Document:

EXHIBIT
10.2

 

GUARANTY

 

GUARANTY,
dated as of June 30, 2004, by WEIDER
NUTRITION INTERNATIONAL, INC., a Delaware corporation (the
“Guarantor”) in favor of (a) KEYBANK NATIONAL
ASSOCIATION, as agent (hereinafter, in such capacity, the “Agent”)
for itself and the other financial institutions (hereinafter, collectively, the
“Banks”) which are or may become parties to that certain Revolving Credit
Agreement dated as of even date herewith among Weider Nutrition Group, Inc., a
Utah corporation, as borrower thereunder (the “Borrower”), the Banks and the
Agent (as amended and in effect from time to time, the “Credit Agreement”) and
(b) each of the Banks.

 

WHEREAS,
the Borrower is a wholly-owned subsidiary of the Guarantor;

 

WHEREAS,
pursuant to the Credit Agreement, the Banks, upon the terms and subject to the
conditions contained therein, have agreed to make loans and otherwise extend
credit to the Borrower;

 

WHEREAS,
the Guarantor expects to receive substantial direct and indirect benefits from
the extensions of credit to the Borrower by the Banks pursuant to the Credit
Agreement (which benefits are hereby acknowledged);

 

WHEREAS,
it is a condition precedent to the Banks and the Agent entering into the Credit
Agreement that the Guarantor execute and deliver to the Agent and the Banks a
guaranty substantially in the form hereof; and

 

WHEREAS,
the Guarantor wishes to guaranty the obligations of the Borrower to the Banks
and Agent under or in respect of the Credit Agreement as provided herein;

 

NOW,
THEREFORE, in consideration of the premises (the foregoing
recitals being part of this Guaranty), the Guarantor hereby agrees with the
Agent for the ratable benefit of the Banks as follows:

 

1.                                      Definitions.  All capitalized
terms used herein without definition shall have the respective meanings
provided therefor in the Credit Agreement.

 

2.                                      Guaranty of Payment and Performance. 
The Guarantor hereby guarantees to the Banks the full and punctual
payment when due (whether at stated maturity, by required pre-payment, by
acceleration or otherwise), as well as the performance, of all of the
Obligations under the Credit Agreement, including all Obligations that would
become due but for the operation of the automatic stay pursuant to §362(a) of
the Federal Bankruptcy Code and the operation of §§502(b) and 506(b) of the
Federal Bankruptcy Code.  This Guaranty
is an absolute, unconditional and continuing guaranty of the full and punctual
payment and performance of all of the Obligations and not of their
collectibility only and is in no way conditioned upon any requirement that the
Agent or any Bank first attempt to collect any of the Obligations from the
Borrower or resort to any collateral security or other means of obtaining
payment.  Should the Borrower default in
the payment or performance of any of the Obligations, the obligations of the
Guarantor hereunder with respect to such Obligations in default shall, upon
demand by the Agent, become immediately due and payable to the Agent, for the
benefit of the Banks and the Agent, without demand or notice of any nature, all
of which are expressly waived by the Guarantor.  Payments by the Guarantor hereunder may be required by the Agent,
for the benefit of the Banks and the Agent, on any number of occasions.  All payments by the Guarantor hereunder
shall be made to the Agent, in the manner and at the place of payment specified
therefor in the Credit Agreement, for the account of the Banks and the Agent.

 

1

 

3.                                      Guarantor’s Agreement to Pay Enforcement
Costs, etc.  The
Guarantor further agrees, as the principal obligor and not as a guarantor only,
to pay to the Agent, on demand, all costs and expenses (including court costs
and legal expenses) incurred or expended by the Agent or any Bank in connection
with the Obligations, this Guaranty and the enforcement thereof, together with
interest on amounts recoverable under this §3 from the time when such amounts
become due until payment, whether before or after any judgment, at the rate of
interest for overdue principal set forth in the Credit Agreement; provided,
that if such interest exceeds the maximum amount permitted to be paid under
applicable law, then such interest shall be reduced to such maximum permitted
amount.

 

4.                                      Waivers by Guarantor; Banks’ Freedom to Act. 
The Guarantor agrees that the Obligations will be paid and performed
strictly in accordance with their respective terms, regardless of any law,
regulation or order now or hereafter in effect in any jurisdiction affecting
any of such terms or the rights of the Agent or any Bank with respect thereto;
provided, however, that the Guarantor shall not be required to pay or perform
any Obligation prohibited by any applicable law, regulation or order of any
jurisdiction.  The Guarantor waives promptness,
diligences, presentment, demand, protest, notice of acceptance, notice of any
Obligations incurred and all other notices of any kind, all defenses which may
be available by virtue of any valuation, stay, moratorium law or other similar
law now or hereafter in effect, any right to require the marshalling of assets
of the Borrower or any other entity or other person primarily or secondarily
liable with respect to any of the Obligations, and all suretyship defenses
generally.  Without limiting the generality
of the foregoing, the Guarantor agrees to the provisions of any instrument
evidencing, securing or otherwise executed by the Guarantor or the Borrower in
connection with any Obligation and agrees that the obligations of the Guarantor
hereunder shall not be released or discharged, in whole or in part, or
otherwise affected by (a) the failure of the Agent or any Bank to assert any
claim or demand or to enforce any right or remedy against the Borrower or any
other entity or other person primarily or secondarily liable with respect to
any of the Obligations; (b) any extensions, compromise, refinancing,
consolidation or renewals of any Obligation; (c) any change in the time, place
or manner of payment of any of the Credit Agreement, the Notes, the other Loan
Documents or any other agreement evidencing, securing or otherwise executed in
connection with any of the Obligations; (d) the addition, substitution or
release of any entity or other person primarily or secondarily liable for any
Obligation, (e) the adequacy of any rights which the Agent or any Bank may have
against any collateral security or other means of obtaining repayment of any of
the Obligations; (f) the impairment of any collateral securing any of the
Obligations, including without limitation the failure to perfect or preserve
any rights which the Agent or any Bank might have in such collateral security
or the substitution, exchange, surrender, release, loss or destruction of any
such collateral security; or (g) any other act or omission which might in any
manner or to any extent vary the risk of the Guarantor or otherwise operate as
a release or discharge of the Guarantor, all of which may be done without
notice to the Guarantor.  To the fullest
extent permitted by law, the Guarantor hereby expressly waives any and all
rights or defenses arising by reason of (i) any “one action” or
“anti-deficiency” law which would otherwise prevent the Agent or any Bank from
bringing any action, including any claim for a deficiency, or exercising any
other right or remedy (including any right of set-off), against the Guarantor
before or after the Agent or such Bank’s commencement or completion of any
foreclosure action, whether judicially, by exercise of power of sale or
otherwise, or (ii) any other law which in any other way would otherwise require
any election of remedies by the Agent or any Bank.

 

5.                                      Unenforceability of Obligations Against
Borrower.  If for any reason the Borrower has no legal
existence or is under no legal obligation to discharge any of the Obligations,
or if any of the Obligations have become irrecoverable from the Borrower by
reason of the Borrower’s insolvency, bankruptcy or reorganization or by other
operation of law or for any other reason, this Guaranty shall nevertheless be
binding on the Guarantor to the same extent as if the Guarantor at all times
had been the principal obligor on all such Obligations.  In the event that acceleration of the time
for payment of any of 

 

2

 

the Obligations is stayed
upon the insolvency, bankruptcy or reorganization of the Borrower, or for any
other reason, all such amounts otherwise subject to acceleration under the
terms of the Credit Agreement, the Notes, the other Loan Documents or any other
agreement evidencing, securing or otherwise executed in connection with any
Obligation shall be immediately due and payable by the Guarantor.

 

6.                                      Subrogation; Subordination.

 

6.1                               Waiver of Rights Against Borrower. 
Until the final payment and performance in full of all of the
Obligations, the Guarantor shall not exercise and hereby waives any rights
against the Borrower arising as a result of payment by the Guarantor hereunder,
by way of subrogation, reimbursement, restitution, contribution or otherwise,
and will not prove any claim in competition with the Agent or any Bank in
respect of any payment hereunder in any bankruptcy, insolvency or
reorganization case or proceedings of any nature; the Guarantor will not claim
any setoff, recoupment or counterclaim against the Borrower; and the Guarantor
waives any benefit of and any right to participate in any collateral security
which may be held by the Agent or any Bank.

 

6.2                               Subordination. 
The payment of any amounts due with respect to any indebtedness of the
Borrower for money borrowed or credit received now or hereafter owed to the
Guarantor is hereby subordinated to the prior payment in full of all of the
Obligations.  The Guarantor agrees that,
after the occurrence of any Default in the payment or performance of any of the
Obligations, the Guarantor will not demand, sue for or otherwise attempt to
collect any such indebtedness of the Borrower to the Guarantor until all of the
Obligations shall have been paid in full. 
If, notwithstanding the foregoing sentence, the Guarantor shall collect,
enforce or receive any amounts in respect of such indebtedness, such amounts
shall be collected, enforced and received by the Guarantor as trustee for the
Banks and the Agent and be paid over to the Agent, for the benefit of the Banks
and the Agent, on account of the Obligations without affecting in any manner
the liability of the Guarantor under the other provisions of this Guaranty.

 

6.3                               Provisions Supplemental. 
The provisions of this §6 shall be supplemental to and not in derogation
of any rights and remedies of the Banks or the Agent under any separate
subordination agreement which the Agent may at any time and from time to time
enter into with the Guarantor for the benefit of the Banks and the Agent.

 

7.                                      Security.  As collateral for the performance of all of
the Guarantor’s obligations and liabilities hereunder, the Guarantor shall and
hereby does grant to the Agent, for the ratable benefit of the Banks, a
continuing lien on and security interest in the following collateral:  one hundred percent of the outstanding and
issued stock (other than any margin stock (as such term is defined by
Regulation U of the Board of Governors of the Federal Reserve System) of the
Borrower now or hereafter held by the Guarantor.  Such security interest shall be further evidenced by and subject
to the terms of a Stock Pledge Agreement in a form satisfactory to the Agent,
financing statements, and such other documents as the Agent may request.

 

8.                                      Further Assurances.  The Guarantor agrees that it will from time
to time, at the request of the Agent, do all such things and execute all such
documents as the Agent may consider necessary or desirable to give full effect
to this Guaranty and to perfect and preserve the rights and powers of the Agent
and the Banks hereunder.  The Guarantor
acknowledges and confirms that the Guarantor itself has established its own
adequate means of obtaining from the Borrower on a continuing basis all
information desired by the Guarantor concerning the financial condition of the
Borrower and that the Guarantor will look to the Borrower and not to the Agent
or any Bank in order for the Guarantor to keep adequately informed of changes
in the Borrower’s financial condition.

 

3

 

9.                                      Termination; Reinstatement.  This Guaranty shall remain in full force and
effect until the Agent is given written notice of the Guarantor’s intention to
discontinue this Guaranty, notwithstanding any intermediate or temporary
payment or settlement of the whole or any part of the Obligations.  No such notice shall be effective unless
received and acknowledged by an officer of the Agent at the address of the
Agent for notices set forth in §20 of the Credit Agreement.  No such notice shall affect any rights of
the Agent or any Bank or of any affiliate of the Agent or any Bank hereunder,
including without limitation the rights set forth in §§4 and 6 hereof, with
respect to any Obligations incurred or accrued prior to the receipt of such
notice or any Obligations incurred or accrued pursuant to any contract or
commitment in existence prior to such receipt. 
This Guaranty shall continue to be effective or re reinstated,
notwithstanding any such notice, if at any time any payment made or value
received with respect to any Obligation is rescinded or must otherwise be
returned by the Agent or any Bank upon the insolvency, bankruptcy or
reorganization of the Borrower, or otherwise, all as though such payment had
not been made or value received. 
Subject to the foregoing and unless terminated earlier in accordance
with this Section 9, this Guaranty shall terminate only upon (i) full
performance and final satisfaction and payment to the Agent, for the ratable
benefit of the Banks, of all Obligations owed by the Borrower to the Agent or
the Banks under the Loan Documents, (ii) full performance of all of the
Guarantor’s other obligations under this Guaranty, and (iii) the termination of
any obligation on the Part of the Agent or any Bank to make Revolving Credit
Loans or issue Letters of Credit to or for the benefit of the Borrower.

 

10.                               Successors and Assigns.  This Guaranty shall be binding upon the
Guarantor, its successors and assigns, and shall insure to the benefit of and
be enforceable by the Agent and the Banks and their successors, transferees and
assigns.  Without limiting the
generality of the foregoing sentence, each Bank may assign or otherwise
transfer the Credit Agreement, the Notes, the other Loan Documents or any other
agreement or note held by it evidencing, securing or otherwise executed in
connection with the Obligations, or sell participations in any interest
therein, to any other entity or other person, and such other entity or other
person shall thereupon become vested, to the extent set forth in the agreement
evidencing such assignment, transfer or participation, with all the rights in
respect thereof granted to such Bank herein, as permitted under the Credit
Agreement.  Guarantor may not assign any
of its obligations hereunder.

 

11.                               Amendments and Waivers.  No amendment or waiver of any provision of
this Guaranty nor consent to any departure by the Guarantor therefrom shall be
effective unless the same shall be in writing and signed by the Guarantor and
by the Agent with the consent of the Majority Banks.  No failure on the part of the Agent or any Bank to exercise, and
no delay in exercising, any right hereunder shall operate as a waiver thereof;
nor shall any single or partial exercise of any right hereunder preclude any
other or further exercise thereof or the exercise of any other right.

 

12.                               Notices.  All notices and other communications called for hereunder shall
be made in writing and, unless otherwise specifically provided herein, shall be
deemed to have been duly made or given when delivered by hand or mailed first
class, postage prepaid, or, in the case of telegraphic or telexed notice, when
transmitted, answer back received, addressed as follows:  if to the Guarantor, at the address set
forth beneath its signature hereto, and if to the Agent, at the address for
notices to the Agent set forth in §20 of the Credit Agreement, or at such
address as either party may designate in writing to the other.

 

13.                               Governing Law; Consent to Jurisdiction.  THIS GUARANTY SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF UTAH.  The Guarantor agrees that any suit for the
enforcement of this Guaranty may be brought in the courts of the State of Utah
or any federal court sitting therein and consents to the nonexclusive

 

4

 

jurisdiction of such
court and to service of process in any such suit being made upon the Guarantor
by mail at the address specified by reference in §12.  The Guarantor hereby waives any objection that it may now or
hereafter have to the venue of any such suit or any such court or that such
suit was brought in an inconvenient court.

 

14.                               Waiver of Jury Trial.  THE GUARANTOR HEREBY WAIVES ITS RIGHT TO A
JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS GUARANTY, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE
PERFORMANCE OF ANY OF SUCH RIGHTS OR OBLIGATIONS.  Except as prohibited by law, the Guarantor hereby waives any
right which it may have to claim or recover in any litigation referred to in
the preceding sentence any special, exemplary, punitive or consequential
damages or any damages other than or in addition to, actual damages.  The Guarantor (a) certifies that neither the
Agent or any Bank nor any representative, agent or attorney of the Agent or any
Bank has represented, expressly or otherwise, that the Agent or any Bank would
not, in the event of litigation, seek to enforce the foregoing waivers and (b)
acknowledges that, in entering into the Credit Agreement and the other Loan
Documents to which the Agent or any Bank is a party, the Agent and the Banks
are relying upon, among other things, the waivers and certifications contained
in this §14.

