Document:

exv10w1

 

Exhibit 10.1

THIRD AMENDMENT AND WAIVER

     This THIRD AMENDMENT AND WAIVER (this “Amendment”) is entered into as of April 30,
2008, among HALIFAX CORPORATION OF VIRGINIA, f/k/a Halifax Corporation, a Virginia corporation
(“Halifax”), HALIFAX ENGINEERING, INC., a Virginia corporation (“Engineering”), MICROSERV LLC, a
Delaware limited liability company (Microserv”) and HALIFAX ALPHANATIONAL ACQUISITION, INC., a
Delaware corporation (“AlphaNational”; collectively with Halifax, Engineering and Microserv,
“Borrower”), and PROVIDENT BANK, a Maryland banking corporation (“Bank”).

W I T N E S S E T H :

     WHEREAS, the Borrower and the Bank entered into that certain Fourth Amended and Restated
Loan and Security Agreement dated as of June 29, 2007 (as amended, restated, supplemented or
modified from time to time, including the amendments and waivers set forth in that certain First
Amendment and Waiver dated November 13, 2007, and that certain Second Amendment and Waiver dated
as of January 31, 2008 the “Loan Agreement”; capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to such terms in the Loan Agreement);

     WHEREAS, the following Events of Default have occurred under the Loan Agreement: (a) Borrower
failing to maintain a minimum Tangible Net Worth plus Subordinated Debt of not less than
$1,000,000 as of March 31, 2008; (b) Borrower failing to maintain a ratio of Total Liabilities
less Subordinated Debt to Tangible Net Worth plus Subordinated Debt of not greater than 4.0:1 as
of December 31, 2007; (c) Borrower failing to maintain a Current Ratio equal to or greater than
1:1 as of March 31, 2008; and (d) Borrower failing to deliver to the Bank, by April 15, 2008, Bank
either: (i) a commitment for financing in sufficient amount to completely pay-off the Line of
Credit and the Auxiliary Revolver Facility; or (ii) an engagement letter with an advisory firm
satisfactory to the Bank to assist the Borrower in evaluating and pursuing alternative
refinancing sources or the sale of all or substantially all of the Borrower’s assets pay  the
principal, interest and late charges owed under the Auxiliary Revolver Facility at the December
31, 2007 maturity thereof or (iii) an Account Control Agreement executed by Liberty Bank in form
and substance acceptable to the Bank covering any accounts maintained by the Borrower at Liberty
Bank (the “Existing Defaults”);

     WHEREAS, the Existing Defaults are continuing and remain unwaived, and the Borrower has
requested that the Bank waive the Existing Defaults;

     WHEREAS, the Bank has agreed to the requested waiver on the terms and conditions provided
herein; and

     WHEREAS, the Borrower has further requested that certain terms and conditions of the Loan
Agreement and the Promissory Notes evidencing the Revolving Line of Credit and the Auxiliary
Revolver Facility (each a “Promissory Note” and collectively, the “Promissory Notes”) be
amended, and the Bank has agreed to the requested amendments on the terms and conditions
provided herein;

 

 

     NOW THEREFORE, in consideration of the foregoing premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

     1. Amounts Due. The Borrower acknowledges and agrees that as of April 29, 2008 the
outstanding principal balance due under: (a) the Line of Credit is Three Million Six Hundred
and Two Thousand Three Hundred Seventy-One Dollars and 96/100 ($3,602,371.96) with accrued
interest due in the amount of Twenty-One Thousand Three Hundred Fifty-two Dollars and
03/100 ($21,352.03) and (b) the Auxiliary Revolver Facility is Thirty Five Thousand Four
Hundred Thirty-Six Dollars and 95/00 ($35,436.95) with accrued interest due in the amount of
Two Hundred and Seventy Dollars and 31/100 ($270.31) and that such sums are in fact now due
and owing without defense, set-off or counterclaim whatsoever.

     2. Amendment to the Loan Agreement.

          A. Section II.A. 1. of the Loan Agreement is hereby modified and
amended by deleting the last two sentences thereof added by that certain Second
Amendment and Waiver dated as of January 31, 2008 and replacing them with the
following:

“All amounts outstanding under the Line of Credit shall be due and paid in full on
June 30, 2008.”

