Document:

exv4w1

 

Exhibit 4.1

THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF
THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO ADSTAR, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.

SECURED CONVERTIBLE TERM NOTE

     FOR VALUE RECEIVED, ADSTAR, INC., a Delaware corporation (the “Borrower”),
hereby promises to pay to LAURUS MASTER FUND, LTD., c/o Ironshore Corporate
Services Ltd., P.O. Box 1234 G.T., Queensgate House, South Church Street, Grand
Cayman, Cayman Islands, Fax: 345-949-9877 (the “Holder”) or its registered
assigns or successors in interest, on order, the sum of ONE MILLION FIVE
HUNDRED THOUSAND DOLLARS ($1,500,000), together with any accrued and unpaid
interest hereon, on April 12, 2007 (the “Maturity Date”) if not sooner paid.

     Capitalized terms used herein without definition shall have the meanings
ascribed to such terms in that certain Securities Purchase Agreement dated as
of the date hereof between the Borrower and the Holder (the “Purchase
Agreement”).

The following terms shall apply to this Note:

ARTICLE I

INTEREST & AMORTIZATION

     1.1(a) Interest Rate. Subject to Sections 4.10 and 5.6 hereof, interest
payable on this Note shall accrue at a rate per annum (the “Interest Rate”)
equal to the “prime rate” published in The Wall Street Journal from time to
time, minus one percent (1%). The prime rate shall be increased or decreased
as the case may be for each increase or decrease in the prime rate in an amount
equal to such increase or decrease in the prime rate; each change to be
effective as of the day of the change in such rate. Interest shall be (i)
calculated on the basis of a 360 day year, (ii) payable monthly, in arrears,
commencing on May 1, 2004 and on the first business day of each consecutive
calendar month thereafter until the Maturity Date (and on the Maturity Date),
whether by acceleration or otherwise (each, a “Repayment Date”).
Notwithstanding anything to the contrary contained in this Section 1.1(a) or in
Section 1.1(b), in no event shall the Interest Rate be less than zero percent
(0%).

     1.1 (b) Interest Rate Adjustment. The Interest Rate shall be calculated
on the last business day of each month hereafter until the Maturity Date (each
a “Determination Date”) subject to adjustment as set forth herein. If (i) the
Borrower shall have registered the shares of the Borrower’s Common Stock
underlying the conversion of the Note and that certain warrant issued to Holder
on a registration statement declared effective by the SEC, and (ii) the market
price of the Common Stock

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as reported by Bloomberg, L.P. on the Principal Market (as defined below)
for the five (5) trading days immediately preceding a Determination Date
exceeds the then applicable Fixed Conversion Price by at least twenty five
percent (25%), then the Interest Rate for the succeeding calendar month shall
automatically be reduced by 100 basis points (1%) for each incremental twenty
five percent (25%) increase in the market price of the Common Stock above the
then applicable Fixed Conversion Price.

     1.2 Minimum Monthly Principal Payments. Amortizing payments of the
aggregate principal amount outstanding under this Note at any time (the
"Principal Amount”) shall begin on July 1, 2004 and shall recur on the first
business day of each succeeding month thereafter until the Maturity Date (each,
an “Amortization Date”). Subject to Article 3 below, beginning on the first
Amortization Date, the Borrower shall make monthly payments to the Holder on
each Repayment Date, each in the amount of $45,454.55, together with any
accrued and unpaid interest to date on such portion of the Principal Amount
plus any and all other amounts which are then owing under this Note but have
not been paid (collectively, the “Monthly Amount”). Any Principal Amount that
remains outstanding on the Maturity Date shall be due and payable on the
Maturity Date.

ARTICLE II

CONVERSION REPAYMENT

     2.1 (a) Payment of Monthly Amount in Cash or Common Stock. Each month by
the fifth (5th) business day prior to each Amortization Date (the “Notice
Date”), the Holder shall deliver to Borrower a written notice in the form of
Exhibit B attached hereto converting the Monthly Amount payable on the next
Repayment Date in either cash or Common Stock, or a combination of both (each,
a “Repayment Notice”). If a Repayment Notice is not delivered by the Holder on
or before the applicable Notice Date for such Repayment Date, then the
Borrower shall pay the Monthly Amount due on such Repayment Date in cash. Any
portion of the Monthly Amount paid in cash on a Repayment Date, shall be paid
to the Holder an amount equal to 102% of the principal portion of the Monthly
Amount due and owing to Holder on the Repayment Date; If the Holder converts
all or a portion of the Monthly Amount in shares of Common Stock as provided
herein, the number of such shares to be issued by the Borrower to the Holder on
such Repayment Date shall be the number determined by dividing (x) the portion
of the Monthly Amount to be paid in shares of Common Stock, by (y) the then
applicable Fixed Conversion Price. For purposes hereof, the initial “Fixed
Conversion Price” means $2.25 (which has been determined on the date of this
Note as an amount equal to 105% of the average closing price for the twenty two
(22) trading days immediately prior to the date of this Note).

     (b) Monthly Amount Conversion Guidelines. Subject to Sections 2.1(a),
2.2, and 3.2 hereof, the Holder shall convert all or a portion of the Monthly
Amount due on each Repayment Date in shares of Common Stock if the average
closing price of the Common Stock as reported by Bloomberg, L.P. on the
Principal Market for the five (5) trading days immediately preceding such
Repayment Date was greater than 110% of the Fixed Conversion Price, provided,
however, that such conversions shall not exceed twenty five percent (25%) of
the aggregate dollar trading volume of the

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Common Stock for the five (5) day trading period immediately preceding
delivery of a Notice of Conversion to the Borrower. Any part of the Monthly
Amount due on a Repayment Date that the Holder has not converted into shares of
Common Stock shall be paid by the Borrower in cash on such Repayment Date. Any
part of the Monthly Amount due on such Repayment Date which must be paid in
cash (as a result of the closing price of the Common Stock on one or more of
the five (5) trading days preceding the applicable Repayment Date being less
than 110% of the Fixed Conversion Price) shall be paid in cash at the rate of
102% of the Monthly Amount otherwise due on such Repayment Date, within three
(3) business days of the applicable Repayment Date.

