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                                                                    EXHIBIT 10.1

                              VARI-L COMPANY, INC.
                             TANDEM STOCK OPTION AND
                         STOCK APPRECIATION RIGHTS PLAN
                                TABLE OF CONTENTS

<TABLE>
<S>      <C>                                                          <C>
1.       Purpose......................................................1

2.       General Provisions...........................................1

3.       Eligibility..................................................2

4.       Number of Shares Subject to Plan.............................2

5.       Stock Option.................................................3

6.       Stock Appreciation Rights....................................6

7.       Capital Adjustments..........................................7

8.       Nontransferability...........................................8

9.       Amendment, Suspension, or Termination of Plan................8

10.      Effective Date...............................................8

11.      Termination Date.............................................9

12.      Resale of Shares Purchased...................................9

13.      Acceleration of Options......................................9

14.      Written Notice Required; Tax Withholding.....................10

15.      Compliance with Securities Laws..............................10

16.      Waiver of Vesting Restrictions by Committee..................10

17.      Reports to Participants......................................10

18.      No Employee Contract.........................................11
</TABLE>

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                             TANDEM STOCK OPTION AND
                         STOCK APPRECIATION RIGHTS PLAN
                               AS OF JUNE 18, 1999

         1.       PURPOSE. Vari-L Company, Inc. (the "Company") hereby
establishes the Tandem Stock Option and Stock Appreciation Rights Plan (the
"Plan"). The purpose of the Plan is to advance the interests of the Company and
its stockholders by providing a means by which the Company shall be able to
attract and retain competent officers, directors, key employees, advisors and
consultants by providing them with an opportunity to participate in the
increased value of the Company which their effort, initiative, and skill have
helped produce.

         2.       GENERAL PROVISIONS.

                  (a) The Plan will be administered by the Compensation
Committee of the Board of Directors of the Company (the "Committee"). The
Committee shall be comprised of two or more directors designated by the Board of
Directors. If and to the extent that Securities Exchange Act Rule 16b-3 or
Internal Revenue Code Section 162 are applicable to the Plan, Committee members
shall qualify as "Non-Employee Directors" within the meaning of Securities
Exchange Act Rule 16b-3 and as "outside directors" within the meaning of
Treasury Regulation Section 1.162-27(e)(3). (In the event Rule 16b-3 or Treasury
Regulation 1.162.27(3)(3) is amended, modified or repealed, the requirements for
being a member of the Committee shall reflect the then current requirements of
the successor rule or regulation, if any.) Options granted under the Plan are
intended to qualify for the "qualified performance based compensation" exception
to Internal Revenue Code Section 162(m). The Committee shall have full power to
construe and interpret the Plan and to establish and amend rules and regulations
for its administration. Notwithstanding the foregoing, if it would be consistent
with all applicable law including without limitation Rule 16b-3 and Treasury
Regulation 1.162-27(e)(3), then the Plan may be administered by the Board of
Directors, and if so administered all subsequent references to the Committee
shall be read as referring to the Board of Directors. Any action of the
Committee with respect to the Plan shall be taken by majority vote or by the
unanimous written consent of the Committee members.

                  (b) The Committee shall determine, in its sole discretion,
which participants under the Plan shall be granted stock options or stock
appreciation rights, the time or times at which options and rights are granted,
as well as the number of shares and the duration of the options or rights which
are granted to participants, provided, however, that no participant may be
granted more than 300,000 options during any three year period under the Plan.

                  (c) The Committee shall also determine any other terms and
conditions relating to options and rights granted under the Plan as the
Committee may prescribe, in its sole discretion.

                  (d) The Committee may, in its discretion, delegate its
administrative duties with respect to the Plan to an officer or employees, or to
a committee composed of officers or employees, of the Company.

                  (e) The Committee shall make all other determinations and take
all other actions which it deems necessary or advisable for the administration
of the Plan.

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                  (f) All decisions, determinations and interpretations made by
the Committee shall be binding and conclusive on all participants in the Plan
and on their legal representatives, heirs and beneficiaries.

                  (g) Notwithstanding anything to the contrary herein, the
Committee shall have no authority to determine the amount, price or timing of
grants hereunder to members of the Committee, unless, and only to the extent
that, its exercise of such authority is consistent with all applicable laws,
including, without limitation, Rule 16b-3.

