Exhibit 10.1

THE SECURITIES REPRESENTED BY THIS OPTION HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES
LAWS OF ANY STATE; THEREFORE, THE TRANSFER OF THIS OPTION IS SUBJECT TO
COMPLIANCE WITH THE CONDITIONS SPECIFIED HEREIN, AND NO SUCH TRANSFER OF THIS
OPTION SHALL BE VALID UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED.

TESSCO TECHNOLOGIES INCORPORATED

STOCK OPTION

THIS STOCK OPTION (this “Option”) is granted by TESSCO Technologies
Incorporated, a Delaware corporation (the “Company”), to _______ (the
“Optionee”) effective as of May 10, 2018 (the “Grant Date”).

RECITALS

A.        The Optionee is a key employee of the Company.  In order to retain the
Optionee and give the Optionee an additional incentive to further the Company’s
growth, development, and financial success, the Compensation Committee of the
Board of Directors of the Company (the “Committee”), pursuant to authority
delegated by the Board of Directors of the Company (the “Board”), has determined
to grant to the Optionee, pursuant to the TESSCO Technologies Incorporated Third
Amended and Restated Stock and Incentive Plan (as heretofore or from time to
time hereafter amended, the “Plan”), an option to purchase 10,000 shares (the
“Option Shares”) of the Company’s Common Stock, par value $.01 per share (the
“Common Stock”), at an exercise price of $17.55 per share (the “Exercise
Price”), which price the Board or Committee has determined to be the fair market
value of the Common Stock as of the Grant Date.

B.         This Option is not intended to, and shall not, constitute or be
treated as an “incentive stock option” within the meaning of Section 422 of the
Internal Revenue Code.

NOW, THEREFORE, to evidence the grant of the option and to set forth the terms
and conditions governing the exercise thereof and the parties’ other agreements
relative thereto, the parties, intending to be legally bound, agree as follows:

SECTION 1.  GRANT, TERM, AND VESTING OF OPTION

1.1       In General.  The Company hereby grants to the Optionee the right, and
the Optionee shall be entitled, to purchase from the Company at any time and
from time to time after the date hereof but not later than 5:00 p.m.  Baltimore
time on May 10, 2024 (the “Expiration Date”), up to 10,000 shares of Common
Stock at the Exercise Price on the terms and subject to the conditions
hereinafter set forth.

1.2       Right to Exercise.  Except as otherwise set forth (and subject to all
of the other conditions and limitations contained) in this SECTION 1, this
Option shall become exercisable with respect to the percentage of the total
number of Option Shares (the “Vested Percentage”) on each of the dates set forth
below (each a “Vesting Date”), provided that the Optionee continues to be
employed by the Company on such Vesting Date:

 

 

 

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(a)        On the first anniversary of the Grant Date:  25% and

(b)        On the corresponding day (i.e., on the 10th day) of each calendar
month following the first anniversary of the Grant Date and continuing for a
total of 36 additional months, an additional 2.0833%, until the fourth
anniversary of the Grant Date, when the total Vested Percentage shall equal
100%.

1.3       Change in Control.

(a)        Accelerated Vesting.  Notwithstanding SECTION 1.2, if there is a
Change in Control of the Company and the Optionee’s employment is terminated
either (x) by the Company other than for Cause (as defined below) and other than
on account of death or Disability (as defined below),  or (y) by the Optionee
for Good Reason (as defined below), and the effective date of such termination
in the case of (x) or (y) occurred or occurs during the period beginning three
(3) months before the date of the Change in Control and ending one (1) year
after the date of the Change in Control, then this Option shall (if not already
so exercisable) become exercisable with respect to 100% of the total number of
Option Shares. For the avoidance of doubt, any change in the identity of the
entity employing Optionee on account of a Change in Control shall not, without
more, constitute termination of employment.

