**Exhibit 4.6****NOTE PURCHASE AGREEMENT**     This Note Purchase Agreement (this “Agreement”) is dated as of March 13, 2006, amongTeleCommunication Systems, Inc., a Maryland corporation (the “Company”), and each purchaseridentified on the signature pages hereto (each, a “Purchaser” and collectively, the “Purchasers”).     WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant toSection 4(2) of the Securities Act (as defined below) and Rule 506 promulgated thereunder, theCompany desires to sell and issue to the Purchasers, and the Purchasers wish to purchase from theCompany (i) an initial aggregate of $10,000,000 in principal amount of the Company’s Secured Notesdue 2009 in the form attached hereto as Exhibit A (the “Notes”; such term to include anyAdditional Notes (as defined below)) and (ii) warrants to purchase an aggregate of 1,750,002 sharesof Class A common stock, par value $0.01 per share, of the Company (the “Class A Common Stock”) inthe form attached hereto as Exhibit B (the “Warrants”).     WHEREAS, at Closing (as defined below), the Company and the Purchasers are entering into aRegistration Rights Agreement in the form attached hereto as Exhibit C (the “RegistrationRights Agreement”), and into a Intellectual Property Security Agreement in the form attached heretoas Exhibit D (the “Intellectual Property Security Agreement”).     NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, and forother good and valuable consideration the receipt and adequacy of which are hereby acknowledged,the Company and the Purchasers agree as follows:ARTICLE I.DEFINITIONS     Definitions. In addition to the terms defined elsewhere in this Agreement, for allpurposes of this Agreement, the following terms shall have the meanings indicated in this Article:     “Additional Notes” means notes substantially in the form of Exhibit A that are issuedafter the Closing Date in payment of interest as provided herein. The Additional Notes will bearinterest at the rate indicated therein.     “Affiliate” means any Person that, directly or indirectly through one or more intermediaries,controls or is controlled by or is under common control with a Person, as such terms are used inand construed under Rule 144. With respect to a Purchaser, any investment fund or managed accountthat is managed on a discretionary basis by the same investment manager as such Purchaser will bedeemed to be an Affiliate of such Purchaser.
 

 
     “Business Day” means any day except Saturday, Sunday and any day which shall be a federallegal holiday or a day on which banking institutions in the State of New York are authorized orrequired by law or other governmental action to close.     “Class A Common Stock” shall have the meaning ascribed to such term in the Recitals.     “Class B Common Stock” means the Class B common stock, par value $0.01 per share of theCompany.     “Closing” means the closing of the purchase and sale of the Notes and Warrants pursuant toSection 2.3.     “Closing Date” means the date of the Closing.     “Commission” means the Securities and Exchange Commission.     “Common Shares” means the shares of Class A Common Stock issued upon exercise of the Warrants.     “Company Counsel” means DLA Piper Rudnick Gray Cary US LLP.     “Disclosure Materials” shall have the meaning ascribed to such term in Section 3.1(h).     “Disclosure Schedules” means the Disclosure Schedules of the Company delivered concurrentlyherewith as referenced in Article III hereof.     “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules andregulations promulgated thereunder.     “Expense Allowance” shall have the meaning ascribed to such term in Section 6.1.     “GAAP” shall have the meaning ascribed to such term in Section 3.1(h).     “Intellectual Property Rights” shall have the meaning ascribed to such term in Section 3.1(q).     “Intellectual Property Security Agreement” shall have the meaning ascribed to such term in theRecitals.     “Lien” means any lien, charge, encumbrance, security interest, right of first refusal,preemptive right or other restriction of any kind; other than (i) restrictions on transfer ofsecurities arising under federal or state securities laws or regulations, (ii) purchase moneyliens, (iii) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, landlord’s, tax,and other similar liens imposed by law or agreement,
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(iv) liens in respect of indebtedness that is subordinate to this Note, and (v) liens securingdebt under Section 4(a) of the Notes.     “Material Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).     “Material Permits” shall have the meaning ascribed to such term in Section 3.1(o).     “Notes” shall have the meaning ascribed to such term in the Recitals.     “Person” means an individual or corporation, partnership, trust, incorporated orunincorporated association, joint venture, limited liability company, joint stock company,government (or an agency or subdivision thereof) or other entity of any kind.     “Proceeding” means an action, claim, suit, investigation or proceeding (including, withoutlimitation, an investigation or partial proceeding, such as a deposition).     “Purchase Price” shall have the meaning ascribed to such term in Section 2.2.     “Registration Rights Agreement” shall have the meaning ascribed to such term in the Recitals.     “Required Approvals” shall have the meaning ascribed to such term in Section 3.1(e).     “Required Holders” means (i) the Note holders who, together with their respective Affiliates,hold a majority of the Notes outstanding at the time of determination, (ii) SRB Management, L.P. aslong as (A) it and its Affiliates, (B) WS Capital Management, L.P. and its Affiliates and (C) WSVentures Management, L.P. and its Affiliates collectively hold at least $2,000,000 in aggregateprincipal amount of the Notes outstanding at the time of determination, and (iii) Bonanza MasterFund Ltd. as long as it, together with its Affiliates, holds at least $3,000,000 in aggregateprincipal amount of the Notes outstanding at the time of determination.     “Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, assuch rule may be amended from time to time, or any similar rule or regulation hereafter adopted bythe Commission having substantially the same effect as such rule.     “SEC Reports” shall have the meaning ascribed to such term in Section 3.1(h).     “Securities Act” means the Securities Act of 1933, as amended.     “Short Sales” shall include all “short sales” as defined in Rule 200 of Regulation SHO underthe Exchange Act.     “Subsidiary” means any subsidiary of the Company that is required to be listed in Schedule3.1(a).
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     “Trading Day” means (i) a day on which the Class A Common Stock is traded on a Trading Market,or (ii) if the Class A Common Stock is not listed on a Trading Market, a day on which the Class ACommon Stock is traded in the over-the-counter market is quoted in the over-the-counter market asreported by Pink Sheets, LLC (or any similar organization or agency succeeding to its functions ofreporting prices); provided, that in the event that the Class A Common Stock is not listed orquoted as set forth in (i) or (ii) hereof, then Trading Day shall mean a Business Day.     “Trading Market” means whichever of the New York Stock Exchange, the American Stock Exchange,the NASDAQ Global Market, the NASDAQ Capital Market or OTC Bulletin Board on which the Class ACommon Stock is listed or quoted for trading on the date in question.     “Transaction Documents” means this Agreement, the Notes, the Warrants, the Registration RightsAgreement, the Intellectual Property Security Agreement and any other documents or agreementsexecuted in connection with the transactions contemplated hereunder.     “Warrants” shall have the meaning ascribed to such term in the Recitals.ARTICLE II.PURCHASE AND SALE OF NOTES AND WARRANTS     2.1 Issuance of Notes and Warrants. Upon the following terms and conditions, theCompany shall issue and sell to each Purchaser, and each Purchaser, severally and not jointly,shall purchase from the Company, the principal amount of Notes and Warrants to purchase the numberof Common Shares indicated next to the Purchaser’s name on Schedule I hereto.     2.2 Purchase Price.          (a) Purchase Price. The purchase price for the Notes and Warrants to be acquired byeach Purchaser (the “Purchase Price”) shall be the Purchase Price set forth opposite suchPurchaser’s name on Schedule I.          (b) Purchase Price Allocation. For U.S. federal income tax purposes, (i) the Companyagrees that the portion of the Purchase Price allocable to the Notes is $9,000,000 and that theportion of the Purchase Price allocable to the Warrants is $1,000,000 and (ii) each Purchaser ofNotes and Warrants, by accepting this Note, agrees to allocate its purchase price for the Notes andWarrants in accordance with clause (i).     2.3 The Closing.          (a) Timing. Subject to the fulfillment or waiver of the conditions set forth inArticle V hereof, the purchase and sale of the Notes and Warrants shall take place at a closing(the “Closing”), on or about the date hereof or such other date as the Purchasers and the Companymay agree upon (the “Closing Date”).
