section 4.2.
2.7 OFFERING TERMINATION DATE means the date described in
Section 4.2.
2.8 OPTION PERCENTAGE means the percentage described in
Section 6.1.
2.9 OPTION VALUE means the value described in Section 6.1.
2.10 PARTICIPANT means any individual who has satisfied the
eligibility and participation requirements set forth in Article III.
2.11 PLAN ADMINISTRATOR means the Company or any third party
administrator designated by the Company.
2.12 TEAM MEMBER means, subject to Section 3.2, any person
employed on a full-time or part-time basis by the Company whose customary
employment is for twenty (20) or more hours per week for the Company.
2.13 TRADING DAY means the day described in Section 4.2.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 INITIAL ELIGIBILITY. A Team Member shall become eligible
to participate in this Plan on the earlier of: (1) the Team Member's eligibility
to make elective deferrals into the TESSCO Technologies Incorporated 401(k)
Plan; or (2) the Offer Period following the first anniversary of the Team
Member's employment by the Company. Notwithstanding the foregoing, Team Members
who customarily work less than twenty (20) hours per week or less than five (5)
months per year will be ineligible to participate in this Plan.
3.2 LEAVE OF ABSENCE. For purposes of participation in the
Plan, a person on leave of absence shall be deemed to be a Team Member for the
first ninety (90) days of such leave of absence and such Team Member's
employment shall be deemed to have terminated at the close of business on the
90th day of such leave of absence unless such Team Member shall have returned to
regular full-time or part-time employment (as the case may be) prior to the
close of business on such 90th day. Termination by the Company of any Team
Member's leave of absence, other than termination of such leave of absence on
return to full time or part time employment, shall terminate a Team Member's
employment for all purposes of the Plan and shall terminate such Team Member's
participation in the Plan and right to exercise any option.
3.3 RESTRICTIONS ON PARTICIPATION. Notwithstanding any
provisions of the Plan to the contrary, no Team Member shall be granted an
option under the Plan:
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(a) if, immediately after the grant, such Team Member would
own stock, and/or hold outstanding options to purchase stock,
possessing five percent (5%) or more of the total combined
voting power or value of all classes of stock of the Company
(for purposes of this paragraph, the rules of Section 424(d)
of the Code shall apply in determining stock ownership of any
Team Member); or
(b) which permits his rights to purchase stock under all
employee stock purchase plans of the Company to accrue at a
rate which exceeds $25,000 in Fair Market Value of the stock
(determined as of the date such option is granted) for each
calendar year in which such option is outstanding.
3.4 COMMENCEMENT OF PARTICIPATION. An eligible Team Member may
become a Participant by completing an authorization for payroll deductions on
the form provided by the Company and filing it with the office of the Plan
Administrator of the Company within the time prescribed by the Plan
Administrator. Payroll deductions for a Participant shall become effective as of
the first payroll period ending in the month in which participation commences
and shall remain in effect until modified or revoked by the Participant pursuant
to Section 5.3 and Article VIII.
ARTICLE IV
OFFERINGS
4.1 NUMBER OF SHARES TO BE OFFERED. The maximum number of
shares of common stock of the Company that may be purchased under the Plan is
two hundred thousand (200,000). Such shares may be treasury shares or authorized
and unissued shares as the Committee may determine in its discretion. The
Company, by action of its Board of Directors upon the advice of the Committee
and subject to stockholder approval, may increase the number of shares reserved
under the Plan.
