Document:

exv10w3

 

Exhibit 10.3

EXECUTION VERSION

WAIVER AGREEMENT

     This WAIVER AGREEMENT (this “Waiver”) is made and entered into as of
August 30, 2004 by and among TeleCommunication Systems, Inc., a Maryland
corporation (the “Company”), and each of the investors listed on the signature
pages hereto (the “Investors”).

RECITALS

     WHEREAS, the Company and the Investors are parties to that certain
Securities Purchase Agreement dated as of December 18, 2003 (the “2003 Purchase
Agreement”) pursuant to which the Investors have been granted certain rights of
participation with respect to issuances of the Company’s capital stock;

     WHEREAS, the Company and each of the Investors are parties to certain
Warrants to Purchase Common Stock of the Company each dated January 13, 2004
(each, a “Warrant Agreement”, and collectively, the “Warrant Agreements”)
pursuant to which each of the Investors has been granted certain anti-dilution
rights upon certain issuances of the Company’s capital stock;

     WHEREAS, the Company and certain of the Investors are or will be parties
to that certain Securities Purchase Agreement dated on or about August 30, 2004
(the “2004 Purchase Agreement”) pursuant to which the Company will issue and
sell (the “Offering”) up to 3,000,000 shares of its Class A common stock, par
value $0.01 per share (the “Common Stock”);

     WHEREAS, pursuant to the 2004 Purchase Agreement, the Company and
Riverview Group LLC have agreed, among other things, to amend certain terms of
the subordinated convertible debenture issued to it on January 13, 2004 (the
“Debenture”) and that Riverview Group LLC will convert such Debenture, in its
entirety, into Common Stock on or before December 31, 2004 in exchange for $1
million and the issuance and sale to it of 200,000 shares of Common Stock by
the Company (the “Conversion and Amendment”, and together with the Offering,
the “Transactions”); and

     WHEREAS, the Company desires that the Investors waive, and the Investors
desire to so waive, certain rights under the 2003 Purchase Agreement and the
Warrant Agreements.

     NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth herein, and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto
hereby agree as follows:

ARTICLE I

 

WAIVERS

     1.1 2003 Purchase Agreement. Each of the Investors hereby agrees (a) to
waive its rights under Sections 4(h) (Additional Debentures; Variable
Securities; Additional Registration Statement) and 4(k) (Right of
Participation) of the 2003 Purchase Agreement with respect to the

1

 

EXECUTION VERSION

Transactions, and (b) that, as of the date hereof, such Sections 4(h) and
4(k) of the 2003 Purchase Agreement are void and of no further force or effect.

     1.2 Warrants. Each of the Investors hereby agrees to waive its rights
under Section 2(a) (Adjustment of Exercise Price and Number of Warrant Shares —
Adjustment upon Issuance of Common Stock) of its Warrant Agreement both (a)
with respect to the Transactions and (b) with respect to any event which would
trigger the Investors’ rights thereunder through December 31, 2004.

     1.3 No Other Waivers. Other than as provided in Section 1.1 and 1.2
hereof, this Waiver shall not constitute a consent or waiver to or modification
of any provision, term or condition of the 2003 Purchase Agreement or any
Warrant Agreement. All terms, provisions, covenants, representations,
warranties, agreements and conditions contained in the 2003 Purchase Agreement
and each of the Warrant Agreements shall otherwise remain in full force and
effect in accordance with their terms.

ARTICLE II
 

ADDITIONAL
AGREEMENTS

     2.1 Counterparts.

          This Waiver may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.

     2.2 Construction.

          The parties have participated jointly in the negotiation and drafting of
this Waiver. In the event an ambiguity or question of intent or interpretation
arises, this Waiver shall be construed as if drafted jointly by the parties and
no presumption or burden of proof shall arise favoring or disfavoring any party
by virtue of authorship of any provision of this Waiver.

     2.3 Governing Law.

          This Waiver shall be governed by and construed under and the rights of the
parties determined in accordance with the laws of the State of New York
(without reference to the choice of law provisions of such state) except with
respect to matters of law concerning the internal corporate affairs of any
corporate entity which is a party to or the subject of this Waiver, and as to
those matters the law of the jurisdiction under which the respective entity
derives its powers shall govern.

2

 

EXECUTION VERSION

     IN WITNESS WHEREOF, each Investor and the Company have caused their
respective signature page to this Waiver to be duly executed as of the date
first written above.

	 	 	 	 	 	 	 	 	 	 	 
	COMPANY:
TELECOMMUNICATION SYSTEMS, INC.	 	INVESTORS:
RIVERVIEW GROUP LLC
	 
	 
	By:	 	/s/ Thomas M. Brandt
	 	By:	 	/s/ David Nolan

	 	 	Name:	 	Thomas M. Brandt, Jr.	 	 	 	Name:	 	David Nolan
	 	 	Title:	 	Senior Vice President and	 	 	 	Title:	 	Vice Chairman
	 	 		 	Chief Financial Officer	 	 	 		 	
	 
	 
	 	 	 	 	 	 	033 GROWTH PARTNERS I, L.P.
	 
	 
	 	 	 	 	 	 	By:	 	/s/ Lawrence C. Longo

	 	 	 	 	 	 	 	 	Name:	 	Lawrence C. Longo
	 	 	 	 	 	 	 	 	Title:	 	Chief Operating Officer for 033 Asset Management, LLC, its
Investment Manager
	 
