Document:

<PAGE>   1

  Confidential materials submitted and filed separately with the Securities and
  Exchange Commission. Asterisk denotes omissions.

                                                                    Exhibit 10.2

                               ALLIANCE AGREEMENT

This is an Alliance Agreement ("Agreement"), effective November 5, 1998 (the
"Effective Date") by and between Lucent Technologies Inc. ("Lucent"), a
corporation organized and existing under the laws of the State of Delaware,
United States of America ("US"), and having an office at 67 Whippany Road,
Whippany, NJ, 07981, US, and TeleCommunication Systems, Inc., ("Company"), a
corporation organized and existing under the laws of Maryland and having an
office at 275 West Street, Suite 400, Annapolis, MD 21401. Each of the foregoing
entities shall be deemed a "Party" and collectively, the "Parties".

                                    RECITALS

         WHEREAS, Lucent is in the business of designing, developing,
manufacturing, selling, installing, and licensing wireless network equipment and
software for the operation of wireless communications systems on a worldwide
basis; and

         WHEREAS, Company is in the business of manufacturing and distributing
certain products that may be useful to Lucent customers who have purchased or
may purchase Lucent's wireless network equipment or software; and

         WHEREAS, Lucent desires to have an arrangement with Company pursuant to
which Lucent may *, and Company is willing to enter into such an arrangement;

         NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein and for other good and valuable considerations, the receipt and
sufficiency of which are hereby mutually acknowledged, the parties hereto agree
as follows:

                                    AGREEMENT

1.0 HEADINGS AND DEFINITIONS

1.1 All headings used in this Agreement are inserted for convenience only and
are not intended to affect the meaning or interpretation of this Agreement or
any Article or section. For the purpose of this Agreement, the following
definitions will apply:

         (a)  "Advertising" means all advertising, sales promotion, press
              releases, and other publicity matters relating to this Agreement
              or any performance under this Agreement;

         (b)  "Affiliate" of a corporation means its Subsidiaries, any company
              of which it is a Subsidiary, and other Subsidiaries of such
              company;

         (c)  "Collateral Material" means data sheets, applications briefs,
              presentation brochures and other advertising or promotional
              materials that are not designated as confidential by Company and
              are distributed in the normal course of business to assist in the
              marketing of Products;

         (d)  "Documentation" means all technical, repair, marketing and end
              user documentation that is designated as confidential by Company
              and usually made available by Company to its customers or
              potential customers, subject to Non-Disclosure obligations, to
              inform or instruct its customers in the description, features and
              function, installation, operation and maintenance of Products;

                  Lucent - Company Proprietary and Confidential
                     Use Pursuant to Applicable Instructions

* Confidential materials submitted and filed separately with the Securities and
  Exchange Commission. Asterisk denotes omissions.
<PAGE>   2
                                      -2-

         (e)  "Exhibits" means the documents attached hereto and incorporated by
              this reference, as they may be amended from time to time by
              written agreement of the Parties. Exhibits include, without
              limitation, the following:

                   Exhibit A - Product Description and List Price Information
                   Exhibit B - Product Specifications
                   Exhibit C - Restricted Company Account(s) and Registered
                               Lucent Account(s) Matrix
                   Exhibit D - Sales Referral Procedure
                   Exhibit E - Commission Percentage

         (f)  "Force Majeure" means fires, strikes, riots, embargoes,
              explosions, earthquakes, floods, wars, water, the elements, labor
              disputes, government requirements, civil or military authorities,
              acts of God or by the public enemy, inability to secure raw
              materials or transportation facilities, acts or omissions of
              carriers or suppliers, or other causes beyond a Party's control
              whether or not similar to the foregoing;

         (g)  "Information" means any specifications, designs, plans, drawings,
              software, data, prototypes, business and/or technical information
              in whatever form recorded or unrecorded.

         (h)  "Lucent Customer(s)" means individually or collectively, as
              applicable, all carriers, service providers, and operators of
              Wireless Network Equipment: (i) to whom Lucent has sold Lucent
              Wireless Network Equipment and to which customers desire to add
              Company's Product, (ii) who have issued a tender, bid request, or
              proposal request or similar request for vendor response to Lucent
              and not to Company, and Lucent's response may include Products or
              (iii) to whom Lucent may be submitting unsolicited proposals for
              Lucent Wireless Network Equipment and/or Products;

         (i)  "Lucent Customer Service Area" means a geographical area, as
              defined by a Lucent Customer, in which the Lucent Customer has
              been authorized to operate Wireless Network Equipment, and in
              which the Lucent Customer is using Lucent Wireless Network
              Equipment. At any specific time a Lucent Customer may operate in
              more than one such area, not all of which are equipped with Lucent
              Wireless Network Equipment;

         (j)  "Products" means, collectively, Company's hardware and/or software
              which is(are) the subject of this Agreement and identified in
              Exhibit A, as it may exist from time to time, whether or not such
              hardware and/or software is provided as part of a service; and
              shall also mean Company's provision of systems integration
              services, systems development services, and other related types of
              services, including but not limited to bringing together business
              hardware and software programs with Lucent technology and/or
              non-Lucent customer technology and/or other various hardware
              and/or software packages, whether or not such hardware or software
              is manufactured, owned, or licensed by Company;

         (k)  "Product Specifications" means those specifications for Products
              set forth in Exhibit B, as it may exist from time to time;

         (1)  "Registered Lucent Account(s)" means those Lucent Customers or
              Lucent Customer Service Areas which have been referred to and
              accepted by Company as provided in Article 3.0. SCOPE OF
              AGREEMENT/IDENTIFICATION OF ACCOUNTS, of this Agreement. A
              Registered Lucent Account(s) List will be created and updated by
              Lucent and Company during the term of this Agreement. The initial
              list of Registered Lucent Account(s), if any, is set forth on
              Exhibit C. Additions and deletions will be made to the Registered
              Lucent Account(s) List from time to time in writing by mutual
              agreement of Lucent and Company, to maintain currency of such
              list;

                  Lucent - Company Proprietary and Confidential
                     Use Pursuant to Applicable Instructions

* Confidential Material Submitted and filed separately with the Securities and
  Exchange Commission. Asterisk denotes omissions.
<PAGE>   3
                                      -3-

         (m)  "Restricted Company Account(s)" means *. A Restricted
              Company Account(s) List will be maintained by Lucent and Company
              during the term of this Agreement. The initial list of Restricted
              Company Account(s), if any, is set forth on Exhibit C. Additions
              and deletions will be made to the Restricted Company Account(s)
              from time to time in writing by mutual agreement of Lucent and
              Company, to maintain currency of such list;

         (n)  "Subsidiary" of a company means a corporation the majority of
              whose shares or other securities entitled to vote for election of
              directors is now or hereafter owned or controlled by such company
              either directly or indirectly; but any such corporation shall be
              deemed to be a Subsidiary of such company only as long as such
              ownership or control exists; and

         (o)  "Wireless Network Equipment" means equipment and/or software,
              typically involving, but not necessarily so, switching equipment
              and cell site radio equipment, used by providers of
              telecommunications services, as authorized by the responsible
              governmental agency, to furnish to the public those wireless
              services generally described as cellular services and personal
              communications services (but not fixed wireless or wireless access
              services) utilizing any one or more of the technologies currently
              known as analog, Code Division Multiple Access, Time Division
              Multiple Access, Cellular Digital Packet Data and other
              technologies as they may, from time to time, be utilized to
              provide such services to the public, but not the technology known
              as Global Systems Mobile Communications.

2.0 TERM OF AGREEMENT

2.1 This Agreement shall be effective on the date written above and, except as
otherwise provided herein, shall continue in effect for a term of forty-two(42)
months or until (a) earlier terminated pursuant to the terms hereof, or (b)
extended or superseded by an amendment to this Agreement or a subsequent written
agreement mutually agreed upon by the Parties. Notwithstanding any such
expiration or termination, Lucent shall be entitled commissions to the full
extent set forth herein with respect to transfers of Products by Company to
Registered Lucent Accounts referred by Lucent and accepted by Company pursuant
to the terms of this Agreement prior to the effectiveness of such expiration or
termination.

3.0 SCOPE OF AGREEMENT/IDENTIFICATION OF ACCOUNTS

3.1 This Agreement is not intended to establish an exclusive relationship.
Nothing in this Agreement shall be construed as limiting, in any manner,
Company's marketing or distribution activities or its appointment of other
dealers, distributors, licensees or agents, provided that in engaging in such
activities or appointments, Company and its other dealers, distributors,
licensees or agents do not violate Company's obligations to Lucent as set out in
this Agreement. Nothing in this Agreement shall be construed as limiting, in any
manner, Lucent's pursuit of, negotiation with, and establishment of sales
referral agreements or other arrangements with other companies, or to market its
own products or those of other third parties to Lucent Customers even though
such products may be comparable to Products. Company acknowledges that nothing
herein shall be deemed to bar Lucent from proposing to the same Lucent Customer,
at the same time that it is referring Products, the products of one or more
other suppliers, including Lucent. Company further acknowledges that Lucent
markets through its own sales personnel and through its Affiliates and that the
right of Lucent to refer Lucent Customers to Company, and to receive sales
referral commissions in respect of transfers of Products to Registered Lucent
Accounts, as set out in Article 6.0. COMMISSION, shall apply to Lucent and such
Affiliates. As used herein, the term Lucent shall include such Affiliates unless
the context otherwise requires.

3.2 Lucent has the right to market its Wireless Network Equipment worldwide. In
the course of such marketing, Lucent may identify Lucent Customers as sales
opportunities for Products. When Lucent sales teams have done so, they are
authorized to provide Lucent Customers with a high level product

                  Lucent - Company Proprietary and Confidential
                     Use Pursuant to Applicable Instructions

* Confidential Material Submitted and filed separately with the Securities and
  Exchange Commission. Asterisk denotes omissions.
<PAGE>   4
                                      -4-

description of and Collateral Material for such Products. Either prior to or
after providing such description, Lucent may refer Lucent Customers to Company
as specified in Exhibit D. Each Lucent Customer referred to Company and accepted
by Company pursuant to such procedure shall, to the extent of such acceptance,
become a Registered Lucent Account.

3.3 Notwithstanding the provisions above, Company shall either accept or reject
each referral of a Lucent Customer or Lucent Customer Service Area within five
(5) business days, stating its reason(s) therefor. Reasons for rejection of a
Lucent Customer referral may include, but are not limited to:

         (a)  the Lucent Customer or Lucent Customer Service Area is a
              Restricted Company Account;

         (b)  the Lucent Customer's financial status is unacceptable; and/or

         (c)  the product development requirements of the Lucent Customer will
              require extensive development by Company.

In the event Company rejects a Lucent Customer referral for reason (a) above,
Company will be able to pursue that account directly without Lucent's approval.
In the event Company rejects a Lucent Customer referral for any reason other
than (a) above, Company agrees it will not pursue that Lucent Customer directly
for a period of one (1) year after its rejection. In the event that Company does
not respond to Lucent within five (5) business days to accept or reject the
Lucent Customer referral, for purposes hereof it will be assumed that Company
has accepted the referral and the referred Lucent Customer or Lucent Customer
Service Area shall be deemed a Registered Lucent Account.

3.4 When requested by Lucent, and as mutually agreed, Company personnel shall
accompany Lucent's personnel on visits to Registered Lucent Accounts and provide
necessary materials to be used in Company's sales and technical presentations to
such customers, and otherwise take affirmative steps intended to cause such
customers to purchase Products.

3.5 In the event that the parties shall mutually agree that a Registered Lucent
Account should no longer be considered such, effective with the date of such
agreement, the Lucent Customer or Lucent Customer Service Area involved shall no
longer be deemed a Registered Lucent Account and Company will then, at its sole
discretion, be able to pursue that account directly or through another
distribution channel without owing any commission or other such payments to
Lucent, provided, however, that nothing herein shall be deemed to excuse
Company's obligation under Article 6.0, COMMISSION to pay commissions in respect
of Products or additional growth, upgrades and new features furnished by Company
for Products transferred to the Lucent Customer or Lucent Customer Service Area
pursuant to arrangements entered into prior to the time the Lucent Customer or
Lucent Customer Service Area ceases to be a Registered Lucent Account.

4.0 RELATIONSHIP OF THE PARTIES

4.1 The relationship of the Parties under this Agreement shall be and at all
times remain one of a referral sales agreement for the purpose of providing
Lucent Customers, at their discretion, with an integrated application solution.
Each Party shall employ its own personnel and shall be solely responsible for
their acts and be responsible for payment of all unemployment, Social Security,
and other payroll taxes, including contributions required by law.

4.2 No director, officer, employee, consultant or agent of either Party hereto
or their respective Affiliates shall at any time be deemed to be a director,
officer, employee, consultant or agent of the other Party for any purpose
whatsoever, and the Parties shall use commercially reasonable efforts to prevent
any such misrepresentation. Nothing in this Agreement shall be deemed to create
any joint venture, partnership, or principal-agent relationship between the
Company and Lucent, and neither Party shall hold itself out in its advertising
or in any other manner which would indicate any such relationship with the
other. Company shall at all times be considered an independent contractor for
the purposes of providing Products to Lucent's Customers.

5.0 LUCENT'S RESPONSIBILITIES

                  Lucent - Company Proprietary and Confidential
                     Use Pursuant to Applicable Instructions

* Confidential materials submitted and filed
  separately with the Securities and Exchange
  Commission. Asterisk denotes omissions.
<PAGE>   5
                                      -5-

5.1 Lucent shall be responsible for sales support to Company by providing access
to Registered Lucent Account teams for training and will coordinate and arrange
training sessions; for providing Lucent Customer lead generation and
introduction to Registered Lucent Account; and, when mutually agreed, for
providing consultation on bids and proposals. Lucent will provide a Relationship
Manager and Lucent representative(s) will participate in joint visits to
Registered Lucent Accounts, as and when mutually agreed. Upon Company's request,
Lucent will include Company's name in its Open Systems Innovations catalog, when
published.

6.0 COMMISSION

6.1 Company shall pay Lucent a commission (the "Commission") on all transfers
(including, but not limited to, sales, leases, and licenses) of Products (and
related services) to a Registered Lucent Account. The "Commission Percentage" is
defined in Exhibit E to this Agreement.

6.2 The Commission Percentage shall be applied to the Net Invoice Amount for
Product(s), including any additional growth, upgrades, new features, or
additional systems, and including all related engineering, installation, post
warranty support, enhanced warranty support, provided, however, that Company's
provision of post warranty support and enhanced warranty support exceed a 16%
profit margin, and any other associated services, but not including any sales or
use taxes, import duties, transportation, freight or shipping charges, ordered
by the Registered Lucent Account, for three (3) years from the date of the last
contract executed by Company with the Registered Lucent Account or purchase
order issued by such customer and accepted by Company during the term of this
Agreement. For the purpose of this Article, the term "Net Invoice Amount" means
the net amount billed by Company, after accounting for any applicable normal
discounts (but not credits or other adjustments for Company delays or other
faults, including liquidated or agreed damages).

6.3 Such Commission shall be paid within thirty (30) days after receipt of
payment by Company from the Registered Lucent Account.

7.0 PROPOSALS, CONTRACTS AND ORDERS

7.1 Company will provide to Lucent, at least five (5) business days prior to
such presentation, a copy of each sales proposal to be made by Company to any
Registered Lucent Account. Company will incorporate in its proposal any changes
reasonably requested by Lucent. Company will present the sales proposal directly
to the Registered Lucent Account.

7.2 When a Lucent Customer issues tenders, bid requests, or proposal requests to
Lucent and Lucent desires Company to assist in a response that includes
Products, Company will, if it has accepted or then accepts the Lucent Customer
or Lucent Customer Service Area as a Registered Lucent Account, provide
appropriate personnel and support to work cooperatively with Lucent in providing
proposals. Lucent personnel will take the leadership role in the preparation and
coordination of the response and will be responsible for that portion of the
proposal, if any, involving Lucent Wireless Network Equipment. Company will
assume responsibility for preparation of that portion of the response involving
Products.

7.3 Company will contract directly with Registered Lucent Accounts for the sale
of Products, including invoicing and collections, warranty support, post
warranty support, complete technical support, engineering and installation
services, growth on initial sales, product upgrades, etc., all subject to
Company's applicable charges or price quotation. For use by Lucent in
determining whether to refer Products to a Lucent Customer. Company shall keep
Lucent informed of Company's list prices for Products, as they may exist from
time to time during the term of this Agreement. All orders for Products and
related services shall be submitted directly to Company by Registered Lucent
Accounts.

7.4 Lucent shall not have any liability or obligation with regard to such
contracts entered into by Company or orders submitted by Lucent Customers and
Lucent Customer Service Areas to Company pursuant to such contracts or
otherwise.

                  Lucent - Company Proprietary and Confidential

                     Use Pursuant to Applicable Instructions

* Confidential Materials submitted and filed
  separately with the Securities and Exchange
  Commission. Asterisk denotes omissions.
<PAGE>   6
                                      -6-

7.5 Company acknowledges that Lucent Customers and Lucent Customer Service Areas
may from time to time pose to Lucent problems or other matters that relate to
Products furnished to them by Company. Unless the Parties otherwise agree in
writing, which such writing shall address the compensation to which Lucent shall
be entitled for any additional services that the Parties agree that Lucent will
perform, all such problems and other matters shall be referred by Lucent to
Company. Promptly upon execution of this Agreement, and as necessary through out
the term of this Agreement, Company will provide Lucent with the current
telephone number or other manner of communicating with Company for referral of
such problems and other matters to Company, on a twenty-four (24) hour per day,
seven (7) day per week, basis. Upon referral of a problem by Lucent, Company
shall promptly confirm in writing an acknowledgment of its receipt thereof and
promptly work to solve the problem. Upon resolution of any referred problem,
Company shall furnish notice to Lucent in writing a description of the actions
taken to clear the problem and the date the problem was cleared.

8.0 AUDIT

8.1 Company shall maintain accurate and complete records of all transactions
with Registered Lucent Accounts for which payment of a * may be owed to Lucent
under this Agreement. Such records shall be maintained in accordance with
recognized commercial accounting practices so they may be readily audited and
shall be held until at least the later of (i) * after the sales referral
commission(s) for all such transactions have been finally determined under this
Agreement and payment or final adjustment of payment, as the case may be, has
been made by Company, or (ii) * after the termination, cancellation or
expiration of this Agreement. Company shall permit Lucent or Lucent's
representative(s), including third party auditor(s), to examine and audit these
records and all supporting records at all reasonable times. Company shall not be
required to allow any such audits after the end of the record retention period
set out above.

