exv10w4wa






Exhibit 10.4(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 11, 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 Additional Note Hedge Confirmation

	 
	 	 
	REFERENCE NUMBER(S):

	 	356979






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 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 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 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 11, 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:

	 	Deutsche.

	 
	 	 	 	 
	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
Deutsche 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:

	 	13,500
	 
	 	 	 	 
	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.







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	Applicable Percentage:

	 	55%
	 
	 	 	 	 
	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:

	 	Deutsche.

	 
	 	 	 	 
	Procedure for Exercise:
	 	 	 	 
	 
	 	 	 	 
	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 less
the number of Note Hedging Units exercised pursuant to the Equity
Derivatives Note Hedge Confirmation dated November 10, 2009,
between the parties hereto (the “Base Note Hedge Confirmation”)
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 Deutsche in writing (and use reasonable
efforts to confirm receipt by telephone to Deutsche’s Origination
Convertible Desk (telephone: 212-250-5600)) 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







3









 






	 	 	 	 	 
	 

	 	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,
Deutsche shall deliver to Counterparty, on the related Settlement
Date, the Settlement Amount. For the avoidance of doubt, to the
extent Deutsche 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
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”).

	 
	 	 	 	 
	 

	 	Deutsche will deliver cash in lieu of any fractional Shares to be







4









 






	 	 	 	 	 
	 

	 	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 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







5









 






	 	 	 	 	 
	 

	 	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.

	 
	 	 	 	 
	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, Deutsche 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:
	 	 	 	 






6









 






	 	 	 	 	 
	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 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 Deutsche 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







7









 






	 	 	 	 	 
	 

	 	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:

	 	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
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




8









 












	 	 	 	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.
	 
	 	(ii)	 	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.
	 
	 	(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 Deutsche as if set forth herein.
	 
	 	(vii)	 	Counterparty understands, agrees and acknowledges that Deutsche 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 Deutsche to it
hereunder 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.
	 
	 	(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 Deutsche or
any of its affiliates as investment advice or as a recommendation to enter into the Transaction
(it being understood that information and





9









 











	 	 	 	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.
	 
	 	(xi)	 	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.
	 
	 	(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 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.





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 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.




Staggered Settlement. Deutsche may, by notice to Counterparty prior to any Settlement Date (a
“Nominal



10









 






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, Deutsche 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 Deutsche will deliver to Counterparty hereunder on all
such Staggered Settlement Dates and delivery times will equal the number of Shares that Deutsche
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 Deutsche 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 Deutsche’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 Deutsche, the Shares (the “Hedge Shares”) acquired by Deutsche for the purpose of
hedging its obligations pursuant to the Transaction cannot be sold in the public market by
Deutsche without registration under the Securities Act, Counterparty shall, at its election: (i)
in order to allow Deutsche to sell the Hedge Shares in a registered offering, make available to
Deutsche 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
Deutsche, 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 Deutsche, (D) provide other customary opinions,
certificates and closing documents customary in form for registered offerings of equity
securities and (E) afford Deutsche 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 Deutsche, 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 Deutsche 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 Deutsche, including customary representations, covenants, blue sky and
other governmental filings and/or registrations, indemnities to Deutsche, due diligence rights
(for Deutsche or any designated buyer of the Hedge Shares from Deutsche), opinions and



11









 






certificates and such other documentation as is customary for private placements agreements of
similar size, all reasonably acceptable to Deutsche (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 Deutsche 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 Deutsche at the VWAP Price on such Exchange Business Days, and in the amounts, requested by
Deutsche. “VWAP Price” means, on any Exchange Business 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 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 1,435,060 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.




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 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,



12









 






560 and 561 of the Bankruptcy Code.




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 Unit Equity Percentage as determined on such day is
(a) equal to or greater than 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 sum of (x) the
number of Note Hedging Units and (y) the number of Note Hedging Units under the Base Note Hedge
Confirmation 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
Deutsche 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 Deutsche’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 Deutsche
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 Deutsche Payment on Early Termination and on Certain Extraordinary
Events. If Deutsche 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)



13









 






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 “Deutsche Payment
Obligation”), Counterparty shall have the right, in its sole discretion, to require Deutsche to
satisfy any such Deutsche 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
Deutsche Termination Delivery”). Within a commercially reasonable period of time following
receipt of a Notice of Deutsche Termination Delivery, Deutsche shall deliver to Counterparty a
number of Termination Delivery Units having a cash value equal to the amount of such Deutsche
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 Deutsche in writing prior to the date on which the offering
of the Convertible Notes was first announced, Counterparty represents and warrants to Deutsche
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 Deutsche 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 Deutsche 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
Deutsche has informed Counterparty in writing that Deutsche has completed all purchases 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 the Shares.



14









 






Right to Extend. Deutsche 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 Deutsche determines, in its reasonable discretion, that
(a) a Regulatory Disruption has occurred or (b) such extension is reasonably necessary or
appropriate to (i) preserve Deutsche’s hedging or hedge unwind activity hereunder in light of
existing liquidity conditions or (ii) enable Deutsche to effect purchases of Shares in
connection with its hedging, hedge unwind or settlement activity hereunder in a manner that
would, if Deutsche 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 Deutsche. “Regulatory Disruption” shall mean 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 Exchange Act and Regulation M and/or
analyzing Deutsche as if it 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.




Transfer or Assignment. Counterparty may not transfer any of its rights or obligations under
the Transaction without the prior written consent of Deutsche. Deutsche 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 Deutsche, 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 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 (the
“Control Share Percentage”) 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 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 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 Deutsche Payment on Early Termination and on Certain Extraordinary Events”
shall apply to any amount that is payable by Deutsche 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 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



15









 






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 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.




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 Deutsche 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 Deutsche on
the Early Unwind Date all Shares purchased by Deutsche or one or more of its affiliates, and
assume, or reimburse the cost of, derivatives and other hedging activities entered into by
Deutsche 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 Deutsche’s (or its
affiliates) actual cost of such Shares and unwind cost of such derivatives and other hedging
activities as Deutsche 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. Deutsche 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



 16









 






under 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	 	 



 









 






	 	 	 	 	 



ANNEX A





The Premium for the Transaction is set forth below.



	 	 	 	 	 
	Premium:
	 	USD1,705,597







A-1