          B. Section II.A.2. of the Loan Agreement is hereby modified and amended by
deleting the last seven sentences thereof added by that certain Second Amendment and Waiver
dated as of January 31, 2008 and replacing them with the following:

“Notwithstanding the provisions set forth above regarding the operation of the
Auxiliary Revolver Facility, the Borrower cannot request any advance under the
Auxiliary Revolver Facility after February 1, 2008 and all amounts outstanding under
the Auxiliary Revolver Facility shall thereafter be due and paid in full as set
forth above and finally on April 30, 2008.”

     3. Amendment to Promissory Notes.

          A. Section 3(a) of the Promissory Note evidencing the Line of Credit shall be
deleted in its entirety and replaced with the following:

“(a) Principal: The principal balance of this Promissory Note and any
accrued but unpaid interest shall be paid in full by the Borrower in immediately
available funds on June 30, 2008.”

          B. Section 3(a) of the Promissory Note evidencing the Auxiliary Revolver
Facility shall be deleted in its entirety and replaced with the following:

“(a) Principal: The principal balance of this Promissory Note and any
accrued but unpaid interest shall be paid in full by the Borrower in immediately available
funds on April 30, 2008.”

2

 

     4. Waiver. The Bank acknowledges that the Existing Defaults currently exist.
Subject to the fulfillment of the conditions precedent to the effectiveness of this Amendment
set forth in Section 4, the Bank hereby waives the Existing Defaults.

     5. No Other Amendments or Waivers. Except in connection with the amendments and
the waivers expressly set forth above, the execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any right, power or remedy of the Bank under the
Loan Agreement or any of the other related documents, nor constitute a waiver of any provision
of the Loan Agreement or any of the other related documents. Except for the amendments set
forth above, the text of the Loan Agreement and all other related documents shall remain
unchanged and in full force and effect and hereby ratifies and confirms its respective
obligations thereunder. The Borrower acknowledges and expressly agrees that the Bank reserves
the right to, and does in fact, require strict compliance with all terms and provisions of
the Loan Agreement.

     6. Conditions Precedent to Effectiveness. This Amendment shall become effective
as of the date hereof when, and only when, the Bank shall have received the following, in form
and substance satisfactory to the Bank:

	 	a.	 	counterparts of this Amendment executed by each Borrower;
	 
	 	b.	 	payment in full, in immediately available funds, to the Bank
of one-half of amendment fee described below in the amount of $15,000, such
fee being fully earned and non-refundable upon the effectiveness of this
Amendment;
	 
	 	c.	 	payment in full of all other fees and expenses due and
payable to the Bank under the Loan Agreement and in connection with the
execution and delivery of this Amendment and the transactions described
herein, including, without limitation, the fees and expenses of counsel
to the Bank, if any; and
	 
	 	d.	 	such other information, documents, including amended and
restated promissory notes, instruments, certificates or approvals as
may be set forth within this Agreement or as the Bank or the Bank’s
counsel may reasonably require.

     7. Additional Agreements. The Borrower agrees as follows:

	 	a.	 	By no later than May 31, 2008, the Borrower shall deliver to
the Bank either: (i) a commitment for financing in sufficient amount to
completely pay-off the Line of Credit by no later than June 30, 2008; or
(ii) an engagement letter with an advisory firm satisfactory to the Bank to
assist the Borrower in evaluating and pursuing alternative refinancing
sources or the sale of all or substantially all of the Borrower’s assets.
	 
	 	b.	 	By no later than May 15, 2008, the Borrower shall deliver to the
Bank a fully executed Account Control Agreement acceptable to Bank perfecting the
Bank’s security interest in all of the Borrower’s accounts at Liberty Bank.

3

 

	 	c.	 	By no later than May 15, 2008, the Borrower shall identify to the Bank all locations at
which it maintains inventory valued at greater than $10,000.
	 
	 	d.	 	On a monthly basis commencing on May 15, 2008, the Borrower shall deliver copies of the
account statements for the prior month on the VDOT escrow funds in accounts at SunTrust Bank,
N.A., and on all Liberty Bank accounts.
	 
	 	e.	 	On a monthly basis commencing on May 30, 2008, and within 30 days of the end of each month
thereafter, the Borrower shall deliver copies of its previous month-end income statement and
balance sheet.
	 
	 	f.	 	By no later than May 15, 2008, the Borrower shall deliver a listing of the names and
address of all of its account debtors and vendors.
	 
