Exhibit 10.4

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (this “Agreement”) is dated as of June 16,
2008 between Answers Corporation, a Delaware corporation (the “Company”), and
Redpoint Omega, L.P. and Redpoint Omega Associates, LLC (each a “Purchaser” and
collectively, the “Purchasers”).

 

WHEREAS, subject to the terms and conditions set forth in this Agreement and
pursuant to the Securities Purchase Agreement, dated as of the date hereof,
among the Company and the Purchaser (the “Purchase Agreement”), the Company has
agreed to provide certain registration rights under the Securities Act of 1933,
as amended, and the rules and regulations thereunder, or any similar successor
statute (collectively, the “Securities Act”), and applicable state securities
laws.

 

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchaser agree
as follows:

 

1.                                      DEFINITIONS

 

As used in this Agreement, the following terms shall have the following
meanings:

 

“Advice” shall have the meaning set forth in Section 8(d).

 

“Certificate of Designation” shall have the meaning set forth in the Purchase
Agreement.

 

“Commission” means the Securities and Exchange Commission.

 

“DGCL” means the General Corporation Law of the State of Delaware.

 

“Effectiveness Date” means, with respect to the initial Registration Statement
required to be filed hereunder, the 150th calendar day following the Closing
Date (as defined in the Purchase Agreement) and, with respect to any additional
Registration Statements which may be required pursuant to Section 2(b), the
150th  calendar day following the date on which the Company first knows, or
reasonably should have known, that such additional Registration Statement is
required hereunder; provided, however, in the event the Company is notified by
the Commission that any Registration Statement(s) required hereunder will not be
reviewed or is no longer subject to further review and comments, the
Effectiveness Date as to such Registration Statement shall be the fifth Trading
Day following the date on which the Company is so notified if such date precedes
the dates required above.

 

“Effectiveness Period” shall have the meaning set forth in Section 2(a).

 

“Event” shall have the meaning set forth in Section 2(c).

 

“Event Date” shall have the meaning set forth in Section 2(c).

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

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“Filing Date” means, with respect to the initial Registration Statement required
hereunder, the 60th calendar day following the date hereof, and, with respect to
any additional Registration Statements which may be required pursuant to
Section 2(b), the 30th day following the date on which the Company first knows,
or reasonably should have known that such additional Registration Statement is
required hereunder.

 

“Holder” or “Holders” means the holder or holders, as the case may be, from time
to time of Registrable Securities.

 

“Indemnified Party” shall have the meaning set forth in Section 5(c).

 

“Indemnifying Party” shall have the meaning set forth in Section 5(c).

 

“Legal Counsel” shall have the meaning set forth in Section 2(d).

 

“Losses” shall have the meaning set forth in Section 5(a).

 

“Plan of Distribution” shall have the meaning set forth in Section 2(a).

 

“Preferred Director” shall have the meaning set forth in the Certificate of
Designation.

 

“Preferred Board Observer” shall have the meaning set forth in the Certificate
of Designation.

 

“Preferred Stock” shall have the meaning set forth in the Purchase Agreement.

 

“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.

 

“Prospectus” means the prospectus included in a Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by a
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.

 

“Registrable Securities” means (i) all of the shares of Common Stock issuable
upon conversion of the Preferred Stock, (ii) all Warrant Shares, (iv) any
additional shares issuable in connection with any anti-dilution provisions in
the Preferred Stock or the Warrants (in each case, without giving effect to any
limitations on conversion set forth in the Preferred Stock or limitations on
exercise set forth in the Warrant), (v) all of the shares of Common Stock
issuable upon conversion of the Series B Preferred Stock and exercise of the
Common Stock Purchase Warrants issued upon exercise of the warrant issued to the
Holder, (vi) any shares of Common Stock issued in payment in kind of accrued
dividends on the Series A Preferred Stock or Series B Preferred Stock and
(vii) any securities issued or issuable upon any stock split, dividend or other

 

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distribution,  recapitalization or similar event with respect to any of the
foregoing referenced in clauses (i) – (vi).

 

“Registration Statement” means the registration statements required to be filed
hereunder and any additional registration statements contemplated by
Section 3(c), including (in each case) the Prospectus, amendments and
supplements to such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference in such registration
statement.

 

“Rule 415” means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same purpose and effect as such Rule.

 

“Rule 424” means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same purpose and effect as such Rule.

 

“Securities” shall have the meaning set forth in the Purchase Agreement.

 

“Selling Shareholder Questionnaire” shall have the meaning set forth in
Section 3(a).

 

“Series B Preferred Stock” shall have the meaning set forth in the Warrant
Agreement.

 

“Series B Director” shall have the meaning set forth in Section 7(a)(i).

 

“Trading Day” shall have the meaning set forth in the Purchase Agreement.

 

“Transaction Documents” shall have the meaning set forth in the Purchase
Agreement.

 

“Unit Warrant” shall have the meaning set forth in the Warrant Agreement.

 

“Warrant Agreement” shall mean the Warrant Agreement, dated the date hereof,
between the Company and the Purchasers.

 

“Warrant Shares” shall have the meaning set forth in the Purchase Agreement.

 

“Warrants” shall have the meaning set forth in the Purchase Agreement.

 

2.                                      REGISTRATION STATEMENT

 

(A)                                  ON OR PRIOR TO EACH FILING DATE, THE
COMPANY SHALL PREPARE AND FILE WITH THE COMMISSION A REGISTRATION STATEMENT
COVERING THE RESALE OF ALL REGISTRABLE SECURITIES ON SUCH FILING DATE FOR AN
OFFERING TO BE MADE ON A CONTINUOUS BASIS PURSUANT TO RULE 415.  THE
REGISTRATION STATEMENT SHALL BE ON FORM S-3 (EXCEPT IF THE COMPANY IS NOT THEN
ELIGIBLE TO REGISTER FOR RESALE THE REGISTRABLE SECURITIES ON FORM S-3, IN WHICH
CASE SUCH REGISTRATION SHALL BE ON ANOTHER APPROPRIATE FORM IN ACCORDANCE
HEREWITH) AND SHALL CONTAIN (UNLESS OTHERWISE DIRECTED BY THE HOLDERS)
SUBSTANTIALLY THE “PLAN OF DISTRIBUTION” ATTACHED HERETO AS ANNEX A.  SUBJECT TO
THE TERMS OF THIS AGREEMENT, THE COMPANY SHALL USE ITS REASONABLE BEST
COMMERCIAL EFFORTS TO CAUSE A REGISTRATION

 

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STATEMENT TO BE DECLARED EFFECTIVE UNDER THE SECURITIES ACT AS PROMPTLY AS
POSSIBLE AFTER THE FILING THEREOF, BUT IN ANY EVENT PRIOR TO THE APPLICABLE
EFFECTIVENESS DATE, AND SHALL USE ITS REASONABLE BEST COMMERCIAL EFFORTS TO KEEP
SUCH REGISTRATION STATEMENT CONTINUOUSLY EFFECTIVE UNDER THE SECURITIES ACT
UNTIL THE EARLIER OF (I) BEGINNING 1 YEAR AFTER THE DATE HEREOF, ALL OF THE
REGISTRABLE SECURITIES COVERED BY SUCH REGISTRATION STATEMENT HAVE BEEN SOLD AND
(II) 100% OF THE REGISTRABLE SECURITIES MAY BE SOLD WITHOUT VOLUME RESTRICTIONS
PURSUANT TO RULE 144(B)(1) AS DETERMINED BY THE COUNSEL TO THE COMPANY PURSUANT
TO A WRITTEN OPINION LETTER TO SUCH EFFECT, ADDRESSED AND ACCEPTABLE TO THE
COMPANY’S TRANSFER AGENT AND THE AFFECTED HOLDERS (THE “EFFECTIVENESS PERIOD”). 
THE COMPANY SHALL TELEPHONICALLY REQUEST EFFECTIVENESS OF A REGISTRATION
STATEMENT AS OF 4:00 PM EASTERN TIME ON A TRADING DAY.   THE COMPANY SHALL
IMMEDIATELY NOTIFY THE HOLDERS OF THE EFFECTIVENESS OF A REGISTRATION STATEMENT
ON THE SAME TRADING DAY THAT THE COMPANY TELEPHONICALLY CONFIRMS EFFECTIVENESS
WITH THE COMMISSION, WHICH SHALL BE THE DATE REQUESTED FOR EFFECTIVENESS OF A
REGISTRATION STATEMENT.  THE COMPANY SHALL, BY 9:30 AM EASTERN TIME ON THE
TRADING DAY AFTER THE EFFECTIVENESS DATE (AS DEFINED IN THE PURCHASE AGREEMENT),
FILE A FORM 424(B)(5) WITH THE COMMISSION.  FAILURE TO SO NOTIFY THE HOLDER
WITHIN 1 TRADING DAY OF SUCH NOTIFICATION SHALL BE DEEMED AN EVENT UNDER
SECTION 2(B).

 

(B)                                 IF FOR ANY REASON THE COMMISSION DOES NOT
PERMIT ALL OF THE REGISTRABLE SECURITIES TO BE INCLUDED IN THE REGISTRATION
STATEMENT(S) FILED PURSUANT TO SECTION 2(A), OR FOR ANY OTHER REASON ANY
OUTSTANDING REGISTRABLE SECURITIES ARE NOT THEN COVERED BY AN EFFECTIVE
REGISTRATION STATEMENT(S), THEN THE COMPANY SHALL PREPARE AND FILE BY THE FILING
DATE FOR SUCH REGISTRATION STATEMENT, AN ADDITIONAL REGISTRATION STATEMENT
COVERING THE RESALE OF ALL REGISTRABLE SECURITIES NOT ALREADY COVERED BY AN
EXISTING AND EFFECTIVE REGISTRATION STATEMENT FOR AN OFFERING TO BE MADE ON A
CONTINUOUS BASIS PURSUANT TO RULE 415, ON FORM S-3 (OR ON SUCH OTHER FORM
APPROPRIATE FOR SUCH PURPOSE).  EACH SUCH REGISTRATION STATEMENT SHALL CONTAIN
(EXCEPT IF OTHERWISE REQUIRED PURSUANT TO WRITTEN COMMENTS RECEIVED FROM THE
COMMISSION UPON A REVIEW OF SUCH REGISTRATION STATEMENT) THE PLAN OF
DISTRIBUTION.  THE COMPANY SHALL CAUSE EACH SUCH REGISTRATION STATEMENT TO BE
DECLARED EFFECTIVE UNDER THE SECURITIES ACT AS SOON AS POSSIBLE, BUT IN ANY
EVENT, BY ITS EFFECTIVENESS DATE, AND SHALL USE ITS REASONABLE BEST COMMERCIAL
EFFORTS TO KEEP SUCH REGISTRATION STATEMENT CONTINUOUSLY EFFECTIVE UNDER THE
SECURITIES ACT DURING THE ENTIRE EFFECTIVENESS PERIOD.

