exv10w3wa






Exhibit 10.3(a)




Deutsche Bank 




Deutsche Bank AG, London Branch

Winchester house

1 Great Winchester St,

London EC2N 2DB

Telephone: 44 20 7545 8000




c/o Deutsche Bank Securities Inc.

60 Wall Street

New York, NY 10005

Telephone: 212-250-2500




	 	 	 	 	 
	DATE:

	 	November 10, 2009

	 
	 	 	 	 
	TO:

	 	TeleCommunication Systems, Inc.

	ATTENTION:

	 	Bruce A. White

	TELEPHONE:

	 	(410) 263-7616

	FACSIMILE:

	 	(410) 263-7617

	 
	 	 	 	 
	FROM:

	 	Deutsche Bank AG, London Branch

	TELEPHONE:

	 	44 20 7545 0556	 	 
	FACSIMILE:

	 	44 11 3336 2009	 	 
	 
	 	 	 	 
	SUBJECT:

	 	Equity Derivatives Warrant Confirmation

	 
	 	 	 	 
	REFERENCE NUMBER(S):

	 	356506	 	 





The purpose of this facsimile agreement (this “Confirmation”) is to confirm the terms and
conditions of the transaction entered into between Deutsche Bank AG, London Branch (“Deutsche”) and
TeleCommunication Systems, Inc. (“Counterparty”) on the Trade Date specified below (the
“Transaction”). This Confirmation constitutes a “Confirmation” as referred to in the ISDA Master
Agreement specified below. This Confirmation constitutes the entire agreement and understanding of
the parties with respect to the subject matter and terms of the Transaction and supersedes all
prior or contemporaneous written and oral communications with respect thereto.



DEUTSCHE BANK AG IS NOT REGISTERED AS A BROKER OR DEALER UNDER THE U.S. SECURITIES EXCHANGE ACT OF
1934, AS AMENDED. DEUTSCHE BANK SECURITIES INC. (“AGENT”) HAS ACTED SOLELY AS AGENT IN CONNECTION
WITH THE TRANSACTION AND HAS NO OBLIGATION, BY WAY OF ISSUANCE, ENDORSEMENT, GUARANTEE OR OTHERWISE
WITH RESPECT TO THE PERFORMANCE OF EITHER PARTY UNDER THE TRANSACTION. DEUTSCHE BANK AG, LONDON
BRANCH IS NOT A MEMBER OF THE SECURITIES INVESTOR PROTECTION CORPORATION (SIPC).



The definitions contained in the 2002 ISDA Equity Derivatives Definitions (the “Equity
Definitions”), as published by the International Swaps and Derivatives Association, Inc., are
incorporated into this Confirmation. In the event of any inconsistency between the Equity
Definitions and the terms of this Confirmation, the terms of this Confirmation shall




	 	 	 
	Chairman of the Supervisory Board: Clemens Börsig
Board of Managing Directors: Hermann-Josef
Lamberti, Josef Ackermann, Dr. Hugo Banziger,
Anthony Dilorio

	 	Deutsche Bank AG is
regulated by the FSA
for the conduct of
designated investment
business in the UK,
is a member of the
London Stock Exchange
and is a limited
liability company
incorporated in the
Federal Republic of
Germany HRB No. 30
000 District Court of
Frankfurt am Main;
Branch Registration
No. in England and
Wales BR000005,
Registered address:
	 

	 	Winchester House, 1
Great Winchester
Street, London EC2N
2DB.






 









 






govern. For the purposes of the Equity Definitions, each reference herein to a Warrant shall be
deemed to be a reference to a Call or an Option, as context requires.



This Confirmation evidences a complete and binding agreement between Deutsche and Counterparty as
to the terms of the Transaction to which this Confirmation relates. This Confirmation shall
supplement, form a part of, and be subject to an agreement (the “Agreement”) in the form of the
ISDA 2002 Master Agreement as if Deutsche and Counterparty had executed an agreement in such form
(without any Schedule but with the “Cross-Default” provisions of Section 5(a)(vi) applicable to
Counterparty with a “Threshold Amount” of $5,000,000 and with such other elections set forth in
this Confirmation). For the avoidance of doubt, the Transaction shall be the only transaction
under the Agreement.



The Transaction is a Warrant Transaction, which shall be considered a Share Option Transaction for
purposes of the Equity Definitions, and shall have the following terms:



General:




	 	 	 
	Trade Date:

	 	November 10, 2009.
	 
	 	 
	Effective Date:

	 	November 16, 2009.
	 
	 	 
	Components:

	 	The Transaction will be divided into individual Components,
each with the terms set forth in this Confirmation, and, in
particular, with the Number of Warrants and Expiration Date set
forth in this Confirmation. The payments and deliveries to be
made upon settlement of the Transaction will be determined
separately for each Component as if each Component were a
separate Transaction under the Agreement.
	 
	 	 
	Warrant Style:

	 	European.
	 
	 	 
	Warrant Type:

	 	Call.
	 
	 	 
	Seller:

	 	Counterparty.
	 
	 	 
	Buyer:

	 	Deutsche.
	 
	 	 
	Shares:

	 	Class A common stock, par value USD 0.01 per share, of
Counterparty.
	 
	 	 
	Number of Warrants:

	 	For each Component, as provided in Annex C to this Confirmation.
	 
	 	 
	Strike Price:

	 	As provided in Annex B to this Confirmation.
	 
	 	 
	Premium:

	 	As provided in Annex B to this Confirmation.
	 
	 	 
	Premium Payment Date:

	 	The Effective Date.
	 
	 	 
	Exchange:

	 	The NASDAQ Global Market.
	 
	 	 
	Related Exchanges:

	 	All Exchanges.
	 
	 	 
	Calculation Agent:

	 	Deutsche.






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	Procedure for Exercise:
	 	 
	 
	 	 
	     In respect of any Component:
	 	 
	 
	 	 
	Expiration Date:

	 	As provided in Annex C to this Confirmation (or, if such date
is not a Scheduled Trading Day, the next following Scheduled
Trading Day that is not already an Expiration Date for another
Component); provided that if that date is a Disrupted Day, the
Expiration Date for such Component shall be the first
succeeding Scheduled Trading Day that is not a Disrupted Day
and is not or is not deemed to be an Expiration Date in respect
of any other Component of the Transaction hereunder; and
provided further that if the Expiration Date has not occurred
pursuant to the preceding proviso as of the Final Disruption
Date, the Final Disruption Date shall be the Expiration Date
(irrespective of whether such date is an Expiration Date in
respect of any other Component for the Transaction) and,
notwithstanding anything to the contrary in this Confirmation
or the Equity Definitions, the Relevant Price for the
Expiration Date shall be the prevailing market value per Share
determined by the Calculation Agent in a commercially
reasonable manner. Notwithstanding the foregoing and anything
to the contrary in the Equity Definitions, if a Market
Disruption Event occurs on any Expiration Date, the Calculation
Agent may determine that such Expiration Date is a Disrupted
Day only in part, in which case the Calculation Agent shall
make adjustments to the number of Warrants for the relevant
Component for which such day shall be the Expiration Date and
shall designate the Scheduled Trading Day determined in the
manner described in the immediately preceding sentence as the
Expiration Date for the remaining Warrants for such Component.
Section 6.6 of the Equity Definitions shall not apply to any
Valuation Date occurring on an Expiration Date. “Final
Disruption Date” has the meaning provided in Annex B to this
Confirmation.
	 
	 	 
	Automatic Exercise:

	 	Applicable. Each Warrant not previously exercised will be
deemed to be automatically exercised on the Expiration Time on
the relevant Expiration Date.
	 
	 	 
	Market Disruption Event:

	 	Section 6.3(a) of the Equity Definitions is hereby amended by
deleting the words “during the one hour period that ends at the
relevant Valuation Time, Latest Exercise Time, Knock-in
Valuation Time or Knock-out Valuation Time, as the case may
be,” in clause (ii) thereof, and by replacing the words “or
(iii) an Early Closure.” with “(iii) an Early Closure or (iv) a
Regulatory Disruption, in each case that the Calculation Agent
determines is material.”
	 
	 	 
	 

	 	Section 6.3(d) of the Equity Definitions is hereby amended by
deleting the remainder of the provision following the term
“Scheduled Closing Time” in the fourth line thereof.






3









 






	 	 	 
	Regulatory Disruption:

	 	Any event that Deutsche, in its commercially reasonable
discretion upon the advice of outside counsel, determines makes
it appropriate with regard to any legal, regulatory or
self-regulatory requirements or related policies and procedures
(whether or not such requirements, policies or procedures are
imposed by law or have been voluntarily adopted by Deutsche,
and including without limitation Rule 10b-18, Rule 10b-5,
Regulation 13D-G and Regulation 14E under the U.S. Securities
Exchange Act of 1934, as amended (the “Exchange Act”), and
Regulation M and/or analyzing Deutsche as if Deutsche were the
Issuer or an affiliated purchaser of the Issuer), for Deutsche
to refrain from or decrease any market activity in connection
with the Transaction. Deutsche shall notify Counterparty as
soon as reasonably practicable that a Regulatory Disruption has
occurred and the Expiration Dates affected by it.
	 
