Document:

exv4w1

Exhibit 4.1

EXECUTION VERSION

 

 

TELECOMMUNICATION SYSTEMS, INC.

4.5% CONVERTIBLE SENIOR NOTES DUE NOVEMBER 1, 2014

 

INDENTURE

DATED AS OF NOVEMBER 16, 2009

 

THE BANK OF NEW YORK MELLON,

AS TRUSTEE

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	ARTICLE 1
	 	 	 	 
	 
	 	 	 	 	 	 
	DEFINITIONS AND INCORPORATION BY REFERENCE
	 	 	 	 
	 
	 	 	 	 	 	 
	Section 1.01.
	 	Definitions	 	 	1	 
	Section 1.02.
	 	Other Definitions	 	 	6	 
	Section 1.03.
	 	Trust Indenture Act Provisions	 	 	7	 
	Section 1.04.
	 	Rules of Construction	 	 	7	 
	 
	 	 	 	 	 	 
	ARTICLE 2
	 	 	 	 
	 
	 	 	 	 	 	 
	THE SECURITIES
	 	 	 	 
	 
	 	 	 	 	 	 
	Section 2.01.
	 	Form and Dating	 	 	8	 
	Section 2.02.
	 	Execution and Authentication	 	 	9	 
	Section 2.03.
	 	Registrar, Paying Agent and Conversion Agent	 	 	10	 
	Section 2.04.
	 	Paying Agent to Hold Money in Trust	 	 	11	 
	Section 2.05.
	 	Securityholder Lists	 	 	11	 
	Section 2.06.
	 	Transfer and Exchange	 	 	11	 
	Section 2.07.
	 	Replacement Securities	 	 	12	 
	Section 2.08.
	 	Outstanding Securities	 	 	13	 
	Section 2.09.
	 	Treasury Securities	 	 	13	 
	Section 2.10.
	 	Temporary Securities	 	 	14	 
	Section 2.11.
	 	Cancellation	 	 	14	 
	Section 2.12.
	 	Legends; Additional Transfer Requirements	 	 	14	 
	Section 2.13.
	 	CUSIP Numbers	 	 	20	 
	Section 2.14.
	 	Ranking	 	 	20	 
	Section 2.15.
	 	Issuance, Transfer and Exchange of Common Stock Issuable Upon Conversion of the Securities	 	 	20	 
	Section 2.16.
	 	Additional Securities	 	 	20	 
	Section 2.17.
	 	Additional Interest	 	 	21	 
	Section 2.18.
	 	Calculations in Respect of Securities	 	 	21	 
	 
	 	 	 	 	 	 
	ARTICLE 3
	 	 	 	 
	 
	 	 	 	 	 	 
	PURCHASES OF SECURITIES UPON FUNDAMENTAL CHANGE
	 	 	 	 
	 
	 	 	 	 	 	 
	Section 3.01.
	 	Purchase of Securities at Option of the Holder Upon Fundamental Change	 	 	22	 
	Section 3.02.
	 	Effect of Fundamental Change Purchase Notice	 	 	25	 
	Section 3.03.
	 	Deposit of Fundamental Change Purchase Price	 	 	26	 
	Section 3.04.
	 	Securities Purchased in Part	 	 	27	 
	Section 3.05.
	 	Compliance with Securities Laws Upon Purchase of Securities	 	 	27	 

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TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	Section 3.06.
	 	No Fundamental Change Repurchase Following Acceleration	 	 	27	 
	Section 3.07.
	 	Trustee’s Fundamental Change Purchase Disclaimer	 	 	27	 
	 
	 	 	 	 	 	 
	ARTICLE 4
	 	 	 	 
	 
	 	 	 	 	 	 
	PAYMENT OF INTEREST AND ADDITIONAL SHARES
	 	 	 	 
	 
	 	 	 	 	 	 
	Section 4.01.
	 	Interest Payments	 	 	27	 
	Section 4.02.
	 	Additional Shares	 	 	28	 
	 
	 	 	 	 	 	 
	ARTICLE 5
	 	 	 	 
	 
	 	 	 	 	 	 
	CONVERSION
	 	 	 	 
	 
	 	 	 	 	 	 
	Section 5.01.
	 	Conversion Privilege	 	 	30	 
	Section 5.02.
	 	Conversion Procedure	 	 	30	 
	Section 5.03.
	 	Fractional Shares	 	 	31	 
	Section 5.04.
	 	Taxes on Conversion	 	 	32	 
	Section 5.05.
	 	Issuance of Common Stock Upon Conversion	 	 	32	 
	Section 5.06.
	 	Adjustment of Conversion Price	 	 	33	 
	Section 5.07.
	 	No Adjustment	 	 	39	 
	Section 5.08.
	 	Adjustment for Tax Purposes	 	 	40	 
	Section 5.09.
	 	Temporary Reduction of Conversion Price	 	 	40	 
	Section 5.10.
	 	Notice of Certain Transactions	 	 	40	 
	Section 5.11.
	 	Effect of Reclassification, Consolidation, Merger, Binding Share Exchange or Sale on Conversion Privilege	 	 	41	 
	Section 5.12.
	 	Disclaimer	 	 	42	 
	Section 5.13.
	 	Limitation on Adjustments	 	 	43	 
	 
	 	 	 	 	 	 
	ARTICLE 6
	 	 	 	 
	 
	 	 	 	 	 	 
	[RESERVED]
	 	 	 	 
	 
	 	 	 	 	 	 
	ARTICLE 7
	 	 	 	 
	 
	 	 	 	 	 	 
	COVENANTS
	 	 	 	 
	 
	 	 	 	 	 	 
	Section 7.01.
	 	Payment of Securities	 	 	43	 
	Section 7.02.
	 	SEC Reports	 	 	44	 
	Section 7.03.
	 	No Resale of Restricted Securities	 	 	44	 
	Section 7.04.
	 	Compliance Certificates	 	 	44	 
	Section 7.05.
	 	Additional Interest Notice	 	 	45	 
	Section 7.06.
	 	Rule 144A Information Requirements	 	 	45	 
	Section 7.07.
	 	Further Instruments and Acts	 	 	45	 

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TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	Section 7.08.
	 	Maintenance of Corporate Existence	 	 	46	 
	Section 7.09.
	 	Stay, Extension and Usury Laws	 	 	46	 
	Section 7.10.
	 	Additional Interest Payable Upon Failure to Report or to Delegend	 	 	46	 
	 
	 	 	 	 	 	 
	ARTICLE 8
	 	 	 	 
	 
	 	 	 	 	 	 
	CONSOLIDATION, MERGER, BINDING SHARE EXCHANGE, CONVEYANCE, TRANSFER OR LEASE
	 	 	 	 
	 
	 	 	 	 	 	 
	Section 8.01.
	 	Company May Consolidate, etc., only on Certain Terms	 	 	47	 
	Section 8.02.
	 	Successor Substituted	 	 	48	 
	 
	 	 	 	 	 	 
	ARTICLE 9
	 	 	 	 
	 
	 	 	 	 	 	 
	DEFAULT AND REMEDIES
	 	 	 	 
	 
	 	 	 	 	 	 
	Section 9.01.
	 	Events of Default	 	 	48	 
	Section 9.02.
	 	Acceleration	 	 	50	 
	Section 9.03.
	 	Other Remedies	 	 	51	 
	Section 9.04.
	 	Waiver of Defaults and Events of Default	 	 	51	 
	Section 9.05.
	 	Control by Majority	 	 	51	 
	Section 9.06.
	 	Limitations on Suits	 	 	51	 
	Section 9.07.
	 	Rights of Holders to Receive Payment and to Convert	 	 	52	 
	Section 9.08.
	 	Collection Suit by Trustee	 	 	52	 
	Section 9.09.
	 	Trustee May File Proofs of Claim	 	 	52	 
	Section 9.10.
	 	Priorities	 	 	53	 
	Section 9.11.
	 	Undertaking for Costs	 	 	53	 
	 
	 	 	 	 	 	 
	ARTICLE 10
	 	 	 	 
	 
	 	 	 	 	 	 
	TRUSTEE
	 	 	 	 
	 
	 	 	 	 	 	 
	Section 10.01.
	 	Duties of Trustee	 	 	54	 
	Section 10.02.
	 	Rights of Trustee	 	 	55	 
	Section 10.03.
	 	Monies Held in Trust	 	 	56	 
	Section 10.04.
	 	Trustee’s Disclaimer	 	 	56	 
	Section 10.05.
	 	Notice of Default or Events of Default	 	 	56	 
	Section 10.06.
	 	Reports by Trustee to Holders	 	 	57	 
	Section 10.07.
	 	Compensation and Indemnity	 	 	57	 
	Section 10.08.
	 	Replacement of Trustee	 	 	58	 
	Section 10.09.
	 	Successor Trustee by Merger, etc.	 	 	59	 
	Section 10.10.
	 	Eligibility; Disqualification	 	 	59	 
	Section 10.11.
	 	Preferential Collection of Claims Against Company	 	 	59	 
	Section 10.12.
	 	Trustee or Agents May Hold Securities	 	 	59	 

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TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	ARTICLE 11
	 	 	 	 
	 
	 	 	 	 	 	 
	SATISFACTION AND DISCHARGE
	 	 	 	 
	 
	 	 	 	 	 	 
	Section 11.01.
	 	Satisfaction and Discharge	 	 	59	 
	Section 11.02.
	 	Application of Trust Money	 	 	60	 
	Section 11.03.
	 	Repayment to Company	 	 	60	 
	Section 11.04.
	 	Reinstatement	 	 	61	 
	 
	 	 	 	 	 	 
	ARTICLE 12
	 	 	 	 
	 
	 	 	 	 	 	 
	AMENDMENTS, SUPPLEMENTS AND WAIVERS
	 	 	 	 
	 
	 	 	 	 	 	 
	Section 12.01.
	 	Without Consent of Holders	 	 	61	 
	Section 12.02.
	 	With Consent of Holders	 	 	62	 
	Section 12.03.
	 	Compliance with Trust Indenture Act	 	 	63	 
	Section 12.04.
	 	Revocation and Effect of Consents	 	 	63	 
	Section 12.05.
	 	Notation on or Exchange of Securities	 	 	63	 
	Section 12.06.
	 	Trustee to Sign Amendments, etc.	 	 	63	 
	Section 12.07.
	 	Effect of Supplemental Indentures	 	 	64	 
	 
	 	 	 	 	 	 
	ARTICLE 13
	 	 	 	 
	 
	 	 	 	 	 	 
	MISCELLANEOUS
	 	 	 	 
	 
	 	 	 	 	 	 
	Section 13.01.
	 	Trust Indenture Act Controls	 	 	64	 
	Section 13.02.
	 	Notices	 	 	64	 
	Section 13.03.
	 	Communications by Holders with Other Holders	 	 	65	 
	Section 13.04.
	 	Certificate and Opinion as to Conditions Precedent	 	 	65	 
	Section 13.05.
	 	Record Date for Vote or Consent of Securityholders	 	 	66	 
	Section 13.06.
	 	Rules by Trustee, Paying Agent, Registrar and Conversion Agent	 	 	66	 
	Section 13.07.
	 	Legal Holidays	 	 	66	 
	Section 13.08.
	 	Governing Law	 	 	66	 
	Section 13.09.
	 	No Adverse Interpretation of Other Agreements	 	 	66	 
	Section 13.10.
	 	No Recourse against Others	 	 	66	 
	Section 13.11.
	 	Successors	 	 	67	 
	Section 13.12.
	 	Multiple Counterparts	 	 	67	 
	Section 13.13.
	 	Severability	 	 	67	 
	Section 13.14.
	 	Table of Contents, Headings, etc.	 	 	67	 
	Section 13.15.
	 	Force Majeure	 	 	67	 
	Section 13.16.
	 	Waiver of Jury Trial	 	 	67	 
	Section 13.17.
	 	Not Security Interest Created	 	 	68	 
	Section 13.18.
	 	Benefits of Indenture	 	 	68	 
	SCHEDULE 4.02	 	 	S-1	 

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	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	Exhibit A
	 	Form of Security	 	 	A-R-1	 
	Exhibit B
	 	Form of Transfer Certificate for Transfer of Restricted Common Stock	 	 	B-1	 

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     THIS INDENTURE, dated as of November 16, 2009, is between TeleCommunication Systems, Inc., a
corporation duly organized under the laws of Maryland (the “Company”), and The Bank of New York
Mellon, a New York banking corporation having its principal office at 101 Barclay Street, Floor 8W,
New York, New York 10286, as Trustee (the “Trustee”).

     In consideration of the premises and the acquisition of the Securities by the Holders thereof,
both parties agree as follows for the benefit of the other and for the equal and ratable benefit of
the registered Holders of the Securities.

ARTICLE 1

DEFINITIONS AND INCORPORATION BY REFERENCE

     Section 1.01. Definitions.

     “Additional Interest” means any additional interest payable pursuant to Section 7.10 or
Section 9.02(b) hereof.

     “Affiliate” means, with respect to any specified person, any other person directly or
indirectly controlling or controlled by or under direct or indirect common control with such
specified person. For the purposes of this definition, “control” when used with respect to any
person means the power to direct the management and policies of such person, directly or
indirectly, whether through the ownership of voting securities, by contract or otherwise; and the
terms “controlling” and “controlled” have meanings correlative to the foregoing.

     “Agent” means any Registrar, Paying Agent or Conversion Agent.

     “Applicable Procedures” means, with respect to any transfer or exchange of beneficial
ownership interests in a Global Security, the delegending of Global Securities or shares of Common
Stock, or the increase or decrease in the aggregate principal amount of the Global Security from
time to time, the rules and procedures of the Depositary, in each case to the extent applicable to
such transfer, exchange, delegending, or increase or decrease in aggregate principal amount of the
Global Security.

     “Board of Directors” means either the board of directors of the Company or any committee of
the Board of Directors specifically authorized to act for it with respect to this Indenture.

     “Business Day” means each day that is not a Legal Holiday.

     “Capital Stock” of any Person means any and all shares, interests, rights to purchase,
warrants, options, participations or other equivalents of or interests in (however designated)
equity of such Person, but excluding any debt securities convertible into such equity.

     “Cash” or “cash” means such coin or currency of the United States as at any time of payment is
legal tender for the payment of public and private debts.

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     “Certificated Security” means a Security that is in substantially the form attached hereto as
Exhibit A and that does not include the information or the schedule called for by footnotes
1, 3 and 7 thereof.

     “Closing Sale Price” of the Common Stock means, as of any date of determination, the closing
sale price per share (or, if no such closing sale price is reported on such day, the average of the
bid and asked prices or, if more than one in either case, the average of the average bid and the
average asked prices) at 4:00 p.m. (New York City time) on such date as reported in composite
transactions for the principal U.S. securities exchange on which the Common Stock is traded or, if
the Common Stock is not listed on a U.S. national or regional securities exchange, as reported by
Pink OTC Markets Inc. If the Common Stock is not so reported, the “Closing Sale Price” of the
Common Stock means the average of the mid-point of the last bid and ask prices for the Common Stock
on the relevant date from each of at least three U.S. nationally recognized independent investment
banking firms selected by the Company for this purpose. The Closing Sale Price shall be determined
without reference to extended or after hours trading.

     “Common Stock” means Class A common stock of the Company, $0.01 par value, as it exists on the
date of this Indenture and any shares of any class or classes of Capital Stock of the Company
resulting from any reclassification or reclassifications thereof and which have no preference in
respect of dividends or of amounts payable in the event of any voluntary or involuntary
liquidation, dissolution or winding-up of the Company and which are not subject to redemption by
the Company; provided, however, that, if at any time there shall be more than one such resulting
class, the shares of each such class then so issuable on conversion of the Securities shall be
substantially in the proportion which the total number of shares of such class resulting from all
such reclassifications bears to the total number of shares of all such classes resulting from all
such reclassifications.

     “Company” means the party named as such in the first paragraph of this Indenture until a
successor replaces it pursuant to the applicable provisions of this Indenture, and thereafter
“Company” shall mean such successor.

     “Continuing Directors” means, as of any date of determination, any member of the Board of
Directors who (a) was a member of the Board of Directors as of the date hereof or (b) was nominated
for election or elected to the Board of Directors with the approval of a majority of the Continuing
Directors who were members of the Board of Directors at the time of such nomination or election.

     “Conversion Rate” means, as of any date of determination, an amount equal to $1,000 divided by
the then applicable Conversion Price on such date, rounded to the nearest 1/10,000th of a share,
for each $1,000 principal amount of the Securities. As of the date hereof and subject to
adjustment pursuant to Section 5.06, the Conversion Rate with respect to the Securities is
approximately 96.637 shares of Common Stock.

     “Corporate Trust Office” means the office of the Trustee at which at any time the trust
created by this Indenture shall be administered, which office at the date of the execution of this
Indenture is located at 101 Barclay Street, Floor 8W, New York, New York 10286, Attention:
Corporate Trust Administration, or at any other time at such other address as the

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Trustee may
designate from time to time by notice to the Holders and the Company or the principal corporate
trust office of any successor Trustee (or such other address as such successor Trustee may
designate from time to time by notice to the Company).

     “Default” or “default” means any event which is or, after notice or passage of time or both,
would be an Event of Default.

     “Ex-Dividend Date” means with respect to any issuance, dividend or distribution on the Common
Stock, the first date on which the shares of Common Stock trade, regular way, on the relevant
exchange or in the relevant market without the right to receive such issuance, dividend or
distribution.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder, as in effect from time to time.

     “Fair Market Value” means with respect to any asset or property, the price which could be
negotiated in an arm’s length, free market transaction, for Cash, between a willing seller and a
willing and able buyer, neither of whom is under undue pressure or compulsion to complete the
transaction. For all purposes of this Indenture, Fair Market Value shall be determined in good
faith by the Board of Directors, whose determination will be conclusive and evidenced by a
resolution of the Board of Directors.

     “Global Security” means a permanent Global Security that is in substantially the form attached
hereto as Exhibit A and that includes the information and schedule called for by footnotes
1, 3 and 4 thereof and which is deposited with the Depositary or its custodian and registered in
the name of the Depositary or its nominee.

     “Holder” or “Securityholder” means the person in whose name a Security is registered on the
Primary Registrar’s books.

     “Indenture” means this Indenture as amended or supplemented from time to time pursuant to the
terms of this Indenture.

     “Initial Issue Date” means November 16, 2009.

     “interest”, in respect of the Securities, unless the context otherwise requires, refers to
interest payable on the Securities, including Additional Interest, if any.

     “Make Whole Adjustment Event” means the occurrence of any of the following: (a) any Change in
Control included in clause (i), (ii) or (iv) of the definition of Change in Control or (b) any
Termination of Trading, provided that an acquisition, consolidation, merger or binding share
exchange or a sale, assignment, conveyance, transfer, lease or other disposition otherwise
constituting a Change in Control will not constitute a Make Whole Adjustment Event if at least 90%
of the consideration paid for the Common Stock in such transaction or transactions, excluding Cash
payments for fractional shares and Cash payments made pursuant to dissenters’ appraisal rights,
consists of shares that are traded on the New York Stock Exchange, the
NASDAQ Global Select Market or the NASDAQ Global Market (or any of their respective

-3-

 

successors) or will be so traded immediately following such transaction or transactions, the
Securities become convertible into such shares of such common stock.

     “Market Disruption Event” means the occurrence or existence for more than one half hour period
in the aggregate on any Scheduled Trading Day for the Common Stock of any suspension or limitation
imposed on trading, by reason of movements in price exceeding limits permitted by NASDAQ or
otherwise, in the Common Stock or in any options, contracts or future contracts relating to the
Common Stock, and such suspension or limitation occurs or exists at any time before 1:00 p.m. (New
York City time) on such day.

     “Maturity Date” means November 1, 2014.

     “NASDAQ” means the NASDAQ Stock Market.

     “Officer” means the Chairman or any Co-Chairman of the Board of Directors, any Vice Chairman
of the Board of Directors, the Chief Executive Officer, the President, any Vice President, the
Chief Financial Officer, the Treasurer, the Secretary or any Assistant Treasurer or Assistant
Secretary of the Company.

     “Officers’ Certificate” means a certificate signed on behalf of the Company by two or more
Officers of the Company, one of whom must be either the principal executive officer, the principal
financial officer or the principal accounting officer of the Company, delivered to the Trustee,
that meets the requirements of Section 13.04.

     “Opinion of Counsel” means a written opinion that meets the requirements of Section 13.04 from
legal counsel. The counsel may be an employee of or counsel to the Company.

     “Person” or “person” means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.

     “Principal” or “principal” of a debt security, including the Securities, means the principal
of the security plus, when appropriate, the premium, if any, on the security.

     “QIB” means any “qualified institutional buyer” (as defined in Rule 144A).

     “Restricted Common Stock” means Common Stock issued upon conversion of a Security that is
Transfer Restricted Common Stock.

     “Restricted Global Security” means a Global Security that is a Transfer Restricted Security.

     “Restricted Security Legend” means the legend set forth in Section 2.12(a).

     “Restricted Stock Legend” means the legend required by Section 2.12(b).

     “Rule 144A” means Rule 144A under the Securities Act (or any successor provision), as it may
be amended from time to time.

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     “Scheduled Trading Day” means any day that is scheduled to be a Trading Day.

     “SEC” means the United States Securities and Exchange Commission.

     “Securities” means the 4.5% Convertible Senior Notes due 2014, or any of them (each, a
“Security”).

     “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder, as in effect from time to time.

     “Securities Custodian” means the Trustee, as custodian with respect to the Securities in
global form, or any successor thereto.

     “Significant Subsidiary” means, in respect of any Person, a Subsidiary of such Person that
would constitute a “significant subsidiary” as such term is defined under Rule 1-02(w) of
Regulation S-X under the Exchange Act.

     “Stated Maturity” means, with respect to any Security, the date specified in such security as
the fixed date on which the final payment of principal of such Security is due and payable,
including pursuant to any mandatory redemption provision (but excluding any provision providing for
the repurchase of such security at the option of the Holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has occurred).

     “Subsidiary” means, in respect of any Person, any corporation, association, partnership or
other business entity of which more than 50% of the total voting power of shares of Capital Stock
or other equity interests entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers, general partners or trustees thereof is at the time owned or
controlled, directly or indirectly, by (i) such Person; (ii) such Person and one or more
Subsidiaries of such Person; or (iii) one or more Subsidiaries of such Person.

     “TIA” means the Trust Indenture Act of 1939, as amended, and the rules and regulations
thereunder as in effect on the date of this Indenture, except to the extent any amendment to the
Trust Indenture Act expressly provides for application of the Trust Indenture Act as in effect on
another date.

     “Trading Day” means a day on which (i) trading in the Common Stock generally occurs, (ii)
there is no Market Disruption Event and (iii) a Closing Sale Price for the Common Stock (other than
a Closing Sale Price referred to in the second sentence of the definition thereof) is available for
such day; provided that if the Common Stock is not admitted for trading or quotation on or by any
exchange, bureau or other organization referred to in the definition of Closing Sale Price
(excluding the second sentence of that definition), “Trading Day” will mean any Business Day. A
“Trading Day” only includes those days that have a scheduled closing time
of 4:00 p.m. (New York City time) or the then standard closing time for regular trading on the
relevant exchange or trading system.

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     “Trustee” means the party named as such in the first paragraph of this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and, thereafter, means
the successor.

     “Trust Officer” shall mean, when used with respect to the Trustee, any officer within the
corporate trust department of the Trustee, including any vice president, assistant vice president,
assistant secretary, assistant treasurer, trust officer or any other officer of the Trustee who
customarily performs functions similar to those performed by the Persons who at the time shall be
such officers, respectively, or to whom any corporate trust matter is referred because of such
person’s knowledge of and familiarity with the particular subject and who shall have direct
responsibility for the administration of this Indenture.

     “Vice President”, when used with respect to the Company or the Trustee, means any vice
president, whether or not designated by a number or a word or words added before or after the title
“vice president.”

     “Voting Stock” of a Person means any class or classes of Capital Stock or other interests of
such Person then outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof.

     “Wholly Owned Subsidiary” means a Significant Subsidiary of the Company all the Capital Stock
of which (other than directors’ qualifying shares) is owned by the Company or another Wholly Owned
Subsidiary.

     Section 1.02. Other Definitions.

	 	 	 
	Term	 	Defined in Section
	“Additional Interest Notice”
	 	7.05
	“Additional Securities”
	 	    2.16(a)
	“Additional Shares”
	 	    4.02(a)
	“Agent Members”
	 	    2.01(b)
	“Bankruptcy Law”
	 	9.01
	“Change in Control”
	 	    3.01(a)
	“Company Order”
	 	2.02
	“Conversion Agent”
	 	2.03
	“Conversion Date”
	 	    5.02(b)
	“Conversion Obligation”
	 	    5.05(a)
	“Conversion Price”
	 	5.06
	“Custodian”
	 	9.01
	“Depositary”
	 	    2.01(a)
	“DTC”
	 	    2.01(a)
	“Effective Date”
	 	    4.02(b)
	“Event of Default”
	 	9.01
	“Expiration Date”
	 	    5.06(d)
	“Expiration Time”
	 	    5.06(d)
	“Fundamental Change”
	 	    3.01(a)

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	Term	 	Defined in Section
	“Fundamental Change Purchase Date”
	 	    3.01(a)
	“Fundamental Change Purchase Notice”
	 	    3.01(c)
	“Fundamental Change Purchase Price”
	 	    3.01(a)
	“Interest Payment Date”
	 	    4.01(a)
	“Legal Holiday”
	 	13.07
	“Make-Whole Adjustment Event Period”
	 	    4.02(a)
	“Maximum Conversion Rate”
	 	    4.02(g)
	“Notice of Conversion”
	 	    5.02(a)
	“Notice of Default”
	 	    9.01(k)
	“Paying Agent”
	 	2.03
	“Primary Registrar”
	 	2.03
	“Record Date”
	 	    4.01(a)
	“Reference Property”
	 	5.11
	“Registrar”
	 	2.03
	“Resale Restriction Termination Date”
	 	    2.12(a)
	“Spin-Off”
	 	           5.06(d)(iii)
	“Stock Price”
	 	    4.02(a)
	“Termination of Trading”
	 	    3.01(a)
	“Transfer Restricted Common Stock”
	 	    2.12(b)
	“Transfer Restricted Securities”
	 	    2.12(a)
	“Unissued Shares”
	 	    3.01(a)
	“Valuation Period”
	 	    5.06(c)

     Section 1.03. Trust Indenture Act Provisions.

     Whenever this Indenture refers to a provision of the TIA, that provision is incorporated by
reference in and made a part of this Indenture. This Indenture shall also include those provisions
of the TIA that would be required to be included herein by the provisions of the Trust Indenture
Reform Act of 1990 if this Indenture had been qualified pursuant to the TIA. The following TIA
terms used in this Indenture have the following meanings:

     “obligor” on the Securities means the Company or any other obligor on the Securities.

     All other terms used in this Indenture that are defined in the TIA, defined by TIA reference
to another statute or defined by any SEC rule and not otherwise defined herein have the meanings
assigned to them therein.

     Section 1.04. Rules of Construction.

     Unless the context otherwise requires:

     (A) a term has the meaning assigned to it herein;

     (B) words in the singular include the plural, and words in the plural include the singular;

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     (C) provisions apply to successive events and transactions;

     (D) the term “merger” includes a statutory share exchange, and the term “merged” has a
correlative meaning;

     (E) the masculine gender includes the feminine and the neuter;

     (F) references to agreements and other instruments include subsequent amendments thereto;

     (G) “herein,” “hereof” and other words of similar import refer to this Indenture as a whole
and not to any particular Article, Section or other subdivision; and

     (H) references to the payments on the Securities shall include Additional Interest payable
hereunder, if any.

ARTICLE 2

THE SECURITIES

     Section 2.01. Form and Dating.

     The Securities and the corresponding Trustee’s certificate of authentication shall be
substantially in the respective forms set forth in Exhibit A, which Exhibit is incorporated
in and made part of this Indenture. The Securities may have notations, legends or endorsements
required by law, stock exchange rule or usage. The Company shall provide any such notations,
legends or endorsements to the Trustee in writing. The Securities shall be dated the date of their
authentication.

     (a) Restricted Global Securities. Securities offered and sold to QIBs in reliance on Rule
144A shall be issued in the form of one or more Restricted Global Securities, substantially in the
form of Exhibit A, which shall be deposited on behalf of the acquirers of the Securities
represented thereby with the Trustee, at its Corporate Trust Office, as custodian for the
depositary, The Depository Trust Company (“DTC”) (such depositary, or any successor thereto, being
hereinafter referred to as the “Depositary”), and registered in the name of its nominee, Cede &
Co., duly executed by the Company and authenticated by the Trustee as hereinafter provided. The
aggregate principal amount of the Global Securities may from time to time be increased or decreased
by adjustments made on the records of the Securities Custodian as hereinafter provided, subject in
each case to compliance with the Applicable Procedures.

     (b) Global Securities in General. Each Global Security shall represent such of the
outstanding Securities as shall be specified therein, and each shall provide that it shall
represent the aggregate principal amount of outstanding Securities from time to time endorsed
thereon and
that the aggregate principal amount of outstanding Securities represented thereby may from
time to time be reduced or increased, as appropriate, to reflect exchanges, transfers, redemptions,
purchases or conversions of such Securities. Any adjustment of the aggregate principal amount of a
Global Security to reflect the amount of any increase or decrease in the amount of outstanding
Securities represented thereby shall be made by the Trustee in accordance with

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instructions given
by the Holder thereof as required by Section 2.12 hereof and shall be made on the records of the
Trustee and the Depositary. Payment of principal of and Interest and premium, if any, on any
Global Security shall be made to the Holder of such Security.

     Members of, or participants in, the Depositary (“Agent Members”) shall have no rights under
this Indenture with respect to any Global Security held on their behalf by the Depositary or under
the Global Security, and the Depositary (including, for this purpose, its nominee) may be treated
by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner and
Holder of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall (A) prevent the Company, the Trustee or any agent of the Company or the Trustee from
giving effect to any written certification, proxy or other authorization furnished by the
Depositary or (B) impair, as between the Depositary and its Agent Members, the operation of
customary practices governing the exercise of the rights of a Holder of any Security.

     (c) Book Entry Provisions. The Company shall execute and the Trustee shall, in accordance
with this Section 2.01(c) and Section 2.02, authenticate and deliver initially one or more Global
Securities that (i) shall be registered in the name of Cede & Co. or as otherwise instructed by the
Depositary, (ii) shall be delivered by the Trustee to the Depositary or pursuant to the
Depositary’s instructions and (iii) shall bear legends substantially to the following effect:

     “UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (“DTC”), TO TELECOMMUNICATION SYSTEMS, INC. (THE “COMPANY”) OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.”

     Section 2.02. Execution and Authentication.

     An Officer shall sign the Securities for the Company by manual or facsimile signature.
Typographic and other minor errors or defects in any such facsimile signature shall not affect the
validity or enforceability of any Security which has been authenticated and delivered by the
Trustee.

     If an Officer whose signature is on a Security no longer holds that office at the time the
Trustee authenticates the Security, the Security shall be valid nevertheless.

     A Security shall not be valid until an authorized signatory of the Trustee manually signs the
certificate of authentication on the Security. The signature shall be conclusive evidence that the
Security has been authenticated under this Indenture.

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     The Trustee shall authenticate and make available for delivery Securities for original issue
in the aggregate principal amount of up to $103,500,000 (subject to Section 2.16) upon receipt of
(i) a written order or orders of the Company signed by two Officers of the Company (a “Company
Order”) and delivered to the Trustee, and (ii) an Officers’ Certificate and Opinion of Counsel
pursuant to Section 13.04 hereof. Additional Securities may thereafter be issued pursuant to
Section 2.16 hereof. Each Company Order shall specify the amount of Securities to be
authenticated, shall provide that all Securities will be represented by a Global Security and the
date on which each original issue of Securities is to be authenticated. The Trustee shall have the
right to decline to authenticate and deliver any Securities under this Section if the Trustee,
being advised by counsel, determines that such action may not lawfully be taken or if the Trustee
in good faith shall determine that such action would expose the Trustee to personal liability to
existing Holders.

     The Trustee shall act as the initial authenticating agent. Thereafter, the Trustee may
appoint an authenticating agent acceptable to the Company to authenticate Securities. An
authenticating agent may authenticate Securities whenever the Trustee may do so. Each reference in
this Indenture to authentication by the Trustee includes authentication by such agent. An
authenticating agent shall have the same rights as an Agent to deal with the Company or an
Affiliate of the Company.

     The Securities shall be issuable only in registered form without coupons and only in
denominations of $1,000 principal amount and any integral multiple thereof.

     Section 2.03. Registrar, Paying Agent and Conversion Agent.

     The Company shall maintain one or more offices or agencies in The City of New York where
Securities may be presented for registration of transfer or for exchange (each, a “Registrar”) or
for conversion (each, a “Conversion Agent”), one or more offices or agencies where Securities may
be presented for payment (each, a “Paying Agent”) and one or more offices or agencies where notices
and demands to or upon the Company in respect of the Securities and this Indenture may be served.
One of the Registrars (the “Primary Registrar”) shall keep a register of the Securities and of
their transfer and exchange.

     The Company shall enter into an appropriate agency agreement with any Agent not a party to
this Indenture. The agreement shall implement the provisions of this Indenture that relate to such
Agent. The Company shall notify the Trustee in writing of the name and address of any Agent not a
party to this Indenture. If the Company fails to maintain a Registrar, Paying Agent, or Conversion
Agent, or fails to give the foregoing notice, the Trustee shall act as such. The Company or any
Affiliate of the Company may act as Paying Agent (except for the purposes of Article 11).

     The Company hereby initially designates the Trustee as Paying Agent, Registrar, Securities
Custodian and Conversion Agent, and the Corporate Trust Office of the Trustee to be such office or
agency of the Company for each of the aforesaid purposes.

-10-

 

     Section 2.04. Paying Agent to Hold Money in Trust.

     Prior to 11:00 a.m. (New York City time) on each due date of the principal of or interest on
any Securities, the Company shall deposit with a Paying Agent a sum sufficient to pay such
principal and interest so becoming due. The Company shall require each Paying Agent other than the
Trustee to agree in writing that such Paying Agent shall hold in trust for the benefit of Holders
or the Trustee all money held by the Paying Agent for the payment of principal of or interest on
the Securities and shall notify the Trustee in writing of any default by the Company (or any other
obligor on the Securities) in making any such payment. If the Company or an Affiliate of the
Company acts as Paying Agent, it shall, before 11:00 a.m. (New York City time) on each due date of
the principal of or interest on any Securities, segregate the money and hold it as a separate trust
fund. The Company at any time may require a Paying Agent to pay all money held by it to the
Trustee, and the Trustee may at any time during the continuance of any default, upon written
request to a Paying Agent, require such Paying Agent to pay forthwith to the Trustee all sums so
held in trust by such Paying Agent. Upon doing so, the Paying Agent (other than the Company) shall
have no further liability for the money.

     Section 2.05. Securityholder Lists.

     The Trustee shall preserve in as current a form as is reasonably practicable the most recent
list available to it of the names and addresses of Holders. If the Trustee is not the Primary
Registrar, the Company shall furnish to the Trustee at least five Business Days before each
semiannual interest payment date, and at such other times as the Trustee may request in writing, a
list in such form and as of such date as the Trustee may reasonably require of the names and
addresses of Holders.

     Section 2.06. Transfer and Exchange.