 

(C)                                  IF: (I) A REGISTRATION STATEMENT IS NOT
FILED ON OR PRIOR TO ITS FILING DATE (IF THE COMPANY FILES A REGISTRATION
STATEMENT WITHOUT AFFORDING THE HOLDERS THE OPPORTUNITY TO REVIEW AND COMMENT ON
THE SAME AS REQUIRED BY SECTION 3(A), THE COMPANY SHALL NOT BE DEEMED TO HAVE
SATISFIED THIS CLAUSE (I)), OR (II) THE COMPANY FAILS TO FILE WITH THE
COMMISSION A REQUEST FOR ACCELERATION IN ACCORDANCE WITH RULE 461 PROMULGATED
UNDER THE SECURITIES ACT, WITHIN FIVE TRADING DAYS OF THE DATE THAT THE COMPANY
IS NOTIFIED (ORALLY OR IN WRITING, WHICHEVER IS EARLIER) BY THE COMMISSION THAT
A REGISTRATION STATEMENT WILL NOT BE “REVIEWED,” OR NOT SUBJECT TO FURTHER
REVIEW, OR (III) A REGISTRATION STATEMENT FILED OR REQUIRED TO BE FILED
HEREUNDER IS NOT DECLARED EFFECTIVE BY THE COMMISSION BY ITS EFFECTIVENESS DATE,
(IV) AFTER THE EFFECTIVENESS DATE, A REGISTRATION STATEMENT CEASES TO REMAIN
CONTINUOUSLY EFFECTIVE AS TO ALL REGISTRABLE SECURITIES FOR WHICH IT IS REQUIRED
TO BE EFFECTIVE DUE TO THE GOOD FAITH DETERMINATION OF

 

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THE BOARD OF DIRECTORS OF THE COMPANY THAT THE EXISTENCE OF A PENDING CORPORATE
DEVELOPMENT WITH RESPECT TO THE COMPANY THAT THE COMPANY REASONABLY BELIEVES IS
MATERIAL MAKES IT NOT IN THE BEST INTEREST OF THE COMPANY TO ALLOW CONTINUED
AVAILABILITY OF A REGISTRATION STATEMENT OR PROSPECTUS, OR THE HOLDERS ARE NOT
PERMITTED TO UTILIZE THE PROSPECTUS THEREIN TO RESELL SUCH REGISTRABLE
SECURITIES FOR 15 CONSECUTIVE CALENDAR DAYS BUT NO MORE THAN AN AGGREGATE OF 45
CALENDAR DAYS DURING ANY 12-MONTH PERIOD (WHICH NEED NOT BE CONSECUTIVE TRADING
DAYS), OR (V) AFTER THE EFFECTIVENESS DATE, A REGISTRATION STATEMENT CEASES FOR
ANY REASON TO REMAIN CONTINUOUSLY EFFECTIVE AS TO ALL REGISTRABLE SECURITIES FOR
WHICH IT IS REQUIRED TO BE EFFECTIVE, OR THE HOLDERS ARE NOT PERMITTED TO
UTILIZE THE PROSPECTUS THEREIN TO RESELL SUCH REGISTRABLE SECURITIES FOR 15
CONSECUTIVE CALENDAR DAYS BUT NO MORE THAN AN AGGREGATE OF 45 CALENDAR DAYS
DURING ANY 12-MONTH PERIOD (WHICH NEED NOT BE CONSECUTIVE TRADING DAYS) (ANY
SUCH FAILURE OR BREACH BEING REFERRED TO AS AN “EVENT”, AND FOR PURPOSES OF
CLAUSE (I) THE DATE ON WHICH SUCH EVENT OCCURS, OR FOR PURPOSES OF CLAUSE
(II) THE DATE ON WHICH SUCH FIVE TRADING DAY PERIOD IS EXCEEDED, OR FOR PURPOSES
OF CLAUSE (III) THE DATE ON WHICH SUCH EVENT OCCURS, EXCEPT THAT IF THE
COMMISSION WILL NOT PERMIT ACCELERATION OR REQUESTS WITHDRAWAL AS A RESULT OF
THE ISSUANCE OF THE SECURITIES UNDER THE PURCHASE AGREEMENT OR THE FAILURE OF
ANY HOLDER TO COMPLY WITH THE PLAN OF DISTRIBUTION, THEN SUCH DATE SHALL BE 30
CALENDAR DAYS AFTER THE DATE SUCH EVENT OCCURS, OR FOR PURPOSES OF CLAUSE
(IV) THE DATE ON WHICH SUCH 15 OR 45 CALENDAR DAY PERIOD, AS APPLICABLE, IS
EXCEEDED, OR FOR PURPOSES OF CLAUSE (V) THE DATE ON WHICH SUCH 15 OR 45 CALENDAR
DAY PERIOD IS EXCEEDED BEING REFERRED TO AS “EVENT DATE”), THEN IN ADDITION TO
ANY OTHER RIGHTS THE HOLDERS MAY HAVE HEREUNDER OR UNDER APPLICABLE LAW, ON EACH
MONTHLY ANNIVERSARY OF EACH SUCH EVENT DATE (IF THE APPLICABLE EVENT SHALL NOT
HAVE BEEN CURED BY SUCH DATE) UNTIL THE APPLICABLE EVENT IS CURED, THE COMPANY
SHALL PROMPTLY PAY TO EACH HOLDER AN AMOUNT IN CASH, AS PARTIAL LIQUIDATED
DAMAGES AND NOT AS A PENALTY, EQUAL TO 1.0% OF THE AGGREGATE PURCHASE PRICE PAID
BY SUCH HOLDER PURSUANT TO THE PURCHASE AGREEMENT OR THE WARRANT AGREEMENT, AS
THE CASE MAY BE, FOR ANY REGISTRABLE SECURITIES THEN HELD BY SUCH HOLDER (UP TO
A MAXIMUM OF 8% OF SUCH AGGREGATE PURCHASE OR EXERCISE PRICES), PROVIDED THAT
PARTIAL LIQUIDATED DAMAGES SHALL NOT BE PAID WITH RESPECT TO THOSE REGISTRABLE
SECURITIES WHICH CANNOT BE REGISTERED UNDER RULE 415 SOLELY AS A RESULT OF
ACTION BY THE COMMISSION.  THE PARTIAL LIQUIDATED DAMAGES PURSUANT TO THE TERMS
HEREOF SHALL APPLY ON A DAILY PRO-RATA BASIS FOR ANY PORTION OF A MONTH PRIOR TO
THE CURE OF AN EVENT.  NOTWITHSTANDING THE FOREGOING, NOTHING SHALL PRECLUDE ANY
HOLDER FROM PURSUING OR OBTAINING ANY AVAILABLE REMEDIES AT LAW, SPECIFIC
PERFORMANCE OR OTHER EQUITABLE REFIEF WITH RESPECT TO THIS SECTION 2(C) IN
ACCORDANCE WITH APPLICABLE LAW.

 

(D)                                 SUBJECT TO SECTION 4 BELOW, THE HOLDER SHALL
HAVE THE RIGHT TO SELECT ONE LEGAL COUNSEL TO REVIEW AND OVERSEE ANY
REGISTRATION PURSUANT TO THIS SECTION 2 AND SECTION 8(E) (“LEGAL COUNSEL”),
WHICH SHALL BE GUNDERSON DETTMER STOUGH VILLENEUVE FRANKLIN & HACHIGIAN, LLP OR
SUCH OTHER COUNSEL AS THEREAFTER DESIGNATED BY THE HOLDER.  THE COMPANY AND
LEGAL COUNSEL SHALL REASONABLY COOPERATE WITH EACH OTHER IN PERFORMING THE
COMPANY’S OBLIGATIONS UNDER THIS AGREEMENT.

 

3.                                      REGISTRATION PROCEDURES.

 

In connection with the Company’s registration obligations hereunder, the Company
shall:

 

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(A)                                  NOT LESS THAN FIVE TRADING DAYS PRIOR TO
THE FILING OF EACH REGISTRATION STATEMENT OR ANY RELATED PROSPECTUS OR ANY
AMENDMENT OR SUPPLEMENT THERETO (INCLUDING ANY DOCUMENT THAT WOULD BE
INCORPORATED OR DEEMED TO BE INCORPORATED THEREIN BY REFERENCE), THE COMPANY
SHALL, (I) FURNISH TO EACH HOLDER AND LEGAL COUNSEL COPIES OF ALL SUCH DOCUMENTS
PROPOSED TO BE FILED, WHICH DOCUMENTS (OTHER THAN THOSE INCORPORATED)  WILL BE
SUBJECT TO THE REVIEW OF SUCH HOLDERS AND LEGAL COUNSEL, AND (II) CAUSE ITS
OFFICERS AND DIRECTORS, COUNSEL AND INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS TO
RESPOND TO SUCH INQUIRIES AS SHALL BE NECESSARY, IN THE REASONABLE OPINION OF
LEGAL COUNSEL TO CONDUCT A REASONABLE INVESTIGATION WITHIN THE MEANING OF THE
SECURITIES ACT. THE COMPANY SHALL NOT FILE A REGISTRATION STATEMENT OR ANY SUCH
PROSPECTUS OR ANY AMENDMENTS OR SUPPLEMENTS THERETO TO WHICH THE HOLDERS OF A
MAJORITY OF THE REGISTRABLE SECURITIES SHALL REASONABLY OBJECT IN GOOD FAITH,
PROVIDED THAT, THE COMPANY IS NOTIFIED OF SUCH OBJECTION IN WRITING NO LATER
THAN 5 TRADING DAYS AFTER THE HOLDERS HAVE BEEN SO FURNISHED COPIES OF SUCH
DOCUMENTS. EACH HOLDER AGREES TO FURNISH TO THE COMPANY A COMPLETED
QUESTIONNAIRE IN THE FORM ATTACHED TO THIS AGREEMENT AS ANNEX B (A “SELLING
SHAREHOLDER QUESTIONNAIRE”) NOT LESS THAN TWO TRADING DAYS PRIOR TO THE FILING
DATE OR BY THE END OF THE FOURTH TRADING DAY FOLLOWING THE DATE ON WHICH SUCH
HOLDER RECEIVES DRAFT MATERIALS IN ACCORDANCE WITH THIS SECTION.

 

(B)                                 (I) PREPARE AND FILE WITH THE COMMISSION
SUCH AMENDMENTS, INCLUDING POST-EFFECTIVE AMENDMENTS, TO A REGISTRATION
STATEMENT AND THE PROSPECTUS USED IN CONNECTION THEREWITH AS MAY BE NECESSARY TO
KEEP A REGISTRATION STATEMENT CONTINUOUSLY EFFECTIVE AS TO THE APPLICABLE
REGISTRABLE SECURITIES FOR THE EFFECTIVENESS PERIOD AND PREPARE AND FILE WITH
THE COMMISSION SUCH ADDITIONAL REGISTRATION STATEMENTS IN ORDER TO REGISTER FOR
RESALE UNDER THE SECURITIES ACT ALL OF THE REGISTRABLE SECURITIES; (II) CAUSE
THE RELATED PROSPECTUS TO BE AMENDED OR SUPPLEMENTED BY ANY REQUIRED PROSPECTUS
SUPPLEMENT (SUBJECT TO THE TERMS OF THIS AGREEMENT), AND AS SO SUPPLEMENTED OR
AMENDED TO BE FILED PURSUANT TO RULE 424; (III) RESPOND AS PROMPTLY AS
REASONABLY POSSIBLE,  TO ANY COMMENTS RECEIVED FROM THE COMMISSION WITH RESPECT
TO A REGISTRATION STATEMENT OR ANY AMENDMENT THERETO AND AS PROMPTLY AS
REASONABLY POSSIBLE PROVIDE THE HOLDERS TRUE AND COMPLETE COPIES OF ALL
CORRESPONDENCE FROM AND TO THE COMMISSION RELATING TO A REGISTRATION STATEMENT;
(IV) FILE THE FINAL PROSPECTUS PURSUANT TO RULE 424 OF THE SECURITIES ACT NO
LATER THAN 9:00 A.M. EASTERN TIME ON THE BUSINESS DAY FOLLOWING THE DATE THE
REGISTRATION STATEMENT IS DECLARED EFFECTIVE BY THE COMMISSION; AND (V) COMPLY
IN ALL MATERIAL RESPECTS WITH THE PROVISIONS OF THE SECURITIES ACT AND THE
EXCHANGE ACT WITH RESPECT TO THE DISPOSITION OF ALL REGISTRABLE SECURITIES
COVERED BY A REGISTRATION STATEMENT DURING THE EFFECTIVENESS PERIOD IN
ACCORDANCE (SUBJECT TO THE TERMS OF THIS AGREEMENT) WITH THE INTENDED METHODS OF
DISPOSITION BY THE HOLDERS THEREOF SET FORTH IN SUCH REGISTRATION STATEMENT AS
SO AMENDED OR IN SUCH PROSPECTUS AS SO SUPPLEMENTED.

