EXHIBIT 10.2
SECOND SOFTWARE DEVELOPMENT
AND DEPLOYMENT AGREEMENT
This SECOND SOFTWARE DEVELOPMENT AND DEPLOYMENT AGREEMENT (this
"Agreement") is made and entered into as of December 23, 2002 (the "Effective
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, Tribune and AdStar signed a Software Development and
Deployment Agreement dated as of March 18, 2002 (the "First Agreement");
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, Gannett Co., Inc. ("Gannett") and Knight-Ridder
Digital, a subsidiary of Knight-Ridder Inc. ("Knight Ridder") are, directly or
indirectly, controlling stockholders in CareerBuilder, LLC, a Delaware limited
liability company 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, in the First Agreement, AdStar agreed to develop, customize
and deploy the CareerBuilder Service (as defined below) solely for the benefit
of Tribune, its Affiliates and the CareerBuilder Network;
WHEREAS, the Parties now desire to enhance the existing
CareerBuilder Service by developing, customizing and deploying, solely for the
benefit of Tribune, its Affiliates and the CareerBuilder Network, new Tribune
specified functionalities, in the form of 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.
(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, Gannett 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, the
Modules, including all Upgrades and Enhancements thereto and inherent or
associated Intellectual Property Rights, Know-How, Source Code and Object Code
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
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any part thereof abnormally ceases functioning, produces incorrect or
misleading information or erroneously interprets information given to it.
(j) "Escrow Project Plan has the meaning set forth in Section 10.2.
(k) "Force Majeure Event" has the meaning set forth in Section
15.15.
(l) "Functional Requirements" means the functional requirements and
specifications for all components of the CareerBuilder Service (other than Third
Party Technology) as specified on Exhibit A.
(m) "Gannett Newspaper" means a newspaper currently or in the future
owned or operated by Gannett.
(n) "Infringe" or "Infringement" means the infringement, imitation,
dilution, misappropriation or any other unauthorized use of any Intellectual
Property Rights.
(o) "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.
(p) "Investment Agreement" means the Series B Preferred Stock
Purchase Agreement dated the date hereof between the Parties.
(q) "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.
(r) "Knight Ridder Newspaper" means a newspaper currently or in the
future owned or operated by Knight Ridder.
(s) "License" means the license granted to Tribune under Section
3.1, as defined and limited by the terms and conditions of this Agreement.
(t) "Module" means the software initially developed pursuant to the
First Agreement as the same will be enhanced by this Agreement, that has the
features and functionality described on Exhibit B, including any Enhancements
thereto.
(u) "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.
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(v) "Other Classified Verticals" mean real estate and automotive
classified advertising.
(w) "Person" has the meaning set forth in the Investment Agreement.
(x) "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 (or its successor), 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.
(y) "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.
(z) "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.
(aa) "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.
(bb) "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.
(cc) "Tribune Developers" has the meaning set forth in Section
2.3(a).
(dd) "Tribune Newspaper" means a newspaper currently or in the
future owned or operated by Tribune.
(ee) "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
Effective Date, but excluding any Enhancements.
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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 and complete certain specified tasks, 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. Tribune shall have the
right to modify Exhibit A and Exhibit B. If any such modification requires the
change of a delivery date, AdStar and Tribune shall mutually agree on a
reasonable adjustment to such date. The Parties understand and agree that
Exhibit A to this Agreement amends and restates in its entirety and replaces
Exhibit A to the First Agreement.
