This OPTION AGREEMENT , dated as of
December 22, 2008 (this “ Agreement ”), is
by and among WESTWOOD ONE, INC., a Delaware corporation (“
Parent ”), TLAC, Inc., a Delaware corporation and
wholly owned subsidiary of Parent (“ Merger Sub
”), TRAFFICLAND, INC., a Delaware corporation (the “
Company ”), and P. Richard Zitelman, in his capacity
as Stockholder Representative (the “ Stockholder
Representative ”). Parent, Merger Sub, the Company and
the Stockholder Representative are sometimes collectively referred
to herein as the “ Parties ,” and each, a
“ Party ”).
WHEREAS , the Parties have negotiated the terms of an
agreement and plan of merger, a copy of which is annexed hereto as
Exhibit A (the “ Merger Agreement
”), providing for (a) the merger of Merger Sub with and into
the Company (the “ Merger ”), with the Company
continuing as the surviving company of the Merger and as a wholly
owned subsidiary of Parent, and (b) the payment of cash and
the delivery of securities to stockholders of the Company in
consideration of the Merger;
WHEREAS , the Company has prepared a disclosure
schedule, a copy of which is annexed hereto as
Exhibit B (the “ Initial Disclosure
Schedule ”), and has advised Parent that the Initial
Disclosure Schedule represents the disclosure schedule which the
Company would have delivered to Parent pursuant to Article IV
of the Merger Agreement (as the so-called “Company Disclosure
Schedule”) if the Company were to have entered into the
Merger Agreement as of the date hereof;
WHEREAS , concurrent with the execution of this
Agreement and as a material inducement for Parent to pursue the
acquisition of the Company pursuant to this Agreement and the
Merger Agreement, certain stockholders of the Company and holders
of Convertible Securities (as defined in the Merger Agreement) (the
“ Signing Stockholders ”) have entered into a
Stockholders’ Agreement, dated as of the date hereof, with
Parent, a copy of which is annexed hereto as Exhibit C
(the “ Stockholders’ Agreement ”),
pursuant to which, among other things, the Signing Stockholders
have agreed to vote in favor of the Merger and the Merger Agreement
(and against any competing transaction with any third party other
than Parent or an Affiliate of Parent), and to indemnify Parent in
accordance with the indemnification provisions set forth in the
Merger Agreement and provide Parent with any documentation or other
information reasonably requested by Parent in order to ensure that
the Signing Stockholders are bound by such provisions;
WHEREAS, concurrent with the execution of this Agreement
and as a material inducement for Parent to pursue the acquisition
of the Company pursuant to this Agreement and the Merger Agreement,
Lawrence H. Nelson, who currently serves as the Company’s
Chief Executive Officer, entered into an employment agreement with
Parent, which employment agreement shall become effective as of and
subject to the occurrence of the Effective Time, and, as further
inducement to Parent to enter into this Agreement and the Merger
Agreement, the Company desires that each of the additional
employees of the Company listed on Exhibit B-1 to the Merger
Agreement (referred to collectively in the Merger Agreement as the
“Restricted
Employees”), or a permissible Replacement
therefor, enter into an employment agreement with Parent in the
form of Company Employment Agreement attached as Exhibit B-2
to the Merger Agreement, which employment agreements would become
effective as of and subject to the occurrence of the Effective
Time;
WHEREAS , upon the terms and subject in all respects to
the conditions set forth in this Agreement and the Merger
Agreement, Parent, Merger Sub and the Company have approved this
Agreement, the Merger and the Merger Agreement;
WHEREAS , the respective Board of Directors of Parent,
Merger Sub and the Company each has (i) determined that the Merger
is advisable and fair to, and in the best interests of, their
respective stockholders, and (ii) subject to the terms and
conditions set forth in this Agreement and the Merger Agreement,
approved and adopted this Agreement and the Merger Agreement and
approved the Merger and the other transactions contemplated by the
Merger Agreement;
WHEREAS , concurrent with the execution of this
Agreement, the Company and Metro Networks Communications, Inc., a
Maryland corporation and wholly owned subsidiary of Parent (“
Network ”), have executed and delivered that certain
License and Services Agreement, dated as of the date hereof, a copy
of which is annexed hereto as Exhibit D (the “