     2.2 No Effective Registration. Notwithstanding anything to the contrary
herein, none of the Borrower’s obligations to the Holder may be converted
into Common Stock unless (i) an effective current Registration Statement (as
defined in the Registration Rights Agreement) covering the shares of Common
Stock to be issued in connection with satisfaction of such obligations exists,
(ii) no Event of Default hereunder exists and is continuing, unless such
Event of Default is cured within any applicable cure period or is otherwise
waived in writing by the Holder in whole or in part at the Holder’s option
(iii) an exemption from registration of the Common Stock is available to
pursuant to Rule 144 of the Securities Act.

     Any amounts converted by the Holder pursuant to this Section 2.2 shall be
deemed to constitute payments of outstanding fees, interest and principal
arising in connection with Monthly Amounts for the remaining Repayment Dates,
in chronological order.

     2.4 Optional Redemption in Cash. The Borrower will have the option of
prepaying this Note (“Optional Redemption”) by paying to the Holder a sum of
money equal to one hundred twenty five percent (125%) of the principal amount
of this Note together with accrued but unpaid interest thereon and any and all
other sums due, accrued or payable to the Holder arising under this Note, the
Security Agreement, or any Related Agreement (the “Redemption Amount”)
outstanding on the day written notice of redemption (the “Notice of
Redemption”) is given to the Holder. The Notice of Redemption shall specify the
date for such Optional Redemption (the “Redemption Payment Date”) which date
shall be seven (7) business days after the date of the Notice of Redemption
(the “Redemption Period”). A Notice of Redemption shall not be effective with
respect to any portion of this Note for which the Holder has a pending election
to convert pursuant to Section 3.1, or for conversions initiated or made by the
Holder pursuant to Section 3.1 during the Redemption Period. The Redemption
Amount shall be determined as if such Holder’s conversion elections had been
completed immediately prior to the date of the Notice of Redemption. On the
Redemption Payment Date, the Redemption Amount must be paid in good funds to
the Holder. In the event the Borrower fails to pay the Redemption Amount on
the Redemption Payment Date as set forth herein, then such Redemption Notice
will be null and void.

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ARTICLE III

CONVERSION RIGHTS

     3.1. Holder’s Conversion Rights. The Holder shall have the right, but not
the obligation, to convert all or any portion of the then aggregate outstanding
principal amount of this Note, together with interest and fees due hereon, into
shares of Common Stock subject to the terms and conditions set forth in this
Article III. The Holder may exercise such right by delivery to the Borrower of
a written notice of conversion not less than one (1) day prior to the date upon
which such conversion shall occur. The date upon which such conversion shall
occur is (the “Conversion Date”).

     3.2 Conversion Limitation. Notwithstanding anything contained herein to
the contrary, the Holder shall not be entitled to convert pursuant to the terms
of this Note an amount that would be convertible into that number of Conversion
Shares which would exceed the difference between the number of shares of Common
Stock beneficially owned by such Holder or issuable upon exercise of warrants
held by such Holder and 4.99% of the outstanding shares of Common Stock of the
Borrower. For the purposes of the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Exchange
Act and Regulation 13d-3 thereunder. The Holder may void the Conversion Share
limitation described in this Section 3.2 upon 75 days prior notice to the
Borrower or without any notice requirement upon an Event of Default.

     3.3 Mechanics of Holder’s Conversion. (a) In the event that the Holder
elects to convert this Note into Common Stock, the Holder shall give notice of
such election by delivering an executed and completed notice of conversion
(“Notice of Conversion”) to the Borrower and such Notice of Conversion shall
provide a breakdown in reasonable detail of the Principal Amount, accrued
interest and fees being converted. On each Conversion Date (as hereinafter
defined) and in accordance with its Notice of Conversion, the Holder shall make
the appropriate reduction to the Principal Amount, accrued interest and fees as
entered in its records and shall provide written notice thereof to the Borrower
within two (2) business days after the Conversion Date. Each date on which a
Notice of Conversion is delivered or telecopied to the Borrower in accordance
with the provisions hereof shall be deemed a Conversion Date (the “Conversion
Date”). A form of Notice of Conversion to be employed by the Holder is annexed
hereto as Exhibit A.

     (b) Pursuant to the terms of the Notice of Conversion, the Borrower will
issue instructions to the transfer agent accompanied by an opinion of counsel
within one (1) business day of the date of the delivery to Borrower of the
Notice of Conversion and shall cause the transfer agent to transmit the
certificates representing the Conversion Shares to the Holder by crediting the
account of the Holder’s designated broker with the Depository Trust Corporation
(“DTC”) through its Deposit Withdrawal Agent Commission (“DWAC”) system within
three (3) business days after receipt by the Borrower of the Notice of
Conversion (the “Delivery Date”). In the case of the exercise of the
conversion rights set forth herein the conversion privilege shall be deemed to
have been exercised and the Conversion Shares issuable upon such conversion
shall be deemed to have been issued upon the date of receipt by the Borrower of
the Notice of Conversion. The Holder shall be treated for all

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purposes as the record holder of such Common Stock, unless the Holder
provides the Borrower written instructions to the contrary.

     3.4 Conversion Mechanics.

     (a) The number of shares of Common Stock to be issued upon each conversion
of this Note shall be determined by dividing that portion of the principal and
interest and fees to be converted, if any, by the then applicable Fixed
Conversion Price. In the event of any conversions of outstanding principal
amount under this Note in part pursuant to this Article III, such conversions
shall be deemed to constitute conversions of outstanding principal amount
applying to Monthly Amounts for the remaining Repayment Dates in chronological
order. By way of example, if the original principal amount of this Note is
$1,500,000 and the Holder converted $90,909.10 of such original principal
amount prior to the first Repayment Date, then (1) the principal amount of the
Monthly Amount due on the first Repayment Date would equal $0, (2) the
principal amount of the Monthly Amount due on the second Repayment Date would
equal $0 and (3) the principal amount of the Monthly Amount due on the third
Repayment Dates would be $45,454.55.

