Document:

Exhibit 10.4

 

REGISTRATION
RIGHTS AGREEMENT

 

REGISTRATION
RIGHTS AGREEMENT (this “Agreement”),
dated as of January 15, 2008, by and among Answers Corporation, a Delaware
corporation, with headquarters located at 237 W. 35th Street, Suite 1101, New York, NY 10001 (the “Company”), and the undersigned buyers
(each, a “Buyer”, and
collectively, the “Buyers”).

 

WHEREAS:

 

A.            In connection with the
Securities Purchase Agreement by and among the parties hereto of even date
herewith (the “Securities Purchase Agreement”),
the Company has agreed, upon the terms and subject to the conditions set forth
in the Securities Purchase Agreement, to issue and sell to each Buyer, either
upon a Follow-On Issuance (as defined in the Securities Purchase Agreement) or
upon a Notes Termination Event (as defined in the Securities Purchase
Agreement), senior convertible notes which shall be either the Follow-On Notes
or Termination Notes (the Follow-On Notes and Termination Notes each as defined
in the Securities Purchase Agreement and, collectively, the “Notes”) which will, among other things, be convertible into
shares of the Company’s common stock, par value $0.001 per share (the “Common Stock,” as converted, collectively, the “Conversion Shares”).

 

B.            In accordance with the terms
of the Securities Purchase Agreement and subject to issuance of the Notes
pursuant to the Securities 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 “1933
Act”), and applicable state securities laws.

 

NOW,
THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company and each of the
Buyers hereby agree as follows:

 

1.     Definitions.

 

Capitalized terms used herein and not
otherwise defined herein shall have the respective meanings set forth in the
Securities Purchase Agreement.  As used
in this Agreement, the following terms shall have the following meanings:

 

a.             “Business Day” means any day other than Saturday, Sunday or any
other day on which commercial banks in the City of New York are authorized or
required by law to remain closed.

 

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

 

c.             “Effective Date” means the date that the Registration Statement
has been declared effective by the SEC.

 

 

d.             “Effectiveness Deadline” means the date that is ninety (90)
days after the Filing Deadline.

 

e.             “Filing Date”
means the date on which the Registration Statement is filed with the SEC.

 

f.              “Filing Deadline” means (A) in the event that the Company
does not have sufficient authorized but unissued shares of Common Stock to
register the Required Registration Amount as of the Closing Date, the date which
is the earlier of (i) ten (10) business days after the Stockholder
Approval Date (as defined in the Securities Purchase Agreement) and (ii) ten (10) business
days after the Stockholder Approval Deadline (as defined in the Securities
Purchase Agreement) or (B) otherwise, thirty (30) calendar days
after the Closing Date.

 

g.             “Investor” means a Buyer or any transferee or assignee thereof
to whom a Buyer assigns its rights under this Agreement and who agrees to
become bound by the provisions of this Agreement in accordance with Section 9
and any transferee or assignee thereof to whom a transferee or assignee assigns
its rights under this Agreement and who agrees to become bound by the
provisions of this Agreement in accordance with Section 9.

 

h.             “Person” means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency thereof.

 

i.              “register,” “registered,”
and “registration” refer to a
registration effected by preparing and filing one or more Registration
Statements in compliance with the 1933 Act and pursuant to Rule 415 and
the declaration or ordering of effectiveness of such Registration Statement(s) by
the SEC.

 

j.              “Registrable Securities” for the Registration Statement means (i) the
Notes, (ii) the Conversion Shares issued or issuable upon conversion of
the Notes, and (iii)  any capital stock of the Company issued or issuable,
with respect to the Notes or the Conversion Shares as a result of any stock
split, stock dividend, recapitalization, exchange or similar event or
otherwise, without regard to any limitations on conversion and/or redemption of
the Notes.

 

k.             “Registration Statement” means a registration statement or registration
statements of the Company filed under the 1933 Act covering the Registrable
Securities.

 

l.              “Required Holders” means the holders of at least a majority of
the Registrable Securities.

 

m.            “Required Registration Amount” means 130% of the sum of the
number of Conversion Shares issued and issuable pursuant to the Notes as of the
Trading Day (as defined in the Securities Purchase Agreement) immediately
preceding the applicable date of determination.

 

n.             “Rule 415” means Rule 415 promulgated under the 1933
Act or any successor rule providing for offering securities on a
continuous or delayed basis.

 

 

o.             “SEC” means the United States Securities and Exchange
Commission.

 

2.     Registration.

 

a.         Mandatory Registration.  The Company shall prepare, and, as soon as
practicable, but in no event later than the Filing Deadline, file with the SEC
the Registration Statement on Form S-3 covering the resale of all of the
Registrable Securities.  In the event
that Form S-3 is unavailable for such a registration, the Company shall
use such other form as is available for such a registration on another
appropriate form reasonably acceptable to the Required Holders, subject to the
provisions of Section 2(d).  The
Registration Statement prepared pursuant hereto shall register for resale the
Notes and at least the number of shares of Common Stock equal to the Required
Registration Amount determined as of the date the Registration Statement is
initially filed with the SEC.  The
Registration Statement shall contain (except if otherwise directed by the
Required Holders) the “Selling Stockholders” and “Plan of
Distribution” sections in substantially the form attached hereto as Exhibit B.  The Company shall use its commercially
reasonable best efforts to have the Registration Statement declared effective
by the SEC as soon as practicable, but in no event later than the Effectiveness
Deadline.  By 9:30 a.m. New York
time on the Business Day following the Effective Date, the Company shall file
with the SEC in accordance with Rule 424 under the 1933 Act the final
prospectus to be used in connection with sales pursuant to such Registration
Statement.

 

b.         Allocation of Registrable
Securities.  The initial
number of Registrable Securities included in any Registration Statement and any
increase in the number of Registrable Securities included therein shall be
allocated pro rata among the Investors based on the number of Registrable
Securities held by each Investor at the time the Registration Statement
covering such initial number of Registrable Securities or increase thereof is
declared effective by the SEC.  In the
event that an Investor sells or otherwise transfers any of such Investor’s Registrable
Securities, each transferee shall be allocated a pro rata portion of the then
remaining number of Registrable Securities included in such Registration Statement
for such transferor.  Any shares of
Common Stock included in a Registration Statement and which remain allocated to
any Person which ceases to hold any Registrable Securities covered by such
Registration Statement shall be allocated to the remaining Investors, pro rata
based on the number of Registrable Securities then held by such Investors which
are covered by such Registration Statement. 
In no event shall the Company include any securities other than
Registrable Securities on any Registration Statement without the prior written
consent of the Required Holders.

 

c.         Legal Counsel.  Subject to Section 5 hereof, the
Required Holders shall have the right to select one legal counsel to review and
oversee any registration pursuant to this Section 2 (“Legal Counsel”), which shall be Schulte
Roth & Zabel LLP or such other counsel as thereafter designated by the
Required Holders.  The Company and Legal
Counsel shall reasonably cooperate with each other in performing the Company’s
obligations under this Agreement.

 

d.         Ineligibility for Form S-3.  In the event that Form S-3 is not
available for the registration of the resale of Registrable Securities
hereunder, the Company shall (i) register the resale of the Registrable
Securities on another appropriate form reasonably acceptable to the 

 

 

Required Holders and (ii) undertake
to register the Registrable Securities on Form S-3 as soon as such form is
available, provided that the Company shall maintain the effectiveness of the
Registration Statement then in effect until such time as a Registration
Statement on Form S-3 covering the Registrable Securities has been
declared effective by the SEC.

 

e.         Sufficient Number of Shares
Registered.  In the
event the number of shares available under a Registration Statement filed
pursuant to Section 2(a) is insufficient to cover all of the
Registrable Securities required to be covered by such Registration Statement or
an Investor’s allocated portion of the Registrable Securities pursuant to Section 2(b),
the Company shall amend the applicable Registration Statement, or file a new
Registration Statement (on the short form available therefor, if applicable),
or both, so as to cover at least the Required Registration Amount as of the Trading
Day immediately preceding the date of the filing of such amendment or new
Registration Statement, in each case, as soon as practicable, but in any event
not later than fifteen (15) days after the necessity therefor arises.  The Company shall use its commercially
reasonable best efforts to cause such amendment and/or new Registration
Statement to become effective as soon as practicable following the filing
thereof.  For purposes of the foregoing
provision, the number of shares available under a Registration Statement shall
be deemed “insufficient to cover all of the Registrable Securities” if at any
time the number of shares of Common Stock available for resale under the
Registration Statement is less than the product determined by multiplying (i) the
Required Registration Amount as of such time by (ii) 0.90.  The calculation set forth in the foregoing
sentence shall be made without regard to any limitations on the conversion
and/or redemption of the Notes and such calculation shall assume that the Notes
are then convertible into shares of Common Stock at the then prevailing
Conversion Rate (as defined in the Notes).

 

f.          Effect of Failure to File
and Obtain and Maintain Effectiveness of Registration Statement.  If (i) a Registration Statement covering
all of the Registrable Securities required to be covered thereby and required
to be filed by the Company pursuant to this Agreement is (A) not filed
with the SEC on or before the respective Filing Deadline (a “Filing Failure”) or (B) not declared
effective by the SEC on or before the respective Effectiveness Deadline (an “Effectiveness Failure”) or (ii) on any
day after the Effective Date sales of all of the Registrable Securities
required to be included on such Registration Statement cannot be made (other
than during an Allowable Grace Period (as defined in Section 3(r))
pursuant to such Registration Statement or otherwise (including, without
limitation, because of a failure to keep such Registration Statement effective,
to disclose such information as is necessary for sales to be made pursuant to
such Registration Statement, to register a sufficient number of shares of
Common Stock or to maintain the listing of the Common Stock) (a “Maintenance Failure”) then, as partial
relief for the damages to any holder by reason of any such delay in or
reduction of its ability to sell the underlying shares of Common Stock (which
remedy shall not be exclusive of any other remedies available at law or in
equity), the Company shall pay to each holder of Registrable Securities
relating to such Registration Statement an amount in cash equal to one percent
(1.0%) of the aggregate Purchase Price (as such term is defined in the
Securities Purchase Agreement) of such Investor’s Registrable Securities
whether or not included in such Registration Statement, on each of the
following dates:  (i) on every
thirtieth day after the day of a Filing Failure and thereafter (pro rated for
periods totaling less than thirty days) until such Filing Failure is cured; (ii) on
every thirtieth day after the day of an Effectiveness Failure and thereafter
(pro rated for periods totaling less 

 

 

than thirty days) until such
Effectiveness Failure is cured; and (iii) on every thirtieth day after the
initial day of a Maintenance Failure and thereafter (pro rated for periods
totaling less than thirty days) until such Maintenance Failure is cured.  The payments to which a holder shall be entitled
pursuant to this Section 2(f) are referred to herein as “Registration Delay Payments.”  Registration Delay Payments shall be paid on
the earlier of (I) the dates set forth above and (II) the third
Business Day after the event or failure giving rise to the Registration Delay
Payments is cured.  In the event the
Company fails to make Registration Delay Payments in a timely manner, such Registration
Delay Payments shall bear interest at the rate of one and one-half percent (1.5%)
per month (prorated for partial months) until paid in full.

 

3.     Related Obligations.

 

At such time as the Company
is obligated to file a Registration Statement with the SEC pursuant to Section 2(a),
2(d), or 2(e), the Company will use its commercially reasonable best efforts to
effect the registration of the Registrable Securities in accordance with the
intended method of disposition thereof and, pursuant thereto, the Company shall
have the following obligations:

 

a.         The Company shall promptly
prepare and file with the SEC a Registration Statement with respect to the
Registrable Securities and use its commercially reasonable best efforts to
cause such Registration Statement relating to the Registrable Securities to
become effective as soon as practicable after such filing (but in no event
later than the Effectiveness Deadline). 
The Company shall keep each Registration Statement effective pursuant to
Rule 415 at all times until the earlier of (i) the date as of which the
Investors may sell all of the Registrable Securities covered by such
Registration Statement without restriction pursuant to Rule 144(k) (or
any successor thereto) promulgated under the 1933 Act or (ii) the date on
which the Investors shall have sold all of the Registrable Securities covered
by such Registration Statement (the “Registration
Period”).  The Company shall
ensure that each Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein) shall not contain any
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 the case
of prospectuses, in the light of the circumstances in which they were made) not
misleading.  The term commercially
reasonable “best efforts” shall mean, among other things, that the Company
shall submit to the SEC, within two (2) Business Days after the later of
the date that (i) the Company learns that no review of a particular
Registration Statement will be made by the staff of the SEC or that the staff
has no further comments on a particular Registration Statement, as the case may
be, and (ii) the approval of Legal Counsel pursuant to Section 3(c) (which
approval is immediately sought), a request for acceleration of effectiveness of
such Registration Statement to a time and date not later than two (2) Business
Days after the submission of such request.  The Company shall respond in writing to
comments made by the SEC in respect of a Registration Statement as soon as
practicable.

 

b.         The Company shall prepare
and file with the SEC such amendments (including post-effective amendments) and
supplements to a Registration Statement and the prospectus used in connection
with such Registration Statement, which prospectus is to be filed pursuant to Rule 424
promulgated under the 1933 Act, as may be necessary to keep such Registration
Statement effective at all times during the Registration Period, and, during
such 

 

 

period, comply with the
provisions of the 1933 Act with respect to the disposition of all Registrable
Securities of the Company covered by such Registration Statement until such
time as all of such Registrable Securities shall have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in such Registration Statement.  In the case of amendments and supplements to
a Registration Statement which are required to be filed pursuant to this
Agreement (including pursuant to this Section 3(b)) by reason of the
Company filing a report on Form 10-Q, Form 10-QSB, Form 10-K, Form 10-KSB
or any analogous report under the Securities Exchange Act of 1934, as amended
(the “1934 Act”), the Company
shall have incorporated such report by reference into such Registration
Statement, if applicable, or shall file such amendments or supplements with the
SEC on the same day on which the 1934 Act report is filed which created the
requirement for the Company to amend or supplement such Registration Statement.

 

c.         The Company shall (A) permit
Legal Counsel to review and comment upon (i) a Registration Statement at
least five (5) Business Days prior to its filing with the SEC and (ii) all
amendments and supplements to all Registration Statements (except for Annual
Reports on Form 10-K or Form 10-KSB, Quarterly Reports on Form 10-Q
or Form 10-QSB, Current Reports on Form 8-K, and any similar or
successor reports) within a reasonable number of days prior to their filing
with the SEC, and (B) not file any Registration Statement or amendment or
supplement thereto in a form to which Legal Counsel reasonably objects.  The Company shall not submit a request for
acceleration of the effectiveness of a Registration Statement or any amendment
or supplement thereto without the prior approval of Legal Counsel, which
consent shall not be unreasonably withheld. 
The Company shall furnish to Legal Counsel, without charge, (i) copies
of any correspondence from the SEC or the staff of the SEC to the Company or
its representatives relating to any Registration Statement, (ii) promptly
after the same is prepared and filed with the SEC, one copy of any Registration
Statement and any amendment(s) thereto, including financial statements and
schedules, all documents incorporated therein by reference, if requested by an
Investor, and all exhibits and (iii) upon the effectiveness of any
Registration Statement, one copy of the prospectus included in such
Registration Statement and all amendments and supplements thereto.  The Company shall reasonably cooperate with
Legal Counsel in performing the Company’s obligations pursuant to this Section 3.

 

d.         The Company shall furnish to
each Investor whose Registrable Securities are included in any Registration
Statement, without charge, if requested by the Investor (i) promptly after
the same is prepared and filed with the SEC, at least one copy of such
Registration Statement and any amendment(s) thereto, including financial
statements and schedules, all documents incorporated therein by reference, all
exhibits and each preliminary prospectus, (ii) upon the effectiveness of
any Registration Statement, ten (10) copies of the prospectus included in
such Registration Statement and all amendments and supplements thereto (or such
other number of copies as such Investor may reasonably request) and (iii) such
other documents, including copies of any preliminary or final prospectus, as
such Investor may reasonably request from time to time in order to facilitate
the disposition of the Registrable Securities owned by such Investor.

 

e.         The Company shall use its commercially
reasonable best efforts to (i) register and qualify, unless an exemption
from registration and qualification applies, the resale 

 

 

by Investors of the
Registrable Securities covered by a Registration Statement under such other
securities or “blue sky” laws of all applicable jurisdictions in the United
States, (ii) prepare and file in those jurisdictions, such amendments
(including post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof during
the Registration Period, (iii) take such other actions as may be necessary
to maintain such registrations and qualifications in effect at all times during
the Registration Period, and (iv) take all other actions reasonably
necessary or advisable to qualify the Registrable Securities for sale in such
jurisdictions; provided, however, that the Company shall not be required in
connection therewith or as a condition thereto to (x) qualify to do
business in any jurisdiction where it would not otherwise be required to
qualify but for this Section 3(e), (y) subject itself to general
taxation in any such jurisdiction, or (z) file a general consent to
service of process in any such jurisdiction. 
The Company shall promptly notify Legal Counsel and each Investor who
holds Registrable Securities of the receipt by the Company of any notification
with respect to the suspension of the registration or qualification of any of
the Registrable Securities for sale under the securities or “blue sky” laws of
any jurisdiction in the United States or its receipt of actual notice of the
initiation or threatening of any proceeding for such purpose.

