Exhibit 10.1
REDEMPTION AGREEMENT
AGREEMENT made as of November 20, 2002 by and between TRAFFIX,
INC., a Delaware corporation with its principal offices at One ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "COMPANY"), and ▇▇▇▇ ▇▇▇▇▇▇▇, an
individual having an address at ▇▇ ▇'▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
(the "SELLER").
W I T N E S S E T H :
WHEREAS, Seller is a shareholder, executive officer and member of
the Board of Directors of the Company; and
WHEREAS, Seller is desirous of selling and the Company is desirous
of purchasing the following securities of the Company owned by the Seller: (i)
262,243 shares of common stock, par value $.001 per share (the "Common Stock")
presently owned by the Seller (the "Presently Owned Shares"), and (ii) 365,789
shares of Common Stock to be acquired by the Seller upon the exercise of his
options to purchase shares of Common Stock in accordance with the terms hereof
(the "Option Shares", and, collectively with the Presently Owned Shares, the
"Shares"); and
WHEREAS, subject to the consummation of the transactions
contemplated by the preceding paragraph, the Seller is desirous of resigning and
the Company is desirous of accepting the resignation of, the Seller as an
executive officer and member of the Company's Board of Directors.
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. Simultaneously herewith (i) the Seller has delivered to the Company
certificates for the Presently Owned Shares, 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 $660,852.36, or $2.52 per share
(the "Presently Owned Shares Proceeds"), and which certain of such
Presently Owned Shares Proceeds shall be used for the purposes
described in clause (iii) of this Section 1(a); (ii) the Seller has
executed and delivered to the Company the Option Exercise Forms
annexed to the options to purchase the Option Shares, evidenced by
the option certificates listed on Schedule 1(a)(ii) hereof (the
"Options"); (iii) the Seller hereby authorizes the Company to retain
$640,130.75 of the Presently Owned Shares Proceeds as Seller's
payment in full of the exercise price for the exercise of the
Options; and (iv) the Company has faxed an instruction letter to its
transfer agent, irrevocably instructing such transfer agent to issue
the Option Shares in the name of the Seller, but to deliver the same
to counsel for the Company, as Escrowee, to be held in accordance
with the terms hereof.
b. Upon the Escrowee's receipt of the Option Shares from the Company's
transfer agent, the Company shall deliver to the Escrowee
$921,788.28 by certified or bank check, payable
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to the order of Seller, as payment in full for the Option Shares.
Upon the Escrowee's receipt of such payment, (i) without the
requirement to receive any further consent of the parties hereto or
to be required to deliver any further notices thereto, the Escrowee
shall deliver (a) such payment to the Seller and (b) the certificate
for the Option Shares to the Company for cancellation; and (ii) the
Seller's resignation in accordance with Section 5 hereof shall
become effective.
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 Presently Owned
Shares and Options, free and clear of all liens, pledges,
liabilities, claims and encumbrances.
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 is, and shall continue to be until his resignation in
accordance with Section 5 hereof, an executive officer of the
Company and a member of its Board of Directors, and, as such, is
privy to all information relating to the financial affairs,
prospects and day-to-day operations of the Company and 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. Pursuant thereto,
Seller hereby waives any claim and releases the Company (and its
subsidiaries and affiliates) and its (and their) 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 (and its subsidiaries and affiliates) or any of its (and
their) officers, directors, employees or agents regarding the amount
or nature of the consideration paid and to be paid by the Company
for the Shares and any other consideration delivered or to be
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, including, without limitation, those matters listed on the
annexed Schedule 2(d).
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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.
f. [Intentionally Omitted]
g. Seller acknowledges that, as an executive officer and director of
the Company, he and the Company are in possession of material,
non-public information (including, without limitation, all items
listed on Schedule 2(d) hereof), which the Company deems
confidential and proprietary. From and after the date hereof, Seller
shall keep absolutely confidential such information and acknowledges
that the confidentiality of all such information is absolutely
essential to the Company's operations. Seller shall not, at any time
after the date hereof, use or disclose to any person any such
information, without the Company's prior written consent, except
insofar as (i) such disclosure may be specifically authorized in
writing from time to time by the Company, (ii) such information is
necessarily disclosed by its commercial use in the operation of the
Company or pursuant to any right or license granted by the Company,
(iii) the Seller can demonstrate that such information was
previously made public or disclosed by the Company to him without
restriction or without restriction to a third party, or is in the
public domain otherwise than as a consequence of a breach of his
obligations hereunder or (iv) such disclosure is required pursuant
to compulsory legal process, including subpoena, civil investigative
demands, oral questions or interrogatories; provided that the party
subject to such compulsory disclosure promptly provides notice of
such legal process to the other party so that such party may oppose
such disclosures or seek a protective order or other confidential
treatment of such information.
h. The December 15, 2000 Amended and Restated Stockholders Agreements
for each of GroupLotto, Inc. and MultiBuyer, Inc. are no longer in
effect as of the date hereof.