     (b) The Fixed Conversion Price and number and kind of shares or other
securities to be issued upon conversion is subject to adjustment from time to
time upon the occurrence of certain events, as follows:

     A. Stock Splits, Combinations and Dividends. If the shares of Common
Stock are subdivided or combined into a greater or smaller number of shares of
Common Stock, or if a dividend is paid on the Common Stock in shares of Common
Stock, the Fixed Conversion Price or the Conversion Price, as the case may be,
shall be proportionately reduced in case of subdivision of shares or stock
dividend or proportionately increased in the case of combination of shares, in
each such case by the ratio which the total number of shares of Common Stock
outstanding immediately after such event bears to the total number of shares of
Common Stock outstanding immediately prior to such event.

     B. During the period the conversion right exists, the Borrower will
reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of Common Stock upon the full conversion of
this Note. The Borrower represents that upon issuance, such shares will be
duly and validly issued, fully paid and non-assessable. The Borrower agrees
that its issuance of this Note shall constitute full authority to its officers,
agents, and transfer agents who are charged with the duty of executing and
issuing stock certificates to execute and issue the necessary certificates for
shares of Common Stock upon the conversion of this Note.

     C. Share Issuances. Subject to the provisions of this Section 3.4, if the
Borrower shall at any time prior to the conversion or repayment in full of the
Principal Amount issue any shares of Common Stock or securities convertible
into Common Stock to a person other than the Holder (except (i) pursuant to
Subsections A or B above; (ii) pursuant to options, warrants, or other

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obligations to issue shares outstanding on the date hereof as disclosed to
Holder in writing; (iii) pursuant to options that may be issued under any
employee incentive stock option and/or any qualified stock option plan adopted
by the Borrower; (iv) pursuant to the Vendor Compensation Plan; (v) in
connection with any strategic merger or acquisition approved by AdStar’s Board
of Directors (vi) for up to 50,000 shares of Common Stock issued by the
Borrower in any single transaction (subject to an aggregate limit of up to
100,000 shares of Common Stock in any consecutive 12 month period) or (vii)
pursuant to conversion privileges or exercise rights of any presently
outstanding securities, including anti-dilution provisions thereof (to the
extent disclosed by the Borrower on the date hereof on Schedule 4.3 to the
Purchase Agreement) for a consideration per share (the “Offer Price”) less than
the Fixed Conversion Price in effect at the time of such issuance, then the
Fixed Conversion Price shall be immediately reset pursuant to the formula
below:

          If the Corporation issues any additional shares pursuant to this Section
3.4, then, and thereafter successively upon each such issue, the Fixed
Conversion Price shall be adjusted by multiplying the then applicable Fixed
Conversion Price by the following fraction:

A + B

(A + B) + [((C – D) x B) / C]

          A = Actual shares outstanding prior to such offering

          B = Actual shares sold in the offering

          C = Fixed Conversion Price

          D = Offering price [establish how this will be calculated]

     For purposes hereof, the issuance of any security of the Borrower
convertible into or exercisable or exchangeable for Common Stock shall result
in an adjustment to the Fixed Conversion Price at the time of issuance of such
securities.

     D. Reclassification, etc. If the Borrower at any time shall, by
reclassification or otherwise, change the Common Stock into the same or a
different number of securities of any class or classes, this Note, as to the
unpaid Principal Amount and accrued interest thereon, shall thereafter be
deemed to evidence the right to purchase an adjusted number of such securities
and kind of securities as would have been issuable as the result of such change
with respect to the Common Stock immediately prior to such reclassification or
other change.

     3.5 Issuance of New Note. Upon any partial conversion of this Note, a new
Note containing the same date and provisions of this Note shall, at the request
of the Holder, be issued by

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the Borrower to the Holder for the principal balance of this Note and
interest which shall not have been converted or paid. The Borrower will pay no
costs, fees or any other consideration to the Holder for the production and
issuance of a new Note.

ARTICLE IV

EVENTS OF DEFAULT

     Upon the occurrence and continuance of an Event of Default beyond any
applicable grace period, the Holder may make all sums of principal, interest
and other fees then remaining unpaid hereon and all other amounts payable
hereunder immediately due and payable. In the event of such an acceleration,
within five (5) days after written notice from Holder to Borrower (each
occurrence being a “Default Notice Period”) the amount due and owing to the
Holder shall be 125% of the outstanding principal amount of the Note (plus
accrued and unpaid interest and fees, if any) (the “Default Payment”). If,
with respect to any Event of Default, the Borrower cures the Event of Default,
the Event of Default will be deemed to no longer exist and any rights and
remedies of Holder pertaining to such Event of Default will be of no further
force or effect. The Default Payment shall be applied first to any fees due and
payable to Holder pursuant to the Note or the Related Agreements, then to
accrued and unpaid interest due on the Note and then to outstanding principal
balance of the Note.

     The occurrence of any of the following events is an “Event of Default”:

     4.1 Failure to Pay Principal, Interest or other Fees. The Borrower fails
to pay when due any installment of principal, interest or other fees hereon in
accordance herewith, or the Borrower fails to pay when due any amount due under
any other promissory note issued by Borrower, and in any such case, such
failure shall continue for a period of three (3) days following the date upon
which any such payment was due.

     4.2 Breach of Covenant. The Borrower breaches any covenant or other term
or condition of this Note or the Purchase Agreement in any material respect or
the Borrower or its Subsidiary breaches any covenant or any other term or
condition of any Related Agreement in any material respect and, in any such
case, such breach, if subject to cure, continues for a period of fifteen (15)
days after the occurrence thereof.

     4.3 Breach of Representations and Warranties. Any representation or
warranty of the Borrower made in this Note or in the Purchase Agreement, or by
the Borrower or its Subsidiary in a Related Agreement, shall, in such case, be
false or misleading in any material respect on the date that such
representation or warranty was made or deemed made, and if subject to cure,
shall not be cured for a period of ten (10) days.

     4.4 Receiver or Trustee. The Borrower or its Subsidiary shall make an
assignment for the benefit of creditors, or apply for or consent to the
appointment of a receiver or trustee for it or for a substantial part of its
property or business; or such a receiver or trustee shall otherwise be
appointed.

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     4.5 Judgments. Any money judgment, writ or similar final process shall be
entered or filed against the Borrower or any of its property or other assets
for more than $50,000, and shall remain unvacated, unbonded or unstayed for a
period of thirty (30) days.