 

f.          The Company shall notify
Legal Counsel and each Investor in writing of the happening of any event, as
promptly as practicable after becoming aware of such event, as a result of
which the prospectus included in a Registration Statement, as then in effect,
includes an untrue statement of a material fact or omission to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading
(provided that in no event shall such notice contain any material, nonpublic
information), and, subject to Section 3(r), promptly prepare a supplement
or amendment to such Registration Statement to correct such untrue statement or
omission and deliver ten (10) copies of such supplement or amendment to
Legal Counsel and each Investor upon request (or such other number of copies as
Legal Counsel or such Investor may reasonably request).  The Company shall also promptly notify Legal
Counsel and each Investor in writing (i) when a prospectus or any
prospectus supplement or post-effective amendment has been filed, and when a
Registration Statement or any post-effective amendment has become effective
(notification of such effectiveness shall be delivered to Legal Counsel and
each Investor by facsimile or e-mail on the same day of such effectiveness and by
overnight mail), (ii) of any request by the SEC for amendments or
supplements to a Registration Statement or related prospectus or related
information, and (iii) of the Company’s reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate.

 

g.         The Company shall use its commercially
reasonable best efforts to prevent the issuance of any stop order or other
suspension of effectiveness of a Registration Statement, or the suspension of
the qualification of any of the Registrable Securities for sale in any jurisdiction
and, if such an order or suspension is issued, to obtain the withdrawal of such
order or suspension at the earliest possible moment and to notify Legal Counsel
and each Investor who holds Registrable Securities being sold of the issuance
of such order and the resolution thereof or its receipt of actual notice of the
initiation or threat of any proceeding for such purpose.

 

 

h.         If any Investor is required
under applicable securities laws to be described in the Registration Statement
as an underwriter or an Investor believes that it could reasonably be deemed to
be an underwriter of Registrable Securities, at the reasonable request of such
Investor, the Company shall furnish to such Investor, on the date of the
effectiveness of the Registration Statement and thereafter from time to time on
such dates as an Investor may reasonably request (i) a letter, dated such
date, from the Company’s independent certified public accountants in form and
substance as is customarily given by independent certified public accountants
to underwriters in an underwritten public offering, addressed to the Investors,
and (ii) an opinion, dated as of such date, of counsel representing the
Company for purposes of such Registration Statement, in form, scope and
substance as is customarily given in an underwritten public offering, addressed
to the Investors.

 

i.          If any Investor is required
under applicable securities laws to be described in the Registration Statement
as an underwriter or an Investor believes that it could reasonably be deemed to
be an underwriter of Registrable Securities, the Company shall make available
for inspection by (i) such Investor, (ii) Legal Counsel and (iii) one
firm of accountants or other agents retained by the Investors (collectively,
the “Inspectors”), all pertinent
financial and other records, and pertinent corporate documents and properties
of the Company (collectively, the “Records”),
as shall be reasonably deemed necessary by each Inspector, and cause the
Company’s officers, directors and employees to supply all information which any
Inspector may reasonably request; provided, however, that each Inspector shall
agree to hold in strict confidence and shall not make any disclosure (except to
an Investor) or use of any Record or other information which the Company
determines in good faith to be confidential, and of which determination the
Inspectors are so notified, unless (a) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in any Registration
Statement or is otherwise required under the 1933 Act, (b) the release of
such Records is ordered pursuant to a final, non-appealable subpoena or order
from a court or government body of competent jurisdiction, or (c) the
information in such Records has been made generally available to the public
other than by disclosure in violation of this Agreement.  Each Investor agrees that it shall, upon
learning that disclosure of such Records is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, the Records deemed confidential.  Nothing
herein (or in any other confidentiality agreement between the Company and any
Investor) shall be deemed to limit the Investors’ ability to sell Registrable
Securities in a manner which is otherwise consistent with applicable laws and
regulations.

 

j.          The Company shall hold in
confidence and not make any disclosure of information concerning an Investor
provided to the Company unless (i) disclosure of such information is
necessary to comply with federal or state securities laws, (ii) the
disclosure of such information is necessary to avoid or correct a misstatement
or omission in any Registration Statement, (iii) the release of such
information is ordered pursuant to a subpoena or other final, non-appealable
order from a court or governmental body of competent jurisdiction, or (iv) such
information has been made generally available to the public other than by
disclosure in violation of this Agreement or any other agreement.  The Company agrees that it shall, upon
learning that disclosure of such information concerning an Investor is sought
in or by a court or governmental body of competent jurisdiction or through
other means, give 

 

 

prompt written notice to
such Investor and allow such Investor, at the Investor’s expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, such information.

 

k.         The Company shall use its commercially
reasonable best efforts either to (i) cause all of the Registrable
Securities covered by a Registration Statement to be listed on each securities
exchange on which securities of the same class or series issued by the Company
are then listed, if any, if the listing of such Registrable Securities is then
permitted under the rules of such exchange or (ii) secure the
inclusion for quotation of all of the Registrable Securities on The NASDAQ
Global Select Market or (iii) if, despite the Company’s commercially
reasonable best efforts, the Company is unsuccessful in satisfying the
preceding clauses (i) and (ii), to secure the inclusion for quotation on
The New York Stock Exchange, The NASDAQ Capital Market or the American Stock
Exchange for such Registrable Securities and, without limiting the generality
of the foregoing, to use its commercially reasonable best efforts to arrange
for at least two market makers to register with the Financial Industry
Regulatory Authority (“FINRA”) as such with respect to such Registrable
Securities.  The Company shall pay all
fees and expenses in connection with satisfying its obligation under this Section 3(k).

 

l.          The Company shall cooperate
with the Investors who hold Registrable Securities being offered and, to the
extent applicable, facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legend) representing the Registrable
Securities to be offered pursuant to a Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may be, as the
Investors may reasonably request and registered in such names as the Investors
may request.

 

m.        If requested by an Investor,
the Company shall as soon as practicable (i) incorporate in a prospectus
supplement or post-effective amendment such information as an Investor
reasonably requests to be included therein relating to the sale and
distribution of Registrable Securities, including, without limitation,
information with respect to the number of Registrable Securities being offered
or sold, the purchase price being paid therefor and any other terms of the
offering of the Registrable Securities to be sold in such offering; (ii) make
all required filings of such prospectus supplement or post-effective amendment
after being notified of the matters to be incorporated in such prospectus
supplement or post-effective amendment; and (iii) supplement or make
amendments to any Registration Statement if reasonably requested by an Investor
holding any Registrable Securities.

 

n.         The Company shall use its commercially
reasonable best efforts to cause the Registrable Securities covered by a
Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to consummate the
disposition of such Registrable Securities.

 

o.         The Company shall make
generally available to its security holders as soon as practical, but not later
than ninety (90) days after the close of the period covered thereby, an
earnings statement (in form complying with, and in the manner provided by, the
provisions of Rule 158 under the 1933 Act) covering a twelve-month period
beginning not later than the first day of the Company’s fiscal quarter next
following the applicable Effective Date of a Registration Statement.

 

 

p.         The Company shall otherwise
use its commercially reasonable best efforts to comply with all applicable rules and
regulations of the SEC in connection with any registration hereunder.

 

q.         Within two (2) Business
Days after a Registration Statement which covers Registrable Securities is ordered
effective by the SEC, the Company shall deliver, and shall cause legal counsel
for the Company to deliver, to the transfer agent for such Registrable
Securities (with copies to the Investors whose Registrable Securities are
included in such Registration Statement) confirmation that such Registration
Statement has been declared effective by the SEC in the form attached hereto as
Exhibit A.

 

r.          Notwithstanding anything to
the contrary herein, at any time after the Effective Date, the Company may
delay the disclosure of material, non-public information concerning the Company
the disclosure of which at the time is not, in the good faith opinion of the Board
of Directors of the Company and its counsel, in the best interest of the
Company and, in the opinion of counsel to the Company, otherwise required (a “Grace Period”); provided, that the Company
shall promptly (i) notify the Investors in writing of the existence of material,
non-public information giving rise to a Grace Period (provided that in each
notice the Company will not disclose the content of such material, non-public
information to the Investors) and the date on which the Grace Period will
begin, and (ii) notify the Investors in writing of the date on which the
Grace Period ends; and, provided further, that no Grace Period shall exceed fifteen
(15) consecutive days and during any three hundred sixty five (365) day period
such Grace Periods shall not exceed an aggregate of sixty (60) days and the
first day of any Grace Period must be at least five (5) Trading Days after
the last day of any prior Grace Period (each, an “Allowable Grace Period”). 
For purposes of determining the length of a Grace Period above, the
Grace Period shall begin on and include the date the Investors receive the
notice referred to in clause (i) and shall end on and include the later of
the date the Investors receive the notice referred to in clause (ii) and
the date referred to in such notice.  The
provisions of Section 3(g) hereof shall not be applicable during the
period of any Allowable Grace Period. 
Upon expiration of the Grace Period, the Company shall again be bound by
the first sentence of Section 3(f) with respect to the information
giving rise thereto unless such material, non-public information is no longer
applicable.  Notwithstanding anything to
the contrary, the Company shall cause its transfer agent to deliver unlegended
shares of Common Stock to a transferee of an Investor in accordance with the
terms of the Securities Purchase Agreement in connection with any sale of
Registrable Securities with respect to which an Investor has entered into a
contract for sale, prior to the Investor’s receipt of the notice of a Grace
Period and for which the Investor has not yet settled.

 

s.         Neither the Company nor any
Subsidiary or affiliate thereof shall identify any Buyer as an underwriter in
any public disclosure or filing with the SEC or any Principal Market (as defined in the Securities Purchase Agreement) or
Eligible Market and any Buyer being deemed an underwriter by the SEC shall not
relieve the Company of any obligations it has under this Agreement or any other
Transaction Document (as defined in the
Securities Purchase Agreement); provided, however, that the
foregoing shall not prohibit the Company from including the disclosure found in
the “Plan of Distribution” section attached hereto as Exhibit B in
the Registration Statement.

 

 

4.     Obligations of the Investors.

 

a.         At least five (5) Business
Days prior to the first anticipated filing date of a Registration Statement,
the Company shall notify each Investor in writing of the information the
Company requires from each such Investor if such Investor elects to have any of
such Investor’s Registrable Securities included in such Registration
Statement.  It shall be a condition
precedent to the obligations of the Company to complete the registration
pursuant to this Agreement with respect to the Registrable Securities of a
particular Investor that such Investor shall furnish to the Company such
information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it, as
shall be reasonably required to effect and maintain the effectiveness of the
registration of such Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably request.

 

b.         Each Investor, by such
Investor’s acceptance of the Registrable Securities, agrees to cooperate with
the Company as reasonably requested by the Company in connection with the
preparation and filing of any Registration Statement hereunder, unless such
Investor has notified the Company in writing of such Investor’s election to
exclude all of such Investor’s Registrable Securities from such Registration
Statement.

 

c.         Each Investor agrees that,
upon receipt of any notice from the Company of the happening of any event of
the kind described in Section 3(g) or the first sentence of 3(f),
such Investor will immediately discontinue disposition of Registrable
Securities pursuant to any Registration Statement(s) covering such
Registrable Securities until such Investor’s receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(g) or
the first sentence of 3(f) or receipt of notice that no supplement or
amendment is required.  Notwithstanding
anything to the contrary, the Company shall cause its transfer agent to deliver
unlegended shares of Common Stock to a transferee of an Investor in accordance
with the terms of the Securities Purchase Agreement in connection with any sale
of Registrable Securities with respect to which an Investor has entered into a
contract for sale prior to the Investor’s receipt of a notice from the Company
of the happening of any event of the kind described in Section 3(g) or
the first sentence of 3(f) and for which the Investor has not yet settled.

 

d.         Each Investor covenants and
agrees that it will comply with the prospectus delivery requirements of the
1933 Act as applicable to it or an exemption therefrom in connection with sales
of Registrable Securities pursuant to the Registration Statement.

 

5.     Expenses of Registration.

 

All reasonable expenses,
other than underwriting discounts and commissions, incurred in connection with
registrations, filings or qualifications pursuant to Sections 2 and 3,
including, without limitation, all registration, listing and qualifications
fees, printers and accounting fees, and fees and disbursements of counsel for
the Company shall be paid by the Company. 
The Company shall also reimburse the Investors for the fees and
disbursements of Legal Counsel in connection with registration, filing or
qualification pursuant to Sections 2 and 3 

 

 

of
this Agreement which amount shall be limited to $10,000 for each such
registration, filing or qualification.

 

6.     Indemnification.

 

In the event any Registrable
Securities are included in a Registration Statement under this Agreement:

 

a.         To the fullest extent
permitted by law, the Company will, and hereby does, indemnify, hold harmless
and defend each Investor, the directors, officers, members, partners,
employees, agents, representatives of, and each Person, if any, who controls
any Investor within the meaning of the 1933 Act or the 1934 Act (each, an “Indemnified Person”), against any losses,
claims, damages, liabilities, judgments, fines, penalties, charges, costs,
reasonable attorneys’ fees, amounts paid in settlement or expenses, joint or
several, (collectively, “Claims”)
incurred in investigating, preparing or defending any action, claim, suit,
inquiry, proceeding, investigation or appeal taken from the foregoing by or
before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto (“Indemnified
Damages”), to which any of them may become subject insofar as such
Claims (or actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon: 
(i) any untrue statement or alleged untrue statement of a material
fact in a Registration Statement or any post-effective amendment thereto or in
any filing made in connection with the qualification of the offering under the
securities or other “blue sky” laws of any jurisdiction in which Registrable
Securities are offered (“Blue Sky Filing”),
or the omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, (ii) any
untrue statement or alleged untrue statement of a material fact contained in
any preliminary prospectus if used prior to the effective date of such
Registration Statement, or contained in the final prospectus (as amended or
supplemented, if the Company files any amendment thereof or supplement thereto
with the SEC) or the omission or alleged omission to state therein any material
fact necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not misleading, (iii) any
violation or alleged violation by the Company of the 1933 Act, the 1934 Act,
any other law, including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement or (iv) any violation of
this Agreement (the matters in the foregoing clauses (i) through (iv) being,
collectively, “Violations”).  Subject to Section 6(c), the Company
shall reimburse the Indemnified Persons, promptly as such expenses are incurred
and are due and payable, for any legal fees or other reasonable expenses
incurred by them in connection with investigating or defending any such
Claim.  Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this Section 6(a):  (i) shall not apply to a Claim by an
Indemnified Person arising out of or based upon a Violation which occurs in reliance
upon and in conformity with information furnished in writing to the Company by
such Indemnified Person for such Indemnified Person expressly for use in
connection with the preparation of the Registration Statement or any such
amendment thereof or supplement thereto, if such prospectus was timely made
available by the Company pursuant to Section 3(d); and (ii) shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall 

 

 

not be unreasonably withheld or delayed.  Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Indemnified
Person and shall survive the transfer of the Registrable Securities by the
Investors pursuant to Section 9.

 

b.         In connection with any
Registration Statement in which an Investor is participating, each such
Investor agrees to severally and not jointly indemnify, hold harmless and
defend, to the same extent and in the same manner as is set forth in Section 6(a),
the Company, each of its directors, each of its officers who signs the
Registration Statement and each Person, if any, who controls the Company within
the meaning of the 1933 Act or the 1934 Act (each, an “Indemnified Party”), against any Claim or
Indemnified Damages to which any of them may become subject, under the 1933
Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified Damages
arise out of or are based upon any Violation, in each case to the extent, and
only to the extent, that such Violation occurs in reliance upon and in
conformity with written information furnished to the Company by such Investor
expressly for use in connection with such Registration Statement; and, subject
to Section 6(c), such Investor shall reimburse the Indemnified Party,
promptly as such expenses are incurred and are due and payable, for any legal
or other expenses reasonably incurred by an Indemnified Party in connection
with investigating or defending any such Claim; provided, however, that the
indemnity agreement contained in this Section 6(b) and the agreement
with respect to contribution contained in Section 7 shall not apply to
amounts paid in settlement of any Claim if such settlement is effected without
the prior written consent of such Investor, which consent shall not be
unreasonably withheld or delayed; provided, further, however, that the Investor
shall be liable under this Section 6(b) for only that amount of a
Claim or Indemnified Damages as does not exceed the net proceeds to such
Investor as a result of the sale of Registrable Securities pursuant to such
Registration Statement.  Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such Indemnified Party and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Section 9.

 

c.         Promptly after receipt by an
Indemnified Person or Indemnified Party under this Section 6 of notice of
the commencement of any action or proceeding (including any governmental action
or proceeding) involving a Claim, such Indemnified Person or Indemnified Party
shall, if a Claim in respect thereof is to be made against any indemnifying
party under this Section 6, deliver to the indemnifying party a written
notice of the commencement thereof, and the indemnifying party shall have the
right to participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to assume control
of the defense thereof with counsel mutually satisfactory to the indemnifying
party and the Indemnified Person or the Indemnified Party, as the case may be;
provided, however, that an Indemnified Person or Indemnified Party shall have
the right to retain its own counsel with the fees and expenses of not more than
one counsel for all such Indemnified Person or Indemnified Party to be paid by
the indemnifying party, if, in the reasonable opinion of counsel retained by
the indemnifying party, the representation by such counsel of the Indemnified
Person or Indemnified Party and the indemnifying party would be inappropriate
due to actual or potential differing interests between such Indemnified Person
or Indemnified Party and any other party represented by such counsel in such proceeding.  In the case of an Indemnified Person, legal
counsel referred to in the immediately preceding sentence shall be selected by
the Investors holding at least a majority  in
interest of the Registrable Securities included in the Registration Statement to
which the Claim relates.  The Indemnified

 

 

Party or Indemnified Person shall cooperate
reasonably with the indemnifying party in connection with any negotiation or
defense of any such action or Claim by the indemnifying party and shall furnish
to the indemnifying party all information reasonably available to the
Indemnified Party or Indemnified Person which relates to such action or
Claim.  The indemnifying party shall keep
the Indemnified Party or Indemnified Person fully apprised at all times as to the
status of the defense or any settlement negotiations with respect thereto.  No indemnifying party shall be liable for any
settlement of any action, claim or proceeding effected without its prior
written consent, provided, however, that the indemnifying party shall not
unreasonably withhold, delay or condition its consent.  No indemnifying party shall, without the
prior written consent of the Indemnified Party or Indemnified Person, consent
to entry of any judgment or enter into any settlement or other compromise which
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party or Indemnified Person of a release from all
liability in respect to such Claim or litigation, and such settlement shall not
include any admission as to fault on the part of the Indemnified Party.  Following indemnification as provided for
hereunder, the indemnifying party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third parties,
firms or corporations relating to the matter for which indemnification has been
made.  The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement
of any such action shall not relieve such indemnifying party of any liability
to the Indemnified Person or Indemnified Party under this Section 6,
except to the extent that the indemnifying party is prejudiced in its ability
to defend such action.