8.2 Company shall provide a statement on a * of all transactions
with Registered Lucent Accounts and all Net Invoice Amounts (as described in
Article 6.0, COMMISSION  applicable thereto, the date(s) of invoices reflecting
such amounts, the amount(s) of payment(s) received from Registered Lucent
Accounts in respect of such invoices, and the date(s) of such receipt by
Company. This statement shall be sent to the Lucent contact specified in Article
22, NOTICES.

8.3 In the event that Lucent exercises its right to audit and Lucent reasonably
determines that Company owes commissions pursuant to Article 6.0, COMMISSION,
that were not paid, Company will immediately pay to Lucent those amounts not
paid. In the event of a discrepancy resulting in an underpayment to Lucent which
is five percent (5%) or greater than the amount that should have been paid to
Lucent, Company agrees to pay for the reasonable cost of the audit.

9.0 INTEROPERABILITY TESTING

9.1 Prior to any sales referral activity between Lucent and Company for any
Product, such Product must have completed successful interoperability testing at
Lucent's Wireless Innovation Lab(SM) testing facility and satisfy all
requirements of interoperability. Except as the Parties may otherwise agree in
writing, such testing shall be performed pursuant to a separate written
agreement setting forth Lucent's standard terms and conditions and charges for
such testing, as they exist from time to time. When a Product previously
successfully tested is modified and/or changed in any way that might render the
previous test results invalid or uncertain, Company must inform Lucent and such
Product must repeat interoperability testing to validate that the modifications
and/or changes do not compromise interoperability status.

9.2 If Lucent Wireless Network Equipment undergoes modification and/or change,
Lucent will notify Company. Each impacted Product must repeat interoperability
testing, if Lucent determines that the modifications and/or changes could
compromise interoperability status of such Product.

10.0 TRAINING

10.1 Company will, at Lucent's request and without charge, provide training in
the features, target markets, selling strategies, and technical aspects of
Products for Lucent's personnel such that said

* Confidential materials submitted and filed separately with the Securities and
  Exchange Commission. Asterisk denotes omissions.

                  Lucent - Company Proprietary and Confidential
                     Use Pursuant to Applicable Instructions

<PAGE>   7
                                      -7-

personnel will be able to effectively identify sales opportunities for Products.
The Parties will mutually agree on the level of training required. Training
courses may be delivered via teleconference training, computer based training,
video, video teleconference, or seminar at a mutually agreeable location. The
Parties will mutually agree on the delivery method and the training materials
required.

10.2 Company shall provide each Lucent attendee, at no charge, a complete set of
available training materials, handouts and associated materials pertaining to
Products. Lucent personnel shall not copy or distribute any such training
materials without the written permission of Company.

11.0 COORDINATION OF INSTALLATION AND ACCEPTANCE

11.1 The Parties will integrate, whenever possible, their installation plans to
satisfy requirements of Registered Lucent Accounts to whom they have marketed
their products. The Parties will also make reasonable efforts to cooperate in
preparing acceptance criteria and plans that will satisfy those customers'
interest in ensuring that Lucent Wireless Network Equipment and Products work
together as an integrated system.

12.0 FEDERAL COMMUNICATIONS COMMISSION (FCC) REGISTRATION

12.1 When a Product furnished by Company to Lucent Customers is subject to Part
2, Part 15, Part 22, Part 68, or any other part of the FCC's Rules and
Regulations, as amended from time to time, Company warrants to Lucent and will
warrant to Lucent Customers and Lucent Customer Service Areas that such Product
complies with the registration, certification, type acceptance, and/or
verification standards of the FCC's Rules and Regulations, including but not
limited to, all labeling and customer instruction requirements, and the
suppression of radiation to specified levels. Company shall establish periodic
on-going compliance re-testing and follow a quality control program to assure
that Products furnished to Lucent Customers and Lucent Customer Service Areas
will comply with the applicable FCC Rules and Regulations. Company agrees to
indemnify and save Lucent, its Affiliates, Lucent Customers, Lucent Customer
Service Areas and each of their officers, directors, employees, agents,
representatives, successors and assigns (all hereinafter referred to in this
clause as "Lucent") harmless from any losses, damages, liabilities, fines,
penalties, claims, suits or demands (including the costs, expenses, and
reasonable attorney's fees incurred on account thereof) that may be made because
of Company's non-compliance with the applicable FCC Rules and Regulations.
Company agrees to defend Lucent, at Lucent's request, against any such
liability, fine, penalty, claim, suit or demand.

12.2 In addition, should any Product, which is subject to Part 15 of the FCC
Rules and Regulations, during use generate harmful interference to radio
communications, Company shall provide Lucent and the impacted Lucent Customers
and Lucent Customer Service Areas with information relating to methods of
suppressing such interference.

13.0 SAFETY CERTIFICATION

13.1 Company warrants to Lucent and will warrant to Lucent Customers and Lucent
Customer Service Areas that Products furnished to them will comply with the
applicable Underwriters Laboratories (UL), Canadian Standards Association (CSA),
and other international standards and regulations. Upon request of Lucent from
time to time during the term of this Agreement, and at no charge to Lucent,
Company will provide Lucent a certification in writing by an authorized officer
of Company, that each Product is in compliance with such standards and
regulations as are applicable. Company shall be responsible for bringing
Products into compliance and maintaining compliance with said UL, CSA, and
international standards and regulations. Company agrees to indemnify and save
Lucent, its Affiliates, Lucent Customers, Lucent Customer Service Areas, and
each of their officers, directors, employees, agents, representatives,
successors and assigns (all hereinafter referred to in this clause as "Lucent")
harmless from any losses, damages, liabilities, fines, penalties, claims, suits
or demands (including the costs, expenses, and reasonable attorney's fees
incurred on account thereof) that may be made because of Company's
non-compliance with such applicable UL, CSA and international standards and
regulations. Company agrees to defend Lucent, at Lucent's request, against any
such liability, fine, penalty, claim, suit or demand.

* Confidential materials submitted and filed separately with the Securities and
  Exchange Commission. Asterisk denotes omissions.

                  Lucent - Company Proprietary and Confidential
                     Use Pursuant to Applicable Instructions
<PAGE>   8
                                      -8-

14.0 APPLICABLE LAW/UNIFORM LAWS NOT APPLICABLE

14.1 The construction and interpretation of, and the rights and obligations of
the Parties pursuant to this Agreement shall be governed by the laws (other than
its conflict of law rules) of the State of New York, United States. The uniform
laws drawn up pursuant to the Diplomatic Conference on Unification of Law
governing the International Sale of Goods held at the Hague in 1964 (and any
successor thereto), whether or not adopted anywhere, shall not apply to this
Agreement or any order issued hereunder. The stipulations concerning the United
Nations Convention on Contracts for the International Sale of Goods held at
Vienna in 1980 shall not apply to this Agreement.

15.0 ARBITRATION

15.1 The Parties agree to attempt in good faith to resolve any dispute regarding
any right, obligation, duty or liability arising out of the provisions of this
Agreement, including its breach. If a dispute is not resolved by such attempt,
such dispute shall be resolved by arbitration in the English language before a
single arbitrator in New York City, New York, United States, pursuant to this
clause and the then current American Arbitration Association ("AAA") rules. The
arbitrator shall be knowledgeable in commercial business transactions and
wireless technology and acceptable to both parties. The arbitrator's decision
and award shall be final and binding and may be entered in any court having
jurisdiction thereof. The arbitrator shall not have the power to award punitive
or exemplary damages. Each Party shall bear its own attorney's fees associated
with any arbitration instituted hereunder and other costs shall be borne as
provided by the applicable AAA rules. The arbitrator, Parties, their
representatives and other participants shall hold the existence, content and
result or award in confidence.

15.2 The procedures specified in this clause shall be the sole and exclusive
procedures for the resolution of disputes arising out of or relating to this
Agreement provided, however, nothing herein shall be deemed to require
arbitration of matters not arbitrable under applicable law, or prohibit a Party
from seeking a preliminary injunction or other preliminary judicial relief if in
such Party's reasonable judgment such action is necessary to avoid irreparable
damage. Despite any such action, the parties will continue to participate in
good faith in the procedures specified herein. All applicable statutes of
limitation shall be tolled while the procedures specified herein are pending,
and nothing herein shall be deemed to bar any Party from taking such action as
may be required to effectuate such tolling.

16.0 ASSIGNMENT AND SUBCONTRACTING

16.1 Company shall not assign any right or interest under this Agreement or
delegate or subcontract any obligation to be performed or owed under this
Agreement without the prior written consent of Lucent. Any attempted assignment,
delegation or subcontracting in contravention of the above provisions shall be
void and ineffective. In the event that a majority or greater of the issued and
outstanding stock of Company changes control in one or a series of related
transactions, such event shall not constitute an assignment.

16.2 Lucent has the right to assign this Agreement and to assign its rights and
delegate its duties under this Agreement, in whole or in part, at any time and
without Company's consent, to any one or more present or future Affiliates of
Lucent. Lucent shall give Company prompt written notice of the assignment.

16.3 Nothing herein shall preclude a Party from employing a subcontractor in
carrying out its obligations under this Agreement. A Party's use of such
subcontractor shall not release the Party from its obligations under this
Agreement.

17.0 COLLATERAL MATERIAL

17.1 Within ten (10) business days of the full execution of this Agreement,
Company will, without charge to Lucent, furnish to the Lucent Relationship
Manager listed in Exhibit D. Collateral Material about Products which Company
makes available to its own customers or its own sales force in sufficient

* Confidential materials submitted and filed separately with the Securities and
  Exchange Commission. Asterisk denotes omissions.

                  Lucent - Company Proprietary and Confidential
                     Use Pursuant to Applicable Instructions
<PAGE>   9
                                      -9-

number for Lucent to commence its activities under this Agreement. From time to
time during the term of this Agreement, upon reasonable request of Lucent,
Company will provide additional copies of then current Collateral Material.
Company will promptly inform Lucent of any changes to the Collateral Material.
Lucent shall have the right to make reasonable numbers of copies of Collateral
Material in any form for use in accordance with its rights under this Agreement.

18.0 ENGLISH LANGUAGE

18.1 This Agreement has been prepared and executed in the English language which
will be the controlling language for all purposes of this Agreement.

19.0 EXPORT CONTROL

19.1 Each Party acknowledges that the Information and other items (including but
not limited to, any services and training) provided under this Agreement are
subject to US export and re-export laws and regulations and any use or transfer
of such Information and other items must be authorized under those regulations.
Each Party agrees that it will not use, distribute, transfer, or transmit the
Information, and other items (even if incorporated into other materials) except
in compliance with US export regulations. If requested by a Party, the other
Party also agrees to sign written assurances and other export-related documents
as may be required for the requesting Party to comply with US export
regulations.

19.2 Each Party further agrees that it shall not transfer or transmit
Information or other items received under this Agreement (even if incorporated
into other material) to any country outside of the US or Canada without the
prior written consent of the disclosing Party.

20.0 FORCE MAJEURE

20.1 Neither Lucent nor Company shall be held responsible for any delay or
failure in performance to the extent that such delay or failure is caused by a
Force Majeure. Each such Party shall notify the other such Party within thirty
(30) days of the occurrence of a Force Majeure. If any Force Majeure occurs and
results in a delay or failure in performance, the Parties may mutually agree to
resume performance once the Force Majeure ceases with an option for the injured
Party to extend the performance date up to the length of time the Force Majeure
endured. Unless written notice is given within thirty (30) days after such
injured Party is apprised of the occurrence of a Force Majeure, the
aforementioned option shall be deemed selected. Nothing contained herein or
elsewhere shall impose any obligation on either Party to settle any labor
difficulty.

21.0 NON-WAIVER

21.1 No waiver of the terms and conditions of this Agreement, or the failure of
any Party strictly to enforce any such term or condition on one or more
occasions shall be construed as a waiver of the same or of any other term or
condition of this Agreement on any other occasion.

22.0 NOTICES

22.1 All notices under this Agreement shall be in writing (except where
otherwise stated) and shall be addressed to the addresses set forth below or to
such other address as either Party may designate by notice pursuant hereto. Such
notices shall be deemed to have been given when delivered by hand or sent
prepaid by reputable international courier service, facsimile or electronic mail
to such applicable address.

         Lucent:     Lucent Technologies Inc.
                     67 Whippany Road
                     Room 2A333
                     Whippany, NJ 07981

                  Lucent - Company Proprietary and Confidential
                     Use Pursuant to Applicable Instructions

* Confidential materials submitted and filed separately with the Securities and
  Exchange Commission. Asterisk denotes omissions.

<PAGE>   10
                                      -10-

                     Attn.: Leslie Brooks, Contract Manager
                     Fax# : 973 386-6633
                     Tel.#: 973 386-2421

         Company:    TeleCommunication Systems, Inc.
                     275 West Street, Suite 400
                     Annapolis, MD 21401

                     Attn.: Bruce White, Director, Contracts & Administration
                     Fax #: 410 263-7617

23.0 PUBLICATION OF AGREEMENT

23.1 The Parties shall keep the provisions of this Agreement submitted hereunder
confidential except as reasonably necessary for performance hereunder or in
connection with any prospective assignments of rights and/or duties hereunder,
and except to the extent disclosure may be required by applicable laws or
regulations, in which latter case, the Party required to make such disclosure
shall promptly inform the other Party prior to such disclosure in sufficient
time to enable each such other Party to make known any objections it may have to
such disclosure. The disclosing Party shall take all reasonable steps to secure
a protective order or otherwise assure that the Agreement or order will be
withheld from the public record.

24.0 PUBLICITY

24.1 A Party shall submit to the other proposed copy of all Advertising wherein
the name, trademark, code, specification or service mark of another Party or its
Affiliates is mentioned; and no Party shall publish or use such Advertising
without the other's prior written approval.

25.0 RELEASES VOID

25.1 Neither Party shall require (i) waivers or releases of any personal rights
or (ii) execution of documents which conflict with the terms of this Agreement,
from employees, agents, representatives or customers of the other in connection
with visits to its premises and both Parties agree that no such releases,
waivers or documents shall be pleaded by them or third persons in any action or
proceeding.

26.0 RIGHT OF ACCESS

26.1 Each Party shall provide the other such access to its premises and
facilities as is reasonably required in connection with the performance of their
respective obligations under this Agreement. No charge shall be made for such
access. Reasonable prior notification will be given when access is required.
Neither Party shall require releases of any personal rights in connection with
visits to its premises.

27.0 SEVERABILITY

27.1 If any provision in this Agreement shall be held to be invalid or
unenforceable, the remaining portions shall remain in effect. In the event such
invalid or unenforceable provision is considered an essential element of this
Agreement, Lucent and Company shall promptly negotiate a replacement provision.

28.0 SURVIVAL OF OBLIGATIONS

                  Lucent - Company Proprietary and Confidential
                     Use Pursuant to Applicable Instructions

* Confidential materials submitted and filed separately with the Securities and
  Exchange Commission. Asterisk denotes omissions.

<PAGE>   11
                                      -11-

28.1 The Parties' rights and obligations which, by their nature, would continue
beyond the termination, cancellation, or expiration of this Agreement, shall
survive such termination, cancellation, or expiration.

29.0 TERMINATION OF AGREEMENT FOR CAUSE

29.1 This Agreement may be terminated by either Party upon the failure of the
other Party to cure any material default following written notice and
opportunity of thirty (30) days to cure, provided, however, that either Party
will have the right to terminate this Agreement immediately upon notice to the
other Party in the following circumstances:

         (i)      If the other Party becomes insolvent or unable to pay its
                  debts in the ordinary course of its business;

         (ii)     If a voluntary or involuntary petition under applicable
                  bankruptcy laws is filed by or against the other Party;

         (iii)    If a receiver is appointed for the business affairs of the
                  other Party or the other Party makes an assignment for the
                  benefit of creditors;

         (iv)     If the other Party liquidates or ceases doing business as a
                  going concern;

         (v)      If there is a change in the control or majority ownership of
                  either Party not otherwise expressly assented to by the other
                  Party;

         (vi)     If Company fails to maintain interoperability compatibility;
                  or

         (vii)    If Company fails materially to live up to its contract
                  obligations to Lucent Customers.

30.0 CONDUCT UPON TERMINATION OR EXPIRATION

30.1 In the event this Agreement is not renewed or is terminated, then the
following shall occur, unless the Parties otherwise agree in writing:

         (i)      Any use of the other Party's marks and use of Collateral
                  Material related to the Products, and marketing efforts by
                  Lucent, not previously commenced, shall terminate on the
                  effective date of termination or expiration;

         (ii)     Both parties will honor the terms and conditions of joint or
                  coordinated proposals submitted to Registered Lucent Accounts
                  prior to the termination or expiration date. All work on
                  proposals including Products not yet submitted shall cease.
                  Company shall continue to honor all contracts it has executed
                  with Registered Lucent Accounts;

         (iii)    Company shall pay Lucent all amounts then currently owed but
                  not previously paid to Lucent and all amounts which become
                  due, when they become due, to Lucent in the future in
                  accordance with Article *; and

         (iv)     Neither Party shall have any liability to the other Party for
                  damages of any kind, including incidental or consequential
                  damages, on account of such termination or expiration of this
                  Agreement. Without limiting the generality of the foregoing,
                  neither Party shall be liable to the other Party on account of
                  such termination or expiration for reimbursement or damages
                  for the loss of goodwill, prospective profits or anticipated
                  sales, or on account of any expenditures, investment, leases
                  or commitments made by such Parties or for any reason
                  whatsoever based upon or growing out of such termination or
                  expiration, except as provided in paragraph (iii) herein.

31.0 USE OF INFORMATION

* Confidential materials submitted and filed separately with the Securities and
  Exchange Commission. Asterisk denotes omissions.

                  Lucent - Company Proprietary and Confidential
                     Use Pursuant to Applicable Instructions
<PAGE>   12
                                      -12-

31.1 All Information which bears a legend or notice restricting its use, copying
or dissemination, shall remain the property of the furnishing Party and shall be
subject to the provisions of this Article. The furnishing Party grants the
receiving Party the right to use such Information only as follows. Such
Information (1) shall not be reproduced or copied, in whole or part, except for
use as authorized in this Agreement; and (2) shall, together with any full or
partial copies thereof, be returned or destroyed when no longer needed. Unless
the furnishing Party consents in writing, such Information, except for that
part, if any, which is known to the receiving Party free of any confidential
obligation, or which becomes generally known to the public through acts not
attributable to the receiving Party, shall be held in confidence by the
receiving Party. The receiving Party may disclose such Information to other
persons, upon the furnishing Party's prior written authorization, but solely to
perform acts which this clause expressly authorizes the receiving Party to
perform itself and further provided such other person agrees in writing (a copy
of which writing will be provided to the furnishing Party at its request) to the
same conditions respecting use of Information contained in this Article and to
any other reasonable conditions requested by the furnishing Party. Nothing
herein shall be deemed to prevent the receiving Party from disclosing the
Information in response to legal process under applicable law, provided that the
receiving Party (i) takes all reasonable steps available to keep the Information
from the public record, and (ii) promptly notifies the furnishing Party of such
process prior to disclosure so that the furnishing Party may seek an appropriate
protective order and/or waive compliance with the terms hereof.

