-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WGplSDb9YhM8jt9l0uUzJVeZdZUdIwBkm0WE8bY8EDaTBXTpJGOsrj6Hg54lKZ73 LczZKrKervFWpmIuOXR8og== 0001005477-02-001338.txt : 20020415 0001005477-02-001338.hdr.sgml : 20020415 ACCESSION NUMBER: 0001005477-02-001338 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20020318 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20020325 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ADSTAR COM INC CENTRAL INDEX KEY: 0001091599 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 223666899 STATE OF INCORPORATION: DE FISCAL YEAR END: 1230 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-15363 FILM NUMBER: 02584834 BUSINESS ADDRESS: STREET 1: 4553 GLENCO AVENUE STREET 2: SUITE 325 CITY: MARINA DEL RAY STATE: CA ZIP: 90292 MAIL ADDRESS: STREET 1: 4553 GLENCO AVENUE STREET 2: SUITE 325 CITY: MARINA DEL REY STATE: CA ZIP: 90292 8-K 1 d02-36752.txt FORM 8-K ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------------ FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) March 18, 2002 -------------- ADSTAR, INC. (Exact name of Registrant as specified in its charter) Delaware 001-15363 22-3666899 - ------------------------- -------------- --------------------- (State or other (Commission (IRS Employer jurisdiction of File Number) Identification No.) incorporation) 4553 Glencoe Avenue, Suite 325 Marina del Rey, California 90292 -------------------------------------------------- (Address Of Principal Executive Office) (Zip Code) Registrant's telephone number, including area code (310) 577-8255 AdStar.com, Inc. ------------------------------------------------ (Former name or former address, if changed since last report) Item 5: Other Events On March 18, 2002, AdStar, Inc. ("AdStar") sold 1,443,457 shares of its Series A Preferred Stock to Tribune Company for an aggregate purchase price of approximately $1.8 million. The material terms and conditions of the financing are set forth in the agreements attached hereto as Exhibits 10.1, 10.2, 10.3 and 10.4. AdStar's Series A Preferred Stock is subject to the terms and conditions of the form of Certificate of Designations, Rights and Preferences attached hereto as Exhibit 3.1. The press release announcing such financing is filed herewith as Exhibit 99.1 and incorporated herein by reference. Item 7: Financial Statements, Pro Forma Financial Information and Exhibits (c) Exhibits Exhibit Number Description - ------- ----------- 3.1 Certificate of Designation of Certificate of Incorporation as filed with the Secretary of State of Delaware on March 15, 2002. 10.1 Series A Preferred Stock Purchase Agreement, dated March 18, 2002, by and between AdStar, Inc. and Tribune Company. 10.2 Software Development and Deployment Agreement, dated March 18, 2002, by and between AdStar, Inc. and Tribune Company. 10.3 Registration Rights Agreement, dated March 18, 2002, by and between AdStar, Inc. and Tribune Company. 10.4 Governance Agreement, dated March 18, 2002, by and among AdStar, Inc., Leslie Bernhard, Eli Rousso and Tribune Company. 99.1 Press Release issued March 18, 2002. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned, hereunto duly authorized. AdStar, Inc. Dated: March 25, 2002 By: /s/ Leslie Bernhard ------------------------------------- Leslie Bernhard, President and Chief Executive Officer EX-3.1 3 ex3-1.txt CERTIFICATE OF DESIGNATION Exhibit 3.1 CERTIFICATE OF DESIGNATION OF CERTIFICATE OF INCORPORATION OF ADSTAR, INC. AdStar, Inc., a Delaware corporation (the ""Corporation""), acting pursuant to Section 141 of the Delaware General Corporation Law, does hereby submit the following Certificate of Designation of Series and Determination of Rights and Preferences of its Series A Preferred Stock. FIRST: The name of the Corporation is AdStar, Inc. SECOND: By a vote of the Board of Directors of the Corporation at a meeting on March 14, 2002, the following resolutions were duly adopted: WHEREAS, the Certificate of Incorporation of the Corporation authorizes Preferred Stock consisting of 5,000,000 shares, par value $.0001 per share, issuable from time to time in one or more series; and WHEREAS, the Board of Directors of the Corporation is authorized, subject to limitations prescribed by law and by the provisions of Article FOURTH of the Corporation's Certificate of Incorporation to establish and fix the number of shares to be included in any series of Preferred Stock and the designation, rights, preferences and limitations of the shares of such series; and WHEREAS, it is the desire of the Board of Directors to establish and fix the number of shares to be included in a new series of Preferred Stock and the designation, rights, preferences and limitations of the shares of such new series. NOW, THEREFORE, BE IT RESOLVED that pursuant to Article FOURTH of the Corporation's Certificate of Incorporation, there is hereby established a new series of 1,443,457 shares of Series A Preferred stock of the Corporation, par value $.0001 per share, to have the designation, rights, preferences, powers, restrictions and limitations set forth in a supplement of Article FOURTH as follows: A. Series A Preferred Stock 1. Dividends. a. General. Upon the occurrence of a Liquidation Event and to the extent permitted under the Delaware General Corporation Law, the Corporation shall pay preferential cumulative dividends in cash to the holders of the Series A Preferred as provided in this Section 1.a. Dividends on each issued and outstanding share of the Series A Preferred shall accrue on a daily basis at a rate of 7% per annum of the Series A Liquidation Value thereof from and including the Series A Original Issuance Date to and including the first to occur of (i) 1 the date on which the Series A Liquidation Value of such share (plus all accrued and unpaid dividends thereon) is paid to the holder thereof in connection with a Liquidation Event or (ii) the date on which such share of Series A Preferred is converted into shares of Common hereunder. Such dividends shall accrue whether or not they have been declared and whether or not there are profits, surplus or other funds of the Corporation legally available for the payment of dividends, and such dividends shall be cumulative such that all accrued and unpaid dividends shall be fully paid or declared with funds irrevocably set apart for payment before any dividends, distributions, redemptions or other payments may be made with respect to any Series A Junior Securities. b. Distribution of Partial Dividend Payments. Except as otherwise provided herein, if at any time the Corporation pays less than the total amount of dividends then accrued with respect to the Series A Preferred, such payment shall be distributed pro rata among the holders thereof based upon the aggregate accrued but unpaid dividends on the Series A Preferred held by each such holder. c. Participation in Common Dividends. In the event that the Corporation declares or pays a dividend or makes any distribution on the Common, then the holders of the outstanding shares of Series A Preferred (on a Common Equivalent Basis as of the record date for such dividend or distribution) and the holders of the Common shall share pro rata in such dividend or distribution. d. Treatment of Accrued and Unpaid Dividends Upon Conversion. Upon any conversion of shares of Series A Preferred into Common in accordance with Section 4, all accrued and unpaid dividends on the Series A Preferred shall be waived. 2. Voting Rights. a. General. The holders of the Series A Preferred shall be entitled to notice of all stockholders meetings in accordance with the By-laws and, except as otherwise provided herein or required by applicable law, the holders of the Series A Preferred shall be entitled to vote on all matters submitted to the stockholders for a vote, voting as a single class with the Common and other securities that vote with the Common, with the holders of Series A Preferred entitled to one vote for each share of Common issuable upon conversion of the Series A Preferred held as of the record date for such vote or, if no record date is specified, as of the date of such vote. b. Actions Requiring the Consent of the Holders of Series A Preferred . So long as any shares of Series A Preferred remains outstanding, the Corporation shall not, unless it has received the prior approval from the holders of at least a majority of the shares of Series A Preferred then outstanding: (i) make any amendment to the Certificate of Incorporation, this Certificate of Designation or the By-laws, or file any resolution of the Board with the Delaware Secretary of State containing any provisions or take any other action, that would amend the terms of the Series 2 A Preferred, increase or decrease the number of authorized Series A Preferred, approve a reverse stock split with respect to the Series A Preferred or adversely affect or otherwise impair the rights or the relative preferences or priorities of the holders of the Series A Preferred under the Certificate of Incorporation, this Certificate of Designation or the By-laws; (ii) make any amendment to the Certificate of Incorporation, this Certificate of Designation or the By-laws, or file any resolution of the Board with the Delaware Secretary of State containing any provisions, or cause the approval and authorization of or amend, replace or modify the Governance Agreement, or take any other action, that would affect the rights of the Investor to nominate a member to the Board; (iii) except for the issuance and sale of the Series A Preferred, authorize, issue or enter into any agreement providing for the issuance (contingent or otherwise) of any capital stock or other equity securities of the Corporation (or any securities convertible into or exchangeable for any capital stock or other equity securities of the Corporation) having rights, preferences, privileges or priorities pari passu with or senior to the Series A Preferred; (iv) directly or indirectly (x) declare or pay any cash or property dividends or make any cash or property distributions upon any of its capital stock or other equity securities or (y) redeem, purchase or otherwise acquire any of the Corporation's capital stock or other equity securities (including warrants, options and other rights to acquire such capital stock or other equity securities), in each case, except out of the Corporation's earned surplus; or (v) liquidate, dissolve or wind-up the Corporation, whether pursuant to a Federal bankruptcy proceeding, state law or otherwise. 3. Liquidation, Dissolution, etc. a. Liquidation Event. Upon any (i) liquidation (whether in connection with a sale of all or substantially all of the assets of the Corporation or otherwise), dissolution or winding up of the Corporation (whether voluntary or involuntary) or (ii) any merger or consolidation to which the Corporation is a party pursuant to which the holders of Common are entitled to receive securities or cash in exchange for such Common (except where, after giving effect to such merger, the holders of the Corporation's outstanding capital stock immediately prior to such merger or consolidation shall continue to own the Corporation's outstanding capital stock possessing more than 50% of the voting power of the surviving entity) (each, a "Liquidation Event"): (i) Each holder of Series A Preferred shall be entitled to receive, prior and in preference to any distribution or payment made upon, or in exchange for, any Series A Junior Securities, an amount equal to (payable in the same form as the merger consideration paid to the holders of Common, if applicable (and in the same ratio if more than one form of consideration is used)) (i) the aggregate Series A Liquidation Value of all shares of Series A Preferred held by such holder plus (ii) all accrued and unpaid dividends on such shares of Series A Preferred. If upon any Liquidation Event the Corporation's assets or merger consideration to be distributed among the holders 3 of the Series A Preferred are insufficient to permit payment to such holders of the aggregate amount that they are entitled to be paid under this Section 3.a(i), then the entire assets or merger consideration available to be distributed to the Corporation's stockholders shall be distributed pro rata among such holders of the Series A Preferred based upon the aggregate Series A Liquidation Value (plus all accrued and unpaid dividends) of the shares of Series A Preferred held by each such holder. (ii) After payment to the holders of the Series A Preferred of the amounts set forth in Section 3.a(i), the entire remaining assets and funds of the Corporation or merger consideration legally available for distribution, if any, shall be distributed pro rata among the holders of the Common and the holders of the Series A Preferred (on a Common Equivalent Basis). b. Form of Consideration. Whenever the distribution provided for in this Section 3 shall be payable in securities or property other than cash, the value of such securities or property shall be the fair market value thereof as determined by the Board in its reasonable and good faith determination. 4. Conversion. a. Conversion Procedure. (i) At any time and from time to time, a holder of Series A Preferred shall have the right to convert all or any portion of its shares of Series A Preferred into the number of shares of Common computed by dividing (x) the aggregate Series A Liquidation Value of the shares of Series A Preferred to be converted by (y) the Series A Conversion Price then in effect. (ii) All shares of Series A Preferred shall automatically convert into Common (pursuant to the computation set forth in Section 4.a(i)) on the first day after the 24-month anniversary of the Series A Original Issuance Date for which the Market Price of a share of Common exceeds 200% of the average trading price per share of Common during the 30 consecutive days immediately preceding the Series A Original Issuance Date. (iii) Each conversion of Series A Preferred shall be deemed to have been effected as of the close of business on the date on which the certificate or certificates representing the Series A Preferred to be converted have been surrendered for conversion at the principal office of the Corporation (any such date being referred to as a "Conversion Date"). At the time any such conversion has been effected, the rights of the holder of the shares of Series A Preferred converted as a holder of Series A Preferred shall cease and the Person or Persons in whose name or names any certificate or certificates for shares of Common are to be issued upon such conversion shall be deemed to have become the holder or holders of record of the shares of Common represented thereby. (iv) As soon as possible after a conversion has been effected the Corporation shall, or (if applicable) use its best efforts to cause its transfer agent to, deliver to the 4 converting holder: (1) certificates representing the number of shares of Common issuable by reason of such conversion in such name or names and such denomination or denominations as the converting holder has specified; and (2) a certificate representing any shares of Series A Preferred which were represented by the certificate or certificates delivered to the Corporation in connection with such conversion but which were not converted. (v) The issuance of certificates for shares of Common upon conversion of Series A Preferred shall be made without charge to the holders of such Series A Preferred or Common for any issuance tax in respect thereof or other cost incurred by the Corporation in connection with such conversion and the related issuance of shares of Common. Upon conversion of each share of Series A Preferred, the Corporation shall take all such actions as are necessary in order to insure that the Common issuable with respect to such conversion shall be validly issued, fully paid and nonassessable, free and clear of all taxes, liens, charges and encumbrances with respect to the issuance thereof. (vi) The Corporation shall not close its books against the transfer of Series A Preferred or of Common issued or issuable upon conversion of Series A Preferred in any manner that interferes with the timely conversion of Series A Preferred. The Corporation shall assist and cooperate with any holder of shares of Series A Preferred required to make any governmental filings or obtain any governmental approval prior to or in connection with any conversion of shares hereunder (including, without limitation, making any filings required to be made by the Corporation). (vii) The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common, solely for the purpose of issuance upon the conversion of shares of the Series A Preferred, such number of shares of Common as are issuable upon the conversion of all outstanding Series A Preferred. All shares of Common that are so issuable shall, when issued, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens, charges and encumbrances. The Corporation shall take all such actions as may be necessary to insure that all such shares of Common may be so issued without violation of any applicable law or governmental regulation or any requirements of any domestic securities exchange upon which shares of Common may be listed (except for official notice of issuance which shall be delivered immediately by the Corporation upon each such issuance). The Corporation shall not take any action that would cause the number of authorized but unissued shares of Common to be less than the number of such shares required to be reserved hereunder for issuance upon conversion of the Series A Preferred. (viii) If any fractional interest in a share of Common would, except for the provisions of this subparagraph, be delivered upon any conversion of the Series A Preferred, the Corporation, in lieu of delivering the fractional share therefor, may pay an amount to 5 the holder thereof equal to the Market Price of such fractional interest as of the date of conversion. The determination as to whether or not to make any cash payment in lieu of the issuance of fractional shares shall be based upon the total number of shares of Series A Preferred being converted at any one time by the holder thereof, not upon each share of Series A Preferred being converted. b. Conversion Price. (i) The initial Series A Conversion Price shall be $1.244 per share of Common. In order to prevent dilution of the conversion rights granted under this Section 4, the Series A Conversion Price shall be subject to adjustment from time to time pursuant to this Section 4.b. (ii) If and whenever on or after the Original Series A Issuance Date, but prior to June 30, 2003, the Corporation issues or sells or, in accordance with this Section 4, is deemed to have issued or sold, any shares of its Common for a consideration per share less than the Series A Conversion Price in effect immediately prior to the time of such issuance, then immediately upon such issuance or sale or deemed issuance or sale the Series A Conversion Price shall be reduced to the conversion price determined by dividing (A) the sum of (1) the product derived by multiplying the Series A Conversion Price in effect immediately prior to such issuance or sale by the number of shares of Common Deemed Outstanding immediately prior to such issuance or sale, plus (2) the consideration, if any, received by the Corporation upon such issuance or sale, by (B) the number of shares of Common Deemed Outstanding immediately after such issue or sale. (iii) Notwithstanding the foregoing, there shall be no adjustment in the Series A Conversion Price as a result of any issuance or sale (or deemed issuance or sale) of shares of Common (a) issued upon conversion of the Series A Preferred, (b) issued as a dividend or distribution on the Series A Preferred for which adjustment is made pursuant to Section 4.c(ix), (c) issued or issuable pursuant to any equity incentive plan approved by the Board or (d) issued or issuable pursuant to any merger, acquisition or consolidation (including shares of Common issued or issuable for cash if such cash is to be used for any such merger, acquisition or consolidation) pursuant to which the Corporation is a party (collectively, the "Excepted Shares"). c. Effect on Conversion Price of Certain Events. For purposes of determining the Series A Conversion Price under Section 4, the following shall be applicable: (i) Issuance of Options. If the Corporation in any manner grants, issues or sells any Options (other than Options that are convertible into Excepted Shares) and the price per share for which Common is issuable upon the exercise of such Options, or upon conversion or exchange of any Convertible Securities issuable upon exercise of such Options, is less than the Series A Conversion Price in effect immediately prior to the time of the granting, issuance or sale of such Options, then the total maximum number of shares of Common issuable upon the exercise of such Options or upon 6 conversion or exchange of the total maximum amount of such Convertible Securities issuable upon the exercise of such Options shall be deemed to be outstanding and to have been issued and sold by the Corporation at the time of the granting, issuance or sale of such Options for such price per share. For purposes of this paragraph, the "price per share for which Common is issuable" shall be determined by dividing (A) the sum of (1) the total amount, if any, received or receivable by the Corporation as consideration for the granting, issuance or sale of such Options, plus (2) the minimum aggregate amount of additional consideration payable to the Corporation upon exercise of all such Options, plus (3) in the case of such Options which relate to Convertible Securities, the minimum aggregate amount of additional consideration, if any, payable to the Corporation upon the issuance or sale of such Convertible Securities and the conversion or exchange thereof, by (B) the total maximum number of shares of Common issuable upon the exercise of such Options or upon the conversion or exchange of all such Convertible Securities issuable upon the exercise of such Options. No further adjustment of the Conversion Price shall be made when Convertible Securities are actually issued upon the exercise of such Options or when Common is actually issued upon the exercise of such Options or the conversion or exchange of such Convertible Securities. (ii) Issuance of Convertible Securities. If the Corporation in any manner issues or sells any Convertible Securities (other than Convertible Securities that are convertible into Excepted Shares) and the price per share for which Common is issuable upon conversion or exchange thereof is less than the Series A Conversion Price in effect immediately prior to the time of such issuance or sale, then the maximum number of shares of Common issuable upon conversion or exchange of such Convertible Securities shall be deemed to be outstanding and to have been issued and sold by the Corporation at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this paragraph, the "price per share for which Common is issuable" shall be determined by dividing (A) the sum of (1) the total amount received or receivable by the Corporation as consideration for the issue or sale of such Convertible Securities, plus (2) the minimum aggregate amount of additional consideration, if any, payable to the Corporation upon the conversion or exchange thereof, by (B) the total maximum number of shares of Common issuable upon the conversion or exchange of all such Convertible Securities. No further adjustment of the Series A Conversion Price shall be made when Common is actually issued upon the conversion or exchange of such Convertible Securities, and if any such issuance or sale of such Convertible Securities is made upon exercise of any Options for which adjustments of the Series A Conversion Price had been or are to be made pursuant to other provisions of this Section 4, no further adjustment of the conversion price shall be made by reason of such issue or sale. (iii) Change in Option Price or Conversion Rate. If the purchase price provided for in any Options (other than Options that are convertible into Excepted Shares), the additional consideration, if any, payable upon the conversion or exchange of any Convertible Securities (other than Convertible Securities that are convertible into Excepted Shares) or the rate at which any Convertible Securities (other than 7 Convertible Securities that are convertible into Excepted Shares) are convertible into or exchangeable for Common changes at any time, the Series A Conversion Price in effect at the time of such change shall be immediately adjusted to the Series A Conversion Price that would have been in effect at such time had such Options or Convertible Securities still outstanding provided for such changed purchase price, additional consideration or conversion rate, as the case may be, at the time initially granted, issued or sold; provided, that, if such adjustment of the Series A Conversion Price would result in an increase in the Series A Conversion Price then in effect, the Corporation will promptly give all holders of Series A Preferred written notice of such increase. For purposes of this Section 4.c(iii), if the terms of any Option or Convertible Security (other than Options or Convertible Securities that are convertible into Excepted Shares) that was outstanding as of the Original Series A Issuance Date are changed in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the Common deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such change; provided, that, no such change shall at any time cause the Series A Conversion Price hereunder to be increased. (iv) Treatment of Expired Options and Unexercised Convertible Securities. Upon the expiration of any Option or the termination of any right to convert or exchange any Convertible Security without the exercise of any such Option or right, the Series A Conversion Price then in effect hereunder shall be adjusted immediately to the Series A Conversion Price that would have been in effect at the time of such expiration or termination had such Option or Convertible Security, to the extent outstanding immediately prior to such expiration or termination, never been issued; provided, that, if such expiration or termination would result in an increase in the Series A Conversion Price then in effect, the Corporation will promptly give all holders of Series A Preferred written notice of such increase. For purposes of this Section 4.c(iv), the expiration or termination of any Option or Convertible Security that was outstanding as of the Original Series A Issuance Date shall not cause the Series A Conversion Price hereunder to be adjusted unless, and only to the extent that, a change in the terms of such Option or Convertible Security caused it to be deemed to have been issued after the Original Series A Issuance Date. (v) Calculation of Consideration Received. If any Common, Option or Convertible Security is issued or sold or deemed to have been issued or sold for cash, the consideration received therefor shall be deemed to be the amount received by the Corporation therefor (net of discounts, commissions and related expenses). If any Common, Option or Convertible Security is issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Corporation shall be the fair value of such consideration, except where such consideration consists of securities, in which case the amount of consideration received by the Corporation shall be the Market Price thereof as of the date of receipt. If any Common, Option or Convertible Security is issued to the owners of the non-surviving entity in connection with any merger in which the Corporation is the surviving corporation, the amount of consideration therefor shall be deemed to be the 8 fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such Common, Option or Convertible Security, as the case may be. The fair value of any consideration other than cash and securities shall be determined by the Board in its reasonable and good faith determination. (vi) Integrated Transactions. In case any Option is issued in connection with the issuance or sale of other securities of the Corporation, together comprising one integrated transaction in which no specific exercise price is allocated to such Option by the parties thereto, the Option shall be deemed to have been issued at an exercise price of $0.01. (vii) Treasury Shares. The number of shares of Common outstanding at any given time shall not include shares owned or held by or for the account of the Corporation, and the disposition of any shares so owned or held shall be considered an issuance or sale of such shares. (viii) Record Date. If the Corporation takes a record of the holders of Common for the purpose of entitling them (A) to receive a dividend or other distribution payable in Common, Options or in Convertible Securities or (B) to subscribe for or purchase Common, Options or Convertible Securities, then such record date shall be deemed to be the date of the issue or sale of the shares of Common deemed to have been issued or sold upon the declaration of such dividend or upon the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be. (ix) Subdivisions or Combinations of Common. If the Corporation at any time subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common into a greater number of shares, the Series A Conversion Price in effect immediately prior to such subdivision shall be reduced proportionately, and if the Corporation at any time combines (by reverse stock split or otherwise) one or more classes of its outstanding shares of Common into a smaller number of shares, the Series A Conversion Price in effect immediately prior to such combination shall be increased proportionately. (x) Recapitalization, Reorganization, Reclassification, Consolidation, Merger or Sale. Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Corporation's assets or other transaction, in each case which is effected in such a manner that the holders of Common are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common, and which does not otherwise qualify as a Liquidation Event, is referred to herein as an "Organic Change." Prior to the consummation of any Organic Change, the Corporation shall make appropriate provisions (in form and substance reasonably satisfactory to the holders of a majority of the Series A Preferred then outstanding) to insure that each of the holders of Series A Preferred shall thereafter have the right to acquire and receive, in lieu of or in addition to (as the case may be) the shares of Common immediately theretofore acquirable and receivable 9 upon the conversion of such holder's Series A Preferred, such shares of stock, securities or assets as such holder would have received in connection with such Organic Change if such holder had converted its Series A Preferred immediately prior to such Organic Change. In each such case, the Corporation shall also make appropriate provisions (in form and substance reasonably satisfactory to the holders of a majority of the Series A Preferred then outstanding) to insure that the provisions of this Section 4.c shall thereafter be applicable to the securities issued in exchange for the Series A Preferred (including, in the case of any such consolidation, merger or sale in which the successor entity or purchasing entity is other than the Corporation and the value for the Common reflected by the terms of such consolidation, merger or sale is less than the Series A Conversion Price in effect immediately prior to such consolidation, merger or sale, an immediate adjustment of the Series A Conversion Price to the value for the Common so reflected and a corresponding immediate adjustment in the number of shares of Common acquirable and receivable upon conversion of Series A Preferred). The Corporation shall not effect any such consolidation, merger or sale, unless prior to the consummation thereof, the successor entity (if other than the Corporation) resulting from consolidation or merger or the entity purchasing such assets assumes by written instrument (in form and substance satisfactory to the holders of a majority of the Series A Preferred then outstanding) the obligation to deliver to each such holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, such holder may be entitled to acquire. (xi) Certain Other Events. If any event occurs of the type contemplated by the provisions of this Section 4 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Board shall make an appropriate adjustment in the Series A Conversion Price so as to protect the rights of the holders of Series A Preferred; provided, that, no such adjustment shall increase the Series A Conversion Price as otherwise determined pursuant to this Section 4 or decrease the number of shares of Common issuable upon conversion of each share of Series A Preferred. d. Notices. (i) Immediately upon any adjustment of the Series A Conversion Price, the Corporation shall give written notice thereof to all holders of Series A Preferred, setting forth in reasonable detail and certifying the calculation of such adjustment. (ii) The Corporation shall give written notice to all holders of Series A Preferred at least ten (10) days prior to the date on which the Corporation closes its books or takes a record (A) with respect to any dividend or distribution upon Common, (B) with respect to any pro rata subscription offer to holders of Common or (C) for determining rights to vote with respect to any Liquidation Event, Organic Change, dissolution or liquidation. (iii) The Corporation shall also give written notice to the holders of Series A Preferred 10 at least ten (10) days prior to the date on which any Organic Change or Liquidation Event shall take place. 5. Preemptive Right. a. If the Corporation proposes to issue or sell any securities, the Corporation shall, as soon as practicable and in any event no later than 30 days after the consummation of such transaction, deliver a notice to each of the holders of the Series A Preferred stating (i) a description of the transaction pursuant to which it issued such securities; (ii) the number of such securities; (iii) the price, if any, for which it sold such securities; and (iv) the identity of the proposed purchaser(s). b. Each holder of Series A Preferred may elect, by giving notice to the Corporation within 15 days after receipt of the notice referenced above, to purchase, at the same price and on the same terms and conditions as the issuance or sale described in such notice, the number of securities equal to the product of (i) the aggregate number of securities issued or sold by the Corporation multiplied by (ii) a fraction with a numerator equal to the number of shares of Common (on a Common Equivalent Basis) that such holder owns and a denominator equal to the number of Common Deemed Outstanding prior to the issuance of such securities. c. The preemptive right set forth in this Section 5 shall not apply to Excepted Shares. 6. General. a. Upon receipt of evidence reasonably satisfactory to the Corporation (an affidavit of the registered holder shall be satisfactory) of the ownership and the loss, theft, destruction or mutilation of any certificate evidencing shares of Common or Series A Preferred, and in the case of any such loss, theft or destruction, upon receipt of indemnity reasonably satisfactory to the Corporation (provided that if the holder is a financial institution or other institutional investor its own agreement shall be satisfactory), or, in the case of any such mutilation upon surrender of such certificate, the Corporation shall (at its expense) execute and deliver in lieu of such certificate a new certificate of like kind representing the number of shares of such class represented by such lost, stolen, destroyed or mutilated certificate and dated the date of such lost, stolen, destroyed or mutilated certificate, and dividends shall accrue on the Common or Series A Preferred represented by such new certificate from the date to which dividends have been fully paid on such lost, stolen, destroyed or mutilated certificate. b. Except as otherwise expressly provided hereunder, all notices referred to herein shall be in writing and shall be delivered by registered or certified mail, return receipt requested and postage prepaid, by reputable overnight courier service, charges prepaid or by personal delivery, and shall be deemed to have been given (i) three (3) business days after being sent by registered or certified mail, (ii) one (1) business day after being deposited with such an overnight courier service, and (iii) upon delivery, if by personal delivery, if mailed or delivered (A) to the Corporation, at its principal executive offices, or (B) to any stockholder, at such holder's address as it appears in the stock records of the Corporation (unless otherwise indicated by any such holder). 11 c. Each share of Series A Preferred shall have the same relative rights as and be identical in all respects with each other share of Series A Preferred. 7. Definitions. "Board" means the Board of Directors of the Corporation. "By-laws" means the By-laws of the Corporation, as they may be amended from time to time. "Certificate of Designation" means this Series A Preferred Certificate of Designation. "Certificate of Incorporation" means the Certificate of Incorporation of the Corporation, as it may be amended from time to time. "Common" means the Corporation's Common Stock, $.0001 par value per share. "Common Deemed Outstanding" means, at any given time, the number of shares of Common actually outstanding at such time, plus the number of shares of Common deemed to be outstanding pursuant to Sections 4.c(i) and 4.c(ii) whether or not the Options or Convertible Securities are actually convertible or exercisable at such time. "Common Equivalent Basis" means, as of the date of such determination, the number of shares of Common that each holder of Series A Preferred would be entitled to receive upon conversion of its Series A Preferred into Common. "Conversion Date" is defined in Section 4.a(iii). "Convertible Securities" means any stock or securities directly or indirectly convertible into or exchangeable for Common. "Corporation" means AdStar, Inc., a Delaware corporation. "Excepted Shares" is defined in Section 4.b(iii). "Governance Agreement" means the Governance Agreement, dated as of March 15, 2002, among the Corporation, the Investor and the stockholders of the Corporation named therein. "Investor" means Tribune Company, a Delaware corporation. "Liquidation Event" has the meaning given such term in Section 3.a above. "Market Price" of any security means the average of the closing prices of such security's sales on all securities exchanges on which such security may at the time be listed, or, if there have been no sales on any such exchange on any day, the average of the highest bid and lowest asked prices on all such exchanges at the end of such day, or, if on any day such security is not so listed, the average of the representative bid and asked prices quoted in the Nasdaq Stock Market as of 4:00 P.M., New York time, or, if on any day such security is not quoted in the Nasdaq 12 Stock Market, the average of the highest bid and lowest asked prices on such day in the domestic over-the-counter market as reported by the National Quotation Bureau, Incorporated, or any similar successor organization, in each such case averaged over a period of 30 days consisting of the day as of which "Market Price" is being determined and the 29 consecutive business days prior to such day. If at any time such security is not listed on any securities exchange or quoted in the Nasdaq Stock Market or the over-the-counter market, the "Market Price" shall be the fair value thereof determined jointly by the Corporation and the holders of a majority of the Series A Preferred. "Options" means any rights, warrants or options to subscribe for or purchase Common or Convertible Securities. "Organic Change" is defined in Section 4.c(x). "Person" means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof. "Series A Conversion Price" has the meaning given such term in Section 4.b. "Series A Junior Securities" means any of the Corporation's equity securities (whether or not currently authorized or outstanding) other than the Series A Preferred that by its terms is junior to the Series A Preferred. "Series A Liquidation Value" means $1.244 per share of Series A Preferred (subject to equitable adjustments to reflect stock splits, stock dividends, stock combinations, recapitalizations and like occurrences). "Series A Original Issuance Date" means the date of the original issuance of Series A Preferred. "Series A Preferred" means the Series A Convertible Preferred Stock of the Corporation, $.0001 par value per share. B. The recitals and resolutions contained herein have not been modified, altered or amended and are presently in full force and effect. 13 IN WITNESS WHEREOF, the undersigned has executed this Certificate this 15th day of March, 2002. ADSTAR, INC. By: /s/ Leslie Bernhard ------------------------------------ Name: Leslie Bernhard Title: President and Chief Executive Officer EX-10.1 4 ex10-1.txt SERIES A PREFERRED STOCK PURCHASE AGREEMENT Execution Copy EXHIBIT 10.1 SERIES A PREFERRED STOCK PURCHASE AGREEMENT Dated as of March 18, 2002 by and between ADSTAR, INC. and TRIBUNE COMPANY TABLE OF CONTENTS Page ---- ARTICLE I DEFINITIONS AND INTERPRETATION.......................................1 1.1. Definitions.........................................................1 1.2. Interpretation......................................................7 1.3. Accounting Principles...............................................8 ARTICLE II AUTHORIZATION AND SALE OF SERIES A PREFERRED SHARES; CLOSING........8 2.1. Authorization of the Series A Preferred Shares......................8 2.2. Purchase and Sale of the Series A Preferred Shares..................8 2.3. Closing.............................................................9 2.4. Delivery of Series A Preferred Shares; Payment of Purchase Price....9 ARTICLE III CONDITIONS OF THE INVESTOR'S OBLIGATIONS...........................9 3.1. Representations and Warranties......................................9 3.2. Performance.........................................................9 3.3. Governmental Authority..............................................9 3.4. Consents............................................................9 3.5. Closing Deliveries.................................................10 3.6. Waiver.............................................................10 ARTICLE IV CONDITIONS OF ADSTAR'S OBLIGATIONS.................................11 4.1. Representations and Warranties.....................................11 4.2. Performance........................................................11 4.3. Registration Rights Agreement......................................11 4.4. Deployment Agreement...............................................11 4.5. Governance Agreement...............................................11 4.6. Payment of Purchase Price..........................................11 4.7. CareerBuilder Services Agreement...................................11 4.8. Waiver.............................................................11 ARTICLE V COVENANTS...........................................................11 5.1. Reporting Status...................................................11 5.2. Reservation of Common Stock........................................12 5.3. Listing............................................................12 5.4. Filing of Form 8-K.................................................12 5.5. Press Release......................................................12 5.6. Expenses...........................................................12 5.7. Use of Proceeds....................................................12 5.8. Replacement of Existing License Agreements.........................12 5.9. Actions Requiring the Consent of the Holders of Series A Preferred...............................................13 ARTICLE VI TRANSFER OF RESTRICTED SECURITIES..................................13 6.1. General Provisions.................................................13 6.2. Legend.............................................................13 6.3. Legend Removal.....................................................13 ARTICLE VII REPRESENTATIONS AND WARRANTIES OF ADSTAR..........................13 7.1. Organization, Qualifications and Corporate Power...................13 7.2. Authorization; No Conflicts........................................14 -i- TABLE OF CONTENTS (continued) Page ---- 7.3. Subsidiaries and Investments.......................................15 7.4. Authorized Capital Stock...........................................15 7.5. SEC Documents......................................................16 7.6. Listing............................................................17 7.7. Financial Statements...............................................17 7.8. Absence of Undisclosed Liabilities.................................17 7.9. No Material Adverse Change.........................................17 7.10. Title to Properties; Leasehold Interests..........................17 7.11. Tax Matters.......................................................17 7.12. Intellectual Property Rights......................................18 7.13. Compliance with Laws; Litigation..................................19 7.14. Brokers...........................................................20 7.15. Governmental Approvals; No Registration...........................20 7.16. Insurance.........................................................20 7.17. Employees.........................................................20 7.18. ERISA.............................................................21 7.19. Environmental Matters.............................................21 7.20. Related-Party Transactions........................................22 7.21. Disclosure........................................................22 7.22. No General Solicitation...........................................22 7.23. No Integrated Offering............................................22 7.24. Application of Takeover Protections...............................22 ARTICLE VIII REPRESENTATIONS AND WARRANTIES OF THE INVESTOR...................23 8.1. Authorization......................................................23 8.2. Brokers............................................................23 8.3. Investment Representations.........................................23 ARTICLE IX MISCELLANEOUS......................................................24 9.1. Survival of Representations and Warranties.........................24 9.2. Amendments and Waivers.............................................24 9.3. Successors and Assigns.............................................24 9.4. Remedies...........................................................24 9.5. Indemnification....................................................24 9.6. Severability.......................................................25 9.7. Notices............................................................25 9.8. Governing Law......................................................25 9.9. Submission to Jurisdiction; Waiver of Jury Trial...................26 9.10. Attorneys' Fees...................................................26 9.11. Execution in Counterparts.........................................26 9.12. Delivery by Facsimile.............................................26 9.13. Entire Agreement..................................................26 -ii- SERIES A PREFERRED STOCK PURCHASE AGREEMENT This SERIES A PREFERRED STOCK PURCHASE AGREEMENT is made as of March 18, 2002 (this "Agreement"), by and between AdStar, Inc., a Delaware corporation ("AdStar") and Tribune Company, a Delaware corporation (the "Investor"). RECITALS WHEREAS, AdStar desires to issue and sell to the Investor and the Investor desires to purchase from AdStar, 1,443,457 shares of the authorized and unissued shares of Series A Convertible Preferred Stock, $0.0001 par value of AdStar (the "Series A Preferred Stock"); which shares of Series A Preferred Stock are convertible into shares of Common Stock, $0.0001 par value of AdStar (the "Common Stock"), with the shares of Series A Preferred Stock and the shares of Common Stock into which they are convertible to have the respective rights, preferences and privileges specified in the Series A Preferred Certificate of Designation (the "Certificate of Designation"), a copy of which is attached as Exhibit A hereto, and the Certificate of Incorporation of AdStar, all on the terms and subject to the conditions set forth herein; WHEREAS, the Investor has required, as a condition to its willingness to enter into this Agreement, that AdStar enter into a Registration Rights Agreement in the form of Exhibit B hereto, a Deployment Agreement in the form of Exhibit C hereto, a Governance Agreement together with the Founders in the form of Exhibit D hereto, a CareerBuilder Services Agreement in the form of Exhibit E hereto and a Newspaper Services Agreement substantially in the form of Exhibit G hereto. WHEREAS, the Investor and AdStar each require, as a condition to their willingness to enter into this Agreement, that (i) the newspapers owned and operated by the Investor replace their current licensing agreements with AdStar with a Newspaper Services Agreement substantially in the form set forth on Exhibit G and (ii) CareerBuilder, Inc. ("CareerBuilder") enters into a CareerBuilder Services Agreement with AdStar substantially in the form of Exhibit E; and WHEREAS, it is contemplated that the Investor may transfer a portion of its Series A Preferred Stock to Knight-Ridder, Inc., a Florida corporation ("Knight Ridder"), in which case Knight Ridder shall be entitled to all the rights and benefits to which the Investor is entitled under this Agreement. NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows: ARTICLE I DEFINITIONS AND INTERPRETATION 1.1. Definitions. For the purposes of this Agreement, the following terms Execution Copy have the meanings specified or referred to in this Section 1.1: "Affiliate" means, with respect to any particular Person, any other Person that directly or indirectly controls, is controlled by or is under common control with such particular Person. For the purpose of this definition, "control" means the possession, directly or indirectly, of the power to direct the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. "Agreement" has the meaning set forth in the first paragraph of this Agreement. "Board of Directors" means the Board of Directors of AdStar. "Business Day" means any day except a Saturday, Sunday or other day on which banks in Chicago, Illinois are authorized or obligated by law or executive order to close. "By-laws" means the By-laws of AdStar, as they may be amended from time to time. "CareerBuilder Services Agreement" means the Service Agreement, dated as of the date hereof, between AdStar and CareerBuilder, Inc., the form of which is attached as Exhibit E hereto. "CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. ss.ss. 9601 et seq., and the rules and regulations promulgated thereunder. "Certificate of Designation" has the meaning set forth in the first recital above. "Certificate of Incorporation" means the Certificate of Incorporation of AdStar, as it may be amended from time to time. "Closing" has the meaning set forth in Section 2.3. "Closing Date" has the meaning set forth in Section 2.3. "Code" means the Internal Revenue Code of 1986, as amended, and any reference to any particular Code section shall be interpreted to include any revision of or successor to that section regardless of how numbered or classified. "Common Stock" has the meaning set forth in the first recital above. "Contract" means all contracts, agreements, commitments, understandings and arrangements, whether written or oral. "Conversion Common Shares" means the Common Stock issued or issuable upon conversion of the Series A Preferred Shares. "Court Order" means any judgment, order, award or decree of any foreign, Federal, state, local or other court or tribunal and any award in any arbitration proceeding. -2- Execution Copy "Deployment Agreement" means the Software Development and Deployment Agreement, dated as of the date hereof, between AdStar and the Investor, the form of which is attached as Exhibit C hereto. "Environmental Laws" means all Requirements of Laws derived from or relating to all Federal, state and local laws or regulations relating to or addressing the environment, health or safety, including CERCLA, OSHA and RCRA and any state equivalent thereof. "ERISA" has the meaning set forth in Section 7.17. "Exchange Act" means the Securities Exchange Act of 1934, as amended, or any similar Federal law then in force, and the rules and regulations promulgated thereunder. "Founders" means Leslie Bernhard and Eli Rousso. "GAAP" means United States generally accepted accounting principles, consistently applied. "Governance Agreement" means the Governance Agreement, dated as of the date hereof, between AdStar and the Investor, the form of which is attached as Exhibit D hereto. "Governmental Authority" means any foreign, Federal, state, local or other government, governmental, statutory or administrative authority or regulatory body or any court, tribunal or judicial or arbitral body. "Indemnified Liabilities" has the meaning set forth in Section 9.5. "Indemnitees" has the meaning set forth in Section 9.5. "Intellectual Property Rights" means all (i) patents, patent applications, patent disclosures and inventions, (ii) trademarks, service marks, trade dress, trade names, URL's, logos and corporate names and registrations and applications for registration thereof, together with all of the goodwill associated therewith, (iii) copyrights (registered or unregistered) and copyrightable works and registrations and applications for registration thereof, (iv) mask works and registrations and applications for registration thereof, (v) computer software, data, data bases and documentation thereof, (vi) trade secrets and other confidential information (including ideas, formulas, compositions, inventions (whether patentable or unpatentable and whether or not reduced to practice), know-how, manufacturing and production processes and techniques, research and development information, drawings, specifications, designs, plans, proposals, technical data, copyrightable works, financial and marketing plans and customer and supplier lists and information), (vii) other intellectual property rights and (viii) copies and tangible embodiments thereof (in whatever form or medium). "Investment" as applied to any Person means (i) any direct or indirect purchase or other acquisition by such Person of any notes, obligations, instruments, stock, securities or ownership interest (including partnership interests, membership interests and joint venture interests) of any other Person, and (ii) any capital contribution by such Person to any other Person. -3- Execution Copy "Investor" has the meaning set forth in the first paragraph of this Agreement. "IRS" means the United States Internal Revenue Service. "Knowledge" or "aware" means (i) the actual knowledge or awareness of any officer, manager or division head of AdStar or any of its Subsidiaries and (ii) the knowledge that such persons should reasonably be expected to have in the performance of their respective duties. "Liens" means any mortgage, pledge, security interest, encumbrance, lien, claim or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof), any sale of receivables with recourse against AdStar or any Affiliate, any filing or agreement to file a financing statement as debtor under the Uniform Commercial Code or any similar statute other than to reflect ownership by a third party of property leased to AdStar under a lease that is not in the nature of a conditional sale or title retention agreement, or any subordination arrangement in favor of another Person (other than any subordination arising in the ordinary course of business). "Material Adverse Effect" means a material adverse effect on the condition (financial or otherwise), operating results, business, prospects, assets, operations, employee relations or customer or supplier relations of AdStar. "NASD" means the National Association of Securities Dealers, Inc. "NASDAQ" means the Nasdaq National Market or the Nasdaq SmallCap Market. "OSHA" means the Occupational Safety and Health Act, 29 U.S.C. ss.ss. 651 et seq., and the rules and regulations promulgated thereunder. "Party" means each of AdStar and the Investor. "Permitted Liens" means (i) liens with respect to Taxes not yet due and payable or which are being contested in good faith by appropriate proceedings and for which appropriate reserves have been established in accordance with GAAP, (ii) mechanics', materialmen's or contractors' liens or encumbrances or any similar lien or restriction and (iii) easements, rights-of-way, restrictions and other similar charges and encumbrances not interfering with the ordinary conduct of the business of AdStar. "Person" means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, a governmental entity or any department, agency or political subdivision thereof or any other entity. "Purchase Price" has the meaning set forth in Section 2.4(b). "RCRA" means the Resource Conservation and Recovery Act, 42 U.S.C. ss.ss. 6901 et seq., and the rules and regulations promulgated thereunder. -4- Execution Copy "Registration Rights Agreement" means the Registration Rights Agreement, dated as of the date hereof, between AdStar and the Investor, the form of which is attached hereto as Exhibit B. "Related Party" means any Subsidiaries, officers, directors (or persons who were officers or directors during the two year period to the date hereof), or stockholders of AdStar who beneficiarlly own 5% or more of the Common Stock, or their Affiliates, or any individual related by blood, marriage, or adoption to any such individual, or any entity in which any such entity or individual owns a 5% or more beneficial interest. "Requirements of Laws" means any foreign, Federal, state and local laws, statutes, regulations, rules, codes, ordinances, orders or requirements enacted, adopted, issued or promulgated by any Governmental Authority (including those pertaining to electrical, building, zoning, subdivision, land use, environmental and occupational safety and health requirements) or common law. "Restricted Securities" means (i) the Series A Preferred Shares issued hereunder, (ii) the Common Stock issued upon conversion of Series A Preferred Stock and (iii) any securities issued with respect to the securities referred to in clauses (i) and (ii) above by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reincorporation. As to any particular Restricted Securities, such securities shall cease to be Restricted Securities when they have (a) been effectively registered under the Securities Act and disposed