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PLACEMENT AGENCY AGREEMENT

Agency Agreement

PLACEMENT AGENCY AGREEMENT 
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LOCAL MATTERS INC.

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Title: PLACEMENT AGENCY AGREEMENT
Governing Law: New York     Date: 3/22/2006
Law Firm: Cooley Godward    

PLACEMENT AGENCY AGREEMENT 
, Parties: local matters inc.
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Exhibit 10.13


PLACEMENT AGENCY AGREEMENT

January 7, 2005

Spencer Trask Ventures, Inc.
535 Madison Avenue
18th Floor
New York, New York 10022

Ladies and Gentlemen:

        Aptas, Inc., a Delaware corporation (together with any subsidiaries, the "Company") and Spencer Trask Ventures, Inc., a Delaware corporation (the "Placement Agent") hereby agree as follows:

1. Offering .

        (a)   The Company will offer (the "Offering") for sale through the Placement Agent, as exclusive agent for the Company, and the Placement Agent's selected dealers, if any, units (the "Units"), each consisting of 100,000 shares of the Company's convertible preferred stock (the "Preferred Stock") priced at an amount per share to be mutually agreed upon by the Company and the Placement Agent (the "Offering Price"). Certain of the proposed terms of the Preferred Stock are set forth on the term sheet annexed hereto as Exhibit A .

        (b)   Placement of the Units by the Placement Agent will be made on a reasonable efforts, "all-or-none" basis. The total amount of the gross proceeds from the Offering shall be $13,000,000; provided , however , that for the purposes of covering over-allotments in the sale of the Units, if any, the Company and the Placement Agent may agree to sell additional Units having total gross proceeds of up to $2,000,000. The minimum subscription for Units shall be one Unit; however, the Placement Agent may, in its discretion, offer fractional Units. The Units will be offered to potential subscribers, both directly and indirectly, through the Special Purpose Investment Entities (as defined in Section 1(c) below)(1) , which may include related parties of the Placement Agent or the Company, commencing on the date of the Investment Letter (as such term is defined in Section 1(d) hereof) for a period of 60 days, unless extended by agreement of the Placement Agent and the Company for an additional 60 days or terminated earlier as provided herein (the "Offering Period"). The date on which the Offering shall terminate shall be referred to as the "Termination Date." A Final Closing (as hereinafter defined) may be held up to ten days after the Termination Date.


(1)

The Special Purpose Investment Entities may in their sole discretion distribute the Units to their respective members pro-rata in accordance with their capital accounts.

        (c)   The offering of the Units will be made by the Placement Agent on behalf of the Company solely pursuant to (i) a transmittal offering letter substantially in the form of Exhibits B-1 and B-2 annexed hereto (the "Investment Letters"), on behalf of two entities formed for the purposes of investing in the Company (the "Special Purpose Investment Entities"), which Investment Letter shall contain a brief description of the Company and its operations, as well as its proposed business combinations with each of Information Services eXtended, Inc. ("ISx") and YP Web Partners, LLC ("YPS") (collectively, the "Mergers") and (ii) a customary long-form confidential private placement memorandum, each of which at all times will be in form and substance acceptable to the Placement Agent, the Company and their respective counsels and contain such legends and other information as the Placement Agent, the Company and their respective counsels may, from time to time, deem necessary and desirable to be set forth therein. "Memorandum" as used in this Agreement means the Company's Confidential Private Placement Memorandum, inclusive of all exhibits, and any and all amendments, supplements and appendices thereto that the Placement Agent will, with the Company's prior approval, use on the Company's behalf to sell the Units.


 

2. Representations, Warranties and Covenants of the Company . For the purpose of the following representations, warranties and covenants, "Company" shall refer to Aptas, Inc. together with any of its wholly owned or majority owned subsidiaries (i) as of the date hereof for purposes of this Section 2 and (ii) as of each date of Closing for purposes of satisfying the requirements of Section 7(a) hereof, assuming, for purposes of such Section 7(a) and (b), the consummation of the Mergers. The Company hereby represents, warrants and covenants to the Placement Agent that:

        (a)   The Memorandum will be diligently prepared by the Company, at its sole cost, in conformity with all applicable laws, and the Investment Letters are, and the Memorandum shall be in compliance with Regulation D ("Regulation D") as promulgated under Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act"), and the applicable securities laws and the rules and regulations of those jurisdictions wherein the Units are to be offered and sold, excluding foreign jurisdictions. The Memorandum will describe all material aspects, including attendant risks, of an investment in the Company. The Company has not taken nor will it take any action that conflicts with the conditions and requirements of, or that would make unavailable with respect to the Offering, the exemption(s) from registration available pursuant to Regulation D and knows of no reason why any such exemption would be otherwise unavailable to it. Neither the Company nor its affiliates has been subject to any order, judgment or decree of any court or governmental authority of competent jurisdiction temporarily, preliminarily or permanently enjoining such person for failing to comply with Section 503 of Regulation D.