(b) AdStar shall be responsible for the further development and
enhancement of the CareerBuilder Service as specified in Exhibit A and for the
completion of the tasks set forth in the Escrow Project Plan. Any development or
other tasks performed by AdStar that are not (i) covered by Exhibit A or in the
Escrow Project Plan or (ii) performed by the Tribune Developers shall be
considered "Additional Development." AdStar shall complete all Additional
Development according to specifications and on the dates mutually agreed by
Tribune and AdStar, and Tribune shall pay AdStar a Development Fee (as described
below) in connection with such Additional Development on a time and materials
basis, subject to the prior approval of Tribune. The Development Fee for any
month shall equal the Development Cost multiplied by (a) 1.0 if the average
revenue per month from Tribune Newspapers and CareerBuilder for the preceding
three-month period is more than $80,000 or (b) if the average revenue per month
from Tribune Newspapers and CareerBuilder for the preceding three-month period
is less than $80,000, 1.15 for all Development Costs less than $200,000 during
2003 or 2004 and 1.20 for all Development Costs in excess of $200,000 in 2003 or
2004. The methodology for calculating the Development Fee shall be reset on
December 31, 2004. The "Development Cost" shall be equal to the number of hours
worked on the Additional Development by each individual working on such
Additional Development multiplied by the Hourly Rate of such individual. For
2003 the Hourly Rate for an individual equals (a) the base salary of such
individual multiplied by 1.4 divided by (b) 2000. The Hourly Rate for 2004 shall
be reset on or prior to December 31, 2003.
SECTION 2.3. Personnel. (a) The Parties understand and agree that
AdStar's obligation under Section 2.2(b) of the First Agreement to devote the
equivalent of two full-time employees (the "Tribune Developers") to the
development and deployment of the CareerBuilder Service and to providing
Upgrades and Enhancements is a continuing obligation under the First Agreement.
The Parties further agree that AdStar's obligation to devote the Tribune
Developers to the development and deployment of the CareerBuilder Service
(including, without limitation, to the development of the Modules and the
completion of the tasks set forth on Exhibit A or in the Escrow Project Plan
and/or any other project designated by Tribune), shall continue for the Term.
The Tribune Developers shall also be responsible for performing Upgrades and
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Enhancements for the Term. The Tribune Developers shall be provided at no
additional cost to Tribune.
(b) In addition to any other personnel needed to meet the objectives
of this Agreement and in addition to the two Tribune Developers, AdStar will
employ six full-time employees (the "Additional Developers"), at no additional
cost to Tribune. The Parties understand and agree that AdStar is obligated to
continue to employ each Additional Developer until the later of (i) May 31, 2003
or (ii) the completion, to Tribune's reasonable satisfaction, of the tasks set
forth on Exhibit A and in the Escrow Project Plan. AdStar may not reduce the
number of Additional Developers without the prior written consent of Tribune,
provided, however, that notwithstanding the foregoing, if the schedule set forth
on Exhibit A and in the Escrow Project Plan is being met or exceeded and is
likely to continue to be met or exceeded in Tribune's good faith judgment, then
AdStar may, upon 15 days written notice, reduce the total number of Additional
Developers to (i) four on March 1, 2003 and (ii) three on May 1, 2003. The
Parties understand and agree that AdStar's obligation to employ any Additional
Developer terminates upon the later to occur of (i) June 1, 2003 or (ii) the
completion, to Tribune's reasonable satisfaction, of the tasks set forth on
Exhibit A and in the Escrow Project Plan. If at any time the number of
Additional Developers devoted to Tribune is less than the number required by the
terms of this Section 2.3(b), Tribune may hire, at AdStar's sole expense,
personnel necessary to meet such requirements.
(c) The Parties understand and agree that (i) from the date hereof,
until February 28,2003, AdStar will devote the time of three of the Additional
Developers exclusively to the development of the Modules and the completion of
the tasks set forth on Exhibit A and in the Escrow Project Plan or any other
project specified by Tribune (it being understood that if any such other project
is not related primarily to the completion of the tasks set forth on Exhibit A
or the Escrow Project Plan, then the Parties will work in good faith to amend
Exhibit A to reflect the reallocation of Additional Developers to any such other
project) and (ii) if in Tribune's good faith judgment, the tasks set forth on
Exhibit A and in the Escrow Project Plan are being completed on a timely basis,
from March 1, 2003 until the later of (x) May 31, 2003 or (y) completion of the
tasks set forth on Exhibit A and in the Escrow Project Plan, AdStar may reduce
the number of Additional Developers devoted exclusively to the development of
the Modules and the completion of the tasks set forth on Exhibit A or in the
Escrow Project Plan or any other project specified by Tribune from three to one.
