Exhibit 10.1
EXECUTION VERSION
TeleCommunication Systems, Inc.
$90,000,000
4.5% CONVERTIBLE SENIOR NOTES DUE 2014
PURCHASE AGREEMENT
November 10, 2009
OPPENHEIMER & CO. INC.
RAYMOND JAMES & ASSOCIATES INC.,
     as Representatives of the several
     Initial Purchasers named in Schedule I hereto
c/o Oppenheimer & Co. Inc.
300 Madison Avenue
New York, New York 10017
Ladies & Gentlemen:
     TeleCommunication Systems, Inc., a Maryland corporation (the “Company”),
proposes to issue and sell to Oppenheimer & Co. Inc. and the other initial
purchasers named on Schedule I to this Agreement, for whom Oppenheimer & Co.
Inc. and Raymond James & Associates Inc. are acting as Representatives (the
“Representatives”) (the “Initial Purchasers”), $90,000,000 in aggregate
principal amount of 4.5% Convertible Senior Notes due 2014 (the “Firm Notes”),
subject to the terms and conditions set forth herein.
     1. The Transaction. Subject to the terms and conditions herein contained,
the Company proposes to issue and sell to the Initial Purchasers, severally and
not jointly, the Firm Notes which are convertible into the Class A common stock
$0.01 par value per share (the “Common Stock”) of the Company. In addition, the
Company proposes to grant to the Initial Purchasers an option to purchase up to
an additional $13,500,000 principal amount of Notes from the Company (the
“Option Notes”) pursuant to the terms hereof. The Firm Notes and the Option
Notes are collectively referred to herein as the “Securities”. The Securities
are to be issued under an Indenture between the Company and The Bank of New York
Mellon, as trustee (the “Trustee”) (the “Indenture”).
     The amounts of the Securities to be purchased by each of the several
Initial Purchasers are set forth opposite their names on Schedule I hereto.

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     In connection with the sale of the Securities, the Company has prepared a
preliminary offering memorandum, dated November 9, 2009 (the “Preliminary
Offering Memorandum”), and has prepared a final offering memorandum, dated the
date hereof (the “Offering Memorandum”), each setting forth information
regarding the Company, the Securities, the terms of the Offering and the
transactions contemplated by the Transaction Documents (as defined below), and
any material developments relating to the Company occurring after the date of
the most recent financial statements included therein. Any references herein to
the Preliminary Offering Memorandum or the Offering Memorandum shall be deemed
to include, in each case, all amendments and supplements thereto and any
information and/or documents incorporated by reference therein. The Company
hereby confirms that it has authorized the use of the Disclosure Package (as
defined below) and the Offering Memorandum in connection with the offering and
resale of the Securities by the Initial Purchasers.
     The Company understands that the Initial Purchasers propose to make an
offering of the Securities (the “Exempt Resales”) only on the terms and in the
manner set forth in the Disclosure Package and the Offering Memorandum, as
amended or supplemented, and the terms hereof as soon as the Initial Purchasers
deem advisable after this Agreement has been executed and delivered, solely to
persons in the United States whom the Initial Purchasers reasonably believe to
be “qualified institutional buyers” (each, a “QIB”) as defined in Rule 144A
under the Securities Act of 1933, as amended (the “Securities Act”), as such
rule may be amended from time to time (“Rule 144A”) in transactions under
Rule 144A or pursuant to another exemption from registration requirements of the
Securities Act. The QIBs are referred to herein from time to time as the
“Eligible Purchasers.” The Initial Purchasers will offer the Securities to such
Eligible Purchasers initially at a price equal to 100% of the principal amount
thereof. Such price may be changed by the Initial Purchasers at any time without
notice.
     The Securities are convertible in accordance with their terms and the terms
of the Indenture into shares of Common Stock (except for any cash in lieu of
fractional shares) at an initial conversion rate of 96.637 shares of Common
Stock per $1,000 principal amount of Securities.
     This Agreement, the Securities, and the Indenture are hereinafter referred
to collectively as the “Transaction Documents.”
     Any references herein to “Exchange Act Reports” herein include all
documents filed by the Company with the Securities and Exchange Commission (the
“Commission”) pursuant to Section 13(a), 13(c) or 15(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). Unless stated to the
contrary, any references herein to the terms “amend”, “amendment” or
“supplement” with respect to the Disclosure Package or the Offering Memorandum
shall be deemed to refer to all Exchange Act Reports filed subsequent to the
date of this Agreement that are incorporated by reference therein.

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     Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to such terms in the Disclosure Package, and if not defined
therein, in the Indenture.
     2. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with, the Initial Purchasers that:
          (a) (i) The Preliminary Offering Memorandum as of its date did not,
(ii) the Preliminary Offering Memorandum, as supplemented by the information
listed in Schedule II hereto (the “Pricing Term Sheet”) (the Preliminary
Offering Memorandum and the Pricing Term Sheet taken together, the “Disclosure
Package”), as of the Applicable Time (as defined below) does not, (iii) the
Offering Memorandum as of its date does not, and as of the Closing Date will
not, (iv) each electronic road show when taken together as a whole with the
Disclosure Package and (v) any supplement or amendment to any of the documents
referenced in clauses (i) through (iv) above does not and will not, contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. Notwithstanding the foregoing, the
representations and warranties contained in this paragraph shall not apply to
statements in or omissions from the Preliminary Offering Memorandum or the
Offering Memorandum (or any supplement or amendment thereto, including the
Pricing Term Sheet) made in reliance upon and in conformity with Initial
Purchaser Information (as such term is defined in Section 11 hereof). For
purposes of this Agreement, the “Applicable Time” means 8:50 p.m. New York City
time on the date of this Agreement.
          (b) The Disclosure Package and the Offering Memorandum have been or
will be prepared by the Company for use by the Initial Purchasers in connection
with the offering of the Securities.
          (c) Each of the Disclosure Package and the Offering Memorandum
contains, if any, all pro forma, as adjusted financial information and
statements and consolidated financial statements including the notes thereto,
which are required to be included or incorporated by reference in accordance
with Regulation S-X promulgated under the Securities Act in the Disclosure
Package and the Offering Memorandum if the Disclosure Package and the Offering
Memorandum were prospectuses included in registration statements on Form S-1
filed with the Commission. The pro forma, as adjusted financial information and
statements, and consolidated financial statements including the notes thereto,
and the supporting schedules included in the Disclosure Package and the Offering
Memorandum present fairly the financial position as of the dates indicated and
the cash flows and results of operations for the periods specified of the
Company and its consolidated subsidiaries in the Disclosure Package and the
Offering Memorandum; except as otherwise stated in the Disclosure Package and
the Offering Memorandum, said financial statements have been prepared in
conformity with U.S. GAAP applied on a consistent basis throughout the periods
involved; and the supporting schedules included in the Disclosure Package and
the Offering Memorandum present fairly the information required to be stated
therein. No other financial statements or supporting schedules are required to
be included in the Disclosure Package or the Offering Memorandum if the
Disclosure Package or the Offering Memorandum, respectively, were included in a
registration statement filed pursuant to the Securities Act.

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          (d) Ernst & Young LLP (the “Auditor”) who have certified the financial
statements and supporting schedules of the Company and its consolidate
subsidiaries included or to be included as part of the Disclosure Package and
the Offering Memorandum, are and, during the periods covered by their report,
were an independent registered public accounting firm as required by the
Securities Act and the Exchange Act.
          (e) The Company is duly organized, validly existing and in good
standing under the laws of Maryland, its jurisdiction of incorporation, has all
requisite power and authority to carry on its business as it is currently being
conducted and as described in the Disclosure Package and the Offering
Memorandum, and to own, lease and operate its properties. The Company is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which the nature of the business conducted by it or
location of the assets or properties owned, leased or licensed by it requires
such qualification, except for those failures to be so qualified or in good
standing which (individually or in the aggregate) could not reasonably be
expected to have a material adverse effect on (A) the business, general affairs,
management, condition (financial or otherwise), results of operations,
stockholders’ equity, properties or business prospects of the Company and the
subsidiaries, individually or taken as a whole, (B) the long-term debt or
capital stock of the Company, (C) the issuance or marketability of the
Securities or (D) the validity of this Agreement or any other Transaction
Documents or the transactions described in the Disclosure Package and the
Offering Memorandum under the caption “Use of Proceeds” (any such effect being a
“Material Adverse Effect”).
          (f) The Company has no significant subsidiaries within the meaning of
Rule 405 under the Securities Act.
          (g) The Company has all requisite corporate power and authority, and
all necessary authorizations, approvals, consents, orders, licenses,
certificates and permits of and from all governmental or regulatory bodies or
any other person or entity (collectively, the “Permits”), to own, lease and
license its assets and properties and conduct its business, all of which are
valid and in full force and effect, except where the lack of such Permits,
individually or in the aggregate, would not have a Material Adverse Effect. The
Company has fulfilled and performed in all material respects all of its
obligations with respect to such Permits and no event has occurred that allows,
or after notice or lapse of time would allow, revocation or termination thereof
or results in any other material impairment of the rights of the Company
thereunder. No Permits are required to enter into, deliver and perform this
Agreement or any other Transaction Document and to issue and sell the
Securities.
          (h) Except as described in the Disclosure Package and the Offering
Memorandum and except as would not have a Material Adverse Effect; (i) the
Company owns or possesses legally enforceable rights to use all patents, patent
rights, inventions, trademarks, trademark applications, trade names, service
marks, copyrights, copyright applications, licenses, know-how and other similar
rights and proprietary knowledge (collectively, “Intangibles”) necessary for the
conduct of its business; and (ii) the Company has not received any notice of, or
is not aware of, any infringement of or conflict with asserted rights of others
with respect to any Intangibles.

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          (i) The Company has good and marketable title in fee simple to all
real property, and good and marketable title to all other property owned by it,
in each case free and clear of all Liens, except such as do not materially
affect the value of such property and do not materially interfere with the use
made or proposed to be made of such property by the Company and its
subsidiaries. All property held under lease by the Company and its subsidiaries
is held by them under valid, existing and enforceable leases, free and clear of
any lien, charge, mortgage, pledge, security interest, claim, limitation on
voting rights, equity, trust or other encumbrance, preferential arrangement,
defect or restriction of any kind whatsoever, other than a Permitted Lien (any
“Lien”), or such as are not material and do not materially interfere with the
use made or proposed to be made of such property by the Company and its
subsidiaries. A Permitted Lien is any security interest, claim, lien, limitation
on voting rights or encumbrance pursuant to the Third Amended and Restated Loan
and Security Agreement among the Company, Longhorn Acquisition, LLC and Silicon
Valley Bank dated June 26, 2009 or any statutory Liens for taxes not yet due or
securing claims or demands of materialmen, mechanics, carriers, warehousemen,
landlords and other Persons imposed without action of such parties. Subsequent
to the respective dates as of which information is given in the Disclosure
Package and the Offering Memorandum, (i) there has not been any event which
would have a Material Adverse Effect; (ii) the Company has not sustained any
loss or interference with its assets, businesses or properties (whether owned or
leased) from fire, explosion, earthquake, flood or other calamity, whether or
not covered by insurance, or from any labor dispute or any court or legislative
or other governmental action, order or decree which would have a Material
Adverse Effect; and (iii) since the date of the latest balance sheet included in
the Disclosure Package and the Offering Memorandum except as disclosed in the
Offering Memorandum or in the Exchange Act Reports, the Company has not
(A) issued any securities or incurred any liability or obligation, direct or
contingent, for borrowed money, except such liabilities or obligations incurred
in the ordinary course of business, (B) entered into any transaction not in the
ordinary course of business or (C) except for regular dividends on the Common
Stock in amounts per share that are consistent with past practice, declared or
paid any dividend or made any distribution on any shares of its stock or
redeemed, purchased or otherwise acquired or agreed to redeem, purchase or
otherwise acquire any shares of its capital stock.
          (j) Each description of a contract, document or other agreement in the
Disclosure Package and the Offering Memorandum accurately reflects in all
material respects the terms of the underlying contract, document or other
agreement. Each contract, document or other agreement described in the
Disclosure Package and the Offering Memorandum is in full force and effect and
is valid and enforceable against the Company, in accordance with its terms. The
Company, nor to the Company’s knowledge any other party, is in default in the
observance or performance of any term or obligation to be performed by it under
any such agreement, and no event has occurred which with notice or lapse of time
or both would constitute such a default, in any such case which default or
event, individually or in the aggregate, would have a Material Adverse Effect.
No default exists, and no event has occurred which with notice or lapse of time
or both would constitute a default, in the due performance and observance of any
term, covenant or condition, by the Company of any other agreement or instrument
to which the Company is a party or by which Company or its properties or
business may be bound or affected which default or event, individually or in the
aggregate, would have a Material Adverse Effect.