 

(C)                                  NOTIFY THE HOLDERS OF REGISTRABLE
SECURITIES  TO BE SOLD (WHICH NOTICE SHALL, PURSUANT TO CLAUSES (II) THROUGH
(VI) HEREOF, BE ACCOMPANIED BY AN INSTRUCTION TO SUSPEND THE USE OF THE
PROSPECTUS UNTIL THE REQUISITE CHANGES HAVE BEEN MADE) AS PROMPTLY AS REASONABLY
POSSIBLE (AND, IN THE CASE OF (I)(A) BELOW, NOT LESS THAN FIVE TRADING DAYS
PRIOR TO SUCH FILING AND IN THE CASE OF CLAUSE (III) BELOW, ON THE SAME DAY OF
RECEIPT BY THE COMPANY OF SUCH NOTICE FROM THE COMMISSION OR FEDERAL OR STATE
GOVERNMENTAL AUTHORITY) AND (IF REQUESTED BY ANY SUCH PERSON) CONFIRM SUCH
NOTICE IN

 

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WRITING NO LATER THAN ONE TRADING DAY FOLLOWING THE DAY (I)(A) WHEN A PROSPECTUS
OR ANY PROSPECTUS SUPPLEMENT OR POST-EFFECTIVE AMENDMENT TO A REGISTRATION
STATEMENT IS PROPOSED TO BE FILED, ; (B) WHEN THE COMMISSION NOTIFIES THE
COMPANY WHETHER THERE WILL BE A “REVIEW” OF SUCH REGISTRATION STATEMENT AND
WHENEVER THE COMMISSION COMMENTS IN WRITING ON SUCH REGISTRATION STATEMENT (THE
COMPANY SHALL PROVIDE TRUE AND COMPLETE COPIES THEREOF AND ALL WRITTEN RESPONSES
THERETO TO EACH OF THE HOLDERS, EXCEPT TO THE EXTENT THE COMPANY REQUESTS THAT
SUCH RESPONSES BE EXEMPT FROM REQUESTS UNDER THE FREEDOM OF INFORMATION ACT);
AND (C) WITH RESPECT TO A REGISTRATION STATEMENT OR ANY POST-EFFECTIVE
AMENDMENT, WHEN THE SAME HAS BECOME EFFECTIVE; (II) OF ANY REQUEST BY THE
COMMISSION OR ANY OTHER FEDERAL OR STATE GOVERNMENTAL AUTHORITY FOR AMENDMENTS
OR SUPPLEMENTS TO A REGISTRATION STATEMENT OR PROSPECTUS OR FOR ADDITIONAL
INFORMATION; (III) OF THE ISSUANCE BY THE COMMISSION OR ANY OTHER FEDERAL OR
STATE GOVERNMENTAL AUTHORITY OF ANY STOP ORDER SUSPENDING THE EFFECTIVENESS OF A
REGISTRATION STATEMENT COVERING ANY OR ALL OF THE REGISTRABLE SECURITIES OR THE
INITIATION OF ANY PROCEEDINGS FOR THAT PURPOSE; (IV) OF THE RECEIPT BY THE
COMPANY OF ANY NOTIFICATION WITH RESPECT TO THE SUSPENSION OF THE QUALIFICATION
OR EXEMPTION FROM QUALIFICATION OF ANY OF THE REGISTRABLE SECURITIES FOR SALE IN
ANY JURISDICTION, OR THE INITIATION OR THREATENING OF ANY PROCEEDING FOR SUCH
PURPOSE; (V) OF THE OCCURRENCE OF ANY EVENT OR PASSAGE OF TIME THAT MAKES THE
FINANCIAL STATEMENTS INCLUDED IN A REGISTRATION STATEMENT INELIGIBLE FOR
INCLUSION THEREIN OR ANY STATEMENT MADE IN A REGISTRATION STATEMENT OR
PROSPECTUS OR ANY DOCUMENT INCORPORATED OR DEEMED TO BE INCORPORATED THEREIN BY
REFERENCE UNTRUE IN ANY MATERIAL RESPECT OR THAT REQUIRES ANY REVISIONS TO A
REGISTRATION STATEMENT, PROSPECTUS OR OTHER DOCUMENTS SO THAT, IN THE CASE OF A
REGISTRATION STATEMENT OR THE PROSPECTUS, AS THE CASE MAY BE, IT WILL NOT
CONTAIN 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; AND
(VI) OF THE OCCURRENCE OR EXISTENCE OF ANY PENDING CORPORATE DEVELOPMENT WITH
RESPECT TO THE COMPANY THAT THE COMPANY REASONABLY BELIEVES IS MATERIAL AND
THAT, IN THE DETERMINATION OF THE COMPANY, MAKES IT NOT IN THE BEST INTEREST OF
THE COMPANY TO ALLOW CONTINUED AVAILABILITY OF A REGISTRATION STATEMENT OR
PROSPECTUS; PROVIDED, THAT, ALL OF SUCH INFORMATION SHALL REMAIN CONFIDENTIAL TO
EACH HOLDER (OTHER THAN DISCLOSURE TO HOLDER’S EMPLOYEES, AGENTS, AFFILIATES,
ACCOUNTANTS, ATTORNEYS AND ADVISORS) UNTIL SUCH INFORMATION OTHERWISE BECOMES
PUBLIC, UNLESS DISCLOSURE BY A HOLDER IS REQUIRED BY LAW; PROVIDED, FURTHER,
NOTWITHSTANDING EACH HOLDER’S AGREEMENT TO KEEP SUCH INFORMATION CONFIDENTIAL
THAT, THE HOLDERS MAKE NO ACKNOWLEDGEMENT THAT ANY SUCH INFORMATION PROVIDED
PURSUANT TO THIS SECTION 3(C) IS MATERIAL, NON-PUBLIC INFORMATION.

 

If the Company notifies the Holders in accordance with clauses (ii) through
(vi) of this Section 3(c) to suspend the use of any Prospectus until the
requisite changes to such Prospectus have been made, then the Holders shall
suspend use of such Prospectus.  The Company will use its reasonable best
commercial efforts to ensure that the use of the Prospectus may be resumed as
promptly as is practicable.  The Company shall be entitled to exercise its right
under this Section 2(c) to suspend the availability of a Registration Statement
and Prospectus, subject to the payment of partial liquidated damages pursuant to
Section 2(c), for a period not to exceed an aggregate 45 days in any 12 month
period; provided, however, that no such postponement or suspension shall be
permitted for more than a consecutive twenty (20) days.

 

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(D)                                 USE ITS REASONABLE BEST COMMERCIAL EFFORTS
TO AVOID THE ISSUANCE OF, OR, IF ISSUED, OBTAIN THE WITHDRAWAL OF (I) ANY ORDER
STOPPING OR SUSPENDING THE EFFECTIVENESS OF A REGISTRATION STATEMENT, OR
(II) ANY SUSPENSION OF THE QUALIFICATION (OR EXEMPTION FROM QUALIFICATION) OF
ANY OF THE REGISTRABLE SECURITIES FOR SALE IN ANY JURISDICTION, AT THE EARLIEST
PRACTICABLE MOMENT.

 

(E)                                  FURNISH TO EACH HOLDER UPON REQUEST AND
WITHOUT CHARGE, AT LEAST ONE CONFORMED COPY OF EACH SUCH REGISTRATION STATEMENT
AND EACH AMENDMENT THERETO, INCLUDING FINANCIAL STATEMENTS AND SCHEDULES, ALL
DOCUMENTS INCORPORATED OR DEEMED TO BE INCORPORATED THEREIN BY REFERENCE TO THE
EXTENT REQUESTED BY SUCH PERSON, AND ALL EXHIBITS TO THE EXTENT REQUESTED BY
SUCH PERSON (INCLUDING THOSE PREVIOUSLY FURNISHED OR INCORPORATED BY REFERENCE)
PROMPTLY AFTER THE FILING OF SUCH DOCUMENTS WITH THE COMMISSION.

 

(F)                                    PROMPTLY DELIVER TO EACH HOLDER, WITHOUT
CHARGE, AS MANY COPIES OF THE PROSPECTUS OR PROSPECTUSES (INCLUDING EACH FORM OF
PROSPECTUS) AND EACH AMENDMENT OR SUPPLEMENT THERETO AS SUCH PERSONS MAY
REASONABLY REQUEST IN CONNECTION WITH RESALES BY THE HOLDER OF REGISTRABLE
SECURITIES.  SUBJECT TO THE TERMS OF THIS AGREEMENT, THE COMPANY HEREBY CONSENTS
TO THE USE OF SUCH PROSPECTUS AND EACH AMENDMENT OR SUPPLEMENT THERETO BY EACH
OF THE SELLING HOLDERS IN CONNECTION WITH THE OFFERING AND SALE OF THE
REGISTRABLE SECURITIES COVERED BY SUCH PROSPECTUS AND ANY AMENDMENT OR
SUPPLEMENT THERETO, EXCEPT AFTER THE GIVING ON ANY NOTICE PURSUANT TO
SECTION 3(D).

 

(G)                                 IF FINRA RULE 2710 REQUIRES ANY
BROKER-DEALER TO MAKE A FILING PRIOR TO EXECUTING A SALE BY A HOLDER, THE
COMPANY SHALL (I) MAKE AN ISSUER FILING WITH THE FINRA CORPORATE FINANCING
DEPARTMENT PURSUANT TO PROPOSED FINRA RULE 2710(B)(10)(A)(I), (II) RESPOND
WITHIN FIVE TRADING DAYS TO ANY COMMENTS RECEIVED FROM FINRA IN CONNECTION
THEREWITH AND (III) AND PAY THE FILING FEE REQUIRED IN CONNECTION THEREWITH.

 

(H)                                 PRIOR TO ANY RESALE OF REGISTRABLE
SECURITIES BY A HOLDER OR ANY PUBLIC OFFERING OF REGISTRABLE SECURITIES
HEREUNDER, USE ITS REASONABLE BEST COMMERCIAL EFFORTS TO REGISTER OR QUALIFY OR
COOPERATE WITH THE SELLING HOLDERS IN CONNECTION WITH THE REGISTRATION OR
QUALIFICATION (OR EXEMPTION FROM THE REGISTRATION OR QUALIFICATION) OF SUCH
REGISTRABLE SECURITIES FOR THE RESALE OR SALE BY THE HOLDER, AS APPLICABLE,
UNDER THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTIONS WITHIN THE UNITED
STATES AS ANY HOLDER REASONABLY REQUESTS IN WRITING, TO KEEP EACH REGISTRATION
OR QUALIFICATION (OR EXEMPTION THEREFROM) EFFECTIVE DURING THE EFFECTIVENESS
PERIOD AND TO DO ANY AND ALL OTHER ACTS OR THINGS REASONABLY NECESSARY TO ENABLE
THE DISPOSITION IN SUCH JURISDICTIONS OF THE REGISTRABLE SECURITIES COVERED BY
EACH REGISTRATION STATEMENT; PROVIDED, THAT THE COMPANY SHALL NOT BE REQUIRED TO
QUALIFY GENERALLY TO DO BUSINESS IN ANY JURISDICTION WHERE IT IS NOT THEN SO
QUALIFIED, SUBJECT THE COMPANY TO ANY MATERIAL TAX IN ANY SUCH JURISDICTION
WHERE IT IS NOT THEN SO SUBJECT OR FILE A GENERAL CONSENT TO SERVICE OF PROCESS
IN ANY SUCH JURISDICTION WHERE IT IS NOT THEN SUBJECT.

 

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(I)                                     COOPERATE WITH THE HOLDERS TO FACILITATE
THE TIMELY PREPARATION AND DELIVERY OF CERTIFICATES REPRESENTING REGISTRABLE
SECURITIES TO BE DELIVERED TO A TRANSFEREE PURSUANT TO A REGISTRATION STATEMENT,
WHICH CERTIFICATES SHALL BE FREE, TO THE EXTENT PERMITTED BY THE PURCHASE
AGREEMENT, OF ALL RESTRICTIVE LEGENDS, AND TO ENABLE SUCH REGISTRABLE SECURITIES
TO BE IN SUCH DENOMINATIONS AND REGISTERED IN SUCH NAMES AS ANY SUCH HOLDERS MAY
REQUEST.

 

(J)                                     UPON THE OCCURRENCE OF ANY EVENT
CONTEMPLATED BY THIS SECTION 3, AS PROMPTLY AS REASONABLY POSSIBLE UNDER THE
CIRCUMSTANCES TAKING INTO ACCOUNT THE COMPANY’S GOOD FAITH ASSESSMENT OF ANY
ADVERSE CONSEQUENCES TO THE COMPANY AND ITS STOCKHOLDERS OF THE PREMATURE
DISCLOSURE OF SUCH EVENT, PREPARE A SUPPLEMENT OR AMENDMENT, INCLUDING A
POST-EFFECTIVE AMENDMENT, TO A REGISTRATION STATEMENT OR A SUPPLEMENT TO THE
RELATED PROSPECTUS OR ANY DOCUMENT INCORPORATED OR DEEMED TO BE INCORPORATED
THEREIN BY REFERENCE, AND FILE ANY OTHER REQUIRED DOCUMENT SO THAT, AS
THEREAFTER DELIVERED, NEITHER A REGISTRATION STATEMENT NOR SUCH PROSPECTUS WILL
CONTAIN AN UNTRUE STATEMENT OF A MATERIAL FACT OR OMIT TO STATE A 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.

 

(K)                                  COMPLY WITH ALL APPLICABLE RULES AND
REGULATIONS OF THE COMMISSION.

 

(L)                                     CAUSE ALL REGISTRABLE SECURITIES
RELATING TO THE REGISTRATION STATEMENT TO BE LISTED ON THE NASDAQ GLOBAL MARKET,
OR OTHER TRADING MARKET ON WHICH SIMILAR SECURITIES ISSUED BY THE COMPANY ARE
THEN LISTED.

