Exhibit 10.1


 


THIRD MODIFICATION AGREEMENT


 


THIS THIRD MODIFICATION
AGREEMENT (this “Agreement”) is made effective as of July 22, 2009, by and
among (a) TESSCO TECHNOLOGIES INCORPORATED, a Delaware corporation (“TESSCO”),
TESSCO SERVICE SOLUTIONS, INC., a Delaware corporation, TESSCO INCORPORATED, a
Delaware corporation, TESSCO COMMUNICATIONS INCORPORATED,
a Delaware
corporation, WIRELESS SOLUTIONS INCORPORATED, a Maryland corporation, TESSCO
BUSINESS SERVICES, LLC, a Delaware limited liability company, TESSCO INTEGRATED
SOLUTIONS, 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) SUNTRUST
BANK, as Administrative Agent (in such capacity, the “Agent”).


 


RECITALS


 


Pursuant to a Credit
Agreement dated as of May 31, 2007 by and among the Borrowers and other
then existing borrowers, the Lenders, and the Agent (as the same may from time
to time be amended, restated, supplemented, or otherwise modified, the “Credit
Agreement”), the Lenders agreed to make available to the Borrowers and
other then existing borrowers a
revolving credit
facility pursuant to which the Lenders would make loans and other credit
accommodations (collectively, the “Loans”) to or for the benefit of the Borrowers
and 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 repay
the Loans with interest is evidenced by the Borrowers’ Revolving Credit Note
dated May 31, 2007 from the Borrowers made payable to the Lenders in the
principal amount of up to $50,000,000 (as the same may from time to time be
amended, 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 the
Borrowers or any other party or parties to evidence, secure, or guarantee, or
in connection with, the Revolving Credit Facility.


 


Pursuant to a First
Modification Agreement dated as of June 30, 2008, the parties agreed to make
certain changes to the Credit Agreement.


 


Pursuant to a Second
Modification Agreement dated as of November 26,
2008, the parties
agreed to amend certain financial covenants and make certain other changes to
the Credit Agreement.


 


With the knowledge and
consent of the Lenders, certain previously existing borrowers engaged in an
internal restructuring (the “Internal Restructuring”) which resulted in TESSCO
Integrated Solutions, L.P., a Delaware limited partnership, being converted into
a Delaware limited liability company, now known as TESSCO Integrated Solutions,
LLC, and pursuant to which TESSCO Supply Chain Services, LLC and TESSCO Product
Solutions, LLC, each a Delaware limited liability company, each merged into
TESSCO Service Solutions, Inc., a Delaware corporation, thereby
terminating the existence of the two limited liability companies.


 


The Borrowers have now
requested that the Lenders and the Agent (a) decrease the maximum
principal amount of the Revolving Credit Facility, (b) modify certain
financial covenants, and (c) make certain additional modifications to the
Loan Documents (including modifications providing for the extension of the term
of the Revolving Credit Facility), and the Lenders and the Agent have agreed to
do so, subject to and upon the terms and conditions hereinafter set forth.


 

















 


AGREEMENTS


 


Now, therefore, in
consideration of the premises and the mutual agreements herein contained, and
for other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto agree as follows:


 


1.                                                 Recitals; Defined Terms. The parties hereto acknowledge that the above
Recitals are true and correct and agree that the same are incorporated herein.
Unless the context clearly indicates otherwise, each term used in this
Agreement which is defined in the Recitals shall have the meaning given to such
term in the Recitals, and each capitalized term used herein which is not
otherwise defined herein shall have the meaning given to such term in the
Credit Agreement.


 


2.                                                 Decrease in Principal
Amount of Revolving
Credit Facility. The Lender hereby agrees to decrease the aggregate
principal 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, shall
be disbursed to the Borrowers subject to and in accordance with the terms of
the Credit Agreement, as amended hereby and shall be evidenced by and repaid in
accordance with the provisions of the Note, as amended hereby. As used in the
Credit Agreement and each of the other Loan Documents, the term “Revolving
Credit 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 the
Note, 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 to
Credit Agreement.


 


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


 


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


 


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


 


““Applicable
Margin” shall mean (a) the margin added to the Libor Index to obtain the interest rate for the outstanding Loans under the
Revolving Credit Facility, and (b) the margin used to calculate the Unused
Availability Fee, all as hereinafter provided. The Applicable Margin for each
fiscal quarter shall be determined by reference to the Borrowers, ratio of
Funded Debt to EBITDA as of the end of the fiscal quarter immediately preceding
the 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

  	
  %

  



 


2

















 


Adjustments, if any, in
the Applicable Margin shall be made by the Agent on the tenth (10th) Business
Day after receipt by the Agent of quarterly financial statements for the
Borrowers and their Subsidiaries and the accompanying Officer’s Compliance
Certificate setting forth the ratio of Funded Debt to EBITDA of the Borrowers
and 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 and
certificate within the time required by Section 7.2 hereof, the Applicable
Margin shall be the highest Applicable Margin set forth above until the
delivery 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, the
definition of “Borrowing Base” appearing in Section 1.1 of the
Credit Agreement is hereby amended by deleting the number “$15,000,000”
appearing in subsection (b) thereof and substituting in lieu thereof the
number “$10,500,000”.


 


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


 


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


 


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


 


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


 


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


 


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


 


“[Intentionally Deleted]”


 


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


 


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


 


3

















 


L/C obligations will be
treated as outstanding Loans.”