4.2 OFFER PERIODS. The Plan shall provide two Offer Periods in
each year in which the Plan is in effect, each of which shall commence on one of
two Offer Dates and end on one of two Offering Termination Dates. The first
Offer Period shall commence on the first Trading Day on or after March 1 (the
first "Offer Date") and terminate on the last Trading Day in the period ending
the following August 31 (the first "Offering Termination Date"). The second
Offer Period shall commence on the first Trading Day on or after September 1
(the second "Offer Date") and terminate on the last Trading Day in the period
ending the following February 28, or in the case of a leap year, the following
February 29 (the second "Offering Termination Date"). Upon the Offer Date, the
Company will issue to each then eligible Team Member, an option to purchase,
based upon the amount of the Team Member's Compensation to be reduced during the
Offer Period, the number of full shares of common stock (the "Offering") as
determined and limited by the Section 6.1. For purposes of this Plan, a Trading
Day is a day on which shares of common stock of the Company are traded on the
NASDAQ Stock Market.
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ARTICLE V
PAYROLL DEDUCTIONS
5.1 AMOUNT OF DEDUCTION. At the time a Participant files his
authorization for payroll deduction, he shall elect the percentage rate of
Compensation to be deducted on each payday during the time he is a Participant
in an Offer Period. In the case of a part-time hourly Team Member, such Team
Member's Compensation during an Offering shall be determined by multiplying such
Team Member's hourly rate of pay in effect during an Offer Period by the number
of regularly scheduled hours of work for such Team Member during such Offer
Period.
Notwithstanding the foregoing, in no event will a Team Member
be granted an option under the Plan which permits his rights to purchase stock
under all employee stock purchase plans of the Company to accrue at a rate which
exceeds $25,000 in Fair Market Value of the stock (determined as of the date
such option is granted) for each calendar year in which such option is
outstanding.
5.2 PARTICIPANT'S ACCOUNT. All payroll deductions made for a
Participant shall be credited to his account under the Plan. The Participant's
account will consist of a bookkeeping entry in the Company's financial records.
A Participant may not make any separate cash payment into such account except
when on leave of absence and then only as provided in Section 5.4.
5.3 CHANGES IN PAYROLL DEDUCTIONS. A Participant may
discontinue his participation in the Plan as described in Article VIII, but no
other change can be made with regard to an Offer Period and, specifically, a
Participant may not alter the amount of his payroll deductions for that Offer
Period. Except as provided in Article VIII, a Participant may modify or revoke
an authorization for payroll deductions only with respect to future Offer
Periods.
5.4 LEAVE OF ABSENCE. If a Participant goes on an approved
leave of absence without pay, such Participant shall have the right to elect to
withdraw the balance in his or her account pursuant to Section 8.1, or the
Participant shall have the right to elect to carryover the balance in his or her
account to be applied to the purchase of shares in a subsequent Offer Period. If
a Participant goes on an approved leave of absence with pay (no interruption of
bi-weekly salary), the Participant shall continue to be eligible to participate
in the Plan.
ARTICLE VI
GRANTING OF OPTION
6.1 NUMBER OF OPTION SHARES. On each Offer Date, participating
Team Members shall be deemed to have been granted options to purchase shares of
common stock of the Company equal to the number of full shares that may be
purchased with the Team Members authorized payroll deductions
4
<PAGE>
for the Offer Period. The number of shares that may be so purchased shall be
determined by dividing the total of the Team Member's payroll deductions
authorized to be made during the Offer Period (plus any carryovers of amounts
not applied to the purchase of shares in an earlier Offer Period) by the Option
Value of the common stock of the Company at the beginning of the Offer Period.
The Option Value for the Offer Period shall be the Option Percentage, multiplied
by the Fair Market Value of the common stock on the first Trading Day of the
Offer Period.
Prior to each Offer Period, the Option Percentage shall be
determined by the Committee, in its sole and absolute subjective discretion,
which percentage shall be at least eighty-five percent (85%) and not more than
one hundred percentage (100%).
Any amount credited to a Participant's account that will not
purchase a full share or is in excess of the amount needed to fully exercise the
Team Member's option for that Offer Period will be carried forward to the next
Offer Period.
