Document:

Exhibit 10.1

 

TESSCO TECHNOLOGIES INCORPORATED

 

PERFORMANCE SHARE UNIT AGREEMENT – OFFICERS AND EMPLOYEES

 

THIS PERFORMANCE SHARE UNIT  AGREEMENT  between
TESSCO TECHNOLOGIES INCORPORATED
(the “Company”) and
                                     
(“you”) is effective as of April
9, 2004.

 

Section 1.              Grant of Performance Shares.

 

1.1.          The
Compensation Committee of the Company’s Board of Directors has awarded to you
the conditional right to receive up to
                     
shares of the Company’s common stock (“Performance
Shares”) under the TESSCO Technologies Incorporated 1994 Stock and
Incentive Plan (the “Plan”). Your
right to receive one (1) Performance Share is sometimes referred to as a “Performance Share Unit” or “PSU” and is in all respects subject to the
terms and conditions contained in this Agreement.

 

1.2.          In
general, whether your PSUs ripen into the right to receive Performance Shares
depends on two factors: (1) the Company’s earnings per share over the next
three Fiscal Years, on a year-by-year basis or cumulatively, and (2) your
individual performance rating for each of the next three Fiscal Years under the
Company’s appraisal process. In addition, as described below, you must remain
employed by the Company until Performance Shares are issued, which generally
will occur in from two to four annual installments after the Fiscal Year for
which the Performance Shares are earned.

 

Section 2.              Defined Terms. This Agreement uses a
number of terms that are defined either in the body of the Agreement or in the
Glossary (section 11), which appears at the end of this Agreement. These
defined terms are capitalized wherever they are used.

 

Section 3.              Earning of Performance Shares.

 

3.1.          In
General. Performance Shares may be earned as of the end of each of the following
three Fiscal Years of the Company: FY2005, FY2006, and FY2007. In particular:

 

(a)           Performance
Shares may be earned for any one of these three Fiscal Years if EPS for that
particular Fiscal Year exceeds the Threshold EPS for that Fiscal Year. This is
referred to as the “Annual Test.”

 

(b)           For
the second and third Fiscal Years, i.e.,
FY 2006 and FY2007, Performance Shares may also be earned if EPS (i) for that
Fiscal Year and the preceding Fiscal Year (in the case of FY2006) or (ii) for
that Fiscal Year and the two preceding Fiscal Years (in the case of FY2007) on
a cumulative basis exceeds the
Cumulative Threshold EPS for that Fiscal Year. This is referred to as the “Cumulative Test.”

 

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(c)           In
general, the number of Performance Shares that can be earned for FY2006 and
FY2007 under the Cumulative Test is significantly greater than the number that
can be earned under the Annual Test. Whichever Test results in the greater
number of Performance Shares earned for either of these Fiscal Years is the
Test that will be applied.

 

3.2.          Number
of Performance Shares Earned. The number of Performance Shares earned for
any Fiscal Year depends on the Corporate Performance Factor for the Fiscal Year
(which is based on EPS as described below) and your Individual Performance
Factor for the Fiscal Year. Specifically, the number of Performance Shares
earned for a particular Fiscal Year is determined as follows:

 

Base Number of Shares x Corporate Performance Factor x Individual
Performance Factor

 

where:

 

•                       “Base
Number of Shares” is the number of shares determined from Table 1 for the
particular Fiscal Year and the particular Test (Annual Test or Cumulative
Test);

 

•                       “Corporate
Performance Factor” is the percentage determined based on EPS as described in
the next section; and

 

•                       “Individual
Performance Factor” is the percentage based on your “Collaboration Rating” and
your “Bottom Line Contribution to Results Rating” for the Fiscal Year as
subjectively determined by the Company as part of the Company’s annual
appraisal of your performance. This percentage will be
       % if you have not achieved your personal
goals and between           % and
          % if you meet or exceed
your personal goals.

 

In applying this formula, two additional rules apply:

 

•                       Under
the Cumulative Test, the result is reduced by the number of Performance Shares
earned in the preceding Fiscal Year or Years; and

 

•                       In
no case may the total number of Performance Shares earned as of the end of any
Fiscal Year exceed the Cumulative Maximum Number of Performance Shares set
forth in Table 1.

 

3.3.          Determination
of “Corporate Performance Factor.” The Corporate Performance Factor for a
particular Fiscal Year and for a particular Test is a percentage based on EPS
(or cumulative EPS) relative to the applicable Threshold EPS and Goal EPS. 

 

	
  If EPS (or cumulative EPS) is:

  	
   

  	
  then the
  Corporate Performance Factor is

  
	
  Less than Threshold EPS

  	
   

  	
          %

  
	
  Exactly equal to Threshold EPS

  	
   

  	
          %

  

 

2

 

	
  Greater than Threshold EPS but

  less than Goal EPS

  	
   

  	
  Determined by multiplying the “Incremental Percentage” shown in Table 1 by the
  number of cents by which EPS exceeds Threshold EPS and adding the result
  (rounded to the nearest whole percentage) to
          %

  
	
  Exactly equal to or greater than Goal EPS

  	
   

  	
          %

  

 

Note that the maximum Corporate Performance Factor if Goal EPS is not
achieved is         %. If Goal EPS is
achieved (or exceeded), then the Corporate Performance Factor is
        %.

 

Although the “Corporate Performance Factor” will be determined as set
forth in this section (which is definitive), Exhibits A through E illustrate this
information in graph form.