(b)        Company Right to Accelerate Vesting and Establish Accelerated
Exercise Deadline.  If at any time before the Expiration Date, and assuming this
option remains in effect, the Company becomes aware of the occurrence (or
impending occurrence) of any Change in Control, then the Company shall have the
right and option (but not any obligation) to give the Optionee written notice
thereof (a “Change in Control Notice”) as promptly as practicable, setting forth
(if known) the date on or about which the Change in Control is anticipated to
occur.  If a Change in Control Notice is given by the Company to the Optionee
not less than twenty (20) days before (x) the consummation of a Change in
Control described in subsection (e)(i), (e)(ii) or (e)(iii) of this SECTION 1.3
(a “Change in Control Event”), or (y) the actual or anticipated record date or
other date for establishing the holders of Common Stock entitled to the initial
liquidating dividend or other distribution in respect of any Change in Control
described in subsection (e)(iv) of this SECTION 1.3 (a “Company Liquidation”,
and the actual date, the “Liquidating Distribution Record Date”),  and otherwise
in accordance with subsection (d) below, the Company shall have the right and
option (but not any obligation under this SECTION 1.3(b)) (i) to cause the
vesting of this Option to be accelerated (whereupon this Option will become
exercisable with respect to 100% of the total number of Option Shares), such
acceleration to be effective upon, or immediately prior to and conditioned upon,
the occurrence of the Change in Control Event or Liquidating Distribution Record
Date, as applicable, described in or contemplated by the Change in Control
Notice, and on or subject to any other conditions, qualifications or limitations
(the “Additional Conditions”) stated or provided for therein (including the
right to withdraw the Change in Control Notice for any or no reason, and subject
to the right of the Company to waive any Additional Conditions or other
requirements in whole or in part), and (ii) as provided in the Change in Control
Notice, and as a condition to acceleration as contemplated by (i) above, to
terminate this Option, insofar as then remaining unexercised, without further
notice and without consideration of any kind, effective upon, or immediately
prior to and conditioned upon, the occurrence of the Change in Control Event or
Liquidating Distribution Record Date, as applicable, and satisfaction of any
other Additional Conditions not waived by the Company.

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Notwithstanding the foregoing, if and in the event that the term of employment
of the Optionee has terminated or expired as of the date of the giving of the
Change in Control Notice or at any time prior to the Change in Control Event or
Liquidating Distribution Record Date referred to therein, as applicable, but
this Option (and the right to exercise this Option) has not then otherwise
expired by its terms, then the Company shall have the right under this SECTION
1.3(b) to deliver a Change in Control Notice and establish an Accelerated
Exercise Deadline (as defined below) without any corresponding acceleration of
the vesting of this Option (except as the circumstances and SECTION 1.3(a)
hereof may otherwise provide for acceleration of vesting), and this Option shall
then be exercisable only to the extent otherwise exercisable as of the date of
termination of employment (except as the circumstances and SECTION 1.3(a) hereof
may otherwise provide for acceleration, in which case vesting of this Option
will accelerate accordingly), until the first to occur of the Accelerated
Exercise Deadline and the date otherwise provided for hereunder, whereupon this
Option will terminate and expire without consideration of any kind.

(c)        Change in Control Agreement.  In the event of, or if in anticipation
of, a Change in Control (including a Company Liquidation) in which the Company
is not or will not be the surviving or acquiring company, or in which the
Company is or becomes, or will become, a wholly-owned subsidiary of another
company prior to the Expiration Date or other termination of this Option, then:

(i)         if there is no Change in Control Agreement (as defined below) or if
the Change in Control Agreement does not provide for the change, conversion or
exchange of this Option for similar securities of another company (with
equivalent terms and appropriate adjustments as provided for below in the
context of a Reorganization Event, and including terms providing for
acceleration of vesting consistent with SECTION 1.3(a) hereof as respects the
then prior Change in Control of the Company),  then the Company shall deliver a
Change in Control Notice and establish an Accelerated Exercise Deadline, each in
the manner and containing the information required or contemplated by (but not
pursuant to) a Change in Control Notice delivered pursuant to subsection (b)
above, and provide the Optionee with an opportunity to exercise this Option in
accordance with subsection (d) below,  whereupon Optionee shall have the right
during the applicable period to exercise this Option only as to all or any part
of the Option Shares for which otherwise exercisable, unless either (x) the
Optionee then continues to be employed by the Company or (y) the provisions of
SECTION 1.3(a) hereof would so provide or require,  in either of which the
vesting of this Option will accelerate and this Option will also be exercisable
for any additional Option Shares as to which this Option would not otherwise be
exercisable by reason of an insufficient lapse of time, all subject, however, to
the actual consummation of the Change in Control (and in the case of a Company
Liquidation, the occurrence of the Liquidating Distribution Record Date) and
satisfaction of the applicable conditions, and this Option will thereupon
terminate and expire without consideration; and