 

d.         The indemnification required
by this Section 6 shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as and when bills are
received or Indemnified Damages are incurred.

 

e.         The indemnity agreements
contained herein shall be in addition to (i) any cause of action or
similar right of the Indemnified Party or Indemnified Person against the
indemnifying party or others, and (ii) any liabilities the indemnifying
party may be subject to pursuant to the law.

 

7.     Contribution.

 

To the extent any
indemnification by an indemnifying party is prohibited or limited by law, the
indemnifying party agrees to make the maximum contribution with respect to any
amounts for which it would otherwise be liable under Section 6 to the
fullest extent permitted by law; provided, however, that:  (i) no Person involved in the sale of
Registrable Securities which Person is guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) in connection
with such sale shall be entitled to contribution from any Person involved in
such sale of Registrable Securities who was not guilty of fraudulent
misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in amount to the amount of net proceeds received by
such seller from the sale of such Registrable Securities pursuant to such
Registration Statement.

 

 

8.     Reports Under the 1934 Act.

 

With a view to making
available to the Investors the benefits of Rule 144 promulgated under the
1933 Act or any other similar rule or regulation of the SEC that may at
any time permit the Investors to sell securities of the Company to the public
without registration (“Rule 144”),
the Company agrees to:

 

a.         make and keep public
information available, as those terms are understood and defined in Rule 144;

 

b.         file with the SEC in a
timely manner all reports and other documents required of the Company under the
1933 Act and the 1934 Act so long as the Company remains subject to such
requirements and the filing of such reports and other documents is required for
the applicable provisions of Rule 144; and

 

c.         furnish to each Investor so
long as such Investor owns Registrable Securities, promptly upon request, (i) a
written statement by the Company, if true, that it has complied with the
reporting requirements of Rule 144, the 1933 Act and the 1934 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 to permit the Investors to sell such
securities pursuant to Rule 144 without registration.

 

9.             Assignment of Registration Rights.

 

The rights under this
Agreement shall be automatically assignable by the Investors to any transferee
of all or any portion of such Investor’s Registrable Securities if:  (i) the Investor agrees in writing with
the transferee or assignee to assign such rights, and a copy of such agreement
is furnished to the Company within a reasonable time after such assignment; (ii) the
Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (a) the name and address of such
transferee or assignee, and (b) the securities with respect to which such
registration rights are being transferred or assigned; (iii) immediately
following such transfer or assignment the further disposition of such
securities by the transferee or assignee is restricted under the 1933 Act or
applicable state securities laws; (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this sentence
the transferee or assignee agrees in writing with the Company to be bound by
all of the provisions contained herein; and (v) such transfer shall have
been made in accordance with the applicable requirements of the Securities
Purchase Agreement.

 

10.           Amendment of Registration Rights.

 

Provisions of this Agreement
may be amended and the observance thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Required Holders.  Any amendment or waiver effected in
accordance with this Section 10 shall be binding upon each Investor and
the Company.  No such amendment shall be
effective to the extent that it applies to less than all of the holders of the
Registrable Securities.  No consideration
shall be offered or paid to any Person 

 

 

to
amend or consent to a waiver or modification of any provision of this Agreement
unless the same consideration also is offered to all of the parties to this
Agreement.

 

11.           Miscellaneous.

 

a.         A Person is deemed to be a
holder of Registrable Securities whenever such Person owns or is deemed to own
of record such Registrable Securities.  If
the Company receives conflicting instructions, notices or elections from two or
more Persons with respect to the same Registrable Securities, the Company shall
act upon the basis of instructions, notice or election received from such
record owner of such Registrable Securities.

 

b.         Any notices, consents,
waivers or other communications required or permitted to be given under the
terms of this Agreement must be in writing and will be deemed to have been
delivered:  (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one Business Day after
deposit with a nationally recognized overnight delivery service, in each case
properly addressed to the party to receive the same.  The addresses and facsimile numbers for such
communications shall be:

 

If to the Company:

 

	
   

  	
  Answers Corporation

  
	
   

  	
  237
  W. 35th Street, Suite 1101

  
	
   

  	
  New
  York, NY 10001

  
	
   

  	
  Telephone:

  	
  (646)
  502-4777

  
	
   

  	
  Facsimile:

  	
  (646) (304-1826)

  
	
   

  	
  Attention:

  	
  Caleb A Chill, General
  Counsel

  
	
   

  	
   

  
	
   

  	
  With a copy (for
  informational purposes only) to:

  
	
   

  	
   

  
	
   

  	
  Sichenzia Ross Friedman Ference LLP

  
	
   

  	
  61 Broadway, 32nd Floor

  
	
   

  	
  New York, New York 10006

  
	
   

  	
  Telephone:

  	
  (212) 930-9700

  
	
   

  	
  Facsimile:

  	
  (212) 930-9725

  
	
   

  	
  Attention:

  	
  Jeffrey J. Fessler, Esq.

  
	
   

  
	
   

  	
  If to the Transfer Agent:

  
	
   

  
	
   

  	
  American Stock Transfer & Trust company

  
								

 

 

	
   

  	
  6201 15th Avenue

  
	
   

  	
  Brooklyn, NY 11219

  
	
   

  	
  Telephone:

  	
  (718) 921-8261

  
	
   

  	
  Facsimile:

  	
  (718) 921-8337

  
	
   

  	
  Attention:

  	
  Donna Ansbro

  
	
   

  
	
   

  	
  If
  to Legal Counsel:

  
	
   

  
	
   

  	
  Schulte
  Roth & Zabel LLP

  
	
   

  	
  919
  Third Avenue

  
	
   

  	
  New
  York, New York 10022

  
	
   

  	
  Telephone:
   (212) 756-2000

  
	
   

  	
  Facsimile:
   (212) 593-5955

  
	
   

  	
  Attention:
   Eleazer N. Klein, Esq.

  
					

 

If to a Buyer, to its address and facsimile
number set forth on the Schedule of Buyers attached hereto, with copies to such
Buyer’s representatives as set forth on the Schedule of Buyers, or to such
other address and/or facsimile number and/or to the attention of such other
Person as the recipient party has specified by written notice given to each
other party five (5) days prior to the effectiveness of such change.  Written confirmation of receipt (A) given
by the recipient of such notice, consent, waiver or other communication, (B) mechanically
or electronically generated by the sender’s facsimile machine containing the
time, date, recipient facsimile number and an image of the first page of
such transmission or (C) provided by a courier or overnight courier
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in
accordance with clause (i), (ii) or (iii) above, respectively.

 

c.         Failure of any party to
exercise any right or remedy under this Agreement or otherwise, or delay by a
party in exercising such right or remedy, shall not operate as a waiver
thereof.

 

d.         All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of New York, without giving effect
to any choice of law or conflict of law provision or rule (whether of the
State of New York or any other jurisdictions) that would cause the application
of the laws of any jurisdictions other than the State of New York.  Each party hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in The City of
New York, Borough of Manhattan, for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper.  Each party
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof
to such party at the address for such notices to it under this Agreement and
agrees that such service shall constitute good and sufficient service of
process and notice thereof.  Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner 

 

 

permitted by law.  If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND
AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.

 

e.         This Agreement, the other
Transaction Documents (as defined in the Securities Purchase Agreement) and the
instruments referenced herein and therein constitute the entire agreement among
the parties hereto with respect to the subject matter hereof and thereof.  There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
and therein.  This Agreement, the other
Transaction Documents and the instruments referenced herein and therein
supersede all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof and thereof.

 

f.          Subject to the requirements
of Section 9, this Agreement shall inure to the benefit of and be binding
upon the permitted successors and assigns of each of the parties hereto.

 

g.         The headings in this
Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof.

 

h.         This Agreement may be
executed in identical counterparts, each of which shall be deemed an original
but all of which shall constitute one and the same agreement.  This Agreement, once executed by a party, may
be delivered to the other party hereto by facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.

 

i.          Each party shall do and
perform, or cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements, certificates,
instruments and documents as any other party may reasonably request in order to
carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.

 

j.          All consents and other
determinations required to be made by the Investors pursuant to this Agreement
shall be made, unless otherwise specified in this Agreement, by the Required
Holders.

 

k.         The language used in this
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent and no rules of strict construction will be applied
against any party.

 

l.          This Agreement is intended
for the benefit of the parties hereto and their respective permitted successors
and assigns, and is not for the benefit of, nor may any provision hereof be
enforced by, any other Person.

 

 

m.        The obligations of each
Investor hereunder are several and not joint with the obligations of any other
Investor, and no provision of this Agreement is intended to confer any
obligations on any Investor vis-à-vis any other Investor.  Nothing contained herein, and no action taken
by any Investor pursuant hereto, shall be deemed to constitute the Investors as
a partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Investors are in any way acting in concert or as
a group with respect to such obligations or the transactions contemplated
herein.

 

* * * * * *

 

[Signature Page Follows]

 

 

IN WITNESS
WHEREOF, each Buyer and the Company have caused their respective signature page to
this Registration Rights Agreement to be duly executed as of the date first
written above.

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ANSWERS
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert S. Rosenschein

  
	
   

  	
   

  	
  Name:
  Robert S. Rosenschein

  
	
   

  	
   

  	
  Title:
  CEO

  

 

 

[Signature Page to Registration Rights Agreement]

 

 

IN WITNESS
WHEREOF, each Buyer and the Company have caused their respective signature page to
this Registration Rights Agreement to be duly executed as of the date first
written above.

 

	
   

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  INTERLACHEN
  CONVERTIBLE INVESTMENTS

  LIMITED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Gregg T. Colburn

  	
   

  
	
   

  	
   

  	
  Name:
  Gregg T. Colburn

  
	
   

  	
   

  	
  Title:
  Authorized Signatory

  

 

 

[Signature Page to Registration Rights Agreement]

 

 

SCHEDULE OF BUYERS

 

	
  Buyer

  	
   

  	
  Buyer
  Address 

  and Facsimile Number

  	
   

  	
  Buyer’s
  Representative’s Address 

  and Facsimile Number

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Interlachen Convertible
  Investments Limited

  	
   

  	
  c/o
  Interlachen Capital Group LP 

  800 Nicollet Mall, Suite 2500 

  Minneapolis, MN 55402-2034  

  Attention: Gregg T. Colburn and the Legal Department  

  Facsimile: (612) 659-4457  

  Telephone: (612) 659-4407  

  Residency: Cayman Islands

  	
   

  	
  Schulte
  Roth & Zabel LLP  

  919 Third Avenue  

  New York, NY 10022  

  Attn: Eleazer Klein, Esq.  

  Facsimile: (212) 593-5955  

  Telephone: (212) 756-2000

  	
   

  

 

 

EXHIBIT A

 

FORM OF
NOTICE OF EFFECTIVENESS

OF REGISTRATION STATEMENT

 

[              ]

 

[              ]

 

[              ]

 

Re:          Answers Corporation

 

Ladies
and Gentlemen:

 

[We
are][I am] counsel to Answers Corporation, a Delaware corporation (the “Company”), and have represented the Company
in connection with that certain Securities Purchase Agreement (the “Securities Purchase
Agreement”) entered into by and among the Company and the buyers
named therein (collectively, the “Holders”)
pursuant to which the Company issued to the Holders senior convertible notes (the
“Notes”) which shall be convertible into
the Company’s common stock, par value $0.001 per share (the “Common Stock”). 
Pursuant to the Securities Purchase Agreement, the Company also has
entered into a Registration Rights Agreement with the Holders (the “Registration Rights Agreement”) pursuant to
which the Company agreed, among other things, to register the Registrable
Securities (as defined in the Registration Rights Agreement), including the
shares of Common Stock issuable upon conversion of the Notes, under the
Securities Act of 1933, as amended (the “1933
Act”).  In connection with the
Company’s obligations under the Registration Rights Agreement, on                         
      , 200_, the Company filed a Registration
Statement on Form S-3 (File No. 333-                          )
(the “Registration Statement”)
with the Securities and Exchange Commission (the “SEC”) relating to the Registrable Securities which names each
of the Holders as a selling stockholder thereunder.

 

In connection with the
foregoing, [we][I] advise you that a member of the SEC’s staff has advised
[us][me] by telephone that the SEC has entered an order declaring the
Registration Statement effective under the 1933 Act at [ENTER TIME OF EFFECTIVENESS] on [ENTER
DATE OF EFFECTIVENESS] and [we][I]
have no knowledge, after telephonic inquiry of a member of the SEC’s staff,
that any stop order suspending its effectiveness has been issued or that any
proceedings for that purpose are pending before, or threatened by, the SEC and
the Registrable Securities are available for resale under the 1933 Act pursuant
to the Registration Statement.

 

 

This
letter shall serve as our standing instruction to you that the shares of Common
Stock are freely transferable by the Holders pursuant to the Registration
Statement.  You need not require further
letters from us to effect any future legend-free issuance or reissuance of
shares of Common Stock to the Holders as contemplated by the Company’s
Irrevocable Transfer Agent Instructions dated [•], 2008.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  [ISSUER’S COUNSEL]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  

CC:          [LIST NAMES OF HOLDERS]

 

 

EXHIBIT B

 

SELLING
STOCKHOLDERS

 

The
shares of common stock being offered by the selling stockholders are issuable
upon conversion of the convertible notes. 
For additional information regarding the issuance of those convertible
notes, see “Private Placement of Convertible Notes “ above.  We are registering the shares of common stock
and convertible Notes in order to permit the selling stockholders to offer the
shares for resale from time to time. 
Except for the ownership of the convertible notes issued pursuant to the
Securities Purchase Agreement, the selling stockholders have not had any
material relationship with us within the past three years.

 

The
table below lists the selling stockholders and other information regarding the
beneficial ownership of the shares of common stock by each of the selling
stockholders.  The second column lists
the number of shares of common stock beneficially owned by each selling
stockholder, based on its ownership of the convertible notes, as of                 ,
2008, assuming conversion of all convertible notes held by the selling
stockholders on that date, without regard to any limitations on conversions.

 

The
third column lists the maximum aggregate principal amount of Notes to be sold
pursuant to the prospectus.

 

The
fourth column lists the shares of common stock being offered by this prospectus
by the selling stockholders.

 

In
accordance with the terms of a registration rights agreement with the selling
stockholders, this prospectus generally covers the resale of the Notes and at
least 130% of the number of shares of common stock issuable upon conversion of
the convertible notes as of the Trading Day immediately preceding the date the
registration statement is initially filed with the SEC.  Because
the conversion price of the convertible notes may be adjusted, the number of
shares that will actually be issued may be more or less than the number of
shares being offered by this prospectus. 
The fifth column assumes the sale of all of the shares offered by the
selling stockholders pursuant to this prospectus.

 

Under
the terms of the convertible notes, a selling stockholder may not convert the
convertible notes to the extent such conversion would cause such selling
stockholder, together with its affiliates, to beneficially own a number of
shares of common stock which would exceed 9.99% of our then outstanding shares
of common stock following such conversion, excluding for purposes of such
determination shares of common stock issuable upon conversion of the
convertible notes which have not been converted.  The number of shares in the second column
does not reflect this limitation.  The
selling stockholders may sell all, some or none of their shares in this
offering.  See “Plan of Distribution.”

 

 

	
  Name of
  Selling Stockholder

  	
   

  	
  Number
  of Shares of 

  Common Stock Owned

  Prior to Offering

  	
   

  	
  Maximum
  

  Aggregate Principal 

  Amount of Notes to 

  be Sold Pursuant o 

  the Prospectus

  	
   

  	
  Maximum
  Number of 

  Shares of Common 

  Stock to be Sold 

  Pursuant to this 

  Prospectus

  	
   

  	
  Number
  of Shares of 

  Common Stock 

  Owned After 

  Offering

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Interlachen Convertible
  Investments Limited

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  0

  	
   

  

 

(1)           Interlachen Capital Group LP
is the trading manager of Interlachen Convertible Investments Limited and has
voting and investment discretion over securities held by Interlachen
Convertible Investments Limited.  Andrew
Fraley, in his role as Chief Investment Officer of Interlachen Capital Group
LP, has voting control and investment discretion over securities held by Interlachen
Convertible Investments Limited.  Andrew
Fraley disclaims beneficial ownership of the securities held by Interlachen
Convertible Investments Limited.

 

 

PLAN OF DISTRIBUTION

 

We
are registering the shares of common stock and convertible Notes issuable upon
conversion of the convertible notes to permit the resale of these shares of
common stock by the holders of the convertible notes from time to time after
the date of this prospectus.  We will not
receive any of the proceeds from the sale by the selling stockholders of the
shares of common stock.  We will bear all
fees and expenses incident to our obligation to register the shares of common
stock.