License Agreement ”);
WHEREAS , as a material inducement for the Company and
the Stockholder Representative to enter into this Agreement and
grant to Parent the Option (as defined herein), Network has entered
into the License Agreement and agreed to the terms and conditions
thereof, including, without limitation, the payment to the Company
of certain fees described therein;
WHEREAS , each Party has duly executed undated copies of
the Merger Agreement (the “ Escrowed Merger Agreements
” and together with the Initial Disclosure Schedule, the
“ Escrowed Documents ”) to LOWENSTEIN SANDLER,
PC (the “ Document Escrow Agent ”), and such
Escrowed Documents have been delivered to the Document Escrow
Agent;
WHEREAS , pursuant to the terms of this Agreement, the
Escrowed Documents shall be held in escrow by the Document Escrow
Agent, who shall hold such Escrowed Documents in escrow in
accordance with the provisions set forth on Exhibit E
annexed hereto pending exercise, expiration or termination of the
Option;
WHEREAS , the Escrowed Documents shall be dated by the
Document Escrow Agent and released to each of the Parties in the
event that Parent, in its sole discretion, elects to exercise the
Option, which only may be exercised after satisfaction of the
conditions precedent to the exercise of the Option, all as more
particularly set forth in this Agreement;
WHEREAS , the Escrowed Documents shall be cancelled and
destroyed by the Document Escrow Agent in accordance with the terms
of this Agreement regarding notice to the Document Escrow Agent and
other matters in the event of the expiration or termination of the
Option; and
-2-
WHEREAS , capitalized terms used but not defined herein
shall have the respective meanings assigned to such terms in the
Merger Agreement;
NOW, THEREFORE , in consideration of the above premises and for
other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Parties agree as
follows:
Section 1.1 The Option . Upon the
terms and subject to the satisfaction of the conditions set forth
in Section 1.3 below, time being of the essence, the
Parties agree that Parent, at its sole election, shall have, and
the Company and the Stockholder Representative hereby grant to
Parent, the right (the “ Option ”), prior to the
Expiration Date (as defined in Article V hereof), to
cause the Escrowed Documents to be released from escrow, dated as
of the date upon which Parent delivers the Exercise Notice (as
defined in Section 1.4 hereof) (except in the case of
the Initial Disclosure Schedule, which shall retain its original
date) and delivered by the Document Escrow Agent. Specifically, in
the event that Network satisfies the conditions precedent to
exercise of the Option set forth herein and then Parent exercises
the Option prior to the Expiration Date, automatically and without
any further action by or consent of any of the Parties other than
the provision of the Exercise Notice (a) the Escrowed
Documents shall be released from escrow by the Document Escrow
Agent and (other than the Initial Disclosure Schedule) shall be
dated by the Document Escrow Agent as of the date upon which Parent
delivers the Exercise Notice to the Company and the Document Escrow
Agent (the “ Execution Date ”);
(b) promptly after the Execution Date, the Escrowed Documents
shall be distributed by the Document Escrow Agent to all of the
Parties (such that each Party shall receive a fully executed and
dated copy of the Escrowed Merger Agreements and the Initial
Disclosure Schedule); and (c) the terms and provisions of the
Merger Agreement (as supplemented by the Final Disclosure Schedule
to be furnished by the Company to Parent pursuant to
Section 1.4 ), including, without limitation, all
pre-Closing covenants set forth therein, shall be in full force and
effect.
Section 1.2 Exercise Period . Parent
shall have the right to exercise the Option if, and only if,
Network timely satisfies each of the payment conditions set forth
in Sections 1.3(a), (b) and (c) below prior to the
Expiration Date, time being of the essence. In the event that
Network satisfies each of such payment conditions prior to the
Expiration Date, Parent shall have the right to exercise the Option
at any time during the period commencing on the date on which
Network timely satisfies the condition set forth in
Section 1.3(c) below (the “ Commencement
Date ”) and ending on the Expiration Date. The period
from the Commencement Date through and including the Expiration
Date is referred to herein as the “ Exercise Period
.”
Section 1.3 Conditions to Exercise .
