Document:

exv4w3

 

Exhibit 4.3

PROMISSORY NOTE

			
	January 14, 2004	 	$1,000,000

     FOR VALUE RECEIVED, TeleCommunication Systems, Inc., a Maryland
corporation (the “Company”), hereby promises to pay to Aether Systems, Inc., a
Delaware corporation (“Aether”), or its registered assigns, the principal
amount of One Million Dollars ($1,000,000) together with interest thereon
calculated from the date hereof in accordance with the provisions of this
promissory note (the “Note”).

     1.   Payment of Interest. Except as otherwise expressly provided in
paragraph 4 hereof, interest shall accrue at the Prime Rateon the unpaid
principal amount of the Note outstanding from time to time. The Company shall
pay to Aether all accrued interest on the Maturity Date (as defined in Section
2(a) below).

     2.   Payment of Principal on Note.

            (a)   Scheduled Payment. The Company shall pay the principal amount
of $1,000,000 (or such lesser principal amount then outstanding), together with
all accrued and unpaid interest thereon, to Aether on the Maturity Date. The
Note shall mature at the earlier to occur of the following (the “Maturity
Date”): (i) August 14, 2004, (ii) an Event of Default (as defined in Section 4)
which has not been duly cured or waived or (iii) the date on which the Company
(and/or its affiliates) become entitled by Research in Motion Limited, a
Canadian corporation (“RIM”) to reduce the aggregate amount of collateral (in
the form of cash or letters of credit) (the “RIM Collateral”) provided to RIM
to $1,000,000 or less.

            (b) Prepayments. The Company may, at any time and from time to
time without premium or penalty, prepay all or a portion of the outstanding
principal amount of the Note. In addition, the Company shall be required to
prepay all or any portion of the outstanding principal amount of the Note no
more than five (5) business days after the amount of the RIM Collateral is
reduced below $2,000,000. The amount of such mandatory payment will be the
difference between (X) $2,000,000 and (Y) the aggregate amount of the RIM
Collateral required after such reduction. Prepayments shall be required within
five (5) business days after each successive reduction to the aggregate amount
of the RIM Collateral, with the prepayment amount calculated as described in
the previous sentence.

     3.   Events of Default.

            (a)   Definition. For purposes of this Note, an “Event of Default”
shall have occurred if:

                    (i)   the Company fails to pay, when due, the full amount of principal and
accrued interest on the Note (whether required by either of paragraph 2(a) or
(b)), and any such failure continues for two (2) business days;

                    (ii)   the Company fails to perform or observe in any material respect any
provision contained herein or in the Purchase Agreement between the Company,
TSYS

 

 

Acquisition Corp., TeleCommunication Systems Limited and Aether dated
December 18, 2003, as amended (the “Purchase Agreement”);

                    (iii)   any representation or warranty of the Company contained in the
Purchase Agreement is false or misleading in any material respect on the date
made or furnished;

                    (iv)   the Company or any Subsidiarymakes an assignment for the benefit of
creditors or admits in writing its inability to pay its debts generally as they
become due; or an order, judgment or decree is entered adjudicating the Company
or any Subsidiary bankrupt or insolvent; or any order for relief with respect
to the Company or any Subsidiary is entered under the Federal Bankruptcy Code;
or the Company or any Subsidiary petitions or applies to any tribunal for the
appointment of a custodian, trustee, receiver or liquidator of the Company or
any Subsidiary, or of any substantial part of the assets of the Company or any
Subsidiary, or commences any proceeding (other than a proceeding for the
voluntary liquidation and dissolution of any Subsidiary) relating to the
Company or any Subsidiary under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation law of any
jurisdiction; or any such petition or application is filed, or any such
proceeding is commenced, against the Company or any Subsidiary and either (A)
the Company or any such Subsidiary by any act indicates its approval thereof,
consent thereto or acquiescence therein or (B) such petition, application or
proceeding is not dismissed within 60 days; or

                    (v)   the Company fails to inform Aether of any reduction in the amount of
the RIM Collateral within five (5) business days of learning of the allowance
of such reduction by RIM. Each of the foregoing shall constitute an “Event of
Default,” whatever the reason or cause for any such event, and whether such
event is voluntary or involuntary or is effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body.

            (b)   Consequences of Events of Default.