 

3.4.          Applicable
Parameters. The Base Number of Shares, the Threshold EPS, and the Goal EPS
for each Fiscal Year for the Annual Test and for the Cumulative Test, as well
as the Cumulative Maximum Number of Performance Shares that may be earned as of
the end of each Fiscal Year, are as follows:

 

Table
1

 

	
   

  	
   

  	
  FY2005

  	
   

  	
  FY2006

  	
   

  	
  FY2007

  	
   

  
	
  Cumulative Test:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Base Number
  of Shares

  	
   

  	
  N/A

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Threshold
  EPS

  	
   

  	
  N/A

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
  Goal EPS

  	
   

  	
  N/A

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
  Incremental
  Percentage

  	
   

  	
  N/A

  	
   

  	
   

  	
  %

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Annual Test:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Base Number
  of Shares

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Threshold EPS

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
  Goal EPS

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
  Incremental
  Percentage

  	
   

  	
   

  	
  %

  	
   

  	
  %

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cumulative
  Maximum Number of Performance Shares

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

3

 

Section 4.              Issuance and Distribution of Performance Shares.
Performance Shares earned as described in section 3 will be issued and
distributed to you in installments as follows, subject to section 5:

 

•                       Performance
Shares earned for FY2005 will be issued and distributed in four (4)
approximately equal installments, on May 1, 2005, 2006, 2007, and 2008.

 

•                       Performance
Shares earned for FY2006 will be issued and distributed in three (3)
approximately equal installments, on May 1, 2006, 2007, and 2008.

 

•                       Performance
Shares earned for FY2006 will be issued and distributed in two (2)
approximately equal installments, on May 1, 2007 and 2008.

 

Section 5.              Continued Employment.

 

5.1.          In
order to earn Performance Shares for any particular Fiscal Year, you must be
employed by the Company for the entire Fiscal Year. Once your employment
terminates (for whatever reason), you may no longer earn any additional
Performance Shares.

 

5.2.          In
order to receive Performance Shares that you have earned, you must be employed
by the Company on the date that the Performance Shares are to be issued and
distributed (as provided in section 4). You will forfeit your right to receive
Performance Shares that have been earned but have not been issued and
distributed as of the date your employment terminates. This condition will not
apply, however, if:

 

•                       Your
employment was terminated by the Company other than for Cause;

 

•                       You
terminated your employment for Good Reason;

 

•                       You
terminated your employment after reaching your “normal retirement date” as
defined in the Company’s Retirement Savings Plan (or successor plan);

 

•                       Your
employment was terminated either by you or by the Company on account of
Disability; or

 

•                       Your
employment was terminated by reason of your death.

 

5.3.          “Employment” by the Company for purposes of
this Agreement includes employment by any of the Company’s subsidiaries.

 

Section
6.              Illustrations. The application of the
above provisions is illustrated by the following examples:

 

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Example 1.                                    If
EPS for FY2005 is $        , then the
Corporate Performance Factor for that Fiscal Year is
          %. If EPS for
FY2005 is $          , then
the Corporate Performance Factor for that Fiscal Year is
          %. If EPS for
FY2005 is $           or
greater, then the Corporate Performance Factor for that Fiscal Year is
          %.

 

Example 2                                       If
EPS for FY2005 is $        , then the
Corporate Performance Factor for that Fiscal Year is the excess of EPS
($          ) over Threshold
EPS ($       ), or
          cents, times the
Incremental Percentage (        %),
which (rounded to the nearest whole percentage) is
         %
(          x          %),
plus          %, which is
          %. If your
Individual Performance Factor for the Fiscal Year is 100%, you would
earn          Performance Shares,
which is the Base Number of Shares for FY2005
(          ) times the
Corporate Performance Factor
(          %) times your
Individual Performance Factor (100%). Assuming that you remain employed as
required by section 5 (and there is no intervening Change in Control as
described in section 7), these                Performance
Shares would be issued and distributed you as
follows:           shares on
May 1, 2005;           
shares on May 1, 2006;           
shares on May 1, 2007;and
           shares on May 1,
2008.

 

Example 3                                       Assume
that EPS for FY2005 is
$           and that your
Individual Performance Factor for the Fiscal Year is
          %. Then (if you are
employed for the entire Fiscal Year as required by section 5.1) you will earn
           Performance Shares:
($          -=          cents)
x           % =
          % (rounded to
           %) +
           %, or
          % x
           % x
          .

 

Example 4                                       Assume
that EPS for FY2005 (as in Example 3)
is $           and for FY2006
is $           . You would
not be entitled to any Performance Shares under the Annual Test for FY2006
since EPS is less than the Threshold EPS for FY2006 ($
          ). If your
Individual Performance is           
%, you would, however, be entitled to
           Performance Shares
under the Cumulative Test (assuming you were employed for the entire Fiscal
Year as required by section 5.1), determined as follows:

 

•                       Corporate
Performance Factor = Cumulative EPS ($
           +              =
$           ) minus the
Cumulative Test Threshold EPS for FY2006 ($
           ), or
           cents, times the
Incremental Percentage (
           %), which rounded
to the nearest whole percentage is
           % (
           x
           % =           %),
plus            % =
          %

 

•                       times Base Number of Shares
(              )

 

5

 

•                       times your Individual Performance Factor
(assumed to be            %
in this example)

 

•                       minus the
               
Performance Shares earned for FY2005 (per Example
3).

 

Example 5                                       Assume
that for FY2005 your Individual Performance Factor is 100% and that EPS equals
or exceeds the Goal EPS ($
                )
for that Fiscal Year. Thus, the Corporate Performance Factor will be . Although
the Base Number of Shares for FY2005 (
             
) times the Corporate Performance Factor () times your Individual Performance
Factor () is           , the
number of Performance Shares you can earn for FY2005 is limited to
          . In the same vein,
if the cumulative Goal EPS for FY2006 is met (and therefore the Corporate
Performance Factor is
          %) and your
Individual Performance Factor for that Fiscal Year is %, the maximum number of
Performance Shares you can earn for FY2006 is
               ,
even though the Base Number of Shares under the Cumulative Test
(              )
times            % times
            % is
                   .

 

Section
7.              Change in Control. If there is a
Change in Control of the Company, then:

 

7.1.          For
the Fiscal Year in which the Change in Control occurs (provided you are employed by the Company
on the date of the Change in Control), you will earn Performance Shares as
though (i) EPS for that Fiscal Year equals Goal EPS for that Fiscal Year (as
set forth in Table 1
for the Annual Test) and (ii) your Individual Performance Factor is
           %;

 

7.2.          Provided
you are employed by the Company on the date of the Change in Control, any
Performance Shares that you have earned for prior Fiscal Years but that have
not yet been issued and distributed to you will be issued and distributed to
you effective as of the Change in Control, along with any Performance Shares
earned under section 7.1; and

 

7.3.          Except
as provided in this section, this Agreement and your right to earn Performance
Shares for any period beginning on or after the date of the Change in Control
will terminate.