        (b)   The Investment Letters do not, and the Memorandum will not, include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The statements, documents, certificates and other items prepared or supplied, or to be prepared or supplied by the Company with respect to the transactions contemplated hereby do not and will not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein not misleading. There is no fact that the Company will not disclose in the Memorandum, of which the Company is aware that materially and adversely affects or could reasonably be expected to materially and adversely affect the business prospects, financial condition, operations, or assets of the Company.

        (c)   The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Except as set forth in the Memorandum, the Company has no subsidiaries and does not have an equity interest in any other firm, partnership, association or other entity. The Company is duly qualified to transact business as a foreign corporation and is in good standing under the laws of each jurisdiction where the location of its properties or the conduct of its business makes such qualification necessary, except where the failure to be so qualified would not have a material adverse effect on the Company or its business.

        (d)   The Company has all requisite power and authority to enter into and perform its obligations under (i) this Agreement, (ii) the subscription agreement and the investor rights agreement, each of which will be annexed to the Memorandum (together with the Memorandum, the "Offering Documents"), and (iii) a placement agent warrant agreement in the form acceptable to the Placement Agent and its counsel (the "Placement Agent Warrant Agreement," and, collectively with this Agreement and the Offering Documents, the "Transaction Documents") and to issue, sell and deliver the Preferred Stock, the Agent's Securities (as such term is defined in Section 3(f) hereof), and the common stock of the Company, $0.001 par value per share (the "Common Stock") issuable upon conversion of the Preferred Stock (the "Conversion Shares") and the Agent's Shares (as such term is defined in Section 3(f) hereof). The execution and delivery of each of the Transaction Documents has been duly authorized by the necessary corporate action. This Agreement has been duly executed and delivered and constitutes, and each of the other Transaction Documents, upon due execution and delivery, will constitute legal, valid and binding obligations of the Company, enforceable against the

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Company in accordance with their respective terms (i) except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to or affecting creditors' rights generally, including the effect of statutory and other laws regarding fraudulent conveyances and preferential transfers, and except that no representation is made herein regarding the enforceability of the Company's obligations to provide indemnification and contribution remedies under the securities laws, and (ii) subject to the limitations imposed by general equitable principles (regardless of whether such enforceability is considered in a proceeding at law or in equity).

        (e)   None of the execution and delivery of, or performance by the Company under, any of the Transaction Documents or the consummation of the transactions herein or therein contemplated conflicts with or violates, or will result in the creation or imposition of any lien, charge or other encumbrance upon any of the assets of the Company under, any agreement or other instrument to which the Company is a party or by which the Company or its assets may be bound, any term of the certificate of incorporation or by-laws of the Company, or any license, permit, judgment, decree, order, statute, rule or regulation applicable to the Company or any of its assets which lien, charge or encumbrance would have a material adverse effect on the Company or its business.

        (f)    The Company's authorized and outstanding capital stock shall be accurately set forth under the heading "Capitalization" in the Memorandum. Except as otherwise to be set forth in the Memorandum, all outstanding shares of capital stock of the Company will be duly authorized, validly issued and outstanding, fully paid and nonassessable. Except as otherwise to be set forth in the Memorandum, as of the date of the Memorandum: (i) there will be no outstanding options, stock subscription agreements, warrants or other rights permitting or requiring the Company or others to purchase or acquire any shares of capital stock, or other equity securities of the Company, or to pay any dividend or make any other distribution in respect thereof; (ii) there will be no securities issued or outstanding that are convertible into or exchangeable for any of the foregoing and there are no contracts, commitments or understandings, whether or not in writing, to issue or grant any such option, warrant, right or convertible or exchangeable security; (iii) no shares of stock or other securities of the Company will be reserved for issuance for any purpose; (iv) and except as set forth in Schedule 2(f)(iv) hereof, there will be no voting trusts or other contracts, commitments, understandings, arrangements or restrictions of any kind to which the Company is a party or of which the Company is aware with respect to the ownership, voting or transfer of shares of stock or other securities of the Company, including without limitation, any preemptive rights, rights of first refusal, proxies or similar rights; and (v) no person shall hold a right to require the Company to register any securities of the Company under the Securities Act or to participate in any such registration. The issued and outstanding shares of capital stock of the Company shall conform to all statements in relation thereto contained in the Memorandum and the Memorandum shall describe all material terms and conditions thereof. All issuances by the Company of its securities were at the time of their issuance exempt from registration under the Securities Act and any applicable state securities laws.