 

(M)                               IN CONNECTION WITH THE FILING OF A
REGISTRATION STATEMENT, THE COMPANY MAY REQUIRE EACH SELLING HOLDER TO FURNISH
TO THE COMPANY A CERTIFIED STATEMENT AS TO THE NUMBER OF SHARES OF COMMON STOCK
BENEFICIALLY OWNED BY SUCH HOLDER AND, IF REQUIRED BY THE COMMISSION, THE PERSON
THEREOF THAT HAS VOTING AND DISPOSITIVE CONTROL OVER THE SHARES. DURING ANY
PERIODS THAT THE COMPANY IS UNABLE TO MEET ITS OBLIGATIONS HEREUNDER WITH
RESPECT TO THE REGISTRATION OF THE REGISTRABLE SECURITIES SOLELY BECAUSE ANY
HOLDER FAILS TO FURNISH SUCH INFORMATION WITHIN THREE TRADING DAYS OF THE
COMPANY’S REQUEST, ANY LIQUIDATED DAMAGES THAT ARE ACCRUING AT SUCH TIME AS TO
SUCH HOLDER ONLY SHALL BE TOLLED AND ANY EVENT THAT MAY OTHERWISE OCCUR SOLELY
BECAUSE OF SUCH DELAY SHALL BE SUSPENDED AS TO SUCH HOLDER ONLY, UNTIL SUCH
INFORMATION IS DELIVERED TO THE COMPANY.

 

4.                                      REGISTRATION EXPENSES.

 

All fees and expenses incident to the performance of or compliance with this
Agreement by the Company shall be borne by the Company whether or not any
Registrable Securities are sold pursuant to a Registration Statement. The fees
and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses (A) with respect to filings required to be made with the
Commission and with the Trading Market on which the Common Stock is then listed
for trading, (B) in compliance with applicable state securities or Blue Sky laws
reasonably agreed to by the Company in writing (including, without limitation,
fees and disbursements of counsel for the

 

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Company in connection with Blue Sky qualifications or exemptions of the
Registrable Securities and determination of the eligibility of the Registrable
Securities for investment under the laws of such jurisdictions as requested by
the Holders) and (C) if not previously paid by the Company in connection with an
Issuer Filing, with respect to any filing that may be required to be made by any
broker through which a Holder intends to make sales of Registrable Securities
with FINRA pursuant to FINRA Rule 2710, so long as the broker is receiving no
more than a customary brokerage commission in connection with such sale,
(ii) printing expenses (including, without limitation, expenses of printing
certificates for Registrable Securities and of printing prospectuses if the
printing of prospectuses is reasonably requested by the holders of a majority of
the Registrable Securities included in a Registration Statement),
(iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel and auditors for the Company, (v) reasonable fees and expenses of  Legal
Counsel in an amount not to exceed (a) $20,000 with respect to all Registration
Statements filed pursuant to Section 2 and (b) an additional $20,000 with
respect to all Registration Statements filed pursuant to Section 7(e),
(vi) Securities Act liability insurance, if the Company so desires such
insurance, and (vii) fees and expenses of all other Persons retained by the
Company in connection with the consummation of the transactions contemplated by
this Agreement.  Invoices with respect to fees and expenses of Legal Counsel
shall be delivered to the Company itemized and in reasonable detail.  In
addition, the Company shall be responsible for all of its internal expenses
incurred in connection with the consummation of the transactions contemplated by
this Agreement (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit and the fees and expenses incurred in connection with the
listing of the Registrable Securities on any securities exchange as required
hereunder.  In no event shall the Company be responsible for any broker or
similar commissions or, except to the extent provided for in the Transaction
Documents, any legal fees or other costs of the Holders.

 

5.                                      INDEMNIFICATION

 

(A)                                  INDEMNIFICATION BY THE COMPANY. THE COMPANY
SHALL, NOTWITHSTANDING ANY TERMINATION OF THIS AGREEMENT, INDEMNIFY AND HOLD
HARMLESS EACH HOLDER, THE OFFICERS, DIRECTORS, MEMBERS, GENERAL AND LIMITED
PARTNERS, MANAGERS, AGENTS, BROKERS (INCLUDING BROKERS WHO OFFER AND SELL
REGISTRABLE SECURITIES AS PRINCIPAL AS A RESULT OF A PLEDGE OR ANY FAILURE TO
PERFORM UNDER A MARGIN CALL OF COMMON STOCK), INVESTMENT ADVISORS AND EMPLOYEES
(AND ANY OTHER PERSONS WITH A FUNCTIONALLY EQUIVALENT ROLE OF A PERSON HOLDING
SUCH TITLES, NOTWITHSTANDING A LACK OF SUCH TITLE OR ANY OTHER TITLE) OF EACH OF
THEM, EACH PERSON WHO CONTROLS ANY SUCH HOLDER (WITHIN THE MEANING OF SECTION 15
OF THE SECURITIES ACT OR SECTION 20 OF THE EXCHANGE ACT) AND THE OFFICERS,
DIRECTORS, MEMBERS, GENERAL AND LIMITED PARTNERS, MANAGERS, AGENTS AND EMPLOYEES
(AND ANY OTHER PERSONS WITH A FUNCTIONALLY EQUIVALENT ROLE OF A PERSON HOLDING
SUCH TITLES, NOTWITHSTANDING A LACK OF SUCH TITLE OR ANY OTHER TITLE) OF EACH
SUCH CONTROLLING PERSON, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, FROM
AND AGAINST ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES, COSTS (INCLUDING,
WITHOUT LIMITATION, REASONABLE ATTORNEYS’ FEES) AND EXPENSES (COLLECTIVELY,
“LOSSES”), AS INCURRED, ARISING OUT OF OR RELATING TO (1) ANY UNTRUE OR ALLEGED
UNTRUE STATEMENT OF A MATERIAL FACT CONTAINED IN A REGISTRATION STATEMENT, ANY
PROSPECTUS OR ANY FORM OF PROSPECTUS OR IN ANY AMENDMENT OR SUPPLEMENT THERETO
OR IN ANY PRELIMINARY PROSPECTUS, OR ARISING OUT OF OR RELATING TO ANY OMISSION
OR ALLEGED OMISSION OF A MATERIAL FACT REQUIRED TO BE STATED THEREIN OR
NECESSARY TO MAKE THE STATEMENTS THEREIN (IN THE CASE OF ANY PROSPECTUS OR FORM
OF PROSPECTUS OR SUPPLEMENT THERETO, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH

 

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THEY WERE MADE) NOT MISLEADING OR (2) ANY VIOLATION OR ALLEGED VIOLATION BY THE
COMPANY OF THE SECURITIES ACT, THE EXCHANGE ACT OR ANY STATE SECURITIES LAW, OR
ANY RULE OR REGULATION THEREUNDER, IN CONNECTION WITH THE PERFORMANCE OF ITS
OBLIGATIONS UNDER THIS AGREEMENT, EXCEPT TO THE EXTENT, BUT ONLY TO THE EXTENT,
THAT (I) SUCH UNTRUE STATEMENTS OR OMISSIONS ARE BASED SOLELY UPON INFORMATION
REGARDING SUCH HOLDER FURNISHED IN WRITING TO THE COMPANY BY SUCH HOLDER
EXPRESSLY FOR USE THEREIN, OR TO THE EXTENT THAT SUCH INFORMATION RELATES TO
SUCH HOLDER OR SUCH HOLDER’S PROPOSED METHOD OF DISTRIBUTION OF REGISTRABLE
SECURITIES AND WAS REVIEWED AND EXPRESSLY APPROVED IN WRITING IN ACCORDANCE WITH
SECTION 3(C) BY SUCH HOLDER EXPRESSLY FOR USE IN A REGISTRATION STATEMENT, SUCH
PROSPECTUS OR SUCH FORM OF PROSPECTUS OR IN ANY AMENDMENT OR SUPPLEMENT THERETO
(IT BEING UNDERSTOOD THAT THE HOLDER HAS APPROVED ANNEX A HERETO FOR THIS
PURPOSE) OR (II) IN THE CASE OF AN OCCURRENCE OF AN EVENT OF THE TYPE SPECIFIED
IN SECTION 3(C)(II)-(VI), THE USE BY SUCH HOLDER OF AN OUTDATED OR DEFECTIVE
PROSPECTUS AFTER THE COMPANY HAS NOTIFIED SUCH HOLDER IN WRITING THAT THE
PROSPECTUS IS OUTDATED OR DEFECTIVE AND PRIOR TO THE RECEIPT BY SUCH HOLDER OF
THE ADVICE CONTEMPLATED IN SECTION 8(D).  THE COMPANY SHALL NOTIFY THE HOLDERS
PROMPTLY OF THE INSTITUTION, THREAT OR ASSERTION OF ANY PROCEEDING ARISING FROM
OR IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OF WHICH
THE COMPANY IS AWARE.

 

(B)                                 INDEMNIFICATION BY HOLDERS. EACH HOLDER
SHALL, SEVERALLY AND NOT JOINTLY, INDEMNIFY AND HOLD HARMLESS THE COMPANY, ITS
DIRECTORS, OFFICERS, AGENTS AND EMPLOYEES, EACH PERSON WHO CONTROLS THE COMPANY
(WITHIN THE MEANING OF SECTION 15 OF THE SECURITIES ACT AND SECTION 20 OF THE
EXCHANGE ACT), AND THE DIRECTORS, OFFICERS, AGENTS OR EMPLOYEES OF SUCH
CONTROLLING PERSONS, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, FROM AND
AGAINST ALL LOSSES, AS INCURRED, TO THE EXTENT ARISING SOLELY OUT OF OR BASED
SOLELY UPON: (X) SUCH HOLDER’S FAILURE TO COMPLY WITH THE PROSPECTUS DELIVERY
REQUIREMENTS OF THE SECURITIES ACT OR (Y) ANY UNTRUE STATEMENT OF A MATERIAL
FACT CONTAINED IN ANY REGISTRATION STATEMENT, ANY PROSPECTUS, OR ANY FORM OF
PROSPECTUS, OR IN ANY AMENDMENT OR SUPPLEMENT THERETO OR IN ANY PRELIMINARY
PROSPECTUS, OR ARISING SOLELY OUT OF OR BASED SOLELY ON TO ANY OMISSION OR
ALLEGED OMISSION OF A MATERIAL FACT REQUIRED TO BE STATED THEREIN OR NECESSARY
TO MAKE THE STATEMENTS THEREIN NOT MISLEADING (IN THE CASE OF ANY PROSPECTUS OR
FORM OF PROSPECTUS OR SUPPLEMENT THERETO, IN THE LIGHT OF THE CIRCUMSTANCES
UNDER WHICH THEY WERE MADE)  (I) TO THE EXTENT, BUT ONLY TO THE EXTENT, THAT
SUCH UNTRUE STATEMENT OR OMISSION IS CONTAINED IN ANY INFORMATION SO FURNISHED
IN WRITING BY SUCH HOLDER TO THE COMPANY SPECIFICALLY FOR INCLUSION IN SUCH
REGISTRATION STATEMENT OR SUCH PROSPECTUS OR (II) TO THE EXTENT THAT (1) SUCH
UNTRUE STATEMENTS OR OMISSIONS ARE BASED SOLELY UPON INFORMATION REGARDING SUCH
HOLDER FURNISHED IN WRITING TO THE COMPANY BY SUCH HOLDER EXPRESSLY FOR USE
THEREIN, OR TO THE EXTENT THAT SUCH INFORMATION RELATES TO SUCH HOLDER OR SUCH
HOLDER’S PROPOSED METHOD OF DISTRIBUTION OF REGISTRABLE SECURITIES AND WAS
REVIEWED AND EXPRESSLY APPROVED IN WRITING BY SUCH HOLDER EXPRESSLY FOR USE IN A
REGISTRATION STATEMENT (IT BEING UNDERSTOOD THAT THE HOLDER HAS APPROVED ANNEX A
HERETO FOR THIS PURPOSE), SUCH PROSPECTUS OR SUCH FORM OF PROSPECTUS OR IN ANY
AMENDMENT OR SUPPLEMENT THERETO OR (2) IN THE CASE OF AN OCCURRENCE OF AN EVENT
OF THE TYPE SPECIFIED IN SECTION 3(C)(II)-(VI), THE USE BY SUCH HOLDER OF AN
OUTDATED OR DEFECTIVE PROSPECTUS AFTER THE COMPANY HAS NOTIFIED SUCH HOLDER IN
WRITING IN ACCORDANCE WITH SECTION 3(C) THAT THE PROSPECTUS IS OUTDATED OR
DEFECTIVE AND PRIOR TO THE RECEIPT BY SUCH HOLDER OF THE ADVICE CONTEMPLATED IN
SECTION 8(D). IN NO EVENT SHALL THE LIABILITY OF ANY SELLING HOLDER HEREUNDER BE
GREATER IN AMOUNT THAN THE DOLLAR AMOUNT OF THE NET PROCEEDS RECEIVED BY SUCH
HOLDER UPON THE SALE OF THE REGISTRABLE SECURITIES GIVING RISE TO SUCH
INDEMNIFICATION OBLIGATION.

