Document:

tess_EX_10_5_1

		

			Exhibit 10.5.1

		

		
			TESSCO TECHNOLOGIES INCORPORATED
		

		
			PERFORMANCE STOCK UNIT AGREEMENT
		

		
			THIS PERFORMANCE STOCK UNIT AGREEMENT between TESSCO TECHNOLOGIES INCORPORATED (the “Company”) and ________ (“you”) is effective as of May 27, 2016.
		

			
	
			
				 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 Stock”) under the TESSCO Technologies Incorporated 1994 Stock and Incentive Plan (as amended, the “Plan”). Shares of Performance Stock are sometimes referred to in this Agreement as “Performance Shares,” and your right to receive one (1) Performance Share is sometimes referred to as a “Performance Stock Unit” or “PSU.” Your Performance Stock and PSUs are 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 Corporate Performance Factor for this Fiscal Year (i.e., the Fiscal Year ending March 26, 2017), which is described in greater detail below and is based partly on the Company’s earnings per share for the Fiscal Year (as defined below) and partly on the achievement of five specified Strategic Transformation Imperatives, and (2) your individual performance rating for this Fiscal Year under the Company’s appraisal process. In addition, as described below, you must remain employed by the Company until Performance Shares are issued, which (if earned) will occur in four annual installments after the end of the Fiscal Year.

			
	
			
				 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 this Fiscal Year, i.e., FY2017.

			
	
			
				 3.2.
			Number of Performance Shares Earned. The number of Performance Shares earned depends on the Corporate Performance Factor for this Fiscal Year (which is based partly on EPS and partly on the achievement of five specified Strategic Transformation Imperatives, as described below) and your Individual Performance Factor for the Fiscal Year. Specifically, the number of Performance Shares earned for the Fiscal Year is determined as follows: 

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

		
			where:
		

			
	
			
				 ·
			

			
	
			
			“Base Number of Shares” is _____;

			
	
			
				 ·
			

			
	
			
			“Corporate Performance Factor” is the percentage determined based partly on EPS and partly on the achievement of the five specified Strategic Transformation Imperatives, as described in the next Section; and 

		 

		

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				 ·
			

			
	
			
			“Individual Performance Factor” is the percentage based on your “Collaboration Rating” and your “Bottom Line Contribution to Results Rating” for the Fiscal Year as 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. You have previously been provided with a written description of how this percentage is determined as a function of your achievement of some, many, nearly all, or none of your personal goals and whether your performance meets, exceeds, or falls short of expectations.

		
			The total number of Performance Shares that may be earned for the Fiscal Year, however, may not exceed 100% of the Base Number of Shares.
		

			
	
			
				 3.3.
			Determination of “Corporate Performance Factor.” The “Corporate Performance Factor,” which is a percentage between __% and __% (inclusive), is the sum of two separate components: (i) the “EPS Component,” which is based on EPS and can range from a minimum of __% to a maximum of __%, and (ii) the “STI Component,” which is based on the Company’s achievement of its Strategic Transformation Imperatives and can range from a minimum of __% to a maximum of __%. Each of these two components – the EPS Component and the STI Component – of the Corporate Performance Factor is defined below.

			
	
			
				 3.4.
			EPS Component. The EPS Component of the Corporate Performance Factor for the Fiscal Year is a percentage based on EPS relative to the applicable Threshold EPS, Midpoint EPS, and Target EPS and the specified intermediate EPS amounts, i.e., the EPS amounts between Threshold EPS and Target EPS specified in the following table. 

			
					
						 

					
					
						 

				
	
					
						If EPS is:

					
					
						Then the EPS Component is:

				
	
					
						Less than Threshold EPS

					
					
						__

				
	
					
						Exactly equal to Threshold EPS

					
					
						__%

				
	
					
						Greater than Threshold EPS but less than Midpoint EPS

					
					
						Determined by multiplying __% by the number of cents by which EPS exceeds Threshold EPS, rounding up or down to the nearest whole percentage, and adding the result to __%

				
	
					
						Exactly equal to Midpoint EPS

					
					
						__%

				
	
					
						Greater than Midpoint EPS but less than Target EPS

					
					
						Determined by multiplying __% by the number of cents by which EPS exceeds Midpoint EPS, rounding up or down to the nearest whole percentage, and adding the result to __%

				
	
					
						Exactly equal to or greater than Target EPS

					
					
						__%

				

		
			 
		

			
	