 

The
selling stockholders may sell all or a portion of the shares of common stock
beneficially owned by them and offered hereby from time to time directly or
through one or more underwriters, broker-dealers or agents.  If the shares of common stock are sold through
underwriters or broker-dealers, the selling stockholders will be responsible
for underwriting discounts or commissions or agent’s commissions.  The shares of common stock may be sold in one
or more transactions at fixed prices, at prevailing market prices at the time
of the sale, at varying prices determined at the time of sale, or at negotiated
prices.  These sales may be effected in
transactions, which may involve crosses or block transactions,

 

·      on any national securities exchange or quotation
service on which the securities may be listed or quoted at the time of sale;

 

·      in the over-the-counter market;

 

·      in transactions otherwise than on these exchanges or
systems or in the over-the-counter market;

 

·      through the writing of
options, whether such options are listed on an options exchange or otherwise;

 

·      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;

 

·      short sales;

 

·      sales pursuant to Rule 144;

 

 

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

 

·      a combination of any such methods of sale; and

 

·      any other method permitted pursuant to applicable
law.

 

If
the selling stockholders effect such transactions by selling shares of common
stock to or through underwriters, broker-dealers or agents, such underwriters,
broker-dealers or agents may receive commissions in the form of discounts,
concessions or commissions from the selling stockholders or commissions from
purchasers of the shares of common stock for whom they may act as agent or to
whom they may sell as principal (which discounts, concessions or commissions as
to particular underwriters, broker-dealers or agents may be in excess of those
customary in the types of transactions involved).  In connection with sales of the shares of
common stock or otherwise, the selling stockholders may enter into hedging
transactions with broker-dealers, which may in turn engage in short sales of
the shares of common stock in the course of hedging in positions they
assume.  The selling stockholders may
also sell shares of common stock short and deliver shares of common stock
covered by this prospectus to close out short positions and to return borrowed
shares in connection with such short sales. 
The selling stockholders may also loan or pledge shares of common stock
to broker-dealers that in turn may sell such shares.

 

The
selling stockholders may pledge or grant a security interest in some or all of
the convertible notes, or shares of common stock owned by them and, if they
default in the performance of their secured obligations, the pledgees or
secured parties may offer and sell the shares of common stock from time to time
pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or
other applicable provision of the Securities Act of 1933, as amended, amending,
if necessary, the list of selling stockholders to include the pledgee,
transferee or other successors in interest as selling stockholders under this
prospectus.  The selling stockholders
also may transfer and donate the shares of common stock in other circumstances
in which case the transferees, donees, pledgees or other successors in interest
will be the selling beneficial owners for purposes of this prospectus.

 

The
selling stockholders and any broker-dealer participating in the distribution of
the shares of common stock may be deemed to be “underwriters” within the
meaning of the Securities Act, and any commission paid, or any discounts or
concessions allowed to, any such broker-dealer may be deemed to be underwriting
commissions or discounts under the Securities Act.  At the time a particular offering of the
shares of common stock is made, a prospectus supplement, if required, will be
distributed which will set forth the aggregate amount of shares of common stock
being offered and the terms of the offering, including the name or names of any
broker-dealers or agents, any discounts, commissions and other terms
constituting compensation from the selling stockholders and any discounts,
commissions or concessions allowed or reallowed or paid to broker-dealers.

 

Under
the securities laws of some states, the shares of common stock may be sold in
such states only through registered or licensed brokers or dealers.  In addition, in some states the shares of
common stock may not be sold unless such shares have been registered or
qualified for 

 

 

sale
in such state or an exemption from registration or qualification is available
and is complied with.

 

There
can be no assurance that any selling stockholder will sell any or all of the
shares of common stock registered pursuant to the registration statement, of
which this prospectus forms a part.

 

The
selling stockholders and any other person participating in such distribution
will be subject to applicable provisions of the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder, including,
without limitation, Regulation M of the Exchange Act, which may limit the
timing of purchases and sales of any of the shares of common stock by the
selling stockholders and any other participating person.  Regulation M may also restrict the ability of
any person engaged in the distribution of the shares of common stock to engage
in market-making activities with respect to the shares of common stock.  All of the foregoing may affect the
marketability of the shares of common stock and the ability of any person or
entity to engage in market-making activities with respect to the shares of
common stock.

 

We
will pay all expenses of the registration of the shares of common stock
pursuant to the registration rights agreement, estimated to be
$[     ] in total, including, without limitation,
Securities and Exchange Commission filing fees and expenses of compliance with
state securities or “blue sky” laws; provided, however, that a selling
stockholder will pay all underwriting discounts and selling commissions, if
any.  We will indemnify the selling
stockholders against liabilities, including some liabilities under the
Securities Act, in accordance with the registration rights agreements, or the
selling stockholders will be entitled to contribution.  We may be indemnified by the selling
stockholders against civil liabilities, including liabilities under the
Securities Act, that may arise from any written information furnished to us by
the selling stockholder specifically for use in this prospectus, in accordance
with the related registration rights agreement, or we may be entitled to
contribution.

 

Once
sold under the registration statement, of which this prospectus forms a part,
the shares of common stock will be freely tradable in the hands of persons
other than our affiliates.Exhibit 10.5

 

Execution Copy

 

AMENDED AND RESTATED PURCHASE AGREEMENT

 

THIS AMENDED AND RESTATED PURCHASE AGREEMENT (as amended,
this “Agreement”) is made and entered into as
of January 15, 2008 by and among Answers Corporation, a Delaware
corporation (the “Purchaser”) and Brian Kariger, as
the Sellers Representative. Certain capitalized terms used in this Agreement
are defined in Exhibit A.

 

RECITALS

 

A.            Lexico Publishing Group,
LLC, a California limited liability company (the “Company”), Brian Kariger, as trustee of the Brian Patrick
Kariger Charitable Remainder Unitrust Trust dated April 9, 2007, Brian
Kariger, as trustee of the Brian Patrick Kariger Revocable Trust dated February 9,
2007, and Daniel Fierro (collectively, the “Sellers”),
the Sellers Representative, and the Purchaser entered into a Purchase
Agreement, dated as of July 13, 2007, as amended by the First Amendment to
the Purchase Agreement dated July 31, 2007 as amended by the Second
Amendment to the Purchase Agreement dated November 12, 2007 (the “Original Purchase Agreement”), which the
parties wish to further amend and restate;

 

B.            Each of the Sellers owns
such percentage of Company’s Membership Interest, which includes the Economic
Interest, as set forth opposite such Seller’s name on Schedule A attached hereto
(collectively, the “Interests”),
in each case free and clear of any Encumbrances, which Interests represents all
of the outstanding Membership Interests of the Company;

 

C.            The Purchaser desiring to
purchase, and the Sellers desiring to sell, all of the Interests, at the
Closing, and, upon consummation of such sale, that the Purchaser shall become
the sole owner of the Company, as more fully set forth herein, have entered
into the Original Purchase Agreement;

 

D.            The
Members of the Company have unanimously approved and authorized the execution,
delivery and performance of this Agreement and the transaction contemplated
hereby, including, the Purchaser’s
admission to the Company as a Member at the Closing;

 

E.             As a material inducement to
the willingness of Purchaser to enter into this Agreement, the parties hereto
and the Escrow Agent executed the Bonus Plan/Documents Escrow Agreement, as
amended, pursuant to which, inter alia, the Sellers have deposited with the
Escrow Agent instruments evidencing the transfer of their Interests to the
Purchaser at the Closing, to be held by the Escrow Agent for the benefit of the
Sellers and the Purchaser, in order to facilitate the Closing;

 

F.             As a material inducement to the willingness of
Purchaser to enter into this Agreement, the parties hereto and the Escrow Agent
executed an Indemnity Escrow Agreement in order to facilitate the
indemnification obligations contemplated by this Agreement, which the parties
wish to amend so as to provide that such agreement shall automatically
terminate if Purchaser elects to effect the Holdback with respect to the entire
Escrow Amount, as set forth in Section 1.3.2 hereto;

 

F.             Concurrently with the Closing
of this Agreement, provided Purchaser elected to effect the Holdback:
(i) the parties hereto shall enter into the that certain Pledge and
Security Agreement, in the form attached hereto as Exhibit E (as amended, the “Pledge and Security Agreement”), and (ii) the parties
hereto and Interlachen Convertible Investments Limited, in its capacity as
collateral agent of the Senior Debt, shall enter into the Subordination
Agreement, in the form attached hereto as Exhibit F
(as amended, the “Subordination
Agreement”); and

 

 

H.            The Parties wish to amend
and restate the Original Purchase Agreement in its entirety, as set forth
herein, in accordance with Section 10.5 of the Original Purchase
Agreement, pursuant to which such amendment and restatement may be made with
the written consent of Purchaser and the Sellers Representative and shall be
binding upon the Parties and their respective successors and assignees.

 

NOW
THEREFORE, in consideration of the premises and of the mutual promises,
covenants, representations and warranties made in this Agreement, the
Purchaser, the Company and the Sellers, intending to be legally bound, hereby
agree as follows:

 

1.             SALE AND PURCHASE.

 

1.1.             Sale and Purchase of the Interests. Subject to the terms and conditions of this
Agreement, at the Closing, (a) the Sellers shall each sell, convey, assign
and transfer his Interests to Purchaser, free and clear of all Encumbrances, (b) the Purchaser shall purchase and accept the Interests from the
Sellers, (c) the Sellers shall each withdraw as a Member of the Company,
and (d) the Purchaser shall be
admitted as the sole Member of the Company with respect to the Interests. All Interests together shall be purchased
by the Purchaser and under no
circumstances shall only part of the Interests be purchased by the Purchaser.

 

1.2.             Purchase Price.

 

1.2.1.          As full consideration
for the sale, conveyance, assignment and
transfer of the Interests to Purchaser, free and clear of all Encumbrances, and all of the obligations,
covenants and conditions contained in this Agreement, (i) at Closing,
Purchaser shall deposit in a bank account in the name of the Escrow Agent an
aggregate amount equal to $80,000,000 (subject to adjustments in accordance
with the provisions of Section 1.2.2) (the “Purchase Price”), to be immediately thereafter transferred by
the Escrow Agent to the Sellers, pro-rata in accordance with the percentage
Membership Interest held by each Seller as set forth in Schedule A; (ii) the amount of
Forfeited Employee Bonus Amount (if any) shall be transferred and paid to the
Sellers, pro-rata in accordance with the percentage Membership Interest held by
each Seller as set forth in Schedule A,
in the manner set forth in Section 1.4.2 (such amount, if any, the “Second Installment”) and (iii) the
Escrow Fund remaining (if any) after deducting any Indemnifiable Damages pursuant to Section 9 shall be
transferred and paid to the Sellers, pro-rata in accordance with the percentage
Membership Interest held by each Seller as set forth in Schedule A, in the manner set forth in Section 9
(such amount, if any, the “Third Installment”,
and together with the Purchase Price, and Second Installment, the “Aggregate Purchase Price”).

 

1.2.2.          No later
than two (2) Business Days prior to the Closing, the Company shall prepare
in good faith and deliver to the Purchaser (with a duplicate copy to the Escrow
Agent) a certificate in the form attached hereto as Schedule 1.2.2 (the “Estimated Closing Adjustments Certificate”)
setting forth, in reasonable detail, the estimated Closing Net Working Capital
(together with the Company’s balance sheet) and the Transaction Expenses, each
as of the Closing.  The Company shall
deliver to Purchaser, together with the Estimated Closing Adjustment
Certificates, all the supporting work
papers prepared for the calculation of the amounts stated therein and
such other supporting documentation as Purchaser shall reasonably request. The
Estimated Closing Adjustments Certificate shall be deemed to be a
representation and warranty of the Sellers hereunder.  The Purchase Price shall be subject to the
following adjustments:

 

 

1.2.2.1.          The
Purchase Price shall be reduced, on a dollar for dollar basis, by the amount,
if any, by which the Closing Net Working Capital is less than $650,000 (with
any negative result, i.e. the estimated Closing Net Working Capital being in
excess of $650,000, treated in accordance with Section 1.2.2.2), as set
forth in the Estimated  Closing
Adjustments Certificate.

 

1.2.2.2.          In
the event that the Closing Net Working Capital as set forth in the Estimated  Closing Adjustments Certificate is in
excess of $650,000, then, at the Sellers’ election, such excess amount shall
be: (i) added to the Purchase Price, on a dollar for dollar basis, or (ii) permitted
to be declared and paid as dividends by the Company to the Sellers prior to or
concurrently with the Closing. Sellers may elect either of the manners of
payments set forth in clauses (i) or (ii) above, or a combination
thereof that has the result of making the full payment of such excess amount to
the Sellers.

 

1.2.2.3.          The
Purchase Price shall be reduced, on a dollar for dollar basis, by the amount of
any Transaction Expenses outstanding at the Closing, as set forth in the
Estimated  Closing Adjustments
Certificate.

 

Failure of the
Company to timely and duly deliver the Estimated Closing Adjustments
Certificate may be waived by Purchaser, in its sole discretion (without
derogating from any rights or remedies under this Agreement, including, without
limitation, under Section 9).

 

1.3.             Escrow;
Holdback.  The Sellers
hereby agree that the Escrow Amount shall not be paid to the Sellers at the
Closing, but instead, at the election of the Purchaser, shall be either (or in a combination of the following):

 

1.3.1.          held
back (in whole or in part with respect to any portion of the Escrow Amount not
deposited in escrow pursuant to Section 1.3.2 below) by the Purchaser
to offset any amount due by Sellers under Sections 1.2 and 9 hereof (the “Holdback”), and the remaining amount shall be paid (if any) to the Sellers,
together with interest thereon at the rate of 7% per annum on the Escrow
Amount, computed on the basis of actual number of days elapsed over a 360-day
year, upon the second anniversary of the Closing (the “Holdback Release Date”) pursuant to Section 9
hereof. In the event that the Purchaser elects to effect the Holdback,
then: (i) if the Holdback is effected with respect to with respect to the
entire Escrow Amount, the Indemnity Escrow Agreement shall automatically terminate, without the need of any action
from any party thereto, and be of no force and effect, and the parties hereto,
acting pursuant to Section 4(b) of the Indemnity Escrow Agreement,
hereby agree that the Indemnity Escrow Agreement shall be deemed to have been
amended to this effect; and (ii) the parties shall enter into the Pledge
and Security Agreement and (if the Purchaser purchases any Senior Notes) the
Subordination Agreement with respect to the Escrow Amount subject to Holdback;
and/or

 

1.3.2.          retained (in
whole or in part with respect to any portion of the Escrow Amount not held back
pursuant to Section 1.3.1 above) by the Escrow Agent in a separate bank account in
the name of the Escrow Agent, to be held by the Escrow Agent pursuant to the
Indemnity Escrow Agreement, to secure the obligations of the Sellers under
Sections 1.2 and 9 hereof (the “Indemnity
Escrow”), and the remaining
amounts shall be paid (if any) to the Sellers upon the lapse of the Escrow
Period pursuant to Section 9 hereof.  In the event that the Purchase elects to
effect the Indemnity Escrow with respect to the entire Escrow Amount, then the
Pledge and Security Agreement and Subordination Agreement shall be of no force and effect.

 

1.3.3.          Notwithstanding
Sections 1.3.1 and 1.3.2 above, in the event the underwriters of the Offering
exercise their over-allotment option, in whole or in part, resulting in
additional Offering proceeds (the “Overallotment
Proceeds”), (i) the Purchaser hereby agrees to use the
Overallotment 

 

 

Proceeds to effect the Indemnity Escrow up to
the entire Escrow Amount; (ii) the Escrow Amount subject to the Indemnity
Escrow will not bear interest pursuant to Section 1.3.1 above, and will
instead be governed by the Indemnity Escrow Agreement; and (iii) any
Overallotment Proceeds in excess of the Escrow Amount shall be retained by the
Purchaser.

 

1.4.             Employees Bonus Plan; Forfeited Employee Bonus Amount.

 

1.4.1.          At the Closing, Purchaser shall deposit with
the Escrow Agent the Employee Bonus Amount, to be held pursuant to the Bonus
Plan/Documents Escrow Agreement.  The
portion of the Employee Bonus Amount to be paid at Closing shall be transferred
by the Escrow Agent to the Company for the purpose of making payments under the
Employee Bonus Plan as soon as practicable after the Closing. The employees
entitled to participate in the Employee Bonus Plan, and their bonus amounts,
shall be determined by the Sellers, with Purchaser’s prior written
consent.  The timing and content of the
notice to eligible participants shall be coordinated with Purchaser in advance
and be subject to Purchaser’s prior consent.

 

1.4.2.          Any portion of the Employee Bonus Amount (if
any), including interest accrued thereon (if any), which the participants in
the Employee Bonus Plan shall not be entitled to receive in accordance with the
terms and conditions thereof (the “Forfeited
Employee Bonus Amount”), shall be paid to the Sellers, pro-rata in
accordance with the allocation of the percentage Membership Interest held by
each Seller as set forth in Schedule A.  Payment to the Sellers of the Forfeited
Employee Bonus Amount shall be made in accordance with the Bonus Plan/Documents
Escrow Agreement.  The Sellers shall not
make any payments from the Forfeited Employee Bonus Amounts to current or
former employees of the Company after the Closing.