 

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(C)                                  CONDUCT OF INDEMNIFICATION PROCEEDINGS. IF
ANY PROCEEDING SHALL BE BROUGHT OR ASSERTED AGAINST ANY PERSON ENTITLED TO
INDEMNITY HEREUNDER (AN “INDEMNIFIED PARTY”), SUCH INDEMNIFIED PARTY SHALL
PROMPTLY NOTIFY THE PERSON FROM WHOM INDEMNITY IS SOUGHT (THE “INDEMNIFYING
PARTY”) IN WRITING, AND THE INDEMNIFYING PARTY SHALL HAVE THE RIGHT TO ASSUME
THE DEFENSE THEREOF, INCLUDING THE EMPLOYMENT OF COUNSEL REASONABLY SATISFACTORY
TO THE INDEMNIFIED PARTY AND THE PAYMENT OF ALL FEES AND EXPENSES INCURRED IN
CONNECTION WITH DEFENSE THEREOF; PROVIDED, THAT THE FAILURE OF ANY INDEMNIFIED
PARTY TO GIVE SUCH NOTICE SHALL NOT RELIEVE THE INDEMNIFYING PARTY OF ITS
OBLIGATIONS OR LIABILITIES PURSUANT TO THIS AGREEMENT, EXCEPT (AND ONLY) TO THE
EXTENT THAT IT SHALL BE FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION
(WHICH DETERMINATION IS NOT SUBJECT TO APPEAL OR FURTHER REVIEW) THAT SUCH
FAILURE SHALL HAVE MATERIALLY PREJUDICED THE INDEMNIFYING PARTY.

 

AN INDEMNIFIED PARTY SHALL HAVE THE RIGHT TO EMPLOY SEPARATE COUNSEL IN ANY SUCH
PROCEEDING AND TO PARTICIPATE IN THE DEFENSE THEREOF, BUT THE FEES AND EXPENSES
OF SUCH COUNSEL SHALL BE AT THE EXPENSE OF SUCH INDEMNIFIED PARTY OR PARTIES
UNLESS:  (1) THE INDEMNIFYING PARTY HAS AGREED IN WRITING TO PAY SUCH FEES AND
EXPENSES; (2) THE INDEMNIFYING PARTY SHALL HAVE FAILED PROMPTLY TO ASSUME THE
DEFENSE OF SUCH PROCEEDING AND TO EMPLOY COUNSEL REASONABLY SATISFACTORY TO SUCH
INDEMNIFIED PARTY IN ANY SUCH PROCEEDING; OR (3) THE NAMED PARTIES TO ANY SUCH
PROCEEDING (INCLUDING ANY IMPLEADED PARTIES) INCLUDE BOTH SUCH INDEMNIFIED PARTY
AND THE INDEMNIFYING PARTY, AND SUCH INDEMNIFIED PARTY SHALL REASONABLY BELIEVE
THAT A MATERIAL CONFLICT OF INTEREST IS LIKELY TO EXIST IF THE SAME COUNSEL WERE
TO REPRESENT SUCH INDEMNIFIED PARTY AND THE INDEMNIFYING PARTY (IN WHICH CASE,
IF SUCH INDEMNIFIED PARTY NOTIFIES THE INDEMNIFYING PARTY IN WRITING THAT IT
ELECTS TO EMPLOY SEPARATE COUNSEL AT THE EXPENSE OF THE INDEMNIFYING PARTY, THE
INDEMNIFYING PARTY SHALL NOT HAVE THE RIGHT TO ASSUME THE DEFENSE THEREOF AND
THE REASONABLE FEES AND EXPENSES OF ONE SEPARATE COUNSEL SHALL BE AT THE EXPENSE
OF THE INDEMNIFYING PARTY).  THE INDEMNIFYING PARTY SHALL NOT BE LIABLE FOR ANY
SETTLEMENT OF ANY SUCH PROCEEDING EFFECTED WITHOUT ITS WRITTEN CONSENT, WHICH
CONSENT SHALL NOT BE UNREASONABLY WITHHELD OR DELAYED.  NO INDEMNIFYING PARTY
SHALL, WITHOUT THE PRIOR WRITTEN CONSENT OF THE INDEMNIFIED PARTY, EFFECT ANY
SETTLEMENT OF ANY PENDING OR THREATENED PROCEEDING IN RESPECT OF WHICH ANY
INDEMNIFIED PARTY IS A PARTY, UNLESS SUCH SETTLEMENT INCLUDES AN UNCONDITIONAL
RELEASE OF SUCH INDEMNIFIED PARTY FROM ALL LIABILITY ON CLAIMS THAT ARE THE
SUBJECT MATTER OF SUCH PROCEEDING.

 

SUBJECT TO THE TERMS OF THIS AGREEMENT, ALL REASONABLE FEES AND EXPENSES OF THE
INDEMNIFIED PARTY (INCLUDING REASONABLE FEES AND EXPENSES TO THE EXTENT INCURRED
IN CONNECTION WITH INVESTIGATING OR PREPARING TO DEFEND SUCH PROCEEDING IN A
MANNER NOT INCONSISTENT WITH THIS SECTION) SHALL BE PAID TO THE INDEMNIFIED
PARTY, AS INCURRED, WITHIN TEN TRADING DAYS OF WRITTEN NOTICE THEREOF TO THE
INDEMNIFYING PARTY; PROVIDED, THAT THE INDEMNIFIED PARTY SHALL PROMPTLY
REIMBURSE THE INDEMNIFYING PARTY FOR THAT PORTION OF SUCH FEES AND EXPENSES
APPLICABLE TO SUCH ACTIONS FOR WHICH IT IS FINALLY JUDICIALLY DETERMINED (NOT
SUBJECT TO APPEAL) SUCH INDEMNIFIED PARTY IS NOT ENTITLED TO INDEMNIFICATION
HEREUNDER, DETERMINED BASED UPON THE RELATIVE FAULTS OF THE PARTIES.

 

(D)                                 CONTRIBUTION. IF THE INDEMNIFICATION UNDER
SECTION 5(A) OR 5(B) IS UNAVAILABLE TO AN INDEMNIFIED PARTY FOR ANY REASON OR
INSUFFICIENT TO HOLD AN INDEMNIFIED PARTY HARMLESS FOR ANY LOSSES, THEN EACH
INDEMNIFYING PARTY SHALL CONTRIBUTE TO THE AMOUNT PAID OR PAYABLE BY SUCH
INDEMNIFIED PARTY, IN SUCH PROPORTION AS IS APPROPRIATE TO REFLECT THE RELATIVE
FAULT OF THE INDEMNIFYING PARTY AND INDEMNIFIED PARTY IN CONNECTION WITH THE
ACTIONS, STATEMENTS OR OMISSIONS THAT RESULTED IN SUCH LOSSES AS WELL AS ANY
OTHER RELEVANT EQUITABLE CONSIDERATIONS.

 

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THE RELATIVE FAULT OF SUCH INDEMNIFYING PARTY AND INDEMNIFIED PARTY SHALL BE
DETERMINED BY REFERENCE TO, AMONG OTHER THINGS, WHETHER ANY ACTION IN QUESTION,
INCLUDING ANY UNTRUE OR ALLEGED UNTRUE STATEMENT OF A MATERIAL FACT OR OMISSION
OR ALLEGED OMISSION OF A MATERIAL FACT, HAS BEEN TAKEN OR MADE BY, OR RELATES TO
INFORMATION SUPPLIED BY, SUCH INDEMNIFYING PARTY OR INDEMNIFIED PARTY, AND THE
PARTIES’ RELATIVE INTENT, KNOWLEDGE, ACCESS TO INFORMATION AND OPPORTUNITY TO
CORRECT OR PREVENT SUCH ACTION, STATEMENT OR OMISSION.  THE AMOUNT PAID OR
PAYABLE BY A PARTY AS A RESULT OF ANY LOSSES SHALL BE DEEMED TO INCLUDE, SUBJECT
TO THE LIMITATIONS SET FORTH IN THIS AGREEMENT, ANY REASONABLE ATTORNEYS’ OR
OTHER REASONABLE FEES OR EXPENSES INCURRED BY SUCH PARTY IN CONNECTION WITH ANY
PROCEEDING TO THE EXTENT SUCH PARTY WOULD HAVE BEEN INDEMNIFIED FOR SUCH FEES OR
EXPENSES IF THE INDEMNIFICATION PROVIDED FOR IN THIS SECTION WAS AVAILABLE TO
SUCH PARTY IN ACCORDANCE WITH ITS TERMS.

 

THE PARTIES HERETO AGREE THAT IT WOULD NOT BE JUST AND EQUITABLE IF CONTRIBUTION
PURSUANT TO THIS SECTION 5(D) WERE DETERMINED BY PRO RATA ALLOCATION OR BY ANY
OTHER METHOD OF ALLOCATION THAT DOES NOT TAKE INTO ACCOUNT THE EQUITABLE
CONSIDERATIONS REFERRED TO IN THE IMMEDIATELY PRECEDING PARAGRAPH. 
NOTWITHSTANDING THE PROVISIONS OF THIS SECTION 5(D), IN NO EVENT SHALL ANY
SELLING HOLDER BE REQUIRED TO CONTRIBUTE AN AMOUNT UNDER THIS SECTION 5(D) IN
EXCESS OF THE NET PROCEEDS RECEIVED BY SUCH HOLDER UPON SALE OF SUCH HOLDER’S
REGISTRABLE SECURITIES PURSUANT TO THE REGISTRATION STATEMENT GIVING RISE TO
SUCH CONTRIBUTION OBLIGATION., EXCEPT IN THE CASE OF FRAUD BY SUCH HOLDER.

 

THE INDEMNITY AND CONTRIBUTION AGREEMENTS CONTAINED IN THIS SECTION ARE IN
ADDITION TO ANY LIABILITY THAT THE INDEMNIFYING PARTIES MAY HAVE TO THE
INDEMNIFIED PARTIES.

 

6.                                      REPORTS UNDER EXCHANGE ACT

 

With a view to making available to the Holder the benefits of Rule 144
promulgated under the Securities Act and any other rule or regulation of the
Commission that may at any time permit a Holder to sell Registrable Shares of
the Company to the public without registration, the Company agrees to:

 

(A)                                  MAKE AND KEEP PUBLIC INFORMATION AVAILABLE,
AS THOSE TERMS ARE USED IN RULE 144, AT ALL TIMES;

 

(B)                                 FILE WITH THE COMMISSION IN A TIMELY MANNER
ALL REPORTS AND OTHER DOCUMENTS REQUIRED OF THE COMPANY UNDER THE SECURITIES
ACT, THE EXCHANGE ACT AND THE RULES AND REGULATIONS OF THE TRADING MARKET;

 

(C)                                  FURNISH TO ANY HOLDER, SO LONG AS THE
HOLDER OWNS ANY REGISTRABLE SHARES, FORTHWITH ON REQUEST, (I) A WRITTEN
STATEMENT BY THE COMPANY THAT IT HAS COMPLIED WITH THE REPORTING REQUIREMENTS OF
RULE 144, THE SECURITIES ACT AND THE EXCHANGE ACT, (II) A COPY OF THE MOST
RECENT ANNUAL OR QUARTERLY REPORT OF THE COMPANY AND SUCH OTHER REPORTS AND
DOCUMENTS SO FILED BY THE COMPANY, AND (III) SUCH OTHER INFORMATION AS MAY BE
REASONABLY REQUESTED IN AVAILING ANY HOLDER OF ANY RULE OR REGULATION OF THE
COMMISSION THAT PERMITS THE SELLING OF ANY SUCH SECURITIES WITHOUT REGISTRATION;
AND

 

(D)                                 UNDERTAKE ANY ADDITIONAL ACTIONS REASONABLY
NECESSARY TO MAINTAIN THE AVAILABILITY OF THE USE OF RULE 144, THE COMPANY’S
ELIGIBILITY TO FILE AND MAINTAIN

 

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CONTINUOUSLY EFFECTIVE FORM S-3 REGISTRATION STATEMENTS AND ANY FUTURE
RULES ADOPTED BY THE COMMISSION PERMITTING THE RESALE OF THE REGISTRABLE
SECURITIES.

 

7.                                      OTHER RIGHTS AND COVENANTS

 

(A)                                  BOARD OF DIRECTORS.