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          (b) Location. The Closing shall take place at the offices of the Company on theClosing Date or telephonically or at such other location or time as the parties may agree.          (c) Form of Payment and Closing. On the Closing Date, the Company shall deliver to thePurchasers all of the Notes and Warrants purchased hereunder, each registered in the name of eachsuch Purchaser. On the Closing Date, the Purchasers shall deliver by wire transfer in payment ofthe aggregate Purchase Price hereunder an aggregate of $10,000,000 to an account designated inwriting by the Company, with each Purchaser responsible for its respective portion of the PurchasePrice as set forth on Schedule I. In addition, each party shall deliver all documents,instruments and writings required to be delivered by such party pursuant to this Agreement at orprior to the Closing.     2.4 Closing Deliveries.          (a) Deliveries by the Company. At the Closing, the Company shall deliver or cause tobe delivered to each Purchaser the following:               (i) a Note in the name of each Purchaser in the amount indicated opposite such Purchaser’sname on Schedule I hereto;               (ii) a Warrant registered in the name of such Purchaser pursuant to which such Purchaser shallhave the right to purchase the number of Common Shares indicated opposite such Purchaser’s name onSchedule I hereto;               (iii) the Registration Rights Agreement executed by the Company;               (iv) the Intellectual Property Security Agreement executed by the Company; and               (v) the legal opinion of Company Counsel addressed to each Purchaser in the form attachedhereto as Exhibit E.          (b) Deliveries by the Purchaser. At the Closing, each Purchaser shall deliver or causeto be delivered to the Company the following:               (i) The Purchase Price amount indicated next to the Purchaser’s name on Schedule Ihereto, in United States dollars and in immediately available funds, by wire transfer to an accountdesignated in writing by the Company for such purpose; and               (ii) the Registration Rights Agreement executed by such Purchaser.
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     2.5 Additional Notes.          (a) On any Interest Payment Date (as defined in the Notes), at its option, the Company, inlieu of paying any portion (allocated on a prorata basis to each holder) of theinterest then due on the Notes in cash, may elect to issue to each holder Additional Notes in anaggregate principal amount equal to the amount of interest due to such holder.          (b) If the Company elects to issue Additional Notes as provided herein and in the Notes, thenthe Company shall deliver to the holders to which such Additional Notes are to be issued an opinionof counsel satisfactory to such holders that: (1) each such Additional Note (A) has been dulyauthorized, executed and delivered by the Company, and (B) constitutes a legal, valid and bindingobligation of the Company, enforceable in accordance with its terms subject, as to enforcement ofremedies, to bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting rightsof creditors generally and to the effect of general principles of equity; and (2) the issuance anddelivery of such Additional Notes complies with all requirements of law, including, withoutlimitation, all federal and state securities laws. The Company also shall deliver to the holdersto which such Additional Notes are to be issued an officers’ certificate indicating that all of therepresentations and warranties of the Company contained herein shall be true and correct as of thedate of the issuance of Additional Notes as though made on and as of such date.ARTICLE III.REPRESENTATIONS AND WARRANTIES     3.1 Representations and Warranties of the Company. Except as set forth under thecorresponding section of the Disclosure Schedules, which Disclosure Schedules shall be deemed apart hereof, the Company hereby makes the following representations and warranties to eachPurchaser:          (a) *Subsidiaries*. The Company has no direct or indirect Subsidiaries other than those listedin the SEC Reports. Except as disclosed in the SEC Reports and as set forth on Schedule3.1(a), the Company owns, directly or indirectly, all of the capital stock of each Subsidiaryfree and clear of any and all Liens, and all the issued and outstanding shares of capital stock ofeach Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive andsimilar rights to subscribe for or purchase securities.          (b) *Organization and Qualification*. Each of the Company and each Subsidiary is an entity dulyincorporated or otherwise organized, validly existing and in good standing under the laws of thejurisdiction of its incorporation or organization (as applicable), with the requisite power andauthority to own and use its properties and assets and to carry on its business substantially asdescribed in the SEC Reports. Neither the Company nor any Subsidiary is in violation of any of theprovisions of its respective certificate or articles of incorporation, bylaws or otherorganizational or charter documents. Each of the Company and each Subsidiary is duly qualified toconduct business and is in good standing as a foreign corporation or other entity in each
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jurisdiction in which the nature of the business conducted or property owned by it makes suchqualification necessary, except where the failure to be so qualified or in good standing, as thecase may be, would not, individually or in the aggregate, reasonably be expected to result in (i)an adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) amaterial and adverse effect on the results of operations, assets, business or condition (financialor otherwise) of the Company and its Subsidiaries, taken as a whole, or (iii) a material andadverse impairment to the Company’s ability to perform on a timely basis its obligations under anyTransaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding hasbeen instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke,limit or curtail such power and authority or qualification.          (c) *Authorization; Enforcement*. The Company has the requisite corporate power and authority toenter into and to consummate the transactions contemplated by each of the Transaction Documents, toissue the Notes and the Warrants, and, if applicable, the Common Shares, and otherwise to carry outits obligations thereunder. The execution and delivery of each of the Transaction Documents by theCompany and the consummation by it of the transactions contemplated thereby, including the issuanceof the Notes and Warrants and, if applicable, the Common Shares, have been duly authorized by allnecessary action on the part of the Company and no further action is required by the Company inconnection therewith, other than in connection with the Required Approvals. Each TransactionDocument has been (or upon delivery will have been) duly executed by the Company and, whendelivered in accordance with the terms thereof, will constitute the valid and binding obligation ofthe Company enforceable against the Company in accordance with its terms except (i) as limited bygeneral equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium andother laws of general application affecting enforcement of creditors’ rights generally, (ii) aslimited by laws relating to the availability of specific performance, injunctive relief or otherequitable remedies, and (iii) insofar as indemnification and contribution provisions may be limitedby applicable law.          (d) *No Conflicts*. The execution, delivery and performance of the Transaction Documents by theCompany, the issuance of the Notes, the Warrants, and, if applicable, the Common Shares, and theconsummation by the Company of the other transactions contemplated thereby do not and will not (i)conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articlesof incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, orconstitute a default (or an event that with notice or lapse of time or both would become a default)under, result in the creation of any Lien upon any of the properties or assets of the Company orany Subsidiary, or give to others any rights of termination, amendment, acceleration orcancellation (with or without notice, lapse of time or both) of, any agreement, credit facility,debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or otherunderstanding to which the Company or any Subsidiary is a party or by which any property or assetof the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals,conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction,decree or other restriction of any court or governmental authority to which the Company or aSubsidiary is subject