The Option shall automatically become exercisable by Parent if,
prior to the Expiration Date, Network timely satisfies each of the
following conditions, time being of the essence:
-3-
(a) Initial Payment . In accordance
with the provisions of the License Agreement, Network shall have
paid to the Company the sum of $750,000 upon execution of the
License Agreement; and
(b) January 31 Payments . In
accordance with the provisions of the License Agreement, Network
(i) shall have paid to the Company, subsequent to the date
hereof and on or before January 31, 2009, the sum of $750,000 (the
“ First January 31 Payment ”) and
(ii) either (x) shall have paid to the Company,
subsequent to the date hereof and on or before January 31,
2009, an additional sum of $750,000 (the “ Second
January 31 Payment — Discounted Basis ”), or
(y) shall have paid to the Company, at any time after
January 31, 2009 and on or before February 20, 2009, an
additional sum of $755,000 (the “ Second January 31
Payment — Non-Discounted Basis ”); and
(c) February 20 Payment . In
accordance with the provisions of the License Agreement, Network
shall have paid to the Company, on or before February 20,
2009, the sum of $750,000 (the “ February 20
Payment ”).
Section 1.4 Update of the Initial
Disclosure Schedule; Notification of Exercise . In the event
that Network timely satisfies each of the payment conditions set
forth in Section 1.3 prior to the Expiration Date and Parent
determines that it may desire to exercise the Option, Parent shall
provide the Company and the Document Escrow Agent with written
notice (a “ Pre-Exercise Notice ”) of its
intention to exercise the Option and of the date on which it
intends to exercise the Option (such date to be not less than five
nor more than ten days from the date on which Parent delivers the
Pre-Exercise Notice to the Company). Within five days of its
receipt of a Pre-Exercise Notice, the Company shall deliver to
Parent an updated disclosure schedule which shall reflect all
changes, updates, revisions or other modifications to the Initial
Disclosure Schedule that are required to assure that each of the
representations and warranties in Article IV of the Escrowed
Merger Agreement, as supplemented by such update, remains accurate
in all material respects or, with respect to any such
representation or warranty that contains a materiality or Company
Material Adverse Effect qualifier, remains accurate in all
respects. If, within five days of its receipt of such updated
disclosure schedule, Parent still desires to exercise the Option,
it shall provide written notice of its election (the “
Exercise Notice ”) to the Company and the Document
Escrow Agent, such Exercise Notice to confirm that Network has
timely satisfied each of the payment conditions set forth in
Section 1.3 If Parent does not provide the Exercise
Notice within such five-day period but Network has timely satisfied
each of the payment conditions set forth in Section 1.3
, Parent shall have the right, on up to one additional occasion
during the Exercise Period, to furnish a Pre-Exercise Notice to the
Company (provided that in such case the Pre-Exercise Notice is
furnished no later than five days prior to the Expiration Date). In
the case of such Pre-Exercise Notice, the Company shall be
obligated to deliver an updated disclosure schedule (which shall
reflect all changes, updates, revisions or other modifications to
the Initial Disclosure Schedule that are required to assure that
each of the representations and warranties in Article IV of
the Escrowed Merger Agreement, as supplemented by such update,
remains accurate in all material respects or, with respect to any
such representation or warranty that contains a materiality or
Company Material Adverse Effect qualifier, remains accurate in all
respects) within five days of the Company’s receipt of such
Pre-Exercise Notice, and Parent shall have the right, but not the
obligation, to exercise the Option by delivering an Exercise Notice
within five days of its receipt of such updated disclosure
schedule.
-4-
The updated
disclosure schedule provided by the Company to Parent following the
Company’s receipt of an Exercise Notice is referred to herein
as the “ Final Disclosure Schedule .”
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY
The Company
hereby represents and warrants to Parent and Merger Sub as
follows:
Section 2.1 Corporate Organization .
The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has
all necessary corporate power and authority to operate and lease
its properties and to carry on its business as now being
conducted.
Section 2.2 Authority . The Company
has all necessary corporate power and authority to execute and
deliver this Agreement and the Transaction Documents, to perform
its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. P. Richard Zitelman,
in his capacity as Stockholder Representative, has full power and
authority, with respect to all Signing Stockholders that have
executed and delivered a Stockholders’ Agreement, to execute
and deliver this Agreement and the Merger Agreement, to perform the
Stockholder Representative’s obligations hereunder and
thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all necessary
corporate action and (subject to receiving stockholder approval of
the Merger Agreement and the Merger) no other corporate proceedings
on the part of the Company are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly executed and delivered by the Company,
and (assuming due authorization, execution and delivery by the
other parties thereto) this Agreement constitutes the legal, valid
and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except that such
enforceability (i) may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting
creditors’ rights and remedies generally, and (ii) is
subject to general principles of equity. The Company has received
all approvals and consents necessary from its board of directors
and (subject to receiving stockholder approval of the Merger
Agreement and the Merger) stockholders to consummate the
transactions contemplated by this Agreement.
