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