     (a) Subject to compliance with any applicable additional requirements contained in Section
2.12, when a Security is presented to a Registrar with a request to register a transfer thereof or
to exchange such Security for an equal principal amount of Securities of other authorized
denominations, the Registrar shall register the transfer or make the exchange as requested;
provided, however, that every Security presented or surrendered for registration of transfer or
exchange shall be duly endorsed or accompanied by, if applicable, any legal opinions,
certifications or other evidence required by the Company pursuant to Section 2.12 and, if it is a
Certificated Security, an assignment form in the form included in Exhibit A, all in form
satisfactory to the Registrar duly executed by the Holder thereof or its attorney duly authorized
in writing. To permit registration of transfers and exchanges, upon surrender of any Security
for transfer or exchange at an office or agency maintained pursuant to Section 2.03, the Company
shall execute and the Trustee shall authenticate Securities of a like aggregate principal amount at
the Registrar’s request. Any exchange or transfer shall be without charge, except that the Company
or the Registrar may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto; provided that this sentence shall
not apply to any exchange pursuant to Section 2.10, 3.04, 5.02(d) or 12.05.

     None of the Company, any Registrar or the Trustee shall be required to exchange or register a
transfer of any Securities or portions thereof (i) in respect of which a Fundamental

-11-

 

Change
Purchase Notice has been delivered and not withdrawn by the Holder thereof (except, in the case of
the purchase of a Security in part, the portion thereof not to be purchased) or (ii) surrendered
for conversion pursuant to Article 5.

     All Securities issued upon any transfer or exchange of Securities shall be valid obligations
of the Company, evidencing the same debt and entitled to the same benefits under this Indenture, as
the Securities surrendered upon such transfer or exchange.

     (b) Any Registrar appointed pursuant to Section 2.03 hereof shall provide to the Trustee such
information as the Trustee may reasonably require in connection with the delivery by such Registrar
of Securities upon transfer or exchange of Securities.

     (c) Each Holder of a Security agrees to indemnify the Company and the Trustee against any
liability that may result from the transfer, exchange or assignment of such Holder’s Security in
violation of any provision of this Indenture and/or applicable U.S. federal or state securities
law. Prior to the due presentment of a registration of a transfer of any Security, the Trustee, any
Agent and the Company may deem and treat the Person in whose name any Security is registered as the
absolute owner of such Security for the purpose of all payments with respect to such Securities,
and neither the Trustee, any Agent nor the Company shall be affected by notice to the contrary.
Neither the Trustee nor any Agent shall have any responsibility for any actions taken or not taken
by the Depositary.

     The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance
with any restrictions on transfer imposed under this Indenture or under applicable law with respect
to any transfer of any interest in any Security (including any transfers between or among Agent
Members or other beneficial owners of interests in any Global Security) other than to require
delivery of such certificates and other documentation or evidence as are expressly required by, and
to do so if and when expressly required by the terms of, this Indenture and to examine the same to
determine substantial compliance as to form with the express requirements hereof.

     Section 2.07. Replacement Securities.

     If any mutilated Security is surrendered to the Company, a Registrar or the Trustee, or the
Company, a Registrar and the Trustee receive evidence to their satisfaction of the destruction,
loss or theft of any Security, and there is delivered to the Company, the applicable Registrar and
the Trustee such security or indemnity as will be required by them to save each of them from any
loss they may suffer if a Security is replaced, then, in the absence of written notice to the
Company, such Registrar or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute, and upon its written request the Trustee shall authenticate
and deliver, in exchange for any such mutilated Security or in lieu of any such destroyed, lost or
stolen Security, a new Security of like tenor and principal amount, bearing a number not
contemporaneously outstanding. The Trustee and the Company each may charge such Holder for
their expenses in replacing such Security.

     In case any such mutilated, destroyed, lost or stolen Security has become or is about to
become due and payable, or is about to be purchased by the Company pursuant to Article 3, or

-12-

 

converted pursuant to Article 5, the Company in its discretion may, instead of issuing a new
Security, pay, purchase or convert such Security, as the case may be.

     Upon the issuance of any new Securities under this Section 2.07, the Company may require the
payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other reasonable expenses (including the reasonable fees and expenses of
the Trustee or the Registrar) in connection therewith.

     Every new Security issued pursuant to this Section 2.07 in lieu of any mutilated, destroyed,
lost or stolen Security shall constitute an original additional contractual obligation of the
Company, whether or not the mutilated, destroyed, lost or stolen Security shall be at any time
enforceable by anyone, and shall be entitled to all benefits of this Indenture equally and
proportionately with any and all other Securities duly issued hereunder.

     The provisions of this Section 2.07 are (to the extent lawful) exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities.

     Section 2.08. Outstanding Securities.

     Securities outstanding at any time are all Securities authenticated by the Trustee, except for
those canceled by it, those purchased pursuant to Article 3, those converted pursuant to Article 5,
those delivered to it for cancellation or surrendered for transfer or exchange and those described
in this Section 2.08 as not outstanding.

     If a Security is replaced pursuant to Section 2.07, it ceases to be outstanding unless the
Company receives, subsequent to the new Security’s authentication, proof satisfactory to the
Company that the replaced Security is held by a bona fide purchaser unaware that such Security has
been replaced.

     If a Paying Agent (other than the Company or an Affiliate of the Company) holds in respect of
Securities on a Fundamental Change Purchase Date or the Maturity Date money sufficient to pay the
principal of (including premium, if any), and any accrued interest on Securities (or portions
thereof) payable on that date, then on and after such Fundamental Change Purchase Date or the
Maturity Date, as the case may be, such Securities (or portions thereof, as the case may be) shall
cease to be outstanding and any interest on them shall cease to accrue.

     Subject to the restrictions contained in Section 2.09, a Security does not cease to be
outstanding because the Company or an Affiliate of the Company holds the Security.

     Section 2.09. Treasury Securities.

     In determining whether the Holders of the required principal amount of Securities have
concurred in any notice, direction, waiver or consent, Securities owned by the Company or any other
obligor on the Securities or by any Affiliate of the Company or of such other obligor shall be
disregarded, except that, for purposes of determining whether the Trustee shall be protected in
relying on any such notice, direction, waiver or consent, only Securities which a Trust Officer of
the Trustee actually knows are so owned shall be so disregarded. Securities so owned which

-13-

 

have
been pledged in good faith shall not be disregarded if the pledgee establishes to the satisfaction
of the Trustee the pledgee’s right so to act with respect to the Securities and that the pledgee is
not the Company or any other obligor on the Securities or any Affiliate of the Company or of such
other obligor.

     Section 2.10. Temporary Securities.

     Until definitive Securities are ready for delivery, the Company may prepare and execute, and,
upon receipt of a Company Order, the Trustee shall authenticate and deliver, temporary Securities.
Temporary Securities shall be substantially in the form of definitive Securities but may have
variations that the Company considers appropriate for temporary Securities and as shall be
reasonably acceptable to the Trustee. Every temporary Security shall be executed and registered by
the Company and be authenticated by the Trustee upon the same conditions and in substantially the
same manner, and with like effect, as the definitive Securities. Without unreasonable delay, the
Company shall prepare and the Trustee shall authenticate and deliver definitive Securities in
exchange for temporary Securities.

     Section 2.11. Cancellation.

     The Company at any time may deliver Securities to the Trustee for cancellation. The
Registrar, the Paying Agent and the Conversion Agent shall forward to the Trustee or its agent any
Securities surrendered to them for transfer, exchange, redemption, payment or conversion. The
Trustee and no one else shall cancel, in accordance with its standard procedures, all Securities
surrendered for transfer, exchange, payment, conversion or cancellation and shall deliver the
canceled Securities to the Company. The Company may, to the extent permitted by law, purchase
Securities in the open market or by tender offer at any price or by private agreement. Any
Securities purchased or otherwise acquired by the Company or any of its Subsidiaries prior to the
Maturity Date may, to the extent permitted by law, be reissued or resold or may, at the option of
the Company, be surrendered to the Trustee for cancellation. Any Securities surrendered for
cancellation may not be reissued or resold and shall be promptly cancelled by the Trustee, and the
Company may not hold or resell such Securities or issue any new Securities to replace any such
Securities or any Securities that any Holder has converted pursuant to Article 5.

     Section 2.12. Legends; Additional Transfer Requirements.

     (a) Every Security that bears or is required under this Section 2.12(a) to bear the Restricted
Security Legend set forth in this Section 2.12(a) (the “Transfer Restricted Securities”) shall be
subject to the restrictions on transfer set forth in Section 2.06 and this
Section 2.12(a) (including those set forth in the Restricted Security Legend set forth below),
and the Holder of each such Transfer Restricted Security, by such Holder’s acceptance thereof,
agrees to be bound by all such restrictions on transfer. As used in Sections 2.12(a) and 2.12(b),
the term “transfer” includes any sale, pledge, transfer or other disposition whatsoever of any
Transfer Restricted Security. The Registrar shall not register any transfer of a Transfer
Restricted Security not made in accordance with the restrictions on transfer set forth in this
Section 2.12.

-14-

 

     Subject to the last two paragraphs of this Section 2.12(a), prior to the date upon which the
Trustee removes the Restricted Security Legend from any Security (the “Resale Restriction
Termination Date,” which shall have a correlative meaning in respect of any Restricted Common
Stock) any certificate evidencing such Security (and all securities issued in exchange therefor or
substitution thereof, including Common Stock, if any, issued upon conversion thereof, which shall
bear the legend set forth in Section 2.12(b), if applicable) shall bear a legend in substantially
the following form:

“THIS SECURITY AND THE CLASS A COMMON STOCK, IF ANY, ISSUABLE UPON CONVERSION OF THIS SECURITY HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE ACQUIRER:

     1. REPRESENTS THAT IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS A “QUALIFIED INSTITUTIONAL
BUYER” (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) AND THAT IT EXERCISES SOLE
INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH ACCOUNT, AND

     2. AGREES FOR THE BENEFIT OF TELECOMMUNICATION SYSTEMS, INC. (THE “COMPANY”) THAT IT WILL
NOT OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY OR ANY BENEFICIAL INTEREST HEREIN
PRIOR TO THE DATE THAT IS THE LATER OF (X) ONE YEAR AFTER THE LAST ORIGINAL ISSUE DATE HEREOF OR
SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144 UNDER THE SECURITIES ACT OR ANY SUCCESSOR
PROVISION THEREUNDER, AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW,
EXCEPT:

          (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, OR

          (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BECOME EFFECTIVE UNDER THE
SECURITIES ACT, OR

          (C) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, OR

          (D) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT OR ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT.

PRIOR TO THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH CLAUSE (2)(D) ABOVE, THE COMPANY AND
THE TRUSTEE RESERVE THE RIGHT TO REQUIRE THE DELIVERY OF SUCH LEGAL OPINIONS, CERTIFICATIONS OR
OTHER EVIDENCE AS MAY REASONABLY BE REQUIRED IN ORDER TO

-15-

 

DETERMINE THAT THE PROPOSED TRANSFER IS
BEING MADE IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. NO
REPRESENTATION IS MADE AS TO THE AVAILABILITY OF ANY EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT;”

     So long as the Securities are represented by Global Securities that are held by or on behalf
of the Depositary only, the Company may accomplish any delegending of such Securities by:

     (i) instructing the Trustee to remove the Restricted Security Legend from the
Securities and instructing the transfer agent for the Common Stock to remove the Restricted
Stock Legend from the Common Stock issued upon conversion of the Securities;

     (ii) notifying Holders of the Securities and Common Stock issued upon conversion of the
Securities that the Restricted Security Legend and Restricted Stock Legend have been removed
or deemed removed;

     (iii) notifying the Trustee, the transfer agent for the Common Stock and DTC to change
the CUSIP number for the Securities and the Common Stock issued upon conversion of the
Securities to the applicable unrestricted CUSIP number; and

     (iv) complying with any Applicable Procedures for delegending;

whereupon the Restricted Security Legend shall be deemed removed from any Global Securities without
further action on the part of Holders.

     Any Security (or security issued in exchange or substitution therefor) as to which the
restrictions on transfer shall have expired in accordance with their terms or that has been
transferred, replaced or exchanged on or after the Resale Restriction Termination Date or that has
been transferred pursuant to a registration statement that has been declared effective under the
Securities Act may, upon surrender of such Security to the Registrar for exchange in accordance
with the provisions of this Section 2.12, be exchanged for a new Security or Securities, of like
tenor and aggregate principal amount, which shall not bear the Restricted Security Legend required
by this Section 2.12(a).

     (b) Every stock certificate representing Common Stock issued upon conversion of a Transfer
Restricted Security that bears or is required under this Section 2.12(b) to bear the
Restricted Stock Legend set forth in this Section 2.12(b) (the “Transfer Restricted Common
Stock”) shall be subject to the restrictions on transfer set forth in Section 2.06 and this Section
2.12(b) (including those set forth in the Restricted Stock Legend set forth below), and the Holder
of such Common Stock issued upon conversion of a Transfer Restricted Security, by such Holder’s
acceptance thereof, agrees to be bound by all such restrictions on transfer and the further
restrictions set forth in Section 2.15. The Company shall not register any transfer of Common
Stock issued upon conversion of such a Transfer Restricted Security not made in accordance with the
restrictions on transfer set forth in this Section 2.12.

-16-

 

     Subject to the last paragraph of this Section 2.12(b) and Section 2.15 with respect to Common
Stock, prior to the Resale Restriction Termination Date, any stock certificate representing Common
Stock issued upon conversion of a Transfer Restricted Security shall bear a legend in substantially
the following form, unless such Common Stock has been sold pursuant to a registration statement
that has been declared effective under the Securities Act (and which continues to be effective at
the time of such issuance) or such Common Stock has been issued upon conversion of Securities that
have been transferred pursuant to a registration statement that has been declared effective under
the Securities Act:

“THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT IN ACCORDANCE WITH THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL
INTEREST HEREIN, THE ACQUIRER:

     1. REPRESENTS THAT IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS A “QUALIFIED INSTITUTIONAL
BUYER” (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) AND THAT IT EXERCISES SOLE
INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH ACCOUNT, AND

     2. AGREES FOR THE BENEFIT OF TELECOMMUNICATION SYSTEMS, INC. (THE “COMPANY”) THAT IT WILL
NOT OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY OR ANY BENEFICIAL INTEREST HEREIN
PRIOR TO THE DATE THAT IS THE LATER OF (X) ONE YEAR AFTER THE LAST ORIGINAL ISSUE DATE OF THE
SECURITY IN RESPECT OF THE CONVERSION OF WHICH THIS SECURITY WAS ISSUED OR SUCH SHORTER PERIOD
OF TIME AS PERMITTED BY RULE 144 UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THEREUNDER,
AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW, EXCEPT:

     (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, OR

     (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BECOME EFFECTIVE UNDER THE
SECURITIES ACT, OR

     (C) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, OR

     (D) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT OR ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT.

PRIOR TO THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH CLAUSE (2)(D) ABOVE,
THE COMPANY AND THE TRANSFER AGENT RESERVE THE RIGHT TO REQUIRE THE DELIVERY OF SUCH

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LEGAL OPINIONS, CERTIFICATIONS OR OTHER EVIDENCE AS MAY REASONABLY BE REQUIRED IN
ORDER TO DETERMINE THAT THE PROPOSED TRANSFER IS BEING MADE IN COMPLIANCE WITH THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. NO REPRESENTATION IS MADE AS TO
THE AVAILABILITY OF ANY EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT.”

     Any stock certificate (or security issued in exchange or substitution therefor) as to which
such restrictions on transfer shall have expired in accordance with their terms or that has been
transferred, replaced or exchanged on or after the Resale Restriction Termination Date or that has
been transferred pursuant to a registration statement that has been declared effective under the
Securities Act may, upon surrender of such stock certificate to the transfer agent for the Common
Stock for exchange in accordance with the provisions of this Section 2.12 and Section 2.15, be
exchanged for a new stock certificate, of like tenor and aggregate number of shares, which shall
not bear the Restricted Stock Legend required by this Section 2.12(b).

     (c) Any Security or Common Stock issued upon the conversion or exchange of a Security that,
prior to the date upon which the Company instructs the Trustee to remove the Restricted Security
Legend, is purchased or owned by the Company or any Affiliate thereof may not be resold by the
Company or such Affiliate unless registered under the Securities Act or resold pursuant to an
exemption from the registration requirements of the Securities Act in a transaction that results in
such Security or Common Stock, as the case may be, no longer being “restricted securities” (as
defined under Rule 144).

     (d) Notwithstanding any provision of Section 2.06 and Section 2.12 to the contrary, in the
event Rule 144(d) as promulgated under the Securities Act (or any successor rule) is amended to
change the one-year period under Rule 144(d) (or the corresponding period under any successor
rule), from and after receipt by the Trustee of the Officers’ Certificate and Opinion of Counsel
provided for in this Section 2.12(d), (i) each reference in Section 2.12(a) to “one year” and in
the Restricted Security Legend set forth in such paragraph to “ONE YEAR” shall be deemed for all
purposes hereof to be references to such changed period, (ii) each reference in Section 2.12(b) to
“one year” and in the Restricted Stock Legend set forth in such paragraph to “ONE YEAR” shall be
deemed for all purposes hereof to be references to such changed period and (iii) all corresponding
references in the Security (including the definition of Resale Restriction Termination Date) and
the Restricted Security Legend thereon shall be deemed for all purposes hereof to be references to
such changed period, provided that such changes shall not
become effective if they are otherwise prohibited by, or would otherwise cause a violation of,
the then-applicable federal securities laws. The provisions of this Section 2.12(d) shall not be
effective until such time as the Opinion of Counsel and Officers’ Certificate have been received by
the Trustee hereunder. This Section 2.12(d) shall apply to successive amendments to Rule 144(d)
(or any successor rule) changing the holding period thereunder.

     (e) A Global Security may not be transferred, in whole or in part, to any Person other than
the Depositary or a nominee or any successor thereof, and no such transfer to any such other Person
may be registered; provided that the foregoing shall not
prohibit any transfer of a Security that
is issued in exchange for a Global Security but is not itself a Global Security. No transfer of

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a
Security to any Person shall be effective under this Indenture or the Securities unless and until
such Security has been registered in the name of such Person. Notwithstanding any other provisions
of this Indenture or the Securities, transfers of a Global Security, in whole or in part, shall be
made only in accordance with this Section 2.12.

     (f) The provisions of clauses (i), (ii), (iii) and (iv) below shall apply only to Global
Securities:

     (i) Notwithstanding any other provisions of this Indenture or the Securities, a Global
Security shall not be exchanged in whole or in part for a Security registered in the name of
any Person other than the Depositary or one or more nominees thereof; provided that a Global
Security may be exchanged for Securities registered in the names of any person designated by
the Depositary in the event that (A) the Depositary has notified the Company that it is
unwilling or unable to continue as Depositary for such Global Security or such Depositary
has ceased to be a “clearing agency” registered under the Exchange Act, and a successor
Depositary is not appointed by the Company within 90 days or (B) an Event of Default has
occurred and is continuing with respect to the Securities. Any Global Security exchanged
pursuant to clause (A) shall be so exchanged in whole and not in part, and any Global
Security exchanged pursuant to clause (B) above may be exchanged in whole or from time to
time in part as directed by the Depositary. Any Security issued in exchange for a Global
Security or any portion thereof shall be a Global Security; provided that any such Security
so issued that is registered in the name of a Person other than the Depositary or a nominee
thereof shall not be a Global Security.

     (ii) Securities issued in exchange for a Global Security or any portion thereof shall
be issued in definitive, fully registered form, without interest coupons, shall have an
aggregate principal amount equal to that of such Global Security or portion thereof to be so
exchanged, shall be registered in such names and be in such authorized denominations as the
Depositary shall designate and shall bear the applicable legends provided for herein. Any
Global Security to be exchanged in whole shall be surrendered by the Depositary to the
Trustee, as Registrar. With regard to any Global Security to be exchanged in part, either
such Global Security shall be so surrendered for exchange or, if the Trustee is acting as
custodian for the Depositary or its nominee with respect to such Global Security, the
principal amount thereof shall be reduced by an amount equal to the portion thereof to be so
exchanged, by means of an appropriate adjustment made on the records of the Trustee. Upon
any such surrender or adjustment, the Trustee shall
authenticate and deliver the Security issuable on such exchange to or upon the order of
the Depositary or an authorized representative thereof.

     (iii) The registered Holder may grant proxies and otherwise authorize any Person,
including Agent Members and persons that may hold interests through Agent Members, to take
any action which a Holder is entitled to take under this Indenture or the Securities.

     (iv) In the event of the occurrence of any of the events specified in clause (i) above,
the Company shall promptly make available to the Trustee a reasonable supply of Certificated
Securities in definitive, fully registered form, without interest coupons.

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     Section 2.13. CUSIP Numbers.

     The Company in issuing the Securities may use one or more “CUSIP” numbers (if then generally
in use), and, if so, the Trustee shall use “CUSIP” numbers in notices of purchase as a convenience
to Holders; provided that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained in any notice of a
purchase and that reliance may be placed only on the other identification numbers printed on the
Securities, and any such purchase shall not be affected by any defect in or omission of such
numbers. The Company shall promptly notify the Trustee in writing of any change in the “CUSIP”
number.

     Section 2.14. Ranking.

     The obligations of the Company arising under or in connection with this Indenture and every
outstanding Security issued under this Indenture from time to time constitute and shall constitute
an unsecured general obligation of the Company, ranking equal in right of payment to all other
existing and future senior unsecured and unsubordinated indebtedness of the Company and ranking
senior in right of payment to any future indebtedness of the Company that is expressly made
subordinate to the Securities by the terms of such indebtedness.

     Section 2.15. Issuance, Transfer and Exchange of Common Stock Issuable Upon Conversion of
the Securities.

     If (i) shares of Common Stock to be issued upon conversion of Securities bearing the
Restricted Security Legend are to be registered in a name other than that of the Holder of such
Securities or (ii) shares of Common Stock represented by a certificate bearing the Restricted Stock
Legend are transferred subsequently by such Holder, then the Holder must deliver to the transfer
agent for the Common Stock and to the Company a certificate in substantially the form of
Exhibit B as to compliance with the restrictions on transfer applicable to such shares of
Common Stock and neither the transfer agent nor the registrar for the Common Stock shall be
required to register any transfer of such Common Stock not so accompanied by a properly completed
certificate.

     Section 2.16. Additional Securities.

     (a) The Company may, from time to time without the consent of the Holders of outstanding
Securities, increase the aggregate principal amount of the Securities by issuing additional
Securities in the future pursuant to this Indenture (“Additional Securities”) having terms and
conditions identical to those of the other outstanding Securities, except that Additional
Securities may have a different initial date from which interest begins to accrue thereon so that
the Additional Securities are fungible with outstanding Securities; provided that no differences
pursuant to this Section 2.16(a) shall cause such Additional Securities to constitute a different
class of securities than the Securities issued on the Initial Issue Date for U.S. federal income
tax purposes; and provided, further, that the Additional Securities shall have the same CUSIP
number as the Securities issued on the Initial Issue Date. The Securities issued on the Initial
Issue Date and any Additional Securities shall be treated as a single class for all purposes under
this Indenture, including, without limitation, waivers, amendments, offers to purchase and U.S.

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federal income tax purposes. No Additional Securities may be issued if on the issue date therefor
any Event of Default has occurred and is continuing.

     (b) With respect to any Additional Securities, the Company shall set forth in an Officers’
Certificate pursuant to a resolution of the Board of Directors of the Company, copies of which
shall be delivered to the Trustee, the following information:

     (i) the aggregate principal amount of such Additional Securities to be authenticated
and delivered pursuant to this Indenture;

     (ii) the issue date and the issue price of such Additional Securities;

     (iii) whether such Additional Securities will be subject to transfer restrictions under
the Securities Act (or other applicable securities laws).

In addition, the Company shall deliver to the Trustee an Opinion of Counsel in accordance with
Section 13.04 hereof certifying as to the satisfaction of all conditions precedent to the
authentication by the Trustee of such Additional Securities.

     Section 2.17. Additional Interest.

     The Company may be obligated to pay Additional Interest to Holders, as and to the extent set
forth in accordance with Section 7.10 and Section 9.02(b) hereof. Any Additional Interest is
deemed to be interest for purposes of this Indenture. The Trustee has no duty to determine when
Additional Interest under Section 7.10 or Section 9.02(b) hereof should be paid.

     Section 2.18. Calculations in Respect of Securities.

     Except to the extent provided herein and therein, the Company will be responsible for making
all calculations called for under the Indenture and the Securities. These calculations include,
but are not limited to, determinations of the Closing Sale Price of the Common Stock, adjustments
to the Conversion Price, any accrued interest payable on the Securities, the Conversion Price and
the Conversion Rate. The Company will make these calculations in good
faith and, absent manifest error, the calculations will be final and binding on Holders of the
Securities. The Company will provide to each of the Trustee and the Conversion Agent a schedule of
its calculations, and the Trustee and the Conversion Agent are entitled to rely conclusively upon
the accuracy of such calculations without independent verification. The Trustee will forward the
Company’s calculations to any Holder of the Securities upon the request of such Holder.

ARTICLE 3

PURCHASES OF SECURITIES UPON FUNDAMENTAL CHANGE

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     Section 3.01. Purchase of Securities at Option of the Holder Upon Fundamental Change.

     (a) If at any time that Securities remain outstanding there shall occur a Fundamental Change,
Securities shall be purchased by the Company at the option of the Holders, as of a date, determined
by the Company in its sole discretion, that is not less than 20 Business Days and not more than 35
Business Days after the occurrence of the Fundamental Change (the “Fundamental Change Purchase
Date”) at a purchase price equal to 100% of the principal amount of the Securities to be purchased,
together with any accrued and unpaid interest to, but excluding, the Fundamental Change Purchase
Date (the “Fundamental Change Purchase Price”), unless the Fundamental Change Purchase Date is
after a Record Date and on or prior to the related Interest Payment Date, in which case interest
accrued to the Interest Payment Date will be paid to Holders of the Securities as of the preceding
Record Date and the Fundamental Change Purchase Price payable to any Holder surrendering such
Holder’s Security for purchase pursuant to this Article 3 shall be equal to the principal amount of
Securities subject to purchase and will not include any accrued and unpaid interest. The
Fundamental Change Purchase Price shall be payable in Cash, subject to satisfaction by or on behalf
of any Holder of the requirements set forth in subsection (c) of this Section 3.01.
Notwithstanding the foregoing, the Company may not repurchase the Securities upon the occurrence of
a Fundamental Change if the principal amount of the Securities has been accelerated and such
acceleration has not been rescinded on or prior to the Fundamental Change Purchase Date.

     A “Fundamental Change” shall mean the occurrence of a Change in Control or a Termination of
Trading.

     A “Change in Control” shall be deemed to have occurred if any of the following occurs after
the date hereof:

     (i) any “person” or “group” (as such terms are defined below) is or becomes the
“beneficial owner” (as defined below), directly or indirectly, of shares of Voting Stock of
the Company representing 50% or more of the total voting power of all outstanding classes of
Voting Stock of the Company or has the power, directly or indirectly, to elect a majority of
the members of the Board of Directors; or

     (ii) the Company consolidates with, enters into a binding share exchange with, or
merges with or into, another Person or the Company sells, assigns, conveys, transfers,
leases or otherwise disposes of all or substantially all of the assets of the Company,
or any Person consolidates with, or merges with or into, the Company, in any such event
other than pursuant to a transaction (A) in which the Persons that “beneficially owned”,
directly or indirectly, shares of Voting Stock of the Company immediately prior to such
transaction “beneficially own”, directly or indirectly, shares of Voting Stock of the
Company representing at least a majority of the total voting power of all outstanding
classes of Voting Stock of the surviving or transferee Person, with such Holders’
proportional voting power immediately after such transaction vis-à-vis each other with
respect to the securities they receive in such transaction being in substantially the same
proportions as their respective voting power vis-à-vis each other immediately prior to such
transaction, or (B) which is effected solely to change the jurisdiction of

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incorporation of
the Company and results in a reclassification, conversion or exchange of outstanding shares
of Common Stock solely into shares of common stock of the surviving Person; or; or

     (iii) a majority of the members of the Board of Directors are not Continuing Directors;
or

     (iv) the holders of the Capital Stock of the Company approve any plan or proposal for
the liquidation or dissolution of the Company (whether or not otherwise in compliance with
the terms hereof).

     For the purpose of the definition of “Change in Control”, (i) “person” and “group” have the
meanings given such terms under Section 13(d) and 14(d) of the Exchange Act or any successor
provision to either of the foregoing, and the term “group” includes any group acting for the
purpose of acquiring, holding, voting or disposing of securities within the meaning of Rule
13d-5(b)(1) under the Exchange Act (or any successor provision thereto), (ii) a “beneficial owner”
shall be determined in accordance with Rule 13d-3 under the Exchange Act, as in effect on the date
of this Indenture, except that the number of shares of Voting Stock of the Company shall be deemed
to include, in addition to all outstanding shares of Voting Stock of the Company and Unissued
Shares deemed to be held by the “person” or “group” (as such terms are defined above) or other
Person with respect to which the Change in Control determination is being made, all Unissued Shares
deemed to be held by all other Persons, and (iii) the terms “beneficially owned” and “beneficially
own” shall have meanings correlative to that of “beneficial owner”. The term “Unissued Shares”
means shares of Voting Stock not outstanding that are subject to options, warrants, rights to
purchase or conversion privileges exercisable within 60 days of the date of determination of a
Change in Control.

     Notwithstanding anything to the contrary set forth in this Section 3.01, Holders shall not
have the right to require the Company to purchase any Securities in the event of a Change of
Control resulting from the occurrence of an event described in clauses (i) and (ii) of the
definition of such term, and the Company shall not be required to deliver a written notice of a
Fundamental Change incidental thereto as a result of any acquisition, consolidation, merger or
binding share exchange or a sale, assignment, conveyance, transfer, lease or other disposition if
at least 90% of the consideration paid for the Common Stock (excluding cash payments for fractional
shares and cash payments pursuant to dissenters’ appraisal rights) in such transaction
or transactions consists of shares of common stock that are traded on the New York Stock
Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or any of their respective
successors) or which will be so traded immediately following such transaction or transactions and
as a result of such transaction or transactions the Securities become convertible into such shares
of such common stock.

     A “Termination of Trading” means that the Common Stock or other securities into which the
Securities are convertible are not approved for listing on the New York Stock Exchange, the NASDAQ
Global Select Market or the NASDAQ Global Market (or any of their respective successors).

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     If any transaction in which the Common Stock is replaced by the securities of another entity
occurs, following completion of any related Make Whole Adjustment Event Period and any related
Fundamental Change Purchase Date, references to the Company in the definitions of “Fundamental
Change,” “Change of Control” and “Termination of Trading” above shall apply to such other entity
instead.

     (b) Within 10 Business Days after the occurrence of a Fundamental Change, the Company shall
mail a written notice of the Fundamental Change to the Trustee and to each Holder. The Company
shall also issue a press release announcing the occurrence of such Fundamental Change (and make
such press release available on the Company’s website). The notice shall include the form of a
Fundamental Change Purchase Notice to be completed by the Holder and shall state:

     (i) briefly, the events causing such Fundamental Change;

     (ii) the Effective Date of the Fundamental Change, and whether the Fundamental Change
is a Make Whole Adjustment Event, in which case the Effective Date of the Make Whole
Adjustment Event;

     (iii) information about the Holders’ right to convert the Securities;

     (iv) information about the Holders’ right to require the Company to purchase the
Securities;

     (v) the last date on which a Holder may exercise the purchase right;

     (vi) the Fundamental Change Purchase Date;

     (vii) the Fundamental Change Purchase Price;

     (viii) the date by which the Fundamental Change Purchase Notice pursuant to this
Section 3.01 must be given;

     (ix) the Conversion Price (giving effect to any applicable Additional Shares) and any
adjustments thereto;

     (x) the procedures that the Holder must follow to exercise rights under this Section
3.01;

     (xi) the procedures for withdrawing a Fundamental Change Purchase Notice, including a
form of notice of withdrawal; and

     (xii) the name and address of each Paying Agent and Conversion Agent;

     (xiii) that the Holder must satisfy the requirements set forth in the Indenture and the
Securities in order to convert the Securities.

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     If any of the Securities is in the form of a Global Security, then the Company shall modify
such notice to the extent necessary to accord with the procedures of the Depositary applicable to
the repurchase of Global Securities.

     (c) A Holder may exercise its rights specified in subsection (a) of this Section 3.01 upon
delivery of a written notice (which shall be in substantially the form included in Exhibit
A hereto and which may be delivered by letter, overnight courier, hand delivery, facsimile
transmission or in any other manner reasonably acceptable to the Paying Agent and, in the case of
Global Securities, may be delivered electronically or by other means in accordance with the
Depositary’s customary procedures) of the exercise of such rights (a “Fundamental Change Purchase
Notice”) to any Paying Agent during the period between the mailing of the Fundamental Change
Purchase Notice and the close of business on the second Scheduled Trading Day next preceding the
Fundamental Change Purchase Date.

     The delivery of such Security to any Paying Agent (together with all necessary endorsements)
at the office of such Paying Agent shall be a condition to the receipt by the Holder of the
Fundamental Change Purchase Price therefor.

     The Company shall purchase from the Holder thereof, pursuant to this Section 3.01, a portion
of a Security if the principal amount of such portion is $1,000 or an integral multiple of $1,000.
Provisions of the Indenture that apply to the purchase of all of a Security pursuant to Section
3.01 through Section 3.04 also apply to the purchase of such portion of such Security.

     Notwithstanding anything herein to the contrary, any Holder delivering to a Paying Agent the
Fundamental Change Purchase Notice contemplated by this subsection (c) shall have the right to
withdraw such Fundamental Change Purchase Notice in whole or in a portion thereof that is a
principal amount of $1,000 or in an integral multiple thereof at any time prior to 5:00 p.m. (New
York City time) on the second scheduled Trading Day next preceding the Fundamental Change Purchase
Date by delivery of a written notice of withdrawal to the Paying Agent in accordance with Section
3.02.

     A Paying Agent shall promptly notify the Company of the receipt by it of any Fundamental
Change Purchase Notice or written withdrawal thereof.

     Anything herein to the contrary notwithstanding, in the case of Global Securities, any
Fundamental Change Purchase Notice may be delivered or withdrawn and such Securities may be
surrendered or delivered for purchase in accordance with the Applicable Procedures as in effect
from time to time.

     Section 3.02. Effect of Fundamental Change Purchase Notice.

     Upon receipt by any Paying Agent of the Fundamental Change Purchase Notice specified in
Section 3.01(c), the Holder of the Security in respect of which such Fundamental Change Purchase
Notice was given shall (unless such Fundamental Change Purchase Notice is withdrawn as specified
below) thereafter be entitled to receive the Fundamental Change Purchase Price with respect to such
Security. Such Fundamental Change Purchase Price shall be paid to such Holder promptly following
the later of (a) the Fundamental Change Purchase Date

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with respect to such Security (provided the conditions in Section 3.01(c) have been satisfied)
and (b) the time of delivery of such Security to a Paying Agent by the Holder thereof in the manner
required by Section 3.01(c). Securities in respect of which a Fundamental Change Purchase Notice
has been given by the Holder thereof may not be converted into shares of Common Stock pursuant to
Article 5 on or after the date of the delivery of such Fundamental Change Purchase Notice unless
such Fundamental Change Purchase Notice has first been validly withdrawn.