	 	 
	Settlement Terms:
	 	 
	 
	 	 
	     In respect of any Component:
	 	 
	 
	 	 
	Net Share Settlement:

	 	On each Settlement Date, Counterparty shall deliver to Deutsche
a number of Shares equal to the Net Share Amount for such
Settlement Date to the account specified by Deutsche, and cash
in lieu of any fractional shares valued at the Relevant Price
for the Valuation Date corresponding to such Settlement Date.
If, in the good faith reasonable judgment of Deutsche, the
Shares deliverable hereunder would not be immediately freely
transferable by Deutsche under Rule 144 (“Rule 144”) under the
U.S. Securities Act of 1933, as amended (the “Securities Act”)
or any successor provision, then Deutsche may elect to either
(x) accept delivery of such Shares notwithstanding the fact
that such Shares are not immediately freely transferable by
Deutsche under Rule 144 or any successor provision or (y)
require that such delivery take place pursuant to the
provisions set forth opposite the caption
“Registration/Private Placement Procedures” below.
	 
	 	 
	Net Share Amount:

	 	For any Exercise Date, a number of Shares, as calculated by the
Calculation Agent, equal to (x) the product of (i) the number
of Warrants being exercised or deemed exercised on such
Exercise Date, and (ii) the excess, if any, of the Relevant
Price for the Valuation Date occurring on such Exercise Date
over the Strike Price (such product, the “Net Share Settlement
Amount”), divided by (y) such Relevant Price.
	 
	 	 
	Relevant Price:

	 	On any Valuation Date, the volume weighted average price per
Share for the regular trading session of the Exchange as
displayed under the heading “Bloomberg VWAP” on Bloomberg Page
TSYS <equity> AQR on such Valuation Date in respect of
the period from 9:30 am to 4:00 p.m. (New York City time) on
such Valuation Date (or if such volume weighted average price
is not available, the Calculation Agent’s reasonable, good
faith estimate of such price on such Valuation Date).






4









 






	 	 	 
	Settlement Currency:

	 	USD.
	 
	 	 
	Other Applicable Provisions:

	 	The provisions of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 (except
that the Representation and Agreement contained in Section 9.11
of the Equity Definitions shall be modified by excluding any
representations therein relating to restrictions, obligations,
limitations or requirements under applicable securities laws as
a result of the fact that Counterparty is the Issuer of the
Shares) and 9.12 of the Equity Definitions will be applicable,
except that all references in such provisions to “Physical
Settlement” and “Physically-settled” shall be read as
references to “Net Share Settlement” and “Net Share Settled”.
“Net Share Settled” in relation to any Warrant means that Net
Share Settlement is applicable to such Warrant.
	 
	 	 
	Dividends:
	 	 
	 
	 	 
	     In respect of any Component:
	 	 
	 
	 	 
	Dividend Adjustments:

	 	Counterparty agrees to notify Deutsche promptly of the
announcement of an ex-dividend date for any cash dividend by
Counterparty. If an ex-dividend date for any cash dividend
occurs at any time from, but excluding, the Trade Date to, and
including, the Expiration Date, then in lieu of any adjustments
as provided under “Method of Adjustment” below, the Calculation
Agent shall make such adjustments to the Strike Price and/or
the Number of Warrants as it deems appropriate to preserve for
the parties the intended economic benefits of the Transaction.
	 
	 	 
	Adjustments:
	 	 
	 
	 	 
	     In respect of any Component:
	 	 
	 
	 	 
	Method of Adjustment:

	 	Calculation Agent Adjustment; provided, however, that the
Equity Definitions shall be amended by replacing the words
“diluting or concentrative” in Sections 11.2(a), 11.2(c) (in
two instances) and 11.2(e)(vii) with the word “material” and by
adding the words “or the Transaction” after the words
“theoretical value of the relevant Shares” in Sections 11.2(a),
11.2(c) and 11.2(e)(vii); provided further that adjustments may
be made to account for changes in expected volatility, expected
dividends, expected correlation, expected stock loan rate and
expected liquidity relative to the relevant Share.
	 
	 	 
	Extraordinary Events:
	 	 
	 
	 	 
	New Shares:

	 	In the definition of New Shares in Section 12.1(i) of the
Equity Definitions, the text in clause (i) thereof shall be
deleted in its entirety and replaced with “publicly quoted,
traded or listed on any of the New York Stock Exchange, The
NASDAQ Global Select Market or The NASDAQ Global Market (or
their respective successors)”.






5









 






	 	 	 
	Modified Calculation Agent Adjustment:

	 	If, in respect of any Merger Event to which Modified
Calculation Agent Adjustment applies, the adjustments to be
made in accordance with Section 12.2(e)(i) of the Equity
Definitions would result in Counterparty being different from
the issuer of the Shares, then with respect to such Merger
Event, as a condition precedent to the adjustments contemplated
in Section 12.2(e)(i) of the Equity Definitions, Counterparty
and the issuer of the Shares shall, prior to the Merger Date,
have entered into such documentation containing
representations, warranties and agreements relating to
securities law and other issues as requested by Deutsche that
Deutsche has determined, in its reasonable discretion, to be
reasonably necessary or appropriate to allow Deutsche to
continue as a party to the Transaction, as adjusted under
Section 12.2(e)(i) of the Equity Definitions, and to preserve
its hedging or hedge unwind activities in connection with the
Transaction in a manner compliant with applicable legal,
regulatory or self-regulatory requirements, or with related
policies and procedures applicable to Deutsche, and if such
conditions are not met or if the Calculation Agent determines
that no adjustment that it could make under Section 12.2(e)(i)
of the Equity Definitions will produce a commercially
reasonable result, then the consequences set forth in Section
12.2(e)(ii) of the Equity Definitions shall apply.
	 
	 	 
	 

	 	For greater certainty, the definition of “Modified Calculation
Agent Adjustment” in Sections 12.2 and 12.3 of the Equity
Definitions shall be amended by adding the following italicized
language to the stipulated parenthetical provision: “(including
adjustments to account for changes in expected volatility,
expected dividends, expected correlation, expected stock loan
rate or expected liquidity relevant to the Shares or to the
Transaction) from the Announcement Date to the Merger Date
(Section 12.2) or Tender Offer Date (Section 12.3)”.
	 
	 	 
	Announcement Event:

	 	If an Announcement Event occurs, the Calculation Agent will
determine the economic effect of the Announcement Event on the
theoretical value of each Component of the Transaction
(including without limitation any change in expected
volatility, expected dividends, expected correlation, expected
stock loan rate or expected liquidity relevant to the Shares or
to the Transaction) from the potential Announcement Date to the
Expiration Date for such Component and, if such economic effect
is material, the Calculation Agent will adjust the terms of the
Transaction to reflect such economic effect. “Announcement
Event” shall mean the occurrence of a potential Announcement
Date of a Merger Event or Tender Offer, if the Merger Date or
Tender Offer Date does not, or is not anticipated to, occur on
or prior to the Expiration Date for, or any earlier termination
of, the relevant Component.
	 
	 	 
	Consequences of Merger Events:
	 	 
	 
	 	 
	(a) Share-for-Share:

	 	Modified Calculation Agent Adjustment.
	 
	 	 
	(b) Share-for-Other:

	 	Cancellation and Payment (Calculation Agent Determination).
	 
	 	 
	(c) Share-for-Combined:

	 	Component Adjustment.






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	Tender Offer:

	 	Applicable; provided that Section 12.1(d) of the Equity
Definitions is hereby amended by adding “, or of the
outstanding Shares,” before “of the Issuer” in the fourth line
thereof. Sections 12.1(e) and 12.1(1)(ii) of the Equity
Definitions are hereby amended by adding “or Shares, as
applicable,” after “voting shares”.
	 
	 	 
	Consequences of Tender Offers:
	 	 
	 
	 	 
	(a) Share-for-Share:

	 	Modified Calculation Agent Adjustment.
	 
	 	 
	(b) Share-for-Other:

	 	Modified Calculation Agent Adjustment.
	 
	 	 
	(c) Share-for-Combined:

	 	Modified Calculation Agent Adjustment.
	 
	 	 
	Nationalization, Insolvency and Delisting:

	 	Cancellation and Payment (Calculation Agent Determination);
provided that in addition to the provisions of Section
12.6(a)(iii) of the Equity Definitions, it shall also
constitute a Delisting if the Exchange is located in the United
States and the Shares are not immediately re-listed, re-traded
or re-quoted on any of the New York Stock Exchange, The NASDAQ
Global Select Market or The NASDAQ Global Market (or their
respective successors); if the Shares are immediately
re-listed, re-traded or re-quoted on any such exchange or
quotation system, such exchange or quotation system shall be
deemed to be the Exchange. For the avoidance of doubt, the
occurrence of any event that is a Merger Event and would
otherwise have been a Delisting will have the consequence
specified for the relevant Merger Event.
	 