of in accordance with the registration statement covering them, (b) been distributed to the public through a broker, dealer or market maker pursuant to Rule 144 (or any similar provision then in force) under the Securities Act or become eligible for sale pursuant to Rule 144(k) (or any similar provision then in force) under the Securities Act, or (c) been otherwise transferred and new certificates for them not bearing the Securities Act legend set forth in Section 6.2 have been delivered by AdStar in accordance with Section 6.3. Whenever any particular securities cease to be Restricted Securities, the holder thereof shall be entitled to receive from AdStar, without expense, new securities of like tenor not bearing a Securities Act legend of the character set forth in Section 6.2. "Restricted Transaction" means either (i) the sale, lease, transfer, conveyance or other disposition, in one or a series of related transactions, of all or substantially all of the assets of AdStar, taken as a whole, to or (ii) a transaction or series of transactions (including by way of merger, consolidation, or sale of stock) the result of which is that the holders of AdStar's outstanding voting stock immediately prior to such transaction are after giving effect to such transaction no longer, in the aggregate, the "beneficial owners" (as that term is defined in Rule 13d-3 and Rule 13d-5 promulgated under the Securities Exchange Act), directly or indirectly through one of more intermediaries, of more than 50% of the voting power of the outstanding voting stock of AdStar with: (x) any third party that in the reasonable good faith determination of the Investor competes with CareerBuilder and such transaction is consummated on or prior to March 15, 2007, or (y) any third party that the Investor reasonably believes in its good faith determination cannot or will not honor the obligations of AdStar in the Deployment Agreement. "Schedule" means any schedule attached to this Agreement. -5- Execution Copy "Securities Act" means the Securities Act of 1933, as amended, or any similar Federal law then in force, and the rules and regulations promulgated thereunder. "SEC" means the Securities and Exchange Commission, including any governmental authority or agency succeeding to the functions thereof. "SEC Documents" has the meaning set forth in Section 7.5. "Series A Preferred Shares" has the meaning set forth in Section 2.1. "Series A Preferred Stock" has the meaning set forth in the first recital above. "Stockholders" means, as of the date hereof, the holders of a majority of the Common Stock. "Subsidiary" means, with respect to any Person, any corporation, limited liability company, partnership, association or other business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a limited liability company, partnership, association or other business entity, a majority of the partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more of the other Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association or other business entity if such Person or Persons shall be allocated a majority of the gains or losses of such limited liability company, partnership, association or other business entity or shall be or control (or have the power to control) a managing director, manager or general partner of such limited liability company, partnership, association or other business entity. "Tax" (and, with correlative meaning, "Taxes" and "Taxable") means: (i) any Federal, state, local or foreign net income, gross income, gross receipts, windfall profit, severance, property, production, sales, use, license, excise, franchise, employment, payroll, withholding, alternative or add-on minimum, ad valorem, value-added, transfer, stamp, or environmental tax, or any other tax, custom, duty, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest or penalty, addition to tax or additional amount imposed by any Governmental Authority; and (ii) any liability of AdStar for the payment of amounts with respect to payments of a type described in clause (i) as a result of any obligation of AdStar under any Tax sharing or indemnity arrangement. "Tax Return" means any return, report or similar statement required to be filed with respect to any Tax (including any attached schedules), including any information return, claim for refund, amended return or declaration of estimated Tax. -6- Execution Copy "Transaction Documents" means the Registration Rights Agreement, the Deployment Agreement, the CareerBuilder Services Agreement, the Governance Agreement, the Newspaper Services Agreement(s) and each of the other agreements, documents and instruments expressly contemplated hereby and thereby. 1.2. Interpretation. (a) As used in this Agreement and each Transaction Document, unless the context clearly indicates otherwise: (i) words used in the singular include the plural and words in the plural include the singular; (ii) reference to any Person includes such Person's successors and assigns, but only if such successors and assigns are permitted by this Agreement or such other Transaction Document, and reference to a Person in a particular capacity excludes such Person in any other capacity; (iii) reference to any gender includes the other gender; (iv) whenever the words "include," "includes" or "including" are used in this Agreement or any Transaction Document, they shall be deemed to be followed by the words "without limitation" or "but not limited to" or words of similar import; (v) reference to any Article, Section, Exhibit or Schedule means such Article or Section of, or such Exhibit or Schedule to, this Agreement, as the case may be, and references in any Section or definition to any clause means such clause of such Section or definition; (vi) the words "herein," "hereunder," "hereof," "hereto" and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Section or other provision hereof; (vii) reference to any agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and by this Agreement; (viii) reference to any law (including statutes and ordinances) means such law (including all rules and regulations promulgated thereunder) as amended, modified, codified or reenacted, in whole or in part, and in effect at the time of determining compliance or applicability, and reference to any particular provision of any law shall be interpreted to include any revision of or successor to that provision regardless of how numbered or classified; (ix) relative to the determination of any period of time, "from" means "from and including," "to" means "to but excluding" and "through" means "through and including"; -7- Execution Copy (x) in the event of any conflict between the provisions of the body of this Agreement and the Exhibits or Schedules hereto, the provisions of the body of this Agreement shall control; and (xi) the titles to Articles and headings of Sections contained in this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of or to affect the meaning or interpretation of this Agreement. (b) This Agreement and each of the Transaction Documents were negotiated by the Parties with the benefit of legal representation, and no rule of construction or interpretation otherwise requiring this Agreement or any of the Transaction Documents to be construed or interpreted against any Party shall apply to any construction or interpretation hereof. Subject to Section 9.6, this Agreement shall be interpreted and construed to the maximum extent possible so as to uphold the enforceability of each of the terms and provisions hereof, it being understood and acknowledged that this Agreement was entered into by the Parties after substantial negotiations and with full awareness by the Parties of the terms and provisions hereof and the consequences thereof. 1.3. Accounting Principles. The classification, character and amount of all assets, liabilities, capital accounts and reserves and of all items of income and expense to be determined, and any consolidation or other accounting computation to be made, and the interpretation of any definition containing any financial term, pursuant to this Agreement shall be determined and made in accordance with GAAP, unless such principles are inconsistent with the express requirements of this Agreement; provided, that, if because of a change of GAAP after the date of this Agreement AdStar would be required to alter a previously utilized accounting principle, method or policy in order to remain in compliance with GAAP, such determination shall continue to be made in accordance with AdStar's previous accounting principles, methods and policies. ARTICLE II AUTHORIZATION AND SALE OF SERIES A PREFERRED SHARES; CLOSING 2.1. Authorization of the Series A Preferred Shares. Prior to the Closing (as defined below), AdStar shall authorize (a) the issuance and sale to the Investor of 1,443,457 shares of Series A Preferred Stock (the "Series A Preferred Shares") having the rights and preferences set forth in Exhibit A attached hereto and (b) the reservation for issuance of 1,443,457 shares of Common Stock upon conversion of the Series A Preferred Shares. 2.2. Purchase and Sale of the Series A Preferred Shares. At the Closing, subject to the terms and the conditions set forth herein, and in reliance upon the representations and warranties of AdStar set forth herein or in any certificate or other document delivered pursuant hereto, AdStar shall issue, sell and deliver to the Investor, free and clear of all Liens, and the Investor shall purchase from AdStar at a purchase price of $1.244 per share, that number of Series A Preferred Shares set forth opposite the Investor's name on Schedule 2.2. The Series A Preferred Shares shall accrue dividends from the date of issuance. -8- Execution Copy 2.3. Closing. The closing of the purchase and sale of the Series A Preferred Shares (the "Closing") shall take place at the offices of Sidley Austin Brown & Wood, 10 South Dearborn Street, Bank One Plaza, Chicago, Illinois 60603 at 10:00 a.m., local time, on the date of this Agreement, or at such other place or time or on such other date as shall be agreed to by the Company and the Investor. The time and date on which the Closing is actually held are sometimes referred to herein as the "Closing Date." 2.4. Delivery of Series A Preferred Shares; Payment of Purchase Price. (a) Subject to satisfaction or waiver of the conditions set forth in Article IV, at the Closing, AdStar shall issue and deliver to the Investor, free and clear of all Liens, one or more stock certificates, duly executed by AdStar and registered in AdStar's stock ledger in the Investor's or its nominee's name, evidencing the number of Series A Preferred Shares to be purchased by the Investor as set forth in Schedule 2.2. (b) Subject to satisfaction or waiver of the conditions set forth in Article III, at the Closing, as payment in full for the Series A Preferred Shares being purchased by it under this Agreement, and against delivery of the stock certificate(s) therefor as described in subparagraph (a) above, the Investor shall transfer $1,795,000 to the account of AdStar by wire transfer (the "Purchase Price"). ARTICLE III. CONDITIONS OF THE INVESTOR'S OBLIGATIONS The obligation of the Investor to purchase the Series A Preferred Shares at the Closing is subject to the fulfillment to the satisfaction of the Investor at or prior to the Closing of each of the following conditions: 3.1. Representations and Warranties. Each of the representations and warranties of AdStar contained in Article VII shall be true, correct and complete on and as of the Closing Date as though then made. 3.2. Performance. All covenants, agreements and conditions contained in this Agreement to be performed or complied with by AdStar on or prior to the Closing Date shall have been performed or complied with. 3.3. Governmental Authority. On or prior to the Closing Date, any authorizations, consents, approvals or permits of any Governmental Authority that are required by law in connection with the lawful sale and issuance of the Series A Preferred Shares, or the consummation of the transactions contemplated by this Agreement and each of the Transaction Documents, shall have been duly obtained by AdStar, and shall be effective on and as of the Closing Date. 3.4. Consents. On or prior to the Closing Date, AdStar shall have delivered to special counsel to the Investor, copies of all consents and approvals of third parties required under all Contracts to which AdStar is a party or by which AdStar or any of its assets or properties is affected in connection with the execution, delivery or performance by AdStar of this Agreement or any of the other agreements or documents contemplated hereby (including waivers -9- Execution Copy of all preemptive rights and rights of first refusal). 3.5. Closing Deliveries. At the Closing, AdStar shall have delivered to the Investor all of the following: (a) copy of the Certificate of Designation certified as of a recent date by the Secretary of State of the State of Delaware; (b) Certificate of good standing of AdStar issued as of a recent date by the Secretaries of State of the States of Delaware, New York, New Jersey and California; (c) Certificate of the Chief Executive Officer or the President of AdStar, dated the Closing Date, to the effect that the conditions specified in Sections 3.1 through 3.4 have been satisfied fully; (d) one or more certificates, duly executed by AdStar and registered in AdStar's stock ledger in the Investor's or its nominee's name, evidencing the number of Series A Preferred Shares to be purchased by the Investor; (e) Certificate of the Secretary or an Assistant Secretary of AdStar, dated the Closing Date, in form and substance reasonably satisfactory to the Investor, as to (i) no amendments to the Certificate of Incorporation; (ii) the By-laws; (iii) the resolutions duly adopted by the Board of Directors authorizing and approving (including for purposes of ss. 203 of the Delaware General Corporation Law), as appropriate, the execution, delivery and performance of this Agreement and each of the Transaction Documents to which it is a party and the transactions contemplated hereby and thereby, including the issuance, sale and delivery of the Series A Preferred Shares and the reservation for issuance of the Conversion Common Shares; and (iv) the incumbency and signatures of the officers of AdStar authorized to execute and deliver this Agreement and any of the Transaction Documents to which AdStar is a party; (f) Legal opinion of Morse, Zelnick, Rose & Lander LLP, counsel for AdStar, dated the Closing Date, addressed to the Investor and in the form attached hereto as Exhibit F; (g) Registration Rights Agreement, duly executed by AdStar; (h) Deployment Agreement, duly executed AdStar; (i) Governance Agreement, duly executed by AdStar and the Founders; (j) CareerBuilder Services Agreement, duly executed by AdStar; and (k) such other documents, instruments, approvals or opinions relating to the transactions contemplated by this Agreement as the Investor or its special counsel may reasonably request. 3.6. Waiver. Any condition specified in this Article III may be waived if consented to by the Investor; provided, that no such waiver shall be effective against the Investor unless it is set forth in a writing duly executed by the Investor. -10- Execution Copy ARTICLE IV CONDITIONS OF ADSTAR'S OBLIGATIONS The obligation of AdStar to issue, sell and deliver the Series A Preferred Shares at the Closing is subject to the fulfillment to the reasonable satisfaction of AdStar at or prior to the Closing of each of the following conditions: 4.1. Representations and Warranties. Each of the representations and warranties of the Investor contained in Article VIII shall be true, correct and complete on and as of the Closing Date as though then made. 4.2. Performance. All covenants, agreements and conditions contained in this Agreement and each of the Transaction Documents to be performed or complied with by the Investor on or prior to the Closing Date shall have been performed or complied with. 4.3. Registration Rights Agreement. At the Closing, the Investor shall have executed and delivered the Registration Rights Agreement to AdStar. 4.4. Deployment Agreement. At the Closing, the Investor shall have executed and delivered the Deployment Agreement to AdStar. 4.5. Governance Agreement. At the Closing, the Investor shall have executed and delivered the Governance Agreement. 4.6. Payment of Purchase Price. The Investor shall have delivered to AdStar the Purchase Price in accordance with Section 2.4(b). 4.7. CareerBuilder Services Agreement. At the Closing, CareerBuilder shall have executed and delivered the CareerBuilder Services Agreement to AdStar. 4.8. Waiver. Any condition specified in this Article IV may be waived if consented to by AdStar; provided, that, no such waiver shall be effective against AdStar unless it is set forth in a writing duly executed by AdStar. ARTICLE V COVENANTS 5.1. Reporting Status. AdStar shall comply with all applicable laws, rules and regulations of all Governmental Authorities, including the rules and regulations under the Securities Act and the Exchange Act, and the rules of any securities exchange upon which any shares of its capital stock are listed. AdStar shall use commercially reasonable efforts to maintain its status as a company with securities registered under Section 12 of the Exchange Act and the quotation of the Common Stock on NASDAQ, and shall timely file all reports and other filings required to be filed by it under the Securities Act and the Exchange Act, the rules and regulations adopted by the SEC thereunder or the rules and regulations of NASDAQ. AdStar -11- Execution Copy shall take such further action as the Investor may reasonably request to enable such holders to sell Restricted Securities pursuant to (a) Rule 144 adopted by the SEC under the Securities Act (as such rule may be amended from time to time) or any similar rule or regulation hereafter adopted by the SEC or (b) a registration statement on Form S-2 or S-3 or any similar registration form hereafter adopted by the SEC. Upon request, AdStar shall deliver to any holder of Restricted Securities a written statement as to whether it has complied with such requirements. 5.2. Reservation of Common Stock. AdStar shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of issuance upon the conversion of the Series A Preferred Shares, such number of shares of Common Stock as shall from time to time be sufficient to effect the full conversion of all outstanding Series A Preferred Shares, and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the full conversion of all of the Series A Preferred Shares, AdStar shall take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes. All shares of Common Stock which are so issuable shall, when issued, be duly and validly issued, fully paid and nonassessable and free from all Taxes and Liens other than Permitted Liens and those created by the Investor. 5.3. Listing. AdStar shall promptly secure the listing of all the Registrable Securities (as defined in the Registration Rights Agreement) upon each national securities exchange and automated quotation system upon which shares of Common Stock are then listed and shall maintain, so long as any other shares of Common Stock shall be so listed, such listing of all Registrable Securities from time to time issuable under the terms of the Transaction Documents and the Certificate of Designation. 5.4. Filing of Form 8-K. Within five Business Days following the Closing Date, AdStar shall file a current report on Form 8-K with the SEC concerning the transactions contemplated hereby and shall attach this Agreement, together with all exhibits hereto, as exhibits to such Form 8-K. Such Form 8-K shall be approved by the Investor prior to issuance. 5.5. Press Release. Any press release issued by AdStar in connection with the transactions contemplated hereby or by any of the Transaction Documents shall be approved of by the Investor prior to its issuance. 5.6. Expenses. Each of AdStar and the Investor shall bear its own expenses in connection with the negotiation, execution, delivery and performance of this Agreement, the Transaction Documents and the transactions contemplated hereby and thereby, except that AdStar shall reimburse the Investor for the reasonable legal expenses of Sidley Austin Brown & Wood, special legal counsel to the Investor, not to exceed $30,000. 5.7. Use of Proceeds. AdStar shall use the proceeds of the sale of the Series A Preferred Shares to expand the capability of the AdStar Service (as defined in the Deployment Agreement), develop the CareerBuilder Service (as defined in the Deployment Agreement) in accordance with the Deployment Agreement and for other general corporate purposes. 5.8. Replacement of Existing License Agreements. Each of the license -12- Execution Copy agreements set forth on Schedule 5.8 shall be replaced with a Newspaper Services Agreement substantially in the form set forth on Exhibit G. 5.9. Actions Requiring the Consent of the Holders of Series A Preferred. So long as any shares of Series A Preferred remains outstanding, the Corporation shall not, unless it has received the prior approval from the holders of at least a majority of the shares of Series A Preferred then outstanding, enter into or approve any Restricted Transaction. ARTICLE VI TRANSFER OF RESTRICTED SECURITIES 6.1. General Provisions. Restricted Securities are transferable only pursuant to (a) public offerings registered under the Securities Act, (b) Rule 144 of the SEC (or any similar rule or rules then in force) if such rule is available and (c) any other legally available means of transfer. 6.2. Legend. Each certificate or instrument representing Restricted Securities shall be imprinted with a legend in substantially the following form: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE ACT OR IN A TRANSACTION WHICH QUALIFIES AS AN EXEMPT TRANSACTION UNDER THE ACT, THE RULES AND REGULATIONS PROMULGATED THEREUNDER AND THE SECURITIES LAW OF ANY APPLICABLE STATE." 6.3. Legend Removal. If any Restricted Securities become eligible for sale pursuant to Rule 144(k), AdStar shall, upon the request of the holder of such Restricted Securities, remove the legend set forth in Section 6.2 from the certificates for such Restricted Securities. ARTICLE VII REPRESENTATIONS AND WARRANTIES OF ADSTAR As an inducement to the Investor to enter into this Agreement and to the purchase of the Series A Preferred Shares, and except as set forth on the Schedule attached hereto specifically identifying the Section of this Article VII to which such exception relates (which in each case shall constitute the sole representation and warranty as to which such exception shall apply), AdStar hereby represents and warrants to the Investor and agrees as follows: 7.1. Organization, Qualifications and Corporate Power. (a) AdStar is a -13- Execution Copy corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. AdStar has full legal and corporate power and authority to own or lease and to operate and use its properties and assets and to carry on its business as now conducted and as proposed to be conducted by it. AdStar is duly qualified or licensed to transact business as a foreign corporation and is in good standing in each of the jurisdictions listed in Schedule 7.1(a), which jurisdictions are the only ones in which the ownership or leasing of its assets or the conduct of its business requires such qualification or licensing, except where the failure to be so qualified or licensed, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. No other jurisdiction has demanded, requested or otherwise indicated that AdStar is required to so qualify. (b) AdStar has full legal and corporate power and authority (i) to execute, deliver and perform this Agreement and each of the Transaction Documents, (ii) to issue, sell and deliver the Series A Preferred Shares and the Conversion Common Shares and (iii) to carry out fully and perform its obligations under the terms hereof and thereof. (c) AdStar is in compliance in all material respects with all of the terms and provisions of its Certificate of Incorporation and By-laws. 7.2. Authorization; No Conflicts. (a) The execution, delivery and performance of this Agreement and each of the Transaction Documents, and the issuance, sale and delivery of the Series A Preferred Shares and the Conversion Common Shares, have been duly authorized and approved by all requisite corporate action of AdStar. This Agreement has been duly authorized, executed and delivered by AdStar and is the legal, valid and binding obligation of AdStar enforceable in accordance with its terms, and each of the Transaction Documents to which AdStar is a party has been duly authorized by AdStar and, upon execution and delivery by AdStar, will be a legal, valid and binding obligation of AdStar enforceable in accordance with its respective terms, in each case subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement thereof or by general equitable principles. (b) Neither the execution and delivery of this Agreement or any of the Transaction Documents or the consummation of any of the transactions contemplated hereby or thereby nor compliance with or fulfillment of the terms, conditions and provisions hereof or thereof will: (i) conflict with, result in a breach or violation of the terms, conditions or provisions of, or constitute a default, an event of default or an event creating rights of acceleration, termination or cancellation or a loss of rights under, or result in the creation or imposition of any Lien upon any of the assets or properties of AdStar, under (A) the Certificate of Incorporation or the By-laws or (B) any note, instrument, contract, agreement, mortgage, lease, license, franchise, permit or other authorization, right, restriction or obligation to which AdStar is a party or any of its assets or properties is subject or by which AdStar is bound, (C) any Court Order to which AdStar is a party or any of its assets or properties is subject or by which AdStar is bound, (D) any rule or regulation of NASDAQ or (E) any Requirements of Laws affecting AdStar or its assets or properties; or -14- Execution Copy (ii) require the approval, consent, authorization or act of, or the making by AdStar of any declaration, filing or registration with, any Person (except for (a) with respect to the Registration Rights Agreement, the registration of the shares covered thereby with the SEC and filings pursuant to state securities laws, (b) with respect to the offer and sale of the Series A Preferred Shares, any required filings under state securities laws (all of which have been made by AdStar) and (c) routine post-Closing notice filings with the SEC and under state corporation and securities laws, each of which will be filed timely within the applicable period therefor). 7.3. Subsidiaries and Investments. Schedule 7.3 sets forth, as of the date hereof, each Subsidiary of AdStar. Except as set forth in Schedule 7.3, all of the outstanding shares of capital stock of each of the Subsidiaries set forth on Schedule 7.3 are owned by AdStar, by another wholly-owned Subsidiary of AdStar or by AdStar and another wholly-owned Subsidiary of AdStar, free and clear of all Liens, and are duly-authorized, validly-issued, fully-paid and nonassessable. Except as set forth in Schedule 7.3, AdStar does not, directly or indirectly, (a) own of record or beneficially or hold the right to acquire any outstanding voting securities or other equity interests in any Person or (b) control or direct the operations of any Person. 