exv10w2wb






Exhibit 10.2(b)









					
	 
	 	 
	 	SOCIÉTÉ GÉNÉRALE

17 COURS VALMY

92987 PARIS-LA DEFENSE,

FRANCE






	 	 	 
	DATE:

	 	November 10, 2009
	 
	 	 
	TO:

	 	TeleCommunication Systems, Inc.
	ATTENTION:

	 	Bruce A. White
	TELEPHONE:

	 	(410) 263-7616
	FACSIMILE:

	 	(410) 263-7617
	 
	 	 
	FROM:

	 	Société Générale
	FACSIMILE:

	 	(212) 278-5624
	 
	 	 
	SUBJECT:

	 	Equity Derivatives Note Hedge Confirmation
	 
	 	 
	REFERENCE NUMBER(S):

	 	[      ]





The purpose of this facsimile agreement (this “Confirmation”) is to confirm the terms and
conditions of the transaction entered into between Société Générale (“Société Générale”) 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.



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 govern. For
the purposes of the Equity Definitions, each reference herein to a Note Hedging Unit 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 Société Générale 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 Société Générale and Counterparty had executed an
agreement in such form (without any Schedule but with the elections set forth in this
Confirmation). For the avoidance of doubt, the Transaction shall be the only transaction under the
Agreement.



The Transaction 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:

	 	The closing date for the initial issuance of the Convertible Notes.

	 
	 	 	 	 
	Transaction Style:

	 	American subject to the provisions below under “Procedure for
Exercise”.

	 
	 	 	 	 
	Transaction Type:

	 	Note Hedging Units.

	 
	 	 	 	 
	Seller:

	 	Société Générale.

	 
	 	 	 	 
	Buyer:

	 	Counterparty.

	 
	 	 	 	 
	Shares:

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

	 
	 	 	 	 
	Convertible Notes:

	 	4.5% Senior Convertible Notes of Counterparty due November 1,
2014, offered pursuant to an Offering Memorandum to be dated as of
November 10, 2009 and issued pursuant to the indenture to be dated
on or about November 16, 2009, by and between Counterparty and The
Bank of New York Mellon, as trustee (as may be amended, modified
or supplemented from time to time, but only if such amendment,
modification or supplement is consented to by Société Générale in
writing, the “Indenture”). Certain defined terms used herein have
the meanings assigned to them in the Indenture. In the event of
any inconsistency between the terms defined in the Indenture and
this Confirmation, this Confirmation shall govern.

	 
	 	 	 	 
	Number of Note Hedging Units:

	 	90,000
	 
	 	 	 	 
	Note Hedging Unit Entitlement:

	 	USD1,000 divided by the Strike Price. Notwithstanding anything to
the contrary herein or in the Agreement (including without
limitation the provisions of Calculation Agent Adjustment), in no
event shall the Note Hedging Unit Entitlement at any time be
greater than the “Conversion Rate” (as such term is defined in the
Indenture) at such time.

	 
	 	 	 	 
	Strike Price:

	 	USD10.348.

	 
	 	 	 	 
	Applicable Percentage:

	 	35%
	 
	 	 	 	 
	Premium:

	 	As provided in Annex A to this Confirmation.

	 
	 	 	 	 
	Premium Payment Date:

	 	The Effective Date.

	 
	 	 	 	 
	Exchange:

	 	The NASDAQ Global Market.

	 
	 	 	 	 
	Related Exchanges:

	 	All Exchanges.

	 
	 	 	 	 
	Calculation Agent:

	 	Société Générale.

	 
	 	 	 	 
	Procedure for Exercise:
	 	 	 	 






2









 






	 	 	 	 	 
	Potential Exercise Dates:

	 	Each Conversion Date.

	 
	 	 	 	 
	Conversion Date:

	 	Each “Conversion Date” as defined in the Indenture.

	 
	 	 	 	 
	Required Exercise on Conversion Dates:

	 	On each Conversion Date, a number of Note Hedging Units equal to
the number of Convertible Notes in denominations of USD1,000
principal amount submitted for conversion in respect of such
Conversion Date in accordance with the terms of the Indenture
shall be exercised as described below under “Notice of Exercise”.

	 
	 	 	 	 
	Expiration Date:

	 	November 1, 2014

	 
	 	 	 	 
	Aggregate Conversion Date:

	 	August 1, 2014

	 
	 	 	 	 
	Multiple Exercise:

	 	Applicable, as provided under “Required Exercise on Conversion
Dates”.

	 
	 	 	 	 
	Automatic Exercise:

	 	As provided under “Required Exercise on Conversion Dates”.