			
				 3.5.
			Applicable Parameters for EPS Component. The Threshold EPS, Midpoint EPS, and Target EPS for this Fiscal Year are as follows:

			
					
						 

					
					
						 

				
	
					
						Threshold EPS

					
					
						$__ 

				
	
					
						Midpoint EPS

					
					
						$__ 

				
	
					
						Target EPS

					
					
						$__ 

				

		
			

		 

		

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				 3.6.
			STI Component. The STI Component of the Corporate Performance Factor for the Fiscal Year is a percentage determined by reference to the Company’s achievement of five Strategic Transformation Imperatives relating to the following:

			
	
			
				 ·
			

			
	
			
			The Offer – Our Value Proposition

			
	
			
				 ·
			

			
	
			
			Supply Chain

			
	
			
				 ·
			

			
	
			
			Consultative-Relationship Team Selling

			
	
			
				 ·
			

			
	
			
			Digital and Internet Marketing & Commerce and Intelligence

			
	
			
				 ·
			

			
	
			
			Customer Journey Touchpoints

		
			Associated with each of these five Strategic Transformation Imperatives are one or two Key Performance Indicators (“KPIs”). In order for a particular Strategic Transformation Imperative to be considered achieved, all KPIs associated with that Strategic Transformation Imperative (if there is more than one) must be satisfied. 
		

			
					
						 

					
					
						 

				
	
					
						If the number of Strategic Transformation Imperatives achieved is:

					
					
						Then the STI Component is

				
	
					
						Fewer than 3

					
					
						__%

				
	
					
						3

					
					
						__%

				
	
					
						4

					
					
						__%

				
	
					
						5

					
					
						__%

				

		
			 
		

		
			 
		

		
			You have been provided with the details of the KPIs associated with the five Strategic Transformation Imperatives. 
		

			
	
			
				 Section 4.
			Issuance and Distribution of Performance Shares. Performance Shares earned as described in Section 3 will be issued and distributed to you in four (4) approximately equal installments on or about May 1, 2017, 2018, 2019, and 2020, subject to Section 5.

			
	
			
				 Section 5.
			Continued Employment.  

			
	
			
				 5.1.
			Unless there is a Change in Control before the end of the Fiscal Year (in which case Section 7.1 will apply), in order to earn Performance Shares for the Fiscal Year, you must be employed by the Company on the last day of the Fiscal Year. If your employment terminates (for whatever reason) before the end of the Fiscal Year, you will not earn any Performance Shares for the Fiscal Year (except to the extent that Section 7.1 applies).

			
	
			
				 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 3.6 or, if there is a Change in Control, in Section 7.2). 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 (and the shares will be immediately granted to you upon termination), however, if:

			
	
			
				 ·
			

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

		 

		

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				 ·
			

			
	
			
			You terminated your employment for Good Reason;

			
	
			
				 ·
			

			
	
			
			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:

		
			Example 1If EPS for FY2017 is at least $__, then the EPS Component of the Corporate Performance Factor for the Fiscal Year is __%. If four out of five of the Strategic Transformation Imperatives are achieved, then the STI Component of the Corporate Performance Factor is __%. The Corporate Performance Factor for the Fiscal Year then is the sum of these two percentages, i.e., __% + __% = __%. If your Individual Performance Factor for the Fiscal Year is __%, then you will earn __% x __% = __% of your Base Number of Shares. Assuming that you remain employed as required by Section 5 (and there is no intervening Change in Control as described in Section 7), the Performance Shares earned will be distributed to you in four approximately equal installments on May 1, 2017, 2018, 2019, and 2020.
		

		
			Example 2If, as in Example 1 above, the EPS Component of the Corporate Performance Factor for the Fiscal Year is __%. (because EPS for FY2017 is at least $__) and the STI Component of the Corporate Performance Factor is __% (because four out of five of the Strategic Transformation Imperatives are achieved), but your Individual Performance Factor is __%, then you will earn __% of your Base Number of Shares. Even though __% x __% = __%, you cannot earn more than __% of your Base Number of Shares. (Indeed, if your Individual Performance Factor is at least __%, you will earn __% of your Base Number of Shares, since __% x __% = __%, which exceeds __%.)
		

		
			Example 3
		

			
	
			
				 (a)
			

			
	
			
			If EPS for FY2017 is $__ (i.e., equals Threshold EPS), then the EPS Component of the Corporate Performance Factor for the Fiscal Year is __%.