         3.       ELIGIBILITY. Officers, directors and employees of the Company
and advisors and consultants to the Company shall be eligible to participate in
the Plan and to receive options and rights hereunder, provided, however, that:
(i) Incentive Stock Options may only be granted to employees (including officers
and directors who are employees) of the Company or its subsidiaries; and (ii)
advisors and consultants shall be eligible for grants only if they provide bona
fide services that are not rendered in connection with the offer or sale of
securities or in a capital- raising transaction.

         4.       NUMBER OF SHARES SUBJECT TO PLAN. The aggregate number of
shares of the Company's $.01 par value Common Stock which may be granted to
participants shall be 3,624,000 shares, subject to adjustment only as provided
in Sections 5(h) and 7 hereof. These shares may consist of shares of the
Company's authorized but unissued Common Stock or shares of the Company's
authorized and issued Common Stock reacquired by the Company and held in its
treasury or any combination thereof. If an option or right granted under this
Plan is surrendered, or for any other reason ceases to be exercisable in whole
or in part, the shares as to which the option or right ceases to be exercisable
shall be available for options or rights to be granted to the same or other
participants under the Plan, except to the extent that an option or right is
deemed surrendered by the exercise of a tandem stock appreciation right and that
right is paid by the Company in stock, in which event the shares issued in
satisfaction of the right shall not be available for new options or rights under
the Plan.

         5.       STOCK OPTION.

                  (a) TYPE OF OPTIONS. Options granted on or after January 28,
1994 may be either Nonqualified Stock Options or Incentive Stock Options as
determined by the Committee in its sole discretion and as reflected in the
Notice of Grant issued by the Committee. All Options granted under the Plan
prior to January 28, 1994 were nonqualified stock options. "Incentive Stock
Option" means an option intended to qualify as an incentive stock option within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"). "Nonqualified Stock Option" means an option not intended to qualify as
an Incentive Stock Option or an Incentive Stock Option which is converted to a
Nonqualified Stock Option under Section 5(f) hereof.


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                  (b) OPTION PRICE. The price at which options may be granted
under the Plan shall be determined as follows:


                      (i) For Incentive Stock Options the option price shall be
equal to 100% of the Fair Market Value of the stock on the date the option is
granted provided, however, that Incentive Stock Options granted to any person
who, at the time such option is granted owns (as defined in Section 422 of the
Code) shares possessing more than 10% of the total combined voting power of all
classes of shares of the Company or its parent or subsidiary corporation, the
Option Price shall be 110% of the Fair Market Value.

                      (ii) For Nonqualified Stock Options the option price may
be less than the Fair Market Value of the stock on the date of grant, but in no
event shall the option price be less than fifty percent 50% of the Fair Market
Value of the stock on the date the option is granted, provided, however that any
grant of a Nonqualified Stock Option at a price less than Fair Market Value
shall not qualify for the "qualified performance based compensation" exception
to Internal Revenue Code Section 162(m).

                      (iii) For purposes of this Plan, and except as otherwise
set forth herein, "Fair Market Value" shall mean (a) if there is an established
market for the Company's Common Stock on a stock exchange, in an
over-the-counter market or otherwise, the closing price on the date of grant, or
(b) as otherwise specified by the Committee. In the case of automatic grants to
Committee members, the Fair Market Value shall be the closing price on the date
of grant.

                  (c) EXERCISE OF OPTION. The right to purchase shares covered
by any option or options under this Plan shall be exercisable only in accordance
with the terms and conditions of the grant to the participant. Such terms and
conditions may include a time period or schedule whereby some of the options
granted may become exercisable, or "vested", over time and certain conditions,
such as continuous service or specified performance criteria or goals, must be
satisfied for such vesting. The determination as to whether to impose any such
vesting schedule or requirements, and the terms of such schedule or
requirements, shall be within the sole discretion of the Committee. These terms
and conditions may be different for different participants so long as all
options satisfy the requirements of the Plan.