 

1.5.             Taxes;
Withholding.  Purchaser, the
Company and the Escrow Agent shall each be entitled to deduct and withhold from
the cash otherwise deliverable under this Agreement, and from any other
payments otherwise required pursuant to this Agreement such amounts as it is
required to deduct and withhold with respect to any such deliveries and
payments under the Internal Revenue Code of 1986, as amended or any provision
of state, local, provincial or foreign Tax law and to request any necessary Tax forms, including
IRS Form W-9 or the appropriate series of Form W-8, as applicable, or
any other proof of exemption from withholding or any similar
information, from the Sellers and any other recipient of any payment hereunder.  To the extent that amounts are so withheld,
such withheld amounts shall be treated for all purposes of this Agreement as
having been delivered and paid to such recipients in respect of which such
deduction and withholding was made.

 

1.6.             Manner
of Payment. The Purchase Price shall be paid in U.S. Dollars. The Escrow Agent shall be instructed to
transfer the Purchase Price by wire transfer in immediately available funds to
such bank accounts the details of which shall be provided by
each of the Sellers to the Escrow Agent, in accordance with the Bonus
Plan/Documents Escrow Agreement.

 

2.     CLOSING.

 

2.1.             Closing
Date.  Unless this
Agreement is earlier terminated in accordance with Section 8, the delivery
by the Purchaser of the Purchase Price (subject to adjustments in accordance
with the provisions of Section 1.2.2) and the Employee Bonus Amount to the
Escrow Agent and Purchaser’s admission to the Company as the sole Member
thereof (the “Closing”) and all
other actions specified in this Agreement to occur at the Closing, shall take
place at the offices of Montgomery & Co., LLC, 100 Wilshire Blvd., Suite 400,
Santa Monica, CA 90401, on the date specified by Purchaser which will be no
later than the fifth Business Day after the date on which the last of the
conditions set forth in Section 7 has been satisfied or waived (if
permissible) (other than those conditions that by their nature are to be 

 

 

satisfied at the Closing, but subject to the satisfaction or waiver of
those conditions) or at such other time and place as Purchaser and the Sellers
Representative shall agree. The date on which the Closing occurs is herein
referred to as the “Closing Date”. All transactions to occur at the Closing
shall be deemed to take place simultaneously, and no transaction shall be
deemed to have been completed or any document delivered until all such transactions
have been completed and all required documents delivered.

 

2.2.             Sellers Deliveries.

 

2.2.1.          Sellers
Closing Deliveries.  The
Sellers shall deliver, or cause to be delivered, to Purchaser, at or prior to
the Closing, each of the following (unless delivery of any such document has
been waived by Purchaser, in its sole discretion):

 

2.2.1.1.              a certificate, dated
as of the Closing Date in the form attached hereto as Schedule 2.2.1.1, executed by each of
the Sellers, on behalf of themselves and the Company, to the effect that each
of the conditions set forth in Section 7.3 have been satisfied;

 

2.2.1.2.              a bring down written
opinion from the legal counsel(s) to the Sellers and the Company and
addressed to Purchaser, that the written opinions rendered on the date of
signing the Original Purchase Agreement, in the form attached hereto as Exhibit D, are true and correct as of
the Closing Date, as though made on and as of such date;

 

2.2.1.3.              a certificate
executed by each of the Sellers, on behalf of the Company, in the form attached
hereto as Schedule 2.2.1.3
and in substance satisfactory to Purchaser, setting forth and certifying the
Company’s aggregate liability for Transaction Expenses as of the Closing Date
(including all Transaction Expenses paid by the Company through such date),
accompanied by such supporting documentation, information and calculations as
are necessary for Purchaser to verify and determine the amount of such
Transaction Expenses as of the Closing Date;

 

2.2.1.4.              all other documents
expressly required to be delivered at or prior to Closing pursuant to the
Sellers’ obligations hereunder.

 

2.2.2.          Sellers
Signing Deliveries.  Concurrently with the execution
of this Agreement, the Sellers have delivered, or cause to be delivered, each
of the following:

 

2.2.2.1.              To the Escrow Agent:

 

(i)                    instruments of
transfer of Membership Interests, validly executed by each of the Sellers,
evidencing the transfer of his Membership Interest to the Purchaser, free and
clean of any Encumbrance (dated blank);

 

(ii)                   spousal consent
to the transfer of Membership Interests, validly executed by the spouse of each
of the Sellers (if applicable), relating to the transfer of Membership Interest
to the Purchaser (dated blank);

 

(iii)                  the list of Company’s Members maintained pursuant to Section 17058(a)(1) of
the California Corporations Code, evidencing the withdrawal of the Sellers as
Members and the admission of the Purchaser as the sole Member (with the date of
admission blank); and

 

(iv)                 signatures of the
Sellers to the Subordination Agreement.

 

 

At
the Closing, the Escrow Agent shall, automatically, and without any further
action required by either party (and the parties hereby irrevocably instruct
the Escrow Agent to) date the documents specified in this Section 2.2.2.1 as
of the Closing Date and deliver them to the Purchaser.

 

2.2.2.2.              to the Purchaser, a
written opinion from the legal counsel to the Sellers and the Company, in the
form attached hereto as Exhibit D,
dated as of the date of signing the Original Purchase Agreement and addressed
to the Purchaser.

 

2.3.             Expenses.  Whether or not the Closing occurs, subject to
Section 8.3.1, the Sellers shall be responsible for the payment of all
Transaction Expenses they have incurred or will incur or that the Company has
incurred at or prior to Closing, in connection with the negotiation, execution
and delivery of this Agreement and consummation of the transactions
contemplated hereby (and, if the Closing occurs, the Sellers shall reimburse
the Company to the extent any such costs were paid by the Company). Purchaser
shall be responsible for the payment of costs (including legal and accounting
fees) it has incurred and will incur in connection with the execution and
delivery of this Agreement and consummation of the transactions contemplated
hereby.

 

2.4.             Further
Action.  The Sellers shall
at any time and from time to time upon the request of the Purchaser execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
all such further assignments, instruments of sale and transfer and other
documents as may be reasonably required for the assigning and transferring to
the Purchaser or its successors and assigns full right, title to, and interest
in, the Interests, and for the purpose of carrying out the intent of this
Agreement.

 

3.             REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND THE COMPANY

 

Subject to the disclosures set forth in the Disclosure Schedule, the
Sellers and the Company hereby represent and warrant to Purchaser as follows:

 

3.1.             Organization, Standing and Power.

 

3.1.1.          The Company is a limited liability company
duly organized, validly existing and, to the extent that such jurisdiction
recognizes the concept of good standing, is in good standing under the laws of
its jurisdiction of organization.  The
Company has all necessary power and authority to own and use its assets in the
manner in which its assets are currently owned and used, conduct its business
in the manner in which its business is currently being conducted, and to
perform its obligations under all Contracts by which it is bound.  The Company is duly qualified to do business
and is in good standing in each jurisdiction where the failure to be so
qualified and in good standing, individually or in the aggregate with any such
other failures, would reasonably be expected to be material to the Company.

 

3.1.2.          The Company has delivered to Purchaser a true
and correct copy of its Charter Documents, as in effect on the date of signing
the Original Purchase Agreement.  The
Charter Documents constitute the sole and exclusive governing document of the
Company. The Company is not in violation of any of the provisions of its
Charter Documents.

 

3.1.3.          Each Seller that is not a natural person is
duly organized, validly existing and is not in violation of any of the
provisions of its formation documents.

 

3.2.             No
Subsidiaries; No officers. The Company does not directly or
indirectly own any equity or similar interest in, or any interest convertible
or exchangeable or exercisable for, any equity or similar interest in, any
Person. The Sellers (in their capacities as Members, or the beneficial holders
of the 

 

 

Interests) are managing the Company, and there are no other managing
members, directors or officers.

 

3.3.             Capital Structure.

 

3.3.1.          The Interests constitute all of the
Membership Interests of the Company and are owned of record and beneficially
solely by the Sellers, free and clear of any Encumbrances.  The Sellers have not sold, pledged or otherwise
transferred (whether by operation of law or otherwise, including, without
limitation, transfers pursuant to any
decree of divorce or separate maintenance, any property settlement, any
separation agreement or any other agreement with a spouse) any Economic
Interests in their Interest to any other Person. Other than the Interest, there
are no other issued and outstanding rights, interests of any kind or other
securities of the Company and no outstanding commitments or Contracts to issue
any rights, interests of any kind or other securities of the Company. No Person
has any right to, and there is no condition or circumstance that could
reasonably be expected to give rise to or provide a basis for the assertion of
a valid claim by any Person to the effect that such Person is entitled to,
acquire rights, interests of any kind or other securities of the Company or any
options, warrants or other rights to purchase the same, from the Company or
from any Member of the Company. The Company has no Members, other than the
Sellers. There are no outstanding contributions required to be made by any
Member to the Company. The Interests are duly authorized, validly issued, fully
paid and non-assessable and are free of any Encumbrances, preemptive rights,
rights of first refusal or “put” or “call” rights created by any Legal
Requirements, the Charter Documents of the Company or any Contract to which the
Company or any of the Sellers is a party or by which the Company or any of the
Sellers is bound.  The Interests were
issued in compliance with all applicable Legal Requirements and all
requirements set forth in applicable Contracts.

 

3.3.2.          There is no liability for dividends accrued
and unpaid by the Company. All distributions were made in compliance with all
applicable Legal Requirements.

 

3.3.3.          No bonds, debentures, notes or other
indebtedness of the Company (i) having the right to vote on any matters on
which Members may vote (or which is convertible into, or exchangeable for,
securities having such right) or (ii) the value of which is any way based
upon or derived from Membership Interest or other securities of the Company,
are issued or outstanding as of the date of signing the Original Purchase
Agreement (collectively, “Company Voting Debt”).  There
are no options, warrants, calls, rights or Contracts of any character to which
the Company is a party or by which it is bound obligating the Company to issue,
deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold,
repurchased or redeemed, any rights, interests of any kind or other securities
of the Company, options, warrants or other rights to purchase rights, interests
of any kind or other securities of the Company, or any Company Voting Debt, or
obligating the Company to grant, extend, accelerate the vesting and/or
repurchase rights of, change the price of, or otherwise amend or enter into any
such option, warrant, call, right or Contract. 
There are no Contracts relating to voting (including, voting trusts or
proxies), participation in the management of the Company, granting the right to
information concerning the business and affairs of the Company, or the purchase
or sale of any Membership Interests (i) between or among the Company and
any of its Members, or (ii) between or among any of the Company’s
Members.  The Company is not under any obligation
to register under the Securities Act any Membership Interest or any other
securities of the Company, whether currently outstanding or that may
subsequently be issued.

 

3.3.4.          The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby will not, of
itself, dissolve the Company or entitle the Sellers or any other Person to vote
or participate in the management and affairs of the Company or to become or
exercise any rights of a Member.

 

 

3.4.             Title
to the Interest.  There
are no restrictions on the transfer of the Interests. The Sellers have good and
valid title to the Interests held by them, free and clear of all
Encumbrances.  Upon delivery of the
Interests to the Purchaser and payment therefor pursuant hereto, good and valid
title to the Interests, free and clear of all Encumbrances will pass to the
Purchaser.

 

3.5.             Authority; Non-Contravention.

 

3.5.1.          The Company and each Seller has all requisite
power and authority to enter into this Agreement and the Transaction Agreements
to which they are a party, and to consummate the transactions contemplated
hereby and thereby.  The execution and
delivery of this Agreement and each of the Transaction Agreements to which they
are a party, and the consummation of the transactions contemplated hereby and
thereby, have been duly authorized by the Company and each Seller that is not a
natural person.  This Agreement and each
of the Transaction Agreements to which they are a party has been duly executed
and delivered by the Company and the Sellers and constitutes the valid and
binding obligation of the Company and the Sellers enforceable against each of
them in accordance with its terms, subject only to the effect, if any, of (i) applicable
bankruptcy and other similar laws affecting the rights of creditors generally
and (ii) rules of law governing specific performance, injunctive
relief and other equitable remedies.  The
Members of the Company, by resolutions duly adopted (and not thereafter
modified or rescinded) by the unanimous vote thereof has approved and adopted
this Agreement, and no other vote is required for the consummation of the
transactions contemplated hereby..

 

3.5.2.          The execution and delivery of this Agreement
and each of the Transaction Agreements to which they are a party by the Company
and the Sellers does not, and the consummation of the transactions contemplated
hereby and thereby, will not (i) result in the creation of any Encumbrance
on the Interests or any of the material properties or assets of the Company, or
(ii) conflict with, or result in any violation of or default under (with
or without notice or lapse of time, or both), or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of any
benefit under, or require any consent, approval or waiver from any Person
pursuant to, (A) any provision of the Charter Documents of the Company, as
amended to date, (B) any Contract of the Company or any Contract
applicable to any of their respective material properties, assets or to the
Interests, other than as set forth in Schedule
3.5.2(ii)(B) of the Disclosure Schedule, or (C) any Legal
Requirements applicable to the Sellers, the Company or any of their respective
material properties, assets or the Interests.

 

3.5.3.          No consent, approval, order or authorization
of, or registration, declaration or filing with, any Governmental Entity is required by or with respect to the Company
or the Sellers in connection with the execution and delivery of this Agreement,
each of the Transaction Agreements to which they are a party, or the
consummation of the transactions contemplated hereby or thereby, or in order to
vest in the Purchaser good and marketable title in and to all of the Interest
upon the Closing, except (to the extent applicable) for notification pursuant
to, and expiration or termination of the waiting period under, the HSR Act.
Neither Sellers nor the Company have any knowledge that the Company will be
unable to continue to operate its business following Closing in the same manner
as conducted prior to the Closing without violating any covenant or agreement
that binds the Company or the Sellers.

 

3.5.4.          No state takeover statute or similar Legal
Requirement applies or purports to apply to this Agreement or any of transactions
contemplated hereby.

 

3.6.             Financial Statements.

 

3.6.1.          Schedule 3.6.1
of the Disclosure Schedule consists of the following (referred to collectively
as the “Financial Statements”) the
audited consolidated financial statements of the Company as of and for the
fiscal years ended December 31, 2005 and 2006 (including, in each case,

 

 

balance sheets, income
statements, statement of changes in shareholders equity and statement of cash
flows), together with the an audit opinion thereon of independent auditors
associated with one of the “Big 4” accounting firms.

 

3.6.2.          The Financial Statements (i) are derived
from and in accordance with the books and records of the Company, (ii) complied
as to form in all material respects with applicable accounting requirements
with respect thereto as of their respective dates, (iii) have been
prepared in accordance with GAAP
applied on a consistent basis throughout the periods indicated and consistent
with each other, (iv) fairly present the consolidated financial condition
of the Company at the dates therein indicated and the consolidated results of
operations and cash flows of the Company for the periods therein specified, and
(v) are true, complete and correct in all material respects.

 

3.6.3.          The Company has no obligations or liabilities
of any nature (matured or un-matured, absolute or accrued, fixed or contingent
or otherwise) other than (i) those set forth or adequately provided for in
the balance sheet included in the Financial Statements as of December 31,
2006 (the “Company Balance Sheet”), and (ii) those
incurred in the conduct of the Company’s business since December 31, 2006
(the “Company Balance Sheet Date”) in the
ordinary course, consistent with past practice, which are of the type that
ordinarily recur and, individually or in the aggregate, are not material in
nature or amount and do not result from any breach of Contract, tort or
violation of law.  Except for obligations
and liabilities reflected in the Financial Statements, the Company has no off
balance sheet obligation or liability of any nature (matured or un-matured,
fixed or contingent) to, or any financial interest in, any third party or
entities (including the Sellers and any of their Affiliates), the purpose or
effect of which is to defer, postpone, reduce or otherwise avoid or adjust the
recording of debt expenses incurred by the Company.  All reserves that are set forth in or
reflected in the Company Balance Sheet have been established in accordance with
GAAP consistently applied and are adequate.

 

3.6.4.          The Company has established and maintains a
system of internal accounting controls sufficient to provide reasonable
assurances (i) that transactions, receipts and expenditures of the Company
are being executed and made only in accordance with appropriate authorizations
of management of Company, (ii) that transactions are recorded as necessary
(A) to permit preparation of financial statements in conformity with GAAP
and (B) to maintain accountability for assets, (iii) regarding
prevention or timely detection of unauthorized acquisition, use or disposition
of the assets of Company, and (iv) that the amount recorded for assets on
the books and records of the Company is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.  Neither the Company,
Company’s independent auditors, nor to the Company’s knowledge, any current or
former employee, consultant or manager (or director, as the case may be) of
Company, has identified or been made aware of any fraud, whether or not
material, that involves Company’s management or other current or former
employees, consultants, managers of Company who have a role in the preparation
of financial statements or the internal accounting controls utilized by the Company,
or any claim or allegation regarding any of the foregoing.  Neither the Company nor, to the Company’s
knowledge, any manager, officer, employee, auditor, accountant or
representative of the Company has received or otherwise had or obtained knowledge
of any material complaint, allegation, assertion or claim, whether written or
oral, in each case, regarding deficient accounting or auditing practices,
procedures, methodologies or methods of the Company or its internal accounting
controls or any material inaccuracy in the Company’s financial statements.  No attorney representing the Company, whether
or not employed by the Company, has reported to Company’s management or any
committee thereof or to any manager or officer of the Company evidence of a
material violation of securities laws, breach of fiduciary duty or similar
violation by the Company or any of its officers, managers, employees or
agents.  There are no significant
deficiencies or material weaknesses in the design or operation of the Company’s
internal controls, which could adversely affect the Company’s ability to
record, process, summarize and report financial data.  There has been no change in the Company
accounting policies since 

 

 

the Company’s inception, except
as described in the Financial Statements.