(ii)       if there is a Change in Control Agreement and if the Change in
Control Agreement provides for the change, conversion or exchange of the shares
under outstanding and unexercised stock options, generally, or this Option, for
similar securities of another company (with equivalent terms and appropriate
adjustments as provided for below in the context of a Reorganization Event, and
including terms providing for acceleration of vesting consistent with SECTION
1.3(a) hereof as respects the then prior Change in Control of the

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Company), then in connection with the Change in Control, in lieu of the vesting
of this Option being accelerated and this Option then terminating to the extent
not exercised as otherwise contemplated by clause (i) of this subsection (c),
then, and unless the Company shall have exercised its right under subsection (b)
above, this Option shall be changed, converted or exchanged in a manner not
inconsistent with the provisions of the Change in Control Agreement for the
adjustment, change, conversion or exchange of such stock and such options, for a
new or replacement option issued by and exercisable for the securities of the
other company (with equivalent terms and appropriate adjustments as provided for
below in the context of a Reorganization Event, and including terms providing
for possible future acceleration of vesting consistent with SECTION 1.3(a)
hereof, as respects the then prior Change in Control of the Company).

Adjustments and determinations under this subsection (c) (including all
determinations regarding Change in Control and the existence and sufficiency of
any Change in Control Agreement, including whether one shall have occurred or
exists)  shall be made by the Committee, whose decisions, including as to what
adjustments or determinations shall be made, and the extent thereof, shall be
final, binding and conclusive.

(d)        Accelerated Exercise Deadline.       As a condition to any
termination of this Option pursuant to or as contemplated by subsection (b) or
subsection (c)(i) of this SECTION 1.3, however, the Company shall afford the
Optionee no less than fifteen (15) days after the date on which the Change in
Control Notice is given to exercise this Option in whole or in part (and, if
applicable, on the assumption that the Option will be accelerated) during a
period ending on a date (the “Accelerated Exercise Deadline”) provided for or
set forth in the Change in Control Notice. In the event that the Optionee does
not deliver a notice of exercise to the Company, or insofar as the Optionee does
not exercise this Option, in either case on or before the Accelerated Exercise
Deadline, then, unless the Board or the Committee (or any successor to either)
in its sole and absolute discretion determines otherwise, this Option will
terminate and expire effective upon, or immediately prior to and conditioned
upon, the occurrence of the Change in Control Event or Liquidating Distribution
Record Date, as applicable, without consideration of any kind.

In order to effect any exercise contemplated by subsection (b) or subsection
(c)(i) of this SECTION 1.3, the Optionee shall deliver a timely notice of
exercise by not later than the Accelerated Exercise Deadline, and then (unless
the notice of exercise expressly states that it is not so conditioned and should
be deemed an exercise of this Option to whatever extent this Option is then
otherwise exercisable or to some lesser extent) the exercise of this Option
effected by such notice of exercise (whether or not explicitly so stated
therein) shall be conditioned upon, and shall be deemed to occur immediately
prior to, the consummation of the Change in Control Event or Liquidating
Distribution Record Date, as applicable, and satisfaction (or waiver by the
Company) of any Additional Conditions. For the avoidance of doubt, any
acceleration of the vesting of this Option (or the right of Optionee to exercise
this Option with respect to any Option Shares vested other than on account of
the passage of time) as described in or contemplated by the Change in Control
Notice (whether delivered pursuant to clause (b) or clause (c)(i) above) may be
deemed by the Company to be effective prior to, but shall not otherwise be
effective unless and until, and shall be conditioned upon, the occurrence or
consummation of the Change in Control Event or Liquidating Distribution Record
Date, as applicable, and satisfaction (or waiver by the Company) of any
Additional Conditions. Any payment of any portion of the Exercise Price
delivered by the

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Optionee in anticipation of an acceleration or termination of this Option in
connection with a Change in Control shall be returned to the Optionee in the
event that the Change in Control does not occur or the conditions to
acceleration are not met for any reason, and the acceptance by the Company of
any such payment in advance shall not be effective to alter the terms hereof.