 

15.                               Miscellaneous.  This Guaranty constitutes the entire
agreement of the Guarantor with respect to the matters set forth herein.  The rights and remedies herein provided are
cumulative and not exclusive of any remedies provided by law or any other
agreement, and this Guaranty shall be in addition to any other guaranty of or
collateral security for any of the Obligations.  The invalidity or enforceability of any one or more sections of
this Guaranty shall not affect the validity or enforceability of its remaining
provisions.  Captions are for the ease
of reference only and shall not affect the meaning of the relevant
provisions.  The meanings of all defined
terms used in this Guaranty shall be equally applicable to the singular and
plural forms of the terms defined.

 

IT WITNESS WHEREOF, the
Guarantor has caused this Guaranty to be executed and delivered as of the date
first above written.

 

	
   

  	
  WEIDER
  NUTRITION INTERNATIONAL, INC.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Joseph Baty

  
	
   

  	
  Its:  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
  Weider Nutrition
  International, Inc.

  
	
   

  	
  2002 South 5070 West

  
	
   

  	
  Salt Lake City, Utah
  84104-4726

  
	
   

  	
  Attn: Chief Financial
  Officer

  

 

5Exhibit 10.1

 

ASSET ACQUISITION AGREEMENT

 

among

 

TRAFFIX, INC.,

 

NEW SEND, INC.,

 

SENDTRAFFIC, INC.,

 

TRAFFICGROUP, LLC,

 

CRAIG HANDELMAN and

 

GREG BYRNES

 

FOR THE

 

ACQUISITION OF THE ASSETS OF
SENDTRAFFIC, INC. AND TRAFFICGROUP LLC

 

 

Table of Contents

 

	
  1.

  	
  DEFINITIONS.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.1

  	
  Acquired Assets.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.2

  	
  Acquired
  Liabilities.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.3

  	
  Affiliate.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.4

  	
  Asserted
  Liability.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.5

  	
  Balance
  Sheet Date.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.6

  	
  Bill of Sale.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.7

  	
  Blue Sky Laws.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.8

  	
  Business Day.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.9

  	
  Cash Component.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.10

  	
  Claims.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.11

  	
  Claims Notice.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.12

  	
  Closing.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.13

  	
  Closing Date.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.14

  	
  Closing
  Share Price.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.15

  	
  Code.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.16

  	
  Commission.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.17

  	
  Common Stock.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.18

  	
  Contingent
  Payment.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.19

  	
  Contingent Purchase Price.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.20

  	
  Contracts.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.21

  	
  Controlled
  Company.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.22

  	
  Delivered Financial
  Statements.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.23

  	
  Determining
  Accountant

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.24

  	
  Dollars or $.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.25

  	
  Domain Names.

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

 

	
   

  	
  1.26

  	
  EBITDA.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.27

  	
  Employment
  Agreements.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.28

  	
  Environmental
  Claim.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.29

  	
  Environmental
  Law.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.30

  	
  ERISA.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.31

  	
  Excluded
  Liabilities.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.32

  	
  Fairness Opinion.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.33

  	
  Final Financial Statements.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.34

  	
  Financial
  Statements.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.35

  	
  First Contingent Payment.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.36

  	
  Fixed
  Purchase Price.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.37

  	
  GAAP.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.38

  	
  Governmental
  Authority.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.39

  	
  Hazardous
  Materials.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.40

  	
  Indemnifying
  Party.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.41

  	
  Indemnitee.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.42

  	
  Internet.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.43

  	
  Knowledge.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.44

  	
  Law.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.45

  	
  Licenses.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.46

  	
  Lien.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.47

  	
  Machinery
  and Equipment.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.48

  	
  Material
  Adverse Effect.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.49

  	
  Minimum
  Working Capital

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.50

  	
  New Send EBITDA.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.51

  	
  Notice
  of Disagreement.

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

2

 

	
   

  	
  1.52

  	
  Order.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.53

  	
  Other Documents.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.54

  	
  Person.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.55

  	
  Purchase Price.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.56

  	
  Purchase Price Allocation.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.57

  	
  Registrar.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.58

  	
  Registration Rights
  Agreement.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.59

  	
  Restrictive
  Agreement.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.60

  	
  Second Contingent Payment.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.61

  	
  Securities Act.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.62

  	
  Seller Indemnified Parties.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.63

  	
  Seller’s
  Accountants.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.64

  	
  Seller’s Business.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.65

  	
  Seller’s
  Shareholders.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.66

  	
  Share
  Certificates.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.67

  	
  Shares.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.68

  	
  Specifications.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.69

  	
  Statement.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.70

  	
  Stub Period Financial
  Statement.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.71

  	
  Tax.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.72

  	
  Tax Return.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.73

  	
  Third
  Contingent Payment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.74

  	
  Trade Rights.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.75

  	
  Traffix’s
  Accountants.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.76

  	
  Traffix Indemnified
  Parties.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.77

  	
  Year-End Financial
  Statements.

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

3

 

	
  2.

  	
  SALE
  AND PURCHASE OF ACQUIRED ASSETS; ASSUMPTION OF ACQUIRED LIABILITIES.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Sale and Purchase
  of Acquired Assets.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.2

  	
  Acquired
  Liabilities.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  PURCHASE PRICE.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Fixed
  Purchase Price.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.2

  	
  Contingent Purchase Price.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  THE CLOSING.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Closing.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.2

  	
  Delay in Closing
  and Termination Fee.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.3

  	
  Deliveries by Seller
  at Closing.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.4

  	
  Deliveries
  by Traffix and New Send at Closing.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.5

  	
  Delivery
  of Employment Agreements at Closing.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.6

  	
  Holdback of
  Portion of Purchase Price.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.7

  	
  Conditions
  to Closing.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  REPRESENTATIONS
  AND WARRANTIES OF SELLER AND SELLER’S SHAREHOLDERS.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  Existence and Good
  Standing.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.2

  	
  Shareholders.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.3

  	
  Financial Statements.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.4

  	
  Books and Records.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.5

  	
  Real
  Property; Personal Property; Machinery and Equipment.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.6

  	
  Contracts.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.7

  	
  Litigation.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.8

  	
  Taxes.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.9

  	
  Liabilities.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.10

  	
  Trade
  Rights.

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

4

 

	
   

  	
  5.11

  	
  Compliance with Laws.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.12

  	
  Licenses.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.13

  	
  Insurance.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.14

  	
  Supplier and Customer
  Relations.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.15

  	
  Employment Relations.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.16

  	
  Personnel;
  Compliance with Legal Requirements for Employee Benefit Plans

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.17

  	
  No Changes
  Since the Balance Sheet Date.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.18

  	
  Valid
  Agreements; Restrictive Documents.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.19

  	
  Required
  Approvals, Notices and Consents.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.20

  	
  Disclosure.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.21

  	
  Environmental Conditions.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.22

  	
  Health and Safety
  Conditions.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.23

  	
  Copies of Documents.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.24

  	
  Brokers.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.25

  	
  Domain
  Names.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.26

  	
  Pre-Closing Obligations.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  REPRESENTATIONS
  OF TRAFFIX AND PURCHASER.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.1

  	
  Existence and Good
  Standing.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.2

  	
  Shares.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.3

  	
  Valid
  Agreements; Restrictive Documents.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.4

  	
  Required
  Approvals, Notices and Consents.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.5

  	
  No
  Brokers.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.6

  	
  Exchange Act Filings.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  POST CLOSING COVENANTS.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.1

  	
  General.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.2

  	
  Post-Closing Access.

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

5

 

	
   

  	
  7.3

  	
  Cooperation
  in Preparation of Securities Law Filings

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.4

  	
  Delivery
  of the Final Financial Statements and Disbursement of the $250,000 Holdback.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.5

  	
  [Intentionally Omitted]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.6

  	
  Availability
  of Minimum Working Capital.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.7

  	
  Survivability of Purchaser.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.8

  	
  Retention
  of Purchaser Business Subsequent to Termination of Employment of ST
  Shareholders.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  SURVIVAL OF
  REPRESENTATIONS; INDEMNITIES.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  Survival
  of Representations and Warranties of Seller and the Seller’s Shareholders.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.2

  	
  Obligations
  of Seller and the Seller’s Shareholders to Indemnify.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.3

  	
  Survival
  of Representations and Warranties of Traffix and Purchaser.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.4

  	
  Notice and
  Opportunity to Defend.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.5

  	
  Limitations.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  MISCELLANEOUS.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.1

  	
  Expenses.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.2

  	
  Governing Law;
  Jurisdiction.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.3

  	
  [Intentionally Omitted]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.4

  	
  Captions.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.5

  	
  Notices.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.6

  	
  Parties in Interest.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.7

  	
  Severability.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.8

  	
  Counterparts.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.9

  	
  Entire Agreement;
  Amendments.

  	
   

  

 

6

 

ASSET
ACQUISITION AGREEMENT

 

AGREEMENT, dated as of June 9, 2004
(“Agreement”), by and among TRAFFIX, INC., a Delaware corporation, having an
address at One Blue Hill Plaza, Fifth Floor, Pearl River, New York 10965,
(hereafter referred to as “Traffix”); NEW SEND, INC., a Delaware corporation,
having an address at One Blue Hill Plaza, Fifth Floor, Pearl River, New York
10965 (hereafter referred to as “New Send” or “Purchaser”); SENDTRAFFIC, INC.,
a New York corporation, having an address at 16 Atlantic Avenue, 2nd
Floor, Lynbrook, New York 11563 (hereafter referred to as “ST”); TRAFFICGROUP,
LLC, a New York limited liability company having an address at 16 Atlantic
Avenue, 2nd Floor, Lynbrook, New York 11563 (“TG”, and, collectively
with ST, the “Seller”); CRAIG HANDELMAN, an individual having an address at 16
Atlantic Avenue, 2nd Floor, Lynbrook, New York 11563 (hereafter
referred to as “Craig”); and GREG BYRNES, an individual having an address at16
Atlantic Avenue, 2nd Floor, Lynbrook, New York 11563 (hereafter
referred to as “Greg”).

 

W
I T N E S S E T H :

 

WHEREAS, New Send, a wholly owned subsidiary
of Traffix, wishes to acquire and Seller is willing to sell to New Send the
Acquired Assets (as defined herein), upon the terms and conditions hereof;

 

NOW, THEREFORE, in consideration of the
agreements herein set forth and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

 

1.             DEFINITIONS.

 

Capitalized terms used in this Agreement
shall, unless the context otherwise requires, have the meanings specified in
this Section 1.  Certain additional
defined terms are set forth elsewhere in this Agreement.

 

1.1           Acquired
Assets.

 

“Acquired Assets” means, except as set forth
on Schedule 1.1, assets of every kind, character and description, whether
tangible or intangible, whether real, personal or mixed, and wherever situated,
employed or held in connection with the business or operations of Seller,
including, without limitation, the following:

 

(1)           all
cash, cash equivalents, accounts receivable and all proceeds thereof;

 

(2)           all
inventory, work in process, product or service ideas or proposals, supplies,
spare parts and other tangible assets used in connection with the Seller’s
Business;

 

(3)           all
Trade Rights and Specifications;

 

(4)           the
Domain Names, including, without limitation, those listed on Schedule 1.25
hereof, together with the goodwill associated with and symbolized by any Domain
Names and registration thereof and all intellectual property rights associated
therewith, including, without limitation, all trade names, trademarks, service
marks, copyrights, common law rights and other intellectual property rights
whatsoever or any interest therein (whether or not registrable under copyright,
trademark or similar statutes or subject to analogous protection), together
with all claims for damages by reason of past infringement of said Domain
Names, with the right to sue for and collect the same for Purchaser’s own use
and for the use of its successors, assigns or other legal representatives;

 

 

(5)           all
of the following relating to the Seller’s Business and the Trade Rights:
customer lists, customer information and identifications (including Internet
electronic mail addresses), databases, account records, pricing information,
sales literature, promotional literature and all other books and records,
files, invoices, supplier lists, blueprints, specifications, designs, drawings,
prototypes, letters of credit, prepaid items and deposits, and the names
“SendTraffic” and “TrafficGroup” together with any goodwill associated
therewith;

 

(6)           all
Machinery and Equipment;

 

(7)           goodwill;
and

 

(8)           all
Contracts and all warranties, claims and causes of action against third parties
relating to any of the Acquired Assets.

 

1.2           Acquired
Liabilities.

 

“Acquired Liabilities” means only those
liabilities of Seller listed on Schedule 1.2, but shall in any case exclude the
Excluded Liabilities.

 

1.3           Affiliate.

 

“Affiliate” means, with respect to any
Person, any other Person, directly or indirectly controlling, controlled by or
under common control with such Person.

 

1.4           Asserted
Liability.

 

“Asserted Liability” has the meaning given in
Section 8.4(a).

 

1.5           Balance
Sheet Date.

 

“Balance Sheet Date” means March 31, 2004.

 

1.6           Bill of
Sale.

 

“Bill of Sale” means the Bill of Sale in the
form of Schedule 1.6.

 

1.7           Blue Sky
Laws.

 

“Blue Sky Laws” means the laws of any state,
the District of Columbia, or any territory or other jurisdiction in the United
States governing the purchase and/or sale of securities in such jurisdiction.

 

1.8           Business
Day.

 

“Business Day” means a day, other than
Saturday, Sunday or a day on which banks in New York City are required or
permitted to be closed.

 

1.9           Cash
Component.

 

“Cash Component” means $3,750,000, subject to
increase as provided in Section 1.67.

 

2

 

1.10         Claims.

 

“Claims” has the meaning given in Section
8.2.

 

1.11         Claims
Notice.

 

“Claims Notice” has the meaning given in
Section 8.4(a).

 

1.12         Closing.

 

“Closing” means the closing of the
transactions described in this Agreement pursuant to Section 4 of this
Agreement.

 

1.13         Closing Date.

 

“Closing Date” means the date of the Closing
under this Agreement.

 

1.14         Closing
Share Price.

 

“Closing Share Price” means the average
market closing price of the Common Stock, as listed on Nasdaq (or the market or
exchange upon which the Common Stock is then listed), for the ten (10) trading
days immediately preceding the day Traffix publicly files a Current Report on
Form 8-K or issues a press release announcing the execution of this Agreement
(whichever occurs first).

 

1.15         Code.

 

“Code” means the Internal Revenue Code of
1986, as amended.

 

1.16         Commission.

 

“Commission” means the United States
Securities and Exchange Commission.

 

1.17         Common Stock.

 

“Common Stock” means the shares of common
stock, par value $.001 per share, of Traffix.

 

1.18         Contingent
Payment.

 

“Contingent Payment” means any of the First
Contingent Payment, Second Contingent Payment or Third Contingent Payment.

 

1.19         Contingent
Purchase Price.

 

“Contingent Purchase Price” has the meaning
given in Section 3.2(a).

 

1.20         Contracts.

 

“Contracts” means all contracts, leases,
licenses, commitments, sales orders, invoices, purchase orders and other
agreements relating to the Seller’s Business, including the agreements listed
on Schedule 5.6.

 

3

 

1.21         Controlled
Company.

 

“Controlled Company” means (i) any Affiliate
of Seller and (ii) any Affiliate of a Seller’s Shareholder that is engaged in a
line of business that is similar to or competes with the Seller’s Business or
acts as a supplier or customer of Seller.

 

1.22         Delivered
Financial Statements.

 

“Delivered Financial Statements” has the
meaning given in Section 5.3(a).

 

1.23         Determining
Accountant

 

“Determining Accountant” shall mean an
accountant that has no past or existing relationship with Seller, Traffix or
any of their respective Affiliates and that is selected by Traffix’s
Accountants and Seller’s Accountants in accordance with this Agreement, or, in
the event of such two accountants’ inability to select a Determining
Accountant, by a Judge of the Supreme Court of the State of New York, County of
New York, upon petition by either Traffix or Seller.

