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EXHIBIT 10.1
REDEMPTION AGREEMENT
AGREEMENT made as of July 13, 2001 by
and between TRAFFIX, INC., a Delaware corporation with its principal
offices at One Xxxx Xxxx Xxxxx, Xxxxx Xxxxx, Xxxxx Xxxxx, XX 00000 (the
"COMPANY"), and XXX XXXXXXXXX, an individual having an address at 00
Xxxxxxx Xx., Xxxxxxxxx, XX 00000 (the "SELLER").
W I T N E S S E T H :
WHEREAS, Seller is a principal
shareholder of, member of the Board of Directors of and consultant to
the Company; and
WHEREAS, Seller is desirous of selling
and the Company is desirous of purchasing a significant portion of the
shares of common stock, par value $.001 per share, of the Company owned
by the Seller; and
WHEREAS, the Seller is desirous of
resigning and the Company is desirous of accepting the resignation of,
the Seller as a member of the Company's Board of Directors and as a
consultant to the Company.
NOW, THEREFORE, in consideration of the
mutual covenants and undertakings hereinafter contained, and other good
and valuable consideration, the parties agree as follows:
1. SALE AND PURCHASE OF SHARES.
a. The Company agrees to purchase from
the Seller, on the terms and conditions set forth in this Redemption
Agreement (the "AGREEMENT"), Two Million (2,000,000) shares (the
"SHARES") of the Company's common stock, par value $.001 per share (the
"COMMON STOCK"), held of record by the Seller.
On the Closing Date (defined
below), the Seller shall deliver certificates representing all of the
Shares to the Company, duly endorsed or with stock powers duly executed
in form for transfer with all applicable tax or revenue stamps affixed
or paid for, in consideration of, and against payment by, the Company of
Six Million ($6,000,000) Dollars, by certified, attorney trust account
or bank check or by wire transfer to an account designated by the
Seller. The closing of the sale and purchase of the Shares shall take
place on July 16, 2001 (the "CLOSING DATE") assuming satisfaction of the
conditions set forth in Section 4 below, at such time and place as shall
be mutually agreed.
2. CERTAIN REPRESENTATIONS.
I. The Seller hereby represents and warrants to the
Company, its officers and directors, the following:
a. The Seller is the sole beneficial owner of the Shares, free and clear of
all liens, pledges, liabilities, claims and encumbrances).
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b. The Seller has read carefully and understands this Agreement and has
consulted his own attorney, accountant and tax and financial advisor
with respect to the transactions contemplated hereby.
c. The Company has made available to the Seller and his counsel, or his
designated representatives, during the course of this transaction and
prior to the sale of any of the securities referred to herein, the
opportunity to ask questions of and receive answers from the officers
and directors of the Company concerning the terms and conditions of the
sale or otherwise relating to the financial data and business of the
Company, to the extent that the Company or its officers and directors
possess such information or can acquire it without unreasonable effort
or expense.
d. Seller acknowledges that he is aware that the Company is seeking to
further develop its current lines of business, including, without
limitation, the marketing and sale on the internet of telecommunications
and other products and services, and to expand into new lines of
business. Seller further acknowledges that until January 1, 2001 he was
an executive officer and a member of the Board of Directors of the
Company and, as such, was privy to all information relating to the
financial affairs, prospects and day-to-day operations of the Company.
In addition, until his execution of this Agreement he was a member of
the Company's Board of Directors and a consultant to the Company, and in
such capacity was privy to that information disseminated to him as a
board member. Seller represents and warrants that he did not rely upon
any representations or warranties of the Company or any of its officers,
directors, employees or agents, in his determination to consummate the
transactions contemplated hereby, except as set forth in (II) below.
Pursuant thereto, Seller hereby waives any claim and releases the
Company and its officers, directors, employees and agents from any claim
that he or any entity or individual controlled by, controlling or under
common control with him (an "Affiliate") has, may have or could have
against the Company or any of its officers, directors, employees or
agents regarding the amount or nature of the consideration paid by the
Company for the Shares and any other consideration delivered by the
Company to Seller or any of his Affiliates in connection with this
Agreement or any other agreements, including, but not limited to, any
claim based upon or arising out of any allegation that the Company
failed to inform Seller about, failed to provide Seller with accurate or
complete information regarding, or provided Seller with misleading
information concerning the Company's business and affairs, financial
condition, prospects, plans, work in process, opportunities or any other
matter or thing concerning the Company.
e. The Seller has such knowledge and experience in financial and business
matters that he is capable of evaluating the merits and risks of the
sale of the Shares.
