**Incentive Stock Option Grant Agreement****Under The****TeleCommunication Systems, Inc.****Fourth Amended and Restated 1997 Stock Incentive Plan**     1. Terminology. All capitalized words that are not defined in this Agreement have themeanings ascribed to them in the Plan. For purposes of this Agreement, the terms below have thefollowing meanings:          (a) “***Cause***” has the meaning ascribed to such term or words of similar import in the Employee’swritten employment or service contract with the Company and, in the absence of such agreement ordefinition, means: (i) the willful commission by the Employee of a criminal or other act thatcauses or is likely to cause substantial economic damage to the Company or substantial injury tothe business reputation of the Company; (ii) the commission by the Employee of an act of fraud inthe performance of such Employee’s duties on behalf of the Company; or (iii) the continuing willfulfailure of the Employee to perform the duties of such Employee to the Company (other than suchfailure resulting from the Employee’s incapacity due to physical or mental illness), all asdetermined by the Administrator, which determination will be conclusive. For purposes of thisAgreement, no act, or failure to act, on the Employee’s part shall be considered “willful” unlessdone or omitted to be done by the Employee not in good faith with the reasonable belief that theEmployee’s action or omission was in the best interest of the Company.          (b) “***Change in Control***” means: (i) an acquisition (other than from the Company) in atransaction, or a series of related transactions, by any person, entity or “group,” within themeaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the “***ExchangeAct***”), (excluding for this purpose, (A) the Company or its subsidiaries, (B) any employee benefitplan of the Company or its subsidiaries which acquires beneficial ownership of voting securities ofthe Company, (C) an underwriter temporarily holding securities pursuant to an offering of suchsecurities, or (D) any corporation owned, directly or indirectly, by the stockholders of theCompany in substantially the same proportions as their ownership of the then outstanding votingsecurities of the Company entitled to vote generally in the election of directors) of beneficialownership, within the meaning of Rule 13d-3 promulgated under the Exchange Act, of 50% or more ofeither the then outstanding shares of common stock or the combined voting power of the Company’sthen outstanding voting securities entitled to vote generally in the election of directors (the“***Company Voting Stock***”); (ii) the effective time of any merger, share exchange, consolidation orother reorganization or business combination of the Company if immediately after such transactionpersons who hold a majority of the outstanding voting securities entitled to vote generally in theelection of directors of the surviving entity (or the entity owning 100% of such surviving entity)are not persons who held the Company Voting Stock immediately prior to such transaction; (iii) theclosing of a sale or conveyance of all or substantially all of the assets of the Company; (iv)individuals who were the Board’s nominees for election as directors immediately prior to a meetingof the stockholders of the Company involving an actual or threatened election contest relating tothe election of the directors of the Company, as such terms are used in Rule 14a-11 of Regulation14A promulgated under the Exchange Act, cease to constitute a majority of the Board following theelection; or (v) the dissolution or liquidation of the Company; provided, however,that the term “Change in Control” does not include a public offering
 

 
of capital stock of the Company that is effected pursuant to a registration statement filedwith, and declared effective by, the Securities and Exchange Commission under the Securities Act of1933.          (c) “***Company***” includes TeleCommunication Systems, Inc. and its Affiliates, except where thecontext otherwise requires.          (d) “***Option Shares***” mean the shares of Common Stock underlying the Options.          (e) “***Total and Permanent Disability***” means the inability to engage in any substantial gainfulactivity by reason of any medically determinable physical or mental impairment which can beexpected to result in death or which has lasted or can be expected to last for a continuous periodof not less than twelve months. The Administrator may require such proof of Total and PermanentDisability as the Administrator in its sole discretion deems appropriate and the Administrator’sgood faith determination as to whether the Employee is totally and permanently disabled will befinal and binding on all parties concerned.     2. Vesting. The Options vest in accordance with the vesting schedule identified inthe Stock Option Certificate which is attached hereto and constitutes a part of the Agreement (the“***Vesting Schedule***”), so long as the Employee is in the continuous employ of, or in a servicerelationship with, the Company from the Grant Date through the applicable date upon which vestingis scheduled to occur. No vesting will accrue to any Options after the Employee ceases to be ineither an employment or other service relationship with the Company.     3. Exercise of Options.          (a) Right to Exercise. The Employee may exercise the Options to the extent vested atany time on or before the Expiration Date or the earlier termination of the Options, unlessotherwise provided in this Agreement. Section 4 below describes certain limitations on exercise ofthe Options that apply in the event of the Employee’s death, Total and Permanent Disability,discharge by the Company without Cause or other termination of employment or other servicerelationship with the Company. The Options may be exercised only in multiples of whole shares andmay not be exercised at any one time as to fewer than one hundred shares (or such lesser number ofshares as to which the Options are then exercisable). No fractional shares will be issued underthe Options.          (b) Exercise Procedure. In order to exercise the Options, the following items must bedelivered to the Administrator before the expiration or termination of the Options: (i) an exercisenotice, in such form as the Administrator may require from time to time, specifying the number ofOption Shares to be purchased, and (ii) full payment of the Exercise Price for such Option Sharesor properly executed, irrevocable instructions, in such form as the Administrator may require fromtime to time, to effectuate a broker-assisted cashless exercise, each in accordance with Section3(c) of this Agreement. An exercise will not be effective until all of the foregoing items arereceived by the Administrator.          (c) Method of Payment. Payment of the Exercise Price may be made by delivery of cash,certified or cashier’s check, money order or other cash equivalent acceptable to the Administratorin its discretion, a broker-assisted cashless exercise in accordance with Regulation T of the Boardof Governors of the Federal Reserve System through a brokerage firm approved by the Administrator,or a combination of the foregoing. In addition, payment of the Exercise Price may be made by anyof the following methods, or a combination thereof, as determined by the Administrator in itsdiscretion at the time of exercise:
 

 
          (i) by tender (via actual delivery or attestation) to the Company of other shares ofCommon Stock of the Company which have a Fair Market Value on the date of tender equal tothe Exercise Price, providedthat such shares have been owned by theEmployee for a period of at least six months free of any substantial risk of forfeiture orwere purchased on the open market without assistance, direct or indirect, from the Company;          (ii) by delivery of the Employee’s full recourse promissory note payable to the Companyin a form approved by the Administrator; or          (iii) by any other method approved by the Administrator.          (d) Issuance of Shares upon Exercise. Upon exercise of the Options in accordance withthe terms of this Agreement, the Company will issue to the Employee, the brokerage firm specifiedin the Employee’s delivery instructions pursuant to a broker-assisted cashless exercise, or suchother person exercising the Options, as the case may be, the number of shares of Common Stock sopaid for, in the form of fully paid and nonassessable stock. The Company will deliver stockcertificates for the Option Shares as soon as practicable after exercise, which certificates will,unless such Option Shares are registered or an exemption from registration is available underapplicable federal and state law, bear a legend restricting transferability of such shares.     4. Termination of Employment or Service.          (a) Exercise Period Following Cessation of Employment or Other Service Relationship, InGeneral. If the Employee ceases to be employed by, or in a service relationship with, theCompany for any reason other than death, Total and Permanent Disability, or discharge by theCompany without Cause, the Options terminate in their entirety, regardless of whether the optionsare vested, immediately upon the Employee’s termination of employment or other servicerelationship.          (b) Termination by the Company Without Cause. In the event the Employee’s employmentor other service relationship is terminated by the Company without Cause, (i) the unvested Options,after giving effect to the provisions of Section 2 of this Agreement, terminate immediately uponsuch cessation, and (ii) the vested Options remain exercisable during the 90-day period followingsuch cessation, but in no event after the Expiration Date. Unless sooner terminated, the vestedOptions terminate upon the expiration of such 90-day period.          (c) Disability of Employee. Notwithstanding the provisions of Section 4(a) above, ifthe Employee ceases to be employed by, or in a service relationship with, the Company as a resultof the Employee’s Total and Permanent Disability, (i) the unvested Options, after giving effect tothe provisions of Section 2 of this Agreement, terminate immediately upon such cessation, and (ii)the vested Options remain exercisable during the six-month period following such cessation, but inno event after the Expiration Date. Unless sooner terminated, the vested Options terminate uponthe expiration of such six-month period.          (d) Death of Employee. If the Employee dies prior to the expiration or othertermination of the Options, (i) the unvested Options, after giving effect to the provisions ofSection 2 of this Agreement, terminate immediately upon the Employee’s death, and (ii) the vestedOptions remain exercisable during the six-month period following the Employee’s death, but in noevent after the Expiration Date, by the Employee’s executor, personal representative, or theperson(s) to whom the
 

 
