**Exhibit 10.1**

** **

THIRD MODIFICATION AGREEMENT

 

THIS THIRD MODIFICATIONAGREEMENT (this “Agreement”) is made effective as of July 22, 2009, by andamong (a) TESSCO TECHNOLOGIES INCORPORATED, a Delaware corporation (“TESSCO”),TESSCO SERVICE SOLUTIONS, INC., a Delaware corporation, TESSCO INCORPORATED, aDelaware corporation, TESSCO COMMUNICATIONS INCORPORATED,a Delawarecorporation, WIRELESS SOLUTIONS INCORPORATED, a Maryland corporation, TESSCOBUSINESS SERVICES, LLC, a Delaware limited liability company, TESSCO INTEGRATEDSOLUTIONS, LLC, a Delaware limited liability company, and GW SERVICE SOLUTIONS,INC., a Delaware corporation (the aforementioned entities, including TESSCO,being hereinafter called collectively the “Borrowers”); (b) SUNTRUST BANK and WACHOVIA BANK,NATIONAL ASSOCIATION, as Lenders (in such capacity, the “Lenders”); and (c) SUNTRUSTBANK, as Administrative Agent (in such capacity, the “Agent”).

 

RECITALS

 

Pursuant to a CreditAgreement dated as of May 31, 2007 by and among the Borrowers and otherthen existing borrowers, the Lenders, and the Agent (as the same may from timeto time be amended, restated, supplemented, or otherwise modified, the “CreditAgreement”), the Lenders agreed to make available to the Borrowers andother then existing borrowers arevolving creditfacility pursuant to which the Lenders would make loans and other creditaccommodations (collectively, the “Loans”) to or for the benefit of the Borrowersand other then existing borrowers in an aggregate principal amount not to exceed$50,000,000 at any one time outstanding (as increased or decreased, the “Revolving Credit Facility”). The Borrowers’ obligation to repaythe Loans with interest is evidenced by the Borrowers’ Revolving Credit Notedated May 31, 2007 from the Borrowers made payable to the Lenders in theprincipal amount of up to $50,000,000 (as the same may from time to time beamended, restated, supplemented, or otherwise modified, the “Note”).

 

As used herein, the term “Loan Documents” means collectively, the Credit Agreement, the Note,and all other documents now or hereafter executed and delivered by theBorrowers or any other party or parties to evidence, secure, or guarantee, orin connection with, the Revolving Credit Facility.

 

Pursuant to a FirstModification Agreement dated as of June 30, 2008, the parties agreed to makecertain changes to the Credit Agreement.

 

Pursuant to a SecondModification Agreement dated as of November 26,2008, the partiesagreed to amend certain financial covenants and make certain other changes tothe Credit Agreement.

 

With the knowledge andconsent of the Lenders, certain previously existing borrowers engaged in aninternal restructuring (the “Internal Restructuring”) which resulted in TESSCOIntegrated Solutions, L.P., a Delaware limited partnership, being converted intoa Delaware limited liability company, now known as TESSCO Integrated Solutions,LLC, and pursuant to which TESSCO Supply Chain Services, LLC and TESSCO ProductSolutions, LLC, each a Delaware limited liability company, each merged intoTESSCO Service Solutions, Inc., a Delaware corporation, therebyterminating the existence of the two limited liability companies.

 

The Borrowers have nowrequested that the Lenders and the Agent (a) decrease the maximumprincipal amount of the Revolving Credit Facility, (b) modify certainfinancial covenants, and (c) make certain additional modifications to theLoan Documents (including modifications providing for the extension of the termof the Revolving Credit Facility), and the Lenders and the Agent have agreed todo so, subject to and upon the terms and conditions hereinafter set forth.

 

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AGREEMENTS

 

Now, therefore, inconsideration of the premises and the mutual agreements herein contained, andfor other good and valuable consideration, receipt of which is herebyacknowledged, the parties hereto agree as follows:

 

1.                                                 Recitals; Defined Terms. The parties hereto acknowledge that the aboveRecitals are true and correct and agree that the same are incorporated herein.Unless the context clearly indicates otherwise, each term used in thisAgreement which is defined in the Recitals shall have the meaning given to suchterm in the Recitals, and each capitalized term used herein which is nototherwise defined herein shall have the meaning given to such term in theCredit Agreement.

