Exhibit 10.7

NONSTATUTORY STOCK OPTION GRANT AGREEMENT

UNDER THE

TELECOMMUNICATION SYSTEMS, INC.

AMENDED AND RESTATED STOCK INCENTIVE PLAN

The Stock Option Certificate that is attached hereto constitutes a part of this
Nonstatutory Stock Option Grant Agreement.

1. Terminology. All capitalized words that are not defined in this Agreement
have the meanings ascribed to them in the Plan or the Stock Option Certificate.
For purposes of this Agreement, the terms below have the following meanings:

(a) “Cause” has the meaning ascribed to such term or words of similar import in
the Optionee’s written employment or service contract with the Company and, in
the absence of such agreement or definition, means: (i) the willful commission
by the Optionee of a criminal or other act that causes or is likely to cause
substantial economic damage to the Company or substantial injury to the business
reputation of the Company; (ii) the commission by the Optionee of an act of
fraud in the performance of such Optionee’s duties on behalf of the Company; or
(iii) the continuing willful failure of the Optionee to perform the duties of
such Optionee to the Company (other than such failure resulting from the
Optionee’s incapacity due to physical or mental illness), all as determined by
the Administrator, which determination will be conclusive. For purposes of this
Agreement, no act, or failure to act, on the Optionee’s part shall be considered
“willful” unless done or omitted to be done by the Optionee not in good faith
with the reasonable belief that the Optionee’s action or omission was in the
best interest of the Company.

(b) “Change in Control” means: (i) an acquisition (other than from the Company)
in a transaction, or a series of related transactions, by any person, entity or
“group,” within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934 (the “Exchange Act”), (excluding for this purpose, (A) the
Company or its subsidiaries, (B) any employee benefit plan of the Company or its
subsidiaries which acquires beneficial ownership of voting securities of the
Company, (C) an underwriter temporarily holding securities pursuant to an
offering of such securities, or (D) any corporation owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors) of beneficial
ownership, within the meaning of Rule 13d-3 promulgated under the Exchange Act,
of 50% or more of either the then outstanding shares of common stock or the
combined voting power of the Company’s then outstanding voting securities
entitled to vote generally in the election of directors (the “Company Voting
Stock”); (ii) the effective time of any merger, share exchange, consolidation or
other reorganization or business combination of the Company if immediately after
such transaction persons who hold a majority of the outstanding voting
securities entitled to vote generally in the election of directors of the
surviving entity (or the entity owning 100% of such surviving entity) are not
persons who held the Company Voting Stock immediately prior to such transaction;
(iii) the closing of a sale or conveyance of all or substantially all of the
assets of the Company; (iv) individuals who were the Board’s nominees

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for election as directors immediately prior to a meeting of the stockholders of
the Company involving an actual or threatened election contest relating to the
election of the directors of the Company, as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Exchange Act, cease to constitute a
majority of the Board following the election; or (v) the dissolution or
liquidation of the Company; provided, however, that the term “Change in Control”
does not include a public offering of capital stock of the Company that is
effected pursuant to a registration statement filed with, and declared effective
by, the Securities and Exchange Commission under the Securities Act of 1933.

(c) “Company” means TeleCommunication Systems, Inc. and its Affiliates, except
where the context otherwise requires. For purposes of determining whether a
Change in Control has occurred, Company shall mean only TeleCommunication
Systems, Inc.

(d) “Option Shares” mean the shares of Common Stock underlying the Options.

(e) “Total and Permanent Disability” means the inability to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or which has lasted
or can be expected to last for a continuous period of not less than twelve
months. The Administrator may require such proof of Total and Permanent
Disability as the Administrator in its sole discretion deems appropriate and the
Administrator’s good faith determination as to whether the Optionee is totally
and permanently disabled will be final and binding on all parties concerned.

2. Vesting. The Options vest in accordance with the vesting schedule identified
in the Stock Option Certificate which is attached hereto and constitutes a part
of the Agreement (the “Vesting Schedule”), so long as the Optionee is in the
continuous employ of, or in a service relationship with, the Company from the
Grant Date through the applicable date upon which vesting is scheduled to occur.
No vesting will accrue to any Options after the Optionee ceases to be in either
an employment or other service relationship with the Company.

3. Exercise of Options.

(a) Right to Exercise. The Optionee may exercise the Options to the extent
vested at any time on or before the Expiration Date or the earlier termination
of the Options, unless otherwise provided in this Agreement. Section 4 below
describes certain limitations on exercise of the Options that apply in the event
of the Optionee’s death, Total and Permanent Disability, discharge by the
Company without Cause or other termination of employment or other service
relationship with the Company. The Options may be exercised only in multiples of
whole shares and may not be exercised at any one time as to fewer than one
hundred shares (or such lesser number of shares as to which the Options are then
exercisable). No fractional shares will be issued under the Options.