         Options shall be paid for in cash or in shares of the Company's Common
Stock, which shares shall be valued at the Fair Market Value of the shares on
the date of exercise, or any combination thereof. The Committee may, in its
discretion and subject to ratification by the entire Board of Directors, loan
one or more participants all or a portion of the exercise price, together with
the amount of any tax liability incurred by the participant as a result of the
exercise of the option, for up to three (3) years with interest payable at the
prime rate quoted in the Wall Street Journal on the date of exercise. Members of
the Committee may receive such loans for the exercise of their options without
Committee approval or Board ratification.

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         The Committee may also permit a participant to effect a net exercise of
an option without tendering any shares of the Company's stock as payment for the
option. In such an event, the participant will be deemed to have paid for the
exercise of the option with shares of the Company's stock and shall receive from
the Company a number of shares equal to the difference between the shares that
would have been tendered and the number of options exercised.

         The Committee may also cause the Company to enter into arrangements
with one or more licensed stock brokerage firms whereby participants may
exercise options without payment therefor but with irrevocable orders to such
brokerage firm to immediately sell the number of shares necessary to pay the
exercise price for the option and the withholding taxes, if any, and then to
transmit the proceeds from such sales directly to the Company in satisfaction of
such obligations.

                  (d) DURATION OF OPTIONS. Unless otherwise prescribed by the
Committee or this Plan, options granted hereunder shall expire ten (10) years
from the date of grant, subject to early termination as provided in Section 5(f)
hereof.

                  (e) INCENTIVE STOCK OPTIONS LIMITATIONS. In no event shall an
Incentive Stock Option be granted to any person who, at the time such option is
granted, owns (as defined in Section 422 of the Code) shares possessing more
than 10% of the total combined voting power of all classes of shares of the
Company or of its parent or subsidiary corporation, unless the option price is
at least 110% of the Fair Market Value of the stock subject to the Option, and
such Option is by its terms not exercisable after the expiration of five (5)
years from the date such Option is granted. Moreover, the aggregate Fair Market
Value (determined as of the time that option is granted) of the shares with
respect to which Incentive Stock Options are exercisable for the first time by
any individual employee during any single calendar year under the Plan shall not
exceed $100,000. In addition, in order to receive the full tax benefits of an
Incentive Stock Option, the employee must not resell or otherwise dispose of the
stock acquired upon exercise of the Incentive Stock Option until two (2) years
after the date the option was granted and one (1) year after it was exercised.

                  (f) EARLY TERMINATION OF OPTIONS. In the event a participant's
employment with or service to the Company shall terminate as the result of total
disability or the result of retirement at 65 years of age or later, then any
options granted to such participant shall terminate and may no longer be
exercised three (3) months after the time such participant is no longer an
employee, officer or director of, or advisor or consultant to, the Company. If
the participant dies while employed or engaged by the Company, to the extent
that the option was exercisable at the time of the participant's death, such
option may, within one year after the participant's death, be exercised by the
person or persons to whom the participant's rights under the option shall pass
by will or by the applicable laws of descent and distribution; provided,
however, that an option may not be exercised to any extent after the expiration
of the option as originally granted. In the event a participant's employment or
engagement by the Company shall terminate as the result of any circumstances
other than those referred to above,


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whether terminated by the participant or the Company, with or without cause,
then all options granted to such participant under this Plan shall terminate and
no longer be exercisable as of the date of such termination, provided, however,
that if an employee with an Incentive Stock Option terminates employment prior
to its exercise, but after such termination becomes or remains a non-employee
officer, director, advisor or consultant eligible for Nonqualified Stock Options
hereunder, then the Incentive Stock Option shall be converted to a Nonqualified
Stock Option on the date the Incentive Stock Option would otherwise have
terminated.

         An employee who is absent from work with the Company because of total
disability, as defined below, shall not by virtue of such absence alone be
deemed to have terminated such participant's employment with the Company. All
rights which such participant would have had to exercise options granted
hereunder will be suspended during the period of such absence and may be
exercised cumulatively by such participant upon his return to the Company so
long as such rights are exercised prior to the expiration of the option as
originally granted. For purposes of this Plan, "total disability" shall mean
disability, as a result of sickness or injury, to the extent that the
participant is prevented from engaging in any substantial gainful activity and
is eligible for and receives a disability benefit under Title II of the Federal
Social Security Act.