     4.6 Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings or relief under any bankruptcy law or any law
for the relief of debtors shall be instituted by or against the Borrower or its
Subsidiary.

     4.7 Stop Trade. An SEC stop trade order or Principal Market trading
suspension of the Common Stock shall be in effect for five (5) consecutive days
or five (5) days during a period of ten (10) consecutive days, excluding in all
cases a suspension of all trading on a Principal Market, provided that the
Borrower shall not have been able to cure such trading suspension within thirty
(30) days of the notice thereof or list the Common Stock on another Principal
Market within sixty (60) days of such notice. The “Principal Market” for the
Common Stock shall include the NASD OTC Bulletin Board, NASDAQ SmallCap Market,
NASDAQ National Market System, American Stock Exchange, or New York Stock
Exchange (whichever of the foregoing is at the time the principal trading
exchange or market for the Common Stock, or any securities exchange or other
securities market on which the Common Stock is then being listed or traded.

     4.8 Failure to Deliver Common Stock or Replacement Note. The Borrower
shall fail to timely deliver Common Stock to the Holder pursuant to and in the
form required by this Note, and Section 9 of the Purchase Agreement, if such
failure to timely deliver Common Stock shall not be cured within two (2) days,
or (ii) if Borrower shall be required to issue a replacement Note to Holder and
Borrower shall fail to deliver such replacement Note within seven (7) business
days following the required date of such issuance pursuant to this Note,
Purchase Agreement or any Related Agreement (to the extent required under such
agreements).

     4.9 Default Under Related Agreements. The occurrence and continuance of
any Event of Default (as defined in any Related Agreement) or any event of
default (or similar term) under any other indebtedness.

     4.10 Change in Control. The occurrence of a change in the control or
ownership of the Company.

DEFAULT RELATED PROVISIONS

     4.11 Payment Grace Period. Following the occurrence and continuance of an
Event of Default beyond any applicable cure period hereunder, the Borrower
shall pay the Holder a default interest rate of two percent (2%) per month on
all amounts due and owing under the Note, which default interest shall be
payable upon demand.

     4.12 Conversion Privileges. The conversion privileges set forth in
Article III shall remain in full force and effect immediately from the date
hereof and until this Note is paid in full.

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     4.13 Cumulative Remedies. The remedies under this Note shall be
cumulative.

ARTICLE V

MISCELLANEOUS

     5.1 Failure or Indulgence Not Waiver. No failure or delay on the part of
the Holder hereof in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof
or of any other right, power or privilege. All rights and remedies existing
hereunder are cumulative to, and not exclusive of, any rights or remedies
otherwise available.

     5.2 Notices. Any notice herein required or permitted to be given shall be
in writing and shall be deemed effectively given: (a) upon personal delivery
to the party notified, (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next
business day, (c) five days after having been sent by registered or certified
mail, return receipt requested, postage prepaid, or (d) one day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt. All communications shall be sent to the
Borrower at the address provided in the Purchase Agreement executed in
connection herewith, and to the Holder at the address provided in the Purchase
Agreement for such Holder, with a copy to John E. Tucker, Esq., 825 Third
Avenue, 14th Floor, New York, New York 10022, facsimile number (212) 541-4434,
or at such other address as the Borrower or the Holder may designate by ten
days advance written notice to the other parties hereto. A Notice of
Conversion shall be deemed given when made to the Borrower pursuant to the
Purchase Agreement.

     5.3 Amendment Provision. The term “Note” and all reference thereto, as
used throughout this instrument, shall mean this instrument as originally
executed, or if later amended or supplemented, then as so amended or
supplemented, and any successor instrument issued pursuant to Section 3.5
hereof, as it may be amended or supplemented.

     5.4 Assignability. This Note shall be binding upon the Borrower and its
successors and assigns, and shall inure to the benefit of the Holder and its
successors and assigns, and may be assigned by the Holder in accordance with
the requirements of the Purchase Agreement.

     5.5 Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of laws. Any action brought by either party against the other
concerning the transactions contemplated by this Agreement shall be brought
only in the state courts of New York or in the federal courts located in the
state of New York. Both parties and the individual signing this Note on behalf
of the Borrower agree to submit to the jurisdiction of such courts. The
prevailing party shall be entitled to recover from the other party its
reasonable attorney’s fees and costs. In the event that any provision of this
Note is invalid or unenforceable under any applicable statute or rule of law,
then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law. Any such provision which may prove invalid or

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unenforceable under any law shall not affect the validity or
unenforceability of any other provision of this Note. Nothing contained herein
shall be deemed or operate to preclude the Holder from bringing suit or taking
other legal action against the Borrower in any other jurisdiction to collect on
the Borrower’s obligations to Holder, to realize on any collateral or any other
security for such obligations, or to enforce a judgment or other court in favor
of the Holder.

     5.6 Maximum Payments. Nothing contained herein shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law. In the event that the rate
of interest required to be paid or other charges hereunder exceed the maximum
permitted by such law, any payments in excess of such maximum shall be credited
against amounts owed by the Borrower to the Holder and thus refunded to the
Borrower.

     5.7 Security Interest and Guarantee. The Holder has been granted a
security interest in certain assets of the Borrower and its Subsidiary as more
fully described in a Master Security Agreement and the Stock Pledge Agreement
in each case as of the date hereof. The obligations of the Borrower under this
Note are guaranteed by its Subsidiary pursuant to the Subsidiary Guaranty dated
as of the date hereof.

     5.8 Construction. Each party acknowledges that its legal counsel
participated in the preparation of this Note and, therefore, stipulates that
the rule of construction that ambiguities are to be resolved against the
drafting party shall not be applied in the interpretation of this Note to favor
any party against the other.

     5.9 Cost of Collection. If default is made in the payment of this Note,
the Borrower shall pay to Holder reasonable costs of collection, including
reasonable attorney’s fees.

[Balance of page intentionally left blank; signature page follows.]

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     IN WITNESS WHEREOF, the Borrower has caused this Convertible Term Note to
be signed in its name effective as of this 12th day of April, 2004.