        (g)   The Preferred Stock, the Conversion Shares and the Agent's Shares (as defined in Section 3(f) hereof) will have been duly authorized and, when issued and delivered against payment therefor as provided in the Transaction Documents, will be validly issued, fully paid and nonassessable and will be free and clear of all liens, charges restrictions, claims and encumbrances imposed by or through the Company other than as provided in the Transaction Documents. The Agent's Warrants will have been duly authorized and, when issued and delivered against payment therefor as provided in the Transaction Documents, will be free and clear of all liens, charges restrictions, claims and encumbrances imposed by or through the Company. No holder of any shares of the Preferred Stock, the Conversion Shares or the Agent's Securities will be subject to personal liability solely by reason of being such a holder and, except as otherwise to be described in the Memorandum, none of the shares of Preferred Stock, Conversion Shares or the Agent's Securities will be subject to preemptive or similar

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rights of any stockholder or securityholder of the Company or an adjustment under the antidilution or exercise rights of any holders of any outstanding shares of capital stock, options, warrants or other rights to acquire any securities of the Company. A sufficient number of authorized but unissued shares of the Common Stock have been reserved for issuance upon the conversion of the Preferred Stock and the Agent's Shares.

        (h)   No consent, authorization or filing of or with any court or governmental authority is required in connection with the issuance of the Preferred Stock, the Conversion Shares or the Agent's Securities or the consummation of the transactions contemplated herein or in the other Transaction Documents, except for required filings with the SEC and applicable "Blue Sky" or state securities commissions relating specifically to the Offering (all of which will be duly made on a timely basis).

        (i)    The financial statements, together with the related notes thereto, of the Company to be included in the Memorandum will present fairly, in all material respects, the financial position of the Company as of the date specified and the results of its operations and changes in financial position for the period covered thereby. Such financial statements and related notes shall be prepared in accordance with U.S. generally accepted accounting principles ("GAAP") throughout the period indicated except as may be disclosed in the notes thereto, and except that the unaudited financial statements omit full notes, and except for normal year-end adjustments. Except as otherwise to be set forth in such financial statements or in the Memorandum, the Company shall have no material liabilities of any kind, whether accrued, absolute, contingent or otherwise and subsequent to the date of the Memorandum it shall not enter into any material transactions or commitments. The other financial and statistical information with respect to the Company to be included in the Memorandum shall present fairly the information shown therein on a basis consistent with the financial statements of the Company to be included in the Memorandum. The Company does not know of any facts, circumstances or conditions (or any state of facts, circumstances or conditions which management of the Company has concluded could give rise thereto) that could reasonably be expected to materially adversely affect its business, operations, earnings or prospects that have not been fully disclosed in the Investment Letters, and any and all such facts, circumstances or conditions shall be fully disclosed in the Memorandum.

        (j)    The conduct of business by the Company as presently and proposed to be conducted is not subject to continuing oversight, supervision, regulation or examination by any governmental official or body of the United States or any other jurisdiction wherein the Company conducts or proposes to conduct such business, except such regulation as is applicable to commercial enterprises generally. The Company has obtained all requisite licenses, permits and other governmental authorization necessary to conduct its business as presently, and as proposed to be, conducted.

        (k)   Except as shall be otherwise set forth in the Memorandum, no default by the Company or, to the best knowledge of the Company, any other party exists in the due performance under any material agreement to which the Company is a party or to which any of its assets is subject.

        (l)    Except as shall be set forth in each of the Investment Letters and the Memorandum, there are and will be no actions, proceedings, claims or investigations, before or by any court or governmental authority (or any state of facts which management of the Company has concluded could reasonably be expected to give rise thereto), pending or, to the best knowledge of the Company, threatened, against the Company, or involving its assets or, to the knowledge of the Company, involving any of its officers or directors which, if determined adversely to the Company or such officer or director, could result in any material adverse change in the condition (financial or otherwise) or prospects of the Company or materially and adversely affect the transactions contemplated by this Agreement or the other Transaction Documents or the enforceability thereof, or materially adversely affect either of the Mergers or prevent either of the Mergers from closing.