			
	
			
				 (b)
			

			
	
			
			If EPS for FY2017 is $__, then the EPS Component of the Corporate Performance Factor for the Fiscal Year is __% [__% + (($__ – $__) x __%) rounded to nearest whole percentage]. 

			
	
			
				 (c)
			

			
	
			
			If EPS for FY2017 is $__ (i.e., equals Midpoint EPS), then the EPS Component of the Corporate Performance Factor for the Fiscal Year is __%.

			
	
			
				 (d)
			

			
	
			
			If EPS for FY2017 is $__, then the EPS Component of the Corporate Performance Factor for the Fiscal Year is __% [__% + (($__ – __) x __%) rounded to nearest whole percentage]. 

			
	
			
				 (e)
			

			
	
			
			If EPS for FY2017 is $__ or greater (i.e., equals or exceeds Target EPS), then the Corporate Performance Factor for the Fiscal Year is __%.

		 

		

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				 Section 7.
			Change in Control. If there is a Change in Control of the Company, then (notwithstanding Section 5):

			
	
			
				 7.1.
			If the Change in Control occurs during this Fiscal Year, i.e., FY2017 (provided you are employed by the Company on the date of the Change in Control), you will earn the entire Base Number of Performance Shares, i.e., as though (i) the Corporate Performance Factor is __% and (ii) your Individual Performance Factor is __%. Any Performance Shares so earned will be issued and distributed to you effective as of the Change in Control;

			
	
			
				 7.2.
			If the Change in Control occurs after the end of this Fiscal Year, (provided you are employed by the Company on the date of the Change in Control), any Performance Shares that you have earned for this Fiscal Year 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; and

			
	
			
				 7.3.
			Except as provided in this Section, this Agreement and your right to earn Performance Shares will terminate.

			
	
			
				 Section 8.
			Adjustment of Number of Performance Shares, etc.

			
	
			
				 8.1.
			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, Target EPS, Base Number of Shares, and the Maximum Number of Performance Shares, shall 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. 

			
	
			
				 8.2.
			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, Target 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. 

			
	
			
				 8.3.
			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. 

			
	
			
				 8.4.
			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 

		 

		

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	shares received under this Agreement in a transaction involving a public offering within the meaning of the Securities Act as then in effect.

			
	
			
				 8.5.
			Shares Fully Paid and Nonassessable. All Shares issued under this Agreement will upon issuance be fully paid and nonassessable.

			
	
			
				 Section 9.
			Restrictions on Transfer; Legends.  

			
	
			
				 9.1.
			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, transferred, 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 be expressly 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 (i) such transfer is made pursuant to an effective registration statement or is exempt from or otherwise permitted under applicable federal and state securities laws and (ii) if the Company so requests or if a legend appearing on the certificate evidencing such shares (or the transfer ledger reflecting such shares, if such shares are in uncertificated form) so requires, the owner delivers an opinion of counsel reasonably satisfactory to counsel for the Company to the effect that such transfer is permitted under applicable federal and state securities laws. Any purported transfer in violation of the foregoing restrictions will be ineffective.

			
	
			
				 9.2.
			Stock Certificate Legends, etc. 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 (or, if such shares are issued in uncertificated form, the transfer ledger of the Company may so or similarly reflect):

		
			No sale, offer to sell, or other transfer of the securities represented by this certificate may be made unless a registration statement under the Securities Act of 1933, as amended (the “Act”), and applicable state securities laws is in effect with respect to the securities or an exemption from the registration provisions of the Act is then in fact applicable. 
		

		
			In addition, if the Company determines that the owner of any such shares is an “affiliate” of the Company within the meaning of that term under the Securities Act of 1933, as amended, and the regulations promulgated thereunder, the following additional legend may be required: 
		

		
			The securities represented by this certificate are beneficially owned by an “affiliate” of the issuer and may not be sold, offered for sale, pledged, hypothecated, or otherwise transferred except: (i) in conjunction with an effective registration statement with respect to such securities under the Act and applicable state securities laws; (ii) pursuant to the terms of Rule 144 under the Act; or (iii) pursuant to an opinion of counsel satisfactory to the issuer that such registration or compliance is not required. 
		

		 

		

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				 Section 10.
			Miscellaneous.

			
	
			
				 10.1.
			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.

			
	
			
				 10.2.
			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. 

			
	
			
				 10.3.
			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.

			
	
			
				 10.4.
			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.
		