 

(I)                                     IN THE EVENT THE PURCHASERS EXERCISE THE
UNIT WARRANT PURSUANT TO THE WARRANT AGREEMENT AND FOR SO LONG AS THE
PURCHASERS’ BENEFICIAL OWNERSHIP PERCENTAGE INTEREST IN THE COMPANY IS AT LEAST
19%, THE PURCHASERS SHALL HAVE THE RIGHT TO APPOINT AN INDIVIDUAL TO SERVE AS A
VOTING MEMBER OF THE COMPANY’S BOARD OF DIRECTORS (THE “SERIES B DIRECTOR”), THE
SOLE RIGHT TO REMOVE ANY SUCH INDIVIDUAL APPOINTED AND TO FILL ANY VACANCIES OF
A SERIES B DIRECTOR.  THIS RIGHT SHALL BE IN ADDITION TO ANY RIGHT THE
PURCHASERS MAY HAVE TO APPOINT A PREFERRED DIRECTOR AND/OR PREFERRED BOARD
OBSERVER PURSUANT TO SECTION 3(B) OF THE CERTIFICATE OF DESIGNATION OR PURSUANT
TO SECTION 7(A)(II); PROVIDED, HOWEVER, THE APPOINTMENT OF THE SERIES B DIRECTOR
SHALL BE IN LIEU OF A PREFERRED BOARD OBSERVER.  FOR PURPOSES OF THIS
SECTION 7(A)(I), BENEFICIAL OWNERSHIP SHALL BE DETERMINED IN ACCORDANCE WITH
SECTION 13(D) OF THE EXCHANGE ACT AND THE RULES AND REGULATIONS PROMULGATED
THEREUNDER.  AT ANY TIME, UPON THE WRITTEN REQUEST OF THE PURCHASERS WHOSE
BENEFICIAL OWNERSHIP PERCENTAGE INTEREST IS AT LEAST 19%, ADDRESSED TO THE
SECRETARY OF THE COMPANY, THE COMPANY WILL CALL A SPECIAL MEETING OF THE BOARD
OF DIRECTORS OR CAUSE THE EXECUTION OF A WRITTEN CONSENT OF THE BOARD OF
DIRECTORS, PURSUANT TO SECTION 141(F) OF THE DGCL, TO APPOINT, REMOVE OR FILL
ANY OPENING FOR A SERIES B DIRECTOR.

 

(II)                                  IN THE EVENT THE PURCHASERS NO LONGER HAVE
THE RIGHT PURSUANT TO SECTION 3(B) OF THE CERTIFICATE OF DESIGNATION TO APPOINT
A PREFERRED DIRECTOR AND A PREFERRED BOARD OBSERVER, SO LONG AS THE PURCHASERS
HOLD A MAJORITY OF THE SHARES OF COMMON STOCK ISSUED OR ISSUABLE UPON CONVERSION
OF THE OUTSTANDING SERIES A PREFERRED STOCK AND SERIES B PREFERRED STOCK
PURCHASED BY THE PURCHASERS PURSUANT TO THE PURCHASE AGREEMENT OR THE WARRANT
AGREEMENT, THE PURCHASERS SHALL HAVE THE SPECIAL RIGHT, TO THE EXCLUSION OF ALL
OTHER CLASSES OR SERIES OF THE COMPANY’S CAPITAL STOCK, TO APPOINT AN INDIVIDUAL
TO SERVE AS A VOTING MEMBER OF THE COMPANY’S BOARD OF DIRECTORS, WHICH MEMBER
SHALL BE A DESIGNEE OF THE PURCHASERS (THE “PREFERRED CONVERSION DIRECTOR”), AND
TO APPOINT AN INDIVIDUAL TO SERVE AS A NON VOTING OBSERVER OF THE COMPANY’S
BOARD OF DIRECTORS, WHICH INDIVIDUAL SHALL BE A DESIGNEE OF THE PURCHASERS (THE
“PREFERRED CONVERSION BOARD OBSERVER”), THE SOLE RIGHT TO REMOVE ANY SUCH
INDIVIDUAL APPOINTED AND TO FILL ANY VACANCIES OF A PREFERRED CONVERSION
DIRECTOR OR PREFERRED CONVERSION BOARD OBSERVER.  AT ANY TIME, UPON THE

 

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WRITTEN REQUEST OF THE PURCHASERS ADDRESSED TO THE SECRETARY OF THE COMPANY, THE
COMPANY WILL CALL A SPECIAL MEETING OF THE BOARD OF DIRECTORS OR CAUSE THE
EXECUTION OF A WRITTEN CONSENT OF THE BOARD OF DIRECTORS, PURSUANT TO
SECTION 141(F) OF THE DGCL, TO APPOINT, REMOVE OR FILL ANY OPENING FOR A
PREFERRED CONVERSION DIRECTOR AND/OR PREFERRED CONVERSION BOARD OBSERVER.  THE
PREFERRED CONVERSION BOARD OBSERVER SHALL HAVE THE RIGHT TO ATTEND ALL MEETINGS
OF THE BOARD OF DIRECTORS (AND COMMITTEES THEREOF) IN A NON VOTING CAPACITY AND
THE COMPANY SHALL GIVE THE PREFERRED CONVERSION BOARD OBSERVER COPIES OF ALL
NOTICES, MINUTES, CONSENTS AND OTHER MATERIALS THAT IT PROVIDES TO ITS DIRECTORS
(WHEN SUCH MATERIALS ARE PROVIDED TO THE BOARD OF DIRECTORS); PROVIDED, HOWEVER,
THAT SUCH REPRESENTATIVE SHALL AGREE TO HOLD IN CONFIDENCE AND TRUST AND TO ACT
IN A FIDUCIARY MANNER WITH RESPECT TO ALL INFORMATION SO PROVIDED.

 

(III)                               THE COMPANY SHALL TAKE ALL ACTIONS WITHIN
ITS CONTROL TO PROVIDE THE PURCHASERS WITH THE REPRESENTATION ON THE BOARD OF
DIRECTORS CONTEMPLATED BY THIS SECTION 7, INCLUDING WITHOUT LIMITATION,
(I) CAUSING EACH DESIGNEE OR APPOINTEE OF THE PURCHASERS TO BE INCLUDED IN THE
SLATE OF NOMINEES RECOMMENDED BY THE BOARD OF DIRECTORS TO THE COMPANY’S
STOCKHOLDERS FOR ELECTION AS A DIRECTOR, AS APPLICABLE, AND (II) CAUSING THE
ELECTION OF EACH SUCH DESIGNEE OR APPOINTEE, INCLUDING USING ITS REASONABLE BEST
EFFORTS TO CAUSE OFFICERS OF THE COMPANY WHO HOLD PROXIES (UNLESS OTHERWISE
DIRECTED BY THE STOCKHOLDER SUBMITTING SUCH PROXY) TO VOTE SUCH PROXIES IN FAVOR
OF THE ELECTION OF EACH SUCH DESIGNEE OR APPOINTEE. FOR SO LONG AS THE
PURCHASERS ARE ENTITLED TO ELECT DIRECTOR(S) PURSUANT TO THIS SECTION 7 OR THE
CERTIFICATE OF DESIGNATION OR THE SERIES B CERTIFICATE OF DESIGNATION, AS
APPLICABLE, UPON THE WRITTEN REQUEST OF THE PURCHASERS, THE COMPANY SHALL USE
ITS REASONABLE BEST EFFORTS TO CAUSE THE BOARD OF DIRECTORS TO REMOVE THE
APPLICABLE DESIGNEE OR APPOINTEE OF THE PURCHASERS THAT THE PURCHASERS REQUEST
FOR REMOVAL FROM THE BOARD OF DIRECTORS (WITH OR WITHOUT CAUSE), AND (II) IN THE
EVENT THAT A DESIGNEE OR APPOINTEE OF THE PURCHASERS SHALL CEASE TO SERVE AS A
DIRECTOR FOR ANY REASON, THE COMPANY SHALL USE ITS REASONABLE BEST EFFORTS TO
CAUSE ANY VACANCY RESULTING THEREBY TO BE FILLED BY ANOTHER DESIGNEE OR
APPOINTEE DESIGNATED BY THE PURCHASERS, AS THE CASE MAY BE.

 

(IV)                              FOR SO LONG AS THE PURCHASERS ARE REPRESENTED
ON THE BOARD OF DIRECTORS, THE PURCHASERS SHALL BE ENTITLED TO APPOINT A MEMBER
OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS.

 

(V)                                 THE COMPANY SHALL PROMPTLY REIMBURSE IN FULL
EACH PREFERRED DIRECTOR, PREFERRED BOARD OBSERVER, SERIES B DIRECTOR, PREFERRED
CONVERSION DIRECTOR AND PREFERRED CONVERSION BOARD

 

--------------------------------------------------------------------------------

 

OBSERVER, AS THE CASE MAY BE, OF THE COMPANY WHO IS NOT AN EMPLOYEE OF THE
COMPANY FOR ALL SUCH DIRECTOR’S OR NON-VOTING OBSERVER’S REASONABLE
OUT-OF-POCKET EXPENSES INCURRED IN ATTENDING EACH MEETING OF THE BOARD OF
DIRECTORS OF THE COMPANY OR ANY COMMITTEE THEREOF OR IN CONNECTION WITH THE
PERFORMANCE OF HIS OR HER SERVICES AS A DIRECTOR.

 

(B)                                 TRANSFEREES AND ASSIGNEES.  IF ANY OF THE
REGISTRABLE SECURITIES ARE TRANSFERRED OR ASSIGNED BY A HOLDER IN ACCORDANCE
WITH THE TERMS OF THE TRANSACTION DOCUMENTS AND THE WARRANT AGREEMENT, THEN,
UPON REQUEST BY THE TRANSFERRING HOLDER, THE COMPANY SHALL USE ITS REASONABLE
BEST EFFORTS (TO THE GREATEST EXTENT AND AT THE EARLIEST OPPORTUNITY PRACTICABLE
AND IN ANY EVENT NOT LATER THAN 20 DAYS AFTER THE EARLIEST PRACTICABLE DATE
PERMITTED UNDER APPLICABLE GUIDANCE OF THE COMMISSION AND THE TRADING MARKET
UPON WHICH THE REGISTRABLE SECURITIES ARE LISTED AND TRADED) TO ENABLE SUCH
TRANSFEREE OR ASSIGNEE TO RESALE SUCH TRANSFERRED OR ASSIGNED REGISTRABLE
SECURITIES USING THE REGISTRATION STATEMENT FILED AND MADE EFFECTIVE PURSUANT TO
THIS AGREEMENT AND THE RELATED PROSPECTUS BY FILING A POST-EFFECTIVE AMENDMENT
OR PROSPECTUS SUPPLEMENT, NAMING SUCH TRANSFEREE OR ASSIGNEE AS A SELLING UNDER
SUCH REGISTRATION STATEMENT AND PROSPECTUS.

 

8.                                      MISCELLANEOUS

 

(A)                                  REMEDIES.  IN THE EVENT OF A BREACH BY THE
COMPANY OR BY A HOLDER, OF ANY OF THEIR OBLIGATIONS UNDER THIS AGREEMENT, EACH
HOLDER OR THE COMPANY, AS THE CASE MAY BE, IN ADDITION TO BEING ENTITLED TO
EXERCISE ALL RIGHTS GRANTED BY LAW AND UNDER THIS AGREEMENT, INCLUDING RECOVERY
OF DAMAGES, WILL BE ENTITLED TO SPECIFIC PERFORMANCE OF ITS RIGHTS UNDER THIS
AGREEMENT.  THE COMPANY AND EACH HOLDER AGREE THAT MONETARY DAMAGES WOULD NOT
PROVIDE ADEQUATE COMPENSATION FOR ANY LOSSES INCURRED BY REASON OF A BREACH BY
IT OF ANY OF THE PROVISIONS OF THIS AGREEMENT AND HEREBY FURTHER AGREES THAT, IN
THE EVENT OF ANY ACTION FOR SPECIFIC PERFORMANCE IN RESPECT OF SUCH BREACH, IT
SHALL WAIVE THE DEFENSE THAT A REMEDY AT LAW WOULD BE ADEQUATE.

 

(B)                                 NO PIGGYBACK ON HOLDER REGISTRATIONS.  NO
PERSON HAS ANY RIGHT TO CAUSE THE COMPANY TO EFFECT A REGISTRATION UNDER THE
SECURITIES ACT OF ANY SECURITIES OF THE COMPANY OR TO INCLUDE SECURITIES OF THE
COMPANY IN THE INITIAL REGISTRATION STATEMENT PURSUANT TO SECTION 2(A) OTHER
THAN THE REGISTRABLE SECURITIES.  NEITHER THE COMPANY  NOR ANY OF ITS SECURITY
HOLDERS (OTHER THAN THE HOLDERS IN SUCH CAPACITY PURSUANT HERETO) MAY INCLUDE
SECURITIES OF THE COMPANY IN THE INITIAL REGISTRATION.  THE COMPANY SHALL NOT
FILE ANY OTHER REGISTRATION STATEMENTS UNTIL THE INITIAL REGISTRATION STATEMENT
REQUIRED HEREUNDER IS DECLARED EFFECTIVE BY THE COMMISSION; PROVIDED THAT THIS
SECTION 8(B) SHALL NOT PROHIBIT THE COMPANY FROM FILING AMENDMENTS TO
REGISTRATION STATEMENTS ALREADY FILED.