	 
	 	 	 	 
	Notice of Exercise:

	 	Notwithstanding anything to the contrary in the Equity
Definitions, in order to exercise any Note Hedging Units,
Counterparty must notify Société Générale in writing (and use
reasonable efforts to confirm receipt by telephone to Société
Générale (telephone: 212-278-5187)) prior to 5:00 PM, New York
City time, on the day that is two Scheduled Trading Days prior to
the first day of the Settlement Averaging Period for the Note
Hedging Units being exercised (the “Notice Deadline”) of (i) the
number of Note Hedging Units being exercised on such Exercise Date
and (ii) the scheduled settlement date under the Indenture for the
Convertible Notes converted on the Conversion Date corresponding
to such Exercise Date; provided that in respect of Convertible
Notes with a Conversion Date occurring on or after the Aggregate
Conversion Date, the Notice Deadline shall be 5:00 PM, New York
City time, on the second “Scheduled Trading Day” (as defined in
the Indenture) immediately preceding the “Maturity Date” (as
defined in the Indenture).

	 
	 	 	 	 
	Settlement Terms:
	 	 	 	 
	 
	 	 	 	 
	Net Share Settlement:

	 	In lieu of the obligations set forth in Sections 8.1 and 9.1 of
the Equity Definitions, and subject to “Notice of Exercise” above,
in respect of any Exercise Date occurring on a Conversion Date,
Société Générale shall deliver to Counterparty, on the related
Settlement Date, the Settlement Amount. For the avoidance of
doubt, to the extent Société Générale is obligated to deliver
Shares hereunder, the provisions of Sections 9.8, 9.9, 9.10, 9.11
and 9.12 of the Equity Definitions shall be applicable to any such
delivery of Shares, 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”; and
provided that the Representation and Agreement contained in
Section 9.11 of the Equity Definitions shall be modified by
excluding any







3









 






	 	 	 	 	 
	 

	 	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.

	 
	 	 	 	 
	Settlement Amount:

	 	The product of the Applicable Percentage and a number of Shares
equal to the Net Shares. In no event will the Net Shares be less
than zero.

	 
	 	 	 	 
	Net Shares:

	 	In respect of any Note Hedging Unit exercised or deemed exercised,
a number of Shares equal to (A) the sum of the quotients, for each
Valid Day during the Settlement Averaging Period for such Note
Hedging Unit, of (x) the Note Hedging Unit Entitlement on such
Valid Day multiplied by (y) the Relevant Price on such Valid Day
less the Strike Price, divided by (z) such Relevant Price, divided
by (B) the number of Valid Days in the Settlement Averaging
Period; provided that in no event shall the Net Shares for any
Note Hedging Unit exceed a number of Shares equal to the
Applicable Limit for such Note Hedging Unit divided by the
Relevant Price on the last Valid Day of the Settlement Averaging
Period (or if such Note Hedging Unit relates to a Convertible Note
with a Conversion Date occurring on or after the Aggregate
Conversion Date, the Relevant Price on the second Scheduled Valid
Day immediately preceding the Expiration Date); provided further
that if the calculation contained in clause (y) above results in a
negative number, such number shall be replaced with the number
“zero”. For the avoidance of doubt, such obligation shall be
determined excluding any Shares or cash that Counterparty is
obligated to deliver to holder(s) of the Convertible Notes as a
result of any adjustments to the “Conversion Rate” for issuance of
additional Shares or cash as set forth in Section 4.02 of the
Indenture (a “Fundamental Change Adjustment”) or any voluntary
adjustment pursuant to Sections 5.08 and 5.09 of the Indenture (a
“Discretionary Adjustment”).

	 
	 	 	 	 
	 
	 	Société Générale will deliver cash in lieu of any fractional
Shares to be delivered with respect to any Net Shares, valued at
the Relevant Price for the last Valid Day of the Settlement
Averaging Period.

	 
	 	 	 	 
	Applicable Limit:

	 	For any Note Hedging Unit, an amount of cash equal to the
Applicable Percentage multiplied by the excess of (i) the number
of Shares delivered to the Holder (as such term is defined in the
Indenture) of the related Convertible Note upon conversion of such
Convertible Note multiplied by the Relevant Price on the date
provided by Counterparty to Dealer pursuant to clause (ii) of
“Notice of Exercise,” or if such Note Hedging Unit relates to a
Convertible Note with a Conversion Date occurring on or after the
Aggregate Conversion Date, the Relevant Price on the second
Scheduled Valid Day immediately preceding the Expiration Date,
over (ii) USD 1,000.

	 
	 	 	 	 
	Valid Day:

	 	A day on which (i) there is no Market Disruption Event and (ii)
trading in the Shares generally occurs on the Exchange or, if the
Shares are not then listed on the Exchange, on the primary other
United States national or regional securities exchange on which
the Shares are listed or







4









 






	 	 	 	 	 
	 

	 	admitted for trading or, if the Shares
are not then listed or admitted for trading on a United States
national or regional securities exchange, on the principal other
market on which the Shares are then traded. If the Shares are not
so listed or admitted for trading, “Valid Day” means a Business
Day.