7.4. Authorized Capital Stock. (a) As of the Closing, the authorized capital stock of AdStar consists of (i) 20,000,000 shares of Common Stock, the number of issued and outstanding shares of which is as set forth in Schedule 7.4 and (ii) 5,000,000 shares of preferred stock, $0.0001 par value, of which 1,443,457 shares have been designated as Series A Preferred Shares and the number of issued and outstanding shares of which is set forth in Schedule 7.4. AdStar has reserved for issuance (x) sufficient shares of Common Stock for issuance upon conversion of all outstanding Series A Preferred Shares, (y) 3,152,530 shares of Common Stock upon exercise of outstanding options and warrants to purchase shares of Common Stock. Immediately after the Closing, the capitalization of AdStar shall be as set forth in the Capitalization Schedule attached to Schedule 7.4, which Capitalization Schedule reflects the capitalization of AdStar both on an actual shares outstanding basis and on a fully-diluted basis assuming conversion of all convertible securities and the exercise of all outstanding options and warrants. (b) No Person is entitled to any pre-emptive right or right of first refusal with respect to the issuance of any capital stock of AdStar, including the Series A Preferred Shares. There are no outstanding pre-emptive rights, options, warrants, conversion rights, agreements or other rights to purchase any of the authorized but unissued capital stock of AdStar or any securities convertible or exchangeable into any capital stock of AdStar, other than (i) those issued, reserved or committed to be issued pursuant to this Agreement and (ii) those set forth in the Capitalization Schedule. (c) Except as set forth in Schedule 7.4, AdStar is not a party to any existing written agreement with the holder of any of its securities that requires AdStar to purchase any of such securities from their holder under any circumstances. (d) Except as set forth in Schedule 7.4, AdStar is not a party or subject to any agreement or understanding, and AdStar has not received any written notice of any agreement or -15- Execution Copy understanding between any Persons, that affects or relates to the voting or giving of written consents with respect to any of the capital stock of AdStar. (e) All outstanding securities of AdStar were issued in compliance with all Federal and state securities laws. (f) Except as provided in the Registration Rights Agreement and as set forth in Schedule 7.4, AdStar is presently not under any obligation and has not granted any rights to register any of its securities under the Securities Act. (g) The Series A Preferred Shares, when issued, sold and delivered in accordance with the terms of this Agreement, will be (i) duly and validly issued, fully paid, non-assessable and free and clear of all Liens except any created by or through the Investor, and will be free of restrictions on transfer other than restrictions on transfer under this Agreement and under applicable state and Federal securities laws and (ii) issued in compliance with all state and Federal securities laws and in compliance with the rules and regulations of NASDAQ. (h) The Conversion Common Shares issuable upon conversion of the Series A Preferred Shares have been duly and validly reserved for issuance and, upon issuance in accordance with the conversion provisions of the Series A Preferred Shares, will be (i) duly and validly issued, fully paid, non-assessable and free and clear of all Liens except any created by or through the Investor, and will be free of restrictions on transfer other than restrictions on transfer under this Agreement and under applicable state and Federal securities laws, (ii) issued in compliance with all state and Federal securities laws and in compliance with the rules and regulations of NASDAQ and (iii) subject to the registration of such shares in accordance with the applicable provisions of the Securities and the Exchange Act, entitled to be quoted and/or listed on NASDAQ. 7.5. SEC Documents. The Common Stock is registered pursuant to Section 12 of the Exchange Act and AdStar has filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Exchange Act, including all such proxy information, solicitation statement and registration statements, and amendments thereto required to have been filed (all of the foregoing and all exhibits included therein and financial statements and schedules thereto and documents incorporated by reference therein being referred to herein as the "SEC Documents"). As of the date of filing of such SEC Documents, the SEC Documents complied in all material respects with the applicable requirements of the regulations of the Exchange Act and the rules and regulations promulgated thereunder and other Federal, state and local laws, rules and regulations applicable to such SEC Documents. None of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The SEC Documents contain all material information concerning AdStar, and no event or circumstance has occurred prior to the date hereof that would require AdStar to disclose such event or circumstance in order to make the statements in the SEC Documents not misleading but which has not been so disclosed. AdStar is not required to file and will not be required to file any Contract entered into prior to the date hereof and to which AdStar is a party or by which AdStar is bound that has not been previously filed as an exhibit to -16- Execution Copy its reports filed with the SEC under the Exchange Act. 7.6. Listing. The Common Stock is quoted on NASDAQ. Except as set forth in Schedule 7.6, AdStar is not in violation of the listing or quotation requirements of NASDAQ and has no Knowledge of any facts that would reasonably lead to delisting or suspension of the Common Stock by NASDAQ in the foreseeable future. 7.7. Financial Statements. The financial statements (including, in each case, any related notes) of AdStar included in the SEC Documents complied as to form and substance in all material respects with applicable accounting requirements of the SEC and the published rules and regulations of the SEC or other applicable SEC or NASDAQ rules and regulations with respect thereto. Such financial statements were prepared in accordance with GAAP during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto or (ii) in the case of unaudited interim statements, to the extent that they may include footnotes, may be condensed or summary statements) and fairly presented in all material respects, the financial position of AdStar as of the respective dates thereof and the results of operations and cash flows for the periods indicated (subject, in the case of unaudited statements, to normal year-end audit adjustments). 7.8. Absence of Undisclosed Liabilities. AdStar has no liabilities or obligations not disclosed in the SEC Documents other than those liabilities incurred in the ordinary course of AdStar's business since September 30, 2001. 7.9. No Material Adverse Change. Except as disclosed in the SEC Documents, since September 30, 2001, (a) no Material Adverse Effect has occurred or exists, (b) no event or circumstance has occurred that, with notice or passage of time or both, is reasonably likely to result in a Material Adverse Effect with respect to AdStar and (c) no change in the financial condition or the assets, liabilities or properties of AdStar has occurred that could reasonably be foreseen to have a Material Adverse Effect with respect to AdStar. 7.10. Title to Properties; Leasehold Interests. AdStar and its Subsidiaries have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them that is material to the business of AdStar and its Subsidiaries, in each case free and clear of all Liens except such as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by AdStar or any of its Subsidiaries. Any real property and facilities held under lease by AdStar or any of its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and facilities by AdStar or its Subsidiaries. 7.11. Tax Matters. (a) (i) AdStar has timely filed all Tax Returns required to be filed by it; (ii) all such Tax Returns are complete and accurate in all material respects, disclose all Taxes required to be paid by AdStar, for the periods covered thereby and have been prepared in compliance with all applicable laws and regulations; (iii) AdStar has timely paid all Taxes (whether or not shown on such Tax Returns) due and owing by it and has withheld and paid over to the appropriate taxing authority all Taxes that it is required by law to withhold or to collect for payment from amounts paid or owing to any employee, stockholder, creditor or other third party; -17- Execution Copy (iv) AdStar has not waived or been requested to waive any statute of limitations in respect of Taxes which waiver is currently in effect; (v) AdStar is not currently the beneficiary of any extension of time within which to file any Tax Return except for an extension to its 2001 returns; (vi) there is no action, suit, investigation, audit, claim or assessment pending or, to the Knowledge of AdStar, proposed or threatened with respect to Taxes of AdStar and no information related to Tax matters has been requested by any foreign, Federal, state or local taxing authority; (vii) there are no Liens for Taxes upon the assets or properties of AdStar except Liens relating to current Taxes not yet due; (viii) there are no material unresolved questions or claims concerning any Tax liability of AdStar; and (ix) AdStar is not and has not been an S corporation since June 1999. (b) AdStar is not liable for the Taxes of another Person in a material amount (i) under Treasury Regulation ss. 1.1502-6 (or comparable provisions of state, local or foreign law), (ii) as a transferee or successor, (iii) by contract or indemnity or (iv) otherwise. AdStar is not a party to any Tax sharing or indemnity agreements. AdStar has not been a member of any affiliated group as defined in Section 1504 of the Code that has filed a consolidated return for Federal income tax purposes (or any similar group under state, local or foreign law). AdStar has not made any payments, is not obligated to make payments or is not a party to an agreement that could obligate it to make any payments that would not be deductible under Section 280G of the Code. 7.12. Intellectual Property Rights. (a) Schedule 7.12 contains a complete and accurate list of all material (i) patented or registered Intellectual Property Rights owned or used by AdStar or any of its Subsidiaries, (ii) pending patent applications and applications for registrations of other Intellectual Property Rights filed by AdStar or any of its Subsidiaries (iii) unregistered trade names and corporate names owned or used by AdStar or any of its Subsidiaries and (iv) unregistered trademarks and service marks owned or used by AdStar or any of its Subsidiaries. Schedule 7.12 also contains a complete and accurate list of all exclusive licenses granted by AdStar or any of its Subsidiaries to any third party with respect to any Intellectual Property Rights and all licenses and other rights granted by any third party to AdStar or any of its Subsidiaries with respect to any Intellectual Property Rights, in each case identifying the subject Intellectual Property Rights. AdStar or its Subsidiaries owns all right, title and interest to, or has the right to use pursuant to a valid license, all Intellectual Property Rights necessary for the operation of the business of AdStar and each of its Subsidiaries as presently conducted and as presently proposed to be conducted, free and clear of all Liens. The loss or expiration of any Intellectual Property Right or related group of Intellectual Property Rights owned or used by AdStar or any of its Subsidiaries has not had a Material Adverse Effect, and no such loss or expiration is threatened, pending or reasonably foreseeable. AdStar has taken reasonable actions to maintain and protect the Intellectual Property Rights that it owns and uses, including, without limitation, causing its employees to execute non-disclosure and confidentiality agreements. Except as set forth on Schedule 7.12, (i) AdStar owns all right, title, and interest in and to all of the Intellectual Property Rights which it owns and uses, including, without limitation, causing its employees to execute non-disclosure and confidentiality agreements. Except as indicated on Schedule 7.12, (i) AdStar owns all right, title, and interest in and to all of the Intellectual Property Rights listed on such schedule and all other Intellectual Property Rights material to the operation of the business of AdStar, (ii) there have been no claims made against AdStar asserting the invalidity, misuse or unenforceability of any of such -18- Execution Copy rights, and there are no grounds for the same, (iii) AdStar has not received a notice of conflict with the asserted rights of others within the last five years and (iv) the conduct of AdStar's business has not infringed or misappropriated and does not infringe or misappropriate any Intellectual Property Rights of other Persons, nor would any future conduct as presently contemplated infringe any Intellectual Property Rights of other Persons and, to the best of AdStar's knowledge, the Intellectual Property Rights owned by AdStar have not been infringed or misappropriated by other Persons. (b) (i) There have been no claims made against AdStar or any of its Subsidiaries asserting the invalidity, misuse or unenforceability of any of the Intellectual Property Rights listed on Schedule 7.12, and there are no grounds for the same, (ii) neither AdStar nor any of its Subsidiaries has received any written notices of, and neither AdStar nor any of its Subsidiaries is aware of any facts that indicate a reasonable likelihood of, any infringement or misappropriation by, or conflict with, any third party with respect to such Intellectual Property Rights (including any demand or request that AdStar or any of its Subsidiaries license any rights from a third party), (iii) the conduct of AdStar's or any of its Subsidiaries' business has not infringed, misappropriated or conflicted with and does not infringe, misappropriate or conflict with any Intellectual Property Rights of other Persons and (iv) to the Knowledge of AdStar, the Intellectual Property Rights owned by or licensed to AdStar or any of its Subsidiaries have not been infringed, misappropriated or conflicted by other Persons. 7.13. Compliance with Laws; Litigation. (a) The assets of AdStar and each of its Subsidiaries and their current and proposed uses comply and will comply in all material respects with all applicable Requirements of Laws and Court Orders; (b) AdStar and each of its Subsidiaries have complied in all material respects with all Requirements of Laws and Court Orders that are applicable to its assets or business; (c) AdStar and each of its Subsidiaries owns, holds or possesses all necessary permits, licenses, franchises and other authorizations from a Governmental Authority required to conduct its business substantially as conducted presently, except where the failure to do so does not have a Material Adverse Effect; and neither of AdStar nor any of its Subsidiaries is in default in any material respect under any such permit, license, franchise or other authorization; (d) Except as set forth in Schedule 7.13, there are no civil, criminal, administrative or regulatory lawsuits, claims, suits, proceedings, arbitrations or investigations pending or, to the Knowledge of AdStar, threatened against or affecting AdStar or any of its Subsidiaries nor, to the Knowledge of AdStar, is there any basis for any of the same, and there are no lawsuits, claims or proceedings pending or threatened in which AdStar or any of its Subsidiaries is the plaintiff or claimant; (e) There are no civil, criminal, administrative or regulatory lawsuits, claims, suits, proceedings, arbitrations or investigations pending or, to the Knowledge of AdStar, -19- Execution Copy threatened against the principal executive officers of AdStar or any of its Subsidiaries by reason of the past employment relationship of any such officer; and (f) To the Knowledge of AdStar, no legislative or regulatory proposal or other proposal for any change in any Requirement of Law, in each case which is specifically focused on AdStar's or any of its Subsidiaries' industry, is pending which, if adopted, could adversely affect AdStar's or any of its Subsidiaries' ability to conduct its business. 7.14. Brokers. Neither AdStar nor any of its Subsidiaries has any Contract with any broker, finder or similar agent with respect to the transactions contemplated by this Agreement for which AdStar or any of its Subsidiaries shall have any liability or responsibility. 7.15. Governmental Approvals; No Registration. Subject to the accuracy of the representations and warranties of the Investor set forth in Article VIII, no permit, consent, approval or authorization of, or registration to or filing with, any Governmental Authority is or will be required in connection with the execution, delivery and performance by AdStar of this Agreement or any of the Transaction Documents, or the issuance, sale and delivery of the Series A Preferred Shares or the reservation for issuance of the Conversion Common Shares, or the consummation by AdStar of any other transactions contemplated hereby or thereby, other than with respect to the Registration Rights Agreement, the registration of the shares covered thereby with the SEC and filings, if any, pursuant to state securities laws. 7.16. Insurance. AdStar and each of its Subsidiaries has in full force and effect fire and casualty insurance policies, with extended coverage, sufficient in amount (subject to reasonable deductibles) to allow it to replace any of its properties that might be damaged or destroyed. Except as set forth on Schedule 7.16, AdStar does not have any self-insurance or co-insurance programs. Neither AdStar nor any of its Subsidiaries has been refused any insurance coverage sought or applied for and neither AdStar nor any of its Subsidiaries has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect. 7.17. Employees. AdStar is not aware that any executive officer of AdStar or any of its Subsidiaries or any group of employees of AdStar or any of its Subsidiaries has any plans to terminate employment with AdStar or any of its Subsidiaries. AdStar and each of its Subsidiaries have complied in all material respects with all laws relating to the employment of labor (including provisions relating to wages, hours, equal opportunity, collective bargaining and the payment of social security and other Taxes, and the Employee Retirement Income Security Act of 1974, as amended ("ERISA")), and AdStar is not aware that it has any labor relations problems (including any union organizational activities, threatened or actual strikes or work stoppages or grievances). Neither AdStar nor any of its Subsidiaries is a party to or bound by any collective bargaining agreement or any other Contract with any labor union. None of AdStar, any of its Subsidiaries or, to the Knowledge of AdStar, any of its or their employees is subject to any noncompete, nondisclosure, confidentiality, employment, consulting or similar agreements, affecting or in conflict with the present business activities of AdStar or the proposed business activities of AdStar as contemplated by the Deployment Agreement, except for agreements between AdStar and its present and former employees. -20- Execution Copy 7.18. ERISA. Except as set forth on Schedule 7.18: (a) Multiemployer Plans. AdStar does not have any obligation, and has never been required, to contribute to (or any other liability, including current or potential withdrawal liability, with respect to) any "multiemployer plan" (as defined in Section 3(37) of ERISA). (b) Retiree Welfare Plans. AdStar does not maintain or have any obligation to contribute to (or any other liability with respect to) any plan or arrangement whether or not terminated, which provides medical, health, life insurance or other welfare-type benefits for current or future retired or terminated employees (except for limited continued medical benefit coverage required to be provided under Section 4980B of the Code or as required under applicable state law). (c) Defined Benefit Plans. AdStar does not maintain, contribute to or have any liability under (or with respect to) any employee plan that is a tax-qualified "defined benefit plan" (as defined in Section 3(35) of ERISA), whether or not terminated. (d) Defined Contribution Plans. AdStar does not maintain, contribute to or have any liability under (or with respect to) any employee plan that is a tax-qualified "defined contribution plan" (as defined in Section 3(34) of ERISA), whether or not terminated. (e) Other Plans. AdStar does not maintain, contribute to or have any liability under (or with respect to) any plan or arrangement providing benefits to current or former employees, including any bonus plan, profit sharing, stock option, employee stock purchase or other plan or arrangement providing for deferred or other compensation, employee health or other welfare benefit plan or other arrangement, or severance agreements, programs, policies or arrangements, whether or not terminated and whether or not subject to ERISA. (f) Unfunded Liability. No Plan maintained by AdStar or to which AdStar has an obligation to contribute, or with respect to which AdStar has any other liability, has any material unfunded liability. (g) Plan Qualification and Compliance. None of the employee benefit plans set forth on Schedule 7.18 is intended to be qualified under Section 401(a) of the Code. Each employee benefit plan set forth on Schedule 7.18 and all related trusts, insurance contracts and funds have been maintained, funded and administered in material compliance with their respective terms and with all applicable laws. (h) AdStar. For purposes of this Section 7.18, the term "AdStar" includes all entities under common control with AdStar pursuant to Section 414(b) or (c) of the Code. 7.19. Environmental Matters. To the Knowledge of AdStar, (a) the operations of AdStar and each of its Subsidiaries comply in all material respects with all applicable Environmental Laws, (b) neither AdStar nor any of its Subsidiaries is or has been subject to any judicial or administrative proceeding, Court Order or settlement alleging or addressing a violation of or liability under any Environmental Law, (c) no material quantity of hazardous wastes, substances or materials or oil or petroleum products have been generated, transported, used, disposed, stored or treated by AdStar or any of its Subsidiaries and (d) no material quantity -21- Execution Copy of hazardous wastes, substances or materials or oil or petroleum products have been released, discharged, disposed, transported, placed or otherwise caused by AdStar or any of its Subsidiaries to enter the soil or water in, under or upon any real property owned, leased or operated by AdStar or any of its Subsidiaries. 7.20. Related-Party Transactions. Except as set forth in Schedule 7.20, no Related Party is indebted to AdStar or any of its Subsidiaries, nor is AdStar or any of its Subsidiaries indebted (or committed to make loans or extend or guarantee credit) to any of such persons, other than for (a) payment of salary for services rendered, (b) reimbursement for reasonable expenses incurred on behalf of AdStar or any of its Subsidiaries and (c) other standard employee benefits made generally available to all employees. To the Knowledge of AdStar, no Related Party has any direct or indirect ownership interest in any firm or corporation with which AdStar or any of its Subsidiaries is affiliated or with which AdStar or any of its Subsidiaries has a business relationship, or any firm or corporation that competes with AdStar or any of its Subsidiaries, except that employees, officers, stockholders or directors of AdStar and its Subsidiaries and members of their immediate families may own not more than 5% of the outstanding capital stock of any publicly-traded company. To the Knowledge of AdStar, no officer, stockholder or director of AdStar, or any member of his or her immediate family, is, directly or indirectly, a party to any material Contract with AdStar or any of its Subsidiaries (other than such Contracts as relate to any such person's employment or ownership of capital stock of AdStar). 7.21. Disclosure. To the Knowledge of AdStar, none of the representations or warranties of AdStar contained herein, none of the information contained in the Schedules referred to in this Article VII, and none of the other written information or documents furnished to the Investor or any of its representatives by AdStar or its representatives in connection with the transactions contemplated by this Agreement, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements herein or therein, in light of the circumstances under which they were made, not misleading in any material respect. There is no fact that AdStar has not disclosed to the Investor in writing that has had or would reasonably be expected to have Material Adverse Effect. 7.22. No General Solicitation. None of AdStar, any of its Affiliates or any Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection with the offer or sale of the Series A Preferred Shares. 7.23. No Integrated Offering. None of AdStar, any of its Affiliates or any Person acting on its or their behalf, has directly or indirectly made any offers or sales of any security or solicited any offers to buy any security under circumstances that would require registration of the Series A Preferred Shares or cause this offering of Series A Preferred Stock to the Investor to be integrated with any prior offering of AdStar's securities. 7.24. Application of Takeover Protections. AdStar does not have a stockholder rights plan or other similar plan. AdStar and its Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination or other similar anti-takeover provision under the Certificate of Incorporation or the -22- Execution Copy laws of the state of its incorporation that is or could become applicable to the Investor as a result of the transactions contemplated hereby. ARTICLE VIII REPRESENTATIONS AND WARRANTIES OF THE INVESTOR As an inducement to AdStar to enter into this Agreement and to issue and sell the Series A Preferred Shares, the Investor hereby represents and warrants to AdStar and agrees as follows: 8.1. Authorization. The execution, delivery and performance of this Agreement and each of the Transaction Documents to which the Investor is a party have been duly authorized and approved by the Investor. This Agreement has been duly executed and delivered by the Investor and is the legal, valid and binding obligation of the Investor enforceable in accordance with its terms, and each of the Transaction Documents to which the Investor is a party has been duly authorized by the Investor and, upon execution and delivery by the other parties thereto, will be a legal, valid and binding obligation of the Investor enforceable in accordance with its respective terms, in each case subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement thereof or by general equitable principles. 8.2. Brokers. The Investor has no Contract with any broker, finder or similar agent with respect to the transactions contemplated by this Agreement for which the Investor shall have any liability or responsibility. 8.3. Investment Representations. (a) The Investor acknowledges that it has been furnished with such documents, materials and information as the Investor deems necessary or appropriate for evaluating an investment in AdStar. The Investor confirms that it has made such further investigation of AdStar as was deemed appropriate to evaluate the merits and risks of this investment. The Investor further acknowledges that it has had the opportunity to ask questions of, and receive answers from, the directors and officers of AdStar, and Persons acting on AdStar's behalf, concerning the terms and conditions of the offering of the Series A Preferred Shares. Notwithstanding the foregoing, it is agreed and understood by the Parties that the acknowledgements made in this Section 8.3(a) shall not be construed to limit or modify in any way the representations and warranties of AdStar contained in Article VII or the right of the Investor to rely on such representations and warranties. (b) The Investor is an "accredited investor" as such term is defined in Rule 501(a) of Regulation D under the Securities Act. -23- Execution Copy ARTICLE IX MISCELLANEOUS 9.1. Survival of Representations and Warranties. All representations and warranties contained herein or made in writing by any Party in connection herewith will survive the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, regardless of any investigation made by or on behalf of the Investor. 9.2. Amendments and Waivers. Except as otherwise expressly provided herein, the provisions of this Agreement may be amended, modified or waived only with the written consent of AdStar and the Investor. No course of dealing between AdStar and the holder of any Series A Preferred Shares or any delay in exercising any rights hereunder or under the Transaction Documents or the Certificate of Designation will operate as a waiver of any rights of any such holders. 9.3. Successors and Assigns. Except as otherwise expressly provided herein, all covenants and agreements contained in this Agreement by or on behalf of any of the Parties will bind and inure to the benefit of the respective successors and permitted assigns of the Parties, whether so expressed or not. It is expressly understood that, in the event of a sale by Investor of a portion of its Series A Preferred Stock to Knight Ridder, Knight Ridder shall qualify as a permitted assign under this Section 9.3, and after any such sale Knight Ridder shall be entitled to all rights and remedies (and shall be bound by any obligations) of a holder of Series A Preferred Stock hereunder to the same extent as the Investor. 9.4. Remedies. The Investor shall be entitled to enforce any rights it has under this Agreement or the Transaction Documents specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. 9.5. Indemnification. In consideration of the Investor's execution and delivery of this Agreement and acquisition of the Series A Preferred Shares and in addition to all of AdStar's other obligations under this Agreement, AdStar shall defend, protect, indemnify and hold harmless the Investor and each other holder of Series A Preferred Shares and Conversion Common Shares and all of their partners, officers, directors, employees and agents (including those retained in connection with the transactions contemplated by this Agreement) (collectively, the "Indemnitees") from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys' fees and disbursements (the "Indemnified Liabilities"), incurred by the Indemnitees as a result of, or arising out of, or relating to (a) any breach by AdStar of any of the representations, warranties or covenants contained in this Agreement or any of the Transaction Documents or (b) any third-party claims incurred solely as a result of the fact that such Person is a stockholder of AdStar (or a partner, officer, director, employee or agent of such Person). To the extent that the foregoing undertaking by AdStar may be unenforceable for any reason, AdStar shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities that is permissible under applicable law. -24- Execution Copy 9.6. Severability. Wherever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law and in such a way as to, as closely as possible, achieve the intended economic effect of such provision and this Agreement as a whole, but if any provision contained herein is, for any reason, held to be invalid, illegal or unenforceable in any respect, such provision shall be ineffective to the extent, but only to the extent, of such invalidity, illegality or unenforceability without invalidating the remainder of such provision or any other provisions hereof, unless such a construction would be unreasonable. 