			
	
			
				 10.5.
			Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware (without regard to any provision that would result in the application of the laws of any other state or jurisdiction).

			
	
			
				 10.6.
			Headings. The descriptive headings in this Agreement are inserted for convenience of reference only and do not constitute a part of this Agreement.

			
	
			
				 10.7.
			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. 

		 

		

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				 10.8.
			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.

			
	
			
				 10.9.
			Withholding Taxes. The Company will be entitled to require as a condition of delivery to you of any Performance Shares (whether evidenced by a physical certificate or made by electronic transfer) 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).

			
	
			
				 10.10.
			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 than 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.

			
	
			
				 10.11.
			Section 409A. The payments to you pursuant to this Agreement are intended to be exempt from Section 409A of the Internal Revenue Code of 1986, as amended, as short-term deferrals pursuant to Treasury Regulation §1.409A-1(b)(4), and for this purpose each payment shall constitute a “separately identified” amount within the meaning of Treasury Regulation §1.409A-2(b)(2).

			
	
			
				 Section 11.
			Glossary. The following capitalized terms have the meanings set forth in this Section:

			
	
			
				 11.1.
			“Base Number of Shares” is defined in Section 3.2.

			
	
			
				 11.2.
			“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; or

			
	
			
				(iii)
			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.

			
	
			
				 11.3.
			“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 

		 

		

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	indirectly, of securities of the Company representing fifty percent (50%) or more of the combined voting power of the then-outstanding securities of the Company; or

			
	
			
				(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 thirty percent (30%) 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 entity 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.

			
	
			
				 11.4.
			“Compensation Committee” means the Compensation Committee of the Company’s Board of Directors as constituted from time to time.

			
	
			
				 11.5.
			“Corporate Performance Factor” is defined in Section 3.3.

			
	
			
				 11.6.
			“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 for a period of one hundred eighty (180) consecutive days as certified by a physician designated by or acceptable to the Company.

			
	
			
				 11.7.
			“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 Value Share 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. In this connection:

			
	
			
				(i)
			The Compensation Committee may make such adjustments to EPS, and to Threshold EPS, Midpoint EPS, and Target 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 8.1 or 8.2, or other extraordinary or nonrecurring events not contemplated in developing the Threshold EPS, Midpoint EPS,  and Target EPS 

		 

		

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	targets, in order to preserve the Compensation Committee’s intent in issuing this and similar Agreements; and

			
	
			
				(ii)
			In addition, and without limiting the generality of the foregoing, if the Company’s consolidated diluted earnings per share before taking into account the costs associated with the grant of Performance Shares under this and similar Agreements would exceed Threshold EPS but such consolidated diluted earnings per share after taking into account such costs would be less than Threshold EPS, then the number of Performance Shares earned under this and similar Agreements will be determined based on the maximum EPS Component (even though such EPS Component is less than __%) such that the Company’s consolidated diluted earnings per share after giving effect to the grant of Performance Shares based on such EPS Component (and taking into account all other costs for the Fiscal Year associated with all elements of the Company’s Value Share Program or successor incentive compensation arrangements) will not be less than Threshold EPS. 

			
	
			
				 11.8.
			“Fiscal Year” means a fiscal year of the Company.

			
	
			
				 11.9.
			“FY2017” means the Fiscal Year ending March 26, 2017.

			
	
			
				 11.10.
			“Good Reason” means:

		
			(i)any material adverse change in your duties 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.
		

			
	
			
				 11.11.
			“Individual Performance Factor” is defined in Section 3.2.

			
	
			
				 11.12.
			“Performance Share” means a share of Performance Stock.

			
	
			
				 11.13.
			“Performance Stock” means common stock of the Company that may become issuable to you under this Agreement.

			
	
			
				 11.14.
			“Performance Stock Unit” or “PSU” means your right to receive, subject to the terms and conditions contained in this Agreement, one (1) Performance Share.