The Parties understand and agree that AdStar's obligation to employ any
Additional Developer terminates upon the later to occur of (x) May 31, 2003 or
(y) completion of the tasks set forth on Exhibit A and in the Escrow Project
Plan.
(d) In addition, AdStar has hired, or as soon as practicable shall
hire, individuals to fill the following positions: (i) Project Manager, (ii)
Quality Assurance Manager and (iii) Vice President/Technology (the "Management
Positions"). AdStar shall permit an employee of Tribune (the "Interviewer") to
interview candidates for the Management Positions and shall only extend an offer
to hire any candidate after such candidate has been approved in writing (or
e-mail) by the Interviewer; provided, however, that (i) Tribune shall not
unreasonably withhold approval and (ii) Tribune's consent shall not be required
if Tribune is not able to accommodate the good faith efforts of AdStar to set up
an interview within the time-frames set forth in this Section. The Management
Positions shall remain a part of AdStar's organizational
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structure until the later of (i) May 31, 2003 and (ii) date upon which all of
the tasks set forth on Exhibit A or in the Escrow Project Plan are completed to
the reasonable satisfaction of Tribune. Individuals performing in the Management
Positions may not be terminated or replaced without the prior written consent of
Tribune. If a Management Position becomes open through resignation or
termination, AdStar shall hire a replacement within 45 calendar days of the date
AdStar determines to terminate such employee or receives a notice of resignation
from such employee. AdStar shall permit the Interviewer to interview replacement
candidates and shall only extend an offer to hire any candidate after such
candidate has been approved in writing (or e-mail) by the Interviewer; provided,
however, that (i) Tribune shall not unreasonably withhold approval and (ii)
Tribune's consent shall not be required if Tribune is not able to accommodate
the good faith efforts of AdStar to set up an interview within the time-frames
set forth in this Section. The Management Positions shall be compensated at a
level subject to the reasonable approval of Tribune. If a vacancy exists for any
reason in any Management Position, excluding the position of Vice
President/Technology, for more than five business days, AdStar, at its sole
expense, shall hire consultants to fill such positions until full-time employees
are hired. Any such consultant shall be hired by AdStar on or before the sixth
day after creation of the vacancy.
(e) Attached hereto as Exhibit C is a true, complete and correct
copy of an organizational chart setting forth each officer, employee and
consultant of AdStar and identifying the Tribune Developers and Additional
Developers. Exhibit C also includes a brief description of each officer's,
employee's or consultant's roles and responsibilities, length of service to
AdStar and, in the case of officers and employees, number of AdStar stock
options. AdStar shall be under no obligation to update Exhibit C. AdStar shall
make compensation levels of all officers and employees available for review by
Tribune upon request.
SECTION 2.4. Progress Reports. Beginning on the Effective Date and
ending on the completion of the development of the Modules, the tasks set forth
on Exhibit A and/or any other project designated by Tribune, AdStar shall submit
to Tribune at such times as Tribune may reasonably request, but no less
regularly than every Thursday, written progress reports relating to the
completion of such development and tasks. Each progress report shall include,
without limitation, project plans, discussion of progress to date, problems
encountered, proposed solutions to such problems and any other items reasonably
requested by Tribune. The reports shall be in the form of Exhibits D and E
hereto.
SECTION 2.5. Acceptance Tests. (a) Upon delivery of the completed
CareerBuilder Service pursuant to the schedule set forth in Exhibit A or in the
Escrow Project Plan, as amended from time to time, Tribune, AdStar, any Tribune
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 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
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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, which failure is not due to any action or inaction
on the part of Tribune, shall constitute a material breach of this Agreement by
AdStar; provided, that no inaction on the part of Tribune shall be deemed to
cause any such failure unless Tribune was notified by AdStar of the need for
Tribune to take certain action and Tribune failed to take such action.