Options are transferred by will or the laws of descent and distribution. Unless soonerterminated, the vested Options terminate upon the expiration of such six-month period.          (e) Misconduct. Notwithstanding anything to the contrary in this Agreement, theOptions terminate in their entirety, regardless of whether the Options are vested, immediately uponthe Employee’s discharge of employment or other service relationship for Cause or upon theEmployee’s commission of any of the following acts during any period following the cessation ofemployment or other service relationship during which the Options otherwise would be exercisable:(i) fraud on or misappropriation of any funds or property of the Company, or (ii) breach by theEmployee of any provision of any employment, non-disclosure, non-competition, non-solicitation,assignment of inventions, or other similar agreement executed by the Employee for the benefit ofthe Company, as determined by the Administrator, which determination will be conclusive.          (f) Change in Status. If the Employee’s relationship with the Company ceases to be a“common law employee” relationship but the Employee continues to provide bona fide services to theCompany following such cessation in a different capacity, including without limitation as adirector, consultant or independent contractor, then a termination of employment or other servicerelationship shall not be deemed to have occurred for purposes of this Section 4 upon such changein relationship. Notwithstanding the foregoing, the Options shall not be treated as incentivestock options within the meaning of Code section 422 with respect to any exercise that occurs morethan 90 days after such cessation of the common law employee relationship (except as otherwisepermitted under Code section 421 or 422).     5. Nontransferability of Options. These Options are nontransferable otherwise than bywill or the laws of descent and distribution and during the lifetime of the Employee, the Optionsmay be exercised only by the Employee or, during the period the Employee is under a legaldisability, by the Employee’s guardian or legal representative. Except as provided above, theOptions may not be assigned, transferred, pledged, hypothecated or disposed of in any way (whetherby operation of law or otherwise) and shall not be subject to execution, attachment or similarprocess.     6. Qualified Nature of the Options. The Options are intended to qualify as incentivestock options within the meaning of Code section 422 (“Incentive Stock Options”), to the fullestextent permitted by Code section 422, and this Agreement shall be so construed. Pursuant to Codesection 422(d) the aggregate fair market value (determined as of the Grant Date) of shares ofCommon Stock with respect to which all Incentive Stock Options first become exercisable by theEmployee in any calendar year under the Plan or any other plan of the Company (and its parent andsubsidiary corporations, within the meaning of Code section 424(e) and (f), as may exist from timeto time) may not exceed $100,000 or such other amount as may be permitted from time to time underCode section 422. To the extent that such aggregate fair market value exceeds $100,000 or otherapplicable amount in any calendar year, such stock options will be treated as nonstatutory stockoptions with respect to the amount of aggregate fair market value thereof that exceeds the Codesection 422(d) limit. For this purpose, the Incentive Stock Options will be taken into account inthe order in which they were granted. In such case, the Company may designate the shares of CommonStock that are to be treated as stock acquired pursuant to the exercise of Incentive Stock Optionsand the shares of Common Stock that are to be treated as stock acquired pursuant to nonstatutorystock options by issuing separate certificates for such shares and identifying the certificates assuch in the stock transfer records of the Company.     Notwithstanding anything herein to the contrary, if the Employee owns, directly or indirectlythrough attribution, stock possessing more than 10% of the total combined voting power of allclasses of
 

 
stock of the Company or of any of its subsidiaries (within the meaning of Code section 424(f))on the Grant Date, then the Exercise Price is the greater of (a) the Exercise Price stated on theStock Option Certificate which is attached hereto and constitutes a part of this Agreement or (b)110% of the Fair Market Value of the Common Stock on the Grant Date, and the Expiration Date is thelast business day prior to the fifth anniversary of the Grant Date.     Code section 422 provides additional limitations respecting the treatment of these Options asIncentive Stock Options.     7. Notice of Disqualifying Disposition. If the Employee makes a disposition (as thatterm is defined in Code section 424(c)) of any Option Shares acquired pursuant to these Optionswithin two years of the Grant Date or within one year after the Option Shares are transferred tothe Employee, the Employee agrees to notify the Administrator of such disposition in writing within30 days of the disposition.     8. Withholding of Taxes. At the time the Options are exercised, in whole or in part,or at any time thereafter as requested by the Company, the Employee hereby authorizes withholdingfrom payroll or any other payment of any kind due the Employee and otherwise agrees to makeadequate provision for foreign, federal, state and local taxes required by law to be withheld, ifany, which arise in connection with the Options (including upon a disqualifying disposition withinthe meaning of Code section 421(b)). The Company may require the Employee to make a cash paymentto cover any withholding tax obligation as a condition of exercise of the Options or issuance ofshare certificates representing Option Shares.     