(b) Exercise Procedure. In order to exercise the Options, the following items
must be delivered to the Administrator before the expiration or termination of
the Options: (i) an exercise notice, in such form as the Administrator may
require from time to time, specifying the number of Option Shares to be
purchased, and (ii) full payment of the Exercise Price for such Option Shares or
properly executed, irrevocable instructions, in such form as the Administrator
may require from time to time, to effectuate a broker-assisted cashless
exercise, each in accordance with Section 3(c) of this Agreement. An exercise
will not be effective until the Administrator receives all of the foregoing
items.

 

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(c) Method of Payment. Payment of the Exercise Price may be made by delivery of
cash, certified or cashier’s check, money order or other cash equivalent
acceptable to the Administrator in its discretion, a broker-assisted cashless
exercise in accordance with Regulation T of the Board of Governors of the
Federal Reserve System through a brokerage firm approved by the Administrator,
or a combination of the foregoing. In addition, payment of the Exercise Price
may be made by any of the following methods, or a combination thereof, as
determined by the Administrator in its discretion at the time of exercise:

(i) by tender (via actual delivery or attestation) to the Company of other
shares of Common Stock of the Company which have a Fair Market Value on the date
of tender equal to the Exercise Price;

(ii) by delivery of the Optionee’s full recourse promissory note payable to the
Company in a form approved by the Administrator; or

(iii) by any other method approved by the Administrator.

(d) Issuance of Shares upon Exercise. Upon exercise of the Options in accordance
with the terms of this Agreement, the Company will issue to the Optionee, the
brokerage firm specified in the Optionee’s delivery instructions pursuant to a
broker-assisted cashless exercise, or such other person exercising the Options,
as the case may be, the number of shares of Common Stock so paid for, in the
form of fully paid and nonassessable stock. The Company, in its discretion, will
either retain the Option Shares in uncertificated book entry form or deliver
stock certificates for the Option Shares as soon as practicable after exercise,
which certificates will, unless such Option Shares are registered or an
exemption from registration is available under applicable federal and state law,
bear a legend restricting transferability of such shares. Notwithstanding the
issuance of the Option Shares or the delivery of one or more stock certificates
for such Option Shares, the Option Shares shall be subject to applicable
restrictions on transfer or liquidation, if any, as set forth in the Optionee’s
written employment or service contract with the Company or pursuant to any
policy adopted by the Company, now or hereafter existing, that imposes stock
ownership requirements, stock holding requirements or stock liquidation
restrictions on the Optionee. The Company may place legends reflecting the
requirements and restrictions described in the immediately foregoing sentence on
any stock certificates for the Option Shares.

4. Termination of Employment or Service.

(a) Exercise Period Following Cessation of Employment or Other Service
Relationship, In General. If the Optionee ceases to be employed by, or in a
service relationship with, the Company for any reason other than death, Total
and Permanent Disability, or discharge by the Company without Cause, the Options
terminate in their entirety, regardless of whether the Options are vested,
immediately upon the Optionee’s termination of employment or other service
relationship.

(b) Termination by the Company Without Cause. In the event the Optionee’s
employment or other service relationship is terminated by the Company without
Cause, (i) the unvested Options, after giving effect to the provisions of
Section 2 of this Agreement, terminate immediately upon such cessation, and
(ii) the vested Options remain exercisable during the 90-day period following
such cessation, but in no event after the Expiration Date. Unless sooner
terminated, the vested Options terminate upon the expiration of such 90-day
period.

 

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(c) Disability of Optionee. Notwithstanding the provisions of Section 4(a)
above, if the Optionee ceases to be employed by, or in a service relationship
with, the Company as a result of the Optionee’s Total and Permanent Disability,
(i) the unvested Options, after giving effect to the provisions of Section 2 of
this Agreement, terminate immediately upon such cessation, and (ii) the vested
Options remain exercisable during the six-month period following such cessation,
but in no event after the Expiration Date. Unless sooner terminated, the vested
Options terminate upon the expiration of such six-month period.

(d) Death of Optionee. If the Optionee dies prior to the expiration or other
termination of the Options, (i) the unvested Options, after giving effect to the
provisions of Section 2 of this Agreement, terminate immediately upon the
Optionee’s death, and (ii) the vested Options remain exercisable during the
six-month period following the Optionee’s death, but in no event after the
Expiration Date, by the Optionee’s executor, personal representative, or the
person(s) to whom the Options are transferred by will or the laws of descent and
distribution. Unless sooner terminated, the vested Options terminate upon the
expiration of such six-month period.

