Execution Copy
EXHIBIT 10.5
STOCKHOLDER SUPPORT AGREEMENT
This STOCKHOLDER SUPPORT AGREEMENT (the "Agreement") is made as of
December 23, 2002, by and among Leslie Bernhard and Eli Rousso (each a
"Stockholder" and collectively, the "Stockholders", each such Stockholder acting
in his capacity as a stockholder of AdStar, Inc., a Delaware corporation
("AdStar") and not as an officer or director of AdStar) and Tribune Company, a
Delaware corporation (the "Investor").
WHEREAS, the Investor will be purchasing on the date hereof
1,200,000 shares of Series B-1 Preferred Stock, $0.0001 par value per share, of
AdStar (the "Series B-1 Preferred Stock") pursuant to the terms of the Series B
Preferred Stock Series B Purchase Agreement dated as of December 23, 2002, by
and between AdStar and the Investor (the "Series B Purchase Agreement") and on
the date of the Subsequent Closing (as defined in the Series B Purchase
Agreement), the Investor will be purchasing certain shares of Series B-2
Preferred Stock, $0.0001 par value per share, of AdStar (the "Series B-2
Preferred Stock") and will be exchanging its Series B-1 Preferred Stock for
additional shares of Series B-2 Preferred Stock;
WHEREAS, as of the date hereof, each of the Stockholders is the
beneficial owner of the number of shares of Common Stock, $0.0001 par value per
share, of AdStar (the "Common Stock") set forth opposite his, her or its name on
Schedule I attached hereto (the "Securities");
WHEREAS, as a condition to the willingness of the Investor to enter
into the Series B Purchase Agreement, and as an inducement to the Investor to do
so, each Stockholder has agreed for the benefit of AdStar as set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained in this Agreement, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound hereby, agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, the following
terms have the following meanings:
"AdStar" shall have the meaning set forth in the Preamble.
"Affiliate" shall mean, with respect to any specified person, any
other person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified person and, in the case of a
person who is an individual, shall include (i) members of such specified
person's immediate family (as defined in Instruction 2 of Item 404(a) of
Regulation S-K under the Securities Act) and (ii) trusts, the trustee and all
beneficiaries of which are such specified person or members of such person's
immediate family as determined in
accordance with the foregoing clause (i). For the purposes of this definition,
"control" when used with respect to any person means the power to direct the
management and policies of such person (in particular the voting and disposition
of shares of Common Stock held directly or indirectly by such person), directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "affiliated," "controlling" and "controlled" have
meanings correlative to the foregoing. Notwithstanding the foregoing, neither
the Investor nor any of its Affiliates shall be deemed Affiliates of AdStar for
purposes of this Agreement.
"Agreement" shall have the meaning set forth in the Preamble.
"beneficial owner" of a security shall mean any person who, directly
or indirectly, through any contract, arrangement, understanding, relationship,
or otherwise has (i) the power to vote, or to direct the voting of, such
security or (ii) the power to dispose, or to direct the disposition of, such
security, or the ability to acquire such voting or dispositive power.
"Common Stock" shall have the meaning set forth in the second
paragraph hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Governmental Authority" shall mean any foreign, Federal, state or
local court or governmental or regulatory authority.
"Investor" shall have the meaning set forth in the Preamble.
"Lien" shall mean any pledge, lien, claim, restriction, charge or
encumbrance of any kind.
"Notices" shall have the meaning set forth in Section 4.6.
"person" shall mean any individual, partnership, corporation,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization, government or agency or political
subdivision thereof, or other entity.
"Securities" shall have the meaning set forth in the second
paragraph hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations thereunder.
"Series B Purchase Agreement" shall have the meaning set forth in
the first paragraph hereof.
"Series B-1 Preferred Stock" shall have the meaning set forth in the
first paragraph hereof.
"Series B-2 Preferred Stock" shall have the meaning set forth in the
first paragraph hereof.
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"Stockholder" or "Stockholders" shall have the meaning set forth in
the Preamble.