The Administrator may, in its sole discretion, permit the Employee to satisfy, in whole or inpart, any withholding tax obligation which may arise in connection with the Options either byelecting to have the Company withhold from the shares to be issued upon exercise that number ofshares, or by electing to deliver to the Company already-owned shares, in either case having a FairMarket Value equal to the amount necessary to satisfy the statutory minimum withholding amount due.     9. Adjustments for Corporate Transactions and Other Events.          (a) Stock Dividend, Stock Split and Reverse Stock Split. Upon a stock dividend of, orstock split or reverse stock split affecting, the Common Stock, the number of shares covered by andthe exercise price and other terms of the Options, shall, without further action of the Board, beadjusted to reflect such event unless the Board determines, at the time it approves such stockdividend, stock split or reverse stock split, that no such adjustment shall be made. TheAdministrator may make adjustments, in its discretion, to address the treatment of fractionalshares and fractional cents that arise with respect to the Options as a result of the stockdividend, stock split or reverse stock split.          (b) Non-Change in Control Transactions. Except with respect to the transactions setforth in Section 9(a), in the event of any change affecting the Common Stock, the Company or itscapitalization, by reason of a spin-off, split-up, dividend, recapitalization, merger,consolidation or share exchange, other than any such change that is part of a transaction resultingin a Change in Control, the Administrator, in its discretion and without the consent of theEmployee, shall make any adjustments in the Options, including but not limited to reducing thenumber, kind and price of securities subject to the Options.
 

 
          (c) Change in Control Transactions. In the event of any transaction resulting in aChange in Control, the Options will terminate upon the effective time of any such Change in Controlunless provision is made in connection with the transaction in the sole discretion of the partiesthereto for the continuation or assumption of the Options, or the substitution of the Options withnew options of the surviving or successor entity or a parent thereof. In the event of suchtermination, the Employee will be permitted, for a period of at least 10 days prior to theeffective time of the Change in Control, to exercise all of the Options that are then exercisableor will become exercisable upon or prior to the effective time of the Change in Control; provided,however, that any such exercise of any Options that become exercisable as a result of the Change inControl shall be deemed to occur immediately prior to the effective time of such Change in Control.          (d) Pooling of Interests Transaction. Notwithstanding anything in the Plan or thisAgreement to the contrary, in connection with any business combination authorized by the Board, theAdministrator, in its sole discretion and without the consent of the Employee, may make anymodifications to the Options, including but not limited to cancellation, forfeiture, surrender orother termination of the Options, in whole or in part, regardless of their vested status, butsolely to the extent necessary to facilitate the compliance of such transaction with requirementsfor treatment as a pooling of interests transaction for accounting purposes under generallyaccepted accounting principles.          (e) Adjustments for Unusual Events. The Administrator is authorized to make, in itsdiscretion and without the consent of the Employee, adjustments in the terms and conditions of, andthe criteria included in, the Options in recognition of unusual or nonrecurring events affectingthe Company, or the financial statements of the Company or any Affiliate, or of changes inapplicable laws, regulations, or accounting principles, whenever the Administrator determines thatsuch adjustments are appropriate in order to prevent dilution or enlargement of the benefits orpotential benefits intended to be made available under the Options or the Plan.          (f) Binding Nature of Adjustments. Adjustments under this Section 9 will be made bythe Administrator, whose determination as to what adjustments, if any, will be made and the extentthereof will be final, binding and conclusive. No fractional shares will be issued pursuant to theOptions on account of any such adjustments. The terms and conditions of this Agreement shall applywith equal force to any additional and/or substitute securities received by the Employee pursuantto this Section 9 in exchange for, or by virtue of the Employee’s ownership of, the Options or theOption Shares, except as otherwise determined by the Administrator.     10. Confidential Information. In consideration of the Options granted to the Employeepursuant to this Agreement, the Employee agrees and covenants that, except as specificallyauthorized by the Company, the Employee will keep confidential any trade secrets or confidential orproprietary information of the Company which are now or which hereafter may become known to theEmployee as a result of the Employee’s employment by or other service relationship with theCompany, and shall not at any time, directly or indirectly, disclose any such information to anyperson, firm, Company or other entity, or use the same in any way other than in connection with thebusiness of the Company, at all times during and after the Employee’s employment or other servicerelationship. The provisions of this Section 10 shall not narrow or otherwise limit theobligations and responsibilities of the Employee set forth in any agreement of similar importentered into between the Employee and the Company.     11. Non-Guarantee of Employment or Service Relationship. Nothing in the Plan or thisAgreement shall alter the at-will or other employment status or other service relationship of theEmployee, nor be construed as a contract of employment or service relationship between the Company
 

 