                    (i)   Upon the occurrence of an Event of Default, the interest rate on the
Note shall increase immediately to 18%, or (if less) the highest rate then
permitted under applicable law. Any increase of the interest rate resulting
from the operation of this subparagraph shall terminate as of the close of
business on the date on which no such Event of Default exists (subject to
subsequent increases pursuant to this subparagraph).

                    (ii)   Aether shall also have any other rights which it may have been
afforded under any contract or agreement at any time and any other rights which
Aether may have pursuant to applicable law.

                    (iii)   The Company hereby waives diligence, presentment, protest and demand
and notice of protest and demand, dishonor and nonpayment of the Note, and
expressly agrees that the Note, or the payment hereunder, may be extended from
time to time and that Aether may accept security for the Note or release
security for the Note, all without in any way affecting the liability of the
Company hereunder.

     4.   RIM Collateral. The Company shall use its commercially
reasonable efforts to perform under its contracts with RIM and negotiate a
reduction in the RIM Collateral. If a

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reduction in the RIM Collateral occurs, the Company shall promptly
notify Aether of the amount of such reduction in accordance with the terms of
this Note and, to the extent required by paragraph 2(b), prepay outstanding
principal on the Note.

     5.   Replacement. Upon receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of the Note and,
in the case of any such loss, theft or destruction of the Note, upon receipt of
an indemnity reasonably satisfactory to the Company or, in the case of any such
mutilation, upon the surrender and cancellation of the Note, the Company, at
its expense, shall execute and deliver, in lieu thereof, a new Note of like
tenor and dated the date of such lost, stolen, destroyed or mutilated Note.
Any Note in lieu of which any such new Note has been so executed and delivered
by the Company shall not be deemed to be an outstanding Note.

     6.   Amendment and Waiver. Except as otherwise expressly provided
herein, the provisions of the Note may be amended and the Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of
Aether.

     7.   Definitions. For purposes of the Note, the following
capitalized terms have the following meaning.

            “Person” means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or political
subdivision thereof.

            “Prime Rate” means, as of any date of determination, a variable rate per
annum equal to the rate of interest most recently published by The Wall Street
Journal under the caption “Money Rates — Prime Rate” at large U.S. money center
banks; provided, however, that if The Wall Street Journal is not being
published as of the date of determination, then the prime rate established
shall be that reported by any U.S. money center bank reasonably selected by the
Company.

            “Subsidiary” means any corporation of which the shares of stock having a
majority of the general voting power in electing the board of directors are, at
the time as of which any determination is being made, owned by the Company
either directly or indirectly through Subsidiaries.

     8.   Cancellation. After all principal and accrued interest at any
time owed on the Note has been paid in full, the Note shall be surrendered to
the Company for cancellation and shall not be reissued.

     9.   Form of Payments. All payments to be made to Aether shall be
made in the lawful money of the United States of America in immediately
available funds.

     10.   Set Off. Amounts due under the Note shall not be subject to
set-off or otherwise reduced by amounts owed to the Company by Aether.

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     11.   Place of Payment. Payments of principal and interest are to be
delivered to the following address:

	 	 	Aether Systems, Inc

11460 Cronridge Drive

Owings Mills, Maryland 21117

Attn: David C. Reymann

or to such other address or to the attention of such other person as specified
by Aether by prior written notice to the Company.

     12.   Business Days. If any payment is due, or any time period for
giving notice or taking action expires, on a day which is a Saturday, Sunday or
legal holiday in the State of Maryland, the payment shall be due and payable
on, and the time period shall automatically be extended to, the next business
day immediately following such Saturday, Sunday or legal holiday, and interest
shall continue to accrue at the required rate hereunder until any such payment
is made.

     13.   Usury Laws. It is the intention of the Company and Aether to
conform strictly to all applicable usury laws now or hereafter in force, and
any interest payable under the Note shall be subject to reduction to the amount
not in excess of the maximum legal amount allowed under the applicable usury
laws as now or hereafter construed by the courts having jurisdiction over such
matters. If the maturity of the Note is accelerated by reason of an election
by Aether resulting from an Event of Default, voluntary prepayment by the
Company or otherwise, then earned interest may never include more than the
maximum amount permitted by law, computed from the date hereof until payment,
and any interest in excess of the maximum amount permitted by law shall be
canceled automatically and, if theretofore paid, shall at the option of Aether
either be rebated to the Company or credited on the principal amount of the
Note, or if the Note has been paid, then the excess shall be rebated to the
Company. The aggregate of all interest (whether designated as interest,
service charges, points or otherwise) contracted for, chargeable, or receivable
under the Note shall under no circumstances exceed the maximum legal rate upon
the unpaid principal balance of the Note remaining unpaid from time to time.
If such interest does exceed the maximum legal rate, it shall be deemed a
mistake and such excess shall be canceled automatically and, if theretofore
paid, rebated to the Company or credited on the principal amount of the Note,
or if the Note has been repaid, then such excess shall be rebated to the
Company.

