Exhibit
10.3


 


WARRANT
AGREEMENT


 


This Warrant Agreement (this “Agreement”) is dated as
of June 16, 2008 among Answers Corporation, a Delaware corporation (the “Company”),
and Redpoint Omega, L.P.
and Redpoint Omega Associates, LLC (each a “Holder” and collectively, the “Holders”).


 


WHEREAS, pursuant to the Securities Purchase Agreement, dated of even
date herewith, between the Company and the Holders (“Purchase Agreement”), the
Holders have agreed to purchase Series A Preferred Stock with a Stated
Value equal to $6,000,000 and Warrants; and


 


WHEREAS, the Company, concurrently with the purchase of the Series A
Preferred Stock and Warrants, has agreed to issue certificates as set forth on Exhibit A
attached hereto (“Warrant Certificates”) evidencing warrants (the “Unit
Warrants”) to purchase a Unit (as defined herein) to the Holders for an
investment of up to $7,000,000 hereunder;


 


NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the Company and the Holders hereby agree as
follows:


 


1.                                                                                       Definitions.  Capitalized terms used and not otherwise
defined herein that are defined in the Purchase Agreement shall have the
meanings given such terms in the Purchase Agreement.


 


2.                                                                                       Exercise
of Warrant.


 


(a)                                  Each Unit Warrant shall entitle
the Holder to purchase for $100 (the “Exercise Price”) a unit (“Unit”)
consisting of (i) one share of the Company’s Series B Convertible
Preferred Stock, par value $0.01 per share (“Series B Preferred Stock”),
and (ii) one Common Stock Purchase Warrant attached hereto as Exhibit B
(the “Common Stock Purchase Warrant”), each Common Stock Purchase Warrant
entitling the holder thereof to purchase up to a number of shares of Common
Stock equal to 50% of the number of shares of Common Stock issuable upon conversion
of the Series B Preferred Stock purchased hereunder and issued in
accordance with the terms of the Certificate of Designation, Number, Voting
Powers, Preferences and Rights of Series B Convertible Preferred Stock (in
substantially the form attached hereto as Exhibit C) (“Series B
Certificate of Designation”), with an exercise price equal to $6.05 per share,
subject to adjustment as set forth herein. 
The shares of Common Stock issuable upon conversion of the Series B
Preferred Stock and exercise of the Common Stock Purchase Warrant are
hereinafter referred to as the “Series B Underlying Shares” and the
Warrant Certificates, Series B Preferred Stock, the Common Stock Purchase
Warrants and the Series B Underlying Shares are hereinafter collectively
referred to as the “Warrant Securities”. 
The Holders shall be entitled to purchase Units for an aggregate purchase price of up to $7,000,000 pursuant to
this Agreement.


 


(b)                                 Exercise of the purchase rights
represented by the Unit Warrant may be made, in whole or in part, at any time
between the date hereof and June 16, 2009 (“Expiry Time”) by delivery to
the principal office of the Company of a duly executed copy of the Notice of
Exercise 


 

















 


annexed hereto (or to such other office
or agency of the Company as it may designate by notice in writing to the
registered Holder at the address of such Holder appearing on the books of the
Company). If the Warrant Certificate evidencing the Unit Warrants is exercised
in full, the Holder shall have surrendered the Warrant Certificate to the
Company and the Company shall have received payment of the aggregate Exercise
Price of the Units thereby purchased by wire transfer or cashier’s check drawn
on a United States bank.  Notwithstanding
anything herein to the contrary, the Holder shall not be required to physically
surrender the Warrant Certificate to the Company until the Holder has purchased
all of the Units available hereunder and the Warrant Certificate has been
exercised in full.  Partial exercises of
the Warrant Certificate resulting in purchases of a portion of the total number
of the Units available hereunder shall have the effect of lowering the
outstanding number of Units purchasable hereunder in an amount equal to the
applicable number of Units purchased.  If
any Unit Warrant should be exercised in part only, the Company shall, upon
surrender of the Warrant Certificates for cancellation and presentment of the
Exercise Form, execute and deliver new a Warrant Certificate or Certificates,
as the case may be, evidencing the rights of the Holder thereof to purchase the
balance of the shares purchasable thereunder.