	 	g.	 	The Automatic Credit Advance procedure of the Borrower’s ARTS Service shall cease on April
30, 2008. Notwithstanding anything to the contrary in any agreement or the Reporting
Requirements Addendum with the Bank, the Borrower shall, commencing in May 1, 2008: (i) upload
Receivable data into ARTS upon each advance request, and in any event shall upload such data
at least every two weeks; (ii) submit to the Bank Borrowing Base Certificates, in form and
substance satisfactory to the Bank, every two weeks; (iii) within ten
(10) days of each month end, submit a Borrowing Base Certificate reflecting activity for the
entire previous month, accompanied by a reconciliation of reported sales, credits, collections,
ending Receivable balances, loan balance to subsidiary records, and bank statements.
	 
	 	h.	 	The Financial Covenants set forth in the Financial Covenants Addendum continue to apply to
the Borrower and shall be measured next by the Bank as of March 31, 2008 and monthly
thereafter. The following Financial Covenants are hereby modified and amended with the
following:

	 	(i)	 	Financial Covenant II.A shall be modified and amended to read as follows: Borrower
shall at all times maintain a minimum Tangible Net Worth plus Subordinated Debt of not
less than $400,000 as of March 31, 2008 and as of the last day of each month thereafter,
and
	 
	 	(ii)	 	Financial Covenant II.D shall be modified and amended to read as follows: Borrower
failing to maintain a Current Ratio equal to or greater than .975 as of March 31, 2008 and
as of the last day of each month thereafter.

For purposes of covenant measurements, any capital infusion or issuance of subordinated debt
shall be deemed to have occurred after March 31, 2008.

4

 

     8. Representations and Warranties of the Borrower. In consideration of the execution
and delivery of this Amendment by the Bank, the Borrower hereby represents and warrants in favor of
the Bank: (a) each Borrower has the power and authority (i) to enter into this Amendment and (ii)
to do all acts and things as are required or contemplated hereunder to be done, observed and
performed by the Borrower; (b) the Borrower has the power and has taken all necessary action to
authorize it to execute, deliver, and perform this Amendment in accordance with the terms hereof
and to consummate the transactions contemplated hereby; (c) (i) the Borrower has obtained all
necessary governmental, shareholder and third party approvals, (ii) all such necessary
governmental, shareholder and third party approvals are in full force and effect, (iii) none of
such necessary governmental, shareholder and third party approvals is the subject of any pending
or, to the best of the Borrower’s knowledge, threatened attack or revocation, by the grantor of the
governmental, shareholder or third party approval and (iv) the Borrower is not required to obtain
any additional necessary governmental, shareholder or third party approval in connection with the
execution, delivery, and performance of this Amendment, in accordance with its terms, or the
consummation of the transactions contemplated hereby or thereby; (d) the execution, delivery, and
performance of this Amendment in accordance with its terms and the consummation of the transactions
contemplated hereby do not and will not (i) violate any applicable law, (ii) conflict with, result
in a breach of, or constitute a default under the charter, bylaws and other governing documents of
each Borrower or under any indenture, agreement, or other instrument to which the Borrower is a
party or by which the Borrower or any of its properties may be bound, or (iii) result in or require
the creation or imposition of any lien upon or with the Borrower except liens permitted by the Loan
Agreement; (e) this Amendment has been duly executed and delivered by each Borrower, and is a
legal, valid and binding obligation of each Borrower, enforceable in accordance with its terms
except to the extent that the enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting the enforcement of creditor’s rights generally
or by general principles of equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law); (f) after giving effect to this Amendment, no Event of Default
exists under the Loan Agreement; (g) as of the date hereof, all representations and warranties of
the Borrower set forth in the Loan Agreement are true, correct and complete in all material
respects; and (h) the Loan Agreement constitutes the legal, valid and binding obligations of each
Borrower, enforceable in accordance with its terms except to the extent that the enforceability
thereof may be limited by applicable bankruptcy, insolvency, reorganization or similar laws
affecting the enforcement of creditor’s rights generally or by general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity or at law).

     9. Amendment Fee. The Borrower agrees to pay the Bank an amendment fee equal to
$30,000 which fee shall be fully earned and non-refundable upon the effectiveness of this
Amendment. Borrower shall pay $15,000 of the fee upon execution of this Agreement and shall pay the
remaining $15,000 on or prior to 5:00 p.m., eastern time, May 31, 2008, provided, however, that its
obligation to make such $15,000 payment shall be discharged if the Borrower fully and finally
repays all sums outstanding under the revolving Line of Credit and the Auxiliary Revolver Facility
prior to 5:00 p.m., eastern time, May 31, 2008.