SECTION 2.6. 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 on Exhibit A or in the Escrow Project Plan or
otherwise delay the development of the CareerBuilder Service. Any material delay
which is caused directly by AdStar, other than a delay resulting from a Force
Majeure Event or due to any action or inaction on the part of Tribune,
CareerBuilder or the Escrow Agent (as defined in Article X) shall be deemed to
be a material breach of this Agreement; provided, that no inaction on the part
of Tribune, CareerBuilder or the Escrow Agent shall be deemed to cause any such
failure unless Tribune was notified by AdStar of the need for Tribune to take
certain action and Tribune failed to take such action. 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 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 dates for the tasks set forth on
Exhibit A and in the Escrow Project Plan shall be extended by the number of days
attributable to the delay.
SECTION 2.7. 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 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 both Parties execute such Change Order. 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 2.8. 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
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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 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 2.9. Management by Tribune. Notwithstanding anything to the
contrary herein, Tribune shall have the right to manage the development
specified herein and the tasks set forth in the Escrow Project Plan to be
provided and completed by AdStar if, in Tribune's reasonable judgment, it
appears reasonably likely that AdStar will fail to meet any requirement
specified in Exhibit A, the Escrow Project Plan or other applicable development
schedule. In the event that Tribune exercises its rights under this Section 2.9
(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 2.6 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) and present right and license
to make, have made, use, reproduce, display, modify, transmit and otherwise
exploit for the purposes of this Agreement and the First Agreement, the Modules
and Enhancements and Upgrades or other modifications thereto. The Parties hereby
acknowledge and agree that the computer code written for the Modules, 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) and present right
and license for the Term to make, have made, use, reproduce, display, modify,
transmit and otherwise exploit for the purposes of this Agreement the
CareerBuilder Service other than the Modules and Enhancements, Upgrades or other
modifications thereto (the "License").
SECTION 3.2. Further Licenses. AdStar may grant directly to
Affiliates of Tribune or members of the CareerBuilder Network or to third
parties the non-exclusive right to
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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.
SECTION 3.3. No Restrictions. Notwithstanding any contrary provision
contained herein, the Parties understand and agree that nothing contained in
this Agreement is intended to, and therefore nothing does, limit or impose any
restriction upon AdStar's ability to contract with, develop software relating to
or provide services (including the CareerBuilder Service) to Gannett, Knight
Ridder or any of their Affiliates.
ARTICLE IV - MAINTENANCE, SUPPORT AND UPGRADES
SECTION 4.1. Maintenance and Support Services. AdStar shall provide
the maintenance support and upgrade services to Tribune as specified on Schedule
4 hereto. The Parties understand and agree that Schedule 4 to this Agreement
amends and restates in its entirety and replaces Schedule 4 to the First
Agreement.
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 Tribune Developers to create Enhancements
shall not be chargeable to Tribune. Any work related to Enhancements that
requires employees or consultants in addition to the Tribune 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 Tribune 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 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
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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 2.4.
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 30 days of receipt of such Enhancement,
such Enhancement shall be deemed to have been accepted by Tribune.
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.
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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 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,
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that AdStar shall have 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. Simultaneously
with the execution of this Agreement, Tribune shall pay to AdStar $5,000 (the
"Second Deployment Fee") by wire transfer to an account specified by AdStar
prior to the Effective Date in consideration for AdStar's agreement to develop
the Modules and to perform the tasks set forth on Exhibit A and in the Escrow
Project Plan.