II. The Company hereby represents and warrants to the Seller that no
information has been disseminated to the Board of Directors that has not
also been disseminated to Seller, other than information disseminated on
a conference call on July 9, 2001 held to discuss this transaction with
Seller, which information related solely to this transaction, and
documentation relating thereto.
3. LOCK-UP AGREEMENT.
The Seller agrees that, for a period of 12 months from and after the
Closing Date, he will not sell, assign, transfer or otherwise dispose of
any securities of the Company owned by him;
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provided, however, that nothing contained herein shall prevent the
Seller from donating any of such securities to a bona fide charitable
organization classified as such pursuant to the provisions of the
Internal Revenue Code, as the same may be amended or supplemented. This
restriction terminates automatically, however, in the event during this
12 month period (a) a person or persons acting as a group, other than
those listed in the Beneficial Ownership Table set forth in the
Company's Proxy Statement dated as of July 13, 2001 (a copy of such
table has been provided to Seller), becomes the benefical owner of 40%
or more of the Company's voting stock or (b) the Company sells all or
substantially all of its assets in a single or series of transactions
4. CONDITIONS TO CLOSING.
a. It shall be a condition to the Company's obligation to close the
purchase of the Shares from the Seller that each of the following
conditions shall have first been satisfied, any one or more of which may
be waived by the Company in its discretion:
i. no action or proceedings shall have been instituted or, to the
knowledge, information and belief of the Company, shall have been
threatened before a court or other government body or by any public
authority to restrain or prohibit any of the transactions contemplated
by this Agreement;
ii. the representations made by the Seller in this Agreement shall be true
and correct in all material respects as of the date hereof and the
Closing Date.
b. It shall be a condition to the Seller's obligation to close the sale of
the Shares to the Company that each of the following conditions shall
have first been satisfied, any one or more of which may be waived by the
Seller in his discretion:
i. no action or proceedings shall have been instituted or, to the
knowledge, information and belief of Seller, shall have been threatened
before a court or other government body or by any public authority to
restrain or prohibit any of the transactions contemplated by this
Agreement.
ii. the representations made by the Company in this Agreement shall be true
and correct in all material respects as of the date hereof and the
Closing Date.
5. RESIGNATION OF SELLER.
Seller hereby tenders his resignation as a member of the Company's Board
of Directors and as a consultant to the Company, and the Company hereby
accepts such resignation. Pursuant to a verbal agreement by and between
the Seller and the Company, pursuant to which, inter alia, the Seller
was appointed a consultant to the Company, hereby terminates and shall
be of no further force and effect; however, this termination shall not
affect any commission arrangements from the Company to Seller for
business brought to the Company by Seller since December 23, 2000. The
Company and the Seller hereby acknowledge that Seller's resignation
hereby is mutually agreed upon between the parties hereto and is not
related to the Seller's disagreement with the Company relating to the
Company's operations, policies or practices.
6. RESTRICTIVE COVENANT.
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a. In consideration of the payments being made by the Company to the Seller
for the Shares, for a period of one (1) year after the Closing Date, the
Seller shall not, directly or indirectly, or through any other person,
firm, company, entity or enterprise, whether as an employee, consultant,
independent contractor, owner, shareholder, officer, director, partner,
joint venturer, member or otherwise, except as an employee of the
Company:
i. directly or indirectly, endeavor to entice away from the employ of the
Company or otherwise negatively influence the relationship of the
Company with any individual, partnership, firm, corporation or other
business organization that is, employed by the Company, or is otherwise
performing services or is selling products to the Company; or
ii. attempt in any manner topersuade, directly or indirectly, any person or
entity, including, but not limited to, the customers of the Company, to
cease doing business or to reduce the amount of business with the
Company which any such customer has customarily done or contemplates
doing with the Company; or
iii. become a greater than 5% owner, employee, independent contractor,
consultant or other advisor to any of the individuals or entities listed
on Schedule 6(a)(iii) hereof.