"subsidiary" shall mean, with respect to any person, (a) a
corporation a majority of whose capital stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such person, by a subsidiary of such person, or by such person and one or
more subsidiaries of such person, (b) a partnership in which such person or a
subsidiary of such person is, at the date of determination, a general partner of
such partnership, or (c) any other person (other than a corporation) in which
such person, a subsidiary of such person or such person and one or more
subsidiaries of such person, directly or indirectly, at the date of
determination thereof, has (i) at least a majority ownership interest, (ii) the
power to elect or direct the election of the directors or other governing body
of such person, or (iii) the power to direct or cause the direction of the
affairs or management of such person. For purposes of this definition, a person
is deemed to own any capital stock or other ownership interest if such person
has the right to acquire such capital stock or other ownership interest, whether
through the exercise of any purchase option, conversion privilege or similar
right.
"Termination Date" shall have the meaning set forth in Section 4.3.
Unless otherwise stated, other capitalized terms used but not
defined herein shall have the meanings set forth in the Series B Purchase
Agreement.
ARTICLE II
COVENANTS OF THE STOCKHOLDERS
Section 2.1 Agreement to Vote. At any meeting of the stockholders of
AdStar held on or prior to the Termination Date (as defined in Section 4.3),
however called, and at every adjournment or postponement thereof, or in
connection with any written consent of the holders of any class or classes of
the capital stock of AdStar prior to the Termination Date, each Stockholder
shall vote and cause each of its controlled Affiliates to vote all of the
Securities with respect to which it has the right to vote or direct the vote (as
of the record date for such meeting of stockholders), in favor of the Series B
Purchase Agreement, the Transaction Documents and all of the transactions
contemplated by the Series B Purchase Agreement and the Transaction Documents,
all matters requiring approval of stockholders under the listing requirements of
the Nasdaq Stock Market in connection with such transactions, and any actions
required in furtherance hereof, including, without limitation the issuance of
the Series B-2 Preferred Stock. None of the Stockholders shall enter into, or
permit any of its controlled Affiliates to enter into, any agreement or
understanding with any person prior to the Termination Date, directly or
indirectly, to vote, grant any proxy or power of attorney, give instructions or
enter into a voting agreement with respect to the voting of his or its
Securities in any manner inconsistent with the preceding sentence.
Section 2.2 Reasonable Efforts. Prior to the Termination Date, each
Stockholder, in his or her capacity as a stockholder of AdStar, shall use
reasonable efforts to assist and cooperate with AdStar in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by the Series B
Purchase Agreement and the Transaction Documents.
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Section 2.3 Restrictions on Transfers. (a) Prior to the Termination
Date, such Stockholder shall not (i) directly or indirectly, offer for sale,
sell, transfer, tender, pledge, encumber, assign or otherwise dispose of, or
enter into any contract, option or other arrangement or understanding with
respect to or consent to the offer for sale, transfer, tender, pledge,
encumbrance, assignment or other disposition of, any or all of the securities
listed beside its name on Schedule I attached hereto or any interest therein or
any shares of Common Stock issuable upon the exercise of stock options or
warrants; (ii) except as contemplated by this Agreement, grant any proxies or
powers of attorney, deposit any such securities into a voting trust or enter
into a voting agreement with respect to any such securities; or (iii) take any
action that would make any representation or warranty of such Stockholder
contained herein untrue or incorrect or have the effect of preventing such
Stockholder from performing such Stockholder's obligations under this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each Stockholder represents and warrants to AdStar, as to himself
that:
Section 3.1 Ownership. Each Stockholder is the record and beneficial
owner of the equity securities of AdStar listed beside such Stockholder's name
on Schedule I attached hereto as of the date hereof. The equity securities set
forth beside the name of each Stockholder on Schedule I constitute all of the
shares of capital stock of AdStar owned of record or beneficially by such
Stockholder as of the date hereof. All of such securities are issued and
outstanding, and except as set forth on Schedule I attached hereto, such
Stockholder does not own, of record or beneficially, any warrants, options or
other rights to acquire any shares of capital stock of AdStar. The securities
listed beside each such Stockholder's name on Schedule I attached hereto and the
certificates representing such securities are now, and at all times during the
term hereof will be, held by such Stockholder, or by a nominee or custodian for
the benefit of such Stockholder, free and clear of all Liens, proxies, voting
trusts or other agreement, arrangement or restriction with respect to the voting
of such securities that would prohibit such Stockholder from complying with
Section 2.1 hereof with respect to such securities (other than as contemplated
by this Agreement).