	 
	 	 	 	 
	Scheduled Valid Day:

	 	A day that is scheduled to be a Valid Day on the principal United
States national or regional securities exchange or market on which
the Shares are listed or admitted for trading. If the Shares are
not so listed or admitted for trading, “Scheduled Valid Day” means
a Business Day.

	 
	 	 	 	 
	Business Day:

	 	Any day other than a Saturday, a Sunday or a day on which the
Federal Reserve Bank of New York is authorized or required by law
or executive order to close or be closed.

	 
	 	 	 	 
	Relevant Price:

	 	On any Valid Day, the per Share volume-weighted average price as
displayed under the heading “Bloomberg VWAP” on Bloomberg page
TSYS <equity> AQR (or any successor thereto) in respect of
the period from the scheduled opening time of the Exchange to the
Scheduled Closing Time of the Exchange on such Valid Day (or if
such volume-weighted average price is unavailable, the market
value of one Share on such Valid Day, as determined by the
Calculation Agent using a substantially similar volume-weighted
method). Notwithstanding the foregoing, if any Valid Day is a
Disrupted Day and the Calculation Agent determines that such
Disrupted Day shall be a Valid Day in part in respect of a number
of Net Shares, then the Relevant Price for such Valid Day and such
number of Net Shares shall be the volume-weighted average price
per Share on such Valid Day on the Exchange, as determined by the
Calculation Agent based on such sources as it deems appropriate
using a volume-weighted methodology, for the portion of such Valid
Day and such number of Net Shares for which the Calculation Agent
determines there is no Market Disruption Event, and the
Calculation Agent shall make corresponding adjustments to the
settlement terms hereunder to account for such partial Valid Day.

	 
	 	 	 	 
	Settlement Averaging Period:

	 	For any Note Hedging Unit:

	 
	 	 	 	 
	 

	 	      (i) If Counterparty has, on or prior to the Aggregate Conversion
Date, delivered a Notice of Exercise to Dealer with respect to
such Note Hedging Unit with a Conversion Date occurring prior to
the Aggregate Conversion Date, the 40 consecutive Valid Days
commencing on and including the second Scheduled Valid Day
following such Conversion Date; or

	 
	 	 	 	 
	 

	 	     (ii) if Counterparty has, on or following the Aggregate Conversion
Date, delivered a Notice of Exercise to Dealer with respect to
such Note Hedging Unit with a Conversion Date occurring on or
following the Aggregate Conversion Date, the 40 consecutive Valid
Days commencing on, and including, the 42nd Scheduled Valid Day
immediately prior to the Expiration Date.







5









 






	 	 	 	 	 
	Settlement Date:

	 	For any Note Hedging Unit, the third Business Day immediately
following the final Valid Day of the Settlement Averaging Period
for such Note Hedging Unit.

	 
	 	 	 	 
	Settlement Currency:

	 	USD.

	 
	 	 	 	 
	Restricted Certificated Shares:

	 	Notwithstanding anything to the contrary in the Equity
Definitions, Société Générale may, in whole or in part, deliver
Shares in certificated form representing the Share portion of the
Settlement Amount to Counterparty in lieu of delivery through the
Clearance System.

	 
	 	 	 	 
	Share Adjustments:
	 	 	 	 
	 
	 	 	 	 
	Potential Adjustment Events:

	 	Notwithstanding Section 11.2(e) of the Equity Definitions, a
“Potential Adjustment Event” means any occurrence of any event or
condition, as set forth in Section 5.06 of the Indenture that
would result in an adjustment to the Conversion Rate of the
Convertible Notes; provided that in no event shall there be any
adjustment hereunder as a result of the Fundamental Change
Adjustment or Discretionary Adjustment provisions of the
Indenture.

	 
	 	 	 	 
	Method of Adjustment:

	 	Calculation Agent Adjustment, which means that, notwithstanding
Section 11.2(c) of the Equity Definitions, upon any adjustment to
the Conversion Rate of the Convertible Notes pursuant to the
Indenture (other than a Fundamental Change Adjustment or a
Discretionary Adjustment), the Calculation Agent shall make a
corresponding adjustment to any one or more of the Strike Price,
Number of Note Hedging Units, the Note Hedging Unit Entitlement
and any other variable relevant to the exercise, settlement,
payment or other terms of the Transaction.

	 
	 	 	 	 
	Extraordinary Events:
	 	 	 	 
	 
	 	 	 	 
	Merger Events:

	 	Notwithstanding Section 12.1(b) of the Equity Definitions, a
“Merger Event” means only the occurrence of any event or condition
set forth in Section 5.11 of the Indenture.