 

3.6.5.          Schedule 3.6.5
of the Disclosure Schedule sets forth the names, account number, account type
and locations of all banks, trust companies, savings and loan associations and
other financial institutions at which the Company maintain accounts of any
nature and the names of all persons authorized to draw thereon or make
withdrawals therefrom.

 

3.6.6.          Schedule 3.6.6
of the Disclosure Schedule accurately lists all indebtedness of Company for
money borrowed (“Company Debt”),
including, for each item of Company Debt, the Contract governing the Company
Debt, the Person to whom it is owed, the interest rate, maturity date and any
assets or properties securing such Company Debt.  All Company Debt may be prepaid at the
Closing without penalty under the terms of the Contracts governing such Company
Debt.

 

3.7.             Absence
of Certain Changes.  Since
the Company Balance Sheet Date,
the Company has conducted its business only in the ordinary course consistent
with past practice and:

 

3.7.1.          there has not been any Material Adverse
Effect with respect to the Company, and no event has occurred or circumstance
has arisen that, in combination with any other events or circumstances, would
have or would reasonably be expected to have or result in a Company Material
Adverse Effect;

 

3.7.2.          the Company has not made nor entered into any
Contract or letter of intent with respect to any acquisition, sale or transfer
of any asset of the Company (other than the sale or nonexclusive license of
Company Products to its customers in the ordinary course of its business
consistent with its past practice);

 

3.7.3.          except as required by GAAP, there has not
occurred any change in accounting methods or practices (including any change in
depreciation or amortization policies or rates or revenue recognition policies)
by the Company or any revaluation by the Company of any of its assets;

 

3.7.4.          there has not occurred any declaration,
setting aside, or payment of a dividend or other distribution with respect to
any securities of the Company, or any direct or indirect redemption, purchase
or other acquisition by the Company of any of its securities, or any change in
any rights, preferences, privileges or restrictions of any of its outstanding
securities, except pursuant to Section  1.2.2.2 hereof;

 

3.7.5.          the Company has not entered into, amended or
terminated any Material Contract, and there has not occurred any default under
any Material Contract to which the Company is a party or by which it is, or any
of its assets and properties are, bound;

 

3.7.6.          there has not occurred any amendment or
change to the Charter Documents of the Company;

 

3.7.7.          there has not occurred any increase in or
modification of the compensation or benefits payable or to become payable by
the Company to any of its managers, officers, employees or consultants (other
than increases in the base salaries of employees who are not officers in an
amount that does not exceed 3% of such base salaries), any material
modification of any “nonqualified deferred compensation plan” within the
meaning of Section 409A of the Code and Internal Revenue Service Notice
2005-1, or any new loans or extension of existing loans to any such Persons
(other than routine expense advances to employees of the Company consistent
with past practice), and the Company has not entered into any Contract to grant
or provide (nor has granted any) severance, acceleration of vesting or 

 

 

other similar benefits to any
such Persons;

 

3.7.8.          there has not occurred any change in title,
office or position, or material reduction in the responsibilities of, or change
in identity with respect to the management, supervisory or other key personnel
of the Company, any termination of employment of any such employees, or any
labor dispute or claim of unfair labor practices involving the Company;

 

3.7.9.          the Company has not incurred, created or
assumed any Encumbrance (other than a Permitted Encumbrance) on any of its
assets or properties, any liability or obligation for borrowed money or any
liability or obligation as guaranty or surety with respect to the obligations
of any other Person;

 

3.7.10.        the Company has not paid or discharged any
Encumbrance or liability which was not shown on the Company Balance Sheet or
incurred in the ordinary course of business consistent with past practice since
the Company Balance Sheet Date;

 

3.7.11.        the Company has not incurred any liability to
its employees, managers (or directors, as the case may be), officers or Members
(other than liabilities to pay compensation or benefits in connection with
services rendered in the ordinary course of business, consistent with past
practice);

 

3.7.12.        the Company has not made any deferral of the
payment of any accounts payable other than in the ordinary course of business,
consistent with past practice, or in an amount in excess of $25,000, or given
any discount, accommodation or other concession other than in the ordinary
course of business, consistent with past practice, in order to accelerate or
induce the collection of any receivable,

 

3.7.13.        the Company has not made any material change in
the manner in which it extends discounts, credits or warranties to customers or
otherwise deals with its customers;

 

3.7.14.        there has been no material damage, destruction
or loss, whether or not covered by insurance, affecting the assets, properties
or business of the Company;

 

3.7.15.        there has been no material change in the
monthly traffic metrics information on each Company Web Site individually or in
the aggregate, according to the parameters requested by Purchaser in connection
with Schedule 3.12.32(i) of
the Disclosure Schedule or in the number of registered users of each of Company
Web Site;

 

3.7.16.        the Company has not (i) sold, disposed of,
transferred or licensed to any Person any rights to any Company IP Rights
(other than licenses of Company Products in the ordinary course of business
consistent with past practice), (ii) sold, disposed of, transferred or
provided a copy of any Company Source Code to any Person, (iii) established
a Subsidiary, or (iv) has acquired or licensed from any Person any
Intellectual Property (other than licenses in the ordinary course of business
consistent with past practice; and

 

3.7.17.        there has not occurred any announcement of, any
negotiation by or any entry into any Contract by the Company or any Subsidiary
to do any of the things described in the preceding clauses 3.7.1 through 3.7.16
(other than negotiations and agreements with Purchaser and its representatives
regarding the transactions contemplated by this Agreement).

 

3.8.             Litigation.  There is no private or governmental action,
suit, proceeding, claim, mediation, arbitration or investigation pending before
any Governmental Entity, or threatened in writing, 

 

 

or, to the knowledge of the Company, otherwise threatened against the
Company or any of its assets or properties or any of their respective managers,
officers or employees (in their capacities as such or relating to their
employment, services or relationship with the Company), nor, to the knowledge
of the Company, is there any reasonable basis for any such action, suit,
proceeding, claim, mediation, arbitration or investigation.  There is no judgment, decree, injunction or
order against the Company, any of its assets or properties, or, to the
knowledge of the Company, any of their respective managers, officers or
employees (in their capacities as such or relating to their employment,
services or relationship with the Company). 
To the knowledge of the Company, there is no reasonable basis for any
Person to assert a claim against the Company based upon the Company entering
into this Agreement or any of the other transactions or agreements contemplated
hereby.  The Company has no action, suit,
proceeding, claim, mediation, arbitration or investigation pending against any
other Person, nor is it a party to, or subject to the provisions of, any
judgment, order, writ, injunction, decree or award of any court, arbitrator or
governmental or regulatory official, body or authority.

 

3.9.             Restrictions
on Business Activities. 
There is no Contract, judgment, injunction, order or decree binding upon
the Company which has or would reasonably be expected to have, whether before
or after consummation of the transaction contemplated hereby, the effect of
prohibiting or impairing any current or presently proposed business practice of
the Company, any acquisition of property by the Company or the conduct of
business by the Company as currently conducted or as presently proposed to be
conducted by the Company.

 

3.10.           Compliance with Laws; Governmental Permits.

 

3.10.1.        The Company has complied in all material
respects with, is not in material violation of, and has not received any
notices of violation with respect to, any Legal Requirement with respect to the
conduct of its business or the ownership or operation of its business
(including the keeping of all required registers and timely filing or delivery
of all required documents under the provisions of any applicable Legal
Requirement), except as set forth in Schedule 3.10.1
of the Disclosure Schedule. 
Neither the Company nor any manager, officer, Affiliate or employee
thereof (in their capacities as such or relating to their employment, services
or relationship with the Company), has given, offered, paid, promised to pay or
authorized payment of any money, any gift or anything of value, with the
purpose of influencing any act or decision of the recipient in his or her
official capacity or inducing the recipient to use his or her influence to
affect an act or decision of a government official or employee, to any (i) governmental
official or employee, (ii) political party or candidate thereof, or (iii) Person
while knowing that all or a portion of such money or thing of value would be
given or offered to a governmental official or employee or political party or
candidate thereof.

 

3.10.2.        The Company has obtained each federal, state,
county, local or foreign governmental consent, license, permit, grant, or other
authorization of a Governmental Entity (a) pursuant to which the Company
currently operates or holds any interest in any of its assets or properties or (b) that
is required for the operation of the Company’s business or the holding of any
such interest (all of the foregoing consents, licenses, permits, grants, and
other authorizations, collectively, the “Company Authorizations”),
and all of the Company Authorizations are in full force and effect.  The Company has not received any notice or
other communication from any Governmental Entity regarding (i) any actual
or possible violation of law or any Company Authorization or any failure to
comply with any term or requirement of any Company Authorization or (ii) any
actual or possible revocation, withdrawal, suspension, cancellation,
termination or modification of any Company Authorization.  None of the Company Authorizations will be
terminated or impaired, or will become terminable, in whole or in part, as a
result of the consummation of the transactions contemplated by this Agreement.

 

3.11.           Title
to Property and Assets. 
The Company has good and valid title to all of their 

 

 

respective properties, and interests in properties and assets, real and
personal, reflected on the Company Balance Sheet or acquired after the Company
Balance Sheet Date (except properties and assets, or interests in properties
and assets, sold or otherwise disposed of since the Company Balance Sheet Date
in the ordinary course of business consistent with past practice), or, with
respect to leased properties and assets, valid leasehold interests in such
properties and assets which afford the Company valid leasehold possession of
the properties and assets that are the subject of such leases, in each case,
free and clear of all Encumbrances, except (i) Permitted Encumbrances
incurred in the ordinary course of business consistent with past practice for
obligations not past due, (ii) such imperfections of title and
non-monetary Encumbrances as do not and will not detract from or interfere with
the use of the properties subject thereto or affected thereby, or otherwise impair
business operations involving such properties, and (iii) liens securing
indebtedness that is reflected on the Company Balance Sheet, if any.  The plant, property and equipment of each of
the Company that are used in the operations of its business are (i) in
good operating condition and repair, subject to normal wear and tear and (ii) not
obsolete, dangerous or in need of renewal or replacement, except for renewal or
replacement in the ordinary course of business, consistent with past
practice.  All properties used in the
operations of the Company are reflected on the Company Balance Sheet to the
extent required under GAAP to be so reflected. 
Schedule 3.11 of the
Disclosure Schedule identifies each parcel of real property leased or
sub-leased by the Company.  The Company
has adequate rights of ingress and egress into any real property used in the
operation of their respective businesses. 
The Company has heretofore provided to Purchaser true, correct and
complete copies of all leases, subleases and other Contracts under which the
Company uses or occupies or has the right to use or occupy, now or in the
future, any real property or facility, including all modifications, amendments
and supplements thereto.  The Company
does not currently owns any real property or any tenant improvement.

 

3.12.           Intellectual Property and Internet Practices.

 

3.12.1.        As used in this Agreement, the following terms
shall have the meanings indicated below:

 

3.12.1.1.    “Intellectual Property” means any and all statutory or common
law worldwide industrial and intellectual property rights and all rights
associated therewith, including all patents and applications therefor and all
reissues, divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof, all inventions (whether patentable or not),
invention disclosures, improvements, trade secrets, proprietary information,
know how, technology, technical data, proprietary processes and formulae,
algorithms, specifications, customer lists and supplier lists, all industrial
designs and any registrations and applications therefor, all trademarks, trade
names, trade dress, logos, and service names and marks (in each case whether or
not registered) and registrations and applications therefore and the right to file
applications for the registration thereof, Internet domain names, Internet and
World Wide Web URLs or addresses, all copyrights (whether or not registered),
registrations and applications therefor and the right to file applications for
registration thereof, and all other rights corresponding thereto, all computer
software, including all source code, object code, firmware, development tools,
files, records, documentation, screen displays, layouts, and data, test
methodologies, emulation and simulation tools and reports, all databases and
data collections and all rights therein, all publicity and privacy rights, and
all moral and economic rights of authors and inventors, however denominated,
and any similar or equivalent rights to any of the foregoing, arising under the
laws of the United States of America, any state thereof, or any other country
or province, and all tangible embodiments of the foregoing (in whatever form).

 

3.12.1.2.            “Company IP Rights” means any and all Intellectual
Property used in the conduct of the business of the Company as currently
conducted or as currently 

 

 

proposed to be conducted by the
Company, including, without limitation, Intellectual Property currently under
development by or for the Company (whether or not in collaboration with another
Person).

 

3.12.1.3.            “Company-Owned IP Rights” means Company IP
Rights that are owned or are purportedly owned by or exclusively licensed to
the Company, including, but not limited to, Company Registered Intellectual
Property.

 

3.12.1.4.            “Company Registered Intellectual Property”
means all United States, international and foreign: (A) patents and patent
applications (including provisional applications all reissues, divisions,
renewals, extensions, continuations and continuations-in-part thereof); (B) registered
trademarks and service marks, applications to register trademarks and service
marks, intent-to-use applications, and other registrations and applications
related to trademarks or service marks; (C) registered Internet domain
names and Internet and World Wide Web URLs or addresses; (D) registered
copyrights and applications for copyright registration; and (E) any other
Intellectual Property that is the subject of an application, certificate,
filing, registration or other document issued, filed with, or recorded by any
governmental authority owned by, registered or filed in the name of, the
Company.

 

3.12.1.5.            “Third Party Intellectual Property Rights”
means any Intellectual Property owned by a third party.

 

3.12.1.6.            “Company
Products” means all products and services produced, marketed,
licensed, sold, distributed or performed by or on behalf of the Company and all
products and services currently under development by the Company.

 

3.12.1.7.            “Company Source Code” means, collectively,
all software source code and specifications and designs and all material
proprietary information and algorithms contained in or relating to any software
source code or specifications or designs, of any Company-Owned IP Rights or
Company Products.

 

3.12.2.        The Company (i) owns and has independently
developed or acquired, or (ii) has the valid right or license to all
Company IP Rights.  The Company IP Rights
are sufficient for the conduct of the business of the Company as currently
conducted and as currently proposed to be conducted by the Company.

 

3.12.3.        The Company has not transferred ownership of
any Intellectual Property that is or was Company-Owned IP Rights to any third
party, or knowingly permitted the Company’s rights in any Intellectual Property
that is or was Company-Owned IP Rights to enter the public domain or, with
respect to any Intellectual Property for which the Company has submitted an
application or obtained a registration, lapse (other than through the
expiration of registered Intellectual Property at the end of its maximum
statutory term).

 

3.12.4.        The Company owns and has good and exclusive
title to each item of Company-Owned IP Rights and each item of Company
Registered Intellectual Property, free and clear of any Encumbrances (other
than Permitted Encumbrances).  The right,
license and interest of the Company in and to all Third Party Intellectual
Property Rights licensed by the Company from a third party are free and clear
of all Encumbrances (excluding restrictions contained in the applicable license
agreements with such third parties and Permitted Encumbrances).

 

3.12.5.        Neither the execution and delivery or
effectiveness of this Agreement nor the 

 

 

performance of the Company’s obligations under this Agreement will
cause the forfeiture or termination of, or give rise to a right of forfeiture
or termination of any Company-Owned IP Right, or impair the right of the
Company or Purchaser to use, possess, sell or license any Company-Owned IP
Right or portion thereof.  After the
Closing, all Company-Owned IP Rights will be fully transferable, alienable or
licensable by Purchaser without restriction and without payment of any kind to
any third party.

 

3.12.6.        Schedule 3.12.6
of the Disclosure Schedule lists all Company Registered Intellectual Property
including the jurisdictions in which each such item of Intellectual Property
has been issued or registered (including, without limitation, the “whois”
lookup with respect to domain names) or in which any application for such
issuance and registration has been filed, or in which any other filing or
recordation has been made.  Schedule 3.12.6 of the Disclosure Schedule
sets forth a list of all actions that are required to be taken by the Company
within 120 days of the date of signing the Original Purchase Agreement with
respect to any of the Company Registered Intellectual Property in order to
avoid prejudice to, impairment or abandonment of such Company Registered
Intellectual Property.

 

3.12.7.        All
statements and representations made by the Company in any pending copyright,
trademark, service mark, or patent applications, filings or registrations were
true in all material respects as of the time they were made.  Each item of Company Registered
Intellectual Property is valid and subsisting (or in the case of applications,
applied for), all registration, maintenance and renewal fees currently due in
connection with such Company Registered Intellectual Property have been paid
and all documents, recordations and certificates in connection with such
Company Registered Intellectual Property currently required to be filed have
been filed with the relevant patent, copyright, trademark or other authorities
in the United States or foreign jurisdictions, as the case may be, for the
purposes of prosecuting, maintaining and perfecting such Company Registered
Intellectual Property and recording the Company’s ownership interests therein.

 

3.12.8.        The Company is not nor shall it be as a result
of the execution and delivery or effectiveness of this Agreement or the
performance of the Company’s obligations under this Agreement, in breach of any
Contract governing any Company IP Rights (the “Company IP Rights Agreements”) and the consummation of the
transactions contemplated by this Agreement will not result in the
modification, cancellation, termination, suspension of, or acceleration of any
payments with respect to the Company IP Rights Agreements, or give any
non-Company party to any Company IP Rights Agreement the right to do any of the
foregoing.  Following the Closing, the Company
(as wholly-owned, directly or indirectly, by Purchaser) will be permitted to
exercise all of the Company’s rights under the Company IP Rights Agreements to
the same extent the Company would have been able to had the transactions
contemplated by this Agreement not occurred and without the payment of any
additional amounts or consideration other than ongoing fees, royalties or
payments which the Company would otherwise be required to pay.

 

3.12.9.        None of the Company IP Rights Agreements grants
any third party exclusive rights to or under any Company IP Rights or grants
any third party the right to sublicense any Company IP Rights.

