exv10w3wb






Exhibit 10.3(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 Warrant 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 Warrant shall be deemed to be a
reference to a Call or an Option, as context requires.



This Confirmation evidences a complete and binding agreement between 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 “Cross-Default” provisions of Section
5(a)(vi) applicable to Counterparty with a “Threshold Amount” of $5,000,000 and with such other
elections set forth in this Confirmation). For the avoidance of doubt, the Transaction shall be
the only transaction under the Agreement.



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




 









 








	 	 	 
	General:
	 	 
	 
	 	 
	Trade Date:

	 	November 10, 2009.
	 
	 	 
	Effective Date:

	 	November 16, 2009.
	 
	 	 
	Components:

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

	 	European.
	 
	 	 
	Warrant Type:

	 	Call.
	 
	 	 
	Seller:

	 	Counterparty.
	 
	 	 
	Buyer:

	 	Société Générale.
	 
	 	 
	Shares:

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

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

	 	As provided in Annex B to this Confirmation.
	 
	 	 
	Premium:

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

	 	The Effective Date.
	 
	 	 
	Exchange:

	 	The NASDAQ Global Market.
	 
	 	 
	Related Exchanges:

	 	All Exchanges.
	 
	 	 
	Calculation Agent:

	 	Société Générale.
	 
	 	 
	Procedure for Exercise:
	 	 
	 
	 	 
	In respect of any Component:
	 	 
	 
	 	 
	Expiration Date:

	 	As provided in Annex C to this Confirmation (or, if such date
is not a Scheduled Trading Day, the next following Scheduled
Trading Day that is not already an Expiration Date for another
Component); provided that if that date is a Disrupted Day, the
Expiration Date for such Component shall be the first
succeeding Scheduled Trading Day that is not a Disrupted Day
and is not or is not deemed to be an Expiration Date in respect
of any other Component of the Transaction






2









 






	 	 	 
	 

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

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

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

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

	 	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 U.S.
Securities Exchange Act of 1934, as amended (the “Exchange
Act”), and Regulation M and/or analyzing Société Générale as if
Société Générale 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.
Société Générale shall notify Counterparty as soon as
reasonably






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	 	practicable that a Regulatory Disruption has
occurred and the Expiration Dates affected by it.
	 
	 	 
	Settlement Terms:
	 	 
	 
	 	 
	In respect of any Component:
	 	 
	 
	 	 
	Net Share Settlement:

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

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

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

	 	USD.
	 
	 	 
	Other Applicable Provisions:

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






4









 






	 	 	 
	 

	 	“Net Share Settlement” and “Net Share Settled”.
“Net Share Settled” in relation to any Warrant means that Net
Share Settlement is applicable to such Warrant.
	 
	 	 
	Dividends:
	 	 
	 
	 	 
	In respect of any Component:
	 	 
	 
	 	 
	Dividend Adjustments:

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

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

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

	 	If, in respect of any Merger Event to which Modified
Calculation Agent Adjustment applies, the adjustments to be
made in accordance with Section 12.2(e)(i) of the Equity
Definitions would result in Counterparty being different from
the issuer of the Shares, then with respect to such Merger
Event, as a condition precedent to the adjustments contemplated
in Section 12.2(e)(i) of the Equity Definitions, Counterparty
and the issuer of the Shares shall, prior to the Merger Date,
have entered into such documentation containing
representations, warranties and agreements relating to
securities law and other issues as requested by Société
Générale that Société Générale has determined, in its
reasonable discretion, to be reasonably






5









 






	 	 	 
	 

	 	necessary or
appropriate to allow Société Générale to continue as a party to
the Transaction, as adjusted under Section 12.2(e)(i) of the
Equity Definitions, and to preserve its hedging or hedge unwind
activities in connection with the Transaction in a manner
compliant with applicable legal, regulatory or self-regulatory
requirements, or with related policies and procedures
applicable to Société Générale, and if such conditions are not
met or if the Calculation Agent determines that no adjustment
that it could make under Section 12.2(e)(i) of the Equity
Definitions will produce a commercially reasonable result, then
the consequences set forth in Section 12.2(e)(ii) of the Equity
Definitions shall apply.
	 