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          (k) The statistical and market related data included in the Disclosure
Package and the Offering Memorandum are based on or derived from sources that
the Company believes to be reliable and accurate.
          (l) The Company (i) is not in violation of its articles of
incorporation or other organizational documents, (ii) is not in default under,
and no event has occurred which, with notice or lapse of time, or both, would
constitute a default under, or result in the creation or imposition of any Lien
upon, any property or assets of the Company pursuant to, any bond, debenture,
note, indenture, mortgage, deed of trust, loan agreement or other material
agreement or instrument to which it is a party or by which it is bound or to
which any of its properties or assets is subject or (iii) is not in violation of
any statute, law, rule, regulation, ordinance, directive, judgment, decree or
order of any judicial, regulatory or other legal or governmental agency or body,
foreign or domestic applicable to it, except (in the case of clauses (ii) and
(iii) above) for violations or defaults that could not (individually or in the
aggregate) have a Material Adverse Effect and except (in the case of clause
(ii) alone) for any Lien disclosed in the Disclosure Package and the Offering
Memorandum.
          (m) The Company has the required corporate or other power and
authority to execute, deliver and perform its obligations under this Agreement
and each of the other Transaction Documents to which it is a party and to
consummate the transactions contemplated hereby and thereby, including, without
limitation, the corporate or other power and authority to issue, sell and
deliver the Securities.
          (n) The Securities have been duly and validly authorized by the
Company for issuance and sale to the Initial Purchasers pursuant to this
Agreement and, when executed by the Company and authenticated by the Trustee in
accordance with the provisions of the Indenture and when delivered to and paid
for by the Initial Purchasers in accordance with the terms hereof and thereof,
will be duly and validly executed, issued and delivered and will constitute
valid and legally binding obligations of the Company, entitled to the benefits
of the Indenture and enforceable against the Company in accordance with their
terms, except that the enforcement thereof may be limited by (i) bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other similar
laws now or hereafter in effect relating to or affecting creditors’ rights
generally and (ii) general principles of equity. The Securities will conform in
all material respects to the descriptions thereof in the Disclosure Package and
the Offering Memorandum. At the Closing Date, the Securities will be in the form
contemplated by the Indenture.
          (o) The Indenture has been duly and validly authorized by the Company
and, when duly executed and delivered by the Company (assuming the due
authorization, execution and delivery by the Trustee), will constitute a valid
and legally binding agreement of the Company, enforceable against each of them
in accordance with its terms, except that the enforcement thereof may be limited
by (i) bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium
or other similar laws now or hereafter in effect relating to or affecting
creditors’ rights generally and (ii) general principles of equity. The Indenture
conforms in all material respects to the description thereof in the Disclosure
Package and the Offering Memorandum.

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          (p) This Agreement has been duly and validly authorized, executed and
delivered by the Company.
          (q) None of (i) the execution, delivery and performance by the Company
of this Agreement and consummation of the transactions contemplated by the
Transaction Documents to which each of them, respectively, is a party, (ii) the
issuance and sale of the Securities or (iii) the application of the proceeds as
described in the Disclosure Package and the Offering Memorandum under the
caption “Use of Proceeds,” will give rise to a right to terminate or accelerate
the due date of any payment due under, or conflict with or result in the breach
of any term or provision of, or constitute a default (or an event which with
notice or lapse of time or both would constitute a default) under, or require
any consent or waiver under, or result in the execution or imposition of any
Lien, upon any properties or assets of the Company pursuant to the terms of, any
indenture, mortgage, deed of trust or other agreement or instrument to which the
Company is a party or by which either the Company or any its properties or
businesses is bound, or any franchise, license, permit, judgment, decree, order,
statute, rule or regulation applicable to the Company or violate any provision
of the charter or by-laws of the Company, except for such consents or waivers
which have already been obtained and are in full force and effect.
          (r) The Company has authorized and outstanding capital stock as set
forth under the caption “Capitalization” in the Disclosure Package and the
Offering Memorandum. All of the issued and outstanding shares of common stock of
the Company have been duly and validly issued and are fully paid and
nonassessable. There are no statutory preemptive or other similar rights to
subscribe for or to purchase or acquire any shares of common stock of the
Company or any such rights pursuant to its charter or by-laws or any agreement
or instrument to or by which the Company is a party or bound. Except as
disclosed in the Disclosure Package and the Offering Memorandum, there is no
outstanding option, warrant or other right calling for the issuance of, and
there is no commitment, plan or arrangement to issue, any share of stock of the
Company or any security convertible into, or exercisable or exchangeable for,
such stock.
          (s) When the Securities are issued and delivered pursuant to this
Agreement, no securities of the Company will be (i) of the same class (within
the meaning of Rule 144A) as the Securities and (ii) listed on a national
securities exchange registered under Section 6 of the Exchange Act, or quoted in
a United States automated interdealer quotation system.
          (t) Except as described in the Disclosure Package and the Offering
Memorandum, no person has any rights to require registration of any security of
the Company by reason of the execution by the Company of this Agreement or any
other Transaction Document to which it is a party or the consummation by the
Company of the transactions contemplated hereby and thereby, or as part or on
account of, or otherwise in connection with the offering of the Securities and
any of the other transactions contemplated by the Transaction Documents, and any
such rights so disclosed have been effectively waived by the holders thereof,
and any such waivers remain in full force and effect.
          (u) None of the Company, any of its respective affiliates (as defined
in Rule 501(b) of Regulation D under the Securities Act) or representatives
directly, or through any agent, (i) sold, offered for sale, solicited offers to
buy or otherwise negotiated in respect of any

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“security” (as defined in the Securities Act) which is or could be integrated
with the sale of the Securities in a manner that would require the registration
under the Securities Act of the Securities or (ii) engaged in any form of
general solicitation or general advertising (as those terms are used in
Regulation D under the Securities Act) in connection with the offer and sale of
the Securities or in connection with Exempt Resales of the Securities, or in any
manner involving a public offering within the meaning of Section 4(2) of the
Securities Act. Assuming the accuracy of the Initial Purchasers’ representations
and warranties set forth in Section 3 hereof, neither (i) the offer and sale of
the Securities to the Initial Purchasers in the manner contemplated by this
Agreement, the Disclosure Package and the Offering Memorandum nor (ii) the
Exempt Resales requires registration under the Securities Act and prior to the
effectiveness of any Registration Statement. The Indenture does not require
qualification under the Trust Indenture Act of 1939, as amended (the “Trust
Indenture Act”) No securities of the same class as the Securities have been
issued and sold by the Company within the six-month period immediately prior to
the date hereof.
          (v) Each of (i) the Preliminary Offering Memorandum as of its date,
(ii) the Disclosure Package as of the Applicable Time, (iii) the Offering
Memorandum as of its date and as of the Closing Date and (iv) each amendment or
supplement to any of the documents referenced in (i), (ii) or (iii), in each
case, as of its date, contains the information specified in, and meets the
requirements of, Rule 144A(d)(4) under the Securities Act.
          (w) Except pursuant to this Agreement, there are no contracts,
agreements or understandings between or among the Company, and any other person
that would give rise to a valid claim against the Company or the Initial
Purchasers for a brokerage commission, finder’s fee or like payment in
connection with the issuance, purchase and sale of the Securities.
          (x) Except as described in the Disclosure Package and the Offering
Memorandum and except as would not have a Material Adverse Effect: (i) there are
no legal or governmental proceedings pending to which the Company is a party or
of which any property of the Company is the subject which, if determined
adversely to the Company could individually or in the aggregate have a Material
Adverse Effect; and (ii) to the knowledge of the Company, no such proceedings
are threatened or contemplated by governmental authorities or threatened by
others.
          (y) The Company is not involved in any labor dispute nor, to the
knowledge of the Company, is any such dispute threatened, which dispute would
have a Material Adverse Effect. The Company is not aware of any existing or
imminent labor disturbance by the employees of any of its principal suppliers or
contractors which would have a Material Adverse Effect. The Company is not aware
of any threatened or pending litigation between the Company and any of its
executive officers which, if adversely determined, could have a Material Adverse
Effect and has no reason to believe that such officers will not remain in the
employment of the Company.
          (z) Except as disclosed in the Disclosure Package and the Offering
Memorandum, no relationship, direct or indirect, exists between or among the
Company, or any affiliate of the Company, on the one hand, and any director,
officer, stockholder, customer or supplier of the Company, or any affiliate of
the Company, on the other hand, which is required

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by the Exchange Act to be described in the Company’s annual and/or quarterly
reports on Form 10-K and 10-Q, as applicable, which is not so described and
described as required in such reports, or which would be required by the
Securities Act to be described in the Disclosure Package and the Offering
Memorandum if the Disclosure Package and the Offering Memorandum were
prospectuses included in registration statements on Form S-1 filed with the
Commission. There are no outstanding loans, advances (except normal advances for
business expenses in the ordinary course of business) or guarantees of
indebtedness by the Company to or for the benefit of any of the officers or
directors of the Company or any of their respective family members. The Company
has not, in violation of the Sarbanes-Oxley Act of 2002 and the rules and
regulations promulgated in connection therewith (the “Sarbanes-Oxley Act”),
directly or indirectly, extended or maintained credit, arranged for the
extension of credit, or renewed an extension of credit, in the form of a
personal loan to or for any director or executive officer of the Company.
          (aa) Neither the Company nor any of its “affiliates” (as defined in
Rule 144 under the Securities Act) has taken, nor will it take, directly or
indirectly, any action designed to or which might reasonably be expected to
cause or result in, or which has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the price of the
Securities or any other security of the Company to facilitate the sale or resale
of any of the Securities or the Common Stock issuable upon conversion thereof.
          (bb) The Company has filed all Federal, state, local and foreign tax
returns which are required to be filed through the date hereof, which returns
are true and correct in all material respects or has received timely extensions
thereof, and has paid all taxes shown on such returns and all assessments
received by it to the extent that the same are material and have become due.
There are no tax audits or investigations pending, which if adversely determined
would have a Material Adverse Effect; nor are there any material proposed
additional tax assessments against the Company.
          (cc) The books, records and accounts of the Company accurately and
fairly reflect, in all material respects, the transactions in, and dispositions
of, the assets of, and the results of operations of, the Company. The Company
maintains a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management’s general
or specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
          (dd) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are
customary in the businesses in which they are engaged or propose to engage after
giving effect to the transactions described in the Disclosure Package and the
Offering Memorandum; all policies of insurance and fidelity or surety bonds
insuring the Company or the Company’s respective businesses, assets, employees,
officers and directors are in full force and effect; the Company is in
compliance with the terms of such policies and instruments in all material
respects; and neither the Company nor any