 

2.                                                 Decrease in PrincipalAmount of RevolvingCredit Facility. The Lender hereby agrees to decrease the aggregateprincipal amount which may be advanced and be outstanding under the Revolving Credit Facility from$50,000,000 to $35,000,000. The Revolving Credit Facility, as decreased, shallbe disbursed to the Borrowers subject to and in accordance with the terms ofthe Credit Agreement, as amended hereby and shall be evidenced by and repaid inaccordance with the provisions of the Note, as amended hereby. As used in theCredit Agreement and each of the other Loan Documents, the term “RevolvingCredit Facility”shall mean the Revolving Credit Facility as decreased to a maximum of$35,000,000 at any one time outstanding. The Borrowers, jointly and severally,promise to pay to the Lender, at the times and in the manner set forth in theNote, as amended hereby, the principal amount of the Revolving Credit Facility,as decreased, or so much thereof as shall be advanced and remain outstanding,together with interest as set forth in the Note.

 

3.                                                 Amendments toCredit Agreement.

 

(a)                                            Effective as of the date hereof, thedefinition of “Aggregate Commitment” appearing in Section 1.1 of the Credit Agreement is hereby deleted, and thefollowing is inserted in lieu thereof:

 

““AggregateCommitment” meansthe aggregate amount of the Lenders’ Commitments hereunder, as such amount may he reduced or modified at any time orfrom time to time pursuant to the terms hereof. As of July 22, 2009, theAggregate Commitment shall be Thirty-Five Million Dollars ($35,000,000).”

 

(b)                                           Effective as of the date hereof, thedefinition of “Applicable Margin” appearing in Section 1.1 of the Credit Agreement is hereby deleted, and thefollowing is inserted in lieu thereof:

 

““ApplicableMargin” shall mean (a) the margin added to the Libor Index to obtain the interest rate for the outstanding Loans under theRevolving Credit Facility, and (b) the margin used to calculate the UnusedAvailability Fee, all as hereinafter provided. The Applicable Margin for eachfiscal quarter shall be determined by reference to the Borrowers, ratio ofFunded Debt to EBITDA as of the end of the fiscal quarter immediately precedingthe delivery of the applicable Officer’s Compliance Certificate as follows:

 
| ** ** | ** ** | **Funded Debt to**                                              | ** ** | ** **                 | ** ** | **Unused**                | ** ** |
|------------|------------|-----------------------------------------------------------------|------------|----------------------------|------------|---------------------------|------------|
| **Level**  | ** ** | **EBITDA**                                                      | ** ** | **Applicable Margin** | ** ** | **Availability Fee** | ** ** |
| I          |       | Greater than or equal  to 2.0 to 1.0                            |       | 3.25                       | %          | .500                      | %          |
| II         |       | Greater than or equal  to I.5 to 1.0 but  less than 2.0  to 1.0 |       | 3.00                       | %          | .375                      | %          |
| III        |       | Greater than or equal  to 1.0 to 1.0 but less than 1.5 to 1.0   |       | 2.50                       | %          | .250                      | %          |
| IV         |       | Less than 1.0 to 1.0                                            |       | 2.25                       | %          | .250                      | %          |

 

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Adjustments, if any, inthe Applicable Margin shall be made by the Agent on the tenth (10th) BusinessDay after receipt by the Agent of quarterly financial statements for theBorrowers and their Subsidiaries and the accompanying Officer’s ComplianceCertificate setting forth the ratio of Funded Debt to EBITDA of the Borrowersand their Subsidiaries as of the most recent fiscal quarter end. Subject to Section 4.1(d),in the event the Borrowers fail to deliver such financial statements andcertificate within the time required by Section 7.2 hereof, the ApplicableMargin shall be the highest Applicable Margin set forth above until thedelivery of such financial statements and certificate. As of July 22,2009, the Applicable Margin is at Level IV.

 

(c)                                                Effective as of the date hereof, thedefinition of “Borrowing Base” appearing in Section 1.1 of theCredit Agreement is hereby amended by deleting the number “$15,000,000”appearing in subsection (b) thereof and substituting in lieu thereof thenumber “$10,500,000”.