 


(c)                                  The Holder shall, at least one (1) business
day prior to the delivery of the Notice of Exercise, deliver to the Company
written notice of its intention to exercise, in whole or in part, the Unit
Warrant (the “Intent Notice”). 
Notwithstanding anything herein to the contrary, within one (1) business
day of receipt of the Intent Notice, the Company shall file with the State of
Delaware the Series B Certificate of Designations.


 


(d)                                 Upon any exercise of a Unit
Warrant pursuant to Section 2(a), no Common Stock Purchase Warrant shall
be issued exercisable for fractional shares of Common Stock.  The aggregate number of shares of Common
Stock issued upon exercise of such Common Stock Purchase Warrant shall be
rounded down to the nearest whole share and any fractional shares of Common
Stock that are not required to be issued by reason of this Section 2(d) shall
be carried forward and shall be taken into account in the subsequent exercise
of a Unit Warrant.  Whether or not Common
Stock Purchase Warrants exercisable for fractional shares of Common Stock would
be issuable upon any exercise of a Unit Warrant shall be determined on the
basis of the total number of Unit Warrants being exercised at the time and the
aggregate number of Common Stock Purchase Warrants issuable upon such exercise.


 


(e)                                  Notwithstanding anything herein
to the contrary, the Company shall not issue to any Holder any Units, including
pursuant to any rights herein, including, without limitation, any exercise
rights, to the extent such shares comprising such Unit, when added to the
number of shares of Common Stock issued (A) upon conversion of any shares
of Series A Preferred Stock  and Series B
Preferred Stock and (B) upon exercise of the Common Stock Purchase
Warrants issued hereunder or pursuant to the Purchase Agreement, as applicable,
would cause the total number of shares of Common Stock then beneficially owned
by such Holder and any Persons whose beneficial ownership of Common Stock would
be aggregated with such Holder for purposes of Section 13(d) of the
Securities Exchange Act to exceed 19.999% of the total number of outstanding
shares of Common Stock of the Company at the time of such issuance, or such
greater number of shares of Common Stock permitted pursuant to the corporate
governance rules of the Trading Market that is at the time the principal
trading exchange or market for the Common Stock, based upon share volume, as
confirmed in writing by counsel to the Company 


 

















 


(the “Maximum
Aggregate Share Amount”), unless and until the Company obtains Stockholder
Approval (as defined below).  For
purposes of this Section 2(e), beneficial ownership shall be determined in
accordance with Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder.    If
on any attempted exercise of a Unit Warrant, the issuance of Units would exceed
the Maximum Aggregate Share Amount and the Company shall not have previously
obtained Stockholder Approval at the time of exercise, then the Company shall
issue to the Holder requesting a Unit Warrant exercise such number of Units as
may be issued below the Maximum Aggregate Share Amount and, with respect to the
remainder of the aggregate number of Units, this Unit Warrant shall not be
exercisable until and unless Stockholder Approval has been obtained.


 


3.                                                                                       Representations
and Warranties.  The Company hereby
represents and warrants to each Holder that, except as set forth on the
disclosure schedules delivered to each Holder on the date hereof or on each
date of a Notice of Exercise hereunder (each, an “Exercise Date”), as
applicable, each of the representations and warranties made by the Company in
the Purchase Agreement will be true and correct as of the date hereof and as of
each Exercise Date unless a different time is expressly provided in such
paragraph; provided, for purposes of this Section 3, that references to
the “Underlying Shares” in such representations and warranties in the Purchase
Agreement shall instead refer to the Warrant Securities with respect to the
representations and warranties made pursuant to this Section 3.


 


4.                                                                                       Closing
Deliveries.  On or prior to each
Exercise Date, the Company shall deliver or cause to be delivered to each
Purchaser the following:


 


(a)                                  a certificate, dated as of such
Exercise Date, duly executed by an officer of the Company to the effect that
the conditions specified in Sections 5(b)(i) and 5(b)(ii) have been
satisfied;


 


(b)                                 a legal opinion of Company Counsel,
substantially in the form of Exhibit D to the Purchase Agreement;


 


(c)                                  the Series B Preferred Stock
and the Common Stock Purchase Warrants included in the Units purchased as a
result of the exercise of the Unit Warrant pursuant to Section 2 hereof
registered in the name of the Holder;


 


(d)                                 evidence of filing of the Series B
Certificate of Designation in form and substance reasonably satisfactory to
each Holder; and


 


(e)                                  the Indemnification Agreement in
favor of the Series B Director (as defined in the Registration Rights
Agreement), to the extent that the Holder or its affiliates have the right to
appoint the Series B Director, duly executed by the Company, unless such
agreement is already in full force and effect with respect to the Series B
Director.