     10. Counterparts. This Amendment may be executed in multiple counterparts, each of
which shall be deemed to be an original and all of which, taken together, shall constitute one and
the same agreement. In proving this Amendment in any judicial proceedings, it shall not be

5

 

necessary to produce or account for more than one such counterpart signed by the party against
whom such enforcement is sought. Any signatures delivered by a party by facsimile transmission or
by e-mail transmission of an adobe file format document (also known as a PDF file) shall be deemed
an original signature hereto.

     11. Reference to and Effect on the Note Documents. Upon the effectiveness of this
Amendment, on and after the date hereof, each reference in the Loan Agreement to “this Agreement”,
“hereunder”, “hereof”, or words of like import referring to the Loan Agreement, and each reference in
the other related documents to “the Loan Agreement”, “thereunder,” “thereof”, or words of like import
referring to the Loan Agreement, shall mean and be a reference to the Loan Agreement as amended
hereby.

     12. Costs, Expenses and Taxes. The Borrower agrees to pay on demand all costs and expenses
in connection with the preparation, execution, and delivery of this Amendment and the other
instruments and documents to be delivered hereunder, including, without limitation, the amendment
fee to be paid pursuant to Sections 5 and 8 of this Amendment, and the fees and out-
of-pocket expenses of counsel for the Bank with respect thereto and with respect to advising the
Bank as to its rights and responsibilities hereunder and thereunder. In addition, the Borrower
agrees to pay any and all stamp and other taxes payable or determined to be payable in connection
with the execution and delivery of this Amendment and the other instruments and documents to be
delivered hereunder, and agrees to save the Bank harmless from and against any and all liabilities
with respect to or resulting from any delay in paying or omission to pay such taxes.

     13. Release of Claims. This Amendment is intended to be a further accommodation by
Bank to Borrower. In consideration of all such accommodations, and acknowledging that Bank will be
specifically relying on the following provisions as a material inducement in entering into this
Amendment, and for other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, each Borrower, on behalf of itself and its shareholders and subsidiaries,
hereby releases, remises and forever discharges Bank and its agents, servants, employees,
directors, officers, attorneys, accountants, consultants, affiliates, representatives, receivers,
trustees, subsidiaries, predecessors, successors and assigns (collectively, the “Released
Parties”) from any and all claims, damages, losses, demands, liabilities, obligations, actions
and causes of action whatsoever (whether arising in contract or in tort, and whether at law or in
equity), whether known or unknown, matured or contingent, liquidated or unliquidated, in any way
arising from, in connection with, or in any way concerning or relating to the Loan Agreement, the
other related documents, or any dealings with any of the Released Parties in connection with the
transactions contemplated by such documents or this Amendment prior to the execution of this
Amendment. This release shall be and remain in full force and effect notwithstanding the discovery
by any Borrower after the date hereof (a) of any new or additional claim against any Released
Party, (b) of any new or additional facts in any way relating to the subject matter of this
release, (c) that any fact relied upon by it was incorrect or (d) that any representation made by
any Released Party was untrue or that any Released Party concealed any fact, circumstance or claim
relevant to Borrower’s execution of this release; provided, however, this release shall not
extend to any claims arising after the execution of this Amendment in connection with the Loan
Agreement. Each Borrower acknowledges and agrees that this release is intended to, and does, fully,
finally and forever release all matters described in this Section 13,

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notwithstanding the existence or discovery of any such new or additional claims or facts, incorrect
facts, misunderstanding of law, misrepresentation or concealment.

     14. Section Titles. The section titles contained in this Amendment are included for
the sake of convenience only, shall be without substantive meaning or content of any kind
whatsoever, and are not a part of the agreement between the parties.

     15. Entire Agreement. This Amendment and the other related documents constitute the
entire agreement and understanding between the parties hereto with respect to the transactions
contemplated hereby and thereby and supersede all prior negotiations, understandings and agreements
between such parties with respect to such transactions.

     16. Governing Law. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF MARYLAND, WITHOUT REGARD TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF.

     17. Time of the Essence. Time is of the essence with respect to all the terms and conditions
of this Agreement.

     18. Voluntary Agreement and Advice of Counsel. The Borrower acknowledges, affirms and
agrees that they: (a) are entering into this Agreement of their own choice without coercion or
duress of any kind; (b) are not relying upon any representations, whether written or oral, not
contained in this Agreement; (c) have had the opportunity to be represented by counsel of their own
choice; and (d) understand the meaning and effect of all of the terms and provisions of this
Agreement including the releases and waivers contained in Section 13.