	 	 
	Additional Disruption Events:
	 	 
	 
	 	 
	Change in Law:

	 	Applicable; provided that Section 12.9(a)(ii) of the Equity
Definitions is hereby amended (i) by the replacement of the
word “Shares” with “Hedge Positions” in clause (X) thereof;
(ii) by adding the phrase “or announcement” immediately after
the phrase “due to the promulgation” in the third line thereof
and adding the phrase “formal or informal” before the word
“interpretation” in the same line; and (iii) immediately
following the word “Transaction” in clause (X) thereof, adding
the phrase “in the manner contemplated by the Hedging Party on
the Trade Date, unless the illegality is due to an act or
omission of the party seeking to elect termination of the
Transaction”.
	 
	 	 
	Failure to Deliver:

	 	Inapplicable
	 
	 	 
	Insolvency Filing:

	 	Applicable
	 
	 	 
	Loss of Stock Borrow:

	 	Applicable
	 
	 	 
	     Maximum Stock Loan Rate:

	 	200 basis points per annum
	 
	 	 
	Increased Cost of Stock Borrow:

	 	Applicable






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	     Initial Stock Loan Rate:

	 	25 basis points per annum
	 
	 	 
	Increased Cost of Hedging:

	 	Applicable
	 
	 	 
	Hedging Disruption:

	 	Applicable
	 
	 	 
	Hedging Party:

	 	Deutsche for all applicable Additional Disruption Events
	 
	 	 
	Determining Party:

	 	Deutsche for all applicable Additional Disruption Events
	 
	 	 
	Acknowledgements:
	 	 
	 
	 	 
	Non-Reliance:

	 	Applicable
	 
	 	 
	Agreements and Acknowledgements
Regarding Hedging Activities:

	 	Applicable
	 
	 	 
	Additional Acknowledgements:

	 	Applicable





Mutual Representations: Each of Deutsche and Counterparty represents and warrants to, and agrees with, the other party
that:





	 	(i)	 	Tax Disclosure. Notwithstanding anything to the contrary herein, in the Equity
Definitions or in the Agreement, and notwithstanding any express or implied claims of
exclusivity or proprietary rights, the parties (and each of their employees, representatives
or other agents) are authorized to disclose to any and all persons, beginning immediately
upon commencement of their discussions and without limitation of any kind, the tax treatment
and tax structure of the Transaction, and all materials of any kind (including opinions or
other tax analyses) that are provided by either party to the other relating to such tax
treatment and tax structure.
	 
	 	(ii)	 	Commodity Exchange Act. It is an “eligible contract participant” within the meaning of
Section 1a(12) of the U.S. Commodity Exchange Act, as amended (the “CEA”). The Transaction
has been subject to individual negotiation by the parties. The Transaction has not been
executed or traded on a “trading facility” as defined in Section 1a(33) of the CEA. It has
entered into the Transaction with the expectation and intent that the Transaction shall be
performed to its termination date.
	 
	 	(iii)	 	Securities Act. It is a “qualified institutional buyer” as defined in Rule 144A under
the Securities Act, or an “accredited investor” as defined under the Securities Act.
	 
	 	(iv)	 	Investment Company Act. It is a “qualified purchaser” as defined under the U.S.
Investment Company Act of 1940, as amended (the “Investment Company Act”).
	 
	 	(v)	 	ERISA. The assets used in the Transaction (1) are not assets of any “plan” (as such term
is defined in Section 4975 of the U.S. Internal Revenue Code (the “Code”)) subject to Section
4975 of the Code or any “employee benefit plan” (as such term is defined in Section 3(3) of
the U.S. Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) subject to
Title I of ERISA, and (2) do not constitute “plan assets” within the meaning of Department of
Labor Regulation 2510.3-101, 29 CFR Section 2510-3-101.




Counterparty Representations: In addition to the representations and warranties in the Agreement and those contained


8









 






elsewhere herein, Counterparty represents, warrants, acknowledges and covenants that:





	 	(i)	 	Counterparty shall immediately provide written notice to Deutsche upon obtaining
knowledge of the occurrence of any event that would constitute an Event of Default, a
Potential Event of Default, a Potential Adjustment Event, a Merger Event or any other
Extraordinary Event; provided, however, that should Counterparty be in possession of material
non-public information regarding Counterparty, Counterparty shall not communicate such
information to Deutsche in connection with this Transaction.
	 
	 	(ii)	 	(A) Counterparty is acting for its own account, and it has made its own independent
decisions to enter into the Transaction and as to whether the Transaction is appropriate or
proper for it based upon its own judgment and upon advice from such advisers as it has deemed
necessary, (B) Counterparty is not relying on any communication (written or oral) of Deutsche
or any of its affiliates as investment advice or as a recommendation to enter into the
Transaction (it being understood that information and explanations related to the terms and
conditions of the Transaction shall not be considered investment advice or a recommendation
to enter into the Transaction) and (C) no communication (written or oral) received from
Deutsche or any of its affiliates shall be deemed to be an assurance or guarantee as to the
expected results of the Transaction.
	 
	 	(iii)	 	Counterparty is not entering into the Transaction for the purpose of (i) creating
actual or apparent trading activity in the Shares (or any security convertible into or
exchangeable for the Shares) or (ii) raising or depressing or otherwise manipulating the
price of the Shares (or any security convertible into or exchangeable for the Shares), in
either case in violation of the Exchange Act.
	 
	 	(iv)	 	Counterparty’s filings under the Securities Act, the Exchange Act, and other applicable
securities laws that are required to be filed have been filed and, as of the respective dates
thereof and as of the date of this representation, there is no misstatement of material fact
contained therein or omission of a material fact required to be stated therein or necessary
to make the statements made therein, in the light of the circumstances under which they were
made, not misleading.
	 
	 	(v)	 	Counterparty has not violated, and shall not directly or indirectly violate, any
applicable law (including, without limitation, the Securities Act and the Exchange Act) in
connection with the Transaction.
	 
	 	(vi)	 	The representations and warranties of Counterparty set forth in Section 3 of the
Agreement and Section 2 of the Purchase Agreement (the “Purchase Agreement”) dated as of the
Trade Date between Counterparty and Oppenheimer & Co. Inc. and Raymond James & Associates are
true and correct and are hereby deemed to be repeated to Deutsche as if set forth herein.
	 
	 	(vii)	 	The Shares issuable upon exercise of all Warrants (the “Warrant Shares”) have been duly
authorized and, when delivered pursuant to the terms of such Transaction, shall be validly
issued, fully-paid and non-assessable, and such issuance of the Warrant Shares shall not be
subject to any preemptive or similar rights and shall, upon such issuance, be accepted for
listing or quotation on the Exchange.
	 
	 	(viii)	 	Counterparty is not as of the Trade Date and as of the date on which Counterparty
delivers any Termination Delivery Units, and shall not be after giving effect to the
transactions contemplated hereby, “insolvent” (as such term is defined in Section 101(32) of
the U.S. Bankruptcy Code (Title 11 of the United States Code) (the “Bankruptcy Code”)).
	 
	 	(ix)	 	Counterparty is not, and after giving effect to the transactions contemplated hereby
will not be, an “investment company” as such term is defined in the Investment Company Act.





9









 









	 	(x)	 	Without limiting the generality of Section 13.1 of the Equity Definitions, Counterparty
acknowledges that Deutsche is not making any representations or warranties with respect to
the treatment of the Transaction under FASB Statements 128, 133, 149 or 150 (or under any
successor statement), EITF Issue No. 00-19, 01-6, 03-6 or 07-5 (or any successor issue
statements), under FASB’s Liabilities & Equity Project, or under any other accounting
guidance.
	 
	 	(xi)	 	Counterparty understands, agrees and acknowledges that no obligations of Deutsche to it
hereunder, if any, shall be entitled to the benefit of deposit insurance and that such
obligations shall not be guaranteed by any affiliate of Deutsche or any governmental agency.
	 
	 	(xii)	 	Counterparty shall deliver to Deutsche an opinion of counsel, dated as of the Trade
Date and reasonably acceptable to Deutsche in form and substance, with respect to the matters
set forth in Section 3(a) of the Agreement and such other matters as Deutsche may reasonably
request.
	 
	 	(xiii)	 	On each anniversary of the Trade Date, Counterparty shall deliver to Deutsche an
officer’s certificate, signed by an authorized officer, stating the number of Available
Shares (as defined in the provision titled “Limitation On Delivery of Shares” below).




Miscellaneous:





Effectiveness. If, on or prior to the Effective Date, Deutsche reasonably determines that it
is advisable to cancel the Transaction because of concerns that Deutsche’s related hedging
activities could be viewed as not complying with applicable securities laws, rules or
regulations, the Transaction shall be cancelled and shall not become effective, and neither
party shall have any obligation to the other party in respect of the Transaction.