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(including federal and state securities laws and regulations), or by which any property orasset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses(ii) and (iii), such as would not reasonably be expected to result in a Material Adverse Effect.          (e) *Filings, Consents and Approvals*. The Company is not required to obtain any consent,waiver, authorization or order of, give any notice to, or make any filing or registration with, anycourt or other federal, state, local or other governmental authority or other Person in connectionwith the execution, delivery and performance by the Company of the Transaction Documents, otherthan (i) the filing with the Commission of one or more Registration Statements in accordance withthe requirements of the Registration Rights Agreement, (ii) the filings required in accordance withSection 4.5, (iii) those that have been made or obtained prior to the date of this Agreement, (iv)application(s) to each applicable Trading Market for the listing of the Common Shares for tradingthereon in the time and manner required thereby, and (v) the filing of a Notice of Sale ofSecurities on Form D with the Commission as required under Regulation D of the Securities Act andsuch filings as are required to be made under applicable state securities laws (collectively the“Required Approvals”).          (f) *Issuance of Common Shares*. Upon issuance, with respect to the Common Shares, in accordancewith the terms of the Warrants, including the receipt by the Company of payment of the exerciseprice pursuant to the terms of the Warrants, the Common Shares will be validly issued, fully paidand nonassessable and free from all United States taxes and Liens created by the Company withrespect to the issue thereof. The issuance of the Common Shares upon exercise of the Warrants isnot subject to any preemptive or similar rights to subscribe for or purchase securities. TheCompany has reserved from its duly authorized capital stock all of the issuable Common Shares.          (g) *Capitalization*. The number of shares and type of all authorized, issued and outstandingcapital stock of the Company, and all shares of Class A Common Stock and Class B Common Stock,reserved for issuance under the Company’s various option and incentive plans, was as set forth inthe SEC Reports as of the respective dates set forth in such SEC Reports. No securities of theCompany are entitled to preemptive or similar rights, and no Person has any right of first refusal,preemptive right, right of participation, or any similar right to participate in the transactionscontemplated by the Transaction Documents. Except as a result of the sale and issuance of theNotes, the Warrants and the Common Shares, other than as described in the SEC Reports andSchedule 3.1(g) there are no outstanding options, warrants, scrip, rights to subscribe to,calls or commitments of any character whatsoever relating to, or securities, rights or obligationsconvertible into or exchangeable for, or giving any Person any right to subscribe for or acquire,any shares of Class A Common Stock or Class B Common Stock, or contracts, commitments,understandings or arrangements by which the Company or any Subsidiary is or may become bound toissue additional shares of Class A Common Stock or Class B Common Stock, or securities or rightsconvertible or exchangeable into shares of Class A Common Stock or Class B Common Stock. The issueand sale of the Notes, the Warrants and the Common Shares will not, immediately or with the passageof time, obligate the Company to issue shares of Class A Common
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Stock, Class B Common Stock or other securities to any Person (other than the Purchasers) andwill not result in a right of any holder of Company securities to adjust the exercise, conversion,exchange or reset price under such securities, other than those Warrants to Purchase Common Stock,each dated January 13, 2004, issued by the Company to each of 033 Growth Partners I, L.P., 033Growth Partners II, L.P., 033 Growth International Fund LTD., Oyster Pond Partners, L.P. and TheRiverview Group LLC. All of the outstanding shares of capital stock of the Company are validlyissued, fully paid and nonassessable, have been issued in compliance with all federal and statesecurities laws, and none of such outstanding shares was issued in violation of any preemptiverights or similar rights to subscribe for or purchase securities. No further approval orauthorization of any stockholder, the Board of Directors of the Company or other Person is requiredfor the issuance and sale of the Notes, the Warrants and the Common Shares. Except as disclosed inthe Disclosure Materials, there are no stockholders agreements, voting agreements or other similaragreements with respect to the Company’s capital stock to which the Company is a party or, to theknowledge of the Company, between or among any of the Company’s stockholders, except as would notreasonably be expected to result in a Material Adverse Effect.          (h) *SEC Reports; Financial Statements*. The Company has filed all reports and proxy statementsrequired to be filed by it under the Securities Act and the Exchange Act, including pursuant toSection 13(a) or 15(d) thereof, since January 1, 2005 (the foregoing materials filed with theCommission prior to the date hereof being collectively referred to herein as the “SEC Reports” and,together with the Disclosure Schedules, the “Disclosure Materials”) on a timely basis or has timelyfiled a valid extension of such time of filing and has filed any such SEC Reports prior to theexpiration of any such extension. As of their respective dates, the SEC Reports complied in allmaterial respects with the requirements of the Securities Act and the Exchange Act, and none of theSEC Reports, when filed, contained any untrue statement of a material fact or omitted to state amaterial fact required 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. The financial statementsof the Company included in the SEC Reports comply in all material respects with applicableaccounting requirements and the rules and regulations of the Commission with respect thereto as ineffect at the time of filing and such financial statements have been prepared in accordance withUnited States generally accepted accounting principles (“GAAP”) applied on a consistent basisduring the periods involved (except as may be otherwise specified in such financial statements orthe notes thereto, or in the case of unaudited financial statements, to the extent they may excludefootnotes or may be condensed or summary footnotes or statements), and fairly present in allmaterial respects the financial position of the Company and its consolidated Subsidiaries as of andfor the dates thereof and the results of operations and cash flows for the periods then ended,subject, in the case of unaudited statements, to normal, year-end audit adjustments. The Companymaintains a standard system of accounting established and administered in accordance with GAAP andthe applicable requirements of the Exchange Act.          (i) *Accountant.*The firm of Ernst & Young LLP, has expressed its opinion with respect to theannual consolidated financial statements for the Company’s
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fiscal year ended December 31, 2004 to be included or incorporated by reference in theRegistration Statement (as defined in the Registration Rights Agreement) and the prospectus whichforms a part thereof (the “Prospectus”), and is an independent accountant as required by theSecurities Act*.*          (j) *Taxes*. Each of the Company and its Subsidiaries has filed all necessary federal, stateand foreign income and franchise tax returns and has paid or accrued all taxes shown as due thereonexcept for taxes being contested in good faith by the Company for which adequate reserves have beenestablished, and neither the Company nor any of its Subsidiaries has knowledge of a tax deficiencywhich has been asserted in writing against it which would reasonably be expected to have a MaterialAdverse Effect.          (k) *Material Changes*. Except as set forth in press releases issued by the Company, since thedate of the latest audited financial statements included within the SEC Reports, except asspecifically disclosed in the SEC Reports or in the Disclosure Materials, (i) there has been noevent, occurrence or development known to the Company that, individually or in the aggregate, hashad or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Companyhas not incurred any liabilities (contingent or otherwise) other than (A) trade payables, accruedexpenses and other liabilities incurred in the ordinary course of business consistent with pastpractice, (B) liabilities not required to be reflected in the Company’s financial statementspursuant to GAAP or required to be disclosed in filings made with the Commission, and (C) otherliabilities that would not, individually or in the aggregate, have a Material Adverse Effect, (iii)the Company has not altered its critical accounting policies, (iv) the Company has not declared ormade any dividend or distribution of cash or other property to its stockholders or purchased,redeemed or made any agreements to purchase or redeem any shares of its capital stock, and (v) theCompany has not issued any equity securities to any officer, director or Affiliate of the Company,except pursuant to existing Company stock incentive or purchase plans. The Company does not havepending before the Commission any request for confidential treatment of information or documents.          (l) *Litigation*. There is no Proceeding or investigation pending or, to the knowledge of theCompany, threatened against or affecting the Company, any Subsidiary or any of their respectiveproperties before or by any court, arbitrator, governmental or administrative agency or regulatoryauthority (federal, state, county, local or foreign) which (i) adversely affects or challenges thelegality, validity or enforceability of any of the Transaction Documents or the Common Shares, or(ii) except as set forth in the SEC Reports, would, if there were an unfavorable decision,individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.Except as set forth in the SEC Reports, neither the Company nor any Subsidiary, nor any director orofficer thereof, is or has been the subject of any Proceeding involving a claim of violation of orliability under federal or state securities laws or a claim of breach of fiduciary duty. There isnot pending, and to the knowledge of the Company, there is not contemplated, any investigation bythe Commission of the Company or any current or former director or officer of the Company.