 

Section
8.              Confidentiality.

 

8.1.          You
acknowledge that the information contained in this Agreement, particularly the
Threshold EPS and Goal EPS information may be highly
confidential and not available to the public and that disclosure of
the information contained in this Agreement could result in harm to the
Company. Therefore, in addition to any obligation you may have under the TESSCO
Code of Conduct or any other policy of or agreement with the Company, you
specifically agree that you will not disclose any of the provisions of or
information contained in this Agreement except as expressly

 

6

 

required by a subpoena or other
order of a court or administrative agency. If you believe that you are so
required to disclose any of the provisions of or information contained in this
Agreement, you agree to give the Company prompt written notice of this
requirement so that the Company (at its expense) may seek an appropriate
protective order or otherwise resist disclosure.

 

8.2.          If
you breach your obligations under this section, the Company may terminate this
Agreement by giving you written notice of termination. If the Company does so,
you will no longer be entitled to earn any Performance Shares under this
Agreement or to receive any Performance Shares that have been earned but not
yet issued and distributed, whether or not the Company also terminates your
employment.

 

8.3.          The
nondisclosure obligation contained in this section will not apply to
information that has been disclosed to the public by the Company or by someone
other than you or a person who (directly or indirectly) obtained the
information from you.

 

Section
9.              Adjustment of Number of Performance Shares, etc.

 

9.1.          Stock Dividends, Splits, Etc. In
the event of a stock split, a stock dividend or a similar change in the shares
of the Company’s common stock, the number of Performance Shares that may be
earned and the number of Performance Shares that have been earned but not yet
issued and distributed under this Agreement, as well as Threshold EPS, Goal
EPS, Base Number of Shares, and the Maximum Number of Performance Shares, may
be adjusted pursuant to the Plan or otherwise as the Compensation Committee
deems reasonable so as to preserve the same relative rights and obligations as
are provided for in this Agreement.

 

9.2.          Reorganization Events. After any
capital reorganization, reclassification of shares of the Company’s common
stock, or consolidation of the Company with, or merger of the Company into, any
other corporation or entity that does not constitute a Change in Control (each
a “Reorganization Event”), the
number of Performance Shares that may be earned and the number of Performance
Shares that have been earned but not yet issued and distributed under this
Agreement, as well as Threshold EPS, Goal EPS, Base Number of Shares, and the
Maximum Number of Performance Shares, may be adjusted pursuant to the Plan or
otherwise as the Compensation Committee deems reasonable so as to preserve the
same relative rights and obligations as are provided for in this Agreement.

 

9.3.          Reservation of Sufficient Shares.
The Company will reserve and keep available out of its authorized but unissued
shares of common stock a number of such shares as will be sufficient to enable
the Company to issue and distribute any Performance Shares that become issuable
and distributable under this Agreement.

 

9.4.          Registration and Approval. If any
shares reserved for issuance under this Agreement require registration with or
approval of any governmental authority under any federal or state law before
those shares may be validly issued, then

 

7

 

the Company will in good faith
and as expeditiously as possible endeavor to secure such registration or
approval. This provision, however, will not require the Company to secure any
registration or approval in order (i) to issue shares under this Agreement if
those shares can lawfully be issued pursuant to one or more exemptions from
registration under applicable federal and state securities laws (even though
the shares may constitute “restricted securities” or the holder of such shares
may be unable to transfer the shares without registration or the availability
of a suitable exemption from registration under such laws) or (ii) to enable
any person to sell or distribute shares received under this Agreement in a
transaction involving a public offering within the meaning of the Securities
Act as then in effect.

 

9.5.          Shares Fully Paid and Nonassessable.
All Shares issued under this Agreement will upon issuance be fully paid and
nonassessable.

 

Section
10.            Restrictions on Transfer; Legends.

 

10.1.        Transfer Restrictions; Opinion of Counsel.
Neither this Agreement nor all or any part of your rights under this Agreement
may be transferred, i.e.,
pledged, hypothecated, sold, assigned, or otherwise encumbered or disposed of,
either voluntarily or by operation of law (whether by virtue of execution,
attachment, or similar process), except as may expressly be provided in the
Plan. No shares issued under this Agreement 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 an opinion of counsel reasonably
satisfactory to counsel for the Company to the effect that the transfer is
permitted under federal and state securities laws. Any purported transfer in
violation of these restrictions will be ineffective.

 

10.2.        Stock Certificate Legends. Each
certificate evidencing Performance Shares issued under this Agreement and each
certificate evidencing shares issued to any subsequent transferee of any
Performance Shares may be imprinted with a legend in substantially the
following form:

 

The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or the securities laws of any
state. The transfer of the shares represented by this certificate is subject to
compliance with the conditions specified in an Agreement dated as of April 9,
2004 under which these shares were issued, and no transfer of these shares will
be valid or effective until such conditions and provisions have been fulfilled
or complied with. A copy of the Agreement will be made available to any person
having a valid interest therein upon request and without charge. Upon the
fulfillment of such conditions and provisions, the issuer has agreed to deliver
to the holder hereof a new certificate, not bearing this legend, for the number
of shares represented hereby, registered in the name of the holder hereof.

 

8

 

Section
11.            Miscellaneous.

 

11.1.        Entire Agreement. This Agreement
constitutes the entire agreement and understanding between us, and supersedes
any prior agreement or understanding, relating to the subject matter of this
Agreement.

 

11.2.        Conflicts with Plan; Amendments.
This Agreement has been granted as a “Performance Award” under the Plan and
will be construed consistently with the Plan. In the event of any conflict
between the provisions of the Plan and this Agreement, the provisions of the
Plan shall control. The Committee has the right, in its sole discretion, to
amend this Agreement from time to time in any manner for the purpose of
promoting the objectives of the Plan but only if all other Performance Share
Award Agreements 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 Agreement 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 you
written notice of any such amendment of this Agreement as promptly as
practicable after it is adopted.