     A Fundamental Change Purchase Notice may be withdrawn by means of a written notice (which may
be delivered by mail, overnight courier, hand delivery, facsimile transmission or in any other
manner reasonably acceptable to the Paying Agent and, in the case of Global Securities, may be
delivered electronically or by other means in accordance with the Depositary’s customary
procedures) of withdrawal delivered by the Holder to a Paying Agent at any time prior to 5:00 p.m.
(New York City time) on the second Scheduled Trading Day immediately preceding the Fundamental
Change Purchase Date, specifying the principal amount of the Security or portion thereof (which
must be a principal amount of $1,000 or an integral multiple of $1,000 in excess thereof) with
respect to which such notice of withdrawal is being submitted.

     Section 3.03. Deposit of Fundamental Change Purchase Price.

     On or before 11:00 a.m. (New York City time) on the Fundamental Change Purchase Date, the
Company shall deposit with the Trustee or with a Paying Agent (other than the Company or an
Affiliate of the Company) an amount of money (in immediately available funds if deposited on such
Fundamental Change Purchase Date) sufficient to pay the aggregate Fundamental Change Purchase Price
of all the Securities or portions thereof that are to be purchased as of such Fundamental Change
Purchase Date. The manner in which the deposit required by this Section 3.03 is made by the
Company shall be at the option of the Company; provided that such deposit shall be made in a manner
reasonably acceptable to the Trustee and the Paying Agent such that the Trustee or a Paying Agent
shall have immediately available funds on the Fundamental Change Purchase Date.

     If a Paying Agent holds, in accordance with the terms hereof, money sufficient to pay the
Fundamental Change Purchase Price of any Security for which a Fundamental Change Purchase Notice
has been tendered and not withdrawn in accordance with this Indenture, then, on the Fundamental
Change Purchase Date, such Security shall cease to be outstanding, interest shall cease to accrue
thereon and the rights of the Holder in respect thereof shall terminate (other than the right to
receive the Fundamental Change Purchase Price as aforesaid). The Company shall publicly announce
the principal amount of Securities purchased as a result of such Fundamental Change on or as soon
as practicable after the Fundamental Change Purchase Date.

     To the extent that the aggregate amount of Cash deposited by the Company pursuant to this
Section 3.03 exceeds the aggregate Fundamental Change Purchase Price of the Securities or portions
thereof that the Company is obligated to purchase, then promptly after the Fundamental Change
Purchase Date the Trustee or a Paying Agent, as the case may be, shall return any such excess Cash
to the Company.

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     Section 3.04. Securities Purchased in Part.

     Any Security that is to be purchased only in part shall be surrendered at the office of a
Paying Agent and, promptly after the Fundamental Change Purchase Date, the Company shall execute
and the Trustee shall authenticate and deliver to the Holder of such Security, without service
charge, a new Security or Securities, of such authorized denomination or denominations as may be
requested by such Holder, in aggregate principal amount equal to, and in exchange for, the portion
of the principal amount of the Security so surrendered that is not purchased.

     Section 3.05. Compliance with Securities Laws Upon Purchase of Securities.

     In connection with any offer to purchase Securities under Section 3.01, the Company shall (a)
comply with the applicable provisions of Rule 13e-4, Rule 14e-1 and any other tender offer rules
under the Exchange Act, (b) file the related Schedule TO (or any successor or similar schedule,
form or report), if required, under the Exchange Act and (c) otherwise comply with all federal and
state securities laws in connection with such offer to purchase or repurchase Securities, all so as
to permit the rights of the Holders and obligations of the Company under Section 3.01 through
Section 3.04 to be exercised in the time and in the manner specified therein.

     Section 3.06. No Fundamental Change Repurchase Following Acceleration.

     No Securities shall be purchased by the Company under Section 3.01 if the principal amount of
the Securities has been accelerated under Section 9.02, and such acceleration has not been
rescinded, on or prior to the Fundamental Change Purchase Date.

     Section 3.07. Trustee’s Fundamental Change Purchase Disclaimer.

     The Trustee has no duty to determine when a Fundamental Change has occurred, or when purchases
of Securities upon a Fundamental Change under Article 3 should be made. The Trustee shall not be
accountable for and makes no representation as to the Fundamental Change Purchase Price payable in
respect of any Fundamental Change. The Trustee shall not be responsible for the Company’s failure
to comply with this Article 3.

ARTICLE 4

PAYMENT OF INTEREST AND ADDITIONAL SHARES

     Section 4.01. Interest Payments.

     (a) The Company shall pay interest on the Securities at a rate of 4.5% per annum, payable
semi-annually in arrears on May 1 and November 1 of each year (each, an “Interest Payment Date”),
or if any such day is not a Business Day, the immediately following Business Day, commencing May
1, 2010. Interest on a Security shall be paid to the Holder of such Security at the close of
business on April 15 or October 15 (each, a “Record Date”), as the case may be, next preceding the
related Interest Payment Date, and shall be computed on the basis of a 360-day year comprised of
twelve 30-day months. In the event of the maturity, conversion, or purchase of a Security by the
Company at the option of the Holder, interest shall cease to accrue
on such Security. Notwithstanding any other provision of this Indenture, however, the Company

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shall pay interest on the Maturity Date to Holders on the Record Date immediately preceding the
Maturity Date in respect of the period ending with the Maturity Date regardless of whether such
Holders convert their Securities.

     (b) Upon conversion of a Security, (i) a Holder shall not receive any Cash payment of interest
(unless such Holder is the Holder on a Record Date and such conversion occurs between such Record
Date and the Interest Payment Date to which it relates, in which case a Holder on the Record Date
shall receive on the Interest Payment Date accrued and unpaid interest) and the Conversion Rate
shall not be adjusted to account for accrued and unpaid interest and (ii) except as set forth in
clause (c) below, the Company’s delivery to a Holder of Common Stock and (in the case of fractional
shares) Cash in settlement of the Conversion Obligation as set forth in Section 5.05 shall be
deemed to satisfy its obligation with respect to such Security, and any accrued but unpaid interest
shall be deemed to be paid in full upon conversion, rather than cancelled, extinguished or
forfeited.

     (c) Securities surrendered for conversion by a Holder after the close of business on any
Record Date but prior to the next Interest Payment Date must be accompanied by payment of an amount
equal to the interest that shall be payable on the Securities; provided, however, that no such
payment need be made (1) if the Company has specified a Fundamental Change Purchase Date that is
after a Record Date and on or prior to the next Interest Payment Date, (2) with respect to any
Securities surrendered for conversion following the Record Date for the payment of interest
immediately preceding the Maturity Date or (3) only to the extent of overdue interest, if any
overdue interest exists at the time of conversion with respect to such Securities.

     Section 4.02. Additional Shares.

     (a) Notwithstanding anything herein to the contrary, in the event a Holder elects to surrender
its Securities for conversion in accordance with Article 5, at any time from, and including, the
Effective Date of a Make Whole Adjustment Event to, and including, the close of business on the
second Scheduled Trading Day immediately preceding the related Fundamental Change Purchase Date, or
(in the case of a Make Whole Adjustment Event that does not also constitute a Fundamental Change)
the 40th Scheduled Trading Day immediately following the Effective Date of such Make Whole
Adjustment Event (such period, the “Make Whole Adjustment Event Period”), the Company will increase
the Conversion Rate for the Securities surrendered for conversion by the applicable number of
additional shares of Common Stock set forth in Schedule 4.02 (the “Additional Shares”), as
described in this Section 4.02.

     (b) For purposes of determining the applicable number of Additional Shares pursuant to
Schedule 4.02:

     (i)
“Effective Date” shall mean the date the Make Whole Adjustment Event occurs or
becomes effective; and

     (ii)
“Stock Price” shall mean:

     (x) in the case of a Make Whole Adjustment Event described in clause
(ii) of the definition of Change in Control in which the holders of

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Common
Stock receive only Cash in such Make Whole Adjustment Event, the Cash amount
paid or deemed paid per share of Common Stock in such Change of Control
converted, if necessary, into U.S. dollars at the exchange rate in effect on
such date; or

     (y) in the case of any other Make Whole Adjustment Event, the average
of the last reported Closing Sale Price over the five consecutive Trading
Day period ending on the Trading Day immediately preceding the Effective
Date of such other Make Whole Adjustment Event.

     (c) If the Stock Price is between two Stock Price amounts in the table attached as Schedule
4.02 hereto, the number of Additional Shares shall be determined by a straight-line interpolation
between the number of Additional Shares set forth for the higher and lower Stock Price amounts,
based on a 365-day year.

     (d) If the Effective Date falls between two Effective Dates in the table attached as Schedule
4.02 hereto, the number of Additional Shares shall be determined by a straight-line interpolation
between the number of Additional Shares set forth for the two dates, based on a 365-day year.

     (e) No increase in the Conversion Rate shall be made pursuant to this Section 4.02 if the
Stock Price (i) exceeds $36.00 per share (subject to adjustment) or (ii) is less than $7.96 per
share (subject to adjustment).

     (f) The Stock Price amounts set forth in the first row of the table (i.e., column headers) in
Schedule 4.02 hereto shall be adjusted as of any date on which the Conversion Price of the
Securities is adjusted pursuant to Section 5.06. The Stock Price amounts set forth in the table
shall be adjusted by the same adjustment factor applied to the Conversion Price pursuant to Section
5.06. The number of Additional Shares indicated in the table shall be adjusted by the inverse of
the adjustment factor applied to the Conversion Price pursuant to Section 5.06.

     (g) In no event shall the Conversion Rate be increased to more than 125.616 shares per $1,000
principal amount of Securities (the “Maximum Conversion Rate”) pursuant to the events described in
this Section 4.02. The Maximum Conversion Rate shall be adjusted as of any date on which the
Conversion Price of the Securities is adjusted pursuant to Section 5.06, by the inverse of the
adjustment factor applied to the Conversion Price pursuant to such section.

     (h) The Company shall use commercially reasonable efforts to notify Holders of the anticipated
Effective Date of a Make Whole Adjustment Event not less than 10 Scheduled Trading Days prior to
the anticipated Effective Date of such Make Whole Adjustment Event.

ARTICLE 5

CONVERSION

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     Section 5.01. Conversion Privilege.

     (a) Subject to the further provisions of this Article 5 and paragraph 6 of the Securities, a
Holder may surrender a Security for conversion at any time prior to the close of business on the
second Scheduled Trading Date immediately preceding the Maturity Date.

     (b) A Security in respect of which a Holder has delivered a Fundamental Change Purchase Notice
pursuant to Section 3.01(c) exercising the option of such Holder to require the Company to purchase
such Security may be converted only if such Fundamental Change Purchase Notice is withdrawn by a
written notice of withdrawal delivered to a Paying Agent prior to 5:00 p.m. (New York City time) on
the second Scheduled Trading Day immediately preceding the Fundamental Change Purchase Date in
accordance with Section 3.02.

     (c) Securities may be surrendered for conversion only in principal amounts that are integral
multiples of $1,000.

     Section 5.02. Conversion Procedure.

     (a) The right to convert any Security may be exercised only if such Holder shall (i) in the
case of a Global Security, comply with the Applicable Procedures of the Depositary in effect at
that time and, if required, pay funds equal to interest payable on the next Interest Payment Date
to which such Holder is not entitled as set forth in Section 4.01(c) and, if required, all transfer
or similar taxes, if any, and (ii) in the case of a Certificated Security, (1) complete and
manually sign and deliver an irrevocable notice to the Conversion Agent in the form on the reverse
of such Certificated Security (or a facsimile thereof) (included in Exhibit A hereto) (a “Notice of
Conversion”) at the office of the Conversion Agent and state in writing therein the principal
amount of Securities to be converted and the name or names (with addresses) in which such Holder
wishes the certificate or certificates for any shares of Common Stock, if any, to be delivered upon
settlement of the Conversion Obligation to be registered, (2) surrender such Securities, duly
endorsed to the Company or in blank (and accompanied by appropriate endorsement and transfer
documents), at the office of the Conversion Agent, (3) if required, pay funds equal to interest
payable on the next Interest Payment Date to which such Holder is not entitled as set forth in
Section 4.01(c), (4) if required, furnish appropriate endorsements and transfer documents, and (5)
if required, pay all transfer or similar taxes, if any, as set forth in Section 5.04. The Trustee
(and if different, the relevant Conversion Agent) shall notify the Company of any conversion
pursuant to this Article 5 on the date of such conversion. No Notice of Conversion with respect to
any Securities may be surrendered by a Holder thereof if such Holder has also delivered a
Fundamental Change Repurchase Notice to the Company in respect of such Securities and has not
validly withdrawn such Fundamental Change Repurchase Notice in accordance with Article 3.

     If more than one Security shall be surrendered for conversion at one time by the same Holder,
the Conversion Obligation with respect to such Securities, if any, that shall be payable upon
conversion shall be computed on the basis of the aggregate principal amount of the Securities (or
specified portions thereof to the extent permitted thereby) so surrendered.

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     (b) A Security shall be deemed to have been converted (the “Conversion Date”) immediately
prior to the close of business on the date that the Holder has complied with the requirements set
forth in Section 5.02(a), if such requirements are satisfied by 11:00 a.m. (New York City time) on
that date, or immediately prior to the close of business on the next succeeding Business Day if
such requirements are satisfied after 11:00 a.m. (New York City time) on that date.

     (c) The Company shall cause the Holder of such Securities on the Conversion Date to become the
holder of record of the deliverable number of shares of Common Stock constituting the Conversion
Obligation on the Conversion Date. The Company shall issue or cause to be issued, and deliver to
the Conversion Agent or to such Holder, or such Holder’s nominee or nominees, certificates or a
book-entry transfer through the Depositary for the number of full shares of Common Stock to which
such Holder shall be entitled in satisfaction of such Conversion Obligation.

     (d) In case any Security shall be surrendered for partial conversion, the Company shall
execute and the Trustee shall authenticate and deliver to or upon the written order of the Holder
of the Security so surrendered, without charge to such Holder, a new Security or Securities in
authorized denominations in an aggregate principal amount equal to the unconverted portion of the
surrendered Security.

     (e) Except as provided in Section 5.06, no adjustment shall be made for dividends on any
shares issued upon the conversion of any Security as provided in this Article.

     (f) Upon the conversion of an interest in a Global Security, the Trustee, or the Custodian at
the direction of the Trustee, shall make a notation on such Global Security as to the reduction in
the principal amount represented thereby. The Company shall notify the Trustee in writing of any
conversion of Securities effected through any Conversion Agent other than the Trustee.

     (g) The Person in whose name the certificate for any shares of Common Stock delivered upon
conversion is registered shall be treated as a stockholder of record as of the close of business on
the relevant Conversion Date.

     (h) The Company shall not be required to deliver any Additional Shares pursuant to Section
4.02 hereof until the Effective Date of the Make Whole Adjustment Event causing such increase has
occurred. The Company shall deliver the Additional Shares as soon as practicable, but in no event
after the third Business Day after the later of:

     (i) the Conversion Date; and

     (ii) the Effective Date of the Make Whole Adjustment Event.

     Section 5.03. Fractional Shares.

     The Company shall not issue fractional shares of Common Stock upon conversion of Securities.
In lieu thereof, the Company shall deliver Cash equal to the remainder multiplied by the Closing
Sale Price of Common Stock on the relevant Conversion Date.

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     Section 5.04. Taxes on Conversion.

     If a Holder converts a Security, the Company shall pay any documentary, stamp or similar issue
or transfer tax due on the issue of shares of Common Stock upon such conversion. However, the
Holder shall pay any such tax which is due because the Holder requests the shares to be issued in a
name other than the Holder’s name. The Conversion Agent may refuse to deliver the certificate
representing the Common Stock being issued in a name other than the Holder’s name until the
Conversion Agent receives a sum sufficient to pay any tax which shall be due because the shares are
to be issued in a name other than the Holder’s name. Nothing herein shall preclude any tax
withholding required by law or regulation.

     Section 5.05. Issuance of Common Stock Upon Conversion.

     (a) Subject to Section 5.02, upon any conversion of any Security, the Company shall deliver to
converting Holders on the third Business Day immediately following the relevant Conversion Date
(unless such Conversion Date occurs on or following August 1, 2014, in which case the Company shall
make such delivery on the Maturity Date), in respect of each $1,000 principal amount of Securities
being converted, the number of shares of Common Stock (the “Conversion Obligation”) equal to the
then applicable Conversion Rate. The Company shall also deliver to each converting Holder of the
Securities Cash in lieu of fractional shares of Common Stock as set forth pursuant to Section 5.03.

     (b) The Company shall, prior to the issuance of any Securities hereunder, and from time to
time as may be necessary, reserve at all times and keep available, free from preemptive rights, out
of its authorized but unissued Common Stock, a sufficient number of shares of Common Stock
deliverable upon conversion of all of the Securities.

     (c) All shares of Common Stock that may be issued upon conversion of the Securities shall be
duly authorized, validly issued, fully paid and nonassessable and shall be free of any preemptive
rights and free of any lien or adverse claim.

     (d) The Company shall endeavor to comply with all applicable securities laws regulating the
offer and delivery of any Common Stock upon conversion of Securities and shall list or cause to
have quoted such shares of Common Stock on each national or regional securities exchange or other
over-the-counter market or such other market on which the Common Stock is then listed or quoted;
provided, however, that, if the rules of such automated quotation system or exchange permit the
Company to defer the listing of such Common Stock until the first conversion of the Securities into
Common Stock in accordance with the provisions of this Indenture, the Company covenants to list
such Common Stock issuable upon conversion of the Securities in accordance with the requirements of
such automated quotation system or exchange at such time. Any Common Stock issued upon conversion
of a Security hereunder which at the
time of conversion was a Transfer Restricted Security shall also be a Transfer Restricted
Security.

     (e) Notwithstanding anything herein to the contrary, nothing herein shall give to any Holder
any rights as a creditor in respect of its right to conversion.

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     Section 5.06. Adjustment of Conversion Price.

     The conversion price as stated in paragraph 6 of the Securities (the “Conversion Price”) shall
be adjusted from time to time by the Company as follows:

     (a) If the Company issues solely shares of Common Stock as a dividend or distribution on all
or substantially all of the shares Common Stock, or if the Company subdivides or combine
outstanding shares of Common Stock, the Conversion Price will be adjusted based on the following
formula:

	 	 	 	 	 	 	 
	 

	 	CP = CP0 ×
	 	OS0
	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	OS	 	 

     where,

     CP0 = the conversion price in effect immediately prior to the open of
business on the Ex-Dividend Date for such dividend or distribution, or immediately prior to
the open of business on the effective date of such subdivision or combination of Common
Stock, as the case may be;

     CP = the Conversion Price in effect immediately after the open of business on the
Ex-Dividend Date for such dividend or distribution, or immediately after the open of
business on the effective date of such subdivision or combination of Common Stock, as the
case may be;

     OS0 = the number of shares of Common Stock outstanding immediately prior to
the open of business on the Ex-Dividend Date for such dividend or distribution, or
immediately prior to the open of business on the effective date of such subdivision or
combination of Common Stock, as the case may be; and

     OS = the number of shares of Common Stock outstanding immediately after such dividend
or distribution, or immediately after the effective date of such subdivision or combination
of Common Stock, as the case may be.

     Such adjustment shall become effective immediately after the opening of business on the
Ex-Dividend Date for such dividend or distribution or the effective date for such subdivision or
combination of Common Stock. If any dividend or distribution of the type described in this Section
5.06(a) is declared but not so paid or made, or the outstanding shares of Common Stock are not
split or combined, as the case may be, the Conversion Price shall be immediately readjusted,
effective as of the date the Board of Directors determines not to pay such dividend or
distribution, or subdivide or combine the outstanding shares of Common Stock, as the case may
be, to the Conversion Price that would then be in effect if such dividend, distribution,
subdivision or combination of Common Stock had not been declared or announced.

     (b) If the Company distributes to all or substantially all holders of Common Stock any rights,
options or warrants entitling them for a period of not more than 60 calendar days from the record
date for such distribution to subscribe for or purchase shares of the Common Stock (or securities
convertible into Common Stock), at a price per share (or a conversion price per share)

-33-

 

less than
the average of the Closing Sale Prices for the 10 consecutive Trading Day period ending on, and
including, the Trading Day immediately preceding the Ex-Dividend Date for such distribution, the
Conversion Price will be decreased based on the following formula:

	 	 	 	 	 	 	 
	 

	 	CP = CP0 ×
	 	OS0 + Y
	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	OS0 + X	 	 

     where,

     CP0 = the Conversion Price in effect immediately prior to the open of
business on the Ex-Dividend Date for such distribution;

     CP = the Conversion Price in effect immediately after the open of business on the
Ex-Dividend Date for such distribution;

     OS0 = the number of shares of Common Stock outstanding immediately prior to
the open of business on the Ex-Dividend Date for such distribution;

     X = the total number of shares of Common Stock issuable pursuant to such rights,
options or warrants; and

     Y = the number of shares of Common Stock equal to the aggregate price payable to
exercise such rights, options or warrants divided by the average of the Closing Sale Prices
over the 10 consecutive Trading Day period ending on, and including, the trading day
immediately preceding the Ex-Dividend Date for such distribution.

     Such adjustment shall be successively made whenever any such rights, options or warrants are
distributed and shall become effective immediately after the opening of business on the Ex-Dividend
Date for each such distribution. To the extent that shares of the Common Stock are not delivered
after the expiration of such rights, options or warrants, the Conversion Price shall be readjusted
to the Conversion Price that would then be in effect had the adjustments made upon the issuance of
such rights, options or warrants been made on the basis of delivery of only the number of shares of
Common Stock actually delivered. If such rights, options or warrants are not so issued, the
Conversion Price shall again be adjusted to be the Conversion Price that would then be in effect if
such Ex-Dividend Date for such distribution had not been fixed.

     For purposes of this Section 5.06(b), in determining whether any rights, options or warrants
entitle the holders to subscribe for or purchase shares of the Common Stock at less than the
average of the Closing Sale Prices for each Trading Day in the applicable 10-consecutive Trading
Day period, there shall be taken into account any consideration received by the
Company for such rights, options or warrants and any amount payable on exercise or conversion
thereof, the value of such consideration, if other than cash, to be determined by the Board of
Directors. In no event shall the Conversion Price be increased pursuant to this Section 5.06(b).

     (c) If the Company distributes shares of its Capital Stock, evidences of its indebtedness or
other assets or property of the Company to all or substantially all holders of Common Stock other
than (i) dividends or distributions (including subdivision of Common

-34-

 

Stock) covered by Section
5.06(a) or Section 5.06(b), (ii) dividends or distributions paid exclusively in cash referred to in
Section 5.06(d), (iii) Spin-Offs to which the provisions set forth below in this Section 5.06(c)
shall apply, and (iv) distributions of rights to all or substantially all holders of Common Stock
pursuant to the adoption of a shareholder rights plan, then, in each such case the Conversion Price
shall be decreased based on the following formula:

	 	 	 	 	 	 	 
	 

	 	CP = CP0 ×
	 	SP0
 - FMV
	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	SP0	 	 

     where,

     CP0 = the Conversion Price in effect immediately prior to the open of
business on the Ex-Dividend Date for such distribution;

     CP = the Conversion Price in effect immediately after the open of business on the
Ex-Dividend Date for such distribution;

     SP0 = the average of the Closing Sale Prices over the 10 consecutive Trading
Day period ending on, and including, the Trading Day immediately preceding the Ex-Dividend
Date for such distribution; and

     FMV = the Fair Market Value of the shares of Capital Stock, evidences of indebtedness,
assets or property distributed with respect to each outstanding share of Common Stock as of
the open of business on the Ex-Dividend Date for such distribution.

     If the then- Fair Market Value of the portion of the shares of Capital Stock, evidences of
indebtedness or other assets or property so distributed applicable to one share of Common Stock is
equal to or greater than the average of the Closing Sale Prices over the 10 consecutive Trading Day
period ending on the Trading Day immediately preceding the Ex-Dividend Date for such distribution,
in lieu of the foregoing adjustment, adequate provisions shall be made so that each Holder of a
Security shall have the right to receive on conversion in respect of each Security held by such
Holder, in addition to the number of shares of Common Stock that such Holder is entitled to
receive, the amount and kind of securities and assets such Holder would have received had such
Holder already owned a number of shares of Common Stock equal to the Conversion Rate immediately
prior to the record date for the distribution of the securities or assets.

     With respect to an adjustment pursuant to this Section 5.06(c) where there has been a dividend
or other distribution on the Common Stock of shares of Capital Stock of any class or series, or
similar equity interest, of or relating to a Subsidiary or other business unit of the
Company (a “Spin-Off”), the Conversion Price will be decreased based on the following formula:

	 	 	 	 	 	 	 
	 

	 	CP = CP0 ×
	 	MP0
	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	FMV + MP0	 	 

     where,

-35-

 

     CP0 = the Conversion Price in effect immediately prior to the open of
business on the Ex-Dividend Date for the Spin-Off;

     CP = the Conversion Price in effect immediately after the open of business on the
Ex-Dividend Date for the Spin-Off;

     FMV = the average of the closing sale prices of the Capital Stock or similar equity
interests distributed to holders of Common Stock applicable to one share of Common Stock
over the first 10 consecutive Trading Day period immediately following, and including, the
Ex-Dividend Date for the Spin-Off (such period, the “Valuation Period”); and

     MP0 = the average of the Closing Sale Price of the Common Stock over the
Valuation Period.

     The adjustment to the Conversion Price under the preceding paragraph of this Section 5.06(c)
shall be made immediately after the open of business on the day after the last day of the Valuation
Period, but shall become effective as of the open of business on the Ex-Dividend Date for the
Spin-Off. For purposes of determining the Conversion Price, in respect of any conversion during
the 10 Trading Days commencing on the Ex-Dividend Date of any Spin-Off, references in the portion
of this Section 5.06(c) related to Spin-Offs to 10 Trading Days shall be deemed replaced with such
lesser number of Trading Days as have elapsed from, and including, the Ex-Dividend Date for such
Spin-Off to, but excluding, the Conversion Date for such conversion.

     For purposes of this Section 5.06(c), Section 5.06(a) and Section 5.06(b), any dividend or
distribution to which this Section 5.06(c) is applicable that also includes shares of Common Stock,
or rights, options or warrants to subscribe for or purchase shares of Common Stock to which Section
5.06(a) or Section 5.06(b) applies (or both), shall be deemed instead to be (1) a dividend or
distribution of the evidences of indebtedness, assets or shares of Capital Stock other than such
shares of Common Stock or rights, options or warrants to which this Section 5.06(c) applies (and
any Conversion Price adjustment required by this Section 5.06(c) with respect to such dividend or
distribution shall then be made) immediately followed by (2) a dividend or distribution of such
shares of Common Stock or such rights, options or warrants (and any further Conversion Price
adjustment required by Section 5.06(a) and Section 5.06(b) with respect to such dividend or
distribution shall then be made), except (A) the Ex-Dividend Date of such dividend or distribution
shall be substituted as “the Ex-Dividend Date,” “the Ex-Dividend Date relating to such distribution
of such rights, options or warrants” and “the Ex-Dividend Date for
such distribution” within the meaning of Section 5.06(a) and Section 5.06(b) and (B) any
shares of Common Stock included in such dividend or distribution shall not be deemed “outstanding
immediately prior to the open of business on the Ex-Dividend Date for such dividend or
distribution, or immediately prior to the open of business on the effective date of such
subdivision or share combination, as the case may be” within the meaning of Section 5.06(a) or
“outstanding immediately prior to the Ex-Dividend Date for such distribution” within the meaning of
Section 5.06(b).

-36-

 

     In no event shall the Conversion Price be increased pursuant to this Section 5.06(c).

     (d) If the Company makes or pays any cash dividend or distribution to all or substantially all
holders of outstanding Common Stock (other than distributions pursuant to Section 5.06(e) and any
dividend or distribution in connection with the liquidation, dissolution or winding up on the
Company), the applicable Conversion Price shall be decreased based on the following formula:

	 	 	 	 	 	 	 
	 

	 	CP = CP0 ×
	 	SP0 - C
	 	 
	 

	 	 	 

	 	 
	 

	 	 	SP0	 	 

     where,

     CP0 = the Conversion Price in effect immediately prior to the open of
business on the Ex-Dividend Date for such dividend or distribution;

     CP = the Conversion Price in effect immediately after the open of business on the
Ex-Dividend Date for such dividend or distribution;

     SP0 = the average of the Closing Sale Prices for the Common Stock over the
10 consecutive Trading Day period ending on, and including, the Trading Day immediately
preceding the Ex-Dividend Date for such dividend or distribution; and

     C = the amount in cash per share the Company pays or distributes to holders of Common
Stock.

     If any dividend or distribution described in this Section 5.06(d) is declared but not so paid
or made, the new Conversion Price shall again be readjusted to be the Conversion Price that would
then be in effect if such dividend or distribution had not been declared.

     For the avoidance of doubt, for purposes of this Section 5.06(d), in the event of any
reclassification of the Common Stock, as a result of which the Securities become convertible into
more than one class of common stock, if an adjustment to the Conversion Price is required pursuant
to this Section 5.06(d), references in this Section to one share of Common Stock or Closing Sale
Prices of one share of Common Stock shall be deemed to refer to a unit or to the price of a unit
consisting of the number of shares of each class of common stock into which the Securities are then
convertible equal to the number of shares of such class issued in respect of one share of Common
Stock in such reclassification. The above provisions of this paragraph shall similarly apply to
successive reclassifications.

     In no event shall the Conversion Price be increased pursuant to this Section 5.06(d).

     (e) If the Company or any of its Subsidiaries makes a payment in respect of a tender offer or
exchange offer for the Common Stock and if the Cash and value of any other consideration included
in the payment per share of the Common Stock exceeds the average of the Closing Sale Prices of the
Common Stock over the 10 consecutive Trading-Day period commencing on, and including, the Trading Day next succeeding the last date on which tenders

-37-

 

or exchanges may be made pursuant to such tender or exchange offer (the “Expiration Date”), the Conversion Price shall be decreased based on the following formula:

	 	 	 	 	 	 	 
	 

	 	CP = CP0 ×
	 	OS0 × SP	 	 
	 

	 	 	 

	 	 
	 

	 	 	AC + (OS × SP)	 	 

     where,

     CP0 = the Conversion Price in effect immediately prior to the open of
business on the Trading Day next succeeding the Expiration Date;

     CP = the Conversion Price in effect immediately after the open of business on the
Trading Day next succeeding the Expiration Date;

     AC = the aggregate value of all cash and any other consideration (as determined by the
Board of Directors) paid or payable for shares purchased in such tender or exchange offer;

     OS0 = the number of shares of Common Stock (including Class B common stock
on an as converted basis) outstanding immediately prior to the time (the “Expiration Time”)
such tender or exchange offer expires (prior to giving effect to such tender offer or
exchange offer);

     OS = the number of shares of Common Stock (including Class B common stock on an as
converted basis) outstanding immediately after the Expiration Time (after giving effect to
such tender offer or exchange offer); and

     SP = the average of the Closing Sale Prices of Common Stock over the 10 consecutive
Trading Day period commencing on, and including, the Trading Day next succeeding the
Expiration Date.

     Such adjustment under this Section 5.06(e) shall become effective at the opening of business
on the Trading Day next succeeding the Expiration Date. For purposes of determining the Conversion
Price, in respect of any conversion during the 10 Trading Days commencing on the Trading Day next
succeeding the Expiration Date, references within this Section 5.06(e) to 10 Trading Days shall be
deemed replaced with such lesser number of Trading Days as have elapsed from, and including, the
Trading Day next succeeding the Expiration Date to, but excluding, the Conversion Date for such
conversion. If the Company is obligated to purchase shares pursuant to any such tender or exchange
offer, but the Company is permanently prevented by applicable law from effecting any or all or any
portion of such purchases or all such purchases are rescinded, the Conversion Rate shall again be
adjusted to be the Conversion Rate that would then be in effect if such tender or exchange offer
had not been made or had been made only in respect of the purchases that had been effected. In no
event shall the Conversion Price be increased pursuant to this Section 5.06(e).

     (f) Notwithstanding this Section 5.06 or any other provision of this Indenture or the
Securities, if any Conversion Price adjustment becomes effective, or any Ex-Dividend Date for

-38-

 

any issuance, dividend or distribution (relating to a required Conversion Price adjustment) occurs on a
Conversion Date, the Board of Directors shall make adjustments to the Conversion Price and the
amount of cash or number of shares of Common Stock issuable upon conversion of the Securities, as
the case may be, as are necessary or appropriate to effect the intent of this Section 5.06 and the
other provisions of this Article 5 and to avoid unjust or inequitable results, as determined in
good faith by the Board of Directors. Any adjustment made pursuant to this Section 5.06(f) shall
apply in lieu of the adjustment or other term that would otherwise be applicable.

     (g) If the Company adjusts the Conversion Price pursuant to the above provisions, the Company
will deliver to the Conversion Agent a certificate setting forth the Conversion Price, detailing
the calculation of the Conversion Price and describing the facts upon which the adjustment is
based. In addition, the Company will issue a press release containing the relevant information and
make the press release available on its website.

     Section 5.07. No Adjustment.

     (a) All calculations and other determinations under this Article 5 shall be made by the
Company and shall be made to the nearest one-ten thousandth (1/10,000) of a share. Notwithstanding
the provisions of Section 5.06, no adjustment in the Conversion Rate shall be required unless the
adjustment would result in a change of at least 1% in the Conversion Price as last adjusted;
provided, however, that any adjustments which by reason of this Section 5.07 are not required to be
made shall be carried forward and taken into account in any subsequent adjustment, regardless of
whether the aggregate adjustment is less than 1%, (i) upon any conversion of Securities, (ii) upon
any required purchases of the Securities in connection with a fundamental change, and (iii) with
respect to any conversions occurring after August 15, 2014, as the case may be.

     (b) No adjustment to the Conversion Rate shall be required in respect of any transaction in
which Holders participate (as a result of holding the Securities, at the same time as holders of
the Common Stock participate) as if such Holders held the number of shares of Common Stock equal to
the applicable Conversion Rate, multiplied by the principal amount of Securities held by such
Holder, divided by 1,000, without conversion of the Securities.

     (c) No adjustment to the Conversion Rate shall be required upon the issuance of any shares of
Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or
interest payable on Company’s securities and the investment of additional optional amounts in
shares of Common Stock under any plan;

     (d) No adjustment to the Conversion Rate shall be required upon the issuance of any shares of
Common Stock or options or rights to purchase those shares pursuant to any present or future employee, director or consultant benefit plan or program of, or assumed by, us or any
of our subsidiaries;

-39-

 

     (e) No adjustment to the Conversion Rate shall be required upon the issuance of any shares of
Common Stock pursuant to any option, warrant, right or exercisable, exchangeable or convertible
security not described in Section 5.07(d) and outstanding as of the date the Securities were first
issued.

     (f) No adjustment to the Conversion Rate shall be required for a change in the par value of
the Common Stock.

     (g) No adjustment to the Conversion Rate shall be required for accrued and unpaid interest, if
any.

     Section 5.08. Adjustment for Tax Purposes.

     The Company shall be entitled to make such reductions in the Conversion Price, for the
remaining term of the Securities or any shorter term, in addition to those required by Section
5.06, as the Board of Directors shall determine to be advisable in order to avoid or diminish any
tax to any holders of shares of Common Stock or rights to purchase Common Stock resulting from any
stock dividends, subdivisions of shares, distributions of rights or warrants to purchase or
subscribe for stock or securities, distributions of securities convertible into or exchangeable for
stock hereafter made by the Company to its stockholders or from any event treated as such for
income tax purposes.

