TELECOMMUNICATION SYSTEMS INC /FA/
PROMISSORY NOTE
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<TYPE>EX-10.35
<SEQUENCE>3
<FILENAME>w54922ex10-35.htm
<DESCRIPTION>PROMISSORY NOTE
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<P align="right"><FONT size="2">EXHIBIT 10.35</FONT>

<P align="center"><FONT size="2"><B>PROMISSORY NOTE</B>
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        <TD align="left" valign="top"><FONT size="2">$2,500,000.00</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
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August&nbsp;29, 2001</FONT></TD>
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<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>FOR VALUE
RECEIVED</B>, MAURICE B. TOS&#201; (referred to herein as <B>&#147;Borrower&#148;</B>),
having a residence and mailing address of 1299 Magnolia Ave., Annapolis, MD
21403, promises to pay to the order of TELECOMMUNICATION SYSTEMS, INC., a
corporation organized and validly existing under the laws of the State of
Maryland (referred to herein as <B>&#147;Lender,&#148;</B> which term shall also include any
subsequent holder of this Note), having a mailing address of 275 West Street,
Annapolis, Maryland 21401, the principal sum of Two Million Five Hundred
Thousand and 00/100 Dollars ($2,500,000.00), together with interest until paid,
as set forth in this Note.
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<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Interest Rate</I>. Interest shall accrue and be payable on the outstanding
unpaid principal balance of this Note at the fixed interest rate of Seven and
fifty hundredths percent (7.50%) per annum.
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<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Principal and Interest Payment</I>. Unless sooner paid in full, the entire
unpaid principal balance of this Note, together with all outstanding and unpaid
accrued interest on this Note, shall be due and payable on August&nbsp;29, 2002 (the
<B>&#147;Loan Maturity Date&#148;</B>). Borrower acknowledges that Lender has no obligation to
extend the Loan Maturity Date and that Lender has no obligation to refinance
the loan evidenced by this Note.
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<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Manner of Payment</I>. All payments shall be made in U.S. dollars in
immediately available funds without set-off or counterclaim or deduction of any
kind on the due dates of such payments. Payments shall be made to the address
set forth herein for notices to Lender. Any payments by check shall be
accepted subject to collection in immediately available funds. Payments shall
be applied first to Collection Costs (herein defined), second to accrued
interest, and third to principal of this Note.
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<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Prepayment</I>. Borrower shall be privileged to prepay this Note in whole
or in part at any time without penalty or premium.
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<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Collateral</I>. This Note is secured by that certain Pledge Agreement
dated August&nbsp;29, 2001 made by Borrower in favor of Lender (referred to herein
as the <B>&#147;Pledge Agreement,&#148;</B> which term also refers to the Pledge Agreement as it
may be amended and extended from time to time, and including any replacements
or substitutes therefor from time to time) pursuant to which Borrower has
pledged to Lender, and granted to Lender a security interest in three million
(3,000,000) shares of Class&nbsp;B common stock of Lender now owned by Borrower and
any other Additional Collateral (as defined in the Pledge Agreement) required
by the terms of the Pledge Agreement, to be pledged to the Lender in the
future.
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<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Default; Acceleration</I>. The occurrence of any of the following events
shall be an <B>&#147;Event of Default&#148;</B> under this Note and the Pledge Agreement:</FONT>
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        <TD width="1%" align="left" nowrap><FONT size="2">(a)</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">If Borrower shall fail to make the payment of
principal or interest under this Note when due; or</FONT></TD>
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        <TD width="1%" align="left" nowrap><FONT size="2">(b)</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">If Borrower shall fail to make any other
payment, or fail to perform any other obligation of Borrower,
under this Note or the Pledge Agreement, other than
obligations within the scope of clause (a)&nbsp;of this Section,
and such failure shall continue more than ten (10)&nbsp;days after
Lender gives Borrower written notice thereof; or</FONT></TD>
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        <TD width="1%" align="left" nowrap><FONT size="2">(c)</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">If any representation or warranty made by
Borrower to Lender in the Pledge Agreement, or in any other
document made by Borrower connection with this Note, shall
have been false, inaccurate, incomplete in any material
respect, when made, or shall have been breached; or</FONT></TD>
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        <TD><FONT size="2">&nbsp;</FONT></TD>
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        <TD width="1%" align="left" nowrap><FONT size="2">(d)</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">If there shall be filed by or against Borrower
any petition under the United States Bankruptcy Code or any
similar federal or state statute; or</FONT></TD>
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        <TD width="1%" align="left" nowrap><FONT size="2">(e)</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">Commencement of any proceeding under any
federal or state statute or rule providing for the relief of
debtors, composition of creditors, arrangement,
reorganization, receivership, liquidation or any similar
event by or against Borrower; or</FONT></TD>
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        <TD width="1%" align="left" nowrap><FONT size="2">(f)</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">If Borrower shall cease to be employed by
Lender for any reason, including, without limitation,
Borrower&#146;s death or the voluntary or involuntary termination
of Borrower&#146;s employment.</FONT></TD>
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<P><FONT size="2">Upon the occurrence of an Event of Default, the unpaid principal with interest
and all other sums evidenced by this Note shall, at the option of Lender and in
Lender&#146;s discretion, become immediately due and payable. Upon the occurrence
of an Event of Default, Lender shall also have Lender&#146;s rights and remedies
available under the Pledge Agreement and any other rights or remedies available
at law or equity.