31.2 Company acknowledges that Lucent is likely to provide to Company
information about Lucent Customers in connection with the Parties' cooperation
under this Agreement. Company understands that all such customer information,
including, but not limited to, names, addresses, telephone numbers, and
telecommunications needs, is confidential to Lucent whether or not available
publicly, and whether or not marked as confidential, and shall be treated in
accordance with the requirements of this article. Company agrees that such
customer information will only be used to perform services for Lucent Customers
pursuant to a contract with the relevant Lucent Customer, or in connection with
the Parties' cooperation under this Agreement, and will not be used for any
other purpose, including the solicitation or servicing of Lucent Customers or
prospective customers, except as expressly authorized in writing by Lucent.

32.0 LIMITATION OF LIABILITY

32.1 NEITHER PARTY NOR ITS AFFILIATES, NOR THE DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS, REPRESENTATIVES, SUCCESSORS OR ASSIGNS OF SUCH PARTY OR ITS AFFILIATES,
SHALL IN ANY EVENT BE LIABLE TO THE OTHER PARTY (INCLUDING HEREIN ITS
AFFILIATES) OR TO ANY OTHER COMPANY OR ENTITY FOR ANY INCIDENTAL, CONSEQUENTIAL,
OR ANY OTHER INDIRECT LOSS OR DAMAGE ARISING OUT OF THIS AGREEMENT OR ANY
OBLIGATION RESULTING THEREFROM, WHETHER IN AN ACTION FOR OR ARISING OUT OF
BREACH OF CONTRACT, FOR TORT, OR ANY OTHER CAUSE OF ACTION, EXCEPT WHERE SUCH
LOSS ARISES FROM BREACH OF A PARTY'S OBLIGATIONS SET OUT IN ARTICLE 31.0, "USE
OF INFORMATION". EACH PARTY'S ENTIRE LIABILITY FOR ANY CLAIM OR LOSS, DAMAGE OR
EXPENSE FROM ANY CAUSE WHATSOEVER SHALL IN NO EVENT EXCEED IN THE AGGREGATE, THE
GREATER OF * OR THE AMOUNT OF MONIES PAID OR PAYABLE TO LUCENT HEREUNDER.
NOTHING HEREIN SHALL BE DEEMED TO EXCUSE COMPANY'S LIABILITY TO PAY COMMISSIONS
TO THE FULL EXTENT PROVIDED IN THIS AGREEMENT OR TO RELIEVE COMPANY OF ANY
EXPRESS REMEDY SET FORTH IN THIS AGREEMENT.

32.2 NO ACTION OR PROCEEDING AGAINST EITHER PARTY MAY BE COMMENCED MORE THAN
* AFTER THE CAUSE OF ACTION ACCRUES.

32.3 THIS CLAUSE SHALL SURVIVE FAILURE OF ANY EXCLUSIVE REMEDY SET OUT IN THIS
AGREEMENT.

33.0 ENTIRE AGREEMENT

                 Lucent - Company Proprietary and Confidential
                     Use Pursuant to Applicable Instructions

* Confidential materials submitted and filed separately with the Securities and
  Exchange Commission. Asterisk denotes omissions.
<PAGE>   13
                                      -13-

33.1 The terms and conditions contained in this Agreement and any subordinate
agreement supersede all prior oral or written understandings between the Parties
with respect to the subject matter thereof and constitute the entire agreement
of the Parties with respect to such subject matter. Such terms and conditions
shall not be modified or amended except by a writing signed by authorized
representatives of both Parties.

                  Lucent - Company Proprietary and Confidential
                     Use Pursuant to Applicable Instructions

* Confidential materials submitted and filed separately with the Securities and
  Exchange Commission. Asterisk denotes omissions.

<PAGE>   14
                                      -14-

IN WITNESS THEREOF, the Parties have executed this Agreement on the respective
dates entered below.

  LUCENT TECHNOLOGIES INC.               TELECOMMUNICATION SYSTEMS,
                                         INC.

By:     /s/ Joseph F. Coletta             By:        /s/ Maurice B. Tose
    -----------------------------------       --------------------------------
            (Signature)                                 (Signature)

          Joseph F. Coletta                           Maurice B. Tose
    -----------------------------------       --------------------------------
            (Typed Name)                                (Typed Name)

              Director                                    President
    -----------------------------------       --------------------------------
              (Title)                                      (Title)

              11/5/98                                     10/27/98
    -----------------------------------       --------------------------------
           (Date Signed)                                 (Date Signed)

                  Lucent - Company Proprietary and Confidential
                     Use Pursuant to Applicable Instructions

* Confidential materials submitted and filed separately with the Securities and
  Exchange Commission. Asterisk denotes omissions.

<PAGE>   15
                                      -15-

           EXHIBIT A - PRODUCT DESCRIPTION AND LIST PRICE INFORMATION

SMS WEB GATEWAY

The SMS Web Gateway works in conjunction with the Short Message Service Center
and uses SMPP, the preferred protocol for sending short text messages. The SMS
Web Gateway accepts messages from e-mail or web pages, translates the messages
from SMTP or HTTP to SMPP and then forwards the messages to the SMSC for
delivery to the handset.

E-mail messages can be sent from standard E-mail clients through the SMS Web
Gateway to SMSC and then to the handset. E-mail attachments are not sent and the
message will be truncated if it is longer than the current acceptable length.

The SMS Web Gateway resides on a platform distinct from that of the SMSC
application. The SMS Web Gateway is a Java application that will run on a server
with a Java interpreter. The SMS Web Gateway must reside on a server with web
server software that supports servlets. Servlet plug-ins are available for many
of the major web servers. If the SMS Web Gateway is to be used for SMTP to SMPP
translation, i.e. e-mail transfers, then no other mail server can reside on the
same server.

<TABLE>
<CAPTION>
       Description                               Floor+                List+
-----------------------------------------------------------------------------
<S>                                             <C>                  <C>
SMS Web Gateway Software
For initial 10,000 SMS subscribers or up
to 100 messages per busy hour.                      *                 *
-----------------------------------------------------------------------------
Support for each additional 100 messages
per busy hour                                       *                 *
-----------------------------------------------------------------------------
Dell Server for SMS Web Gateway                     *                 *
-----------------------------------------------------------------------------
Web Server software with Servlet
Support                                             *                 *
-----------------------------------------------------------------------------
Basic Web page                                      *                 *
-----------------------------------------------------------------------------
0S                                                  *                 *
-----------------------------------------------------------------------------
300 Mhz Intel Server                                *                 *
-----------------------------------------------------------------------------
64MB RAM                                            *                 *
-----------------------------------------------------------------------------
4GB SCSI Hard drives                                *                 *
-----------------------------------------------------------------------------
NIC                                                 *                 *
-----------------------------------------------------------------------------
14" monitor                                         *                 *
-----------------------------------------------------------------------------
Keyboard, mouse, 3.5" floppy                        *                 *
-----------------------------------------------------------------------------
SCSI CD-Rom                                         *                 *
-----------------------------------------------------------------------------
1 year warranty, 7x24, 4 hours                      *                 *
response
-----------------------------------------------------------------------------
</TABLE>

 + DOES NOT INCLUDE LUCENT COMMISSION.

NOTE: HARDWARE CONFIGURATIONS, AND THUS HARDWARE PRICES, VARY DEPENDING UPON THE
NUMBER OF SUBSCRIBERS OR MESSAGES PER BUSY HOUR AND THE NUMBER OF APPLICATIONS
TO BE RUN ON THE PLATFORM.

                  Lucent - Company Proprietary and Confidential
                     Use Pursuant to Applicable Instructions

* Confidential materials submitted and filed separately with the Securities
  and Exchange Commission. Asterisk denotes omissions.
<PAGE>   16
                                      -16-

CUSTOMIZED PERSONAL LIST PAGES

The Customized Personal List Pages are intelligent, client-side web pages which
can be used in conjunction with the SMSC. The Personal List pages allow the user
to categorize their personal entries.

The Customized Personal Lists allow any number of end users to store the names
and associated MIN numbers of their personal contacts. This allows users to
customize the web page to their individual needs. By using client side cookies,
the pages do not add any additional storage or processing overhead to the server
due to data lookups.

Once the user has entered a contact, the user would simply select the contact's
name from a list and the MIN would automatically be entered in the To: field.
The user would then type a short text message on the form and submit the form
when complete. The Customized Personal Lists works in conjunction with a web
server and the SMS Web Gateway. The submitted message would then be routed to
the SMS Web Gateway for protocol translation and forwarding to the SMSC.

DESCRIPTION                       FLOOR+                    LIST+
-----------------------------------------------------------------------------
Customized Personal Lists           *                         *
-----------------------------------------------------------------------------
 + DOES NOT INCLUDE LUCENT COMMISSION.

CUSTOM USER PAGE APPLICATION

The Custom User Page Application (CUPA) application can be configured to operate
with the SMS Web Gateway. This application resides on a web server that supports
servlets. It queries a relational database and allows individual users to
configure customized web pages for themselves containing such information as
their e-mail, address, message of the day and a URL. The generated pages allow
individuals to send short text messages directly to the owner of the page.

<TABLE>
<CAPTION>
 DESCRIPTION                           FLOOR+               LIST+
-----------------------------------------------------------------------------
<S>                                   <C>          <C>
 Custom User Page Application,           *              *
 5,000 user license
-----------------------------------------------------------------------------
 Custom User Page Application,           *              *
 5,001 - 10,000 user license
-----------------------------------------------------------------------------
 Custom User Page Application,           *              *
 10,001 - 15,000 license
-----------------------------------------------------------------------------
 Custom User Page Application,           *              *
 15,001 - 20,000 licenses
-----------------------------------------------------------------------------
 Custom User Page Application,           *              *
 20,001 - 25,000 licenses
-----------------------------------------------------------------------------
 Custom User Page Application, each      *              *
 additional 5,000 users
-----------------------------------------------------------------------------
</TABLE>

 + DOES NOT INCLUDE LUCENT COMMISSION.

SMS WEB CALENDAR

The SMS Web Calendar Application provides users with the ability to schedule
personalized events over the web for notification by either Short Message
Service or e-mail. Using an intuitive interface featuring monthly and daily
views, the user can schedule any number of individual or recurring events.
Monthly summary, monthly detail and daily detail forms as well as forms for
adding and editing events. Events with SMS notification can include callback
number, priority, and message validity period.

The SMS Calendar application requires a server to run a database and web server
software which supports servlets. The SMS Calendar application submits short
message notifications via SMPP and e-

                  Lucent - Company Proprietary and Confidential
                     Use Pursuant to Applicable Instructions

* Confidential materials submitted and filed separately with the Securities
  and Exchange Commission. Asterisk denotes omissions.
<PAGE>   17
                                      -17-

mail notifications via SMTP. The SMS Calendar and the Custom User Page
Application can both use the same database as well as the same password schema,
thus allowing the user to use one account for both applications.

<TABLE>
<CAPTION>
  DESCRIPTION                          FLOOR+           LIST+
-----------------------------------------------------------------------------
<S>                                    <C>          <C>
  SMS Web Calendar Application,
  5,000 user license                     *                *
-----------------------------------------------------------------------------
  Calendar Application, 5,001 -
  10,000 user license                    *                *
-----------------------------------------------------------------------------
  Calendar Application, 10,001 -
  15,000 license                         *                *
-----------------------------------------------------------------------------
  Calendar Application, 15,001 -
  20,000 licenses                        *                *
-----------------------------------------------------------------------------
  Calendar Application, 20,001 -
  25,000 licenses                        *                *
-----------------------------------------------------------------------------
  Calendar Application, each
  additional 5,000 users                 *                *
-----------------------------------------------------------------------------
</TABLE>

 + DOES NOT INCLUDE LUCENT COMMISSION.

PROFESSIONAL SERVICES
---------------------

-  Web Site Development
-  Firewall Installations
-  Security Engineering
-  Systems Engineering
-  Software Applications Development
-  Database Development, Integration and Maintenance
-  Cable Plant Cabling and Management
-  Network Installation and Migration
-  Requirements Analysis
-  LAN/WAN design
-  LAN/WAN installation and configuration
-  Network troubleshooting
-  Configurations management and Documentation
-  Help Desk Services, including Virtual Help Desk Centers
-  Imaging and Workgroup systems integration
-  Logistics and Program Management

                  Lucent - Company Proprietary and Confidential
                     Use Pursuant to Applicable Instructions

* Confidential materials submitted and filed separately with the Securities
  and Exchange Commission. Asterisk denotes omissions.
<PAGE>   18
EXHIBIT B - PRODUCT SPECIFICATIONS
To be provided by Company within ten (10) business days of the execution of
this Agreement

                  Lucent - Company Proprietary and Confidential
                     Use Pursuant to Applicable Instructions

* Confidential materials submitted and filed separately with the Securities and
  Exchange Commission. Asterisk denotes omissions.
<PAGE>   19
                                      -18-

EXHIBIT C - RESTRICTED COMPANY ACCOUNT(S) AND REGISTERED LUCENT ACCOUNT(S)
            MATRIX

<TABLE>
<CAPTION>
  Account Name                Last Update          PRODUCT A     PRODUCT B     PRODUCT C     PRODUCT D     PRODUCT E
                              Date                 SMS Web      Customized       CUPA        SMS Web       Professional
                                                    Gateway      Personal                    Calendar      Services
                                                                   Lists                                   Related to
                                                                                                           Products
                                                                                                           A, B, C & D
<S>                           <C>                   <C>           <C>           <C>           <C>          <C>
                                                                                                              (/)
*                                                       (R)            (R)       (R)            (R)
*                                                       (R)            (R)       (R)            (R)
*                                                       (R)            (R)       (R)            (R)
*                                                       (R)            (R)       (R)            (R)
*                                                       (R)            (R)       (R)            (R)
*                                                       (/)            (/)       (/)            (/)
*                                                       (R)            (R)       (R)            (R)
*                                                       (R)            (R)       (R)            (R)
*                                                       (R)            (R)       (R)            (R)
*                                                       (R)            (R)       (R)            (R)
*                                                       (R)            (R)       (R)            (R)
*                                                       (R)            (R)       (R)            (R)
*                                                       (/)            (/)       (/)            (/)            (/)
*                                                       (R)            (R)       (R)            (R)            (/)
*                                                       (R)            (R)       (R)            (R)
*                                                       (R)            (R)       (R)            (R)
*                                                       (R)            (R)       (R)            (R)            (/)
*                                                       (R)            (R)       (R)            (R)
</TABLE>

(R) in a specific Product column indicates that the Account is a Registered
Lucent Account for that specific Product

(/) in a specific Product column indicates that the Account is a Restricted
Company Account for that specific Product

                  Lucent - Company Proprietary and Confidential
                     Use Pursuant to Applicable Instructions

* Confidential materials submitted and filed separately with the Securities and
  Exchange Commission. Asterisk denotes omissions.
<PAGE>   20
                                      -19-

                      EXHIBIT D - SALES REFERRAL PROCEDURE

1.   A sales lead is submitted by the Lucent Sales Team to the Lucent Alliance
     Manager; or the Lucent Sales Team or Lucent Alliance Manager introduces a
     Lucent Account representative to Company; or Company identifies a sales
     lead during the course of a trade show or similar cooperative marketing
     event, in which case, Company shall provide a list of all sales leads
     identified during the trade show or other cooperative marketing event, to
     the Lucent Alliance Manager via telephone, e-mail and facsimile, within 48
     hours of the end of the event.

     Lucent Alliance Manager:           Angelo Bravos
     Telephone Number:                  630 713-9581
     E-mail Address:                    abravos@lucent.com
     Facsimile Number:                  630 713-0081

2.   The Lucent Alliance Manager provides the following sales lead referral
     information to the Company Alliance Manager via telephone, email and
     facsimile:

     -  Company Alliance Manager:       Drew Morin
        Telephone Number:               410 280-1203
        E-mail Address:                 morin@pobox.tcs-inc.com
        Facsimile Number:               410 263-7617

     -  Sales Lead Referral Information:
        Account Name:
                                        ------------------------------
        Account Location:
                                        ------------------------------
        Product(s) Interest:
                                        ------------------------------

3.   The Company Alliance Manager responds within 5 business days via telephone,
     e-mail, and facsimile to the Lucent Alliance Manager, accepting or
     rejecting the sales lead referral for the Product(s) of interest. If the
     sales lead is rejected by the Company Alliance Manager, the Company
     Alliance Manager will include in the response the reason for the
     rejection.

4.   The Sales Referral Agreement is amended to add the Account Name, Last
     Update Date, and the appropriate symbols in the Product columns in Exhibit
     C - Restricted Company Account(s) and Registered Lucent Account(s) Matrix.

5.   The Lucent Alliance Manager will coordinate the introduction of the Company
     Alliance Manager to the Lucent Sales Team personnel.

6.   If the sales lead involves a written response to a tender, Request for
     Proposal (RFP), Request for Information (RFI), and/or Request for Quote
     (RFQ), the Parties shall perform their responsibilities as outlined in this
     Sales Referral Agreement.

7.   Lucent Sales Team personnel will coordinate and participate in the initial
     meeting or conference call between the Company Sales Team and the
     Registered Lucent Account. If further meetings or conference calls are
     requested by the Registered Lucent Account, the Parties shall perform their
     responsibilities as outlined in this Sales Referral Agreement.

8.   Lucent Sales Team personnel will monitor the Lucent Registered Account for
     indications of client satisfaction with Company and will communicate this
     information to the Company Sales Team should issues be brought to their
     attention by the Lucent Registered Account.

9.   Lucent Sales Team Personnel will monitor the Lucent Registered Account for
     indications of follow on sales opportunities for Company products and will
     communicate this information to the Company Sales Team should opportunities
     arise.

* Confidential materials submitted and filed separately with the Securities and
  Exchange Commission. Asterisk denotes omissions.