     Section 5.09. Temporary Reduction of Conversion Price.

     To the extent permitted by applicable law, the Company from time to time may reduce the
Conversion Price by any amount for any period of time if the period is at least 20 Business Days,
the reduction is irrevocable during such period, and the Board of Directors shall have made a
determination that such reduction would be in the best interest of the Company. Whenever the
Conversion Price is reduced pursuant to the preceding sentence, the Company shall provide notice of
any reduction in the Conversion Price to the Holders in the manner provided in Section 13.02, with
a copy to the Trustee and Conversion Agent, at least 15 days prior to the date such reduced
Conversion Price takes effect, and such notice shall state the reduced Conversion Price and the
period during which it will be in effect.

     Section 5.10. Notice of Certain Transactions.

     In the event that:

          (1) the Company takes any action which would require an adjustment in the Conversion Price;

          (2) the Company consolidates or enters into a binding share exchange with, merges with or
into, or transfers all or substantially all of its property and assets to, another corporation and
shareholders of the Company must approve the transaction; or

          (3) there is a dissolution or liquidation of the Company,

-40-

 

the Company shall mail to Holders and file with the Trustee a notice stating the proposed record or
effective date, as the case may be, and mail the notice at least 10 days before such date;
provided, further, that upon occurrence of an event referred to in clause (1) of this Section 5.10,
the Company shall file with the Trustee (and deliver a copy to the Conversion Agent) an Officers’
Certificate briefly stating the facts requiring the adjustment and the manner of computing it and
promptly mail to Holders a notice of the adjustment. Failure to mail such notice or any defect
therein shall not affect the validity of any transaction referred to in clause (1), (2) or (3) of
this Section 5.10; provided, however, that unless and until the Trustee and the Conversion Agent
shall have received an Officers’ Certificate setting forth an adjustment of the Conversion Price in
connection with the event referred to in clause (1), the Trustee may assume without inquiry that
the Conversion Price has not been adjusted and that the last Conversion Price of which it has
knowledge remains in effect.

     Section 5.11. Effect of Reclassification, Consolidation, Merger, Binding Share Exchange or
Sale on Conversion Privilege.

     If any of the following shall occur, namely: (a) any reclassification or change of shares of
Common Stock issuable upon conversion of the Securities (other than a change in par value, or from
par value to no par value, or from no par value to par value, or as a result of a subdivision or
combination, or any other change for which an adjustment is provided in Section 5.06); (b) any
consolidation, merger, binding share exchange or combination to which the Company is a party other
than a merger or binding share exchange in which the Company is the continuing corporation and
which does not result in any reclassification of, or change (other than in par value, or from par
value to no par value, or from no par value to par value, or as a result of a subdivision or
combination) in, outstanding shares of Common Stock; or (c) any sale, assignment, conveyance,
transfer, lease or other disposition as an entirety or substantially as an entirety of the property
and assets of the Company, directly or indirectly, to any person, then the Company, or such
successor, purchasing or transferee corporation, as the case may be, shall, as a condition
precedent to such reclassification, change, combination, consolidation, merger, binding share
exchange, sale, assignment, conveyance, transfer, lease or other disposition, execute and deliver
to the Trustee a supplemental indenture providing that the Holder of each Security then outstanding
shall have the right to convert such Security into the kind and amount of shares of stock and other
securities and property (including Cash) receivable upon such reclassification, change,
combination, consolidation, merger, binding share exchange, sale, assignment, conveyance, transfer,
lease or other disposition by a holder of the number of shares of Common Stock deliverable upon
conversion of such Security immediately prior to such reclassification, change, combination,
consolidation, merger, binding share exchange, sale, assignment, conveyance, transfer, lease or
other disposition (the “Reference Property”). For purposes of the foregoing, if holders of the
Common Stock receive or have the right to receive more than one form of consideration in connection
with such reclassification, change, combination, consolidation, merger, binding share exchange,
sale, assignment, conveyance, transfer, lease or other disposition, then the Reference Property
shall be based on weighted average of elections as to consideration made by holders of the Common
Stock (such as pro rata reductions made to any portion of consideration payable). If the Common
Stock is replaced by Reference Property, thereafter all references to Common Stock in this Indenture shall be references to such
Reference Property, except as the context otherwise requires. The determination of the Reference
Property shall apply to all of the Securities and the Company shall notify the Trustee of the
composition

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of the Reference Property promptly after it is determined. Such supplemental indenture
shall provide for adjustments of the Conversion Price which shall be as nearly equivalent as may be
practicable to the adjustments of the Conversion Price provided for in this Article 5. If, in the
case of any such consolidation, merger, binding share exchange, combination, sale, assignment,
conveyance, transfer, lease or other disposition, the stock or other securities and property
(including Cash) receivable thereupon by a holder of Common Stock include shares of stock or other
securities and property of a person other than the successor, purchasing or transferee corporation,
as the case may be, in such consolidation, merger, binding share exchange, combination, sale,
assignment, conveyance, transfer, lease or other disposition, then such supplemental indenture
shall also be executed by such other person and shall contain such additional provisions to protect
the interests of the Holders of the Securities as the Board of Directors shall reasonably consider
necessary by reason of the foregoing. The provisions of this Section 5.11 shall similarly apply to
successive reclassifications, changes, combinations, consolidations, mergers, binding share
exchanges, sales, assignments, conveyances, transfers, leases and other dispositions. The Trustee
has no duty to determine whether a supplemental indenture under this Section 5.11 need be entered
into.

     In the event the Company shall execute a supplemental indenture pursuant to this Section 5.11,
the Company shall promptly file with the Trustee (x) an Officers’ Certificate briefly stating the
reasons therefor, the kind or amount of Reference Property receivable by Holders of the Securities
upon the conversion of their Securities after any such reclassification, change, combination,
consolidation, merger, binding share exchange, sale, assignment, conveyance, transfer, lease or
other disposition, any adjustment to be made with respect thereto and that all conditions precedent
have been complied with and (y) an Opinion of Counsel that all conditions precedent have been
complied with, and shall promptly mail notice thereof to all Holders.

     Section 5.12. Disclaimer.

     Nether the Trustee nor any Conversion Agent (other than the Company or an Affiliate of the
Company) shall have any duty to determine when an adjustment under this Article 5 should be made,
how it should be made or what such adjustment should be, but may accept as conclusive evidence of
that fact or the correctness of any such adjustment, and shall be protected in relying upon, an
Officers’ Certificate, including the Officers’ Certificate with respect thereto, which the Company
is obligated to file with the Trustee (and to deliver a copy thereof to the Conversion Agent)
pursuant to Section 5.10. Neither the Trustee nor any Conversion Agent (other than the Company or
an Affiliate of the Company) makes any representation as to the validity or value of any securities
or assets issued upon conversion of Securities, and neither shall be responsible for the Company’s
failure to comply with any provisions of this Article 5.

     The Trustee shall not be under any responsibility to determine the correctness of any
provisions contained in any supplemental indenture executed pursuant to Section 5.11, but may
accept as conclusive evidence of the correctness thereof, and shall be fully protected in relying
upon, the Officers’ Certificate with respect thereto which the Company is obligated to file
with the Trustee pursuant to Section 5.11.

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     Section 5.13. Limitation on Adjustments.

     (a) The Company shall not take any action that would result in an adjustment pursuant to the
foregoing provisions in this Article 5 without complying with the shareholder approval rules of the
NASDAQ Stock Market (including NASDAQ Market Rule 5635), or any similar rules of any other stock
exchange on which the Common Stock may be listed, if applicable.

     (b) The Company shall not take any action that would result in an adjustment pursuant to the
foregoing provisions in this Article 5 if that adjustment would reduce the Conversion Price below
the then par value of the shares of Common Stock issuable upon conversion of the Securities.

ARTICLE 6

[Reserved]

ARTICLE 7

COVENANTS

     Section 7.01. Payment of Securities.

     The Company shall promptly make all payments in respect of the Securities on the dates and in
the manner provided in the Securities and this Indenture. An installment of principal or interest
shall be considered paid on the date it is due if the Paying Agent (other than the Company) holds
by 11:00 a.m. (New York City time) on that date money, deposited by the Company or an Affiliate
thereof, sufficient to pay such installment. The Company shall (in immediately available funds),
to the fullest extent permitted by law, pay interest on overdue principal and overdue installments
of interest at the rate borne by the Securities per annum.

     Payment of the principal of and interest on the Securities shall be made at the office or
agency of the Company maintained for that purpose in New York, New York (which shall initially be
The Bank of New York Mellon), or at the Corporate Trust Office of the Trustee in such coin or
currency of the United States of America as at the time of payment is legal tender for payment of
public and private debts; provided, however, that at the option of the Company payment of interest
may be made by check mailed to the address of the Person entitled thereto as such address appears
in the Register; provided, further, that a Holder holding an aggregate principal amount of the
Securities in excess of $1,000,000 shall be paid by wire transfer in immediately available funds at
the election of such Holder if such Holder has provided wire transfer instructions to the Trustee
and the Paying Agent at least 10 Business Days prior to the payment date; provided, further, that all payments made to the Depositary or its nominee shall
be made by wire transfer in immediately available funds.

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     Section 7.02. SEC Reports.

     So long as any Securities are outstanding, the Company shall (i) file with the SEC within the
time periods prescribed by its rules and regulations and (ii) furnish to the Trustee and the
Holders of the Securities within 15 days after the date on which the Company would be required to
file the same with the SEC pursuant to its rules and regulations (giving effect to any grace period
provided by Rule 12b-25 under the Exchange Act), all quarterly and annual financial information
required to be contained in Forms 10-Q and 10-K and, with respect to the annual consolidated
financial statements only, a report thereon by the Company’s independent auditors.

     Delivery of such reports, information and documents to the Trustee is for informational
purposes only, and the Trustee’s receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained therein, including the
Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to
rely exclusively on Officers’ Certificates). The Company shall not be required to file any report
or other information with the SEC if the SEC does not permit such filing, although such reports
shall be furnished to the Trustee. Documents filed by the Company with the SEC via the SEC’s EDGAR
system (or any successor thereto) will be deemed furnished to the Trustee and the Holders of the
Securities as of the time such documents are filed via EDGAR (or such successor). The Trustee is
hereby directed, which direction may be changed by the Company at any time, upon a three Business
Day prior written notice, to access the EDGAR system for purposes of retrieving the reports so
filed. The Trustee shall have no duty to search for or obtain any electronic or other filings that
the Company makes with the SEC, regardless of whether such filings are periodic, supplemental or
otherwise.

     Section 7.03. No Resale of Restricted Securities.

     During the period of one year after the last original issuance of the Securities, the Company
shall not, and shall not permit any of its Affiliates to, resell any of the Securities that
constitute Transfer Restricted Securities that have been reacquired by any of them. The Securities
will be issued with a restricted CUSIP number. Until such time as the Company notifies the Trustee
to remove the Restricted Security Legend from the Securities, the restricted CUSIP will be the
CUSIP number for the Securities. At such time as the Company notifies the Trustee to remove the
Restricted Security Legend from the Securities, such Restricted Security Legend will be deemed
removed from any Global Securities and an unrestricted CUSIP number for the Securities will be
deemed to be the CUSIP number for the Securities.

     Section 7.04. Compliance Certificates.

     The Company shall deliver to the Trustee, within 90 days after the end of each fiscal year of
the Company (beginning with the fiscal year ending December 31, 2009), an Officers’ Certificate as
to the signer’s knowledge of the Company’s compliance with all conditions and covenants on its part
contained in this Indenture and stating whether or not the signer knows of any default or Event of
Default. If such signer knows of such a default or Event of Default, the Officers’ Certificate shall describe the default or Event of Default and the efforts to remedy
the same. For the purposes of this Section 7.04, compliance shall be determined without regard to
any grace period or requirement of notice provided pursuant to the terms of this Indenture.

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     The Company shall deliver to the Trustee, as soon as possible and in any event within thirty
days after the Company becomes aware of the occurrence of any Event of Default or an event which,
with notice or the lapse of time or both, would constitute an Event of Default, an Officers’
Certificate setting forth the details of such Event of Default or default and the action which the
Company proposes to take with respect thereto.

     Section 7.05. Additional Interest Notice.

     In the event that the Company is required to pay Additional Interest to Holders of Securities
pursuant to Sections 7.10 or 9.02(b) hereof, the Company shall provide a direction or order in the
form of a written notice (“Additional Interest Notice”) to the Trustee (and if the Trustee is not
the Paying Agent, the Paying Agent) of the Company’s obligation to pay Additional Interest no later
than ten Business Days prior to the proposed payment date set for the payment of Additional
Interest, and the Additional Interest Notice shall set forth the amount of Additional Interest to
be paid by the Company on such payment date and direct the Trustee (or, if the Trustee is not the
Paying Agent, the Paying Agent) to make payment to the extent it receives funds from the Company to
do so. The Trustee shall not at any time be under any duty or responsibility to any holder of
Securities to determine whether Additional Interest is payable, or with respect to the nature,
extent, or calculation of the amount of Additional Interest owed, or with respect to the method
employed in such calculation of Additional Interest.

     Section 7.06. Rule 144A Information Requirements.

     For so long as any of the Securities or the Common Stock issuable upon the conversion thereof
are “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act (or any
successor provision), the Company covenants and agrees that it shall, during any period in which it
is not subject to and in compliance with Section 13 or 15(d) under the Exchange Act, upon the
request of any Holder or beneficial holder of the Securities or any Common Stock issued upon
conversion thereof bearing a Restricted Security Legend or Restricted Stock Legend, as the case may
be, make available to such Holder or beneficial holder of such Securities or any Common Stock
issued upon conversion thereof in connection with any sale thereof and any prospective purchaser of
Securities or such Common Stock designated by such Holder or beneficial holder, the information
required pursuant to Rule 144A(c)(2) under the Securities Act and it shall take such further action
as any Holder or beneficial holder of such Securities or such Common Stock may reasonably request,
all to the extent required from time to time to enable such Holder or beneficial holder to sell its
Securities or Common Stock without registration under the Securities Act within the limitation of
the exemption provided by Rule 144A, as such Rule may be amended from time to time. Upon the
request of any Holder or any beneficial holder of the Securities or such Common Stock, the Company
shall deliver to such Holder a written statement as to whether such Holder and prospective
purchaser have complied with such requirements.

     Section 7.07. Further Instruments and Acts.

     Upon request of the Trustee, the Company shall execute and deliver such further instruments
and do such further acts as may be reasonably necessary or proper to carry out more effectively the
purposes of this Indenture.

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     Section 7.08. Maintenance of Corporate Existence.

     Subject to Article 8, the Company shall do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence.

     Section 7.09. Stay, Extension and Usury Laws.

     The Company covenants (to the extent that it may lawfully do so) that it shall not at any time
insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any
stay, extension or usury law or other law which would prohibit or forgive the Company from paying
all or any portion of the principal of, or premium, if any, or interest on, the Securities as
contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect
the covenants or the performance of this Indenture, and the Company (to the extent it may lawfully
do so) hereby expressly waives all benefit or advantage of any such law and covenants that it shall
not, by resort to any such law, hinder, delay or impede the execution of any power herein granted
to the Trustee, but shall suffer and permit the execution of every such power as though no such law
had been enacted.

     Section 7.10. Additional Interest Payable Upon Failure to Report or to Delegend.

     (a) If at any time during the six months to one-year period following the last original
issuance date of the Securities, the Company fails to timely file any document or report that it is
required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act (other than any
Current Report on Form 8-K), as applicable, or the Securities are not otherwise freely tradable by
the Holders, other than Holders who are Affiliates of the Company (as a result of restrictions
imposed pursuant to U.S. securities law or the terms of this Indenture or the Securities), the
Company shall make a one time payment in respect of the Securities in the amount of 0.50% of their
principal amount, provided that the Company will have 14 days, in the aggregate, to cure all such
missed filings.

     (b) Unless:

     (i) the Restricted Security Legend on the Securities has been removed, and

     (ii) the Securities are freely tradable pursuant to Rule 144 under the Securities Act
without volume restrictions by Holders other than Affiliates of the Company (without
restrictions pursuant to U.S. securities law or the terms of this Indenture or the
Securities)

as of the 375th day after the last date of original issuance of the Securities, the Company shall
either (i) pay Additional Interest on the Securities at an annual rate equal to 0.50% of the
aggregate principal amount of the outstanding Securities until the Securities are freely tradable
as described above or pursuant to the next clause or (y) designate an effective shelf registration
statement useable for the resale of such Securities and any Common Stock issuable upon conversion
of the Securities. So long as a condition described in either (i) or (ii) of this Section 7.10(b)
continues, the Company shall pay such Additional Interest in Cash on May 1 and November 1 of each
year to the Person who is the Holder of record of the Securities on the immediately preceding April
15 and October 15. When such registration default ceases to continue, accrued and unpaid Additional
Interest through the date of cessation shall be paid in

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Cash on the subsequent Interest Payment Date to the record Holder. In no event shall Additional Interest accrue at an annual rate in excess
of 0.50%, in the aggregate, pursuant to this Section 7.10 and Section 9.02(b).

ARTICLE 8

CONSOLIDATION, MERGER, BINDING SHARE EXCHANGE, CONVEYANCE,

TRANSFER OR LEASE

     Section 8.01. Company May Consolidate, etc., only on Certain Terms.

     The Company shall not consolidate with, enter into a binding share exchange or merge with or
into another Person or sell, assign, convey, transfer, lease or otherwise dispose of its properties
and assets substantially as an entirety to any Person, unless:

     (1) in case the Company shall consolidate or enter into a binding share exchange with, or
merge with or into, another Person or sell, assign, convey, transfer, lease or otherwise dispose of
its properties and assets substantially as an entirety to any Person, the Person formed by such
consolidation or binding share exchange or with or into which the Company is merged or the Person
which acquires by sale, assignment, conveyance, transfer, lease, or which otherwise acquires, the
properties and assets of the Company substantially as an entirety shall be a corporation organized
and validly existing under the laws of the United States of America, any State thereof or the
District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the
principal of and interest on all the Securities and the performance or observance of every covenant
of this Indenture on the part of the Company to be performed or observed, and the conversion rights
shall be provided for in accordance with Article 5, by supplemental indenture satisfactory in form
to the Trustee, executed and delivered to the Trustee, by the Person (if other than the Company)
formed by such consolidation, binding share exchange or into which or with whom the Company shall
have been merged or by the Person which shall have acquired the Company’s assets;

     (2) immediately after giving effect to such transaction, no Event of Default, and no default
which, after notice or lapse of time or both, would become an Event of Default, shall have happened
and be continuing; and

     (3) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each in a form reasonably satisfactory to the Trustee and stating that such consolidation,
merger with or into another person, binding share exchange, sale, assignment, conveyance, transfer, lease or other disposal and, if a supplemental indenture is required in
connection with such transaction, such supplemental indenture complies with this Article and that
all conditions precedent herein provided for relating to such transaction have been complied with.

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     Section 8.02. Successor Substituted.

     Upon any consolidation of the Company or binding share exchange with, or merger of the Company
into or with, any other Person or any sale, assignment, conveyance, transfer, lease or other
disposal of the properties and assets of the Company substantially as an entirety in accordance
with Section 8.01, the successor Person formed by such consolidation or binding share exchange or
into which or with whom the Company is merged or to which such assignment, sale, conveyance,
transfer, lease or other disposal is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein, and thereafter, except in the case of a
lease, the predecessor Person shall be relieved of all obligations and covenants under this
Indenture and the Securities.

ARTICLE 9

DEFAULT AND REMEDIES

     Section 9.01. Events of Default.

     An “Event of Default” with respect to Securities shall occur if:

     (a) the Company defaults in the payment of any principal of any Security when the same becomes
due and payable (whether at maturity, on a Fundamental Change Purchase Date or otherwise);

     (b) the Company defaults in the payment of Cash and the delivery of shares of Common Stock
owing upon conversion of any Security (including any Additional Shares), within the time period
required under Article 5;

     (c) the Company defaults in the payment of interest (including any Additional Interest) when
the same becomes due and payable and the default continues for a period of 30 days;

     (d) The Company fails to perform or comply with any of its other covenants or agreements
contained in the Securities or in this Indenture (other than a covenant or agreement a default in
whose performance or whose breach is specifically dealt with in clauses (a), (b) or (c) of this
Section 9.01) and the default continues for 60 days after notice is given as specified below;

     (e) the Company defaults in the payment of the purchase price of any Security when the same
becomes due and payable;

     (f) the Company fails to provide on a timely basis written notice of a Fundamental Change as
required by Section 3.01(b);

     (g) any indebtedness for money borrowed by the Company, or any of the Significant Subsidiary
of the Company (or any group of Subsidiaries that, taken together, would constitute a
Significant Subsidiary), in an outstanding principal amount, individually or in the aggregate,
in

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excess of $5.0 million is not paid at final maturity (or when otherwise due) or is accelerated,
and such indebtedness is not discharged (or such default in payment or acceleration is not cured or
rescinded) within 30 days after written notice as provided in this Indenture;

     (h) the Company or any Significant Subsidiary of the Company (or any group of Subsidiaries
that, taken together, would constitute a Significant Subsidiary) fails to pay one or more final and
non-appealable judgments entered by a court or courts of competent jurisdiction, the aggregate
uninsured or unbonded portion of which is in excess of $5.0 million, if the judgments are not paid,
discharged or stayed within 30 days;

     (i) the Company or any Significant Subsidiary of the Company, pursuant to or within the
meaning of any Bankruptcy Law:

     (i) commences a voluntary case or proceeding;

     (ii) consents to the entry of an order for relief against it in an involuntary case or
proceeding;

     (iii) consents to the appointment of a Custodian of it or for all or substantially all
of its property; or

     (iv) makes a general assignment for the benefit of its creditors; or

     (j) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

     (i) is for relief against the Company or any Significant Subsidiary of the Company in
an involuntary case or proceeding;

     (ii) appoints a Custodian of the Company or any Significant Subsidiary of the Company
for all or substantially all of the property of the Company or any such Significant
Subsidiary; or

     (iii) orders the liquidation of the Company or any Significant Subsidiary of the
Company;

and in each case the order or decree remains unstayed and in effect for 60 consecutive days.

     The term “Bankruptcy Law” means Title 11 of the United States Code (or any successor thereto)
or any similar federal or state law for the relief of debtors. The term “Custodian” means any
receiver, trustee, assignee, liquidator, sequestrator or similar official under any Bankruptcy Law.

     (k) A default under clause (d) above is not an Event of Default until the Trustee notifies the
Company, or the Holders of at least 25% in aggregate principal amount of the Securities then
outstanding notify the Company and the Trustee, in writing of the default, and the
Company does not cure the default within 60 days after receipt of such notice. The notice
given

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pursuant to this Section 9.01 must specify the default, demand that it be remedied and state
that the notice is a “Notice of Default.” When any default under this Section 9.01 is cured, it
ceases.

     (l) The Trustee shall not be charged with knowledge of any Event of Default unless written
notice thereof shall have been given to a Trust Officer at the Corporate Trust Office of the
Trustee by the Company, a Paying Agent, any Holder or any agent of any Holder.

     Section 9.02. Acceleration.

     (a) If an Event of Default (other than an Event of Default specified in clause (i) or (j) of
Section 9.01) occurs and is continuing with respect to any Securities, the Trustee may, by notice
to the Company, or the Holders of at least 25% in aggregate principal amount of the Securities then
outstanding may, by notice to the Company and the Trustee, declare all unpaid principal to the date
of acceleration on the Securities then outstanding (if not then due and payable) to be due and
payable upon any such declaration, and the same shall become and be immediately due and payable.
If an Event of Default specified in clause (i) or (j) of Section 9.01 occurs, all unpaid principal
of the Securities then outstanding shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any Holder. The Holders of a
majority in aggregate principal amount of the Securities then outstanding by notice to the Trustee
may rescind an acceleration of Securities and its consequences if (a) all existing Events of
Default, other than the nonpayment of the principal of the Securities which has become due solely
by such declaration of acceleration, have been cured or waived; (b) interest which has become due
otherwise than by such declaration of acceleration, has been paid; (c) the rescission would not
conflict with any judgment or decree of a court of competent jurisdiction; and (d) all payments due
to the Trustee and any predecessor Trustee under Section 10.07 have been made. No such rescission
shall affect any subsequent default or impair any right consequent thereto.

     (b) Notwithstanding anything in the Indenture to the contrary, if the Company so elects, the
sole remedy for any failure comply with Section 7.02 hereof shall, for 180 days following the
occurrence of such an Event of Default, be limited to the payment of Additional Interest as
provided in the following sentence. If the Company fails to comply with Section 7.02 hereof to
file periodic or other reports, the Company shall pay Additional Interest to all Holders at a rate
per annum equal to 0.50% of the principal amount of the Securities to, but not including, the 181st
day thereafter (or, if applicable, the earlier date on which such Event of Default is waived). In
no event shall Additional Interest accrue at an annual rate in excess of 0.50%, in the aggregate,
pursuant to Section 7.10 hereof and this Section 9.02(b). If the Event of Default is continuing on
the 181st day after an Event of Default relating to a failure to comply with Section 7.02 first
occurs, the Securities shall be subject to acceleration as provided in Section 9.02(a) hereof. All
accrued and unpaid Additional Interest arising under this paragraph, if any, shall be paid in
arrears in Cash to Holders of the Securities by the Company on the Interest Payment Date on which
interest in respect of the Securities for the same accrual period is paid, to the Holders receiving
such interest. The provisions of this Indenture described in this paragraph shall not affect the
rights of the Holders in the event of the occurrence of any other Events of Default.

     In order to elect to pay additional interest as the sole remedy during the first 180 days
after the occurrence of an Event of Default relating to the failure to comply with Section 7.02 in

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accordance with the immediately preceding paragraph, the Company shall notify all Holders and the
Trustee and Paying Agent of such election on or before the close of business on the fifth Business
Day after the date on which such Event of Default otherwise would occur. Upon a failure by the
Company to timely give such notice or pay additional interest, the Securities will be immediately
subject to acceleration as otherwise provided in this Section 9.02.

     Section 9.03. Other Remedies.

     If an Event of Default with respect to Securities occurs and is continuing, the Trustee may,
but shall not be obligated to, pursue any available remedy by proceeding at law or in equity to
collect the payment of the principal of or any interest on, the Securities or to enforce the
performance of any provision of the Securities or this Indenture.

     The Trustee may maintain a proceeding even if it does not possess any of the Securities or
does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder
in exercising any right or remedy accruing upon an Event of Default shall not impair the right or
remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive
of any other remedy. All available remedies are cumulative to the extent permitted by law.

     Section 9.04. Waiver of Defaults and Events of Default.

     Subject to Section 9.02, 9.07 and 12.02, the Holders of a majority in aggregate principal
amount of the Securities then outstanding by notice to the Trustee may waive an existing default or
Event of Default and its consequence, except a default or Event of Default in the payment of the
principal of or interest on, any Security, a failure by the Company to pay the Cash and deliver the
shares of Common Stock owing upon conversion of any Security (including Additional Shares, if any)
within the time period required by this Indenture or any default or Event of Default in respect of
any provision of this Indenture or the Securities which, under Section 12.02, cannot be modified or
amended without the consent of the Holder of each Security affected. When a default or Event of
Default is waived, it is cured and ceases.

     Section 9.05. Control by Majority.

     The Holders of a majority in aggregate principal amount of the Securities then outstanding may
direct the time, method and place of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to
follow any direction that conflicts with law or this Indenture, that the Trustee determines may be
unduly prejudicial to the rights of another Holder or the Trustee or that may involve the Trustee
in personal liability unless the Trustee is offered indemnity satisfactory to it; provided,
however, that the Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction.

     Section 9.06. Limitations on Suits.

     A Holder of a Security may not pursue any remedy with respect to this Indenture or the
Securities (except actions for payment of overdue principal, premium, if any, or interest or for
the conversion of the Securities pursuant to Article 5) unless:

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     (a) the Holder personally gives to the Trustee written notice of a continuing Event of
Default;

     (b) the Holders of at least 25% in aggregate principal amount of the then outstanding
Securities make a written request to the Trustee to pursue the remedy;

     (c) such Holder or Holders offer to the Trustee indemnity satisfactory to the Trustee against
any loss, liability or expense;

     (d) the Trustee does not comply with the request within 60 days after receipt of the request
and the offer of indemnity; and

     (e) no direction inconsistent with such written request has been given to the Trustee during
such 60-day period by the Holders of a majority in aggregate principal amount of the Securities
then outstanding.

     A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a
preference or priority over such other Holder, it being understood that the Trustee does not have
an affirmative duty to ascertain whether or not a Holder’s actions or forbearances constitute such
prejudicial use.

     Section 9.07. Rights of Holders to Receive Payment and to Convert.

     Notwithstanding any other provision of this Indenture, the right of any Holder of a Security
to receive payment of the principal of and interest on the Security, on or after the respective due
dates expressed in the Security and this Indenture, to convert such Security in accordance with
Article 5 and to bring suit for the enforcement of any such payment on or after such respective
dates or the right to convert, is absolute and unconditional and shall not be impaired or affected
without the consent of the Holder.

     Section 9.08. Collection Suit by Trustee.

     If an Event of Default in the payment of principal, premium, if any, or interest specified in
clause (a) or (b) of Section 9.01 occurs and is continuing, the Trustee may recover judgment in its
own name and as trustee of an express trust against the Company or another obligor on the
Securities for the whole amount of principal and accrued interest remaining unpaid, and such
further amount as shall be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and
counsel.

     Section 9.09. Trustee May File Proofs of Claim.

     The Trustee may file such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceedings relative to the Company (or any other obligor on the
Securities), its creditors or its property and shall be entitled and empowered to collect and
receive any money or other property payable or deliverable on any such claims and

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to distribute the
same, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make
such payments to the Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and any
other amounts due the Trustee under Section 10.07, and to the extent that such payment of the
reasonable compensation, expenses, disbursements and advances in any such proceedings shall be
denied for any reason, payment of the same shall be secured by a lien on, and shall be paid out of,
any and all distributions, dividends, money, securities and other property which the Holders may be
entitled to receive in such proceedings, whether in liquidation or under any plan of reorganization
or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to, or, on behalf of any Holder, to authorize, accept or adopt, any plan of
reorganization, arrangement, adjustment or composition affecting the Securities or the rights of
any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding.

     Section 9.10. Priorities.

     If the Trustee collects any money pursuant to this Article 9, it shall pay out the money in
the following order:

     First, to the Trustee for amounts due under Section 10.07;

     Second, to Holders for amounts due and unpaid on the Securities for principal and interest
ratably, without preference or priority of any kind, according to the amounts due and payable on
the Securities for principal and interest, respectively; and

     Third, the balance, if any, to the Company.

     The Trustee may fix a record date and payment date for any payment to Holders pursuant to this
Section 9.10.

     Section 9.11. Undertaking for Costs.

     In any suit for the enforcement of any right or remedy under this Indenture or in any suit
against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay the costs of the
suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’
fees and expenses (whether incurred before trial, at trial or on appeal or in any bankruptcy,
arbitration or other administrative proceeding), against any party litigant in the suit, having due
regard to the
merits and good faith of the claims or defenses made by the party litigant. This Section 9.11
does not apply to a suit made by the Trustee, a suit by a Holder pursuant to Section 9.07 or a suit
by Holders of more than 10% in aggregate principal amount of the Securities then outstanding.

ARTICLE 10

TRUSTEE

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     Section 10.01. Duties of Trustee.

     (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of
the rights and powers vested in it by this Indenture and use the same degree of care and skill in
its exercise as a prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.

     (b) Except during the continuance of an Event of Default:

     (i) the Trustee need perform only those duties as are specifically set forth in this
Indenture and no others and no implied covenants or obligations shall be read into this
Indenture or the TIA against the Trustee; and

     (ii) in the absence of bad faith on its part, the Trustee may conclusively rely,
without investigation as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Trustee and conforming to
the requirements of this Indenture but need not verify the content thereof. The Trustee,
however, shall examine any certificates and opinions which by any provision hereof are
specifically required to be delivered to the Trustee to determine whether or not they
conform to the requirements of this Indenture, but need not confirm or investigate the
accuracy of mathematical calculations or other facts stated therein.

     (c) The Trustee may not be relieved from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that:

     (i) this paragraph does not limit the effect of subsection (b) of this Section 10.01;

     (ii) the Trustee shall not be liable for any error of judgment made in good faith by a
Trust Officer, unless it is proved that the Trustee was negligent in ascertaining the
pertinent facts; and

     (iii) the Trustee shall not be liable with respect to any action it takes or omits to
take in good faith in accordance with a direction received by it pursuant to Section 9.02,
9.04 or 9.05.

     (d) No provision of this Indenture shall require the Trustee to expend or risk its own funds
or otherwise incur any financial liability in the performance of any of its duties hereunder
or in the exercise of any of its rights or powers unless the Trustee shall have received
adequate indemnity in its opinion against potential costs and liabilities incurred by it relating
thereto.

     (e) Every provision of this Indenture that in any way relates to the Trustee is subject to
subsections (a), (b), (c) and (d) of this Section 10.01.

     (f) The Trustee shall not be liable for interest on any money received by it except as the
Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be
segregated from other funds except to the extent required by law.

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     Section 10.02. Rights of Trustee.

     Subject to Section 10.01:

     (a) The Trustee may rely conclusively on any document believed by it to be genuine and to have
been signed or presented by the proper person. The Trustee need not investigate any fact or matter
stated in the document.

     (b) Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate
or an Opinion of Counsel or both, which shall conform to Section 13.04(b). The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on such Officers’
Certificate or Opinion of Counsel.

     (c) The Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents, attorneys, or independent contractors and shall
not be responsible for any misconduct or negligence on the part of any agent, attorney or
independent contractor appointed with due care.

     (d) The Trustee shall not be liable for any action it takes or omits to take in good faith
which it believes to be authorized or within its rights or powers.

     (e) The Trustee may consult with counsel of its selection, and the advice or opinion of such
counsel as to matters of law shall be full and complete authorization and protection in respect of
any such action taken, omitted or suffered by it hereunder in good faith and in accordance with the
advice or opinion of such counsel.

     (f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in
it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture,
unless such Holders shall have offered to the Trustee security or indemnity satisfactory to the
Trustee against the costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction.

     (g) The Trustee shall not be bound to make any investigation into the facts or matters stated
in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document,
but the Trustee, in its discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Trustee shall determine to make such further
inquiry or investigation, it shall be entitled to examine the books, records and premises of
the Company, personally or by agent or attorney at the sole cost of the Company, and shall incur no
liability or additional liability of any kind by reason of such inquiry or investigation.

     (h) The Trustee shall not be deemed to have knowledge of any Default or Event of Default
unless a Trust Officer of the Trustee has actual knowledge thereof or unless written notice of any
event which is in fact such a default is received by the Trustee at the Corporate Trust Office, and
such notice references the Securities and this Indenture. The Trustee shall not be charged with
the knowledge of the Company’s obligation to pay Additional Interest, or the cessation of such
obligation, unless the Trustee receives written notice thereof from the Company or any Holder.

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     (i) The rights, privileges, protections, immunities and benefits given to the Trustee,
including, without limitation, its right to be indemnified, are extended to, and shall be
enforceable by, the Trustee in each of its capacities hereunder, and to each agent, custodian and
other Person employed to act hereunder (including, but not limited to, the Paying Agent or
Conversion Agent).