 

11.3.        No
Rights of Stockholder. You will not have the rights of a stockholder of the
Company with respect to the Performance Shares that may become issuable under
this Agreement until the Performance Shares have actually been issued and
distributed to you. This Agreement will not affect in any way the right or
power of the Board of Directors or the 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 of holders of common stock, or any dissolution or liquidation
of the Company, or any sale or transfer of all or any part of the Company’s
assets or business, or any other corporate act or proceeding, whether of a similar
character or otherwise.

 

11.4.        Notices. Any notice or
communication required or permitted by this Agreement will be sufficiently
given if delivered in person or by commercial courier service or sent by first
class mail, postage prepaid:

 

(i)            if to the Company,
addressed to it at 11126 McCormick Road, Hunt Valley, Maryland 21031, marked
for the attention of the President, and

 

(ii)           if to you, to the
address set forth below your signature,

 

or in either case to such other address as either of us notifies the
other in accordance with this section.

 

11.5.        Governing Law. This Agreement
shall be governed by and construed in accordance with the laws of the State of
Delaware.

 

9

 

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

 

11.7.        Limitations on Issuance.
Notwithstanding any other provisions of this Agreement or of the Plan, no
Performance Shares will be issuable under this Agreement at any time when such
issuance is prohibited by the Company’s policies then in effect concerning
transactions by officers, directors, and employees in securities of the
Company.

 

11.8.        Fractional Shares. The Company
will not be required to issue fractions of Performance Shares under this
Agreement. If any fractional interest in a Performance Share is otherwise
deliverable, the Company will instead pay cash equal to the fair market value
of the fractional interest as reasonably determined by the Company.

 

11.9.        Withholding Taxes. The Company
will be entitled to require as a condition of delivery to you of a certificate
representing any Performance Shares that you 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. Whether or not the Company
requires you to remit any such amounts, the Company will at all times have the
right to withhold such amounts from any compensation or other payments
otherwise due to you (under this Agreement or otherwise).

 

11.10.      Issuance Taxes. The issuance of
stock certificates under this Agreement will be made without charge to you for
any stamp or similar tax imposed with respect to such certificate. The Company
will 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
yours, and the Company will not be required to issue or deliver any such stock
certificate unless and until the person or persons requesting its issuance 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 12.            Glossary. The following capitalized
terms have the meanings set forth in this section:

 

12.1.        “EPS” means the Company’s consolidated
diluted earnings per share net of the costs for the Fiscal Year associated with
all components of the Company’s Reward for Results Program (or successor
incentive compensation arrangements), including the costs associated with the
grant of Performance Shares under this and similar Agreements, all as
determined in good faith by the Compensation Committee. The Compensation
Committee may make such adjustments to EPS, and to Threshold EPS and Goal EPS,
for any Fiscal Year as the Compensation Committee reasonably determines in its
sole discretion are necessary (i) to maintain consistency with the accounting
principles and practices applied by the Company on the effective date of this
Agreement or (ii) as a result of transactions or events described in sections
9.1 or 9.2, or other extraordinary or nonrecurring events not contemplated in
developing the Threshold EPS and Goal EPS targets, in order to preserve the
Compensation Committee’s intent in issuing this and similar Agreements.

 

10

 

12.2.        “Base Number of Shares” is defined in
section 3.2.

 

12.3.        “Cause” means:

 

(i)            your conviction of,
or a plea of guilty or nolo contendere to, a felony or a crime involving moral
turpitude;

 

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

 

(iii)          your
breach of your confidentiality obligations under section ; or

 

(iv)          any
other gross misconduct by you in connection with your employment with the
Company or any willful failure by you to perform the substantial duties of your
position.

 

12.4.        “Change in Control” means the occurrence of
any of the following:

 

(i)            any
“person” (as that term is used in section 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange
Act”) (other than Robert B. Barnhill, Jr., his affiliates, and
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

 

(ii)           there is a change
in the composition of a majority of the Board of Directors of the Company
within twelve (12) months after any “person” (as defined above) (other than
Robert B. Barnhill, Jr., his affiliates, and members of his family) becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing twenty percent (20%) or more of the combined voting power of the
then-outstanding securities of the Company; or

 

(iii)          there
is consummated any consolidation or merger or share exchange involving the
Company in which the Company is not the continuing or surviving corporation or
pursuant to which shares of the Company’s common stock would be converted into
cash, securities, or other property, other than a merger of the Company in
which the holders of the Company’s common stock immediately before the merger
have substantially the same proportionate ownership of common stock of the
surviving corporation immediately after the merger; or

 

(iv)          there
is consummated any sale, lease, exchange, or other transfer (in one transaction
or a series of related transactions) of all or a substantial portion of the
assets of the Company other than to one or more of its wholly-owned
subsidiaries; or

 

11

 

(v)           the
stockholders of the Company approve a plan or proposal for the complete or
partial liquidation, dissolution, or divisive reorganization of the Company.

 

12.5.        “Compensation Committee” means the
Compensation Committee of the Company’s Board of Directors as constituted from
time to time.

 

12.6.        “Corporate Performance Factor” is defined in
section 3.3.

 

12.7.        “Disability” means a physical or mental
disease, injury, or infirmity that prevents you (despite the provision of
reasonable accommodations as required by law) from performing the substantial
duties of your position for a period of one hundred eighty (180) consecutive
days as certified by a physician designated by or acceptable to the Company.

 

12.8.        “Fiscal Year” means a fiscal year of the
Company.

 

12.9.        “FY2005,” “FY2006,”
and “FY2007” mean the Fiscal Years
ending in March 2005, 2006, and 2007, respectively.