		
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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:

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				

		
			 
		

		 

		

			11Exhibit 10.1

 

GUARANTY

 

This Guaranty (as amended, restated, supplemented or otherwise modified from time to time, this “Guaranty”) dated as of August 3, 2016 is made by Dynegy Inc., a Delaware corporation (“Guarantor”) in favor of J-POWER USA Development Co., Ltd., a Delaware corporation (“Beneficiary”)

 

WITNESSETH:

 

WHEREAS, Beneficiary and Elwood Expansion Holdings, LLC, a Delaware limited liability company, Elwood Energy Holdings, LLC, a Delaware limited liability company, Tomcat Power, LLC, a Delaware limited liability company and Elwood Energy Holdings II, LLC, a Delaware limited liability company (together, “Sellers”), are parties to that certain Membership Interest Purchase Agreement dated as of the date hereof (the “MIPA”), for the sale by Sellers of the Transferred Interests (as defined in the MIPA);

 

WHEREAS, Sellers are wholly-owned indirect subsidiaries of Guarantor, and Guarantor will receive a continuing benefit from Beneficiary’s execution and performance of the MIPA; and

 

WHEREAS, subject to the terms and conditions set forth herein, in order to induce Beneficiary to enter into the MIPA, Guarantor desires to guarantee the payment and performance obligations of Sellers set forth in the MIPA.

 

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Guarantor agrees as follows:

 

ARTICLE 1
 DEFINITIONS; RULES OF INTERPRETATION

 

Section 1.1                                   Definitions.  Capitalized terms used herein and not otherwise defined shall have the meanings given in the MIPA.

 

Section 1.2                                   Rules of Interpretation.  The rules of interpretation set forth in Section 1.02 of the MIPA shall apply, mutatis mutandis, to this Guaranty.

 

ARTICLE 2
 GUARANTY

 

Section 2.1                                   Guaranty.  For value received, Guarantor hereby absolutely, unconditionally and irrevocably guarantees to Beneficiary, as primary obligor and not as surety, the prompt payment and performance of all obligations, now or hereafter existing, of Sellers (including, without limitation, any assignee permitted thereunder) under the MIPA, including, without limitation, the payment of any amounts due pursuant to Section 8.01 of the MIPA to Beneficiary or other Indemnified Purchaser Entity (together with any and all costs and expenses, including reasonable counsel fees and expenses, incurred by Beneficiary in enforcing its rights under this Guaranty, the “Guarantied Obligations”) whether according to the present terms of the 

 

 

MIPA or pursuant to any change in the terms, covenants or conditions of the MIPA at any time after the date hereof made or granted, including, without limitation, pursuant to any amendments, or waivers affecting the MIPA and the transactions contemplated by the MIPA.  In the event that Sellers fail in any manner whatsoever to pay or perform any of the Guarantied Obligations when due, Guarantor will itself duly and promptly pay and perform the Guarantied Obligations, or cause the Guarantied Obligations to be duly and promptly paid and performed, in each case as if Guarantor were itself Sellers with respect to the Guarantied Obligations.  This Guaranty shall remain in full force and effect from the date hereof until payment and performance in full of the Guarantied Obligations.

 

Section 2.2                                   Nature of Guaranty.  This Guaranty constitutes a Guaranty of payment and performance when due and not of collection, and Guarantor specifically agrees that it shall not be necessary or required that Beneficiary exercise any right, assert any claim or demand or enforce any remedy whatsoever against Sellers either before or as a condition to the obligations of Guarantor hereunder; provided, that Guarantor shall have the benefit of and the right to assert any defenses against the claims of Beneficiary that are available to Sellers, and that would have also been available to Guarantor if Guarantor had been in the same contractual position as Sellers under the MIPA other than (a) defenses arising from the insolvency, reorganization or bankruptcy of Sellers, (b) defenses expressly waived in this Guaranty, and (c) defenses previously asserted by Sellers against such claims to the extent such defenses have been finally resolved in Beneficiary’s favor by a court of last resort.  For the avoidance of doubt, payment or performance by Guarantor under the MIPA shall be due hereunder when and if such payment or performance is due (and in the case of a payment, payable) by Sellers (by acceleration or otherwise) to Beneficiary or other Indemnified Purchaser Entity under Article 8 of the MIPA.  All sums payable by Guarantor hereunder shall be paid by wire transfer of immediately available funds to an account designated by Beneficiary.