 

1.24         Dollars or $.

 

“Dollars” or “$” means United States dollars.

 

1.25         Domain Names.

 

Domain Names means any and all domain names
owned by Seller other than those set forth on Schedule 1.1, all of which are
listed on Schedule 1.25, and which have been registered with the Registrar.

 

1.26         EBITDA.

 

“EBITDA” means, with respect to any Person,
an amount equal to a Person’s earnings before interest, taxes, depreciation and
amortization, as reported by such Person in accordance with GAAP.

 

1.27         Employment
Agreements.

 

“Employment Agreements” means the employment
agreements between Purchaser and each of Craig and Greg substantially in the
form annexed hereto as Schedule 1.27.

 

1.28         Environmental
Claim.

 

“Environmental Claim” means any written
notice, claim, demand, action, suit, complaint, proceeding or other written
communication by any Person alleging liability or potential liability
(including, without limitation, liability or potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resource damages, property damage, personal injury, fines or penalties) arising
out of or relating to (i) the discharge, emission, release or threatened
release of any Hazardous Materials, at any 
locations of the Seller’s Business in violation of any Environmental
Law, or (ii) the violation or alleged violation by Seller or any of its
Affiliates of any permit, license, registration or other authorization required
under applicable Environmental Laws.

 

1.29         Environmental
Law.

 

“Environmental Law” means any existing
applicable federal, state, local or municipal laws, rules, orders, regulations,
statutes, ordinances, codes, decrees, notification and reporting requirements
of any 

 

4

 

Governmental Authority, or requirements of
law (including, without limitation, common law) relating in any manner to
contamination, pollution, or the conservation, preservation or protection of
human health or the environment.

 

1.30         ERISA.

 

“ERISA” means the Employee Retirement Income
Security Act of 1974, as amended.

 

1.31         Excluded
Liabilities.

 

“Excluded Liabilities” means any and all
liabilities or other obligations, contingent or otherwise, of ST, TG, the
Seller’s Shareholders or any Controlled Company or any of their Affiliates that
are not Acquired Liabilities.

 

1.32         Fairness
Opinion.

 

“Fairness Opinion” means the opinion of
ValueScope, Inc. or similar investment banking institution or business
valuation service retained by Traffix or Purchaser as to whether or not the
transactions contemplated by this Agreement are fair to the stockholders of
Traffix from a financial point of view.

 

1.33         Final
Financial Statements.

 

“Final Financial Statements” has the meaning
given in Section 7.4(a).

 

1.34         Financial
Statements.

 

“Financial Statements” means the Year-End Financial
Statements and the Stub Period Financial Statements.

 

1.35         First
Contingent Payment.

 

“First Contingent Payment” means, if the New
Send EBITDA for the 12 month period beginning on the first day of the calendar
month immediately following the Closing Date equals at least $500,000.00, the
sum of (a) the amount, but not more than $1,000,000.00, by which the New Send
EBITDA exceeds $500,000.00 and (b) 65% of the amount by which the New Send
EBITDA for such period exceeds $1,500,000.00, but in no event shall the First
Contingent Payment be greater than $2,500,000.00.

 

1.36         Fixed
Purchase Price.

 

“Fixed Purchase Price” has the meaning given
in Section 3.1.

 

1.37         GAAP.

 

“GAAP” means generally accepted accounting
principles.

 

1.38         Governmental
Authority.

 

“Governmental Authority” means any applicable
court, tribunal, arbitrator or any government or political subdivision thereof,
whether federal, state, county or local, or any agency, authority, official or
instrumentality of any such government or political subdivision.

 

5

 

1.39         Hazardous
Materials.

 

“Hazardous Materials” means any and all
hazardous or toxic substances, wastes, materials or chemicals, petroleum
(including crude oil or any fraction thereof) and petroleum products, asbestos
and asbestos-containing materials, pollutants, contaminants, polychlorinated
biphenyls and any and all other materials and substances regulated pursuant to
any Environmental Laws.

 

1.40         Indemnifying
Party.

 

“Indemnifying Party” has the meaning given in
Section 8.4(a).

 

1.41         Indemnitee.

 

“Indemnitee” has the meaning given in Section
8.4(a).

 

1.42         Internet.

 

“Internet” means the worldwide global
communication network commonly referred to as the “internet.”

 

1.43         Knowledge.

 

“Knowledge” of any matter means, with respect
to an individual, the actual knowledge, or knowledge that would be obtained
after due inquiry, but otherwise not constructive or imputed knowledge, of such
matter of such Person and, with respect to any Person that is not an
individual, such actual knowledge of each individual that is a director,
officer, or manager of such Person.

 

1.44         Law.

 

“Law” means any statute, rule, regulation or
ordinance of any Governmental Authority.

 

1.45         Licenses.

 

“Licenses” has the meaning given in Section
5.12.

 

1.46         Lien.

 

“Lien” means any security interest,
conditional sale or other title retention agreement, mortgage, pledge, lien,
charge, encumbrance or other adverse claim or interest.

 

1.47         Machinery
and Equipment.

 

“Machinery and Equipment” means all vehicles,
machinery and equipment (including computer hardware and software) owned by
Seller, subject to leases or subleases thereby, or used or held in connection
with the Seller’s Business.

 

1.48         Material
Adverse Effect.

 

“Material Adverse Effect” means any change or
changes or effect or effects that individually or in the aggregate are or may
reasonably be expected to be materially adverse to the condition (financial or
otherwise) of Seller  and/or the
Acquired Assets (taken as a whole).

 

6

 

1.49         Minimum
Working Capital

 

“Minimum Working Capital” means the working
capital generated from the operations of New Send from and after the Closing,
as periodically determined by Traffix in its reasonable discretion in
accordance with GAAP.

 

1.50         New Send
EBITDA.

 

“New Send EBITDA” means an amount determined
in accordance with GAAP (subject to adjustment, as set forth in Section 3.2(c)
hereof), equal to EBITDA for New Send for the applicable measurement, which
determination shall be made no later than ninety (90) days after the conclusion
of the 12-month measurement period required to determine the amount of the
First Contingent Payment, Second Contingent Payment and Third Contingent
Payment, as the case may be.  Solely for purposes of determining New Send
EBITDA under this Agreement, the following shall apply: (i) to the extent New
Send uses the services of Infiknowledge, ULC (Traffix’s technology development
subsidiary), Infiknowledge, ULC will bill New Send at the rate of its cost plus
7%; (ii) if New Send refers a client (including a new or existing New Send
client) to Traffix, and Traffix or its other Affiliates generates revenue from
such client (a) from Traffix’s proprietary media properties, then Traffix will
allocate 15% of the collected revenue from such client to New Send, or (b) from
Traffix’s third-party affiliate media properties, then Traffix will allocate
33% of the gross profit recognized from such client to New Send; (iii) if Traffix
refers a client (including a new or existing Traffix client) to New Send, and
New Send generates revenue from such client from traditional New Send revenue
sources, then 65% of the gross profit recognized from such client will be
allocated to New Send; and (iv) the following operating expenses shall be
allocated to New Send (thereby causing a reduction to New Send EBITDA):

 

(a)           for the 12-month period ending on the
first day of the calendar month following the one-year anniversary of the
Closing Date,  operating expenses of
$150,000 shall be allocated to New Send;

 

(b)           for the 12-month period ending on the
first day of the calendar month following the two-year anniversary of the
Closing Date, New Send shall have operating expenses allocated to it in an amount
equal to the product of (1) $150,000, multiplied by (2) a fraction, the
numerator of which shall be the total operating expenses for New Send for the
12-month period ending on the two-year anniversary of the Closing Date, and the
denominator of which shall be $1,400,000; and

 

(c)           for the 12-month period ending on the
three-year anniversary of the first day of the calendar month following the
Closing Date, New Send shall have operating expenses allocated to it in an
amount equal to the product of (1) $150,000, multiplied by (2) a fraction, the
numerator of which shall be the total operating expenses for New Send for the
12-month period ending on the three-year anniversary of the Closing Date, and
the denominator of which shall be $1,400,000.

 

1.51         Notice
of Disagreement.

 

“Notice of Disagreement” has the meaning
given in Section 3.2(c) or Section 7.4(b), as the case may be.

 

1.52         Order.

 

“Order” means any judgment, writ, decree,
injunction or similar order of any Governmental Authority, in each case whether
preliminary or final.

 

7

 

1.53         Other
Documents.

 

“Other Documents” means all Schedules and
Exhibits to this Agreement and all other instruments, agreements and documents
executed or to be executed by any party hereto in connection with the
transactions contemplated hereby.

 

1.54         Person.

 

“Person” means and includes an individual, a
partnership, a joint venture, a joint stock company, a corporation, a limited
liability company, a trust, an unincorporated association or organization and a
government or a department or agency, authority, official or instrumentality
thereof, or any group of the foregoing acting in concert.

 

1.55         Purchase
Price.

 

“Purchase Price” has the meaning set forth in
Section 3.2.

 

1.56         Purchase
Price Allocation.

 

“Purchase Price Allocation” has the meaning
given in Section 3.4.

 

1.57         Registrar.

 

“Registrar” means either Godaddy.com,
Bluegenesis.com, Directnic.com or Networksolutions.com, as the case may be.

 

1.58         Registration
Rights Agreement.

 

“Registration Rights Agreement” means the
agreement annexed hereto as Schedule 1.58.

 

1.59         Restrictive
Agreement.

 

“Restrictive Agreement” means an agreement
that prohibits or limits Seller’s (or its Affiliate’s) use of a Trade Right of
another Person or prohibits Seller (or its Affiliate) from engaging, or
curtails or restricts the nature or scope of Seller’s (or its Affiliate’s)
activities, in any line of business or geographic territory.

 

1.60         Second
Contingent Payment.

 

“Second Contingent Payment” means the amount
by which the New Send EBITDA for the 12- month period beginning on the first
day of the calendar month immediately following the first anniversary of the
Closing Date exceeds $2,250,000.00, but in no event shall the Second Contingent
Payment exceed $2,500,000.00.

 

1.61         Securities
Act.

 

“Securities Act” means the Securities Act of
1933, as amended.

 

1.62         Seller
Indemnified Parties.

 

“Seller Indemnified Parties” has the meaning
given in Section 8.3(b).

 

8

 

1.63         Seller’s
Accountants.

 

“Seller’s Accountants” means the CPA firm of
Steven Boccio, CPA, or such other firm selected by Seller upon prior written
notice to Purchaser.

 

1.64         Seller’s
Business.

 

“Seller’s Business” means the business and
operations of ST and TG (and each of their respective subsidiaries) all as
reflected in the Financial Statements as at and for the period ending on the
Balance Sheet Date and as conducted by ST and TG (and all of their respective
subsidiaries) through the Closing Date, including, without limitation, search
engine marketing through increasing customers’ exposure on search engines and
portals.

 

1.65         Seller’s
Shareholders.

 

“Seller’s Shareholders” means Craig and Greg.

 

1.66         Share
Certificates.

 

“Share Certificates” means the certificates
representing the Shares.

 

1.67         Shares.

 

“Shares” means the number of shares of Common
Stock, equal to the number of shares determined by dividing $1,682,500 by the
Closing Share Price; provided, however, that if such number of shares exceeds
19.99% of the total outstanding shares of Common Stock on the Closing Date,
Traffix shall be required to deliver only that number of shares equal to 19.99%
of the total outstanding shares of Common Stock on the Closing Date, provided
that the Cash Component shall be increased by an amount equal to the product of
(a) that number of shares so in excess of 19.99%, multiplied by (b) the Closing
Share Price.

 

1.68         Specifications.

 

“Specifications” means all software code,
specifications, plans, and designs, expressed in any tangible form or stored on
any electronic storage device such as a floppy disk or compact disc, and any
computer software or hardware used in order to interpret or apply the
Specifications, owned by Seller and its Affiliates or otherwise used in
connection with the Seller’s Business.

 

1.69         Statement.

 

“Statement” has the meaning given in Section
3.2(c) or Section 7.4(b), as the case may be.

 

1.70         Stub
Period Financial Statement. 

 

“Stub Period Financial Statement” means the
income statement and balance sheet of (i) ST; (ii) TG; and (iii) each
subsidiary of ST and TG for the period January 1, 2004 to March 31, 2004,
prepared by Seller’s Accountants in accordance with GAAP.

 

1.71         Tax.

 

“Tax” means all federal, state, local and foreign
income, profits, franchise, sales, use, occupancy, excise and payroll taxes or
charges imposed by any Governmental Authority, and any expenses incurred in
connection with the determination, settlement or litigation of any liability
for such taxes, includes any interest, penalty, or addition thereto, whether
disputed or not.

 

9

 

1.72         Tax Return.

 

“Tax Return” means any return, report,
information return or other document (including any related or supporting
information) filed or required to be filed with any federal, state, local or
foreign Governmental Authority in connection with the determination, assessment
or collection of any Tax or the administration of any laws, regulations or
administrative requirements relating to any Tax.

 

1.73         Third
Contingent Payment

 

“Third Contingent Payment” means the amount by which
the New Send EBITDA for the 12- month period beginning on the first day of the
calendar month immediately following the second anniversary of the Closing Date
exceeds $3,250,000.00, but in no event shall the Third Contingent Payment
exceed $2,500,000.00.

 

1.74         Trade Rights.

 

“Trade Rights” means United States and
foreign patents, patent applications, patent licenses, software licenses and
know-how licenses, inventions, trade secrets, trade dress or design, or
representation or any expression thereof, trade names, trademarks, copyrights,
service marks, trademark registrations and applications (whether pending or
abandoned), logos, service mark registrations and applications, copyright
registrations and applications (whether pending or abandoned), job or shop
rights, service mark applications  and
registrations (whether pending or abandoned), job or shop rights, all Internet
domain names used or controlled by Seller (including any Affiliates thereof),
rights to inventions and all other items of intellectual property or other
intangible property used in the Seller’s Business.

 

1.75         Traffix’s
Accountants.

 

“Traffix’s Accountants” means the independent
public accountants then regularly retained by Traffix.

 

1.76         Traffix
Indemnified Parties.

 

“Traffix Indemnified Parties” has the meaning
given in Section 8.2.

 

1.77         Year-End
Financial Statements.

 

“Year-End Financial Statements” means the
income statement and balance sheet of (i) ST; (ii) TG; and (iii) each
subsidiary of ST and TG, all as at December 31, 2003, attached hereto as
Schedule 1.77.

 

2.             SALE AND PURCHASE OF ACQUIRED ASSETS;
ASSUMPTION OF ACQUIRED LIABILITIES.

 

2.1           Sale and Purchase of Acquired Assets.

 

Subject to the terms and conditions set forth
in this Agreement, Seller hereby agrees to sell to the Purchaser, and the
Purchaser hereby agrees to purchase from Seller, at the Closing all of the
Acquired Assets, free and clear of any liabilities, Liens, security interests,
pledges, conditions or encumbrances, other than the Acquired Liabilities.  Immediately after the Closing Date, none of
Seller, Seller’s Shareholders or any Controlled Company (or any of their
respective Affiliates) shall have or control any assets related to or necessary
in the conduct of the Seller’s Business except, in the case of Seller’s
Shareholders, in their capacities as executive officers of Purchaser.

 

10

 

2.2           Acquired
Liabilities.

 

Subject to the terms and conditions set forth
in this Agreement, the Purchaser agrees that, on the Closing Date, the
Purchaser shall assume and thereafter pay, perform and discharge when due all
of the Acquired Liabilities (but none of the Excluded Liabilities,
notwithstanding the disclosure of a liability on any Schedule hereto except for
those specifically set forth on Schedule 1.2 hereof).