                  (g) AUTOMATIC GRANTS TO COMMITTEE MEMBERS. Except as provided
in Section 2(g) hereof, no action may be taken by the Committee to grant any
options to members of the Committee. Notwithstanding the foregoing and
irrespective of any action by the Committee, on the date of each meeting of the
Board of Directors or a committee thereof, each member of the Committee and of
the Audit Committee (other than members who are officers or employees of the
Company) of such committee that attends such meeting in person shall receive a
grant of ten year fully vested Nonqualified Stock Options to purchase 500 shares
of the Company's Common Stock at an exercise price equal to the Fair Market
Value calculated in accordance with Section 5(b).

                  (h) RELOAD BY PAYMENT IN SHARES. To the extent that a
participant pays for the exercise of an option with shares of the Company's
stock rather than cash, the tendered shares shall be deemed to be added back to
the Plan, increasing the

total number of shares subject to and reserved for the Plan by that amount.

         6.       STOCK APPRECIATION RIGHTS.

                  (a) GRANT. Stock appreciation rights may be granted by the
Committee under this Plan upon such terms and conditions as it may prescribe. A
stock appreciation right may be granted only in connection with an option
previously granted to or to be granted under this Plan. Each stock appreciation
right shall become nonexercisable and be forfeited if the related option is
exercised. "Stock appreciation right" as used in this Plan means a right to
receive the excess of Fair Market Value, on the date of exercise, of a share of
the Company's Common Stock on which an appreciation right is exercised over the
option price provided for in the related option and is issued in consideration
of services performed for the Company or for its benefit by the participant.
Such excess is hereafter called "the differential."

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                  (b) EXERCISE OF STOCK APPRECIATION RIGHTS. Stock appreciation
rights shall be exercisable and be payable in the following manner:

                      (i) A stock appreciation right shall be exercisable by the
participant at the same time or times that the option to which it relates could
be exercised. A participant wishing to exercise a stock appreciation right shall
give written notice of such exercise to the Company. Upon receipt of such
notice, the Company shall determine, in its sole discretion, whether the
participant's stock appreciation rights shall be paid in cash or in shares of
the Company's Common Stock or any combination of cash and shares and thereupon
shall, without deducting any transfer or issue tax, deliver to the person
exercising such right an amount of cash or shares of the Company's Common Stock
or a combination thereof with a value equal to the differential minus
withholding taxes, if any. The date the Company receives the written notice of
exercise hereunder is the exercise date. The shares issued upon the exercise of
a stock appreciation right may consist of shares of the Company's authorized but
unissued Common Stock or of its authorized and issued Common Stock reacquired by
the Company and held in its treasury or any combination thereof. No fractional
share of Common Stock shall be issued; rather, the Committee shall determine
whether cash shall be given in lieu of such fractional share or whether such
fractional share shall be eliminated.

                      (ii) The exercise of a stock appreciation right shall
automatically result in the surrender of the related stock option by the
participant on a share for share basis. Likewise, the exercise of a stock option
shall automatically result in the surrender of the related stock appreciation
right. Shares covered by surrendered options shall be available for granting
further options under this Plan except to the extent and in the amount that such
rights are paid by the Company with shares of stock, as more fully discussed in
Section 4 hereof.

                      (iii) The Committee may impose any other terms and
conditions it prescribes upon the exercise of a stock appreciation right, which
conditions may include a condition that the stock appreciation right may only be
exercised in accordance with rules and regulations adopted by the Committee from
time to time.

                  (c) LIMITATION ON PAYMENTS. Notwithstanding any other
provision of this Plan, the Committee may from time to time determine, including
at the time of exercise, the maximum amount of cash or stock which may be given
upon exercise of any stock appreciation right in any year, provided, however,
that all such amounts shall be paid in full no later than the end of the year
immediately following the year in which the participant exercised such stock
appreciation rights. Any determination under this paragraph may be changed by
the Committee from time to time provided that no such change shall require the
participant to return to the Company any amount theretofore received or to
extend the period within which the Company is required to make full payment of
the amount due as the result of the exercise of the participant's stock
appreciation rights.

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                  (d) EXPIRATION OR TERMINATION OF STOCK APPRECIATION RIGHTS.