Netting and Set-Off. The parties hereto agree that the Transaction shall not be subject to
netting or set off with any other transaction.




Qualified Financial Contracts. It is the intention of the parties that, in respect of
Counterparty, (a) the Transaction shall constitute a “qualified financial contract” within
the meaning of 12 U.S.C. Section 1821(e)(8)(D)(i) and (b) a Non-defaulting Party’s rights
under Sections 5 and 6 of the Agreement constitute rights of the kind referred to in 12
U.S.C. Section 1821(e)(8)(A).




Method of Delivery. Whenever delivery of funds or other assets is required hereunder by or
to Counterparty, such delivery shall be effected through Agent. In addition, all notices,
demands and communications of any kind relating to the Transaction between Deutsche and
Counterparty shall be transmitted exclusively through Agent.




Status of Claims in Bankruptcy. Deutsche acknowledges and agrees that this Confirmation is
not intended to convey to Deutsche rights with respect to the Transaction that are senior to
the claims of common stockholders in any U.S. bankruptcy proceedings of Counterparty;
provided that nothing herein shall limit or shall be deemed to limit Deutsche’s right to
pursue remedies in the event of a breach by Counterparty of its obligations and agreements
with respect to the Transaction; provided, further, that nothing herein shall limit or shall
be deemed to limit Deutsche’s rights in respect of any transactions other than the
Transaction.




No Collateral. Notwithstanding any provision of this Confirmation, the Agreement, Equity
Definitions, or any other agreement between the parties to the contrary, the obligations of
Counterparty under the Transaction are not secured by any collateral.




Securities Contract; Swap Agreement. The parties hereto agree and acknowledge that Deutsche
is a “financial institution,” “swap participant” and “financial participant” within the
meaning of Sections 101(22), 101(53C) and 101(22A) of the Bankruptcy Code. The parties
hereto further agree and acknowledge (A) that this Confirmation is (i) a “securities
contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to



10









 







which each payment and delivery hereunder or in connection herewith is a “termination value,”
“payment amount” or “other transfer obligation” within the meaning of Section 362 of the
Bankruptcy Code and a “settlement payment” or a “transfer” within the meaning of Section 546
of the Bankruptcy Code, and (ii) a “swap agreement,” as such term is defined in Section
101(53B) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or
in connection herewith is a “termination value,” a “payment amount” or “other transfer
obligation” within the meaning of Section 362 of the Bankruptcy Code and a “transfer” within
the meaning of Section 546 of the Bankruptcy Code, and (B) that Deutsche is entitled to the
protections afforded by, among other sections, Section 362(b)(6), 362(b)(17), 362(b)(27),
362(o), 546(e), 546(g), 546(j), 548(d)(2), 555, 560 and 561 of the Bankruptcy Code.




Alternative Calculations and Counterparty Payment on Early Termination and on Certain
Extraordinary Events. If Counterparty owes Deutsche any amount in connection with the
Transaction pursuant to Sections 12.2, 12.3, 12.6, 12.7 or 12.9 of the Equity Definitions
(except in the case of an Extraordinary Event in which the consideration or proceeds to be
paid to holders of Shares as a result of such event consists solely of cash) or pursuant to
Section 6(d)(ii) of the Agreement (except in the case of an Event of Default in which
Counterparty is the Defaulting Party or a Termination Event in which Counterparty is the
Affected Party, other than (x) an Event of Default of the type described in Section
5(a)(iii), (v), (vi) or (vii) of the Agreement or (y) a Termination Event of the type
described in Section 5(b)(i), (ii), (iii), (iv), (v) or (vi) of the Agreement that in the
case of either (x) or (y) resulted from an event or events outside Counterparty’s control) (a
“Counterparty Payment Obligation”), Counterparty shall have the right, in its sole
discretion, to satisfy any such Counterparty Payment Obligation by delivery of Termination
Delivery Units (as defined below) by giving irrevocable telephonic notice to Deutsche,
confirmed in writing within one Scheduled Trading Day, between the hours of 9:00 a.m. and
4:00 p.m. New York time on the Early Termination Date or other date the transaction is
terminated, as applicable (“Notice of Counterparty Termination Delivery”). Within a
commercially reasonable period of time following receipt of a Notice of Counterparty
Termination Delivery, Counterparty shall deliver to Deutsche a number of Termination Delivery
Units having a cash value equal to the amount of such Counterparty Payment Obligation (such
number of Termination Delivery Units to be delivered to be determined by the Calculation
Agent as the number of whole Termination Delivery Units that could be sold over a
commercially reasonable period of time to generate proceeds equal to the cash equivalent of
such payment obligation). In addition, if, in the good faith reasonable judgment of
Deutsche, for any reason, the Termination Delivery Units deliverable pursuant to this
paragraph would not be immediately freely transferable by Deutsche under Rule 144 or any
successor provision, then Deutsche may elect either to (x) accept delivery of such
Termination Delivery Units notwithstanding any restriction on transfer or (y) require that
such delivery take place pursuant to the provisions set forth opposite the caption
“Registration/Private Placement Procedures” below. If the provisions set forth in this
paragraph are applicable, the provisions of Sections 9.8, 9.9, 9.10, 9.11 (modified as
described above) and 9.12 of the Equity Definitions shall be applicable, except that all
references to “Shares” shall be read as references to “Termination Delivery Units”.




“Termination Delivery Unit” means (a) in the case of a Termination Event, an Event of Default
or an Extraordinary Event (other than an Insolvency, Nationalization, Merger Event or Tender
Offer), one Share or (b) in the case of an Insolvency, Nationalization, Merger Event or
Tender Offer, a unit consisting of the number or amount of each type of property received by
a holder of one Share (without consideration of any requirement to pay cash or other
consideration in lieu of fractional amounts of any securities) in such Insolvency,
Nationalization, Merger Event or Tender Offer. If a Termination Delivery Unit consists of
property other than cash or New Shares and Counterparty provides irrevocable written notice
to the Calculation Agent on or prior to the Closing Date that it elects to deliver cash, New
Shares or a combination thereof (in such proportion as Counterparty designates) in lieu of
such other property, the Calculation Agent shall replace such property with cash, New Shares
or a combination thereof as components of a Termination Delivery Unit in such amounts, as
determined by the Calculation Agent in its discretion by commercially reasonable means, as
shall have a value equal to the value of the property so replaced. If such Insolvency,
Nationalization, Merger Event or Tender Offer involves a choice of consideration to be
received by holders, such holder shall be deemed to have elected to receive the maximum
possible amount of cash.




Registration/Private Placement Procedures. If, in the reasonable opinion of Deutsche,
following any delivery of Shares or Termination Delivery Units to Deutsche hereunder, such
Shares or Termination Delivery Units



11









 







would be in the hands of Deutsche subject to any
applicable restrictions with respect to any registration or qualification requirement or
prospectus delivery requirement for such Shares or Termination Delivery Units pursuant to any
applicable federal or state securities law (including, without limitation, any such
requirement arising under Section 5 of the Securities Act as a result of such Shares or
Termination Delivery Units being “restricted securities”, as such term is defined in Rule
144) (such Shares or Termination Delivery Units, “Restricted Shares”), then delivery of such
Restricted Shares shall be effected pursuant to either clause (i) or (ii) of Annex A hereto
at the election of Counterparty, unless waived by Deutsche. Notwithstanding the foregoing,
solely in respect of any Warrants exercised or deemed exercised on any Exercise Date,
Counterparty shall elect, prior to the first Settlement Date for the first Exercise Date, a
Private Placement Settlement (as defined in Annex A hereto) or Registration Settlement (as
defined in Annex A hereto) for all deliveries of Restricted Shares for all such Exercise
Dates which election shall be applicable to all Settlement Dates for such Warrants and the
procedures in clause (i) or clause (ii) of Annex A hereto shall apply for all such delivered
Restricted Shares on an aggregate basis commencing after the final Settlement Date for such
Warrants. The Calculation Agent shall make reasonable adjustments to settlement terms and
provisions under this Confirmation to reflect a single Private Placement Settlement or
Registration Settlement for such aggregate Restricted Shares delivered hereunder. If the
Private Placement Settlement or the Registration Settlement shall not be effected as set
forth in clauses (i) or (ii) of Annex A, as applicable, then failure to effect such Private
Placement Settlement or such Registration Settlement shall constitute an Event of Default
with respect to which Counterparty shall be the Defaulting Party.