	 
	 	 	 	 
	Notice of Merger Consideration:

	 	Upon the occurrence of a Merger Event that causes the Shares to be
converted into or exchanged for more than a single type of
consideration (determined based in part upon the form of election
of the holders of Shares), Counterparty shall promptly (but in any
event prior to the effective date of the Merger Event) notify the
Calculation Agent of the weighted average of the kind and amounts
of consideration to be received by the holders of Shares in any
Merger Event who affirmatively make such an election.

	 
	 	 	 	 
	Consequences of Merger Events:

	 	Notwithstanding Section 12.2 of the Equity Definitions, upon the
occurrence of a Merger Event, the Calculation Agent shall make the
corresponding adjustment in respect of any adjustment under the
Indenture to any one or more of the nature of the Shares, the
Strike Price, the Number of Note Hedging Units, the Note Hedging
Unit







6









 






	 	 	 	 	 
	 

	 	Entitlement and any other variable relevant to the exercise,
settlement, payment or other terms of the Transaction, to the
extent an analogous adjustment is made under the Indenture;
provided that such adjustment shall be made without regard to any
adjustment to the Conversion Rate for the issuance of additional
shares or cash pursuant to a Fundamental Change Adjustment or a
Discretionary Adjustment; and provided further that the
Calculation Agent may limit or alter any such adjustment
referenced in this paragraph so that the fair value of the
Transaction to Société Générale is not reduced as a result of such
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:

	 	Applicable

	 
	 	 	 	 
	Insolvency Filing:

	 	Applicable

	 
	 	 	 	 
	Increased Cost of Hedging:

	 	Applicable

	 
	 	 	 	 
	Hedging Party:

	 	Société Générale for all applicable Additional Disruption Events

	 
	 	 	 	 
	Determining Party:

	 	Société Générale for all applicable Additional Disruption Events

	 
	 	 	 	 
	Acknowledgements:
	 	 	 	 
	 
	 	 	 	 
	Non-Reliance:

	 	Applicable







7









 






	 	 	 	 	 
	Agreements and Acknowledgements Regarding Hedging Activities:
	 	Applicable

	 
	 	 	 	 
	Additional Acknowledgements:

	 	Applicable






Mutual Representations: Each of Société Générale 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
U.S. Securities Act of 1933, as amended (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
elsewhere herein, Counterparty represents, warrants, acknowledges and covenants that:




	 	(i)	 	Counterparty is not as of the Trade Date, 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”)) and
Counterparty would be able to purchase a number of Shares equal to the Number of Shares in
compliance with the laws of the jurisdiction of Counterparty’s incorporation or organization.




8









 






	 	(ii)	 	Counterparty shall immediately provide written notice to Société Générale 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 Société Générale
in connection with this Transaction.
	 
	 	(iii)	 	Counterparty has (and shall at all times during the Transaction have) the capacity and
authority to invest directly in the Shares underlying the Transaction and has not entered into
the Transaction with the intent to avoid any regulatory filings.
	 
	 	(iv)	 	Counterparty’s financial condition is such that it has no need for liquidity with respect
to its investment in the Transaction and no need to dispose of any portion thereof to satisfy
any existing or contemplated undertaking or indebtedness.
	 
	 	(v)	 	Counterparty’s investments in and liabilities in respect of the Transaction, which it
understands are not readily marketable, are not disproportionate to its net worth, and
Counterparty is able to bear any loss in connection with the Transaction, including the loss of
its entire investment in the Transaction.
	 
	 	(vi)	 	The representations and warranties of Counterparty set forth in Section 3 of the Agreement
and Section 2 of the Purchase Agreement dated as of the Trade Date between Counterparty and
Oppenheimer & Co. Inc. and Raymond James & Associates (the “Purchase Agreement”) are true and
correct and are hereby deemed to be repeated to Société Générale as if set forth herein.
	 
	 	(vii)	 	Counterparty understands, agrees and acknowledges that Société Générale has no obligation
or intention to register the Transaction under the Securities Act, any state securities law or
other applicable federal securities law.
	 
	 	(viii)	 	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.
	 
	 	(ix)	 	Counterparty understands, agrees and acknowledges that no obligations of Société Générale
to it hereunder shall be entitled to the benefit of deposit insurance and that such obligations
shall not be guaranteed by any affiliate of Société Générale or any governmental agency.
	 
	 	(x)	 	(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 Société
Générale 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 Société
Générale or any of its affiliates shall be deemed to be an assurance or guarantee as to the
expected results of the Transaction.
	 
	 	(xi)	 	Without limiting the generality of Section 13.1 of the Equity Definitions, Counterparty
acknowledges that Société Générale 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.




9









 






	 	(xii)	 	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 U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”).
	 
	 	(xiii)	 	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.
	 
	 	(xiv)	 	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.
	 