                  Lucent - Company Proprietary and Confidential
                     Use Pursuant to Applicable Instructions

<PAGE>   21
                                      -22-

                                    EXHIBIT E

                              COMMISSION PERCENTAGE

Company shall pay Lucent a commission (the "Commission") on all transfers
(including, but not limited to, sales, leases, and licenses) of Products (and
related services) to a Registered Lucent Account. The "Commission Percentage" is
Twenty-Five Percent (25%).

The Commission Percentage shall be applied to the Net Invoice Amount for
Product(s), including any additional growth, upgrades, new features, or
additional systems, and including all related engineering, installation, post
warranty support, enhanced warranty support, and any other associated services,
but not including any sales or use taxes, import duties, transportation, freight
or shipping charges, ordered by the Registered Lucent Account, for three (3)
years from the date of the last contract executed by Company with the Registered
Lucent Account or purchase order issued by such customer and accepted by Company
during the term of this Agreement.

Company's checks for payment of the Commission should include the following
information:

-    Company name
-    Registered Lucent Account name
-    Product(s) sold
-    Appropriate codes (as provided to Company by Lucent)

SEND PAYMENTS TO:

             Lucent Technologies Inc.
             Derek Gullett
             67 Whippany Road
             Room 3E 332A
             Whippany, NJ 07981

When payment of the Commission is issued, Company will also provide a report to
Lucent which will include the following information:

-   Company name
-   Registered Lucent Account name
-   Product(s) sold
-   Net Invoice Amount
-   Date of the invoice
-   Commission Percentage calculation
-   Amount of the payment of the Commission

SEND REPORTS TO:

             Lucent Technologies Inc.
             Leslie Brooks, Contract Manager
             67 Whippany Road
             Room 2A333
             Whippany, NJ 07981

                  Lucent - Company Proprietary and Confidential
                     Use Pursuant to Applicable Instructions

* Confidential materials submitted and filed separately with the Securities and
  Exchange Commission. Asterisk denotes omissions.<PAGE>   1
                                                                    Exhibit 10.3

                          WEST GARRETT OFFICE BUILDING

                          FULL SERVICE LEASE AGREEMENT

         THIS FULL SERVICE LEASE AGREEMENT, hereinafter referred to as the
"Lease," made this 1st day of October, 1997, by and between WEST GARRETT JOINT
VENTURE, a Maryland general partnership, of which FRANCIS E. GARDINER, JR. is
the managing partner, hereinafter referred to as "Landlord" and
TELECOMMUNICATION SYSTEMS, INC., hereinafter referred to as "Tenant".

                                   WITNESSETH:

         That in consideration of the rents and covenants hereinafter set forth,
Landlord hereby leases to Tenant, and Tenant hereby rents from Landlord, office
space in the premises known as West Garrett Office Building, hereinafter
referred to as the "Building", located at the corner of West Street and Amos
Garrett Boulevard in the City of Annapolis, State of Maryland, on the Floors
designated herein. This Lease shall be for the term, upon the rents, and subject
to the terms and conditions hereinafter set forth as follows:

         1. LEASED PREMISES.

         The portion of the Building leased hereunder is referred to as the
"Leased Premises" and contains approximately 23,399 square feet of leasehold
space in the Building, as outlined on the floor plans marked "Exhibit A,"
attached hereto and made a part hereof. The square footage of the Leased
Premises includes a "core factor" of ten percent (10%) for the purposes of
including common areas. For the purposes of determining the square footage of
the Leased Premises, leasehold space is calculated by measuring from the outside
of any exterior walls of the Leased Premises to the center line of any
partitions constructed which separate the Leased Premises from an adjoining
leased premises, plus an additional ten percent (10%) "core factor."

         In addition to the Leased Premises, Tenant shall be entitled to
forty-eight (48) free parking spaces in the Building's adjacent parking garage,
hereinafter referred to as the "Garage," during the initial and renewal Lease
terms. Fifteen (15) of these spaces are reserved and shall be preserved in their
current locations; the remaining thirty-three (33) are in unreserved spaces in
the Garage.

         2. GRANT OF LEASEHOLD INTEREST.

         Landlord hereby demises and leases the Leased Premises to Tenant and
Tenant hereby rents and takes the Leased Premises from Landlord, for the
purposes and subject to the rents and other terms and conditions in this Lease
(including the Rules and Regulations from time to time adopted by the Landlord),
together with a non-exclusive license to use, in common with the Landlord and
others to whom Landlord gives similar rights, all areas and facilities which may
be designated by Landlord as "Common Facilities," sometimes referred to as
common areas, for general use by all customers, suppliers, employees and other
business invitees of occupants of the Building.
<PAGE>   2
         3. LANDLORD'S RESERVATIONS.

         Landlord reserves the right to change, enlarge, reduce, and otherwise
modify any structure or improvement now or later constructed adjacent to or near
the Building, and to change the size, appearance, character and other features
of the Building, and/or any of the Building Complex (as hereinafter defined).
For example, Landlord may (a) change the locations and/or dimensions of parking
areas, roads, entrances, exits, courtyards, corridors, footways and loading and
other facilities of the Building Complex; (b) place landscaping, plantings,
decorative items, temporary structures and areas for retail sales and
promotional activities in any courtyards, corridors, footways; (c) make
alterations and additions to and build additional floors on or above the
Building Complex in which the Leased Premises is located; (d) erect temporary
scaffolds, protective barriers and other aids to construction on, around and
about the exterior of the Leased Premises; (e) enter the Leased Premises to
shore and support the foundation and/or walls and/or to install, maintain, use,
repair, replace, remove and inspect pipes, ducts, conduits and wires passing
into, through, above or beneath the Leased Premises for service to other parts
of the Building Complex and (f) cover over or enclose all or any portion of any
courtyard, corridor, footways or other area intended for pedestrian passage of
customers or other business invitees of occupants of the Building Complex. If
Landlord does any of the things cited above, it will not (1) invalidate or
affect this Lease or any right hereunder, (2) constitute an eviction of Tenant
or breach of this Lease, (3) give rise to any claim for abatement of rent or
other obligation of Tenant, or (4) be the basis of a claim for damages by Tenant
for any inconvenience, loss or business or other injury allegedly caused thereby
(excepting only claims for property damage and/or bodily injury).

         4. LANDLORD AND TENANT'S IMPROVEMENTS.

         a. Upon taking possession and occupying the Leased Premises, Tenant
shall thereby be deemed to have accepted the same and acknowledged the Leased
Premises are in the condition called for hereunder.

         b. Tenant shall not transport any safe, heavy machinery, heavy
equipment, including unusually large computer terminals or other computer
equipment, bulky matter or fixtures (the "equipment and machinery") into or out
of the Building or Leased Premises without Landlord's prior written consent and
approval. In obtaining the Landlord's approval as required under this paragraph,
Tenant agrees to provide Landlord with all technical specifications concerning
the equipment and machinery and to pay the costs of any and all structural
changes which in the sole discretion of the Landlord are required to be made in
order to safely and efficiently accommodate the equipment and machinery to be
transported into or out of the Building or Leased Premises. If such equipment or
machinery requires special handling, Tenant agrees to employ only persons
holding the proper license to do said, work and that all work in connection
therewith shall comply with any applicable federal, state, city or other
governing laws, rules or regulations. Tenant understands and agrees that it is
liable for any damage done to the Building or Leased Premises resulting from the
movement of any equipment or machinery.

                                        2
<PAGE>   3
         c. If a mechanic's lien or claim is filed against Landlord's property
because of work, labor or services performed or materials furnished for Tenant
or anyone authorized by Tenant, Tenant shall cause it to be discharged to the
satisfaction of the Landlord, failing which Landlord may, in addition to any
other right or remedy, discharge it by paying the amount claimed to be due. Any
amount paid by Landlord and all related costs and expenses (including reasonable
attorney's fees) plus twenty percent (20%) of such amounts shall be due and
payable by Tenant to Landlord on written demand as compensation for Landlord's
administrative expenses. The failure to pay such demand by the Tenant shall
result in an additional charge equal to eighteen (18%) percent interest per
annum on the unpaid sum until paid in full. Tenant shall provide to Landlord a
release of liens for any work on the Leased Premises which may be performed or
authorized by Tenant.

         5. BUILDING COMPLEX.

         Tenant understands that the Building Complex is composed of
professional office units, retail sites, Common Facilities, common areas and the
Garage with common areas including but not limited to, visitor parking
facilities, area ways, walkways, hallways, elevators, courtyards, malls and
landscaped areas all of which are appurtenant to the improvements containing the
Leased Premises.

         6. TERM.

         (a) The initial term of this Lease shall commence on October 1, 1997,
and shall be for a period of five (5) years. After the execution of this Lease
each of the parties hereto agrees, upon demand of the other, to execute a
declaration in recordable form expressing the commencement and termination dates
of the Lease term.

         (b) Provided Tenant is not then in default of a material provision
under this Lease, the term of this Lease shall be automatically renewed for two
(2) additional and successive terms of three (3) years upon all the terms,
covenants and conditions applicable herein. Each renewal option shall be
exercisable by the Tenant only if all rental charges during the preceding lease
period (original term or first renewal option) have been paid in accordance with
the Lease terms and if the Tenant is not otherwise materially in default
hereunder. However, Tenant may elect to terminate this Lease at the end of the
initial term and any renewal term by giving Landlord notice of termination not
less than Ninety (90) days prior to the expiration of the then current term.
Landlord shall give written notice to Tenant no less than one hundred twenty
(120) days prior to the expiration of the then current term if the Landlord
considers the Tenant to have defaulted in any material provision under the Lease
such that an automatic renewal of any successive term will have been cancelled.

         (c) The Tenant shall have the option to terminate this Lease at the end
of the fourth (4th) year of the initial Lease term by giving ninety (90) days'
prior written notice to the Landlord. If Tenant exercises its option to
terminate this Lease, Tenant shall pay an early termination fee

                                        3
<PAGE>   4
equal to the sum of the unamortized Tenant improvement allowance plus any
unamortized/unearned leasing commission.

         7. RENT.

         Tenant covenants and agrees to pay to Landlord, as a minimum annual
rental (sometimes hereinafter referred to as "rent" or "rental") for the Leased
Premises, an initial rental rate of Four Hundred Forty-Six Thousand Nine Hundred
Twenty and 90/100 Dollars ($446,920.90) per annum, payable in twelve (12)
monthly installments of Thirty-Seven Thousand Two Hundred Forty-Three and 41/100
Dollars ($37,243.41) in advance, on the first day of each full calendar month
during the Lease term; the first such payment to include also any prorated
rental for the period from the date of the commencement of the Lease term to the
first full calendar month hereof. Of the above amount, One Hundred Fifty
Thousand Nine Hundred Twenty-Three and 55/100 Dollars ($150,923.55) per annum,
or Twelve Thousand Five Hundred Seventy-Six and 96/100 Dollars ($12,576.96) per
month, shall be allocated to Landlord's Costs, as that term is defined in
Section 8, "Adjustments to Rent," paragraph (b), and shall be subject to
adjustment as provided in Section 8, "Adjustments to Rent, " paragraph (b). The
balance of the above minimum rental amount shall initially be subject to
adjustment as provided in Section 8, "Adjustments to Rent," paragraph (a).

         Tenant covenants and agrees to pay Landlord the minimum annual rental
during the initial term of this Lease as follows:

<TABLE>
<CAPTION>
                                 ANNUAL                             MONTHLY
<S>                            <C>                                <C>
YEAR ONE:                      $446,920.90                        $37,243.41
YEAR TWO:                      $455,110.55                        $37,925.88
YEAR THREE:                    $463,300.20                        $38,608.35
YEAR FOUR:                     $477,339.60                        $39,778.30
YEAR FIVE:                     $479,679.50                        $39,973.29
</TABLE>

         (a) The Tenant shall, on the signing and execution of this Agreement,
pay to Landlord, the sum of Thirty-Seven Thousand Two Hundred Forty-Three and
41/100 Dollars ($37,243.41) to be applied by the Landlord to the payment of rent
for the Leased Premises for the first month of the term of this Lease. It is
agreed between the respective parties hereto that this payment shall constitute
an advance rental, and that the Landlord shall have unrestricted right to the
use of the funds herein provided to be paid.

         (b) Tenant has on deposit with Landlord Twenty-Four Thousand Eight
Hundred Thirty Six and 99/100 Dollars ($24,836.99) that Landlord is to retain as
security for the faithful performance of all the terms and conditions of this
Lease. In no event shall Landlord be obligated to apply the deposit toward rent
or other charges in arrears or on damages for failure to perform the terms and
conditions of this Lease by Tenant. Application of the security deposit sum to
the rental payments of damages shall be at the option of Landlord, and the right
to possession of the Leased Premises by Tenant for nonpayment of rent or for any
other reason

                                        4
<PAGE>   5
shall not, in any event, be affected by this security deposit. The security
deposit is to be returned to Tenant when this Lease is terminated, according to
the terms of this Lease, if not applied toward the payment of rent in arrears,
or toward the payment of damages suffered by Landlord by reason of any breach of
the terms and conditions of this Lease by Tenant, or toward reimbursement to
Landlord for the expense of cleaning and restoring the Leased Premises on
termination of this Lease. In no event is the security deposit to be returned
until Tenant has vacated the Leased Premises and delivered possession to
Landlord.

The security deposit is maintained in a separate account. Interest earned
thereon inures to the benefit of the Tenant, provided the security deposit is
returned to Tenant. In the event Landlord repossesses the Leased Premises
because of default of Tenant or because of a failure by Tenant to carry out the
terms and conditions of this Lease, Landlord may apply the security deposit to
all damages suffered to the date of repossession and may retain the balance of
the security deposit to apply on damages that may accrue or be suffered
thereafter by reason of the default or breach of Tenant.

         (c) In advance, on or before the first day of each month when due, all
rentals payable by Tenant to Landlord under this Agreement shall be paid to
Landlord at the office of Landlord or at such place as Landlord may designate in
writing without prior demand therefore and, except as provided herein without
any set-off or deduction whatsoever. Tenant shall pay a "late charge" of ten
percent (10%) of any installment of rental (or any other charge or payment as
may be considered additional rental under this Lease) when paid after the tenth
(10th) day of the month when due. In addition to the ten percent (10%) late
charge Tenant agrees to pay all reasonable attorney fees incurred by Landlord as
a result of collection action undertaken by Landlord. If Landlord shall pay any
monies, or incur any expenses in correction of violation of any covenants herein
set forth, the amount so paid or incurred shall, at Landlord's option, and on
written notice to Tenant, be considered additional rental payable by Tenant
with the first installment of rental thereafter becoming due and payable, and
may be collected or enforced by law as provided for respective rentals. All sums
payable from Tenant to Landlord pursuant to this Lease shall be deemed to be
rent.

         8. ADJUSTMENTS TO RENT.

         (a) The minimum annual rental payable under Section 7, of this Lease
shall be increased beginning with the sixth year of this Lease and every year
thereafter throughout any renewal terms hereof by three percent (3%) annually.

         (b) For the purpose of this Section, "Landlord's Costs" shall include
Operating Costs paid by Landlord as provided in Section 11, " Common Area
Expense," Taxes paid by Landlord as provided in Section 12, "Real Estate Taxes,"
Utilities paid by Landlord as provided in Section 13, "Utilities," Insurance
paid by Landlord as provided in Section 14, "Insurance," and Services paid by
Landlord as provided in Section 17, "Janitorial Services and Trash Removal."
Within ninety (90) days of the end of each calendar year, Landlord shall
determine the actual Landlord's Costs for the immediately preceding year. Based
upon that amount, Landlord shall adjust the

                                        5
<PAGE>   6
portion of the minimum rent allocated to Landlord's Costs for the succeeding
calendar year. During each calendar year, Landlord shall have the right at the
end of each calendar quarter to adjust the portion of minimum annual rental
allocated to Landlord's Costs to reflect actual Landlord's Costs paid or
anticipated, with such adjustments to apply to subsequent monthly installments
of minimum annual rental. Additionally, on an annual basis, Landlord shall bill
Tenant, and Tenant shall promptly pay to Landlord, its proportionate share of
actual Landlord's Costs for the immediately preceding calendar year, to the
extent such amount exceeds the amounts collected and allocated to Landlord's
Costs out of the minimum annual rental.

         9. TENANT'S BUSINESS OPERATIONS AND USE OF LEASED PREMISES.

         a. The Leased Premises are leased to Tenant solely and exclusively for
the purpose of conducting therein a professional office. No use shall be made or
permitted to be made of the Leased Premises or acts done which will increase the
existing rate of insurance on the Building, Garage or any structure or
improvement within the Building Complex, or cause the cancellation of any
insurance policy covering the Building, Garage or any structure or improvement
within the Building Complex, nor shall Tenant sell or permit to be kept or used
in or about the I-eased Premises, any article which may be prohibited by the
standard form of fire insurance policies.

         b. Tenant understands that the Building is within an MX Zoning District
with Conditional Use Approval by the Annapolis City Council and that approval
from the City of Annapolis may be necessary for the Tenant's intended use of the
Leased Premises. Accordingly, Tenant shall take all action necessary in order to
obtain any necessary approvals for Tenant's use of the Leased Premises. In the
event such approvals cannot be obtained, Tenant may terminate this Lease.

         c. Tenant shall not commit or suffer to be committed any waste upon the
Leased Premises or any public or private nuisance or any other act or thing
which may disturb the quiet enjoyment of any other Tenant in the Building.
Tenant shall not use the Leased Premises (including the Garage) or permit the
same to be used in whole or in part for any purpose or use that is deemed to be
in violation of any of the laws, ordinances, regulations or rules of any public
authority or organization at any time. A judgment of any court of competent
jurisdiction, governmental administrative agency, a criminal indictment, or the
admission by Tenant in any action or proceeding against Tenant that Tenant has
violated any such laws, ordinances, regulations or rules in the use of the
Leased Premises, shall be deemed to be a conclusive determination of the fact
between Landlord and Tenant.

