AMENDMENT NO. 1 TO

CREDIT AGREEMENT

   

This AMENDMENT NO. 1 TO CREDIT AGREEMENT (this “Amendment”) is made as of
July 29, 2013, by and among TELECOMMUNICATION SYSTEMS, INC., a Maryland
corporation (“TCS”), SOLVERN INNOVATIONS, INC., a Maryland corporation
(“Solvern”), NETWORKS IN MOTION, INC., a Delaware corporation (“NIM”), MICRODATA
GIS, INC., a Vermont corporation (“microDATA GIS”),  MICRODATA, LLC, a Maryland
limited liability company (“microDATA LLC”), NEXTGEN COMMUNICATIONS, INC., a
Maryland corporation (“NextGen,” and together with TCS, Solvern, NIM, microDATA
GIS, and microDATA LLC, jointly and severally, individually and collectively,
referred to as the “Borrower”), the several banks and other financial
institutions or entities parties hereto as lenders hereunder (each a “Lender”
and collectively, the “Lenders”), SILICON VALLEY BANK, as the Issuing Lender and
the Swingline Lender, and SILICON VALLEY BANK (“SVB”), as administrative agent
and collateral agent for the Lenders (in such capacity, the “Administrative
Agent”).  Capitalized terms used but not defined in this Amendment shall have
the meanings given to them in the Credit Agreement (as defined below).

BACKGROUND

 

WHEREAS,

the parties hereto are parties to that certain Credit Agreement dated June 25,
2013 (as it may be amended, restated, supplemented, and modified from time to
time, the “Credit Agreement”);  

 

WHEREAS,

the Lenders have extended credit to the Borrower for the purposes permitted in
the Credit Agreement;

 

WHEREAS,

the Loan Parties have requested that the Lenders modify certain of the
provisions of the Credit Agreement as more fully set forth in this Amendment;  

 

WHEREAS,

the Loan Parties have requested that the Lenders agree to waive the requirement
to deliver certain foreign qualification certificates from certain states
because the respective Loan Parties are not required to qualify to do business
in such states at this time; and

 

WHEREAS,

subject to the representations and warranties of the Loan Parties in this
Amendment and the Loan Documents and the terms and conditions set forth in this
Amendment, the Lenders are willing to so amend the Credit Agreement and to waive
the requirement for the Borrower to deliver certain foreign qualification
certificates.

NOW, THEREFORE, in consideration of the foregoing and intending to be legally
bound, the parties hereto agree as follows:

AGREEMENT

 

1.

Amendments to Credit Agreement.  

 

1.1

Section 2.1(b).  The second sentence of Section 2.1(b) of the Credit Agreement
is hereby amended and restated in its entirety to read as follows:

“The Delayed Draw Term Loans may be drawn in up to five (5) separate draws of
not less than $5,000,000 each.”

 

1.2

Section 4.16.  The second sentence of Section 4.16 of the Credit Agreement is
hereby amended and restated in its entirety to read as follows:

“The proceeds of the Delayed Draw Term Loans shall be used solely to refinance
the 2014 Convertible Unsecured Notes contemporaneously with (or within five
(5) Business Days thereafter) the repayment, purchase or redemption thereof by
the Loan Parties and to pay related fees and expenses; provided that up to 50%
of the aggregate Delayed Draw Term Commitments (i.e., up to $21,750,000) may be
used to reimburse, on a dollar for dollar basis, the Loan Parties for prior cash
repayments, purchases or redemptions of the 2014 Convertible Unsecured Notes
made by the Loan Parties after Closing Date pursuant to Section 7.6(i) that were
not contemporaneously (or within five (5) Business Days) refinanced with the
proceeds of the Delayed Draw Term Loans and not otherwise previously refinanced
with the proceeds of the Delayed Draw Term Loans, and to pay related fees and
expenses.”

 

1.3

Section 4.20.  The first sentence of Section 4.20 of the Credit Agreement is
hereby amended and restated in its entirety to read as follows:

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“The Borrower and its consolidated Subsidiaries taken as a whole are, and after
giving effect to the incurrence of all Indebtedness, the Obligations and
obligations being incurred in connection herewith, will be and will continue to
be, Solvent (and giving effect (i) on the Closing Date to the repayment of the
Existing Senior Indebtedness and (ii) on the date of the funding of any Delayed
Draw Term Loans, the repayment, purchase or redemption of the 2014 Convertible
Unsecured Notes with the proceeds of such Delayed Draw Term Loans (or the
reimbursement of the Loan Parties for the prior cash repayment, purchase or
redemption of the 2014 Convertible Unsecured Notes in accordance with
Section 4.16)).”