SECTION 7.2. Other Payments. Any payments other than the Second
Deployment Fee (including any payment required to be made pursuant to the
Schedules) due to Tribune under this Agreement shall be paid by AdStar within 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 and that
Schedule 8 to this Agreement amends and restates in its entirety and replaces
Schedule 8 to the First Agreement. 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. Delivery of Documentation. As soon as practicable but
no later than February 1, 2003, AdStar shall provide, in form and substance
reasonably acceptable to Tribune and to the Escrow Agent all the documentation
related to (i) the server configuration, architecture and software inventory for
both production and internal development machines; (ii) code and data migration
processes (including build processes if there is a build process in use); (iii)
release/implementation processes for both web and desktop applications, market
configurations and data changes; and (iv) backup procedures and schedule for
both production and development environments (collectively, the
"Documentation"). AdStar will deliver to Tribune and to the Escrow Agent updates
to the Documentation no later than the first business day of each month
thereafter.
SECTION 8.3. Integration Fees. Tribune will pay AdStar a $25,000
integration fee for each additional Tribune newspaper (each, an "Additional
Newspaper") that becomes an AdStar customer with a full AdStar integration, and
will pay a lower negotiated fee for any
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Tribune newspaper opting for an e-mail integration, after the Effective Date; it
being understood that no Additional Newspaper will be obligated to become an
AdStar customer.
SECTION 8.4. Certain Breaches. As used herein, a "Breach Period" is
a period during which AdStar is, based on Tribune's reasonable belief, in breach
of this Agreement, commencing on the first date that Tribune notifies AdStar in
writing (or e-mail) that Tribune has determined that AdStar is in breach of this
Agreement and ending on the date that AdStar cures the underlying breach to
Tribune's reasonable satisfaction. Unless otherwise agreed to in writing by
Tribune, if AdStar breaches (i) Section 2.4, 8.2 or 10.2 of this Agreement or
(ii) Section 7.9 to the Investment Agreement, AdStar hereby agrees to waive
aggregate fees owed to it by Tribune Newspapers in the following amounts:
(i) $1,500 for a Breach Period of one to five business days,
(ii) $6,000 for a Breach Period of six to 10 business days,
(iii) $15,000 for a Breach Period of 11 to 19 business days,
and
(iv) a Breach Period of more than 19 business days shall
result in a waiver of $20,000 plus $2,500 for each
business day in excess of 19.
Nothing herein shall be construed to limit Tribune's right to any other remedy
for the breaches described herein, either separately or cumulatively, in equity
or at law. In addition, the Parties understand and agree that no "grace" or
"cure" period contained in any other section of this Agreement shall be
applicable to this Section 8.4.
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 Effective 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
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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 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, Gannett, 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, Gannett 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, Gannett, 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
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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 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. (a) The Parties have entered into an
escrow agreement (the "Escrow Agreement") with DSI Technology Escrow Services,
Inc. ("DSI" or the "Escrow Agent"). The costs of the escrow shall continue to be
paid by Tribune. No later than December 30, 2002, 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, including the Modules ("Deposit Materials"). 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 30 days of a request by Tribune to do so; 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 15 days of receiving written notice from
Tribune. 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.
(b) (i) Attached hereto as Exhibit F is a plan to verify, compile
and load the CareerBuilder Service onto a server supported by the Escrow Agent
(the "Escrow Project Plan"). As set forth in the Escrow Project Plan, all Level
I and Level II tasks shall be completed on or before January 17, 2003 and, if
elected by Tribune, all Level III tasks shall be completed on or
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before March 4, 2003 (the "Escrow Date"; provided that if Tribune does not elect
to cause the Level III tasks to be completed, the "Escrow Date" shall be January
17, 2003). (ii) Tribune shall also have the right to require AdStar to provide
the Escrow Agent with full cooperation and any materials necessary to enable the
Escrow Agent to again verify, compile and load the CareerBuilder Service onto a
server supported by the Escrow Agent on a date (the "Second Escrow Date") in
2003 that is not before May 1, 2003 and not later than 75 days after Tribune
notifies AdStar in writing (or e-mail) of its election to exercise this right.