II. The Company hereby represents and warrants to the Seller, the following:
a. The Company has full corporate power and authority to execute and
deliver this Agreement and to assume and perform its obligations
hereunder. The execution and delivery of this Agreement by the
Company and the performance of its obligations hereunder have been
duly authorized by all requisite board and other corporate action on
the part of Buyer.
b. The Company expressly acknowledges and confirms that the indemnities
available to Seller as an executive officer and director of the
Company pursuant to Delaware law and the Company's certificate of
incorporation and by laws shall continue to apply for acts performed
by the Seller as an executive officer and director up to the date of
his resignation, notwithstanding anything to the contrary set forth
herein.
c. The December 15, 2000 Amended and Restated Stockholders Agreements
for GroupLotto, Inc. and MultiBuyer, Inc. are no longer in effect as
of the date hereof.
d. Any press release to be filed by the Company in connection with the
transactions contemplated hereby shall be in form and substance
reasonably acceptable to the Seller.
e. The Company will cancel all of the Shares upon its acquisition
thereof.
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f. The Company has read carefully and understands this Agreement and
has consulted its own attorney, accountant and tax and financial
advisor with respect to the transactions contemplated hereby.
g. The Seller has made available to the Company and its counsel, or its
designated representatives, during the course of this transaction
and prior to the purchase of any of the securities referred to
herein, the opportunity to ask questions of and receive answers from
the Seller concerning the terms and conditions of the purchase or
otherwise relating to the transactions contemplated hereby, to the
extent that the Seller possesses such information or can acquire it
without unreasonable effort or expense.
i. The Company has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and
risks of the purchase of the Shares.
j. The Company did not rely upon any representations or warranties of
the Seller not otherwise contained herein in its determination to
consummate the transactions contemplated hereby. Pursuant thereto,
the Company hereby waives any claim and releases Seller from any
claim that it or any of its affiliates have, may have or could have
against Seller regarding the amount or nature of the consideration
paid and to be paid to the Seller for the Shares and any other
consideration delivered or to be delivered by the Company to Seller
in connection with this Agreement or any other agreements,
including, but not limited to, any claim based upon or arising out
of any allegation regarding Seller's failure to provide the Company
with accurate or complete information regarding, or that Seller
provided the Company with misleading information concerning, the
Seller's business and affairs, financial condition, prospects,
plans, work in process, opportunities or any other matter or thing
concerning the Seller; provided, however, that the foregoing waiver
and release shall not apply with respect to any claim that Seller
has bound the Company to an agreement or commitment out of the
ordinary course of business that is materially injurious to the
Company and that was not heretofore disclosed to the Company and
which injury Seller cannot cure within 15 business days after
delivery of notice thereof. The Company hereby specifically
acknowledges that it has knowledge of those matters listed on the
annexed Schedule 2(d).
3. LOCK-UP AGREEMENT.
The Seller agrees that, for a period of 6 months from and after the
date hereof, he will not sell, assign, transfer (including without
limitation by gift) or otherwise dispose of any securities of the Company,
or any interest therein or right thereto; provided, however, that, the
foregoing lock-up shall not apply to Seller's disposition of any
securities pursuant to a Change in Control. For purposes of this
Agreement, a "Change in Control" shall mean (i) any merger, consolidation
or other combination of the Company with any other company, other than a
merger, consolidation or other combination which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than 50% of
the combined voting power of the voting securities of the Company or
combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger, consolidation
or other combination; (ii) the sale or disposition by the Company of all
or substantially all of the Company's assets and properties to any person
other than an affiliate; or (iii) any compulsory share exchange pursuant
to which the Company's common
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stock converted into other securities, cash or property of another person.
Subject to the requirements of the securities laws, rules and regulations
of the United States or any state or protectorate thereof, the Company
hereby warrants and represents that at the end of the 6 month period
provided for herein and upon the request of the Seller, it shall cause the
Company's transfer agent to remove the restrictive 1933 Act legend
imprinted on the certificates for any shares of common stock then held by
the Seller.