 

(d)                                               Effective as of the effective date ofthis Agreement, the definition of “L/C Commitment” appearing in Section 1.1of the Credit Agreement is hereby deleted, and the following is inserted inlieu thereof:

 

““L/C Commitment” ThreeMillion Five Hundred Thousand Dollars ($3,500,000).”

 

(e)                                                Effective as of the effective date ofthis Agreement, the following definition is hereby added to Section 1.1:

 

““Unused AvailabilityFee” shall have the meaning given to such term in Section 4.2.”

 

(f)                                                  Effective as of the effective date ofthis Agreement, the date “May 30, 2010” appearing in Section 2.6is hereby deleted, and the date “May 31, 2012” is hereby inserted in lieuthereof. The Scheduled Maturity Date of the Revolving Credit Facility is herebyextended accordingly.

 

(g)                                               Effective as of the effective date ofthis Agreement, existing Section 4.1(c) is hereby deleted, andthe following is inserted in lieu thereof:

 

“[Intentionally Deleted]”

 

(h)                                               Effective as of the effective date ofthis Agreement, existing Section 4.2(b) is hereby deleted, andthe following is inserted in lieu thereof:

 

“(b) UnusedAvailability Fee. At the end of each fiscal quarter of the Borrowers, andon the Termination Date, the Borrowers shall pay to the Agent, in arrears, forthe ratable benefit of the Lenders, a facility fee equal to the ApplicableMargin per annum on the daily unused portion of the Credit Facility for theprevious quarter. For purposes of the calculation of this fee, outstanding

 

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L/C obligations will betreated as outstanding Loans.”

 

(i)                                     Effective as of the effective date ofthis Agreement, Section 9.1 of the Credit Agreement is hereby deleted, and thefollowing is inserted in lieu thereof:

 

From and including September 30,2009, through the Scheduled Maturity Date, as measured at the end of each ofthe Borrowers’ fiscal quarters, maintain a combined Tangible Net Worth of notless than $47,000,000; provided, however, that (a) in the eventthat, during fiscal year 2011, the Borrowers make a goodwill payment inconnection with its purchase of the non-cash assets and business of TerraWaveSolutions, Ltd, and/or Giga Wave Technologies Limited, commencing on firstmeasurement date following such payment, the Borrowers’ minimum Tangible NetWorth requirement shall be reduced by the lesser of the amount of such paymentor $3,000,000; and (b) commencing on March 31, 2012, the Borrower’sminimum Tangible Net Worth requirement shall be increased by an amount equal tofifty percent (50%) of the Borrowers’ combined net income after applicabletaxes for the year ending March 31, 2012.

 

(j)            Effective as of the effective dateof this Agreement, Sections 9.4 and 9.5 of the Credit Agreement are herebydeleted, and the following is inserted in lieu thereof:

 

“SECTION 9.4 Maximum FundedDebt/EBITDA. Maintain a ratio of (a) Funded Debt, as measured at the end ofeach of the Borrowers’ fiscal quarters, to (b) EBITDA, as measured at theend of each of the Borrowers’ fiscal quarters on a trailing four-quarter basis,of no more than 2.50:1:00.

 

(k)                                  Effective as of the effective date ofthis Agreement, Section 10.7 of the Credit Agreement is hereby deleted, and thefollowing is inserted in lieu thereof:

 

SECTION 10.7. Limitationson Dividends and Distributions. Declare or pay any dividends upon any of its capitalstock; purchase, redeem, retire or otherwise acquire, directly or indirectly,any shares of its capital stock, or make any distribution of cash, property orassets among the holders of shares of its capital stock, or make any change inits capital structure: provided that, (a) any Subsidiary (including any Subsidiarythat is also a Borrower) may pay cash dividends to any of the Borrowers, (b) theBorrowers may pay additional cash dividends not to exceed $2,500,000 in theaggregate during any 12-month period so long as after giving effect to any suchdividends, no Event of Default shall occur as a result thereof, and (c) theBorrowers may purchase up to $25,000,000 of their issued and outstanding stockin the aggregate during the term of the Credit Facility, of which as of July 20,2009, $13,303,920 has been repurchased.