	 	(xv)	 	The Transaction, and any repurchase of the Shares by Counterparty in connection with the
Transaction, is pursuant to a publicly announced Share repurchase program that has been approved
by Counterparty’s board of directors (including engaging in derivative transactions) and any
such repurchase has been, or shall when so required be, publicly disclosed in its periodic
filings under the Exchange Act and its financial statements and notes thereto.
	 
	 	(xvi)	 	Counterparty shall deliver to Société Générale an opinion of counsel, dated as of the
Trade Date and reasonably acceptable to Société Générale in form and substance, with respect to
the matters set forth in Section 3(a) of the Agreement and such other matters as Société
Générale may reasonably request.





Miscellaneous:





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 will be effected through Agent. In addition, all notices, demands
and communications of any kind relating to the Transaction between Société Générale and
Counterparty may be transmitted exclusively through Agent.




Staggered Settlement. Société Générale may, by notice to Counterparty prior to any Settlement
Date (a “Nominal Settlement Date”), elect to deliver the Shares deliverable on such Nominal
Settlement Date on two or more dates (each, a “Staggered Settlement Date”) or at two or more
times on the Nominal Settlement Date as follows: (i) in such notice, Société Générale will
specify to Counterparty the related Staggered Settlement Dates (each of which will be on or
prior to such Nominal Settlement Date or delivery times and how it will allocate the Shares it
is required to deliver under “Net Share Settlement” above among the Staggered Settlement Dates
or delivery times; and (ii) the aggregate number of Shares that Société
Générale will deliver to
Counterparty hereunder on all such Staggered Settlement Dates and delivery times will equal the
number of Shares that Société



10









 







Générale would otherwise be required to deliver on such Nominal
Settlement Date.




Additional Termination Events. The occurrence of (i) an “Event of Default” with respect to
Counterparty under the terms of the Convertible Notes as set forth in Section 9.01 of the
Indenture, (ii) an Amendment Event or (iii) a Repayment Event shall be an Additional Termination
Event, in each case with the Transaction as the sole Affected Transaction and Counterparty as
the sole Affected Party and Société Générale as the party entitled to designate an Early
Termination Date pursuant to Section 6(a) of the Agreement; provided that in the case of a
Repayment Event the Transaction shall be subject to termination only in respect of the portion
of the Transaction corresponding to the number of Convertible Notes subject to such Repayment
Event.




“Amendment Event” means that Counterparty amends, modifies, supplements or obtains a waiver with
respect to any term of the Indenture or the Convertible Notes if such amendment, modification,
supplement or waiver has an adverse effect on this Transaction or Société Générale’s ability to
hedge all or a portion of this Transaction, with such determination to be made in the sole
discretion of the Calculation Agent. For the avoidance of doubt, Counterparty electing to
increase the Conversion Rate pursuant to a Discretionary Adjustment shall not constitute an
Amendment Event.




“Repayment Event” means that (A) any Convertible Notes are repurchased (whether in connection
with or as a result of a change of control, howsoever defined, or for any other reason) by
Counterparty or any of its subsidiaries, (B) any Convertible Notes are delivered to Counterparty
or any of its subsidiaries in exchange for delivery of any property or assets of Counterparty or
any of its subsidiaries (howsoever described), (C) any principal of any of the Convertible Notes
is repaid prior to the final maturity date of the Convertible Notes (whether following
acceleration of the Convertible Notes or otherwise), or (D) any Convertible Notes are exchanged
by or for the benefit of the holders thereof for any other securities of Counterparty or any of
its affiliates (or any other property, or any combination thereof) pursuant to any exchange
offer or similar transaction; provided that, in the case of clause (B) and clause (D),
conversions of the Convertible Notes pursuant to the terms of the Indenture as in effect on the
date hereof shall not be Repayment Events.