 


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


 


From and including September 30,
2009, through the Scheduled Maturity Date, as measured at the end of each of
the Borrowers’ fiscal quarters, maintain a combined Tangible Net Worth of not
less than $47,000,000; provided, however, that (a) in the event
that, during fiscal year 2011, the Borrowers make a goodwill payment in
connection with its purchase of the non-cash assets and business of TerraWave
Solutions, Ltd, and/or Giga Wave Technologies Limited, commencing on first
measurement date following such payment, the Borrowers’ minimum Tangible Net
Worth requirement shall be reduced by the lesser of the amount of such payment
or $3,000,000; and (b) commencing on March 31, 2012, the Borrower’s
minimum Tangible Net Worth requirement shall be increased by an amount equal to
fifty percent (50%) of the Borrowers’ combined net income after applicable
taxes for the year ending March 31, 2012.


 


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


 


“SECTION 9.4 Maximum Funded
Debt/EBITDA. Maintain a ratio of (a) Funded Debt, as measured at the end of
each of the Borrowers’ fiscal quarters, to (b) EBITDA, as measured at the
end 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 of
this Agreement, Section 10.7 of the Credit Agreement is hereby deleted, and the
following is inserted in lieu thereof:


 


SECTION 10.7. Limitations
on Dividends and Distributions. Declare or pay any dividends upon any of its capital
stock; purchase, redeem, retire or otherwise acquire, directly or indirectly,
any shares of its capital stock, or make any distribution of cash, property or
assets among the holders of shares of its capital stock, or make any change in
its capital structure: provided that, (a) any Subsidiary (including any Subsidiary
that is also a Borrower) may pay cash dividends to any of the Borrowers, (b) the
Borrowers may pay additional cash dividends not to exceed $2,500,000 in the
aggregate during any 12-month period so long as after giving effect to any such
dividends, no Event of Default shall occur as a result thereof, and (c) the
Borrowers may purchase up to $25,000,000 of their issued and outstanding stock
in 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 of
this Agreement, Schedule 1 to the Credit Agreement is hereby deleted, and the
following is inserted in lieu thereof:


 


4

















 


Schedule 1


 


(Lenders and
Commitments)


 


	
  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 Agreement
acknowledge the occurrence of the Internal Restructuring and that the borrowers
party to the Credit Agreement and the Note are now the Borrowers.


 


4.                                                 Amendments to Note.


 


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


 


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


 


(c)                                      Effective as of the date hereof, the
phrase “FIFTY MILLION DOLLARS ($50,000,000)” appearing in the first paragraph
of 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 second
sentence of Section 3 of the Note is hereby deleted, and the following is
inserted in lieu thereof:


 


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


 


5

















 


5.                                            Representations and Warranties. In order to induce the Lenders and the Agent
to enter into this Agreement, the Borrowers represent and warrant to the
Lenders and the Agent that as of the date hereof (a) no Event of Default
exists under the provisions of the Loan Documents, (b) except as to
matters of which the Borrowers have advised the Agent in a writing and which
have been acknowledged by the Agent, all of the representations and warranties
of the Borrowers in the Loan Documents are true and correct on the date hereof
as if the same were made on the date hereof (provided that any representation
or warranty that speaks “as of the Closing Date” or as of any other specific
date shall continue to speak as of such date, notwithstanding), (c) no
material adverse change has occurred in the business, financial condition,
prospects or operations of the Borrowers since the date of the most recent
financial statement of the Borrowers furnished to the Lenders and the Agent in
accordance with the provisions of the Loan Documents, and (d) this
Agreement constitutes the legal, valid and binding obligation of the Borrowers,
jointly and severally enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar state or federal debtor relief laws from time to time in
effect which affect the enforcement of creditors’ rights in general and the
availability of equitable remedies. If any of the foregoing representations and
warranties shall prove to be false, incorrect or misleading in any material
respect, 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 Loan
Documents, and the Lenders and the Agent shall he entitled to all of the rights
and remedies set forth in the Loan Documents as the result of the occurrence of
such default.


 


6.                                            Ratification
and No Novation.
The Borrowers hereby ratify and confirm all of their obligations, liabilities
and indebtedness under the provisions of the Credit Agreement, the Note, and
the other Loan Documents, as the same may be amended and modified by this
Agreement. The Lenders, the Agent, and the Borrowers agree that it is their
intention that nothing herein shall be construed to extinguish, release or
discharge or constitute, create or effect a novation of, or an agreement to
extinguish any of the obligations, indebtedness and liabilities of the
Borrowers or any other party under the provisions of the Loan Documents. The
Borrowers agree that all of the provisions of the Credit Agreement and the
other Loan Documents shall remain and continue in full force and effect as the
same may be modified and amended by this Agreement. In the event of any
conflict between the provisions of this Agreement and the provisions of the
Loan Documents, the provisions of this Agreement shall control.


 


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


 


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


 


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


 


[Remainder of Page Intentionally
Left Blank]


 


6

















 


IN WITNESS WHEREOF, the parties hereto have each
caused this Agreement to be executed and sealed, the day and year first above
written.


 


	
  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

  



 


7

















 


	
   

  	
   

  	
  ADMINISTRATIVE AGENT:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SUNTRUST BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  [ILLEGIBLE]

  	
   

  	
  By:

  	
  /s/ Gregory Farno

  
	
   

  	
   

  	
   

  	
  Gregory
  Farno

  
	
   

  	
   

  	
   

  	
  Senior
  Vice President

  



 


8