6.2 OPTION PRICE. The Option Price of stock purchased with
payroll deductions made during such Offer Period for a Participant therein shall
be the lesser of:
(i) the Option Percentage multiplied by the Fair
Market Value of a share of common stock on the first Trading Day of the Offer
Period (the "Offer Date"); or
(ii) the Option Percentage multiplied by the Fair
Market Value of a share of common stock on the last Trading Day of the Offer
Period (the "Offering Termination Date").
ARTICLE VII
EXERCISE OF OPTION
7.1 AUTOMATIC EXERCISE. Unless a Participant withdraws from
the Plan as provided in Article 8, his option to purchase stock with payroll
deductions made during each Offer Period will be deemed to have been exercised
automatically on the Offering Termination Date (as defined in Section 4.2)
applicable to such Offering, for the purchase of the number of full shares of
stock which the accumulated payroll deductions and carryovers in his account at
that time will purchase at the applicable Option Price (but not in excess of the
number of shares for which options were deemed to have been granted to the Team
Member at the Offer Date pursuant to Article VI).
7.2 FRACTIONAL SHARES. Fractional shares will not be issued
under the Plan and any accumulated payroll deductions which would have been used
to purchase fractional shares will be carried over to the next Offer Period
pursuant to Section 6.1.
7.3 TRANSFER OF OPTION. During a Participant's lifetime,
options held by such Participant shall be exercisable only by that Participant.
7.4 DELIVERY OF STOCK. As promptly as practicable after the
Offering Termination Date of each Offering, the Company will deliver to the
Administrative Agent, as appropriate, certificates for the shares of stock
purchased upon exercise of the Participant's
5
<PAGE>
option. Certificates for the shares of stock purchased upon exercise of the
Participant's option will be held by the Administrative Agent in accordance with
Section 10.4.
7.5 WITHDRAWAL OF ACCOUNT. By written notice to the Plan
Administrator of the Company at any time prior to the Offering Termination Date
applicable to any Offering, a Participant may elect to withdraw all the
accumulated payroll deductions in his account at such time.
ARTICLE VIII
WITHDRAWAL
8.1 IN GENERAL. As indicated in Section 7.5, a Participant may
withdraw payroll deductions credited to his account under the Plan at any time
prior to the Offering Termination Date applicable to any Offering by giving
written notice to the Plan Administrator of the Company. All of the
Participant's payroll deductions credited to his account will be paid to him
promptly after receipt of his notice of withdrawal, and no further payroll
deductions will be made from his pay during such Offering. The Company may, at
its option, treat any attempt by a Team Member to borrow on the security of his
accumulated payroll deductions as an election to withdraw such deductions.
8.2 EFFECT ON SUBSEQUENT PARTICIPATION. A Participant's
withdrawal of his account will not have any effect upon his eligibility to
participate in any succeeding Offering or in any similar plan which may
hereafter be adopted by the Company.
8.3 TERMINATION OF EMPLOYMENT. Upon termination of the
Participant's employment for any reason, including retirement (but excluding
death while in the employ of the Company or continuation of a leave of absence
for a period beyond ninety (90) days), the payroll deductions credited to his
account will be returned to him, or, in the case of his death subsequent to the
termination of his employment, to the person or persons entitled thereto under
Section 12.1.
8.4 TERMINATION OF EMPLOYMENT DUE TO DEATH. Upon termination
of the Participant's employment because of his death, his beneficiary (as
defined in Section 12.1) shall have the right to elect, by written notice given
to the Plan Administrator prior to the earlier of the Offering Termination Date
or the expiration of a period of sixty (60) days commencing with the date of
death of the Participant, either
(a) to withdraw all of the payroll deductions credited to the
Participant's account under the Plan, or
(b) to exercise the Participant's option for the purchase of
stock on the Offering Termination Date next following the date
of the Participant's death for the purchase of the number of
full shares of stock which the accumulated payroll deductions
in the Participant's account at the date of the Participant's
death will purchase at the applicable option price, and any
excess credited to such account will be paid to said
beneficiary, without interest.