Section 2.3 No Conflicts
.
(a) The execution and delivery by the
Company of this Agreement does not, and the performance of this
Agreement by the Company will not, (i) conflict with or
violate the Company Organizational Documents, as amended or
restated, or conflict with or violate, in any material respect, any
Laws applicable to the Company or by which any of the properties of
the Company are bound, or (ii) except as set forth in
Section 4.5 of the Initial Disclosure Schedule with respect to
the consequences of entering into the License Agreement or the
consummation of the Merger, result in any breach of or constitute a
default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of
termination,
-5-
amendment,
acceleration or cancellation of, or require payment under, or
result in the creation of a Lien on, any of the properties or
assets of the Company pursuant to, any note, bond, mortgage,
indenture, contract, lease, license, permit, franchise or other
instrument or obligation (each, a “ Contract ”)
to which the Company is a party or by which the Company or any of
its properties is bound, except for, solely in the case of clause,
(ii) such breaches, defaults, terminations, amendments or
accelerations that would not, individually or in the aggregate, be
reasonably likely to result in a Company Material Adverse
Effect.
(b) Except as set forth in Section 4.5
of the Initial Disclosure Schedule with respect to the consequences
of entering into the License Agreement or the consummation of the
Merger, the execution and delivery of this Agreement by the Company
does not, and the performance of this Agreement by the Company will
not, require the Company to obtain any consent, approval,
authorization or permit of, or to make any filing with or
notification to, any Governmental Authority based on any Laws or
other requirements of any Governmental Authorities.
Section 2.4 Litigation . There are
no actions, suits, hearings, proceedings, audits, inspections,
claims, inquiries or similar processes pending or, to the Knowledge
of the Company, threatened, and, to the Knowledge of the Company,
there are no investigations, examinations or reviews pending or
threatened, that are reasonably likely to prohibit or restrain in
any material respect the ability of the Company to perform its
obligations under this Agreement or to consummate the transactions
contemplated hereby.
Section 2.5 Brokers . No broker,
finder or investment banker is entitled to any brokerage,
finder’s or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company.
REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGER SUB
Parent and
Merger Sub hereby represent and warrant to the Company as
follows:
Section 3.1 Organization and
Qualification .
(a) Parent is a corporation duly organized,
validly existing and in good standing under the laws of Delaware
and has all necessary corporate power and authority to own, lease
and operate its properties and to carry on its business as it is
now being conducted.
(b) Merger Sub is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Delaware and has all necessary corporate power and
authority to own, lease and operate its properties and to carry on
its business as it is now being conducted.
(a) Parent has all necessary corporate
power and authority to execute and deliver this Agreement and the
Transaction Documents, to perform its obligations hereunder
and
-6-
thereunder and
to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement by Parent and the
consummation by Parent of the transactions contemplated hereby have
been duly authorized by all necessary corporate action and no other
corporate proceedings on the part of Parent are necessary to
authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by Parent and (assuming due authorization, execution and
delivery by the other parties thereto) this Agreement constitutes a
legal, valid and binding obligation of Parent, enforceable against
Parent in accordance with its terms, except that such
enforceability (i) may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting
creditors’ rights and remedies generally, and (ii) is
subject to general principles of equity.
(b) Merger Sub has all necessary corporate
power and authority to execute and deliver this Agreement and the
Transaction Documents, to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement by Merger
Sub and the consummation by Merger Sub of the transactions
contemplated hereby have been duly authorized by all necessary
corporate action and no other corporate proceedings on the part of
Merger Sub are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has
been duly executed and delivered by Merger Sub and (assuming due
authorization, execution and delivery by the other parties thereto)
this Agreement constitutes a legal, valid and binding obligation of
Merger Sub, enforceable against Merger Sub in accordance with its
terms, except that such enforceability (i) may be limited by
bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting creditors’ rights and remedies
generally, and (ii) is subject to general principles of
equity.
Section 3.3 No Conflict; Required
Filings and Consents .