and the Employee, or as a contractual right of Employee to continue in the employ of, or in aservice relationship with, the Company for any period of time, or as a limitation of the right ofthe Company to discharge the Employee at any time with or without cause or notice and whether ornot such discharge results in the failure of any Options to vest or any other adverse effect on theEmployee’s interests under the Plan.     12. No Rights as a Stockholder. The Employee shall not have any of the rights of astockholder with respect to the Option Shares until such shares have been issued to him or her uponthe due exercise of the Options. No adjustment shall be made for dividends or distributions orother rights for which the record date is prior to the date such shares are issued.     13. The Company’s Rights. The existence of the Options shall not affect in any waythe right or power of the Company or its stockholders to make or authorize any or all adjustments,recapitalizations, reorganizations or other changes in the Company’s capital structure or itsbusiness, or any merger or consolidation of the Company, or any issue of bonds, debentures,preferred or other stocks with preference ahead of or convertible into, or otherwise affecting theCommon Stock or the rights thereof, or the dissolution or liquidation of the Company, or any saleor transfer of all or any part of the Company’s assets or business, or any other corporate act orproceeding, whether of a similar character or otherwise.     14. Employee. Whenever the word “Employee” is used in any provision of this Agreementunder circumstances where the provision should logically be construed, as determined by theAdministrator, to apply to the estate, personal representative, or beneficiary to whom the Optionsmay be transferred by will or by the laws of descent and distribution, the word “Employee” shall bedeemed to include such person.     15. Notices. All notices and other communications made or given pursuant to thisAgreement shall be in writing and shall be sufficiently made or given if hand delivered or mailedby certified mail, addressed to the Employee at the address contained in the records of theCompany, or addressed to the Administrator, care of the Company for the attention of its CorporateSecretary at its principal office or, if the receiving party consents in advance, transmitted andreceived via telecopy or via such other electronic transmission mechanism as may be available tothe parties.     16. Entire Agreement. This Agreement contains the entire agreement between theparties with respect to the Options granted hereunder. Any oral or written agreements,representations, warranties, written inducements, or other communications made prior to theexecution of this Agreement with respect to the Options granted hereunder shall be void andineffective for all purposes.     17. Amendment. This Agreement may be amended from time to time by the Administratorin its discretion; provided, however, that this Agreement may not be modified in amanner that would have a materially adverse effect on the Options or Option Shares as determined inthe discretion of the Administrator, except as provided in the Plan or in a written document signedby each of the parties hereto.     18. Conformity with Plan. This Agreement is intended to conform in all respects with,and is subject to all applicable provisions of, the Plan. Inconsistencies between this Agreementand the Plan shall be resolved in accordance with the terms of the Plan. In the event of anyambiguity in this Agreement or any matters as to which this Agreement is silent, the Plan shallgovern. A copy of the Plan is available upon request to the Administrator.
 

 
     19. Governing Law. The validity, construction and effect of this Agreement, and of anydeterminations or decisions made by the Administrator relating to this Agreement, and the rights ofany and all persons having or claiming to have any interest under this Agreement, shall bedetermined exclusively in accordance with the laws of the State of Maryland, without regard to itsprovisions concerning the applicability of laws of other jurisdictions. Any suit with respecthereto will be brought in the federal or state courts in the districts which include the city andstate in which the principal offices of the Company are located, and the Employee hereby agrees andsubmits to the personal jurisdiction and venue thereof.     20. Headings. The headings in this Agreement are for reference purposes only andshall not affect the meaning or interpretation of this Agreement.**Attachment:** **Form of Stock Option Certificate****Enclosure: Prospectus of the TeleCommunication Systems, Inc. Fourth Amended and Restated1997 Stock Incentive Plan**
 

 
STOCK OPTION CERTIFICATE1/1/2007TCS Employee