 


5.                                                                                       Closing
Conditions.


 


(a)                                  The obligations of the Company
hereunder in connection with each exercise of the Unit Warrant pursuant to Section 2
hereof is subject to the following conditions being met, any or all of which
may be waived by the Company:


 

















 


(i)                                     the
accuracy in all material respects on each Exercise Date of the representations
and warranties of the Holder contained in the Purchase Agreement; and


 


(ii)                                  the
delivery by the Holder to the Company of the aggregate Exercise Price of the
Units thereby purchased.


 


(b)                                 The obligations of the Holder
hereunder in connection with each exercise of the Unit Warrant pursuant to Section 2
hereof is subject to the following conditions being met, any or all of which
may be waived by such Holder in writing:


 


(i)                                     the accuracy in
all material respects on each Exercise Date of the representations and
warranties of the Company contained in the Purchase Agreement (which are
incorporated by reference herein and modified as set forth in Section 3
above);


 


(ii)                                  all
obligations, covenants and agreements of the Company required to be performed
in connection with such exercise of the Unit Warrant shall have been performed;


 


(iii)                               there
shall have been no Material Adverse Effect with respect to the Company since
the date hereof;


 


(iv)                              as
of each Exercise Date, the Transaction Documents shall be in full force and
effect;


 


(v)                                 the Series B
Certificate of Designation shall have been duly filed by the Company with the
Secretary of State of the State of Delaware in accordance with the General
Corporation Law of the State of Delaware; and


 


(vi)                              as of each Exercise Date,
trading in the Common Stock shall not have been suspended by the Commission or
the Company’s principal Trading Market (except for any suspension of trading of
limited duration agreed to by the Company, which suspension shall be terminated
prior to each Exercise Date), and, at any time prior to each Exercise Date,
trading in securities generally as reported by Bloomberg Financial Markets
shall not have been suspended or limited, or minimum prices shall not have been
established on securities whose trades are reported by such service, or on any
Trading Market, nor shall a banking moratorium have been declared either by the
United States or New York State authorities nor shall there have occurred any
material outbreak or escalation of hostilities or other national or
international calamity of such magnitude in its effect on, or any material
adverse change in, the financial markets which, in each case, makes it
impracticable or inadvisable to purchase the Series B Preferred Stock and
the Common Stock Purchase Warrants.


 


6.                                                                                       Stockholder
Approval.  The Company shall provide
each stockholder entitled to vote at a special meeting of stockholders of the
Company (the “Stockholder Meeting”), which shall be promptly called and held
not later than 90 calendar days from the date hereof, a proxy 


 

















 


statement meeting the
requirements of Section 14 of the Exchange Act and the related rules and
regulations thereunder promulgated by the Commission (“Proxy Statement”)
soliciting each such stockholder’s affirmative vote at the Stockholder Meeting
for approval of resolutions approving the Company’s issuance of the Warrant
Securities and any shares of Common Stock issued or issuable upon conversion of
the Series A Preferred Stock and exercise of the Common Stock Purchase
Warrants and any other securities issuable pursuant to the Certificate of
Designation and the Series B Certificate of Designation and all the other
transactions contemplated by the Transaction Documents and this Agreement
(including, without limitation, increase in the size of the Board of Directors
as necessary to elect the Series B Director (as defined in the
Registration Rights Agreement)) (the “Stockholder Approval”) in accordance with
law and the rules and regulations of the Nasdaq Global Market (or any
other applicable Trading Market) and the Delaware General Corporation Law, and
the Company shall use its reasonable best efforts to solicit its stockholders’
approval of such resolutions and to cause the Board of Directors of the Company
to recommend to the stockholders that they approve such resolutions.  The Proxy Statement shall be in a form
reasonably acceptable to the Holders and accordingly, the Company shall provide
the Legal Counsel (as defined in the Registration Rights Agreement) with
reasonable opportunity to review and comment on the Proxy Statement.


 


The Company shall keep the Holders apprised of the
status of matters relating to the Proxy Statement and the Stockholder Meeting,
including promptly furnishing the Holders and their counsel with copies of
notices or other communications related to the Proxy Statement, the Stockholder
Meeting or the transactions contemplated hereby received by the Company from
the Commission or the Nasdaq Global Market.