Share Deliveries. Counterparty acknowledges and agrees that, to the extent that Deutsche is
not then an affiliate, as such term is used in Rule 144, of Counterparty and has not been
such an affiliate of Counterparty for 90 days (it being understood that Deutsche shall not be
considered such an affiliate of Counterparty solely by reason of its right to receive Shares
pursuant to a Transaction hereunder), any Shares or Termination Delivery Units delivered
hereunder at any time after one year from the Premium Payment Date shall be eligible for
resale under Rule 144 or any successor provision, and Counterparty agrees to promptly remove,
or cause the transfer agent for such Shares or Termination Delivery Units to remove, any
legends referring to any restrictions on resale under the Securities Act from the
certificates representing such Shares or Termination Delivery Units. Counterparty further
agrees that with respect to any Shares or Termination Delivery Units delivered hereunder at
any time after 6 months from the Premium Payment Date but prior to 1 year from the Premium
Payment Date, to the extent that Counterparty then satisfies the current information
requirement of Rule 144, Counterparty shall promptly remove, or cause the transfer agent for
such Shares or Termination Delivery Units to remove, any legends referring to any such
restrictions or requirements from the certificates representing such Share or Termination
Delivery Units upon delivery by Deutsche to Counterparty or such transfer agent of any
customary seller’s and broker’s representation letters in connection with resales of such
Shares or Termination Delivery Units pursuant to Rule 144, without any further requirement
for the delivery of any certificate, consent, agreement, opinion of counsel, notice or any
other document, any transfer tax stamps or payment of any other amount or any other action by
Deutsche. Counterparty further agrees and acknowledges that Deutsche shall run a holding
period under Rule 144 with respect to the Warrants and/or any Shares or Termination Delivery
Units delivered hereunder notwithstanding the existence of any other transaction or
transactions between Counterparty and Deutsche relating to the Shares. Counterparty further
agrees that Shares or Termination Delivery Units delivered hereunder prior to the date that
is 6 months from the Premium Payment Date may be freely transferred by Deutsche to its
affiliates, and Counterparty shall effect such transfer without any further action by
Deutsche. Notwithstanding anything to the contrary herein, Counterparty agrees that any
delivery of Shares or Termination Delivery Units shall be effected by book-entry transfer
through the facilities of the Clearance System if, at the time of such delivery, the
certificates representing such Shares or Termination Delivery Units would not contain any
restrictive legend as described above. Notwithstanding anything to the contrary herein, to
the extent the provisions of Rule 144 or any successor rule are amended, or the applicable
interpretation thereof by the Securities and Exchange
Commission or any court changes after
the Trade Date, the agreements of Counterparty herein shall be deemed modified to the extent
necessary, in the opinion of outside counsel of Counterparty, to comply with Rule 144,
including Rule 144(b) or any successor provision, as in effect at the time of delivery of the
relevant Shares or Termination Delivery Units.




No Material Non-Public Information. On each day during the period beginning on the Trade
Date and ending on the day on which Deutsche has informed Counterparty in writing that
Deutsche has completed all purchases or sales of Shares or other transactions to hedge
initially its exposure with respect to the Transaction, Counterparty represents and warrants
to Deutsche that it is not aware of any material nonpublic information concerning itself or



12









 







the Shares.




Limit on Beneficial Ownership. Notwithstanding any other provisions hereof, Deutsche may not
exercise any Warrant hereunder, Automatic Exercise shall not apply with respect thereto, and
no delivery hereunder (including pursuant to provisions opposite the headings “Alternative
Calculations and Counterparty Payments on Early Termination and on Certain Extraordinary
Events,” “Registration/Private Placement Procedures,” “Limitation on Delivery of Shares” or
Annex A) shall be made, to the extent (but only to the extent) that the receipt of any Shares
upon such exercise or delivery would result in the Equity Percentage (as defined below)
exceeding 9% or an Ownership Trigger (as defined below) being met. Any purported delivery
hereunder shall be void and have no effect to the extent (but only to the extent) that such
delivery would result in the Equity Percentage exceeding 9% or an Ownership Trigger being
met. If any delivery owed to Deutsche or exercise hereunder is not made, in whole or in
part, as a result of this provision, Counterparty’s obligation to make such delivery and
Deutsche’s right to exercise a Warrant shall not be extinguished and Counterparty shall make
such delivery as promptly as practicable after, but in no event later than one Clearance
System Business Day after, Deutsche gives notice to Counterparty that such exercise or
delivery would not result in the Equity Percentage exceeding 9% or an Ownership Trigger being
met.




Repurchase Notices. Counterparty shall, on any day on which Counterparty effects any
repurchase of Shares, provide Deutsche with a written notice of such repurchase (a
“Repurchase Notice”) on such day if, following such repurchase, the Warrant Equity Percentage
(as defined below) is (a) equal to or greater than 4.5% and (b) greater by 0.5% or more than
the Warrant Equity Percentage set forth in the immediately preceding Repurchase Notice (or,
in the case of the first such Repurchase Notice, greater by 0.5% or more than the Warrant
Equity Percentage as of the date hereof). The “Warrant Equity Percentage” as of any day is
the fraction, expressed as a percentage, of (1) the numerator of which is the Number of
Warrants, and (2) the denominator of which is the number of Shares outstanding on such day.
Counterparty agrees to indemnify and hold harmless Deutsche and its affiliates and their
respective officers, directors, employees, affiliates, advisors, agents and controlling
person (each, an “Indemnified Person”) from and against any and all losses (including losses
relating to Deutsche’s hedging activities as a consequence of becoming, or of the risk of
becoming, an “insider” as defined under Section 16 of the Exchange Act, including without
limitation, any forbearance from hedging activities or cessation of hedging activities and
any losses in connection therewith with respect to this Transaction), claims, damages,
judgments, liabilities and expense (including reasonable attorney’s fees), joint or several,
which an Indemnified Person actually may become subject to, as a result of Counterparty’s
failure to provide Deutsche with a Repurchase Notice on the day and in the manner specified
herein, and to reimburse, upon written request, each of such Indemnified Persons for any
reasonable legal or other expenses incurred in connection with investigating, preparing for,
providing testimony or other evidence in connection with or defending any of the foregoing.
If any suit, action, proceeding (including any governmental or regulatory investigation),
claim or demand shall be brought or asserted against the Indemnified Person, such Indemnified
Person shall promptly notify Counterparty in writing, and Counterparty, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the Indemnified Person to
represent the Indemnified Person and any others Counterparty may designate in such proceeding
and shall pay the fees and expenses of such counsel related to such proceeding. Counterparty
shall be relieved from liability to the extent that the Indemnified Person fails promptly to
notify Counterparty of any action commenced against it in respect of which indemnity may be
sought hereunder; provided that failure to notify Counterparty (x) shall not relieve
Counterparty from any liability hereunder to the extent it is not materially prejudiced as a
result thereof and (y) shall not, in any event, relieve Counterparty from any liability that
it may have otherwise than on account of this indemnity agreement. Counterparty shall not be
liable for any settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, Counterparty
agrees to indemnify any Indemnified Person from and against any loss or liability by reason
of such settlement or judgment. Counterparty shall not, without the prior written consent of
the Indemnified Person, effect any settlement of any pending or threatened proceeding in
respect of which any Indemnified Person is or could have been a party and indemnity could
have been sought hereunder by such Indemnified Person, unless such settlement includes an
unconditional release of such Indemnified Person from all liability on claims that are the
subject matter of such proceeding on terms reasonably satisfactory to such Indemnified
Person. If the indemnification provided for in this paragraph is unavailable to an
Indemnified Person or insufficient in respect of any losses, claims, damages or liabilities
referred to therein, then Counterparty, in lieu of indemnifying such Indemnified Person
thereunder, shall



13









 







contribute to the amount paid or payable by such Indemnified Person as a
result of such losses, claims, damages or liabilities. The remedies provided for in this
paragraph are not exclusive and shall not limit any rights or remedies that may otherwise be
available to any Indemnified Person at law or in equity. The indemnity and contribution
agreements contained in this paragraph shall remain operative and in full force and effect
regardless of the termination of the Transaction.




Limitation On Delivery of Shares. Notwithstanding anything herein or in the Agreement to the
contrary, in no event shall Counterparty be required to deliver Shares in connection with the
Transaction in excess of 7,827,600 Shares (the “Maximum Delivery Amount”). Counterparty
represents and warrants (which shall be deemed to be repeated on each day that the
Transaction is outstanding) that the Maximum Delivery Amount is equal to or less than the
number of authorized but unissued Shares of Counterparty that are not reserved for future
issuance in connection with transactions in the Shares (other than the Transaction) on the
date of the determination of the Maximum Delivery Amount (such Shares, the “Available
Shares”). In the event Counterparty shall not have delivered the full number of Shares
otherwise deliverable as a result of this paragraph (the resulting deficit, the “Deficit
Shares”), Counterparty shall be continually obligated to deliver, from time to time until the
full number of Deficit Shares have been delivered pursuant to this paragraph, Shares when,
and to the extent, that (i) Shares are repurchased, acquired or otherwise received by
Counterparty or any of its subsidiaries after the Trade Date (whether or not in exchange for
cash, fair value or any other consideration), (ii) authorized and unissued Shares reserved
for issuance in respect of other transactions prior to such date which prior to the relevant
date become no longer so reserved and (iii) Counterparty additionally authorizes any unissued
Shares that are not reserved for other transactions. Counterparty shall immediately notify
Deutsche of the occurrence of any of the foregoing events (including the number of Shares
subject to clause (i), (ii) or (iii) and the corresponding number of Shares to be delivered)
and promptly deliver such Shares thereafter. Notwithstanding the provisions of Section
5(a)(ii) of the Agreement, in the event of a failure by Counterparty to comply with the
agreement set forth in this provision, there shall be no grace period for remedy of such
failure.