 

3.             PURCHASE PRICE.

 

3.1           Fixed
Purchase Price.

 

The fixed portion of the Purchase Price (the
“Fixed Purchase Price”) for the Acquired Assets is $5,432,500.00 (except as may
be increased post-Closing pursuant to Section 7.4(c) hereof), payable as
follows:

 

(1)           the
Cash Component payable at the Closing as provided in Section 4.4; and

 

(2)           the
Shares, which shall be delivered at the Closing as provided in Section 4.4.

 

3.2           Contingent
Purchase Price.

 

(a)           The
contingent portion of the Purchase Price (the “Contingent Purchase Price”, and,
with the Fixed Purchase Price, the “Purchase Price”) shall be payable as
follows:

 

(1)           within ten (10) days after the earlier of (i) receipt by
Traffix of notice from Seller stating that the Statement (as defined below) is
acceptable or (ii) final determination in accordance with Section 3.2(c) of the
amount of the New Send EBITDA used to calculate the First Contingent Payment,
Purchaser shall deliver or cause to be delivered to Seller the First Contingent
Payment;

 

(2)           within ten (10) days after the earlier of (i) receipt by
Traffix of notice from Seller stating that the Statement is acceptable or (ii)
final determination in accordance with Section 3.2(c) of the amount of the New
Send EBITDA used to calculate the Second Contingent Payment, Purchaser shall
deliver or cause to be delivered to Seller the Second Contingent Payment;

 

(3)           within ten (10) days after the earlier of (i) receipt by
Traffix of notice from Seller stating that the Statement is acceptable or (ii)
final determination in accordance with Section 3.2(c) of the amount of the New
Send EBITDA used to calculate the Third Contingent Payment, Purchaser shall
deliver or cause to be delivered to Seller the Third Contingent Payment.

 

(b)           One-half
(1/2) of each Contingent Payment shall be paid in cash and the remaining
one-half (1/2) shall be paid, in the sole discretion of Traffix, in any
combination of cash and restricted shares of Common Stock; provided, however,
that a Contingent Payment must be paid entirely in cash if, at the time such
Contingent Payment becomes due, Traffix has either (i) consummated the sale of
all or substantially all of its assets to an individual or a privately-held
entity; or (ii) merged with and into a privately-held entity, which
privately-held entity is the surviving corporation in such merger.  Each share of Common Stock included in a
Contingent Payment shall have a value equal to the average market closing price
of the Common Stock, as listed on Nasdaq (or the market or exchange upon which
the Common Stock is then listed), over the ten (10) trading days immediately
preceding the last 

 

11

 

day of the measurement period
used to calculate the First Contingent Payment, Second Contingent Payment or
Third Contingent Payment, as the case may be.

 

(c)           Not
later than thirty (30) days after Traffix has delivered to Seller its
determination of the New Send EBITDA used to calculate a Contingent Payment
(the “Statement”), Seller shall notify Traffix in writing (the “Notice of
Disagreement”) if Seller disagrees with the Statement.  If no Notice of Disagreement is received by
Traffix within such 30-day period, then the Statement shall be deemed to be
accepted and agreed to by Seller.  The
Notice of Disagreement shall provide specific reasons for the disagreement.  If such Notice of Disagreement is timely
given, then Traffix and Seller shall use reasonable efforts to resolve the
disagreement regarding the Statement. 
If no agreement is reached between them within thirty (30) days after
the date on which Seller gives its Notice of Disagreement, then the Determining
Accountant shall be appointed by Traffix’s Accountants and Seller’s Accountants
within ten (10) days thereafter with instructions to resolve the disagreement
and provide a report of its determination of the amounts in dispute within
thirty (30) days of its appointment. 
The Determining Accountant may examine all ledgers, books, records and
work papers utilized in connection with the accounting and preparation of the
Statement.  The decision of the
Determining Accountant shall be delivered in a written report addressed to
Traffix and Seller and shall be binding and conclusive upon the parties
hereto.  The costs and fees of the
Determining Accountant shall be borne one-half by Seller and one-half by
Traffix; provided, however, that if the amount of the New Send EBITDA reflected
in the Statement is more than $50,000 less than the amount determined by the
Determining Accountant and such miscalculation was not caused by the act or
omission of Seller, Craig or Greg or any of their respective Affiliates, then
Traffix shall bear all of such costs and fees.

 

3.3           Purchase Price Allocation.

 

The Purchase Price shall be allocated (the
“Purchase Price Allocation”) among the Acquired Assets as set forth on Schedule
3.3, except that the parties hereto agree to amend prior to Closing the amount
allocated on such schedule to “goodwill” in accordance with the recommendation
of an independent valuation service provider being retained for such purpose
subsequent to the date hereof.  Such
Purchase Price Allocation is being made consistent with Section 1060 of the
Code.  Each of the parties hereto shall
not, and shall not permit any of its Affiliates to, take a position (except as
required pursuant to any Order) on any Tax Return or before any Governmental
Authority charged with the collection of any Tax, or in any judicial
proceeding, that is in any way inconsistent with the Purchase Price Allocation
determined in accordance with this Section 3.3.  Any state or local sales tax or other transfer tax due with
respect to the transfer of the Assets conveyed to the Purchaser shall be paid
by Seller.

 

4.             THE CLOSING.

 

4.1           Closing.

 

The Closing is anticipated to take place on
or about June 18, 2004 at the offices of Traffix’s counsel, Feder, Kaszovitz,
Isaacson, Weber, Skala, Bass & Rhine LLP, 750 Lexington Avenue, New York,
New York 10022-1200, or at such other place as the parties hereto may agree;
provided, however, that in the event Seller and Seller’s Shareholders are
ready, willing and able to consummate the transactions contemplated to be performed
thereby as of the Closing Date hereunder, and all Closing conditions required
hereunder to be performed or satisfied by Seller or Seller’s Shareholders or
their respective designees have been so performed and satisfied, and Traffix or
Purchaser are not so ready, willing and able to close, Purchaser shall deliver
$200,000 of the Cash Component by wire transfer to the account designated by
ST, to be applied against the Purchase Price at Closing.

 

12

 

4.2           Delay in Closing and Termination
Fee.

 

(a)           In
the event that on June 30, 2004, (i) Seller and Seller’s Shareholders are
ready, willing and able to consummate the transactions contemplated to be
performed thereby as of the Closing Date hereunder, and all Closing conditions
required hereunder to be performed or satisfied by Seller or Seller’s
Shareholders or their respective designees have been so performed and
satisfied; and (ii) (x) Purchaser and Traffix have not received the Fairness
Opinion due to any reason other than the failure of Seller or Seller’s
Shareholders to reasonably cooperate with the Purchaser and Traffix and their
designees in the preparation of the Fairness Opinion, or (y) the Fairness
Opinion opines, inter alia, that the transactions contemplated hereby are not
fair to the stockholders of Traffix from a financial point of view, then either
Seller or Purchaser may terminate this Agreement by written notice to the
other, whereupon Seller may retain the $200,000 paid in accordance with Section
4.1 hereof as a termination fee and thereafter neither party hereto shall have
any further rights against or obligations to the other.

 

(b)           In the event that (i) Seller and Seller’s Shareholders have
not reasonably cooperated with the Purchaser and Traffix and their designees in
their preparation of the Fairness Opinion, or (ii) on June 30, 2004, Seller and
Seller’s Shareholders are not ready, willing and able to consummate the
transactions contemplated to be performed thereby as of the Closing Date hereunder,
or all Closing conditions required hereunder to be performed or satisfied by
Purchaser and Traffix or their respective designees have not been so performed
and satisfied, then, in either of such instances, Seller shall immediately
return the $200,000 paid in accordance with Section 4.1 and this Agreement
shall continue in full force and effect, with the Closing Date being July 15,
2004, time being of the essence.

 

4.3           Deliveries
by Seller at Closing.

 

At the Closing, Seller shall deliver, or
cause to be delivered, to Traffix and New Send:

 

(1)           (a)  a certificate issued by the Secretary of
State of the State of New York, certifying that ST is a corporation duly
organized and existing in good standing under the law of the State of New York,
and copies of ST’s Certificate of Incorporation, including all amendments,
certified by the office of the Secretary of State of New York, and a
certificate from the appropriate office of each other state in which ST has
qualified to do business, to the effect that ST is in good standing in each
state and that it owes no taxes; and

 

(b)  a certificate issued by the Secretary of
State of the State of New York, certifying that TG is a limited liability
company duly organized and existing in good standing under the law of the State
of New York, and copies of TG’s Certificate of Formation and Articles of
Organization, including all amendments, certified by the office of the
Secretary of State of New York, and a certificate from the appropriate office
of each other state in which TG has qualified to do business, to the effect
that TG is in good standing in each state and that it owes no taxes;

 

(2)           (a)  a certificate signed by the Secretary of
Seller certifying as to (i) the Certificate of Incorporation and Bylaws of ST
being true and correct as of the Closing Date, (ii) resolutions of the
shareholders and the directors of ST, authorizing and approving all matters in
connection with this Agreement and the transactions contemplated hereby, and
(iii) the incumbency of the executive officers of ST executing this Agreement
and any related agreements; and

 

(b)  a certificate signed by the managing member
of TG certifying as to (i) the Certificate of Formation, Articles of
Organization and Bylaws of TG being true and correct as of the Closing Date,
(ii) resolutions of the members and the directors of TG, authorizing and
approving all matters in connection with this Agreement and the transactions
contemplated hereby, and 

 

13

 

(iii) the incumbency of the
executive officers or managing members of TG executing this Agreement and any
related agreements;

 

(3)           the
Bill of Sale;

 

(4)           a
certificate signed by a duly authorized executive officer of each of ST and TG
and each Seller’s Shareholder that the representations and warranties of Seller
and each Seller’s Shareholder contained in this Agreement are true, correct and
complete on and as of the Closing Date, except for changes contemplated by the
Agreement and except for those representations and warranties that address
matters only as of a particular date (which shall remain true and correct as of
such particular date), and that Seller and each Seller’s Shareholder has
performed and complied with all covenants and agreements required by this Agreement
to be performed or complied with by it on or prior to the Closing Date;

 

(5)           copies
of written consents to the assignment of those Contracts listed on Schedule
4.3(5), executed by the counterparties thereto;

 

(6)           (a)  a Certificate of Amendment to the Articles
of Incorporation of ST, duly executed and in suitable form for filing with the
Secretary of State of the State of New York changing the name of ST to
Handelman Byrnes Corp.; and

 

(b)  a Certificate of Amendment to the Articles
of Organization of TG, duly executed and in suitable form for filing with the
Secretary of State of the State of New York changing the name of TG to Byrnes
Handelman LLC;

 

(7)           confirmation
that the Registrar has correctly changed the administrative contact, billing
contact, and technical contact for the Domain Names to Purchaser, or to such
other entity as is directed by Purchaser (a current printout of a Registrar
WHOIS database query provided to Feder, Kaszovitz, Isaacson, Weber, Skala, Bass
& Rhine LLP by Seller shall be sufficient evidence of the successful
transfer of the Domain Names to Purchaser);

 

(8)           investment
representation letters in the form requested by Traffix from Seller and each
Seller’s Shareholder regarding the Shares;

 

(9)           the
Registration Rights Agreement, as executed by ST and each Seller’s Shareholder;

 

(10)         an opinion of counsel to Seller, such counsel to be
reasonably acceptable to Purchaser, dated the Closing Date and addressed to
Purchaser and Traffix, in form and substance reasonably satisfactory to
Purchaser and Traffix, to the effect that (i) ST and TG are each duly
incorporated or organized, as the case may be, validly existing and in good
standing under the Laws of the jurisdiction of their incorporation or
organization, as the case may be, (ii) Seller has all requisite corporate power
and authority to make, execute, deliver and perform this Agreement and each
Other Document required to be executed, delivered and performed by it in
connection with the transactions contemplated hereby, and to sell, convey,
assign, transfer and deliver the Acquired Assets to Purchaser, as set forth
herein, (iv) this Agreement, any Other Document to which Seller or any Seller’s
Shareholder is a party, and all assignments and other instruments of
conveyance, transfer and sale, as specified in such opinion, delivered by
Seller hereunder constitute the valid and binding obligations of Seller and
each Seller’s Shareholder, as the case may be, enforceable against them in
accordance with their respective terms, (v) neither the execution and delivery
of this Agreement or any Other Document to which Seller or any Seller’s
Shareholder is a party, nor the consummation of the transactions 

 

14

 

contemplated hereby and
thereby, nor compliance with and fulfillment of the terms and conditions of
this Agreement or any Other Document to which Seller or any Seller’s
Shareholder is a party, by Seller or a Seller’s Shareholder, shall conflict
with, or result in a breach of the terms, conditions or provisions of, or
constitute a default under the articles of incorporation or bylaws (or
equivalent documents) of Seller or any Contract specified as material by Seller
in a schedule attached to such opinion to which Seller and/or Seller’s Shareholder
is subject; (vi) no notice to or authorization of, any Government Entity
required by federal or New York state Law to be obtained by Seller or any
Seller’s Shareholder, which has not been given or obtained prior to Closing, is
required for the consummation by Seller and/or any Seller’s Shareholder, as the
case may be, of the transactions contemplated hereby; (vii) the consummation by
Seller or any Seller’s Shareholder of the transactions described herein shall
not violate or result in a breach or default under any federal or New York
state Law applicable to Seller or any Seller’s Shareholder and does not and
will not result in the creation or imposition of any Lien upon any of the
Acquired Assets; and (viii) to the Knowledge of such counsel, there is no litigation
or action pending or threatened against Seller (or any subsidiaries thereof) or
any Seller’s Shareholder, at Law or in equity, before or by any Government
Entity or other Person.  In rendering
such opinion, such counsel may include customary qualifications and
assumptions, may rely upon certificates of government entities and may place
reasonable reliance upon the representations of officers of Seller;

 

(11)         a written assignment of those Contracts listed on Schedule
4.3(11) hereto, which Seller and Seller’s Shareholders hereby acknowledge are
the only Contracts being assumed by Purchaser and/or Traffix hereunder; and

 

(12)         such other instruments or documents as may be reasonably
necessary in order to consummate the transactions described in this Agreement.

 

4.4           Deliveries by Traffix and New Send at
Closing.

 

At the Closing, Traffix and New Send shall
deliver, or cause to be delivered, to ST:

 

(1)           $3,500,000
of the Cash Component (except as may be increased pursuant to Section 1.67, but
less any amounts previously paid pursuant to Section 4.1 and not returned by
Seller pursuant to Section 4.2(b)), payable by wire transfer to the account
designated by ST, with the remaining $250,000 of the Cash Component to be
disbursed in accordance with Section 7.4 hereof;

 

(2)           the
Share Certificates representing the Shares deliverable at the Closing, which
shall bear a restrictive legend in substantially the following form:

 

“Any transfer or other disposition of the
shares represented by this certificate is subject to the provisions of an Asset
Acquisition Agreement dated as of June 9, 2004, among Traffix, Inc. (the
“Corporation”), New Send, Inc., SendTraffic, Inc., TrafficGroup, LLC, Craig
Handelman and Greg Byrnes.  The shares
of stock represented by this Certificate have not been registered under the
United States Securities Act of 1933, as amended (the “Act”), and may be
transferred only if (i) registered under the Act and the requirements of any
state having jurisdiction are complied with or (ii) the transfer is exempt from
such registration and state requirements and counsel reasonably acceptable to
the Corporation has delivered to the Corporation a written opinion reasonably
acceptable to the Corporation setting forth the basis for such exemption.”