Section 3.2 Authority; No Conflicts. Each Stockholder has the
authority and has been duly authorized by all necessary action (including
consultation, approval or other action by or with any other person), to execute,
deliver and perform this Agreement and consummate the transactions contemplated
hereby. Such actions by such Stockholder require no action by, or in respect of,
or filing with, any Governmental Authority with respect to such Stockholder
other than any required filings under Section 13 of the Exchange Act. None of
the execution and delivery of this Agreement by such Stockholder, the
consummation by such Stockholder of the transactions contemplated hereby or
compliance by such Stockholder with any of the provisions hereof shall (A)
conflict with or result in any breach of or constitute (with or without notice
or lapse of time or both) a default (or give rise to any third party right of
termination, cancellation, material modification or acceleration) under any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement or other
instrument or obligation of any kind to which such Stockholder is a party or
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by which such Stockholder or any of such Stockholder's properties or assets may
be bound, or (B) violate any order, writ, injunction, decree, judgment, order,
statute, rule or regulation applicable to such Stockholder or any of such
Stockholder's properties or assets.
Section 3.3 Binding Effect. This Agreement has been duly executed
and delivered by such Stockholder and is the valid and binding agreement of such
Stockholder, enforceable against such Stockholder in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights generally and by equitable
principles to which the remedies of specific performance and injunctive and
similar forms of relief are subject.
Section 3.4 Reliance by the Investor. Each Stockholder understands
and acknowledges that the Investor is entering into the Series B Purchase
Agreement in reliance upon such Stockholder's execution and delivery of this
Agreement.
ARTICLE IV
MISCELLANEOUS
Section 4.1 Expenses. All costs and expenses incurred in connection
with this Agreement shall be paid by the party incurring such cost or expense.
Section 4.2 Specific Performance. Each Stockholder agrees that the
Investor would be irreparably damaged if for any reason such Stockholder fails
to perform any of such Stockholder's obligations under this Agreement, and that
the Investor would not have an adequate remedy at law for money damages in such
event. Accordingly, the Investor shall be entitled to seek specific performance
and injunctive and other equitable relief to enforce the performance of this
Agreement by each Stockholder. This provision is without prejudice to any other
rights that the Investor may have against such Stockholder for any failure to
perform its obligations under this Agreement.
Section 4.3 Amendments; Termination. Neither this Agreement, nor any
of the terms or provisions contained herein, may be waived, modified or amended
without the prior written consent of the Investor, which consent may be withheld
in the sole and absolute discretion of any Investor. No amendment, modification
or termination of this Agreement shall be binding upon any other party unless
executed in writing by the parties hereto intending to be bound thereby. This
Agreement shall terminate, except with respect to liability for prior breaches
thereof, immediately following the stockholder meeting called and held pursuant
to Section 7.5 of the Series B Purchase Agreement (the "Termination Date").
Section 4.4 Successors and Assigns. This Agreement and the rights,
duties and obligations hereunder may not be assigned or delegated by any
Stockholder without the prior written consent of the Investor. Except as
provided in the preceding sentence, any assignment or delegation of rights,
duties or obligations hereunder made without the prior written consent of the
Investor shall be void and of no effect. This Agreement and the provisions
hereof shall be binding upon and shall inure to the benefit of each of the
parties and their respective successors and permitted assigns.
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Section 4.5 Certain Events. Each Stockholder agrees that this
Agreement and the obligations hereunder shall attach to the Securities of such
Stockholder and, except with respect to the Securities transferred in accordance
with Section 2.3, shall be binding upon any person to which legal or beneficial
ownership of such shares shall pass, whether by operation of law or otherwise.
Section 4.6 Notices. All notices, demands, requests, consents,
approvals or other communications (collectively, "Notices") required or
permitted to be given hereunder or which are given with respect to this
Agreement shall be in writing and shall be personally served, delivered by a
reputable air courier service with tracking capability, with charges prepaid, or
transmitted by hand delivery or facsimile, addressed as set forth below, or to
such other address as such party shall have specified most recently by written
notice. Notice shall be deemed given on the date of service or transmission if
personally served or transmitted by facsimile. Notice otherwise sent as provided
herein shall be deemed given on the next business day following delivery of such
notice to a reputable air courier service (a) if to any Stockholder, to it at
the address(es) or facsimile number(s) set forth on Schedule I hereto, with a
copy to AdStar at 4553 Glencoe Avenue, Suite 325, Marina del Rey, California
90292, Attention: Leslie Bernhard, and (b) if to the Investor, to it at the
following contact information:
Tribune Company
435 N. Michigan Ave.
Chicago, IL 60611
Attn: General Counsel
Facsimile: (312) 222-4206
with a copy (which shall not constitute notice) to:
Sidley Austin Brown & Wood
Bank One Plaza
10 South Dearborn
Chicago, IL 60603
Attention: Larry A. Barden
Jon A. Ballis
Facsimile: (312) 853-7036
Section 4.7 Governing Law. This Agreement and the rights and
obligations of the parties hereunder shall be governed by, and construed in
accordance with, the laws of the State of Illinois, and each party hereto
submits to the non-exclusive jurisdiction of the state and federal courts within
Cook County in the State of Illinois. Any legal action or proceeding with
respect to this Agreement may be brought in the courts of the State of Illinois
or of the United States of America for the Northern District of Illinois and, by
execution and delivery of this Agreement, each party hereto hereby accepts for
itself and in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts. Each party hereto further irrevocably
consents to the service of process out of any of the aforementioned courts in
any action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to such party at its address set forth in
Section 4.6, such service to become effective seven days after such mailing.
Nothing herein shall affect the right of the Investor to serve
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process in any of the matters permitted by law or to commence legal proceedings
or otherwise proceed against any of the Stockholders in any other jurisdiction.
Each party hereto hereby irrevocably waives any objection which it may now or
hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement
Section 4.8 Entire Agreement. This Agreement (including all
agreements entered into pursuant hereto and all certificates and instruments
delivered pursuant hereto and thereto) constitutes the entire agreement of the
parties with respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements, representations, understandings, negotiations and
discussions between the parties, whether oral or written, with respect to the
subject matter hereof.
Section 4.9 Waivers and Extensions. Subject to Section 4.3, any
party to this Agreement may waive any right, breach or default which such party
has the right to waive, provided that such waiver will not be effective against
the waiving party unless it is in writing, is signed by such party and the
Investor, and specifically refers to this Agreement. Waivers may be made in
advance or after the right waived has arisen or the breach or default waived has
occurred. Any waiver may be conditional. No waiver of any breach of any
agreement or provision herein contained shall be deemed a waiver of any
preceding or succeeding breach thereof nor of any other agreement or provision
herein contained. No waiver or extension of time for performance of any
obligations or acts shall be deemed a waiver or extension of the time for
performance of any other obligations or acts.
Section 4.10 Titles and Headings. Titles and headings of sections of
this Agreement are for convenience only and shall not affect the construction of
any provision of this Agreement.
Section 4.11 Exhibits and Schedules. Each of the annexes, exhibits
and schedules referred to herein and attached hereto is an integral part of this
Agreement and is incorporated herein by reference.
Section 4.12 Attorneys' Fees. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and necessary
disbursements, in addition to any other relief to which such party may be
entitled.
Section 4.13 Severability. This Agreement shall be deemed severable,
and the invalidity or unenforceability of any term or provision hereof shall not
affect the validity or enforceability of this Agreement or of any other term or
provision hereof. Furthermore, in lieu of any such invalid or unenforceable term
or provision, the parties hereto intend that there shall be added as a part of
this Agreement a provision as similar in terms to such invalid or unenforceable
provision as may be possible and be valid and enforceable.
Section 4.14 Counterparts; Facsimile. This Agreement may be executed
in multiple counterparts, each of which shall be deemed an original, and all of
which taken together shall constitute one and the same instrument. This
Agreement may be delivered by a party via
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facsimile; provided, that, the originally executed signature pages and original
documents are delivered to the appropriate parties within two (2) business days.
Section 4.15 Further Assurances. Each party hereto, upon the request
of any other party hereto, shall do all such further acts and execute,
acknowledge and deliver all such further instruments and documents as may be
necessary or desirable to carry out the transactions contemplated by this
Agreement.
Section 4.16 Remedies Cumulative. The remedies provided herein shall
be cumulative and shall not preclude the assertion by any party hereto,
including any Investor, of any other rights or the seeking of any remedies
against any other party hereto.
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IN WITNESS WHEREOF, AdStar and the Stockholders have caused this
Agreement to be duly executed as of the day and year first above written.
ADSTAR, INC.
By: /s/ Leslie Bernhard
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Name: Leslie Bernhard
Title: President and Chief Executive Officer
/s/ Leslie Bernhard
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Leslie Bernhard
/s/ Eli Rousso
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Eli Rousso
TRIBUNE COMPANY
By: /s/ Timothy Landon
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Name: Timothy Landon
Title: President/Tribune Classifieds