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        (m)  The Company is not and will not be in violation of: (i) its certificate of incorporation or by-laws; (ii) any indenture, mortgage, deed of trust, note or other agreement or instrument to which the Company is a party or by which it is or may be bound or to which any of its assets may be subject; (iii) any statute, rule or regulation currently applicable to the Company; or (iv) any judgment, decree or order applicable to the Company, which violation or violations individually, or in the aggregate, would result in any material adverse change in the condition (financial or otherwise) or prospects of the Company, or materially adversely affect either of the Mergers or prevent either of the Mergers from closing.

        (n)   The Company does not and will not own any real property in fee simple, and the Company has and will maintain good and marketable title to all property (personal, tangible and intangible) owned by it, free and clear of all security interests, liens and encumbrances, except for such as shall be described in the Memorandum.

        (o)   The Company owns and will own all right, title and interest in, or possesses adequate and enforceable rights to use, all patents, patent applications, trademarks, trade names, service marks, copyrights, rights, licenses, franchises, trade secrets, confidential information, processes, formulations, software and source and object codes necessary for the conduct of its business, except as shall otherwise be described in the Memorandum (collectively, the "Intangibles"). Except as shall be set forth in the Memorandum, to the knowledge of the Company, it has not infringed upon the rights of others with respect to the Intangibles and the Company has not received notice that it has or may have infringed or is infringing upon the rights of others with respect to the Intangibles, or any notice of conflict with the asserted rights of others with respect to the Intangibles that could, individually or in the aggregate, materially and adversely affect the condition (financial or otherwise) or prospects of the Company. Except as shall be set forth in the Memorandum, to the best knowledge of the Company, no others have infringed upon the Intangibles.

        (p)   Except as set forth in Schedule 2(p) hereof, the Company has filed and will use its best efforts to continue to file, on a timely basis, each Federal, state, local and foreign tax return which is or shall be required to be filed by it, or has requested an extension therefor and has paid all taxes and all related assessments, penalties and interest to the extent that the same have become due.

        (q)   Except as otherwise set forth herein, the Company is not obligated to pay, and has not obligated and will not obligate the Placement Agent to pay, a finder's or origination fee in connection with the Offering and agrees to indemnify the Placement Agent from any such claim made by any other person. The Company has not offered for sale or solicited offers and will not offer for sale or solicit offers to purchase Units, except for negotiations with the Placement Agent. Except as shall be set forth in the Memorandum, no other person has or will have any right to participate in any offer, sale or distribution of the Company's securities to which the Placement Agent's rights, described herein, shall apply.

        (r)   The Company has and will maintain appropriate casualty and liability insurance coverage, in scope and amounts reasonable and customary for similar businesses.

3. Placement Agent Appointment and Compensation .

        (a)   The Company hereby appoints the Placement Agent as its exclusive agent in connection with the Offering. The Company acknowledges that the Placement Agent may use selected dealers and sub-agents to fulfill its agency hereunder (collectively, the "Brokers") provided that such Brokers are compensated solely by the Placement Agent. The Company has not made and will not make, or permit to be made, any offers or sales of the Units other than through the Placement Agent without the Placement Agent's prior written consent. The Placement Agent has no obligation to purchase any of the Units. The agency of the Placement Agent hereunder shall continue until the later of the Termination Date or the Final Closing (as defined in Section 5(c) hereof).

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        (b)   The Company will cause to be delivered to the Placement Agent copies of the Memorandum and has consented, and hereby consents, to the use of such copies for the purposes permitted by the Securities Act and applicable securities laws (and for no other purpose), and hereby authorizes the Placement Agent, the Brokers, and their respective agents and employees to use the Investment Letters and the Memorandum in connection with the sale of the Units until the earlier of the Termination Date or the Final Closing. None of the Placement Agent, the Brokers or any other person or entity is or will be authorized to give any information or make any representations other than those to be contained in the Investment Letters or any of the Offering Documents or to use any offering materials other than those to be contained in the Investment Letters and the Memorandum in connection with the sale of the Units. The Company will provide at its own expense such quantities of the Investment Letters and the Memorandum and other documents and instruments relating to the Offering as the Placement Agent may reasonably request.