 

(l)                                     Effective as of the effective date ofthis Agreement, Schedule 1 to the Credit Agreement is hereby deleted, and thefollowing is inserted in lieu thereof:

 

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Schedule 1

 

(Lenders andCommitments)

 
| **LENDER**                               | ** ** | **COMMITMENT  PERCENTAGE** | ** ** | **COMMITMENT** | ** ** |
|------------------------------------------|------------|----------------------------|------------|----------------|------------|
| SunTrust  Bank                           |       | 70                         | %          | $              | 24,500,000 | ** ** |
| 120  East Baltimore Street               | ** ** | ** **                 | ** ** | ** **     | ** ** |
| Baltimore,  Maryland 21202               |       | ** **                 | ** ** | ** **     | ** ** |
| Attn:  Gregory Farno, Sr. Vice President |       |                       |       |           | ** ** |
| Telephone  No. 410-986-1673              |       |                       |       |           | ** ** |
| Telecopy  No. 410-986-1927               |       |                       |       |           | ** ** |
|                                     |       |                       |       |           | ** ** |
| Wachovia  Bank, National Association     |       | 30                         | %          | $              | 10,500,000 | ** ** |
| 7  St. Paul Street, 2nd Floor       |       |                       |       |           | ** ** |
| Baltimore,  Maryland 21202               |       |                       |       |           | ** ** |
| Attn:  Lucy C. Campbell, Vice President  |       |                       |       |           | ** ** |
| Telephone  No.: 410-332-5242             |       |                       |       |           | ** ** |
| Telecopy  No. 410-539-0136               |       |                       |       |           | ** ** |

 

(m)                               The parties to the Credit Agreementacknowledge the occurrence of the Internal Restructuring and that the borrowersparty to the Credit Agreement and the Note are now the Borrowers.

 

4.                                                 Amendments to Note.

 

(a)                                      The reference in the first full paragraphof the Note to “TESSCO Integrated Solutions, L.P., a Delaware limitedpartnership” is hereby deleted and in lieu thereof is inserted “TESSCOIntegrated Solutions, LLC, a Delaware limited liability company”, and thereferences in the first full paragraph of the Note to “TESSCO Supply ChainServices, LLC” and “TESSCO Product Solutions, LLC” are hereby deleted.

 

(b)                                     Effective as of the date hereof, thenumber “$50,000,000” appearing in the upper lefthand corner of the Note ishereby deleted, and the number “$35,000,000” is hereby inserted in lieuthereof.

 

(c)                                      Effective as of the date hereof, thephrase “FIFTY MILLION DOLLARS ($50,000,000)” appearing in the first paragraphof the Note is hereby deleted, and the phrase “THIRTY-FIVE MILLION DOLLARS($35,000,000)” is hereby inserted in lieu thereof.

 

(d)                                     Effective as of the date of this Agreement, the secondsentence of Section 3 of the Note is hereby deleted, and the following isinserted in lieu thereof:

 

“The entire unpaidprincipal balance of this Note, together with all accrued and unpaid interestthereon, shall be due and payable on the Scheduled Maturity Date.”

 

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5.                                            Representations and Warranties. In order to induce the Lenders and the Agentto enter into this Agreement, the Borrowers represent and warrant to theLenders and the Agent that as of the date hereof (a) no Event of Defaultexists under the provisions of the Loan Documents, (b) except as tomatters of which the Borrowers have advised the Agent in a writing and whichhave been acknowledged by the Agent, all of the representations and warrantiesof the Borrowers in the Loan Documents are true and correct on the date hereofas if the same were made on the date hereof (provided that any representationor warranty that speaks “as of the Closing Date” or as of any other specificdate shall continue to speak as of such date, notwithstanding), (c) nomaterial adverse change has occurred in the business, financial condition,prospects or operations of the Borrowers since the date of the most recentfinancial statement of the Borrowers furnished to the Lenders and the Agent inaccordance with the provisions of the Loan Documents, and (d) thisAgreement constitutes the legal, valid and binding obligation of the Borrowers,jointly and severally enforceable in accordance with its terms, except as suchenforcement may be limited by bankruptcy, insolvency, reorganization,moratorium or similar state or federal debtor relief laws from time to time ineffect which affect the enforcement of creditors’ rights in general and theavailability of equitable remedies. If any of the foregoing representations andwarranties shall prove to be false, incorrect or misleading in any materialrespect, the Lenders and the Agent may, in their absolute and sole discretion,declare that a default has occurred and exists under the provisions of the LoanDocuments, and the Lenders and the Agent shall he entitled to all of the rightsand remedies set forth in the Loan Documents as the result of the occurrence ofsuch default.