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subsidiary has reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business at a
cost that is not materially greater than the current cost.
          (ee) Each approval, consent, order, authorization, designation,
declaration or filing of, by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery by the
Company of this Agreement and the other Transaction Documents and the
consummation of the transactions herein contemplated required to be obtained or
performed by the Company has been obtained or made and is in full force and
effect.
          (ff) The Company is not now and, after sale of the Securities as
contemplated hereunder and application of the net proceeds of such sale as
described in the Disclosure Package and the Offering Memorandum under the
caption “Use of Proceeds,” will not be, required to register as an “investment
company” under the Investment Company Act of 1940, as amended (the “Investment
Company Act”) and is not and will not be an entity “controlled” by an
“investment company” within the meaning of the Investment Company Act.
          (gg) To the knowledge of the Company, the Company or any other person
associated with or acting on behalf of the Company including, without
limitation, any director, officer, agent or employee of the Company or its
subsidiaries, has not, directly or indirectly, while acting on behalf of the
Company or its subsidiaries (i) used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity; (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns from corporate funds; (iii) violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended; or (iv) made any other unlawful
payment.
          (hh) To the knowledge of the Company, the operations of the Company
and its subsidiaries are and have been conducted at all times in compliance with
applicable financial recordkeeping and reporting requirements of the Currency
and Foreign Transactions Reporting Act of 1970, as amended, the money laundering
statutes of all jurisdictions, the rules and regulations thereunder and any
related or similar rules, regulations or guidelines, issued, administered or
enforced by any governmental agency (collectively, the “Money Laundering Laws”)
and no action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any of its
subsidiaries with respect to the Money Laundering Laws is pending, or to the
best knowledge of the Company, threatened.
          (ii) Neither the Company nor any of its subsidiaries nor, to the
knowledge of the Company, any director, officer, agent, employee or affiliate of
the Company or any of its subsidiaries is currently subject to any U.S.
sanctions administered by the Office of Foreign Assets Control of the U.S.
Treasury Department (“OFAC”); and the Company will not directly or indirectly
use the proceeds of the offering, or lend, contribute or otherwise make
available such proceeds to any subsidiary, joint venture partner or other person
or entity, for the purpose of financing the activities of any person currently
subject to any U.S. sanctions administered by OFAC.

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          (jj) The Company has fulfilled its obligations, if any, under the
minimum funding standards of Section 302 of the U.S. Employee Retirement Income
Security Act of 1974 (“ERISA”) and the regulations and published interpretations
thereunder with respect to each “plan” as defined in Section 3(3) of ERISA and
such regulations and published interpretations in which its employees are
eligible to participate and each such plan is in compliance in all material
respects with the presently applicable provisions of ERISA and such regulations
and published interpretations. No “Reportable Event” (as defined in 12 ERISA)
has occurred with respect to any “Pension Plan” (as defined in ERISA) for which
the Company could have any liability.
          (kk) The Company has established and maintains disclosure controls and
procedures (as such term is defined in Rule 13a-15 under the Exchange Act),
which: (i) are designed to ensure that material information relating to the
Company is made known to the Company’s principal executive officer and its
principal financial officer by others within those entities; (ii) provide for
the periodic evaluation of the effectiveness of such disclosure controls and
procedures at the end of the periods in which the periodic reports are required
to be prepared; and (iii) are effective in all material respects to perform the
functions for which they were established.
          (ll) Based on the evaluation of its disclosure controls and
procedures, the Company is not aware of (i) any significant deficiency in the
design or operation of internal controls which could adversely affect the
Company’s ability to record, process, summarize and report financial data or any
material weaknesses in internal controls; or (ii) any fraud, whether or not
material, that involves management or other employees who have a role in the
Company’s internal controls.
          (mm) Except as described in the Disclosure Package and the Offering
Memorandum, there are no material off-balance sheet arrangements (as defined in
Item 303 of Regulation S-K) that have or are reasonably likely to have a
material current or future effect on the Company’s financial condition, revenues
or expenses, changes in financial condition, results of operations, liquidity,
capital expenditures or capital resources.
          (nn) The Company’s Board of Directors has validly appointed an audit
committee whose composition satisfies the requirements of Rule 5605(c)(2) of the
Rules of the NASDAQ Stock Market (the “NASD Rules”) and the Board of Directors
and/or the audit committee has adopted a charter that satisfies the requirements
of Rule 5605(c)(1) of the NASD Rules. The audit committee has reviewed the
adequacy of its charter within the past twelve months.
          (oo) There is and has been no failure on the part of the Company or
any of its directors or officers, in their capacities as such, to comply with
any provision of the Sarbanes-Oxley Act, including, without limitation,
Section 402 related to loans and Sections 302 and 906 related to certifications.
          (pp) The Company is in compliance with all rules, laws and regulation
relating to the use, treatment, storage and disposal of toxic substances and
protection of health or the environment (“Environmental Law”) which are
applicable to its business except as would not reasonable be expected to have a
Material Adverse Effect. Except as described in the Disclosure

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Package and the Offering Memorandum, the Company has not received any written
notice from any governmental authority or third party of an asserted claim under
Environmental Laws which are applicable to its business. Except as described in
the Disclosure Package and the Offering Memorandum, the Company has received all
permits, licenses or other approvals required of it under applicable
Environmental Laws to conduct its business and is in compliance in all material
respects with all terms and conditions of any such permit, license or approval.
To the Company’s knowledge, except as disclosed in the Disclosure Package and
Offering Memorandum, no facts currently exist that will require the Company to
make future material capital or other expenditures to comply with Environmental
Laws which are applicable to its business.
          (qq) The statements in the Preliminary Offering Memorandum and the
Offering Memorandum under the headings “Description of Capital Stock”,
“Description of Convertible Note Hedge and Warrant Transactions,” and “Certain
Material United States Federal Income Tax Considerations”, insofar as such
statements summarize legal matters, agreements or documents discussed therein,
are accurate and fair summaries of such legal matters, agreements or documents.
          (rr) Each director and executive officer of the Company listed on
Schedule IV hereto has delivered to the Representatives his or her enforceable
written lock-up agreement in the form attached to this Agreement as Exhibit A
hereto (“Lock-Up Agreement”).
          (ss) Upon the Issuance and delivery of the Securities in accordance
with this Agreement and the Indenture, the Securities will be convertible at the
option of the holder thereof into shares of the Common Stock in accordance with
the terms of the Securities and the Indenture; the Common Stock issuable upon
conversion of the Securities have been duly authorized and reserved and, when
issued upon conversion of the Securities, will be validly issued, fully paid and
non-assessable; and the issuance of the Common Stock will not be subject to any
preemptive or similar rights.
          (tt) The Company has taken no action designed to, or likely to have
the effect of, terminating the registration of the Common Stock under the
Exchange Act or the quotation of the Common Stock on the Nasdaq Global Market,
nor has the Company received any notification that the Commission or the Nasdaq
Global Market is contemplating terminating such registration or quotation.
          (uu) Except as described in the Disclosure Package and the Offering
Memorandum, the Company is not in default under any of the Transaction Documents
or any of the contracts described in the Disclosure Package and the Offering
Memorandum, has received a notice or claim of any such default or has knowledge
of any breach of such contracts by the other party or parties thereto, except
such defaults or breaches as would not, individually or in the aggregate, have a
Material Adverse Effect.
          (vv) The Company has not distributed or, prior to the later to occur
of (i) the Closing Date and (ii) completion of the distribution of the
Securities, will distribute any material in connection with the offering and
sale of the Securities other than the Preliminary Offering Memorandum or the
Offering Memorandum.

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     Any certificate contemplated in this Agreement signed by or on behalf of
the Company and delivered to the Initial Purchasers shall be deemed to be a
representation and warranty by the Company to the Initial Purchasers as to the
matters covered thereby.
     The Company acknowledges that the Initial Purchasers and, for purposes of
the opinions to be delivered to the Initial Purchasers pursuant to Section 9
hereof, counsel for the Company and counsel for the Initial Purchasers, will
rely upon the accuracy and truth of the foregoing representations and hereby
consent to such reliance.
     3. Representations and Warranties of the Initial Purchasers. Each Initial
Purchaser severally and not jointly, represents, warrants and covenants to the
Company and agrees that:
          (a) Such Initial Purchaser is a QIB and an accredited investor within
the meanings of Rule 501(a) of the Securities Act, with such knowledge and
experience in financial and business matters as are necessary in order to
evaluate the merits and risks of an investment in the Securities.
          (b) Such Initial Purchaser (i) has not solicited offers for, or
offered or sold, and will not solicit offers for, or offer or sell, the
Securities by means of any form of general solicitation or general advertising
within the meaning of Rule 502(c) of Regulation D under the Securities Act
(“Regulation D”) or in any manner involving a public offering within the meaning
of Section 4(2) of the Securities Act and (ii) it has solicited and will solicit
offers for the Securities only from, and has offered or sold and will offer,
sell or deliver the Securities, as part of their initial offering, only within
the United States to persons whom it reasonably believes to be QIBs, or if any
such person is buying for one or more institutional accounts for which such
person is acting as fiduciary or agent, only when such person has represented to
it that each such account is a QIB to whom notice has been given that such sale
or delivery is being made in reliance on Rule 144A and in each case, in
transactions in accordance with Rule 144A in transactions pursuant to another
exemption from the registration requirements of the Securities Act.
          (c) The Initial Purchasers will not amend or supplement the
Preliminary Offering Memorandum or the Offering Memorandum or any other document
used in connection with the offer and sale of the Securities or any amendment or
supplement thereto unless the Company shall previously have been advised thereof
and furnished a copy for a reasonable period of time prior to the proposed
amendment or supplement and as to which the Company shall not have given their
consent, which shall not be unreasonably withheld.
     4. Purchase, Sale and Delivery. On the basis of the representations,
warranties, covenants and agreements contained in this Agreement, and subject to
its terms and conditions:
          (a) The Company agrees to issue and sell to the several Initial
Purchasers, and each of the Initial Purchasers agrees, severally and not
jointly, to purchase from the Company, at a purchase price of 100% of the
principal amount thereof, plus accrued interest, if any, from November 10, 2009
to the Closing Date, as defined below (the “Initial Price”), the aggregate
amount of Firm Notes. The Company hereby grants to each of the Initial
Purchasers an option to purchase all or any part of the Option Notes at the
Initial Price. The aggregate amount of Option