9.7. Notices. All notices or other communications required or permitted hereunder shall be in writing and shall be deemed given or delivered (a) when delivered personally, (b) if transmitted by facsimile when confirmation of transmission is received, (c) if sent by registered or certified mail, postage prepaid, return receipt requested, three Business Days after mailing or (iv) if sent by reputable overnight courier service, one Business Day after delivery to such service; and shall be addressed as follows: If to AdStar, to: with a copy to: AdStar, Inc. Morse, Zelnick, Rose & Lander, LLP 4553 Glencoe Avenue, Suite 300 450 Park Avenue Marina del Rey, California 90292 New York, New York, 10022 Attention: Leslie Bernhard, President Attention: Stephen A. Zelnick, Esq. and Chief Executive Officer Facsimile: (212) 838-9190 Facsimile: (310) 577-8266 If to the Investor, to: with a copy to: Tribune Company Sidley Austin Brown & Wood 435 N. Michigan Ave. Bank One Plaza Chicago, IL 60611 10 South Dearborn Street Attention: General Counsel Chicago, Illinois 60603 Facsimile: (312) 222-4206 Attention: Larry A. Barden Jon A. Ballis and also to Facsimile: (312) 853-7036 Tribune Company 435 N. Michigan Ave. Chicago, IL 60611 Attention: Vice President of Strategy and Development Facsimile: (312) 222-4206 9.8. Governing Law. This Agreement and the Exhibits and Schedules hereto shall be governed by, and construed in accordance with, the laws of the State of Illinois, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of -25- Execution Copy Illinois or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Illinois. In furtherance of the foregoing, the internal law of the State of Illinois shall control the interpretation and construction of this Agreement (and all Schedules and Exhibits hereto), even though under that jurisdiction's choice of law or conflict of law analysis, the substantive law of some other jurisdiction would ordinarily apply. 9.9. Submission to Jurisdiction; Waiver of Jury Trial. (a) Each of the Parties hereby irrevocably submits in any suit, action or proceeding arising out of or related to this Agreement or any of the Transaction Documents, or any of the transactions contemplated hereby or thereby, to the exclusive jurisdiction of the United States District Court for the Northern District of Illinois and the Circuit Court of Cook County, Illinois and, to the extent permissible by law, waives any and all claims and objections that any such court is an inconvenient forum. (b) EACH OF THE PARTIES HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, BETWEEN OR AMONG ANY OF THE PARTIES ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OF THE TRANSACTION DOCUMENTS, OR ANY OTHER INSTRUMENT OR DOCUMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THEREWITH. ANY PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. 9.10. Attorneys' Fees. In the event of any action or suit based upon or arising out of any actual or alleged breach by any Party of any representation, warranty or agreement in this Agreement, the prevailing party shall be entitled to recover its reasonable attorneys' fees and expenses of such action or suit from the losing party, in addition to any other relief ordered by the court. 9.11. Execution in Counterparts. This Agreement may be executed in any number of counterparts (including via facsimile), each of which will be considered an original instrument, but all of which together will be considered one and the same agreement, and will become binding when one or more counterparts have been signed by and delivered to each of the Parties. 9.12. Delivery by Facsimile. This Agreement, to the extent signed and delivered by means of a facsimile machine, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of any Party, each other Party shall reexecute original forms thereof and deliver them to all other Parties. No Party shall raise the use of a facsimile machine to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine as a defense to the formation or enforceability of a contract and each such Party forever waives any such defense. 9.13. Entire Agreement. This Agreement and the Exhibits and Schedules -26- Execution Copy referred to herein, the Transaction Documents and the other documents delivered pursuant hereto contain the entire understanding of the Parties with regard to the subject matter contained herein or therein, and supersede all prior agreements, understandings or letters of intent between or among any of the Parties. [SIGNATURE PAGE FOLLOWS] -27- IN WITNESS WHEREOF, the Parties have caused this Stock Purchase Agreement to be executed the day and year first above written. ADSTAR, INC. By: /s/ Leslie Bernhard ------------------------------------ Name: Leslie Bernhard Title: President and Chief Executive Officer TRIBUNE COMPANY By: /s/ Timothy Landon ------------------------------------ Name: Timothy Landon Title: President/Tribune Classifieds Signature Page to the Stock Purchase Agreement EX-10.2 5 ex10-2.txt SOFTWARE DEVELOPMENT AND DEPLOYMENT AGREEMENT Execution Copy EXHIBIT 10.2 SOFTWARE DEVELOPMENT AND DEPLOYMENT AGREEMENT This SOFTWARE DEVELOPMENT AND SERVICES DEPLOYMENT AGREEMENT (the "Agreement"), is made and entered into as of March 18, 2002 (the "Closing Date") by and between AdStar, Inc., a Delaware corporation ("AdStar") and Tribune Company, a Delaware corporation ("Tribune") (collectively the "Parties" and each a "Party"). WHEREAS, AdStar is the sole and exclusive developer and worldwide owner of a proprietary software product that is used, together with AdStar's hosting and servicing facilities, to provide a service known as the "AdStar Service"; WHEREAS, AdStar provides services related to the implementation, customization and maintenance of the AdStar Service; WHEREAS, Tribune and Knight-Ridder Inc. ("Knight Ridder") are controlling stockholders in CareerBuilder, Inc., a Delaware corporation that operates the "CareerBuilder" recruitment business ("CareerBuilder"); WHEREAS, together with its newspaper partners (which together with CareerBuilder comprise the "CareerBuilder Network"), CareerBuilder provides an integrated print and online recruitment solution available in major markets throughout the United States; WHEREAS, Tribune and AdStar wish to develop, customize and deploy, solely for the benefit of Tribune, its Affiliates and the CareerBuilder Network, a service that combines the AdStar Service with the new Tribune specified functionalities, in the form of new software Modules (as defined below), for use with the CareerBuilder Network; WHEREAS, Tribune desires to license from AdStar the software Modules so developed for the CareerBuilder Service and license rights to use the AdStar Service and receive certain services of AdStar appurtenant thereto; and WHEREAS, subject to the terms and under the conditions of this Agreement, AdStar desires to grant certain license and usage rights and provide such services. NOW, THEREFORE, in consideration of the premises and the mutual agreements and covenants hereinafter set forth, and other good and valuable consideration (including, without limitation, that described in Section 15.8), the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows: ARTICLE I - DEFINITIONS SECTION 1.1. The following terms as used in this Agreement shall have the respective meanings set forth below or as defined elsewhere in the text of this Agreement. (a) "Acceptance Tests" shall mean the software testing plan to be agreed upon by the Parties, which shall meet the minimum specifications set forth in Exhibit A, as the same will be developed and updated by Tribune. (b) "AdStar Service" means AdStar's hosting and servicing facilities and software, and includes without limitation the software and services comprising "AdStar User" and "AdStar Server". (c) "Affiliate" has the meaning set forth in the Investment Agreement. (d) "Bankruptcy" means, with respect to a Party, the happening of any one or more of the following events: a Party: (i) makes an assignment for the benefit of creditors; (ii) files a voluntary petition in bankruptcy; (iii) is adjudged a bankrupt or insolvent, or there has been entered against such Party an order for relief, in any bankruptcy or insolvency proceeding; (iv) files a petition or answer seeking in respect of such Party any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation; (v) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against such Party in any proceeding of a nature described above; or (vi) seeks, consents or acquiesces in the appointment of a trustee, receiver, conservator or liquidator of such Party or of all or any substantial part of such Party's properties. (e) "CareerBuilder Network" has the meaning set forth in the recitals to this Agreement and includes without limitation the Tribune Newspapers and Knight Ridder Newspapers. (f) "CareerBuilder Service" means the software comprising the AdStar Service as configured and customized pursuant to this Agreement, including the hosting and servicing facilities that are part of the AdStar Service, and the Modules, including all Upgrades and Enhancements thereto and inherent or associated Intellectual Property Rights therein. (g) "Competitor" has the meaning set forth on Schedule 8. (h) "Enhancements" means any improvement or modification made to the CareerBuilder Service pursuant to a request made by Tribune in accordance with Article V of this Agreement. (i) "Error" means any deviations from the Functional Requirements or Technical Specifications, including without limitation cases where the CareerBuilder Service or any part thereof abnormally ceases functioning, produces incorrect or misleading information or erroneously interprets information given to it. (j) "Force Majeure Event" has the meaning set forth in Section 15.15. -2- (k) "Functional Requirements" means the functional requirements and specifications for all components of the CareerBuilder Service (other than Third Party Technology) as stated in narrative and flow chart forms as specified on Exhibit A. (l) "Infringe" or "Infringement" means the infringement, imitation, dilution, misappropriation or any other unauthorized use of any Intellectual Property Rights. (m) "Intellectual Property Rights" means all patents, reexamined patents and patent applications (including all divisions, continuations, continuations-in-part, reissues, renewals, extensions, supplementary protection certificates, utility models and the like), copyrights (whether registered or unregistered), trade dress, trademarks and service marks (whether registered or unregistered), moral rights, all derivative works and other intellectual property rights and any applications for, or rights to obtain or acquire such rights. (n) "Know-How" means all Confidential Information and all unpatented proprietary information, trade secrets, data and materials, in whatever form, including, but not limited to, the following: specifications, calculations, formulae, engineering and technical data, blueprints, diagrams, charts, results, computer programs, designs, skills, methods, techniques, procedures, manufacturing data and marketing or sales information. (o) "Investment Agreement" means the Series A Preferred Stock Purchase Agreement dated the date hereof between the Parties. (p) "Knight Ridder Newspaper" means any newspaper designated as such on Schedule 1, as amended from time to time. (q) "Launch Date" means the sooner to occur of (i) the date upon which the Acceptance Testing for the CareerBuilder Service has been completed to the satisfaction of the first Tribune Newspaper to conduct such testing; (ii) thirty (30) days after the date that AdStar notifies Tribune that establishes that the CareerBuilder Service is ready for Acceptance Tests if no such testing takes place due solely to the action or inaction of Tribune (of which Tribune has received notice from AdStar); or (iii) thirty (30) days after the date that AdStar establishes that the CareerBuilder Service would have been ready for Acceptance Testing (and AdStar notified Tribune of its readiness) but for the action or inaction of Tribune (of which Tribune has received notice from AdStar) (excluding, in the case of (ii) and (iii), modifications to Exhibit A). (r) "License" means the license granted to Tribune under Section 3.1, as defined and limited by the terms and conditions of this Agreement. (s) "Module" means the software developed pursuant to this agreement that has the features and functionality described on Exhibit B, as amended from time to time, including any Enhancements. (t) "Object Code" means machine-executable computer software prepared by compiling and linking Source Code or machine independent representations of computer software intended for subsequent interpretation or just-in-time compiling. -3- (u) "Other Classified Verticals" mean real estate and automotive classified advertising. (v) "Person" has the meaning set forth in the Investment Agreement. (w) "Restricted Transaction" means either (i) the sale, lease, transfer, conveyance or other disposition, in one or a series of related transactions, of all or substantially all of the assets of AdStar, taken as a whole, or (ii) a transaction or series of transactions (including by way of merger, consolidation, or sale of stock) the result of which is that the holders of AdStar's outstanding voting stock immediately prior to such transaction are after giving effect to such transaction no longer, in the aggregate, the "beneficial owners" (as such term is defined in Rule 13d-3 and Rule 13d-5 promulgated under the Securities Exchange Act), directly or indirectly through one of more intermediaries, of more than 50% of the voting power of the outstanding voting stock of AdStar, in which (in either (i) or (ii)) a purchaser, transferor or successor is (x) a Competitor of CareerBuilder or (y) not approved by Tribune based on Tribune's sole, good faith judgment that a purchaser, transferor or successor in any such transaction is unlikely to meet the obligations of this Agreement or support the CareerBuilder Service. (x) "Source Code" means the source code form of any computer software and any associated documentation in human-readable form, including programmers' comments, data files and structures, APIs, Technical Specifications, and such other documents necessary to fully utilize, modify and maintain the computer software. (y) "Statement of Work" means any agreement entered into by the Parties with respect to the development of Enhancements and the services to be performed by AdStar related thereto, as described more fully in Article V. (z) "Technical Specifications" means the detailed technical specifications and parameters for all components of the CareerBuilder Service, including, without limitation, flow charts, file layouts, output descriptions, screen outputs and response times as specified on Exhibit A. (aa) "Third Party Technology" means equipment, designs, circuits, algorithms, computer software or other technology that is sourced from a third party and all third party intellectual property rights therein. (bb) "Tribune Newspaper" means any newspaper designated as such on Schedule 1 as amended from time to time by Tribune. (cc) "Upgrade" means all fixes, upgrades, integrations or new additions to and advances in the CareerBuilder Service and all new technology developed by AdStar or the rights to which are obtained by AdStar after the Closing Date, but excluding any Enhancements. -4- ARTICLE II - DEVELOPMENT AND DEPLOYMENT SECTION 2.1. Purpose. The Parties hereby acknowledge and agree that the CareerBuilder Service is being developed for the sole and exclusive benefit of Tribune and its Affiliates and the CareerBuilder Network. SECTION 2.2. Obligations of AdStar. (a) AdStar shall be responsible for supplying the resources necessary to (i) reconfigure and customize the AdStar Service, (ii) install data and other components into the AdStar database, and (iii) develop the Modules, all in the manner, time and date as specified on Exhibit A hereto and as necessary to support the requirements of the CareerBuilder Service and (iv) build a user interface for use by agencies and advertisers with the "look and feel", branding and links requested by Tribune in its sole discretion. (b) In addition to any other personnel needed to meet the objectives of this Agreement, AdStar will specifically devote the equivalent of two full-time employees (the "Developers"), at no additional charge to Tribune, to the development and deployment of the CareerBuilder Service and to providing Upgrades and Enhancements. The Developers shall for the term of this Agreement be responsible for performing Upgrades and Enhancements. SECTION 2.3. Progress Reports. Beginning on the Closing Date and ending on the completion of all of the development contemplated on Exhibit A, AdStar shall submit to Tribune on a weekly basis, or at such other times as Tribune may reasonably request, written progress reports relating to the development of the CareerBuilder Service. Each progress report shall include, without limitation, project plans, technical designs, Q&A reports, discussion of progress to date, problems encountered, proposed solutions to such problems and any other items reasonably requested by Tribune. SECTION 2.4. Acceptance Tests. (a) Upon delivery of the completed CareerBuilder Service pursuant to the schedule set forth in Exhibit A, as amended from time to time, Tribune, AdStar, any Tribune Newspaper, any Knight Ridder Newspaper and/or their representatives shall conduct the Acceptance Tests as specified in Exhibit A, as the same will be developed and updated by Tribune for the completed CareerBuilder Service. (b) If in the course of conducting Acceptance Tests, Tribune or its representatives determine that the CareerBuilder Service (including the testing of any Upgrade or Enhancement) does not materially perform in accordance with the applicable Acceptance Tests, Tribune shall promptly notify AdStar and AdStar shall, within thirty (30) days, or such other time period as may be requested by AdStar and approved by Tribune, at AdStar's sole cost and expense, modify or improve the CareerBuilder Service so that the same shall perform in accordance with the Acceptance Tests. Upon redelivery of the CareerBuilder Service, Tribune and AdStar or their representatives shall conduct, as applicable, additional Acceptance Tests as specified in Exhibit A or such other documents as agreed by the Parties. (c) The material failure of the CareerBuilder Service to meet the applicable Acceptance Tests after the second set of Acceptance Tests, which failure is not due to any action -5- or inaction on the part of Tribune (of which Tribune has received prior written notice from AdStar), shall constitute a material breach of this Agreement by AdStar. SECTION 2.5. Milestones; Delay. (a) AdStar shall notify Tribune on a continuing basis of any event or occurrence that could cause a material delay in meeting any milestone set forth in Exhibit A or otherwise delay the development of the CareerBuilder Service. Any material delay which is caused by AdStar, other than a delay resulting from a Force Majeure Event or due to any action or inaction on the part of Tribune or CareerBuilder (of which Tribune has received notice from AdStar) shall be deemed to be a material breach of this Agreement. If, in the event of such delay, Tribune, in its sole discretion, elects not to exercise its rights under Article X or otherwise pursuant to this Agreement, Tribune may, by written notice, designate a new date for the completion of the delayed CareerBuilder Service. (b) If a new completion date is designated, AdStar shall pay Tribune, as liquidated damages and not as a penalty, Two Thousand Dollars ($2,000) for each week between the original completion date as set forth on Exhibit A or the applicable development schedule and the actual completion date. (c) If a delay is caused by a Force Majeure Event or by Tribune, the outstanding milestone dates and the completion date for the CareerBuilder Service under Exhibit A shall be extended by the number of days attributable to the delay. SECTION 2.6. Change in Scope. Tribune may request a change to the specifications set forth on Exhibit A pursuant to a written change order ("Change Order"). Each Change Order shall identify with specificity any modifications to the applicable Functional Requirements, Technical Specifications, and schedule, including, without limitation, modifications to tasks, timetables, deliverables, fees and charges. Within five (5) business days after the receipt of a Change Order, the Parties shall discuss the availability of personnel and resources to fulfill such Change Order and the resulting adjustments to the Functional Requirements, Technical Specifications and schedule. AdStar shall have no obligation to commence work in connection with any Change Order until such Change Order is executed by both Parties. Each Change Order executed by Tribune and AdStar shall be incorporated into and constitute an amendment to this Agreement. The terms of any Change Order shall control over any inconsistent provisions set forth in this Agreement or any attachment hereto. SECTION 2.7. Project Management. (a) Each Party shall designate one of its employees to be its project manager (the "Project Manager"). Each Project Manager's responsibilities shall include, without limitation: (i) having direct responsibility for the overall performance of its Party under this Agreement and have final authority vis-a-vis the other Party on all matters that relate to such Party's performance under this Agreement; (ii) interacting with the other Party's Project Manager; and (iii) supervising the performance of such Party's obligations under this Agreement. Project Managers of each Party shall meet as needed, but no less often than monthly to review progress and to resolve issues relating to this Agreement. (b) Tribune may, if good cause exists therefor, withdraw its approval of AdStar's Project Manager. If AdStar's Project Manager is unable to continue to serve due to physical disability or termination of employment, or if Tribune withdraws its approval of -6- AdStar's Project Manager, AdStar shall appoint a successor Project Manager, subject to Tribune prior written approval, which approval will not be unreasonably withheld or delayed. SECTION 2.8. Management by Tribune. Notwithstanding anything to the contrary herein, Tribune shall have the right to manage the development specified herein provided by AdStar if, in Tribune's reasonable judgment, it appears reasonably likely that AdStar will fail to meet any requirement specified in Exhibit A or other applicable development schedule. In the event that Tribune exercises its rights under this Section 2.8 (i) AdStar will continue to use best efforts to meet the objectives of this Agreement, (ii) AdStar will not be subject to any liquidated damages under Section 2.5 accruing after the date on which Tribune begins such management and (iii) Tribune will be entitled to reimbursement commensurate with the management so provided. ARTICLE III - GRANT OF LICENSE SECTION 3.1. License Grant; Scope. (a) AdStar hereby grants to Tribune and its Affiliates an exclusive (even as against AdStar), perpetual, irrevocable, sublicensable (but only to Affiliates of Tribune or members of the CareerBuilder Network), worldwide, transferable (but only to Affiliates of Tribune or members of the CareerBuilder Network) right and license to use, reproduce, display, modify and transmit the Modules and Enhancements or other modifications thereto. The parties hereby acknowledge and agree that the computer code written for the Modules, as defined in Exhibit B, may not be used by AdStar to create software for any third party. The definition of the Modules may be expanded and/or modified from time to time to include other functionality by mutual agreement between the parties. (b) AdStar hereby grants to Tribune and its Affiliates an exclusive (even as against AdStar), sublicensable (but only to Affiliates of Tribune or members of the CareerBuilder Network), worldwide, transferable (but only to Affiliates of Tribune or members of the CareerBuilder Network) right and license for the Term to use, reproduce, display, modify and transmit the CareerBuilder Service other than the Modules and Enhancements or other modifications thereto (the "License"). SECTION 3.2. Further Licenses. Upon the prior consent of Tribune, AdStar may grant directly to Affiliates of Tribune or members of the CareerBuilder Network or to third parties the non-exclusive right to use the CareerBuilder Service solely as approved by Tribune and solely in connection with products or platforms developed by CareerBuilder or any other product or platform approved by Tribune. ARTICLE IV - MAINTENANCE, SUPPORT AND UPGRADES SECTION 4.1. Maintenance and Support Services. The maintenance support and upgrade services shall be provided by AdStar to Tribune as specified on Schedule 4 hereto. -7- ARTICLE V - ENHANCEMENTS SECTION 5.1. Enhancements. (a) Tribune may request that AdStar create Enhancements to the CareerBuilder Service, and AdStar agrees to use its best efforts in performing the services to develop such Enhancements. Tribune may also request that AdStar create improvements or modifications to the CareerBuilder Service to be used in Other Classified Verticals and such improvements or modifications will be considered Enhancements for the purposes of this Agreement. The use of the Developers to create Enhancements shall not be chargeable to Tribune. Any work related to Enhancements that requires employees or consultants in addition to the Developers will be chargeable to Tribune on a time and materials basis without mark-up; provided, however, that if Tribune's concept for an Enhancement is under active development by AdStar with a projected deployment date ("Deployment Date"), Tribune shall have the option to (i) wait until the Deployment Date and receive the new functionality as an Upgrade, or (ii) request that the new functionality be developed on an accelerated basis with Tribune paying any applicable fees in accordance with the Agreement. If Tribune opts to proceed under clause (ii), the Parties shall mutually agree whether such new functionality will be considered an Enhancement (and subject to Article VIII) or, if not, whether any period of exclusivity will apply and whether and on what basis AdStar will repay to Tribune any fees paid for development of the new functionality or reimburse Tribune for the use of the Developers. (b) Tribune shall request a Statement of Work from AdStar for each Enhancement to the CareerBuilder Service it desires. AdStar shall deliver the requested Statement of Work within ten (10) days of each such request and prior to commencing work. Each Statement of Work shall set forth: (i) the type of Enhancement and the related services to be provided; (ii) the scope of the services; (iii) any specific Confidential Information (as defined below) of a Party to be incorporated into or form the basis of the Enhancement (iv) the estimated Development Schedule (as defined below) for the delivery of the Enhancement; (v) the time and materials rates for the development services; and (vi) if applicable, the name and contact information of Tribune's project manager responsible for coordinating the development of the Enhancement from the perspective of Tribune. All Statements of Work shall be deemed incorporated by reference into this Agreement and subject to the rights and obligations of the Parties as stated herein. SECTION 5.2. Development Schedule. Following receipt of a Statement of Work, AdStar and Tribune shall mutually agree to a schedule for the development of the Enhancement and an estimate of the hours required to create such Enhancement (the "Development Schedule"). If Tribune approves the Development Schedule, AdStar shall use its best efforts to create the Enhancement pursuant to the Development Schedule. AdStar shall provide reports to Tribune on the progress of the Enhancements as specified in Section 2.3. SECTION 5.3. Acceptance of Enhancements. Acceptance testing of Enhancements shall be conducted as specified in Article II or as otherwise specified in writing by the Parties. Unless Tribune notifies AdStar in writing of any Errors in the Enhancement within thirty (30) days of receipt of such Enhancement, such Enhancement shall be deemed to have been accepted by Tribune. -8- SECTION 5.4. Tribune's Cooperation. Tribune acknowledges that the successful and timely rendering of the services and provision of the Enhancements requires the good faith cooperation of Tribune. Tribune shall cooperate with AdStar by, among other things: (a) providing AdStar with all required information concerning the proposed services and intended Enhancements as may be reasonably required by AdStar; and (b) making reasonably available to AdStar such personnel of Tribune