 


7.                                                                                       Operation
of Business.  During the period from
the date of this Agreement until the Expiry Time, except as contemplated by
this Agreement and the Transaction Documents, the Company shall carry on its
business in the ordinary course in substantially the same manner as heretofore
conducted and, to the extent consistent with such business, use its
commercially reasonable efforts consistent with past practice and policies to
preserve intact its present business organizations, keep available the services
of its present officers, consultants and employees and preserve its
relationships with customers, suppliers and others having business dealings
with it.


 


8.                                                                                       Non-Solicitation.


 


(a)                                  During the period from the date
of this Agreement until the first day following 
the Stockholder Meeting in which a vote of the stockholders of the
Company takes place for the Stockholder Approval, without the consent of each
of the Holders, the Company shall not take, cause or permit (and shall use its best
efforts to ensure that none of its officers, directors, agents or
representatives takes, causes or permits) any person to take, directly or
indirectly, any of the following actions with any third party:  (i) solicit, knowingly encourage,
initiate or participate in any negotiations, inquiries or discussions with
respect to any offer or proposal (including, without limitation, from any third
parties) to acquire any capital stock of the Company (including any securities
convertible into or exercisable or exchangeable for such capital stock) for
capital raising purposes (an “Alternative Proposal”), (ii) disclose, in
connection with an Alternative Proposal, any nonpublic information concerning
Company’s business or properties or afford to any third party access to its
properties, books or records, except in the ordinary course of business and as
required by law or pursuant to a governmental request for information, (iii) enter



 

















 


into or execute any agreement providing for
an Alternative Proposal or (iv) make or authorize any public statement,
recommendation or solicitation in support of any Alternative Proposal or any
offer or proposal relating to an Alternative Proposal.


 


(b)                                 In the event that the Company is
contacted by any third party expressing an interest in discussing an
Alternative Proposal, the Company will promptly, but in no event later than
twenty-four (24) hours following the Company’s knowledge of such contact,
notify the Holders in writing of such contact and the identity of the third
party so contacting the Company and shall promptly, but in no event later than
twenty-four (24) hours, advise the Holders of any material modification or
proposed modification thereto.


 


9.                                                                                       Integration.  Neither the Company, nor any of its
affiliates, nor any Person acting on its or their behalf shall sell, offer for
sale or solicit offers to buy or otherwise negotiate in respect of any security
(as defined in Section 2 of the Securities Act) that would be integrated
with the offer or sale of the Warrant Securities in a manner that would require
the registration under the Securities Act of the sale of the Warrant Securities
to the Holders or that would be integrated with the offer or sale of the
Warrant Securities for purposes of the rules and regulations of any Trading
Market.


 


10.                                                                                 Conversion
and Exercise Procedures.  The form of
Notice of Exercise included in this Agreement, the Warrant Certificate and the
Common Stock Purchase Warrants and the form of Notice of Conversion included in
the Series B Certificate of Designation  set
forth the totality of the procedures required of a Holder in order to exercise
the Unit Warrants and the Common Stock Purchase Warrants or convert the Series B
Preferred Stock.  No additional legal
opinion or other information or instructions shall be required of such Holder
to exercise their Unit Warrants or Common Stock Purchase Warrants or convert
their Series B Preferred Stock.  The
Company shall honor exercises of the Unit Warrants and Common Stock Purchase
Warrants and conversions of the Series B Preferred Stock and shall deliver
Series B Underlying Shares in accordance with the terms, conditions and
time periods set forth herein and in the Transaction Documents.


 


11.                                                                                 Securities
Laws Disclosure; Publicity.  The
Company and the Holders shall consult with each other in issuing any press
releases or other public disclosures with respect to the transactions
contemplated hereby, and neither the Company nor any Holder shall issue any
such press release without the prior consent of the Company, with respect to
any press release or other public disclosure of such Holder, or without the
prior consent of the Holders with respect to any press release or other public
disclosure of the Company, which consent shall not unreasonably be withheld,
except if such disclosure is required by law, in which case the disclosing
party shall promptly provide the other party with prior notice of such public
statement or communication. 
Notwithstanding the foregoing, the Company shall not publicly disclose
the name of any Holder or any of its affiliates, or include the name of any
Holder or any of its affiliates in any filing with the Commission or any
regulatory agency or Trading Market, without the prior written consent of such
Holder, except (i) as required by federal securities law in connection
with the registration statement contemplated by the Registration Rights
Agreement and (ii) to the extent such disclosure is required by law or
Trading Market regulations, in which case the Company shall provide such Holder
with prior notice of such disclosure permitted under subclause (i) or
(ii).