        (c)   The Company will cooperate with the Placement Agent by making available to its representatives such information as may be requested in making a reasonable investigation of the Company and its affairs and shall provide access to such representatives as shall be reasonably requested.

        (d)   The Company shall pay to the Placement Agent at each Closing a cash placement fee (the "Placement Agent's Fee") equal to (i): seven percent (7%) of the purchase price of Units sold to one or more related subscribers that invest, in the aggregate, an amount equal to or greater than $1,000,000; (ii) eight percent (8%) of the purchase price of Units sold to one or more related subscribers that invest, in the aggregate, an amount equal to or greater than $500,000 but less than $1,000,000; and (iii) ten percent (10%) of the purchase price of Units sold to one or more related subscribers that invest, in the aggregate, an amount less than $500,000; provided , however , with respect to investments made by the Special Purpose Investment Entities, the applicable Placement Agent's Fee will be determined based upon the capital contributions made by each subscriber of the Special Purpose Investment Entities, not the aggregate amount invested in the Offering by each Special Purpose Investment Entity. No Placement Agent's Fee shall be payable with respect to investments by the Company Investors (whether invested directly into the Company or through the Special Purpose Investment Entities); provided , however , if subscriptions from Company Investors exceed $2,000,000, in the aggregate, the Company may either (x) accept such excess subscriptions from Company Investors only with the Placement Agent's prior written consent, or (y) accept subscriptions from non-Company Investors rather than accept subscriptions from Company Investors in excess of $2,000,000; provided , further , however , the Company may accept such excess subscriptions from Company Investors upon receipt of the Placement Agent's written consent and if the Company agrees to pay the Placement Agent's Fees on such excess amount in accordance with this Section 3(d). For the purposes of this Agreement, the term "Company Investor" shall mean individuals and/or entities set who have been specifically identified by Company and set forth on Exhibit C hereto.

        (e)   The Company shall pay to the Placement Agent an accountable expense allowance (the "Expense Allowance") for its reasonable, documented out-of-pocket expenses incurred in connection with the Offering and the offering of interests of the Special Purpose Investment Entities, including, without limitation, expenses relating to marketing, due diligence review and accounting and legal fees (including fees of counsel (the "Special Counsel") associated with such Special Counsel rendering a 10b-5 opinion in customary form to the Placement Agent in accordance with Section 6(k) hereof), filing fees, printing and mailing costs, and costs associated with the formation, organization and qualification of the Special Purpose Investment Entities (the "Reimbursable Expenses"). The aggregate amount of the Expense Allowance shall not exceed three percent (3%) of the gross cash proceeds received from the sale of Units in this Offering. Subject to the terms of Section 3(d) hereof and this Section 3(e), the Placement Agent's Fee and the Expense Allowance and the expenses set forth in Section 6(h) hereof will be deducted from the gross proceeds of the Units sold at each Closing (as hereinafter defined), as

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set forth in Section 5 hereof. The Placement Agent may direct all such amounts to be paid directly from the escrow account to be established pursuant to Section 5(b) hereof.

        (f)    As additional compensation hereunder, at each Closing the Company shall sell to the Placement Agent or its designees, for nominal consideration, warrants (the "Agent's Warrants") to purchase, at an exercise price per share equal to the Offering Price, a number of shares of Preferred Stock equal to twenty percent (20%) of the number of shares of Preferred Stock contained in the Units sold at such Closing (the "Agent's Shares," and, collectively with the Agent's Warrants, the "Agent's Securities"); provided , however , the Placement Agent shall not be entitled to Agent's Warrants for investments by Company Investors up to an aggregate amount of $2,000,000 (subject however to the same provisions as contained in the penultimate sentence of Section 3(d) above). The Agent's Warrants shall contain cashless exercise provisions and shall be exercisable for a period of five (5) years after the date of the Final Closing. The holders of the Agent's Securities shall have demand and "piggy-back" registration rights to the extent provided for in the Warrant Agreement. At the First Closing the Company and Placement Agent shall enter into the Warrant Agreement setting forth the terms and conditions of the Agent's Warrants, which Warrant Agreement shall be in form and substance satisfactory to the Company and the Placement Agent.

        (g)   The Company shall also pay the Placement Agent's Fee and the Expense Allowance to the Placement Agent, and deliver warrants on a basis comparable to the Agent's Warrants under the Warrant Agreement and this Agreement, with respect to, and based on, any investment by any third party (a "Post Closing Investor") (i) contacted by the Placement Agent who invests in thi


 
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