Disposition of Hedge Shares. Counterparty hereby agrees that if, in the good faith reasonable
judgment of Société Générale, the Shares (the “Hedge Shares”) acquired by Société Générale for
the purpose of hedging its obligations pursuant to the Transaction cannot be sold in the public
market by Société Générale without registration under the Securities Act, Counterparty shall, at
its election: (i) in order to allow Société Générale to sell the Hedge Shares in a registered
offering, make available to Société Générale an effective registration statement under the
Securities Act to cover the resale of such Hedge Shares and (A) enter into an agreement, in form
and substance satisfactory to Société Générale, substantially in the form of an underwriting
agreement for a registered offering, (B) provide accountant’s “comfort” letters in customary
form for registered offerings of equity securities, (C) provide disclosure opinions of
nationally recognized outside counsel to Counterparty reasonably acceptable to Société Générale,
(D) provide other customary opinions, certificates and closing documents customary in form for
registered offerings of equity securities and (E) afford Société Générale a reasonable
opportunity to conduct a “due diligence” investigation with respect to Counterparty customary in
scope for underwritten offerings of equity securities; provided, however, that if Société
Générale, in its sole reasonable discretion, is not satisfied with access to due diligence
materials, the results of its due diligence investigation, or the procedures and documentation
for the registered offering referred to above, then clause (ii) or clause (iii) of this
paragraph shall apply at the election of Counterparty; (ii) in order to allow Société Générale
to sell the Hedge Shares in a private placement, enter into a private placement agreement
substantially similar to private placement purchase agreements customary for private placements
of equity securities of its size, in form and substance satisfactory to Société Générale,
including customary representations, covenants, blue sky and other governmental filings and/or
registrations, indemnities to Société Générale, due diligence rights (for Société Générale or
any designated buyer of the Hedge Shares from Société Générale), opinions and certificates and
such other documentation as is customary for private placements agreements of similar size, all
reasonably acceptable to Société Générale (in which case, the Calculation Agent shall make any
adjustments to the terms of the Transaction that are necessary, in its reasonable judgment, to
compensate Société Générale for any discount from the public market price of the Shares incurred
on the sale of Hedge Shares in a private placement); or (iii) purchase the Hedge Shares from
Société Générale at the VWAP Price on such Exchange Business Days, and in the amounts, requested
by Société Générale. “VWAP Price” means, on any Exchange Business Day, the per



11









 







Share
volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg page
TSYS <equity> AQR (or any successor thereto) in respect of the period from 9:30 a.m. to
4:00 p.m. (New York City time) on such Exchange Business Day (or if such volume-weighted average
price is unavailable, the market value of one Share on such Exchange Business Day, as determined
by the Calculation Agent using a volume-weighted method). This paragraph shall survive the
termination, expiration or early unwind 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 6,088,133 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 Société Générale 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.




Status of Claims in Bankruptcy. Société Générale acknowledges and agrees that this Confirmation
is not intended to convey to Société Générale 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 Société Générale’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 Société Générale’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 Société
Générale 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 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 Société Générale 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.




Repurchase Notices. Counterparty shall, on any day on which Counterparty effects any repurchase
of Shares, provide Société Générale with a written notice of such repurchase (a “Repurchase
Notice”) on such day if, following such repurchase, the Unit Equity Percentage as determined on
such day is (a) equal to or greater than



12









 







4.5% and (b) greater by 0.5% or more than the Unit
Equity Percentage included in the immediately preceding Repurchase Notice (or, in the case of
the first such Repurchase Notice, greater by 0.5% or more than the Unit Equity Percentage as of
the date hereof). The “Unit Equity Percentage” as of any day is the fraction, expressed as a
percentage, (i) the numerator of which is the product of the Applicable Percentage, the number
of Note Hedging Units and the Note Hedging Unit Entitlement, and (ii) the denominator of which
is the number of Shares outstanding on such day. Counterparty agrees to indemnify and hold
harmless Société Générale and its affiliates and their respective officers, directors,
employees, advisors, agents and controlling persons (each, a “Section 16 Indemnified Person”)
from and against any and all losses (including losses relating to Société Générale’s hedging
activities as a consequence of becoming, or of the risk of becoming, a Section 16 “insider”,
including without limitation, any forbearance from hedging activities or cessation of hedging
activities and any losses in connection therewith with respect to the Transaction), claims,
damages, judgments, liabilities and expenses (including reasonable attorney’s fees), joint or
several, to which a Section 16 Indemnified Person may become subject, as a result of
Counterparty’s failure to provide Société Générale with a Repurchase Notice on the day and in
the manner specified in this paragraph, and to reimburse, upon written request, each of such
Section 16 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 Section 16
Indemnified Person, such Section 16 Indemnified Person shall promptly notify Counterparty in
writing, and Counterparty, upon request of the Section 16 Indemnified Person, shall retain
counsel reasonably satisfactory to the Section 16 Indemnified Person to represent the Section 16
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 Section 16 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 Section 16 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
Section 16 Indemnified Person, effect any settlement of any pending or threatened proceeding in
respect of which any Section 16 Indemnified Person is or could have been a party and indemnity
could have been sought hereunder by such Section 16 Indemnified Person, unless such settlement
includes an unconditional release of such Section 16 Indemnified Person from all liability on
claims that are the subject matter of such proceeding on terms reasonably satisfactory to such
Section 16 Indemnified Person. If the indemnification provided for in this paragraph is
unavailable to a Section 16 Indemnified Person or insufficient in respect of any losses, claims,
damages or liabilities referred to therein, then Counterparty, in lieu of indemnifying such
Section 16 Indemnified Person thereunder, shall contribute to the amount paid or payable by such
Section 16 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 Section 16 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.