Additional Termination Event. The occurrence of any of the following shall constitute an
Additional Termination Event with respect to which (1) Counterparty shall be the sole
Affected Party and (2) the Transaction shall be the sole Affected Transaction; provided that
with respect to any Additional Termination Event, Deutsche may choose to treat part of the
Transaction as the sole Affected Transaction, and, upon termination of the Affected
Transaction, a Transaction with terms identical to those set forth herein except with a
Number of Warrants equal to the unaffected number of Warrants shall be treated for all
purposes as the Transaction, which shall remain in full force and effect:




(i) Deutsche reasonably determines, upon advice of counsel, that it is advisable to terminate
a portion of the Transaction so that Deutsche’s related hedging activities will comply with
applicable securities laws, rules or regulations;




(ii) The Shares are not approved for listing on the New York Stock Exchange, The NASDAQ
Global Select Market or The NASDAQ Global Market (or any of their respective successors);




(iii) any “person” or “group” (as such terms are used for purposes of Sections 13(d) and
14(d) of the Exchange Act or any successor provisions, including any group acting for the
purpose of acquiring, holding, voting or disposing of securities within the meaning of Rule
13d-5(b)(1) under the Exchange Act or any successor provision) is or becomes the “beneficial
owner” (as that term is used in Rule 13d-3 under the Exchange Act as in effect on the
Effective Date, except that the number of shares of Counterparty’s voting stock will be
deemed to include, in addition to all outstanding shares of Counterparty’s voting stock and
shares of voting stock not outstanding that are subject to options, warrants, rights to
purchase or conversion privileges exercisable within 60 days of the date of determination
(“unissued shares”) deemed to be held by the “person” or “group” or other person with respect
to which the determination is being made, all unissued shares deemed to be held by all other
persons), directly or indirectly, of shares representing 50% or more of the total voting
power of all outstanding classes of Counterparty’s capital stock or other interests normally
entitled (without regard to the occurrence of any contingency) to vote in the election of the
board of directors, managers or trustees (“voting stock”) or has the power, directly or
indirectly, to elect a majority of the members of Counterparty’s board of directors, unless
the exception provided in clause (iv)(2) below applies;



14









 









(iv) Counterparty consolidates with, enters into a binding share exchange with, or merges
with or into, another person, or Counterparty sells, assigns, conveys, transfers, leases or
otherwise disposes of all or substantially all of its assets, or any person consolidates
with, or merges with or into, Counterparty, in any such event, other than any transaction:




(1) pursuant to which the persons that “beneficially owned,” directly or indirectly, the
shares of Counterparty’s voting stock immediately prior to such transaction “beneficially
own,” directly or indirectly, shares of Counterparty’s voting stock representing at least a
majority of the total voting power of all outstanding classes of voting stock of the
surviving or transferee person and such holders’ proportional voting power immediately after
such transaction vis-à-vis each other with respect to the securities they receive in such
transaction shall be in substantially the same proportions as their respective voting power
vis-à-vis each other immediately prior to such transaction;




(2) in which at least 90% of the consideration paid for the Shares (other than cash payments
for fractional shares or pursuant to dissenters’ appraisal rights) consists of shares of
common stock traded on the New York Stock Exchange, The NASDAQ Global Market or The NASDAQ
Global Select Market (or any of their respective successors), or which will be so traded
immediately following such transaction; or




(3) which is effected solely to change Counterparty’s jurisdiction of incorporation and
results in a reclassification, conversion or exchange of outstanding Shares solely into
shares of common stock of the surviving person;




(v) (a) individuals who on the Effective Date constituted Counterparty’s board of directors
and (b) any new directors whose election to Counterparty’s board of directors or whose
nomination for election by Counterparty’s stockholders was approved by at least a majority of
the directors at the time of such election or nomination still in office either who were
directors on the Effective Date or whose election or nomination for election was previously
so approved, cease for any reason to constitute a majority of Counterparty’s board of
directors; or




(vi) the holders of Counterparty’s capital stock approve any plan or proposal for liquidation
or dissolution of Counterparty.




Transfer or Assignment. Notwithstanding any provision of the Agreement to the contrary,
Deutsche may, subject to applicable law, freely transfer and assign all of its rights and
obligations under the Transaction without the consent of Counterparty.




If, as determined in Deutsche’s sole discretion, (a) at any time (1) the Equity Percentage
exceeds 8.0% (2) Deutsche, Deutsche Group (as defined below) or any person whose ownership
position would be aggregated with that of Deutsche or Deutsche Group (Deutsche, Deutsche
Group or any such person, a “Deutsche Person”) under Sections 3-701 to 3-709 of the Maryland
Control Share Acquisition Act or other federal, state or local laws, regulations or
regulatory orders applicable to ownership of Shares (“Applicable Laws”), owns, beneficially
owns, constructively owns, controls, holds the power to vote or otherwise meets a relevant
definition of ownership, or could be reasonably viewed as meeting any of the foregoing, in
excess of a number of Shares equal to (x) the number of Shares that would give rise to
reporting, registration, filing or notification obligations or other requirements (including
obtaining prior approval by a state or federal regulator) of a Deutsche Person under
Applicable Laws and with respect to which such requirements have not been met or the relevant
approval has not been received (this clause (2)(x), the “Ownership Trigger”) minus (y) 1% of
the number of Shares outstanding on the date of determination, or (3) the number of “control
shares” (as such term is used in Section 3-701(d) of the Maryland Control Share Acquisition
Act) owned by a Deutsche Person divided by the number of Counterparty’s outstanding Shares
exceeds 8.0%, (each of such conditions described in clause (1), (2) or (3), an “Excess
Ownership Position”), and (b) Deutsche is unable, after commercially reasonable efforts, to
effect a transfer or assignment on pricing and terms and within a time period reasonably
acceptable to it of all or a portion of this Transaction pursuant to the preceding paragraph
such that an Excess Ownership Position no longer exists, Deutsche may designate any Scheduled
Trading Day as an Early Termination Date with respect to a portion (the “Terminated Portion”)
of this Transaction, such that an Excess Ownership Position no longer exists following



15









 







such partial termination. In the event that Deutsche so designates an Early Termination Date with
respect to a portion of this Transaction, a payment shall be made pursuant to Section 6 of
the Agreement as if (i) an Early Termination Date had been designated in respect of a
Transaction having terms identical to this Transaction and a Number of Warrants equal to the
Terminated Portion (allocated among the Components thereof in the discretion of Deutsche),
(ii) Counterparty shall be the sole Affected Party with respect to such partial termination
and (iii) such Transaction shall be the only Terminated Transaction (and, for the avoidance
of doubt, the provisions set forth under the caption “Alternative Calculations and
Counterparty Payment on Early Termination and on Certain Extraordinary Events” shall apply to
any amount that is payable by Counterparty to Deutsche pursuant to this sentence). The
“Equity Percentage” as of any day is the fraction, expressed as a percentage, (A) the
numerator of which is the number of Shares that Deutsche and any of its affiliates subject to
aggregation with Deutsche for purposes of the “beneficial ownership” test under Section 13 of
the Exchange Act and all persons who may form a “group” (within the meaning of Rule
13d-5(b)(1) under the Exchange Act) with Deutsche (collectively, “Deutsche Group”)
“beneficially own” (within the meaning of Section 13 of the Exchange Act) without duplication
on such day and (B) the denominator of which is the number of Shares outstanding on such day.




Notwithstanding any other provision in this Confirmation to the contrary requiring or
allowing Deutsche to purchase, sell, receive or deliver any shares or other securities to or
from Counterparty, Deutsche, acting in good faith and in a commercially reasonable manner,
may designate any of its affiliates to purchase, sell, receive or deliver such shares or
other securities and otherwise to perform Deutsche’s obligations in respect of the
Transaction and any such designee may assume such obligations. Deutsche shall be discharged
of its obligations to Counterparty to the extent of any such performance.