(e) Misconduct. Notwithstanding anything to the contrary in this Agreement, the
Options terminate in their entirety, regardless of whether the Options are
vested, immediately upon the Optionee’s discharge of employment or other service
relationship for Cause or upon the Optionee’s commission of any of the following
acts during any period following the cessation of employment or other service
relationship during which the Options otherwise would be exercisable: (i) fraud
on or misappropriation of any funds or property of the Company, or (ii) breach
by the Optionee of any provision of any employment, non-disclosure,
non-competition, non-solicitation, assignment of inventions, or other similar
agreement executed by the Optionee for the benefit of the Company, as determined
by the Administrator, which determination will be conclusive.

5. Nontransferability of Options. These Options are nontransferable otherwise
than by will or the laws of descent and distribution and during the lifetime of
the Optionee, the Options may be exercised only by the Optionee or, during the
period the Optionee is under a legal disability, by the Optionee’s guardian or
legal representative. Except as provided above, the Options may not be assigned,
transferred, pledged, hypothecated or disposed of in any way (whether by
operation of law or otherwise) and shall not be subject to execution, attachment
or similar process.

6. Nonstatutory Nature of the Options. The Options are not intended to qualify
as incentive stock options within the meaning of Code section 422, and this
Agreement shall be so construed. The Optionee acknowledges that, upon exercise
of the Options, the Optionee will recognize taxable income in an amount equal to
the excess of the then Fair Market Value of the Option Shares over the Exercise
Price and must comply with the provisions of Section 7 of this Agreement with
respect to any tax withholding obligations that arise as a result of such
exercise.

7. Withholding of Taxes. At the time the Options are exercised, in whole or in
part, or at any time thereafter as requested by the Company, the Optionee hereby
authorizes withholding from payroll or any other payment of any kind due the
Optionee and otherwise

 

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agrees to make adequate provision for foreign, federal, state and local taxes
required by law to be withheld, if any, which arise in connection with the
Options. The Company may require the Optionee to make a cash payment to cover
any withholding tax obligation as a condition of exercise of the Options or
issuance of share certificates representing Option Shares.

The Administrator may, in its sole discretion, permit the Optionee to satisfy,
in whole or in part, any withholding tax obligation which may arise in
connection with the Options either by electing to have the Company withhold from
the shares to be issued upon exercise that number of shares, or by electing to
deliver to the Company already-owned shares, in either case having a Fair Market
Value not in excess of the amount necessary to satisfy the statutory minimum
withholding amount due.

8. Adjustments for Corporate Transactions and Other Events.

(a) Stock Dividend, Stock Split and Reverse Stock Split. Upon a stock dividend
of, or stock split or reverse stock split affecting, the Common Stock, the
number of shares covered by and the exercise price and other terms of the
Options, shall, without further action of the Board, be adjusted to reflect such
event unless the Board determines, at the time it approves such stock dividend,
stock split or reverse stock split, that no such adjustment shall be made. The
Administrator may make adjustments, in its discretion, to address the treatment
of fractional shares and fractional cents that arise with respect to the Options
as a result of the stock dividend, stock split or reverse stock split.

(b) Non-Change in Control Transactions. Except with respect to the transactions
set forth in Section 8(a), in the event of any change affecting the Common
Stock, the Company or its capitalization, by reason of a spin-off, split-up,
dividend, recapitalization, merger, consolidation or share exchange, other than
any such change that is part of a transaction resulting in a Change in Control,
the Administrator, in its discretion and without the consent of the Optionee,
shall make any adjustments in the Options, including but not limited to reducing
the number, kind and price of securities subject to the Options.

(c) Change in Control Transactions. In the event of any transaction resulting in
a Change in Control, the Options will terminate upon the effective time of any
such Change in Control unless provision is made in connection with the
transaction in the sole discretion of the parties thereto for the continuation
or assumption of the Options, or the substitution of the Options with new
options of the surviving or successor entity or a parent thereof. In the event
of such termination, the Employee will be permitted, for a period of at least 10
days prior to the effective time of the Change in Control, to exercise all of
the Options that are then exercisable or will become exercisable upon or prior
to the effective time of the Change in Control; provided, however, that any such
exercise of any Options that become exercisable as a result of the Change in
Control shall be deemed to occur immediately prior to the effective time of such
Change in Control.