 

12.10.      “Good Reason” means:

 

(i)            any material
adverse change in your title or reporting responsibilities or any material
reduction in your authority, provided you
specifically object in writing to the change or reduction within thirty (30)
days and the Company does not rescind the change or reduction within a further
period of thirty (30) days; or

 

(ii)           any failure by the
Company or its subsidiaries to make a payment due to you or to provide you with
a benefit due to you, but only if the failure is not cured within fifteen (15)
days after the Company receives written notice of the failure.

 

12.11.      “Incremental Percentage” is defined in
sections 3.3 and 3.4.

 

12.12.      “Individual Performance Factor” is defined
in section 3.2.

 

12.13.      “Performance Shares” means shares of the
Company’s common stock that may become issuable to you under this Agreement.

 

12.14.      “Performance Share Unit” or “PSU” means your right to receive, subject
to the terms and conditions contained in this Agreement, one (1) Performance
Share.

 

12

 

To confirm the
above, the Company and you hereby sign this Agreement, which is effective as of
the date set forth on the first page.

 

	
  ATTEST/WITNESS:

  	
  TESSCO TECHNOLOGIES
  INCORPORATED

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  (SEAL)

  
	
   

  	
   

  	
  Robert B. Barnhill, Jr.

  
	
   

  	
   

  	
  Chairman and Chief Executive

  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (SEAL)

  
	
   

  	
   

  	
  «Participant»

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
						

 

13Exhibit 10.2

 

TESSCO TECHNOLOGIES INCORPORATED

 

PERFORMANCE SHARE UNIT AGREEMENT – NON EMPLOYEE DIRECTORS

 

THIS PERFORMANCE SHARE UNIT  AGREEMENT  between
TESSCO TECHNOLOGIES INCORPORATED
(the “Company”) and «Participant» (“you”) is effective as of April 9, 2004.

 

Section 1.              Grant of Performance Shares.

 

1.1.          The
Company has awarded to you the conditional right to receive up to
         shares of the Company’s common
stock (“Performance Shares”) under
the TESSCO Technologies Incorporated 1994 Stock and Incentive Plan (the “Plan”). Your right to receive one (1)
Performance Share is sometimes referred to as a “Performance Share Unit” or “PSU”
and is in all respects subject to the terms and conditions contained in this
Agreement.

 

1.2.          In
general, whether your PSUs ripen into the right to receive Performance Shares
depends on the Company’s earnings per share over the next three Fiscal Years,
on a year-by-year basis or cumulatively. In addition, as described below, you
must remain a member of the Company’s Board of Directors until Performance
Shares are issued, which generally will occur in from two to four annual
installments after the Fiscal Year for which the Performance Shares are earned.

 

Section 2.              Defined Terms. This Agreement uses a
number of terms that are defined either in the body of the Agreement or in the
Glossary (section 11), which appears at the end of this Agreement. These
defined terms are capitalized wherever they are used.

 

Section 3.              Earning of Performance Shares.

 

3.1.          In
General. Performance Shares may be earned as of the end of each of the
following three Fiscal Years of the Company: FY2005, FY2006, and FY2007. In
particular:

 

(a)           Performance
Shares may be earned for any one of these three Fiscal Years if EPS for that
particular Fiscal Year exceeds the Threshold EPS for that Fiscal Year. This is
referred to as the “Annual Test.”

 

(b)           For
the second and third Fiscal Years, i.e.,
FY 2006 and FY2007, Performance Shares may also be earned if EPS (i) for that
Fiscal Year and the preceding Fiscal Year (in the case of FY2006) or (ii) for
that Fiscal Year and the two preceding Fiscal Years (in the case of FY2007) on
a cumulative basis exceeds the
Cumulative Threshold EPS for that Fiscal Year. This is referred to as the “Cumulative Test.”

 

(c)           In
general, the number of Performance Shares that can be earned for FY2006 and
FY2007 under the Cumulative Test is significantly greater

 

1

 

than the number that can be
earned under the Annual Test. Whichever Test results in the greater number of
Performance Shares earned for either of these Fiscal Years is the Test that
will be applied.

 

3.2.          Number
of Performance Shares Earned. The number of Performance Shares earned for
any Fiscal Year depends on the Corporate Performance Factor for the Fiscal Year
(which is based on EPS as described below). Specifically, the number of
Performance Shares earned for a particular Fiscal Year is determined as
follows:

 

Base Number of Shares x Corporate Performance Factor

 

where:

 

•                       “Base
Number of Shares” is the number of shares determined from Table 1 for the
particular Fiscal Year and the particular Test (Annual Test or Cumulative
Test); and

 

•                       “Corporate
Performance Factor” is the percentage determined based on EPS as described in
the next section.

 

In applying this formula, two additional rules apply:

 

•                       Under the
Cumulative Test, the result is reduced by the number of Performance Shares
earned in the preceding Fiscal Year or Years; and

 

•                       In
no case may the total number of Performance Shares earned as of the end of any
Fiscal Year exceed the Cumulative Maximum Number of Performance Shares set
forth in Table 1.

 

3.3.          Determination
of “Corporate Performance Factor.” The Corporate Performance Factor for a
particular Fiscal Year and for a particular Test is a percentage based on EPS
(or cumulative EPS) relative to the applicable Threshold EPS and Goal EPS. 

 

	
  If EPS (or cumulative EPS) is:

  	
   

  	
  then the
  Corporate Performance Factor is

  
	
  Less than Threshold EPS

  	
   

  	
          %

  
	
  Exactly equal to Threshold EPS

  	
   

  	
          %

  
	
  Greater than Threshold EPS but 
  less than Goal EPS

  	
   

  	
  Determined by multiplying the “Incremental Percentage” shown in Table 1 by the
  number of cents by which EPS exceeds Threshold EPS and adding the result
  (rounded to the nearest whole percentage) to
          %

  
	
  Exactly equal to or greater than Goal EPS

  	
   

  	
          %

  

 

2

 

Note that the maximum Corporate Performance Factor if Goal EPS is not
achieved is         %. If Goal EPS is
achieved (or exceeded), then the Corporate Performance Factor is
        %.