         10. COMMON AREAS AND FACILITIES.

         a. During the term of this Lease, Tenant shall have the right of
nonexclusive use, in common with others, of the hallways, courtyards, corridors,
malls, elevators, visitor parking spaces, driveways, footways, loading
facilities and other common areas and facilities, shown on "Exhibit A",
sometimes hereinafter referred to as common areas or Common Facilities provided

                                        6
<PAGE>   7
that such use shall be subject to such Rules and Regulations as Landlord may
from time to time prescribe governing the same; and provided that Landlord shall
at all times have full and exclusive control, management and direction thereof.
Tenant understands and agrees that none of the rights granted herein extend to
the use of any of the Operational facilities of the Building or Garage such as
areas containing heating or air conditioning units, electrical transformers,
storage areas, central telephone boards, water and sewer controls and similar
facilities. Landlord shall further have the right to police all common areas and
Common Facilities; to close temporarily all or any portion of the common areas
or Common Facilities as may be required for proper maintenance and/or repair; to
change the location, layout and arrangement of the common areas and Common
Facilities; driveways and footways from time to time; and, to do and perform
such other acts in and to such areas, in the use of its business judgment, the
Landlord shall determine to be advisable in order to improve the overall
operation and/or make more convenient the use thereof by tenants of the
Building.

         b. It is understood and agreed by the Tenant that the Landlord shall
not be required to employ any security system or personnel for either the
Garage, the Building or the Leased Premises (including the common areas).
However, in the event that Landlord does employ any of the aforementioned
security systems, Landlord shall provide and employ said personnel or system and
the costs thereof shall be borne by the Tenant based on the square foot
percentage that the Tenant's Leased Premises bears to the total leasehold
premises occupied by all tenants of the Building, subject to Tenant's approval,
which shall not be unreasonably withheld, said costs not deemed by Landlord to
be within the definition of "Operating Costs" as defined in Section 11 of this
Agreement.

         11. COMMON AREA EXPENSE.

         a. Landlord will, at its expense (subject to the reimbursement
provisions herein set forth), operate and maintain the common areas and Common
Facilities described or referred to in Section 10. For the purpose of this
Section, "Operating Costs" shall be those of operating and maintaining the
common areas and Common Facilities in a manner deemed by Landlord, in its sole
discretion, to be reasonable and appropriate and for the best interests of the
tenants in the operation of the Building, including, without limitation, the
following:

                  1) All costs and expense of operating, maintaining, repairing,
lighting, cleaning, painting, striping, insuring (including liability for
personal injury, death and property damage and workmen's compensation insurance
covering personnel) the Building and Garage, removing snow, ice and debris from
the common areas and Common Facilities and/or amortization of machinery and
equipment used for such operations;

                  2) All costs and expenses, for the repair or replacement of
paving, curbs, walkways, landscaping, drainage, and lighting facilities;

                  3) All costs and expense of grass cutting, fertilizing,
planting, replanting and replacing flowers, shrubs or other exterior decorations
within the Building and Garage area;

                                        7
<PAGE>   8
                  4) Painting and decorating of all common areas and Common
Facilities;

                  5) All costs and expenses necessary for operating, maintaining
and repairing the sprinkler system installed in the Leased Premises and in the
other areas of the Building and the Garage;

                  6) All other expenses which would be considered as a
reasonable expense of owning, maintaining, operating or repairing the Building
and Garage under sound accounting principles, including, but not limited to such
license fees or other similar charges levied by the City of Annapolis or any
other governmental body for the privilege of renting or using the premises,
subject, however, to any limitations which may be specified under Section 10 and
13 of this Agreement;

                  7) All utility expenses charged to the Building such as
electric, water, sewer;

                  8) The administrative and management costs equal to 15% of the
total of the foregoing costs (except appropriate reserves).

         b. In each Lease year, which shall be a calendar year, or prorated
calendar year, Tenant will pay Landlord, as a portion of the minimum annual
rental allocated to Landlord's Costs, its proportionate share of the Operating
Costs. Tenant's proportionate share shall be obtained by multiplying Operating
Costs by a fraction, the numerator of which shall be the number of square feet
of the Leased Premises and the denominator of which shall be the total number of
square feet of leasehold floor area in the Building. Notwithstanding the
aforementioned, Tenant shall not be responsible to pay additional Operating
Costs until the Tenant's Operating Costs exceed Six and 45/100 Dollars ($6.45)
per square foot at the Leased Premises annually (which is equal to One Hundred
Fifty Thousand Nine Hundred Twenty-Three and 55,100 ($150,923.55). However, the
Tenant's contribution to the Operating Expenses in excess of Six and 45/100
Dollars ($6.45) per square foot of the Leased Premises annually shall increase
no more than three percent (3%) per annum.

         12. REAL ESTATE TAXES.

         a. As used herein, the term "Taxes" shall mean and include all present
and future real estate and other ad valorem taxes, including front foot benefit
charges and all other governmental impositions and/or levies, whether or not now
customary, and regardless of whether the same shall be extraordinary or
ordinary, general or special, foreseen or unforeseen, or similar or dissimilar
to any of the foregoing, relating to the Building Complex, Garage and all land
or other improvements therein.

         b. If at any time during the term hereof the method and/or basis of
taxation prevailing at the commencement of the terms shall be altered so that in
addition to, or in lieu of or as a substitute for the whole or any part of the
Taxes now levied, assessed or imposed on real estate as such, there shall be
levied, assessed or imposed (i) a tax on the rents received from such real
estate, or (ii) a license fee measured by the rent receivable by the Landlord
from the Building

                                        8
<PAGE>   9
Complex, or (iii) a tax or license fee imposed upon Landlord which is otherwise
measured by or based in whole or in part upon rents derived from the Complex
then and in any of such events, the same shall be included in the computation
hereunder of Taxes.

         c. Tenant shall pay Landlord, as a portion of the minimum annual rental
allocated to Landlord's Costs, its proportionate share of the Taxes levied upon
the Building Complex, Garage and grounds for each tax year (or any part thereof)
during the term of this Lease. Tenant's proportionate share of the Taxes shall
be obtained by multiplying the Taxes by a fraction, the numerator of which shall
be the number of square feet of the Leased Premises, and the denominator of
which shall be the total number of square feet of leasable floor area in the
Building. The official tax bill or bills, as the case may be, issued by the
appropriate taxing authorities shall be conclusive evidence as to the amount of
the Taxes levied upon the Building Complex, Garage and grounds. Taxes shall be
paid by Tenant in the following manner:

                  1) Tenant shall pay its proportionate share of such Taxes from
the commencement date of the term through the expiration of the tax year in
which the term commences to Landlord with each payment of the monthly
installment of rent provided for in Section 7 above. Such sum shall be billed by
the Landlord on a monthly basis.

                  2) Commencing with the first month of the first full tax year
during the term of this Lease, and each month thereafter during the term and
renewal terms of this Lease, Tenant shall pay to Landlord a sum determined as
above and billed by Landlord representing one-twelfth (1/12) of Tenant's
proportionate share of the Taxes for that tax year; provided, however, that
where the term expires during such tax year, Tenant shall only be liable for its
monthly payment of the Taxes until the final month of this lease.

         d. Landlord, in its discretion, shall have the sole and exclusive right
to protest any special assessments and any increase in land or building
assessments upon or affecting the Building Complex and Garage, to petition for
reduction of such assessments, and to appeal such protests and petitions, and
file and prosecute such actions as Landlord, in its sole discretion, shall deem
appropriate. All reasonable expenses incurred by Landlord (including attorney's
fees and costs) in contesting, appealing and/or negotiating against any increase
in taxes or any increase in such assessments shall be included as part of Taxes
for the purpose of computing additional rent due hereunder.

         e. In the event the tax base or other basis upon which such Taxes are
levied or assessed includes, as is reasonably determined by Landlord, the value
of any improvements, betterments, furnishings, fixtures and the like ("leasehold
improvements") installed by the Landlord or the Tenant in respect of the Leased
Premises, and Landlord has not estimated and billed for such Taxes, then Tenant
shall pay to Landlord, within ten (10) days of Landlord's rendering a written
statement therefor, the entire amount of Taxes attributable to such leasehold
improvements. For the purpose of determining any increase in Taxes due to
leasehold improvements, Tenant agrees that it will certify by affidavit to
Landlord, within thirty (30) days of taking possession of the Leased Premises,
the actual cost of all leasehold improvements constructed within the Leased

                                        9
<PAGE>   10
Premises and paid by Tenant. This figure will be multiplied by 0.45 (or any
future percentage used by any taxing authorities to adjust fair market value to
assessed value) and the resulting number will then be multiplied by the current
tax rate. For example, if leasehold improvements of the Leased Premises total
$5,000.00, a base of $2,250.00 would then be multiplied by the current tax rate,
say $3.00 per $100.00 of assessed valuation, for a total tax of $67.50 payable
to the Landlord for the tax year in question. The resulting number would be the
Taxes attributable to the leasehold improvements and shall be paid to Landlord
in addition to any proportionate share of Taxes otherwise payable by Tenant
under this Lease Agreement. The total amount of Taxes attributable to any
leasehold improvements constructed on the Leasehold Premises of the Building,
shall be subtracted from the total amount of Taxes levied by all taxing
authorities prior to calculating the amount of Taxes payable by the Tenant to
the Landlord in excess of the square foot sum per tax year as required under
this section.

         f. Tenant shall at all times be solely responsible for all other Taxes
assessed or levied against any leasehold interest hereunder or any personal
property of any kind owned or installed by Tenant.

         13. UTILITIES.

         a. The Landlord and Tenant understand and agree that the Tenant shall
have a common electrical service for the Leased Premises with others.

         b. Tenant shall pay Landlord, as a portion of the minimum rent
allocated to Landlord's Costs, its proportionate share of the charges for all
common utility services rendered or furnished to the Leased Premises (whether by
meter or sub-meter), together with all Taxes, levies or other charges on such
utilities. For the purpose of this Section, such charges shall be referred to as
"Utilities." Tenant charges for water and sewer service (if any) furnished to
the Leased Premises shall be a pro rata share of the respective bill for the
Building based upon the number of square feet of Leased Premises compared to the
number of square feet of all leasable floor area in the Building. Landlord will
provide and maintain the necessary mains and electrical conduits to bring water
and electricity to the premises. Landlord shall under no circumstances be
liable to Tenant in damages or otherwise for any interruption in utility
services to the Leased Premises caused by the making of any repairs or
improvements of the Building or the Building Complex other than Landlord's
negligence.

         c. Landlord shall under no circumstances be liable to Tenant in damages
or otherwise, for any interruption in service of water, electricity, gas,
heating, air conditioning, sprinkler system or other utilities or services
caused by an unavoidable delay, by the making of any necessary repairs or
improvements, or by any cause beyond Landlord's reasonable control other than
Landlord's negligence.

                                       10
<PAGE>   11
         14. INSURANCE.

         a. Landlord shall maintain at all times during the term and renewal
terms of this Agreement the following policies of insurance for the Building
Complex and Garage which shall cover the improvements of the Leased Premises,
but which shall not include Tenant's personal property located therein:

                  1) Fire and extended insurance coverage.

                  2) Rental insurance, as required by the Landlord's mortgagee
or lender.

                  3) Umbrella liability insurance with minimum coverage of One
Million Dollars ($1,000,000.00).

                  4) Owned and non-owned automobile insurance.

                  5) Any other insurance that may from time to time, be required
by Landlord's mortgagee or lender.

         b. Tenant shall pay Landlord, as a portion of the minimum annual rental
allocated to Landlord's Costs, its pro rata share of the cost of the insurance
premiums therefor, promptly following receipt of a bill for same which shall be
that amount which bears the same ratio of the entire insurance premium as the
square footage of the Leased Premises bears to the square footage of all
leasable floor area in the Building. For the purposes of this Section, such
charges shall be referred to as "Insurance." Tenant will not do or suffer to be
done, or keep or suffer to be kept, anything in, upon or about the Leased
Premises which will contravene the policies insuring the Leased Premises against
loss or damage by fire or other hazards, or which will prevent Landlord for
procuring such policies in companies reasonably acceptable to Landlord. If
anything done, omitted to be done, or suffered by Tenant to be kept in, upon or
about the Leased Premises shall cause the rate of fire or other insurance on the
Leased Premises or on other property of Landlord or of others within the
Building to be increased beyond the minimum rate from time to time applicable to
the Leased Premises for the uses permitted therein, or to any other property for
the use or uses made thereof, Tenant will pay, as additional rent, the amount of
any such increase upon Landlord's demand.

         15. RULES AND REGULATIONS.

         Tenant agrees to be bound by the Rules and Regulations as adopted,
promulgated and amended by Landlord pertaining to and for the purpose of
maintaining and operating all Common Areas and structures and improvements
within the Building Complex in a clean and orderly manner, preserving the safety
and good order thereof, and furthering the convenience and welfare of all of the
tenants in the Building. A copy of these Rules and Regulations is attached
hereto and made a part hereof as Exhibit "B," and may be reasonably amended from
time to time by Landlord. Said Rules and Regulations and any reasonable
amendments, changes

                                       11
<PAGE>   12
or additions thereto which Landlord may hereafter make are hereby incorporated
in this Lease and shall be binding upon Tenant as if fully set forth herein,
provided that said Rules and Regulations shall in no way be in conflict with any
of the terms and conditions of this Lease. Any amendments or additions to the
Rules and Regulations shall be effective upon written notice thereof to Tenant
in the manner provided in Section 34 hereof.

         If Tenant permits or causes any condition, action, omission or pattern
of actions or omissions which in the sole judgment of Landlord violates any Rule
or Regulation (as amended or supplemented), Landlord will give Tenant written
notice of the violation. If Tenant permits or causes the same or substantially
similar condition, action, omission or pattern of action or omission to occur or
continue after receiving notice from Landlord, Tenant will have materially
breached this Lease. In such event, Landlord may terminate this Lease upon not
less than thirty (30) days written notice to Tenant and/or take any other
actions at law and/or in equity as Landlord may desire to recover damages
resulting from Tenant's breach of the Lease and violation of the Rules and
Regulations and/or to obtain specific performance by Tenant in complying with
all Rules and Regulations. Tenant agrees that its failure to comply continually
with such Rules and Regulations will materially injure the operation of the
Building and Garage and will be harmful to Landlord and other Tenants and
occupants of the Building and Garage. Therefore, Tenant agrees that Landlord is
and should be entitled to obtain injunctive relief against any violation by
Tenant or such Rules and Regulations even though Landlord may have an adequate
remedy at law. Regardless of Landlord's rights in the event Tenant violates any
Rule and Regulation, Landlord is not responsible or liable to Tenant for the
non-compliance, violation or breach of any Rule or Regulation by any other
Tenant or occupant of the Building or Garage.

         16. REPAIRS.

a. Tenant will keep the interior of the Leased Premises, together with all plate
glass doors and windows and all electrical plumbing and individual mechanical
installations therein, including heating, ventilation, and air conditioning
equipment servicing the Leased Premises, in good order and repair and will make
all replacements at its own expense (All central or common mechanicals will be
repaired by Landlord and tenant will be billed for it's proportionate share).
Tenant will surrender the Leased Premises at the expiration of the term or at
such other time as it may vacate the premises, in as good condition as when
received, excepting depreciation caused by ordinary wear and tear or casualty by
fire or acts of God.

b. Tenant will promptly repair at its own expense any damage to the Leased
Premises caused by bringing into the premises any property for Tenant's use or
by the installation or removal of such property, regardless of fault or by whom
such damage shall be caused, unless caused by Landlord, its agents, employees or
contractors; and, in default of such repairs by Tenant, Landlord shall make the
same and Tenant agrees to pay the cost thereof to Landlord promptly upon
Landlord's demand therefor.

                                       12
<PAGE>   13
C. The Landlord shall cause the Leased Premises to be able to maintain
temperatures within the range of 68 degrees - 75 degrees Fahrenheit (the
"Tolerance Range") year round, under reasonable operating conditions by Tenant.
If the Leased Premises are unable to maintain temperatures within the Tolerance
Range, and provided the inability to maintain such temperatures within the
Tolerance Range is not as a result of Tenant's equipment being extraordinary for
contemporary office usage, or other unreasonable use of the Leased Premises,
then the following shall be applicable.

         Tenant shall promptly notify Landlord via telephone, facsimile, hand
delivery or in person that the temperatures within the Leased Premises are not
capable of being maintained within the Tolerance Range. Upon receipt of such
notice, Landlord will promptly attempt to cause the temperatures to be brought
within the Tolerance Range. Notwithstanding any attempt by Landlord, if the
temperatures remain outside of the Tolerance Range for either three (3)
consecutive business days, or any three (3) business days out of ten (10)
consecutive business days then Tenant may reduce its minimum annual rental,
pro-rata, by twenty-five percent (25%), applicable to that portion of the
Leased Premises so effected. Such rent reduction shall be calculated on a per
suite basis within the Leased Premises.

         If the minimum annual rental shall be adjusted as above provided, the
payment adjustment shall be made to the monthly rent installment next due.

         Nothing contained under this paragraph 16 shall be construed to prevent
Tenant from filing an action to terminate this Lease in the event of a
persistent breach of the terms contained in this paragraph 16 by the Landlord.

         Landlord shall be given the right to enter onto the Leasehold Premises
during and after business hours, to conduct such tests and investigations as
Landlord deems necessary to attempt to comply with the provisions hereof.

         17. JANITORIAL SERVICES AND TRASH REMOVAL.

         Landlord shall provide such janitorial services as are necessary to
maintain the Leased Premises in a sanitary, good and safe condition. Such
janitorial services shall include, but not be limited to, the maintenance of all
exterior plate glass windows and doors of the Leased Premises in a clean and
good condition. In addition, Landlord shall provide cleaning and maintenance
services for the common areas and Common Facilities of the Building and Garage
as described within the definition of "Operating Costs" in Section 11 of this
Agreement.

         Trash removal shall be provided by the Landlord and the cost of
providing such services shall be borne by each of the tenants in the Building
(including Tenant) based upon the individual use and need of each such tenant,
as determined by the Landlord. Tenant agrees that Landlord's determination in
this manner shall be final and binding upon Tenant. For the purposes of this
Section, "Services" shall include the cost of such janitorial and trash removal

                                       13
<PAGE>   14
services which are not otherwise included in Operating Costs. Tenant shall pay
Landlord, as a portion of the minimum rent allocated to Landlord's Costs, its
proportionate share of the Services.

         18. WATER DAMAGE.

         Landlord shall not be liable to Tenant, its agent employees,
contractors, customers or other visitors for any injury or damage to person,
property or the operation of business resulting from water, rain, snow or
dampness which may leak or issue from or through any part of the Building other
than that caused by the failure of Landlord to make any repairs which it is
required to make hereunder following receipt of written notice of such repairs
and after having a reasonable opportunity in which to make same.

         19. ALTERATIONS BY TENANT.

         Tenant will not make any alteration to the Leased Premises, or any part
thereof without first obtaining Landlord's written approval of such alteration;
and Tenant agrees that any improvements made by it shall immediately become the
property of Landlord and shall remain upon the Leased Premises in the absence of
an agreement to the contrary. Tenant will not cut or drill into or secure any
fixtures, apparatus or equipment of any kind to any part of the Leased Premises
without first obtaining Landlord's written consent.

         Alterations by Tenant shall be subject to the following conditions:

                  1. All of Tenant's alterations shall be performed in a way
which will not interfere with Landlord's construction activity.