 

15

 

(3)           a
copy of Traffix’s and New Send’s Certificates of Incorporation, including all
amendments, certified, in each case, by the office of the Secretary of State of
Delaware; and certificates from the office of the Secretary of State of
Delaware to the effect that each of such entities is in good standing and owes
no taxes in Delaware;

 

(4)           a
certificate signed by the Secretary of each of Traffix and New Send, certifying
as to (a) the Certificate of Incorporation and By-Laws of each of Traffix and
New Send, respectively, (b) resolutions of the Board of Directors of each of
Traffix and New Send, respectively, authorizing and approving all matters in
connection with this Agreement and the transactions contemplated hereby, and
(c) the incumbency of the officer(s) of each of Traffix and New Send,
respectively, executing this Agreement and any related agreements;

 

(5)           a
certificate signed by a duly authorized executive officer of each of Traffix
and New Send that the representations and warranties of each of Traffix and New
Send contained in this Agreement are true, correct and complete on and as of
the Closing Date, except for changes contemplated by the Agreement and except
for those representations and warranties that address matters only as of a
particular date (which shall remain true and correct as of such particular
date), and that each of Traffix and New Send has performed and complied with
all covenants and agreements required by this Agreement to be performed or complied
with by it on or prior to the Closing Date;

 

(6)           the
Registration Rights Agreement, as executed by Traffix;

 

(7)           options to purchase an aggregate of 70,000 shares of
Common Stock issued in the names of those employees of Seller designated at
Closing by Seller, provided such designated individuals are employees of
Traffix (or any subsidiary thereof) at Closing (such options vesting in equal
installments on each of their date of grant and the first and second
anniversaries of their date of grant and otherwise governed in accordance with
the terms and provisions of Traffix’s 1996 Employee Stock Option Plan, as then
amended and restated);

 

(8)           an
opinion of Feder, Kaszovitz, Isaacson, Weber, Skala, Bass & Rhine LLP,
counsel to Traffix and Purchaser, dated the Closing Date and addressed to
Seller, in form and substance reasonably satisfactory to Seller, to the effect
that (i) Purchaser and Traffix are each duly incorporated or organized, as the
case may be, validly existing and in good standing under the Laws of the
jurisdiction of their incorporation or organization, as the case may be, (ii)
Purchaser and Traffix have all requisite corporate power and authority to make,
execute, deliver and perform this Agreement and each Other Document required to
be executed, delivered and performed by them in connection with the
transactions contemplated hereby, and to pay the Purchase Price, including,
without limitation, the issuance of the Share Component, as set forth herein,
(iv) this Agreement and any Other Document to which Purchaser or Traffix is a
party, as specified in such opinion, delivered by Purchaser hereunder
constitute the valid and binding obligations of Purchaser and Traffix, as the
case may be, enforceable against them in accordance with their respective
terms, (v) neither the execution and delivery of this Agreement or any Other
Document to which Purchaser or Traffix is a party, nor the consummation of the
transactions contemplated hereby and thereby, nor compliance with and
fulfillment of the terms and conditions of this Agreement or any Other Document
to which Purchaser or Traffix is a party, by Purchaser or Traffix, shall
conflict with, or result in a breach of the terms, conditions or provisions of,
or constitute a default under the articles of incorporation or bylaws of
Purchaser or Traffix; (vi) no notice to or authorization of, any Government
Entity required by federal or Delaware state Law to be obtained by Purchaser or
Traffix, which has not been given or obtained prior to Closing, is required for
the consummation by Purchaser and/or Traffix, as the case may be, of the
transactions contemplated hereby; 

 

16

 

(vii) the consummation by
Purchaser or Traffix of the transactions described herein shall not violate or
result in a breach or default under any federal or Delaware state Law
applicable to Purchaser or Traffix and does not and will not result in the
creation or imposition of any Lien upon any portion of the Share Component or
the Acquired Assets; and (viii) to the Knowledge of such counsel, there is no
litigation or action pending or threatened against Purchaser or Traffix (or any
subsidiaries thereof), at Law or in equity, before or by any Government Entity
or other Person, that would have a Material Adverse Effect and that is not
otherwise disclosed in a document filed by Traffix with the Commission.  In rendering such opinion, such counsel may
include customary qualifications and assumptions, may rely upon certificates of
government entities and may place reasonable reliance upon the representations
of officers of Purchaser or Traffix;

 

(9)           an assignment and assumption agreement pursuant to which
Purchaser assumes all Acquired Liabilities; and

 

(10)         such other instruments or documents as may be reasonably
necessary in order to consummate the transactions described in this Agreement.

 

4.5           Delivery of Employment Agreements
at Closing.

 

At the Closing, Traffix and
Purchaser and each of Craig and Greg shall execute and deliver an Employment
Agreement in substantially the form of the Employment Agreement annexed hereto
as Schedule 1.27.

 

4.6           Holdback of Portion of Purchase
Price.

 

At the Closing, Purchaser shall deposit in an
interest bearing, segregated bank account, $250,000, representing that portion
of the Cash Component not delivered at Closing to ST, such reserved amount to
be disbursed in accordance with Section 7.4 hereof.

 

4.7           Conditions
to Closing.

 

(a)           The
obligation of Traffix and Purchaser to consummate the purchase of the Acquired
Assets in accordance herewith and the other transactions contemplated hereby
shall be subject to the satisfaction (or waiver by Traffix and Purchaser) prior
to the Closing of each of the following conditions:

 

(1)           the
representations and warranties made by Seller and the Seller’s Shareholders
herein shall be true in all material respects on and as of the Closing Date,
except for changes contemplated by the Agreement and except for those
representations and warranties that address matters only as of a particular date
(which shall remain true and correct as of such particular date);

 

(2)           Seller
and Seller’s Shareholder shall have performed and complied in all material
respects with all obligations and conditions to be performed or complied with
by them hereunder;

 

(3)           no
Order or Law shall be in effect which prohibits consummation of the
Acquisition;

 

17

(4)           each
Consent of, or Notice to, any Governmental Authority or other Person (including
the counterparty to any Contract) required for the consummation of the
Acquisition shall have been obtained or given;

 

(5)           there
shall not have occurred, since the date of this Agreement, any Material Adverse
Effect;

 

(6)           the
Seller’s Shareholders shall have approved the sale of the Acquired Assets and
the other transactions contemplated by this Agreement;

 

(7)           there
shall not exist any Lien affecting the Acquired Assets, other than those Liens
set forth on Schedule 4.7(a)(7);

 

(8)           Seller
and each Seller’s Shareholder shall execute and/or deliver at the Closing all
the documents so to be executed and/or delivered by them and take all other
actions at the Closing so to be taken by them, pursuant to Section 4.3 and 4.5;
and

 

(9)           Seller shall cause those of its employees and consultants
(all of whom are listed on Schedule 4.7(a)(9)) selected by Purchaser prior to
Closing (in its sole discretion), to agree to become employees-at-will of
Purchaser from and after the Closing; provided, however, that if Purchaser has
notified Seller prior to Closing that Purchaser chooses (in its sole
discretion) to have an employee or consultant continue as an employee or
consultant of Purchaser from and after the Closing on the same terms and
conditions as exist under the Seller’s written agreements therewith, Seller
shall cause such employee or consultant to consent to the assignment of
Seller’s rights and obligations under such agreement to Purchaser.

 

(b)           The
obligation of Seller and each Seller’s Shareholder to consummate the
Acquisition in accordance herewith shall be subject to the satisfaction (or
waiver by Seller and each Seller’s Shareholder) prior to or at the Closing of
each of the following conditions:

 

(1)           the
representations and warranties made by Traffix and Purchaser herein shall be
true in all respects on and as of the Closing Date, except for changes
contemplated by the Agreement and except for those representations and warranties
that address matters only as of a particular date (which shall remain true and
correct as of such particular date);

 

(2)           Traffix
and Purchaser shall have performed and complied with all obligations and
conditions to be performed or complied with by them hereunder;

 

(3)           no
Order or Law shall be in effect which prohibits consummation of the
Acquisition; and

 

(4)           Traffix
and Purchaser shall execute and/or deliver at the Closing all the documents and
monies so to be executed and/or delivered by it and take all other actions at
the Closing so to be taken by it, pursuant to Section 4.4, 4.5 and 4.5.

 

5.             REPRESENTATIONS AND WARRANTIES OF SELLER AND
SELLER’S SHAREHOLDERS.

 

ST, TG and each of the Seller’s Shareholders,
jointly and severally, represent and warrant to Traffix and Purchaser the
following:

 

18

 

5.1           Existence and Good
Standing.

 

(a)           ST is a corporation, duly organized, validly existing and
in good standing under the laws of its jurisdiction of organization, and has
all requisite corporate power and authority to own, lease and operate all its
properties and to carry on its business as now being conducted.  ST is duly qualified and in good standing in
each jurisdiction in which the failure to qualify would have a Material Adverse
Effect; and

 

(b)           TG is a limited liability company, duly organized, validly
existing and in good standing under the laws of its jurisdiction of formation,
and has all requisite limited liability company power and authority to own,
lease and operate all its properties and to carry on its business as now being
conducted.  TG is duly qualified and in
good standing in each jurisdiction in which the failure to qualify would have a
Material Adverse Effect.

 

5.2           Shareholders.

 

The Seller’s Shareholders own all of the
issued and outstanding securities of all classes of ST and TG,
respectively.  All shares and membership
interests, as the case may be, held by the Seller’s Shareholders have been duly
authorized and validly issued and are fully paid and non-assessable, and have
not been issued in violation of any rights of other Persons.  No other class of ownership of ST or TG is
authorized or outstanding other than the shares and membership interests, as
the case may be, owned by the Seller’s Shareholders.  There are no outstanding options, warrants, rights, calls,
commitments, conversion rights, rights of exchange, plans or other agreements
of any character providing for the purchase, issuance or sale of any shares,
membership interests or other ownership interest in ST or TG.

 

5.3           Financial Statements.

 

(a)           Seller
has furnished or made available to Traffix the following financial statements
and Tax Returns (the “Delivered Financial Statements”):

 

(1)           federal
and state Tax Returns of ST and TG (and their respective subsidiaries) for the
fiscal years ended December 31, 2001, December 31, 2002 and December 31, 2003;

 

(2)           the
Year-End Financial Statements; and

 

(3)           the Stub Period
Financial Statements.

 

Except as set forth on Schedule 5.3(a), the
Delivered Financial Statements, including the footnotes thereto, are true and
correct in all material respects, and all adjustments consist only of normal
recurring adjustments necessary for a fair presentation of the results of
operations and financial condition for the period covered by such Financial
Statement.  Except as set forth on
Schedule 5.3(b), the balance sheets included in the Delivered Financial
Statements, taken together, fairly present, in all material respects, the
financial condition of Seller as at the respective dates thereof and, except as
indicated therein, in all material respects all known claims against and all
debts and liabilities of Seller and its Affiliates, fixed or contingent, as at
the date thereof, required to be shown thereon in accordance with reasonable
and prudent United States business and financial accounting practices and the
related statements of operations and cash flows for the periods indicated,
taken together, fairly present, in all material respects the results of
operations and financial condition for such periods.  If misstatements exist in the Year-End Financial Statements that
cause Seller’s “adjusted EBITDA after LA”, as reported in such Year-End
Financial 

 

19

 

Statements, to be reduced, but by $100,000 or
less, such Year-End Financial Statements shall still be deemed to be “true and
correct in all material respects” for purposes of this paragraph.

 

(b)           Since
the Balance Sheet Date, except as set forth on Schedule 5.3(b) there has been
(i) no materially adverse change in the assets or liabilities, or in the
business or financial condition, or in the results of operations of Seller or
its Affiliates, and (ii) no fact or condition exists or, to the Knowledge of Seller
or the Seller’s Shareholders, is contemplated or threatened which might result
in a Material Adverse Effect in the future.

 

5.4           Books and Records.

 

Except as set forth on Schedule 5.4, all
accounts, books, ledgers, minute books and official and other records of Seller
and its Affiliates of whatsoever kind related to the Acquired Assets and the
Seller’s Business have been properly and accurately kept and completed in all
material respects, and there are no material inaccuracies or discrepancies of any
kind contained or reflected therein. 
Seller does not own or possess any records, systems, controls, data or
information material or necessary to the conduct of the Seller’s Business,
which is recorded, stored, maintained, operated or otherwise wholly or partly
dependent on or held by any means (including all means of access thereto and
therefrom) that are not under the exclusive ownership and direct control of
Seller, other than financial records which are maintained at the locations
identified on Schedule 5.4 annexed hereto, and which, after the Closing Date,
are readily available to Traffix and Purchaser.

 

5.5           Real
Property; Personal Property; Machinery and Equipment.

 

(a)           Except
as set forth in Schedule 5.5(a), Seller does not own or have any leasehold or
other interest in any real property that is presently necessary to conduct the
development, production, marketing and sale of the products and services
offered as part of the Seller’s Business.

 

(b)           Except
as set forth in Schedule 5.5(b), Seller has good title or holds a valid,
existing, enforceable lease or license to the Acquired Assets, subject to no
encumbrance, Lien, charge or other restriction of any kind or character.

 

(c)           Except
as set forth in Schedule 5.5(c), the Machinery and Equipment are, individually
and in the aggregate, in good operating condition, normal wear and tear
excepted.  Except as set forth in
Schedule 5.5(c), (i) all capital or operating leases under which Seller leases
equipment; and (ii) each contract for the purchase of as yet undelivered
equipment is in full force and effect and constitutes a binding obligation,
enforceable in accordance with its terms, of Seller.  Except as disclosed on Schedule 5.5(c), there are no existing
defaults by Seller under any such lease or contract beyond applicable notice
and grace periods or which have not been waived by the other party thereto.

 

(d)           The
Acquired Assets constitute all of the operating assets used in connection with
the Seller’s Business and, at the Closing, will be available for immediate use
by Purchaser.

 

5.6           Contracts.

 

Except as set forth in Schedule 5.6, neither
Seller (or any subsidiaries thereof) nor Seller’s Shareholders are a party to
or bound by any agreement, contract or commitment relating to any collective
bargaining agreement, any bonus, deferred compensation, pension, profit
sharing, stock option, retirement or other 

 

20

 

employee benefit plan; any loan or advance
to, or investment in, any other Person or any agreement relating to the making
of any such loan, advance or investment; any guarantee or other contingent
liability in respect of any indebtedness or obligation of any other Person
(other than the endorsement of negotiable instruments for collection in the
ordinary course of business); any management service, employment, consulting or
any other similar type of contract; any Restrictive Agreement; any secrecy or
confidentiality agreement with any Person, including any employee of or
consultant to Seller; any agreement, contract or commitment which involves the
payment by Seller or any Affiliate thereof of Five Thousand  Dollars ($5,000.00) or more, in the
aggregate, and is not cancelable without penalty within thirty (30) days; any
agreement with any officer or director of Seller; any licensing or franchise
agreement; or any contract with customers or other third parties for the
delivery of goods or performance of services which involves payment by Seller
or any Affiliate thereof of more than Five Thousand  Dollars ($5,000.00).