     14.   Enforcement Costs. The Company agrees to pay, and to indemnify
Aether and hold the Aether harmless from, against and for any and all
liabilities, obligations, claims, damages, actions, penalties, causes of
action, losses, judgments, suits, costs, expenses and disbursements, including
without limitation, reasonable attorneys’ fees, incurred or arising in
connection with the enforcement by Aether of its rights under the Note
(“Enforcement Costs”) and that any such Enforcement Costs shall be added to and
become part of the indebtedness evidenced by the Note, be payable immediately
upon demand and be a full-recourse obligation of the Company.

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     15.   Governing Law. The Note shall be deemed to be made in and in
all respects shall be interpreted, construed and governed by and in accordance
with the law of the State of Maryland without regard to the conflict of law
principles thereof

* * * * *

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     IN WITNESS WHEREOF, the Company has executed and delivered the Note on
January 14, 2004.

	 	 	 	 	 	 	 
	 	 	TELECOMMUNICATION SYSTEMS, INC.
	 	 	 	 	 	 	 
	 	 	
By:
	 	
/s/ Thomas M. Brandt, Jr.

	 	 
	 	 	 	 	 	 	 
	 	 	Its:	 	Senior Vice
President & Chief
Financial Officer	 	 

Attest:

      /s/ Bruce A. White            

Secretaryexv10w2

 

Exhibit 10.2

AMENDMENT AND CONSENT AGREEMENT

     This AMENDMENT AND CONSENT AGREEMENT (this “Agreement”) is made and
entered into as of January 13, 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 “Securities
Purchase Agreement”) pursuant to which the Investors have agreed to purchase,
and the Company has agreed to sell, the Debentures, Common Stock and Warrants
(as each of those terms is defined in the Securities Purchase Agreement) and;

     WHEREAS, the Company and the Investors are parties to that certain
Registration Rights Agreement dated as of December 18, 2003 (the “Registration
Rights Agreement”) pursuant to which the Investors have been granted certain
registration rights with respect to the Registrable Shares (as that term is
defined in the Registration Rights Agreement), and;

     WHEREAS, Aether Systems, Inc., a Delaware corporation (“Aether”), the
Company, TSYS Acquisition Corp., a Maryland corporation and wholly-owned
subsidiary of the Company and TeleCommunication Systems Limited, a company
organized under the laws of England, have previously entered into that certain
Purchase Agreement dated as of January 13, 2004, as amended by that certain
Amendment No.1 to Purchase Agreement dated as of January
13, 2004 (together, the “Purchase Agreement”); and

     WHEREAS, the Purchase Agreement provides for the payment of a portion of
the consideration to Aether by issuing $1 million worth of Class A Common
Stock, par value $0.01 per share, of the Company, with the exact number of
shares to be determined pursuant to the terms of the Purchase Agreement (the
“Aether Shares”), which Aether Shares will be subject to a registration rights
agreement between Aether and the Company (the “Aether Registration Rights
Agreement”); and

     WHEREAS, the Company has requested, and the Investors intend to approve,
an amendment to certain provisions of the Securities Purchase Agreement with
respect to the issuance and sale of the Aether Shares; and

     WHEREAS, the Company has requested, and the Investors intend to grant, the
Investors’ consent to the registration of the resale of the Aether Shares
pursuant to the Registration Statement (as defined in the Registration Rights
Agreement) notwithstanding the provisions of the Registration Rights Agreement.

     NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements set forth herein, and other good and
valuable

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consideration, the receipt and adequacy of which are hereby acknowledged,
the parties hereto hereby agree as follows:

ARTICLE I

AMENDMENTS TO THE SECURITIES PURCHASE AGREEMENT

     1.1 Amendments to Section 3 of the Securities Purchase Agreement. Section
3(p) of the Securities Purchase Agreement is hereby amended and restated in its
entirety as follows:

          ‘(p) Equity Capitalization. As of the date hereof, the authorized capital
stock of the Company consists of (x) 225,000,000 shares of Common Stock, of
which 21,900,732 are issued and outstanding, 75,000,000 shares of Class B
Common Stock, of which 9,507,988 are issued and outstanding, 11,794,786 shares
of Common Stock are reserved for issuance pursuant to the Company’s stock
option and purchase plans and 32,046 shares of Common Stock are reserved for
issuance pursuant to securities (other than the Debentures and the Warrants)
exercisable or exchangeable for, or convertible into, shares of Common Stock,
and (y) no shares of preferred stock. Pursuant to the purchase agreement for
the Aether Acquisition (as that term is defined in Section 7(l) of this
Agreement), the Company is obligated to issue $1 million worth of Common Stock
to Aether Systems, Inc. as part of the consideration in the Aether Acquisition,
with the exact number of such shares of Common Stock to be the quotient of (A)
$1 million and (B) the arithmetic average of the Weighted Average Price (as
that term is defined in the Debentures) of the Common Stock for the five
trading days immediately prior to the closing date of the Aether Acquisition.
All of such outstanding shares have been, or upon issuance will be, validly
issued and are fully paid and nonassessable. Except as disclosed in Schedule
3(p) of the Disclosure Schedule: (i) no shares of the Company’s capital stock
are subject to preemptive rights or any other similar rights or any liens or
encumbrances suffered or permitted by the Company; (ii) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any shares of capital
stock of the Company or any of its Subsidiaries, or contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to issue additional shares of capital stock of the
Company or any of its Subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, or exercisable or exchangeable for, any
shares of capital stock of the Company or any of its Subsidiaries; (iii) there
are no outstanding debt securities, notes, credit agreements, credit facilities
or other agreements, documents or instruments evidencing Indebtedness of the
Company or any of its Subsidiaries or by which the Company or any of its
Subsidiaries is or may become bound; (iv) there are no financing statements
securing obligations in any material amounts, either singly or in the
aggregate, filed in connection with the Company; (v) there are no agreements or
arrangements under which the Company or any of its Subsidiaries is obligated to
register the sale of any of their securities under the 1933 Act (except the
Registration Rights Agreement); (vi) there are no outstanding securities or
instruments of the Company or any of its Subsidiaries which contain any
redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries

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is or may become bound to redeem a security of the Company or any of its
Subsidiaries; (vii) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities; (viii) the Company does not have any stock appreciation rights
or “phantom stock” plans or agreements or any similar plan or agreement; and
(ix) the Company and its Subsidiaries have no liabilities or obligations
required to be disclosed in the SEC Documents but not so disclosed in the SEC
Documents, other than those incurred in the ordinary course of the Company’s or
its Subsidiaries’ respective businesses and which, individually or in the
aggregate, do not or would not have a Material Adverse Effect.’

     1.2 Amendments to Section 4 of the Securities Purchase Agreement. Section
4(k)(vii) of the Securities Purchase Agreement is hereby amended and restated
in its entirety as follows:

               ‘(vii) Exception. The rights of the Buyers under this Section 4(k) shall
not apply to: (A) Common Stock issued as a stock dividend to all holders of
Common Stock or upon any subdivision or combination of shares of Common Stock,
(B) Securities issued to a Buyer pursuant to terms of the Debentures or upon
exercise of the Warrants or issued upon conversion or exercise of any other
currently outstanding securities of the Company pursuant to the terms of such
securities, (C) pursuant to a bona fide firm commitment underwritten public
offering with a nationally recognized underwriter which generates gross
proceeds to the Company in excess of $20,000,000 (other than an “at the market
offering” as defined in Rule 415(a)(4) under the 1933 Act and “equity lines”),
(D) in connection with any employee benefit plan which has been approved by the
Board of Directors of the Company, pursuant to which the Company’s securities
may be issued to any employee, officer or director of, or consultant or other
service provider to, the Company for services provided to the Company, (E)
securities issued not primarily for capital raising purposes and in connection
with bona fide, arm’s length strategic partnerships, acquisitions or joint
ventures (including, without limitation, licenses, licensors, customer and
vendors) in which there is a significant commercial relationship with the
Company, (F) with the prior written approval of a majority in interest of the
Buyers, which will not be unreasonably withheld, conditioned or delayed and (G)
the Aether Shares (collectively, “Excluded Securities”).’