(e)        Certain Definitions.    For purposes of this Option:

(i)         “Change in Control” means the occurrence of any of the following:

1)         A transaction or series of transactions (other than an offering of
Common Stock to the general public through a registration statement filed with
the Securities and Exchange Commission) whereby any “person” or related “group”
of persons (as such terms are used in Section 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) (other than the Company or
any of its subsidiaries, or Robert B.  Barnhill, Jr., his affiliates, or members
of his family) directly or indirectly acquires beneficial ownership (within the
meaning of Rule 13d-3 under the Exchange Act) of securities of the Company
representing fifty percent (50%) or more of the combined voting power of the
then-outstanding securities of the Company; or

2)         there is a change in the composition of a majority of the Board
within twelve (12) months after any “person” or related “group” of persons (as
such terms are defined above) (other than Robert B.  Barnhill, Jr., his
affiliates, or members of his family) becomes the beneficial owner, directly or
indirectly, of securities of the Company representing thirty percent (30%) or
more of the combined voting power of the then-outstanding securities of the
Company; or

3)         there is consummated (in one transaction or a series of related
transactions, and whether directly involving the Company or indirectly involving
the Company through one or more intermediaries)  any (x) consolidation, merger,
reorganization, share exchange or business combination, or (y) any sale, lease,
exchange, or other transfer of all or a substantial portion of the assets of the
Company,  or (z) the acquisition of assets or stock of another entity, in each
case other than:    a transaction

(a)        which results in the Company’s voting securities outstanding
immediately before the transaction continuing to represent (either by remaining
outstanding or by being converted into voting securities of the Company or the
person that, as a result of the transaction, controls, directly or indirectly,
the Company or owns, directly or indirectly, all or substantially all of the
Company’s assets or otherwise succeeds to the business of the Company (the
Company or such person, the “Successor Entity”)) directly or indirectly, at
least a majority of the combined voting power of the Successor Entity’s
outstanding voting securities immediately after the transaction, and

(b)        after which no person or group beneficially owns voting securities
representing 50% or more of the combined voting power of the Successor Entity;
provided, however, that no person or group shall be treated for these purposes
as

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beneficially owning 50% or more of the combined voting power of the Successor
Entity solely as a result of the voting power held in the Company prior to the
consummation of the transaction;

or

4)         the stockholders of the Company approve a plan or proposal in respect
of any liquidation, dissolution, or divisive reorganization of the Company (a
“Company Liquidation”); and

(ii)       “Change in Control Agreement” means a written plan or agreement
regarding the terms and implementation of a Change in Control in which the
Company is not the surviving or acquiring company, or in which the Company is or
becomes a wholly-owned subsidiary of another company after the effective date of
the Change in Control.

(f)        No Extension of Expiration Date.  Notwithstanding any other provision
of this Option, in no event may this Option be exercised in whole or in part
after the Expiration Date.

1.4       Termination for Cause; Resignation.  If (i) the Optionee’s employment
with the Company is terminated by the Company for Cause (as defined below) or
(ii) the Optionee resigns or otherwise voluntarily terminates his or her
employment with the Company other than for Good Reason (as defined below), then
all rights under this Option shall terminate effective as of the date of such
termination.  For purposes of this Option:

(a)        “Cause” means any of the following, each of which shall also
constitute “gross misconduct” as that term is used in the Plan:

(i)         The Optionee’s conviction of, or a plea of guilty or nolo contendere
to, a felony or a crime involving moral turpitude;

(ii)       The Optionee’s embezzlement or criminal diversion of funds or
property of the Company or any of the Company’s subsidiaries; or

(iii)      Any willful failure by the Optionee to perform the substantial duties
of the Optionee’s position or any other act or failure to act that is reasonably
determined by the Committee to constitute gross misconduct by the Optionee;

and

(b)        “Good Reason” means any of the following:

(i)         Any material adverse change in the Optionee’s duties or reporting
responsibilities or any material reduction in the Optionee’s authority (other
than as a result of Disability of Optioneee), provided the Optionee specifically
objects in writing to the change or reduction within thirty (30) days after the
change or reduction occurs and the Company does not rescind the change or
reduction within a further period of thirty (30) days; or

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(ii)       Any material failure by the Company or its subsidiaries to make a
payment due to the Optionee or to provide the Optionee with a benefit due to the
Optionee, but only if the failure is not cured in all material respects within
fifteen (15) days after the Company receives written notice of such failure.

1.5       Termination Without Cause or for Good Reason.

(a)        If the Optionee’s employment with the Company is terminated by the
Company other than for Cause or Disability or (y) by the Optionee for Good
Reason, then, subject to SECTION 1.3(a), the Optionee shall be entitled to
exercise this Option to the same extent that it would have been exercisable on
the effective date of termination of the Optionee’s employment for a period of
three (3) months thereafter (but in no event later than the Expiration Date),
unless the Board or the Committee in its sole and absolute discretion determines
that this Option should be exercisable to some greater extent or remain
exercisable for some longer period (ending in no event later than the Expiration
Date).

