TeleCommunication Systems (TSYS)

Item 1.01 Entry into a Material Definitive Agreement.

On June 26, 2009, TeleCommunication Systems, Inc. (the "Company" or "we"), and its subsidiary, Longhorn Acquisition, LLC ("Longhorn" together with the Company, the "Borrowers"), entered into the Third Amended and Restated Loan and Security Agreement (the "Loan Agreement") with Silicon Valley Bank (the "Bank").

The Loan Agreement provides for a $20,000,000 term loan (the "Term Loan") that replaces the Company’s existing $10,000,000 term loan with the Bank. As of the date of this Current Report on Form 8-K (the "Form 8-K"), the full amount of $20,000,000 is outstanding under the Term Loan. The Loan Agreement also provides for a $30,000,000 revolving line of credit (the "Line of Credit,") that replaces the Company’s existing $22,000,000 line of credit with the Bank. As of the date of this Form 8-K, there is no outstanding borrowing under the Line of Credit and as of May 31, 2009, there was approximately $20 million of unused borrowing availability under Line of Credit. The Term Loan maturity date is June 30, 2014 and the Line of Credit maturity date is June 25, 2012.

Under the Loan Agreement, the Company and Longhorn are jointly and severally obligated to repay all advances or credit extensions made pursuant to the Loan Agreement, regardless of which entity actually receives such advance or credit extension. The Loan Agreement is secured by substantially all of the Borrowers’ tangible and intangible assets as collateral, except that the collateral does not include any of the Borrowers’ intellectual property.

The Line of Credit includes three sub-facilities: (i) a letter of credit sub-facility pursuant to which the Bank may issue letters of credit, (ii) a foreign exchange sub-facility pursuant to which the Company may purchase foreign currency from the Bank, and (iii) a cash management sub-facility pursuant to which the Bank may provide cash management services (which may include, among others, merchant services, direct deposit of payroll, business credit cards and check cashing services) and in connection therewith make loans and extend credit to the Company. The principal amount outstanding under the Line of Credit shall accrue interest at a floating per annum rate equal to the rate which is the greater of (i) 4% per annum, or (ii) the Bank’s most recently announced "prime rate," even if it is not Bank’s lowest prime rate (the "Interest Rate"). The principal amount outstanding under the Line of Credit is payable either prior to or on the maturity date and interest on the Line of Credit is payable monthly. The principal amount outstanding under the Term Loan shall accrue interest at a floating per annum rate equal to one-half of one percentage point (0.50%) above the Interest Rate. The principal amount outstanding under the Term Loan is payable in sixty (60) equal installments of principal beginning on July 31, 2009 and interest is payable on a monthly basis.

The Loan Agreement contains customary representations and warranties of the Borrowers and customary events of default. Availability under the Line of Credit is subject to certain conditions, including the continued accuracy of the Borrowers’ representations and warranties. The Loan Agreement also contains covenants that requires (i) no material impairment in the perfection or priority of the Bank’s lien in the collateral of the Loan Agreement, (ii) no material adverse change in the business, operations, or condition (financial or otherwise) of the Borrowers, or (iii) no material impairment of the prospect of repayment of any portion of the borrowings under the Loan Agreement. The Loan Agreement also contains covenants requiring the Borrowers to maintain a minimum adjusted quick ratio and a fixed charge coverage ratio as well as other restrictive covenants including, among others, restrictions on the Borrowers’ ability to dispose part of their business or property; to change their business, liquidate or enter into certain extraordinary transactions; to merge, consolidate or acquire stock or property of another entity; to incur indebtedness; to encumber their property; to pay dividends or other distributions or enter into material transactions with an affiliate of the Borrowers.

The foregoing description of the Loan Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Loan Agreement.

Item 1.01 Entry into a Material Definitive Agreement.

On June 29, 2007, TeleCommunication Systems, Inc. (the "Company") announced that it had refinanced $10 million of its long-term debt under an amended bank loan and security agreement with SVB Silicon Valley Bank ("SVB").

The initial term notes issued in March 2006 (the "Initial Notes"), were carried net of discount, at approximately $8 million, had 14% per annum interest and were due in March 2009. The Initial Notes were retired as a result of the refinancing with a five-year SVB bank term loan at a prime-baed interest rate, or 8.5% as of June 29, 2007. The interest rate on any future borrowings under the $22 million revolving credit line has been reduced to the bank's prime rate. The Company expects to incur a one-time non-cash charge of about $2.3 million in the second quarter of 2007 for the write-off of the unamortized discount and deferred debt issuance expenses associated with the Initial Notes.