(d) Adjustments for Unusual Events. The Administrator is authorized to make, in
its discretion and without the consent of the Optionee, adjustments in the terms
and conditions of, and the criteria included in, the Options in recognition of
unusual or nonrecurring events affecting the Company, or the financial
statements of the Company or any Affiliate, or of changes in applicable laws,
regulations, or accounting principles, whenever the Administrator determines
that such adjustments are appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Options or the Plan.

 

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(e) Binding Nature of Adjustments. Adjustments under this Section 8 will be made
by the Administrator, whose determination as to what adjustments, if any, will
be made and the extent thereof will be final, binding and conclusive. No
fractional shares will be issued pursuant to the Options on account of any such
adjustments. The terms and conditions of this Agreement shall apply with equal
force to any additional and/or substitute securities received by the Optionee
pursuant to this Section 8 in exchange for, or by virtue of the Optionee’s
ownership of, the Options or the Option Shares, except as otherwise determined
by the Administrator.

9. Confidential Information. In consideration of the Options granted to the
Optionee pursuant to this Agreement, the Optionee agrees and covenants that,
except as specifically authorized by the Company, the Optionee will keep
confidential any trade secrets or confidential or proprietary information of the
Company which are now or which hereafter may become known to the Optionee as a
result of the Optionee’s employment by or other service relationship with the
Company, and shall not at any time, directly or indirectly, disclose any such
information to any person, firm, Company or other entity, or use the same in any
way other than in connection with the business of the Company, at all times
during and after the Optionee’s employment or other service relationship. The
provisions of this Section 9 shall not narrow or otherwise limit the obligations
and responsibilities of the Optionee set forth in any agreement of similar
import entered into between the Optionee and the Company.

10. Non-Guarantee of Employment or Service Relationship. Nothing in the Plan or
this Agreement shall alter the at-will or other employment status or other
service relationship of the Optionee, nor be construed as a contract of
employment or service relationship between the Company and the Optionee, or as a
contractual right of Optionee to continue in the employ of, or in a service
relationship with, the Company for any period of time, or as a limitation of the
right of the Company to discharge the Optionee at any time with or without cause
or notice and whether or not such discharge results in the failure of any
Options to vest or any other adverse effect on the Optionee’s interests under
the Plan.

11. No Rights as a Stockholder. The Optionee shall not have any of the rights of
a stockholder with respect to the Option Shares until such shares have been
issued to him or her upon the due exercise of the Options. No adjustment shall
be made for dividends or distributions or other rights for which the record date
is prior to the date such shares are issued.

12. The Company’s Rights. The existence of the Options shall not affect in any
way the right or power of the Company or its stockholders to make or authorize
any or all 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, preferred or other stocks
with preference ahead of or convertible into, or otherwise affecting the Common
Stock or the rights thereof, or the 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.

13. Optionee. Whenever the word “Optionee” is used in any provision of this
Agreement under circumstances where the provision should logically be construed,
as

 

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determined by the Administrator, to apply to the estate, personal
representative, or beneficiary to whom the Options may be transferred by will or
by the laws of descent and distribution, or another permitted transferee, the
word “Optionee” shall be deemed to include such person.

14. Notices. All notices and other communications made or given pursuant to this
Agreement shall be in writing and shall be sufficiently made or given if hand
delivered or mailed by certified mail, addressed to the Optionee at the address
contained in the records of the Company, or addressed to the Administrator, care
of the Company for the attention of its Corporate Secretary at its principal
office or, if the receiving party consents in advance, transmitted and received
via telecopy or via such other electronic transmission mechanism as may be
available to the parties.

15. Entire Agreement. This Agreement contains the entire agreement between the
parties with respect to the Options granted hereunder. Any oral or written
agreements, representations, warranties, written inducements, or other
communications made prior to the execution of this Agreement with respect to the
Options granted hereunder shall be void and ineffective for all purposes.

16. Amendment. This Agreement may be amended from time to time by the
Administrator in its discretion; provided, however, that this Agreement may not
be modified in a manner that would have a materially adverse effect on the
Options or Option Shares as determined in the discretion of the Administrator,
except as provided in the Plan or in a written document signed by each of the
parties hereto.

17. Conformity with Plan. This Agreement is intended to conform in all respects
with, and is subject to all applicable provisions of, the Plan. Inconsistencies
between this Agreement and the Plan shall be resolved in accordance with the
terms of the Plan. In the event of any ambiguity in this Agreement or any
matters as to which this Agreement is silent, the Plan shall govern. A copy of
the Plan is available upon request to the Administrator.