	 	 	 	 	 
	 	 	ADSTAR, INC.
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	
 
	

	 	Name:
	 	Leslie Bernhard
	

	 	Title:
	 	President and Chief Executive Officer
	 
	 	 	 	 
	WITNESS:
	 	 	 	 
	 
	 	 	 	 
	

	 	 	 	 

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EXHIBIT A

NOTICE OF CONVERSION

(To be executed by the Holder in order to convert all or part of the Note into
Common Stock

[Name and Address of Holder]

The Undersigned hereby converts $                    of the principal due on [specify
applicable Repayment Date] under the Convertible Term Note issued by ADSTAR,
INC. dated [Month]                    , 2004 by delivery of Shares of Common Stock of ADSTAR,
INC. on and subject to the conditions set forth in Article III of such Note.

	1.	 	Date of Conversion                                       
	 
	2.	 	Shares To Be Delivered:                                       

	 	 	 	 	 
	 

	 	By:	 	 
	

	 	 	 	
 
	

	 	Name:
	 	Leslie Bernhard
	

	 	Title:
	 	President and Chief Executive Officer

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EXHIBIT B

CONVERSION NOTICE

(To be executed by the Holder in order to convert all or part of a Monthly
Amount into Common Stock)

[Name and Address of Holder]

Holder hereby converts $                    of the Monthly Amount due on [specify
applicable Repayment Date] under the Convertible Term Note issued by ADSTAR,
INC. dated                    , 200                    by delivery of Shares of Common Stock of ADSTAR, INC.
on and subject to the conditions set forth in Article III of such Note.

	 	 	 	 	 	 	 
	1.

	 	Fixed Conversion Price:
	 	$                                      
	 	 
	2.

	 	Amount to be paid:
	 	$                                      	 	 
	3.

	 	Shares To Be Delivered (2 divided by 1):
	 	                                      	 	 
	4.

	 	Cash payment to be made by Borrower :
	 	$                                      	 	 

	 	 	 	 	 
	Date:                    	 	LAURUS MASTER FUND, LTD.
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	
 
	

	 	Name:	 	 
	

	 	 	 	
 
	

	 	Title:	 	 
	

	 	 	 	
 

13exv4w2

 

Exhibit 4.2

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THIS WARRANT
AND THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY
NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT
UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO ADSTAR, INC. THAT
SUCH REGISTRATION IS NOT REQUIRED.

Right to Purchase up to 200,000 Shares of Common Stock of

ADSTAR, INC.

(subject to adjustment as provided herein)

COMMON STOCK PURCHASE WARRANT

			
	No.                    
	 	Issue Date: April 12, 2004

     ADSTAR, INC. a corporation organized under the laws of the State of
Delaware, hereby certifies that, for value received, LAURUS MASTER FUND, LTD.,
or assigns (the “Holder”), is entitled, subject to the terms set forth below,
to purchase from the Company (as defined herein) from and after the Issue Date
of this Warrant and at any time or from time to time before 5:00 p.m., New York
time, through the close of business April 12, 2011 (the “Expiration Date”), up
to 200,000 fully paid and nonassessable shares of Common Stock (as hereinafter
defined), $0.0001 par value per share, at the applicable Exercise Price per
share (as defined below). The number and character of such shares of Common
Stock and the applicable Exercise Price per share are subject to adjustment as
provided herein.

     As used herein the following terms, unless the context otherwise requires,
have the following respective meanings:

     (a) The term “Company” shall include ADSTAR, INC. and any
corporation which shall succeed, or assume the obligations of, ADSTAR,
INC. hereunder.

     (b) The term “Common Stock” includes (i) the Company’s Common Stock,
par value $0.0001 per share; and (ii) any other securities into which or
for which any of the securities described in (a) may be converted or
exchanged pursuant to a plan of recapitalization, reorganization, merger,
sale of assets or otherwise.

     (c) The term “Other Securities” refers to any stock (other than
Common Stock) and other securities of the Company or any other person
(corporate or otherwise) which the Holder of the Warrant at any time
shall be entitled to receive, or shall have received, on the exercise of
the Warrant, in lieu of or in addition to Common Stock, or which at any
time shall be issuable or shall have been issued in exchange for or in
replacement of Common Stock or Other Securities pursuant to Section 4 or
otherwise.

 

 

     (d) The “Exercise Price” applicable under this Warrant shall be as
follows:

     (i) a price of $2.58 [120% of the average closing price of
Common Stock for the twenty-two (22) trading days immediately prior
to the date] hereof for the first 120,000 shares acquired
hereunder; and

     (ii) a price of $2.80 [130% of the average closing price of
Common Stock for the twenty-two (22) trading days immediately prior
to the date] hereof for the next 80,000 shares acquired hereunder.

     1. Exercise of Warrant.

          1.1 Number of Shares Issuable upon Exercise. From and after the date
hereof through and including the Expiration Date, the Holder shall be entitled
to receive, upon exercise of this Warrant in whole or in part, by delivery of
an original or fax copy of an exercise notice in the form attached hereto as
Exhibit A (the “Exercise Notice”), shares of Common Stock of the Company,
subject to adjustment pursuant to Section 4.

          1.2 Fair Market Value. For purposes hereof, the “Fair Market Value” of a
share of Common Stock as of a particular date (the “Determination Date”) shall
mean:

     (a) If the Company’s Common Stock is traded on the American Stock
Exchange or another national exchange or is quoted on the National or
SmallCap Market of The Nasdaq Stock Market, Inc.(“Nasdaq”), then the
closing or last sale price, respectively, reported for the last business
day immediately preceding the Determination Date.

     (b) If the Company’s Common Stock is not traded on the American
Stock Exchange or another national exchange or on the Nasdaq but is
traded on the NASD OTC Bulletin Board, then the mean of the average of
the closing bid and asked prices reported for the last business day
immediately preceding the Determination Date.

     (c) Except as provided in clause (d) below, if the Company’s Common
Stock is not publicly traded, then as the Holder and the Company agree or
in the absence of agreement by arbitration in accordance with the rules
then in effect of the American Arbitration Association, before a single
arbitrator to be chosen from a panel of persons qualified by education
and training to pass on the matter to be decided.