(a) The execution and delivery of this
Agreement by Parent and Merger Sub do not, and the performance of
this Agreement by Parent and Merger Sub will not, (i) conflict
with or violate the respective certificates of incorporation or
by-laws, in each case as amended or restated, of Parent or Merger
Sub, (ii) conflict with or violate any Laws applicable to
Parent or Merger Sub or by which any of their respective properties
is bound, or (iii) result in any breach of or constitute a
default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or require
payment under, or result in the creation of a Lien on, any of the
properties or assets of Parent or Merger Sub pursuant to any
Contract (other than any Contracts requiring Parent Lender
Consents) to which Parent or Merger Sub is a party or by which
Parent or Merger Sub or any of their respective properties is
bound, except for (x) any such conflicts or violations
described in clause (ii) above or (y) breaches, defaults,
events, rights of termination, amendment, acceleration or
cancellation, payment requirements or Liens described in clause
(iii) above that would not impair in any material respect the
ability of either Parent or Merger Sub to perform its obligations
under this Agreement or materially delay the consummation of any of
the transactions contemplated by this Agreement.
(b) The execution and delivery of this
Agreement by Parent and Merger Sub do not, and the performance of
this Agreement by Parent and Merger Sub will not, require Parent or
Merger Sub to obtain any consent, approval, authorization or permit
of, or to make any filing
-7-
with or
notification to, any Governmental Authorities based on Laws or
other requirements of any Governmental Authorities, except
(i) those consents, approvals, authorizations or permits
received and in full force and effect, and (ii) where the
failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not impair
in any material respect the ability of either Parent or Merger Sub
to perform its obligations under this Agreement or materially delay
the consummation of any of the transactions contemplated by this
Agreement.
(c) There are no actions, suits, hearings,
proceedings, audits, inspections, claims, inquiries or similar
processes pending (or, to the knowledge of Parent, threatened)
against Parent or Merger Sub that would materially and adversely
affect Parent’s or Merger Sub’s ability to consummate
any of the transactions contemplated by this Agreement. There is no
order, writ, injunction or judgment to which Parent or Merger Sub
is subject that would materially and adversely affect
Parent’s or Merger Sub’s ability to consummate any of
the transactions contemplated by this Agreement. To Parent’s
knowledge, as of the date of this Agreement, no investigation,
examination or review by any Government Authority with respect to
Parent, Merger Sub or any other Affiliate of Parent is pending or
threatened, other than any investigation or review that would not
materially and adversely affect Parent’s or Merger
Sub’s ability to consummate any of the transactions
contemplated by this Agreement.
Section 3.4 Brokers . No broker,
finder or investment banker is entitled to any brokerage,
finder’s or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Parent or any of its Affiliates.
Section 4.1 Operations of the
Company .
(a) From the date of this Agreement through
the Expiration Date, unless (i) otherwise expressly
contemplated by this Agreement or consented to in writing by
Parent, which consent shall not be unreasonably withheld, delayed
or conditioned, (ii) in the case of clause (B) of this
Section 4.1(a) , an expenditure constitutes a Budget
Covered Expenditure, or (iii) otherwise expressly set forth in
Section 6.2 of the Initial Disclosure Schedule, and subject in
all cases to Section 4.3 below, the Company will
(A) operate its business in the ordinary course consistent
with past practice or in accordance with or pursuant to the
Company’s written business plans furnished to Parent prior to
the Initial Escrow Date, and in compliance with all applicable
Laws, (B) use commercially reasonable efforts to successfully
execute the Rollout Plan, (C) use commercially reasonable
efforts to preserve substantially intact its business
organizations, its Intellectual Property and its relationships with
licensors, licensees, customers, suppliers and lessors, and to
retain the services of its key Employees, and (D) use
commercially reasonable efforts to maintain and keep its properties
and assets in as good repair and condition as at present, ordinary
wear and tear excepted.
-8-
(b) Nothing contained in this Agreement is
intended to give Parent, directly or indirectly, the right to
control or direct the Company’s operations during the period
from the date hereof through the Expiration Date, and nothing
contained in this Agreement is intended to give the Company,
directly or indirectly, the right to control or direct
Parent’s or its Subsidiaries’ operations. During the
period from the date hereof through the Expiration Date, each of
Parent and the Company shall exercise, consistent with the terms
and conditions of this Agreement, complete control and supervision
over its and, as applicable, its Subsidiaries’, respective
operations.