as are familiar with the anticipated requirements of the Enhancements; Tribune's Project Manager shall be the only person authorized to act for Tribune with respect to the matters related to the applicable Statement of Work. SECTION 5.5. Ownership of Enhancements. Except for Joint Developments under Section 6.4, upon completion of the services under the Statement of Work, all Enhancements developed by AdStar hereunder, including, without limitation, all modifications and derivative works of the CareerBuilder Service, and the CareerBuilder Service so enhanced, are and shall become and remain, as between AdStar and Tribune, the sole and exclusive property of AdStar, subject to any Third Party Technology included therein and the exclusive rights and covenants granted herein. AdStar hereby grants to Tribune an exclusive license to use the Enhancement during the Term, on the same conditions, and to the same extent, as the License of the CareerBuilder Service granted to Tribune under Section 3.1 of this Agreement. ARTICLE VI - OWNERSHIP SECTION 6.1. Ownership Rights. All intellectual property rights in and to the CareerBuilder Service created prior to or during the Term, including all Enhancements (except as limited by Section 6.4), are solely and exclusively owned by AdStar, subject to the exclusive rights and covenants granted herein. All ownership and intellectual property rights in and to any and all data and information processed through the CareerBuilder Service are and shall remain the sole and exclusive property of Tribune and AdStar shall provide such data to Tribune as soon as practicable if and when requested. SECTION 6.2. Maintenance of Intellectual Property Rights. AdStar shall take all action necessary to maintain and protect the Intellectual Property Rights subsisting in the CareerBuilder Service. Tribune may request that AdStar take any specific action, and AdStar shall not unreasonably deny any such request and shall take such action at its own expense. At AdStar's expense, Tribune shall reasonably cooperate with AdStar in the maintenance of the applications and registrations relating to the Intellectual Property Rights subsisting in the CareerBuilder Service, including executing such instruments as AdStar may from time to time reasonably request. SECTION 6.3. Goodwill. Any and all goodwill arising from Tribune's use of any trademarks owned by AdStar included within the CareerBuilder Service shall inure solely to the benefit of AdStar. Any and all goodwill arising from AdStar's use of any trademarks owned by Tribune included within the CareerBuilder Service shall inure solely to the benefit of Tribune. SECTION 6.4. Joint Developments. During the term of this Agreement, any idea, invention, design, process, improvement, discovery, know-how, computer software, documentation, other work of authorship, product, or other material, and all Intellectual Property -9- Rights therein, which the Parties invent, create or develop jointly, shall be jointly owned without a right of accounting ("Joint Developments"). AdStar agrees, however, that its interest in Joint Developments shall be subject to the terms of this Agreement. SECTION 6.5. Use of Third Party Technology by AdStar. AdStar has not and shall not incorporate any material Third Party Technology in the CareerBuilder Services unless: (i) such technology and their owners (including the owners of any patents, copyrights, trade secrets, trademarks or other intellectual property rights embedded therein) are identified in writing to Tribune, and (ii) AdStar either: (x) has sufficient authority to grant to Tribune the rights and licenses necessary to exploit the CareerBuilder Service as contemplated herein (y) the third party owner has granted directly to Tribune rights and licenses in such materials necessary to exploit the CareerBuilder Service as contemplated herein pursuant to a separate written agreement. Schedule 6 contains a complete and accurate list of all Third Party Technology used or contemplated to be used in the CareerBuilder Service and except as specified in Schedule 6, AdStar has the right to assign all Third Party Technology licenses incorporated in the CareerBuilder Service to Tribune in the event of a release of the Deposit Materials pursuant to Article X. AdStar also agrees that it will use its best efforts to assign any Third Party Technology licenses to Tribune in the event of a release of the Deposit Materials as specified in Article X and will use it best efforts to secure such rights in all future Third Party Technology licenses. AdStar shall have sole responsibility for payment of all royalties and other charges with respect to Third Party Technology employed by AdStar and included in the CareerBuilder Service or the Modules, including as they may accrue with respect to subsequent exercise by Tribune, its Affiliates, customers, and successors and assigns. With respect to material Third Party Technology that is identified in writing to Tribune, AdStar shall, prior to incorporating the same in the CareerBuilder Services, either provide to Tribune a copy of any agreements or other instruments from which AdStar derives its authority to grant Tribune the rights contemplated herein, or shall allow Tribune's counsel to review such agreements or other instruments on a confidential basis for the purpose of advising Tribune with respect to AdStar's authority to grant Tribune such rights and licenses. Failure to provide such agreements or instruments to Tribune or Tribune's counsel shall be deemed a material breach of this Agreement; provided, however, that AdStar shall have ten (10) calendar days to provide such agreements upon notice from Tribune. If Tribune is not satisfied that AdStar has sufficient rights with respect to any Third Party Technology, or if AdStar fails to assume and discharge its responsibility for related royalties and other charges, Tribune may suspend further action or payment with respect to this Agreement. Nothing contained in this Section 6.5 shall apply to Third Party Technology incorporated into the CareerBuilder Services at the request of Tribune, or to restrict or preclude Tribune from dealing directly with any third party with respect to such Third Party Technology. ARTICLE VII - PAYMENTS SECTION 7.1. Development and Deployment Payments. Tribune shall pay to AdStar $5,000.00 on April 2, 2002 (the "Deployment Fee") by wire transfer to an account specified by AdStar. SECTION 7.2. Other Payments. Any payments other than the Deployment Fee (including any payment required to be made pursuant to the Schedules) due to Tribune under this -10- Agreement shall be paid by AdStar within thirty (30) days of accrual of any such payments by wire transfer to an account specified by Tribune. ARTICLE VIII - COVENANTS SECTION 8.1. Covenants. The Parties hereby agree that AdStar will be bound by and adhere to covenants and agreements set forth in Schedule 8. Without limiting in any respect the validity of the consideration received by the Parties in exchange for the other agreements and obligations set forth herein, AdStar expressly acknowledges and agrees that due and valid consideration has been received in exchange for the covenants set for in Schedule 8. SECTION 8.2. Integration Fees. Tribune will pay AdStar a $25,000 integration fee for each additional Tribune newspaper that becomes an AdStar customer (each, an "Additional Newspaper") after the Closing Date; it being understood that no Additional Newspaper will be obligated to become an AdStar customer and that, if such Additional Newspaper desires to become an AdStar customer, the Additional Newspaper will either execute a License Agreement with AdStar substantially in the form of Exhibit G to the Investment Agreement or otherwise become subject to the terms of such License Agreement. ARTICLE IX - REPRESENTATIONS AND WARRANTIES SECTION 9.1. General. Each Party represents and warrants to the other that: (a) all corporate action necessary for the authorization, execution and delivery of this Agreement by such Party and the performance of its obligations hereunder has been taken; (b) the execution, delivery and performance of this Agreement do not violate or conflict with any law applicable to it, any provision of its charter or bylaws, any order or judgment of any court or other agency of government applicable to it or any of its assets or any contractual restriction binding on or affecting it or any of its assets; and (c) its obligations hereunder constitute its legal, valid and binding obligations, enforceable in accordance with their respective terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors' rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)). SECTION 9.2. Warranty on the CareerBuilder Service. AdStar represents and warrants that the CareerBuilder Service will conform to its Technical Specifications and the Functional Requirements. AdStar further represents and warrants that, as of the Closing Date: (a) except with respect to Third Party Technology, it owns all right, title and interest in the CareerBuilder Service, and all Intellectual Property Rights therein, free and clear of all encumbrances; (b) the owners of Third Party Technology have granted AdStar the right to license or sublicense the same for the purposes of this Agreement; (c) neither Tribune nor any of its Affiliates or customers will infringe upon, violate or misappropriate any third party's Intellectual Property Rights as a result of the License granted to Tribune under this Agreement or as a result of using the CareerBuilder Service; (d) the CareerBuilder Service is free from the rightful claims of any third party for infringement of any intellectual property rights; (e) AdStar has received no notice of a claim of infringement, violation or misappropriation from any third party regarding the AdStar Service, and AdStar is not aware of the potential assertion of any -11- such claim; and (f) AdStar has not granted, and will not grant, any licenses or sublicenses for use of the CareerBuilder Service, or any component thereof. SECTION 9.3. Remedy for Third-Party Intellectual Property Claims. (a) With respect to a claim asserted by or on behalf of a third-party based on the breach of a representation or warranty contained in Section 9.2, AdStar's indemnity obligations under Section 12.2 shall extend to Tribune, Knight Ridder, their Affiliates and their directors, officers, employees, representatives and agents. As the result of any such third-party claim, if an injunction is entered against the use or distribution of the CareerBuilder Service by Tribune, CareerBuilder or Knight Ridder or their Affiliates, or if in Tribune's reasonable opinion the CareerBuilder Service or any part thereof is likely to become the subject of such a claim, AdStar will, at its sole option and its own expense: (i) procure the right for Tribune, CareerBuilder, Knight Ridder and their Affiliates to continue using the CareerBuilder Service through a license or other agreement; (ii) replace or modify the CareerBuilder Service or any part thereof with an equivalent of like performance so that it becomes non-infringing; or (iii) remove the encumbrance or otherwise cure the impairment that is the subject of the claim. SECTION 9.4. AdStar's Virus Warranty. AdStar represents and warrants that any software included within the CareerBuilder Service, to the best of AdStar's knowledge, will not contain any virus or other instruction or routine designed to erase data or programming or to cause the CareerBuilder Service to become inoperable or otherwise incapable of being used in the full manner for which it was designed and created by AdStar. SECTION 9.5. Development and Deployment Warranties. AdStar represents and warrants that: (i) AdStar shall use its best efforts in developing the CareerBuilder Service in accordance with the applicable development schedule; (ii) developments relating to the CareerBuilder Service and deployment thereof shall be performed in a professional and workmanlike manner in accordance with the highest applicable professional standards; (iii) all charges and costs for development and deployment of the CareerBuilder Services are set forth herein or shall be borne by AdStar; (iv) AdStar's development and deployment of the CareerBuilder Service shall comply in all material respects with the applicable Functional Requirements and Technical Specifications; (v) AdStar possesses the equipment, personnel and other expertise necessary to develop and deploy the CareerBuilder Service as set forth herein; (vi) AdStar personnel creating and deploying the CareerBuilder Service shall have appropriate technical skills, training, experience and expertise to enable AdStar to perform its responsibilities set forth herein; (vii) the development and deployment of the CareerBuilder Service shall not be performed in violation of any applicable law, rule or regulation, and AdStar shall have obtained all permits necessary to comply with such laws, rules and regulations. The Parties acknowledge and agree that disruptions of the transmission of data over the Internet may occur from time to time through no fault of AdStar. AdStar shall not be liable for any such disruption of the transmission of data over the Internet that is not under the control of AdStar except to the extent that AdStar is negligent in providing a remedy to such disruption. SECTION 9.6. Warranty Disclaimer. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, ADSTAR MAKES NO OTHER EXPRESS, IMPLIED OR STATUTORY WARRANTIES, INCLUDING ANY WARRANTY OF MERCHANTABILITY -12- OR FITNESS FOR A PARTICULAR PURPOSE OR ANY WARRANTY BASED UPON COURSE OF CONDUCT OR TRADE USAGE, IN CONNECTION WITH THIS AGREEMENT. ALL OTHER WARRANTIES AS TO THE MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE ARE EXPRESSLY DISCLAIMED. ARTICLE X - TECHNOLOGY ESCROW SECTION 10.1. Acknowledgement. AdStar acknowledges that the essential purpose of this Agreement is for Tribune to use and license the CareerBuilder Service. In connection therewith, Tribune may require access to the Source Code, Object Code, Intellectual Property Rights and Know How relating to the CareerBuilder Service and the AdStar Service. SECTION 10.2. Escrow Terms. Tribune shall select an escrow agent, and the Parties shall enter into an escrow agreement with such escrow agent substantially in the form of Exhibit C ("Escrow Agreement"). The costs of the escrow shall be paid by Tribune. Within thirty (30) days following the Launch Date, AdStar shall deliver to the escrow agent all plans, drawings, designs, specifications, schematics, source code, compilers, reports, studies, data, and other materials necessary for one skilled in the art to develop the AdStar Service and the CareerBuilder Service, and to manufacture, sell, support and maintain the AdStar Service and the CareerBuilder Service ("Deposit Materials"); provided, however, that if, in Tribune's reasonable judgment, it appears likely that AdStar will fail to meet any requirements specified in Exhibit A, AdStar shall deliver the Deposit Materials within fifteen (15) days of receiving written notice from Tribune. AdStar shall supplement the Deposit Materials to reflect any change, upgrade, improvement or other modification to the AdStar Service or the CareerBuilder Service or the Intellectual Property Rights therein, or the materials needed to manufacture, support, improve or enhance the AdStar Service and the CareerBuilder Service (i) in the case of a new version of the CareerBuilder Service, within 30 days of deployment of such new version of CareerBuilder Service and (ii) in the case of a non-material release, within 90 days of deployment of such non-material release. Notwithstanding the foregoing, AdStar agrees that it will update the Deposit Materials within thirty (30) days of a request by Tribune to do so. AdStar shall notify Tribune each time it delivers Deposit Materials to the escrow agent. Tribune shall have the right to review and audit the Deposit Materials and any additions thereto, and AdStar shall have the right to be present at any such audit or review. SECTION 10.3. Release Conditions. A "Release Condition" shall occur upon: (i) a Restricted Transaction; (ii) in the event AdStar files for Bankruptcy; (iii) a material breach of this Agreement by AdStar or (iv) a determination made by Tribune in its sole discretion that AdStar has materially failed to meet the requirements set forth in Exhibit A. At any time after the occurrence of a Release Condition specified in clause (i) or (ii) above, the escrow agent shall be authorized to release the Deposit Materials to Tribune. At any time after the occurrence of the Release Condition relating to (iii) or (iv) above (of which AdStar receives written notice from Tribune), AdStar shall either enter into the procedures defined in Section 15.4 or (y) authorize the Escrow Agent to release the Deposit Materials to Tribune. If AdStar does not take any of the foregoing actions within a five (5) day period after receiving notice from Tribune or the Release Conditions are not resolved pursuant to Section 15.4, Tribune may obtain delivery of the Deposit Materials by giving a release notice to the escrow agent. -13- SECTION 10.4. Assignment of Joint Ownership. Upon the event of a Release Condition that is not cured as specified in Section 10.3, AdStar shall, and hereby does, assign to Tribune a sole ownership interest to the Modules and Enhancements or other modifications thereto and a joint ownership interest, without a right of accounting, in the Deposit Materials other than the Modules and Enhancements or other modifications thereto. AdStar hereby agrees to take any action or execute any document as reasonably requested by Tribune to effectuate the foregoing. SECTION 10.5. License. In the event that the assignment of sole and/or joint ownership as specified in Section 10.4 is declared invalid by any legal authority, upon and after receipt of the Deposit Materials, Tribune shall have an exclusive, perpetual, fully paid-up, irrevocable, sublicensable (but only to Affiliates or members of the CareerBuilder Network) and worldwide license to use the Modules and Enhancements and other modifications thereto, and a non-exclusive, perpetual, fully paid-up; irrevocable, sublicensable (but only to Affiliates or members of the CareerBuilder Network) and worldwide license to use Deposit Materials other than the Modules and Enhancements or other modifications thereto and all Intellectual Property Rights embodied therein to: (i) make, have made and use the CareerBuilder Service; (ii) copy, display and make derivative works from the Deposit Materials in order to support the CareerBuilder Service and to enhance and improve the CareerBuilder Service for the purpose of developing improvements; and (iii) to otherwise exploit the Deposit Materials for the purposes contemplated by this Agreement. SECTION 10.6. Duties of AdStar. Upon and after Tribune's receipt of the Deposit Materials, AdStar shall assist Tribune with the migration and integration of the CareerBuilder Service to Tribune's hardware, including without limitation providing all necessary training for Tribune personnel. The Parties agree to use best efforts to effect such migration and integration within thirty (30) days. Tribune shall reimburse AdStar for actual costs incurred in providing such assistance. AdStar further agrees that upon or after the release of the Deposit Materials to Tribune, AdStar will not upgrade or modify the CareerBuilder Service such that the upgrade or modification alters the agency desktop software in any manner that would adversely affect the placement of a Tribune Newspaper, Knight Ridder Newspaper or any of their Affiliates on the desktop of an agency or inhibit in any way the transmission of ads from an agency to a Tribune Newspaper, a Knight Ridder Newspaper or CareerBuilder. SECTION 10.7. Restriction on Use. In the event that the Deposit Materials are released, migrated, assigned and/or licensed to Tribune pursuant to this Article X, Tribune shall not sell or license the CareerBuilder Service or any of the Deposit Materials to any third Party that is not or does not become part of the CareerBuilder Network, and Tribune hereby acknowledges that AdStar can sell or license its interest in the Deposit Materials other than the Modules subject to the exclusive rights granted to Tribune in the Modules and Enhancements thereto. SECTION 10.8. Duration of Escrow. If the Deposit Materials have not been previously released to Tribune under the terms of this Article, the escrow will be terminated and the Deposit Materials returned to AdStar upon the first to occur of the following: (i) termination or expiration of this Agreement; or (ii) mutual written agreement of the Parties. -14- ARTICLE XI - PROTECTION OF INTELLECTUAL PROPERTY SECTION 11.1. Infringement of Intellectual Property Rights. AdStar agrees at its sole expense to enforce its Intellectual Property Rights related to the CareerBuilder Service against any infringement that materially adversely affects the marketing and sales activities of Tribune or its Affiliates within thirty (30) days of notification. In any such case, AdStar shall have the right to pursue any claim, initiate a lawsuit, conduct litigation, retain any damages awarded, or settle any matter related thereto. If an incident of infringement does not materially adversely affect Tribune's rights hereunder, AdStar shall have to option not to bring an action. If AdStar elects not to bring legal action, Tribune shall have the right to bring suit at its sole expense and control while such infringement continues. In the event that either Party becomes aware of actual or threatened infringement of any such Intellectual Property Rights in North America, that Party shall promptly notify the other Party in writing. Each Party shall assist the other and cooperate in any litigation that ensues with respect to such infringement when and as reasonably requested by the other Party. The Party that controls any such litigation shall be entitled to keep any damages awarded. SECTION 11.2. Status of Activities. AdStar shall keep Tribune informed of the status of its activities regarding any litigation or settlement the relating to its enforcement of its Intellectual Property Rights in the CareerBuilder Service; provided, however, that no settlement, consent judgment or other voluntary final disposition of any suit defended, or action brought by, AdStar pursuant to Section 11.1 may be entered into without the consent of Tribune, if such settlement, payment judgment or other voluntary final disposition would subject Tribune to an injunction, require that Tribune make a monetary payment, or otherwise materially adversely affect Tribune's rights under this Agreement. ARTICLE XII - INDEMNIFICATION SECTION 12.1. Indemnification by Tribune. Except for matters indemnified by AdStar under Section 12.2, Tribune agrees to indemnify, defend, and hold AdStar and its directors, officers, employees, representatives and agents harmless from and against any and all claims (including those for personal injury or death), losses, damages, obligations, liabilities and costs (including reasonable out-of-pocket attorneys' and other professional fees and other costs of litigation) (collectively, "Liabilities") arising out of or attributable to: (a) the gross negligence or willful misconduct of Tribune in connection with this Agreement; (b) any material breach of any warranty or the inaccuracy of any representation of Tribune contained or referred to in this Agreement; or (c) any material breach of any covenant or obligation of Tribune under this Agreement. SECTION 12.2. Indemnification by AdStar. Except for matters indemnified under Section 12.1, AdStar agrees to indemnify, defend, and hold Tribune, it Affiliates and their directors, officers, employees, representatives and agents harmless from and against: (a) any and all Liabilities, arising out of or attributable to: (i) the gross negligence or willful misconduct of AdStar in connection with this Agreement; (ii) any material breach of any warranty or the inaccuracy of any representation of AdStar contained or referred to -15- in this Agreement; or (iii) any material breach of any covenant or obligation of AdStar under this Agreement; and (b) Any and all Liabilities arising out of or attributable to the CareerBuilder Service or any component thereof infringing, misappropriating or violating any Intellectual Property Rights of any third Party and/or based upon any claim, which, if true, would constitute a breach of any express warranty made by AdStar hereunder. SECTION 12.3. Indemnification Procedures. In the event that any Party intends to claim indemnification pursuant to Section 12.1 or Section 12.2 (an "Indemnitee"), it shall promptly notify the indemnifying Party (the "Indemnitor") in writing of such alleged liability; provided, however, that the failure to promptly notify the Indemnitor shall not relieve the Indemnitor of any obligation under this Agreement except to the extent such failure to provide prompt notice adversely impairs the Indemnitor's ability to defend against the claim, suit or proceeding. The Indemnitor shall have the sole right to control the defense and settlement of the liability, provided that: (a) the Indemnitor may not consent to imposition of any obligation or restriction on the Indemnitee in any settlement unless mutually agreed in writing among the Parties; (b) Indemnitor shall keep Indemnitee fully informed and permit the Indemnitee to participate (at Indemnitee's expense) as the Indemnitee may reasonably request; and (c) Indemnitee may, without affecting its right to indemnity hereunder, defend and settle any such claim, suit or proceeding if Indemnitor declines to defend against such claim, suit or proceeding or files for bankruptcy. The Indemnitee shall cooperate with the Indemnitor and its legal representatives in the investigation of liability covered by Section 12.1 or Section 12.2. The Indemnitee shall not, except at its own cost, voluntarily make any payment or incur any expense with respect to any claim or suit without the prior written consent of Indemnitor, which Indemnitor shall not be required to give, provided that the Indemnitee may, without affecting its right to indemnity hereunder, defend and settle any such claim, suit or proceeding if the Indemnitor declines to take responsibility or files for bankruptcy. ARTICLE XIII - TERM AND TERMINATION SECTION 13.1. Term. Except for the license grant in Section 3.1(a) which shall be perpetual and except as set forth in Section 15.16, the term of this Agreement shall commence on the Closing Date and continue in full force and effect for as long as the Service Agreement between AdStar and CareerBuilder dated the date hereof, as the same may be renewed, amended or extended, is in effect ( the "Term"). SECTION 13.2. Termination by Either Party With Notice. Either Party shall have the right to terminate this Agreement by providing written notice to the other Party for any breach or alleged breach by the other Party of any material covenant, term, or condition of this Agreement. Such notice shall adequately describe the nature of the breach, and the breaching Party shall have thirty (30) calendar days from receipt of such notice to attempt to cure the breach. If the breach is not cured within such thirty (30) calendar day period, the non-breaching Party may terminate this Agreement in its entirety by providing the breaching Party with written notice of termination. At the request of the breaching Party, the non-breaching Party may consent to extend the cure period for up to an additional sixty (60) calendar days, which consent -16- shall not be withheld or delayed unreasonably if the breaching Party has commenced commercially reasonable, good faith cure efforts during such period and has continued to pursue such cure. SECTION 13.3. Termination By Either Party Without Notice. Either Party may terminate this Agreement in its entirety immediately upon the occurrence of any of the following events with respect to the other Party: (a) a receiver is appointed for such Party or its material assets; (b) such Party becomes insolvent, generally unable to pay its debts as they become due, or makes an assignment for the benefit of its creditors or seeks relief under any bankruptcy, insolvency or debtor's relief law; or (c) if proceedings are commenced against such Party under any bankruptcy, insolvency or debtor's relief law, and such proceedings have not been vacated or set aside within sixty (60) calendar days from the date of commencement thereof. SECTION 13.4. Rights of Parties Upon Termination. (a) In any case of termination where Tribune fails to make a payment required hereunder and such nonpayment remains uncured for thirty (30) days after demand from AdStar for payment, Tribune shall have no further rights to License the CareerBuilder Service under Section 3.1, and shall, as directed by AdStar return to AdStar immediately upon such termination all Confidential Information of AdStar that is not necessary for the maintenance of the CareerBuilder Service. (b) In any case of termination where AdStar is the breaching Party under Section 13.2 or Section 13.3 (subject to any applicable provisions of the Escrow Agreement), in addition to any other rights and remedies of Tribune under this Agreement, Tribune shall be entitled to continuous exercise of its License under Section 3.1. If such termination constitutes a Release Condition under the Escrow Agreement, Tribune shall receive