b. During the one (1) year period referred to in subparagraph (a) of this
Paragraph 6, the Seller shall keep secret and retain in strictest
confidence, all confidential matters relating to the Company and its
affiliates, including, but not limited to, its "know-how", trade
secrets, customer lists, data, pricing policies, operational methods,
marketing plans or strategies, product and service development
techniques or plans, information pertaining to the customers of the
Company or the Seller, and any such customer's requirements, business
acquisition plans, new personnel acquisition plans, formulae, methods of
operation, technical processes, designs and design projects and other
business affairs relating to the Company or its affiliates learned by
such person heretofore and hereafter, and shall not disclose such
matters to anyone outside of the Company and its affiliates, except as
such may be compelled by legal process (after having given due notice to
the Company).
c. The Seller acknowledges that the type and period of restriction imposed
in these subparagraphs 6(a) and (b) are fair and reasonable and are
reasonably required for the protection of the Company and are given as
an integral part of the Company's purchase of the Shares. The Seller
acknowledges that a breach of the provisions of subparagraphs 6(a) or
(b) would irreparably damage the Company, and that once such a breach
has occurred, there may be no accurate way of determining the amount of
damage or loss suffered by the Company. The Seller, therefore, agrees
that the terms of subparagraphs 6(a) and (b) may be enforced through
preliminary or final injunctive relief or other equitable remedy..
Nothing in this subparagraph 6(c) shall be construed to prohibit the
Company from seeking any other legal or equitable remedy available to it
and arising from the breach by the Seller of the provisions of
subparagraphs 6(a) or (b).
d. In the event that any provisions of subparagraphs (a) or (b) of this
Paragraph 6 shall be deemed unenforceable, invalid or overbroad in whole
or in part for any reason, then any tribunal, forum or court of
competent jurisdiction is hereby requested and instructed to reform such
provision to provide for the maximum competitive restraints upon the
Seller's activities (in time, product and geographic area) which may
then be legal and valid, and consent to such reformation is hereby
granted by the parties hereto.
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7. NO ASSIGNMENT.
This Agreement is not transferable or assignable by the Seller and the
Company may not assign its obligations under 1(b) hereof.
8. GENERAL.
a. This Agreement shall be binding upon the Seller and the Company and
their respective representatives, successors, and permitted assigns.
b. This Agreement shall be governed by and construed in accordance with the
law of New York, including its choice of law rules. Any judicial
proceeding brought against any of the parties to this Agreement on any
dispute arising out of this Agreement or any matter related hereto shall
be brought in the courts of the State of New York in New York County or
in the United States District Court for the Southern District of New
York, and, by execution and delivery of this Agreement, each of the
parties to this Agreement accepts for itself the jurisdiction of the
aforesaid courts, irrevocably consents to the service of any and all
process in any action or proceeding by the mailing of copies of such
process to such party at its address provided for the giving of notices
under Section 8(e) below, and irrevocably agrees to be bound by any
judgment rendered thereby in connection with this Agreement. Each party
hereto irrevocably waives to the fullest extent permitted by law any
objection that it may now or hereafter have to the laying of the venue
of any judicial proceeding brought in such courts and any claim that any
such judicial proceeding has been brought in an inconvenient forum.
c. All covenants, agreements, representations and warranties made herein or
otherwise made in writing by any party pursuant hereto shall survive the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
d. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
e. Any Notice or demand required or permitted to be given or made hereunder
to or upon any party hereto shall be deemed to have been duly given or
made for all purposes if (a) in writing and sent by (i) messenger or an
overnight courier service against receipt, or (ii) certified or
registered mail, postage paid, return receipt requested, or (b) sent by
telegram, telecopy, telex or similar electronic means, provided that a
written copy thereof is sent on the same day by postage-paid first-class
mail, if to the Company, at Xxx Xxxx Xxxx Xxxxx, Xxxxx Xxxxx, XX 00000,
attn: Xxxxxxx Xxxxxxxx (fax: 000-000-0000), and if to the Seller, at 00
Xxxxxxx Xx., Xxxxxxxxx, XX 00000 (fax: 000-000-0000), or at such other
address as each such party furnishes by notice given in accordance with
this Section 8(e).
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the 13th day of July, 2001.
TRAFFIX, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name:
Title:
/s/ Xxx Xxxxxxxxx
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XXX XXXXXXXXX
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Schedule 6(a)(iii)
Paradigm Direct
Naviant Marketing Solutions
Cross Media Marketing
World Class Marketing
Access Resources
Xxxxxxxxxx.xxx
Xxxxxxxxx.xxx
Xxxxxxx.xxx
Netcreations
Uproar
Imustlotto
Iwon
Sweepsclub
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