     (d) If the Determination Date is the date of a liquidation,
dissolution or winding up, or any event deemed to be a liquidation,
dissolution or winding up pursuant to the Company’s charter, then all
amounts to be payable per share to holders of the Common Stock pursuant
to the charter in the event of such liquidation, dissolution or winding
up, plus all other amounts to be payable per share in respect of the
Common Stock in liquidation under the charter, assuming for the purposes
of this clause (d) that all of the shares of Common Stock then issuable
upon exercise of the Warrant are outstanding at the Determination Date.

2

 

          1.3 Company Acknowledgment. The Company will, at the time of the exercise
of the Warrant, upon the request of the Holder hereof acknowledge in writing
its continuing obligation to afford to such Holder any rights to which such
Holder shall continue to be entitled after such exercise in accordance with the
provisions of this Warrant. If the Holder shall fail to make any such request,
such failure shall not affect the continuing obligation of the Company to
afford to such Holder any such rights.

          1.4 Trustee for Warrant Holders. In the event that a bank or trust
company shall have been appointed as trustee for the Holders of the Warrant
pursuant to Subsection 3.2, such bank or trust company shall have all the
powers and duties of a warrant agent (as hereinafter described) and shall
accept, in its own name for the account of the Company or such successor person
as may be entitled thereto, all amounts otherwise payable to the Company or
such successor, as the case may be, on exercise of this Warrant pursuant to
this Section 1.

     2. Procedure for Exercise.

          2.1 Delivery of Stock Certificates, Etc., on Exercise. The Company agrees
that the shares of Common Stock purchased upon exercise of this Warrant shall
be deemed to be issued to the Holder as the record owner of such shares as of
the close of business on the date on which this Warrant shall have been
surrendered and payment made for such shares in accordance herewith. As soon
as practicable after the exercise of this Warrant in full or in part, and in
any event within three (3) business days thereafter, the Company at its expense
(including the payment by it of any applicable issue taxes) will cause to be
issued in the name of and delivered to the Holder, or as such Holder (upon
payment by such Holder of any applicable transfer taxes) may direct in
compliance with applicable securities laws, a certificate or certificates for
the number of duly and validly issued, fully paid and nonassessable shares of
Common Stock (or Other Securities) to which such Holder shall be entitled on
such exercise, plus, in lieu of any fractional share to which such Holder would
otherwise be entitled, cash equal to such fraction multiplied by the then Fair
Market Value of one full share, together with any other stock or other
securities and property (including cash, where applicable) to which such Holder
is entitled upon such exercise pursuant to Section 1 or otherwise.

          2.2 Exercise. Payment may be made either (i) in cash or by certified or
official bank check payable to the order of the Company equal to the applicable
aggregate Exercise Price, (ii) by delivery of the Warrant, or shares of Common
Stock and/or Common Stock receivable upon exercise of the Warrant in accordance
with Section (b) below, or (iii) by a combination of any of the foregoing
methods, for the number of Common Shares specified in such Exercise Notice (as
such exercise number shall be adjusted to reflect any adjustment in the total
number of shares of Common Stock issuable to the Holder per the terms of this
Warrant) and the Holder shall thereupon be entitled to receive the number of
duly authorized, validly issued, fully-paid and non-assessable shares of Common
Stock (or Other Securities) determined as provided herein. Notwithstanding any
provisions herein to the contrary, if the Fair Market Value of one share of
Common Stock is greater than the Exercise Price (at the date of calculation as
set forth below) and if the Common Stock (or Other Securities) are not then
covered by an effective Registration Statement, under the Securities Act of
1933 or otherwise saleable pursuant to Rule 144(k) or in their entirety within
one 90-day period under Rule 144 then, in lieu of exercising this Warrant for
cash, the Holder may elect to receive shares equal to the value (as

3

 

determined below) of this Warrant (or the portion thereof being exercised)
by surrender of this Warrant at the principal office of the Company together
with the properly endorsed Exercise Notice in which event the Company shall
issue to the Holder a number of shares of Common Stock computed using the
following formula:

	 	 	 	 	 
	X=Y

	 	(A-B)
	 	 
	

	 	
 	 	 
	

	 	A	 	 

	 	 	 
	Where X =

	 	the number of shares of Common Stock to be issued to the
Holder
	 
	 	 
	Y =

	 	the number of shares of Common Stock purchasable under the
Warrant or, if only a portion of the Warrant is being exercised, the
portion of the Warrant being exercised (at the date of such
calculation)
	 
	 	 
	A =

	 	the Fair Market Value of one share of the Company’s Common
Stock (at the date of such calculation)
	 
	 	 
	B =

	 	Exercise Price (as adjusted to the date of such
calculation)

     3. Effect of Reorganization, Etc.; Adjustment of Exercise Price.

          3.1 Reorganization, Consolidation, Merger, Etc. In case at any time or
from time to time, the Company shall (a) effect a reorganization, (b)
consolidate with or merge into any other person, or (c) transfer all or
substantially all of its properties or assets to any other person under any
plan or arrangement contemplating the dissolution of the Company, then, in each
such case, as a condition to the consummation of such a transaction, proper and
adequate provision shall be made by the Company whereby the Holder of this
Warrant, on the exercise hereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation or merger or the effective
date of such dissolution, as the case may be, shall receive, in lieu of the
Common Stock (or Other Securities) issuable on such exercise prior to such
consummation or such effective date, the stock and other securities and
property (including cash) to which such Holder would have been entitled upon
such consummation or in connection with such dissolution, as the case may be,
if such Holder had so exercised this Warrant, immediately prior thereto, all
subject to further adjustment thereafter as provided in Section 4.

          3.2 Dissolution. In the event of any dissolution of the Company following
the transfer of all or substantially all of its properties or assets, the
Company, concurrently with any distributions made to holders of its Common
Stock, shall at its expense deliver or cause to be delivered to the Holder the
stock and other securities and property (including cash, where applicable)
receivable by the Holder of the Warrant pursuant to Section 3.1, or, if the
Holder shall so instruct the Company, to a bank or trust company specified by
the Holder and having its principal office in New York, NY as trustee for the
Holder of the Warrant (the “Trustee”).