	 	 
	 

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

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

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

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

	 	Component Adjustment.
	 
	 	 
	Tender Offer:

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

	 	Modified Calculation Agent Adjustment.






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	(b) Share-for-Other:

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

	 	Modified Calculation Agent Adjustment.
	 
	 	 
	Nationalization, Insolvency and Delisting:

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

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

	 	Inapplicable
	 
	 	 
	Insolvency Filing:

	 	Applicable
	 
	 	 
	Loss of Stock Borrow:

	 	Applicable
	 
	 	 
	     Maximum Stock Loan Rate:

	 	200 basis points per annum
	 
	 	 
	Increased Cost of Stock Borrow:

	 	Applicable
	 
	 	 
	     Initial Stock Loan Rate:

	 	25 basis points per annum
	 
	 	 
	Increased Cost of Hedging:

	 	Applicable
	 
	 	 
	Hedging Disruption:

	 	Applicable
	 
	 	 
	Hedging Party:

	 	Société Générale for all applicable Additional Disruption Events
	 
	 	 
	Determining Party:

	 	Société Générale for all applicable Additional Disruption Events






7









 






	 	 	 
	Acknowledgements:
	 	 
	 
	 	 
	Non-Reliance:

	 	Applicable
	 
	 	 
	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 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 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.




8









 






	 	(ii)	 	(A) Counterparty is acting for its own account, and it has made its own independent
decisions to enter into the Transaction and as to whether the Transaction is appropriate or
proper for it based upon its own judgment and upon advice from such advisers as it has deemed
necessary, (B) Counterparty is not relying on any communication (written or oral) of 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.
	 
	 	(iii)	 	Counterparty is not entering into the Transaction for the purpose of (i) creating
actual or apparent trading activity in the Shares (or any security convertible into or
exchangeable for the Shares) or (ii) raising or depressing or otherwise manipulating the
price of the Shares (or any security convertible into or exchangeable for the Shares), in
either case in violation of the Exchange Act.
	 
	 	(iv)	 	Counterparty’s filings under the Securities Act, the Exchange Act, and other applicable
securities laws that are required to be filed have been filed and, as of the respective dates
thereof and as of the date of this representation, there is no misstatement of material fact
contained therein or omission of a material fact required to be stated therein or necessary
to make the statements made therein, in the light of the circumstances under which they were
made, not misleading.
	 
	 	(v)	 	Counterparty has not violated, and shall not directly or indirectly violate, any
applicable law (including, without limitation, the Securities Act and the Exchange Act) in
connection with the Transaction.
	 
	 	(vi)	 	The representations and warranties of Counterparty set forth in Section 3 of the
Agreement and Section 2 of the Purchase Agreement (the “Purchase Agreement”) dated as of the
Trade Date between Counterparty and Oppenheimer & Co. and Raymond James are true and correct
and are hereby deemed to be repeated to Société Générale as if set forth herein.
	 
	 	(vii)	 	The Shares issuable upon exercise of all Warrants (the “Warrant Shares”) have been duly
authorized and, when delivered pursuant to the terms of such Transaction, shall be validly
issued, fully-paid and non-assessable, and such issuance of the Warrant Shares shall not be
subject to any preemptive or similar rights and shall, upon such issuance, be accepted for
listing or quotation on the Exchange.
	 
	 	(viii)	 	Counterparty is not as of the Trade Date and as of the date on which Counterparty
delivers any Termination Delivery Units, and shall not be after giving effect to the
transactions contemplated hereby, “insolvent” (as such term is defined in Section 101(32) of
the U.S. Bankruptcy Code (Title 11 of the United States Code) (the “Bankruptcy Code”)).
	 
	 	(ix)	 	Counterparty is not, and after giving effect to the transactions contemplated hereby
will not be, an “investment company” as such term is defined in the Investment Company Act.
	 
	 	(x)	 	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.
	 
	 	(xi)	 	Counterparty understands, agrees and acknowledges that no obligations of Société
Générale to it hereunder, if any, shall be entitled to the benefit of deposit insurance and
that such obligations shall not be guaranteed by any affiliate of Société Générale or any
governmental agency.