Alternative Calculations and Société Générale Payment on Early Termination and on Certain
Extraordinary Events. If Société Générale owes Counterparty any amount in connection with the
Transaction pursuant to Sections 12.2, 12.3 (and “Consequences of Merger Events” above), 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
“Société Générale Payment Obligation”), Counterparty shall have the right, in its sole
discretion, to require Société Générale to satisfy any such Société Générale Payment Obligation
by delivery of Termination Delivery Units (as defined below) by giving irrevocable telephonic
notice to Société Générale,



13









 







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 Société Générale Termination Delivery”).
Within a commercially reasonable period of time following receipt of a Notice of Société
Générale Termination Delivery, Société Générale shall deliver to Counterparty a number of
Termination Delivery Units having a cash value equal to the amount of such Société Générale
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
purchased over a commercially reasonable period of time with the cash equivalent of such payment
obligation). 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 or Merger Event), one Share or
(b) in the case of an Insolvency, Nationalization or Merger Event, 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 or Merger Event. 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 receive 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 or Merger Event 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.




Rule 10b-18. Except as disclosed to Société Générale in writing prior to the date on which the
offering of the Convertible Notes was first announced, Counterparty represents and warrants to
Société Générale that it has not made any purchases of blocks by or for itself or any of its
Affiliated Purchasers pursuant to the one block purchase per week exception in Rule 10b-18(b)(4)
under the Exchange Act during each of the four calendar weeks preceding, and during the week of,
such date (“Rule 10b-18 purchase,” “blocks” and “Affiliated Purchaser” each as defined in Rule
10b-18 under the Exchange Act). Counterparty agrees and acknowledges that it shall not, and
shall cause its affiliates and Affiliated Purchasers not to, directly or indirectly (including
by means of a derivative instrument) enter into any transaction to purchase any Shares during
the period beginning on such date and ending on the day on which Société Générale has informed
Counterparty in writing that it has completed all purchases of Shares or other transactions to
hedge initially its exposure to the Transaction.




Regulation M. Counterparty was not on the date on which the offering of the Convertible Notes
was first announced, has not since such date, and is not on the date hereof, engaged in a
distribution, as such term is used in Regulation M under the Exchange Act, of any securities of
Counterparty, other than a distribution meeting the requirements of the exception set forth in
Sections 101(b)(10) and 102(b)(7) of Regulation M under the Exchange Act. Counterparty shall
not, until the day on which Société Générale has informed Counterparty in writing that it has
completed all purchases of Shares or other transactions to hedge initially its exposure to the
Transaction, engage in any such distribution.




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




Right to Extend. Société Générale may postpone any potential Exercise Date or postpone or
extend any other date of valuation or delivery with respect to some or all of the relevant Note
Hedging Units (in which event the Calculation Agent shall make appropriate adjustments to the
Settlement Amount for such Note Hedging Units), if Société Générale determines, in its
reasonable discretion, that (a) a Regulatory Disruption has occurred or (b)



14









 







such extension is
reasonably necessary or appropriate to (i) preserve Société Générale’s hedging or hedge unwind
activity hereunder in light of existing liquidity conditions or (ii) enable Société Générale to
effect purchases of Shares in connection with its hedging, hedge unwind or settlement activity
hereunder in a manner that would, if Société Générale were the Issuer or an affiliated purchaser
of the Issuer, be in compliance with applicable legal, regulatory or self-regulatory
requirements, or with related policies and procedures applicable to Société Générale.
“Regulatory Disruption” shall mean any event that Société Générale, 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 Société Générale, and including without limitation Rule 10b-18, Rule
10b-5, Regulation 13D-G and Regulation 14E under the Exchange Act and Regulation M and/or
analyzing Société Générale as if it were the Issuer or an affiliated purchaser of the Issuer),
for Société Générale to refrain from or decrease any market activity in connection with the
Transaction.




Transfer or Assignment. Counterparty may not transfer any of its rights or obligations under
the Transaction without the prior written consent of Société Générale. Société Générale may
transfer or assign all or a portion of its Note Hedging Units hereunder at any time to any third
party with a rating (or whose guarantor has a rating) for its long term, unsecured and
unsubordinated indebtedness of A+ or better by Standard & Poor’s Ratings Services or its
successor (“S&P”), or A1 or better by Moody’s Investors Service, Inc. or its successor
(“Moody’s”) or, if either S&P or Moody’s ceases to rate such debt, at least an equivalent rating
or better by a substitute agency rating mutually agreed by Counterparty and Société Générale,
without the consent of Counterparty.