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In the event that no such written notice of election shall be
duly received by the Plan Administrator, the beneficiary shall automatically be
deemed to have elected, pursuant to paragraph (b), to exercise the Participant's
option.
ARTICLE IX
INTEREST
9.1 PAYMENT OF INTEREST. No interest will be paid or allowed
on any money paid into the Plan or credited to the account of any Participant
Team Member.
ARTICLE X
STOCK
10.1 MAXIMUM SHARES. If the total number of shares for which
options are exercised on any Offering Termination Date in accordance with
Article VI exceeds the maximum number of authorized shares remaining for
purchase under Section 4.1, the Committee shall make a pro rata allocation
(based on the amounts deducted from pay) of the shares available for delivery
and distribution in as nearly a uniform manner as shall be practicable and as it
shall determine to be equitable, and the balance of payroll deductions credited
to the account of each Participant under the Plan shall be returned to him as
promptly as possible.
10.2 PARTICIPANT'S INTEREST IN OPTION STOCK. The Participant
will have no interest in any shares of stock covered by his option until such
option has been exercised and shares have been issued to the Participant.
10.3 REGISTRATION OF STOCK. Stock to be delivered to a
Participant under the Plan will be registered in the name of the Participant,
or, if the Participant so directs by written notice to the Plan Administrator of
the Company prior to the Offering Termination Date applicable thereto, in the
names of the Participant and one such other person as may be designated by the
Participant, as joint tenants with rights of survivorship to the extent
permitted by applicable law.
10.4 DISPOSITION OF STOCK. Shares of common stock to be
delivered to any individual by virtue of such individual's participation in the
Plan will be held by the Administrative Agent for at least eighteen (18) months
following the Offering Termination Date. Notwithstanding the foregoing, during
such period that the common stock is held by the Administrative Agent, such
individual shall be the owner of record, provided however, that such individual
may not sell, assign, or otherwise dispose of such common stock during the
eighteen (18) month period immediately following the Offering Termination Date.
7
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ARTICLE XI
ADMINISTRATION
11.1 APPOINTMENT OF COMMITTEE. The Compensation Committee
shall administer the Plan, which shall consist of no fewer than three members of
the Board of Directors. No member of the Committee shall be a Team Member
eligible to purchase stock under the Plan.
11.2 AUTHORITY OF COMMITTEE. Subject to the express provisions
of the Plan, the Committee shall have plenary authority in its discretion to
interpret and construe any and all provisions of the Plan, to adopt rules and
regulations for administering the Plan, and to make all other determinations
deemed necessary or advisable for administering the Plan. The Committee's
determination on the foregoing matters shall be conclusive.
11.3 RULES GOVERNING THE ADMINISTRATION OF THE COMMITTEE. The
Board of Directors may from time to time appoint members of the Committee in
substitution for or in addition to members previously appointed and may fill
vacancies, however caused, in the Committee. The Committee may select one of its
members as its Chairman and shall hold its meetings at such times and places as
it shall deem advisable and may hold telephonic meetings. A majority of its
members shall constitute a quorum. All determinations of the Committee shall be
made by a majority of its members. The Committee may correct any defect or
omission or reconcile any inconsistency in the Plan, in the manner and to the
extent it shall deem desirable and in accordance with applicable law. Any
decision or determination reduced to writing and signed by all of the members of
the Committee shall be as fully effective as if it had been made by a majority
vote at a meeting duly called and held. The Committee may appoint a secretary
and shall make such rules and regulations for the conduct of its business as it
shall deem advisable.