(b)        In the event of any conflict between the provisions of subsection (a)
of this SECTION and SECTION 1.3, the provisions of SECTION 1.3 shall prevail
over and supersede the provisions of subsection (a) of this SECTION.

1.6       Disability.  If the Optionee’s employment with the Company is
terminated as a result of Disability (as defined in the Plan), this Option shall
not terminate or be forfeited and the Optionee shall remain entitled to exercise
this Option to the same extent that it would have been exercisable on the date
of termination of the Optionee’s employment for a period of twelve (12) months
thereafter (but in no event later than the Expiration Date), unless the Board or
the Committee in its sole and absolute discretion determines that this Option
should be exercisable to some greater extent or remain exercisable for some
longer period (ending in no event later than the Expiration Date or, if
applicable, by any earlier Accelerated Exercise Deadline established pursuant to
SECTION 1.3 hereof).

1.7       Death.  In the event that the Optionee remains employed by the Company
at the time of the Optionee’s death, the Optionee’s personal representative or
other successor in interest shall be entitled to exercise this Option to the
same extent that it would have been exercisable on the date of the Optionee’s
death for a period of twelve (12) months thereafter (but in no event later than
the Expiration Date), unless the Board or the Committee in its sole and absolute
discretion determines that this Option should be exercisable to some greater
extent or remain exercisable for some longer period (ending in no event later
than the Expiration Date or, if applicable, by any earlier Accelerated Exercise
Deadline established pursuant to SECTION 1.3 hereof).

1.8       “Employment” As used in this Option, “employment” by or with the
Company includes employment by or with any of the Company’s subsidiaries.

 

SECTION 2.  EXERCISE OF OPTION

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2.1       In General.  In the event the Optionee desires to exercise this Option
with respect to all or any portion of the Option Shares, the Optionee shall give
notice to the Company in substantially the form of Exhibit A (together with any
other representations, warranties, and undertakings that may otherwise be
required by the Company of the Optionee pursuant to the terms of this Option or
the Plan).  Such notice shall state the number of Option Shares with respect to
which this Option is being exercised and shall be accompanied by payment of the
Exercise Price multiplied by the number of Option Shares with respect to which
this Option is being exercised (the “Aggregate Exercise Price”).

2.2       Payment Options.  Unless otherwise permitted by the Board or the
Committee, payment of the Aggregate Exercise Price shall be made in cash or by
check payable to the order of the Company.  Notwithstanding the foregoing, if
authorized by the Board or the Committee in its sole discretion (either
generally in respect of all or a particular class or group of option awards
under the Plan or specifically in respect of this Option), payment of the
Aggregate Exercise Price may also be made in whole or in part:  (i) through the
retention by the Company of Option Shares that would otherwise be issued
pursuant to the exercise of this Option, (ii) by the delivery of shares of
Common Stock already owned by the Optionee with an aggregate Fair Market Value
(as defined below) equal to the Aggregate Exercise Price, or (iii) by any other
form of payment that is acceptable to the Board or the Committee, as the case
may be.  If the Aggregate Exercise Price is paid in the manner described in
clause (i) above, the number of shares to be issued to the Optionee shall be
reduced by the product of (x) the total number of shares to be acquired
(determined without regard to clause (i)) times (y) the quotient of (a) the
Exercise Price divided by (b) the Fair Market Value, which reduction shall
constitute payment of the Exercise Price for the shares acquired pursuant to
clause (i).

2.3       Withholding Taxes.  The Company shall be entitled to require as a
condition of delivery of the shares to be acquired upon exercise of this Option
that the Optionee remit to the Company an amount sufficient to satisfy all
federal, state, and other taxes or withholding requirements that may be imposed
upon the Company (“Tax Obligations”).  Notwithstanding the foregoing, the Board
or the Committee may in its sole discretion authorize payment or other
satisfaction of all or any portion of such Tax Obligations to be made in a
manner similar to one or more of the methods referenced in SECTION 2.2 with
respect to payment of the Aggregate Exercise Price.  Whether or not the Company
requires the Optionee to remit any such amounts, the Company shall have the
right to withhold such amounts from any compensation or other payments otherwise
due to the Optionee.

2.4       Fractional Shares.  The Company shall not be required to issue
fractions of shares upon exercise of this Option.  If any fractional interest in
a share is otherwise deliverable upon the exercise of this Option, the Company
shall purchase the fractional interest for an amount in cash equal to the Fair
Market Value of the fractional interest.