Section 4.2 Stockholders’
Agreement . The Company shall use commercially reasonable
efforts to cause all holders of the Company’s capital stock
(other than the Signing Stockholders) or Convertible Securities to
become parties to the Stockholders’ Agreement through the
execution and delivery of a joinder agreement to the
Stockholders’ Agreement, and, in connection therewith, the
Company shall prepare and provide to each such holder of the
Company’s securities a disclosure document describing, among
other things, the Merger Agreement and the transactions
contemplated thereby, and which disclosure document shall be
furnished to and deemed reasonably acceptable in form and substance
by Parent prior to being furnished to any holders of the
Company’s securities.
Section 4.3 Conduct of the Company .
Except (i) as otherwise expressly contemplated by this
Agreement or consented to in writing by Parent, which consent shall
not be unreasonably withheld, delayed or conditioned,
(ii) Budget Covered Expenditures that otherwise would be
prohibited by clauses (i) or (m) of this
Section 4.3 , or (iii) as set forth in
Section 6.2 of the Initial Disclosure Schedule, from the date
hereof through the Expiration Date, the Company will not do any of
the following:
(a) except for instances where the amount
paid or payable by the Company, or the value of securities, rights
or other benefits granted by the Company, equal not more than
$10,000 for any Non-Inside Employee and not more than $100,000 for
all Non-Inside Employees as a group, and in each case can be
affected without breaching Section 4.3(m) hereof:
(i) increase the rate of compensation or benefits payable to
or to become payable to, any director or Employee of the Company,
except for (x) increases in salary or wages payable or to
become payable pursuant to existing written employment agreements
or the Company Benefit Plans, in each case, as in effect on the
Initial Escrow Date, (y) the increases in the rate of
compensation set forth in Section 6.2 of the Initial
Disclosure Schedule or (z) merit increases of not more than
five percent (5%) per annum granted in the ordinary course of
business to Non-Inside Employees of the Company; (ii) grant
any severance or termination, bonus, retention or other special pay
to, or enter into any employment, severance, retention, bonus or
similar agreement with, any director or Employee of the Company;
(iii) adopt any employee benefit plan or arrangement, except
as may be required by applicable Law; (iv) otherwise modify or
amend any of the foregoing except as required by Law;
(v) grant any equity or equity-linked compensation or
securities to any director or Employee of the Company; or (vi) make
any investments in or loans to or, except in the ordinary course of
business consistent with past practices, pay any fees or expenses
to, or enter into or modify any Contract, agreement, plan or
arrangement with, any director or Employee of the
Company;
-9-
(b) (i) acquire or agree to acquire,
by merging or consolidating with, by purchasing an equity interest
in or a portion of the assets of, or by any other manner, any
business or any corporation, partnership, association, limited
liability company or other business organization or division
thereof, or otherwise acquire or agree to acquire any assets or
equity interests of any other Person (other than the purchase of
assets in the ordinary course of business and consistent with past
practice), (ii) sell, lease, exchange, mortgage, transfer,
license or otherwise dispose of, or agree to sell, lease, exchange,
mortgage, transfer, license or otherwise dispose of, any of its
material assets, or any of its assets aggregating $50,000 or more
in total, except for non-exclusive licensing arrangements permitted
under the License Agreement and leasing of equipment in the
ordinary course of the Company’s business, consistent with
past practice, or (iii) enter into any joint venture,
partnership, strategic alliance, profit sharing or similar
agreement;
(c) (i) repay any of the
Company’s Indebtedness other than (x) Short-Term
Indebtedness of up to $2,000,000 (inclusive of any accrued and
unpaid interest thereon), provided that any such repayment of
Short-Term Indebtedness does not impair, impede, delay, prevent or
otherwise materially adversely affect the Company’s
successful execution of the Rollout Plan, and (y) Permitted
Financings of Indebtedness of up to a total of $1,500,000,
(ii) propose or adopt any amendments or modifications to or
restatements of the Company Organizational Documents, or (iii)
effect any recapitalization, reclassification, split, subdivision,
combination or like change in the capitalization of the Company, or
amend the terms of any outstanding securities of the Company, or
issue any securities of the Company, except for (A) the
repayment of the Company’s Indebtedness to the extent
permitted in clause (i) of this Section 4.3(c) ,