 

1.4

Section 5.3(b).  Section 5.3(b) of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:

“(b)The proceeds of the Delayed Draw Term Loans shall be used solely to
refinance the 2014 Convertible Unsecured Notes contemporaneously with (or within
five (5) Business Days thereafter) the repayment, purchase or redemption thereof
by the Loan Parties and to pay related fees and expenses; provided that up to
50% of the aggregate Delayed Draw Term Commitments (i.e., up to $21,750,000) may
be used to reimburse, on a dollar for dollar basis, the Loan Parties for prior
cash repayments, purchases or redemptions of the 2014 Convertible Unsecured
Notes made by the Loan Parties after Closing Date pursuant to Section 7.6(i)
that were not contemporaneously (or within five (5) Business Days) refinanced
with the proceeds of the Delayed Draw Term Loans and not otherwise previously
refinanced with the proceeds of the Delayed Draw Term Loans, and to pay related
fees and expenses.”

 

2.

Representations, Warranties and Acknowledgements.  

 

2.1

The Loan Parties hereby jointly and severally represent and warrant to the
Administrative Agent and each Lender that:

 

   

(a)

immediately upon giving effect to this Amendment (i) the representations and
warranties contained in the Loan Documents are true, accurate and complete in
all material respects as of the date hereof (except to the extent such
representations and warranties relate to an earlier date, in which case they are
true and correct as of such date), and (ii) no Event of Default has occurred and
is continuing;

   

   

   

   

(b)

Each Loan Party has the corporate power and authority to execute and deliver
this Amendment and to perform their obligations under the Loan Documents, as
amended by this Amendment;

   

   

   

   

(c)

the execution and delivery by the Loan Parties of this Amendment and the
performance by the Loan Parties of their obligations under the Loan Documents,
as amended by this Amendment, have been duly authorized by all necessary
corporate or limited liability company action on the part of the Loan Parties;

   

   

   

   

(d)

this Amendment has been duly executed and delivered by the Loan Parties and is
the binding obligation of each Loan Party, enforceable against it in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, liquidation, moratorium or other similar laws
affecting the enforcement of creditors’ rights generally and by general
equitable principals (whether enforcement is sought by proceedings in equity or
at law); and

   

   

   

   

(e)

as of the date hereof, no Loan Party has any defenses against the obligations to
pay any amounts under the Obligations.  

 

2.2

The Loan Parties acknowledge that the Administrative Agent and the Lenders have
acted in good faith and have conducted in a commercially reasonable manner their
relationships with the Loan Parties in connection with this Amendment and in
connection with the Loan Documents.

 

2.3

The Loan Parties understand and acknowledge that the Administrative Agent and
the Lenders, are entering into this Amendment in reliance upon, and in partial
consideration for, the above representations, warranties, and acknowledgements,
and the Loan Parties agree that such reliance is reasonable and appropriate.

 

3.

Waiver of Certain Foreign Qualification Certificates.  The Lenders hereby waive
the requirement set forth in that certain Post-Closing Letter, dated as of
June 25, 2013, that the Borrower provide foreign qualification certificates from
the appropriate authorities of the states listed on Schedule 1 attached hereto.

 

   

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4.

Pledge of Capital Stock of Foreign Subsidiaries.  Notwithstanding any term or
provision of the Credit Agreement or any other Loan Document to the contrary, in
no event shall the Borrower or any Subsidiary thereof be required to pledge to
the Administrative Agent, or grant a security interest to the Administrative
Agent in, more than 66% of the total combined voting power of the outstanding
voting Capital Stock of any Excluded Foreign Subsidiary.  Effective June 25,
2013, all references in the Loan Documents to “66 2/3% of the total combined
voting power” of the outstanding voting Capital Stock or Capital Stock of any
Excluded Foreign Subsidiary shall mean “66%  of the total combined voting power”
of the outstanding voting Capital Stock of such Excluded Foreign Subsidiary.

 

5.

Limitation.  The amendment set forth in Section 1 of this Amendment and the
waiver set forth in Section 3 of this Amendment shall be limited precisely as
written and shall not be deemed (a) to be a waiver, amendment or modification of
any other term or condition of the Credit Agreement, of any instrument or
agreement referred to therein, or of any other Loan Document, (b) to be an
agreement to forbear with respect to any breach or Event of Default, (c) to
prejudice any right or remedy which one or more of the Administrative Agent and
the Lenders may now have or may have in the future under or in connection with
the Loan Documents or any instrument or agreement referred to therein, or (d) to
be a consent to any future amendment, modification, or waiver of any Loan
Document, or any of the provisions thereof.  Except as expressly amended or
waived hereby, nothing in this Amendment shall, or shall be construed to,
modify, impair, or affect any of the covenants, agreements, terms, or conditions
of the Credit Agreement or any other Loan Document all of which shall remain in
full force and effect in accordance with their respective terms.

 

6.