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<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Collection Costs</I>. If Borrower shall default in payment of this Note,
or under the Pledge Agreement which secures this Note, and Lender refers this
Note to an attorney who is not a salaried employee of Lender for collection,
Lender may charge and collect from Borrower reasonable attorneys fees and all
court costs and other collection costs actually incurred by Lender relating to
Borrower&#146;s default (such attorneys fees and costs are referred to in this Note
as &#147;<B>Collection Costs</B>&#148;).
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<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Notices</I>. Any notice required or permitted by or in connection with
this Note shall be in writing and shall be made by hand delivery, or by
overnight delivery service, or by certified mail, return receipt requested,
postage prepaid, addressed to the parties at the appropriate address set forth
on the first page of this Note or to such other address as may be hereafter
specified by written notice by the parties to each other. Notice shall be
considered given as of the earlier of the date of actual receipt, or the date
of the hand delivery, or one (1)
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<P><FONT size="2">business day after delivery to an overnight delivery service, or three (3)
business days after the date of mailing, independent of the date of actual
delivery or whether delivery is ever in fact made, as the case may be, provided
the giver of notice can establish that notice was given as provided herein.
Notwithstanding the aforesaid procedures, any notice or demand upon Borrower,
in fact received by Borrower, shall be sufficient notice or demand.
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<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Certain Waivers</I>. As to this Note, Borrower waives, to the fullest
extent that Borrower is permitted to waive under applicable law, all applicable
exemption rights, whether under any state constitution, homestead laws or
otherwise, and also waives valuation and appraisement, presentment, notice of
dishonor, and protest, notice of demand and nonpayment of this Note, and notice
of acceleration and expressly agrees that the maturity of this Note, or any
payment under this Note, may be extended from time to time without in any way
affecting the liability of Borrower.
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<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Preservation of Lender&#146;s Rights</I>. No failure on the part of Lender to
exercise any right or remedy hereunder, whether before or after the happening
of an Event of Default shall constitute a waiver thereof, and no waiver of any
past Event of Default shall constitute waiver of any future default or of any
other Event of Default. No failure to accelerate the indebtedness evidenced by
this Note by reason of any Event of Default, or acceptance of a past due
payment, or indulgence granted from time to time, shall be construed to be a
waiver of the right to insist upon prompt payment thereafter, or shall be
deemed to be a novation of this Note or as a reinstatement of the indebtedness
evidenced hereby or as a waiver of such right or acceleration or any other
right, or be construed so as to preclude the exercise of any right that Lender
may have, whether by the laws of the State of Maryland, by agreement, or
otherwise. Borrower hereby expressly waives the benefit of any statute or rule
of law or equity that would produce a result contrary to or in conflict with
the preceding sentences of this Section.
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<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Captions</I>. Section headings and captions in this Note are for
convenience only and shall not affect the construction or interpretation of
this Note.
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<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Amendments</I>. This Note may not be amended orally, but only by an
agreement in writing signed by the party against whom such agreement is sought
to be enforced.
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<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Severability</I>. In case any provision or any part of any provision
contained in this Note shall for any reason be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provision or remaining part of the affected
provision of this Note, but this Note shall be construed as if such invalid,
illegal, or unenforceable provision or part thereof had never been contained
herein but only to the extent such provision or part thereof is invalid,
illegal, or unenforceable.
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<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Maryland Law</I>. This Note shall be governed by the laws of the State of
Maryland (excluding Maryland conflicts of laws rules).
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<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Jurisdiction; Venue</I>. Borrower hereby irrevocably consents to the
non-exclusive personal jurisdiction of the courts of the State of Maryland and,
if a basis for federal
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<P><FONT size="2">jurisdiction exists, the non-exclusive jurisdiction of the United States
District Court for the District of Maryland. Borrower agrees that venue shall
be proper in any circuit court of the State of Maryland selected by Lender or,
if a basis for federal jurisdiction exists, in any Division of the United
States District Court for the District of Maryland. Borrower waives any right
to object to the maintenance of any suit or claim in any of the state or
federal courts of the State of Maryland on the basis of improper venue or of
inconvenience of forum. Any suit or claim brought by Borrower against Lender
that is based, in whole or in part, directly or indirectly, on this Note or any
matters relating to this Note, shall be brought in a court only in the State of
Maryland. Borrower shall not file any counterclaim against Lender in any suit
or claim brought by Lender against Borrower in a jurisdiction outside of the
State of Maryland unless under the rules of the court in which Lender brought
such suit or claim the counterclaim is mandatory, and not permissive, and would
be considered waived unless filed as a counterclaim in the claim or suit
instituted by Lender against Borrower. Borrower agrees that any forum outside
the State of Maryland is an inconvenient forum and that a suit brought by
Borrower against Lender in any court outside the State of Maryland should be
dismissed or transferred to a court located in the State of Maryland. Nothing
in this Note shall affect the right of Lender to commence legal proceedings or
to otherwise proceed against Borrower in any jurisdiction.
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<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>IN WITNESS WHEREOF</B>, and intending to be legally bound hereby Borrower
executes this Note under seal as of the date first written above.
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<P><FONT size="2">WITNESS:
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        <TD valign="top"><FONT size="2">/s/ Bruce A. White<BR><HR size="1" noshade>
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/s/ Maurice B. Tos&#233;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(SEAL)<BR>
</FONT><HR size="1" noshade width=51%><FONT size="2">
Maurice B. Tos&#233;</FONT></TD>
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<P align="center"><FONT size="2">- 4 -</FONT>
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