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     1.3 No Additional Consent or Waiver. The amendments set forth in this
Article I shall not constitute a consent or waiver to or modification of any
provision, term or condition of the Securities Purchase Agreement or any other
Transaction Document (as that term is defined in the Securities Purchase
Agreement), other than such terms, provisions, or conditions mentioned above.
All terms, provisions, covenants, representations, warranties, agreements and
conditions contained in the Securities Purchase Agreement and any other
Transaction Document shall otherwise remain in full force and effect.

ARTICLE II

CONSENT UNDER THE REGISTRATION RIGHTS AGREEMENT

     2.1 Consent Pursuant to Section 2(b) of the Registration Rights Agreement.
Each of the Investors hereby consents, pursuant to the last sentence of Section
2(b) of the Registration Rights Agreement, to the registration of the resale of
the Aether Shares through inclusion of the Aether Shares on the Registration
Statement.

     2.2 Limitation on Consent. The consent set forth in this Article II shall
not constitute a consent or waiver to or modification of any provision, term or
condition of the Registration Rights Agreement, other than such terms,
provisions, or conditions that are required to permit the registration of the
resale of the Aether Shares pursuant to the Registration Statement. All terms,
provisions, covenants, representations, warranties, agreements and conditions
contained in the Registration Rights Agreement shall otherwise remain in full
force and effect.

ARTICLE III

ADDITIONAL AGREEMENTS

     3.1 Counterparts.

          This Agreement 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.

     3.2 Construction.

          The parties have participated jointly in the negotiation and drafting of
this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement 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
Agreement.

     3.3 Governing Law.

          This Agreement 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

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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 Agreement, and as to those matters the law
of the jurisdiction under which the respective entity derives its powers shall
govern.

     3.4 Fees and Expense Reimbursement.

          The Company shall reimburse the Investors for the Investors’ reasonable
expenses incurred in connection with the preparation, execution and performance
of this Agreement and related closing matters.

(signatures appear on following page)

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          IN WITNESS WHEREOF, the Company and each of the Investors have caused this
Agreement to be executed and delivered, all as of the date first written above.

	 	 	 	 	 	 	 
	COMPANY:	 	INVESTORS:
	 	 	 	 	 	 	 
	TELECOMMUNICATION SYSTEMS, INC.	 	THE RIVERVIEW GROUP LLC
	 	 	 	 	 	 	 
	By:	 	/s/ Thomas M.
Brandt, Jr.	 	By:	 	/s/ Terry Feeney
	 	 	

	 	 	 	

	 	 	
Name: Thomas M. Brandt, Jr.
	 	 	 	Name: Terry Feeney
	 	 	
Title: Senior Vice President and Chief Financial Officer
	 	 	 	Title: Chief
Operating Officer

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     IN WITNESS WHEREOF, the parties have caused their respective signature
page to this Agreement to be duly executed as of day and year first above
written.

	 	 	 	 	 
	 	 	INVESTORS:
	 	 	 	 	 
	 	 	033 GROWTH PARTNERS I, L.P.
	 	 	 	 	 
	 	 	
By:	 	/s/ Lawrence C. Longo
	 	 	 	

	 	 	 	 	Name: Lawrence C. Longo
	 	 	 	 	Title: Chief
Operating Officer
	 	 	 	 	 
	 	 	033 GROWTH PARTNERS II, L.P.
	 	 	 	 	 
	 	 	
By:	 	/s/ Lawrence C. Longo
	 	 	 	

	 	 	 	 	Name: Lawrence C. Longo
	 	 	 	 	Title: Chief
Operating Officer
	 	 	 	 	 
	 	 	033 GROWTH INTERNATIONAL FUND, LTD.
	 	 	 	 	 
	 	 	
By:	 	/s/ Lawrence C. Longo
	 	 	 	

	 	 	 	 	Name: Lawrence C. Longo
	 	 	 	 	Title: Chief
Operating Officer
	 	 	 	 	 
	 	 	OYSTER POND PARTNERS, L.P.
	 	 	 	 	 
	 	 	
By:	 	/s/ Lawrence C. Longo
	 	 	 	

	 	 	 	 	Name: Lawrence C. Longo
	 	 	 	 	Title: Chief
Operating Officer

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