ARTICLE XII
MISCELLANEOUS
12.1 DESIGNATION OF BENEFICIARY. A Participant may file a
written designation of one or more beneficiaries who is to receive any stock
and/or cash issuable or payable, as the case may be, after the Participant's
death. Such designation of beneficiary may be changed by the Participant at any
time by written notice delivered prior to the Participant's death to the Plan
Administrator. Upon the death of a Participant, if the Plan Administrator has
received a valid designation of beneficiary and receives sufficient proof of
such beneficiary's identity, the Company shall deliver such stock and/or cash to
such beneficiary. In the event of the death of a Participant and in the absence
of a living, validly designated beneficiary, the Company shall deliver such
stock and/or cash to the executor or administrator of the estate of the
Participant, or if no such executor or administrator has been appointed (to the
knowledge of the Company), the Committee, in its discretion, any cause the
Company to deliver such stock and/or cash to the spouse or to any one or more
dependents of the Participant as the Company may
8
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designate. No beneficiary shall, prior to the death of the Participant by whom
he has been designated, acquire any interest in the stock or cash credited to
the Participant under the Plan.
12.2 TRANSFERABILITY. Neither payroll deductions credited to a
Participant's account nor any rights with regard to the exercise of an option or
to receive stock under the Plan may be assigned, transferred, pledged, or
otherwise disposed of in any way by the Participant other than by will or the
laws of descent and distribution. Any such attempted assignment, transfer,
pledge or other disposition shall be without effect, except that the Plan
Administrator may treat such act as an election to withdraw funds in accordance
with Section 8.1.
12.3 USE OF FUNDS. All payroll deductions received or held by
the Company under this Plan may be used by the Company for any corporate purpose
and the Company shall not be obligated to segregate such payroll deductions.
12.4 ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
(a) If, during any Offer Period, the outstanding shares of
common stock of the Company have increased, decreased, changed into, or been
exchanged for a different number or kind of shares or securities of the Company
without the receipt of consideration through reorganization, merger,
recapitaliztion, reclassification, stock split, reverse stock split or similar
transaction, appropriate and proportionate adjustments may be made by the
Committee in the number and/or kind of shares which are subject to purchase
under outstanding options and on the option exercise price applicable to such
outstanding options. In addition, in any such event, the number and/or kind of
shares which may be offered in the Offerings described in Article IV hereof
shall also be proportionately adjusted. No adjustments shall be made for stock
dividends. For the purposes of this paragraph, any distribution of shares to
shareholders in an amount aggregating 20% or more of the outstanding shares
shall be deemed a stock split and any distributions of shares aggregating less
than 20% of the outstanding shares shall be deemed a stock dividend.
(b) If, during the Offer Period, the Company dissolves,
liquidates, reorganizes, merges, or consolidates with one or more corporations
as a result of which the Company is not the surviving corporation, or upon a
sale of substantially all of the property or stock of the Company to another
corporation, the holder of each option then outstanding under the Plan will
thereafter be entitled to receive at the next Offering Termination Date upon the
exercise of such option for each share as to which such option shall be
exercised, as nearly as reasonably may be determined, the cash, securities
and/or property which a holder of one share of the common stock was entitled to
receive upon and at the time of such transaction. The Board of Directors shall
take such steps in connection with such transactions as the Board shall deem
necessary to assure that the provisions of this Section 12.4 shall thereafter be
applicable, as nearly as reasonably may be determined, in relation to the said
cash, securities and/or property as to which such holder of such option might
thereafter be entitled to receive.
12.5 AMENDMENT AND TERMINATION. The Board of Directors shall
have complete power and authority to terminate or amend the Plan; provided,
however, that the
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Board of Directors shall not, without the approval of the stockholders of the
Corporation (i) increase the maximum number of shares which may be issued under
any Offering; (ii) or amend the requirements as to the class of Team Members
eligible to purchase stock under the Plan. No termination, modification, or
amendment of the Plan may, without the consent of a Team Member then having an
option under the Plan to purchase stock, adversely affect the rights of such
Team Member under such option.
12.6 EFFECTIVE DATE. The Plan shall become effective as of
February 1, 1999, subject to the approval by the holders of the majority of the
common stock present and represented at a special or annual meeting of the
shareholders held on or before February 1, 2000. If the Plan is not so approved,
the Plan shall not become effective.