 

Except as set forth on Schedule 5.6, there
exists no default or event of default by Seller (or any subsidiaries thereof)
or Seller’s Shareholders, or occurrence, condition, or act (including this
transaction) which, with the giving of notice, the lapse of time or the
happening of any other event or condition, would become a default or event of
default under any Contract identified on such Schedule.  Except as set forth on Schedule 5.6, (i)
neither Seller (or any subsidiaries thereof) nor Seller’s Shareholders have
violated any material terms or conditions of any Contract which would permit
termination or modification of any such Contract, (ii) there are no outstanding
written claims of breach or indemnification or written notice of default or termination
of any such Contract and, (iii) to the Knowledge of Seller (or any subsidiaries
thereof) or the Seller’s Shareholders, all of the covenants to be performed by
any other party thereto have been substantially performed.

 

5.7           Litigation.

 

Except as set forth in Schedule 5.7, there is
no action, suit, proceeding at law or in equity by any Person, or any
arbitration or any administrative or other proceeding by or before any
Governmental Authority, pending or, to the Knowledge of Seller or the Seller’s Shareholders,
threatened since the Balance Sheet Date, against or affecting Seller (or any
subsidiaries thereof) or Seller’s Shareholders or any of their respective
properties or rights or the operation of the Seller’s Business, and to the
Knowledge of Seller or the Seller’s Shareholders no event has occurred or
circumstance exists that provides a valid basis for any such action, proceeding
or investigation and that is reasonably likely to give rise to or serve as the
basis for the commencement of any such action, proceeding or
investigation.  Except as disclosed on
Schedule 5.7, none of Seller, the Seller’s Shareholders, any Affiliate of
Seller or any Controlled Company is subject to any Order entered in any lawsuit
or proceeding which has a Material Adverse Effect or which would prevent or
interfere with the consummation of the transactions contemplated hereby.

 

5.8           Taxes.

 

Seller, Craig and Greg and their respective
Affiliates have filed all Tax Returns that they were required to file, and have
paid all Taxes shown thereon as owing. 
Schedule 5.8 lists all Tax Returns filed with respect to Seller, Craig
and Greg and their respective Affiliates for taxable periods ended on or after
December 31, 2003, indicates those Tax Returns that have been audited, and indicates
those Tax Returns that currently are the subject of audit.  Seller has delivered to the Purchaser
correct and complete copies of all federal, state and local Tax Returns,
examination reports, and statements of deficiencies assessed against or agreed
to by Seller, Craig, Greg and/or their respective Affiliates since December 31,
2003.  None of Seller, Craig, Greg or
their respective Affiliates have waived any statute of limitations in respect
of Income Taxes or agreed to any extension of time with respect to an Income
Tax assessment or deficiency.  None of
Seller, Craig, Greg or any of their respective Affiliates are a party to any
Income Tax allocation or sharing agreement.

 

21

 

5.9           Liabilities.

 

There are no outstanding claims, liabilities
or indebtedness, contingent or otherwise against Seller or any of its
Affiliates, except as set forth in Schedule 5.9 or reserved against or
reflected in the Delivered Financial Statements, other than liabilities incurred
subsequent to the Balance Sheet Date in the ordinary course of business and
consistent with past practice and which in the aggregate do not have a Material
Adverse Effect.  Schedule 5.9 sets forth
a list of all current arrangements of Seller and its Affiliates for borrowed
money and all outstanding balances as of the date hereof with respect
thereto.  Neither Seller nor any of its
Affiliates are in default in respect of the terms or conditions of any such
indebtedness.

 

5.10         Trade Rights.

 

Schedule 5.10 contains an accurate and
complete list of all Trade Rights owned or used or anticipated to be used by
Seller in the development, production, marketing and sale of the products and
services offered as part of the Seller’s Business.  Except as set forth on Schedule 5.10, no claim of infringement or
misappropriation of Trade Rights has been made against Seller and, Seller does
not infringe or misappropriate any Trade Rights of any third party.

 

5.11         Compliance with Laws.

 

Except as set forth on Schedule 5.11, Seller
and its Affiliates are in compliance with all applicable federal, state and
local Laws, regulations and Orders and all other applicable requirements of any
Governmental Authority having jurisdiction. 
Except as set forth on Schedule 5.11, Seller and its Affiliates are not
now charged with, and, to the Knowledge of Seller and the Seller’s
Shareholders, not now under investigation with respect to, any violation of any
Law, regulation, or Order affecting the Seller’s Business or any of the
Acquired Assets, and Seller and its Affiliates have filed all material reports
required to be filed with any Governmental Authority.

 

5.12         Licenses.

 

Seller has all licenses and permits and other
governmental certificates, authorizations and approvals (collectively,
“Licenses”) required by any Governmental Authority for the development,
production, marketing and sale of the products and services offered as part of
the Seller’s Business and the use of its properties as presently operated or
used.  All of such Licenses are in full
force and effect and no action or claim is pending to revoke or terminate any
of the Licenses or declare any License invalid.

 

5.13         Insurance.

 

Schedule 5.13 is a schedule of all insurance
policies (including life insurance) or binders maintained by Seller.  All such policies are in full force and
effect and all premiums that have become due have been currently paid.  The coverage under such policies for
occurrences prior to the Closing shall not be materially adversely affected by
reason of the transactions contemplated hereby.  Neither the Seller’s Shareholders nor Seller has received written
notice of cancellation or non-renewal of any such policy or binder.  Neither the Seller’s Shareholders nor Seller
has received any written notice from any of its insurance carriers that any
premiums will be materially increased in the future or that any insurance
coverage listed on Schedule 5.13 will not be available in the future on
substantially the same terms now in effect.

 

22

 

5.14         Supplier and
Customer Relations.

 

There has not been, and neither Seller nor
the Seller’s Shareholders has any Knowledge (but without any due inquiry) that
would lead them to anticipate, any adverse change in relations with the
suppliers or customers of Seller or any Affiliate thereof as a result of the
transactions contemplated by this Agreement that would result in a Material
Adverse Effect.  Schedule 5.14 lists the
ten largest suppliers and customers of Seller and its Affiliates, as of the
prior three (3) months.  Except as set
forth on Schedule 5.14, none of these current suppliers and none of these
current customers has advised Seller or the Seller’s Shareholders, orally or in
writing, formally or informally, that (i) it is terminating or considering
terminating, or is materially dissatisfied with its business relationship, as a
whole or in respect of any particular product or service, or (ii) any of these
current customers is contemplating reducing or discontinuing in any material
respect its purchases from Seller (or any subsidiary thereof), or that any of
these suppliers is contemplating reducing or discontinuing in any material
respect its services or sales to Seller (or any subsidiary thereof).

 

5.15         Employment Relations.

 

(i) Seller has not committed any unfair labor
practices in connection with the Seller’s Business and there is no unfair labor
practice complaint pending against Seller or any Affiliate thereof before any
applicable government entity; (ii) there is no labor strike, dispute, slowdown
or stoppage actually pending or, to the Knowledge of Seller and the Seller’s
Shareholders, threatened against or involving Seller or any Affiliate thereof;
(iii) no representation question exists respecting the employees of Seller; and
(iv) no grievance which might have a Material Adverse Effect on the Seller’s
Business, nor any arbitration proceeding arising out of or under any collective
bargaining agreement with Seller or any Affiliate thereof is pending or, to the
Knowledge of Seller and Seller’s Shareholders, threatened, and no claim
therefor has been asserted.  Except as
set forth in Schedule 5.15, (A) none of Seller or any Affiliate thereof are a
party to any collective bargaining agreement; (B) no collective bargaining agreement
is currently being negotiated by Seller or any Affiliate thereof; and (C)
Seller has not experienced any work stoppage or any other labor difficulty
during the last three (3) years.  There
has not been, and Seller does not anticipate, any adverse changes in its
relations with its employees as a result of the transactions contemplated by
this Agreement that would result in a Material Adverse Effect.

 

5.16         Personnel;
Compliance with Legal Requirements for Employee Benefit Plans 

 

(a)           Schedule
5.16 contains a true and complete list of all persons employed (and their
latest rates of compensation) or retained as independent contractors (and their
latest rates of compensation) by Seller and its Affiliates as at the Closing
Date.  Schedule 5.16 also lists all
sales agents or sales representatives (and their latest rates of compensation)
as at the Closing Date.  Except as set
forth on Schedule 5.16, no employees of Seller or any Affiliate thereof are
entitled to any accrued vacation pay, sick leave or non-statutory severance
benefits.

 

(b)           With
respect to any employee benefit plan, program, arrangement or contract
(including, without limitation, any “employee benefit plan” as defined in
Section 3(3) of ERISA) maintained by Seller or any Affiliate thereof or to
which Seller or any Affiliate thereof contributes, Seller has made available to
Traffix and Purchaser a true and correct copy of (i) such employee benefit
plan, (ii) each trust agreement relating to such employee benefit plan, (iii)
the most recent summary plan description of the employee benefit plan, if any,
and (iv) Internal Revenue Service determination letters for all such employee
benefit plans that are intended to be tax-qualified under Section 401(a) of the
Code.  Forms 5500 for all such employee benefit
plans have been timely and properly filed, or a valid extension for filing has
been obtained, and all employees excluded from participating in any such
employee benefit plans were properly excludable by Seller or any Affiliate
thereof.

 

23

 

5.17         No Changes
Since the Balance Sheet Date.

 

Since the Balance Sheet Date, except as
specifically stated on Schedule 5.3(b) or Schedule 5.17, neither Seller nor any
Affiliate thereof have incurred any liability or obligation of any nature
(whether accrued, absolute, contingent or otherwise), except in the ordinary
course of Seller’s business; permitted any of its assets to be subjected to any
mortgage, pledge, Lien, security interest, encumbrance, restriction or charge
of any kind; sold, transferred or otherwise disposed of any assets except in
the ordinary course of Seller’s business; made any single capital expenditure
or commitment therefor involving the expenditure of more than Five Thousand
Dollars ($5,000.00); made any bonus or profit sharing distribution or payment
of any kind; granted any increase in the rate of wages, salaries, bonuses or
other remuneration of any employee who after giving effect to such increase or
prior thereto receives compensation at an annual rate of $30,000.00 or more,
except pursuant to a prior obligation or employment policy in the ordinary
course of Seller’s business, including, but not limited to, payments to
employees for unpaid past compensation and expenses; canceled or waived any
claims or rights of substantial value; made any change in any method of
accounting or auditing practice; otherwise conducted its business or entered
into any transaction, except in the usual and ordinary manner and in the
ordinary course of its business; amended or terminated any agreement which is
material to the Seller’s Business; renewed, extended or modified any lease or,
except in the ordinary course of business, any lease of personal property; or
agreed, whether or not in writing, to do any of the foregoing; and there has
been no change in the financial condition or results of operations of Seller or
any Affiliate thereof, which, individually or in the aggregate, has or would
have a Material Adverse Effect.

 

5.18         Valid
Agreements; Restrictive Documents.

 

Seller has corporate or limited liability
authority, as the case may be, and Seller and the Seller’s Shareholders have
the full legal right and capacity, to execute, deliver and perform their
respective obligations under this Agreement and the Other Documents to which it
or they are a party, and all of the foregoing have been duly authorized by all
necessary shareholder, member and corporate action of Seller.  This Agreement and the Other Documents to
which Seller or the Seller’s Shareholders are a party have been duly executed
and delivered by Seller and the Seller’s Shareholders, respectively, and
constitute the valid and binding obligation of Seller and the Seller’s
Shareholders, respectively, enforceable against Seller and the Seller’s
Shareholders, respectively, in accordance with their respective terms, except
as the enforcement thereof may be limited by bankruptcy, reorganization,
moratorium, insolvency and other Laws of general applicability relating to or
affecting creditors’ rights or general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity or at
law).  Except as set forth in Schedule
5.18, neither Seller nor any Seller’s Shareholder nor any Affiliate thereof is
subject to, or a party to, any charter, by-law, mortgage, Lien, lease, license,
permit, contract, instrument, law, regulation or Order or any other restriction
of any kind or character, which has a Material Adverse Effect, or which would
prevent consummation of the transactions contemplated by this Agreement and the
Other Documents or compliance by Seller or the Seller’s Shareholders with the
terms, conditions and provisions of this Agreement and the Other
Documents.  Except as set forth in
Schedule 5.18, the execution, delivery and performance of this Agreement and
the Other Documents and the consummation of the transactions contemplated
hereby and thereby will not violate, conflict with or result in the breach of
any provision of the organization documents or operating agreement of either ST
or TG or any Affiliate thereof; violate, conflict with or result in the breach
or material modification of any of the terms of, or constitute (or with notice
or lapse of time or both constitute) a default under, or otherwise give any
other contracting party the right to accelerate or terminate, any material
obligation, Contract, agreement, Lien, Order or other instrument to which
Seller or the Seller’s Shareholders or any Affiliate thereof are a party or by
or to which they or any of their respective assets or properties may be bound
or subject; violate any Order of any Governmental Authority against, or binding
upon Seller or the Seller’s Shareholders or any Affiliate thereof or upon any
of their respective assets; or violate any statute, Law or regulation of the
United 

 

24

 

States or any state having jurisdiction; and,
which violations, conflicts or breaches of any of the foregoing would have a
Material Adverse Effect.

 

5.19         Required
Approvals, Notices and Consents.

 

Except as set forth on Schedule 5.19, no
consent or approval of, other action by, or notice to, any Governmental
Authority, or any third party is required in connection with the execution and
delivery by Seller and the Seller’s Shareholders of this Agreement and the
Other Documents or the consummation by Seller and the Seller’s Shareholders of
the transactions contemplated hereby or thereby.  The approval by the Seller’s Shareholders of this Agreement and
the Other Documents and the consummation by Seller and the Seller’s
Shareholders of the transactions contemplated hereby or thereby shall be
obtained in accordance with applicable Law, including but not limited to the
securities Laws of the United States and any state having jurisdiction of such
matters.

 

5.20         Disclosure.

 

This Agreement, the Delivered Financial
Statements, or any Schedule hereto, or any certificate, document or statement
in writing to be delivered as required under this Agreement, by or on behalf of
Seller does not contain, or will not contain, any untrue statement of a
material fact, and does not omit, or will not omit, any statement of a material
fact required to be stated or necessary in order to make the statements
contained herein or therein not misleading. 
There is no fact which materially adversely affects the business or
financial condition of Seller or any Affiliate thereof which has not been, or
will not be, set forth in this Agreement or an Other Document to be delivered
at the Closing.

 

5.21         Environmental Conditions.

 

Except as set forth on Schedule 5.21, no
treatment, storage and disposal facilities for Hazardous Material, or hazardous
waste disposal sites or underground storage tanks are or have been owned or
used by Seller or any Affiliate thereof in connection with the Seller’s
Business, and there are no sites at which hazardous wastes from the operation
of the Seller’s Business have been disposed. 
Except as disclosed on Schedule 5.21 in connection with, or in any way
related to, the Seller’s Business:

 

(1)           Seller
holds, and is in substantial compliance with, all permits, licenses,
registrations or other authorizations required under applicable Environmental
Laws, and is, and has been, otherwise in substantial compliance with all
applicable Environmental Laws.

 

(2)           neither
Seller nor any Affiliate thereof has received any written notice of any
Environmental Claim, and neither the Seller’s Shareholders nor Seller are
aware, without any duty of inquiry, of any threatened Environmental Claim that
remains outstanding.

 

(3)           neither
Seller nor any Affiliate thereof have entered into or agreed to or is subject
to, any judgment, decree or Order of any Governmental Authority under any
Environmental Laws, including, without limitation, relating to investigation,
cleanup, remediation or removal of Hazardous Materials;

 

(4)           Hazardous
Materials have not been generated, transported, treated, stored, disposed of,
released or threatened to be released at, on, from or under any of the
properties included among the assets of Seller or any Affiliate thereof in
material violation of, or in a manner or to a location that is likely to give
rise to material liability of Seller or any Affiliate thereof under any
Environmental Laws; and

 

25

 

(5)           no
approval is required under any Environmental Law for the acquisition of the
Acquired Assets pursuant to this Agreement.