          3.3 Continuation of Terms. Upon any reorganization, consolidation, merger
or transfer (and any dissolution following any transfer) referred to in this
Section 3, this Warrant shall continue in full force and effect and the terms
hereof shall be applicable to the shares of stock and other securities and
property receivable on the exercise of this Warrant after the

4

 

consummation of such reorganization, consolidation or merger or the
effective date of dissolution following any such transfer, as the case may be,
and shall be binding upon the issuer of any such stock or other securities,
including, in the case of any such transfer, the person acquiring all or
substantially all of the properties or assets of the Company, whether or not
such person shall have expressly assumed the terms of this Warrant as provided
in Section 4. In the event this Warrant does not continue in full force and
effect after the consummation of the transactions described in this Section 3,
then the Company’s securities and property (including cash, where applicable)
receivable by the Holders of the Warrant will be delivered to Holder or the
Trustee as contemplated by Section 3.2.

     4. Extraordinary Events Regarding Common Stock. In the event that the
Company shall (a) issue additional shares of the Common Stock as a dividend or
other distribution on outstanding Common Stock, (b) subdivide its outstanding
shares of Common Stock, or (c) combine its outstanding shares of the Common
Stock into a smaller number of shares of the Common Stock, then, in each such
event, the Exercise Price shall, simultaneously with the happening of such
event, be adjusted by multiplying the then Exercise Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such event and the denominator of which shall be the
number of shares of Common Stock outstanding immediately after such event, and
the product so obtained shall thereafter be the Exercise Price then in effect.
The Exercise Price, as so adjusted, shall be readjusted in the same manner upon
the happening of any successive event or events described herein in this
Section 4. The number of shares of Common Stock that the Holder of this
Warrant shall thereafter, on the exercise hereof as provided in Section 1, be
entitled to receive shall be increased to a number determined by multiplying
the number of shares of Common Stock that would otherwise (but for the
provisions of this Section 4) be issuable on such exercise by a fraction of
which (a) the numerator is the Exercise Price that would otherwise (but for the
provisions of this Section 4) be in effect, and (b) the denominator is the
Exercise Price in effect on the date of such exercise.

     5. Certificate as to Adjustments. In each case of any adjustment or
readjustment in the shares of Common Stock (or Other Securities) issuable on
the exercise of the Warrant, the Company at its expense will promptly cause its
Chief Financial Officer or other appropriate designee to compute such
adjustment or readjustment in accordance with the terms of the Warrant and
prepare a certificate setting forth such adjustment or readjustment and showing
in detail the facts upon which such adjustment or readjustment is based,
including a statement of (a) the consideration received or receivable by the
Company for any additional shares of Common Stock (or Other Securities) issued
or sold or deemed to have been issued or sold, (b) the number of shares of
Common Stock (or Other Securities) outstanding or deemed to be outstanding, and
(c) the Exercise Price and the number of shares of Common Stock to be received
upon exercise of this Warrant, in effect immediately prior to such adjustment
or readjustment and as adjusted or readjusted as provided in this Warrant. The
Company will forthwith mail a copy of each such certificate to the Holder of
the Warrant and any Warrant agent of the Company (appointed pursuant to Section
11 hereof).

     6. Reservation of Stock, Etc., Issuable on Exercise of Warrant. The
Company will at all times reserve and keep available, solely for issuance and
delivery on the exercise of the

5

 

Warrant, shares of Common Stock (or Other Securities) from time to time
issuable on the exercise of the Warrant.

     7. Assignment; Exchange of Warrant. Subject to compliance with applicable
securities laws, this Warrant, and the rights evidenced hereby, may be
transferred by any registered Holder hereof (a “Transferor”) in whole or in
part. On the surrender for exchange of this Warrant, with the Transferor’s
endorsement in the form of Exhibit B attached hereto (the “Transferor
Endorsement Form”) and together with evidence reasonably satisfactory to the
Company demonstrating compliance with applicable securities laws, which shall
include, without limitation, a legal opinion from the Transferor’s counsel that
such transfer is exempt from the registration requirements of applicable
securities laws, the Company at its expense but with payment by the Transferor
of any applicable transfer taxes) will issue and deliver to or on the order of
the Transferor thereof a new Warrant of like tenor, in the name of the
Transferor and/or the transferee(s) specified in such Transferor Endorsement
Form (each a “Transferee”), calling in the aggregate on the face or faces
thereof for the number of shares of Common Stock called for on the face or
faces of the Warrant so surrendered by the Transferor.

     8. Replacement of Warrant. On receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this Warrant
and, in the case of any such loss, theft or destruction of this Warrant, on
delivery of an indemnity agreement or security reasonably satisfactory in form
and amount to the Company or, in the case of any such mutilation, on surrender
and cancellation of this Warrant, the Company at its expense will execute and
deliver, in lieu thereof, a new Warrant of like tenor.

     9. Registration Rights. The Holder of this Warrant has been granted
certain registration rights by the Company. These registration rights are set
forth in a Registration Rights Agreement entered into by the Company and
Purchaser dated as of even date of this Warrant.

     10. Maximum Exercise. The Holder shall not be entitled to exercise this
Warrant on an exercise date, in connection with that number of shares of Common
Stock which would be in excess of the sum of (i) the number of shares of Common
Stock beneficially owned by the Holder and its affiliates on an exercise date,
and (ii) the number of shares of Common Stock issuable upon the exercise of
this Warrant with respect to which the determination of this proviso is being
made on an exercise date, which would result in beneficial ownership by the
Holder and its affiliates of more than 4.99% of the outstanding shares of
Common Stock of the Company on such date. For the purposes of the proviso to
the immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, and Regulation 13d-3 thereunder. Notwithstanding the foregoing, the
restriction described in this paragraph may be revoked upon 75 days prior
notice from the Holder to the Company and is automatically null and void upon
an Event of Default under the Note.

     11. Warrant Agent. The Company may, by written notice to the each Holder
of the Warrant, appoint an agent for the purpose of issuing Common Stock (or
Other Securities) on the exercise of this Warrant pursuant to Section 1,
exchanging this Warrant pursuant to Section 7, and replacing this Warrant
pursuant to Section 8, or any of the foregoing, and thereafter any such

6

 

issuance, exchange or replacement, as the case may be, shall be made at
such office by such agent.

     12. Transfer on the Company’s Books. Until this Warrant is transferred on
the books of the Company, the Company may treat the registered Holder hereof as
the absolute owner hereof for all purposes, notwithstanding any notice to the
contrary.