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Notes to be purchased by each of the Initial Purchasers shall be the same
percentage of the Option Notes to be purchased by each of the Initial Purchasers
as such Initial Purchaser is purchasing of the Firm Notes. Such option may be
exercised in whole or in part at any time on or before 12:00 noon, New York City
time, on the business day before the Firm Notes Closing Date (as defined below),
and from time to time thereafter within 30 days after the date of this
Agreement, in each case upon written, facsimile or telegraphic notice, or verbal
or telephonic notice confirmed by written, facsimile or telegraphic notice, by
each of the Initial Purchasers to the Company no later than 12:00 noon, New York
City time, on the business day before the Firm Notes Closing Date or at least
two business days before the Option Notes Closing Date (as defined below), as
the case may be, setting forth the aggregate amount of Option Notes to be
purchased and the time and date (if other than the Firm Notes Closing Date) of
such purchase.
          (b) Payment of the purchase price for, and delivery of, the Firm Notes
shall be made at the offices of Oppenheimer & Co. Inc., 300 Madison Avenue, New
York, New York 10017, at 10:00 a.m., New York City time, on November 16, 2009 or
at such time on such other date, not later than ten (10) business days after the
date of this Agreement, as shall be agreed upon by the Company and the
Representatives (such time and date of delivery and payment are called the “Firm
Notes Closing Date”. In addition, in the event that any or all of the Option
Notes are purchased by the Initial Purchasers, payment of the purchase price,
and delivery of the certificates, for such Option Notes shall be made at the
above-mentioned offices, or at such other place as shall be agreed upon by the
Initial Purchasers and the Company, on each date of delivery as specified in the
notice from the Initial Purchasers to the Company (such time and date of
delivery and payment are called the “Option Notes Closing Date”). The Firm Notes
Closing Date and any Option Notes Closing Dates are called, individually, a
“Closing Date” and, together, the “Closing Dates”.
          (c) Payment for the Securities shall be made to the Company by wire
transfer of immediately available funds or by certified or official bank check
or checks payable in New York Clearing House (same day) funds drawn to the order
of the Company, against delivery of the Securities to the Representatives for
the respective accounts of the Initial Purchasers.
          (d) On each Closing Date the Company will deliver to the Initial
Purchasers, in such denomination or denominations and registered in such name or
names as the Representatives request upon notice to the Company at least 48
hours prior to the Closing Date, one or more Securities in definitive form,
registered in such name and in such denominations as the Initial Purchasers
shall request, having an aggregate amount corresponding to the aggregate
principal amount of the Securities sold pursuant to Exempt Resales to QIBs and
Individual Accredited Investors (the “Definitive Note”), against payment of the
purchase price therefor by wire transfer of same-day funds to the account of the
Company, previously designated by it in writing. The Definitive Note shall be
made available to the Initial Purchasers for inspection not later than 5:00
p.m., New York City time, on the business day immediately preceding each Closing
Date.
     5. Offering by Initial Purchasers. The Initial Purchasers propose to make
an offering of the Securities at the price and upon the terms set forth in the
Offering Memorandum as soon as practicable after this Agreement is entered into
and as, in the judgment of the Initial Purchasers, is advisable.

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     6. Agreements of the Company. The Company covenants and agrees with the
Initial Purchasers that:
          (a) The Company shall advise the Initial Purchasers promptly and, if
requested by the Representative, confirm such advice in writing, (i) of the
issuance by any state securities commission or other regulatory authority of any
stop order or order suspending the qualification or exemption from qualification
of any Securities for offering or sale in any jurisdiction, or the initiation of
any proceeding for such purpose by any state securities commission or other
regulatory authority and (ii) of the happening of any event that makes any
statement of a material fact made in the Disclosure Package or the Offering
Memorandum untrue or that requires the making of any additions to or changes in
the Disclosure Package or the Offering Memorandum in order to make the
Disclosure Package or the Offering Memorandum not misleading in the light of the
circumstances existing at the time it is delivered to an Eligible Purchaser. The
Company shall use their commercially reasonable efforts to prevent the issuance
of any stop order or order suspending the qualification or exemption from
qualification of any Securities under any state securities or blue sky laws and,
if at any time any state securities commission or other regulatory authority
shall issue an order suspending the qualification or exemption from
qualification of any Securities under any state securities or blue sky laws, the
Company shall use its commercially reasonable efforts to obtain the withdrawal
or lifting of such order at the earliest possible time.
          (b) The Company shall, without charge, provide to the Initial
Purchasers and to counsel to the Initial Purchasers, and to those persons
identified by the Initial Purchasers to the Company as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum, and any amendments
or supplements thereto, as the Initial Purchasers may reasonably request. The
Company consents to the use of the Preliminary Offering Memorandum and the
Offering Memorandum, and any amendments and supplements thereto required
pursuant hereto, by the Initial Purchasers in connection with Exempt Resales.
          (c) The Company will not amend or supplement the Preliminary Offering
Memorandum or the Offering Memorandum or any other document used in connection
with the offer and sale of the Securities or any amendment or supplement thereto
during such period as, in the opinion of counsel for the Initial Purchasers, the
Preliminary Offering Memorandum or the Offering Memorandum is required by law to
be delivered in connection with Exempt Resales and in connection with
market-making activities of the Initial Purchasers for so long as any Notes are
outstanding unless the Initial Purchasers shall previously have been advised
thereof and furnished a copy for a reasonable period of time prior to the
proposed amendment or supplement and as to which the Initial Purchasers shall
not have given their consent, which shall not be unreasonably withheld.
          (d) If, during the period referred to in 6(c) above, any event shall
occur as a result of which, it is necessary or advisable, in the opinion of
counsel for the Initial Purchasers, to amend or supplement the Preliminary
Offering Memorandum or the Offering Memorandum or any other document used in
connection with the offer and sale of the Securities in order to make such
Preliminary Offering Memorandum or Offering Memorandum or such other document
not misleading in the light of the circumstances existing at the time it is
delivered to an Eligible Purchaser, or if for any other reason it shall be
reasonably necessary or advisable to amend or

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supplement the Preliminary Offering Memorandum or the Offering Memorandum or
such other document to comply with applicable laws, rules or regulations, the
Company shall (subject to Section 6(c) hereof) forthwith amend or supplement
such Preliminary Offering Memorandum or Offering Memorandum or such other
document at its own expense so that, as so amended or supplemented, such
Preliminary Offering Memorandum or Offering Memorandum or such other document
will not include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein not misleading
or so that such Preliminary Offering Memorandum or Offering Memorandum or such
other document will comply with all applicable laws, rules or regulations; if,
during the period referred to in 6(c) above, the Company proposes to file with
the SEC an Exchange Act Report that is incorporated by reference into the
Offering Memorandum, a reasonable time prior to the proposed filing, the Company
shall furnishes a copy of such Exchange Act Report to the Initial Purchasers for
review and comment, and shall not file such document with the Commission until
the Initial Purchasers have been afforded the opportunity to review and comment
and the Initial Purchasers have not reasonably objected to the filing of such
Exchange Act Report.
          (e) The Company shall cooperate with the Initial Purchasers and
counsel for the Initial Purchasers in connection with the qualification or
registration of the Securities for offering and sale under the securities or
blue sky laws of such jurisdictions as the Representative may designate and
shall continue such qualifications in effect for as long as may be necessary to
complete the Exempt Resales; provided, however, that in connection therewith
neither the Company shall be required to qualify as a foreign corporation where
it is not now so qualified or to execute a general consent to service of process
in any jurisdiction or to take any other action that would subject it to general
service of process or to taxation in respect of doing business in any
jurisdiction in which it is not otherwise subject, in each case, other than as
to matters and transactions relating to the Preliminary Offering Memorandum, the
Offering Memorandum or Exempt Resales.
          (f) If this Agreement shall terminate or shall be terminated after
execution because of any failure or refusal on the part of the Company to comply
with the terms or fulfill any of the conditions of this Agreement, the Company
agrees to reimburse the Initial Purchasers for all reasonable out-of-pocket
expenses (including reasonable fees and expenses of counsel for the Initial
Purchasers) incurred by the Initial Purchasers in connection herewith.
          (g) The Company shall apply the net proceeds from the sale of the
Securities in the manner set forth under “Use of Proceeds” in the Disclosure
Package and the Offering Memorandum.
          (h) The Company shall not voluntarily claim, and shall actively resist
any attempts to claim, the benefit of any usury laws against the holders of any
Securities.
          (i) The Company shall do and perform all things required or necessary
to be done and performed under this Agreement prior to or after each Closing
Date and to satisfy all conditions precedent to the delivery of the Securities.
          (j) None of the Company or any of its “affiliates” (as defined in
Rule 144 under the Securities Act) will sell, offer for sale, solicit offers to
buy or otherwise negotiate in

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respect of any “security” (as defined in the Securities Act) that could be
integrated with the sale of the Securities in a manner that would require the
registration under the Securities Act of the sale to the Initial Purchasers or
the Eligible Purchasers of the Securities or to take any other action that would
result in the Exempt Resales not being exempt from registration under the
Securities Act.
          (k) For so long as any of the Securities remain outstanding and are
“restricted securities” within the meaning of Rule 144(a)(3) under the
Securities Act and are not able to be sold in their entirety under Rule 144
under the Securities Act (or any successor provision), for the benefit of
holders from time to time of Securities, the Company will furnish at its
expense, upon request, to any holder or beneficial owner of Notes and
prospective purchasers of the Notes, information specified in Rule 144A(d)(4)
under the Securities Act, unless the Company are then subject to and in
compliance with Section 13 or 15(d) of the Exchange Act.
          (l) The Company shall comply with the representation letters to DTC
relating to the approval of the Securities by DTC for “book-entry” transfer.
          (m) During the period of three years from the Closing Date, the
Company shall deliver without charge to the Initial Purchasers (i) as soon as
available, copies of each report and other communication (financial or
otherwise) of the Company mailed to the Trustee of the holders of the
Securities, stockholders or any national securities exchange on which any class
of securities of the Company may be listed (including without limitation, press
releases) other than materials filed with or furnished to the Commission and
(ii) from time to time such other information concerning the Company as the
Initial Purchasers may reasonably request.
          (n) The Company shall not take, directly or indirectly, any action
which constitutes or is designed to cause or result in, or which could
reasonably be expected to constitute, cause or result in, the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Securities or the Common Stock issuable upon conversion
thereof, or take any action prohibited by Regulation M under the Exchange Act,
in connection with the distribution of the Securities contemplated hereby. The
Company will not distribute any (i) preliminary offering memorandum, including,
without limitation, the Preliminary Offering Memorandum, (ii) offering
memorandum, including, without limitation, the Offering Memorandum or
(iii) other offering material in connection with the offering and sale of the
Securities.
          (o) For so long as the Securities constitute “restricted” securities
within the meaning of Rule 144(a)(3) under the Securities Act, the Company shall
not, and shall not permit any subsidiary to, solicit any offer to buy or offer
to sell the Securities by means of any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Securities Act)
or in any manner involving a public offering within the meaning of Section 4(2)
of the Securities Act.
          (p) During the period from the Closing Date until one year after the
Closing Date, without the prior written consent of the Initial Purchasers, the
Company shall not, and shall not permit any of its “affiliates” (as defined in
Rule 144 under the Securities Act) to, resell any of

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the Securities that constitute “restricted securities” under Rule 144 that have
been reacquired by any of them.
          (q) Prior to the Closing Date, except as required by law, not to issue
any press release or other communications, directly or indirectly, or hold any
press conference with respect to the issuance of the Securities, the Company,
the properties, business, results of operations, condition (financial or
otherwise), affairs or business prospects of the Company, without the prior
consent of the Initial Purchasers, which shall not be unreasonably withheld. In
such instance, the Company shall furnish a copy of any such release or
communication to the Initial Purchasers for review and comment a reasonable time
prior to its contemplated release.
          (r) Without the prior consent of the Initial Purchasers, not to make
any offer relating to the Securities that would constitute a “free writing
prospectus” (if the offering of the Securities was made pursuant to a registered
offering under the Securities Act) as defined in Rule 405 under the Securities
Act (a “Free Writing Offering Document”); any such Free Writing Offering
Document the use of which has been consented to by the Initial Purchasers is
listed on Schedule III hereto; if at any time following issuance of a Free
Writing Offering Document any event occurred or occurs as a result of which such
Free Writing Offering Document would conflict with the information in the
Preliminary Offering Memorandum or the Offering Memorandum or would include an
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances then
prevailing, not misleading, the Company will give prompt notice thereof to the
Initial Purchasers and, if requested by the Initial Purchasers, will prepare and
furnish without charge to the Initial Purchasers a Free Writing Offering
Document or other document which will correct such conflict, statement or
omission.
          (s) Without the prior written consent of the Representatives, for a
period of 90 days after the date of this Agreement, the Company shall not issue,
sell or register with the Commission (other than (1) securities issued in
connection with an acquisition transaction and (2) on Form S-8 or on any
successor form), or otherwise dispose of, directly or indirectly, any (i) debt
securities issued or guaranteed by the Company and having a maturity of more
than one year from the date of issue, or (ii) equity securities of the Company
(or any securities convertible into, exercisable for or exchangeable for equity
securities of the Company.
          (t) To reserve and keep available at all times, free of preemptive
rights, shares of Common Stock for the purpose of enabling the Company to
satisfy any obligations to issue shares of its Common Stock upon conversion of
the Securities.
          (u) To use its commercially reasonable efforts to list, subject to
notice of issuance, the shares of Common Stock issuable upon conversion of the
Securities on the Nasdaq Global Market.
     7. Expenses. Whether or not the transactions contemplated by this Agreement
are consummated or this Agreement becomes effective or is terminated (pursuant
to Section 13 hereof or otherwise), the Company hereby agrees to pay all costs
and expenses incident to the performance of their obligations hereunder,
including the following: (i) the negotiation, preparation, printing, typing,
filing, reproduction, execution and delivery of this Agreement and