 

Although the “Corporate Performance Factor” will be determined as set
forth in this section (which is definitive), Exhibits A through E illustrate this
information in graph form.

 

3.4.          Applicable
Parameters. The Base Number of Shares, the Threshold EPS, and the Goal EPS
for each Fiscal Year for the Annual Test and for the Cumulative Test, as well
as the Cumulative Maximum Number of Performance Shares that may be earned as of
the end of each Fiscal Year, are as follows:

 

Table
1

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FY2005

  	
   

  	
  FY2006

  	
   

  	
  FY2007

  	
   

  
	
  Cumulative Test:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Base Number
  of Shares

  	
   

  	
  N/A

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Threshold
  EPS

  	
   

  	
  N/A

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
  Goal EPS

  	
   

  	
  N/A

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
  Incremental
  Percentage

  	
   

  	
  N/A

  	
   

  	
   

  	
  %

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Annual Test:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Base Number
  of Shares

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Threshold
  EPS

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
  Goal EPS

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
  Incremental
  Percentage

  	
   

  	
   

  	
  %

  	
   

  	
  %

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cumulative
  Maximum Number of Performance Shares

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Section 4.              Issuance and Distribution of Performance Shares.
Performance Shares earned as described in section 3 will be issued and
distributed to you in installments as follows, subject to section 5:

 

•                       Performance
Shares earned for FY2005 will be issued and distributed in four (4)
approximately equal installments, on May 1, 2005, 2006, 2007, and 2008.

 

3

 

•                       Performance
Shares earned for FY2006 will be issued and distributed in three (3)
approximately equal installments, on May 1, 2006, 2007, and 2008.

 

•                       Performance
Shares earned for FY2006 will be issued and distributed in two (2)
approximately equal installments, on May 1, 2007 and 2008.

 

Section 5.              Continued Employment.

 

5.1.          In
order to earn Performance Shares for any particular Fiscal Year, you must be a
member of the Company’s Board of Directors (a “Director”) for the entire
Fiscal Year. Once you are no longer a Director (for whatever reason), you may
no longer earn any additional Performance Shares.

 

5.2.          In
order to receive Performance Shares that you have earned, you must be a
Director of the Company on the date that the Performance Shares are to be
issued and distributed (as provided in section 4). You will forfeit your right
to receive Performance Shares that have been earned but have not been issued and
distributed as of the date you are no longer a Director. This condition will
not apply, however, if you are no longer a Director because of your Disability
or death.

 

Section
6.              Illustrations. The application of the
above provisions is illustrated by the following examples:

 

Example 1.                                    If
EPS for FY2005 is $      , then the Corporate
Performance Factor for that Fiscal Year is
      %. If EPS for FY2005 is
$      , then the Corporate Performance Factor
for that Fiscal Year is       %. If EPS for
FY2005 is $       or greater, then the Corporate
Performance Factor for that Fiscal Year is
      %.

 

Example 2                                       If
EPS for FY2005 is $      , then the Corporate
Performance Factor for that Fiscal Year is the excess of EPS
($        ) over Threshold EPS
($      ), or
$      , times the Incremental Percentage
(      %), which (rounded to the nearest whole
percentage) is       % (    
x       %), plus
      %, which is
      %. You would earn
         Performance Shares, which is
the Base Number of Shares for FY2005 (      )
times the Corporate Performance Factor (      %).
Assuming that you remain a Director as required by section 5 (and there is no
intervening Change in Control as described in section 7), these         
Performance Shares would be issued and distributed you as follows:
        shares on May 1, 2005;
         shares on May 1, 2006;
         shares on May 1, 2007;and
         shares on May 1, 2008.

 

Example 3                                       Assume
that EPS for FY2005 is $      . Then (if you
remain a Director for the entire Fiscal Year as required by section 5.1) you
will earn          Performance Shares:
[($       -       
=         ) x         %
=       % (rounded to     %)
+     %, or     %] x
      % x        .

 

4

 

Example 4                                       Assume
that EPS for FY2005 (as in Example 3)
is $         and for FY2006 is
$        . You would not be entitled to
any Performance Shares under the Annual Test for FY2006 since EPS is less than
the Threshold EPS for FY2006 ($      ). You
would, however, be entitled to         
Performance Shares under the Cumulative Test (assuming you were a Director for
the entire Fiscal Year as required by section 5.1), determined as follows:

 

•                       Corporate
Performance Factor = Cumulative EPS
($         +
         =
$        ) minus the Cumulative Test
Threshold EPS for FY2006 ($        ),
or         , times the Incremental
Percentage (        %), which rounded to
the nearest whole percentage is       %
(       x       % =
        %), plus
      % =         %

 

•                       times Base Number of Shares
(          )

 

•                       minus the
         Performance Shares earned for
FY2005 (per Example 3).

 

Example 5                                       Assume
that for FY2005 EPS equals or exceeds the Goal EPS
($        ) for that Fiscal Year. Thus,
the Corporate Performance Factor will be       %.
Although the Base Number of Shares for FY2005
(        ) times the Corporate
Performance Factor (      %)
is        , the number of Performance Shares
you can earn for FY2005 is limited
to        . In the same vein, if the
cumulative Goal EPS for FY2006 is met (and therefore the Corporate Performance
Factor is         %), the maximum
number of Performance Shares you can earn for FY2006
is        , even though the Base Number
of Shares under the Cumulative Test
(        ) times
      %
is        .

 

Section
7.              Change in Control. If there is a
Change in Control of the Company, then:

 

7.1.          For
the Fiscal Year in which the Change in Control occurs (provided you are a Director of the Company
on the date of the Change in Control), you will earn Performance Shares as
though EPS for that Fiscal Year equals Goal EPS for that Fiscal Year (as set
forth in Table 1
for the Annual Test);

 

7.2.          Provided
you are a Director of the Company on the date of the Change in Control, any
Performance Shares that you have earned for prior Fiscal Years but that have
not yet been issued and distributed to you will be issued and distributed to
you effective as of the Change in Control, along with any Performance Shares
earned under section 7.1; and

 

7.3.          Except
as provided in this section, this Agreement and your right to earn Performance
Shares for any period beginning on or after the date of the Change in Control
will terminate.