     (j) Unless otherwise specifically provided in this Indenture, any demand, request, direction
or notice from the Company shall be sufficiently evidenced by a written order signed by one Officer
of the Company.

     (k) In no event shall the Trustee be responsible or liable for special, indirect, or
consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit)
irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and
regardless of the form of action.

     (l) The Trustee may request that the Company deliver a certificate setting forth the names of
individuals and/or titles of officers authorized at such time to take specified actions pursuant to
this Indenture.

     Section 10.03. Monies Held in Trust.

     Subject to the provisions of Section 11.03, all monies and properties received by the Trustee
shall, until used or applied as herein provided, be held in trust for the purposes for which they
were received. Money held by the Trustee in trust hereunder need not be segregated from other
funds except to the extent required by law. The Trustee shall be under no liability for interest on
any money received by it hereunder except as may be agreed in writing from time to time by the
Company and the Trustee.

     Section 10.04. Trustee’s Disclaimer.

     The Trustee makes no representation as to the validity or adequacy of this Indenture or the
Securities, it shall not be accountable for the Company’s use of the proceeds from the Securities,
and it shall not be responsible for any statement herein or in the Securities or any other document
in connection with the sale of the Securities or pursuant to this Indenture other than its
certificate of authentication.

     Section 10.05. Notice of Default or Events of Default.

     If a default or an Event of Default occurs and is continuing and if it is known to the
Trustee, the Trustee shall mail to each Holder notice of the default or Event of Default within 90
days after it becomes known to the Trustee. However, the Trustee may withhold the notice if and so
long as a committee of its Trust Officers in good faith determines that withholding notice is in
the interests of Holders, except in the case of a default or an Event of Default in payment of the
principal of or interest on any Security, including the failure to make Cash payments due upon
conversion.

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     Section 10.06. Reports by Trustee to Holders.

     If such report is required by TIA Section 313, within 60 days after each May 1, beginning with
the May 1 following the date of this Indenture, the Trustee shall mail to each Holder a brief
report dated as of such May 1 that complies with TIA Section 313(a). The Trustee also shall comply
with TIA Section 313(b)(2) and (c).

     A copy of each report at the time of its mailing to Holders shall be mailed to the Company and
filed with the SEC and each stock exchange, if any, on which the Securities are listed. The
Company shall notify the Trustee whenever the Securities become listed on any stock exchange or
listed or admitted to trading on any quotation system and any changes in the stock exchanges or
quotation systems on which the Securities are listed or admitted to trading and of any delisting
thereof.

     Section 10.07. Compensation and Indemnity.

     The Company shall pay to the Trustee from time to time such compensation (as agreed to from
time to time by the Company and the Trustee in writing) for its services (which compensation shall
not be limited by any provision of law in regard to the compensation of a trustee of an express
trust). The Company shall reimburse the Trustee upon request for all reasonable disbursements,
expenses and advances incurred or made by it. Such expenses may include the reasonable
compensation, disbursements and expenses of the Trustee’s agents and counsel.

     The Company shall indemnify the Trustee or any predecessor Trustee (which for purposes of this
Section 10.07 shall include its officers, directors, employees and agents) for, and hold it
harmless against, any and all loss, claim, damage, liability or expense, including taxes (other
than taxes based upon, measured by or determined by the income of the Trustee), including
reasonable legal fees and expenses, incurred by it in connection with the acceptance or
administration of its duties under this Indenture or any action or failure to act as authorized or
within the discretion or rights or powers conferred upon the Trustee hereunder, including the
reasonable costs and expenses of the Trustee and its counsel in defending itself against any claim
or liability in connection with the exercise or performance of any of its powers or duties
hereunder. The Trustee shall notify the Company promptly of any claim asserted against the Trustee
for which it may seek indemnity. The Company need not pay for any settlement without its written
consent, which shall not be unreasonably withheld.

     The Company need not reimburse the Trustee for any expense or indemnify it against any loss or
liability incurred by it resulting from its gross negligence or bad faith.

     To secure the Company’s payment obligations in this Section 10.07, the Trustee shall have a
lien prior to the Securities as to all money or property held or collected by the Trustee for any
amount owing it or any predecessor Trustee pursuant to this Section 10.07, except such money or
property held in trust for the benefit of holders of particular Securities. The obligations of the
Company under this Section 10.07 shall survive the satisfaction and discharge of this Indenture or
the resignation or removal of the Trustee.

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     When the Trustee incurs expenses or renders services after an Event of Default specified in
clause (i) or (j) of Section 9.01 occurs, the expenses and the compensation for the services are
intended to constitute expenses of administration under any Bankruptcy Law. The provisions of this
Section shall survive the termination of this Indenture.

     Section 10.08. Replacement of Trustee.

     The Trustee may resign by so notifying the Company. The Holders of a majority in aggregate
principal amount of the Securities then outstanding may remove the Trustee by so notifying the
Trustee and may, with the Company’s written consent, appoint a successor Trustee. The Company may
remove the Trustee if:

     (a) the Trustee fails to comply with Section 10.10;

     (b) the Trustee is adjudged a bankrupt or an insolvent;

     (c) a receiver or other public officer takes charge of the Trustee or its property; or

     (d) the Trustee becomes incapable of acting.

     If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any
reason, the Company shall promptly appoint a successor Trustee. The resignation or removal of a
Trustee shall not be effective until a successor Trustee shall have delivered the written
acceptance of its appointment as described below.

     If a successor Trustee does not take office within 45 days after the retiring Trustee resigns
or is removed, the retiring Trustee, the Company or the Holders of 10% in principal amount of the
Securities then outstanding may petition any court of competent jurisdiction for the appointment of
a successor Trustee at the expense of the Company.

     If the Trustee fails to comply with Section 10.10, any Holder may petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

     A successor Trustee shall deliver a written acceptance of its appointment to the retiring
Trustee and to the Company. Immediately after that, the retiring Trustee shall, upon payment of
any fees and expenses due and owing to it hereunder, transfer all property held by it as Trustee to
the successor Trustee and be released from its obligations (exclusive of any liabilities that the
retiring Trustee may have incurred while acting as Trustee) hereunder, the resignation or
removal of the retiring Trustee shall become effective, and the successor Trustee shall have all
the rights, powers and duties of the Trustee under this Indenture. A successor Trustee shall mail
notice of its succession to each Holder.

     A retiring Trustee shall not be liable for the acts or omissions of any successor Trustee
after its succession.

     Notwithstanding replacement of the Trustee pursuant to this Section 10.08, the Company’s
obligations under Section 10.07 shall continue for the benefit of the retiring Trustee.

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     Section 10.09. Successor Trustee by Merger, etc.

     If the Trustee consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust assets (including the administration of this Indenture) to, another
corporation, the resulting, surviving or transferee corporation, without any further act, shall be
the successor Trustee, provided such transferee corporation shall qualify and be eligible under
Section 10.10. Such successor Trustee shall promptly mail notice of its succession to the Company
and each Holder.

     Section 10.10. Eligibility; Disqualification.

     The Trustee shall always satisfy the requirements of paragraphs (1), (2) and (5) of TIA
Section 310(a). The Trustee (or its parent holding company) shall have a combined capital and
surplus of at least $50,000,000. If at any time the Trustee shall cease to satisfy any such
requirements, it shall resign immediately in the manner and with the effect specified in this
Article 10. The Trustee shall be subject to the provisions of TIA Section 310(b). Nothing herein
shall prevent the Trustee from filing with the SEC the application referred to in the penultimate
paragraph of TIA Section 310(b).

     Section 10.11. Preferential Collection of Claims Against Company.

     The Trustee shall comply with TIA Section 311(a), excluding any creditor relationship listed
in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section
311(a) to the extent indicated therein.

     Section 10.12. Trustee or Agents May Hold Securities

     The Trustee, any Paying Agent, any Registrar or any other agent of the Company, in its
individual or any other capacity, may become the owner or pledgee of Securities and, subject to
Sections 10.10 and 10.11, may otherwise deal with the Company with the same rights it would have if
it were not Trustee, Paying Agent, Registrar or such other agent.

ARTICLE 11

SATISFACTION AND DISCHARGE

     Section 11.01. Satisfaction and Discharge.

     (a) This Indenture shall cease to be of further effect, and the Trustee, on demand of and at
the expense of the Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when

     (i) all Securities theretofore authenticated and delivered (other than (i) Securities
which have been destroyed, lost or stolen and which have been replaced or paid as provided
in Section 2.07 and (ii) Securities for whose payment money has theretofore been deposited
in trust and thereafter repaid to the Company as provided in Section 11.03) have been
delivered to the Trustee for cancellation;

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     (ii) the Company has paid or caused to be paid all other sums payable hereunder by the
Company; and

     (iii) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion
of Counsel, each stating that all conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture have been complied with.

     Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the
Company to the Trustee under Section 10.07 shall survive.

     (b) The Company may discharge its obligations to pay principal of and interest on the
Securities when all Securities not theretofore delivered to the Trustee for cancellation have
become due and payable and the Company has irrevocably, subject to the limitations set forth in the
following sentence, deposited or caused to be irrevocably, subject to the limitations set forth in
the following sentence, deposited with the Trustee or a Paying Agent (other than the Company or any
of its Affiliates) as trust funds in trust for such purpose Cash or Cash and shares of Common
Stock, if any (solely to satisfy outstanding conversions, if applicable), in an amount sufficient
to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the
Trustee for cancellation for principal and interest, to the date of such deposit; provided,
however, that the foregoing shall not affect the obligations of the Company to the Trustee under
Section 10.07 hereof.

     Section 11.02. Application of Trust Money.

     Subject to the provisions of Section 11.03, the Trustee or a Paying Agent shall hold in trust,
for the benefit of the Holders of Securities, all money deposited with it pursuant to Section
11.01(b) with respect to Securities and shall apply the deposited money in accordance with this
Indenture and the Securities to the payment of the principal of and any interest on the Securities.

     Section 11.03. Repayment to Company.

     The Trustee and each Paying Agent shall promptly pay to the Company upon request any excess
money (i) deposited with them pursuant to Section 11.01(b) and (ii) held by them at any time.

     The Trustee and each Paying Agent shall pay to the Company upon request any money held by them
for the payment of principal or interest that remains unclaimed for two years after a right to such
money has matured; provided, however, that the Trustee or such Paying Agent, before being required
to make any such payment, may at the expense of the Company cause to be mailed to each Holder
entitled to such money notice that such money remains unclaimed and that after a date specified
therein, which shall be at least 30 days from the date of such mailing, any unclaimed balance of
such money then remaining shall be repaid to the Company. After payment to the Company, Holders
entitled to money must look to the Company for payment as general creditors unless an applicable
abandoned property law designates another person.

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     Section 11.04. Reinstatement.

     If the Trustee or any Paying Agent is unable to apply any money in accordance with Section
11.02 by reason of any legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such application, then the
Company’s obligations under this Indenture and the Securities shall be revived and reinstated as
though no deposit had occurred pursuant to Section 11.01(b) until such time as the Trustee or such
Paying Agent is permitted to apply all such money in accordance with Section 11.02; provided,
however, that, if the Company has made any payment of the principal of or interest on any
Securities because of the reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Securities to receive any such payment from the money held by the
Trustee or such Paying Agent.

ARTICLE 12

AMENDMENTS, SUPPLEMENTS AND WAIVERS

     Section 12.01. Without Consent of Holders.

     The Company, when authorized by a resolution of the Board of Directors, and the Trustee may
amend or supplement the Indenture or the Securities without notice to or consent of any Holder:

     (a) to comply with Section 5.11 and 8.01;

     (b) to cure any ambiguity, or correct any defect or inconsistency; provided that any amendment
or supplement to cure any ambiguity or correct any defect or inconsistency in the Indenture or the
Securities that is made solely to conform the provisions of the Indenture and the Securities to the
descriptions thereof contained in the offering memorandum relating to the Securities dated November
10, 2009, shall be deemed not to adversely affect the rights of any Holder;

     (c) to make any other change that does not adversely affect the rights of any Holder;

     (d) to comply with the provisions of the TIA;

     (e) to add to the covenants of the Company for the equal and ratable benefit of the Holders or
to surrender any right, power or option conferred upon the Company;

     (f) to appoint a successor Trustee; or

     (g) to provide for the issuance of Additional Securities as permitted by Section 2.16, which
will have terms substantially identical to the other outstanding Securities except as specified in
Section 2.16, and which will be treated, together with any other outstanding Securities, as a
single issue of securities.

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     Section 12.02. With Consent of Holders.

     The Company and the Trustee may amend or supplement the Securities or this Indenture with the
written consent of the Holders of at least a majority in aggregate principal amount of the
Securities then outstanding. The Holders of at least a majority in aggregate principal amount of
the Securities then outstanding may waive compliance in a particular instance by the Company with
any provision of the Securities or this Indenture without notice to any Holder. However,
notwithstanding the foregoing but subject to Section 12.04, without the written consent of each
Holder affected, an amendment, supplement or waiver, including a waiver pursuant to Section 9.04,
may not:

     (a) change the Stated Maturity of, or the date any installment of interest (including any
Additional Interest) is due on, any Security;

     (b) reduce the principal amount of or interest (including any Additional Interest) on, any
Security;

     (c) reduce the amount of principal payable upon acceleration of the maturity of any Security;

     (d) change the place or currency of payment of principal of or interest (including any
Additional Interest) on, any Security;

     (e) impair the right of any Holder to receive payment of principal and of interest on such
Holder’s Securities on or after the due date therefore or to institute suit for the enforcement of
any payment on, or with respect to, any Security;

     (f) modify the provisions with respect to the purchase right of Holders pursuant to Article 3
upon a Fundamental Change in a manner adverse to the Holders of Securities;

     (g) change the ranking of the Securities;

     (h) modify the provisions of this Indenture with respect to conversion of the Securities in a
manner adverse to the Holders of Securities; and

     (i) modify any of the provisions of this Section or Section 9.04, except to increase any such
percentage or to provide that certain provisions of this Indenture cannot be modified, amended or
waived without the consent of the Holder of each outstanding Security affected thereby.

     It shall not be necessary for the consent of the Holders under this Section 12.02 to approve
the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if
such consent approves the substance thereof.

     After an amendment, supplement or waiver under this Section 12.02 becomes effective, the
Company shall mail to the Holders affected thereby a notice briefly describing the amendment,
supplement or waiver. Any failure of the Company to mail such notice, or any

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defect therein, shall not, however, in any way impair or affect the validity of any such
amendment, supplement or waiver.

     Section 12.03. Compliance with Trust Indenture Act.

     Every amendment to or supplement of this Indenture or the Securities shall comply with the TIA
as applicable to indentures qualified thereunder at the date of such amendment or supplement.

     Section 12.04. Revocation and Effect of Consents.

     Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder is a
continuing consent by the Holder and every subsequent Holder of a Security or portion of a Security
that evidences the same debt as the consenting Holder’s Security, even if notation of the consent
is not made on any Security. However, any such Holder or subsequent Holder may revoke the consent
as to its Security or portion of a Security if the Trustee receives the notice of revocation before
the date the amendment, supplement or waiver becomes effective.

     After an amendment, supplement or waiver becomes effective, it shall bind every applicable
Holder, unless it makes a change described in any of clauses (a) through (j) of Section 12.02. In
that case the amendment, supplement or waiver shall bind each Holder of a Security who has
consented to it and every subsequent Holder of a Security or portion of a Security that evidences
the same debt as the consenting Holder’s Security.

     Section 12.05. Notation on or Exchange of Securities.

     If an amendment, supplement or waiver changes the terms of a Security, the Trustee may require
the Holder of the Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security about the changed terms and return it to the Holder. Alternatively, if
the Company or the Trustee so determines, the Company in exchange for the Security shall issue and
the Trustee shall authenticate a new Security that reflects the changed terms.

     Section 12.06. Trustee to Sign Amendments, etc.

     The Trustee shall sign any amendment or supplemental indenture authorized pursuant to this
Article 12 if the amendment or supplemental indenture does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. If it does, the Trustee may, in its sole discretion, but
need not sign it. In signing or refusing to sign such amendment or supplemental indenture, the
Trustee shall be provided with, and, subject to Section 10.01, shall be fully protected in relying
upon, an Officers’ Certificate (accompanied by a resolution of the Board of Directors of the
Company) and an Opinion of Counsel in accordance with Section 13.04 hereof, each stating that such
amendment or supplemental indenture is authorized or permitted by this Indenture. The Company may
not sign an amendment or supplement indenture until the Board of Directors approves it.

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     Section 12.07. Effect of Supplemental Indentures.

     Upon the execution of any supplemental indenture under this Article, this Indenture shall be
modified in accordance therewith, and such supplemental indenture shall form a part of this
Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated
and delivered hereunder shall be bound thereby.

ARTICLE 13

MISCELLANEOUS

     Section 13.01. Trust Indenture Act Controls.

     If any provision of this Indenture limits, qualifies or conflicts with any duties imposed by
any of Sections 310 to 317, inclusive, of the TIA through operation of Section 318(c) thereof, such
imposed duties shall control.

     Section 13.02. Notices.

     Any demand, authorization, notice, request, consent or communication shall be given in writing
and delivered in person or mailed by first-class mail, postage prepaid, addressed as follows or
transmitted by facsimile transmission (confirmed by delivery in person or mail by first-class mail,
postage prepaid, or by guaranteed overnight courier) to the following facsimile numbers:

If to the Company, to:

TeleCommunication Systems, Inc.

275 West Street,

Annapolis, Maryland

21401

Attention: Chief Legal Officer

Facsimile No.: (410) 263-7617

if to the Trustee, to:

The Bank of New York Mellon

101 Barclay Street, 8 West

New York, New York 10286

Attention: Corporate Trust Administration

Facsimile No.: (212) 815-5704

     Such notices or communications shall be effective when received.

     The Company or the Trustee by notice to the other may designate additional or different
addresses for subsequent notices or communications.

-64-

 

     Any notice or communication mailed to a Holder shall be mailed by first-class mail or
delivered by an overnight delivery service to it at its address shown on the register kept by the
Primary Registrar.

     Failure to mail a notice or communication to a Holder or any defect in it shall not affect its
sufficiency with respect to other Holders. If a notice or communication to a Holder is mailed in
the manner provided above, it is duly given, whether or not the addressee receives it.

     Section 13.03. Communications by Holders with Other Holders.

     Holders may communicate pursuant to TIA Section 312(b) with other Holders with respect to
their rights under this Indenture or the Securities. The Company, the Trustee, the Registrar and
any other person shall have the protection of TIA Section 312(c).

     Section 13.04. Certificate and Opinion as to Conditions Precedent.

     (a) Upon any request or application by the Company to the Trustee to take any action under
this Indenture, if required, the Company shall furnish to the Trustee:

     (i) an Officers’ Certificate stating that, in the opinion of the signers, all
conditions precedent (including any covenants, compliance with which constitutes a condition
precedent), if any, provided for in this Indenture relating to the proposed action have been
complied with; and

     (ii) an Opinion of Counsel stating that, in the opinion of such counsel, all such
conditions precedent (including any covenants, compliance with which constitutes a condition
precedent) have been complied with.

     (b) Each Officers’ Certificate and Opinion of Counsel with respect to compliance with a
condition or covenant provided for in this Indenture shall include:

     (i) a statement that the person making such certificate or opinion has read such
covenant or condition;

     (ii) a brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion are based;

     (iii) a statement that, in the opinion of such person, he or she has made such
examination or investigation as is necessary to enable him or her to express an informed
opinion as to whether or not such covenant or condition has been complied with; and

     (iv) a statement as to whether or not, in the opinion of such person, such condition or
covenant has been complied with;

provided, however, that with respect to matters of fact an Opinion of Counsel may rely on an
Officers’ Certificate or certificates of public officials.

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     Section 13.05. Record Date for Vote or Consent of Securityholders.

     The Company (or, in the event deposits have been made pursuant to Section 11.01, the Trustee)
may set a record date for purposes of determining the identity of Holders entitled to vote or
consent to any action by vote or consent authorized or permitted under this Indenture, which record
date shall not be more than 30 days prior to the date of the commencement of solicitation of such
action. Notwithstanding the provisions of Section 12.04, if a record date is fixed, those persons
who were Holders of Securities at the close of business on such record date (or their duly
designated proxies), and only those persons, shall be entitled to take such action by vote or
consent or to revoke any vote or consent previously given, whether or not such persons continue to
be Holders after such record date.

     Section 13.06. Rules by Trustee, Paying Agent, Registrar and Conversion Agent.

     The Trustee may make reasonable rules (not inconsistent with the terms of this Indenture) for
action by or at a meeting of Holders. Any Registrar, Paying Agent or Conversion Agent may make
reasonable rules for its functions.

     Section 13.07. Legal Holidays.

     A “Legal Holiday” is a Saturday, Sunday or a day on which state or federally chartered banking
institutions in New York, New York are not required to be open. If a payment date is a Legal
Holiday, payment shall be made on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period. If a regular record date is a Legal Holiday, the
record date shall not be affected.

     Section 13.08. Governing Law.

     This Indenture and the Securities shall be governed by, and construed in accordance with, the
laws of the State of New York applicable to contracts made and to be performed in such state.

     Section 13.09. No Adverse Interpretation of Other Agreements.

     This Indenture may not be used to interpret another indenture, loan or debt agreement of the
Company or a Subsidiary of the Company. Any such indenture, loan or debt agreement may not be used
to interpret this Indenture.

     Section 13.10. No Recourse Against Others.

     No recourse for the payment of the principal of or premium, if any, or interest on any
Security, or for any claim based thereon or otherwise in respect thereof, and no recourse under or
upon any obligation, covenant or agreement of the Company in this Indenture or in any supplemental
indenture or in any Security, or because of the creation of any indebtedness represented thereby,
shall be had against any incorporator, stockholder, employee, agent, officer, director or
subsidiary, as such, past, present or future, of the Company or of any successor corporation,
either directly or through the Company or any successor corporation, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or

-66-

 

penalty or otherwise; it being expressly understood that all such liability is hereby
expressly waived and released as a condition of, and as a consideration for, the execution of this
Indenture and the issue of the Securities.

     Section 13.11. Successors.

     All agreements of the Company in this Indenture and the Securities shall bind its successors.
All agreements of the Trustee in this Indenture shall bind its successors.

     Section 13.12. Multiple Counterparts.

     The parties may sign multiple counterparts of this Indenture. Each signed counterpart shall
be deemed an original, but all of them together represent the same agreement.

     Section 13.13. Severability.

     In case any provisions in this Indenture or in the Securities shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

     Section 13.14. Table of Contents, Headings, etc.

     The table of contents, cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions hereof.

     Section 13.15. Force Majeure.

     In no event shall the Trustee be responsible or liable for any failure or delay in the
performance of its obligations hereunder arising out of or caused by, directly or indirectly,
forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts
of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of
God, and interruptions, loss or malfunctions of utilities, communications or computer (software and
hardware) services; it being understood that the Trustee shall use reasonable efforts which are
consistent with accepted practices in the banking industry to resume performance as soon as
practicable under the circumstances.

     Section 13.16. Waiver of Jury Trial.

     EACH OF THE COMPANY AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS INDENTURE, THE SECURITIES OR THE TRANSACTIONS CONTEMPLATED HEREBY.

-67-

 

     Section 13.17. No Security Interest Created.

     Nothing in this Indenture or in the Securities, expressed or implied, shall be construed to
constitute a security interest under the Uniform Commercial Code or similar legislation, as now or
hereafter enacted and in effect, in any jurisdiction in which property of the Company or its
Subsidiaries is located.

     Section 13.18. Benefits of Indenture.

     Nothing in this Indenture or in the Securities, express or implied, shall give to any Person,
other than the parties hereto, any Paying Agent, any authenticating agent, any Security Registrar
and their successors hereunder and the holders of Securities any benefit or any legal or equitable
right, remedy or claim under this Indenture.

[SIGNATURE PAGE FOLLOWS]

-68-

 

     IN WITNESS WHEREOF, the parties hereto have hereunto set their hands as of the date and year
first above written.

	 	 	 	 	 
	 	TELECOMMUNICATION SYSTEMS, INC.

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

Chief Financial Officer 	 
	 
	 	THE BANK OF NEW YORK MELLON,

as Trustee

 	 
	 	By:  	/s/ Cheryl L. Clarke
 	 
	 	 	Name:  	Cheryl L. Clarke 	 
	 	 	Title:  	Vice President 	 
	 

-69-

 

SCHEDULE 4.02

The following table sets forth the increase in the Conversion Rate, expressed as a number of
Additional Shares to be received per $1,000 principal amount of Securities:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Stock price
	Effective date	 	7.960	 	8.500	 	10.000	 	11.500	 	13.000	 	14.500	 	16.000	 	20.000	 	24.000	 	28.000	 	32.000	 	36.000
	November 16, 2009
	 	 	28.979	 	 	 	25.435	 	 	 	18.374	 	 	 	13.874	 	 	 	10.839	 	 	 	8.692	 	 	 	7.107	 	 	 	4.420	 	 	 	2.879	 	 	 	1.899	 	 	 	1.240	 	 	 	0.785	 
	November 1, 2010
	 	 	28.979	 	 	 	23.698	 	 	 	16.585	 	 	 	12.214	 	 	 	9.369	 	 	 	7.418	 	 	 	6.016	 	 	 	3.706	 	 	 	2.406	 	 	 	1.581	 	 	 	1.025	 	 	 	0.640	 
	November 1, 2011
	 	 	28.979	 	 	 	21.669	 	 	 	14.424	 	 	 	10.198	 	 	 	7.595	 	 	 	5.898	 	 	 	4.729	 	 	 	2.884	 	 	 	1.871	 	 	 	1.225	 	 	 	0.785	 	 	 	0.478	 
	November 1, 2012
	 	 	28.979	 	 	 	20.306	 	 	 	12.384	 	 	 	8.104	 	 	 	5.702	 	 	 	4.277	 	 	 	3.370	 	 	 	2.050	 	 	 	1.348	 	 	 	0.890	 	 	 	0.570	 	 	 	0.342	 
	November 1, 2013
	 	 	28.979	 	 	 	19.252	 	 	 	9.724	 	 	 	5.238	 	 	 	3.194	 	 	 	2.232	 	 	 	1.728	 	 	 	1.088	 	 	 	0.740	 	 	 	0.499	 	 	 	0.322	 	 	 	0.190	 
	November 1, 2014
	 	 	28.979	 	 	 	21.010	 	 	 	3.363	 	 	 	0.000	 	 	 	0.000	 	 	 	0.000	 	 	 	0.000	 	 	 	0.000	 	 	 	0.000	 	 	 	0.000	 	 	 	0.000	 	 	 	0.000	 

 

 

EXHIBIT A

[FORM OF FACE OF SECURITY]

[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (“DTC”), TO TELECOMMUNICATION SYSTEMS, INC. (THE “COMPANY”) OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.]1

[THIS SECURITY AND THE CLASS A COMMON STOCK, IF ANY, ISSUABLE UPON CONVERSION OF THIS SECURITY HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE ACQUIRER:

     1. REPRESENTS THAT IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS A “QUALIFIED INSTITUTIONAL
BUYER” (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) AND THAT IT EXERCISES SOLE
INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH ACCOUNT, AND

     2. AGREES FOR THE BENEFIT OF TELECOMMUNICATION SYSTEMS, INC. THAT IT WILL NOT OFFER, SELL,
PLEDGE OR OTHERWISE TRANSFER THIS SECURITY OR ANY BENEFICIAL INTEREST HEREIN PRIOR TO THE DATE
THAT IS THE LATER OF (X) ONE YEAR AFTER THE LAST ORIGINAL ISSUE DATE HEREOF OR SUCH SHORTER
PERIOD OF TIME AS PERMITTED BY RULE 144 UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION
THEREUNDER, AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW, EXCEPT:

     (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, OR

     (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BECOME EFFECTIVE UNDER THE
SECURITIES ACT, OR

     (C) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, OR

 

			
	1	 	This paragraph should be included only if the Security
is a Global Security.

A-F-1

 

     (D) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT OR ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT.

PRIOR TO THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH CLAUSE (2)(D) ABOVE, THE COMPANY AND
THE TRUSTEE RESERVE THE RIGHT TO REQUIRE THE DELIVERY OF SUCH LEGAL OPINIONS, CERTIFICATIONS OR
OTHER EVIDENCE AS MAY REASONABLY BE REQUIRED IN ORDER TO DETERMINE THAT THE PROPOSED TRANSFER IS
BEING MADE IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. NO
REPRESENTATION IS MADE AS TO THE AVAILABILITY OF ANY EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT.] 2

 

			
	2	 	These paragraphs should be included only if the
Security is a Transfer Restricted Security.

A-F-2

 

TELECOMMUNICATION SYSTEMS, INC.

	 	 	 
	CUSIP:

	 	No.     

4.5% CONVERTIBLE SENIOR NOTES DUE 2014

TeleCommunication Systems, Inc., a Maryland corporation (the “Company”, which term shall include
any successor corporation under the Indenture referred to on the reverse hereof), promises to pay
to Cede & Co., or registered assigns, the principal sum of ($ ) on November 1, 2014 [or
such greater or lesser amount as is indicated on the Schedule of Exchanges of Securities on the
reverse of this Security].3

The Company shall pay interest at a rate of 4.5% per annum, on the principal amount of this
Security payable as provided in the Indenture. The Company further agrees to pay Additional
Interest as provided for, and under the circumstances specified in, Sections 7.10 and 9.02(b) of
the Indenture.

This Security is convertible as specified on the reverse of this Security. Additional provisions of
this Security are set forth on the reverse of this Security.

[SIGNATURE PAGE FOLLOWS]

 

			
	3	 	This phrase should be included only if the Security is
a Global Security.

A-F-3

 

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.

	 	 	 	 	 
	 	TELECOMMUNICATION SYSTEMS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Trustee’s Certificate of Authentication: This is one of the
Securities referred to in the within-mentioned Indenture.

	 	 	 	 	 
	THE BANK OF NEW YORK MELLON,

as Trustee

 	 	 
	By:  	 	 	 
	 	Name:  	 	 	 
	 	Title:  	 	 	 
	 

A-F-4

 

[FORM OF REVERSE OF SECURITY]

TELECOMMUNICATION SYSTEMS, INC.

4.5% CONVERTIBLE SENIOR NOTES DUE 2014

1. INTEREST AMOUNTS

     TeleCommunication Systems, Inc., a Maryland corporation (the “Company”, which term shall
include any successor corporation under the Indenture hereinafter referred to), shall pay interest,
at a rate of 4.5% per annum, on the principal amount of this Security payable as provided in the
Indenture. The Company further agrees to pay Additional Interest as provided for, and under the
circumstances specified in, Sections 7.10 and 9.02(b) of the Indenture.

2. METHOD OF PAYMENT

     The Company shall pay any interest on this Security to the person who is the Holder of this
Security at the close of business on April 15 or October 15, as the case may be, next preceding the
related interest payment date. The Holder must surrender this Security to a Paying Agent to collect
payment of principal. Interest on the Security will be paid at a rate of 4.5% per annum, payable
semi-annually in arrears on May 1 and November 1 of each year, or if any such day is not a Business
Day, the immediately following Business Day, commencing May 1, 2010. Interest is computed on the
basis of a 360-day year comprised of twelve 30-day months. In the event of the maturity, conversion
or purchase of the Security by the Company at the option of the Holder, interest shall cease to
accrue on the Security. Notwithstanding any other provision hereof, however, the Company shall pay
interest on the Maturity Date to the Holder of this Security on the Record Date immediately
preceding the Maturity Date in respect of the period ending with the Maturity Date regardless of
whether such Holder converts this Security.

3. PAYING AGENT, REGISTRAR AND CONVERSION AGENT

     Initially, The Bank of New York Mellon (the “Trustee”, which term shall include any successor
trustee under the Indenture hereinafter referred to) will act as Paying Agent, Registrar and
Conversion Agent. The Company may change any Paying Agent, Registrar or Conversion Agent without
notice to the Holder.

4. INDENTURE, LIMITATIONS

     This Security is one of a duly authorized issue of Securities of the Company designated as its
4.5% Convertible Senior Notes due 2014 (the “Securities”), issued under an Indenture, dated as of
November 16, 2009 (together with any supplemental indentures thereto, the “Indenture”), between the
Company and the Trustee. The terms of this Security include those stated in the Indenture and those
required by or made part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended, as in effect on the date of the Indenture. This Security is subject to all such terms, and
the Holder of this Security is referred to the Indenture and said Act for a statement of them.

A-R-1

 

5. PURCHASE OF SECURITIES AT OPTION OF THE HOLDER UPON A FUNDAMENTAL CHANGE

     At the option of the Holder and subject to the terms and conditions of the Indenture, the
Company shall become obligated to purchase all or any part specified by the Holder (so long as the
principal amount of such part is $1,000 or an integral multiple of $1,000 in excess thereof) of the
Securities held by such Holder on the date of the Company’s choosing that is not less than 20 or
more than 35 Business Days after the date on which the Company notifies the Holders of the
Securities of the occurrence of the effective time of a Fundamental Change, at a purchase price
equal to 100% of the principal amount thereof, together with any accrued and unpaid interest up to,
but excluding, the Fundamental Change Purchase Date, payable in Cash. The Holder shall have the
right to withdraw any Fundamental Change Purchase Notice (in whole or in a portion thereof that is
$1,000 or an integral multiple of $1,000 in excess thereof) at any time prior to 5:00 p.m. (New
York City time) on the second Scheduled Trading Day next preceding the Fundamental Change Purchase
Date by delivering a written notice of withdrawal to the Paying Agent in accordance with the terms
of the Indenture.

6. CONVERSION

     A Holder of a Security may convert the principal amount of such Security (or any portion
thereof equal to $1,000 or any integral multiple of $1,000 in excess thereof) into Common Stock at
any time prior to the close of business on the second scheduled Trading Date immediately preceding
the maturity date pursuant to Section 5.01 of the Indenture.

     The initial Conversion Price is $10.348 per share, and the initial Conversion Rate is
approximately 96.637 shares of Common Stock, in each case subject to adjustment under certain
circumstances as provided in the Indenture. Upon conversion, the Company shall deliver to holders
in respect of each $1,000 principal amount of Securities being converted a number of shares of
Common Stock equal to the applicable Conversion Rate, together with a Cash payment in lieu of any
fractional share of Common Stock issuable upon conversion based on the Closing Sale Price of Common
Stock on the relevant Conversion Date.

     A Security in respect of which a Holder had delivered a Fundamental Change Purchase Notice
exercising the option of such Holder to require the Company to purchase such Security may be
converted only if the Fundamental Change Purchase Notice is withdrawn in accordance with the terms
of the Indenture.

7. DENOMINATIONS, TRANSFER, EXCHANGE

     The Securities are in registered form, without coupons, in denominations of $1,000 and
integral multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes or other governmental charges that may be
imposed in relation thereto by law or permitted by the Indenture.

	8.	 	PERSONS DEEMED OWNERS

A-R-2

 

     The Holder of a Security may be treated as the owner of it for all purposes.

9. UNCLAIMED MONEY

     If money for the payment of principal or interest remains unclaimed for two years, the Trustee
or Paying Agent will pay the money back to the Company at its written request, subject to
applicable unclaimed property law. After any such payment, Holders entitled to money must look to
the Company for payment as general creditors unless an applicable abandoned property law designates
another person.