2.5       Limitation on Exercise.  Notwithstanding any other provision of this
Option, this Option shall not be exercisable in whole or in part, and no shares
of Common Stock shall be issuable by the Company in respect of any attempted
exercise, at any time when such exercise or issuance is prohibited by the
Company’s policies then in effect concerning transactions by officers,
directors, or employees in securities of the Company.

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2.6       “Fair Market Value”.

(a)        For purposes of this SECTION 2, except as provided in subsection (b)
of this SECTION 2.6, “Fair Market Value” means the last reported sales price of
the Common Stock on any national securities exchange or quotation system as of
the day before the date of exercise, or the average of the closing bid and asked
prices of the Common Stock as reported by the Nasdaq Stock Market as of the day
before the date of exercise, or, if not reported by Nasdaq, the fair market
value of a share of Common Stock as of the day before the date of exercise as
determined in good faith by the Board or the Committee.

(b)        Notwithstanding subsection (a), in the case of any exercise of this
Option in connection with or conditioned upon the consummation of a Change in
Control Transaction in which, or in connection with which, the Common Stock of
the Company generally is valued for purposes of its acquisition, conversion, or
exchange in such Change in Control Transaction, “Fair Market Value” for purposes
hereof shall be equal to the value established for the Common Stock in such
Change in Control Transaction, but in any event such valuation shall not be
effective unless and until the conditions to such Change in Control Transaction
and the implementation of such value for the Common Stock are satisfied (or
deemed satisfied in accordance with the terms hereof, for purposes of exercise
of this Option).

2.7       Issuance Taxes.  The issuance of any stock certificates upon exercise
of this Option shall be made without charge to the exercising holder for any
stamp or similar tax imposed with respect thereto.  The Company shall not,
however, be required to pay any such tax that may be payable on account of the
issuance and delivery of stock certificates in any name other than that of the
registered holder of this Option, and the Company shall not be required to issue
or deliver any such stock certificate unless and until the person or persons
requesting the issue thereof have paid to the Company the amount of such tax or
have established to the satisfaction of the Company that such tax has been paid.

SECTION 3.  RESTRICTIONS ON TRANSFER; LEGENDS

3.1       Transfer Restrictions; Opinion of Counsel.  Neither this Option nor
all or any part of the Optionee’s rights hereunder may be pledged, hypothecated,
sold, assigned, transferred, or otherwise encumbered or disposed of, either
voluntarily or by operation of law (whether by virtue of execution, attachment,
or similar process) (each of the foregoing a “Transfer”).  No shares issued upon
the exercise of this Option may be Transferred, other than by will or by
operation of the laws of descent and distribution, unless the transferor first
delivers to the Company (if the Company so requests or if a legend appearing on
the certificate evidencing, or a similar restriction contained in the books of
account reflecting, shares of Common Stock to be so issued requires) an opinion
of counsel reasonably satisfactory to counsel for the Company to the effect that
such Transfer is permitted under applicable federal and state securities laws. 
Any purported Transfer in violation of the foregoing restrictions shall be null
and void and without effect.

3.2       Option Legends.  This Option and each option issued in exchange for or
upon transfer of this Option shall (unless otherwise permitted by the provisions
of this SECTION 3) be stamped or otherwise imprinted with a legend in
substantially the following form:

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The securities represented by this Option have not been registered under the
Securities Act of 1933, as amended, or the securities laws of any state;
therefore, the transfer of this Option is subject to compliance with the
conditions specified herein, and no transfer of this Option shall be valid or
effective until such conditions have been fulfilled.

SECTION 4.  ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES ISSUABLE UPON
EXERCISE

4.1       Stock Dividends, Splits, Etc.  In the event that (i) the authorized
shares of Common Stock are subdivided into a greater, or combined into a lesser,
number of shares of Common Stock (whether with or without par value) or (ii) the
Company issues additional Common Stock as a dividend:

(a)        The Exercise Price shall be decreased or increased, as the case may
be, to an amount which bears the same relation to the Exercise Price in effect
immediately before such subdivision, combination, or dividend as the total
number of shares of Common Stock outstanding immediately before such
subdivision, combination, or dividend bears to the total number of shares of
Common Stock outstanding immediately after such subdivision, combination, or
dividend; and

(b)        The number of shares issuable upon the exercise of this Option shall
be adjusted by multiplying the number of shares so issuable immediately before
the adjustment of the Exercise Price described in subsection (a) by the Exercise
Price immediately before such adjustment and dividing the product so obtained by
the Exercise Price after such adjustment.