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          (m) *Labor Relations*. No material labor dispute exists or, to the knowledge of the Company, isimminent with respect to any of the employees of the Company which could reasonably be expected toresult in a Material Adverse Effect.          (n) *Compliance.*Neither the Company nor any Subsidiary (i) is in default under or in violationof (and no event has occurred that has not been waived that, with notice or lapse of time or both,would result in a default by the Company or any Subsidiary under), nor has the Company or anySubsidiary received notice of a claim that it is in default under or that it is in violation of,any indenture, loan or credit agreement or any other agreement or instrument to which it is a partyor by which it or any of its properties is bound (whether or not such default or violation has beenwaived), (ii) is in violation of any order of any court, arbitrator or governmental body, or (iii)is or has been in violation of any statute, rule or regulation of any governmental authority,including without limitation all foreign, federal, state and local laws applicable to its business,except as to each of the foregoing clauses (i), (ii) and (iii) as would not have a Material AdverseEffect.          (o) *Regulatory Permits*. The Company and the Subsidiaries possess all certificates,authorizations and permits issued by the appropriate federal, state, local or foreign regulatoryauthorities necessary to conduct their respective businesses as described in the SEC Reports,except where the failure to possess such permits would not, individually or in the aggregate,reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and neither theCompany nor any Subsidiary has received any notice of proceedings relating to the revocation ormodification of any Material Permit.          (p) *Title to Assets*. The Company and the Subsidiaries have good and marketable title in feesimple to all real property owned by them that is material to their respective businesses and goodand marketable title in all personal property owned by them that is material to their respectivebusinesses, in each case free and clear of all Liens, except for Liens that do not materiallyaffect the value of such property and do not materially interfere with the use made and proposed tobe made of such property by the Company and the Subsidiaries. Any real property and facilities heldunder lease by the Company and the Subsidiaries are held by them under valid, subsisting andenforceable leases of which the Company and the Subsidiaries are in compliance, except for suchcompliance as would not, individually or in the aggregate, reasonably be expected to result in aMaterial Adverse Effect.          (q) *Patents and Trademarks*. The Company and the Subsidiaries have, or have rights to use, allpatents, patent applications, trademarks, trademark applications, service marks, trade names,copyrights, licenses and other similar rights that are necessary or material for use in connectionwith their respective businesses as described in the SEC Reports and which the failure to so havewould, individually or in the aggregate, reasonably be expected to result in a Material AdverseEffect (collectively, the “Intellectual Property Rights”). Neither the Company nor any Subsidiaryhas received a written notice that the Intellectual Property Rights used by the Company or anySubsidiary violates or infringes upon the rights of any Person other than matters
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previously resolved or as would not, individually or in the aggregate, have a Material AdverseEffect. Except as set forth in the SEC Reports, all such Intellectual Property Rights areenforceable and, to the Company’s knowledge, do not violate or infringe the Intellectual PropertyRights of others in any respect that would reasonably be expected to result in a Material AdverseEffect and, to the knowledge of the Company, there is no material existing infringement by anotherPerson of any of the Intellectual Property Rights.          (r) *Insurance.*The Company and the Subsidiaries are insured against such losses and risks andin such amounts as are believed by the Company to be prudent in the businesses in which the Companyand the Subsidiaries are engaged. The Company has no reason to believe that it will not be able torenew its existing insurance coverage as and when such coverage expires or to obtain similarcoverage from similar insurers as may be necessary to continue its business without a significantincrease in cost, other than general insurance price increases.          (s) *Transactions With Affiliates and Employees*. Except as disclosed in the SEC Reports, noneof the officers or directors of the Company and, to the knowledge of the Company, none of theemployees of the Company, is presently a party to any transaction with the Company or anySubsidiary required to be disclosed in the SEC Reports (other than for services as employees,officers and directors), including any contract, agreement or other arrangement providing for thefurnishing of services to or by, providing for rental of real or personal property to or from, orotherwise requiring payments to or from any officer, director or such employee or, to the knowledgeof the Company, any entity in which any officer, director, or any such employee has a substantialinterest or is an officer, director, trustee or partner.          (t) *Certain Registration Matters*. Assuming the accuracy of the Purchasers’ representations andwarranties set forth in Section 3.2(c)-(g), no registration under the Securities Act is requiredfor the offer and issuance of the Notes, the Warrants and the Common Shares by the Company to thePurchasers under the Transaction Documents. Neither the Company nor any Person acting on behalf ofthe Company has offered or sold any of the Notes, the Warrants or the Common Shares by any form ofgeneral solicitation or general advertising. The Company has offered the Notes, the Warrants andthe Common Shares for sale only to the Purchasers and certain other “accredited investors” withinthe meaning of Rule 501 under the Securities Act.          (u) *Listing and Maintenance Requirements*. The Company’s Class A Common Stock is registeredpursuant to Section 12(g) of the Exchange Act, and the Company has taken no action designed to, orwhich to its knowledge is likely to have the effect of, terminating the registration of the Class ACommon Stock under the Exchange Act nor has the Company received any written notification that theCommission is contemplating terminating such registration. The Company has not, in the two yearspreceding the date hereof, received written notice from any Trading Market to the effect that theCompany is not in compliance with the listing or maintenance requirements thereof. The Company isin compliance with the listing and maintenance requirements for continued listing of the CommonStock on the Trading Market. The issuance and sale of
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the Notes and the Warrants under the Transaction Documents does not contravene the rules andregulations of the Trading Market on which the Class A Common Stock is currently listed or quoted,and no approval of the stockholders of the Company thereunder is required for the Company to issueand deliver to the Purchasers the Notes and the Warrants contemplated by Transaction Documents.          (v) *Investment Company*. The Company is not, and is not an Affiliate of, and immediately afterreceipt of payment of the Purchase Price, will not be or be an Affiliate of, an “investmentcompany” within the meaning of the Investment Company Act of 1940, as amended.          (w) *Disclosure.*The Company confirms that neither it nor, to its knowledge, any Person actingon its behalf, has provided any of the Purchasers or their agents or counsel with any informationthat the Company believes constitutes material, non-public information other than information givenon a confidential basis other than the fact that discussions or negotiations are taking placeconcerning the transaction contemplated by this Agreement and any of the terms, conditions or otherfacts with respect thereto (including the status thereof).          (x) *No Integrated Offering*. Neither the Company, nor any of its Affiliates, nor any Personacting on its or their behalf has, directly or indirectly, made any offers or sales of any securityor solicited any offers to buy any security, under circumstances that would cause this offering ofthe Notes and the Warrants, and the Common Shares to be integrated with prior offerings by theCompany for purposes of the Securities Act or any applicable stockholder approval provisions,including, without limitation, under the rules and regulations of the Trading Market on which theClass A Common Stock is currently listed or quoted.          (y) *Acknowledgment Regarding Purchasers’ Purchase of Notes, Warrants, and Common Shares.*TheCompany acknowledges that each of the Purchasers is acting solely in the capacity of an arm’slength purchaser with respect to the Transaction Documents and the transactions contemplatedhereby. The Company further acknowledges that no Purchaser is acting as a financial advisor orfiduciary of the Company (or in any similar capacity) with respect to this Agreement and thetransactions contemplated hereby and any advice given by any Purchaser or any of their respectiverepresentatives or agents in connection with this Agreement and the transactions contemplatedhereby is merely incidental to the Purchasers’ purchase of the Notes, the Warrants and the CommonShares. The Company further represents to each Purchaser that the Company’s decision to enter intothis Agreement has been based solely on the independent evaluation of the transactions contemplatedhereby by the Company and its representatives.          (z) *Seniority*. As of the Closing Date, except for Indebtedness (as defined in the Notes) (i)pursuant to the SVB Facility (as defined in the Notes), (ii) pursuant to the Receivables Facility(as defined in the Notes), (iii) pursuant to the capital leases described on Schedule 3.1(aa) tothis Agreement and any extensions, renewals or replacements thereof, (iv) pursuant to conditionalsale or other title retention agreements