 

Section 2.3                                   Unconditional Obligations.  The obligations of Guarantor under this Guaranty are independent of the Guarantied Obligations and any obligations of Sellers under the MIPA, and an action may be brought and prosecuted against Guarantor to enforce this Guaranty, irrespective of whether any action is brought against Sellers, or whether Sellers are joined in any such action or actions.  The liability of Guarantor under this Guaranty shall be irrevocable, absolute and unconditional irrespective of, and Guarantor hereby irrevocably waives, any circumstance that constitutes a legal or equitable discharge under applicable Law of a guarantor or surety other than satisfaction in full of the Guarantied Obligations including, for the avoidance of doubt, (i) the validity, legality or enforceability of the MIPA or any agreement or document in connection with the MIPA, any of the Guarantied Obligations or any collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by Sellers, (ii) any claim, set-off, counterclaim or other right which may at any time be available to or be asserted by Sellers or Guarantor against Beneficiary or any of its Affiliates in connection with the Guarantied Obligations or otherwise, (iii) any requirement that Beneficiary exhaust any right to take any action against Sellers or any other Person prior to or contemporaneously with proceeding to exercise any right against Guarantor under this Guaranty, (iv) any change in the applicable Law of any jurisdiction, or (v) any present or future action of any Governmental Entity amending, varying, reducing or otherwise affecting or purporting to amend, vary, reduce or otherwise affect, any of the obligations of Sellers under the MIPA or of Guarantor under this 

 

 

Guaranty, and Guarantor hereby waives any defense based on or arising out of any of the foregoing clauses (i) through (v). 

 

Without limiting the generality of the foregoing, Guarantor hereby agrees, acknowledges and represents and warrants to Beneficiary as follows:

 

(a)         Guarantor hereby waives any defense arising by reason of, and any and all right to assert against Beneficiary any claim or defense based on, an election of remedies by Beneficiary which in any manner impairs, affects, reduces, releases, destroys and/or extinguishes Guarantor’s rights to proceed against Sellers or any other guarantor for reimbursement, indemnification or contribution, and/or any other rights of Guarantor to proceed against Sellers, any other guarantor, or any other Person or security.

 

(b)         Guarantor has independently reviewed the MIPA and has made an independent determination as to the validity and enforceability thereof, and in executing and delivering this Guaranty to Beneficiary, Guarantor is not in any manner relying upon the validity, and/or enforceability, and/or attachment, and/or perfection of any Liens of any kind or nature granted by Sellers to Beneficiary, now or at any time and from time to time in the future.

 

Section 2.4                                   Waiver.  Guarantor hereby unconditionally waives promptness, presentment, demand of payment, protest for nonpayment or dishonor, diligence, notice of acceptance and any other notice with respect to any of the Guarantied Obligations by Beneficiary, and all defenses not otherwise available to Sellers under the MIPA which may be available to Guarantor by virtue of any valuation, stay, moratorium law or other similar law now or hereafter in effect and any right to require the marshalling of assets of Sellers or any other Person interested in the transactions contemplated by the MIPA.  The Guarantied Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred in reliance upon this Guaranty and all dealings between Sellers or Guarantor, on the one hand, and Beneficiary, on the other hand, shall likewise be conclusively presumed to have been had or consummated in reliance upon this Guaranty.  Guarantor hereby waives any defense based on (a) lack of authority of Sellers to enter into the MIPA or perform their obligations thereunder, (b) the failure of Sellers or any of their Affiliates to assert any claim or demand or to enforce any right or remedy under the provisions of the MIPA or any agreement or other document in connection with the MIPA or the transactions contemplated thereby, (c) any rescission, waiver, amendment or modification of any of the terms or provisions of the MIPA or any agreement or other document in connection with the MIPA (including, without limitation, any change in the time, place or manner of payment or performance of the Guarantied Obligations), (d) any insolvency, bankruptcy, reorganization, assignment for the benefit of creditors, liquidation, dissolution, or similar proceedings with respect to Sellers, (e) the release of, or any impairment of or failure to protect, secure, perfect or insure any Lien at any time held by Sellers at any time for the payment of the Guarantied Obligations, (f) any default, failure or delay, willful or otherwise, in the performance of the Guarantied Obligations, (g) the sale, exchange, waiver, surrender, substitution or release of any collateral security, guarantee or right of offset at any time held by Sellers for the payment of the Guarantied Obligations, (h) the adequacy of any other means Beneficiary may have of obtaining payment and performance of the Guarantied Obligations, (i) change of name, purpose, structure, organizational documents or ownership of Sellers and (j) any 

 

 

change in the financial condition of Guarantor or Sellers.  Without limitation, Beneficiary may at any time and from time to time without notice to or consent of Guarantor and without impeding or releasing the obligations of Guarantor hereunder: (i) make any change to the terms of the Guarantied Obligations, including granting extensions, renewals, release or discharges of Sellers; (ii) take or fail to take any action of any kind in respect of any security for the Guarantied Obligations; (iii) exercise or refrain from exercising any rights against Sellers in respect of the Guarantied Obligations; (iv) compromise or subordinate the Guarantied Obligations, including any security therefore or accept settlement from Sellers; or (v) apply any sums received to any indebtedness for which Sellers are liable, whether or not such indebtedness is a Guarantied Obligation.