10. AMENDMENT, SUPPLEMENT AND WAIVER

     Subject to the exceptions set forth in the Indenture, the Securities and the Indenture may be
amended or supplemented with the written consent of the Holders of at least a majority in aggregate
principal amount of the Securities then outstanding, and an existing default or Event of Default
with respect to the Securities and its consequence or compliance with any provision of the
Securities or the Indenture may be waived in a particular instance with the consent of the Holders
of a majority in aggregate principal amount of the Securities then outstanding. Without notice to
or the consent of any Holder, the Company and the Trustee may amend or supplement the Indenture or
the Securities to, among other things, cure any ambiguity, correct any defect or inconsistency or
make any other change that does not adversely affect the rights of any Holder.

11. SUCCESSOR ENTITY

     When a successor corporation assumes all the obligations of its predecessor under the
Securities and the Indenture in accordance with the terms and conditions of the Indenture, the
predecessor corporation (except in the circumstances specified in the Indenture) shall be released
from those obligations.

12. CALCULATIONS IN RESPECT OF SECURITIES

     Except to the extent provided therein, the Company will be responsible for making all
calculations called for under the Indenture and the Securities. These calculations include, but
are not limited to, determinations of the Closing Sale Price of the Common Stock, adjustments to
the Conversion Price, any accrued interest payable on the Securities, the Conversion Price and the
Conversion Rate. The Company will make these calculations in good faith and, absent manifest
error, the calculations will be final and binding on Holders of the Securities. The Company will
provide to each of the Trustee and the Conversion Agent a schedule of its calculations, and the
Trustee and the Conversion Agent are entitled to rely conclusively upon the accuracy of such
calculations without independent verification. The Trustee will forward the Company’s calculations
to any Holder of the Securities upon the request of such Holder.

13. DEFAULTS AND REMEDIES

     Under the Indenture, an Event of Default with respect to the Securities includes: (i) default
in the payment of any principal of any Security when the same becomes due and payable; (ii)
defaults in the payment of Cash and delivery of shares of Common Stock owing

A-R-3

 

upon conversion of any Security (including any Additional Shares), when the same becomes due and
payable; (iii) default for 30 days in the payment of interest (including any Additional Interest)
when the same becomes due and payable; (iv) failure by the Company for 60 days after notice to it
to comply with any of its other agreements contained in the Securities or in the Indenture with
respect to the Securities (other than a default set forth in clauses (1) through (3) above); (v)
default in payment of the purchase price of any Security when the same becomes due and payable;
(vi) failure to provide a Fundamental Change Purchase Notice when required; (vii) any indebtedness
for money borrowed of the Company or a Significant Subsidiary in an outstanding principal amount,
individually or in the aggregate, in excess of $5.0 million is not paid at stated maturity (or when
otherwise due) or is accelerated and such indebtedness is not discharged (or such default in
payment or acceleration is not cured or rescinded) within 30 days after written notice as provided
in the Indenture; (viii) the Company or a Significant Subsidiary fails to pay one or more final and
non-appealable judgments entered by a court or courts of competent jurisdiction, the aggregate
uninsured or unbonded portion of which is in excess of $5.0 million, if the judgments are not paid,
discharged or stayed within 30 days; and (xi) certain events of bankruptcy, insolvency or
reorganization of the Company or any Significant Subsidiary. If an Event of Default with respect to
the Securities (other than as a result of certain events of bankruptcy, insolvency or
reorganization specified in the Indenture) occurs and is continuing, the Trustee or the Holders of
at least 25% in aggregate principal amount of the Securities then outstanding may declare all
unpaid principal to the date of acceleration on the Securities then outstanding to be due and
payable immediately, all as and to the extent, and subject to the exceptions, provided in the
Indenture. If an Event of Default occurs as a result of certain events of bankruptcy, insolvency or
reorganization specified in the Indenture, all unpaid principal of the Securities then outstanding
shall become due and payable immediately without any declaration or other act on the part of the
Trustee or any Holder, all as and to the extent provided in the Indenture. Holders may not enforce
the Indenture or the Securities except as provided in the Indenture. The Trustee may require
indemnity satisfactory to it before it enforces the Indenture or the Securities. Subject to certain
limitations, Holders of a majority in aggregate principal amount of the Securities then outstanding
may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders
notice of any continuing default (except a default in payment of principal or interest, including
the failure to make Cash payments and deliver shares of Common Stock due upon conversion) if it
determines that withholding notice is in their interests.

14. TRUSTEE DEALINGS WITH THE COMPANY

     The Bank of New York Mellon, the Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from and perform services for the Company or an
Affiliate of the Company and may otherwise deal with the Company or an Affiliate of the Company, as
if it were not the Trustee.

15. NO RECOURSE AGAINST OTHERS

     A director, officer, employee or shareholder, as such, of the Company shall not have any
liability for any obligations of the Company under the Securities or the Indenture or for any claim
based on, in respect of or by reason of such obligations or their creation. The Holder of this

A-R-4

 

Security by accepting this Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of this Security.

16. AUTHENTICATION

     This Security shall not be valid until the Trustee or an authenticating agent manually or by
facsimile signs the certificate of authentication on the face of this Security.

17. ABBREVIATIONS AND DEFINITIONS

     Customary abbreviations may be used in the name of the Holder or an assignee, such as: TEN COM
(= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian) and UGMA (= Uniform Gifts to Minors
Act).

     All terms defined in the Indenture and used in this Security but not specifically defined
herein are used herein as so defined.

18. INDENTURE TO CONTROL; GOVERNING LAW

     In the case of any conflict between the provisions of this Security and the Indenture, the
provisions of the Indenture shall control. This Security shall be governed by, and construed in
accordance with, the laws of the State of New York applicable to contracts made and to be performed
in such state.

     The Company will furnish to any Holder, upon written request and without charge, a copy of the
Indenture. Requests may be made to: TeleCommunication Systems, Inc., 275 West Street, Annapolis,
Maryland 21401, Attention: Chief Legal Officer.

A-R-5

 

ASSIGNMENT FORM4

To assign this Security, fill in the form below:

I or we assign and transfer this Security to

 
(Insert assignee’s soc. sec. or tax I.D. no.)

 

 

 

 
(Print or type assignee’s name, address and zip code)

and irrevocably appoint

 

 
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him or her.

	 	 	 	 	 
	 	Your Signature:

 	 
	Date:                       	
 	 
	 	(Sign exactly as your name appears on the other side of this Security) 	 
	 

	 	 	 	 	 
	 

	 	*Signature guaranteed by:	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

	 	 

 

			
	*	 	The signature must be guaranteed by an institution which is a member
of one of the following recognized signature guaranty programs: (i)
the Securities Transfer Agent Medallion Program (STAMP); (ii) the New
York Stock Exchange Medallion Program (MSP); (iii) the Stock Exchange
Medallion Program (SEMP); or (iv) such other guaranty program
acceptable to the Trustee.
	 
	4	 	This form should be included only if the Security is a
Certificated Security.

A-R-6

 

CONVERSION NOTICE5

To convert this Security into Common Stock of the Company, check the box: o

To convert only part of this Security, state the principal amount to be converted (must be $1,000
or a integral multiple of $1,000): $     .

If you want the stock certificate made out in another person’s name, fill in the form below:

 
(Insert assignee’s soc. sec. or tax I.D. no.)

 

 

 

 
(Print or type assignee’s name, address and zip code)

	 	 	 	 	 
	 	Your Signature:

 	 
	Date:                      	
 	 
	 	(Sign exactly as your name appears on the other side of this Security) 	 
	 

	 	 	 	 	 
	 

	 	*Signature guaranteed by:	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

	 	 

 

			
	*	 	The signature must be guaranteed by an institution which is a member
of one of the following recognized signature guaranty programs: (i)
the Securities Transfer Agent Medallion Program (STAMP); (ii) the New
York Stock Exchange Medallion Program (MSP); (iii) the Stock Exchange
Medallion Program (SEMP); or (iv) such other guaranty program
acceptable to the Trustee.
	 
	5	 	This form should be included only if the Security is a
Certificated Security.

A-R-7

 

OPTION TO ELECT REPURCHASE

UPON A FUNDAMENTAL CHANGE6

To: TeleCommunication Systems, Inc.

     The undersigned registered owner of this Security hereby irrevocably acknowledges receipt of a
notice from TeleCommunication Systems, Inc. (the “Company”) as to the occurrence of a Fundamental
Change with respect to the Company and requests and instructs the Company to repurchase the entire
principal amount of this Security, or the portion thereof (which is $1,000 or an integral multiple
thereof) below designated, in accordance with the terms of the Indenture referred to in this
Security at a purchase price equal to the Fundamental Change Purchase Price, payable in Cash.

	 	 	 	 	 
	 	 	 
	Dated:
                     	
 	 
	 	Signature(s) must be guaranteed by a qualified guarantor institution with membership in an approved signature
guarantee program pursuant to Rule 17Ad-15 under the
Securities Exchange Act of 1934.

 

Signature Guaranty 	 
	 

Principal amount to be repurchased (in an

integral multiple of $1,000, if less than

all):

NOTICE: The signature to the foregoing Election must correspond to the Name as written upon the
face of this Security in every particular, without alteration or any change whatsoever.

 

			
	6	 	This form should be included only if the Security is a
Certificated Security.

A-R-8

 

SCHEDULE OF EXCHANGES OF SECURITIES7

     The following exchanges, increases/decreases in principal amount, repurchases or conversions
of a part of this Global Security have been made:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Principal Amount	 	 	 	 	 	 	 	 	 
	of this Global Security	 	Authorized	 	 	Amount of	 	 	Amount of	 
	Following Such Decrease	 	Signatory of	 	 	Decrease in	 	 	Increase in	 
	Date of Exchange	 	Securities	 	 	Principal Amount	 	 	Principal Amount	 
	(or Increase)	 	Custodian	 	 	of this Global Security	 	 	of this Global Security	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 

 

			
	7	 	This schedule should be included only if the Security
is a Global Security.

A-R-9

 

EXHIBIT B

FORM OF TRANSFER CERTIFICATE FOR TRANSFER

OF RESTRICTED COMMON STOCK

[NAME AND ADDRESS OF COMMON STOCK TRANSFER AGENT]

			
	     Re:	 	TeleCommunication Systems, Inc. 4.5% Convertible Senior Notes Due 2014
(the “Securities”)

Reference is hereby made to the Indenture dated as of November 16, 2009 between the Company and the
Trustee (the “Indenture”). Capitalized terms used but not defined herein shall have the meanings
given them in the Indenture.

This letter relates to                      shares of Common Stock [that are to be] [represented by the accompanying certificate(s) that were] issued upon conversion of Securities and
which are held in the name of [name of transferor] (the “Transferor”) to effect the transfer of
such Common Stock.

In connection with the transfer of such shares of Common Stock, the undersigned confirms that such
shares of Common Stock are being transferred:

CHECK ONE BOX BELOW:

o   To the Company or any Subsidiary thereof.

o   To a person the undersigned reasonably believes is a “qualified institutional buyer” (as
defined in Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”)), in
accordance with Rule 144A under the Securities Act.

o   Pursuant to another available exemption from the registration requirements of the
Securities Act.

B-1

 

 

Unless one of the boxes is checked, the transfer agent will refuse to register any of the Common
Stock evidenced by this certificate in the name of any person other than the registered holder
thereof; provided , however , that if the third box is checked, the transfer agent may require,
prior to registering any such transfer of the Common Stock such certifications and other
information, including opinions of counsel, as the Company has reasonably requested in writing, by
delivery to the transfer agent of a standing letter of instruction, to confirm that such transfer
is being made pursuant to an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act.

	 	 	 	 	 
	 	[Name of Transferor],

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	

 	 
	 	Dated:	

 	 
	 

A-R-2exv10w1

Exhibit 10.1

EXECUTION VERSION

TeleCommunication Systems, Inc.

$90,000,000

4.5% CONVERTIBLE SENIOR NOTES DUE 2014

PURCHASE AGREEMENT

November 10, 2009

OPPENHEIMER & CO. INC.

RAYMOND JAMES & ASSOCIATES INC.,

     as Representatives of the several

     Initial Purchasers named in Schedule I hereto

c/o Oppenheimer & Co. Inc.

300 Madison Avenue

New York, New York 10017

Ladies & Gentlemen:

     TeleCommunication
Systems, Inc., a Maryland corporation (the “Company”), proposes to issue and
sell to Oppenheimer & Co. Inc. and the other initial purchasers named on Schedule I to this
Agreement, for whom Oppenheimer & Co. Inc. and Raymond James & Associates Inc. are acting as
Representatives (the
“Representatives”) (the “Initial Purchasers”), $90,000,000 in aggregate
principal amount of 4.5% Convertible Senior Notes due 2014 (the
“Firm Notes”), subject to the terms
and conditions set forth herein.

     1. The Transaction. Subject to the terms and conditions herein contained, the Company
proposes to issue and sell to the Initial Purchasers, severally and not jointly, the Firm Notes
which are convertible into the Class A common stock $0.01 par
value per share (the “Common Stock”)
of the Company. In addition, the Company proposes to grant to the Initial Purchasers an option to
purchase up to an additional $13,500,000 principal amount of Notes from the Company (the “Option
Notes”) pursuant to the terms hereof. The Firm Notes and the Option Notes are collectively
referred to herein as the “Securities”. The Securities are to be issued under an Indenture between
the Company and The Bank of New York Mellon, as trustee (the “Trustee”) (the “Indenture”).

     The amounts of the Securities to be purchased by each of the several Initial Purchasers are
set forth opposite their names on Schedule I hereto.

1

 

     In connection with the sale of the Securities, the Company has prepared a preliminary offering
memorandum, dated November 9, 2009 (the “Preliminary Offering Memorandum”), and has prepared a
final offering memorandum, dated the date hereof (the “Offering Memorandum”), each setting forth
information regarding the Company, the Securities, the terms of the Offering and the transactions
contemplated by the Transaction Documents (as defined below), and any material developments
relating to the Company occurring after the date of the most recent financial statements included
therein. Any references herein to the Preliminary Offering Memorandum or the Offering Memorandum
shall be deemed to include, in each case, all amendments and supplements thereto and any
information and/or documents incorporated by reference therein. The Company hereby confirms that
it has authorized the use of the Disclosure Package (as defined below) and the Offering Memorandum
in connection with the offering and resale of the Securities by the Initial Purchasers.

     The Company understands that the Initial Purchasers propose to make an offering of the
Securities (the “Exempt Resales”) only on the terms and in the manner set forth in the Disclosure
Package and the Offering Memorandum, as amended or supplemented, and the terms hereof as soon as
the Initial Purchasers deem advisable after this Agreement has been executed and delivered, solely
to persons in the United States whom the Initial Purchasers reasonably believe to be “qualified
institutional buyers” (each, a “QIB”) as defined in Rule 144A under the Securities Act of 1933, as
amended (the “Securities Act”), as such rule may be amended from time to time (“Rule 144A”) in
transactions under Rule 144A or pursuant to another exemption from registration requirements of the
Securities Act. The QIBs are referred to herein from time to time as the “Eligible Purchasers.”
The Initial Purchasers will offer the Securities to such Eligible Purchasers initially at a price
equal to 100% of the principal amount thereof. Such price may be changed by the Initial Purchasers
at any time without notice.

     The Securities are convertible in accordance with their terms and the terms of the Indenture
into shares of Common Stock (except for any cash in lieu of fractional shares) at an initial
conversion rate of 96.637 shares of Common Stock per $1,000 principal amount of Securities.

     This Agreement, the Securities, and the Indenture are hereinafter referred to collectively as
the “Transaction Documents.”

     Any references herein to “Exchange Act Reports” herein include all documents filed by the
Company with the Securities and Exchange Commission (the “Commission”) pursuant to Section 13(a),
13(c) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Unless
stated to the contrary, any references herein to the terms “amend”, “amendment” or “supplement”
with respect to the Disclosure Package or the Offering Memorandum shall be deemed to refer to all
Exchange Act Reports filed subsequent to the date of this Agreement that are incorporated by
reference therein.

2

 

     Capitalized terms used herein and not otherwise defined shall have the meanings assigned to
such terms in the Disclosure Package, and if not defined therein, in the Indenture.

     2. Representations and Warranties of the Company. The Company represents and warrants
to, and agrees with, the Initial Purchasers that:

          (a) (i) The Preliminary Offering Memorandum as of its date did not, (ii) the Preliminary
Offering Memorandum, as supplemented by the information listed in Schedule II hereto (the
“Pricing Term Sheet”) (the Preliminary Offering Memorandum and the Pricing Term Sheet taken
together, the “Disclosure Package”), as of the Applicable Time (as defined below) does not, (iii)
the Offering Memorandum as of its date does not, and as of the Closing Date will not, (iv) each
electronic road show when taken together as a whole with the Disclosure Package and (v) any
supplement or amendment to any of the documents referenced in clauses (i) through (iv) above does
not and will not, contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in light of the circumstances under which
they were made, not misleading. Notwithstanding the foregoing, the representations and warranties
contained in this paragraph shall not apply to statements in or omissions from the Preliminary
Offering Memorandum or the Offering Memorandum (or any supplement or amendment thereto, including
the Pricing Term Sheet) made in reliance upon and in conformity with Initial Purchaser Information
(as such term is defined in Section 11 hereof). For purposes of this Agreement, the “Applicable
Time” means 8:50 p.m. New York City time on the date of this Agreement.

          (b) The Disclosure Package and the Offering Memorandum have been or will be prepared by the
Company for use by the Initial Purchasers in connection with the offering of the Securities.

          (c) Each of the Disclosure Package and the Offering Memorandum contains, if any, all pro
forma, as adjusted financial information and statements and consolidated financial statements
including the notes thereto, which are required to be included or incorporated by reference in
accordance with Regulation S-X promulgated under the Securities Act in the Disclosure Package and
the Offering Memorandum if the Disclosure Package and the Offering Memorandum were prospectuses
included in registration statements on Form S-1 filed with the Commission. The pro forma, as
adjusted financial information and statements, and consolidated financial statements including the
notes thereto, and the supporting schedules included in the Disclosure Package and the Offering
Memorandum present fairly the financial position as of the dates indicated and the cash flows and
results of operations for the periods specified of the Company and its consolidated subsidiaries in
the Disclosure Package and the Offering Memorandum; except as otherwise stated in the Disclosure
Package and the Offering Memorandum, said financial statements have been prepared in conformity
with U.S. GAAP applied on a consistent basis throughout the periods involved; and the supporting
schedules included in the Disclosure Package and the Offering Memorandum present fairly the
information required to be stated therein. No other financial statements or supporting schedules
are required to be included in the Disclosure Package or the Offering Memorandum if the Disclosure
Package or the Offering Memorandum, respectively, were included in a registration statement filed
pursuant to the Securities Act.

3

 

          (d) Ernst & Young LLP (the “Auditor”) who have certified the financial statements and
supporting schedules of the Company and its consolidate subsidiaries included or to be included as
part of the Disclosure Package and the Offering Memorandum, are and, during the periods covered by
their report, were an independent registered public accounting firm as required by the Securities
Act and the Exchange Act.

          (e) The Company is duly organized, validly existing and in good standing under the laws of
Maryland, its jurisdiction of incorporation, has all requisite power and authority to carry on its
business as it is currently being conducted and as described in the Disclosure Package and the
Offering Memorandum, and to own, lease and operate its properties. The Company is duly qualified
to do business and is in good standing as a foreign corporation in each jurisdiction in which the
nature of the business conducted by it or location of the assets or properties owned, leased or
licensed by it requires such qualification, except for those failures to be so qualified or in good
standing which (individually or in the aggregate) could not reasonably be expected to have a
material adverse effect on (A) the business, general affairs, management, condition (financial or
otherwise), results of operations, stockholders’ equity, properties or business prospects of the
Company and the subsidiaries, individually or taken as a whole, (B) the long-term debt or capital
stock of the Company, (C) the issuance or marketability of the Securities or (D) the validity of
this Agreement or any other Transaction Documents or the transactions described in the Disclosure
Package and the Offering Memorandum under the caption “Use of Proceeds” (any such effect being a
“Material Adverse Effect”).

          (f) The Company has no significant subsidiaries within the meaning of Rule 405 under the
Securities Act.

          (g) The Company has all requisite corporate power and authority, and all necessary
authorizations, approvals, consents, orders, licenses, certificates and permits of and from all
governmental or regulatory bodies or any other person or entity (collectively, the “Permits”), to
own, lease and license its assets and properties and conduct its business, all of which are valid
and in full force and effect, except where the lack of such Permits, individually or in the
aggregate, would not have a Material Adverse Effect. The Company has fulfilled and performed in all
material respects all of its obligations with respect to such Permits and no event has occurred
that allows, or after notice or lapse of time would allow, revocation or termination thereof or
results in any other material impairment of the rights of the Company thereunder. No Permits are
required to enter into, deliver and perform this Agreement or any other Transaction Document and to
issue and sell the Securities.

          (h) Except as described in the Disclosure Package and the Offering Memorandum and except as
would not have a Material Adverse Effect; (i) the Company owns or possesses legally enforceable
rights to use all patents, patent rights, inventions, trademarks, trademark applications, trade
names, service marks, copyrights, copyright applications, licenses, know-how and other similar
rights and proprietary knowledge (collectively, “Intangibles”) necessary for the conduct of its
business; and (ii) the Company has not received any notice of, or is not aware of, any infringement
of or conflict with asserted rights of others with respect to any Intangibles.

4

 

          (i) The Company has good and marketable title in fee simple to all real property, and good and
marketable title to all other property owned by it, in each case free and clear of all Liens,
except such as do not materially affect the value of such property and do not materially interfere
with the use made or proposed to be made of such property by the Company and its subsidiaries. All
property held under lease by the Company and its subsidiaries is held by them under valid, existing
and enforceable leases, free and clear of any lien, charge, mortgage, pledge, security interest,
claim, limitation on voting rights, equity, trust or other encumbrance, preferential arrangement,
defect or restriction of any kind whatsoever, other than a Permitted Lien (any “Lien”), or such as
are not material and do not materially interfere with the use made or proposed to be made of such
property by the Company and its subsidiaries. A Permitted Lien is any security interest, claim,
lien, limitation on voting rights or encumbrance pursuant to the Third Amended and Restated Loan
and Security Agreement among the Company, Longhorn Acquisition, LLC and Silicon Valley Bank dated
June 26, 2009 or any statutory Liens for taxes not yet due or securing claims or demands of
materialmen, mechanics, carriers, warehousemen, landlords and other Persons imposed without action
of such parties. Subsequent to the respective dates as of which information is given in the
Disclosure Package and the Offering Memorandum, (i) there has not been any event which would have a
Material Adverse Effect; (ii) the Company has not sustained any loss or interference with its
assets, businesses or properties (whether owned or leased) from fire, explosion, earthquake, flood
or other calamity, whether or not covered by insurance, or from any labor dispute or any court or
legislative or other governmental action, order or decree which would have a Material Adverse
Effect; and (iii) since the date of the latest balance sheet included in the Disclosure Package and
the Offering Memorandum except as disclosed in the Offering Memorandum or in the Exchange Act
Reports, the Company has not (A) issued any securities or incurred any liability or obligation,
direct or contingent, for borrowed money, except such liabilities or obligations incurred in the
ordinary course of business, (B) entered into any transaction not in the ordinary course of
business or (C) except for regular dividends on the Common Stock in amounts per share that are
consistent with past practice, declared or paid any dividend or made any distribution on any shares
of its stock or redeemed, purchased or otherwise acquired or agreed to redeem, purchase or
otherwise acquire any shares of its capital stock.

          (j) Each description of a contract, document or other agreement in the Disclosure Package and
the Offering Memorandum accurately reflects in all material respects the terms of the underlying
contract, document or other agreement. Each contract, document or other agreement described in the
Disclosure Package and the Offering Memorandum is in full force and effect and is valid and
enforceable against the Company, in accordance with its terms. The Company, nor to the Company’s
knowledge any other party, is in default in the observance or performance of any term or obligation
to be performed by it under any such agreement, and no event has occurred which with notice or
lapse of time or both would constitute such a default, in any such case which default or event,
individually or in the aggregate, would have a Material Adverse Effect. No default exists, and no
event has occurred which with notice or lapse of time or both would constitute a default, in the
due performance and observance of any term, covenant or condition, by the Company of any other
agreement or instrument to which the Company is a party or by which Company or its properties or
business may be bound or affected which default or event, individually or in the aggregate, would
have a Material Adverse Effect.

5

 

          (k) The statistical and market related data included in the Disclosure Package and the
Offering Memorandum are based on or derived from sources that the Company believes to be reliable
and accurate.

          (l) The Company (i) is not in violation of its articles of incorporation or other
organizational documents, (ii) is not in default under, and no event has occurred which, with
notice or lapse of time, or both, would constitute a default under, or result in the creation or
imposition of any Lien upon, any property or assets of the Company pursuant to, any bond,
debenture, note, indenture, mortgage, deed of trust, loan agreement or other material agreement or
instrument to which it is a party or by which it is bound or to which any of its properties or
assets is subject or (iii) is not in violation of any statute, law, rule, regulation, ordinance,
directive, judgment, decree or order of any judicial, regulatory or other legal or governmental
agency or body, foreign or domestic applicable to it, except (in the case of clauses (ii) and (iii)
above) for violations or defaults that could not (individually or in the aggregate) have a Material
Adverse Effect and except (in the case of clause (ii) alone) for any Lien disclosed in the
Disclosure Package and the Offering Memorandum.

          (m) The Company has the required corporate or other power and authority to execute, deliver
and perform its obligations under this Agreement and each of the other Transaction Documents to
which it is a party and to consummate the transactions contemplated hereby and thereby, including,
without limitation, the corporate or other power and authority to issue, sell and deliver the
Securities.

          (n) The Securities have been duly and validly authorized by the Company for issuance and sale
to the Initial Purchasers pursuant to this Agreement and, when executed by the Company and
authenticated by the Trustee in accordance with the provisions of the Indenture and when delivered
to and paid for by the Initial Purchasers in accordance with the terms hereof and thereof, will be
duly and validly executed, issued and delivered and will constitute valid and legally binding
obligations of the Company, entitled to the benefits of the Indenture and enforceable against the
Company in accordance with their terms, except that the enforcement thereof may be limited by (i)
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other similar laws now
or hereafter in effect relating to or affecting creditors’ rights generally and (ii) general
principles of equity. The Securities will conform in all material respects to the descriptions
thereof in the Disclosure Package and the Offering Memorandum. At the Closing Date, the Securities
will be in the form contemplated by the Indenture.

          (o) The Indenture has been duly and validly authorized by the Company and, when duly executed
and delivered by the Company (assuming the due authorization, execution and delivery by the
Trustee), will constitute a valid and legally binding agreement of the Company, enforceable against
each of them in accordance with its terms, except that the enforcement thereof may be limited by
(i) bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other similar laws
now or hereafter in effect relating to or affecting creditors’ rights generally and (ii) general
principles of equity. The Indenture conforms in all material respects to the description thereof
in the Disclosure Package and the Offering Memorandum.

6

 

          (p) This Agreement has been duly and validly authorized, executed and delivered by the
Company.

          (q) None of (i) the execution, delivery and performance by the Company of this Agreement and
consummation of the transactions contemplated by the Transaction Documents to which each of them,
respectively, is a party, (ii) the issuance and sale of the Securities or (iii) the application of
the proceeds as described in the Disclosure Package and the Offering Memorandum under the caption
“Use of Proceeds,” will give rise to a right to terminate or accelerate the due date of any payment
due under, or conflict with or result in the breach of any term or provision of, or constitute a
default (or an event which with notice or lapse of time or both would constitute a default) under,
or require any consent or waiver under, or result in the execution or imposition of any Lien, upon
any properties or assets of the Company pursuant to the terms of, any indenture, mortgage, deed of
trust or other agreement or instrument to which the Company is a party or by which either the
Company or any its properties or businesses is bound, or any franchise, license, permit, judgment,
decree, order, statute, rule or regulation applicable to the Company or violate any provision of
the charter or by-laws of the Company, except for such consents or waivers which have already been
obtained and are in full force and effect.

          (r) The Company has authorized and outstanding capital stock as set forth under the caption
“Capitalization” in the Disclosure Package and the Offering Memorandum. All of the issued and
outstanding shares of common stock of the Company have been duly and validly issued and are fully
paid and nonassessable. There are no statutory preemptive or other similar rights to subscribe for
or to purchase or acquire any shares of common stock of the Company or any such rights pursuant to
its charter or by-laws or any agreement or instrument to or by which the Company is a party or
bound. Except as disclosed in the Disclosure Package and the Offering Memorandum, there is no
outstanding option, warrant or other right calling for the issuance of, and there is no commitment,
plan or arrangement to issue, any share of stock of the Company or any security convertible into,
or exercisable or exchangeable for, such stock.

          (s) When the Securities are issued and delivered pursuant to this Agreement, no securities of
the Company will be (i) of the same class (within the meaning of Rule 144A) as the Securities and
(ii) listed on a national securities exchange registered under Section 6 of the Exchange Act, or
quoted in a United States automated interdealer quotation system.

          (t) Except as described in the Disclosure Package and the Offering Memorandum, no person has
any rights to require registration of any security of the Company by reason of the execution by the
Company of this Agreement or any other Transaction Document to which it is a party or the
consummation by the Company of the transactions contemplated hereby and thereby, or as part or on
account of, or otherwise in connection with the offering of the Securities and any of the other
transactions contemplated by the Transaction Documents, and any such rights so disclosed have been
effectively waived by the holders thereof, and any such waivers remain in full force and effect.

          (u) None of the Company, any of its respective affiliates (as defined in Rule 501(b) of
Regulation D under the Securities Act) or representatives directly, or through any agent, (i) sold,
offered for sale, solicited offers to buy or otherwise negotiated in respect of any

7

 

“security” (as defined in the Securities Act) which is or could be integrated with the sale of
the Securities in a manner that would require the registration under the Securities Act of the
Securities or (ii) engaged in any form of general solicitation or general advertising (as those
terms are used in Regulation D under the Securities Act) in connection with the offer and sale of
the Securities or in connection with Exempt Resales of the Securities, or in any manner involving a
public offering within the meaning of Section 4(2) of the Securities Act. Assuming the accuracy of
the Initial Purchasers’ representations and warranties set forth in Section 3 hereof, neither (i)
the offer and sale of the Securities to the Initial Purchasers in the manner contemplated by this
Agreement, the Disclosure Package and the Offering Memorandum nor (ii) the Exempt Resales requires
registration under the Securities Act and prior to the effectiveness of any Registration Statement.
The Indenture does not require qualification under the Trust Indenture Act of 1939, as amended (the
“Trust Indenture Act”) No securities of the same class as the Securities have been issued and sold
by the Company within the six-month period immediately prior to the date hereof.

          (v) Each of (i) the Preliminary Offering Memorandum as of its date, (ii) the Disclosure
Package as of the Applicable Time, (iii) the Offering Memorandum as of its date and as of the
Closing Date and (iv) each amendment or supplement to any of the documents referenced in (i), (ii)
or (iii), in each case, as of its date, contains the information specified in, and meets the
requirements of, Rule 144A(d)(4) under the Securities Act.

          (w) Except pursuant to this Agreement, there are no contracts, agreements or understandings
between or among the Company, and any other person that would give rise to a valid claim against
the Company or the Initial Purchasers for a brokerage commission, finder’s fee or like payment in
connection with the issuance, purchase and sale of the Securities.

          (x) Except as described in the Disclosure Package and the Offering Memorandum and except as
would not have a Material Adverse Effect: (i) there are no legal or governmental proceedings
pending to which the Company is a party or of which any property of the Company is the subject
which, if determined adversely to the Company could individually or in the aggregate have a
Material Adverse Effect; and (ii) to the knowledge of the Company, no such proceedings are
threatened or contemplated by governmental authorities or threatened by others.

          (y) The Company is not involved in any labor dispute nor, to the knowledge of the Company, is
any such dispute threatened, which dispute would have a Material Adverse Effect. The Company is
not aware of any existing or imminent labor disturbance by the employees of any of its principal
suppliers or contractors which would have a Material Adverse Effect. The Company is not aware of
any threatened or pending litigation between the Company and any of its executive officers which,
if adversely determined, could have a Material Adverse Effect and has no reason to believe that
such officers will not remain in the employment of the Company.

          (z) Except as disclosed in the Disclosure Package and the Offering Memorandum, no
relationship, direct or indirect, exists between or among the Company, or any affiliate of the
Company, on the one hand, and any director, officer, stockholder, customer or supplier of the
Company, or any affiliate of the Company, on the other hand, which is required

8

 

by the Exchange Act to be described in the Company’s annual and/or quarterly reports on Form
10-K and 10-Q, as applicable, which is not so described and described as required in such reports,
or which would be required by the Securities Act to be described in the Disclosure Package and the
Offering Memorandum if the Disclosure Package and the Offering Memorandum were prospectuses
included in registration statements on Form S-1 filed with the Commission. There are no
outstanding loans, advances (except normal advances for business expenses in the ordinary course of
business) or guarantees of indebtedness by the Company to or for the benefit of any of the officers
or directors of the Company or any of their respective family members. The Company has not, in
violation of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection
therewith (the “Sarbanes-Oxley Act”), directly or indirectly, extended or maintained credit,
arranged for the extension of credit, or renewed an extension of credit, in the form of a personal
loan to or for any director or executive officer of the Company.

          (aa) Neither the Company nor any of its “affiliates” (as defined in Rule 144 under the
Securities Act) has taken, nor will it take, directly or indirectly, any action designed to or
which might reasonably be expected to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the price of the
Securities or any other security of the Company to facilitate the sale or resale of any of the
Securities or the Common Stock issuable upon conversion thereof.

          (bb) The Company has filed all Federal, state, local and foreign tax returns which are
required to be filed through the date hereof, which returns are true and correct in all material
respects or has received timely extensions thereof, and has paid all taxes shown on such returns
and all assessments received by it to the extent that the same are material and have become due.
There are no tax audits or investigations pending, which if adversely determined would have a
Material Adverse Effect; nor are there any material proposed additional tax assessments against the
Company.

          (cc) The books, records and accounts of the Company accurately and fairly reflect, in all
material respects, the transactions in, and dispositions of, the assets of, and the results of
operations of, the Company. The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting
principles and to maintain asset accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific authorization and (iv) the recorded accountability
for assets is compared with the existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.

          (dd) The Company is insured by insurers of recognized financial responsibility against such
losses and risks and in such amounts as are customary in the businesses in which they are engaged
or propose to engage after giving effect to the transactions described in the Disclosure Package
and the Offering Memorandum; all policies of insurance and fidelity or surety bonds insuring the
Company or the Company’s respective businesses, assets, employees, officers and directors are in
full force and effect; the Company is in compliance with the terms of such policies and instruments
in all material respects; and neither the Company nor any

9

 

subsidiary has reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from similar insurers as
may be necessary to continue its business at a cost that is not materially greater than the current
cost.

          (ee) Each approval, consent, order, authorization, designation, declaration or filing of, by
or with any regulatory, administrative or other governmental body necessary in connection with the
execution and delivery by the Company of this Agreement and the other Transaction Documents and the
consummation of the transactions herein contemplated required to be obtained or performed by the
Company has been obtained or made and is in full force and effect.

          (ff) The Company is not now and, after sale of the Securities as contemplated hereunder and
application of the net proceeds of such sale as described in the Disclosure Package and the
Offering Memorandum under the caption “Use of Proceeds,” will not be, required to register as an
“investment company” under the Investment Company Act of 1940, as amended (the “Investment Company
Act”) and is not and will not be an entity “controlled” by an “investment company” within the
meaning of the Investment Company Act.