 

3.12.10.      There are no royalties, honoraria, fees or other
payments payable by the Company to any Person (other than salaries payable to
employees, consultants and independent contractors not contingent on or related
to use of their work product) as a result of the ownership, use, possession,
license-in, license-out, sale, marketing, advertising or disposition of any
Company-Owned IP Rights by the Company.

 

3.12.11.      To the knowledge of the Company, there is no
unauthorized use, unauthorized disclosure, infringement or misappropriation of
any Company-Owned IP Rights, by any third party, 

 

 

including any employee or former employee of the Company.  The Company has not brought any action, suit
or proceeding for infringement or misappropriation of any Intellectual Property
or breach of any Company IP Rights Agreement.

 

3.12.12.      The Company has not been sued in any suit, action
or proceeding (or received any written notice or, to the knowledge of the
Company, threat) which involves a claim of infringement or misappropriation of
any Intellectual Property right of any third party or which contests the
validity, ownership or right of the Company to exercise any Intellectual
Property right.  The Company has not
received any written communication that involves an offer to license or grant
any other rights or immunities under any Third Party Intellectual Property
Right.

 

3.12.13.      The operation of the business of the Company as
such business is currently conducted and as currently proposed to be conducted
by the Company, including (i) the design, development, manufacturing,
reproduction, marketing, licensing, sale, offer for sale, importation,
distribution, provision and/or use of any Company Product and (ii) the
Company’s use of any product, device or process used in the business of the
Company as previously conducted, as currently conducted and as currently
proposed to be conducted by the Company, does not and will not infringe or
misappropriate the Intellectual Property of any third party and does not
constitute unfair competition or unfair trade practices under the laws of any
jurisdiction and there is no substantial basis for a claim that the design,
development, manufacturing, reproduction, marketing, licensing, sale, offer for
sale, importation, distribution, provision and/or use of any Company Product or
the operation of the business of the Company is infringing or has infringed on
or misappropriated any Intellectual Property of a third party.

 

3.12.14.      None of the Company-Owned IP Rights, the Company
Products, the Company is subject to any proceeding or outstanding order,
Contract or stipulation (A) restricting in any manner the use, transfer,
or licensing by the Company of any Company-Owned IP Right or any Company
Product, or which may affect the validity, use or enforceability of any such
Company-Owned IP Right or Company Product, or (B) restricting the conduct
of the business of the Company in order to accommodate third party Intellectual
Property rights.

 

3.12.15.      The Company has not received any opinion of
counsel that any Company Product or the operation of the business of the
Company, as previously or currently conducted, or as currently proposed to be
conducted by the Company, infringes or misappropriates any Third Party
Intellectual Property Rights.

 

3.12.16.      The Company has secured from all of its
consultants, employees and independent contractors who independently or jointly
contributed to the conception, reduction to practice, creation or development
of any Company-Owned IP Rights unencumbered and unrestricted exclusive
ownership of, all such third party’s Intellectual Property in such contribution
that the Company does not already own by operation of law and such third party
has not retained any rights or licenses with respect thereto.  Without limiting the foregoing, the Company
has obtained proprietary information and invention disclosure and assignment
agreements from all current and former employees and consultants of the
Company.

 

3.12.17.      No current or former employee, consultant or
independent contractor of the Company: (i) is in violation of any term or
covenant of any Contract relating to employment, invention disclosure,
invention assignment, non-disclosure or non-competition or any other Contract
with any other party by virtue of such employee’s, consultant’s or independent
contractor’s being employed by, or performing services for, the Company or
using trade secrets or proprietary information of others without permission; or
(ii) has developed any technology, software or other copyrightable,
patentable or otherwise 

 

 

proprietary work for the Company that is subject to any agreement under
which such employee, consultant or independent contractor has assigned or
otherwise granted to any third party any rights (including Intellectual
Property rights) in or to such technology, software or other copyrightable,
patentable or otherwise proprietary work.

 

3.12.18.      The employment of any employee of the Company or
the use by the Company of the services of any consultant or independent
contractor does not subject the Company to any liability to any third party for
improperly soliciting such employee, consultant or independent contractor to
work for the Company, whether such liability is based on contractual or other
legal obligations to such third party. 
No current or former employee, consultant or independent contractor of
the Company has any right, license, claim or interest whatsoever in or with
respect to any Company-Owned IP Rights.

 

3.12.19.      To the extent that any Intellectual Property that
is or was a Third Party Intellectual Property Right is incorporated into,
integrated or bundled with, or used by the Company in the development,
manufacture or compilation of any of the Company Products, the Company has a
written agreement with such third party with respect thereto pursuant to which
the Company either (A) has obtained complete, unencumbered and
unrestricted ownership of, and is the exclusive owners of such Intellectual
Property by operation of law or by valid assignment, or (B) has obtained
perpetual, assignable and non terminable (other than for breach) licenses
(sufficient for the conduct of its business as currently conducted by the
Company and as currently proposed to be conducted by the Company) to all such
Third Party Intellectual Property Rights.

 

3.12.20.      The Company has taken all commercially reasonable
steps to protect and preserve the confidentiality of all confidential or
non-public information included in the Company IP Rights (“Confidential
Information”).  All use,
disclosure or appropriation of Confidential Information owned by the Company to
a third party has been pursuant to the terms of a written Contract between the
Company and such third party.  All use,
disclosure or appropriation of Confidential Information by the Company not
owned by the Company has been pursuant to the terms of a written agreement
between the Company and the owner of such Confidential Information, or is
otherwise lawful.  All current and former
employees and consultants of the Company having access to Confidential
Information or proprietary information of any of their respective customers or
business partners have executed and delivered to the Company an agreement
regarding the protection of such Confidential Information or proprietary
information (in the case of proprietary information of the Company’s customers
and business partners, to the extent required by such customers and business
partners).

 

3.12.21.      Schedule 3.12.21
of the Disclosure Schedule lists all software or other material that is
distributed as “free software”, “open source software” or under a similar
licensing or distribution terms (including but not limited to the GNU General
Public License (GPL), GNU Lesser General Public License (LGPL), Mozilla Public
License (MPL), BSD licenses, the Artistic License, the Netscape Public License,
the Sun Community Source License (SCSL) the Sun Industry Standards License
(SISL) and the Apache License) (“Open Source
Materials”) used by the Company in any way.  The Company is in compliance with the terms
and conditions of all licenses for the Open Source Materials.

 

3.12.22.      The Company has not (i) incorporated Open
Source Materials into, or combined Open Source Materials with, the Company IP
Rights or Company Products; (ii) distributed Open Source Materials in
conjunction with any Company IP Rights or Company Products; or (iii) used
Open Source Materials, in such a way that, with respect to (i), (ii), or (iii),
creates, or purports to create obligations for the Company with respect to any
Company IP Rights or grant, or purport to grant, to any third party, any rights
or immunities under any Company IP Rights (including using any Open Source
Materials that require, as a condition of use, modification and/or distribution
of such Open Source Materials that other software incorporated into, derived
from or distributed with such Open Source 

 

 

Materials be (A) disclosed or distributed in source code form, (B) be
licensed for the purpose of making derivative works, or (C) be
redistributable at no charge).

 

3.12.23.      All Company Products sold, licensed, leased or
delivered by the Company to customers and all services provided by or through
the Company to customers on or prior to the Closing Date conform to applicable
contractual commitments, express and implied warranties (to the extent not
subject to legally effective express exclusions thereof), and to any
representations provided to customers and conform in all material respects to
packaging, advertising and marketing materials and to applicable product or
service specifications or documentation. 
The Company has no liability (and, to the knowledge of the Company,
there is no legitimate basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim or demand against
the Company giving rise to any material liability relating to the foregoing
Contracts) for replacement or repair thereof or other damages in connection
therewith in excess of any reserves therefor reflected on the Company Balance
Sheet.

 

3.12.24.      The Company has provided Purchaser with all
documentation and notes relating to the testing of all Company Products.  The Company has documented all bugs, errors
and defects in all the Company Products, and such documentation is retained and
is available internally at the Company. 
All Company Products are free from any material defect, bug, virus, time
bomb, Trojan horse, backdoor or programming, design or documentation error and
operate and run in a reasonable manner.

 

3.12.25.      For all software used by the Company in providing
services, or in developing or making available any of the Company Products, the
Company has implemented any and all security patches or upgrades that are
generally available for that software.

 

3.12.26.      No (i) government funding; (ii) facilities
of a university, college, other educational institution or research center; or (iii) funding
from any Person (other than funds received in consideration for the Membership
Interests) was used in the development of the Company-Owned IP Rights.  No current or former employee, consultant or
independent contractor of the Company, who was involved in, or who contributed
to, the creation or development of any Company-Owned IP Rights, has performed
services for or otherwise was under restrictions resulting from his/her
relations with any government, university, college or other educational
institution or research center during a period of time during which such
employee, consultant or independent contractor was also performing services for
the Company.

 

3.12.27.      Neither the Company nor any other Person then
acting on its behalf has disclosed, delivered or licensed to any Person, agreed
to disclose, deliver or license to any Person, or permitted the disclosure or
delivery to any escrow agent or other Person of, any Company Source Code.  No event has occurred, and no circumstance or
condition exists, that (with or without notice or lapse of time, or both) will,
or would reasonably be expected to, result in the disclosure, delivery or
license by the Company or any Person then acting on its behalf to any Person of
any Company Source Code.  Schedule 3.12.27 of the Disclosure
Schedule identifies each Contract pursuant to which the Company has deposited,
or is or may be required to deposit, with an escrow holder or any other Person,
any of the Company Source Code, and describes whether the execution of this
Agreement or any of the transactions contemplated by this Agreement, in and of
itself, would reasonably be expected to result in the release from escrow of
any Company Source Code.

 

3.12.28.      The Company is not now and has never been a
member or promoter of, or a contributor to, any industry standards body or any
similar organization that could reasonably be expected to require or obligate
any of the Company to grant or offer to any other Person any license or right
to any Company-Owned IP Rights.

 

 

3.12.29.      The Company has implemented and maintains a comprehensive
security plan which (i) identifies internal and external risks to the
security of the Confidential Information, including personally identifiable
information; (ii) implements, monitors and improves adequate and effective
administrative, electronic and physical safeguards to control those risks; and (iii) maintains
notification procedures in compliance with applicable Legal Requirements in the
case of any breach of security compromising unencrypted data containing
personally identifiable information.  The
Company has not experienced any breach of security or otherwise unauthorized
access by third parties to the Confidential Information, including personally
identifiable information in the Company’s possession, custody or control, or to
any Company Product.

 

3.12.30.      The Company (i) has not collected, and is
not collecting, any personally identifiable information from any third parties,
(ii) is in compliance with their respective internal privacy policies and
terms of use, (iii) has not and does not, directly or indirectly, deliver
or has third parties deliver unsolicited electronic mails, nor place metatags
in a manner that infringes rights of third parties, (iv) complies with the
safe harbor requirements of the United States Designated Agent Filings For Safe
Harbor Under Digital Millennium Copyright Act of 1998, (v) does not
provide goods or services that are regulated or are intended only for adults,
or prohibited or controlled in any jurisdictions, and (vi) does not
knowingly collect personally identifiable information from anyone under the age
of 13 and comply with the requirements of the United States Children’s Online
Privacy Protection Act of 1998, as amended. Third parties’ content (including
without limitation text, graphics and technology) included in, or linked to by,
the websites maintained by the Company and the Subsidiary is properly licensed
for electronic posting, distribution, storage and all other intended uses by
the Company and users of all such websites.

 

3.12.31.      The Company has complied with all applicable
Legal Requirements and their respective internal and public privacy policies
relating to the use, collection, storage, disclosure and transfer of any
personally identifiable information collected by the Company or by third parties
having authorized access to the records of the Company.  The execution, delivery and performance of
this Agreement, will comply with all applicable Legal Requirements relating to
privacy and with the Company’s privacy policies.  The Company has not received a complaint
regarding the Company’s collection, use or disclosure of personally
identifiable information.

 

3.12.32.      Schedule 3.12.32(i) of
the Disclosure Schedule sets forth true and accurate monthly traffic metrics
information on each Company Web site, individually and in the aggregate,
according to the parameters requested by Purchaser and reflects, in all
material respects, the actual use of each Company Web Site by its respective
users for the periods covered by such metrics. 
The number of registered users of each Company Web Site, as of July 5,
2007, is as set forth in Schedule 3.12.32(ii) of
the Disclosure Schedule.

 

3.13.     Environmental
Matters.  (i) All
Hazardous Materials and wastes of the Company has been disposed of in
accordance in all material respects with all Environmental and Safety Laws; (ii) 
the Company has not received any notice of any noncompliance of the Facilities
or its past or present operations with Environmental and Safety Laws; (iii) no
notices, administrative actions or suits are pending or threatened relating to
an actual or alleged violation of any applicable Environmental and Safety Laws
by the Company; (iv) the Company is not a potentially responsible party
under the federal Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, or any analogous state, local or foreign
laws arising out of events occurring prior to the Closing Date; (v) to the
Company’s knowledge, there have not been in the past, and are not now, any
Hazardous Materials on, under or migrating to or from any of the Facilities or
any Property; (vi) to the Company’s knowledge, there have not been in the
past, and are not now, any underground tanks or underground improvements at, on
or under any Property, including treatment or storage tanks, sumps, or water,
gas or oil wells; and (vii) the Company’s uses and activities at its
Facilities have at all times materially complied with all 

 

 

Environmental and Safety Laws.

 

3.14.           Tax Matters.

 

3.14.1.        The Company and any consolidated, combined,
unitary or aggregate group for Tax purposes of which the Company is or has been
a member, have properly completed and timely filed all Tax Returns required to
be filed by them and have timely paid all Taxes whether or not shown on any Tax
Return.  All Tax Returns were complete
and accurate and have been prepared in substantial compliance with all
applicable Legal Requirements.  All
amounts shown on the Tax Returns to be due on or before the Closing Date have
been or will be paid on or before the Closing Date.  The Company has disclosed on its income Tax
Returns in any year for which the statute of limitations has not expired all
positions that would reasonably be expected to give rise to a material understatement
penalty or any similar Legal Requirement.

 

3.14.2.        The Company has delivered or made available to
Purchaser (i) complete and correct copies of all Tax Returns of the
Company relating to Taxes for all taxable periods including related workpapers,
(ii) all foreign statutory accounts of the Company, and (iii) complete
and correct copies of all private letter rulings, revenue agent reports,
information document requests, notices of proposed deficiencies, deficiency
notices, protests, petitions, closing agreements, settlement agreements, pending
ruling requests and any similar documents submitted by, received by, or agreed
to by or on behalf of the Company relating to Taxes for all taxable periods for
which the statute of limitations has not yet expired.  The Company has not been informed by any
jurisdiction that the jurisdiction believes that the Company was required to
file any Tax Return that was not filed.

 

3.14.3.        The Company Balance Sheet reflects all
liability for unpaid Taxes of the Company for periods (or portions of periods)
through the Company Balance Sheet Date. 
The Company has no liability for unpaid Taxes accruing after the Company
Balance Sheet Date except for Taxes arising in the ordinary course of business
subsequent to the Company Balance Sheet Date.

 

3.14.4.        There is (i) no claim for Taxes being
asserted against the Company that has resulted in a lien against the property
of the Company other than liens for Taxes not yet due and payable, (ii) no
audit or pending audit of, or Tax controversy associated with, any Tax Return
of the Company being conducted by a Tax Authority, (iii) no extension of
any statute of limitations on the assessment of any Taxes granted by the
Company currently in effect, and (iv) no agreement by the Company to any
extension of time for filing any Tax Return which has not been filed.

 

3.14.5.        The Company has not been, nor will it be,
required to include any material adjustment in taxable income for any tax
period (or portion thereof) ending after the Closing Date as a result of
transactions or events occurring, or accounting methods employed, prior to the
Closing.

 

3.14.6.        The Company (i) is not a party to nor
bound by any Tax sharing, Tax indemnity, or Tax allocation agreement, nor does
the Company has any liability or potential liability to another party under any
such agreement; (ii) is not liable for Taxes of any other Person pursuant
to any Contract or any Legal Requirement, nor is it currently under any
contractual obligation to indemnify any Person with respect to any amounts of
such Person’s Taxes or is a party to any Contract providing for payments by an
Acquired Corporation with respect to any amount of Taxes of any other Person; (iii) has
not requested nor received a ruling from any Tax authority or signed a closing
or other agreement with any Tax authority, nor has any the Company or anyone
acting on its behalf requested or received a ruling from any Taxation Authority
or signed a closing or other agreement with any Taxation Authority.

 

3.14.7.        No written notice has ever been delivered by
any Governmental Entity to the

 

 

Company in a jurisdiction where it does not file a Tax Return that
claims that it is or may be subject to taxation by that jurisdiction which has
resulted or could reasonably be expected to result in an obligation to pay
material Taxes. The Company has in its possession official foreign government
receipts for any Taxes paid by it to any foreign Tax Authorities.

 

3.14.8.        The Company has provided to the Purchaser all
documentation relating to any applicable Tax holidays or incentives.  The Company is in compliance with the
requirements for any applicable Tax holidays or incentives and none of the Tax
holidays or incentives will be jeopardized by the transaction contemplated in
this Agreement.

 

3.14.9.        The Company is not nor has it ever been a “United
States real property holding corporation” within the meaning of Section 897
of the Code, and the Company has filed with the Internal Revenue Service all
statements, if any, which are required under Section 1.897-2(h) of
the Treasury Regulations promulgated thereunder.