[Remainder of page intentionally left blank.]

[Signatures follow]

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Amendment as of
the day and year first written above.

	 	 	 	 	 	 	 
	BORROWER:	 	HALIFAX CORPORATION OF VIRGINIA	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Joseph Sciacca                                                                      (SEAL)
 

	 	 
	 

	 	Name:
	 	Joseph Sciacca	 	 
	 

	 	Title:
	 	Chief Financial Officer	 	 
	 
	 	 	 	 	 	 
	 	 	HALIFAX ENGINEERING, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Joseph Sciacca                                                                      (SEAL)
 

	 	 
	 

	 	Name:
	 	Joseph Sciacca	 	 
	 

	 	Title:
	 	Vice President, Secretary and Treasurer	 	 
	 
	 	 	 	 	 	 
	 	 	MICROSERV LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Joseph Sciacca                                                                      (SEAL)
 

	 	 
	 

	 	Name:
	 	Joseph Sciacca	 	 
	 

	 	Title:
	 	Vice President, Secretary and Treasurer	 	 
	 
	 	 	 	 	 	 
	 	 	HALIFAX ALPHANATIONAL ACQUISITION, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Joseph Sciacca                                                                      (SEAL)
 

	 	 
	 

	 	Name:
	 	Joseph Sciacca	 	 
	 

	 	Title:
	 	Vice President, Secretary and Treasurer	 	 
	 
	 	 	 	 	 	 
	BANK:	 	PROVIDENT BANK	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Michael McShane                                                                 (SEAL)
 

	 	 
	 

	 	Name:
	 	Michael McShane	 	 
	 

	 	Title:
	 	Senior Vice President	 	 

Third Amendment and Waiver

to Loan Agreement

April, 2008

8exv10w2

 

Exhibit 10.2

ARBITRON INC.

Form of 2008 CEO Restricted Stock Unit Agreement

Granted Under the 1999 Stock Incentive Plan

     AGREEMENT made between Arbitron Inc., a Delaware corporation (the “Company”), and Stephen B.
Morris (the “Participant”).

     For valuable consideration, receipt of which is acknowledged, the parties hereto agree as
follows:

     1. Grant of RSUs.

On ___, 2008 (the “Date of Grant”) and subject to the terms and conditions set forth in this
Agreement and in the Arbitron Inc. 1999 Stock Incentive Plan (the “Plan”), the Company granted to
the Participant Restricted Stock Units (“RSUs”) providing the right to receive ___(___)
shares of common stock, $0.50 par value, of the Company (the “Shares”).

     2. Vesting and Forfeiture.

     (a) While the Participant remains employed, the RSUs shall vest in two (2) equal annual
installments commencing on December 31, 2008, with a final vesting on December 31, 2009,
subject to earlier vesting under subsection (b). The date upon which each installment vests
shall be considered a “Vesting Date” for the portion of the RSUs vesting on that date.

     (b) The Vesting Date for all unvested RSUs shall be accelerated, if applicable, to the
earliest of:

     (i) The death of the Participant;

     (ii) The “Disability” of the Participant (within the meaning of Proposed
Treasury Regulation Section 1.409A-3(g)(4) or any successor regulation); and

     (iii) A “Change in Control” consisting of a change in ownership or effective
control of the Company (within the meaning of Treasury Regulation Section
1.409A-3(g)(5) or any successor regulation).

     (c) If the Participant ceases to be employed by the Company (and any applicable
Subsidiaries) for any reason or no reason (except for death or Disability), the Participant
shall immediately and automatically forfeit all rights to any of his RSUs that have Vesting
Dates after the date employment ends except as an applicable employment agreement or
executive retention agreement may provide to the contrary.

     3. Issuance of Shares.

          Subject to the terms and conditions of this Agreement (including any Withholding Tax
obligations), as soon as practicable after a Vesting Date, the Company shall issue one or more
certificates representing Fifty Percent (50%), rounded down to the next whole Share, of the newly
vested Shares (the “Initial Tranches”) to the Participant or his estate, or, as directed
by the Participant, a brokerage account, with the remaining Shares credited to the
Participant’s account as an equivalent number of “Deferred Stock Units.” The Company must, in any
event, issue the applicable Shares in respect of the Initial Tranches no later than the later of
(i) December 31 of the calendar year in which the applicable Vesting Date occurs and (ii) the
fifteenth day of the third calendar month following the Vesting Date. Until the Vesting Date, the
Participant shall have no rights to any Shares or any rights associated with such Shares, including
without limitation dividend or voting rights, and the Participant shall have no voting rights with
respect to Deferred Stock Units.