                  2. Tenant shall keep the common area free of building
materials and equipment used in connection with Tenant's work.

                  3. Tenant shall continue to perform all duties and obligations
imposed by this Lease during the period in which alterations are made. Landlord
will not be responsible or liable to Tenant or its agents, employees, licensees
or contractors for any bodily injury or property loss or damage occurring prior
to the commencement date, and Tenant will indemnify, defend and hold harmless
Landlord and its contractors against all claims and liabilities resulting from
the performance of Tenant's alterations.

         Each request for Landlord's approval shall be accompanied by reasonably
detailed plans and specifications for the proposed alterations. Landlord will
have absolute discretion in deciding whether or not to grant the approval.
Landlord's approval will not constitute the assumption of any responsibility by
Landlord for the accuracy or sufficiency of the plans or specifications
submitted as Tenant shall be solely responsible for such matters.

                                       14
<PAGE>   15
         20. LANDLORD'S SIGN POLICY.

         Landlord shall, at Tenant's sole cost and expense, have prepared in
accordance with Tenant's specifications and thereafter install a sign containing
Tenant's name, business practice and suite location upon the exterior door of
the Leased Premises or such other location designated by Landlord in accordance
with the Sign Policy of the Landlord (a copy of which is attached hereto). Said
Sign Policy and any reasonable amendments, changes or additions thereto which
Landlord may hereafter make are hereby incorporated in this Lease and shall be
binding upon Tenant as if fully set forth herein, provided that said policy
shall in no way be in conflict with any of the terms and conditions of this
Lease. Any amendments, changes or additions to the Sign Policy shall be
effective upon written notice thereof to Tenant in the manner provided in
Section 34 hereof.

         Other than as provided in Landlord's Sign Policy, Tenant will not place
or suffer to be placed or maintained on the exterior of the Leased Premises any
other sign, advertising matter or any other thing of any kind whatsoever. Tenant
further agrees to maintain its entrance door sign and any other signs as may be
approved by Landlord and provided for in Landlord's Sign Policy, in good
condition and repair at all times.

         In the event that the Sign Policy of the Landlord provides for the
establishment of a "Tenant's Directory" within the Building, Tenant shall have
the right to have its name, business practice (if appropriate) and location
placed on the Directory. The reasonable cost of the placement of Tenant's name,
business practice and location on the Directory, shall be borne by the Tenant.

         21. PUBLIC LIABILITY INSURANCE.

         With respect to the Leased Premises, Tenant will keep in force at its
own expense, so long as this Lease remains in effect, general liability
insurance (providing among other coverage, contractual liability coverage) and
provider negligence insurance with companies and in a form reasonably acceptable
to Landlord with a minimum of One Million Dollars ($1,000,000.00) of combined
single limit general liability coverage, naming both Landlord and Tenant as
insured parties; and Tenant will further deposit a copy of the policy or
policies of such insurance or certificates thereof, with Landlord. If Tenant
shall not comply with its covenants made in this Section, Landlord may at its
option, cause insurance as aforesaid to be issued, and in such event Tenant
agrees to pay the premium for such insurance promptly upon Landlord's demand. In
such event, Tenant shall pay to Landlord a fee of Two Hundred Dollars ($200.00)
as reimbursement for Landlord's time and expenses. An executed copy of this
Memorandum will be returned to Landlord at time of final execution of the Lease.
Also, whenever an insurance policy is renewed or a new policy issued, Tenant
shall immediately cause such a Memorandum of Insurance to be executed and
delivered to Landlord.

                                       15
<PAGE>   16
         22. INDEMNITY BY TENANT.

         Tenant will indemnify Landlord and save it harmless from and against
any expenses, loss or liability paid, suffered or incurred as the result of any
breach by Tenant, Tenant's agents, servants, employees, clients/customers,
contractors, visitors or licensees, of any covenant or condition of this Lease,
and any and all claims, action, damages, liability and expense in connection
with loss of life, personal injury and/or damage to property arising from or out
of the occupancy or use by Tenant of the Leased Premises or any part thereof or
any other part of the Building Complex and Garage, or occasioned wholly or in
part by any act or omission of Tenant, Tenant's agents, servants, employees,
customers, contractors, visitors or licensees; provided, however, that this
indemnification shall not apply to any such injury, loss damage, or liability
arising from any omission, fault, negligence, or misconduct on the part of
Landlord, its agents, servants, employees, contractors or licensees.

         23. FIRE OR OTHER CASUALTY.

         If the Leased Premises, or any other portion of the Building, Building
Complex or Garage shall, through no fault of Tenant or Tenant's agents,
servants, employees, customers, contractors, visitors or licensees, be damaged
by fire, the elements, unavoidable accident or other casualty, but the Leased
Premises are not thereby rendered untenantable in whole or in part, Landlord
shall promptly at its own expense cause such damage to be repaired, and rent
shall not be abated; if by reason of such occurrence, the Leased Premises shall
be rendered untenantable only in part, Landlord shall promptly at its own
expense cause the damage to be repaired, and rent meanwhile shall be abated
proportionately as to the portion of the Leased Premises rendered untenantable.
If by reason of such occurrence the Leased Premises shall be rendered wholly
untenantable, Landlord shall promptly at its own expense cause such damage to be
repaired and the rent meanwhile shall be abated in whole, unless within sixty
(60) days after said occurrence Landlord shall give Tenant written notice that
it has elected not to reconstruct the destroyed premises in which event, this
Lease and tenancy hereby created shall cease as of the date of said occurrence,
the rental to be adjusted as of such date. All of the above notwithstanding, if
Landlord, in its absolute discretion, shall desire, within a reasonable time
after the occurrence of any such accident or casualty (even though the Leased
Premises may not have been affected by the same) to demolish, rebuild or
reconstruct the Building Complex, then, upon written notice from Landlord to
Tenant, this Lease shall terminate on a date to be specified in such notice, and
all rent payable hereunder shall be adjusted as of the time of the occurrence of
any such accident or casualty.

         Landlord and Tenant respectively waive and release each other from any
and all rights of recovery, claims, losses and/or damages arising or resulting
from any act or omissions of either with respect to the Leased Premises to the
extent that such loss or damage should have been recovered under their
respective insurance policies in accordance with this Lease Agreement.
Furthermore, Landlord and Tenant agree to waive any right of subrogation in
behalf of any party in whom such right may otherwise exist or accrue as a result
of any of the aforesaid incidents.

                                       16
<PAGE>   17
         24. INSPECTION BY LANDLORD.

         Tenant shall permit, and hereby authorizes Landlord, its mortgagee or
mortgagees (noteholder if deed of trust), its agents, employees and contractors
to enter the Leased Premises and all parts thereof during business hours (or at
any time in case of an emergency) to inspect the same and to enforce or carry
out any provisions of this Lease.

         25. NO ASSIGNMENT OR SUBLETTING.

         Tenant shall not assign this Lease in whole or in part, nor sublet all
or any part of the Leased Premises, without the prior written consent of the
Landlord which consent shall not be withheld unreasonably. No consent by
Landlord shall be required for an assignment to an entity controlled by Tenant
or by Tenant's shareholders. Consent by Landlord to any assignment or subletting
shall not constitute a waiver of the necessity for such consent to any
subsequent assignment or subletting. This prohibition against assigning or
subletting shall be construed to include a prohibition against any assignment or
subletting by operation of law.

         26. NOTICE OF DEFAULT TO LANDLORD AND MORTGAGEE AND RIGHT TO CURE.

         If Landlord shall fail to perform any covenant, term or condition of
this Agreement required to be performed by Landlord, Tenant shall give, by
certified mail, a notice of default to the Landlord, which shall specifically
set forth the nature of the nonperformance by the Landlord and shall give the
Landlord thirty (30) days within which to cure such default or nonperformance.
Said notice of default shall be a condition precedent to the institution by
Tenant of any judicial proceedings for nonperformance or default against the
Landlord. Tenant agrees to give any mortgagee and/or trust deed holder, by
certified mail, a copy of any notice of default served upon the Landlord,
provided that prior to such notice Tenant has been notified, in writing, of the
address of such mortgagees and/or trust deed holder (by way of Notice of
Assignment of Rents and Leases or otherwise). Tenant further agrees that if
Landlord shall fail to cure such default within the time provided for in this
Lease Agreement, then the mortgagees and/or trust deed holder shall have an
additional thirty (30) days within which to cure such default or if such default
cannot be cured within that time, then such additional time as may reasonably be
necessary if within such thirty (30) days, any mortgage and/or trust deed holder
has commenced and is diligently pursuing the remedies necessary to cure such
default (including but not limited to commencement of foreclosure proceedings,
if necessary to effect such cure), in which event this Lease shall not be
terminated while such remedies are being so diligently pursued.

         27. BANKRUPTCY OF TENANT.

         If any sale of Tenant's interest in the Leased Premises created by this
Lease shall be made under execution or similar process, or if Tenant shall be
adjudicated a bankrupt or insolvent, or if a receiver or trustee shall be
appointed for its business or property, or if a

                                       17
<PAGE>   18
corporate reorganization of Tenant or an arrangement with its creditors shall be
approved by a court under the United States Bankruptcy Code, or if Tenant shall
make an assignment for the benefit of creditors, or if in any other manner
Tenant's interest under this Lease shall pass to another by operation of law,
then, in any of said events, Tenants shall be deemed to have breached a material
covenant of this Lease and Landlord may, at its option, re-enter the Leased
Premises and declare this Lease and the tenancy hereby created terminated.
Notwithstanding such termination Tenant shall remain liable for all rent or
damages which may be due at the time of such termination and, further shall be
liable for the liquidated damages set forth in Section 31(b) of this Agreement.

         28. PERFORMANCE BY TENANT.

         Tenant covenants and agrees that it will perform all agreements and
covenants herein expressed on its part to be performed, and that it will
promptly upon receipt of written notice specifying action desired by Landlord in
connection with any such covenant commence to comply with such notice; and
further, that if Tenant shall not commence and proceed diligently to comply with
such notice to the satisfaction of Landlord within thirty (30) days after
delivery thereof, then Landlord may, at it option, enter upon the Leased
Premises and do the things specified in said notice, and Landlord shall not be
liable to Tenant for any loss or damage resulting in any way from such action by
Landlord, unless resulting from Landlord's negligence and Tenant agrees to pay
promptly upon demand any expense incurred by Landlord in taking such action.

         29. CONDEMNATION.

         If the whole or any part of the Leased Premises shall be acquired or
condemned by way of condemnation, or under threat thereof, for any public or
quasi-public use or purpose, then in that event this Lease and the tenancy
created hereunder shall cease and termination from the date of title vesting in
such proceeding and Tenant shall have no claim against Landlord or against any
award obtained for the value of any unexpired portion of the lease term or
otherwise, provided, that the rent payable hereunder shall be adjusted as of the
date of any such termination.

         30. EVENTS OF DEFAULT.

         The following events shall be deemed to be events of default by Tenant
under this Lease:

                  a. Tenant shall fail to pay when due any rental or other sums
payable be Tenant hereunder (or under any other lease now or hereafter executed
by Tenant in connection with space in the Building).

                  b. Tenant shall fail to comply with or observe any other
provision of this Lease (or any other lease now or hereafter executed by Tenant
in connection with space in the Building).

                                       18
<PAGE>   19
                  c. Tenant or any guarantor of Tenant's obligations hereunder
shall make an assignment for the benefit of creditors.

                  d. Any petition shall be filed by or against Tenant or any
guarantor of Tenant's obligations hereunder under any section or chapter of the
Bankruptcy Code, as amended, or under any similar law or statute of the United
States or any State thereof; or Tenant or any guarantor of Tenant's obligations
hereunder shall be adjudged bankrupt or insolvent in proceedings filed
thereunder.

                  e. A receiver or Trustee shall be appointed for all or
substantially all of the assets of Tenant or any guarantor of Tenant's
obligations hereunder.

                  f. Tenant shall abandon any portion of the premises.

         31. REMEDIES OF LANDLORD.

         Upon the occurrence of any event of default specified in this Lease,
for which notice has been given and any applicable cure period expired, Landlord
shall have the option to pursue any one or more of the following remedies
without any notice or demand whatsoever:

                  a. Terminate this Lease in which event Tenant shall
immediately surrender the Leased Premises to Landlord, and if Tenant fails to do
so, Landlord may, without prejudice to any other remedy which it may have for
possession or arrearages in rent, enter upon and take possession and expel or
remove Tenant and any other person who may be occupying said premises or any
part thereof, by force if necessary, without being liable for prosecution or any
claim for damages therefore; and Tenant agrees to pay to Landlord on written
demand the amount of all loss and damage which Landlord may suffer by reason of
such termination, whether through inability to relet the Leased Premises on
satisfactory terms or otherwise, including the loss of rental for the remainder
of the Lease.

                  b. Enter upon and take possession of the Leased Premises and
expel or remove Tenant and any other person who may be occupying the Leased
Premises or any part thereof, by force if necessary, without being liable for
prosecution or any claim for damages therefor, and if Landlord so elects, relet
the Leased Premises on such terms as Landlord shall deem advisable and receive
the rent therefore; and Tenant agrees to pay to Landlord on demand any
deficiency that may arise by reason of such reletting for the remainder of the
Lease term.

                  c. Enter upon the Leased Premises by force if necessary,
without being liable for prosecution or any claim for damages therefor, and do
whatever Tenant is obligated to do under the terms of this Lease; and Tenant
agrees to reimburse Landlord on demand for any expenses which Landlord may incur
in thus effecting compliance with Tenant's obligations under this Lease, and
Tenant further agrees that Landlord shall not be liable for any damages
resulting to the Tenant from such action.

                                       19
<PAGE>   20
                  d. Tenant further agrees that notwithstanding re-entry and
termination pursuant to Section 24 or paragraphs a and b of this Section, Tenant
shall remain liable for any rent or damages which may be due or sustained prior
thereto, all reasonable costs, professional fees and expenses incurred by
Landlord in leasing the Leased Premises to another tenant, and Tenant shall
further be liable for liquidated damages to be calculated in the following
manner: Tenant shall pay an amount of money equal to the total rent which but
for such termination would have become payable during the unexpired portion of
the Lease term remaining at the time of such termination, less the amount of
rent, if any, which Landlord may receive during such period from others to whom
the Leased Premises may be rented on such terms and conditions and at such
rentals as Landlord, in its sole discretion, shall deem proper. Such liquidated
damages shall be payable in monthly installments, in advance, on the first day
of each calendar month following such termination, and continuing until the date
originally fixed herein for the expiration of the Lease term, however, if there
is any failure to pay any such installment when due, Landlord may accelerate the
balance and the entire balance shall be due and payable in full. Any suit or
action brought to collect the amount of any deficiency for any month shall not
in any manner prejudice the right of Landlord to collect any deficiency for any
subsequent month by a similar proceeding. Additional rent due under Sections 7,
8, 11, 12, 13 and 14 hereof shall be payable, as part of such liquidated
damages, on an annual basis provided therein during the remainder of the Lease
term. Within one month after the date originally fixed herein for the expiration
of the Lease term, Landlord shall give a written statement to Tenant showing all
sums received by Landlord by way of liquidated damages and all sums received
from others to whom the Leased Premises may have been rented. In the event it
appears that Tenant has paid a greater sum of money than is due, as determined
by the terms of this subparagraph (b) of this Section, then, and in such event,
Landlord will promptly refund to Tenant any such excess.

         No re-entry or taking possession of the Leased Premises by Landlord
shall be construed as an election on its part to terminate this Lease, unless a
written notice of such intention be given to Tenant. Notwithstanding any such
reletting or re-entry or taking possession, Landlord may at any time thereafter
elect to terminate this Lease for a previous default. Pursuit of any of the
foregoing remedies shall not preclude pursuit of any of the other remedies
herein provided or any other remedies provided by law, nor shall pursuit of any
remedy herein provided constitute a forfeiture or waiver of any rent due to
Landlord hereunder or of any damages accruing to Landlord by reason of the
violation of any of the terms, provisions and covenants herein contained.
Landlord's acceptance of rent following an event of default hereunder shall not
be construed as Landlord's waiver of such event of default. No waiver by
Landlord of any violation or breach of any of the terms, provisions and
covenants herein contained shall be deemed or construed to constitute a waiver
of any other violation or default. The loss or damage that Landlord may suffer
by reason of termination of this Lease or the deficiency from any reletting as
provided for above shall include the expense of repossession and any repairs or
remodeling undertaken by Landlord following possession. Should Landlord at any
time terminate this lease for any default, in addition to any other remedy
Landlord may have, Landlord may recover from Tenant all damages Landlord may
incur by reason of such default, including the cost of recovering the premises
and the loss of rental for the remainder of the Lease Term.

                                       20
<PAGE>   21
         32. REMEDIES CUMULATIVE.

         No mention in this Lease or any specific right or remedy shall preclude
Landlord from exercising any other right or from having any other remedy, or
from maintaining any action to which it may otherwise be entitled either at law
or equity; and the failure of Landlord to insist in any one or more instances
upon a strict performance of any covenant of this Lease or to exercise any
option or right herein contained shall not be construed as a waiver of
relinquishment for the future of such covenant, right or option, but the same
shall remain in full force and effect unless the contrary is expressed in
writing by Landlord.

         33. SUCCESSORS AND ASSIGNS.

         This Lease and the covenants and conditions herein contained shall
inure to the benefit of and be binding upon Landlord, its successors and
assigns, and shall be binding upon Tenant, its successors and assigns, and shall
inure to the benefit of Tenant and only such assigns of Tenant to whom the
assignments by Tenant has been consented to by Landlord.

         34. NOTICES.

         All notices, demands and requests required under this Lease shall be in
writing. All such notices, demands and requests shall be deemed to have been
properly given if sent by United States certified mail, return receipt
requested, postage prepaid, addressed as follows:

         a.       If to Landlord:
                  West Garrett Joint Venture
                  c/o Francis E. Gardiner, Jr.
                  2111 Baldwin Avenue
                  Crofton, Maryland 21114

                  With copies to:
                  Louis Hyatt Inc.
                  1919 West Street
                  Annapolis, Maryland 21401

                  b. If to Tenant:
                  TeleCommunication Systems, Inc.
                  West Garrett Place
                  275 West Street, Suite 400
                  Annapolis, MD 21401

         Either party may designate a change of address by written notice to the
other party, and thereafter all notices to such parties shall be sent by
certified mail to each substitute address.

                                       21
<PAGE>   22
         35. APPLICABLE LAW.

         This Lease shall be construed under the laws of the State of Maryland.