 

















 


12.                                                                                 Stockholder
Rights Plan.  No claim will be made
or enforced by the Company or, to the knowledge of the Company, any other
Person, that any Holder is an “Acquiring Person” under any stockholder rights
plan or similar plan or arrangement in effect or hereafter adopted by the
Company, or that any Holder could be deemed to trigger the provisions of any
such plan or arrangement, by virtue of receiving Warrant Securities hereunder or
under the Transaction Documents or under any other agreement between the
Company and such Holder. The Company shall conduct its business in a manner so
that it will not become subject to the Investment Company Act.


 


13.                                                                                 Indemnification
of Holders.   Subject to the
provisions of this Section 13, the Company will indemnify and hold each
Holder and its directors, officers, stockholders, members, partners, employees
and agents (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), each Person who controls such Holder (within the meaning of Section 15
of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents, members, partners or 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 such controlling
person (each, a “Holder Party”) harmless from any and all losses,
liabilities, obligations, claims, contingencies, damages, costs and expenses,
including all judgments, amounts paid in settlements, court costs and
reasonable attorneys’ fees and costs of investigation that any such Holder
Party may suffer or incur as a result of or relating to (a) any breach of
any of the representations, warranties, covenants or agreements made by the
Company in this Agreement or (b) any action instituted against a Holder
Party, by any third party with respect to any of the transactions contemplated
hereunder (unless such action is based upon a breach of such Holder’s
representations, warranties or covenants under this Agreement or any agreements
or understandings such Holder may have with any such stockholder or any
violations by such Holder of state or federal securities laws or any conduct by
such Holder which constitutes fraud, gross negligence, willful misconduct or
malfeasance).  If any action shall be
brought against any Holder Party in respect of which indemnity may be sought
pursuant to this Agreement, such Holder Party shall promptly notify the Company
in writing, and the Company shall have the right to assume the defense thereof
with counsel of its own choosing.  Any
Holder Party shall have the right to employ separate counsel in any such action
and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Holder Party except to the extent that (i) the
employment thereof has been specifically authorized by the Company in writing, (ii) the
Company has failed after a reasonable period of time to assume such defense and
to employ counsel or (iii) in such action there is, in the reasonable
opinion of such separate counsel, a material conflict on any material issue
between the position of the Company and the position of such Holder Party.  The Company will not be liable to any Holder
Party under this Agreement (i) for any settlement by a Holder Party
effected without the Company’s prior written consent, which shall not be
unreasonably withheld or delayed; or (ii) to the extent, but only to the
extent that a loss, claim, damage or liability is attributable to any Holder
Party’s breach of any of the representations, warranties, covenants or
agreements made by the Holders in this Agreement.


 


14.                                                                                 Reservation
and Listing of Securities.


 


(a)                                  The Company shall maintain a
reserve from its duly authorized shares of Common Stock for issuance pursuant
to this Agreement or the Transaction Documents in such 


 

















 


amount as may be required to fulfill
its obligations in full under this Agreement and the Transaction Documents.


 


(b)                                 If, on any date, the number of
authorized but unissued (and otherwise unreserved) shares of Common Stock is
less than the Required Minimum on such date, then the Board of Directors shall
use commercially reasonable efforts to amend the Company’s certificate of
incorporation to increase the number of authorized but unissued shares of
Common Stock to at least the Required Minimum at such time, as soon as possible
and in any event not later than the 75th day after such date.


 


(c)                                  The Company shall, if
applicable: (i) in the time and manner required by the Trading Market,
prepare and file with such Trading Market an additional shares listing
application covering a number of shares of Common Stock at least equal to the
Required Minimum on the date of such application, (ii) take all steps
necessary to cause such shares of Common Stock to be approved for listing on
the Trading Market as soon as possible thereafter, (iii) provide to each
Holder evidence of such listing, and (iv) maintain the listing of such
Common Stock on any date at least equal to the Required Minimum on such date on
such Trading Market or another Trading Market.