Amendments to Equity Definitions. (a) Section 12.9(b)(iv) of the Equity Definitions is
hereby amended by: (i) deleting (1) subsection (A) in its entirety, (2) the phrase “or (B)”
following subsection (A) and (3) the phrase “in each case” in subsection (B); (ii) replacing
“will lend” with “lends” in subsection (B); and (iii) deleting the phrase “neither the
Non-Hedging Party nor the Lending Party lends Shares in the amount of the Hedging Shares or”
in the penultimate sentence; and (b) Section 12.9(b)(v) of the Equity Definitions is hereby
amended by: (i) adding the word “or” immediately before subsection “(B)” and deleting the
comma at the end of subsection (A); (ii) (1) deleting subsection (C) in its entirety, (2)
deleting the word “or” immediately preceding subsection (C) and (3) deleting the penultimate
sentence in its entirety and replacing it with the sentence “The Hedging Party will determine
the Cancellation Amount payable by one party to the other”; and (iii) deleting subsection (X)
in its entirety and the words “or (Y)” immediately following subsection (X).




Severability; Illegality. If compliance by either party with any provision of the
Transaction would be unenforceable or illegal, (a) the parties shall negotiate in good faith
to resolve such unenforceability or illegality in a manner that preserves the economic
benefits of the transactions contemplated hereby and (b) the other provisions of the
Transaction shall not be invalidated, but shall remain in full force and effect.




Waiver of Jury Trial. EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING
RELATING TO THE TRANSACTION. EACH PARTY (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF SUCH A SUIT, ACTION OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HAVE BEEN INDUCED TO ENTER INTO THE
TRANSACTION, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS
PROVIDED HEREIN.




Payment by Deutsche. In the event that (i) an Early Termination Date occurs or is designated
with respect to the Transaction as a result of a Termination Event or an Event of Default
(other than an Event of Default arising under Section 5(a)(ii) or 5(a)(iv) of the Agreement)
and, as a result, Deutsche owes to Company pursuant to Section 6(d)(ii) of the Agreement an
amount calculated under Section 6(e) of the Agreement, or (ii) Deutsche owes to Company,
pursuant to Section 12.7 or Section 12.9 of the Equity Definitions (including, for the
avoidance of doubt, any amount payable in connection with an Extraordinary Event), an amount
calculated under



16









 







Section 12.8 of the Equity Definitions, such amount shall be deemed to be zero.




Governing law: The law of the State of New York.


Contact information. For purposes of the Agreement (unless otherwise specified in the Agreement),
the addresses for notice to the parties shall be:




(a) Counterparty



TeleCommunication Systems, Inc

275 West Street,

Annapolis, Maryland 21401

Attention: Bruce A. White

Fax:           (410) 263-7617




(b) Deutsche



Deutsche Bank AG, London Branch

c/o Deutsche Bank Securities Inc.

60 Wall Street

New York, NY 10005

Attention: Faiz Khan



Telephone: (212) 250-0668

Email:          faiz.khan@db.com



with a copy to:



Deutsche Bank AG, London Branch

c/o Deutsche Bank Securities Inc.

60 Wall Street

New York, New York 10005

Attention: Lars Kestner



Telephone: (212) 250-6043

Email:          Lars.Kestner@db.com



with a copy to:



Deutsche Bank AG, London Branch

c/o Deutsche Bank Securities Inc.

60 Wall Street

New York, NY 10005

Attention: Andrew Yaeger



Telephone: (212) 250-2717

Email:          andrew.yaeger@db.com





17









 








This Confirmation may be executed in several counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same instrument.



Counterparty hereby agrees to check this Confirmation and to confirm that the foregoing correctly
sets forth the terms of the Transaction by signing in the space provided below and returning to
Deutsche a facsimile of the fully-executed Confirmation to Deutsche at 44 113 336 2009. Originals
shall be provided for your execution upon your request.



We are very pleased to have executed the Transaction with you and we look forward to completing
other transactions with you in the near future.



	 	 	 	 	 
	Very truly yours,



	 	 



DEUTSCHE BANK AG, LONDON BRANCH




	 	 	 	 	 
	By:  	
/s/ Lars Kestner	 	 
	 	Name:  	Lars Kestner	 	 
	 	Title:  	Managing Director	 	 
	 
	By:  	
/s/ Jon Arnone	 	 
	 	Name:  	Jon Arnone	 	 
	 	Title:  	Managing Director	 	 
	 
	DEUTSCHE BANK SECURITIES INC.,

acting solely as Agent in connection with this Transaction

 	 	 
	By:  	/s/
Lars Kestner	 	 
	 	Name:  	Lars Kestner	 	 
	 	Title:  	Managing Director	 	 
	 
	By:  	
/s/ John Arnone	 	 
	 	Name:  	John Arnone	 	 
	 	Title:  	Managing Director	 	 
	 




Counterparty hereby agrees to, accepts and confirms the terms of the foregoing as of the Trade
Date.



	 	 	 	 	 
	TELECOMMUNICATION SYSTEMS, INC.

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












	 	 	 
	Chairman of the Supervisory Board: Clemens Börsig
Board of Managing Directors: Hermann-Josef
Lamberti, Josef Ackermann, Dr. Hugo Banziger,
Anthony Dilorio

	 	Deutsche Bank AG is
regulated by the FSA
for the conduct of
designated investment
business in the UK,
is a member of the
London Stock Exchange
and is a limited
liability company
incorporated in the
Federal Republic of
Germany HRB No. 30
000 District Court of
Frankfurt am Main;
Branch Registration
No. in England and
Wales BR000005,
Registered address:
	 

	 	Winchester House, 1
Great Winchester
Street, London EC2N
2DB.






 









 






ANNEX A




Registration Settlement and Private Placement Settlement





	(i)	 	If Counterparty elects to settle the Transaction pursuant to this clause (i) (a “Private
Placement Settlement”), then delivery of Restricted Shares by Counterparty shall be effected
in private placement procedures (customary for equity securities of the size of such private
placement) with respect to such Restricted Shares reasonably acceptable to Deutsche; provided
that Counterparty may not elect a Private Placement Settlement if, on the date of its
election, it has taken, or caused to be taken, any action that would make unavailable either
the exemption pursuant to Section 4(2) of the Securities Act for the sale by Counterparty to
Deutsche (or any affiliate designated by Deutsche) of the Restricted Shares or the exemption
pursuant to Section 4(1) or Section 4(3) of the Securities Act for resales of the Restricted
Shares by Deutsche (or any such affiliate of Deutsche). The Private Placement Settlement of
such Restricted Shares shall include customary representations, covenants, blue sky and other
governmental filings and/or registrations, indemnities to Deutsche, due diligence rights (for
Deutsche or any buyer of the Restricted Shares designated by Deutsche), opinions and
certificates, and such other documentation as is customary for private placement agreements,
all reasonably acceptable to Deutsche. In the event of a Private Placement Settlement, the Net
Share Settlement Amount or the Counterparty Payment Obligation, respectively, shall be deemed
to be the Net Share Settlement Amount or the Counterparty Payment Obligation, respectively,
plus an additional amount (determined from time to time by the Calculation Agent in its
commercially reasonable judgment) attributable to interest that would be earned on such Net
Share Settlement Amount or the Counterparty Payment Obligation, respectively, (increased on a
daily basis to reflect the accrual of such interest and reduced from time to time by the
amount of net proceeds received by Deutsche as provided herein) at a rate equal to the open
Federal Funds Rate plus 100 basis points per annum for the period from, and including, such
Settlement Date or the date on which the Counterparty Payment Obligation is due, respectively,
to, but excluding, the related date on which all the Restricted Shares have been sold and
calculated on an Actual/360 basis.
	 
	(ii)	 	If Counterparty elects to settle the Transaction pursuant to this clause (ii) (a
“Registration Settlement”), then Counterparty shall promptly (but in any event no later than
the beginning of the Resale Period) file and use its reasonable best efforts to make effective
under the Securities Act a registration statement or supplement or amend an outstanding
registration statement in form and substance reasonably satisfactory to Deutsche, to cover the
resale of such Restricted Shares (and any Make-whole Shares) in accordance with customary
resale registration procedures, including covenants, conditions, representations, underwriting
discounts (if applicable), commissions (if applicable), indemnities, due diligence rights,
opinions and certificates, and such other documentation as is customary for equity resale
underwriting agreements, all reasonably acceptable to Deutsche. If Deutsche, in its sole
reasonable discretion, is not satisfied with such procedures and documentation, Private
Placement Settlement shall apply. If Deutsche is satisfied with such procedures and
documentation, it shall sell the Restricted Shares (and any Make-whole Shares) pursuant to
such registration statement during a period (the “Resale Period”) commencing on the Exchange
Business Day following delivery of such Restricted Shares (and any Make-whole Shares) and
ending on the earliest of (i) the Exchange Business Day on which Deutsche completes the sale
of all Restricted Shares or, in the case of settlement of Termination Delivery Units, a
sufficient number of Restricted Shares so that the realized net proceeds of such sales exceed
the Counterparty Payment Obligation, (ii) the date upon which all Restricted Shares (and any
Make-whole Shares) have been sold or transferred pursuant to Rule 144 (or similar provisions
then in force) and (iii) the date upon which all Restricted Shares (and any Make-whole Shares)
may be sold or transferred by a non-affiliate pursuant to Rule 144 (or any similar provision
then in force) without any further restriction whatsoever.
	 