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of the other Transaction Documents, any amendment or supplement to or
modification of any of the foregoing and any and all other documents furnished
pursuant hereto or thereto or in connection herewith or therewith and with the
Exempt Resales; (ii) the preparation, printing or reproduction of each
Preliminary Offering Memorandum, the Offering Memorandum (including, without
limitation, financial statements), and any other document prepared in connection
with the offer and sale of the Securities, and all amendments and supplements to
any of them; (iii) the issuance, transfer and delivery of the Securities
endorsed thereon to the Initial Purchasers; (iv) the registration or
qualification of the Securities for offer and sale under the securities or blue
sky laws of the several states (including, without limitation, filing fees, the
cost of printing and mailing a preliminary and final blue sky memorandum, and
the reasonable fees and disbursements of counsel to the Initial Purchasers
relating to such registration or qualification, including the preparation of a
preliminary and final blue sky memorandum); (v) the delivery (including postage,
air freight charges and charges for counting and packaging) of such copies of
each Preliminary Offering Memorandum, the Offering Memorandum and any other
document used in connection with the offer and sale of the Securities and all
amendments or supplements to any of them as may be requested for use in
connection with the offering and sale of the Securities and the Exempt Resales;
(vi) the preparation, printing, authentication, issuance and delivery of
certificates for the Securities, including any stamp taxes in connection with
the original issuance and sale of the Securities and Trustee’s fees; (vii) the
fees, disbursements and expenses of the Company’s counsel (including local and
special counsel, if any) and accountants; (viii) the preparation, reproduction
and delivery of the preliminary and supplemental blue sky memoranda and all
other agreements of documents reproduced and delivered in connection with the
offering of the Securities (including the reasonable fees and disbursements of
counsel to the Initial Purchasers in connection with such preparation); (ix) all
fees and expenses (including fees and expenses of counsel) of the Company in
connection with the approval of the Securities by DTC for “book-entry” transfer;
(x) any fees charged by investment rating agencies for the rating of the
Securities; (xi) the fees and expenses of the Trustee and its counsel; (xii) all
expenses incurred in connection with the performance by the Company of their
other obligations under this Agreement and the other Transaction Documents;
(xiii) the transportation and other road show expenses incurred by or on behalf
of the Company representatives in connection with presentations to and related
communications with prospective purchasers of the Securities; and (xiv) all
expenses and listing fees incurred in connection with the application for
quotation of the Common Stock on the Nasdaq Global Market.
     8. Indemnification.
          (a) The Company agrees to indemnify and hold harmless the Initial
Purchasers and each person, if any, who controls the Initial Purchasers within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act against any and all losses, claims, damages and liabilities, joint or
several (including any reasonable investigation, legal and other expenses
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted), to which they, or any of them, may
become subject under the Securities Act, the Exchange Act or other Federal or
state law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Disclosure Package, any Free Writing Offering Document or the Offering
Memorandum, or in any supplement thereto or amendment thereof, or in any
electronic road show, or in any Blue

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Sky application or other information or other documents executed by the Company
filed in any state or other jurisdiction to qualify any or all of the Securities
under the securities laws thereof (any such application, document or information
being hereinafter referred to as a “Blue Sky Application”) or (ii) any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that such indemnity shall not inure to the benefit of any Initial Purchaser (or
any person controlling such Initial Purchaser) on account of any losses, claims,
damages or liabilities arising from the sale of the Securities to any person by
such Initial Purchaser if such untrue statement or omission or alleged untrue
statement or omission was made in the Disclosure Package, any Free Writing
Offering Document or the Offering Memorandum, or in any supplement thereto or
amendment thereof, or in any electronic road show, or in any Blue Sky
Application in reliance upon and in conformity with the Initial Purchaser
Information (as defined in Section 11 hereto). This indemnity agreement will be
in addition to any liability which the Company may otherwise have.
          (b) Each Initial Purchaser, severally and not jointly, agrees to
indemnify and hold harmless the Company, each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, and the officers and directors of the Company, against any
losses, claims, damages or liabilities to which such party may become subject,
under the Securities Act, the Exchange Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of a material
fact contained in the Disclosure Package, any Free Writing Offering Document or
the Offering Memorandum, or in any supplement thereto or amendment thereof, or
arise out of or are based upon the omission or alleged omission to state
therein, a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in the Disclosure Package, any Free Writing Offering Document or the Offering
Memorandum, or in any supplement thereto or amendment thereof, in reliance upon
and in conformity with the Initial Purchaser Information; provided, however,
that the obligation of any Initial Purchaser to severally and not jointly
indemnify the Company (including any controlling person, director or officer
thereof) shall be limited to the net proceeds received by the Company from such
Initial Purchaser.
          (c) Any party that proposes to assert the right to be indemnified
under this Section will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim is to
be made against an indemnifying party or parties under this Section, notify each
such indemnifying party of the commencement of such action, suit or proceeding,
enclosing a copy of all papers served. No indemnification provided for in
Section 8(a) or 8(b) shall be available to any party who shall fail to give
notice as provided in this Section 8(c) if the party to whom notice was not
given was unaware of the proceeding to which such notice would have related and
was prejudiced by the failure to give such notice but the omission so to notify
such indemnifying party of any such action, suit or proceeding shall not relieve
it from any liability that it may have to any indemnified party for contribution
or otherwise than under this Section. In case any such action, suit or
proceeding shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate in, and, to the extent that it shall

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wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof and the approval by the
indemnified party of such counsel, the indemnifying party shall not be liable to
such indemnified party for any legal or other expenses, except as provided below
and except for the reasonable costs of investigation subsequently incurred by
such indemnified party in connection with the defense thereof. The indemnified
party shall have the right to employ its counsel in any such action, but the
fees and expenses of such counsel shall be at the expense of such indemnified
party unless (i) the employment of counsel by such indemnified party has been
authorized in writing by the indemnifying parties, (ii) the indemnified party
shall have been advised by counsel that there may be one or more legal defenses
available to it which are different from or in addition to those available to
the indemnifying party (in which case the indemnifying parties shall not have
the right to direct the defense of such action on behalf of the indemnified
party) or (iii) the indemnifying parties shall not have employed counsel to
assume the defense of such action within a reasonable time after notice of the
commencement thereof, in each of which cases the reasonable fees and expenses of
counsel shall be at the expense of the indemnifying parties. An indemnifying
party shall not be liable for any settlement of any action, suit, and proceeding
or claim effected without its written consent, which consent shall not be
unreasonably withheld or delayed. No indemnifying party shall, without the prior
written consent, which consent shall not be unreasonably withheld or delayed, of
the indemnified party, effect any settlement of any proceeding or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless (i) such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding and (ii) does not contain any factual or legal admission by or with
respect to any indemnified party or any adverse statement with respect to the
character, professionalism, expertise or reputation of any Indemnified Party or
any action or inaction of any Indemnified Party.
     9. Contribution. In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section 8(a) or 8(b)
is due in accordance with its terms but for any reason is unavailable to or
insufficient to hold harmless an indemnified party in respect to any losses,
liabilities, claims, damages or expenses referred to therein, then each
indemnifying party shall contribute to the aggregate losses, liabilities,
claims, damages and expenses (including any investigation, legal and other
expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claims asserted, but after
deducting any contribution received by any person entitled hereunder to
contribution from any person who may be liable for contribution) incurred by
such indemnified party, as incurred, in such proportion as is appropriate to
reflect the relative benefits received by the Company, on the one hand, and the
Initial Purchasers, on the other hand, from the offering of the Securities
pursuant to this Agreement or, if such allocation is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to above but also the relative fault of the Company, on the
one hand, and the Initial Purchasers, on the other hand, in connection with the
statements or omissions which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable considerations. The
Company and the Initial Purchasers agree that it would not be just and equitable
if contribution pursuant to this Section 9 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above. The

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aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission. Notwithstanding the provisions of
this Section 9, no Initial Purchaser shall be required to contribute any amount
in excess of the amount by which the total price at which the Securities resold
by it to Eligible Purchasers were offered to the public exceeds the amount of
damages which such Initial Purchaser has otherwise been required to pay by
reason of any such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. For purposes
of this Section 9, each person, if any, who controls an Initial Purchaser within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act shall have the same rights to contribution as such Initial Purchaser, and
each director of the Company, each officer of the Company, and each person, if
any, who controls the Company within the meaning of the Section 15 of the
Securities Act or Section 20 of the Exchange Act, shall have the same rights to
contribution as the Company. Any party entitled to contribution will, promptly
after receipt of notice of commencement of any action, suit or proceeding
against such party in respect of which a claim for contribution may be made
against another party or parties under this Section 9, notify such party or
parties from whom contribution may be sought, but the omission so to notify such
party or parties from whom contribution may be sought shall not relieve the
party or parties from whom contribution may be sought from any other obligation
it or they may have hereunder or otherwise than under this Section 9. No party
shall be liable for contribution with respect to any action, suit, proceeding or
claim settled without its written consent.
     The remedies provided for in Section 8 and this Section 9 are not exclusive
and shall not limit any rights or remedies which otherwise may be available to
any indemnified party in law or in equity.
     10. Conditions of Initial Purchasers Obligations. The obligations of the
Initial Purchasers under this Agreement are several and not joint. The
obligations of the Initial Purchasers to purchase and pay for the Securities, as
provided herein, are subject to the absence from any certificates, opinions,
written statements or letters furnished to the Initial Purchasers pursuant to
this Section 10 of any misstatement or omissions and to the satisfaction of the
following additional conditions unless waived in writing by the Representative:
          (a) All of the representations and warranties of the Company contained
in this Agreement shall be true and correct on the date hereof and on each
Closing Date with the same force and effect as if made on and as of the date
hereof and the Closing Date, respectively. The Company shall have performed or
complied with all of the agreements and satisfied all conditions on their
respective parts to be performed, complied with or satisfied hereunder at or
prior to each Closing Date.