 

5.22         Health and Safety
Conditions.

 

Neither Seller nor any Affiliate thereof has
conducted any internal health and safety audits, or industrial hygiene
surveys.  Except as set forth on
Schedule 5.22, Seller and its Affiliates are in substantial compliance with the
requirements of the Occupational Safety and Health Act and all other federal, state
and local occupational health and safety laws, rules and regulations.

 

5.23         Copies of Documents.

 

Seller has caused to be made available for
inspection and copying by Traffix or its officers or advisers, true and correct
copies of all documents referred to in this Section 5 or in any Schedule
furnished pursuant to this Section 5.

 

5.24         Brokers.

 

No broker, finder, agent or similar
intermediary has acted on behalf of the Seller’s Shareholders or Seller in
connection with this Agreement or the transactions contemplated hereby except
Merriman Curhan Ford & Co., and there are no brokerage commissions,
finder’s fees or similar fees or commissions payable in connection therewith
based on any agreement, arrangement or understanding with any of the Seller’s
Shareholders or Seller, or any action taken by any of them except to Merriman
Curhan Ford & Co., the entire amount of which shall be payable thereto by
Seller pursuant to separate agreement.

 

5.25         Domain Names.

 

The Domain Names constitute all domain names
that the Seller owns or possesses the right to use or that are otherwise used
in the operation of the Seller’s Business.

 

5.26         Pre-Closing Obligations.

 

From and after the date hereof and until the
Closing, except as otherwise provided elsewhere herein or as Traffix may
otherwise consent, Seller shall:

 

(1)           conduct
the Seller’s Business in ordinary course;

 

(2)           preserve
the Seller’s Business and the Acquired Assets and maintain its relationship
with customers and other Persons with which it has material business dealings;

 

(3)           not
(i) sell, lease, transfer or dispose of any Acquired Asset, other than sales of
merchandise from inventory in the ordinary course of business, or (ii)
terminate any Contract, except upon expiration of the term thereof as provided
therein;

 

(4)           maintain
all Licenses and Trade Rights;

 

(5)           maintain
all insurance listed on Schedule 5.13 in full force and effect;

 

(6)           except
as required under a Contract, not increase the compensation or other employment
benefits payable to or for the benefit of any employee;

 

26

 

(7)           not
amend ST’s Certificate of Incorporation, TG’s Certificate of Formation or
Articles of Organization, or the By-laws of either ST or TG or permit the
amendment of any similar document of any of Seller’s Affiliates;

 

(8)           not
merge or consolidate with any other Person or effect any capital
reorganization;

 

(9)           not
acquire the business or assets, substantially as a whole, of any other Person,
or make any capital expenditure in excess of $5,000.00;

 

(10)         not
solicit or respond to any inquiry or proposal relating to any sale of the
Seller’s Business or the Acquired Assets from any Person other than Traffix
and/or Purchaser;

 

(11)         furnish
such information with respect to the Seller’s Business and the Acquired Assets
as Traffix and/or Purchaser may from time to time reasonably request and shall
permit Traffix and/or Purchaser and their authorized representatives access
during regular business hours and upon reasonable notice to conduct a physical
inventory of the Acquired Assets, to examine the books and records of Seller
and its Affiliates relating to the Seller’s Business and to make inquiries of
responsible Persons designated by Seller with respect thereto;

 

(12)         not
make any press release or other public announcement with respect to this
Agreement or the transactions contemplated hereby, without the prior written
consent of Traffix; and

 

(13)         conduct,
or cause to be conducted by a nationally-recognized service company, as of a
date or dates as late as reasonably practicable prior to the Closing Date, a
search or survey of Liens, including without limitation security interests and
other notice filings under the Uniform Commercial Code, tax Liens and judgment
Liens, of record in each jurisdiction where Acquired Assets are located or in
which Seller or any Affiliate thereof conducts the Seller’s Business, upon,
against or affecting the Acquired Assets.

 

6.             REPRESENTATIONS OF TRAFFIX AND PURCHASER.

 

Traffix and Purchaser, jointly and severally,
represent and warrant to Seller and the Seller’s Shareholders as follows:

 

6.1           Existence and Good
Standing.

 

Traffix and Purchaser are each corporations
duly organized, validly existing and in good standing under the laws of
Delaware and each has all requisite corporate power and authority to own, lease
and operate all its properties and to carry on its business as now being
conducted.  Neither Purchaser nor
Traffix is required to qualify to do business in any jurisdiction such that the
failure to qualify would have an adverse effect on the conduct of its
business.  Traffix directly owns all of
the capital stock of Purchaser.

 

6.2           Shares.

 

The Shares have been duly authorized and,
when delivered at the Closing, will be validly issued, fully paid and
non-assessable, will be free and clear of any liabilities, liens, security
interests, pledges or encumbrances of any nature whatsoever, except such as may
be created by Seller or the Seller’s 

 

27

 

Shareholders and except as the sale, pledge
or other disposition thereof is limited by the provisions of the Securities Act
and other applicable Blue Sky Laws, and will have been issued in accordance
with the Securities Act and other applicable Blue Sky Laws.

 

6.3           Valid
Agreements; Restrictive Documents.

 

Each of Traffix and Purchaser has corporate
authority to execute, deliver and perform their respective obligations under
this Agreement and the Other Documents to which it is a party, and all of the
foregoing have been duly authorized by all necessary corporate action.  This Agreement and the Other Documents to
which Traffix or Purchaser is a party, have been duly executed and delivered by
Traffix and Purchaser, respectively, and constitute a valid and binding agreement
of Traffix and Purchaser, respectively, enforceable against Traffix and
Purchaser, respectively, in accordance with their respective terms, except as
the enforcement thereof may be limited by bankruptcy, reorganization,
moratorium, insolvency and other laws of general applicability relating to or
affecting creditors’ rights or general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity or at
law).  Except as set forth in any
Schedule to this Agreement, Purchaser and Traffix are not subject to, or a
party to, any charter, by-law, mortgage, lien, lease, license, permit,
contract, instrument, law, rule, ordinance, regulation, or Order or any other
restriction of any kind or character, which would prevent consummation of the
transactions contemplated by this Agreement and the Other Documents, or
compliance by Purchaser or Traffix with the terms, conditions and provisions of
this Agreement and the Other Documents or which has a Material Adverse Effect
on Purchaser’s business following the Closing. 
The execution, delivery and performance of this Agreement and the Other
Documents, and the consummation of the transactions contemplated hereby and
thereby will not (i) violate, conflict with or result in the breach of any
provision of the charter documents or by-laws of Traffix or Purchaser; (ii)
violate, conflict with or result in the breach or material modification of any
of the terms of, or constitute (or with notice or lapse of time or both
constitute) a default under, or otherwise give any other contracting party the
right to accelerate or terminate, any material obligation, contract, agreement,
lien, Order or other instrument to which Traffix or Purchaser is a party or by
or to which Traffix or Purchaser may be bound or subject; (iii) violate any
Order of any Governmental Authority against, or binding upon, Traffix or
Purchaser or any of their assets which violation will or may reasonably be
expected to be materially adverse to the condition (financial or otherwise) of
Traffix and Purchaser in the aggregate or of Purchaser individually; or (iv)
violate any statute, law or regulation of the United States or any State
thereof which violation will or may reasonably be expected to be materially
adverse to the condition (financial or otherwise) of Traffix and Purchaser in
the aggregate or of Purchaser individually.

 

6.4           Required
Approvals, Notices and Consents.

 

Except as set forth on Schedule 6.4, no
consent or approval of, other action by, or notice to, any Governmental
Authority, or any third party is required in connection with the execution and
delivery by Traffix or Purchaser of this Agreement and the Other Documents, or
the consummation by Traffix or Purchaser of the transactions contemplated
hereby or thereby.  No consent or
approval of or other action by the securityholders of Traffix is required in
connection with the execution and delivery by Traffix or Purchaser of this
Agreement and the Other Documents, or the consummation by Traffix or Purchaser
of the transactions contemplated hereby or thereby.

 

6.5           No Brokers.

 

No broker, finder, agent or similar
intermediary has acted on behalf of Traffix or Purchaser in connection with
this Agreement or the transactions contemplated hereby, and there are no
brokerage commissions, finders’ fees or similar fees or commissions payable in
connection therewith based on any agreement, arrangement or understanding with
Traffix, Purchaser, or any action taken by Traffix or Purchaser.

 

28

 

6.6           Exchange Act Filings.

 

Traffix has filed all forms, reports and documents required to be filed
by Traffix with the SEC. All such required forms, reports and documents are
referred to herein as the “Traffix SEC Reports.” As of their respective dates,
the Traffix SEC Reports (i) were true and correct in all material respects, as
of the dates filed with the SEC, (ii) were prepared in all material respects in
accordance with the requirements of the Securities Act or the Securities
Exchange Act of 1934, as the case may be, and the rules and regulations of the
SEC thereunder applicable to such Traffix SEC Reports, and (iii) did not at the
time they were filed (or if amended or superseded by a filing prior to the date
of this Agreement, then on the date of such filing) contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, except to the
extent corrected prior to the date of this Agreement by a subsequently filed
Traffix SEC Report.

 

7.             POST CLOSING COVENANTS.

 

7.1           General.

 

In case at any time after the Closing any
further action is necessary to carry out the purposes of this Agreement, each
of the parties will take such reasonable further action (including the
execution and delivery of such further instruments and documents) as any other
party reasonably may request.  Seller
acknowledges and agrees that from and after the Closing Traffix and Purchaser
will be entitled to possession of all documents, books, records (including tax
records), agreements and financial data of any sort in its possession relating
to Seller and the Seller’s Business.

 

7.2           Post-Closing Access.

 

Following the Closing, each party will afford
to the other party, its counsel and its accountants, during normal business
hours, reasonable access to the books, records and other data of Seller or
relating to the Seller’s Business, the Acquired Assets, the Acquired
Liabilities or Seller in its possession and the right to make copies and
extracts therefrom, to the extent that such access may be reasonably required
by the requesting party (a) to facilitate the investigation, litigation and
final disposition of any claims which may have been or may be made against any
party or its Affiliates, (b) to prepare the financial information required by
Section 7.4 hereof and (c) for any other reasonable business purpose.

 

7.3           Cooperation
in Preparation of Securities Law Filings 

 

Seller and the Seller’s Shareholders agree to
cooperate and to cause Seller’s Accountants to cooperate with Traffix and
Traffix’s Accountants in the provision of such information and documents as may
be reasonably required in order to complete any filings required under the
Securities Act or other United States securities laws or Blue Sky Laws relating
to the transactions described in this Agreement.

 

7.4           Delivery of
the Final Financial Statements and Disbursement of the $250,000 Holdback.

 

(a)           Not
later than one hundred twenty (120) days after the Closing Date, Seller shall
prepare (under the direct supervision of Traffix and, in Traffix’s sole
discretion, Traffix’s Accountants) and deliver to Traffix, Seller’s balance
sheet, statement of income and retained earnings for the period commencing the
day after the period covered by the Stub Period Financial Statements and ending
on the Closing Date (the “Final Financial Statements”).  The Final Financial Statements shall be
prepared on the same basis as the Financial Statements were prepared and fairly

 

29

 

present in all material respects the
financial condition and results of operations of Seller and its Affiliates at
such date for the respective periods then ended, and except as indicated therein
and except for the absence of footnotes, the balance sheets included therein
shall reflect in all material respects all known claims against and all debts
and liabilities of Seller and its Affiliates, fixed or contingent, as of the
respective dates thereof, required by reasonable and prudent United States
business and financial accounting practices to be shown thereon.

 

(b)           Not later than 30 days after Seller has delivered to
Traffix the Final Financial Statements, Traffix shall notify Seller in writing
(the “Notice of Disagreement”) if Traffix disagrees with the Final Financial
Statement.  If no Notice of Disagreement
is received by Seller within such 30-day period, then the Final Financial
Statement shall be deemed to be accepted and agreed to by Traffix.  The Notice of Disagreement shall provide
specific reasons for the disagreement. 
If such Notice of Disagreement is timely given, then Traffix and Seller
shall use reasonable efforts to resolve the disagreement regarding the Final
Financial Statement.  If no agreement is
reached between them within thirty (30) days after the date on which Traffix
gives its Notice of Disagreement, then the Determining Accountant shall be
appointed by Traffix’s Accountants and Seller’s Accountants within ten (10)
days thereafter with instructions to resolve the disagreement and provide a
report of its determination of the amounts in dispute within thirty (30) days
of its appointment.  The Determining
Accountant may examine all ledgers, books, records and work papers utilized in
connection with the accounting and preparation of the Final Financial Statement
but the scope of its engagement will be limited to resolving those items which
Traffix identified in its Notice of Disagreement as to which Traffix disagreed
and determining whether such items were properly reflected on the Final
Financial Statement in accordance with the requirements of this Section
7.4.  The decision of the Determining
Accountant shall be delivered in a written report addressed to Traffix and
Seller and shall be binding and conclusive upon the parties hereto.  The costs and fees of the Determining
Accountant shall be borne one-half by Seller and one-half by Traffix; provided,
however, that if the decision of the Determining Accountant reflects that the
amount of Seller’s current assets less current liabilities were overstated in
the Final Financial Statement by $30,000 or more, then Seller shall bear all of
such costs and fees.

 

(c)           In the event the Final Financial Statement (as
definitively determined in accordance with the above clause (b)) reflects that
Seller had, as of the Closing Date, current assets less current liabilities
equal to:

 

(i)
                                  at least
$493,000.00, (x) Purchaser shall promptly deliver to Seller the $250,000.00
portion of the Cash Component retained thereby in accordance with Section 4.5,
plus all interest accrued thereon; (y) the amount in excess of such $493,000.00
shall be retained by Purchaser; and (z) the Purchase Price shall be increased
by the amount in excess of such $493,000.00, which excess amount shall be
immediately paid by Purchaser to ST in cash;

 

(ii)                                  between
$243,000.00 and $492,999.99, Purchaser shall deliver to Seller from the
$250,000.00 portion of the Cash Component retained thereby in accordance with
Section 4.5, the amount by which such current assets less liabilities exceeds
$243,000.00, and shall be permitted to retain the balance thereof, with any
accrued interest to be distributed to the Seller and Purchaser pro rata to such disbursement; provided,
however, that if any accounts receivable of Seller are collected by Traffix or
Purchaser subsequent to the date such $250,000 has been 

 

30

 

                                                disbursed, the
net amounts so received (after deducting costs of collection) shall be promptly
paid to Seller in cash; or

 

(iii)                               less than
$243,000.00, Purchaser shall be permitted to retain the entire $250,000.00
portion of the Cash Component retained thereby in accordance with Section 4.5,
plus all interest accrued thereon, and Seller shall become obligated to refund
to Purchaser that portion of the Cash Component delivered at Closing equal to
the amount by which such current assets less liabilities are less than
$243,000.00; provided, however, that if any accounts receivable of Seller are
collected by Traffix or Purchaser subsequent to the date such $250,000 has been
disbursed, the net amounts so received (after deducting costs of collection)
shall be (x) credited against any moneys owed by Seller to Purchaser hereunder,
or (y) to the extent such collected net amounts exceed the moneys owed by
Seller to Purchaser hereunder, promptly paid to Seller in cash.

 

7.5           [Intentionally Omitted] 

 

7.6           Availability
of Minimum Working Capital.

 

Traffix hereby warrants and represents that
from the Closing Date until the third anniversary of the Closing Date it shall
make available for use by Purchaser working capital in an amount equal to at
least the Minimum Working Capital.