 

6.                                            Ratificationand No Novation.The Borrowers hereby ratify and confirm all of their obligations, liabilitiesand indebtedness under the provisions of the Credit Agreement, the Note, andthe other Loan Documents, as the same may be amended and modified by thisAgreement. The Lenders, the Agent, and the Borrowers agree that it is theirintention that nothing herein shall be construed to extinguish, release ordischarge or constitute, create or effect a novation of, or an agreement toextinguish any of the obligations, indebtedness and liabilities of theBorrowers or any other party under the provisions of the Loan Documents. TheBorrowers agree that all of the provisions of the Credit Agreement and theother Loan Documents shall remain and continue in full force and effect as thesame may be modified and amended by this Agreement. In the event of anyconflict between the provisions of this Agreement and the provisions of theLoan Documents, the provisions of this Agreement shall control.

 

7.                                            Fees, Costs andExpenses. In consideration of the agreement ofthe Lenders to enter into this Agreement, (a) the Borrowers shall pay tothe Agent on the date hereof, for the ratable benefit of the Lenders, an amendmentfee in the amount of $175,000, and (b) the Borrowers reasonably shall payto the Agent and the Lenders on demand all costs and expenses both now andhereafter paid or incurred with respect to the preparation, negotiation,execution, administration and enforcement of this Agreement and all documentsrelated thereto, including, without limitation, reasonable attorney’s fees andexpenses, recording costs and costs of record searches.

 

8.                                            Applicable Law. This Agreement shall be construed inaccordance with and governed by the laws of the State of Maryland.

 

9.                                            Binding Effect. This Agreement shall be binding upon andinure to the benefit of the Lenders, the Agent, and the Borrowers, and their respectivesuccessors and assigns.

 

[Remainder of Page IntentionallyLeft Blank]

 

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IN WITNESS WHEREOF, the parties hereto have eachcaused this Agreement to be executed and sealed, the day and year first abovewritten.

 
| WITNESS:            |   | BORROWERS:                          |
|---------------------|--------|-------------------------------------|
|                |   |                                |
|                |   | TESSCO TECHNOLOGIES  INCORPORATED   |
|                |   |                                |
|                |   |                                |
| /s/  David M. Young |   | By:                                 | /s/ Robert B. Barnhill, Jr. |
|                |   |                                | Robert  B. Barnhill, Jr. |
|                |   |                                | President  and Chief Executive Officer |
|                |   |                                |
|                |   |                                |
|                |   | TESSCO SERVICE SOLUTIONS,  INC.     |
|                |   |                                |
|                |   |                                |
| /s/  David M. Young |   | By:                                 | /s/ Robert B. Barnhill, Jr. |
|                |   |                                | Robert  B. Barnhill, Jr. |
|                |   |                                | President |
|                |   |                                |   |
|                |   |                                |   |
|                |   | TESSCO INCORPORATED                 |
|                |   |                                |
|                |   |                                |
| /s/  David M. Young |   | By:                                 | /s/ Robert B. Barnhill, Jr. |
|                |   |                                | Robert  B. Barnhill, Jr. |
|                |   |                                | President |
|                |   |                                |
|                |   |                                |
|                |   | TESSCO COMMUNICATIONS  INCORPORATED |
|                |   |                                |
|                |   |                                |
| /s/  David M. Young |   | By:                                 | /s/ Robert B. Barnhill, Jr. |
|                |   |                                | Robert  B. Barnhill, Jr. |
|                |   |                                | President |
|                |   |                                |
|                |   |                                |
|                |   | WIRELESS SOLUTIONS  INCORPORATED    |
|                |   |                                |
|                |   |                                |
| /s/  David M. Young |   | By:                                 | /s/ Robert B. Barnhill, Jr. |
|                |   |                                | Robert  B. Barnhill, Jr. |
|                |   |                                | President |

 

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|        |   | ADMINISTRATIVE AGENT: |
|-------------|--------|-----------------------|
|        |   |                  |
|        |   | SUNTRUST BANK         |
|        |   |                  |
|        |   |                  |
| [ILLEGIBLE] |   | By:                   | /s/ Gregory Farno |
|        |   |                  | Gregory  Farno |
|        |   |                  | Senior  Vice President |

 

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