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          (b) The Offering Memorandum shall have been printed and copies
distributed to the Initial Purchasers not later than 10:00 a.m., New York City
time, on the day following the date of this Agreement or at such later date and
time as to which the Representatives may agree.
          (c) No stop order suspending the qualification or exemption from
qualification of the Securities thereof in any jurisdiction referred to in
Section 6(e) hereof shall have been issued and no proceeding for that purpose
shall have been commenced or shall be pending or threatened.
          (d) None of the issuance and sale of the Securities pursuant to this
Agreement or any of the transactions contemplated by any of the other
Transaction Documents shall be enjoined (temporarily or permanently) and no
restraining order or other injunctive order shall have been issued; and there
shall not have been any legal action, statute, order, rule, regulation, decree
or other administrative proceeding enacted, instituted, adopted, issued or
threatened against the Company or against any Initial Purchasers relating to the
issuance of the Securities or the Initial Purchasers activities in connection
therewith or any other transactions contemplated by this Agreement or the
Offering Memorandum, or the other Transaction Documents. No action, suit or
proceeding shall have been commenced and be pending against or affecting or, to
the best of the Company’s knowledge, threatened against, the Company before any
court or arbitrator or any governmental body, agency or official that, if
adversely determined, could reasonably be expected to result in a Material
Adverse Effect; and no stop order shall have been issued preventing the use of
the Preliminary Offering Memorandum, any Free Writing Offering Document, the
Offering Memorandum, or any amendment or supplement thereto.
          (e) Since the respective dates as of which information is given in the
Disclosure Package, (i) there shall not have occurred any change, or any
development involving a prospective change, in or affecting the general affairs,
management, business, condition (financial or other), properties, business
prospects, results of operations, capital stock, or long-term debt, or a
material increase in the short-term debt, of the Company, not contemplated by
the Disclosure Package and the Offering Memorandum that is, in the judgment of
the Representative, so material and adverse as to make it impracticable or
inadvisable to proceed with the offering of the Securities on the terms and in
the manner contemplated by the Transaction Documents, (ii) no dividend or
distribution of any kind shall have been declared, paid or made by the Company
on any class of its capital stock, other than as disclosed in the Disclosure
Package and the Offering Memorandum, (iii) the Company shall not have incurred
any liability or obligation, direct or contingent, that is material,
individually or in the aggregate, to the Company, and that is required to be
disclosed on a balance sheet or notes thereto in accordance with U.S. GAAP and
is not disclosed on the latest balance sheet or notes thereto included in the
Disclosure Package and the Offering Memorandum and (iv) there shall not have
occurred any event or development relating to or involving the Company, or any
of its respective officers or directors that makes any statement made in the
Disclosure Package or the Offering Memorandum untrue or that, in the opinion of
the Company, and their counsel or the Initial Purchasers and their counsel,
require the making of any addition to or change in the Disclosure Package or the
Offering Memorandum in order to state a material fact required by any applicable
law, rule or regulation to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.

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          (f) At each Closing Date and after giving effect to the consummation
of the transactions contemplated by the Transaction Documents, there exists no
Default or Event of Default (as defined in the Indenture).
          (g) The Initial Purchasers shall have received certificates, dated
each Closing Date, signed by the chief financial officer and the general counsel
of the Company, in form and substance satisfactory to the Representatives,
confirming, as of the Closing Date, the matters set forth in paragraphs (a),
(b), (c), (d) and (e) of this Section 10 and that, as of such Closing Date, the
obligations of the Company to be performed hereunder on or prior thereto have
been duly performed.
          (h) The Initial Purchasers shall have received on the Closing Date:
          (i) an opinion, dated the Closing Date, in form and substance
reasonably satisfactory to the Initial Purchasers, of DLA Piper LLP (US),
counsel for the Company, to the effect set forth in Exhibit B hereto.
          (ii) an opinion, dated the Closing Date, in form and substance
reasonably satisfactory to the Initial Purchasers, of Skadden, Arps, Slate,
Meagher & Flom LLP, counsel for the Initial Purchasers, relating to this
Agreement and such other related matters as the Initial Purchasers may require.
          (i) Ernst & Young, LLP (the “Auditor”), the independent registered
public accounting firm for the Company, shall deliver to the Initial Purchasers:
(i) simultaneously with the execution of this Agreement a signed letter from the
Auditor addressed to the Initial Purchasers and dated the date of this
Agreement, in form and substance reasonably satisfactory to the Representatives
and Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the Initial
Purchasers, containing statements and information of the type ordinarily
included in accountants’ “comfort letters” to initial purchasers with respect to
the financial statements and certain financial information contained in the
Preliminary Offering Memorandum, and (ii) on each Closing Date, a signed letter
from the Auditor addressed to the Initial Purchasers and dated the date of such
Closing Date(s), in form and substance reasonably satisfactory to the
Representatives and Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the
Initial Purchasers, containing statements and information of the type ordinarily
included in accountants’ “comfort letters” to initial purchasers with respect to
the financial statements and certain financial information contained in the
Offering Memorandum.
          (j) The Initial Purchasers and Skadden, Arps, Slate, Meagher & Flom
LLP, counsel to the Initial Purchaser, shall have been furnished with such
information, certificates and documents, in addition to those set forth above,
as they may reasonably require for the purpose of enabling them to review or
pass upon the matters referred to in this Section 10 and in order to evidence
the accuracy, completeness or satisfaction in all material respects of any of
the representations, warranties or conditions herein contained.
          (k) The Company and the Trustee shall have entered into the Indenture
and the Initial Purchasers shall have received counterparts, conformed as
executed, thereof and the

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Securities shall have been duly executed and delivered by the Company, and the
Securities shall have been duly authenticated by the Trustee.
          (l) On or after the date hereof (i) there shall not have occurred any
downgrading, suspension or withdrawal of, nor shall there have been any
announcement of any potential or intended downgrading, suspension or withdrawal
of, or of any review (or of any potential or intended review) for a possible
downgrading, or with negative implications, or direction not determined of, any
rating of the Company or any securities of the Company (including, without
limitation, the placing of any of the foregoing ratings on credit watch with
negative or developing implications or under review with an uncertain direction)
by any “nationally recognized statistical rating organization” as such term is
defined for purposes of Rule 436(g)(2) under the Securities Act, (ii) there
shall not have occurred any change, nor shall any notice have been given of any
potential or intended change, in the outlook for any rating of the Company or
any securities of the Company by any such rating organization and (iii) no such
rating organization shall have given notice that it has assigned (or is
considering assigning) a lower rating to the Securities than that on which the
Securities were marketed.
          (m) Each of the Transaction Documents and each other agreement or
instrument executed in connection with the transactions contemplated thereby
shall be reasonably satisfactory in form and substance to the Initial Purchasers
and shall have been executed and delivered by all the respective parties thereto
and shall be in full force and effect, and there shall have been no material
amendments, alterations, modifications or waivers of any provision thereof since
the date of this Agreement.
          (n) All proceedings taken in connection with the issuance of the
Securities and the transactions contemplated by this Agreement, the other
Transaction Documents and all documents and papers relating thereto shall be
reasonably satisfactory to the Initial Purchasers and counsel to the Initial
Purchasers. The Initial Purchasers and counsel to the Initial Purchasers shall
have received copies of such papers and documents as they may reasonably request
in connection therewith, all in form and substance reasonably satisfactory to
them.
          (o) All opinions, certificates, letters, schedules, documents or
instruments required by this Section 10 to be delivered by the Company will be
in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to the Representatives and counsel to the
Initial Purchasers. The Company shall furnish the Initial Purchasers such
conformed copies of such opinions, certificates, letters, schedules, documents
and instruments in such quantities as the Initial Purchasers shall reasonably
request.
          (p) On or prior to the Closing Date, the Initial Purchasers shall have
received a lock up agreement substantially in the form attached hereto as
Exhibit A signed by the Company’s Executive Officers and Directors on
Schedule IV hereto.
     11. Initial Purchaser Information. The Company acknowledges that the
statements with respect to the offering of the Securities set forth in the 10th
paragraph regarding the delivery of the Securities and the 11th paragraph
related to stabilization, syndicate covering transactions and penalty under the
heading “Plan of Distribution” in the Preliminary Offering Memorandum and the
Offering Memorandum constitute the only written information relating to the
Initial

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Purchasers furnished to the Company by or on behalf of the Initial Purchasers
expressly for use in the Preliminary Offering Memorandum, the Disclosure Package
and the Offering Memorandum, for purposes of Sections 2(a), 8(a) and 8(b) hereof
(the “Initial Purchaser Information”).
     12. Survival of Representations and Agreements. The respective
representations, warranties, covenants, agreements, indemnities and other
statements of the Company, their respective officers and the Initial Purchasers
set forth in this Agreement or made by or on behalf of them, respectively
pursuant to this Agreement shall remain operative and in full force and effect
regardless of (i) any investigation made by or on behalf of the Company, any of
its officers of directors, the Initial Purchasers or any controlling person
referred to in Sections 8 and 9 hereof and (ii) delivery of and payment for the
Securities to and by the Initial Purchasers, and shall be binding upon and shall
inure to the benefit of, any successors, assigns, heirs, personal
representatives of the Company, the Initial Purchasers and the indemnified
parties referred to in Section 8 hereof. The respective representations,
agreements, covenants, indemnities and other statements set forth in Sections 7,
8, 9, 12 and 13 shall survive the termination of this Agreement, regardless of
any termination or cancellation of this Agreement.
     13. Effective Date of Agreement; Termination.
          (a) This Agreement shall become effective upon execution and delivery
of a counterpart hereof by each of the parties hereto.
          (b) This Agreement may be terminated in the sole discretion of the
Initial Purchasers by notice to the Company from the Representatives, without
liability (other than with respect to Sections 8 and 9 hereof) on the Initial
Purchasers’ part to the Company in the event the Company has failed, refused or
been unable to perform or satisfy all conditions on their respective parts to be
performed or satisfied hereunder on or prior to the Closing Date, or if:
          (i) there has occurred any material adverse change in the securities
markets or any event, act or occurrence that has materially disrupted, or in the
opinion of the Initial Purchasers, will in the future materially disrupt, the
securities markets or there shall be such a material adverse change in general
financial, political or economic conditions or the effect of international
conditions on the financial markets in the United States is such as to make it,
in the judgment of the Initial Purchasers, inadvisable or impracticable to
market the Securities or enforce contracts for the sale of the Securities;
          (ii) there has occurred any outbreak or material escalation of
hostilities or other calamity or crisis the effect of which on the financial
markets of the United States is such as to make it, in the judgment of the
Initial Purchasers, inadvisable or impracticable to market the Securities or
enforce contracts for the sale of the Securities;
          (iii) trading in any securities of the Company has been suspended or
materially limited or trading generally on the Nasdaq Global Market shall have
been suspended or materially limited, or minimum or maximum prices