                      (i) Each stock appreciation right and all rights and
obligations thereunder shall expire on the date on which the related option
expires or terminates.

                      (ii) A stock appreciation right shall terminate and may no
longer be exercised upon the expiration or termination of the related option.

         7.       CAPITAL ADJUSTMENTS. The aggregate number of shares of the
Company's Common Stock subject to this Plan, the maximum number of shares as to
which options may be granted to any one participant hereunder, and the number of
shares and the price per share subject to outstanding options, shall be
appropriately adjusted by the Committee for any increase or decrease in the
number of shares of Common Stock which the Company has issued resulting from any
stock split, reverse stock split, stock dividend, combination of shares or any
other change, or any exchange for other securities or any reclassification,
merger, reorganization, consolidation, redesignation, recapitalization, or
otherwise. Similar adjustments shall be made to the terms of stock appreciation
rights.

         8.       NONTRANSFERABILITY. During a participant's lifetime, an option
may be exercisable only by the participant and options granted under the Plan
and the rights and privileges conferred thereby shall not be subject to
execution, attachment or similar process and may not be transferred, assigned,
pledged or hypothecated in any manner (whether by operation of law or otherwise)
other than by will or by the applicable laws of descent and distribution.
Notwithstanding the foregoing, to the extent permitted by applicable law and
Rule 16b-3, the Committee may (i) permit a recipient of a Nonqualified Stock
Option to designate in writing during the participant's lifetime a beneficiary
to receive and exercise the participant's Nonqualified Stock Options in the
event of such participant's death (as provided in Section 5(f)), (ii) grant
Nonqualified Stock Options that are transferable to the immediate family or a
family trust of the recipient, and (iii) modify existing Nonqualified Stock
Options to be transferable to the immediate family or a family trust of the
recipient. Any other attempt to transfer, assign, pledge, hypothecate or
otherwise dispose of any option under the Plan or of any right or privilege
conferred thereby, contrary to the provisions of the Plan shall be null and
void.

         9.       AMENDMENT, SUSPENSION, OR TERMINATION OF PLAN. The Board of
Directors or the Committee may at any time suspend or terminate the Plan and may
amend it from time to time in such respects as the Board of Directors or the
Committee may deem advisable in order that options and rights granted hereunder
shall conform to any change in the law, or in any other respect which the Board
of Directors or the Committee may deem to be in the best interests of the
Company; provided, however, that no such amendment shall, without the
participant's consent, alter or impair any of the rights or obligations under
any option or stock appreciation rights theretofore granted to him under the
plan; and provided further

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that no such amendment shall, without shareholder approval: increase the total
number of shares available for grants of options or rights under the Plan
(except as provided by Section 7 hereof); or effect any change to the Plan which
is required to be approved by shareholder by law, including, without limitation,
the regulations promulgated under Section 422 and Section 162(m) of the Code. In
addition, the provisions of Section 5(g) relating to the amount, price and
timing of grants to members of the Committee shall not be amended more than once
every six (6) months other than to comport with applicable changes to the Code,
the Employee Retirement Income Security Act or rules thereunder.

         10.      EFFECTIVE DATE. The effective date of the Plan shall be
December 31, 1987, provided, however, that the effective date of the Plan as it
relates to Incentive Stock Options shall be January 28, 1994 and no Incentive
Stock Option may be granted hereunder before January 28, 1994. If the January
28, 1994 amendment to and restatement of the Plan is not approved by the
affirmative vote of a majority of the Company's shareholders on or before
January 28, 1995, then the Plan shall remain in effect as it was last amended on
June 14, 1990. The failure of the shareholders to approve such amendment and
restatement of the Plan shall not, however, affect the validity, duration or any
other terms and conditions of options or rights granted prior to January 28,
1994, and shall affect the terms and conditions of options or rights granted
after that date only to the extent required by law.

         11.      TERMINATION DATE. Unless this Plan shall have been previously
terminated by the Committee, this Plan shall terminate on January 28, 2004,
except as to options and rights theretofore granted and outstanding under the
Plan at that date, and no stock option or stock appreciation rights shall be
granted after that date.