(B) the cancellation, conversion or exercise of Convertible
Securities (including Convertible Notes) as contemplated by the
Escrowed Merger Agreement and (C) any issuance of securities
in a Permitted Financing;
(d) change any of its methods of accounting
in effect at the Balance Sheet Date, except as may be required by
GAAP or by Law as concurred with by the Company’s
Accountants, and then only after prior written notice to, and an
opportunity to comment by, Parent;
(e) (i) issue, create, incur, assume,
guarantee, endorse or otherwise become liable or responsible with
respect to (whether directly, contingently or otherwise), or modify
in any way the terms of, any Indebtedness, including, without
limitation, any Indebtedness to Stockholders, except for
(x) the repayment of the Company’s Indebtedness to the
extent permitted in Section 4.3(c)(i) , (y) the
incurrence of Indebtedness in connection with a Permitted Financing
and (z) the conversion of the Convertible Securities (including the
Convertible Notes) prior to the Closing, or (ii) subject to
any Lien (other than a Permitted Lien) or otherwise encumber or
permit, allow or suffer to be encumbered, any of the properties or
assets (whether tangible or intangible) of, or used by, the
Company;
(f) make any material Tax election, change
any material Tax election, change any annual Tax accounting period,
adopt or change any material method of Tax accounting, enter into
any closing agreement, settle any material Tax claim or assessment
or consent to the extension or waiver of the limitations period
applicable to any Tax claim or assessment;
-10-
(g) declare, set aside, make or pay any
dividend or other distribution in respect of any shares of the
Company’s capital stock or any other equity securities of the
Company, or repurchase, redeem or otherwise acquire any such shares
or equity securities, or make any other payments or distributions
whatsoever, in cash or in kind, with respect to any such shares or
equity securities;
(h) cancel or compromise any claim for an
amount greater than $25,000, or waive or release any material right
of the Company, or settle or compromise any pending or threatened
Proceeding or any material claim or claims;
(i) enter
into any commitment for capital or other expenditures;
(j) enter into any transaction, or enter
into, modify or renew any Contract, plan or arrangement, which, by
reason of its size, nature or otherwise, is not in the ordinary
course of business;
(k) (i) modify, amend, renew or
terminate any Contract in any manner that reasonably could be
expected to be materially detrimental or adverse to the Company;
(ii) enter into, modify, amend or terminate any lease of real
property; (iii) materially change the amount of any insurance
coverage; (iv) enter into any new Department of Transportation
Contract or any other material Contract which, in either such case,
is on terms that are not substantially similar to, and consistent
with, the Company’s past practice; (v) enter into any
new Contract, or any modification, amendment, renewal or
termination of any existing Contract, that would be prohibited by,
or inconsistent with the terms of, the License Agreement or take
any other action that would be prohibited by, or inconsistent with
the terms of, the License Agreement; or (vi) except to the
extent permitted in the License Agreement, enter into any
transaction or Contract, or modify, amend, renew or terminate any
Contract, with any Company Competitor;
(l) except for the repayment of the
Company’s Indebtedness to the extent permitted in
Section 4.3(c)(i) , materially change or modify its
credit, collection or payment policies, procedures or practices,
including acceleration of collections or receivables (whether or
not past due) or fail to pay or delay payment of payables or other
liabilities, in each case in any material respect;
(m) make any expenditures in any year that
cause any of the seven (7) line items in the Expense Budget
included in Section 6.2 of the Initial Disclosure Schedule
[(the “ Expense Budget ”)] to exceed the
budgeted amount for such line items;
(n) enter
into any guaranty or surety, or grant any power of attorney to any
Person;
(o) enter into any Contract that would not
be permitted under the terms of the License Agreement, including
those pursuant to which the Company agrees to encumber, not assert,
license, transfer or sell rights in, or with respect to, its
Intellectual Property;
(p) enter into or amend any Contract,
understanding or commitment (A) that restrains, restricts,
limits or impedes the ability of the Company to compete with or
conduct any business or line of business in any geographic area or
solicit the employment of any Persons, or
-11-
(B) pursuant to which any other party is
granted exclusive rights or “most favored nations”
rights of any type or scope with respect to any of the
Company’s products, technology, Intellectual Property or
business;
|