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entered into by the Company or any Subsidiary in the ordinary course of business and (v)secured by Permitted Liens (as defined in the Notes) (collectively, such Indebtedness, “SeniorDebt”), no Indebtedness or equity of the Company is senior to the Notes in right of payment,whether with respect to interest or upon liquidation or dissolution, or otherwise. The Company hasnot granted any Liens on any of its assets or the assets of its Subsidiaries to secure anyIndebtedness other than Liens granted to secure Senior Debt and Indebtedness under the capitalleases described on Schedule 3.1(aa).          (aa) *Solvency*. Based on the financial condition of the Company as of the Closing Date aftergiving effect to the receipt by the Company of the proceeds from the sale of the Notes hereunder,(i) the fair saleable value of the Company’s assets exceeds the amount that will be required to bepaid on or in respect of the Company’s existing debts and other liabilities (including knowncontingent liabilities) as they mature; (ii) the Company’s assets do not constitute unreasonablysmall capital to carry on its business as now conducted and as proposed to be conducted includingits capital needs taking into account the particular capital requirements of the business conductedby the Company, and projected capital requirements and capital availability thereof; and (iii) thecurrent cash flow of the Company, together with the proceeds the Company would receive, were it toliquidate all of its assets, after taking into account all anticipated uses of the cash, would besufficient to pay all amounts on or in respect of its liabilities when such amounts are required tobe paid. Schedule 3.1(aa) sets forth as of the dates thereof all outstanding secured andunsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiaryhas commitments. For the purposes of this Agreement, “Indebtedness” shall mean (a) anyliabilities for borrowed money or amounts owed in excess of $50,000 (other than trade accountspayable incurred in the ordinary course of business), (b) all guaranties, endorsements and othercontingent obligations in respect of Indebtedness of others, whether or not the same are or shouldbe reflected in the Company’s balance sheet (or the notes thereto), except guaranties byendorsement of negotiable instruments for deposit or collection or similar transactions in theordinary course of business; and (c) the present value of any lease payments in excess of $50,000due under leases required to be capitalized in accordance with GAAP. Neither the Company nor anySubsidiary is in default with respect to any Indebtedness.          (bb) *Sarbanes-Oxley Act*. The Company is, and at the Closing Date will be, in compliance inall material respects with all provisions of the Sarbanes-Oxley Act of 2002 which are applicable toit. The Company is an “accelerated filer” as defined in Rule 12b-2 under the Exchange Act and,accordingly, is in compliance in all material respects with Section 404 of the Sarbanes-Oxley Actof 2002. The Company maintains a system of internal accounting controls that the Companyreasonably believes are sufficient to provide reasonable assurance that (i) transactions areexecuted in accordance with management’s general or specific authorization; (ii) transactions arerecorded as necessary to permit preparation of financial statements in conformity with generallyaccepted accounting principles and to maintain accountability for assets; (iii) access to assets ispermitted only in accordance with management’s general or specific authorization; and (iv) therecorded accountability for assets is compared with existing assets at reasonable intervals andappropriate action is taken with respect to any differences.
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     3.2 Representations and Warranties of the Purchasers. Each Purchaser hereby, foritself and for no other Purchaser, represents and warrants to the Company as follows:          (a) *Organization; Authority*. Such Purchaser is an entity duly organized, validly existing andin good standing under the laws of the jurisdiction of its organization with the requisitecorporate or partnership power and authority to enter into and to consummate the transactionscontemplated by the applicable Transaction Documents and otherwise to carry out its obligationsthereunder. The execution, delivery and performance by such Purchaser of the transactionscontemplated by this Agreement has been duly authorized by all necessary corporate or, if suchPurchaser is not a corporation, such partnership, limited liability company or other applicablelike action, on the part of such Purchaser. Each of this Agreement and other Transaction Documentssigned by Purchaser have been duly executed by such Purchaser, and constitute or, when delivered bysuch Purchaser in accordance with the terms hereof, will constitute, the valid and bindingobligation of such Purchaser, enforceable against it in accordance with its terms, except (i) aslimited by general equitable principles and applicable bankruptcy, insolvency, reorganization,moratorium and other laws of general application affecting enforcement of creditors’ rightsgenerally, (ii) as limited by laws relating to the availability of specific performance, injunctiverelief or other equitable remedies and (iii) insofar as indemnification and contribution provisionsmay be limited by applicable law.          (b) *No Conflicts*. The execution, delivery and performance of this Agreement and otherTransaction Documents by the Purchaser and the consummation by such Purchaser of the transactionscontemplated hereby and thereby will not (i) result in a violation of the certificate ofincorporation, by-laws or other documents of organization of such Purchaser, (ii) conflict with, orconstitute a default (or an event which with notice or lapse of time or both would become adefault) under, or give others any rights of termination, amendment, acceleration or cancellationof, any agreement, indenture or instrument to which such Purchaser is bound, or (iii) result in aviolation of any law, rule, regulation or decree applicable to such Purchaser.          (c) *Investment Intent.*Such Purchaser is purchasing the Notes, the Warrants and the CommonShares for its own account and not with a view to distribution. Such Purchaser has been advised andunderstands that neither the Notes, the Warrants nor the Common Shares issuable upon exercise ofthe Warrants by the Company pursuant to the terms of the Notes have been registered under theSecurities Act or under the “blue sky” laws of any jurisdiction and may be resold only ifregistered pursuant to the provisions of the Securities Act or if an exemption from registration isavailable. Such Purchaser has been advised and understands that the Company, in issuing the Notes,the Warrants, and, if applicable, the Common Shares, is relying upon, among other things, therepresentations and warranties of such Purchaser contained in this Section 3.2 in concluding thatsuch issuance is exempt from the registration provisions of the Securities Act. Such Purchaser isacquiring the Notes, the Warrants and the Common Shares hereunder in the ordinary course of itsbusiness. Such Purchaser (i) does not have any agreement or understanding, directly or indirectly,with any Person to distribute any of the Notes, the Warrants or the Common Shares, and (ii) has nopresent plan, intention or
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understanding and has made no arrangement to sell any Notes, Warrants or Common Shares at anypredetermined time or for any predetermined price, without prejudice, however, to such Investor’sright at all times to sell or otherwise dispose of all or any part of such Notes, Warrants andCommon Shares in compliance with applicable federal and state securities laws.          (d) *Accredited Investor Status*. At the time such Purchaser was offered the Notes and theWarrants, it was, and at the date hereof it is, and on each date on which any Common Shares areissued, it will be, an “accredited investor” as defined in Rule 501(a) under the Securities Act.Such Purchaser is not required to be registered as a broker-dealer under Section 15 of the ExchangeAct.          (e) *Experience of Such Purchaser*. Such Purchaser, either alone or together with itsrepresentatives, has such knowledge, sophistication and experience in business and financialmatters so as to be capable of evaluating the merits and risks of the purchase of the Notes, theWarrants, and, if applicable, the Common Shares, and has so evaluated the merits and risks of suchpurchase. Such Purchaser is able to bear the economic risk of the purchase of the Notes, theWarrants, and, if applicable, the Common Shares, and, at the present time, is able to afford acomplete loss of such investment.          (f) *General Solicitation*. Such Purchaser is not purchasing the Notes, the Warrants, or, ifapplicable, the Common Shares, as a result of any advertisement, article, notice or othercommunication regarding the Notes, the Warrants, or, if applicable, the Common Shares, published inany newspaper, magazine or similar media or broadcast over television or radio or presented at anyseminar or any other general solicitation or general advertisement.          (g) *Access to Information*. Such Purchaser acknowledges that it has reviewed the DisclosureMaterials and has been afforded the opportunity to ask such questions as it has deemed necessaryof, and to receive answers from, representatives of the Company concerning the terms and conditionsof the offer and sale of the Notes, the Warrants and the Common Shares. Such Purchaser issophisticated and has prior experience with purchases comparable to the Notes, the Warrants and theCommon Shares. Neither such inquiries nor any other investigation conducted by or on behalf of suchPurchaser or its representatives or counsel shall modify, amend or affect such Purchaser’s right torely on the truth, accuracy and completeness of the Disclosure Materials and the Company’srepresentations and warranties contained in the Transaction Documents.          (h) *Independent Investment Decision*. Such Purchaser has independently evaluated the merits ofits decision to purchase the Notes, the Warrants, and/or the Common Shares pursuant to thisAgreement, such decision has been independently made by such Purchaser and such Purchaser confirmsthat it has only relied on the advice of its own business and/or legal counsel and not on theadvice of any other Purchaser’s business and/or legal counsel in making such decision.