 

(C)                                  COMPLIANCE. EACH HOLDER COVENANTS AND
AGREES THAT IT WILL COMPLY WITH THE PROSPECTUS DELIVERY REQUIREMENTS OF THE
SECURITIES ACT AS APPLICABLE TO IT IN CONNECTION WITH SALES OF REGISTRABLE
SECURITIES PURSUANT TO A REGISTRATION STATEMENT.

 

--------------------------------------------------------------------------------

 

(D)                                 DISCONTINUED DISPOSITION. EACH HOLDER AGREES
BY ITS ACQUISITION OF SUCH REGISTRABLE SECURITIES THAT, UPON RECEIPT OF A NOTICE
FROM THE COMPANY OF THE OCCURRENCE OF ANY EVENT OF THE KIND DESCRIBED IN
SECTION 3(C), SUCH HOLDER WILL FORTHWITH DISCONTINUE DISPOSITION OF SUCH
REGISTRABLE SECURITIES UNDER A REGISTRATION STATEMENT UNTIL SUCH HOLDER’S
RECEIPT OF THE COPIES OF THE SUPPLEMENTED PROSPECTUS AND/OR AMENDED REGISTRATION
STATEMENT, OR UNTIL IT IS ADVISED IN WRITING (THE “ADVICE”) BY THE COMPANY THAT
THE USE OF THE APPLICABLE PROSPECTUS MAY BE RESUMED, AND, IN EITHER CASE, HAS
RECEIVED COPIES OF ANY ADDITIONAL OR SUPPLEMENTAL FILINGS THAT ARE INCORPORATED
OR DEEMED TO BE INCORPORATED BY REFERENCE IN SUCH PROSPECTUS OR REGISTRATION
STATEMENT.  THE COMPANY WILL USE ITS BEST EFFORTS TO ENSURE THAT THE USE OF THE
PROSPECTUS MAY BE RESUMED AS PROMPTLY AS IT PRACTICABLE.  THE COMPANY AGREES AND
ACKNOWLEDGES THAT ANY PERIODS DURING WHICH THE HOLDER IS REQUIRED TO DISCONTINUE
THE DISPOSITION OF THE REGISTRABLE SECURITIES HEREUNDER SHALL BE SUBJECT TO THE
PROVISIONS OF SECTION 2(C).

 

(E)                                  PIGGY-BACK REGISTRATIONS. IF AT ANY TIME
DURING THE EFFECTIVENESS PERIOD THERE IS NOT AN EFFECTIVE REGISTRATION STATEMENT
COVERING ALL OF THE REGISTRABLE SECURITIES AND THE COMPANY SHALL DETERMINE TO
PREPARE AND FILE WITH THE COMMISSION A REGISTRATION STATEMENT RELATING TO AN
OFFERING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF OTHERS UNDER THE SECURITIES ACT
OF ANY OF ITS EQUITY SECURITIES, OTHER THAN ON FORM S-4 OR FORM S-8 (EACH AS
PROMULGATED UNDER THE SECURITIES ACT) OR THEIR THEN EQUIVALENTS RELATING TO
EQUITY SECURITIES TO BE ISSUED SOLELY IN CONNECTION WITH ANY ACQUISITION OF ANY
ENTITY OR BUSINESS OR EQUITY SECURITIES ISSUABLE IN CONNECTION WITH STOCK OPTION
OR OTHER EMPLOYEE BENEFIT PLANS, THEN THE COMPANY SHALL SEND TO THE HOLDER
WRITTEN NOTICE OF SUCH DETERMINATION AND, IF WITHIN TWENTY DAYS AFTER RECEIPT OF
SUCH NOTICE, THE HOLDER SHALL SO REQUEST IN WRITING, THE COMPANY SHALL INCLUDE
IN SUCH REGISTRATION STATEMENT ALL OR ANY PART OF SUCH REGISTRABLE SECURITIES
SUCH HOLDER REQUESTS TO BE REGISTERED, SUBJECT TO CUSTOMARY UNDERWRITER CUTBACKS
APPLICABLE TO ALL HOLDERS OF REGISTRATION RIGHTS, IF ANY, DUE TO A REASONABLE
OBJECTION FROM THE UNDERWRITERS THAT THE INCLUSION OF SUCH REGISTRABLE
SECURITIES WOULD MATERIALLY ADVERSELY AFFECT THE CONTEMPLATED OFFERING;
PROVIDED, HOWEVER, THAT, REGISTRABLE SECURITIES OF SUCH HOLDER AND SECURITIES OF
OTHER HOLDERS OF REGISTRATION RIGHTS SHALL CONSTITUTE A MINIMUM OF 30% OF THE
SECURITIES TO BE REGISTERED ON SUCH REGISTRATION STATEMENT; PROVIDED, FURTHER,
THAT NO OTHER STOCKHOLDER’S SECURITIES ARE INCLUDED IN SUCH OFFERING IN WHICH A
HOLDER’S REGISTRABLE SECURITIES ARE CUTBACK AND PROVIDED, FURTHER, THAT THE
COMPANY SHALL NOT BE REQUIRED TO REGISTER ANY REGISTRABLE SECURITIES PURSUANT TO
THIS SECTION 8(E) THAT ARE ELIGIBLE FOR RESALE PURSUANT TO
RULE 144(B)(1) PROMULGATED UNDER THE SECURITIES ACT OR THAT ARE THE SUBJECT OF A
THEN EFFECTIVE REGISTRATION STATEMENT.

 

(F)                                    AMENDMENTS AND WAIVERS. THE PROVISIONS OF
THIS AGREEMENT, INCLUDING THE PROVISIONS OF THIS SENTENCE, MAY NOT BE AMENDED,
MODIFIED OR SUPPLEMENTED, AND WAIVERS OR CONSENTS TO DEPARTURES FROM THE
PROVISIONS HEREOF MAY NOT BE GIVEN, UNLESS THE SAME SHALL BE IN WRITING AND
SIGNED BY THE COMPANY AND THE HOLDERS OF A MAJORITY OF THE THEN OUTSTANDING
REGISTRABLE SECURITIES.  NOTWITHSTANDING THE FOREGOING, A WAIVER OR CONSENT TO
DEPART FROM THE PROVISIONS HEREOF WITH RESPECT TO A MATTER THAT RELATES
EXCLUSIVELY TO THE RIGHTS OF HOLDERS AND THAT DOES NOT DIRECTLY OR INDIRECTLY
AFFECT THE RIGHTS OF OTHER HOLDERS MAY BE GIVEN BY HOLDERS OF ALL OF THE
REGISTRABLE SECURITIES TO WHICH SUCH WAIVER OR CONSENT RELATES; PROVIDED,
HOWEVER, THAT

 

--------------------------------------------------------------------------------

 

THE PROVISIONS OF THIS SENTENCE MAY NOT BE AMENDED, MODIFIED, OR SUPPLEMENTED
EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF THE IMMEDIATELY PRECEDING SENTENCE.

 

(G)                                 NOTICES. ANY AND ALL NOTICES OR OTHER
COMMUNICATIONS OR DELIVERIES REQUIRED OR PERMITTED TO BE PROVIDED HEREUNDER
SHALL BE DELIVERED AS SET FORTH IN THE PURCHASE AGREEMENT.

 

(H)                                 SUCCESSORS AND ASSIGNS. THIS AGREEMENT SHALL
INURE TO THE BENEFIT OF AND BE BINDING UPON THE SUCCESSORS AND PERMITTED ASSIGNS
OF EACH OF THE PARTIES AND SHALL INURE TO THE BENEFIT OF EACH HOLDER. THE
COMPANY MAY NOT ASSIGN ITS RIGHTS OR OBLIGATIONS HEREUNDER WITHOUT THE PRIOR
WRITTEN CONSENT OF ALL OF THE HOLDERS OF THE THEN-OUTSTANDING REGISTRABLE
SECURITIES. EACH HOLDER MAY ASSIGN THEIR RESPECTIVE RIGHTS HEREUNDER IN THE
MANNER AND TO THE PERSONS AS PERMITTED UNDER THE PURCHASE AGREEMENT, INCLUDING,
WITHOUT LIMITATION, TO AFFILIATES OF ANY HOLDER OR ANY GENERAL PARTNER, LIMITED
PARTNERS OR MEMBERS OF A HOLDER OR OF SUCH HOLDER’S AFFILIATES.

 

(I)                                     NO INCONSISTENT AGREEMENTS. NEITHER THE
COMPANY NOR ANY OF ITS SUBSIDIARIES HAS ENTERED, AS OF THE DATE HEREOF, NOR
SHALL THE COMPANY OR ANY OF ITS SUBSIDIARIES, ON OR AFTER THE DATE OF THIS
AGREEMENT, ENTER INTO ANY AGREEMENT WITH RESPECT TO ITS SECURITIES, THAT WOULD
HAVE THE EFFECT OF IMPAIRING THE RIGHTS GRANTED TO THE HOLDERS IN THIS AGREEMENT
OR OTHERWISE CONFLICTS WITH THE PROVISIONS HEREOF.  NEITHER THE COMPANY NOR ANY
OF ITS SUBSIDIARIES HAS PREVIOUSLY ENTERED INTO ANY AGREEMENT GRANTING ANY
REGISTRATION RIGHTS WITH RESPECT TO ANY OF ITS SECURITIES TO ANY PERSON THAT
HAVE NOT BEEN SATISFIED IN FULL.

 

(J)                                     EXECUTION AND COUNTERPARTS. THIS
AGREEMENT MAY BE EXECUTED IN ANY NUMBER OF COUNTERPARTS, EACH OF WHICH WHEN SO
EXECUTED SHALL BE DEEMED TO BE AN ORIGINAL AND, ALL OF WHICH TAKEN TOGETHER
SHALL CONSTITUTE ONE AND THE SAME AGREEMENT. IN THE EVENT THAT ANY SIGNATURE IS
DELIVERED BY FACSIMILE TRANSMISSION (OR ELECTRONIC TRANSMISSION OF A PDF FILE),
SUCH SIGNATURE SHALL CREATE A VALID BINDING OBLIGATION OF THE PARTY EXECUTING
(OR ON WHOSE BEHALF SUCH SIGNATURE IS EXECUTED) THE SAME WITH THE SAME FORCE AND
EFFECT AS IF SUCH FACSIMILE SIGNATURE (OR PDF FILE) WERE THE ORIGINAL THEREOF.

 

(K)                                  GOVERNING LAW.  ALL QUESTIONS CONCERNING
THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT
SHALL BE DETERMINED IN ACCORDANCE WITH THE PROVISIONS OF THE PURCHASE AGREEMENT.

 

(L)                                     CUMULATIVE REMEDIES. THE REMEDIES
PROVIDED HEREIN ARE CUMULATIVE AND NOT EXCLUSIVE OF ANY OTHER REMEDIES PROVIDED
BY LAW.

 

(M)                               SEVERABILITY. IF ANY TERM, PROVISION, COVENANT
OR RESTRICTION OF THIS AGREEMENT IS HELD BY A COURT OF COMPETENT JURISDICTION TO
BE INVALID, ILLEGAL, VOID OR UNENFORCEABLE, THE REMAINDER OF THE TERMS,
PROVISIONS, COVENANTS AND RESTRICTIONS SET FORTH HEREIN SHALL REMAIN IN FULL
FORCE AND EFFECT AND SHALL IN NO WAY BE AFFECTED, IMPAIRED OR INVALIDATED, AND
THE PARTIES HERETO SHALL USE THEIR BEST EFFORTS TO FIND AND EMPLOY AN
ALTERNATIVE MEANS TO ACHIEVE THE SAME OR SUBSTANTIALLY THE SAME RESULT AS THAT
CONTEMPLATED BY SUCH TERM, PROVISION, COVENANT OR RESTRICTION. IT IS HEREBY
STIPULATED AND DECLARED TO BE THE INTENTION OF THE PARTIES THAT THEY WOULD HAVE
EXECUTED THE REMAINING

 

--------------------------------------------------------------------------------

 

TERMS, PROVISIONS, COVENANTS AND RESTRICTIONS WITHOUT INCLUDING ANY OF SUCH THAT
MAY BE HEREAFTER DECLARED INVALID, ILLEGAL, VOID OR UNENFORCEABLE.