4.2       Reorganization Events.  In case of any capital reorganization,
reclassification of the Common Stock, consolidation of the Company with, or the
merger of the Company into, any other corporation or entity as may be permitted
by law, or the sale of all or substantially all of the property and assets of
the Company to any other corporation or entity (each a “Reorganization Event”)
that affects the Common Stock in such a manner that an adjustment is necessary
or appropriate in order to prevent dilution or enlargement of the benefits
intended by this Option, the Committee (or any successor thereto) shall, in such
manner as it may deem equitable but subject otherwise to the terms of this
Option effective upon or in anticipation of a Change in Control, adjust any or
all of:  (A) the number and type of securities or other property that thereafter
shall be the subject of this Option and (B) the exercise price with respect to
this Option, and after such Reorganization Event this Option (or any replacement
or substitution therefor that is issued as a consequence of the Reorganization
Event), as so adjusted, shall remain outstanding and continue to vest and be and
become exercisable (but in no event beyond the Expiration Date) for shares of
stock or other securities or property of the Company, or of the corporation or
entity resulting from or surviving, or acquiring the assets of the Company
pursuant to, such Reorganization Event.  The subdivision or combination of the
authorized shares of Common Stock into a greater or lesser number of shares of
Common Stock (whether with or without par value) shall not be deemed a
reclassification of the Common Stock for the purposes of this Section 4.2.

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4.3       Notice of Certain Actions.  In addition to such other notices as may
be required of the Company under SECTION 1.3(b) or (c) in respect of a Change in
Control, if any date before the Expiration Date is fixed by the Company as the
date as of which holders of Common Stock (i) shall be entitled to receive any
dividend or any distribution upon the Common Stock of the Company other than a
dividend payable in cash or in Common Stock, (ii) shall be offered any
subscription or other rights, or (iii) shall be entitled to participate in any
Reorganization Event, the Company shall cause notice thereof (specifying such
date) to be mailed to the registered holder of this Option at such holder’s
address appearing on the books of the Company at least fifteen (15) days before
the date as of which such holders of Common Stock are to be determined.

4.4       Notice of Adjustment.  Whenever the Exercise Price or the number or
shares issuable upon exercise of this Option is adjusted as required by the
provisions of this SECTION 4 and such adjustment is not otherwise publicly
announced, the Company shall endeavor to promptly mail a notice setting forth
the adjusted Exercise Price and the adjusted number of shares for which this
Option is exercisable to the registered holder of this Option at such holder’s
last address as it appears on the books of the Company, but failure to give or
receive such notice, or any defects therein or in the mailing thereof, shall not
affect such adjustments.

4.5       Reservation of Sufficient Shares.  The Company shall at all times
reserve and keep available out of its authorized but unissued Common Stock and
for the purpose of effecting the issuance of shares upon the exercise of this
Option such number of its duly authorized shares of Common Stock as shall from
time to time be sufficient for such purpose.  If at any time the number of
authorized but unissued shares of Common Stock is not sufficient to effect the
issuance of shares upon the exercise of this Option at the Exercise Price then
in effect, the Company shall take such corporate action as may, in the opinion
of its counsel, be reasonably necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for this
purpose.

4.6       Exercise Price Not Less Than Par Value.  As a condition precedent to
the taking of any action that would cause an adjustment reducing the
then-prevailing Exercise Price below the then-par value, if any, per share of
the Common Stock issuable upon exercise of this Option, the Company shall take
such corporate action as may, in the opinion of its counsel, be reasonably
necessary in order that the Company may validly and legally issue its Common
Stock at the adjusted Exercise Price upon any subsequent exercise of this
Option.

4.7       Registration and Approval.

(a)        If any shares of the Common Stock reserved or to be reserved for the
purpose of issuance upon the exercise of this Option require registration with
or approval of any governmental authority under any federal or state law before
such shares may be validly issued upon exercise of this Option, then the Company
covenants that it will in good faith and as expeditiously as reasonably possible
endeavor to secure such registration or approval, as the case may be; provided,
however, that this provision shall not require the Company (i) to actually
secure such registration or approval (but merely to endeavor in good faith and
as expeditiously as reasonably possible to do so) or (ii) to endeavor to secure
such registration or approval in order (x) to issue shares upon exercise of this
Option if such shares can lawfully be issued pursuant to one or more exemptions
from registration under applicable federal and state securities laws (whether

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or not as a consequence thereof such shares constitute “restricted securities”
or the holder of such shares is unable to transfer such shares absent
registration or the availability of a suitable exemption from registration under
such laws) or (y) to enable any person to sell or distribute shares received
upon exercise of this Option in a transaction involving a public offering within
the meaning of the Securities Act as then in effect.