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     The Company acknowledges and agrees that each Purchaser does not make or has not made anyrepresentations or warranties with respect to the transactions contemplated hereby other than thosespecifically set forth in this Agreement.ARTICLE IV.OTHER AGREEMENTS OF THE PARTIES     4.1 Legends.          (a) The Notes and Warrants (and any shares of the Company’s capital stock issued upon exerciseof the Warrants or pursuant to the Notes) may only be disposed of in compliance with state andfederal securities laws, and in connection with any transfer thereof (other than pursuant to aneffective registration statement, to the Company, to an Affiliate of an Investor who qualifies asan accredited investor under Regulation D under the Securities Act, the Company may require thetransferor thereof to provide to the Company an opinion of counsel (the form and substance ofwhich, and the counsel providing such opinion, shall be reasonably satisfactory to the Company) tothe effect that such transfer does not require registration under the Securities Act and anyapplicable state securities laws.          (b) The Notes and Warrants (and certificates representing shares of the Company’s capitalstock issued upon exercise of the Warrants or pursuant to the Notes) will contain a legend insubstantially the following form, until such time as they are not required under Section 4.1(c):THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THESECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THESECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED ORSOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TOAN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OFTHE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGALOPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLYACCEPTABLE TO THE COMPANY. THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGINACCOUNT SECURED BY SUCH SECURITIES.          (c) Certificates evidencing the Common Shares shall not contain any legend (including thelegend set forth in Section 4.1(b) hereof): (i) while a registration statement (including theRegistration Statement) covering the resale of such security is effective under the Securities Act,or (ii) following any sale of such Common Shares pursuant to Rule 144, or (iii) if such CommonShares are eligible for sale under Rule 144(k), or (iv) if such legend is not required underapplicable requirements of the
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Securities Act (including judicial interpretations and pronouncements issued by the staff ofthe Commission). The Company shall deliver the instructions in the form attached hereto asExhibit F to the Company’s transfer agent, and the Company shall cause its counsel to issuea legal opinion to the Company’s transfer agent promptly upon the occurrence of any of the eventsin clauses (i), (ii), (iii) or (iv) above to effect the removal of the legend on certificatesevidencing the Common Shares and shall also cause its counsel to issue a “blanket” legal opinion tothe Company’s transfer agent promptly after the effective date of any registration statementcovering the resale of the Common Shares to allow sales without restriction pursuant to aneffective registration statement. If all or any portion of a Warrant is exercised at a time whenthere is an effective registration statement to cover the resale of the Common Shares, or if suchCommon Shares may be sold under Rule 144(k) or if such legend is not otherwise required underapplicable requirements of the Securities Act (including judicial interpretations andpronouncements issued by the staff of the Commission) then such Common Shares shall be issued freeof all legends. The Company agrees that following the Effective Date or at such time as suchlegend is no longer required under this Section 4.1(c), it will, no later than three Trading Daysfollowing the delivery by a Purchaser to the Company or, if delivered to the Company’s transferagent, no later than three Trading Days after receipt by the Company from the transfer agent, of acertificate representing such shares containing a restrictive legend, and if such restrictivelegend is to be removed pursuant to Rule 144 or Rule 144(k), an opinion of counsel regarding thesame, the Company’s transfer agent of a certificate representing Common Shares issued with arestrictive legend (such third Trading Day, the “Legend Removal Date”), deliver or cause tobe delivered to such Purchaser a certificate representing such shares that is free from allrestrictive and other legends. The Company may not make any notation on its records or giveinstructions to any transfer agent of the Company that enlarge the restrictions on transfer setforth in this Section. Certificates for Common Shares subject to legend removal hereunder shall betransmitted by the transfer agent of the Company to the Purchasers by crediting the account of thePurchaser’s prime broker with the Depository Trust Company System.     In addition to such Purchaser’s other available remedies, the Company shall pay to aPurchaser, in cash, as liquidated damages and not as a penalty, for each $1,000 of Common Shares(based on the volume weighted average price of the Common Stock on the date such Securities aresubmitted to the Company’s transfer agent) delivered for removal of the restrictive legend andsubject to Section 4.1(c), $10 per Trading Day (increasing to $20 per Trading Day 10 Trading Daysafter such damages have begun to accrue) for each Trading Day after the Legend Removal Date untilsuch certificate is delivered without a legend. Nothing herein shall limit such Purchaser’s rightto pursue actual damages for the Company’s failure to deliver certificates representing any CommonShares as required by the Transaction Documents, and such Purchaser shall have the right to pursueall remedies available to it at law or in equity including, without limitation, a decree ofspecific performance and/or injunctive relief.     Each Purchaser, severally and not jointly with the other Purchasers, agrees that the removalof the restrictive legend from certificates representing Common Shares as set forth in this Section4.1 is predicated upon the Company’s reliance that the Purchaser will sell any Common Sharespursuant to either the registration requirements of the Securities
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Act, including any applicable prospectus delivery requirements, or an exemption therefrom, andthat if Common Shares are sold pursuant to a Registration Statement, they will be sold incompliance with the plan of distribution set forth therein.     4.2 Listing of Common Stock. The Company hereby agrees to use commercially reasonableefforts to maintain the listing of its Class A Common Stock on the Trading Market on which theClass A Common Stock is currently listed or quoted, and as soon as reasonably practicable followingthe Closing (with respect to the Common Shares) to list all of the Common Shares on such TradingMarket. The Company further agrees, if the Company applies to have the Class A Common Stock tradedon any other Trading Market, it will include in such application the Common Shares, and will takesuch other action as is necessary or desirable in the opinion of the Purchasers to cause all of theCommon Shares to be listed on such other Trading Market as promptly as possible. The Company willtake all action reasonably necessary to comply in all respects with the Company’s reporting, filingand other obligations under the bylaws or rules of such Trading Market. This Section 4.2 shall notapply after five years or if the Company ceases to have a publicly traded class of securities as aresult of an acquisition.     4.3 Use of Proceeds. The Company shall use the net proceeds from the sale of the Notesand the Warrants hereunder and payment of the exercise price of the Warrants for working capital orother general corporate purposes (which may include, without limitation, mergers and/oracquisitions).     4.4 Reservation of Common Stock. As of the date hereof, the Company has reserved andthe Company shall continue to reserve and keep available at all times, for the purpose of effectingthe exercise of the Warrants, a sufficient number of shares of Common Stock, free of preemptiverights or similar rights, to effect the exercise of all of the Warrants.     4.5 Securities Laws Disclosure; Publicity. By 8:30 a.m. (New York time) on the TradingDay following the Closing Date, the Company shall issue a press release disclosing the transactionscontemplated hereby and file a Current Report on Form 8-K within three Trading Days thereafterdisclosing the material terms of the transactions contemplated hereby. In addition, the Companywill make such other filings and notices in the manner and time required by the Commission and theTrading Market on which the Common Stock is listed or quoted.     4.6 Certain Trading Activities. Such Purchaser has not directly or indirectly, nor hasany Person acting on behalf of or pursuant to any understanding with such Purchaser, engaged in anytransactions in the securities of the Company (including, without limitations, any Short Salesinvolving the Company’s securities) since the time that such Purchaser was first contacted by theCompany, Raymond James & Associates, Inc. or any other Person regarding an investment in theCompany. Such Purchaser covenants that neither it nor any Person acting on its behalf or pursuantto any understanding with it will engage in any transactions in the securities of the Company(including Short Sales) prior to the date that is six months from the Closing Date. Such Purchaserhas maintained, and covenants that until such time as the transactions