 

(N)                                 HEADINGS. THE HEADINGS IN THIS AGREEMENT ARE
FOR CONVENIENCE OF REFERENCE ONLY AND SHALL NOT LIMIT OR OTHERWISE AFFECT THE
MEANING HEREOF.

 

(O)                                 INDEPENDENT NATURE OF HOLDERS’ OBLIGATIONS
AND RIGHTS. THE OBLIGATIONS OF EACH HOLDER HEREUNDER ARE SEVERAL AND NOT JOINT
WITH THE OBLIGATIONS OF ANY OTHER HOLDER HEREUNDER, AND NO HOLDER SHALL BE
RESPONSIBLE IN ANY WAY FOR THE PERFORMANCE OF THE OBLIGATIONS OF ANY OTHER
HOLDER HEREUNDER. NOTHING CONTAINED HEREIN OR IN ANY OTHER AGREEMENT OR DOCUMENT
DELIVERED AT ANY CLOSING, AND NO ACTION TAKEN BY ANY HOLDER PURSUANT HERETO OR
THERETO, SHALL BE DEEMED TO CONSTITUTE THE HOLDERS AS A PARTNERSHIP, AN
ASSOCIATION, A JOINT VENTURE OR ANY OTHER KIND OF ENTITY, OR CREATE A
PRESUMPTION THAT THE HOLDERS ARE IN ANY WAY ACTING IN CONCERT WITH RESPECT TO
SUCH OBLIGATIONS OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH HOLDER
SHALL BE ENTITLED TO PROTECT AND ENFORCE ITS RIGHTS, INCLUDING WITHOUT
LIMITATION THE RIGHTS ARISING OUT OF THIS AGREEMENT, AND IT SHALL NOT BE
NECESSARY FOR ANY OTHER HOLDER TO BE JOINED AS AN ADDITIONAL PARTY IN ANY
PROCEEDING FOR SUCH PURPOSE.

 

(P)                                 AGGREGATION OF STOCK.  ALL SHARES OF
REGISTRABLE SECURITIES HELD OR ACQUIRED BY AFFILIATED ENTITIES (INCLUDING
AFFILIATED VENTURE CAPITAL FUNDS) OR PERSONS SHALL BE AGGREGATED TOGETHER FOR
THE PURPOSE OF DETERMINING THE AVAILABILITY OF ANY RIGHTS UNDER THIS AGREEMENT.

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
as of the date first written above.

 

 

 

ANSWERS CORPORATION

 

 

 

 

 

 

By:

/s/ Robert S. Rosenschein

 

 

    Name:  Robert S. Rosenschein

 

 

    Title:    Chief Executive Officer

 

--------------------------------------------------------------------------------

 

[SIGNATURE PAGE OF HOLDERS TO REGISTRATION RIGHTS AGREEMENT]

 

IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
as of the date first written above.

 

Redpoint Omega, L.P., by its General Partner Redpoint Omega, LLC

 

Redpoint Omega Associates LLC, as nominee

 

 

By:

/s/ W. Allen Beasley

 

    Name:

W. Allen Beasley

    Title:

Managing Director

 

--------------------------------------------------------------------------------

 

 

Annex A

 

Plan of Distribution

 

Each Selling Stockholder (the “Selling Stockholders”) of the common stock
(“Common Stock”) of Answers Corporation, a Delaware corporation (the “Company”)
and any of their pledgees, assignees and successors-in-interest may, from time
to time, sell any or all of their shares of Common Stock on the Trading Market
or any other stock exchange, market or trading facility on which the shares are
traded or in private transactions.  These sales may be at fixed or negotiated
prices.  A Selling Stockholder may use any one or more of the following methods
when selling shares:

 

·      ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;

 

·      block trades in which the broker-dealer will attempt to sell the shares
as agent but may position and resell a portion of the block as principal to
facilitate the transaction;

 

·      purchases by a broker-dealer as principal and resale by the broker-dealer
for its account;

 

·      an exchange distribution in accordance with the rules of the applicable
exchange;

 

·      privately negotiated transactions;

 

·      settlement of short sales entered into after the effective date of the
registration statement of which this prospectus is a part;

 

·      broker-dealers may agree with the Selling Stockholders to sell a
specified number of such shares at a stipulated price per share;

 

·      a combination of any such methods of sale;

 

·      through the writing or settlement of options or other hedging
transactions, whether through an options exchange or otherwise; or

 

·      any other method permitted pursuant to applicable law.

 

The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act of 1933, as amended (the “Securities Act”), if available, rather
than under this prospectus.  The Selling Stockholders have the sole and absolute
discretion not to accept any purchase offer or make any sale of shares if they
deem the purchase price to be unsatisfactory at any particular time.

 

--------------------------------------------------------------------------------

 

Broker-dealers engaged by the Selling Stockholders may arrange for other
brokers-dealers to participate in sales.  Broker-dealers may receive commissions
or discounts from the Selling Stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated, but, except as set forth in a supplement to this Prospectus, in the
case of an agency transaction not in excess of a customary brokerage commission
in compliance with NASDR Rule 2440; and in the case of a principal transaction a
markup or markdown in compliance with NASDR IM-2440.

 

In connection with the sale of the Common Stock or interests therein, the
Selling Stockholders may enter into hedging transactions with broker-dealers or
other financial institutions, which may in turn engage in short sales of the
Common Stock in the course of hedging the positions they assume.  The Selling
Stockholders may also sell shares of the Common Stock short and deliver these
securities to close out their short positions, or loan or pledge the Common
Stock to broker-dealers that in turn may sell these securities.  The Selling
Stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such transaction).

 

The Selling Stockholders and any broker-dealers or agents that are involved in
selling the shares may be deemed to be “underwriters” within the meaning of the
Securities Act in connection with such sales.  In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act.  Each Selling Stockholder has informed the
Company that it does not have any written or oral agreement or understanding,
directly or indirectly, with any person to distribute the Common Stock.

 

The Company is required to pay certain fees and expenses incurred by the Company
incident to the registration of the shares.  The Company has agreed to indemnify
the Selling Stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.

 

Because Selling Stockholders may be deemed to be “underwriters” within the
meaning of the Securities Act, they will be subject to the prospectus delivery
requirements of the Securities Act.  In addition, any securities covered by this
prospectus which qualify for sale pursuant to Rule 144 under the Securities Act
may be sold under Rule 144 rather than under this prospectus.  Each Selling
Stockholder has advised us that they have not entered into any written or oral
agreements, understandings or arrangements with any underwriter or broker-dealer
regarding the sale of the resale shares.  There is no underwriter or
coordinating broker acting in connection with the proposed sale of the resale
shares by the Selling Stockholders.

 

We agreed to keep this prospectus effective Act until the earlier of
(i) beginning 1 year after the date hereof, all of the Registrable Securities
covered by such Registration Statement have been sold and (ii) 100% of the
Registrable Securities may be sold without volume restrictions pursuant to
Rule 144(b)(1) as determined by the counsel to the Company pursuant to a written
opinion letter to such effect, addressed and acceptable to the Company’s
transfer agent and the affected Holders.  The resale shares will be sold only
through registered or licensed

 

--------------------------------------------------------------------------------

 

brokers or dealers if required under applicable state securities laws. In
addition, in certain states, the resale shares may not be sold unless they have
been registered or qualified for sale in the applicable state or an exemption
from the registration or qualification requirement is available and is complied
with.

 

Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the resale shares may not simultaneously engage
in market making activities with respect to the Common Stock for the applicable
restricted period, as defined in Regulation M, prior to the commencement of the
distribution.  In addition, the Selling Stockholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including Regulation M, which may limit the timing of purchases and
sales of shares of the Common Stock by the Selling Stockholders or any other
person.  We will make copies of this prospectus available to the Selling
Stockholders and have informed them of the need to deliver a copy of this
prospectus to each purchaser at or prior to the time of the sale.

 

--------------------------------------------------------------------------------

 

Annex B

 

ANSWERS CORPORATION

 

Selling Securityholder Notice and Questionnaire

 

The undersigned beneficial owner of common stock, no par value per share (the
“Common Stock”), of Answers Corporation, a Delaware corporation (the “Company”),
(the “Registrable Securities”) understands that the Company has filed or intends
to file with the Securities and Exchange Commission (the “Commission”) a
registration statement on Form S-3  (the “Registration Statement”) for the
registration and resale under Rule 415 of the Securities Act of 1933, as amended
(the “Securities Act”), of the Registrable Securities, in accordance with the
terms of the Registration Rights Agreement, dated as of June 16, 2008 (the
“Registration Rights Agreement”), among the Company and the Purchasers named
therein.  A copy of the Registration Rights Agreement is available from the
Company upon request at the address set forth below.  All capitalized terms not
otherwise defined herein shall have the meanings ascribed thereto in the
Registration Rights Agreement.

 

Certain legal consequences arise from being named as a selling securityholder in
the Registration Statement and the related prospectus.  Accordingly, holders and
beneficial owners of Registrable Securities are advised to consult their own
securities law counsel regarding the consequences of being named or not being
named as a selling securityholder in the Registration Statement and the related
prospectus.

 

NOTICE

 

The undersigned beneficial owner (the “Selling Securityholder”) of Registrable
Securities hereby elects to include the Registrable Securities owned by it and
listed below in Item 3 (unless otherwise specified under such Item 3) in the
Registration Statement.

 

--------------------------------------------------------------------------------

 

The undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate:

 

QUESTIONNAIRE

 

1.

Name.

 

 

 

 

 

(a)

Full Legal Name of Selling Securityholder

 

 

 

 

 

 

 

(b)

Full Legal Name of Registered Holder (if not the same as (a) above) through
which Registrable Securities Listed in Item 3 below are held:

 

 

 

 

 

 

 

(c)

Full Legal Name of Natural Control Person (which means a natural person who
directly or indirectly alone or with others has power to vote or dispose of the
securities covered by the questionnaire):

 

 

 

 

 

 

2.  Address for Notices to Selling Securityholder:

 

 

 Telephone:

 Fax:

 Contact Person:

 

3.  Beneficial Ownership of Registrable Securities:

 

 

 

 

(a)

Type and Principal Amount of Registrable Securities beneficially owned (not
including the Registrable Securities that are issuable pursuant to the Purchase
Agreement):

 

 

 

 

--------------------------------------------------------------------------------

 

4.  Broker-Dealer Status:

 

 

 

 

(a)

Are you a broker-dealer?

 

 

 

 

 

Yes o  No o

 

 

 

 

(b)

If “yes” to Section 4(a), did you receive your Registrable Securities as
compensation for investment banking services to the Company.

 

 

 

 

 

Yes o  No o

 

 

 

 

Note:

If no, the Commission’s staff has indicated that you should be identified as an
underwriter in the Registration Statement.

 

 

 

 

(c)

Are you an affiliate of a broker-dealer?

 

 

 

 

 

Yes o  No o

 

 

 

 

(d)

If you are an affiliate of a broker-dealer, do you certify that you bought the
Registrable Securities in the ordinary course of business, and at the time of
the purchase of the Registrable Securities to be resold, you had no agreements
or understandings, directly or indirectly, with any person to distribute the
Registrable Securities?

 

 

 

 

 

Yes o  No o

 

 

 

 

Note:

If no, the Commission’s staff has indicated that you should be identified as an
underwriter in the Registration Statement.

 

 

 

5.  Beneficial Ownership of Other Securities of the Company Owned by the Selling
Securityholder.

 

 

 

 

Except as set forth below in this Item 5, the undersigned is not the beneficial
or registered owner of any securities of the Company other than the Registrable
Securities listed above in Item 3.

 

 

 

 

(a)

Type and Amount of Other Securities beneficially owned by the Selling
Securityholder:

 

 

 

 

--------------------------------------------------------------------------------

 

6.  Relationships with the Company:

 

Except as set forth below, neither the undersigned nor any of its affiliates,
officers, directors or principal equity holders (owners of 5% of more of the
equity securities of the undersigned) has held any position or office or has had
any other material relationship with the Company (or its predecessors or
affiliates) during the past three years.

 

State any exceptions here:

 

 

 

The undersigned agrees to promptly notify the Company of any inaccuracies or
changes in the information provided herein that may occur subsequent to the date
hereof at any time while the Registration Statement remains effective.

 

By signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items 1 through 6 and the inclusion of such
information in the Registration Statement and the related prospectus and any
amendments or supplements thereto.  The undersigned understands that such
information will be relied upon by the Company in connection with the
preparation or amendment of the Registration Statement and the related
prospectus.

 

IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this
Notice and Questionnaire to be executed and delivered either in person or by its
duly authorized agent.

 

Dated:

 

 

Beneficial Owner: 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

Title:

 

PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND
RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:

 

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