 

Section 2.5                                   No Subrogation.  Notwithstanding any payment or payments made by Guarantor under this Guaranty or any set-off or application of funds of Guarantor by Beneficiary, Guarantor shall not be entitled to be subrogated to any of the rights of Beneficiary against Sellers or any collateral security or Guaranty or right of offset held by Beneficiary for the payment of the Guarantied Obligations, nor shall Guarantor seek or be entitled to seek any contribution or reimbursement from Beneficiary in respect of payments made by Guarantor under this Guaranty.

 

Section 2.6                                   Representations and Warranties.  Guarantor hereby represents and warrants that:

 

(a)                                 it is a corporation duly organized and validly existing under the laws of Delaware;

 

(b)                                 the execution, delivery and performance by it of this Guaranty are within its corporate powers, have been duly authorized by all necessary corporate action, and do not contravene (i) its articles of incorporation  and any other organizational documents, (ii) any contractual restriction binding on or affecting it or its assets or (iii) applicable Law;

 

(c)                                  no consent of any Person is required for the due execution, delivery and performance by it of this Guaranty;

 

(d)                                 this Guaranty has been duly executed and delivered by Guarantor and is the legal, valid and binding obligation of Guarantor enforceable against Guarantor in accordance with its terms, except to the extent that enforceability may be limited by bankruptcy, insolvency or other laws affecting creditors’ rights generally;

 

(e)                                  there is no claim now pending or, to the best of its knowledge, threatened against it before any Governmental Entity or arbitral tribunal that is reasonably likely to have a material adverse effect on its ability to perform its obligations under this Guaranty; and

 

(f)                                   no bankruptcy, reorganization or insolvency proceedings are pending by or against Guarantor, as debtor.

 

Section 2.7                                   Termination.  If the MIPA is terminated prior to the Closing, this Guaranty shall terminate and be of no further force or effect.  Subject to Section 2.3, this Guaranty shall terminate and be of no further force or effect with respect to the Guarantied Obligations on the 

 

 

date that is two (2) years following the Tier One Closing Date; provided, however, that, subject to the terms and conditions of this Guaranty, any such termination shall not prejudice any outstanding claim validly made by Beneficiary against Guarantor hereunder prior to such termination date.

 

ARTICLE 3
 MISCELLANEOUS

 

Section 3.1                                   Governing Law.  This Guaranty shall be governed by and interpreted in all respects in accordance with the laws of the State of New York without reference to conflicts of laws.

 

Section 3.2                                   Consent to Jurisdiction.  Guarantor, and, by acceptance hereof, Beneficiary hereby irrevocably and unconditionally (a) submits to the non-exclusive jurisdiction of any New York state or federal court sitting in Manhattan in any action or proceeding arising out of or relating to this Guaranty, or for recognition or enforcement of any judgment, (b) agrees that all claims in respect of any such action or proceeding may be heard and determined in any such court, (c) agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law, and (d) waives, to the fullest extent permitted by Law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of this Guaranty and any claim that any such action or proceeding has been brought in an inconvenient forum.  Guarantor irrevocably appoints its registered agent as its agent to receive service of process or other legal summons for purposes of any such action or proceeding.  Nothing herein shall affect the right of Beneficiary to serve process in any other manner permitted by Law or to commence legal proceedings or otherwise proceed against Guarantor in any other jurisdiction.  Guarantor agrees that service of process, summons, notice or other documents in the manner set forth in Section 3.5 to its registered agent at the address set forth in Section 3.5 will be effective service or process for any action, suit, or proceeding brought against it in any New York state or federal court sitting in Manhattan, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

 

Section 3.3                                   Waiver of Jury Trial.  GUARANTOR, AND, BY ACCEPTANCE HEREOF, BENEFICIARY KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVES ANY RIGHT IT MAY NOW OR HEREAFTER HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED HEREIN, OR ARISING OUT OF, UNDER, OR IN RESPECT OF THIS GUARANTY, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF BENEFICIARY OR GUARANTOR.