9









 






	 	(xii)	 	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.
	 
	 	(xiii)	 	On each anniversary of the Trade Date, Counterparty shall deliver to Société Générale
an officer’s certificate, signed by an authorized officer, stating the number of Available
Shares (as defined in the provision titled “Limitation On Delivery of Shares” below).





Miscellaneous:





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




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




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




Method of Delivery. Whenever delivery of funds or other assets is required hereunder by or
to Counterparty, such delivery 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.




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



10









 







“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.




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




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




Registration/Private Placement Procedures. If, in the reasonable opinion of Société
Générale, following any delivery of Shares or Termination Delivery Units to Société Générale
hereunder, such Shares or Termination Delivery Units would be in the hands of Société
Générale subject to any applicable restrictions with respect to any registration or
qualification requirement or prospectus delivery requirement for such Shares or Termination
Delivery Units pursuant to any applicable federal or state securities law (including, without
limitation, any such requirement arising under Section 5 of the Securities Act as a result of
such Shares or Termination Delivery Units being “restricted securities”, as such term is
defined in Rule 144) (such Shares or Termination Delivery Units,



11









 







“Restricted Shares”), then
delivery of such Restricted Shares shall be effected pursuant to either clause (i) or (ii) of
Annex A hereto at the election of Counterparty, unless waived by Société Générale.
Notwithstanding the foregoing, solely in respect of any Warrants exercised or deemed
exercised on any Exercise Date, Counterparty shall elect, prior to the first Settlement Date
for the first Exercise Date, a Private Placement Settlement (as defined in Annex A hereto) or
Registration Settlement (as defined in Annex A hereto) for all deliveries of Restricted
Shares for all such Exercise Dates which election shall be applicable to all Settlement Dates
for such Warrants and the procedures in clause (i) or clause (ii) of Annex A hereto shall
apply for all such delivered Restricted Shares on an aggregate basis commencing after the
final Settlement Date for such Warrants. The Calculation Agent shall make reasonable
adjustments to settlement terms and provisions under this Confirmation to reflect a single
Private Placement Settlement or Registration Settlement for such aggregate Restricted Shares
delivered hereunder. If the Private Placement Settlement or the Registration Settlement
shall not be effected as set forth in clauses (i) or (ii) of Annex A, as applicable, then
failure to effect such Private Placement Settlement or such Registration Settlement shall
constitute an Event of Default with respect to which Counterparty shall be the Defaulting
Party.




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




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




Limit on Beneficial Ownership. Notwithstanding any other provisions hereof, Société Générale
may not



12









 







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




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



13









 







contribution agreements contained in this paragraph shall
remain operative and in full force and effect regardless of the termination of the
Transaction.




Limitation On Delivery of Shares. Notwithstanding anything herein or in the Agreement to the
contrary, in no event shall Counterparty be required to deliver Shares in connection with the
Transaction in excess of 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.




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




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




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




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




(iv) Counterparty consolidates with, enters into a binding share exchange with, or merges
with or into, another person, or Counterparty sells, assigns, conveys, transfers, leases or
otherwise disposes of all or



14









 







substantially all of its assets, or any person consolidates
with, or merges with or into, Counterparty, in any such event, other than any transaction:




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




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




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




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




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




Transfer or Assignment. Notwithstanding any provision of the Agreement to the contrary,
Société Générale may, subject to applicable law, freely transfer and assign all of its rights
and obligations under the Transaction without the consent of Counterparty.
If, as determined in 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 (this clause (2)(x), the “Ownership Trigger”) minus (y) 1% of
the number of Shares outstanding on the date of determination, or (3) the number of “control
shares” (as such term is used in Section 3-701(d) of the Maryland Control Share Acquisition
Act) owned by a Société Générale Person divided by the number of Counterparty’s outstanding
Shares exceeds 8.0%, (each of such conditions described in clause (1), (2) or (3), an
“Excess Ownership Position”), and (b) 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



15









 







Termination Date had been designated in respect of a Transaction having terms identical
to this Transaction and a Number of Warrants equal to the Terminated Portion (allocated among
the Components thereof in the discretion of Société Générale), (ii) Counterparty shall be the
sole Affected Party with respect to such partial termination and (iii) such Transaction shall
be the only Terminated Transaction (and, for the avoidance of doubt, the provisions set forth
under the caption “Alternative Calculations and Counterparty Payment on Early Termination and
on Certain Extraordinary Events” shall apply to any amount that is payable by Counterparty to
Société Générale 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.