	(iii)	 	If (ii) above is applicable and the Net Share Settlement Amount or the Counterparty Payment
Obligation, as applicable, exceeds the realized net proceeds from such resale, or if (i) above
is applicable and the Freely Tradeable Value (as defined below) of the Shares owed pursuant to
the Net Share Settlement Amount, or the Counterparty Payment Obligation (in each case as
adjusted pursuant to (i) above), as applicable, exceeds the realized net proceeds from such
resale, Counterparty shall transfer to Deutsche by the open of the regular trading session on
the Exchange on the Exchange Business Day immediately following the last day of the Resale
Period the amount of such excess




A-1









 






	 	 	(the “Additional Amount”), at its option, either in cash or in a number of Restricted Shares
(“Make-whole Shares”, provided that the aggregate number of Restricted Shares and Make-whole
Shares delivered shall not exceed the Maximum Delivery Amount) that, based on the Relevant
Price on the last day of the Resale Period (as if such day was the “Valuation Date” for
purposes of computing such Relevant Price), has a value equal to the Additional Amount. If
Counterparty elects to pay the Additional Amount in Make-whole Shares, Counterparty shall
elect whether the requirements and provisions for either Private Placement Settlement or
Registration Settlement shall apply to such payment. This provision shall be applied
successively until the Additional Amount is equal to zero, subject to “Limitation on
Delivery of Shares”. “Freely Tradeable Value” means the value of the number of Shares
delivered to Deutsche which such Shares would have if they were freely tradeable (without
prospectus delivery) upon receipt by Deutsche, as determined by the Calculation Agent by
reference to the Relevant Price for freely tradeable Shares as of the Valuation Date, or
other date of valuation used to determine the delivery obligation with respect to such
Shares, or by other commercially reasonable means.






A-2









 








ANNEX B




The Strike Price, Premium and Final Disruption Date for the Transaction are set forth below.



	 	 	 	 	 
	Strike Price:
	 	USD12.736
	Premium:
	 	USD5,071,005
	Final Disruption Date:
	 	July 7, 2015







B-1









 








ANNEX C




For each Component of the Transaction, the Number of Warrants and Expiration Date is set forth
below.



	 	 	 	 	 	 	 	 	 
	Component Number	 	Number of Warrants	 	Expiration Date
	1.
	 	 	43,487	 	 	Fri, 02/13/15
	2.
	 	 	43,487	 	 	Tue, 02/17/15
	3.
	 	 	43,487	 	 	Wed, 02/18/15
	4.
	 	 	43,487	 	 	Thu, 02/19/15
	5.
	 	 	43,487	 	 	Fri, 02/20/15
	6.
	 	 	43,487	 	 	Mon, 02/23/15
	7.
	 	 	43,487	 	 	Tue, 02/24/15
	8.
	 	 	43,487	 	 	Wed, 02/25/15
	9.
	 	 	43,487	 	 	Thu, 02/26/15
	10.
	 	 	43,487	 	 	Fri, 02/27/15
	11.
	 	 	43,487	 	 	Mon, 03/02/15
	12.
	 	 	43,487	 	 	Tue, 03/03/15
	13.
	 	 	43,487	 	 	Wed, 03/04/15
	14.
	 	 	43,487	 	 	Thu, 03/05/15
	15.
	 	 	43,487	 	 	Fri, 03/06/15
	16.
	 	 	43,487	 	 	Mon, 03/09/15
	17.
	 	 	43,487	 	 	Tue, 03/10/15
	18.
	 	 	43,487	 	 	Wed, 03/11/15
	19.
	 	 	43,487	 	 	Thu, 03/12/15
	20.
	 	 	43,487	 	 	Fri, 03/13/15
	21.
	 	 	43,487	 	 	Mon, 03/16/15
	22.
	 	 	43,487	 	 	Tue, 03/17/15
	23.
	 	 	43,487	 	 	Wed, 03/18/15
	24.
	 	 	43,487	 	 	Thu, 03/19/15
	25.
	 	 	43,487	 	 	Fri, 03/20/15
	26.
	 	 	43,487	 	 	Mon, 03/23/15
	27.
	 	 	43,487	 	 	Tue, 03/24/15
	28.
	 	 	43,487	 	 	Wed, 03/25/15
	29.
	 	 	43,487	 	 	Thu, 03/26/15
	30.
	 	 	43,487	 	 	Fri, 03/27/15
	31.
	 	 	43,487	 	 	Mon, 03/30/15
	32.
	 	 	43,487	 	 	Tue, 03/31/15
	33.
	 	 	43,487	 	 	Wed, 04/01/15
	34.
	 	 	43,487	 	 	Thu, 04/02/15
	35.
	 	 	43,487	 	 	Mon, 04/06/15
	36.
	 	 	43,487	 	 	Tue, 04/07/15
	37.
	 	 	43,487	 	 	Wed, 04/08/15
	38.
	 	 	43,487	 	 	Thu, 04/09/15
	39.
	 	 	43,487	 	 	Fri, 04/10/15






C-1









 






	 	 	 	 	 	 	 	 	 
	Component Number	 	Number of Warrants	 	Expiration Date
	40.
	 	 	43,487	 	 	Mon, 04/13/15
	41.
	 	 	43,487	 	 	Tue, 04/14/15
	42.
	 	 	43,487	 	 	Wed, 04/15/15
	43.
	 	 	43,487	 	 	Thu, 04/16/15
	44.
	 	 	43,487	 	 	Fri, 04/17/15
	45.
	 	 	43,487	 	 	Mon, 04/20/15
	46.
	 	 	43,487	 	 	Tue, 04/21/15
	47.
	 	 	43,487	 	 	Wed, 04/22/15
	48.
	 	 	43,487	 	 	Thu, 04/23/15
	49.
	 	 	43,487	 	 	Fri, 04/24/15
	50.
	 	 	43,487	 	 	Mon, 04/27/15
	51.
	 	 	43,487	 	 	Tue, 04/28/15
	52.
	 	 	43,487	 	 	Wed, 04/29/15
	53.
	 	 	43,487	 	 	Thu, 04/30/15
	54.
	 	 	43,487	 	 	Fri, 05/01/15
	55.
	 	 	43,487	 	 	Mon, 05/04/15
	56.
	 	 	43,487	 	 	Tue, 05/05/15
	57.
	 	 	43,487	 	 	Wed, 05/06/15
	58.
	 	 	43,487	 	 	Thu, 05/07/15
	59.
	 	 	43,487	 	 	Fri, 05/08/15
	60.
	 	 	43,487	 	 	Mon, 05/11/15
	61.
	 	 	43,487	 	 	Tue, 05/12/15
	62.
	 	 	43,487	 	 	Wed, 05/13/15
	63.
	 	 	43,487	 	 	Thu, 05/14/15
	64.
	 	 	43,487	 	 	Fri, 05/15/15
	65.
	 	 	43,487	 	 	Mon, 05/18/15
	66.
	 	 	43,487	 	 	Tue, 05/19/15
	67.
	 	 	43,487	 	 	Wed, 05/20/15
	68.
	 	 	43,487	 	 	Thu, 05/21/15
	69.
	 	 	43,487	 	 	Fri, 05/22/15
	70.
	 	 	43,487	 	 	Tue, 05/26/15
	71.
	 	 	43,487	 	 	Wed, 05/27/15
	72.
	 	 	43,487	 	 	Thu, 05/28/15
	73.
	 	 	43,487	 	 	Fri, 05/29/15
	74.
	 	 	43,487	 	 	Mon, 06/01/15
	75.
	 	 	43,487	 	 	Tue, 06/02/15
	76.
	 	 	43,487	 	 	Wed, 06/03/15
	77.
	 	 	43,487	 	 	Thu, 06/04/15
	78.
	 	 	43,487	 	 	Fri, 06/05/15
	79.
	 	 	43,487	 	 	Mon, 06/08/15
	80.
	 	 	43,487	 	 	Tue, 06/09/15
	81.
	 	 	43,487	 	 	Wed, 06/10/15
	82.
	 	 	43,487	 	 	Thu, 06/11/15
	83.
	 	 	43,487	 	 	Fri, 06/12/15
	84.
	 	 	43,487	 	 	Mon, 06/15/15
	85.
	 	 	43,487	 	 	Tue, 06/16/15






A-2









 






	 	 	 	 	 	 	 	 	 
	Component Number	 	Number of Warrants	 	Expiration Date
	86.
	 	 	43,487	 	 	Wed, 06/17/15
	87.
	 	 	43,487	 	 	Thu, 06/18/15
	88.
	 	 	43,487	 	 	Fri, 06/19/15
	89.
	 	 	43,487	 	 	Mon, 06/22/15
	90.
	 	 	43,457	 	 	Tue, 06/23/15








A-2