(b)        In the event that shares of Common Stock issued upon exercise of this
Option are not to be issued pursuant to an effective Registration Statement
under the Securities Act, or if such shares otherwise are or would be restricted
securities in the hands of the Optionee upon issuance, then the Company may
require, as a condition to exercise by the Optionee of this Option, such
representations and undertakings on the part of the Optionee as may be
reasonably required by the Company to allow for such issuance without violation
of, and to assure continued compliance by the Optionee following such issuance
with, applicable law, and the certificate(s) evidencing such shares, or the
books of account reflecting such shares, may bear or be marked with an
appropriate legend as to any applicable restrictions on transfer, or similar
restrictions, as may be so required.

4.8       Shares Fully Paid and Nonassessable.  The Company covenants that all
shares issued upon exercise of this Option will upon issuance be fully paid and
nonassessable.

SECTION 5.  MISCELLANEOUS

5.1       Entire Agreement.  This Option (together with the Plan, to which it is
and shall remain subject) constitutes the entire agreement and understanding
between the parties hereto, and supersedes any prior agreement or understanding,
relating to the subject matter of this Option.

5.2       Conflicts with Plan; Amendments.  This Agreement has been granted as
an “Option” (and, in particular, a “Non-Qualified Option”) under the Plan and
shall be construed consistently with the Plan.  In the event of any clear
conflict between the provisions of the Plan and this Option, the provisions of
the Plan shall control.  The Committee has the right, in its sole discretion, to
amend this Option from time to time in any manner for the purpose of promoting
the objectives of the Plan but only if all other Non-Qualified Options under the
Plan that are then in effect at the time of such amendment are also similarly
amended with substantially the same effect.  Any such amendment of this Option
will, upon adoption by the Committee, become and be binding and conclusive on
all persons affected by it without requirement for consent or other action by
any such person.  The Company will give the Optionee or other registered holder
of this Option written notice of any such amendment of this Option as promptly
as practicable after it is adopted.

5.3       No Rights of Stockholder.  The Optionee shall not be deemed a
stockholder of the Company for any purpose until the shares issuable upon
exercise of this Option have been issued to the Optionee upon exercise of this
Option.  The existence of this Option shall not affect in any way the right or
power of the Company or its stockholders to make or authorize any adjustments,
recapitalizations, reorganizations, or other changes in the Company’s capital
structure or its business, or any merger or consolidation of the Company, or any
issue of bonds, debentures, or shares of capital stock with a preference ahead
of, or convertible into, or otherwise affecting the Common Stock or rights
thereof, or dissolution or liquidation of the Company, or any

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sale or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or otherwise.

5.4       Notices.  Any notice or communication required or permitted hereunder
shall be sufficiently given if delivered in person or by commercial courier
service or sent by first class mail, postage prepaid:

(a)        If to the Company, addressed to it at 11126 McCormick Road, Hunt
Valley, MD 21031, marked for the attention of the President, and

(b)        If to the Optionee, to the address set forth below Optionee’s
signature,

or in either case to such other address as any party shall notify the other in
accordance with this SECTION 5.4.

5.5       Governing Law.  This Option shall be governed by and construed in
accordance with the federal laws of the United States and the laws of the State
of Delaware (without regard to any provision that would result in the
application of the laws of any other state or jurisdiction).

5.6       Headings.  The descriptive headings in this Option are inserted for
convenience of reference only and do not constitute a part of this Agreement.

5.7       Incorporation of Recitals and Exhibits.  The recitals to this Option
and any exhibits and schedules hereto are a material part of and by this
reference are hereby incorporated into this Option.

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IN WITNESS WHEREOF, the parties have caused this Stock Option to be signed under
seal as of the date first above written.

 

 

 

 

 

ATTEST/WITNESS:

    

TESSCO TECHNOLOGIES INCORPORATED

 

 

 

 

 

By:

 

(SEAL)

 

 

 

Murray Wright

 

 

 

President and Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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