access to the Deposit Materials pursuant to the terms and conditions of such Escrow Agreement. In addition to the foregoing, AdStar shall, as directed by Tribune, either: (i) return to Tribune all of Tribune's Confidential Information in its possession, custody or control; or (ii) provide a written certification from an officer of AdStar as to the destruction of the foregoing. ARTICLE XIV - CONFIDENTIALITY SECTION 14.1. Confidential Information. In connection with this Agreement, each of AdStar and Tribune (in such capacity, the "Recipient") has received, developed or been given access to, and shall in the future receive, develop or be given access to, certain information and materials deemed confidential by and proprietary to the other Party (in such capacity, the "Disclosing Party"). Subject to Section 14.2, regardless of whether such information and materials are furnished in whole or part, in writing or orally, or in any physical format including without limitation, written documents and computer-related media, and whether or not such information is made available to a Party under this Agreement, such information and materials may include, without limitation, (a) the Disclosing Party's services (both existing and under development during the Term), including, as to AdStar, the CareerBuilder Service, Source Code, Object Code, Enhancements, Intellectual Property Rights and Know-How; (b) information, data, materials, subject matter, algorithms, work-flows, models, formulae, structures, schematics, designs, drawings, specifications, flow charts, diagrams and methods and processes of, contained in or embodied by any of the Disclosing Party's CareerBuilder Services (both existing and under -17- development during the Term) and related documentation, including, as to AdStar, such as may related to the CareerBuilder Service, Source Code, Object Code, Enhancements, Intellectual Property Rights and Know-How; and (c) information, data, materials, subject matter, methods and processes, concerning the current or prospective businesses, customers, potential customers, employees, operating methods, sources of supply, potential sources of supply, distribution methods, sales, sales plans, sales methods, profits, markets, financing or plans for future development (collectively, the "Confidential Information"). SECTION 14.2. Exclusions. Notwithstanding anything to the contrary contained in Section 14.1, Confidential Information shall not include any information or materials which: (a) prior to disclosure, are or were known or generally available to the public other than by means of a breach of this Agreement; (b) after disclosure, become known to the public through no act or omission of the Recipient or any other person with an obligation of confidentiality to the Disclosing Party; (c) are independently developed by or for the Recipient, as evidenced by written records of the Recipient; or (d) are required to be disclosed pursuant to an application, law, rule, regulation, government requirement or court order, or the rules of any stock exchange; provided, however, that the Recipient shall advise the Disclosing Party of such required disclosure promptly upon learning thereof in order to afford the Disclosing Party a reasonable opportunity to contest, limit and assist the Recipient in responding to such disclosure. SECTION 14.3. Protection of Confidential Information. The Recipient shall hold in the strictest confidence all Confidential Information provided to it and shall not make any disclosure of the Disclosing Party's Confidential Information to any person other than its Authorized Representatives during the Term of this Agreement and for a period of three (3) years thereafter; provided, however, that upon a Release Condition that is not cured by AdStar, Tribune shall no longer be subject to the restrictions of Article XIV to the extent necessary to operate the CareerBuilder Services. The Recipient shall handle the Disclosing Party's Confidential Information with the same degree of care and through procedures no less stringent than those taken to protect its own Confidential Information. Notwithstanding the foregoing, the Recipient may disclose such Confidential Information to those directors, officers, employees, agents, advisors and sublicensee of the Recipient who have a need to know such information in connection with the use by Recipient of the CareerBuilder Service or in connection with its performance under this Agreement ("Authorized Representatives"). The Recipient shall be responsible for any and all breaches of the provisions of this Section 14.2 by its Authorized Representatives. SECTION 14.4. Restricted Use of Confidential Information. The Recipient and its Authorized Representatives shall use the Disclosing Party's Confidential Information solely in connection with performance under this Agreement or any sublicense, and for no other purpose. All Confidential Information shall remain the sole and exclusive property of the Disclosing Party and, other than the License expressly granted to the CareerBuilder Service, no disclosure or permitted use of the Confidential Information under this Agreement shall be construed as the grant of any right, title or interest, by license or otherwise, in or to the Confidential Information related to the CareerBuilder Service. The Disclosing Party shall use commercially reasonable efforts to identify all embodiments of the Confidential Information (in whatever medium) with the legend "Confidential;" provided, however, that any material -18- reasonably believed to be confidential by the Receiving Party and not stamped "Confidential" shall also be treated as Confidential Information. SECTION 14.5. Obligation to Inform. Upon learning of any unauthorized disclosure or use of a Disclosing Party's Confidential Information, the Party learning of such disclosure promptly shall provide the Disclosing Party with written notice thereof. ARTICLE XV - GENERAL PROVISIONS SECTION 15.1. Governing Law; Submission to Jurisdiction. This Agreement and any disputes arising hereunder or related hereto shall be governed by and construed in accordance with the internal laws of the State of Illinois, without regard to principles of conflicts of laws. By the execution and delivery of this Agreement, the Parties submit to the venue and personal jurisdiction of any federal or state court in the State of Illinois in any suit or proceeding arising out of or relating to this Agreement. SECTION 15.2. Public Announcement. The Parties shall mutually agree upon and issue a press release within five (5) calendar days of the Closing Date. Neither Party shall issue any press release, publicity statement or other public notice or announcement relating to this Agreement without the prior consent of the other Party in each instance. Nothing in this Section 15.2 shall be construed as prohibiting AdStar's use of the name and identity of Tribune in sales or marketing or similar materials distributed to prospective customers or investors of AdStar. SECTION 15.3. Non-Solicitation/Non-Hiring. The Parties recognize that their respective employees, and such employees' loyalty and services, constitute valuable assets of the other. Accordingly, neither Party shall, during the Term and for a period of one (1) year thereafter, directly or indirectly solicit, employ, offer to employ, nor engage as a consultant, any employee or independent consultant of the other Party with whom such Party had contact pursuant to this Agreement, without the express consent of the other Party in each instance; provided, however, that in the event the Deposit Materials are released to Tribune pursuant to the Escrow Agreement, this Section 15.3 shall no longer apply to either Party. SECTION 15.4. Disputes. In the event of any disagreement, controversy or dispute regarding performance under or interpretation of this Agreement, the Parties agree to attempt to reach a negotiated resolution among themselves. If after twenty (20) calendar days Tribune and AdStar have not agreed to resolve the dispute, AdStar will have the right to present the dispute and proposed resolution to both (i) the Chief Technology Officer (or an officer with similar responsibilities) of Tribune Company and (ii) President of Tribune Publishing and Tribune will have the right to present the dispute and proposed resolution to Eli Rousso. If such disagreement, controversy or dispute can not be resolved within ten (10) calendar days of such escalation, the Parties may pursue their rights under this Agreement or otherwise. The periods specified in this Section 15.4 may be increased on a one-to-one basis for each day the appropriate Tribune personnel are not available to engage in dispute resolution. If no resolution of a dispute is achieved pursuant to this Section 15.4, AdStar will fully cooperate with Tribune if such failure to resolve a dispute entitles Tribune to a release of the Deposit Materials. -19- SECTION 15.5. Assignment. Subject to the terms of this Agreement, neither Party may assign or transfer this Agreement without the prior written consent of the other Party, except that Tribune (and not AdStar) may transfer or assign this Agreement without such consent: (a) in connection with the sale of all or significant portion of its assets; or (b) to the surviving entity in any merger or consolidation. SECTION 15.6. Successors. This Agreement shall be binding upon and inure solely to the benefit of each Party and their successors and assigns, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. SECTION 15.7. Independent Contractors. No agency, partnership or joint venture is established by this Agreement. Neither Party shall enter into, incur liabilities, or hold itself out to third Parties as having the authority to enter into and incur any contractual obligations, expenses or liabilities on behalf of the other Party. Each of the Parties, in performing its obligations under this Agreement is acting as an independent contractor of the other Party and shall have exclusive control of the manner and means of performing such obligations. Each Party shall be solely responsible for the supervision, daily direction and control of its employees and for payment of their salaries (including withholding of appropriate payroll taxes), worker's compensation, disability, and other benefits. Under no circumstances shall the employees of one Party be deemed to be employees of the other for any purpose. SECTION 15.8. Entire Agreement; Amendments. Except for the Investment Agreement and the other agreements contemplated thereby, this Agreement and the Exhibits and Schedules hereto contain the entire understanding of the Parties with regard to the subject matter contained herein or therein, and supersede all other prior representations, warranties, agreements, understandings or letters of intent between or among the Parties. This Agreement shall not be amended, modified or supplemented except by a written instrument signed by an authorized representative of each of the Parties. Except as set forth in Section 15.17 and except for the CareerBuilder Network and the Tribune Newspapers (which are intended beneficiaries of this Agreement) this Agreement is not intended to confer upon any Person other than the Parties hereto any rights or remedies hereunder. The Parties acknowledge and agree that the fees paid by the Tribune Newspapers ("Newspaper Fees") are part of the total consideration received by AdStar under this Agreement. SECTION 15.9. Waivers. Any term or provision of this Agreement may be waived, or the time for its performance may be extended, by the Party or Parties entitled to the benefit thereof. Any such waiver shall be validly and sufficiently authorized for the purposes of this Agreement if, as to any Party, it is authorized in writing by the President of AdStar or by the President or any vice president of Tribune, as the case may be. The failure of any Party to enforce at any time any provision of this Agreement shall not be construed to be a waiver of such provision, nor in any way to affect the validity of this Agreement or any part hereof or the right of any Party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to constitute a waiver of any other or subsequent breach. SECTION 15.10. Expenses. Except as expressly set forth herein or in the Investment Agreement and related agreements, each Party will pay all costs and expenses -20- incident to its negotiation and preparation of this Agreement and to its performance and compliance with all agreements and conditions contained herein on its part to be performed or complied with, including the fees, expenses and disbursements of its counsel and independent public accountants. SECTION 15.11. Partial Invalidity. Wherever possible, each provision hereof shall be interpreted in such manner as to be effective and valid under applicable law, but in case any one or more of the provisions contained herein shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such provision shall be ineffective to the extent, but only to the extent, of such invalidity, illegality or unenforceability without invalidating the remainder of such invalid, illegal or unenforceable provision or provisions or any other provisions hereof, unless such a construction would be unreasonable. SECTION 15.12. Execution in Counterparts. This Agreement may be executed in counterparts, each of which shall be considered an original instrument, but all of which shall be considered one and the same agreement, and shall become binding when one or more counterparts have been signed by each Party and delivered to each Party. SECTION 15.13. Headings. The section and article headings contained in this Agreement are inserted for convenience of reference only and will not affect the meaning or interpretation of this Agreement. SECTION 15.14. Notices. All notices or other communications required or permitted hereunder shall be in writing and shall be deemed given or delivered when delivered personally or when sent by registered or certified mail or by private courier addressed as follows: If to Tribune, to: Tribune Company 435 North Michigan Avenue Chicago, Illinois 60611 Attention: Tribune Publishing Company Vice President of Strategy & Development Facsimile: (312) 222-3942 and to: Tribune Company 435 North Michigan Avenue Chicago, Illinois 60611 Attention: General Counsel Facsimile: (312) 222-4206 -21- with a copy to: Sidley Austin Brown & Wood Bank One Plaza 10 South Dearborn Street Chicago, Illinois 60603 Attention: Jon A. Ballis Timothy E. Sheil Telephone: (312) 853-7000 Facsimile: (312) 853-7036 If to AdStar, to: AdStar, Inc. 4553 Glencoe Avenue, Suite 300 Marina Del Rey, California 90292 Attention: Leslie Bernhard President and Chief Executive Officer Telephone: (310) 577-8255 Facsimile: (310) 577-8266 with a copy to: Morse, Zelnick, Rose & Lander, LLP 450 Park Avenue New York, New York 10022 Attention: Stephen A. Zelnick, Esq. Telephone: (212) 838-8040 Facsimile: (212) 838-9190 or to such other address as such Party may indicate by a notice delivered to the other Party hereto. SECTION 15.15. Force Majeure. Except with respect to the payment obligations of the Parties hereunder, neither Party shall be deemed in default or otherwise liable for any delay in or failure of its performance under this Agreement by reason of any Act of God, act of terrorism, war, fire, natural disaster, accident, riot, act of government, strike or labor dispute, shortage of materials or supplies, failure of transportation or communication or of suppliers of goods or services, or any other cause beyond the reasonable control of such Party ("Force Majeure Event"). SECTION 15.16. Survival. The following Articles and Sections shall survive any termination of this Agreement: 3.1(a) (License Grant; Scope); 5.5 (Ownership of Enhancements); 6.1 (Ownership Rights); 6.2 (Maintenance of Intellectual Property Rights); 6.3 (Goodwill); 6.4 (Joint Developments); Article XII (Indemnification); 14.3 (Protection of -22- Confidential Information); 14.4 (Restricted Use of Confidential Information); and 15.3 (Non-Solicitation/NonHiring). SECTION 15.17. Additional Parties. The Parties acknowledge that, under the terms of the Investment Agreement, Tribune is permitted to sell a portion of the shares (the "Shares") of Series A Preferred Stock of AdStar being purchased by Tribune under the Investment Agreement to Knight Ridder. The Parties agree that, in the event that Tribune elects to sell Shares to Knight Ridder, this Agreement will be amended and restated in order to (a) make Knight Ridder an original Party hereto, (b) provide that Knight Ridder is entitled to all the rights and protections granted to Tribune under this Agreement and (c) amend Exhibit A to incorporate changes requested by Knight Ridder (with the incremental cost of development caused by any such changes to Exhibit A to be paid by Knight Ridder). At the time of any such amendment and restatement, Knight Ridder shall pay AdStar a fee of $25,000. * * * * * -23- IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each of the Parties as of the date first above written. TRIBUNE COMPANY By: /s/ Timothy Landon -------------------------------------------- Name: Timothy Landon Title: President/Tribune Classifieds ADSTAR, INC. By: /s/ Leslie Bernhard -------------------------------------------- Name: Leslie Bernhard Title: President and Chief Executive Officer Signature Page to the Software Development and Deployment Agreement EX-10.3 6 ex10-3.txt REGISTRATION RIGHTS AGREEMENT Execution Copy EXHIBIT 10.3 REGISTRATION RIGHTS AGREEMENT This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of March 18, 2002, by and between AdStar, Inc., a Delaware corporation ("AdStar"), and Tribune Company, a Delaware corporation (the "Investor"). WHEREAS, the Investor will be purchasing on the date hereof 1,443,457 shares of Series A Convertible Preferred Stock, $0.0001 par value per share, of AdStar (the "Series A Preferred Stock") pursuant to the terms of the Series A Preferred Stock Purchase Agreement dated as of March 18, 2002, by and between AdStar and the Investor (the "Series A Purchase Agreement"); WHEREAS, pursuant to the terms of, and in partial consideration for the Investor's agreement to enter into, the Series A Purchase Agreement, AdStar has agreed to provide the Investor with certain registration rights, as well as certain other rights and remedies set forth in this Agreement; WHEREAS, it is contemplated that the Investor may transfer a portion of its Series A Preferred Stock to Knight-Ridder, Inc., a Florida corporation ("Knight Ridder"), in which case Knight Ridder shall be entitled to all the rights and benefits to which the Investor is entitled under this Agreement; and WHEREAS, the Series A Purchase Agreement is conditioned upon this Agreement being executed by the parties hereto. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Definitions. 1.1 Unless otherwise provided in this Agreement, capitalized terms used herein shall have the following meanings: "AdStar" has the meaning set forth in the first paragraph hereof. "Agreement" has the meaning set forth in the first paragraph hereof. "Investor" has the meaning set forth in the first paragraph hereof. "Registrable Securities" means (a) any Common Stock issued upon the conversion of any Series A Preferred Stock and (b) any Common Stock issued or issuable with respect to the securities referred to in clause (a) by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization. As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when (i) all such securities may be sold in accordance with Rule 144(k) of the Securities Act or (ii) they have been distributed to the public pursuant to an offering registered under the Securities Act or sold to the public through a broker, dealer or market maker in compliance with Rule 144 under the Securities Act (or any similar rule then in force). For purposes of this Agreement, a Person shall be deemed to be the holder of Registrable Securities, and the Registrable Securities shall be deemed to be outstanding and in existence, whenever such Person has the right to acquire such Registrable Securities upon conversion of Series A Preferred Stock or conversion or exercise of any other securities held by such Person, whether or not such acquisition has actually been effected, and such Person shall be entitled to exercise the rights of a holder of such Registrable Securities hereunder. "Resale Registration" has the meaning set forth in Section 2.1. "SEC" means the Securities and Exchange Commission, including any governmental authority or agency succeeding to the functions thereof. "Securities Act" means the Securities Act of 1933, as amended. "Series A Preferred Stock" has the meaning set forth in the first recital above. "Series A Purchase Agreement" has the meaning set forth in the first recital above. 1.2 Unless otherwise stated, other capitalized terms used but not defined herein shall have the meanings set forth in the Series A Purchase Agreement. 2. Resale Registrations. 2.1 Requests for Registration. At any time following the date hereof, the holders of at least a majority of the Registrable Securities may request registration under the Securities Act permitting the resale of all or any portion of its Registrable Securities (the "Resale Registration") pursuant to Rule 415 of the Securities Act (or any similar rule then in force). Within ten days after receipt of any such request, AdStar shall give written notice of such requested registration to all other holders of Registrable Securities and shall include in such registration all Registrable Securities with respect to which AdStar has received written requests for inclusion therein within 15 days after the receipt of AdStar's notice; provided, that, if such request comes after 45 days but prior to 90 days after AdStar's fiscal year end, AdStar shall not be required to file any Resale Registration until the 90th day following the fiscal year end. 2.2 Restrictions on Registration. AdStar may postpone for up to 30 days the filing or the effectiveness of the registration statement with respect to the Resale Registration if AdStar reasonably believes that the Resale Registration will have a material adverse effect on any proposal or plan by AdStar to engage in any financing, acquisition of assets (other than in the ordinary course of business) or any merger, consolidation, tender offer or other significant transaction. 3. Registration Procedures. Upon the request of at least a majority of the holders of Registrable Securities for the Resale Registration pursuant to this Agreement, AdStar shall use 2 its best efforts to effect the registration and the sale of such Registrable Securities in accordance with the intended method of disposition thereof, and pursuant thereto AdStar shall as expeditiously as possible: 3.1 prepare and file with the SEC a registration statement (it being agreed that AdStar would intend to use Form S-3 or Form S-2, if available) with respect to such Registrable Securities and use its best efforts to cause such registration statement to become effective (provided that before filing a registration statement or prospectus or any amendments or supplements thereto, AdStar shall furnish to the counsel selected by the holders of a majority of the Registrable Securities covered by such registration statement copies of all such documents proposed to be filed, which documents shall be subject to the review and comment of such counsel); 3.2 notify each holder of Registrable Securities of the effectiveness of such registration statement and prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement accurate and effective until the earlier of (i) the date on which all Registrable Securities have been sold or (ii) all such unsold Registrable Securities may be sold in any single 90-day period pursuant to Rule 144 of the Securities Act. 3.3 furnish to each holder of Registrable Securities such number of copies of such registration statement, each amendment and supplement thereto, the prospectus included in such registration statement (including each preliminary prospectus) and such other documents as such seller may reasonably request in order to facilitate the disposition of the Registrable Securities owned by the such seller; 3.4 use its best efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions as any seller reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller (provided, however, that AdStar shall not be required to (a) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subsection, (b) subject itself to taxation in any such jurisdiction or (c) consent to general service of process in any such jurisdiction); 3.5 notify each holder of Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading, and, at the request of any such seller, AdStar shall prepare a supplement or amendment to such prospectus so that, as thereafter delivered to the sellers of such Registrable Securities, such prospectus shall not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading; 3.6 cause all such Registrable Securities to be listed on each securities exchange or NASDAQ market on which similar securities issued by AdStar are then listed; 3 3.7 make available for inspection by any seller of Registrable Securities and any attorney, accountant or other agent retained by any such seller, all financial and other records, pertinent corporate documents and properties of AdStar, and cause AdStar's officers, directors, employees and independent accountants to supply all information reasonably requested by any such seller or any such attorney, accountant or agent in connection with such registration statement; 3.8 otherwise use its best efforts to comply with all applicable rules and regulations of the SEC, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months beginning with the first day of AdStar's first full calendar quarter after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder; 3.9 upon the request of any holder of Registrable Securities, insert language into the registration statement to the effect that the holding by such holder of such securities is not to be construed as a recommendation by such holder of the investment quality of AdStar's securities covered thereby and that such holding does not imply that such holder shall assist in meeting any future financial requirements of AdStar; 3.10 in the event of the issuance of any stop order suspending the effectiveness of a registration statement or of any order suspending or preventing the use of any related prospectus or suspending the qualification of any Common Stock included in such registration statement for sale in any jurisdiction, AdStar shall use its best efforts promptly to obtain the withdrawal of such order; and 3.11 use its best efforts to cause such Registrable Securities covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the sellers thereof to consummate the disposition of such Registrable Securities. 4. Registration Expenses. All expenses incident to AdStar's performance of or compliance with this Agreement, including, without limitation, all registration and filing fees, fees of any transfer agent and registrar, fees and expenses of compliance with securities or blue sky laws, printing expenses, messenger and delivery expenses, fees and disbursements of custodians, fees and disbursements of counsel for AdStar and its independent certified public accountants, AdStar's internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any liability insurance and the expenses and fees for listing the securities to be registered on each securities exchange on which similar securities issued by AdStar are then listed or on the NASDAQ (all such expenses being herein called "Registration Expenses") shall be borne by AdStar. 5. Indemnification. 5.1 AdStar agrees to indemnify, to the extent permitted by law, each holder of Registrable Securities, its officers and directors and each Person who controls such holder (within the meaning of the Securities Act) against all losses, claims, damages, liabilities and 4 expenses caused by any untrue or alleged untrue statement of material fact contained in any registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same are caused by or contained in any information furnished in writing to AdStar by such holder expressly for use therein or by such holder's failure to deliver a copy of the registration statement or prospectus or any amendments or supplements thereto after AdStar has furnished such holder with a sufficient number of copies of the same. 5.2 Each holder of Registrable Securities shall furnish to AdStar in writing such information and affidavits as AdStar reasonably requests for use in connection with any such registration statement or prospectus and, to the extent permitted by law, shall indemnify AdStar, its directors and officers and each Person who controls AdStar (within the meaning of the Securities Act) against any losses, claims, damages, liabilities and expenses resulting from any untrue or alleged untrue statement of material fact contained in the registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is contained in any information or affidavit so furnished in writing by such holder expressly for use in such registration statement or prospectus; provided, that, the obligation to indemnify shall be individual, not joint and several, for each holder and shall be limited to the net amount of proceeds received by such holder from the sale of Registrable Securities pursuant to such registration statement. 