Conditions.  This Amendment shall become effective upon the fulfillment by the
Loan Parties, in a manner reasonably satisfactory to Administrative Agent and
the Lenders, of all of the following conditions precedent (the “Conditions”):

 

6.1

No Default.  No Default or Event of Default shall have occurred and be
continuing and all representations and warranties in Section 2 shall be true and
correct in all material respects.

 

6.2

Execution of this Amendment.  Each of the parties hereto shall have duly
executed a counterpart of this Amendment and each shall have delivered the same
to Administrative Agent.

 

6.3

Expenses.  The Administrative Agent shall have received payment of all of its
costs and expenses incurred through the effective date of this Amendment
pursuant to and in accordance with the Credit Agreement, including the
reasonable costs and expenses of counsel to the Administrative Agent incurred in
connection with this Amendment.

 

7.

Counterparts.  This Amendment may be signed in any number of counterparts, and
by different parties hereto in separate counterparts, with the same effect as if
the signatures to each such counterpart were upon a single instrument.  All
counterparts shall be deemed an original of this Amendment.

 

8.

Integration.  This Amendment and any documents executed in connection herewith
or pursuant hereto contain the entire agreement between the parties with respect
to the subject matter hereof and supersede all prior agreements, understandings,
offers and negotiations, oral or written, with respect thereto.

 

9.

Governing Law.  THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
UNDER THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

[Remainder of page intentionally left blank—signature pages follow]

   

       

 

   

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
as of the date first written above.

   

   

 

   

BORROWER:

   

   

   

TELECOMMUNICATION SYSTEMS, INC.

   

By: /s/ Thomas M. Brandt, Jr.

   

Name: Thomas M. Brandt, Jr.

   

Title: Senior Vice President and Chief Financial Officer

   

 

   

SOLVERN INNOVATIONS, INC.

   

By: /s/ Thomas M. Brandt, Jr.

   

Name: Thomas M. Brandt, Jr.

   

Title: Treasurer

   

 

   

NETWORKS IN MOTION, INC.

   

By: /s/ Thomas M. Brandt, Jr.

   

Name: Thomas M. Brandt, Jr.

   

Title: Treasurer

   

 

   

MICRODATA GIS, INC.

   

By: /s/ Thomas M. Brandt, Jr.

   

Name: Thomas M. Brandt, Jr.

   

Title: Treasurer

   

 

   

MICRODATA, LLC

   

By: /s/ Thomas M. Brandt, Jr.

   

Name: Thomas M. Brandt, Jr.

   

Title: Treasurer

   

   

 

[Signature Page to Amendment No. 1 to Credit Agreement]

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NEXTGEN COMMUNICATIONS, INC.

   

By: /s/ Thomas M. Brandt, Jr.

   

Name: Thomas M. Brandt, Jr.

   

Title: Treasurer

   

   

   

       

 

   

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ADMINISTRATIVE AGENT:

   

   

   

SILICON VALLEY BANK,

   

as the Administrative Agent

   

   

   

By: /s/ Michael Shuhy

   

Name: Michael Shuhy

   

Title: Vice President

   

   

   

 

[Signature Page to Amendment No. 1 to Credit Agreement]

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LENDERS:

   

   

   

SILICON VALLEY BANK,

   

as Issuing Lender, Swingline Lender and as a Lender

   

   

   

By: /s/ Michael Shuhy

   

Name: Michael Shuhy

   

Title: Vice President

   

 

   

GE CAPITAL BANK

   

as a Lender

   

   

   

By: /s/ Heather-Leigh Glade

   

Name: Heather-Leigh Glade

   

Title: Duly Authorized Signatory

   

 

   

GENERAL ELECTRIC CAPITAL CORPORATION

   

as a Lender

   

   

   

By: /s/ Susan Bassett

   

Name: Susan Bassett

   

Title: Duly Authorized Signatory

   

 

   

PNC BANK, NATIONAL ASSOCIATION

   

as a Lender

   

   

   

By: /s/ Timothy M. Naylon

   

Name: Timothy M. Naylon

   

Title: Senior Vice President

   

 

[Signature Page to Amendment No. 1 to Credit Agreement]

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MANUFACTURERS & TRADERS TRUST COMPANY

   

as a Lender

   

   

   

By: /s/ Mary Frances Isakov

   

Name: Mary Frances Isakov

   

Title: Vice President

   

       

 

[Signature Page to Amendment No. 1 to Credit Agreement]

   

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TeleCommunication Systems, Inc.:  Alaska, Idaho, Indiana, Kansas, Kentucky,
Louisiana, Maine, Montana, North Dakota, New Hampshire, Nevada, Ohio, Oklahoma,
South Dakota, Vermont, Wisconsin and Wyoming.

NextGen Communications, Inc.:  Illinois.

   

   

 

   

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