 

 

     4. Acceleration/ Deferral.

     (a) Acceleration. In no event may the Company deliver the Shares to the
Participant earlier than an applicable Vesting Date.

     (b) Deferral. The Company shall issue Shares in payment of the Deferred Stock
Units as of or as soon as practicable after the first day of the seventh (7th) month (the
“Deferred Payment Date”) following the Participant’s separation from service, as a lump sum
in common stock of the Company (with any fractional share paid in cash). If the Participant
separates from service with the Company and all Subsidiaries on account of death or if the
Participant dies prior to payment under the preceding sentence, the Company shall make
payment as soon as reasonably practicable following the Participant’s death, in accordance
with the beneficiary designation form filed for this benefit (or, if none, according to the
beneficiary designation form filed by the Participant with respect to his 2006 award of
restricted stock) as the form may be updated from time to time (provided that a designation
specific to the Deferred Stock Units hereunder shall take precedence over a form filed for
the 2006 award). If there is a Change in Control, then upon consummation of the Change in
Control, but in no event more than 15 days following the Change in Control, the Company
shall provide the Participant a cash payment equal to the value per share of the
consideration received in the Change in Control multiplied by the number of Deferred Stock
Units then credited to the Participant under this Agreement. In no event may the Company or
the Participant defer the delivery of the Shares beyond the date specified in this Section
4(b), unless such deferral complies in all respects with Treasury Regulation Section
1.409A-2(b) related to subsequent changes in the time or form of payment of nonqualified
deferred compensation arrangements, or any successor regulation.

     5. Dividend Equivalent Rights.

          The Participant shall receive Dividend Equivalent Rights on the Shares between the applicable
Vesting Date and the date on which Shares are distributed. “Dividend Equivalent Rights” mean a
credit to the account of the Participant, based on the number of vested RSUs or Deferred Stock
Units then credited to the Participant under this Agreement, equivalent to the cash, stock or other
property dividends on shares of Common Stock. Dividend Equivalent credits shall be deemed
reinvested in additional RSUs or Deferred Stock Units, as applicable, (or fractions thereof) by
dividing the dollar amount of the Dividend Equivalent credit by the Fair Market Value of a share of
the Company’s common stock on the payment date of the dividend. The resulting number of Common
Stock equivalents shall be added to the number of RSUs or Deferred Stock Units (as applicable)
subject to this Agreement.

- 2 -

 

     6. Restrictions Regarding Employment.

     (a) The Participant agrees that he will not take any Adverse Actions (as defined below)
against the Company or any Subsidiary from the Date of Grant through the first anniversary
of the Participant’s termination of employment with the Company or any Subsidiary (the
“Restricted Period”). The Participant acknowledges that damages that may arise from a
breach of this Section 6 may be impossible to ascertain or prove with certainty.
Notwithstanding anything in this Agreement or the Plan to the contrary, if the Company
determines in its sole discretion that the Participant has taken Adverse Actions against the
Company or any Subsidiary at any time during the Restricted Period, in addition to other
legal remedies that may be available, (i) the Company will be entitled to an immediate
injunction from a court of competent jurisdiction to end such Adverse Action, without
further proof of damage, (ii) the Committee will have the authority in its sole discretion
to terminate immediately all rights of the Participant under the Plan and this Agreement
without notice of any kind, and (iii) the Committee will have the authority in its sole
discretion to cause a forfeiture of any Shares acquired by the Participant upon the vesting
of the RSUs to the extent that such vesting occurred within six months prior to the date the
Participant first commences any such Adverse Actions and require the Participant to disgorge
any profits (however defined by the Committee) realized by the Participant relating to such
vested portion of the Shares. Such disgorged profits paid to the Company must be made in
cash (including check, bank draft or money order) or, with the Committee’s consent, shares
of Common Stock with a Fair Market Value on the date of payment equal to the amount of such
payment. The Company will be entitled to withhold and deduct from future wages of the
Participant (or from other amounts that may be due and owing to the Participant from the
Company or a Subsidiary) or make other arrangements for the collection of all amounts
necessary to satisfy such payment obligation.