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for trading shall have been fixed, or maximum ranges for prices for securities
shall have been required by any of said exchanges or by order of the Commission,
the Financial Industry Regulatory Authority or other regulatory body or
governmental authority having jurisdiction;
          (iv) a banking moratorium has been declared by any state or Federal a
banking moratorium has been declared by any state or Federal authority;
          (v) in the judgment of the Initial Purchasers, there has been since
the time of the execution of the Purchase Agreement or since the respective
dates as of which information is given in the Disclosure Package, any material
adverse change in the assets, properties, condition (financial or otherwise), or
in the results or operations, business affairs or business prospects or cash
flows of the Company, whether or not arising in the ordinary course of business;
or
          (vi) any debt securities of the Company shall have been downgraded or
placed on any “watch list” for possible downgrading by any “nationally
recognized statistical rating organization” as defined for purposes of Rule
436(g) under the Securities Act.
          (c) If this Agreement shall be terminated pursuant to any of the
provisions hereof, or if the sale of the Securities provided for herein is not
consummated because any condition to the obligations of the Initial Purchasers
set forth herein is not satisfied or because of any refusal, inability or
failure on the part of the Company to perform any agreement herein or comply
with any provision hereof, the Company will, subject to demand by the Initial
Purchasers, reimburse the Initial Purchasers for all out of pocket expenses
(including the reasonable fees and expenses of the Initial Purchasers’ counsel),
incurred by the Initial Purchasers in connection herewith. If this Agreement is
terminated pursuant to Section 14 by reason of the default of one or more of the
Initial Purchasers, the Company shall not be obligated to reimburse any Initial
Purchaser on account of such expenses.
     14. Substitution of Initial Purchasers. If any Initial Purchaser shall
default in its obligation to purchase on the Closing Date the Securities agreed
to be purchased hereunder, the Representative shall have the right, within 36
hours thereafter, to make arrangements for one or more of the non-defaulting
Initial Purchasers, or any other Initial Purchasers, to purchase such Securities
on the terms contained herein. If, however, the Representative shall not have
completed such arrangements within such 36-hour period, then the Company shall
be entitled to a further period of thirty-six hours within which to procure
another party or other parties satisfactory to the Initial Purchasers to
purchase such Securities on such terms. If, after giving effect to any
arrangements for the purchase of the Securities of a defaulting Initial
Purchaser or Initial Purchasers by the Representative and the Company as
provided above, the aggregate amount of Securities which remains unpurchased on
the Closing Date does not exceed one-tenth of the aggregate amount of all the
Securities that all the Initial Purchasers are obligated to purchase on such
date, then the Company shall have the right to require each non-defaulting
Initial Purchaser to purchase the aggregate amount of Securities which such
Initial Purchaser agreed to purchase hereunder at such date and, in addition, to
require each non-defaulting Initial Purchaser to purchase its pro rata share
(based on the aggregate amount of Securities which such

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Purchaser agreed to purchase hereunder) of the Securities of such defaulting
Initial Purchaser or Initial Purchasers for which such arrangements have not
been made; but nothing herein shall relieve a defaulting Initial Purchaser from
liability for its default. In any such case, either the Representative or the
Company shall have the right to postpone the Closing Date for a period of not
more than seven days in order to effect any necessary changes and arrangements
(including any necessary amendments or supplements to the Offering Memorandum or
any other documents).
     If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Initial Purchaser or Initial Purchasers by the
Representative and the Company as provided above, the aggregate amount of such
Securities which remains unpurchased exceeds 10% of the aggregate amount of all
the Securities to be purchased at such date, then this Agreement shall
terminate, without liability on the part of any non-defaulting Initial
Purchasers to the Company and without liability on the part of the Company
except as provided in Sections 7, 8, 9 and 13(b). The provisions of this
Section 14 shall not in any way affect the liability of any defaulting Initial
Purchaser to the Company or the nondefaulting Initial Purchasers arising out of
such default. The term “Initial Purchaser” as used in this Agreement shall
include any person substituted under this Section 14 with like effect as if such
person had originally been a party to this Agreement with respect to such
Securities.
     15. Notices. All communications hereunder shall be in writing and, if sent
to the Initial Purchasers, shall be hand-delivered, mailed by first-class mail,
couriered by next-day air courier or faxed and confirmed in writing to
Oppenheimer & Co. Inc., 300 Madison Avenue, New York, New York 10017, Attention:
Andrew MacInnes, Head of Equity Capital Markets, with copy to Wade Dougherty,
Executive Director, and with a copy to Skadden, Arps, Slate, Meagher and Flom
LLP, Four Times Square, New York, New York, 10036, Attention: David J.
Goldschmidt, as Representatives on behalf of the Initial Purchasers If sent to
the Company, shall be mailed, delivered, couriered or faxed and confirmed in
writing to TeleCommunication Systems, Inc., 275 West Street, Annapolis, Maryland
21401, Attention: Bruce A. White, and with a copy to DLA Piper LLP (US), 6225
Smith Avenue Baltimore, Maryland 21209, Attention: Wm. David Chalk.
     16. Successors. This Agreement shall inure to the benefit of, and shall be
binding upon, the Initial Purchasers, the Company, and their respective
successors, legal representatives and assigns, and nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person any legal or equitable right, remedy or claim under or in respect of, or
by virtue of, this Agreement or any provision herein contained; this Agreement
and all conditions and provisions hereof being intended to be and being for the
sole and exclusive benefit of such persons and for the benefit of no other
person except that (i) the indemnities of the Company contained in Section 8
hereof shall also be for the benefit of the controlling persons and agents
referred to in Sections 8 and 9 hereof and (ii) the indemnities of the Initial
Purchasers contained in Section 8 hereof shall also be for the benefit of the
directors of the Company, and its officers, employees and agents and any
controlling person or persons referred to in Sections 8 and 9 hereof. No
purchaser of Securities from the Initial Purchasers will be deemed a successor,
legal representative or assign because of such purchase.

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     17. No Waiver; Modifications in Writing. No failure or delay on the part of
the Company or the Initial Purchasers in exercising any right, power or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. The
remedies provided for herein are cumulative and are not exclusive of any
remedies that may be available to the Company or the Initial Purchasers at law
or in equity or otherwise. No waiver of or consent to any departure by the
Company or the Initial Purchasers from any provision of this Agreement shall be
effective unless signed in writing by the party entitled to the benefit thereof;
provided that notice of any such waiver shall be given to each party hereto as
set forth above. Except as otherwise provided herein, no amendment, modification
or termination of any provision of this Agreement shall be effective unless
signed in writing by or on behalf of the Company and the Initial Purchasers. Any
amendment, supplement or modification of or to any provision of this Agreement,
any waiver of any provision of this Agreement, and any consent to any departure
by the Company or the Initial Purchasers from the terms of any provision of this
Agreement shall be effective only in the specific instance and for the specific
purpose for which made or given. Except where notice is specifically required by
this Agreement, no notice to or demand on the Company in any case shall entitle
the Company to any other or further notice or demand in similar or other
circumstances.
     18. Entire Agreement. This Agreement constitutes the entire agreement among
the parties hereto and supersedes all prior agreements, understandings and
arrangements, oral or written, among the parties hereto with respect to the
subject matter hereof.
     19. Applicable Law. THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT, AND
THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. TIME IS OF THE ESSENCE IN
THIS AGREEMENT.
     20. Contractual Relationship. The Company acknowledges and agrees that each
of the Initial Purchasers has acted and is acting solely in the capacity of a
principal in an arm’s length transaction between the Company, on the one hand,
and the Initial Purchasers, on the other hand, with respect to the offering of
Securities contemplated hereby (including in connection with determining the
terms of the offering) and not as a financial advisor, agent or fiduciary to the
Company or any other person. Additionally, the Company acknowledges and agrees
that the Initial Purchasers have not and will not advise the Company or any
other person as to any legal, tax, investment, accounting or regulatory matters
in any jurisdiction. The Company has consulted with its own advisors concerning
such matters and shall be responsible for making its own independent
investigation and appraisal of the transactions contemplated hereby, and the
Initial Purchasers shall have no responsibility or liability to the Company or
any other person with respect thereto, whether arising prior to or after the
date hereof. Any review by the Initial Purchasers of the Company, the
transactions contemplated hereby or other matters relating to such transactions
have been and will be performed solely for the benefit of the Initial Purchasers
and shall not be on behalf of the Company. The Company agrees that it will not
claim that the Initial Purchasers, or any of them, has rendered advisory
services of any nature or respect, or owes a fiduciary duty to the Company or
any other person in connection with any such transaction or the process leading
thereto.

29

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     21. Partial Unenforceability. The invalidity or unenforceability of any
Section, paragraph or provision of this Agreement shall not affect the validity
or enforceability of any other Section, paragraph or provision hereof.
     22. Headings. The headings herein are inserted for convenience of reference
only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
     23. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument. Delivery of
a signed counterpart of this Agreement by facsimile transmission shall
constitute valid and sufficient delivery thereof.
[Signature page follows]

30

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If the foregoing correctly sets forth the understanding among the Initial
Purchasers and the Company please so indicate in the space provided below for
that purpose, whereupon this letter shall constitute a binding agreement among
us.

            Very truly yours,

TELECOMMUNICATION SYSTEMS INC.
      By:   /s/ Thomas M. Brandt, Jr.         Name:   Thomas M. Brandt, Jr.     
  Title:   Senior Vice President and
Chief Financial Officer     

Accepted and agreed to as of the date first above written:
OPPENHEIMER & CO. INC.
RAYMOND JAMES & ASSOCIATES INC.
ACTING SEVERALLY ON BEHALF OF THEMSELVES AND AS REPRESENTATIVES OF THE SEVERAL
INITIAL PURCHASERS NAMED IN SCHEDULE 1 HERETO.

          By:   OPPENHEIMER & CO. INC.             /s/ Andrew MacInnes      
Name:   Andrew MacInnes      Title:   Head of Equity Capital Markets        By: 
RAYMOND JAMES & ASSOCIATES INC.             /s/ Raymond James & Associates Inc.
      Name:   Ryan D. Lund      Title:   Senior Vice President   

 

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SCHEDULE I
INITIAL PURCHASERS

              Aggregate       Amount of       Firm Notes   Name   to be
Purchased  
Oppenheimer & Co. Inc.
  $ 63,000,000  
Raymond James & Associates Inc.
  $ 27,000,000  
 
       
Total
  $ 90,000,000  
 
     

 

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SCHEDULE II
PRICING TERM SHEET

      (OPPENHEIMER LOGO) [w76318w7631800.gif]   (TELECOMMUNICATION SYSTEMS LOGO)
[w76318w7631801.gif]

Pricing Term Sheet — TeleCommunication Systems, Inc.
The information in this pricing term sheet supplements TeleCommunication
Systems, Inc.’s (“TCS”) preliminary offering memorandum, dated November 9, 2009
(the “Preliminary Offering Memorandum”), and supersedes the information in the
Preliminary Offering Memorandum to the extent inconsistent with the information
in the Preliminary Offering Memorandum. In all other respects, this term sheet
is qualified in its entirety by reference to the Preliminary Offering
Memorandum. Terms used herein but not defined herein shall have the respective
meanings as set forth in the Preliminary Offering Memorandum.
Adjustment to Conversion Rate upon a Make-Whole Adjustment Event:

     
Issuer:
  TeleCommunication Systems, Inc.
Ticker Symbol (Exchange):
  TSYS (NASDAQ)
Offering Type:
  144A Offering (QIBs Only)
Title of Securities:
  4.5% Convertible Senior Notes due 2014
Aggregate principal amount offered:
  $90,000,000
Over-Allotment Option:
  $13,500,000
Maturity:
  November 1, 2014
Principal Amount per Note:
  $1,000
Coupon:
  4.5% per Annum (Payable Semi-Annually)
Issue Price:
  100% of principal amount
Reference Price (Last Reported Sale Price per Share of TSYS Class A Common Stock
on NASDAQ on November 10, 2009):
  $7.96
Initial Conversion Price:
  $10.348 per share of our Class A common stock for each $1,000 aggregate
principal amount of notes
Initial Conversion Rate:
  96.637 shares of TCS Class A common stock for each $1,000 aggregate principal
amount of notes
Conversion Premium:
  30% above the last reported sale price per share of TCS Class A common stock
on NASDAQ on November 10, 2009
Call Protection:
  Non-Callable for Life
use of proceeds
  We estimate that the net proceeds from this offering, after deducting
estimated fees and expenses and the initial purchasers’ discounts and
commissions, will be approximately $87.3 million, if the overallotment option is
not exercised.
 