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, acting in good faith and in a
commercially reasonable manner, may designate any of its affiliates to purchase, sell,
receive or deliver such shares or other securities and otherwise to perform 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.




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




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




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




Payment by Société Générale. 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, Société Générale owes to Company pursuant to Section 6(d)(ii) of
the Agreement an amount calculated under Section 6(e) of the Agreement, or (ii) Société
Générale owes to Company, pursuant to Section 12.7 or Section 12.9 of the Equity Definitions
(including, for the avoidance of doubt, any amount payable in connection with an
Extraordinary Event), an amount calculated under 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

Annapolis, Maryland 21401

Attention:  Bruce A. White

Facsimile: (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




Registration Settlement and Private Placement Settlement





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




A-1









 






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




A-2









 











ANNEX B



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




	 	 	 
	Strike Price:

	 	USD12.736
	Premium:

	 	USD3,944,115
	Final Disruption Date:

	 	July 7, 2015.






B-1









 






ANNEX C



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




	 	 	 	 	 	 	 	 	 
	Component Number	 	Number of Warrants	 	Expiration Date
	1.
	 	 	33,823	 	 	Fri, 02/13/15
	2.
	 	 	33,823	 	 	Tue, 02/17/15
	3.
	 	 	33,823	 	 	Wed, 02/18/15
	4.
	 	 	33,823	 	 	Thu, 02/19/15
	5.
	 	 	33,823	 	 	Fri, 02/20/15
	6.
	 	 	33,823	 	 	Mon, 02/23/15
	7.
	 	 	33,823	 	 	Tue, 02/24/15
	8.
	 	 	33,823	 	 	Wed, 02/25/15
	9.
	 	 	33,823	 	 	Thu, 02/26/15
	10.
	 	 	33,823	 	 	Fri, 02/27/15
	11.
	 	 	33,823	 	 	Mon, 03/02/15
	12.
	 	 	33,823	 	 	Tue, 03/03/15
	13.
	 	 	33,823	 	 	Wed, 03/04/15
	14.
	 	 	33,823	 	 	Thu, 03/05/15
	15.
	 	 	33,823	 	 	Fri, 03/06/15
	16.
	 	 	33,823	 	 	Mon, 03/09/15
	17.
	 	 	33,823	 	 	Tue, 03/10/15
	18.
	 	 	33,823	 	 	Wed, 03/11/15
	19.
	 	 	33,823	 	 	Thu, 03/12/15
	20.
	 	 	33,823	 	 	Fri, 03/13/15
	21.
	 	 	33,823	 	 	Mon, 03/16/15
	22.
	 	 	33,823	 	 	Tue, 03/17/15
	23.
	 	 	33,823	 	 	Wed, 03/18/15
	24.
	 	 	33,823	 	 	Thu, 03/19/15
	25.
	 	 	33,823	 	 	Fri, 03/20/15
	26.
	 	 	33,823	 	 	Mon, 03/23/15
	27.
	 	 	33,823	 	 	Tue, 03/24/15
	28.
	 	 	33,823	 	 	Wed, 03/25/15
	29.
	 	 	33,823	 	 	Thu, 03/26/15
	30.
	 	 	33,823	 	 	Fri, 03/27/15
	31.
	 	 	33,823	 	 	Mon, 03/30/15
	32.
	 	 	33,823	 	 	Tue, 03/31/15
	33.
	 	 	33,823	 	 	Wed, 04/01/15
	34.
	 	 	33,823	 	 	Thu, 04/02/15
	35.
	 	 	33,823	 	 	Mon, 04/06/15
	36.
	 	 	33,823	 	 	Tue, 04/07/15
	37.
	 	 	33,823	 	 	Wed, 04/08/15
	38.
	 	 	33,823	 	 	Thu, 04/09/15
	39.
	 	 	33,823	 	 	Fri, 04/10/15