          (gg) To the knowledge of the Company, the Company or any other person associated with or
acting on behalf of the Company including, without limitation, any director, officer, agent or
employee of the Company or its subsidiaries, has not, directly or indirectly, while acting on
behalf of the Company or its subsidiaries (i) used any corporate funds for unlawful contributions,
gifts, entertainment or other unlawful expenses relating to political activity; (ii) made any
unlawful payment to foreign or domestic government officials or employees or to foreign or domestic
political parties or campaigns from corporate funds; (iii) violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended; or (iv) made any other unlawful payment.

          (hh) To the knowledge of the Company, the operations of the Company and its subsidiaries are
and have been conducted at all times in compliance with applicable financial recordkeeping and
reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended,
the money laundering statutes of all jurisdictions, the rules and regulations thereunder and any
related or similar rules, regulations or guidelines, issued, administered or enforced by any
governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or proceeding
by or before any court or governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries with respect to the Money Laundering Laws is pending, or to the
best knowledge of the Company, threatened.

          (ii) Neither the Company nor any of its subsidiaries nor, to the knowledge of the Company, any
director, officer, agent, employee or affiliate of the Company or any of its subsidiaries is
currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the
U.S. Treasury Department (“OFAC”); and the Company will not directly or indirectly use the proceeds
of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary,
joint venture partner or other person or entity, for the purpose of financing the activities of any
person currently subject to any U.S. sanctions administered by OFAC.

10

 

          (jj) The Company has fulfilled its obligations, if any, under the minimum funding standards of
Section 302 of the U.S. Employee Retirement Income Security Act of 1974 (“ERISA”) and the
regulations and published interpretations thereunder with respect to each “plan” as defined in
Section 3(3) of ERISA and such regulations and published interpretations in which its employees are
eligible to participate and each such plan is in compliance in all material respects with the
presently applicable provisions of ERISA and such regulations and published interpretations. No
“Reportable Event” (as defined in 12 ERISA) has occurred with respect to any “Pension Plan” (as
defined in ERISA) for which the Company could have any liability.

          (kk) The Company has established and maintains disclosure controls and procedures (as such
term is defined in Rule 13a-15 under the Exchange Act), which: (i) are designed to ensure that
material information relating to the Company is made known to the Company’s principal executive
officer and its principal financial officer by others within those entities; (ii) provide for the
periodic evaluation of the effectiveness of such disclosure controls and procedures at the end of
the periods in which the periodic reports are required to be prepared; and (iii) are effective in
all material respects to perform the functions for which they were established.

          (ll) Based on the evaluation of its disclosure controls and procedures, the Company is not
aware of (i) any significant deficiency in the design or operation of internal controls which could
adversely affect the Company’s ability to record, process, summarize and report financial data or
any material weaknesses in internal controls; or (ii) any fraud, whether or not material, that
involves management or other employees who have a role in the Company’s internal controls.

          (mm) Except as described in the Disclosure Package and the Offering Memorandum, there are no
material off-balance sheet arrangements (as defined in Item 303 of Regulation S-K) that have or are
reasonably likely to have a material current or future effect on the Company’s financial condition,
revenues or expenses, changes in financial condition, results of operations, liquidity, capital
expenditures or capital resources.

          (nn) The Company’s Board of Directors has validly appointed an audit committee whose
composition satisfies the requirements of Rule 5605(c)(2) of the Rules of the NASDAQ Stock Market
(the “NASD Rules”) and the Board of Directors and/or the audit committee has adopted a charter that
satisfies the requirements of Rule 5605(c)(1) of the NASD Rules. The audit committee has reviewed
the adequacy of its charter within the past twelve months.

          (oo) There is and has been no failure on the part of the Company or any of its directors or
officers, in their capacities as such, to comply with any provision of the Sarbanes-Oxley Act,
including, without limitation, Section 402 related to loans and Sections 302 and 906 related to
certifications.

          (pp) The Company is in compliance with all rules, laws and regulation relating to the use,
treatment, storage and disposal of toxic substances and protection of health or the environment
(“Environmental Law”) which are applicable to its business except as would not reasonable be
expected to have a Material Adverse Effect. Except as described in the Disclosure

11

 

Package and the Offering Memorandum, the Company has not received any written notice from any
governmental authority or third party of an asserted claim under Environmental Laws which are
applicable to its business. Except as described in the Disclosure Package and the Offering
Memorandum, the Company has received all permits, licenses or other approvals required of it under
applicable Environmental Laws to conduct its business and is in compliance in all material respects
with all terms and conditions of any such permit, license or approval. To the Company’s knowledge,
except as disclosed in the Disclosure Package and Offering Memorandum, no facts currently exist
that will require the Company to make future material capital or other expenditures to comply with
Environmental Laws which are applicable to its business.

          (qq) The statements in the Preliminary Offering Memorandum and the Offering Memorandum under
the headings “Description of Capital Stock”, “Description of Convertible Note Hedge and Warrant
Transactions,” and “Certain Material United States Federal Income Tax Considerations”, insofar as
such statements summarize legal matters, agreements or documents discussed therein, are accurate
and fair summaries of such legal matters, agreements or documents.

          (rr) Each director and executive officer of the Company listed on Schedule IV hereto
has delivered to the Representatives his or her enforceable written lock-up agreement in the form
attached to this Agreement as Exhibit A hereto (“Lock-Up Agreement”).

          (ss) Upon the Issuance and delivery of the Securities in accordance with this Agreement and
the Indenture, the Securities will be convertible at the option of the holder thereof into shares
of the Common Stock in accordance with the terms of the Securities and the Indenture; the Common
Stock issuable upon conversion of the Securities have been duly authorized and reserved and, when
issued upon conversion of the Securities, will be validly issued, fully paid and non-assessable;
and the issuance of the Common Stock will not be subject to any preemptive or similar rights.

          (tt) The Company has taken no action designed to, or likely to have the effect of, terminating
the registration of the Common Stock under the Exchange Act or the quotation of the Common Stock on
the Nasdaq Global Market, nor has the Company received any notification that the Commission or the
Nasdaq Global Market is contemplating terminating such registration or quotation.

          (uu) Except as described in the Disclosure Package and the Offering Memorandum, the Company is
not in default under any of the Transaction Documents or any of the contracts described in the
Disclosure Package and the Offering Memorandum, has received a notice or claim of any such default
or has knowledge of any breach of such contracts by the other party or parties thereto, except such
defaults or breaches as would not, individually or in the aggregate, have a Material Adverse
Effect.

          (vv) The Company has not distributed or, prior to the later to occur of (i) the Closing Date
and (ii) completion of the distribution of the Securities, will distribute any material in
connection with the offering and sale of the Securities other than the Preliminary Offering
Memorandum or the Offering Memorandum.

12

 

     Any certificate contemplated in this Agreement signed by or on behalf of the Company and
delivered to the Initial Purchasers shall be deemed to be a representation and warranty by the
Company to the Initial Purchasers as to the matters covered thereby.

     The Company acknowledges that the Initial Purchasers and, for purposes of the opinions to be
delivered to the Initial Purchasers pursuant to Section 9 hereof, counsel for the Company and
counsel for the Initial Purchasers, will rely upon the accuracy and truth of the foregoing
representations and hereby consent to such reliance.

     3. Representations and Warranties of the Initial Purchasers. Each Initial Purchaser
severally and not jointly, represents, warrants and covenants to the Company and agrees that:

          (a) Such Initial Purchaser is a QIB and an accredited investor within the meanings of Rule
501(a) of the Securities Act, with such knowledge and experience in financial and business matters
as are necessary in order to evaluate the merits and risks of an investment in the Securities.

          (b) Such Initial Purchaser (i) has not solicited offers for, or offered or sold, and will not
solicit offers for, or offer or sell, the Securities by means of any form of general solicitation
or general advertising within the meaning of Rule 502(c) of Regulation D under the Securities Act
(“Regulation D”) or in any manner involving a public offering within the meaning of Section 4(2) of
the Securities Act and (ii) it has solicited and will solicit offers for the Securities only from,
and has offered or sold and will offer, sell or deliver the Securities, as part of their initial
offering, only within the United States to persons whom it reasonably believes to be QIBs, or if
any such person is buying for one or more institutional accounts for which such person is acting as
fiduciary or agent, only when such person has represented to it that each such account is a QIB to
whom notice has been given that such sale or delivery is being made in reliance on Rule 144A and in
each case, in transactions in accordance with Rule 144A in transactions pursuant to another
exemption from the registration requirements of the Securities Act.

          (c) The Initial Purchasers will not amend or supplement the Preliminary Offering Memorandum or
the Offering Memorandum or any other document used in connection with the offer and sale of the
Securities or any amendment or supplement thereto unless the Company shall previously have been
advised thereof and furnished a copy for a reasonable period of time prior to the proposed
amendment or supplement and as to which the Company shall not have given their consent, which shall
not be unreasonably withheld.

     4. Purchase, Sale and Delivery. On the basis of the representations, warranties,
covenants and agreements contained in this Agreement, and subject to its terms and conditions:

          (a) The Company agrees to issue and sell to the several Initial Purchasers, and each of the
Initial Purchasers agrees, severally and not jointly, to purchase from the Company, at a purchase
price of 100% of the principal amount thereof, plus accrued interest, if any, from November 10,
2009 to the Closing Date, as defined below (the “Initial Price”), the aggregate amount of Firm
Notes. The Company hereby grants to each of the Initial Purchasers an option to purchase all or
any part of the Option Notes at the Initial Price. The aggregate amount of Option

13

 

Notes to be purchased by each of the Initial Purchasers shall be the same percentage of the
Option Notes to be purchased by each of the Initial Purchasers as such Initial Purchaser is
purchasing of the Firm Notes. Such option may be exercised in whole or in part at any time on or
before 12:00 noon, New York City time, on the business day before the Firm Notes Closing Date (as
defined below), and from time to time thereafter within 30 days after the date of this Agreement,
in each case upon written, facsimile or telegraphic notice, or verbal or telephonic notice
confirmed by written, facsimile or telegraphic notice, by each of the Initial Purchasers to the
Company no later than 12:00 noon, New York City time, on the business day before the Firm Notes
Closing Date or at least two business days before the Option Notes Closing Date (as defined below),
as the case may be, setting forth the aggregate amount of Option Notes to be purchased and the time
and date (if other than the Firm Notes Closing Date) of such purchase.

          (b) Payment of the purchase price for, and delivery of, the Firm Notes shall be made at the
offices of Oppenheimer & Co. Inc., 300 Madison Avenue, New York, New York 10017, at 10:00 a.m., New
York City time, on November 16, 2009 or at such time on such other date, not later than ten (10)
business days after the date of this Agreement, as shall be agreed upon by the Company and the
Representatives (such time and date of delivery and payment are called the “Firm Notes Closing
Date”. In addition, in the event that any or all of the Option Notes are purchased by the Initial
Purchasers, payment of the purchase price, and delivery of the certificates, for such Option Notes
shall be made at the above-mentioned offices, or at such other place as shall be agreed upon by the
Initial Purchasers and the Company, on each date of delivery as specified in the notice from the
Initial Purchasers to the Company (such time and date of delivery and payment are called the
“Option Notes Closing Date”). The Firm Notes Closing Date and any Option Notes Closing Dates are
called, individually, a “Closing Date” and, together, the “Closing Dates”.

          (c) Payment for the Securities shall be made to the Company by wire transfer of immediately
available funds or by certified or official bank check or checks payable in New York Clearing House
(same day) funds drawn to the order of the Company, against delivery of the Securities to the
Representatives for the respective accounts of the Initial Purchasers.

          (d) On each Closing Date the Company will deliver to the Initial Purchasers, in such
denomination or denominations and registered in such name or names as the Representatives request
upon notice to the Company at least 48 hours prior to the Closing Date, one or more Securities in
definitive form, registered in such name and in such denominations as the Initial Purchasers shall
request, having an aggregate amount corresponding to the aggregate principal amount of the
Securities sold pursuant to Exempt Resales to QIBs and Individual Accredited Investors (the
“Definitive Note”), against payment of the purchase price therefor by wire transfer of same-day
funds to the account of the Company, previously designated by it in writing. The Definitive Note
shall be made available to the Initial Purchasers for inspection not later than 5:00 p.m., New York
City time, on the business day immediately preceding each Closing Date.

     5. Offering by Initial Purchasers. The Initial Purchasers propose to make an offering
of the Securities at the price and upon the terms set forth in the Offering Memorandum as soon as
practicable after this Agreement is entered into and as, in the judgment of the Initial Purchasers,
is advisable.

14

 

     6. Agreements of the Company. The Company covenants and agrees with the Initial
Purchasers that:

          (a) The Company shall advise the Initial Purchasers promptly and, if requested by the
Representative, confirm such advice in writing, (i) of the issuance by any state securities
commission or other regulatory authority of any stop order or order suspending the qualification or
exemption from qualification of any Securities for offering or sale in any jurisdiction, or the
initiation of any proceeding for such purpose by any state securities commission or other
regulatory authority and (ii) of the happening of any event that makes any statement of a material
fact made in the Disclosure Package or the Offering Memorandum untrue or that requires the making
of any additions to or changes in the Disclosure Package or the Offering Memorandum in order to
make the Disclosure Package or the Offering Memorandum not misleading in the light of the
circumstances existing at the time it is delivered to an Eligible Purchaser. The Company shall use
their commercially reasonable efforts to prevent the issuance of any stop order or order suspending
the qualification or exemption from qualification of any Securities under any state securities or
blue sky laws and, if at any time any state securities commission or other regulatory authority
shall issue an order suspending the qualification or exemption from qualification of any Securities
under any state securities or blue sky laws, the Company shall use its commercially reasonable
efforts to obtain the withdrawal or lifting of such order at the earliest possible time.

          (b) The Company shall, without charge, provide to the Initial Purchasers and to counsel to the
Initial Purchasers, and to those persons identified by the Initial Purchasers to the Company as
many copies of the Preliminary Offering Memorandum and the Offering Memorandum, and any amendments
or supplements thereto, as the Initial Purchasers may reasonably request. The Company consents to
the use of the Preliminary Offering Memorandum and the Offering Memorandum, and any amendments and
supplements thereto required pursuant hereto, by the Initial Purchasers in connection with Exempt
Resales.

          (c) The Company will not amend or supplement the Preliminary Offering Memorandum or the
Offering Memorandum or any other document used in connection with the offer and sale of the
Securities or any amendment or supplement thereto during such period as, in the opinion of counsel
for the Initial Purchasers, the Preliminary Offering Memorandum or the Offering Memorandum is
required by law to be delivered in connection with Exempt Resales and in connection with
market-making activities of the Initial Purchasers for so long as any Notes are outstanding unless
the Initial Purchasers shall previously have been advised thereof and furnished a copy for a
reasonable period of time prior to the proposed amendment or supplement and as to which the Initial
Purchasers shall not have given their consent, which shall not be unreasonably withheld.

          (d) If, during the period referred to in 6(c) above, any event shall occur as a result of
which, it is necessary or advisable, in the opinion of counsel for the Initial Purchasers, to amend
or supplement the Preliminary Offering Memorandum or the Offering Memorandum or any other document
used in connection with the offer and sale of the Securities in order to make such Preliminary
Offering Memorandum or Offering Memorandum or such other document not misleading in the light of
the circumstances existing at the time it is delivered to an Eligible Purchaser, or if for any
other reason it shall be reasonably necessary or advisable to amend or

15

 

supplement the Preliminary Offering Memorandum or the Offering Memorandum or such other
document to comply with applicable laws, rules or regulations, the Company shall (subject to
Section 6(c) hereof) forthwith amend or supplement such Preliminary Offering Memorandum or Offering
Memorandum or such other document at its own expense so that, as so amended or supplemented, such
Preliminary Offering Memorandum or Offering Memorandum or such other document will not include an
untrue statement of a material fact or omit to state a material fact necessary in order to make the
statements therein not misleading or so that such Preliminary Offering Memorandum or Offering
Memorandum or such other document will comply with all applicable laws, rules or regulations; if,
during the period referred to in 6(c) above, the Company proposes to file with the SEC an Exchange
Act Report that is incorporated by reference into the Offering Memorandum, a reasonable time prior
to the proposed filing, the Company shall furnishes a copy of such Exchange Act Report to the
Initial Purchasers for review and comment, and shall not file such document with the Commission
until the Initial Purchasers have been afforded the opportunity to review and comment and the
Initial Purchasers have not reasonably objected to the filing of such Exchange Act Report.

          (e) The Company shall cooperate with the Initial Purchasers and counsel for the Initial
Purchasers in connection with the qualification or registration of the Securities for offering and
sale under the securities or blue sky laws of such jurisdictions as the Representative may
designate and shall continue such qualifications in effect for as long as may be necessary to
complete the Exempt Resales; provided, however, that in connection therewith neither the Company
shall be required to qualify as a foreign corporation where it is not now so qualified or to
execute a general consent to service of process in any jurisdiction or to take any other action
that would subject it to general service of process or to taxation in respect of doing business in
any jurisdiction in which it is not otherwise subject, in each case, other than as to matters and
transactions relating to the Preliminary Offering Memorandum, the Offering Memorandum or Exempt
Resales.

          (f) If this Agreement shall terminate or shall be terminated after execution because of any
failure or refusal on the part of the Company to comply with the terms or fulfill any of the
conditions of this Agreement, the Company agrees to reimburse the Initial Purchasers for all
reasonable out-of-pocket expenses (including reasonable fees and expenses of counsel for the
Initial Purchasers) incurred by the Initial Purchasers in connection herewith.

          (g) The Company shall apply the net proceeds from the sale of the Securities in the manner set
forth under “Use of Proceeds” in the Disclosure Package and the Offering Memorandum.

          (h) The Company shall not voluntarily claim, and shall actively resist any attempts to claim,
the benefit of any usury laws against the holders of any Securities.

          (i) The Company shall do and perform all things required or necessary to be done and performed
under this Agreement prior to or after each Closing Date and to satisfy all conditions precedent to
the delivery of the Securities.

          (j) None of the Company or any of its “affiliates” (as defined in Rule 144 under the
Securities Act) will sell, offer for sale, solicit offers to buy or otherwise negotiate in

16

 

respect of any “security” (as defined in the Securities Act) that could be integrated with the
sale of the Securities in a manner that would require the registration under the Securities Act of
the sale to the Initial Purchasers or the Eligible Purchasers of the Securities or to take any
other action that would result in the Exempt Resales not being exempt from registration under the
Securities Act.

          (k) For so long as any of the Securities remain outstanding and are “restricted securities”
within the meaning of Rule 144(a)(3) under the Securities Act and are not able to be sold in their
entirety under Rule 144 under the Securities Act (or any successor provision), for the benefit of
holders from time to time of Securities, the Company will furnish at its expense, upon request, to
any holder or beneficial owner of Notes and prospective purchasers of the Notes, information
specified in Rule 144A(d)(4) under the Securities Act, unless the Company are then subject to and
in compliance with Section 13 or 15(d) of the Exchange Act.

          (l) The Company shall comply with the representation letters to DTC relating to the approval
of the Securities by DTC for “book-entry” transfer.

          (m) During the period of three years from the Closing Date, the Company shall deliver without
charge to the Initial Purchasers (i) as soon as available, copies of each report and other
communication (financial or otherwise) of the Company mailed to the Trustee of the holders of the
Securities, stockholders or any national securities exchange on which any class of securities of
the Company may be listed (including without limitation, press releases) other than materials filed
with or furnished to the Commission and (ii) from time to time such other information concerning
the Company as the Initial Purchasers may reasonably request.

          (n) The Company shall not take, directly or indirectly, any action which constitutes or is
designed to cause or result in, or which could reasonably be expected to constitute, cause or
result in, the stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities or the Common Stock issuable upon conversion
thereof, or take any action prohibited by Regulation M under the Exchange Act, in connection with
the distribution of the Securities contemplated hereby. The Company will not distribute any (i)
preliminary offering memorandum, including, without limitation, the Preliminary Offering
Memorandum, (ii) offering memorandum, including, without limitation, the Offering Memorandum or
(iii) other offering material in connection with the offering and sale of the Securities.

          (o) For so long as the Securities constitute “restricted” securities within the meaning of
Rule 144(a)(3) under the Securities Act, the Company shall not, and shall not permit any subsidiary
to, solicit any offer to buy or offer to sell the Securities by means of any form of general
solicitation or general advertising (as those terms are used in Regulation D under the Securities
Act) or in any manner involving a public offering within the meaning of Section 4(2) of the
Securities Act.

          (p) During the period from the Closing Date until one year after the Closing Date, without the
prior written consent of the Initial Purchasers, the Company shall not, and shall not permit any of
its “affiliates” (as defined in Rule 144 under the Securities Act) to, resell any of

17

 

the Securities that constitute “restricted securities” under Rule 144 that have been
reacquired by any of them.

          (q) Prior to the Closing Date, except as required by law, not to issue any press release or
other communications, directly or indirectly, or hold any press conference with respect to the
issuance of the Securities, the Company, the properties, business, results of operations, condition
(financial or otherwise), affairs or business prospects of the Company, without the prior consent
of the Initial Purchasers, which shall not be unreasonably withheld. In such instance, the Company
shall furnish a copy of any such release or communication to the Initial Purchasers for review and
comment a reasonable time prior to its contemplated release.

          (r) Without the prior consent of the Initial Purchasers, not to make any offer relating to the
Securities that would constitute a “free writing prospectus” (if the offering of the Securities was
made pursuant to a registered offering under the Securities Act) as defined in Rule 405 under the
Securities Act (a “Free Writing Offering Document”); any such Free Writing Offering Document the
use of which has been consented to by the Initial Purchasers is listed on Schedule III
hereto; if at any time following issuance of a Free Writing Offering Document any event occurred or
occurs as a result of which such Free Writing Offering Document would conflict with the information
in the Preliminary Offering Memorandum or the Offering Memorandum or would include an untrue
statement of a material fact or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances then prevailing, not misleading, the Company will
give prompt notice thereof to the Initial Purchasers and, if requested by the Initial Purchasers,
will prepare and furnish without charge to the Initial Purchasers a Free Writing Offering Document
or other document which will correct such conflict, statement or omission.

          (s) Without the prior written consent of the Representatives, for a period of 90 days after
the date of this Agreement, the Company shall not issue, sell or register with the Commission
(other than (1) securities issued in connection with an acquisition transaction and (2) on Form S-8
or on any successor form), or otherwise dispose of, directly or indirectly, any (i) debt securities
issued or guaranteed by the Company and having a maturity of more than one year from the date of
issue, or (ii) equity securities of the Company (or any securities convertible into, exercisable
for or exchangeable for equity securities of the Company.

          (t) To reserve and keep available at all times, free of preemptive rights, shares of Common
Stock for the purpose of enabling the Company to satisfy any obligations to issue shares of its
Common Stock upon conversion of the Securities.

          (u) To use its commercially reasonable efforts to list, subject to notice of issuance, the
shares of Common Stock issuable upon conversion of the Securities on the Nasdaq Global Market.

     7. Expenses. Whether or not the transactions contemplated by this Agreement are
consummated or this Agreement becomes effective or is terminated (pursuant to Section 13 hereof or
otherwise), the Company hereby agrees to pay all costs and expenses incident to the performance of
their obligations hereunder, including the following: (i) the negotiation, preparation, printing,
typing, filing, reproduction, execution and delivery of this Agreement and

18

 

of the other Transaction Documents, any amendment or supplement to or modification of any of
the foregoing and any and all other documents furnished pursuant hereto or thereto or in connection
herewith or therewith and with the Exempt Resales; (ii) the preparation, printing or reproduction
of each Preliminary Offering Memorandum, the Offering Memorandum (including, without limitation,
financial statements), and any other document prepared in connection with the offer and sale of the
Securities, and all amendments and supplements to any of them; (iii) the issuance, transfer and
delivery of the Securities endorsed thereon to the Initial Purchasers; (iv) the registration or
qualification of the Securities for offer and sale under the securities or blue sky laws of the
several states (including, without limitation, filing fees, the cost of printing and mailing a
preliminary and final blue sky memorandum, and the reasonable fees and disbursements of counsel to
the Initial Purchasers relating to such registration or qualification, including the preparation of
a preliminary and final blue sky memorandum); (v) the delivery (including postage, air freight
charges and charges for counting and packaging) of such copies of each Preliminary Offering
Memorandum, the Offering Memorandum and any other document used in connection with the offer and
sale of the Securities and all amendments or supplements to any of them as may be requested for use
in connection with the offering and sale of the Securities and the Exempt Resales; (vi) the
preparation, printing, authentication, issuance and delivery of certificates for the Securities,
including any stamp taxes in connection with the original issuance and sale of the Securities and
Trustee’s fees; (vii) the fees, disbursements and expenses of the Company’s counsel (including
local and special counsel, if any) and accountants; (viii) the preparation, reproduction and
delivery of the preliminary and supplemental blue sky memoranda and all other agreements of
documents reproduced and delivered in connection with the offering of the Securities (including the
reasonable fees and disbursements of counsel to the Initial Purchasers in connection with such
preparation); (ix) all fees and expenses (including fees and expenses of counsel) of the Company in
connection with the approval of the Securities by DTC for “book-entry” transfer; (x) any fees
charged by investment rating agencies for the rating of the Securities; (xi) the fees and expenses
of the Trustee and its counsel; (xii) all expenses incurred in connection with the performance by
the Company of their other obligations under this Agreement and the other Transaction Documents;
(xiii) the transportation and other road show expenses incurred by or on behalf of the Company
representatives in connection with presentations to and related communications with prospective
purchasers of the Securities; and (xiv) all expenses and listing fees incurred in connection with
the application for quotation of the Common Stock on the Nasdaq Global Market.

     8. Indemnification.

          (a) The Company agrees to indemnify and hold harmless the Initial Purchasers and each person,
if any, who controls the Initial Purchasers within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act against any and all losses, claims, damages and liabilities,
joint or several (including any reasonable investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or proceeding or any claim
asserted), to which they, or any of them, may become subject under the Securities Act, the Exchange
Act or other Federal or state law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities arise out of or are based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in the Disclosure Package, any Free Writing
Offering Document or the Offering Memorandum, or in any supplement thereto or amendment thereof, or
in any electronic road show, or in any Blue

19

 

Sky application or other information or other documents executed by the Company filed in any
state or other jurisdiction to qualify any or all of the Securities under the securities laws
thereof (any such application, document or information being hereinafter referred to as a “Blue Sky
Application”) or (ii) any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that such indemnity shall not inure to the
benefit of any Initial Purchaser (or any person controlling such Initial Purchaser) on account of
any losses, claims, damages or liabilities arising from the sale of the Securities to any person by
such Initial Purchaser if such untrue statement or omission or alleged untrue statement or omission
was made in the Disclosure Package, any Free Writing Offering Document or the Offering Memorandum,
or in any supplement thereto or amendment thereof, or in any electronic road show, or in any Blue
Sky Application in reliance upon and in conformity with the Initial Purchaser Information (as
defined in Section 11 hereto). This indemnity agreement will be in addition to any liability which
the Company may otherwise have.

          (b) Each Initial Purchaser, severally and not jointly, agrees to indemnify and hold harmless
the Company, each person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, and the officers and directors of the Company,
against any losses, claims, damages or liabilities to which such party may become subject, under
the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in the Disclosure Package, any Free Writing
Offering Document or the Offering Memorandum, or in any supplement thereto or amendment thereof, or
arise out of or are based upon the omission or alleged omission to state therein, a material fact
required to be stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or alleged omission was
made in the Disclosure Package, any Free Writing Offering Document or the Offering Memorandum, or
in any supplement thereto or amendment thereof, in reliance upon and in conformity with the Initial
Purchaser Information; provided, however, that the obligation of any Initial Purchaser to severally
and not jointly indemnify the Company (including any controlling person, director or officer
thereof) shall be limited to the net proceeds received by the Company from such Initial Purchaser.

          (c) Any party that proposes to assert the right to be indemnified under this Section will,
promptly after receipt of notice of commencement of any action, suit or proceeding against such
party in respect of which a claim is to be made against an indemnifying party or parties under this
Section, notify each such indemnifying party of the commencement of such action, suit or
proceeding, enclosing a copy of all papers served. No indemnification provided for in Section 8(a)
or 8(b) shall be available to any party who shall fail to give notice as provided in this Section
8(c) if the party to whom notice was not given was unaware of the proceeding to which such notice
would have related and was prejudiced by the failure to give such notice but the omission so to
notify such indemnifying party of any such action, suit or proceeding shall not relieve it from any
liability that it may have to any indemnified party for contribution or otherwise than under this
Section. In case any such action, suit or proceeding shall be brought against any indemnified
party and it shall notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate in, and, to the extent that it shall

20

 

wish, jointly with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume the defense thereof and
the approval by the indemnified party of such counsel, the indemnifying party shall not be liable
to such indemnified party for any legal or other expenses, except as provided below and except for
the reasonable costs of investigation subsequently incurred by such indemnified party in connection
with the defense thereof. The indemnified party shall have the right to employ its counsel in any
such action, but the fees and expenses of such counsel shall be at the expense of such indemnified
party unless (i) the employment of counsel by such indemnified party has been authorized in writing
by the indemnifying parties, (ii) the indemnified party shall have been advised by counsel that
there may be one or more legal defenses available to it which are different from or in addition to
those available to the indemnifying party (in which case the indemnifying parties shall not have
the right to direct the defense of such action on behalf of the indemnified party) or (iii) the
indemnifying parties shall not have employed counsel to assume the defense of such action within a
reasonable time after notice of the commencement thereof, in each of which cases the reasonable
fees and expenses of counsel shall be at the expense of the indemnifying parties. An indemnifying
party shall not be liable for any settlement of any action, suit, and proceeding or claim effected
without its written consent, which consent shall not be unreasonably withheld or delayed. No
indemnifying party shall, without the prior written consent, which consent shall not be
unreasonably withheld or delayed, of the indemnified party, effect any settlement of any proceeding
or threatened proceeding in respect of which any indemnified party is or could have been a party
and indemnity could have been sought hereunder by such indemnified party, unless (i) such
settlement includes an unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding and (ii) does not contain any factual or legal
admission by or with respect to any indemnified party or any adverse statement with respect to the
character, professionalism, expertise or reputation of any Indemnified Party or any action or
inaction of any Indemnified Party.

     9. Contribution. In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section 8(a) or 8(b) is due in
accordance with its terms but for any reason is unavailable to or insufficient to hold harmless an
indemnified party in respect to any losses, liabilities, claims, damages or expenses referred to
therein, then each indemnifying party shall contribute to the aggregate losses, liabilities,
claims, damages and expenses (including any investigation, legal and other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding
or any claims asserted, but after deducting any contribution received by any person entitled
hereunder to contribution from any person who may be liable for contribution) incurred by such
indemnified party, as incurred, in such proportion as is appropriate to reflect the relative
benefits received by the Company, on the one hand, and the Initial Purchasers, on the other hand,
from the offering of the Securities pursuant to this Agreement or, if such allocation is not
permitted by applicable law, in such proportion as is appropriate to reflect not only the relative
benefits referred to above but also the relative fault of the Company, on the one hand, and the
Initial Purchasers, on the other hand, in connection with the statements or omissions which
resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations. The Company and the Initial Purchasers agree that it would not be just
and equitable if contribution pursuant to this Section 9 were determined by pro rata allocation or
by any other method of allocation which does not take account of the equitable considerations
referred to above. The

21

 

aggregate amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or
omission or alleged omission. Notwithstanding the provisions of this Section 9, no Initial
Purchaser shall be required to contribute any amount in excess of the amount by which the total
price at which the Securities resold by it to Eligible Purchasers were offered to the public
exceeds the amount of damages which such Initial Purchaser has otherwise been required to pay by
reason of any such untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 9, each person, if any, who controls an Initial
Purchaser within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
shall have the same rights to contribution as such Initial Purchaser, and each director of the
Company, each officer of the Company, and each person, if any, who controls the Company within the
meaning of the Section 15 of the Securities Act or Section 20 of the Exchange Act, shall have the
same rights to contribution as the Company. Any party entitled to contribution will, promptly
after receipt of notice of commencement of any action, suit or proceeding against such party in
respect of which a claim for contribution may be made against another party or parties under this
Section 9, notify such party or parties from whom contribution may be sought, but the omission so
to notify such party or parties from whom contribution may be sought shall not relieve the party or
parties from whom contribution may be sought from any other obligation it or they may have
hereunder or otherwise than under this Section 9. No party shall be liable for contribution with
respect to any action, suit, proceeding or claim settled without its written consent.

     The remedies provided for in Section 8 and this Section 9 are not exclusive and shall not
limit any rights or remedies which otherwise may be available to any indemnified party in law or in
equity.

     10. Conditions of Initial Purchasers Obligations. The obligations of the Initial
Purchasers under this Agreement are several and not joint. The obligations of the Initial
Purchasers to purchase and pay for the Securities, as provided herein, are subject to the absence
from any certificates, opinions, written statements or letters furnished to the Initial Purchasers
pursuant to this Section 10 of any misstatement or omissions and to the satisfaction of the
following additional conditions unless waived in writing by the Representative:

          (a) All of the representations and warranties of the Company contained in this Agreement shall
be true and correct on the date hereof and on each Closing Date with the same force and effect as
if made on and as of the date hereof and the Closing Date, respectively. The Company shall have
performed or complied with all of the agreements and satisfied all conditions on their respective
parts to be performed, complied with or satisfied hereunder at or prior to each Closing Date.

22

 

          (b) The Offering Memorandum shall have been printed and copies distributed to the Initial
Purchasers not later than 10:00 a.m., New York City time, on the day following the date of this
Agreement or at such later date and time as to which the Representatives may agree.

          (c) No stop order suspending the qualification or exemption from qualification of the
Securities thereof in any jurisdiction referred to in Section 6(e) hereof shall have been issued
and no proceeding for that purpose shall have been commenced or shall be pending or threatened.

          (d) None of the issuance and sale of the Securities pursuant to this Agreement or any of the
transactions contemplated by any of the other Transaction Documents shall be enjoined (temporarily
or permanently) and no restraining order or other injunctive order shall have been issued; and
there shall not have been any legal action, statute, order, rule, regulation, decree or other
administrative proceeding enacted, instituted, adopted, issued or threatened against the Company or
against any Initial Purchasers relating to the issuance of the Securities or the Initial Purchasers
activities in connection therewith or any other transactions contemplated by this Agreement or the
Offering Memorandum, or the other Transaction Documents. No action, suit or proceeding shall have
been commenced and be pending against or affecting or, to the best of the Company’s knowledge,
threatened against, the Company before any court or arbitrator or any governmental body, agency or
official that, if adversely determined, could reasonably be expected to result in a Material
Adverse Effect; and no stop order shall have been issued preventing the use of the Preliminary
Offering Memorandum, any Free Writing Offering Document, the Offering Memorandum, or any amendment
or supplement thereto.