If, as determined in Société Générale’s sole discretion, (a) at any time (1) the Equity
Percentage exceeds 8.0%, (2) Société Générale, Société Générale Group (as defined below) or any
person whose ownership position would be aggregated with that of Société Générale or Société
Générale Group (Société Générale, Société Générale Group or any such person, a “Société Générale
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 Société
Générale Person under Applicable Laws and with respect to which such requirements have not been
met or the relevant approval has not been received 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 Société
Générale Person divided by the number of Counterparty’s outstanding Shares (the “Control Share
Percentage”) exceeds 8.0% (each of such conditions described in clause (1), (2) or (3), an
“Excess Ownership Position”), and (b) Société Générale 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, Société Générale 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 such partial termination. In the event that Société Générale 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 Note
Hedging Units equal to the Terminated Portion, (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 Société Générale Payment on Early Termination and on
Certain Extraordinary Events” shall apply to any amount that is payable by Société Générale to
Counterparty 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 Société
Générale and any of its affiliates subject to aggregation with Société Générale 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 Société
Générale (collectively, “Société Générale 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.



15









 






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




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.




Early Unwind. In the event the sale of Convertible Notes is not consummated with the initial
purchasers thereof for any reason by the close of business in New York on November 16, 2009 (or
such later date as agreed upon by the parties) (November 16, 2009 or such later date as agreed
upon being the “Early Unwind Date”), the Transaction shall automatically terminate (the “Early
Unwind”) on the Early Unwind Date and (a) the Transaction and all of the respective rights and
obligations of Société Générale and Counterparty under the Transaction shall be cancelled and
terminated and (b) each party shall be released and discharged by the other party from and
agrees not to make any claim against the other party with respect to any obligations or
liabilities of the other party arising out of and to be performed in connection with the
Transaction either prior to or after the Early Unwind Date; provided that Counterparty shall
purchase from Société Générale on the Early Unwind Date all Shares purchased by Société Générale
or one or more of its affiliates, and assume, or reimburse the cost of, derivatives and other
hedging activities entered into by Société Générale or one or more of its affiliates, in each
case, in connection with hedging of the Transaction and the unwind of such hedging activities.
The amount payable by Counterparty in cash or, as described in the following sentence, in
Shares, shall be Société Générale’s (or its affiliates) actual cost of such Shares and unwind
cost of such derivatives and other hedging activities as Société Générale informs Counterparty
and shall be paid in immediately available funds on the Early Unwind Date. Counterparty may
satisfy its reimbursement obligation in cash or Shares, with the number of registered or
unregistered Shares to be delivered to be determined by the Calculation Agent as the number of
whole Shares that could be sold by Counterparty over a commercially reasonable period of time
with the cash equivalent of such payment obligation; and provided that, to the extent that such
Shares cannot be sold in the public market without registration under the Securities Act, such
Shares shall be subject to the provisions under “Disposition of Hedge Shares” above, to be
applied to such Shares. Société Générale and Counterparty represent and acknowledge to the other
that, subject to the proviso included in the preceding sentence, upon an Early Unwind, all
obligations with respect to the Transaction shall be deemed fully and finally discharged.




Payment by Counterparty. 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, Counterparty owes to Dealer pursuant to Section 6(d)(ii) of the Agreement an amount
calculated under Section 6(e) of the Agreement, or (ii) Counterparty owes to Dealer, 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
Section 12.8 of the Equity Definitions, such amount shall be deemed to be zero.



16









 






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




Terms relating to the Agent. Société Générale is not registered as a broker or dealer under the
Securities Exchange Act of 1934, as amended. SG Americas Securities, LLC has acted solely as
agent for Société Générale and the counterparty to the extent required by law in connection with
this Transaction and has no obligations, by way of issuance, endorsement, guarantee or
otherwise, with respect to the performance of either party under this Transaction. The parties
agree to proceed solely against each other, and not against SG Americas Securities, LLC as
agent, in seeking enforcement of their rights and obligations with respect to this Transaction,
including their rights and obligations with respect to payment of funds and delivery of
securities.




Broker. SG Americas Securities, LLC may have been paid a fee by Société Générale in connection
with this Transaction. Further details will be furnished upon written request.




Time of Dealing. The time of the Transaction will be furnished by SG Americas Securities, LLC
upon written request.



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) Société Générale



Société Générale

1221 Avenue of the Americas

New York, NY 10020

Attention: Sanjay Garg

Telephone:   (212) 278-5187

Facsimile:    (212) 278-5624

Email:           sanjay.garg@sgcib.com



with a copy to:



Société Générale

1221 Avenue of the Americas

New York, NY 10020

Attention: Steve Milankov

Telephone:  (212) 278-6985

Facsimile:    (212) 278-7365

Email:          steve.milankov@sgcib.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
Société Générale a facsimile of the fully-executed Confirmation to Société Générale at (212)
278-5624. 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,



SOCIÉTÉ GÉNÉRALE

 	 	 
	By:  	/s/
Sanjay Garg	 	 
	 	Name:  	Sanjay Garg	 	 
	 	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	 	 



 









 






	 	 	 	 	 



ANNEX A





The Premium for the Transaction is set forth below.



	 	 	 	 	 
	Premium:
	 	USD7,235,865







A-1