 


15.                                                                                 Form D: Blue Sky Filings.  The Company
agrees to timely file a Form D with respect to the Warrant Securities as
required under Regulation D and to provide a copy thereof, promptly upon
request of any Holder.  The Company
shall, on or before the date hereof, take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for, or to
qualify the Warrant Securities for, sale to the Holders under applicable
securities or “Blue Sky” laws of the states of the United States, and shall
provide evidence of such actions promptly upon request of any Holder.  The Company shall make all filings and
reports relating to the offer and sale of the Warrant Securities required under
applicable securities or “Blue Sky” laws of the states of the United States
following the date hereof.


 


16.                                                                                 Legends.


 


(a)                                  Certificates evidencing the
Underlying Shares shall not contain any legend: (i) while a registration
statement (including, without limitation, the Registration Statement) covering
the resale of such security is effective under the Securities Act, or (ii) following
any sale of such Underlying Shares pursuant to Rule 144, or (iii) if
such Underlying Shares are eligible for sale under Rule 144(b)(1), or (iv) if
such legend is not required under applicable requirements of the Securities Act
(including, without limitation, judicial interpretations and pronouncements
issued by the staff of the Commission). The Company shall cause its counsel to
issue a legal opinion to the Company’s transfer agent promptly after the
Effective Date if required by the Company’s transfer agent to effect the
removal of the legend hereunder.  If all
or any portion of Series B Preferred Stock or Common Stock Purchase
Warrant is converted or exercised (as applicable) at a time when there is an
effective registration statement (including, without limitation, the
Registration Statement) to cover the resale of the Underlying Shares, or if
such Underlying Shares may be sold under Rule 144(b)(1) or if such
legend is not otherwise required under applicable requirements of the
Securities Act (including, without limitation, judicial interpretations
thereof) then such Underlying Shares shall be issued free of all legends.  The Company agrees that following the
Effective Date or at such time as such legend is no 


 

















 


longer required under this Section 16(a),
it will, no later than three Trading Days following the delivery by a Holder to
the Company or the Company’s transfer agent of a certificate representing
Underlying Shares, as applicable, issued with a restrictive legend (such third
Trading Day, the “Legend Removal Date”), deliver or cause to be delivered to
such Holder a certificate representing such shares that is free from all
restrictive and other legends.  The
Company may not make any notation on its records or give instructions to any
transfer agent of the Company that enlarge the restrictions on transfer set
forth in this Section.  Certificates for
Securities subject to legend removal hereunder shall be transmitted by the
transfer agent of the Company to the Holder by crediting the account of the Holder’s
prime broker with the Depository Trust Company System


 


(b)                                 Notwithstanding anything herein
to the contrary, no registration statement or opinion of counsel shall be
necessary for a transfer (i) by a Holder that is a partnership to a
partner (limited or general) of such partnership or a retired partner of such
partnership who retires after the date hereof, or to the estate of any such
partner or retired partner or the transfer by gift, will or intestate
succession of any partner to his or her spouse or to the siblings, lineal
descendants or ancestors of such partner or his or her spouse,  (ii) by a Holder that is a limited
liability company to a member of such limited liability company or a retired
member of such limited liability company who retires after the date hereof, or
to the estate of any such member or retired member or the transfer by gift,
will or intestate succession of any member to his or her spouse or to the
siblings, lineal descendants or ancestors of such member or his or her spouse or
(iii) by a Holder to an affiliate of such Holder, if the prospective
transferee agrees in all such instances in writing to be subject to the terms
hereof to the same extent as if he or she were an original Investor hereunder.


 


17.                                                                                 Rights
of the Holder. The Warrant Certificate does not entitle the Holder to any
voting rights or other rights as a shareholder of the Company prior to the
exercise hereof.  Upon the surrender of
the Warrant Certificate and the payment of the aggregate Exercise Price, the Series B
Preferred Stock and Common Stock Purchase Warrants so purchased shall be and be
deemed to be issued to such Holder as the record owner of such securities as of
the close of business on the later of the date of such surrender or payment.


 


18.                                                                                 Notices
to Warrant Holder. Nothing contained in this Agreement shall be construed
as conferring upon the Holder or  Holders
the right to vote or to consent or to receive notice as a shareholder in
respect of any meetings of shareholders for the election of directors or any
other matter, or as having any rights whatsoever as a shareholder of the
Company.