   
 
  We intend to use:
 
   
 
  • approximately $9.4 million (without giving effect to the exercise of the
initial purchasers’ overallotment option, if any) of the net proceeds from this
offering to pay the cost to us of the convertible note hedge transactions (after
such cost is partially offset by the proceeds to us from the warrant
transactions), as described below; and
 
   
 
  • we intend to use the remainder of the net proceeds from this

 

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  offering for general corporate purposes, including working capital. In
addition, our use of the remaining net proceeds may include the selective
acquisition or investment in businesses, products and technologies that are
complementary to our own. As of the date of this offering memorandum, we do not
have any binding commitments or agreements relating to any of these types of
transactions. However, from time to time, we will consider a proposed
transaction when it is presented to us and, if appropriate, enter into a
non-binding letter of intent with respect to such a proposed transaction. As of
the date of this offering memorandum, we are party to two such non-binding
letters of intent.
Moodys/ S&P Rating:
  Not Rated
Dividend and Takeover Protection:
  Yes
Interest Payment Dates:
  November 1 and May 1, commencing May 1, 2010
Trade Date:
  November 11, 2009
Settlement Date:
  November 16, 2009
144A CUSIP:
  87929JAA1
Convertible Note Hedge and Warrant Transactions:
  in connection with the offering of the notes, tcs entered into convertible
note hedge transactions and warrant transactions with each of Deutsche Bank AG,
société generale and royal bank of canada
Book-Running Managers:
  Oppenheimer & Co., Raymond James

The following table sets forth the number of additional shares to be added to
the conversion rate per $1,000 principal amount of the Notes in connection with
a Make-Whole Adjustment Event as described in the Preliminary Offering
Memorandum, based on the stock price and effective date of the Make-Whole
Adjustment Event.

                                                                               
                      Stock Price  
Effective Date
  $ 7.96     $ 8.50     $ 10.00     $ 11.50     $ 13.00     $ 14.50     $ 16.00
    $ 20.00     $ 24.00     $ 28.00     $ 32.00     $ 36.00  
November 16, 2009
    28.979       25.435       18.374       13.874       10.839       8.692      
7.107       4.420       2.879       1.899       1.240       0.785  
November 1, 2010
    28.979       23.698       16.585       12.214       9.369       7.418      
6.016       3.706       2.406       1.581       1.025       0.640  
November 1, 2011
    28.979       21.669       14.424       10.198       7.595       5.898      
4.729       2.884       1.871       1.225       0.785       0.478  
November 1, 2012
    28.979       20.306       12.384       8.104       5.702       4.277      
3.370       2.050       1.348       0.890       0.570       0.342  
November 1, 2013
    28.979       19.252       9.724       5.238       3.194       2.232      
1.728       1.088       0.740       0.499       0.322       0.190  
November 1, 2014
    28.979       21.010       3.363       0.000       0.000       0.000      
0.000       0.000       0.000       0.000       0.000       0.000  

The exact stock prices and effective dates may not be set forth in the table
above, in which case if the stock price is:

  •   between two stock price amounts in the table or the effective date is
between two effective dates in the table, the number of additional shares will
be determined by a straight-line interpolation between the number of additional
shares set forth for the higher and lower stock prices and the earlier and later
effective dates, as applicable, based on a 365-day year;     •   in excess of
$36.00 per share (subject to adjustment), no additional shares will be issued
upon conversion; and     •   less than $7.96 per share (subject to adjustment),
no additional shares will be issued upon conversion.

Ratio of Earnings to Fixed Charges
     On page 37 of the Preliminary Offering Memorandum the ratio of earnings to
fixed charges for the nine months ended September 30, 2009 was noted as 36.5 to
1. This ratio should read 32.7 to 1 for the said period.

 

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Capitalization
The following table sets forth our cash and cash equivalents and consolidated
capitalization as of September 30, 2009:

  •   on an actual basis; and     •   on an as adjusted basis to give effect to
(i) the issuance and sale of $90,000,000 aggregate principal amount of notes in
this offering, after deducting the underwriting discounts and commissions and
before estimated offering expenses (assuming no exercise of the underwriters’
over-allotment option to purchase additional notes) and (ii) the use of
approximately $9.4 million in net proceeds to fund the cost of the convertible
note hedge transactions after giving effect to the proceeds from the warrant
transactions.

This table should be read in conjunction with our consolidated financial
statements and related notes incorporated by reference in this offering
memorandum. See “Where You Can Find More Information.” The following table
assumes that the initial purchasers have not exercised their over-allotment
option.
Amounts representing the number of shares of Class A common stock outstanding
exclude:

  •   options outstanding on September 30, 2009 to purchase 12,247,277 shares of
Class A common stock at a weighted exercise price of $4.45;     •   Class A
restricted stock outstanding on September 30, 2009 at a weighted-average grant
date fair value of $6.95;     •   an aggregate of 2,823,921 shares of Class A
common stock that were reserved for future issuance under our 1997 Stock
Incentive Plan and Employee Stock Purchase Plan on September 30, 2009; and     •
  shares of Class A common stock issuable upon exercise of the warrants that we
expect to sell to one or more counterparties.

                      As of September 30, 2009               As       Actual    
Adjusted(1)       (in thousands, except share data)  
Cash and cash equivalents
  $ 79,296     $ 157,141  
 
           
 
               
Indebtedness:
               
Capital lease obligations and notes payable, less current portion, and other
long-term liabilities
  $ 21,920     $ 21,920  
Convertible Senior Notes Due 2014 offered hereby
    —       90,000  
 
           
Total Long-Term Debt
  $ 21,920     $ 111,920  
 
               
Stockholder’s equity:
               

 

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                      As of September 30, 2009               As       Actual    
Adjusted(1)       (in thousands, except share data)  
Class A common stock; $0.01 par value:
               
Authorized shares — 225,000,000; issued and outstanding shares of 42,273,555
    423       423  
Class B common stock; $0.01 par value:
               
Authorized shares — 75,000,000; issued and outstanding shares of 6,391,334
    64       64  
Additional paid-in capital(2)
    259,835       258,490  
Accumulated other comprehensive income
    115       115  
Accumulated deficit
    (109,809 )     (109,809 )
 
           
Total stockholder’s equity
    150,568       149,223  
 
           
Total capitalization
  $ 172,488     $ 261,143  
 
           

 

(1)   “As Adjusted” financial data assumes issuance and sale of the notes, less
the initial purchasers’ discounts and commissions and estimated offering
expenses payable by us, and assumes that the initial purchasers have not
exercised their over-allotment option.   (2)   Additional paid-in capital
adjusted for the net cost of the convertible note hedge, net of tax, and
warrants transactions.

General
The notes and the shares of common stock issuable upon conversion of the notes
(together, the “Securities”) have not been and will not be registered under the
Securities Act or any state securities laws and may not be offered in the United
States, except that Securities may be offered and sold to Qualified
Institutional Buyers exclusively in reliance upon the exemption from the
registration requirements of the Securities Act provided by Rule 144A.
The Securities have not been approved or disapproved by the Securities and
Exchange Commission or by any state securities commission or regulatory
authority, nor have the foregoing authorities passed on the accuracy or adequacy
of the attached documents. Any representation to the contrary is a criminal
offense.
This communication shall not constitute an offer to sell or the solicitation of
an offer to buy any securities of TeleCommunication Systems, Inc., nor shall
there be any sale of securities in any state or jurisdiction in which such an
offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such state or jurisdiction.
Copies of the Final Offering Memorandum can be obtained from your Oppenheimer
sales representative.
This message is intended solely for the benefit of the initial recipient. No
retransmission, copying or distribution is permitted.

 

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SCHEDULE III
FREE WRITING OFFERING DOCUMENTS

 

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SCHEDULE IV
PERSONS PARTY TO LOCK-UP AGREEMENT
Maurice B. Tosé
James M. Bethmann
Thomas M. Brandt, Jr.
Richard A. Young
Clyde A. Heintzelman
Jan C. Huly
Richard A. Kozak
Weldon H. Latham
Drew Morin
Tim Lorello

 

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EXHIBIT A
FORM OF LOCK UP AGREEMENT
November 9, 2009
Oppenheimer & Co. Inc.
Raymond James & Associates Inc.
c/o Oppenheimer & Co. Inc.
300 Madison Avenue
New York, New York 10017
Ladies and Gentlemen:
The undersigned, a holder of Class A common stock, par value $0.01 (“Common
Stock”), or rights to acquire Common Stock, of TeleCommunication Systems, Inc.,
a Maryland corporation (the “Company”) understands that you, as Representatives
of the several Initial Purchasers, propose to enter into a Purchase Agreement
(the “Purchase Agreement”) with the Company, with respect to the offering (the
“Offering”) without registration under the Securities Act of 1933, as amended
(the “Act”), and initial resale in reliance on Rule 144A under the Act, of
$90,000,000 of 4.5% Convertible Senior Notes due 2014 (the “Securities”) of the
Company. Capitalized terms used herein without definition shall have the
respective meanings ascribed to them in the Purchase Agreement.
     In consideration of the Initial Purchasers ‘ agreement to enter into the
Purchase Agreement and to proceed with the Offering of the Securities, and for
other good and valuable consideration receipt of which is hereby acknowledged,
the undersigned hereby agrees for the benefit of the Company, you and the other
Initial Purchasers that, without the prior written consent of Oppenheimer & Co.
Inc. on behalf of the Initial Purchasers, the undersigned will not, during the
period ending 90 days (the “Lock-Up Period”) after the date of the Purchase
Agreement, directly or indirectly (1) offer, pledge, assign, encumber, announce
the intention to sell, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, or otherwise transfer or dispose of, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock owned either of record or beneficially (as defined in the
Securities Exchange Act of 1934, as amended) by the undersigned on the date
hereof or hereafter acquired or (2) enter into any swap or other agreement that
transfers, in whole or in part, any of the economic consequences of ownership of
the Common Stock, whether any such transaction described in clause (1) or
(2) above is to be settled by delivery of Common Stock or such other securities,
in cash or otherwise, or publicly announce an intention to do any of the
foregoing. In addition, the undersigned agrees that, without the prior written
consent of Oppenheimer & Co. Inc. on behalf of the Initial Purchasers, it will
not, during the period ending 90 days after the date of the Purchase Agreement,
make any demand for or exercise any right with respect to, the registration of
any shares of Common Stock or any security convertible into or exercisable or
exchangeable

 

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for Common Stock. The foregoing shall not apply to (x) Common Stock to be
transferred as a gift or gifts (provided that any donee thereof agrees in
writing to be bound by the terms hereof), (y) the exercise by you of options or
other rights to purchase Common Stock held by you (provided, however, that
shares of Common Stock acquired upon such exercise shall be subject to this
letter) and (y) sales under any 10b-5 plan.
     In furtherance of the foregoing, the Company, and any duly appointed
transfer agent for the registration or transfer of the securities described
herein, are hereby authorized to decline to make any transfer of securities if
such transfer would constitute a violation or breach of this Letter Agreement.
     The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Letter Agreement. All authority
herein conferred or agreed to be conferred and any obligations of the
undersigned shall be binding upon the successors, assigns, heirs or personal
representatives of the undersigned.
     The undersigned understands that, if the Purchase Agreement does not become
effective, or if the Purchase Agreement (other than the provisions thereof which
survive termination) shall terminate or be terminated prior to payment for and
delivery of the Common Stock to be sold thereunder, the undersigned shall be
released form all obligations under this Letter Agreement.
     The undersigned, understands that the Initial Purchasers are entering into
the Purchase Agreement and proceeding with the Offering in reliance upon this
Letter Agreement.

 

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     This lock-up agreement shall be governed by and construed in accordance
with the laws of the State of New York, without regard to the conflict of laws
principles thereof.

            Very truly yours,
      By:           Name:           Title:      

 

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EXHIBIT B
FORM OF OPINION OF COMPANY COUNSEL

1