 

7.7           Survivability of
Purchaser.

 

Traffix hereby warrants and represents that
Purchaser will continue to operate as a wholly-owned subsidiary of Traffix from
the Closing Date until at least the third anniversary of the Closing Date.

 

7.8           Retention
of Purchaser Business Subsequent to Termination of Employment of ST
Shareholders.

 

In the event the employment of Craig and Greg
under their Employment Agreements are terminated by Purchaser without Cause,
from the date the later of Craig or Greg is so terminated until the third
anniversary of the Closing Date, Traffix and Purchaser will not divert any
sources of revenue from Purchaser that were attributable to New Send EBITDA as
of the date of such later termination, and will continue to recognize revenue
consistent with its prior practices.

 

8.             SURVIVAL OF REPRESENTATIONS; INDEMNITIES.

 

8.1           Survival
of Representations and Warranties of Seller and the Seller’s Shareholders.

 

The representations and warranties of Seller
and the Seller’s Shareholders and the indemnification obligations under Section
8.2 shall survive the execution and delivery of this Agreement and the Other
Documents and the Closing hereunder for a period of two (2) years, provided,
however, that the covenants contained in Section 7.5 and the representations
and warranties made in Sections 5.2, 5.8, 5.16, 5.21 and 5.22, shall survive
the execution of this Agreement and the Other Documents and the Closing
hereunder until the date of expiration of the relevant federal, state or other
statute of limitations; provided 

 

31

 

further, however, that as to matters as to
which any Indemnitee has given a proper Claims Notice under Section 8.4 on or
prior to the expiration of the applicable survival period aforesaid, the right
to indemnification with respect thereto shall survive the expiration of any
such period until such claim is finally resolved and any obligations with
respect thereto are fully satisfied.

 

8.2           Obligations of
Seller and the Seller’s Shareholders to Indemnify.

 

Subject to Section 8.1, Seller and the Seller’s Shareholders, jointly
and severally, agree to indemnify, defend and hold harmless Purchaser and
Traffix, and their respective officers, directors, employees and agents, and
any of their successors and assigns (collectively, “Traffix Indemnified
Parties”) from and against any and all losses, liabilities, damages,
deficiencies, demands, claims, actions, judgments or causes of action,
assessments, costs or expenses (including, without limitation, interest,
penalties and reasonable attorneys’ fees and disbursements) (“Claims”), whether
such Claims are incurred in Purchaser’s or Traffix’s disputes with Seller or
the Seller’s Shareholders or involving third-party claims against Purchaser or
Traffix, based upon, arising out of or otherwise in respect of (i) any
inaccuracy in or any breach of any representation, warranty, covenant or
agreement of Seller or the Seller’s Shareholders contained in this Agreement or
any of the Other Documents or (ii) any Claim based upon the operation of the
Seller’s Business prior to the Closing Date, regardless of whether the same has
been disclosed in this Agreement or Other Document or otherwise listed on any
Schedule hereto; provided, however, that “Claims” shall not include any Claims
that are Acquired Liabilities.

 

8.3           Survival
of Representations and Warranties of Traffix and Purchaser.

 

(a)           Traffix’s and Purchaser’s representations and warranties,
covenants and the indemnification obligations under Section 8.3(b) shall
survive the execution and delivery of this Agreement and the Other Documents
and the Closing for a period of two (2) years, provided however, that (i) the
representations and warranty made in Section 8.3(b), and (ii) the obligation to
indemnify Seller and the Seller’s Shareholders for any Claim incurred by Seller
or the Seller’s Shareholders based upon, arising out of, or otherwise in
respect of, the operation of the Seller’s Business on or after the Closing
Date, in each case as provided in Section 8.3(b), shall survive the execution
of this Agreement and the Other Documents and the Closing hereunder until the
date of expiration of the relevant federal, state or other statute of
limitations; and provided further however, that as to matters as to which any
Indemnitee has given a proper Claims Notice under Section 8.4 on or prior to
the expiration of the applicable period aforesaid, the right to indemnification
with respect thereto shall survive the expiration of any such period until such
claim is finally resolved and any obligations with respect thereto are fully
satisfied.

 

(b)           Subject to Section 8.3(a), Traffix and Purchaser agree,
jointly and severally, to indemnify, defend and hold harmless Seller and the
Seller’s Shareholders and their respective officers, directors, employees and
agents, and any of their successors, heirs and assigns (collectively, “Seller
Indemnified Parties”) from and against any and all Claims based upon, arising
out of or otherwise in respect of (i) any inaccuracy in or any breach of any
representation or warranty or covenant or agreement of Traffix or Purchaser
contained in this Agreement or in any Other Document delivered by Traffix or
Purchaser, and (ii) any Claim incurred by Seller or the Seller’s Shareholders
resulting from the operation of the Seller’s Business on or after the Closing
Date.

 

8.4           Notice and
Opportunity to Defend.

 

(a)           Promptly
after receipt by any Seller Indemnified Party or Traffix Indemnified Party (the
“Indemnitee”) of notice of any demand, claim or circumstance which, with the
lapse of time, would or might give rise to a Claim or the commencement (or
threatened commencement) 

 

32

 

of any action, proceeding or investigation
(an “Asserted Liability”) that may result in any Claim, the Indemnitee shall
promptly give notice thereof (the “Claims Notice”) to the party obligated to
provide indemnification pursuant to Section 8.2 or 8.3 (the “Indemnifying
Party”).  The Claims Notice shall
describe the Asserted Liability in reasonable detail, shall contain supporting
documentation (if applicable), and shall indicate the amount (estimated, if
necessary and to the extent feasible) of the Claims that have been or may be
suffered by the Indemnitee.  No
indemnification obligation shall be imposed upon an Indemnifying Party unless a
proper Claims Notice is given to that Indemnifying Party on or before the last
day of the survival period for the representation, warranty, or covenant, the
alleged breach of which forms the basis for the Claim.

 

(b)           The
Indemnifying Party may elect to compromise or defend, at its own expense and by
its own counsel, any Asserted Liability. 
If the Indemnifying Party elects to compromise or defend such Asserted
Liability, it shall within thirty (30) days (or sooner, if the nature of the Asserted
Liability so requires) notify the Indemnitee of its intent to do so, and the
Indemnitee shall cooperate with the Indemnifying Party and shall provide the
Indemnifying Party access to its records and personnel relating to any such
Asserted Liability, in each case, at the expense of the Indemnifying Party, in
the compromise of, or defense against, such Asserted Liability.  If the Indemnifying Party elects not to
compromise or defend the Asserted Liability or fails to notify the Indemnitee
of its election as herein provided, the Indemnitee may pay, compromise or
defend such Asserted Liability at the expense of the Indemnifying Party.  Subject to the limitations contained in
Section 8.4(c) on the obligations of the Indemnifying Party in respect of
proposed settlements, the Indemnitee shall have the right to employ its own
counsel with respect to any Asserted Liability, but the fees and expenses of
such counsel shall be at the expense of such Indemnitee unless (a) the
employment of such counsel at the expense of the Indemnifying Party shall have been
authorized in writing by the Indemnifying Party in connection with the defense
of such action, or (b) such Indemnifying Party shall not have, as provided
above, promptly employed counsel to take charge of the defense of such action.  The Indemnitee, at its own cost, may employ
separate counsel to assert, based on an opinion of counsel, one or more legal
defenses available to it which are different from or additional to those
available to such Indemnifying Party; the Indemnifying Party shall not have the
right to direct the defense of such action on behalf of the Indemnitee in
respect of such different or additional defenses.  If the Indemnifying Party chooses to defend any Claim, the
Indemnitee shall make available to the Indemnifying Party any books, records or
other documents within its control that are necessary or appropriate for such
defense.

 

(c)           Notwithstanding
the provisions of Section 8.4(b), neither the Indemnifying Party nor the
Indemnitee may settle or compromise any claim for which indemnification has
been sought and is available hereunder, over the reasonable objection of the
other; provided, however, that consent to settlement or compromise shall not be
unreasonably withheld or delayed.  If,
however, the Indemnitee refuses to consent to a bona fide offer of settlement
that the Indemnifying Party wishes to accept, the Indemnitee may continue to
pursue such matter, free of any participation by the Indemnifying Party, at the
sole expense of the Indemnitee.  In such
event, the obligation of the Indemnifying Party to the Indemnitee shall be
equal to the lesser of (i) the amount of the offer of settlement which the
Indemnitee refused to accept plus the costs and expenses of the Indemnitee
prior to the date the Indemnifying Party notified the Indemnitee of the offer
of settlement, and (ii) the actual out-of-pocket amount the Indemnitee is
obligated to pay as a result of the Indemnitee’s continuing to pursue such
matter.

 

8.5           Limitations.

 

(a)           An Indemnifying Party shall be obligated to indemnify for Claims
(determined without regard to any materiality qualification contained in any
representation, 

 

33

 

warranty or covenant giving rise to a Claim
for indemnity hereunder) only to the extent that the aggregate amount of such
Claims exceeds Twenty Five Thousand Dollars ($25,000).

 

(b)           In no event shall the aggregate indemnification liability
of Seller and Seller’s Shareholders hereunder exceed the sum of (i) $5,000,000
for all Claims known to Seller or Seller’s Shareholders or any Affiliates
thereof prior to the Closing Date, including, without limitation:

 

(x)
any Claim included on any Schedule to the Agreement;

 

(y)
any Claim disclosed on any Delivered Financial Statement or Final Financial
Statement; and

 

(z)
any Claim disclosed to the Purchaser or Traffix in any of the documents
produced in its due diligence review in response to the Memorandum of
Purchaser’s counsel delivered to Seller in April 2004; and

 

(ii) $1,000,000 for all Claims not included in the foregoing clause
(i); provided, however, that such limitations shall not apply to
any obligation to indemnify for Claims arising out of, resulting from or
otherwise relating to intentional misrepresentation or fraud on the part of
Seller and/or Seller’s Shareholders.  In
no event shall the aggregate indemnification liability of Purchaser and Traffix
hereunder exceed $5,000,000; provided, however, that such
limitation shall not apply to any obligation to indemnify for Claims arising
out of, resulting from or otherwise relating to intentional misrepresentation
or fraud on the part of Purchaser or Traffix.

 

(c)           Any Claim for which Purchaser or Traffix shall be
indemnified hereunder shall be payable by Seller and/or Seller’s Shareholders
(in their discretion) in cash or through the surrender of any Shares, with such
surrendered Shares having a per share value for purposes of this clause (c)
equal to the Closing Share Price; provided, however, that if Seller,
Craig or Greg sell any shares of Common Stock after any of them has received a
Claims Notice relating to such indemnified Claim, the per share value for all
Shares surrendered in satisfaction of such Claim shall be equal to the sales
price for that sale.

 

9.             MISCELLANEOUS.

 

9.1           Expenses.

 

Except as otherwise provided herein, the
parties hereto shall pay all of their own expenses relating to the transactions
contemplated by this Agreement and the Other Documents, including, without
limitation, the fees and expenses of their respective counsel and financial advisers.

 

9.2           Governing Law;
Jurisdiction.

 

It is acknowledged by the Company and the
Seller’s Shareholders that this Agreement has been negotiated with Traffix and
Purchaser, each a corporation organized under the law of Delaware, U.S.A. with
its principal place of business in Pearl River, New York, U.S.A., and that the
governing law and jurisdictional provisions of this paragraph are an inducement
to Traffix and Purchaser to enter into the transactions described in this
Agreement.  THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT AND THE OTHER
DOCUMENTS, AND ALL MATTERS RELATING HERETO, SHALL BE GOVERNED BY THE LAW OF THE
STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAWS PROVISIONS. EACH
OF THE PARTIES HERETO HEREBY IRREVOCABLY CONSENTS AND SUBMITS TO THE 

 

34

 

EXCLUSIVE JURISDICTION OF
THE SUPREME COURT OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH ANY PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY,
WAIVES ANY OBJECTION TO VENUE IN THE COUNTY AND STATE OF NEW YORK, OR SUCH
DISTRICT, AND AGREES THAT SERVICE OF ANY SUMMONS, COMPLAINT, NOTICE OR OTHER
PROCESS RELATING TO SUCH PROCEEDING MAY BE EFFECTED IN THE MANNER PROVIDED BY
SECTION 9.5 OF THIS AGREEMENT.

 

9.3           [Intentionally Omitted]

 

9.4           Captions.

 

The article and section captions used herein
are for reference purposes only, and shall not in any way affect the meaning or
interpretation of this Agreement.

 

9.5           Notices.

 

Any notice or other communications required
or permitted hereunder shall be in writing and shall be deemed effective (a)
one day after the date of delivery by Federal Express or other nationally
recognized courier service that provides a delivery receipt, if delivered by
priority overnight delivery between any two points within the United States; or
(b) five days after deposit in the mails, if mailed by certified or registered
mail (return receipt requested) between any two points within the United
States, and in each case of mailing, postage prepaid, addressed to a party at
its address first set forth above, with copies to Feder, Kaszovitz, Isaacson,
Weber, Skala, Bass & Rhine LLP, 750 Lexington Avenue, New York, New York
10022-1200, Attention: Geoffrey A. Bass, Esq., and to Cohen Mohr LLP, 1420 Beverly Road, Suite 380, McLean, VA 22101,
Attention Daniel H. DuVal, Esq., or such other address as
shall be furnished in writing by like notice by any such party.

 

9.6           Parties in Interest.

 

Except as otherwise provided elsewhere herein
or in the Other Documents, this Agreement and the Other Documents may not be
transferred, assigned, pledged or hypothecated by any party hereto, other than
by operation of law.  This Agreement and
the Other Documents shall be binding upon and shall inure to the benefit of the
parties hereto and their respective heirs, executors, administrators,
successors and permitted assigns, Except as otherwise provided elsewhere
herein, each party hereto intends that this Agreement shall not benefit or
create any right or cause of action in or on behalf of any Person other than
the parties hereto.

 

9.7           Severability.

 

In the event any provision of this Agreement
or the Other Documents is found to be void and unenforceable by a court of
competent jurisdiction, the remaining provisions of this Agreement or such
Other Documents shall nevertheless be binding upon the parties with the same
effect as though the void or unenforceable part had been severed and deleted.

 

9.8           Counterparts.

 

This Agreement may be executed in two or more
counterparts, all of which taken together shall constitute one instrument.

 

35

 

9.9           Entire Agreement;
Amendments.

 

This Agreement, including all Schedules attached hereto, and the
Other Documents contain the entire agreement of the parties and supersedes any
and all prior or contemporaneous agreements between the parties, written or
oral, with respect to the transactions contemplated hereby.  It may not be changed or terminated orally,
but may only be changed by an agreement in writing signed by the party or
parties against whom enforcement of any waiver, change, modification,
extension, discharge or termination is sought.

 

Signature page to follow

 

36

 

IN WITNESS WHEREOF, the individual parties
have executed and the corporate parties have each caused its corporate name to
be hereunto subscribed by their respective duly authorized officers on the date
first written above.

 

	
   

  	
  TRAFFIX,
  INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/
  Josh Gillon

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  NEW
  SEND, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/
  Josh Gillon

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SENDTRAFFIC,
  INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/
  Craig Handleman

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TRAFFICGROUP,
  LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/
  Craig Handleman

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  /s/

  
	
   

  	
  CRAIG
  HANDELMAN

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  /s/

  
	
   

  	
  GREG
  BYRNES

  

 

37

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00068-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00068-of-00352.parquet"}]]