 


19.                                                                                 Notices.  Any and all notices or other communications
or deliveries required or permitted to be provided hereunder shall be in
writing and shall be deemed given and effective on the earliest of (a) the
next Trading Day after delivery, if such notice or communication is delivered
via confirmed registered mail,  (b) the
2nd Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service, or (c) upon actual
receipt by the party to whom such notice is required to be given.  The address for such notices and
communications shall be as set forth on the signature pages attached
hereto (unless later updated in writing by the parties hereto to the other
parties) and if to the Company, with a copy to:


 

















 


Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP


155 Constitution Drive


Menlo Park, CA 94025


Attention: Scott C. Dettmer, Bennett L. Yee


Fax: (650) 321-2800.


 


20.                                                                                 Fees
and Expenses.  Except as expressly
set forth herein and in the Transaction Documents to the contrary, each party
shall pay the fees and expenses of its advisers, counsel, accountants and other
experts, if any, and all other expenses incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this
Agreement; provided, however, the Company shall reimburse, in connection with
each exercise of the Unit Warrant (and payable on such exercise dates), the
reasonable fees for the Holders’ legal counsel, fees to other advisors retained
by the Holders to represent them in the transactions contemplated by this
Agreement and the Transaction Documents, in an aggregate amount not to exceed
$100,000, less any amount previously reimbursed by the Company pursuant to this
Section 20 or pursuant to Section 5.2 of the Purchase Agreement.  The Company shall pay all transfer agent
fees, stamp taxes and other taxes and duties levied in connection with the
delivery of any Securities to the Purchasers.


 


21.                                                                                 Survival.  The representations, warranties, covenants
and other agreements contained herein shall survive the delivery, exercise
and/or conversion of this Warrant Agreement, the Series B Preferred Stock,
the Common Stock Purchase Warrants, the Warrant Certificates and the Series B
Underlying Shares, as applicable, for the applicable statue of limitations.


 


22.                                                                                 Successors.  All the covenants and provisions of the
Warrant Agreement by or for the benefit of the Holder shall inure to the
benefit of his successors and assigns hereunder.


 


23.                                                                                 Governing
Law. The Warrant Agreement shall be deemed to be made under the laws of the
State of New York and for all purposes shall be construed in accordance with
the laws of said State, excluding choice of law principles thereof.


 


24.                                                                                 Entire
Agreement; Amendment; Waiver.  The
Warrant Agreement and all attachments hereto and all incorporation by
references set forth herein, set forth the entire agreement and understanding
between the parties as to the subject matter hereof and merges and supersedes
all prior discussions, agreements and understandings of any and every nature
among them. The Warrant Agreement may be amended, the Company may take any
action herein prohibited or omit to take any action herein required to be
performed by it, and any breach of any covenant, agreement, warranty or
representation may be waived, only if the Company has obtained the written
consent or waiver of the Holder. No course of dealing between or among any
persons having any interest in the Warrant Agreement will be deemed effective
to modify, amend or discharge any part of the Warrant Agreement or any rights
or obligations of any person under or by reason of the Warrant Agreement.


 


25.                                                                                 Execution.  This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. 
In the event that any 


 

















 


signature
is delivered by facsimile transmission (or electronic transmission of PDF
file), such signature shall create a valid and binding obligation of the party
executing (or on whose behalf such signature is executed) with the same force
and effect as if such facsimile (or PDF file) signature page were an
original thereof.


 


26.                                                                                 Severability.  If any provision of this Agreement is held to
be invalid or unenforceable in any respect, the validity and enforceability of
the remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.


 


27.                                                                                 Replacement
of Securities.  If any certificate or
instrument evidencing any Series B Preferred Stock, Unit Warrant, Common
Stock Purchase Warrant or Series B Underlying Shares is mutilated, lost,
stolen or destroyed, the Company shall issue or cause to be issued in exchange
and substitution for and upon cancellation thereof, or in lieu of and
substitution therefor, a new certificate or instrument, but only upon receipt
of evidence reasonably satisfactory to the Company of such loss, theft or
destruction and customary and reasonable indemnity, if requested.  The applicants for a new certificate or
instrument under such circumstances shall also pay any reasonable third-party
costs associated with the issuance of such replacement certificate or
instrument.