     (b) For purposes of this Agreement, an “Adverse Action” will mean any of the following:
(i) engaging in any commercial activity in competition with any part of the business of the
Company or any Subsidiary as conducted during the Restricted Period for which the
Participant has or had access to trade secrets and/or confidential information; (ii)
diverting or attempting to divert from the Company or any Subsidiary any business of any
kind, including, without limitation, interference with any business relationships with
suppliers, customers, licensees, licensors, clients or contractors; (iii) participating in
the ownership, operation or control of, being employed by, or connected in any manner with
any person or entity that solicits, offers or provides any services or products similar to
those that the Company or any Subsidiary offers to its customers or prospective customers,
(iv) making, or causing or attempting to cause any other person or entity to make, any
statement, either written or oral, or conveying any information about the Company or any
Subsidiary that is disparaging or that in any way reflects negatively on the Company or any
Subsidiary; or (v) engaging in any other activity that is hostile, contrary or harmful to
the interests of the Company or any Subsidiary, including, without limitation, influencing
or advising any person who is employed by or in the service of the Company or any Subsidiary
to leave such employment or service with the Company or any Subsidiary or to enter into the
employment or service of any actual or prospective competitor of the Company or any
Subsidiary, influencing or advising any competitor of the Company or any Subsidiary to
employ to otherwise engage the services of any person who is employed by or in the service
of the Company or any Subsidiary, or improperly disclosing or otherwise misusing any trade
secrets or confidential information regarding the Company or any Subsidiary.

- 3 -

 

     (c) Should any provision of this Section 6 of the Agreement be held invalid or illegal,
such illegality shall not invalidate the whole of this Section 6 of the Agreement, but,
rather, the Agreement shall be construed as if it did not contain the illegal part or
narrowed to permit its enforcement, and the rights and obligations of the parties shall be
construed and enforced accordingly. In furtherance of and not in limitation of the
foregoing, the Participant expressly agrees that should the duration of or business
activities covered by, any provision of this Agreement be in excess of that which is valid
or enforceable under applicable law, then such provision shall be construed to cover only
that duration, extent or activities that may validly or enforceably be covered. The
Participant acknowledges the uncertainty of the law in this respect and expressly stipulates
that this Agreement shall be construed in a manner that renders its provisions valid and
enforceable to the maximum extent (not exceeding its express terms) possible under
applicable law. This Section 6 of the Agreement does not replace and is in addition to any
other agreements the Participant may have with the Company or any of its Subsidiaries on the
matters addressed herein.

     7. Transferability.

          This Agreement may not be sold, assigned, transferred, pledged, hypothecated or otherwise
disposed of (whether by operation of law or otherwise) (collectively, a “transfer”), except that
this Agreement may be transferred by the laws of descent and distribution or as otherwise permitted
under the Plan. The Participant may only transfer the Shares that may be issued pursuant to this
Agreement following a Vesting Date (or, for Deferred Stock Units, the Deferred Payment Date) that
covers them.

     8. Withholding Taxes.

     (a) The Participant has reviewed with the Participant’s own tax advisors the federal,
state, local and foreign tax consequences of this investment and the transactions
contemplated by this Agreement. The Participant is relying solely on such advisors and not
on any statements or representations of the Company or any of its agents.

     (b) The Company’s obligation to deliver Shares to the Participant upon the vesting of
the RSUs shall be subject to the satisfaction of all income tax (including federal, state
and local taxes), social insurance, payroll tax, payment on account or other tax related
withholding requirements (“Withholding Taxes”). FICA taxes will be withheld from other
compensation due to the Participant with respect to RSUs that become credited as Deferred
Stock Units.

     (c) The Participant acknowledges and agrees that the Company has the right to deduct
from payments of any kind otherwise due to the Participant any Withholding Taxes to be
withheld with respect to the transactions contemplated by this Agreement, including the
vesting of the Shares.

     9. Securities Laws.

          Notwithstanding any other provision of the Plan or this Agreement, the Company will not be
required to issue, and the Executive may not sell, assign, transfer or otherwise dispose of, any
shares of Common Stock received as payment of the RSUs, unless (a) there is in effect with respect
to the shares of Common Stock received as payment of the RSUs a

registration statement under the Securities Act of 1933, as amended, and any applicable state
or foreign securities laws or an exemption from such registration, and (b) there has been obtained
any other consent, approval or permit from any other regulatory body that the Committee, in its
sole discretion, deems necessary or advisable. The Company may condition such issuance, sale or
transfer upon the receipt of any representations or agreements from the parties involved, and the
placement of any legends on certificates representing Common Stock received as payment of the RSUs,
as may be deemed necessary or advisable by the Company to comply with such securities law or other
restrictions.