18. Governing Law. The validity, construction and effect of this Agreement, and
of any determinations or decisions made by the Administrator relating to this
Agreement, and the rights of any and all persons having or claiming to have any
interest under this Agreement, shall be determined exclusively in accordance
with the laws of the State of Maryland, without regard to its provisions
concerning the applicability of laws of other jurisdictions. Any suit with
respect hereto will be brought in the federal or state courts in the districts
which include the city and state in which the principal offices of the Company
are located, and the Optionee hereby agrees and submits to the personal
jurisdiction and venue thereof.

19. Section 409A. This Agreement and the Options granted hereunder are intended
to comply with, or otherwise be exempt from, Section 409A of the Code. Nothing
in the Plan or this Agreement shall be construed as including any feature for
the deferral of compensation other than the deferral of recognition of income
until the exercise of the Options. Should any provision of the Plan or this
Agreement be found not to comply with, or otherwise be exempt from, the
provisions of Section 409A of the Code, it may be modified and given effect, in
the sole discretion of the Administrator and without requiring the Optionee’s
consent, in such manner as the Administrator determines to be necessary or
appropriate to comply with, or to effectuate an exemption from, Section 409A of
the Code. The foregoing, however, shall not be construed as a guarantee by the
Company of any particular tax effect to the Optionee.

 

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20. Electronic Delivery of Documents. The Optionee (i) consents to the
electronic delivery of this Agreement, all information with respect to the Plan
and the Options, and any reports of the Company provided generally to the
Company’s stockholders; (ii) acknowledges that the Optionee may receive from the
Company a paper copy of any documents delivered electronically at no cost to the
Optionee by contacting the Company by telephone or in writing; (iii) further
acknowledges that the Optionee may revoke his or her consent to the electronic
delivery of documents at any time by notifying the Company of such revoked
consent by telephone, postal service or electronic mail; and (iv) further
acknowledges that the Optionee understands that he or she is not required to
consent to electronic delivery of documents.

21. No Future Entitlement. The Optionee acknowledges and agrees that: (i) the
grant of these Options is a one-time benefit which does not create any
contractual or other right to receive future grants of stock options, or
compensation in lieu of stock options, even if stock options have been granted
repeatedly in the past; (ii) all determinations with respect to any such future
grants, including, but not limited to, the times when stock options shall be
granted or shall become exercisable, the maximum number of shares subject to
each stock option, and the purchase price, will be at the sole discretion of the
Administrator; (iii) the value of these Options is an extraordinary item of
compensation which is outside the scope of the Optionee’s employment contract,
if any; (iv) the value of these Options is not part of normal or expected
compensation or salary for any purpose, including, but not limited to,
calculating any termination, severance, resignation, redundancy, end of service
payments or similar payments, or bonuses, long-service awards, pension or
retirement benefits; (v) the vesting of these Options ceases upon termination of
employment with the Company or transfer of employment from the Company, or other
cessation of eligibility for any reason, except as may otherwise be explicitly
provided in this Agreement; (vi) if the underlying Common Stock does not
increase in value, these Options will have no value, nor does the Company
guarantee any future value; and (vii) no claim or entitlement to compensation or
damages arises if these Options do not increase in value and the Optionee
irrevocably releases the Company from any such claim that does arise.

22. Personal Data. For the exclusive purpose of implementing, administering and
managing these Options, the Optionee consents to the collection, receipt, use,
retention and transfer, in electronic or other form, of the Optionee’s personal
data by and among the Company and its third party vendors. The Optionee
understands that personal data (including but not limited to, name, home
address, telephone number, employee number, employment status, social security
number, tax identification number, date of birth, nationality, job and payroll
location, data for tax withholding purposes and shares awarded, cancelled,
exercised, vested and unvested) may be transferred to third parties assisting in
the implementation, administration and management of these Options and the Plan
and the Optionee expressly authorizes such transfer as well as the retention,
use, and the subsequent transfer of the data by the recipient(s). The Optionee
understands that these recipients may be located in the Optionee’s home country
or elsewhere, and that the recipient’s country may have different data privacy
laws and protections than the Optionee’s home country. The Optionee understands
that data will be held only as long as is necessary to implement, administer and
manage these Options. The Optionee understands that he or she may, at any time,
request a list with the names and addresses of any potential recipients of the
personal data, view data, request additional information about the storage and
processing of data, require any necessary amendments to data or refuse or
withdraw the consents herein, in any case without cost, by contacting in writing
the Company’s Secretary. The Optionee understands, however, that refusing or
withdrawing the Optionee’s consent may affect the Optionee’s ability to accept a
stock option.

 

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23. Headings. The headings in this Agreement are for reference purposes only and
shall not affect the meaning or interpretation of this Agreement.

Enclosure: Prospectus of the TeleCommunication Systems, Inc. Amended and
Restated Stock Incentive Plan

 

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