         12.      RESALE OF SHARES PURCHASED. All shares of stock purchased
under this Plan may be freely resold, subject to applicable state and federal
securities laws restricting their transfer. As a condition to exercise of an
option, the Company may impose various conditions, including a requirement that
the person exercising such option represent and warrant that, at the time of
such exercise, the shares of Common Stock being purchased are being purchased
for investment and not with a view to resale or distribution thereof. The resale
of shares purchased upon the exercise of Incentive Stock Options may, however,
cause the employee to lose certain tax benefits if the employee fails to comply
with the holding period requirements described in Section 5(e) hereof.

         13.      ACCELERATION OF OPTIONS. If the Company or its shareholders
enter into an agreement to dispose of all or substantially all of the assets or
stock of the Company by means of a sale, merger or other reorganization,
liquidation, or otherwise, any option granted pursuant to the Plan shall become
immediately exercisable with respect to the full number of shares subject to
that option during the period commencing as of the date of the agreement to
dispose of all or substantially all of the assets or stock of the Company and
ending when the disposition of assets or stock contemplated by that agreement is
consummated or the option is otherwise terminated in accordance with its
provisions or the provisions of the Plan, whichever occurs first; provided that


<PAGE>   10



no option shall be immediately exercisable under this Section on account of any
agreement of merger or other reorganization where the shareholders of the
Company immediately before the consummation of the transaction will own 50% or
more of the total combined voting power of all classes of stock entitled to vote
of the surviving entity (whether the Company or some other entity) immediately
after the consummation of the transaction. In the event the transaction
contemplated by the agreement referred to in this section is not consummated,
but rather is terminated, canceled or expires, the options granted pursuant to
the Plan shall thereafter be treated as if that agreement had never been entered
into.

         14.      WRITTEN NOTICE REQUIRED; TAX WITHHOLDING. Any option or right
granted pursuant to the Plan shall be exercised when written notice of that
exercise by the participant has been received by the Company at its principal
office and, with respect to options, when such notice is received and full
payment for the shares with respect to which the option is exercised has been
received by the Company. Participant agrees that, to the extent required by law,
the Company shall withhold or require the payment by participant of any state,
federal or local taxes resulting from the exercise of an option or right,
provided however that to the extent permitted by law, the Committee may in its
discretion, permit some or all of such withholding obligation to be satisfied by
the delivery by the participant of, or the retention by the Company of, shares
of its Common Stock.

         15.      COMPLIANCE WITH SECURITIES LAWS. Shares shall not be issued
with respect to any option or right granted under the Plan unless the exercise
of that option and the issuance and delivery of the shares pursuant thereto
shall comply with all relevant provisions of state and federal law, including
without limitation the Securities Act of 1933, as amended, the rules and
regulations promulgated thereunder and the requirements of any stock exchange or
automated quotation system upon which the shares may then be listed or traded,
and shall be further subject to the approval of counsel for the Company with
respect to such compliance. Further, each participant must consent to the
imposition of a legend on the certificate representing the shares of Common
Stock issued upon the exercise of the option or right restricting their
transferability as may be required by law, the option, or the Plan.

         16.      WAIVER OF VESTING RESTRICTIONS BY COMMITTEE. Notwithstanding
any provision of the Plan, in the event a participant dies, becomes disabled,
retires as an employee, officer or director of, or as an advisor or consultant
to, the Company, the Committee shall have the discretion to waive any vesting
restrictions on the retiree's options, or the early termination of any
Nonqualified Stock Options held by the retiree.

         17.      REPORTS TO PARTICIPANTS. The Company shall furnish to each
participant a copy of the annual report sent to the Company's shareholders. Upon
written request, the Company shall furnish to each participant a copy of its
most recent annual report and each quarterly report to shareholders issued since
the end of the Company's most recent fiscal year.

<PAGE>   11


         18.      NO EMPLOYEE CONTRACT. The grant of an option or right under
the Plan shall not confer upon any participant any right with respect to
continuation of employment by, or the rendition of advisory or consulting
services to, the Company, nor shall it interfere in any way with the Company's
right to terminate the participant's employment or services at any time.



DAVID G. SHERMAN,                                     JOSEPH H. KISER,
    President                                            Chairman of the Board
                                                         and Secretary