 

Section 3.4                                   Amendments, Etc.  No amendment or waiver of any provision of this Guaranty, and no consent to any departure by Guarantor or Beneficiary herefrom, shall in any event be effective unless the same shall be in writing and signed by Beneficiary and Guarantor, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

 

 

Section 3.5                                   Notices.  Unless otherwise expressly specified or permitted hereunder, all notices, approvals, consents, waivers and other communications provided for herein between Guarantor and Beneficiary shall be in writing or shall be produced by a telecommunications device capable of creating a written record, and any such communication shall become effective (a) upon personal delivery thereof, including by overnight mail or next Business Day or courier service, (b) in the case of notice by U.S. mail, certified or registered, postage prepaid, return receipt requested, upon receipt thereof, or (c) in the case of notice by a telecommunications device, upon transmission thereof; provided, that such transmission is promptly confirmed, in each case addressed as provided in this Section 3.5, or to such other address as the relevant Person may designate by notice to:

 

	
If to Guarantor, to:
    	
 
    	
with a copy to:
    
	
 
    	
 
    	
 
    
	
Dynegy Inc. 
    	
 
    	
Skadden, Arps, Slate,   Meagher & Flom LLP
    
	
601 Travis Street
    	
 
    	
1440 New York Avenue,   N.W.
    
	
Houston, TX 77002
    	
 
    	
Washington, D.C. 20005
    
	
Attn: Catherine   James, Esq., Executive Vice President and General Counsel
    	
 
    	
Attention: Michael P.   Rogan
    
	
 
    	
Facsimile No.: (202)   661-8200
    
	
Facsimile No.: (713)   507-6808
    	
 
    	
Email:   michael.rogan@skadden.com
    
	
Email:   catherine.james@dynegy.com
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
If to Beneficiary, to:
    	
 
    	
with a copy to:
    
	
 
    	
 
    	
 
    
	
J-POWER USA Development   Co., Ltd.
    	
 
    	
James P. O’Brien
    
	
1900 East Golf Road,   Suite 1030
    	
 
    	
Baker &   McKenzie LLP
    
	
Schaumburg, Illinois   60173
    	
 
    	
300 E. Randolph Drive,   Suite 5000
    
	
Phone: (847) 908-2800
    	
 
    	
Chicago, IL 60601
    
	
Fax: (847) 908-2888
    	
 
    	
Facsimile No.: (312)   698-2324
    
	
 
    	
 
    	
Email: james.p.o’brien@bakermckenzie.com
    

 

Section 3.6                                   No Waiver; Remedies.  No failure on the part of Beneficiary or Guarantor to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right.  The remedies herein provided are cumulative and not exclusive of any remedies provided by Law.

 

Section 3.7                                   Severability.  In case any one or more of the provisions contained in this Guaranty should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impeded thereby.

 

Section 3.8                                   Entire Agreement.  This Guaranty and any agreement, document or instrument referred to herein integrate all the terms and conditions mentioned herein or incidental hereto and supersede all oral negotiations and prior writings in respect of the subject matter hereof.

 

Section 3.9                                   Continuing Guaranty.  This Guaranty is a continuing Guaranty and shall (a) remain in full force and effect until payment and performance in full of the Guarantied 

 

 

Obligations, (b) be binding upon Guarantor and its successors and assigns and (c) inure to the benefit of and be enforceable by Beneficiary and its successors and assigns.  Notwithstanding the foregoing, neither of Guarantor nor Beneficiary may assign its rights or obligations hereunder in whole or in part to any other Person, and no assignment shall relieve Guarantor of its obligations hereunder; provided that Beneficiary shall have the right to assign this Guaranty to an assignee of the MIPA under Section 10.11 of the MIPA.

 

Section 3.10                            Financial Condition of Sellers.  Guarantor is familiar with the financial conditions of Sellers, and has executed and delivered this Guaranty based on Guarantor’s own judgment and not in reliance upon any statement or representation of Beneficiary. Beneficiary shall have no obligation to provide Guarantor with any advice or to inform Guarantor at any time of Beneficiary’s actions, evaluations or conclusions on the financial condition or any other matter concerning Sellers.

 

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IN WITNESS WHEREOF, Guarantor, intending to be legally bound, has caused this Guaranty to be executed by its duly authorized representative as of the date first written above.

 

 

	
 
    	
DYNEGY INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Mathew J. Parker
    
	
 
    	
Name: Mathew J. Parker
    
	
 
    	
Title: VP and Chief Risk Officer

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