         36. CAPTIONS AND HEADINGS.

         The caption and heading throughout this Lease are for convenience of
reference only and the words contained therein shall in no way be held or deemed
to define, limit, describe, explain, modify, amplify or add to the
interpretation, construction or meaning or any provision or the scope or intent
of this Lease nor in any way affect this Lease.

         37. LEASE RECORDING.

         It is understood and agreed that Landlord shall not record the within
Lease Agreement among the Land Records of Anne Arundel County for any purpose.
In the event that Tenant should elect to record the subject Lease Agreement, it
shall record only a memorandum of the Lease and not the entire within Lease
Agreement. All costs of the recording of the Memorandum of Lease, including
transfer Taxes (if any), shall be borne solely by Tenant.

         38. SUBORDINATION.

         Tenant accepts this Lease, and the tenancy created hereunder, subject
and subordinate to any mortgage or deed of trust constituting a lien upon or
affecting the Building, Garage or the Building Area, or any part thereof. Tenant
shall, at any time hereafter, within ten (10) days written demand by Landlord,
execute any instrument, releases or other documents that may be reasonably
required by any mortgagee or mortgagees or beneficiary under a deed of trust,
and the failure of Tenant to execute any such instruments, releases or
documents, shall constitute a default hereunder. In case of the failure of
Tenant to execute any such instruments, releases or documents on demand,
Landlord is hereby authorized as the attorney and agent of Tenant to execute
such instruments, releases or documents, and in such event Tenant hereby
confirms and ratifies any of the same so executed by virtue of this Power of
Attorney.

         39. ESTOPPEL CERTIFICATES.

         At any time and from time to time, within ten (10) days after Landlord
shall request the same in writing, Tenant will execute, acknowledge, and deliver
to Landlord and to such mortgagee or other party as may be designated by
Landlord, a statement in writing certifying that this Lease is unmodified and in
full force and effect (or if there have been modifications, that the same is in
full force and effect as modified and stating the modifications). Such
certificate shall state the dates to which the rent and other charges have been
paid in advance, if any, and whether or not to the best knowledge of the signer
of such certificate Landlord is in default in performance of any covenant,
agreement or condition contained in this Lease, and if

                                       22
<PAGE>   23
applicable, specifying each such default of which the signer may have knowledge,
it being intended that any such statement delivered hereunder may be relied upon
by third parties not a party to this Lease.

         40. ATTORNMENT.

         In the event of any foreclosure sale or sales pursuant to the terms of
any mortgages or deeds of trust or other security instruments now or hereafter
constituting a lien upon or affecting the Building, Garage or Building Complex
or any part thereof, by virtue of judicial proceedings or otherwise, this Lease
shall, at the option of the mortgagee or beneficiary under the deed of trust or
other security instrument (including any master lease), continue in full force
and effect and Tenant thereunder will, upon request, attorn to and acknowledge
the foreclosure purchaser or purchasers at such sale, as landlords hereunder.

         41. QUIET ENJOYMENT.

         If and so long as Tenant pays the minimum annual rental and any other
sums payable to Landlord under the terms of this Lease, and performs and
observes all the covenants and provisions hereof, Tenant shall quietly enjoy the
Leased Premises, subject, however, to the terms and provisions hereof.

         42. TERMINATION.

         This Lease and the tenancy hereby created shall cease and terminate at
the end of the Lease term, or any extension or renewal thereof, and Tenant
hereby waives notice to vacate the Leased Premises and agrees that Landlord
shall be entitled to the benefit of all provisions of law respecting the summary
recovery of possession of premises from a tenant holding over to the same extent
as if statutory notice had been given. Tenant covenants to notify Landlord in
writing at least ninety (90) days prior to the end of the Lease term of its
intention to renegotiate its Lease or vacate the Leased Premises. Upon failure
of Landlord to receive such written notice, for a period of ninety (90) days
prior to the expiration of the Lease term or any extension or renewal thereof,
Landlord shall have the right to display on the exterior wall of the Leased
Premises (but not in any window or doorway thereof) the customary sign "For
Rent", and during such period Landlord may show the Leased Premises and all
parts thereof to prospective tenants between the hours of 9:00 a.m. to 5:00
p.m. on any day except Saturday and Sunday and except any legal holiday on
which Tenant may not be open for business.

         43. HOLDING OVER.

         Should Tenant remain in possession of all or any part of the Leased
Premises after the expiration of the term of this Lease, or any renewal or
extension thereof, such holding over shall, in the absence of a written
agreement to the contrary, be deemed to have created and be construed to be
tenancy from month to month terminable on thirty (30) days written notice from
either party to the other, at a monthly rental equal to the total of: (1) 110%
of the monthly

                                       23
<PAGE>   24
installment of minimum rental (as adjusted) and payable during the last month of
the term of this Lease under Section 7 hereof or under any Addendum or rider
hereto; (2) Tenant's proportionate share of real estate taxes; and (3) Tenant's
share of common area expenses, utilities, insurance and all other charges under
this Lease and otherwise subject to all of the Other terms, covenants, and
conditions of this Lease insofar as the same may be applicable to a
month-to-month tenancy.

         44. NO OPTION.

         The submission of this Lease for examination does not constitute a
reservation of any option for the Leased Premises, and this Lease becomes
effective as a lease only upon execution and delivery thereof by Landlord and
Tenant.

         45. NO WAIVER.

         The failure of Landlord to insist, in any one or more instances, upon a
strict performance of any of the covenants of this Lease, or to exercise any
option herein contained shall not be construed as a waiver, or a relinquishment
for the future, of such covenant or option, but the same shall continue and
remain in full force and effect. The receipt by Landlord of rent, with knowledge
of the breach of any covenant hereof, shall not be deemed a waiver of such
breach, and no waiver by Landlord of any provision hereof shall be deemed to
have been made unless expressed in writing and signed by Landlord.

         46. ENTIRE AGREEMENT.

         This writing is intended by the parties as a final expression of their
agreement and as a complete and exclusive statement of the terms thereof, all
negotiations, considerations and representations between the parties having been
incorporated herein. No course of prior dealings between the parties or their
affiliates shall be relevant or admissible to supplement, explain or vary any of
the terms of this Lease. Acceptance of, or acquiescence in, a course of
performance rendered under this or any prior agreement between the parties or
their affiliates shall not be relevant or admissible to determine the meaning of
any of the terms of this Lease. No representations, understandings or agreements
have been made or relied upon in the making of this Lease other than those
specifically set forth herein. This Lease can only be modified by a writing
signed by all of the parties hereto or their duly authorized agents.

         47. JOINT AND SEVERAL LIABILITY.

         If two or more individuals, corporations, partnerships or other
business associations (or any combination of two or more thereof) shall sign
this Lease Agreement as Tenant, the liability of each such individuals,
corporations, partnerships or other business associations to pay rent and
perform all other obligations hereunder shall be deemed to be joint and several.
In like manner, if the Tenant named in this Lease Agreement shall be a
partnership or other business association, the members of which are, by virtue
of statute or general law, subject to personal liability, the liability of each
such members shall be deemed to be joint and several.

                                       24
<PAGE>   25
         48. CORPORATE APPROVAL.

         If Tenant is a corporation, Tenant shall provide to Landlord, upon its
execution of this Lease Agreement, a copy of any executed resolution by its
Board of Directors, authorizing the execution of the Lease Agreement and
authorizing the individual executing this Lease Agreement to execute said
Agreement on behalf of and in the name of the Corporation. A copy of said
resolution shall be attached to this Lease and shall be incorporated herein. If
Tenant shall fail to provide the executed resolution as required under this
Section, Landlord may, at its option, declare this Lease Agreement to be null
and void and of no further force or effect.

         49.DELETED

         50.DELETED

         51. LANDLORD'S LIABILITY.

         Anything in this Lease to the contrary notwithstanding, covenants,
undertakings and agreements herein made on the part of the Landlord are made and
intended not as personal covenants, undertakings and agreements or for the
purpose of binding Landlord personally or the assets of Landlord except
Landlord's interest in the Leased Premises and Building, but are made and
intended for the purpose binding only the Landlord's interest in the Leased
Premises and Building as the same may from time to time be encumbered. No
personal liability or personal responsibility is assumed by, nor shall at any
time be asserted or enforceable against, Landlord or its partners or their
respective heirs, legal representatives, successors, and assigns on account of
the Lease or on account of any covenant, undertaking or agreement of Landlord in
this Lease contained.

         52. PRINCIPAL AND AGENT.

         Neither the method of computation of rent nor any other provisions
contained in this Lease nor any acts of the parties shall be deemed or construed
by the parties or by any third person to create the relationship of principal
and agent or of partnership or of joint venture or of any association between
Landlord and Tenant, other than the relationship of Landlord and Tenant.

                                       25
<PAGE>   26
         53. SEVERABILITY.

         If any term or provision, or any portion thereof, of this Lease, or the
application thereof to any person or circumstances shall to any extent be
invalid or unenforceable, the remainder of this Lease, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
term and provision of this Lease shall be valid and be enforced to the fullest
extent permitted by law.

         54. PERFORMANCE.

         Time is hereby made of the essence of each and every one of the terms,
covenants and conditions to be kept, observed or performed under this Lease.

         55. WAIVER OF JURY TRIAL

         THE LANDLORD AND TENANT WAIVE ALL RIGHTS TO A TRIAL BY JURY IN ANY
ACTION, COUNTERCLAIM, OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT
MATTER OF THIS LEASE. THIS WAIVER APPLIES TO ALL CLAIMS AGAINST ALL PARTIES TO
SUCH ACTIONS AND PROCEEDINGS, INCLUDING PARTIES WHO ARE NOT PARTIES TO THIS
LEASE. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY MADE BY THE
TENANT AND THE TENANT ACKNOWLEDGES THAT NEITHER THE LANDLORD, NOR ANY PERSON
ACTING ON BEHALF OF THE LANDLORD, HAS MADE ANY REPRESENTATIONS OF FACTS TO
INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS
EFFECT. THE TENANT FURTHER ACKNOWLEDGES THAT IS HAS BEEN REPRESENTED (OR HAS HAD
THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS LEASE AND IN THE
MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF ITS OWN FREE
WILL, AND THAT IT HAS HAD OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL. THE
TENANT FURTHER ACKNOWLEDGES THAT IT HAS READ AND UNDERSTANDS THE MEANING AND
RAMIFICATIONS OF THIS WAIVER PROVISION AND AS EVIDENCE OF THIS FACT SIGNS ITS
INITIALS.

 JMS
______ INITIALS OF TENANT

         56. DISCLOSURE

         Francis E. Gardiner, Jr., Louis Hyatt, and Roy Morauer, who have
financial interests in West Garrett Joint Venture, are Real Estate Brokers
licensed in the State of Maryland.

                                       26
<PAGE>   27
         IN WITNESS WHEREOF, the parties hereto have executed this Lease
Agreement as of the day and year first above written.

WITNESS:                               WEST GARRETT JOINT VENTURE
                                        A Maryland General Partnership

 /s/ illegible                         By: /s/ Francis E. Gardiner, Jr.,
-------------------------------            -----------------------------
                                           Francis E. Gardiner, Jr.,
                                           Managing Partner

                                       LANDLORD
                                       TELECOMMUNICATION SYSTEMS, INC.

 /s/ Richard A. Young                  By: /s/ Thomas M. Brandt, Jr.
-------------------------------            -----------------------------
                                           By: Thomas M. Brandt, Jr.
                                               -------------------------
                                           Title: VP & CFO
                                                  ----------------------

                                       TENANT

                                       27
<PAGE>   28
                                TCS - Annapolis

                                   Space Plan                            10/2/97

<TABLE>
<CAPTION>

Suite               Offices        Cubes          Total
-----               -------        -----          -----
<S>                 <C>            <C>            <C>
400                   27            17(1)           44
300                   12            17              29
306                    -            14              14
220                   17            20              37
                     ---           ---             ---
Total                 56            68             124
                     ===           ===             ===

</TABLE>

                     4th Floor cubes/non-office workspaces

<TABLE>

          <S>  <C>                                 <C>
          (1)  4 - acctg
               6 - mktg & HR
               2 - admin                            23,399
               1 - recep                               124
               1 - Liz L.                           ------
               1 - Bob Rose                           189
               2 - Proposed room                   per work
              --                                     space
              17
              ==

</TABLE>

<PAGE>   29
                                                                     EXHIBIT "A"

[FLOORPLAN OF 37 WORKSPACES]
<PAGE>   30
SUITE #220

[FLOORPLAN OF 20 CUBES]
<PAGE>   31
                                                                     EXHIBIT "A"

[FLOORPLAN OF 29 WORKSPACES]
<PAGE>   32
SUITE #300

[FLOORPLAN OF 17 WORKSPACES]
<PAGE>   33
SUITE #306

[FLOORPLAN OF 14 WORKSPACES]
<PAGE>   34
                                                                     EXHIBIT "A"

FOURTH FLOOR PLAN
<PAGE>   35
                                   EXHIBIT "B"

                               WEST GARRETT PLACE

                                  TENANT GUIDE

                               MOVE IN PROCEDURES

                               RULES & REGULATIONS

                                    CONTENTS

  I.          BUILDING INFORMATION

 II.          MANAGEMENT INFORMATION

III.          SECURITY FEATURES

 IV.          EMERGENCY PROCEDURES

  V.          MOVE IN PROCEDURES

 VI.          RULES & REGULATIONS

VII.          EMERGENCY DATA SHEET

                            /s/ illegible
                            __________________ Landlord
                               [Signature]

                            /s/ illegible
                            __________________ Tenant
                               [Signature]

                                       29
<PAGE>   36
                             I. BUILDING INFORMATION

         West Garrett Place is located at the intersection of West Street and
Amos Garrett Blvd. It consists of approximately 70,000 square feet of mixed-use
office and retail space. The project also includes a 288 car parking garage-

         The Building is located within the City of Annapolis, blocks from
Church Circle and Downtown. The mailing address for anyone in the building is:

                           West Garrett Place, Suite ____
                           275 West Street
                           Annapolis, Maryland 21401

         The present hours of operation for the building are:

                     Monday thru Friday 6:30 A.M. - 6:00 P.M.

         To accommodate our tenants, these hours can be modified as it becomes
necessary. During hours that the building is closed, tenants may enter using the
in-place security and building entry system (see Section III.).

         The Building is also closed seven (7) days a year for national
holidays. The Holiday schedule is as follows:

<TABLE>
<S>                          <C>                                <C>
          New Year's Day     Memorial Day                       Independence Day
          Labor Day          Thanksgiving & the Friday after
                             Christmas Day
</TABLE>

         The Building can be accessed on these days through the security system.

         The West Garrett Place Garage is attended Monday through Friday from
6:30 A.M. to 8:00 P.M. The Garage handles both monthly and hourly parkers. It is
currently by Towne Park, Ltd. and they can be reached at the Building at
269-5521. The number for the regional office in Baltimore is 685-2332. If you
have a building pass card and a right to park in the garage, this one card will
allow access to both facilities. Your clients, guests, and invitees can park in
the garage at the hourly rate. If you are interested in purchasing parking for
your clients, etc., please see Towne Park, Ltd.

                                       30
<PAGE>   37
                           II. MANAGEMENT INFORMATION

         Management for West Garrett Place is provided to Landlord by Hyatt Real
Estate. If you have any need to contact Hyatt Real Estate, please direct them to
the Commercial Management Division at 266-6500.

         Hyatt Real Estate provides an after hours answering service for
emergencies. That number is 266-6500.

         All correspondence or payments are to be sent to the following address:

                       WEST GARRETT PLACE
                       C/O HYATT REAL ESTATE
                       1919 WEST STREET
                       ANNAPOLIS, MD 21401

         Toward the end of the month, you will receive a rent statement for the
following month. If you have parking that is included with your lease, these
charges will be included on that statement along with any other charges for your
space. If you do not understand the statement, please give us a call.

                  III. SECURITY FEATURES

         West Garrett Place is equipped with a computerized card entry security
system. This system monitors the building and the garage. You will find data
forms enclosed for this security system. These forms must be completed on
yourself and any of your employees that you wish to have access to the building
after hours. These forms also need to be completed on any employees that have
parking rights in the garage.

         After the cards are programmed, the monitoring system of the building
will or will not allow access to the building in accordance with your requests.
To gain access to the building, "card readers" have been installed at various
entrances to the building and at the outside entrances to all tenant floors from
elevator #2. The building monitor locations are as follows:

                  - Garage entrance Level 1G".

                  - Lobby #2 outside entrance.

                  - * Exterior entrance to tenant floors from garage elevator
(#2).

This system is not in effect at this time. Identifiers for these hidden readers
will be placed on the wall when activated.

         To gain entrance with your card, simply hold the card against the
reader. You do not have to take the card out of your wallet, the system can
"read" the card through it.

                                       31
<PAGE>   38
         Security cards are issued free to tenants for this access with the
required data information. However, if a card is lost there will be a $20.00
charge for an replacement. If you do lose your card, notify Hyatt Real Estate
immediately. These cards are tailor programmed for each person and they have a
trace feature which lists your name on a print out when you use the card. Any
lost cards must be deleted from the system to assure that unauthorized persons
do not enter the building using your name. The security card will also allow
those tenants, with a right to park, access to the garage.

         The garage is equipped with an "anti-passback" feature. This feature
prohibits a card holder from allowing unauthorized access to the garage. Once
you enter the garage with your passcard, you must exit before it will allow you
back in. If you or your clients leave the garage after attended hours, the exits
will automatically open to let you out. this should not interfere with you
entering the garage again. If for some reason you do have trouble entering the
garage, the Towne Park attendant will assist you.

         If you or your employees have any trouble with the building access
system or in locating the monitor points, please let us know. We will be happy
to demonstrate the system for you.

                  V. EMERGENCY PROCEDURES

         West Garrett Place is equipped with three (3) stairwells. One next to
the garage elevator (#2), one facing Amos Garrett Blvd. and one leading to the
side of the building facing down West Street.

         If an emergency arises where the building needs to be evacuated, these
are the exits to use. Each tenant should appoint "Emergency Monitors" that will
be responsible for every person in the suite in case of an emergency. Every
employee needs to be aware of the closest emergency exit and where your office
will assemble in case of evacuation.

         If your suite is close to either the stairs next to the back elevators
or the stairs facing down West St., pick a location in the back parking lot next
to Monticello to meet. If your suite is closest to the stairs leading to Amos
Garret, choose a location on the other side of the street to meet.

         The enclosed form needs to be filled out and returned to Hyatt Real
Estate listing the monitors for your office and the location where you have
chosen to assemble. Fire Drills will be scheduled periodically so that everyone
will be familiar with the procedures.