4. [INTENTIONALLY OMITTED]
5. RESIGNATION OF SELLER AND TERMINATION OF EMPLOYMENT AGREEMENT.
a. Simultaneously herewith, in partial consideration for the payment of
the Presently Owned Shares Proceeds and the Company's other
covenants contained herein, any agreements to which the Seller is a
party that governs his employment with the Company or any
subsidiaries or affiliates thereof, including, without limitation,
the December 1, 1999 Employment Agreements by and between the Seller
and each of the Company and GroupLotto, Inc. and MultiBuyer, Inc.,
as amended, are terminated (specifically excluding those provisions,
if any, contained therein which are expressly stated to survive the
termination of such agreements) and shall be of no further force and
effect, but Seller shall continue to serve as President of the
Company and a member of its Board of Directors. Seller hereby
acknowledges that he has received all compensation to which he is
entitled, and the Company (and its subsidiaries and affiliates)
performed all of the obligations required of it (and them), under
such Employment Agreements through the date hereof, and Seller
hereby waives any claim and releases the Company (and its affiliates
and representatives) and its (and their) officers, directors,
employees and agents from any claim that he or any Affiliate has,
may have or could have against the Company (and its subsidiaries and
affiliates) or any of its (and their) officers, directors, employees
or agents regarding such Employment Agreements. The Company hereby
waives any claim and releases Seller from any claim that it or any
of its affiliates have, may have or could have against Seller
regarding the Employment Agreements; provided, however, that the
foregoing waiver and release given by the Company shall not apply
with respect to any claim that Seller has bound the Company to an
agreement or commitment outside the ordinary course of business that
is materially injurious to the Company and that was not heretofore
disclosed to the Company and which injury Seller cannot cure within
15 business days after delivery of notice thereof.
b. Upon the consummation of the transactions contemplated by Section
1(b) hereof, Seller's resignation as President of the Company and a
member of its Board of Directors shall be deemed tendered, and the
Company shall then be deemed to have accepted such resignation. The
Company and the Seller hereby acknowledge that (subject to the
consummation of such transactions) Seller's contemplated resignation
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.
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 date
hereof, the Seller shall not, directly or indirectly, or through any
other person, firm, company, entity or enterprise, whether as
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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 endeavor to negatively
influence the relationship of the Company with any individual
that is or will become employed by the Company, or any
individual, partnership, firm, corporation or other business
organization that is, as of the date hereof, otherwise
performing services or selling products to the Company; or
ii. attempt in any manner to persuade, directly or indirectly, any
person or entity, including, but not limited to, the customers
of the Company existing as of the date hereof, to cease doing
business or to reduce the amount of business with the Company
which any customer existing as of the date hereof has
customarily done or which any customer existing as of the date
hereof contemplates doing with the Company; or
iii. become a greater than 5% owner, employee, consultant or other
advisor to any of the individuals or entities listed on
Schedule 6(a)(iii) hereof; or
iv. create any voice mail or ISP product or program that will be
billed through any of Integretel, Inc., ILD Teleservices, Inc.
or Billing Concepts, Inc.
b. During the one (1) year period referred to in subparagraph (a) of
this Section 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 insofar as (i) such
disclosure may be specifically authorized in writing from time to
time by the Company, (ii) such information is necessarily disclosed
by its commercial use in the operation of the Company or pursuant to
any right or license granted by the Company, (iii) the Seller can
demonstrate that such information was previously made public or
disclosed by the Company to him without restriction or without
restriction to a third party, or is in the public domain otherwise
than as a consequence of a breach of his obligations hereunder or
(iv) such disclosure is required pursuant to compulsory legal
process, including subpoena, civil investigative demands, oral
questions or interrogatories; provided that the party subject to
such compulsory disclosure promptly provides notice of such legal
process to the other party so that such party may oppose such
disclosures or seek a protective order or other confidential
treatment of such information.
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
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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
Section 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.
7. ESCROWEE.
a. If for any reason either party gives written notice to the Escrowee
demanding disbursement of any items held in escrow in accordance
herewith, Escrowee shall give prompt notice to the other party of
such demand. If Escrowee does not receive notice of objection from
such other party to the proposed disbursement within 5 business days
after the giving of such notice, Escrowee is hereby authorized and
directed to make such disbursement. If Escrowee does receive such
notice of objection within such 5 day period or if for any other
reason Escrowee in good faith shall elect not to make such
disbursement, Escrowee shall continue to hold such items until
otherwise directed by notice from the parties to this Agreement or a
final, non-appealable judgment, order or decree of a court. However,
Escrowee shall have the right at any time to deposit the escrowed
items with the clerk of a court in the county in which such items
are located and shall give notice of such deposit to the parties
hereto. Upon such deposit or other disbursement in accordance with
the terms of this paragraph, Escrowee shall be relieved and
discharged of all further obligations and responsibilities
hereunder.