5.3 Any Person entitled to indemnification hereunder shall (a) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any Person's right to indemnification hereunder to the extent such failure has not prejudiced the indemnifying party) and (b) unless in the written opinion of legal counsel to such indemnified or indemnifying parties a conflict of interest between such indemnified and indemnifying parties exists with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent shall not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment (with written advice of counsel) of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. 5.4 The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling Person of such indemnified party and shall survive the transfer of securities. AdStar also agrees to make such provisions, as are reasonably requested by any indemnified party, for contribution to such party in the event AdStar's indemnification is unavailable for any reason. 5 6. Miscellaneous. 6.1 No Inconsistent Agreements. AdStar shall not hereafter enter into any agreement with respect to its securities that is inconsistent with or violates the rights granted to the holders of Registrable Securities in this Agreement. 6.2 Remedies. Each holder of Registrable Securities shall be entitled to enforce any rights it has under this Agreement specifically (without posting any bond or other security) to recover damages caused by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. 6.3 Amendments and Waivers. Except as otherwise provided herein, the provisions of this Agreement may be amended or waived only upon the prior written consent of AdStar and the holders of a majority of the Registrable Securities. 6.4 Successors and Assigns. All covenants and agreements in this Agreement by or on behalf of any of the parties hereto shall bind and inure to the benefit of the respective successors and assigns of the parties hereto whether so expressed or not. The sale by the Investor of a portion of its Series A Preferred Stock to Knight Ridder shall qualify as an assignment under this Section 6.4, and after any such sale Knight Ridder shall be entitled to all rights and remedies (and shall be bound by all obligations) of a holder of Registrable Securities hereunder. 6.5 Entire Agreement. This Agreement, together with the Series A Purchase Agreement and all agreements contemplated thereby, constitutes the entire agreement of the parties hereto with respect to the subject matter contained herein, and supersedes all prior agreements, negotiations, discussions and understandings among the parties hereto with respect to such subject matter. 6.6 Severability. Wherever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law and in such a way as to, as closely as possible, achieve the intended economic effect of such provision and this Agreement as a whole, but if any provision contained herein is, for any reason, held to be invalid, illegal or unenforceable in any respect, such provision shall be ineffective to the extent, but only to the extent, of such invalidity, illegality or unenforceability without invalidating the remainder of such provision or any other provisions hereof, unless such a construction would be unreasonable. 6.7 Notices. All notices or other communications required or permitted hereunder shall be in writing and shall be deemed given or delivered (a) when delivered personally, (b) if transmitted by facsimile when confirmation of transmission is received, (c) if sent by registered or certified mail, postage prepaid, return receipt requested, three Business Days after mailing or (iv) if sent by reputable overnight courier service, one Business Day after delivery to such service; and shall be addressed as follows: 6 If to AdStar, to: with a copy to: AdStar, Inc. Morse, Zelnick, Rose & Lander, LLP 4553 Glencoe Avenue, Suite 300 450 Park Avenue Marina del Rey, California 90292 New York, New York 10022 Attention: Leslie Bernhard, President Attention: Stephen A. Zelnick, Esq. and Chief Executive Officer Facsimile: (212) 838-9190 Facsimile: (310) 577-8266 If to the Investor, to: with a copy to: Tribune Company Sidley Austin Brown & Wood 435 N. Michigan Ave. Bank One Plaza Chicago, IL 60611 10 South Dearborn Street Attention: General Counsel Chicago, Illinois 60603 Facsimile: (312) 222-4206 Attention: Larry A. Barden Jon A. Ballis and also to Facsimile: (312) 853-7036 Tribune Company 435 N. Michigan Ave. Chicago, IL 60611 Attention: VP/Strategy and Development Facsimile: (312) 222-4206 6.8 Governing Law. This Agreement and the exhibits and schedules hereto shall be governed by, and construed in accordance with, the laws of the State of Illinois, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Illinois or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Illinois. In furtherance of the foregoing, the internal law of the State of Illinois shall control the interpretation and construction of this Agreement (and all schedules and exhibits hereto), even though under that jurisdiction's choice of law or conflict of law analysis, the substantive law of some other jurisdiction would ordinarily apply. 6.9 Execution in Counterparts. This Agreement may be executed in any number of counterparts (including via facsimile), each of which will be considered an original instrument, but all of which together will be considered one and the same agreement, and will become binding when one or more counterparts have been signed by and delivered to each of the parties. 6.10 Delivery by Facsimile. This Agreement, to the extent signed and delivered by means of a facsimile machine, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of any party, each other party shall reexecute original forms thereof and deliver them to all other parties. No 7 party shall raise the use of a facsimile machine to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine as a defense to the formation or enforceability of a contract and each such party forever waives any such defense. [SIGNATURE PAGE FOLLOWS] 8 Execution Copy IN WITNESS WHEREOF, the parties hereto have caused this Registration Rights Agreement to be executed the day and year first above written. ADSTAR, INC. By: /s/ Leslie Bernhard ------------------------------------ Name: Leslie Bernhard Title: President and Chief Executive Officer TRIBUNE COMPANY By: /s/ Timothy Landon ------------------------------------ Name: Timothy Landon Title: President/Tribune Classifieds Signature Page to Registration Rights Agreement EX-10.4 7 ex10-4.txt GOVERNANCE AGREEMENT Execution Copy EXHIBIT 10.4 GOVERNANCE AGREEMENT This GOVERNANCE AGREEMENT (this "Agreement") is made as of March 18, 2002, by and among AdStar, Inc., a Delaware corporation (the "AdStar"), Leslie Bernhard ("Bernhard"), Eli Rousso ("Rousso"), and Tribune Company, a Delaware corporation (the "Investor"). Each of Bernhard and Rousso is referred to herein as a "Stockholder" and collectively, the "Stockholders". WHEREAS, as of the date hereof, each of the Stockholders Beneficially Own (as defined below) the number of shares of Common Stock of AdStar set forth opposite his, her or its name on Schedule 1 attached hereto; WHEREAS, the Investor will be purchasing on the date hereof 1,443,457shares of Series A Convertible Preferred Stock, $0.0001 par value per share, of AdStar (the "Series A Preferred Stock") pursuant to the terms of the Series A Preferred Stock Purchase Agreement dated as of March 18, 2002, by and between AdStar and the Investor (the "Series A Purchase Agreement"); WHEREAS, as senior officers and stockholders of AdStar, the Stockholders will materially benefit from the Investor's investment under the Series A Purchase Agreement; and WHEREAS, the Series A Purchase Agreement is conditioned upon this Agreement being executed by the parties hereto. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each of the parties hereby agrees as follows: 1. Definitions. As used in this Agreement, the following terms shall have the following meanings: "Affiliate" means, with respect to a Person, any other Person that directly or indirectly, through one or more intermediaries, Controls, is Controlled by or is under common Control with such Person. "Beneficially Own" has the meaning specified in Rule 13d-3 under the Exchange Act as in effect on the date hereof. "Bernhard" has the meaning set forth in the first paragraph hereof. "Board" means the Board of Directors of AdStar. "Certificate of Designation" means the Series A Preferred Certificate of Designation. "Common Stock" means the common stock of AdStar, par value $0.0001 per share and any other class or series of common stock issued by AdStar subsequent to the date of this Agreement. "Control" has the meaning specified in Rule 12b-2 under the Exchange Act as in effect on the date hereof. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. "Investor" has the meaning set forth in the first paragraph hereof. "Listing Rules" has the meaning set forth in Section 2(b). "Nominee" means such Person as is so designated by the Investor from time to time to serve as a member of the Board pursuant to this Agreement. "Observor" has the meaning set forth in Section 2(c). "Person" means any individual, corporation, association, limited liability company, partnership, trust or estate, an unincorporated organization, a joint venture, a government or any agency or political subdivision thereof, or any other entity of whatever nature. "Rousso" has the meaning set forth in the first paragraph hereof. "Series A Preferred Stock" means the authorized and outstanding shares of Series A Convertible Preferred Stock, $0.0001 par value of AdStar. "Series A Purchase Agreement" has the meaning set forth in the second recital above. "Stockholders" has the meaning set forth in the first paragraph hereof. "Transfer" means any sale, transfer, assignment, pledge, mortgage, exchange, hypothecation, grant of a security interest or other direct or indirect disposition or encumbrance of an interest (whether with or without consideration whether voluntarily or involuntarily or by operation of law) or actions thereof. Unless otherwise stated, other capitalized terms used but not defined herein shall have the meanings set forth in the Series A Purchase Agreement. 2. Nomination. Until the termination of this Agreement: (a) Each of the Stockholders and the Investor, respectively, shall vote his, her or its shares and any other voting securities of AdStar (whether now owned or hereafter acquired) over which such Stockholder has voting control and shall take all other necessary or desirable actions within his, her or its control as a stockholder (including, without limitation, - 2 - attendance at meetings in person or by proxy for purposes of obtaining a quorum and execution of written consents in lieu of meetings), to cause the board to consist of no more than seven members. The Investor shall have the right to designate one Nominee to serve on the Board; provided, that, any waiver or failure by the Investor to designate the Nominee to which it is entitled hereunder shall not be deemed a waiver of the Investor's rights hereunder in connection with any future elections of directors to the Board. (b) AdStar shall take (and cause to be taken) all actions and agrees to exercise all authority under applicable law to cause any slate of directors presented to stockholders of AdStar for election to the Board to include the Nominee. In this regard, AdStar shall, subject to applicable law and the listing requirements of any stock exchange or interdealer quotation system, if and to the extent AdStar is subject thereto (the "Listing Rules"), duly nominate the Nominee for election to the Board and shall solicit proxies in favor of the election of the Nominee from the stockholders of AdStar entitled to vote for the election of directors. In connection therewith and in furtherance thereof, AdStar shall include in any proxy solicitation materials related to the election of members of the Board such information regarding the Nominee and recommendations of the Board as are appropriate in proxy solicitation materials or as may be required under the rules and regulations promulgated by the SEC. (c) If the Investor requests that the Nominee be elected to the Board prior to any election of directors by stockholders, then the existing directors on the Board shall promptly (and in any event within ten (10) business days of such request) (x) increase the size of the Board, if necessary and (y) appoint such Nominee to the Board. To the extent the foregoing is not accomplished within the prescribed time period, then the Company shall be deemed to be in breach of this Agreement. (d) So long as the Investor is entitled to designate a Nominee, if at any time no such Nominee is serving as a director on the Board, then, at the request of the Investor, AdStar shall promptly invite (or cause to be invited) a Nominee, to attend all meetings of the Board, and, unless otherwise prohibited by applicable law or the Listing Rules, any meetings of the Compensation Committee of the Board in a nonvoting observer capacity (an "Observer") and, in this respect, shall give (or cause to be given) to the Observer copies of all notices, minutes, consents, and other material that AdStar provides to its directors, provided, however, that AdStar shall have the right to exclude the Observer from access to any material or meeting or portion thereof if the Board, based on the advice of its attorneys, believes that such exclusion is reasonably necessary to preserve the attorney-client privilege, to protect confidential proprietary information or to avoid a conflict of interest or potential conflict of interest. 3. Removal and Replacement. Following the election of a Nominee to the Board, such Nominee shall not be removed from the Board except for cause under applicable law. Upon the removal for cause or the resignation, death or disability of a Nominee serving as a director of the Board, the Investor shall have the right to designate a replacement Nominee and either the remaining directors on the Board shall promptly (and in any event within ten business days) appoint such replacement Nominee to fill the vacancy on the Board or, if the remaining directors fail to appoint such replacement Nominee to fill such vacancy, then AdStar shall duly nominate such replacement Nominee for election to the Board pursuant to Section 2(b), and, if - 3 - requested by the Investor, promptly call (or cause to be called) and hold a special meeting of AdStar's stockholders for the purpose of voting on such replacement Nominee. 4. Compensation Committee. Unless otherwise prohibited by applicable law or the Listing Rules, the composition of Compensation Committee of the Board shall include the Nominee. 5. Stockholder Voting Agreement. From and after the date of this Agreement and until it is terminated in accordance with the terms hereof, each of the Stockholders shall vote all of his, her or its shares and any other voting securities of AdStar (whether now owned or hereafter acquired) over which such Stockholder has voting control and shall take all other necessary or desirable actions within its control including, without limitation, attendance at meetings in person or by proxy for purposes of obtaining a quorum and execution of written consents in lieu of meetings), so that the Nominee be elected to the Board. Each of the Stockholders agrees that this Agreement and the obligations hereunder shall attach to his, her or its shares and shall be binding upon any person or entity to which legal or beneficial ownership of any or all of his, her or its shares shall pass, whether by operation of law or otherwise, including, without limitation, the successors and assigns of each Stockholder. 6. Stockholder Transfer Restrictions. Each Stockholder shall not Transfer more than ten percent (10%) of his or her Common Stock Beneficially Owned by such Stockholder as of the date hereof (as set forth on Schedule 1 hereto), prior to December 31, 2002, without the Investor's prior written approval. 7. Expenses. In lieu of any other compensation, AdStar shall pay the reasonable out-of-pocket expenses incurred by the Nominee (including any serving as an Observer) in connection with attending any meeting of the Board, or any committee of the Board and other travel expenses reasonably incurred in discharging such individual's duties as a director or Observer. 8. Representations and Warranties of AdStar. AdStar represents and warrants to the Stockholders and the Investor as follows: (i) it has full power and authority to execute, deliver and perform its obligations under this Agreement and (ii) this Agreement and all actions to be undertaken by AdStar contemplated hereby have been, or will be when taken, duly and validly authorized by all necessary action on its part and constitutes a legal, valid and binding obligation enforceable against AdStar in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws of general application that may affect the enforcement of creditors' rights generally and by general equitable principles. 9. Representations and Warranties of the Investor. The Investor represents and warrants to AdStar and the Stockholders as follows: (i) the Investor has full power and authority to execute, deliver and perform its obligations under this Agreement and (ii) this Agreement and all actions to be undertaken by the Investor contemplated hereby have been, or will be when taken, duly and validly authorized by all necessary action on the Investor's part and constitutes a legal, valid and binding obligation enforceable against the Investor in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, - 4 - moratorium and other similar laws of general application that may affect the enforcement of creditors' rights generally and by general equitable principles. 10. Representations, Warranties and Covenants of the Stockholders. Each of the Stockholders represents and warrants to AdStar and the Investor that (i) this Agreement has been duly authorized, executed and delivered by such Stockholder and constitutes the valid and binding obligation of such Stockholder, enforceable in accordance with its terms; (ii) such Stockholder has not granted and is not a party to any proxy, voting trust or other agreement which is inconsistent with, conflicts with or violates any provision of this Agreement; and (iii) such Stockholder Beneficially Owns the number of shares of Common Stock set forth opposite its name on Schedule 1 attached hereto. No Stockholder shall grant any proxy or become party to any voting trust or other agreement that is inconsistent with, conflicts with or violates any provision of this Agreement. 11. Termination. This Agreement shall terminate automatically and be of no further force and effect upon the agreement of AdStar and the Investor to terminate this Agreement. 12. Amendment and Waiver. This Agreement may be amended only by a writing signed by AdStar, each of the Stockholders and the Investor. Any provision of this Agreement may be waived by a writing signed by the party granting such waiver. 13. Severability. Wherever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law and in such a way as to, as closely as possible, achieve the intended economic effect of such provision and this Agreement as a whole, but if any provision contained herein is, for any reason, held to be invalid, illegal or unenforceable in any respect, such provision shall be ineffective to the extent, but only to the extent, of such invalidity, illegality or unenforceability without invalidating the remainder of such provision or any other provisions hereof, unless such a construction would be unreasonable. 14. Entire Agreement. This Agreement, together with the Series A Purchase Agreement and all agreements contemplated thereby, constitutes the entire agreement of the parties hereto with respect to the subject matter contained herein, and supersedes all prior agreements, negotiations, discussions and understandings among the parties hereto with respect to such subject matter. 15. Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. 16. Successors and Assigns. Except as otherwise provided herein, this Agreement shall bind and inure to the benefit of and be enforceable by AdStar and its successors and permitted assigns, the Stockholders and their permitted assigns, and the Investor and its successors and permitted assigns. None of AdStar, the Stockholders, or the Investor may assign, directly or indirectly, this Agreement to any Person (other than, in the case of the Investor, an Affiliate of the Investor) without the prior consent of the other parties hereto. - 5 - 17. Remedies. The Investor shall be entitled to enforce any rights it has under this Agreement or the Transaction Documents specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. 18. Governing Law. The laws of Delaware shall govern all issues concerning the relative rights of AdStar, the Stockholders and the Investor and all other questions concerning the construction, validity and interpretation of this Agreement, without giving effect to any choice of law or other conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. 19. Counterparts. This Agreement may be executed in any number of counterparts (including via facsimile), each of which will be considered an original instrument, but all of which together will be considered one and the same agreement, and will become binding when one or more counterparts have been signed by and delivered to each of the Parties. 20. Delivery by Facsimile. This Agreement, to the extent signed and delivered by means of a facsimile machine, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of any party, each other party shall reexecute original forms thereof and deliver them to all other parties. No party shall raise the use of a facsimile machine to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine as a defense to the formation or enforceability of a contract and each such party forever waives any such defense. * * * * * - 6 - IN WITNESS WHEREOF, the parties hereto have executed this Governance Agreement as of the day and year first above written. ADSTAR, INC. By: /s/ Leslie Bernhard ------------------------------------ Name: Leslie Bernhard Its: President and Chief Executive Officer LESLIE BERNHARD By: /s/ Leslie Bernhard ------------------------------------ Leslie Bernhard ELI ROUSSO By: /s/ Eli Rousso ------------------------------------ Eli Rousso TRIBUNE COMPANY By: /s/ Timothy Landon ------------------------------------ Name: Timothy Landon Its: President/Tribune Classifieds Signature Page to Governance Agreement EX-99.1 8 ex99-1.txt PRESS RELEASE ISSUED MARCH 18, 2002 Exhibit 99.1 AdStar and Tribune Company Enter Strategic Alliance MARINA DEL REY, Calif. - March 18, 2002 - AdStar (Nasdaq: ADST, ADSTW), a leading application service provider for the classified advertising industry, today announced that it has entered into a strategic alliance that includes approximately $1.8 million in funding from Tribune Company (NYSE: TRB), one of the country's premier media companies, operating businesses in broadcasting, publishing and on the Internet, for a new series of preferred stock convertible into 1,443,457 shares of common stock. "We are excited that Tribune has recognized the strength of our business and technology," said Leslie Bernhard, president of AdStar. "Our shareholders should be happy to know that one of the largest and most well-known media companies has strengthened its support of AdStar. We look forward to our ongoing relationship and Tribune's support as we continue to grow and develop our ad-transaction technology." Through this strategic alliance, Adstar will provide Web-based recruitment ad sales technology to all major market Tribune newspapers, including Chicago Tribune, Los Angeles Times and Newsday. Ad agency and employer customers will be able to create, schedule and purchase print ads to run in the CareerBuilder-branded print help wanted sections, as well as place these ads on the CareerBuilder Web site, www.careerbuilder.com. "Tribune's investment demonstrates its commitment to Adstar's technology. We expect the platform to be highly scaleable - from both an economic and technological perspective," said Tim Landon, president of Tribune Classified Services. "An integrated print and online approach makes strategic, economic and operational sense for newspapers of all sizes and, because of this, we are pursuing newspapers of all sizes to become affiliates of the CareerBuilder Network. We think both large and small newspapers will see that we have a model that is a 'win - win' for both the local newspaper and CareerBuilder." CareerBuilder is one of the fastest growing recruitment and career-advancement sources for employers, recruiters and job seekers - in print and online. In partnership with Tribune and Knight Ridder, CareerBuilder provides job seekers exposure to more than 300,000 continuously updated jobs, representing more than 25,000 of the top employers in virtually every industry and field. Employers reach, each month, more than six million of the most qualified professionals in the job market. The alliance will arm Tribune and CareerBuilder with easy-to-use, seamless integrated print and online products that offer tremendous efficacy and value for employers. Included in that product offering will be tools to reach both white collar and blue-collar job seekers. Bernhard added, "Because only AdStar's technology supports multiple newspaper systems via a Web-based architecture, we are uniquely suited to support national campaigns, as well as local initiatives. This makes us an indispensable technology for media companies seeking synergies among their regional holdings. Our agreement with Tribune Company and CareerBuilder, as well as our previous agreement with Knight Ridder, places our ad transaction technology behind the Web sites of many of the largest newspapers in the country, as well as a major online job board. "Our ASP model allows for a quick integration for our customers, while creating ongoing, transaction-based revenue for AdStar," continued Bernhard. "We estimate that AdStar will experience a dramatic increase in ad transactions from the CareerBuilder service resulting in significant revenues in 2003. These revenues will be derived from our standard pricing model which includes a monthly technology access fee plus a per ad fee. Although this is a standard ASP business model, AdStar is the first to successfully sell it to media groups for their newspapers." About Tribune Company Tribune (NYSE: TRB) is one of the country's premier media companies, operating businesses in broadcasting, publishing and on the Internet. It reaches more than 80 percent of U.S. households, and is the only media company with television stations, newspapers and Web sites in the nation's top three markets. Tribune media span 23 major-market television stations, including national superstation WGN-TV; 11 market-leading daily newspapers, including the Los Angeles Times, Chicago Tribune and Newsday; and news and information Web sites in 18 of the nation's top 30 markets. About CareerBuilder CareerBuilder is the recruiting source for connecting employers with the right talent and professionals with the right jobs. CareerBuilder attracts the most qualified candidates by reaching the best audiences - in print and online, locally and nationally. In partnership with Tribune Company (NYSE:TRB) and Knight-Ridder Inc. (NYSE: KRI), CareerBuilder provides the most integrated print and online recruitment solutions available in major markets throughout the United States, including CareerBuilder-branded help wanted sections reaching more than 25 million people every Sunday. With the Chicago Tribune, Los Angeles Times, Newsday, The Miami Herald, The San Jose Mercury News, and The Philadelphia Inquirer, as well as many other major metropolitan newspapers and local news and information sites throughout the country, CareerBuilder provides more local jobs than any other recruitment solution. For more information about CareerBuilder products and services, call 888.670.TEAM or visit CareerBuilder at www.careerbuilder.com. About AdStar, Inc. AdStar (Nasdaq: ADST, ADSTW), based in Marina del Rey, Calif., serves as an application service provider (ASP) for the $20+ billion classified advertising industry. AdStar turns publishers' Web sites into full-service classified ad sales channels for their print and online classified ad sections. Since 1986, AdStar has set the standard for remote ad entry software by giving advertisers the ability to place ads electronically with many of the largest newspapers in the United States. Today, AdStar's infrastructure, through its private label model, powers classified ad sales for more than 20 of the largest newspapers in the country and the Newspaper Association of America's bonafideclassifieds.com, where ads can be placed in more than 120 newspapers. Forward-Looking Statements This press release contains forward-looking statements concerning the business and products of the Company. Actual results may differ from those projected or implied by such forward-looking statements depending on a number of risks and uncertainties, including, but not limited to the following: development, shipment and market acceptance. Other risks inherent in the business of the Company are described in Securities and Exchange Commission filings, including the Company prospectus on Form SB-2. The Company undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this release -----END PRIVACY-ENHANCED MESSAGE-----