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     10. Adjustments.

          In the event of any reorganization, merger, consolidation, recapitalization, liquidation,
reclassification, stock dividend, stock split, combination of shares, rights offering, divestiture
or extraordinary dividend (including a spin-off), or any other change in the corporate structure or
shares of the Company, the Committee (or, if the Company is not the surviving corporation in any
such transaction, the board of directors of the surviving corporation), in order to prevent
dilution or enlargement of the rights of the Grantee, shall make equitable adjustments (which
adjustments will be conclusive) as to the number and kind of securities or other property
(including cash) covered by this grant of RSUs and any related Deferred Stock Units.

     11. Provisions of the Plan.

This Agreement is subject to the provisions of the Plan, a copy of which is furnished to the
Participant with this Agreement. Any undefined terms are defined in the Plan.

     12. Miscellaneous.

     (a) Section 409A. This Agreement is intended to comply with the requirements
of Section 409A of the Internal Revenue Code and shall be construed consistently therewith.

     (b) Unsecured Creditor. This Agreement shall create a contractual obligation
on the part of Company to make payment of the RSUs and Deferred Stock Units credited to the
account of the Participant at the time provided for in this Agreement. Neither the
Participant nor any other party claiming an interest in deferred compensation hereunder
shall have any interest whatsoever in any specific assets of the Company. The Executive’s
right to receive payments hereunder shall be that of an unsecured general creditor of
Company.

     (c) Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision of this
Agreement, and each other provision of this Agreement shall be severable and enforceable to
the extent permitted by law.

     (d) Waiver. Any provision for the benefit of the Company contained in this
Agreement may be waived, either generally or in any particular instance, by the Board of
Directors of the Company or the Committee.

     (e) Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the Company and the Participant and their respective heirs, executors,
administrators, legal representatives, successors and assigns, subject to the
restrictions on transfer set forth in Section 7 of this Agreement.

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     (f) Notice. All notices required or permitted hereunder shall be in writing
and deemed effectively given upon personal delivery or five calendar days after deposit in
the United States Post Office, by registered or certified mail, postage prepaid, addressed
to the other party hereto at the address shown beneath his, her, or its respective signature
to this Agreement, or at such other address or addresses as either party shall designate to
the other in accordance with this Section 12(f).

     (g) Entire Agreement. This Agreement and the Plan constitute the entire
agreement between the parties, and supersedes all prior agreements and understandings,
relating to the subject matter of this Agreement.

     (h) Amendment. This Agreement may be amended or modified only by a written
instrument executed by both the Company and the Participant.

     (i) Governing Law. This Agreement shall be construed, interpreted and enforced
in accordance with the internal laws of the State of Delaware without regard to any
applicable conflicts of laws.

     (j) Electronic Delivery. The Company may, in its sole discretion, decide to
deliver any documents related to participation in the Plan, RSUs granted under the Plan or
future RSUs that may be granted under the Plan by electronic means or to request the
Participant’s consent to participate in the Plan by electronic means. The Participant
hereby consents to receive such documents by electronic delivery and, if requested, to agree
to participate in the Plan through an on-line or electronic system established and
maintained by the Company or another third party designated by the Company.

     (k) Participant’s Acknowledgments. The Participant acknowledges that he: (i)
has read this Agreement; (ii) has been represented in the preparation, negotiation and
execution of this Agreement by legal counsel of the Participant’s own choice or has
voluntarily declined to seek such counsel; (iii) understands the terms and consequences of
this Agreement; (iv) is fully aware of the legal and binding effect of this Agreement; and
(v) understands that the law firm of Wilmer Cutler Pickering Hale and Dorr LLP is acting as
counsel to the Company in connection with the transactions contemplated by the Agreement,
and is not acting as counsel for the Participant.

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date last indicated
below.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	ARBITRON INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Date:                     , 2008
	 	By:	 	 	 	 
	 

	 	 	 	 	 	 

Name:
	 	 
	 

	 	 	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Date:                     , 2008
	 	By:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Stephen B. Morris	 	 

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