C-1









 






	 	 	 	 	 	 	 	 	 
	Component Number	 	Number of Warrants	 	Expiration Date
	40.
	 	 	33,823	 	 	Mon, 04/13/15
	41.
	 	 	33,823	 	 	Tue, 04/14/15
	42.
	 	 	33,823	 	 	Wed, 04/15/15
	43.
	 	 	33,823	 	 	Thu, 04/16/15
	44.
	 	 	33,823	 	 	Fri, 04/17/15
	45.
	 	 	33,823	 	 	Mon, 04/20/15
	46.
	 	 	33,823	 	 	Tue, 04/21/15
	47.
	 	 	33,823	 	 	Wed, 04/22/15
	48.
	 	 	33,823	 	 	Thu, 04/23/15
	49.
	 	 	33,823	 	 	Fri, 04/24/15
	50.
	 	 	33,823	 	 	Mon, 04/27/15
	51.
	 	 	33,823	 	 	Tue, 04/28/15
	52.
	 	 	33,823	 	 	Wed, 04/29/15
	53.
	 	 	33,823	 	 	Thu, 04/30/15
	54.
	 	 	33,823	 	 	Fri, 05/01/15
	55.
	 	 	33,823	 	 	Mon, 05/04/15
	56.
	 	 	33,823	 	 	Tue, 05/05/15
	57.
	 	 	33,823	 	 	Wed, 05/06/15
	58.
	 	 	33,823	 	 	Thu, 05/07/15
	59.
	 	 	33,823	 	 	Fri, 05/08/15
	60.
	 	 	33,823	 	 	Mon, 05/11/15
	61.
	 	 	33,823	 	 	Tue, 05/12/15
	62.
	 	 	33,823	 	 	Wed, 05/13/15
	63.
	 	 	33,823	 	 	Thu, 05/14/15
	64.
	 	 	33,823	 	 	Fri, 05/15/15
	65.
	 	 	33,823	 	 	Mon, 05/18/15
	66.
	 	 	33,823	 	 	Tue, 05/19/15
	67.
	 	 	33,823	 	 	Wed, 05/20/15
	68.
	 	 	33,823	 	 	Thu, 05/21/15
	69.
	 	 	33,823	 	 	Fri, 05/22/15
	70.
	 	 	33,823	 	 	Tue, 05/26/15
	71.
	 	 	33,823	 	 	Wed, 05/27/15
	72.
	 	 	33,823	 	 	Thu, 05/28/15
	73.
	 	 	33,823	 	 	Fri, 05/29/15
	74.
	 	 	33,823	 	 	Mon, 06/01/15
	75.
	 	 	33,823	 	 	Tue, 06/02/15
	76.
	 	 	33,823	 	 	Wed, 06/03/15
	77.
	 	 	33,823	 	 	Thu, 06/04/15
	78.
	 	 	33,823	 	 	Fri, 06/05/15
	79.
	 	 	33,823	 	 	Mon, 06/08/15
	80.
	 	 	33,823	 	 	Tue, 06/09/15
	81.
	 	 	33,823	 	 	Wed, 06/10/15
	82.
	 	 	33,823	 	 	Thu, 06/11/15
	83.
	 	 	33,823	 	 	Fri, 06/12/15
	84.
	 	 	33,823	 	 	Mon, 06/15/15
	85.
	 	 	33,823	 	 	Tue, 06/16/15






A-2









 






	 	 	 	 	 	 	 	 	 
	Component Number	 	Number of Warrants	 	Expiration Date
	86.
	 	 	33,823	 	 	Wed, 06/17/15
	87.
	 	 	33,823	 	 	Thu, 06/18/15
	88.
	 	 	33,823	 	 	Fri, 06/19/15
	89.
	 	 	33,823	 	 	Mon, 06/22/15
	90.
	 	 	33,819	 	 	Tue, 06/23/15







A-2