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contemplated by this Agreement are publicly disclosed by the Company pursuant to Section 4.5such Purchaser will maintain, the confidentiality of all disclosures made to it in connection withthis transaction (including the existence and terms of this transaction) and any information otherthan the terms of this transaction that the Company provided to Purchaser on a confidential basis.Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investmentvehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets andthe portfolio managers have no direct knowledge of the investment decisions made by the portfoliomanagers managing other portions of such Purchaser’s assets, the covenant set forth above shallonly apply with respect to the portion of assets managed by the portfolio manager that made theinvestment decision to purchase the Notes, the Warrants and/or the Common Shares covered by thisAgreement.     4.7 Certain Repayment Requirements. In the event the Company’s EBITDA from continuingoperations is negative for any two quarters in 2006, then the Company shall use its best efforts tomonetize assets in an amount sufficient to repay at least 50% of the Notes. The Purchasers agreeto waive any and all prepayment penalties upon such occurrence.ARTICLE V.CONDITIONS PRECEDENT     5.1 Conditions Precedent to the Obligations of the Purchaser to Purchase. Theobligation of each Purchaser to acquire and pay for the Notes and the Warrants at the Closing issubject to the satisfaction or waiver by such Purchaser, at or before the Closing, of each of theconditions set forth below. These conditions are for the Purchaser’s benefit and may be waived bythe Purchaser at any time in its sole discretion.          (a) *Representations and Warranties*. The representations and warranties of the Companycontained herein shall be true and correct as of the date when made and as of the Closing as thoughmade on and as of such date.          (b) *Performance*. The Company shall have performed, satisfied and complied with all covenants,agreements and conditions required by the Transaction Documents to be performed, satisfied orcomplied with by it at or prior to the Closing and shall have delivered or cause to be deliveredthe items set forth in Section 2.4(a).          (c) *No Injunction*. No statute, rule, regulation, executive order, decree, ruling or injunctionshall have been enacted, entered, promulgated or endorsed by any court or governmental authority ofcompetent jurisdiction that prohibits the consummation of any of the transactions contemplated bythe Transaction Documents. The Trading Market shall not have objected or indicated that it mayobject to the consummation of any of the transactions contemplated by this Agreement.
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          (d) *Adverse Changes.*Since the date of execution of this Agreement, no event or series ofevents shall have occurred that reasonably would be expected to have or result in:               (i) an adverse effect on the legality, validity or enforceability of any Transaction Document,or               (ii) a Material Adverse Effect.          (e) *No Suspensions of Trading in Common Stock; Listing.*Trading in the Class A Common Stockshall not have been suspended by the Commission or any Trading Market (except for any suspensionsof trading of not more than one Trading Day solely to permit dissemination of material informationregarding the Company).          (f) *Timing.*The Closing shall have occurred no later than March 15, 2006.     5.2 Conditions Precedent to the Obligation of the Company to Sell. The obligation ofthe Company to issue and/or sell the Notes and the Warrants to the Purchasers at the Closing issubject to the satisfaction or waiver by the Company, at or before the Closing, of each of theconditions set forth below. These conditions are for the Company’s sole benefit and may be waivedby the Company at any time in its sole discretion.          (a) *Representations and Warranties*. The representations and warranties of each Purchasercontained herein shall be true and correct as of the date when made and as of the Closing Date asthough made on and as of such date.          (b) *Performance*. Each Purchaser shall have performed, satisfied and complied with allcovenants, agreements and conditions required by the Transaction Documents to be performed,satisfied or complied with by such Purchaser at or prior to the Closing and shall have delivered orcause to be delivered the items set forth in Section 2.4(b), including payment of the PurchasePrice set forth on Schedule I to the Company as provided herein.          (c) *No Injunction.*No statute, rule, regulation, executive order, decree, ruling or injunctionshall have been enacted, entered, promulgated or endorsed by any court or governmental authority ofcompetent jurisdiction that prohibits the consummation of any of the transactions contemplated bythe Transaction Documents.          (d) *Timing.*The Closing shall have occurred no later than March 15, 2006.
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ARTICLE VI.MISCELLANEOUS     6.1 Fees and Expenses. At the Closing, the Company shall pay a total expense allowanceof $20,000 to the Purchasers (the “Expense Allowance”). Each Purchaser shall withhold its *pro rata*share of the Expense Allowance from its Purchase Price. Each Purchaser and the Company shall payits own respective fees and expenses of its advisers, counsel, accountants and other experts, ifany, and all other expenses incurred by such party incident to the negotiation, preparation,execution, delivery and performance of the Transaction Documents. The Company shall pay all UCC-1filing fees and, with respect to United States Patent and Trademark Office filings, such fees onlyif a blanket lien is filed in connection with the perfection of the security interests granted bythe Intellectual Property Security Agreement.     6.2 Entire Agreement. The Transaction Documents, together with the Exhibits andSchedules thereto, contain the entire understanding of the parties with respect to the subjectmatter hereof and supersede all prior agreements and understandings, oral or written, with respectto such matters, which the parties acknowledge have been merged into such documents, exhibits andschedules; notwithstanding the foregoing, those certain Confidentiality Agreements, dated as ofFebruary 21, 2006, by and between the Company and each Purchaser, or its Affiliates, shall survivethe execution and delivery of this Agreement and the provisions thereof shall survive for the termsset forth therein.     6.3 Notices. Any and all notices or other communications or deliveries required orpermitted to be provided hereunder shall be in writing and shall be deemed given and effective onthe earliest of (a) the date of transmission, if such notice or communication is delivered viafacsimile at the facsimile number specified in this Section prior to 6:30 p.m. (New York City time)on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice orcommunication is delivered via facsimile at the facsimile number specified in this Section on a daythat is not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day, (c) theTrading Day following the date of mailing, if sent and delivered by U.S. nationally recognizedovernight courier service, or (d) upon actual receipt by the party to whom such notice is requiredto be given. The address for such notices and communications shall be as follows:   If to the Company: TeleCommunication Systems, Inc.  275 West Street  Annapolis, Maryland 21401  Attn: Chief Financial Officer  Facsimile: (410) 263-7617   With a copy to: DLA Piper Rudnick Gray Cary US LLP  6225 Smith Avenue  Baltimore, Maryland 21209-3600  Attn: Wm. David Chalk, Esq.  Facsimile: (410) 580-3120
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   If to a Purchaser: To the address set forth under such Purchaser’s name onthe signature pages hereof; or such other address asmay be designated in writing hereafter, in the samemanner, by such Person.     6.4 Amendments; Waivers. Any provision of this Agreement may be waived or amended by awritten instrument signed by the Company and all of the Purchasers, except that in the event thatany Purchaser no longer holds any portion of the Notes purchased pursuant to this Agreement, thenthe written instrument shall be signed by the Company and the Required Holders; provided that suchwaiver or amendment shall apply with the same force and effect to all Purchasers and Note holders.Notwithstanding the foregoing, following the Closing, any provision of this Agreement, a Note, or aWarrant may be amended or waived with the consent of any single Purchaser, Note holder, or Warrantholder (as the case may be), provided that such amendment or waiver shall not affect any otherPurchaser, Note holder, or Warrant holder. No waiver of any default with respect to any provision,condition or requirement of this Agreement shall be deemed to be a continuing waiver in the futureor a waiver of any subsequent default or a waiver of any other provision, condition or requirementhereof, nor shall any delay or omission of a party hereto to exercise any right hereunder in anymanner impair the exercise of any such right.     6.5 Construction. The headings herein are for convenience only, do not constitute apart of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. Thelanguage used in this Agreement will be deemed to be the language chosen by the parties to expresstheir mutual intent, and no rules of strict construction will be applied against any party. ThisAgreement shall be construed as if drafted jointly by the parties, and no presumption or burden ofproof shall arise favoring or disfavoring any party by virtue of the authorship of any provisionsof this Agreement or any of the Transaction Documents.     6.6 Successors and Assigns. This Agreement shall be binding upon and inure to thebenefit of the parties and their successors and permitted assigns. The Company may not assign thisAgreement or any rights or obligations hereunder without the prior written consent of each of thePurchasers. Any Purchaser may assign any or all of its rights under this Agreement to any assigneeof the Purchaser’s Notes or Warrants; provided that such transferee or assignee agrees in writingto be bound, with respect to the transferred or assigned Notes, Warrants, or Common Shares by theprovisions hereof that apply to the “Purchasers” and makes the representations set forth in Section3.2 hereof.     6.7 No Third-Party Beneficiaries. This Agreement is intended for the benefit of theparties hereto and their respective successors and permitted assigns and is not for the benefit of,nor may any provision hereof be enforced by, any other Person.