b. The parties acknowledge that Escrowee is acting solely as a
stakeholder at their request and for their convenience and that
Escrowee shall not be liable to either party for any act or omission
on its part unless taken or suffered in bad faith or in willful
disregard of this Agreement or involving gross negligence on the
part of Escrowee. The parties hereto jointly and severally (with
right of contribution) agree to defend (by attorneys selected by
Escrowee), indemnify and hold Escrowee harmless from and against all
costs, claims and expenses (including reasonable attorney's fees)
incurred in connection with the performance of Escrowee's duties
hereunder, except with respect to actions or omissions taken or
suffered by Escrowee in bad faith or in willful disregard of this
Agreement or involving gross negligence on the part of Escrowee.
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c. Escrowee may act or refrain from acting in respect of any matter
referred to herein in full reliance upon and with the advice of
counsel which may be selected by it (including any member of its
firm) and shall be fully protected in so acting or refraining from
action upon the advice of such counsel.
d. Escrowee or any member of its firm shall be permitted to act as
counsel for the Company in any dispute as to the disbursement of the
escrowed items or any other dispute between the parties whether or
not Escrowee is in possession of the escrowed items and continues to
act as Escrowee.
e. Escrowee shall have the right to resign as such at any time and for
any reason or no reason at all.
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 6(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
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, and if to the Seller, at 80
▇
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address as each such party furnishes by notice given in accordance
with this Section 6(e).
f. No amendment of this Agreement shall be valid or effective, unless
in writing and signed by or on behalf of the parties hereto.
g. No course of dealing or omission or delay on the part of either
party hereto in asserting or exercising any right hereunder shall
constitute or operate as a waiver of any such right. No waiver of
any provision hereof shall be effective, unless in writing and
signed by or on behalf of the party to be charged therewith. No
waiver shall be deemed a continuing waiver or waiver in respect of
any other or subsequent breach or default, unless expressly so
stated in writing.
h. The provisions hereof are severable and in the event that any
provision of this Agreement shall be determined to be invalid or
unenforceable in any respect by a court of competent jurisdiction,
the remaining provisions hereof shall not be affected, but shall,
subject to the discretion of such court, remain in full force and
effect, and any invalid or unenforceable provision shall be deemed,
without further action on the part of the parties hereto, amended
and limited to the extent necessary to render the same valid and
enforceable.
i. Each party hereto shall promptly execute, deliver, file or record
such agreements, instruments, certificates and other documents and
perform such other and further acts as the other party hereto may
reasonably request or as may otherwise be necessary or proper to
consummate and perfect the transactions contemplated hereby.
j. This Agreement, and each right, interest and obligation hereunder,
may not be assigned by the Seller without the prior written consent
of the Company, and any purported assignment without such consent
shall be void and without effect.
k. Each party hereto acknowledges that it has participated, with the
advice of counsel, in the preparation of this Agreement. No party
hereto is entitled to any presumption with respect to the
interpretation of any provision hereof or the resolution of any
alleged ambiguity herein based on any claim that the other party
hereto drafted or controlled the drafting of this Agreement.
l. This Agreement embodies the entire agreement of the parties hereto
with respect to the subject matter hereof and supersedes any prior
agreement, commitment or arrangement relating thereto.
m. Upon a default by a party hereto of any of the provisions hereof,
the other party shall notify the defaulting party in writing of such
default, whereupon the defaulting party shall have 5 business days
to cure the default contained in said notice. In the event the
default is not cured within such 5 business day period, the
notifying party may seek to enforce any rights it may have hereunder
at law or in equity. Notwithstanding anything contained in this
Section 8(m) to the contrary, in the event the default stated in a
notifying party's notice would be reasonably likely to result in
immediate material damage to the notifying party, the defaulting
party shall not have the 5 business day right to cure provided for
herein.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK WITH SIGNATURE PAGE TO FOLLOW
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the 20th day of November, 2002.
TRAFFIX, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Title: Executive Vice President
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
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SCHEDULE 1(A)(II)
OPTIONS
1. September 14, 1998 Option to purchase 358,498 shares of Common Stock at an
exercise price of $1.75 per share, expiring September 14, 2003.
2. September 14, 1998 Option to purchase 7,291 shares of Common Stock at an
exercise price of $1.75 per share, expiring December 26, 2002.
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SCHEDULE 2(D)
{Confidential portion omitted and filed separately with the Commission}
12
Schedule 6(a)(iii)
{Confidential portion omitted and filed separately with the Commission}
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