 

5

 

Section
8.              Confidentiality.

 

8.1.          You
acknowledge that the information contained in this Agreement, particularly the
Threshold EPS and Goal EPS information, may be highly
confidential and not available to the public and that disclosure of
the information contained in this Agreement could result in harm to the Company.
Therefore, in addition to any obligation you may have under the TESSCO Code of
Conduct or any other policy of or agreement with the Company, you specifically
agree that you will not disclose any of the provisions of or information
contained in this Agreement except as expressly required by a subpoena or other
order of a court or administrative agency. If you believe that you are so
required to disclose any of the provisions of or information contained in this
Agreement, you agree to give the Company prompt written notice of this
requirement so that the Company (at its expense) may seek an appropriate
protective order or otherwise resist disclosure.

 

8.2.          If
you breach your obligations under this section, the Company may terminate this
Agreement by giving you written notice of termination. If the Company does so,
you will no longer be entitled to earn any Performance Shares under this
Agreement or to receive any Performance Shares that have been earned but not
yet issued and distributed, whether or not you thereafter remain a Director.

 

8.3.          The
nondisclosure obligation contained in this section will not apply to
information that has been disclosed to the public by the Company or by someone
other than you or a person who (directly or indirectly) obtained the
information from you.

 

Section
9.              Adjustment of Number of Performance Shares, etc.

 

9.1.          Stock Dividends, Splits, Etc. In
the event of a stock split, a stock dividend or a similar change in the shares
of the Company’s common stock, the number of Performance Shares that may be
earned and the number of Performance Shares that have been earned but not yet
issued and distributed under this Agreement, as well as Threshold EPS, Goal
EPS, Base Number of Shares, and the Maximum Number of Performance Shares, may be
adjusted pursuant to the Plan or otherwise as the Compensation Committee deems
reasonable so as to preserve the same relative rights and obligations as are
provided for in this Agreement.

 

9.2.          Reorganization Events. After any
capital reorganization, reclassification of shares of the Company’s common
stock, or consolidation of the Company with, or merger of the Company into, any
other corporation or entity that does not constitute a Change in Control (each
a “Reorganization Event”), the
number of Performance Shares that may be earned and the number of Performance
Shares that have been earned but not yet issued and distributed under this
Agreement, as well as Threshold EPS, Goal EPS, Base Number of Shares, and the
Maximum Number of Performance Shares, may be adjusted pursuant to the Plan or
otherwise as the Compensation Committee deems reasonable so as to preserve the
same relative rights and obligations as are provided for in this Agreement.

 

6

 

9.3.          Reservation of Sufficient Shares.
The Company will reserve and keep available out of its authorized but unissued
shares of common stock a number of such shares as will be sufficient to enable
the Company to issue and distribute any Performance Shares that become issuable
and distributable under this Agreement.

 

9.4.          Registration and Approval. If any
shares reserved for issuance under this Agreement require registration with or
approval of any governmental authority under any federal or state law before
those shares may be validly issued, then the Company will in good faith and as
expeditiously as possible endeavor to secure such registration or approval.
This provision, however, will not require the Company to secure any
registration or approval in order (i) to issue shares under this Agreement if
those shares can lawfully be issued pursuant to one or more exemptions from
registration under applicable federal and state securities laws (even though
the shares may constitute “restricted securities” or the holder of such shares
may be unable to transfer the shares without registration or the availability
of a suitable exemption from registration under such laws) or (ii) to enable
any person to sell or distribute shares received under this Agreement in a
transaction involving a public offering within the meaning of the Securities
Act as then in effect.

 

9.5.          Shares Fully Paid and Nonassessable.
All Shares issued under this Agreement will upon issuance be fully paid and
nonassessable.

 

Section
10.            Restrictions on Transfer; Legends.

 

10.1.        Transfer Restrictions; Opinion of Counsel.
Neither this Agreement nor all or any part of your rights under this Agreement
may be transferred, i.e.,
pledged, hypothecated, sold, assigned, or otherwise encumbered or disposed of,
either voluntarily or by operation of law (whether by virtue of execution,
attachment, or similar process), except as may expressly be provided in the
Plan. No shares issued under this Agreement 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 an opinion of counsel reasonably
satisfactory to counsel for the Company to the effect that the transfer is
permitted under federal and state securities laws. Any purported transfer in
violation of these restrictions will be ineffective.

 

10.2.        Stock Certificate Legends. Each
certificate evidencing Performance Shares issued under this Agreement and each
certificate evidencing shares issued to any subsequent transferee of any
Performance Shares may be imprinted with a legend in substantially the
following form:

 

The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or the securities laws of any
state. The transfer of the shares represented by this certificate is subject to
compliance with the conditions specified in an Agreement dated as of April 9,
2004 under which these shares were issued, and no transfer of these shares will
be valid or effective until such conditions and provisions have been fulfilled
or complied with. A copy of the Agreement will be

 

7

 

made available to any person having a valid interest therein upon
request and without charge. Upon the fulfillment of such conditions and
provisions, the issuer has agreed to deliver to the holder hereof a new
certificate, not bearing this legend, for the number of shares represented
hereby, registered in the name of the holder hereof.

 

Section
11.            Miscellaneous.

 

11.1.        Entire Agreement. This Agreement
constitutes the entire agreement and understanding between us, and supersedes
any prior agreement or understanding, relating to the subject matter of this
Agreement.

 

11.2.        Conflicts with Plan; Amendments.
This Agreement has been granted as a “Performance Award” under the Plan and
will be construed consistently with the Plan. In the event of any conflict
between the provisions of the Plan and this Agreement, the provisions of the
Plan shall control. The Committee has the right, in its sole discretion, to
amend this Agreement from time to time in any manner for the purpose of
promoting the objectives of the Plan but only if all other Performance Share
Award Agreements 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 Agreement 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 you
written notice of any such amendment of this Agreement as promptly as
practicable after it is adopted.