AdStar shall provide all necessary assistance to the Escrow Agent in effecting
the placement of the CareerBuilder Service on the Escrow Agent's server by the
dates set forth in the Escrow Project Plan. Except as set forth herein, the
Escrow Date and the Second Escrow Date are subject to change only in the event
of a failure by Tribune or the Escrow Agent to carry out any task by the date
set forth on the Escrow Project Plan and AdStar has notified Tribune and the
Escrow Agent in writing (or e-mail) of such failure. Such written notice of a
failure shall provide AdStar's estimate of the cost and time impact of the
failure on the Escrow Project Plan. Tribune shall reimburse AdStar reasonable
travel costs incurred in the fulfillment of the obligations of this Section
10.2(b).
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 (x) 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 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.
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
continue to have the license rights to the Deposit Materials specified in
Section 3.1 of this Agreement.
SECTION 10.6. Duties of AdStar. (a) AdStar shall cooperate with the
Escrow Agent in all matters related to this Agreement.
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(b) AdStar 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, Gannett 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, Gannett Newspapers 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 destroyed by the Escrow Agent upon
the first to occur of the following: (i) termination or expiration of this
Agreement; or (ii) mutual written agreement of the Parties.
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
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.
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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 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
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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 Effective Date and continue in full force
and effect for as long as the CareerBuilder Service Agreement (the "Service
Agreement") between AdStar and CareerBuilder dated as of March 18, 2002, as the
same may be renewed, amended or extended, is in effect (the "Term"). The Parties
hereby agree that (i) any reference in the Service Agreement to the First
Agreement shall also be deemed to apply to this Agreement and (ii) the term
"Launch Date" in the Service Agreement shall mean August 1, 2002.
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
30 calendar days from receipt of such notice to attempt to cure the breach;
provided, however, that if the breach relates to a failure to meet a date set
forth on Exhibit A or in the Escrow Project Plan, the breaching party shall have
only 15 calendar days to cure the breach. If the breach is not cured within the
required period, the non-breaching Party may terminate this Agreement in its
entirety by providing the breaching Party with written notice of termination.
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 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 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
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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 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 years thereafter; provided,
however, that upon a Release Condition that is not cured by AdStar,
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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 14.3 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 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 calendar days of the Effective 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.
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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 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 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 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.
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
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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. The Parties Agree that any rights or
obligations existing under the First Agreement are not superceded or waived by
reason of the Parties entry into this Agreement. 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 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.
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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
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 325
Marina Del Rey, California 90292
Attention: Leslie Bernhard
President and Chief Executive Officer
Telephone: (310) 577-8255
Facsimile: (310) 577-8266
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with a copy to:
Morse, Zelnick, Rose & Lander, LLP
405 Park Avenue, Suite 1401
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 Confidential Information); 14.4
(Restricted Use of Confidential Information); and 15.3
(Non-Solicitation/NonHiring).
SECTION 15.17. Additional Parties. The Parties acknowledge that,
Tribune is permitted to sell a portion of its shares (the "Shares") of Series A
Preferred Stock, Series B1 Preferred Stock or Series B2 Preferred Stock of
AdStar to Gannett or Knight Ridder. The Parties agree that, in the event that
Tribune elects to sell Shares to Gannett or Knight Ridder, this Agreement will
be amended and restated in order to (a) make Gannett or Knight Ridder an
original Party hereto, (b) provide that Gannett or Knight Ridder is entitled to
all the rights and protections granted to Tribune under this Agreement and (c)
amend Exhibit A or Exhibit B to incorporate changes requested by Gannett or
Knight Ridder (with the incremental cost of development caused by any such
changes to Exhibit A or Exhibit B to be paid by Knight Ridder or Gannett). At
the time of any such amendment and restatement, Gannett or Knight Ridder shall
pay AdStar a fee of $25,000.
SECTION 15.18. Third Party Beneficiaries. The Parties expressly
intend the provisions of Section 13.1 to confer a benefit upon, and be
enforceable by, as third party beneficiaries, the third persons specified in
such section.
* * * * *
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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