 


28.                                                                                 Remedies.  In addition to being entitled to exercise all
rights provided herein or granted by law, including recovery of damages, each
Holder and the Company will be entitled to specific performance under the
Transaction Documents and this Agreement. 
The parties agree that monetary damages may not be adequate compensation
for any loss incurred by reason of any breach of obligations described in the
foregoing sentence and hereby agrees to waive in any action for specific
performance of any such obligation the defense that a remedy at law would be
adequate.


 


29.                                                                                 Liquidated
Damages.  The Company’s obligation to
pay any partial liquidated damages or other amounts owing under the Transaction
Documents or this Agreement is a continuing obligation of the Company and shall
not terminate until all unpaid partial liquidated damages and other amounts
have been paid notwithstanding the fact that the instrument or security
pursuant to which such partial liquidated damages or other amounts are due and
payable shall have been canceled.


 


(Signature Pages Follow)


 
















 


IN WITNESS WHEREOF, the
parties hereto have caused this Warrant Agreement to be duly executed by their
respective authorized signatories as of the date first indicated above.


 


	
  ANSWERS CORPORATION

  	
   

  	
  Address for Notice:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Robert S. Rosenschein

  	
   

  	
   

  
	
   

  	
  Name:  Robert S. Rosenschein

  	
   

  	
   

  
	
   

  	
  Title:    Chief Executive
  Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  With a copy to (which shall not constitute notice):

  	
   

  	
   

  
					



 


 


[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK


SIGNATURE PAGE FOR PURCHASER FOLLOWS]


 

















 


[HOLDER SIGNATURE PAGE TO WARRANT AGREEMENT]


 


IN WITNESS WHEREOF, the undersigned have caused this Warrant Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.


 


 


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

  
	
  Redpoint Omega, LLC

  
	
   

  	
   

  
	
  Redpoint Omega Associates, LLC, as nominee

  
	
   

  	
   

  
	
  By:

  	
  /s/ W. Allen Beasley

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  W. Allen Beasley

  	
   

  
	
   

  	
  Name

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Managing Director

  	
   

  
	
   

  	
  Title

  
	
   

  	
   

  
	
   

  	
   

  
	
  Address for Notice of Holder:

  
	
   

  	
   

  
	
   

  	
   

  
	
  Address for Delivery of Securities for Holder (if
  not same as above):

  
	
   

  
	
   

  
	
  EIN Number:

  
				



 

















 


EXHIBIT A


 


[Form of Warrant Certificate]


 

















 


EXHIBIT B


 


[Form of Common Stock Purchase Warrant
Certificate]


 

















 


EXHIBIT C


 


[Series B Certificate of Designation]


 

















 


NOTICE OF EXERCISE


 


TO:     ANSWERS
CORPORATION


 


(1)          The undersigned hereby elects to purchase
                
Units of the Company pursuant to the terms of the attached Warrant (only if
exercised in full), and tenders herewith payment of the Exercise Price in full,
together with all applicable transfer taxes, if any.


 


(2)          Please issue a certificate or certificates
representing said securities issuable in the name of the undersigned or in such
other name as is specified below:


 


	
   

  	
   

  	
   

  	
   

  



 


The Units shall be
delivered to the following:


 


	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 


(3)          Accredited Investor.  The undersigned is an “accredited investor”
as defined in Regulation D promulgated under the Securities Act of 1933, as
amended.


 


[SIGNATURE OF
HOLDER]


 


	
  Name of Investing
  Entity:

  	
   

  
	
  Signature
  of Authorized Signatory of Investing Entity:

  	
   

  
	
  Name of Authorized
  Signatory:

  	
   

  
	
  Title of Authorized
  Signatory:

  	
   

  
	
  Date:

  	
   

  
						



 

















 


ASSIGNMENT
FORM


 


(To assign the foregoing warrant, execute

this form and supply required information. 

Do not use this form to exercise the warrant.)


 


FOR VALUE RECEIVED, the foregoing Warrant
and all rights evidenced thereby are hereby assigned to


 


	
   

  	
   whose address is

  
	
   

  	
   

  
	
   

  	
  .

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Dated:

  	
   

  	
  ,

  	
   

  	
   

  
										



 


 


	
   

  	
  Holder’s
  Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Holder’s Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Signature Guaranteed:

  	
   

  	
   

  
					



 


 


NOTE:  The signature to this Assignment Form must
correspond with the name as it appears on the face of the Warrant, without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank or trust company.  Officers of
corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.