 

11.3.        No
Rights of Stockholder. You will not have the rights of a stockholder of the
Company with respect to the Performance Shares that may become issuable under
this Agreement until the Performance Shares have actually been issued and
distributed to you. This Agreement will not affect in any way the right or
power of the Board of Directors or the 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 of holders of common stock, or any dissolution or liquidation
of the Company, or any sale or transfer of all or any part of the Company’s
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.

 

11.4.        Notices. Any notice or
communication required or permitted by this Agreement will be sufficiently
given if delivered in person or by commercial courier service or sent by first
class mail, postage prepaid:

 

(i)            if to the Company,
addressed to it at 11126 McCormick Road, Hunt Valley, Maryland 21031, marked
for the attention of the President, and

 

8

 

(ii)           if to you, to the
address set forth below your signature,

 

or in either case to such other address as either of us notifies the
other in accordance with this section.

 

11.5.        Governing Law. This Agreement
shall be governed by and construed in accordance with the laws of the State of
Delaware.

 

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

 

11.7.        Limitations on Issuance.
Notwithstanding any other provisions of this Agreement or of the Plan, no
Performance Shares will be issuable under this Agreement at any time when such
issuance is prohibited by the Company’s policies then in effect concerning
transactions by officers, directors, and employees in securities of the Company.

 

11.8.        Fractional Shares. The Company
will not be required to issue fractions of Performance Shares under this
Agreement. If any fractional interest in a Performance Share is otherwise
deliverable, the Company will instead pay cash equal to the fair market value
of the fractional interest as reasonably determined by the Company.

 

11.9.        Withholding Taxes. The Company
will be entitled to require as a condition of delivery to you of a certificate
representing any Performance Shares that you 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. Whether or not the Company
requires you to remit any such amounts, the Company will at all times have the
right to withhold such amounts from any compensation or other payments
otherwise due to you (under this Agreement or otherwise).

 

11.10.      Issuance Taxes. The issuance of
stock certificates under this Agreement will be made without charge to you for
any stamp or similar tax imposed with respect to such certificate. The Company
will 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
yours, and the Company will not be required to issue or deliver any such stock
certificate unless and until the person or persons requesting its issuance 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 12.            Glossary. The following capitalized
terms have the meanings set forth in this section:

 

12.1.        “EPS” means the Company’s consolidated
diluted earnings per share net of the costs for the Fiscal Year associated with
all components of the Company’s Reward for Results Program (or successor
incentive compensation arrangements), including the costs associated with the
grant of Performance Shares under this and similar Agreements, all as
determined in good faith by the Compensation

 

9

 

Committee. The Compensation
Committee may make such adjustments to EPS, and to Threshold EPS and Goal EPS,
for any Fiscal Year as the Compensation Committee reasonably determines in its
sole discretion are necessary (i) to maintain consistency with the accounting
principles and practices applied by the Company on the effective date of this
Agreement or (ii) as a result of transactions or events described in sections
9.1 or 9.2, or other extraordinary or nonrecurring events not contemplated in
developing the Threshold EPS and Goal EPS targets, in order to preserve the
Compensation Committee’s intent in issuing this and similar Agreements.

 

12.2.        “Base Number of Shares” is defined in
section 3.2.

 

12.3.        “Change in Control” means the occurrence of
any of the following:

 

(i)            any
“person” (as that term is used in section 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange
Act”) (other than Robert B. Barnhill, Jr., his affiliates, and
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

 

(ii)           there is a change
in the composition of a majority of the Board of Directors of the Company
within twelve (12) months after any “person” (as defined above) (other than
Robert B. Barnhill, Jr., his affiliates, and members of his family) becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing twenty percent (20%) or more of the combined voting power of the
then-outstanding securities of the Company; or

 

(iii)          there
is consummated any consolidation or merger or share exchange involving the
Company in which the Company is not the continuing or surviving corporation or
pursuant to which shares of the Company’s common stock would be converted into
cash, securities, or other property, other than a merger of the Company in
which the holders of the Company’s common stock immediately before the merger
have substantially the same proportionate ownership of common stock of the
surviving corporation immediately after the merger; or

 

(iv)          there
is consummated any sale, lease, exchange, or other transfer (in one transaction
or a series of related transactions) of all or a substantial portion of the
assets of the Company other than to one or more of its wholly-owned
subsidiaries; or

 

(v)           the
stockholders of the Company approve a plan or proposal for the complete or
partial liquidation, dissolution, or divisive reorganization of the Company.

 

12.4.        “Compensation Committee” means the
Compensation Committee of the Company’s Board of Directors as constituted from
time to time.

 

10

 

12.5.        “Corporate Performance Factor” is defined in
section 3.3.

 

12.6.        “Disability” means a physical or mental
disease, injury, or infirmity that prevents you (despite the provision of
reasonable accommodations as required by law) from performing the substantial duties
of your position as a Director for a period of one hundred eighty (180)
consecutive days as certified by a physician designated by or acceptable to the
Company.

 

12.7.        “Fiscal Year” means a fiscal year of the
Company.

 

12.8.        “FY2005,” “FY2006,”
and “FY2007” mean the Fiscal Years
ending in March 2005, 2006, and 2007, respectively.

 

12.9.        “Incremental Percentage” is defined in
sections 3.3 and 3.4.

 

12.10.      “Performance Shares” means shares of the
Company’s common stock that may become issuable to you under this Agreement.

 

12.11.      “Performance Share Unit” or “PSU” means your right to receive, subject
to the terms and conditions contained in this Agreement, one (1) Performance
Share.

 

To confirm the
above, the Company and you hereby sign this Agreement, which is effective as of
the date set forth on the first page.

 

	
  ATTEST/WITNESS:

  	
  TESSCO TECHNOLOGIES
  INCORPORATED

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  (SEAL)

  
	
   

  	
  Robert B. Barnhill, Jr.

  
	
   

  	
  Chairman and Chief Executive

  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (SEAL)

  
	
   

  	
  «Participant»

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
						

 

11

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00070-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00070-of-00352.parquet"}]]