     13. Notices, Etc. All notices and other communications from the Company
to the Holder of this Warrant shall be mailed by first class registered or
certified mail, postage prepaid, at such address as may have been furnished to
the Company in writing by such Holder or, until any such Holder furnishes to
the Company an address, then to, and at the address of, the last Holder of this
Warrant who has so furnished an address to the Company.

     14. Voluntary Adjustment by the Company. The Company may at any time
during the term of this Warrant reduce the then current Exercise Price to any
amount and for any period of time deemed appropriate by the Board of Directors
of the Company.

     15. Miscellaneous. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or
termination is sought. This Warrant shall be governed by and construed in
accordance with the laws of State of New York without regard to principles of
conflicts of laws. Any action brought concerning the transactions contemplated
by this Warrant shall be brought only in the state courts of New York or in the
federal courts located in the state of New York; provided, however, that the
Holder may choose to waive this provision and bring an action outside the state
of New York. The individuals executing this Warrant on behalf of the Company
agree to submit to the jurisdiction of such courts and waive trial by jury.
The prevailing party shall be entitled to recover from the other party its
reasonable attorney’s fees and costs. In the event that any provision of this
Warrant is invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law. Any such provision which may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any other provision
of this Warrant. The headings in this Warrant are for purposes of reference
only, and shall not limit or otherwise affect any of the terms hereof. The
invalidity or unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision. The Company
acknowledges that legal counsel participated in the preparation of this Warrant
and, therefore, stipulates that the rule of construction that ambiguities are
to be resolved against the drafting party shall not be applied in the
interpretation of this Warrant to favor any party against the other party.

[BALANCE OF PAGE INTENTIONALLY LEFT BLANK;

SIGNATURE PAGE FOLLOWS.]

7

 

     IN WITNESS WHEREOF, the Company has executed this Warrant as of the date
first written above.

	 	 	 	 	 
	 	 	ADSTAR, INC.
	 
	 	 	 	 
	WITNESS:
	 	 	 	 
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	
 
	

	 	Name:	 	 
	

	 	 	 	
 
	

	 	Title:	 	 
	
 

	 	 	 	
 

8

 

EXHIBIT A

FORM OF SUBSCRIPTION

(To Be Signed Only On Exercise Of Warrant)

TO:     ADSTAR, INC.

     Attention:     Principal Financial Officer

     The undersigned, pursuant to the provisions set forth in the attached
Warrant (No.   ), hereby irrevocably elects to purchase (check applicable
box):

	 	 	 
	o

	 	               
    shares of the Common Stock covered by such Warrant; or

	 
	o

	 	the maximum number of shares of Common Stock covered by such Warrant pursuant
to the cashless exercise procedure set forth in Section 2.

     The undersigned herewith makes payment of the full Exercise Price for such
shares at the price per share provided for in such Warrant, which is
$                   . Such payment takes the form of (check applicable box or boxes):

	 	 	 
	o

	 	$                    in lawful money of the United States; and/or
	 
	 	 
	o

	 	the cancellation of such portion of the attached Warrant as is exercisable for
a total of                
    shares of Common Stock (using a Fair Market Value of
$                    per share for purposes of this calculation); and/or
	 
	 	 
	o

	 	the cancellation of such number of shares of Common Stock as is necessary, in
accordance with the formula set forth in Section 2.2, to exercise this Warrant
with respect to the maximum number of shares of Common Stock purchasable
pursuant to the cashless exercise procedure set forth in Section 2.

     The undersigned requests that the certificates for such shares be issued
in the name of, and delivered to                                                                                                
whose address is                                                                                                                                                .

     The undersigned represents and warrants that all offers and sales by the
undersigned of the securities issuable upon exercise of the within Warrant
shall be made pursuant to registration of the Common Stock under the Securities
Act of 1933, as amended (the “Securities Act”) or pursuant to an exemption from
registration under the Securities Act.

	 	 	 	 	 	 	 
	Dated:
	 	 	 	 	 	 
	 	 	
 	 	
 
	 	 	 	 	(Signature must conform to name of holder as specified on the face
of the Warrant)
	 
	

	 	 	 	Address:	 	 
	

	 	 	 	 	 	
 
	 
	

	 	 	 	 	 	
 

A-1

 

EXHIBIT B

FORM OF TRANSFEROR ENDORSEMENT

(To Be Signed Only On Transfer Of Warrant)

     For value received, the undersigned hereby sells, assigns, and transfers
unto the person(s) named below under the heading “Transferees” the right
represented by the within Warrant to purchase the percentage and number of
shares of Common Stock of ADSTAR, INC. into which the within Warrant relates
specified under the headings “Percentage Transferred” and “Number Transferred,”
respectively, opposite the name(s) of such person(s) and appoints each such
person Attorney to transfer its respective right on the books of ADSTAR, INC
with full power of substitution in the premises.

	 	 	 	 	 	 	 
	 	 	 	 	Percentage	 	Number
	Transferees	 	Address	 	Transferred	 	Transferred
	 
	 	 	 	 	 	 
	

	 	

	 	

	 	

	 
	 	 	 	 	 	 
	

	 	

	 	

	 	

	 
	 	 	 	 	 	 
	

	 	

	 	

	 	

	 
	 	 	 	 	 	 
	

	 	

	 	

	 	

	 
	 	 	 	 	 	 

	 	 	 	 	 	 	 
	Dated:
	 	 	 	 	 	 
	

	 	
 	 	
 
	 	 	 	 	(Signature must conform to name of holder as
specified on the face of the Warrant)
	 
	

	 	 	 	Address:	 	 
	

	 	 	 	 	 	
 
	 
	 	 	 	 	 	 
	

	 	 	 	 	 	
 
	 
	 	 	 	 	SIGNED IN THE PRESENCE OF:
	 
	 	 	 	 	
 
	

	 	 	 	 	 	(Name)
	 
	 	 	 	 	 	 
	ACCEPTED AND AGREED:

[TRANSFEREE]	 	 	 	 
	 
	 	 	 	 	 	 
	
 	 	 	 	 
	(Name)
	 	 	 	 	 	 

B-1

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