         The enclosed floor plan shows the locations of the stairwells. This
should be posted around your suite with the exit route for your suite marked.

                  IV. MOVE IN PROCEDURES

         In a attempt to make your move to West Garrett Place as hassle-free as
possible the following procedures and guidelines have been established:

                                       32
<PAGE>   39
         - Notify Hyatt Real Estate at least 24 hours in advance if you have any
workers or contractors that will need access to the mechanical rooms of the
building prior to move in. This will assure that keys are provided to them and
that vial functions such as your phone system are in place when you arrive.

         - Have your moving company contact Hyatt Real Estate with the date that
you will be moving. To cut down on building disruption, moves can only take
place after 5:00 p.m. on weekdays or on weekends. Someone will be here to meet
you and provide any keys, etc. that might be needed.

         - To preserve the appointments of the building, all moves will use the
garage elevator (elevator #2). The movers can use the Monticello entrance to the
garage and the first level garage elevator. The elevator will be equipped with
pads to protect the walls and you can sign out a key to hold the elevator for
easy loading and unloading.

         - You will need to arrange with the moving company to provide floor
mats and wall protection for the hallways and your suite walls.

         - Tenants will be responsible for arranging to have any large or bulky
boxes removed from the building and grounds.

         Again, these guidelines are for your benefit, if you have any
questions, or need special arrangements, please contact Hyatt Real Estate.

                  VI. RULES & REGULATIONS

         Landlord reserves the right at any time to add to, modify or rescind
these Rules and Regulations, or to waive these Rules and Regulations for the
benefit of any particular tenant or tenants, but no such wavier by Landlord
shall be construed as a waiver in favor of any other tenant or tenants nor
prevent Landlord from thereafter enforcing any such Rules and Regulations
against any or all of the tenants. These Rules and Regulations are in addition
to the Lease and shall not be construed to in any way modify, alter or amend the
Lease, in whole or in part.

         All areas of the Building other than those under lease to tenants,
shall be under the sole control of Landlord who shall have the exclusive right
to regulate and control these areas. The common areas of the Building shall not
be obstructed by any of the tenants, or used by them for any purpose other than
for ingress to and egress from any premises. Landlord shall in all cases retain
the right, but not the obligation, to control and prevent access to the Building
by all persons whose presence the Landlord considers, in its sole discretion, to
be prejudicial to the safety, character, reputation and interests of the
Building and Tenants.

         Landlord retains absolute control over the exterior appearance of the
Building and the exterior appearance of any premises as viewed from the exterior
of the Building, or from public halls or passageways, and tenants shall not,
without Landlord's prior written consent, install or permit to be installed any
lighting, paintings, drapes, blinds, shades, signs, lettering, placards,
decorations or advertising media of any type which can be viewed from the
exterior of the Building, or from public halls or passageways. If any tenant
obtains

                                       33
<PAGE>   40
permission and installs any of the above items, such tenant shall not make any
changes, alterations or modifications to said installed items without the prior
written consent of Landlord, and such tenant shall maintain such items at its
expense in a neat and orderly manner at all times.

         In the event any tenant fails to keep and perform any of the terms and
conditions hereof, such a default shall constitute an event of default under
such tenant's Lease.

         The directory of the Building will be provided for the display of the
name and location of Tenants and Landlord may exclude any other names from the
directory.

         Unless the Use of the Leased Premises designated in your Lease is the
sale or preparation of food, no cooking shall be done or permitted by any Tenant
on the premises, except for the preparation of coffee, tea, hot chocolate and
similar items by Tenant. Tenants shall not use or keep in or about the Building
any kerosene, gasoline, inflammable or combustible fluid or material, or any
foul or noxious gas or substance. Tenant shall not permit or suffer the Building
to be occupied or used in a manner offensive or objectionable to Landlord or
other Tenants by reason of noise, odors and/or vibrations. No portion of the
Building shall be used for lodging or sleeping or for any immoral or illegal
purpose.

         The toilets, wash basins and other plumbing fixtures shall not be used
for any purpose other than those for which they were constructed, and not
sweeping, rubbish, rags or other substances shall be thrown therein. All damage
resulting from any misuses of fixtures shall be borne by any tenant who, or
whose employees, agents or visitors, shall have caused the same.

         The tenants shall not place any other or additional lock, bolt or mail
slot upon any door, window or wall within the Leased Premises or elsewhere upon
the Building, and shall surrender all keys for all such locks at the end of the
term. The Landlord shall provide the Tenant with one set of keys to the Leased
Premises when the Tenant assumes possession thereof. Tenant shall not change the
locks on any door within or without the Premises without the prior written
consent of Landlord, and shall deliver a set of all keys to said locks to
Landlord.

         The delivery of towels, ice, water, food, beverages, newspapers, and
other supplies, equipment and furniture will be permitted only under the
Landlord's direction and control. At this time, all deliveries will be make via
Monticello Avenue and elevator #2 (small elevator). No furniture, package,
equipment, supplies, or merchandise may be received in the Building, or carried
up or down in the elevators or stairways, except during such hours as are
designated for such purpose by the Landlord, and only after the Tenant gives
notice thereof to the Landlord. The Landlord shall have the exclusive right to
prescribe the method and manner in which any of the same is brought into or
taken out of the Building, and the right to exclude from the Building any heavy
furniture, safe or other article which may create a hazard and to require it to
be located at a designated place in the Premises. The Tenant shall not place any
weight anywhere beyond the safe carrying capacity of the building. The cost of
repairing any damage to the Building or any other part of the Property caused by
taking any of the same in or out of the Premises, or any damage caused while it
is in the Premises or the rest of the Building, shall be borne by the Tenant.

                                       34
<PAGE>   41
         The Tenant shall not do or permit to be done anything which obstructs
or interferes with the rights of any other tenant of the Property. The Tenant
shall not keep anywhere within the Property any matter having an offensive odor,
or any kerosene, gasoline, benzine, camphene, fuel or other explosive or highly
flammable material. No bird, fish or other animal shall be brought into or kept
in or about the Premises by Tenant.

         So that the Premises may be kept in a good state of preservation and
cleanliness, the Tenant shall, while in possession of the Premises, permit only
the Landlord's employees and contractors to clean the Premises unless prior
thereto the Landlord otherwise consents in writing. The Landlord shall not be
responsible to the Tenant for any damage done to any furniture or other property
of the Tenant or any other person or for any loss sustained by any of the
Tenant's employees, or for any loss of property of any kind in or from the
Premises, unless caused by Landlord, its employees or agents. The Tenant shall
see each day that the windows are closed and the doors securely locked before
leaving the premises, and that all lights and standard office equipment within
the Premises are turned off. All janitor service shall be performed in
accordance with Landlord's Building Service standard. (In the event Tenant
desires additional service, said service shall be at Tenant's sole costs and
expense.)

         If the Tenant desires to install signalling, telegraphic, telephonic,
protective alarm or other wires, apparatus or devices within the Premises, the
Landlord shall direct where and how they are to be installed and, except as so
directed, no installation, boring or cutting shall be permitted, except as
otherwise shown on Tenant's space plan, as approved by the Landlord. The
Landlord shall have the right (a) to prevent or interrupt the transmission of
excessive, dangerous or annoying current of electricity or otherwise into or
through the Building or the Premises (b) to require the changing of wiring
connections or layout at the Tenants expense, to the extent that the Landlord
may deem necessary, (c) to require compliance with such reasonable rules as the
Landlord may establish relating thereto, and (d) in the event of noncompliance
with such requirements or rules, immediately to cut wiring or do whatever else
it considers necessary to remove the danger, annoyance or electrical
interference with apparatus in any part of the Building. Each wire installed by
the Tenant must be clearly tagged at each distributing board and junction box
and elsewhere where required by the Landlord, with the number of the office to
which such wire leads and the purpose for which it is used, together with the
name of the Tenant or other concern, if any, operating or using it.

         Without the Landlord's prior written consent, (a) nothing shall be
fastened to (and no hole shall be drilled, or nail or screw driven into) any
wall or partition, (b) no wall, or partition shall be painted, papered or
otherwise covered or moved in any way or marked or broken, (c) no connection
shall be made to any electrical wire or running any fan, motor or other
apparatus, device or equipment, (d) no machinery of any kind other than
customary small business machinery shall be allowed in the Premises, (e) no
switchboard or telephone wiring or equipment shall be placed anywhere other than
where designated by the Landlord, and (f) no mechanic shall be allowed to work
in or about the Building other than one employed by the Landlord.

         The Tenant shall have access to the Leased Premises at all reasonable
times. The Landlord shall in no event be responsible for admitting or excluding
any person from the Leased Premises. In case of invasion, hostile attack,
insurrection, mob violence, riot, public excitement or other commotion,
explosion, fire or any casualty, the Landlord shall have the right to bar or
limit access to the Building to protect the safety of occupants of the Building,
or any property within the Building Complex.

                                       35
<PAGE>   42
         The Tenant shall keep the windows and doors of the Premises (including
those opening on corridors and all doors between rooms entitled to receive
heating or air conditioning service and rooms not entitled to receive such
service), closed while the heating or air conditioning system is operating, in
order to minimize the energy used by, and to conserve the effectiveness of, such
systems. The Tenant shall comply with all reasonable Rules and Regulations from
time to time promulgated by the Landlord with respect to such systems or their
use.

         Nothing in these Rules and Regulations shall give any Tenant any right
or claim against the Landlord or any other person if the Landlord does not
enforce any of them against any other tenant or person (whether or not the
Landlord has the right to enforce them against such tenant or person), and no
such nonenforcement with respect to any tenant shall constitute a waiver of the
right to enforce them as to the Tenant or any other tenant or person.

         Tenant shall be obligated, at all times, to protect the Property's
and/or Buildings's finishes, including, without limitation, decorative brick,
paving, granite flooring, carpeting, wood paneling, brass fixtures, elevator
paneling and corridor paneling. The Tenant shall be responsible for any damage
that Tenant or any of its agents, contractors, servants, employees, subtenants,
licensees or invitees cause to any of the Property's and/or Building's finishes.

         Parking and the access drives thereto are provided solely as an
accommodation to Tenants on a non-exclusive basis. The use of the parking areas
and drives shall be at the vehicle owner's sole risk. Tenant (a) will observe
all parking and traffic regulations promulgated from time to time by the
Landlord, (b) will park only properly tagged and functioning motor vehicles in
the parking areas and will not permit or maintain any commercial vehicles,
trucks, trailers, campers or boats in or about the Property, and (c) will not
permit the use of the parking areas for the washing, storage or repair of any
motor vehicle. Landlord shall have the right to have any non-complying vehicle
towed and stored at Tenant's risk and expense, and to charge Tenant $50.00 per
violation for each violation by Tenant, its employees, agents, invitees and
licensees.

         No bicycles, motor scooters or any other type of vehicle shall be
brought into the Building.

         Tenant will not make any changes, modification or alterations to the
Leased Premises without the written permission of the Landlord. Tenant will make
no changes or tie-ins to the Building's mechanical, electrical or phone systems
without the approval of the Landlord as to type of equipment, manner of tie-ins
and contractor performing the work.

         Landlord shall have the right to prohibit Tenant's use of the Building
name or photo in its advertising which, in the opinion of the landlord, tends to
impair the reputation of the Building.

         Landlord reserves the right to exclude from the Building, between the
hours of 6:00 PM and 7:00 AM on all days and all the hours of Saturday, Sunday
and legal holidays, all persons who do not present a Building pass issued by
Tenant.

         Tenant's contractor, while in the Building or Leased Premises or
parking areas shall be subject to the Rules and Regulations of the Building and
will also be subject to direction from the Landlord or its agents, but will not
be an agent or contractor of the Landlord or its agents.

                                       36
<PAGE>   43
         If the Leased Premises or any part of the Building becomes infested
with vermin as a result of the use or neglect on the part of the Tenant, the
Tenant shall reimburse Landlord for the extermination expenses.

         If, as a result of any governmental rule of regulation or law, Landlord
imposes a curtailment of services or a reduction of energy usage, the Tenant
shall comply and shall be liable for any surcharges imposed upon Landlord for
non-compliance.

         Tenant shall install and maintain, at Tenant's expense, fire
extinguishers, per local governmental regulations or law, next to any
duplicating machine or similar heat producing equipment.

         Tenant shall install and maintain, at Tenant's expense, any life safety
equipment required by governmental rules, regulations or laws to be kept in the
Leased Premises, except for any such equipment which is capital in nature.

         No air conditioner or heater or similar device shall be used without
the prior approval of Landlord.

         No canvassing or soliciting shall be allowed in the Building.

         Tenant shall not conduct in or about the Building any auction, public
or private, without the prior written approval of Landlord.

         Landlord will furnish Tenant, free of charge, one key to the entry door
of their Premises. Landlord shall make a reasonable charge for any additional
keys. Tenant upon termination of its Lease, shall deliver to Landlord all keys
to doors of the Building.

         Landlord reserves the right to prohibit smoking in the common areas of
the Building. Tenant may designate areas within their premises for smoking, but
no smoking shall be permitted within the common areas.

                                       37
<PAGE>   44
                            EMERGENCY PROCEDURE DATA

COMPANY NAME: _________________________________________________________

SUITE NUMBER: _____________________________ PHONE: ____________________

NUMBER OF EMPLOYEES: _________

                               EMERGENCY MONITORS

1ST ____________________________________ HOME PHONE: ___________________________

2ND ____________________________________ HOME PHONE: ___________________________

3RD ____________________________________ HOME PHONE: ___________________________

                        CLOSEST EMERGENCY EXIT STAIRWELL:

___________ 1) FACING DOWN WEST STREET

___________ 2) BESIDE ELEVATOR #2

___________ 3) FACING AMOS GARRETT BLVD.

                              DESIGNATED MEET POINT

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

                                       38
<PAGE>   45
                           WEST GARRETT JOINT VENTURE
                                    ADDENDUM

Addendum
To Lease dated the 1st day of October, 1997, by and between West Garrett Joint
Venture (Landlord) and TeleCommunication Systems, Inc., (Tenant) for the Leased
Premises known as West Garrett Place, Suites 400, 300, 306, and 222, 275 West
Street, Annapolis, Maryland.

     SAID LEASE is hereby amended as follows:

1.   Tenant Allowance - The Tenant shall be entitled to a $50,000.00 allowance
     payable ratably over the first three (3) months of the Lease term. This
     allowance shall be taken as a reduction of the monthly rental payments.
     It is understood that the intent of this Allowance is to provide funds
     for the improvement of the Leased Premises, namely painting, carpet, office
     cubicles and the move-out of suite 320.

2.   Expansion - The Tenant shall have the right of first refusal for any
     additional available space in the Building during the original and renewal
     Lease terms (except for current vacancy within the Building and any first
     floor space). This right shall be exercisable only if the Tenant has
     complied with the terms and covenants of this Lease, and only if the
     Tenant continues to provide a quarter-annual notice to the Landlord of the
     anticipated need for additional space in the building over the successive
     three months. Said first right of refusal shall be granted as follows:
     Tenant shall advise Landlord in writing no later than the first day of
     each calendar quarter of its anticipated additional space requirements
     within the building for the succeeding three months. After such notice,
     Landlord shall advise Tenant, in writing, of that information, setting
     forth the location, square footage, the date and the lease terms upon
     which such space shall be available. Within ten (10) days after the date
     of such notice, Tenant shall notify Landlord in writing of its intention to
     acquire such additional space. If Tenant fails to notify Landlord of its
     intention to acquire such additional space within ten (10) days after
     receipt of the notice of the availability by Landlord, or, if after
     notifying Landlord of its intent to acquire said additional space, the
     Landlord and Tenant do not enter into a lease agreement within forty-five
     (45) days after the date of notice of availability by Landlord to Tenant
     then this right to first refusal shall be void and of no effect. This
     right is subject to any prior rights of first refusal given by Landlord to
     other tenants within the Building.

3.   Storage Space - The Tenant shall be entitled to utilize 228 square feet of
     the Plaza level storage space, for the amount of One Hundred Ninety and
     00/100 dollars ($190.00) per month, to be added to the minimum annual
     rental, through the initial term of this Lease.

All other terms and conditions of the above referenced Lease remain as
originally agreed, unless amended by subsequent addenda/amendments executed by
the parties hereto.

                                              WEST GARRETT JOINT VENTURE
ATTEST/WITNESS:                          Landlord, By: Francis E. Gardiner, Jr.
                                                    Managing Partner

/s/ CAROL B. URBANSKI                     /s/ FRANCIS E. GARDINER, JR. GEN. PAR.
----------------------------              -------------------------------------

                                          TELECOMMUNICATION SYSTEMS, INC.
/s/ RICHARD A. YOUNG
----------------------------              /s/ THOMAS M. BRANDT, JR.
                                          -------------------------------------
                                          By: Thomas M. Brandt, Jr.
                                          Senior Vice President and Chief
                                          Financial Officer
<PAGE>   46
                           WEST GARRETT JOINT VENTURE
                                LEASE PROVISIONS

TRADE NAME TeleCommunication Systems, Inc,

PROPERTY ADDRESS:          West Garrett Place
                           275 West Street, Suite 400
                           Annapolis, Maryland 21401

USE OF PREMISES: Professional Office

TERM: Five (5) YRS                RENEWAL OPTION Two (2), Three (3) yr. options

COMMENCEMENT DATE: September 1, 1997        EXPIRATION DATE: October 31, 2008

SIZE OF PREMISES: 23,399 SF W/CORE

INCREASE:         Year One: $19.10 PSF
                  Year Two: $19.45 PSF
                  Year Three: $19.80 PSF
                  Year Four: $20.40 PSF
                  Year Five: $20.50 PSF

Three percent (3%) annual increase beginning with year six (6).

BASE RENT:        $19.10 PSF         October 1, 1998 ADJUSTMENT DATE

                  $ 446,920.90 INITIAL ANNUAL BASE RENT
                  $  37,243.41 MONTHLY RENTAL

         EXPENSE STOP OF $6.45 PER SQUARE FOOT

PARKING SPACES:   Forty-eight (48) SPACES (included in rent)

SECURITY DEPOSIT: On deposit

NOTICE TO TENANT:         TeleCommunication Systems, Inc.
                          275 West Street, Suite 400
                          Annapolis, Maryland 21401

In the event of any conflict between the foregoing summary and the balance of
the Lease, the latter shall control.

 *LATE CHARGE: TEN PERCENT (10%), IF NOT PAID BY THE 10TH OF MONTH* THIS LEASE
IS SUBJECT TO THE APPROVAL OF WEST GARRETT JOINT VENTURE.

**Net Square Footage is an estimate, subject to final plan.

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