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     6.8 Governing Law. All questions concerning the construction, validity, enforcementand interpretation of this Agreement shall be governed by and construed and enforced in accordancewith the internal laws of the State of New York, without regard to the principles of conflicts oflaw thereof. Each party agrees that all Proceedings to resolve any dispute among the partiesconcerning the interpretations, enforcement and defense of the transactions contemplated by thisAgreement and any other Transaction Documents (whether brought against a party hereto or itsrespective Affiliates, employees or agents having rights hereunder) shall be commenced exclusivelyin the state and federal courts sitting in the City of New York, Borough of Manhattan (the “NewYork Courts”), although depositions may be taken in other locations. Each party hereto herebyirrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication ofany dispute hereunder or in connection herewith or with any transaction contemplated hereby ordiscussed herein (including with respect to the enforcement of the any of the TransactionDocuments), and hereby irrevocably waives, and agrees not to assert in any Proceeding, any claimthat it is not personally subject to the jurisdiction of any such New York Court, or that suchProceeding has been commenced in an improper or inconvenient forum. Each party hereto herebyirrevocably waives personal service of process and consents to process being served in any suchProceeding by mailing a copy thereof via registered or certified mail or overnight delivery (withevidence of delivery) to such party at the address in effect for notices to it under this Agreementand agrees that such service shall constitute good and sufficient service of process and noticethereof. Nothing contained herein shall be deemed to limit in any way any right to serve process inany manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extentpermitted by applicable law, any and all right to trial by jury in any legal proceeding arising outof or relating to this Agreement or the transactions contemplated hereby. If a party hereto shallcommence a Proceeding to enforce any provisions of a Transaction Document, then the prevailingparty in such Proceeding shall be reimbursed by the other party for its attorney’s fees and othercosts and expenses incurred with the investigation, preparation and prosecution of such Proceeding.     6.9 Execution. This Agreement may be executed in two or more counterparts, all ofwhich when taken together shall be considered one and the same agreement and shall become effectivewhen counterparts have been signed by each party and delivered to the other party, it beingunderstood that both parties need not sign the same counterpart. In the event that any signature isdelivered by facsimile transmission, such signature shall create a valid and binding obligation ofthe party executing (or on whose behalf such signature is executed) with the same force and effectas if such facsimile signature page were an original thereof.     6.10 Severability. If any provision of this Agreement is held to be invalid orunenforceable in any respect, the validity and enforceability of the remaining terms and provisionsof this Agreement shall not in any way be affected or impaired thereby and the parties will attemptto agree upon a valid and enforceable provision that is a reasonable substitute therefor, and uponso agreeing, shall incorporate such substitute provision in this Agreement.
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     6.11 Replacement of Notes, the Warrants and the Common Shares. If any certificate orinstrument evidencing any of the Notes, the Warrants or the Common Shares is mutilated, lost,stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution forand upon cancellation thereof, or in lieu of and substitution therefor, a new certificate orinstrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss,theft or destruction and customary and reasonable indemnity, if requested. The applicants for a newcertificate or instrument under such circumstances shall also pay any reasonable third-party costsassociated with the issuance of such replacement Notes, Warrants or Common Shares. If a replacementcertificate or instrument evidencing any Notes, Warrants or Common Shares is requested due to amutilation thereof, the Company may require delivery of such mutilated certificate or instrument asa condition precedent to any issuance of a replacement.     6.12 Independent Nature of Purchasers’ Obligations and Rights. The obligations of eachPurchaser under any Transaction Document are several and not joint with the obligations of anyother Purchaser, and no Purchaser shall be responsible in any way for the performance of theobligations of any other Purchaser under any Transaction Document. The decision of each Purchaserto purchase Notes, Warrants or Common Shares pursuant to the Transaction Documents has been made bysuch Purchaser independently of any other Purchaser. Nothing contained herein or in any TransactionDocument, and no action taken by any Purchaser pursuant thereto, shall be deemed to constitute thePurchasers as a partnership, an association, a joint venture or any other kind of entity, or createa presumption that the Purchasers are in any way acting in concert or as a group with respect tosuch obligations or the transactions contemplated by the Transaction Document. Each Purchaseracknowledges that no other Purchaser has acted as agent for such Purchaser in connection withmaking its investment hereunder and that no Purchaser will be acting as agent of such Purchaser inconnection with monitoring its investment in the Notes, Warrants, or Common Shares, or enforcingits rights under the Transaction Documents. Each Purchaser shall be entitled to independentlyprotect and enforce its rights, including without limitation the rights arising out of thisAgreement or out of the other Transaction Documents, and it shall not be necessary for any otherPurchaser to be joined as an additional party in any proceeding for such purpose. Each Purchaser isrepresented by its own counsel and is not relying on counsel of any other Purchaser or of anybroker or placement agent in connection with this matter.     6.13 Equal Treatment of Purchasers. No consideration shall be offered or paid to anyPerson to amend or consent to a waiver or modification of any provision of any of the TransactionDocuments unless the same consideration is also offered to all of the parties to the TransactionDocuments. Further, the Company shall not make any payment of principal or interest on the Notes inamounts which are disproportionate to the respective principal amounts outstanding on the Notes atany applicable time. For clarification purposes, this provision constitutes a separate rightgranted to each Purchaser by the Company and negotiated separately by each Purchaser, and isintended for the Company to treat the Purchasers as a class and shall not in any way be construedas the Purchasers acting in concert or as a group with respect to the purchase, disposition orvoting of the Notes, Warrants, Common Shares or otherwise.
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