12.7 NO EMPLOYMENT RIGHTS. The Plan does not, directly or
indirectly, create in any Team Member or class of Team Members any right with
respect to continuation of employment by the Company, and it shall not be deemed
to interfere in any way with the Company's right to terminate, or otherwise
modify, a Team Member's employment at any time.
12.8 EFFECT OF PLAN. The provisions of the Plan shall, in
accordance with its terms, be binding upon, and inure to the benefit of all Team
Members and all beneficiaries of Team Members participating in the Plan,
including, without limitation, each such Team Member's estate and the executors,
administrators or trustees thereof, heirs and legatees.
12.9 GOVERNING LAW. The law of the State of Maryland will
govern all matters relating to this Plan except to the extent it is superseded
by the laws of the United States.
IN WITNESS WHEREOF, the Company has caused this Plan to be
executed by its duly authorized officer and its seal to be affixed hereto,
effective, except as specified to the contrary herein, as of February 1, 1999.
ATTEST: TESSCO TECHNOLOGIES INCORPORATED
By:
- ----------------------------- --------------------------------
Name:
------------------------------
Title:
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10
<PAGE>
TESSCO Technologies Incorporated
ANNUAL MEETING OF SHAREHOLDERS, AUGUST 13, 1999
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints ROBERT B. BARNHILL, JR. and GERALD T. GARLAND,
and each of them, with full power of substitution to each, as proxy, to vote all
shares which the undersigned is entitled to vote at the Annual Meeting of
Shareholders of TESSCO Technologies Incorporated to be held Friday, August 13,
1999 at 10:00 a.m., at the TESSCO Technologies Incorporated Headquarters, 11126
McCormick Road, Hunt Valley, Maryland 21031 and at any adjournments thereof:
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. IT MAY BE REVOKED
AT ANY TIME PRIOR TO ITS EXERCISE BY SENDING WRITTEN NOTICE TO THE SECRETARY OF
THE COMPANY, BY DELIVERING TO THE COMPANY A DULY EXECUTED PROXY BEARING A LATER
DATE OR BY ATTENDING THE MEETING AND VOTING IN PERSON.
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Fold and Detach Here
THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE PERSON SIGNING IT.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
NOMINEES INDICATED AND FOR THE OTHER PROPOSALS.
1. To elect two (2) directors to a three (3) year term ending in 2002
Robert B. Barnhill, Jr. and Benn R. Konsynski
(To withhold authority to vote for an individual nominee,
strike a line through the nominee's name).
<TABLE>
<S> <C>
FOR the election of all nominees listed WITHHOLD AUTHORITY to vote for
(except as marked to the contrary to the right) all nominees listed to the right
[ ] [ ]
</TABLE>
2. To approve an amendment to the Company's 1994 Stock and Incentive Plan
increasing the number of shares available for issuance under the Plan by
300,000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To approve amendment to the Company's 1994 Stock and Incentive Plan
authorizing the issuance of up to 50,000 shares to nonemployee directors.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. To approve adoption of the Company's Team Member Stock Purchase Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. To ratify the election of Arthur Andersen LLP as the Company's independent
public accountants.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
6. To act upon any other matter which may properly come before the Annual
Meeting or any adjournment thereof.
<PAGE>
Receipt of notice of the meeting and proxy statement is hereby acknowledged, and
the terms of the notice and statement are hereby incorporated by reference into
this proxy. The undersigned hereby revokes all proxies heretofore given for said
meeting or any adjournment or adjournments thereof.
(Please sign exactly as your name appears hereon. Executors, administrators,
guardians, officers signing for corporations, trustees and attorneys should give
full title. For joint owners, both owners should sign.)
Date: _________________, 1999
______________________(SEAL)
______________________(SEAL)
Please sign, date and promptly return this proxy in the enclosed envelope. No
postage is required if mailed in the United States.