          (e) Since the respective dates as of which information is given in the Disclosure Package, (i)
there shall not have occurred any change, or any development involving a prospective change, in or
affecting the general affairs, management, business, condition (financial or other), properties,
business prospects, results of operations, capital stock, or long-term debt, or a material increase
in the short-term debt, of the Company, not contemplated by the Disclosure Package and the Offering
Memorandum that is, in the judgment of the Representative, so material and adverse as to make it
impracticable or inadvisable to proceed with the offering of the Securities on the terms and in the
manner contemplated by the Transaction Documents, (ii) no dividend or distribution of any kind
shall have been declared, paid or made by the Company on any class of its capital stock, other than
as disclosed in the Disclosure Package and the Offering Memorandum, (iii) the Company shall not
have incurred any liability or obligation, direct or contingent, that is material, individually or
in the aggregate, to the Company, and that is required to be disclosed on a balance sheet or notes
thereto in accordance with U.S. GAAP and is not disclosed on the latest balance sheet or notes
thereto included in the Disclosure Package and the Offering Memorandum and (iv) there shall not
have occurred any event or development relating to or involving the Company, or any of its
respective officers or directors that makes any statement made in the Disclosure Package or the
Offering Memorandum untrue or that, in the opinion of the Company, and their counsel or the Initial
Purchasers and their counsel, require the making of any addition to or change in the Disclosure
Package or the Offering Memorandum in order to state a material fact required by any applicable
law, rule or regulation to be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading.

23

 

          (f) At each Closing Date and after giving effect to the consummation of the transactions
contemplated by the Transaction Documents, there exists no Default or Event of Default (as defined
in the Indenture).

          (g) The Initial Purchasers shall have received certificates, dated each Closing Date, signed
by the chief financial officer and the general counsel of the Company, in form and substance
satisfactory to the Representatives, confirming, as of the Closing Date, the matters set forth in
paragraphs (a), (b), (c), (d) and (e) of this Section 10 and that, as of such Closing Date, the
obligations of the Company to be performed hereunder on or prior thereto have been duly performed.

          (h) The Initial Purchasers shall have received on the Closing Date:

          (i) an opinion, dated the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchasers, of DLA Piper LLP (US), counsel for the
Company, to the effect set forth in Exhibit B hereto.

          (ii) an opinion, dated the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchasers, of Skadden, Arps, Slate, Meagher & Flom LLP,
counsel for the Initial Purchasers, relating to this Agreement and such other
related matters as the Initial Purchasers may require.

          (i) Ernst & Young, LLP (the “Auditor”), the independent registered public accounting firm for
the Company, shall deliver to the Initial Purchasers: (i) simultaneously with the execution of this
Agreement a signed letter from the Auditor addressed to the Initial Purchasers and dated the date
of this Agreement, in form and substance reasonably satisfactory to the Representatives and
Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the Initial Purchasers, containing statements
and information of the type ordinarily included in accountants’ “comfort letters” to initial
purchasers with respect to the financial statements and certain financial information contained in
the Preliminary Offering Memorandum, and (ii) on each Closing Date, a signed letter from the
Auditor addressed to the Initial Purchasers and dated the date of such Closing Date(s), in form and
substance reasonably satisfactory to the Representatives and Skadden, Arps, Slate, Meagher & Flom
LLP, counsel for the Initial Purchasers, containing statements and information of the type
ordinarily included in accountants’ “comfort letters” to initial purchasers with respect to the
financial statements and certain financial information contained in the Offering Memorandum.

          (j) The Initial Purchasers and Skadden, Arps, Slate, Meagher & Flom LLP, counsel to the
Initial Purchaser, shall have been furnished with such information, certificates and documents, in
addition to those set forth above, as they may reasonably require for the purpose of enabling them
to review or pass upon the matters referred to in this Section 10 and in order to evidence the
accuracy, completeness or satisfaction in all material respects of any of the representations,
warranties or conditions herein contained.

          (k) The Company and the Trustee shall have entered into the Indenture and the Initial
Purchasers shall have received counterparts, conformed as executed, thereof and the

24

 

Securities shall have been duly executed and delivered by the Company, and the Securities
shall have been duly authenticated by the Trustee.

          (l) On or after the date hereof (i) there shall not have occurred any downgrading, suspension
or withdrawal of, nor shall there have been any announcement of any potential or intended
downgrading, suspension or withdrawal of, or of any review (or of any potential or intended review)
for a possible downgrading, or with negative implications, or direction not determined of, any
rating of the Company or any securities of the Company (including, without limitation, the placing
of any of the foregoing ratings on credit watch with negative or developing implications or under
review with an uncertain direction) by any “nationally recognized statistical rating organization”
as such term is defined for purposes of Rule 436(g)(2) under the Securities Act, (ii) there shall
not have occurred any change, nor shall any notice have been given of any potential or intended
change, in the outlook for any rating of the Company or any securities of the Company by any such
rating organization and (iii) no such rating organization shall have given notice that it has
assigned (or is considering assigning) a lower rating to the Securities than that on which the
Securities were marketed.

          (m) Each of the Transaction Documents and each other agreement or instrument executed in
connection with the transactions contemplated thereby shall be reasonably satisfactory in form and
substance to the Initial Purchasers and shall have been executed and delivered by all the
respective parties thereto and shall be in full force and effect, and there shall have been no
material amendments, alterations, modifications or waivers of any provision thereof since the date
of this Agreement.

          (n) All proceedings taken in connection with the issuance of the Securities and the
transactions contemplated by this Agreement, the other Transaction Documents and all documents and
papers relating thereto shall be reasonably satisfactory to the Initial Purchasers and counsel to
the Initial Purchasers. The Initial Purchasers and counsel to the Initial Purchasers shall have
received copies of such papers and documents as they may reasonably request in connection
therewith, all in form and substance reasonably satisfactory to them.

          (o) All opinions, certificates, letters, schedules, documents or instruments required by this
Section 10 to be delivered by the Company will be in compliance with the provisions hereof only if
they are reasonably satisfactory in form and substance to the Representatives and counsel to the
Initial Purchasers. The Company shall furnish the Initial Purchasers such conformed copies of such
opinions, certificates, letters, schedules, documents and instruments in such quantities as the
Initial Purchasers shall reasonably request.

          (p) On or prior to the Closing Date, the Initial Purchasers shall have received a lock up
agreement substantially in the form attached hereto as Exhibit A signed by the Company’s Executive
Officers and Directors on Schedule IV hereto.

     11. Initial Purchaser Information. The Company acknowledges that the statements with
respect to the offering of the Securities set forth in the 10th paragraph regarding the delivery of
the Securities and the 11th paragraph related to stabilization, syndicate covering
transactions and penalty under the heading “Plan of Distribution” in the Preliminary Offering
Memorandum and the Offering Memorandum constitute the only written information relating to the
Initial

25

 

Purchasers furnished to the Company by or on behalf of the Initial Purchasers expressly for
use in the Preliminary Offering Memorandum, the Disclosure Package and the Offering Memorandum, for
purposes of Sections 2(a), 8(a) and 8(b) hereof (the “Initial Purchaser Information”).

     12. Survival of Representations and Agreements. The respective representations,
warranties, covenants, agreements, indemnities and other statements of the Company, their
respective officers and the Initial Purchasers set forth in this Agreement or made by or on behalf
of them, respectively pursuant to this Agreement shall remain operative and in full force and
effect regardless of (i) any investigation made by or on behalf of the Company, any of its officers
of directors, the Initial Purchasers or any controlling person referred to in Sections 8 and 9
hereof and (ii) delivery of and payment for the Securities to and by the Initial Purchasers, and
shall be binding upon and shall inure to the benefit of, any successors, assigns, heirs, personal
representatives of the Company, the Initial Purchasers and the indemnified parties referred to in
Section 8 hereof. The respective representations, agreements, covenants, indemnities and other
statements set forth in Sections 7, 8, 9, 12 and 13 shall survive the termination of this
Agreement, regardless of any termination or cancellation of this Agreement.

     13. Effective Date of Agreement; Termination.

          (a) This Agreement shall become effective upon execution and delivery of a counterpart hereof
by each of the parties hereto.

          (b) This Agreement may be terminated in the sole discretion of the Initial Purchasers by
notice to the Company from the Representatives, without liability (other than with respect to
Sections 8 and 9 hereof) on the Initial Purchasers’ part to the Company in the event the Company
has failed, refused or been unable to perform or satisfy all conditions on their respective parts
to be performed or satisfied hereunder on or prior to the Closing Date, or if:

          (i) there has occurred any material adverse change in the securities markets or
any event, act or occurrence that has materially disrupted, or in the opinion of the
Initial Purchasers, will in the future materially disrupt, the securities markets or
there shall be such a material adverse change in general financial, political or
economic conditions or the effect of international conditions on the financial
markets in the United States is such as to make it, in the judgment of the Initial
Purchasers, inadvisable or impracticable to market the Securities or enforce
contracts for the sale of the Securities;

          (ii) there has occurred any outbreak or material escalation of hostilities or
other calamity or crisis the effect of which on the financial markets of the United
States is such as to make it, in the judgment of the Initial Purchasers, inadvisable
or impracticable to market the Securities or enforce contracts for the sale of the
Securities;

          (iii) trading in any securities of the Company has been suspended or materially
limited or trading generally on the Nasdaq Global Market shall have been suspended
or materially limited, or minimum or maximum prices

26

 

for trading shall have been fixed, or maximum ranges for prices for securities
shall have been required by any of said exchanges or by order of the Commission, the
Financial Industry Regulatory Authority or other regulatory body or governmental
authority having jurisdiction;

          (iv) a banking moratorium has been declared by any state or Federal a banking
moratorium has been declared by any state or Federal authority;

          (v) in the judgment of the Initial Purchasers, there has been since the time of
the execution of the Purchase Agreement or since the respective dates as of which
information is given in the Disclosure Package, any material adverse change in the
assets, properties, condition (financial or otherwise), or in the results or
operations, business affairs or business prospects or cash flows of the Company,
whether or not arising in the ordinary course of business; or

          (vi) any debt securities of the Company shall have been downgraded or placed on
any “watch list” for possible downgrading by any “nationally recognized statistical
rating organization” as defined for purposes of Rule 436(g) under the Securities
Act.

          (c) If this Agreement shall be terminated pursuant to any of the provisions hereof, or if the
sale of the Securities provided for herein is not consummated because any condition to the
obligations of the Initial Purchasers set forth herein is not satisfied or because of any refusal,
inability or failure on the part of the Company to perform any agreement herein or comply with any
provision hereof, the Company will, subject to demand by the Initial Purchasers, reimburse the
Initial Purchasers for all out of pocket expenses (including the reasonable fees and expenses of
the Initial Purchasers’ counsel), incurred by the Initial Purchasers in connection herewith. If
this Agreement is terminated pursuant to Section 14 by reason of the default of one or more of the
Initial Purchasers, the Company shall not be obligated to reimburse any Initial Purchaser on
account of such expenses.

     14. Substitution of Initial Purchasers. If any Initial Purchaser shall default in its
obligation to purchase on the Closing Date the Securities agreed to be purchased hereunder, the
Representative shall have the right, within 36 hours thereafter, to make arrangements for one or
more of the non-defaulting Initial Purchasers, or any other Initial Purchasers, to purchase such
Securities on the terms contained herein. If, however, the Representative shall not have completed
such arrangements within such 36-hour period, then the Company shall be entitled to a further
period of thirty-six hours within which to procure another party or other parties satisfactory to
the Initial Purchasers to purchase such Securities on such terms. If, after giving effect to any
arrangements for the purchase of the Securities of a defaulting Initial Purchaser or Initial
Purchasers by the Representative and the Company as provided above, the aggregate amount of
Securities which remains unpurchased on the Closing Date does not exceed one-tenth of the aggregate
amount of all the Securities that all the Initial Purchasers are obligated to purchase on such
date, then the Company shall have the right to require each non-defaulting Initial Purchaser to
purchase the aggregate amount of Securities which such Initial Purchaser agreed to purchase
hereunder at such date and, in addition, to require each non-defaulting Initial Purchaser to
purchase its pro rata share (based on the aggregate amount of Securities which such

27

 

Purchaser agreed to purchase hereunder) of the Securities of such defaulting Initial Purchaser
or Initial Purchasers for which such arrangements have not been made; but nothing herein shall
relieve a defaulting Initial Purchaser from liability for its default. In any such case, either
the Representative or the Company shall have the right to postpone the Closing Date for a period of
not more than seven days in order to effect any necessary changes and arrangements (including any
necessary amendments or supplements to the Offering Memorandum or any other documents).

     If, after giving effect to any arrangements for the purchase of the Securities of a defaulting
Initial Purchaser or Initial Purchasers by the Representative and the Company as provided above,
the aggregate amount of such Securities which remains unpurchased exceeds 10% of the aggregate
amount of all the Securities to be purchased at such date, then this Agreement shall terminate,
without liability on the part of any non-defaulting Initial Purchasers to the Company and without
liability on the part of the Company except as provided in Sections 7, 8, 9 and 13(b). The
provisions of this Section 14 shall not in any way affect the liability of any defaulting Initial
Purchaser to the Company or the nondefaulting Initial Purchasers arising out of such default. The
term “Initial Purchaser” as used in this Agreement shall include any person substituted under this
Section 14 with like effect as if such person had originally been a party to this Agreement with
respect to such Securities.

     15. Notices. All communications hereunder shall be in writing and, if sent to the
Initial Purchasers, shall be hand-delivered, mailed by first-class mail, couriered by next-day air
courier or faxed and confirmed in writing to Oppenheimer & Co. Inc., 300 Madison Avenue, New York,
New York 10017, Attention: Andrew MacInnes, Head of Equity Capital Markets, with copy to Wade
Dougherty, Executive Director, and with a copy to Skadden, Arps, Slate, Meagher and Flom LLP, Four
Times Square, New York, New York, 10036, Attention: David J. Goldschmidt, as Representatives on
behalf of the Initial Purchasers If sent to the Company, shall be mailed, delivered, couriered or
faxed and confirmed in writing to TeleCommunication Systems, Inc., 275 West Street, Annapolis,
Maryland 21401, Attention: Bruce A. White, and with a copy to DLA Piper LLP (US), 6225 Smith
Avenue Baltimore, Maryland 21209, Attention: Wm. David Chalk.

     16. Successors. This Agreement shall inure to the benefit of, and shall be binding
upon, the Initial Purchasers, the Company, and their respective successors, legal representatives
and assigns, and nothing expressed or mentioned in this Agreement is intended or shall be construed
to give any other person any legal or equitable right, remedy or claim under or in respect of, or
by virtue of, this Agreement or any provision herein contained; this Agreement and all conditions
and provisions hereof being intended to be and being for the sole and exclusive benefit of such
persons and for the benefit of no other person except that (i) the indemnities of the Company
contained in Section 8 hereof shall also be for the benefit of the controlling persons and agents
referred to in Sections 8 and 9 hereof and (ii) the indemnities of the Initial Purchasers contained
in Section 8 hereof shall also be for the benefit of the directors of the Company, and its
officers, employees and agents and any controlling person or persons referred to in Sections 8 and
9 hereof. No purchaser of Securities from the Initial Purchasers will be deemed a successor, legal
representative or assign because of such purchase.

28

 

     17. No Waiver; Modifications in Writing. No failure or delay on the part of the
Company or the Initial Purchasers in exercising any right, power or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy
preclude any other or further exercise thereof or the exercise of any other right, power or remedy.
The remedies provided for herein are cumulative and are not exclusive of any remedies that may be
available to the Company or the Initial Purchasers at law or in equity or otherwise. No waiver of
or consent to any departure by the Company or the Initial Purchasers from any provision of this
Agreement shall be effective unless signed in writing by the party entitled to the benefit thereof;
provided that notice of any such waiver shall be given to each party hereto as set forth above.
Except as otherwise provided herein, no amendment, modification or termination of any provision of
this Agreement shall be effective unless signed in writing by or on behalf of the Company and the
Initial Purchasers. Any amendment, supplement or modification of or to any provision of this
Agreement, any waiver of any provision of this Agreement, and any consent to any departure by the
Company or the Initial Purchasers from the terms of any provision of this Agreement shall be
effective only in the specific instance and for the specific purpose for which made or given.
Except where notice is specifically required by this Agreement, no notice to or demand on the
Company in any case shall entitle the Company to any other or further notice or demand in similar
or other circumstances.

     18. Entire Agreement. This Agreement constitutes the entire agreement among the
parties hereto and supersedes all prior agreements, understandings and arrangements, oral or
written, among the parties hereto with respect to the subject matter hereof.

     19. Applicable Law. THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT, AND THE TERMS
AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK. TIME IS OF THE ESSENCE IN THIS AGREEMENT.

     20. Contractual Relationship. The Company acknowledges and agrees that each of the
Initial Purchasers has acted and is acting solely in the capacity of a principal in an arm’s length
transaction between the Company, on the one hand, and the Initial Purchasers, on the other hand,
with respect to the offering of Securities contemplated hereby (including in connection with
determining the terms of the offering) and not as a financial advisor, agent or fiduciary to the
Company or any other person. Additionally, the Company acknowledges and agrees that the Initial
Purchasers have not and will not advise the Company or any other person as to any legal, tax,
investment, accounting or regulatory matters in any jurisdiction. The Company has consulted with
its own advisors concerning such matters and shall be responsible for making its own independent
investigation and appraisal of the transactions contemplated hereby, and the Initial Purchasers
shall have no responsibility or liability to the Company or any other person with respect thereto,
whether arising prior to or after the date hereof. Any review by the Initial Purchasers of the
Company, the transactions contemplated hereby or other matters relating to such transactions have
been and will be performed solely for the benefit of the Initial Purchasers and shall not be on
behalf of the Company. The Company agrees that it will not claim that the Initial Purchasers, or
any of them, has rendered advisory services of any nature or respect, or owes a fiduciary duty to
the Company or any other person in connection with any such transaction or the process leading
thereto.

29

 

     21. Partial Unenforceability. The invalidity or unenforceability of any Section,
paragraph or provision of this Agreement shall not affect the validity or enforceability of any
other Section, paragraph or provision hereof.

     22. Headings. The headings herein are inserted for convenience of reference only and
are not intended to be part of, or to affect the meaning or interpretation of, this Agreement.

     23. Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but all such counterparts shall together constitute one
and the same instrument. Delivery of a signed counterpart of this Agreement by facsimile
transmission shall constitute valid and sufficient delivery thereof.

[Signature page follows]

30

 

If the foregoing correctly sets forth the understanding among the Initial Purchasers and the
Company please so indicate in the space provided below for that purpose, whereupon this letter
shall constitute a binding agreement among us.

	 	 	 	 	 
	 	Very truly yours,

TELECOMMUNICATION SYSTEMS INC.

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

Chief Financial Officer 	 
	 

Accepted and agreed to as of the date first above written:

OPPENHEIMER & CO. INC.

RAYMOND JAMES & ASSOCIATES INC.

ACTING SEVERALLY ON BEHALF OF THEMSELVES
AND AS REPRESENTATIVES OF THE SEVERAL INITIAL PURCHASERS NAMED IN SCHEDULE 1 HERETO.

	 	 	 	 	 
	By:  	OPPENHEIMER & CO. INC.
 	 
	 	 	 
	 	
/s/ Andrew MacInnes
 	 
	 	Name:  	Andrew MacInnes 	 
	 	Title:  	Head of Equity Capital Markets 	 
	 	 
	By: 	RAYMOND JAMES & ASSOCIATES INC.
 	 
	 	 	 
	 	                /s/ Raymond James & Associates Inc.
 	 
	 	Name:  	Ryan D. Lund 	 
	 	Title:  	Senior Vice President 	 

 

 

	 	 	 	 	 

SCHEDULE I

INITIAL PURCHASERS

	 	 	 	 	 
	 	 	Aggregate	 
	 	 	Amount of	 
	 	 	Firm Notes	 
	Name	 	to be Purchased	 
	Oppenheimer & Co. Inc.
	 	$	63,000,000	 
	Raymond James & Associates Inc.
	 	$	27,000,000	 
	 
	 	 	 	 
	Total
	 	$	90,000,000	 
	 
	 	 	 

 

 

SCHEDULE II

PRICING TERM SHEET

			
	 	 	 
	
	 	

Pricing Term Sheet — TeleCommunication Systems, Inc.

The information in this pricing term sheet supplements TeleCommunication Systems, Inc.’s (“TCS”)
preliminary offering memorandum, dated November 9, 2009 (the “Preliminary Offering Memorandum”),
and supersedes the information in the Preliminary Offering Memorandum to the extent inconsistent
with the information in the Preliminary Offering Memorandum. In all other respects, this term
sheet is qualified in its entirety by reference to the Preliminary Offering Memorandum. Terms used
herein but not defined herein shall have the respective meanings as set forth in the Preliminary
Offering Memorandum.

Adjustment to Conversion Rate upon a Make-Whole Adjustment Event:

	 	 	 
	Issuer:

	 	TeleCommunication Systems, Inc. 
	Ticker Symbol (Exchange):

	 	TSYS (NASDAQ)
	Offering Type:

	 	144A Offering (QIBs Only)
	Title of Securities:

	 	4.5% Convertible Senior Notes due 2014
	Aggregate principal amount offered:

	 	$90,000,000 
	Over-Allotment Option:

	 	$13,500,000
	Maturity:

	 	November 1, 2014
	Principal Amount per Note:

	 	$1,000
	Coupon:

	 	4.5% per Annum (Payable Semi-Annually)
	Issue Price:

	 	100% of principal amount
	Reference Price (Last Reported Sale Price per Share
of TSYS Class A Common Stock on NASDAQ on November 10,
2009):

	 	$7.96
	Initial Conversion Price:

	 	$10.348 per share of our Class A common stock for each $1,000 aggregate
principal amount of notes
	Initial Conversion Rate:

	 	96.637 shares of TCS Class A common stock for each $1,000 aggregate
principal amount of notes
	Conversion Premium:

	 	30% above the last reported sale price per share of TCS Class A common
stock on NASDAQ on November 10, 2009
	Call Protection:

	 	Non-Callable for Life
	use of proceeds

	 	We estimate that the net proceeds from this offering, after deducting
estimated fees and expenses and the initial purchasers’ discounts and
commissions, will be approximately $87.3 million, if the overallotment
option is not exercised.
	 
	 	 
	 

	 	We intend to use:
	 
	 	 
	 

	 	• approximately $9.4 million (without giving effect to the exercise
of the initial purchasers’ overallotment option, if any) of the net
proceeds from this offering to pay the cost to us of the convertible
note hedge transactions (after such cost is partially offset by
the proceeds to us from the warrant transactions), as described
below; and
	 
	 	 
	 

	 	• we intend to use the remainder of the net proceeds from this

 

 

	 	 	 
	 

	 	offering for general corporate purposes, including working capital.
In addition, our use of the remaining net proceeds may
include the selective acquisition or investment in businesses,
products and technologies that are complementary to our own.
As of the date of this offering memorandum, we do not have
any binding commitments or agreements relating to any of these
types of transactions. However, from time to time, we will consider
a proposed transaction when it is presented to us and, if
appropriate, enter into a non-binding letter of intent with respect
to such a proposed transaction. As of the date of this offering
memorandum, we are party to two such non-binding letters of
intent. 
	Moodys/ S&P Rating:

	 	Not Rated
	Dividend and Takeover Protection:

	 	Yes
	Interest Payment Dates:

	 	 November 1 and May 1, commencing May 1, 2010
	Trade Date:

	 	November 11, 2009
	Settlement Date:

	 	November 16, 2009
	144A CUSIP:

	 	87929JAA1
	Convertible Note Hedge and Warrant Transactions:

	 	in connection with the offering of the notes, tcs entered into
convertible note hedge transactions and warrant transactions with each of
Deutsche Bank AG, société generale and royal bank of canada

	Book-Running Managers:

	 	
Oppenheimer & Co., Raymond James

The following table sets forth the number of additional shares to be added to the conversion rate
per $1,000 principal amount of the Notes in connection with a Make-Whole Adjustment Event as
described in the Preliminary Offering Memorandum, based on the stock price and effective date of
the Make-Whole Adjustment Event.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Stock Price	 
	Effective Date
	 	$	7.96	 	 	$	8.50	 	 	$	10.00	 	 	$	11.50	 	 	$	13.00	 	 	$	14.50	 	 	$	16.00	 	 	$	20.00	 	 	$	24.00	 	 	$	28.00	 	 	$	32.00	 	 	$	36.00	 
	November 16, 2009
	 	 	28.979	 	 	 	25.435	 	 	 	18.374	 	 	 	13.874	 	 	 	10.839	 	 	 	8.692	 	 	 	7.107	 	 	 	4.420	 	 	 	2.879	 	 	 	1.899	 	 	 	1.240	 	 	 	0.785	 
	November 1, 2010
	 	 	28.979	 	 	 	23.698	 	 	 	16.585	 	 	 	12.214	 	 	 	9.369	 	 	 	7.418	 	 	 	6.016	 	 	 	3.706	 	 	 	2.406	 	 	 	1.581	 	 	 	1.025	 	 	 	0.640	 
	November 1, 2011
	 	 	28.979	 	 	 	21.669	 	 	 	14.424	 	 	 	10.198	 	 	 	7.595	 	 	 	5.898	 	 	 	4.729	 	 	 	2.884	 	 	 	1.871	 	 	 	1.225	 	 	 	0.785	 	 	 	0.478	 
	November 1, 2012
	 	 	28.979	 	 	 	20.306	 	 	 	12.384	 	 	 	8.104	 	 	 	5.702	 	 	 	4.277	 	 	 	3.370	 	 	 	2.050	 	 	 	1.348	 	 	 	0.890	 	 	 	0.570	 	 	 	0.342	 
	November 1, 2013
	 	 	28.979	 	 	 	19.252	 	 	 	9.724	 	 	 	5.238	 	 	 	3.194	 	 	 	2.232	 	 	 	1.728	 	 	 	1.088	 	 	 	0.740	 	 	 	0.499	 	 	 	0.322	 	 	 	0.190	 
	November 1, 2014
	 	 	28.979	 	 	 	21.010	 	 	 	3.363	 	 	 	0.000	 	 	 	0.000	 	 	 	0.000	 	 	 	0.000	 	 	 	0.000	 	 	 	0.000	 	 	 	0.000	 	 	 	0.000	 	 	 	0.000	 

The exact stock prices and effective dates may not be set forth in the table above, in which case
if the stock price is:

	 	•	 	between two stock price amounts in the table or the effective date is between two
effective dates in the table, the number of additional shares will be determined by a
straight-line interpolation between the number of additional shares set forth for the higher and
lower stock prices and the earlier and later effective dates, as applicable, based on a 365-day
year;
	 
	 	•	 	in excess of $36.00 per share (subject to adjustment), no additional shares will be issued
upon conversion; and
	 
	 	•	 	less than $7.96 per share (subject to adjustment), no additional shares will be issued
upon conversion.

Ratio of Earnings to Fixed Charges

     On page 37 of the Preliminary Offering Memorandum the ratio of earnings to fixed charges for the
nine months ended September 30, 2009 was noted as 36.5 to 1. This ratio should read 32.7 to 1 for
the said period.

 

 

Capitalization

The following table sets forth our cash and cash equivalents and consolidated capitalization as of
September 30, 2009:

	 	•	 	on an actual basis; and
	 
	 	•	 	on an as adjusted basis to give effect to (i) the issuance and sale of $90,000,000
aggregate principal amount of notes in this offering, after deducting the underwriting
discounts and commissions and before estimated offering expenses (assuming no exercise of
the underwriters’ over-allotment option to purchase additional notes) and (ii) the use of
approximately $9.4 million in net proceeds to fund the cost of the convertible note hedge
transactions after giving effect to the proceeds from the warrant transactions.

This table should be read in conjunction with our consolidated financial statements and related
notes incorporated by reference in this offering memorandum. See “Where You Can Find More
Information.” The following table assumes that the initial purchasers have not exercised their
over-allotment option.

Amounts representing the number of shares of Class A common stock outstanding exclude:

	 	•	 	options outstanding on September 30, 2009 to purchase 12,247,277 shares of Class A
common stock at a weighted exercise price of $4.45;
	 
	 	•	 	Class A restricted stock outstanding on September 30, 2009 at a weighted-average grant
date fair value of $6.95;
	 
	 	•	 	an aggregate of 2,823,921 shares of Class A common stock that were reserved for future
issuance under our 1997 Stock Incentive Plan and Employee Stock Purchase Plan on September
30, 2009; and
	 
	 	•	 	shares of Class A common stock issuable upon exercise of the warrants that we expect to
sell to one or more counterparties.

	 	 	 	 	 	 	 	 	 
	 	 	As of September 30, 2009	 
	 	 	 	 	 	 	As	 
	 	 	Actual	 	 	Adjusted(1)	 
	 	 	(in thousands, except share data)	 
	Cash and cash equivalents
	 	$	79,296	 	 	$	157,141	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Indebtedness:
	 	 	 	 	 	 	 	 
	Capital lease obligations and notes payable, less current portion, and other
long-term liabilities
	 	$	21,920	 	 	$	21,920	 
	Convertible Senior Notes Due 2014 offered hereby
	 	 	—	 	 	 	90,000	 
	 
	 	 	 	 	 	 
	Total Long-Term Debt
	 	$	21,920	 	 	$	111,920	 
	 
	 	 	 	 	 	 	 	 
	Stockholder’s equity:
	 	 	 	 	 	 	 	 

 

 

	 	 	 	 	 	 	 	 	 
	 	 	As of September 30, 2009	 
	 	 	 	 	 	 	As	 
	 	 	Actual	 	 	Adjusted(1)	 
	 	 	(in thousands, except share data)	 
	Class A common stock; $0.01 par value:
	 	 	 	 	 	 	 	 
	Authorized shares — 225,000,000; issued and outstanding shares of 42,273,555
	 	 	423	 	 	 	423	 
	Class B common stock; $0.01 par value:
	 	 	 	 	 	 	 	 
	Authorized shares — 75,000,000; issued and outstanding shares of 6,391,334
	 	 	64	 	 	 	64	 
	Additional paid-in capital(2)
	 	 	259,835	 	 	 	258,490	 
	Accumulated other comprehensive income

	 	 	115	 	 	 	115	 
	Accumulated deficit
	 	 	(109,809	)	 	 	(109,809	)
	 
	 	 	 	 	 	 
	Total stockholder’s equity
	 	 	150,568	 	 	 	149,223	 
	 
	 	 	 	 	 	 
	Total capitalization
	 	$	172,488	 	 	$	261,143	 
	 
	 	 	 	 	 	 

 

			
	(1)	 	“As Adjusted” financial data assumes issuance and sale of the notes, less the initial
purchasers’ discounts and commissions and estimated offering expenses payable by us, and
assumes that the initial purchasers have not exercised their over-allotment option.
	 
	(2)	 	Additional paid-in capital adjusted for the net cost of the convertible note hedge, net of
tax, and warrants transactions.

General

The notes and the shares of common stock issuable upon conversion of the notes (together, the
“Securities”) have not been and will not be registered under the Securities Act or any state
securities laws and may not be offered in the United States, except that Securities may be offered
and sold to Qualified Institutional Buyers exclusively in reliance upon the exemption from the
registration requirements of the Securities Act provided by Rule 144A.

The Securities have not been approved or disapproved by the Securities and Exchange Commission or
by any state securities commission or regulatory authority, nor have the foregoing authorities
passed on the accuracy or adequacy of the attached documents. Any representation to the contrary
is a criminal offense.

This communication shall not constitute an offer to sell or the solicitation of an offer to buy any
securities of TeleCommunication Systems, Inc., nor shall there be any sale of securities in any
state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such state or jurisdiction.

Copies of the Final Offering Memorandum can be obtained from your Oppenheimer sales representative.

This message is intended solely for the benefit of the initial recipient. No retransmission,
copying or distribution is permitted.

 

 

SCHEDULE III

FREE WRITING OFFERING DOCUMENTS

 

 

SCHEDULE IV

PERSONS PARTY TO LOCK-UP AGREEMENT

Maurice B. Tosé

James M. Bethmann

Thomas M. Brandt, Jr.

Richard A. Young

Clyde A. Heintzelman

Jan C. Huly

Richard A. Kozak

Weldon H. Latham

Drew Morin

Tim Lorello

 

 

EXHIBIT A

FORM OF LOCK UP AGREEMENT

November 9, 2009

Oppenheimer & Co. Inc.

Raymond James & Associates Inc.

c/o Oppenheimer & Co. Inc.

300 Madison Avenue

New York, New York 10017

Ladies and Gentlemen:

The undersigned, a holder of Class A common stock, par value $0.01 (“Common Stock”), or rights to
acquire Common Stock, of TeleCommunication Systems, Inc., a Maryland corporation (the “Company”)
understands that you, as Representatives of the several Initial Purchasers, propose to enter into a
Purchase Agreement (the “Purchase Agreement”) with the Company, with respect to the offering (the
“Offering”) without registration under the Securities Act of 1933, as amended (the
“Act”), and initial resale in reliance on Rule 144A under the Act, of $90,000,000 of 4.5%
Convertible Senior Notes due 2014 (the “Securities”) of the Company. Capitalized terms
used herein without definition shall have the respective meanings ascribed to them in the Purchase
Agreement.

     In consideration of the Initial Purchasers ‘ agreement to enter into the Purchase Agreement
and to proceed with the Offering of the Securities, and for other good and valuable consideration
receipt of which is hereby acknowledged, the undersigned hereby agrees for the benefit of the
Company, you and the other Initial Purchasers that, without the prior written consent of
Oppenheimer & Co. Inc. on behalf of the Initial Purchasers, the undersigned will not, during the
period ending 90 days (the “Lock-Up Period”) after the date of the Purchase Agreement, directly or
indirectly (1) offer, pledge, assign, encumber, announce the intention to sell, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase, or otherwise transfer or dispose of, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for Common Stock owned
either of record or beneficially (as defined in the Securities Exchange Act of 1934, as amended) by
the undersigned on the date hereof or hereafter acquired or (2) enter into any swap or other
agreement that transfers, in whole or in part, any of the economic consequences of ownership of the
Common Stock, whether any such transaction described in clause (1) or (2) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise, or publicly announce an
intention to do any of the foregoing. In addition, the undersigned agrees that, without the prior
written consent of Oppenheimer & Co. Inc. on behalf of the Initial Purchasers, it will not, during
the period ending 90 days after the date of the Purchase Agreement, make any demand for or exercise
any right with respect to, the registration of any shares of Common Stock or any security
convertible into or exercisable or exchangeable

 

 

for Common Stock. The foregoing shall not apply to (x) Common Stock to be transferred as a gift or
gifts (provided that any donee thereof agrees in writing to be bound by the terms hereof), (y) the
exercise by you of options or other rights to purchase Common Stock held by you (provided, however,
that shares of Common Stock acquired upon such exercise shall be subject to this letter) and (y)
sales under any 10b-5 plan.

     In furtherance of the foregoing, the Company, and any duly appointed transfer agent for the
registration or transfer of the securities described herein, are hereby authorized to decline to
make any transfer of securities if such transfer would constitute a violation or breach of this
Letter Agreement.

     The undersigned hereby represents and warrants that the undersigned has full power and
authority to enter into this Letter Agreement. All authority herein conferred or agreed to be
conferred and any obligations of the undersigned shall be binding upon the successors, assigns,
heirs or personal representatives of the undersigned.

     The undersigned understands that, if the Purchase Agreement does not become effective, or if
the Purchase Agreement (other than the provisions thereof which survive termination) shall
terminate or be terminated prior to payment for and delivery of the Common Stock to be sold
thereunder, the undersigned shall be released form all obligations under this Letter Agreement.

     The undersigned, understands that the Initial Purchasers are entering into the Purchase
Agreement and proceeding with the Offering in reliance upon this Letter Agreement.

 

 

     This lock-up agreement shall be governed by and construed in accordance with the laws of the
State of New York, without regard to the conflict of laws principles thereof.

	 	 	 	 	 
	 	Very truly yours,

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

EXHIBIT B

FORM OF OPINION OF COMPANY COUNSEL

1

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