	 
	 	 	 	 	 	 	033 GROWTH PARTNERS II, L.P.
	 
	 
	 	 	 	 	 	 	By:	 	/s/ Lawrence C. Longo

	 	 	 	 	 	 	 	 	Name:	 	Lawrence C. Longo
	 	 	 	 	 	 	 	 	Title:	 	Chief Operating Officer for 033 Asset Management, LLC, its
Investment Manager
	 
	 
	 	 	 	 	 	 	033 GROWTH INTERNATIONAL FUND, LTD.
	 
	 
	 	 	 	 	 	 	By:	 	/s/ Lawrence C. Longo

	 	 	 	 	 	 	 	 	Name:	 	Lawrence C. Longo
	 	 	 	 	 	 	 	 	Title:	 	Chief Operating Officer for 033 Asset Management, LLC, its
Investment Manager
	 
	 
	 	 	 	 	 	 	OYSTER POND PARTNERS, L.P.
	 
	 
	 	 	 	 	 	 	By:	 	/s/ Lawrence C. Longo

	 	 	 	 	 	 	 	 	Name:	 	Lawrence C. Longo
	 	 	 	 	 	 	 	 	Title:	 	Chief Operating Officer for 033 Asset Management, LLC, its
Investment Manager

3exv10w4

 

EXHIBIT 10.4

TeleCommunication Systems, Inc.

275 West Street

Annapolis, Maryland 21401

September 1, 2004

Riverview Group, LLC

666 Fifth Avenue, 8th Floor

New York, New York 10103

     Reference is made to (a) that certain Securities Purchase Agreement, dated
as of August 30, 2004 (the “Securities Purchase Agreement”), by and among
TeleCommunication Systems, Inc. (the “Company”), Riverview Group, LLC, as an
investor (“Riverview”), and the other investors party thereto and (b) that
certain Subordinated Convertible Debenture issued by the Company to Riverview
on January 13, 2004 in the principal amount of $15,000,000 (the “Debenture”).
Any capitalized term used herein and not defined herein shall have the meaning
assigned to it in the Securities Purchase Agreement, unless specified
otherwise.

     Notwithstanding anything to the contrary in the Transaction Documents, the
Company and Riverview hereby agree that, in lieu of issuing the Shares
described in Section 2.2(a)(ii)(A)(y) of the Securities Purchase Agreement as
provided therein:

     (a) Section 5.2 of the Securities Purchase Agreement shall be
amended and restated in its entirety as follows:

     “5.2 Amendments. Notwithstanding anything to the
contrary contained in the Debenture, the Company and the Designated
Investor hereby agree that:

     (a) Interest (as such term is defined in the Debenture) on the Debenture shall
cease to accrue as of the Closing Date, and any accrued but unpaid Interest as
of the Closing Date (the “Accrued Interest”) shall be offset by the Designated
Investor against its Investment Amount in full satisfaction of such obligation
to pay such Accrued Interest pursuant to the terms of the Debenture;

     (b) on and after the Closing Date, the provisions of
Sections 5, 7(a), 8(d), 11 (to the extent implicated by
Section 5), 12, 14, 17 and 18(a) of the Debenture shall be
void and of no further force and effect;

     (c) on the earlier of (X) the date on which the
Designated Investor has complied with all of the obligations
set forth above in Section 5.1 and (Y) December 31, 2004, the
provisions of Section 6 of the Debenture shall be void and of
no further force and effect; and

 

 

     (d) The Conversion Price (as that term is used in the
Debenture) shall mean $5.01581.”

     (b) Section 4.5 of the Securities Purchase Agreement shall be
amended and restated in its entirety as follows:

     “4.5 Securities Laws Disclosure; Publicity. By 9:00
a.m. (New York time) on the Trading Day following the execution of
this Agreement the Company shall issue a press release (in a form
previously approved by the Investors) announcing the execution of
this Agreement, and by 9:00 a.m. (New York time) on September 2,
2004, the Company shall issue a press release (in a form previously
approved by the Investors) announcing the Closing and file a
Current Report on Form 8-K announcing the execution of this
Agreement and the Closing and attaching as exhibits thereto the
Transaction Documents. In addition, the Company will make such
other filings and notices in the manner and time required by the
Commission and the Trading Market on which the Common Stock is
listed. Notwithstanding the foregoing, the Company shall not
publicly disclose the name of any Investor, or include the name of
any Investor in any filing with the Commission (other than the
Registration Statement and any exhibits to filings made in respect
of this transaction in accordance with periodic filing requirements
under the Exchange Act) or any regulatory agency or Trading Market,
without the prior written consent of such Investor, except to the
extent such disclosure is required by law or Trading Market
regulations.”

 

 

     Except as specifically modified by this letter, all other terms and
conditions of the Transaction Documents and the Debenture shall remain in full
force and effect. This letter may be executed in counterparts and will be
effective as of the date first written above.

	 	 	 	 	 
	 	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 	 
	 

ACKNOWLEDGED AND AGREED

RIVERVIEW GROUP, LLC

	 	 	 
	 	 
	By:  	/s/ Terry Feeney	 
		Name:   Terry Feeney 	 
		Title:     Chief Operating Officer 	 
	 

Dated: September 1, 2004

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