 

3.14.10.      The Company has complied (and until the Closing
will comply) with all applicable Legal Requirements relating to the payment,
reporting and withholding of Taxes (including withholding of Taxes pursuant to
Sections 1441, 1442, 1445 and 1446 of the Code or similar provisions under any
foreign law), has, within the time and in the manner prescribed by law,
withheld from any payments (including, without limitation, employee wages or
consulting compensation) and paid over to the proper governmental authorities
(or is properly holding for such timely payment) all amounts required to be so
withheld and paid over under all applicable Legal Requirements, including
federal and state income Taxes, Federal Insurance Contribution Act, Medicare,
Federal Unemployment Tax Act, relevant state income and employment Tax
withholding laws, and has timely filed all withholding Tax Returns, for all
periods through and including the Closing Date. 
The Company has collected (and remitted to the proper authorities of any
state or other jurisdiction) and/or paid all sales and/or use Taxes required
under all applicable Legal Requirements to be charged on any transactions that
it has engaged in.

 

3.14.11.      There is no agreement, plan, arrangement or other
Contract covering any current or former employee or other service provider of
the Company or ERISA Affiliate (as defined below) to which the Company is a
party or by which the Company is bound that, considered individually or
considered collectively with any other such agreements, plans, arrangements or
other Contracts, that has resulted, will, or could reasonably be expected to,
result, on account of entering into the transactions contemplated hereby
(whether alone or upon the occurrence of any additional or subsequent events,
including, any termination of employment), in the payment of any amount that
could reasonably be expected to be non-deductible under Section 162 of the
Code (or any corresponding or similar provision of state, local or foreign Tax law)
or characterized as an “excess parachute payment” within the meaning of Section 280G
of the Code (or any corresponding or similar provision of state, local or
foreign Tax law).  Schedule 3.14.11 of the Disclosure
Schedule lists each Person who the Company reasonably believes is, with respect
to the Company and/or any ERISA Affiliate, a “disqualified individual” (within
the meaning of Section 280G of the Code and the regulations promulgated
thereunder), as determined as of the date of signing the Original Purchase
Agreement.

 

3.14.12.      Schedule 3.14.12
of the Disclosure Schedule sets forth each jurisdiction (other than United
States federal) in which the Company files, is required to file or has been
required to file a Tax Return or is or has been liable for any Taxes on a “nexus”
basis and each jurisdiction that has sent notices or communications of any kind
requesting information relating to the Company’s nexus with such jurisdiction.

 

3.14.13.      The Company is not nor has it even been a party
to a transaction or agreement that is in conflict with the Tax rules on
transfer pricing in any relevant jurisdiction.

 

 

3.14.14.      The Company has not consummated, has participated
in, or is currently participating in any transaction which was or is a “Tax
shelter” transaction as defined in Sections 6662, 6011, 6012 or 6111 of the
Code or the Treasury Regulations promulgated thereunder or in similar
provisions of foreign law or which was or is a “Listed Transaction” or a “Reportable
Transaction” as those terms are defined in the Code and the Treasury
regulations thereunder or in similar provisions of foreign law.

 

3.14.15.      Schedule 3.14.15
the Disclosure Schedule sets forth the following information with respect to
the Company as of the most recent practicable date: (i) the basis in its
assets and (ii) the amount of any net operating loss, net capital loss,
unused investment or other credit, unused foreign tax, or excess charitable
contribution allocable to it.

 

3.14.16.      No stock transfer Taxes, sales Taxes,
use Taxes, real estate transfer or gains Taxes or other
similar Taxes will be imposed on the transactions contemplated by this
Agreement.

 

3.14.17.      The Company has always been treated as a
partnership for federal income tax purposes and has not made an election to be
treated as an association taxable as a corporation.

 

3.15.           Employee Benefit Plans and Employee Matters.

 

3.15.1.        Schedule 3.15.1
of the Disclosure Schedule lists, with respect to the Company and any trade or
business (whether or not incorporated) which is treated as a single employer
with the Company (an “ERISA Affiliate”)
within the meaning of Section 414(b), (c), (m) or (o) of the
Code, (i) all “employee benefit plans” within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), (ii) each loan to an employee in excess of
$10,000, (iii) all stock option, stock purchase, phantom stock, stock
appreciation right, supplemental retirement, severance, sabbatical, medical,
dental, vision care, disability, employee relocation, cafeteria benefit (Section 125
of the Code), dependent care (Section 129 of the Code), life insurance or
accident insurance plans, programs or arrangements, (iv) all bonus,
pension, profit sharing, savings, severance, retirement, deferred compensation
or incentive plans, programs or arrangements, (v) all other fringe or
employee benefit plans, programs or arrangements that apply to senior
management and that do not generally apply to all employees, and (vi) all
employment or executive compensation or severance agreements, written or
otherwise, as to which unsatisfied obligations of the Company of greater than
$10,000 remain for the benefit of, or relating to, any present or former
employee, consultant or non-employee manager (or director, as the case may be)
of the Company (all of the foregoing described in clauses (i) through
(vi), collectively, the “Company Employee Plans”,
and each a “Company Employee Plan”).

 

3.15.2.        The Company has furnished to Purchaser a true,
correct and complete copy of each of the Company Employee Plans and related
plan documents (including trust documents, insurance policies or Contracts,
employee booklets, summary plan descriptions and other authorizing documents,
and any material employee communications relating thereto) and has, with
respect to each Company Employee Plan which is subject to ERISA reporting
requirements, provided to Purchaser true, correct and complete copies of the Form 5500
reports filed for the last three plan years. 
Any Company Employee Plan intended to be qualified under Section 401(a) of
the Code has either obtained from the Internal Revenue Service a favorable
determination letter as to its qualified status under the Code, including all
amendments to the Code effected by the Tax Reform Act of 1986 and subsequent
legislation, or has applied (or has time remaining in which to apply) to the
Internal Revenue Service for such a determination letter prior to the
expiration of the requisite period under applicable Treasury Regulations or
Internal Revenue Service pronouncements in which to apply for such
determination letter and to make any amendments necessary to obtain a favorable
determination or has been established under a standardized prototype plan for
which an Internal Revenue Service opinion letter has been obtained by the 

 

 

plan sponsor and is valid as to the adopting employer.  The Company has also provided to Purchaser a
true, correct and complete copy of the most recent Internal Revenue Service
determination or opinion letter issued with respect to each such Company
Employee Plan, and nothing has occurred since the issuance of each such letter
which would reasonably be expected to cause the loss of the Tax-qualified
status of any Company Employee Plan subject to Section 401(a) of the
Code.  The Company has also provided to
Purchaser all registration statements and prospectuses prepared in connection
with each Company Employee Plan.  All
individuals who, pursuant to the terms of any Company Employee Plan, are
entitled to participate in any Company Employee Plan, are currently
participating in such Company Employee Plan or have been offered an opportunity
to do so and have declined in writing. 
No employee of the Company and no person subject to any health plan of
the Company has made medical claims through any such health plan during the 12
months preceding the date of signing the Original Purchase Agreement for more
than $25,000 in the aggregate for which the Company is responsible.  For the purposes of the forgoing sentence,
any exception to such representation and warranty set forth in the Disclosure
Letter shall be stated generally and shall not identify any employee of the
Company or person subject to any health plan of the Company who has made
medical claims.  The Company does not
sponsor or maintain any self-funded employee benefit plan.

 

3.15.3.        None of the Company Employee Plans promises or
provides retiree medical or other retiree welfare benefits to any person other
than as required under the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended (“COBRA”), or
similar state law.  There has been no “prohibited
transaction” (within the meaning of Section 406 of ERISA and Section 4975
of the Code and not exempt under Section 408 of ERISA and regulatory
guidance thereunder) with respect to any Company Employee Plan.  Each Company Employee Plan has been
administered in accordance with its terms and in compliance with the
requirements prescribed by any and all statutes, rules and regulations
(including ERISA and the Code), and the Company and each ERISA Affiliate has
performed all obligations required to be performed by it under, is not in
default under or in violation of, and has no knowledge of any default or
violation by any other party to, any of the Company Employee Plans.  Neither the Company nor any ERISA Affiliate
is subject to any liability or penalty under Sections 4976 through 4980 of the
Code or Title I of ERISA with respect to any of the Company Employee
Plans.  All contributions required to be
made by the Company or any ERISA Affiliate to any Company Employee Plan have
been made on or before their due dates and a reasonable amount has been accrued
for contributions to each Company Employee Plan for the current plan years (and
no further contributions will be due or will have accrued thereunder as of the
Closing Date, other than contributions accrued in the ordinary course of
business, consistent with past practice, after the Company Balance Sheet Date
as a result of the operations of Company after the Company Balance Sheet
Date).  In addition, with respect to each
Company Employee Plan intended to include a Code Section 401(k) arrangement,
the Company and ERISA Affiliates have at all times made timely deposits of
employee salary reduction contributions and participant loan repayments, as
determined pursuant to regulations issued by the United States Department of
Labor.  No Company Employee Plan is
covered by, and neither the Company nor any ERISA Affiliate has incurred or
expects to incur any liability under Title IV of ERISA or Section 412 of
the Code.  Each Company Employee Plan can
be amended, terminated or otherwise discontinued after the Closing in
accordance with its terms, without liability to Purchaser and/or the Company
(other than ordinary administrative expenses typically incurred in a
termination event).  With respect to each
Company Employee Plan subject to ERISA as either an employee pension benefit
plan within the meaning of Section 3(2) of ERISA or an employee
welfare benefit plan within the meaning of Section 3(1) of ERISA, the
Company has prepared in good faith and timely filed all requisite governmental
reports (which were true, correct and complete as of the date filed), including
any required audit reports, and has properly and timely filed and distributed
or posted all notices and reports to employees required to be filed,
distributed or posted with respect to each such Company Employee Plan.  No suit, administrative proceeding, action or
other litigation has been brought, or to the knowledge of the 

 

 

Company, is
threatened, against or with respect to any such Company Employee Plan,
including any audit or inquiry by the Internal Revenue Service or United States
Department of Labor.

 

3.15.4.        With respect to each Company Employee Plan, the
Company has complied with (i) the applicable health care continuation and
notice provisions of COBRA and the regulations (including proposed regulations)
thereunder, (ii) the applicable requirements of the Family Medical and
Leave Act of 1993 and the regulations (including proposed regulations)
thereunder, (iii) the applicable requirements of the Health Insurance
Portability and Accountability Act of 1996 and the regulations (including
proposed regulations) thereunder, (iv) the applicable requirements of the
Americans with Disabilities Act of 1990, as amended and the regulations
(including proposed regulations) thereunder, (v) the Age Discrimination in
Employment Act of 1967, as amended, and (vi) the applicable requirements
of the Women’s Health and Cancer Rights Act of 1998 and the regulations
(including proposed regulations) thereunder.

 

3.15.5.        There has been no amendment to, written
interpretation or announcement (whether or not written) by the Company or any
ERISA Affiliate relating to, or change in participation or coverage under, any
Company Employee Plan which would materially increase the expense of
maintaining such Company Employee Plan above the level of expense incurred with
respect to such Company Employee Plan for the most recent fiscal year included
in the Financial Statements.  No Company
Employee Plan will be subject to any surrender fees or service fees upon
termination other than the normal and reasonable administrative fees associated
with the termination of benefit plans.

 

3.15.6.        Neither the Company nor any current or former
ERISA Affiliate currently maintains, sponsors, participates in or contributes
to, or has ever maintained, established, sponsored, participated in, or
contributed to, any pension plan (within the meaning of Section 3(2) of
ERISA) which is subject to Part 3 of subtitle B of Title I of ERISA, Title
IV of ERISA or Section 412 of the Code. Neither the Company nor any ERISA
Affiliate is a party to, or has made any contribution to or otherwise incurred
any obligation under, any “multiemployer plan” as such term is defined in Section 3(37)
of ERISA or any “multiple employer plan” as such term is defined in Section 413(c) of
the Code.

 

3.15.7.        Each compensation and benefit plan maintained or contributed to by
the Company under the law or applicable custom or rule of the relevant
jurisdiction outside of the United States (each such plan, a “Foreign Plan”) is listed in Schedule 3.15.7 of the Disclosure Schedule.  As regards each Foreign Plan, (i) such
Foreign Plan is in material compliance with the provisions of the Legal
Requirements of each jurisdiction in which such Foreign Plan is maintained, to
the extent those Legal Requirements are applicable to such Foreign Plan, (ii) all
contributions to, and material payments from, such Foreign Plan which may have
been required to be made in accordance with the terms of such Foreign Plan,
and, when applicable, the Legal Requirements of the jurisdiction in which such
Foreign Plan is maintained, have been timely made or shall be made by the
Closing Date, and all such contributions to such Foreign Plan, and all payments
under such Foreign Plan, for any period ending before the Closing Date that are
not yet, but will be, required to be made, are reflected as an accrued
liability on the Company Balance Sheet, (iii) the Company and each ERISA
Affiliate has materially complied with all applicable reporting and notice
requirements, and such Foreign Plan has obtained from the Governmental Entity
having jurisdiction with respect to such Foreign Plan any required determinations,
if any, that such Foreign Plan is in compliance with the Legal Requirements of
the relevant jurisdiction if such determinations are required in order to give
effect to such Foreign Plan, (iv) such Foreign Plan has been administered
in all material respects at all times in accordance with its terms and
applicable Legal Requirements, (v) to the knowledge of the Company, there
are no pending investigations by any governmental body involving such Foreign
Plan, and no pending claims (except for claims for benefits payable in the
normal operation of such Foreign Plan), suits or proceedings against such
Foreign Plan or asserting any rights or claims to benefits under such Foreign
Plan, (vi) the 

 

 

consummation of the transactions contemplated
by this Agreement will not by itself create or otherwise result in any
liability with respect to such Foreign Plan, and (vii) except
as required by applicable Legal Requirements, no condition exists that would
prevent the Company from terminating or amending any Foreign Plan at any time
for any reason in accordance with the terms of each such Foreign Plan without
the payment of any fees, costs or expenses (other than the payment of benefits
accrued through the date of termination and any normal and reasonable expenses
typically incurred in a termination event).  The benefits available under all
Foreign Plans in the aggregate do not provide materially greater benefits to
employees of the Company participating in such plans than the benefits
available under the Company Employee Plans for employees of the Company in the
United States.  No Foreign Plan has
unfunded liabilities that will not be offset by insurance or that are not fully
accrued on the financial statements of the Company in accordance with GAAP.

 

3.15.8.        Schedule 3.15.8
of the Disclosure Schedule lists as of the date of signing the Original
Purchase Agreement each employee of the Company who is not fully available to
perform work because of disability or other leave and also lists, with respect
to each such employee, the basis of such disability or leave and the
anticipated date of return to full service.

 

3.15.9.        None of the execution and delivery of this
Agreement or the consummation of the transaction contemplated hereby or any
termination of employment or service in connection therewith or subsequent
thereto will, individually or together with the occurrence of some other event,
(i) result in any payment (including severance, unemployment compensation,
golden parachute, bonus or otherwise) becoming due to any Person, (ii) materially
increase or otherwise enhance any benefits otherwise payable by the Company, (iii) result
in the acceleration of the time of payment or vesting of any such benefits,
except as required under Section 411(d)(3) of the Code, (iv) increase
the amount of compensation due to any Person, or (v) result in the
forgiveness in whole or in part of any outstanding loans made by the Company to
any Person.

 

3.15.10.      The Company is in compliance in all material
respects with all currently applicable Legal Requirements respecting
employment, discrimination in employment, terms and conditions of employment,
worker classification (including the proper classification of workers as
independent contractors and consultants), wages, hours and occupational safety
and health and employment practices, including the Immigration Reform and Control Act, and is not engaged in any
unfair labor practice.  All employees of
the Company who reside in the United States of America are authorized for
employment by the Company in accordance with all United States immigration laws
(including the Immigration and Naturalization Act, the Immigration Reform and
Control Act and the Illegal Immigration Reform and Responsibility Act, each as
amended) and the regulations promulgated thereunder.  The Company has completed and retained in
accordance with Immigration and Naturalization Service regulations a Form I-9
for all employees hired on or after November 7, 1986.  The Company has withheld all amounts required
by law or by agreement to be withheld from the wages, salaries, and other
payments to employees; and is not liable for any arrears of wages,
compensation, Taxes, penalties or other sums for failure to comply with any of
the foregoing.  The Company has paid in
full to all employees, independent contractors and consultants all wages,
salaries, commissions, bonuses, benefits and other compensation due to or on
behalf of such employees, independent contractors and consultants.  The Company is liable for any payment to any
trust or other fund or to any Governmental Entity, with respect to unemployment
compensation benefits, social security or other benefits or obligations for
employees (other than routine payments to be made in the normal course of
business and consistently with past practice). 
There are no pending claims against the Company under any workers
compensation plan or policy or for long term disability.  The Company has no obligations under COBRA
with respect to any former employees or qualifying beneficiaries thereunder,
except for obligations that are not material in amount.  There are no controversies pending or, to the
knowledge of the Company, threatened, between the Company and any its
employees, which controversies have or would reasonably 

 

 

be expected to
result in an action, suit, proceeding, claim, arbitration or investigation
before any Governmental Entity.

 

3.15.11.      Schedule 3.15.11 of the
Disclosure Schedule sets forth a true, correct and complete list of all severance Contracts and employment
Contracts to which the Company is a party  or by which the Company is
bound. 
The Company has no obligation to pay any amount or provide any
benefit to any former employee or officer, other than obligations (i) for
which Company has established a reserve for such amount on the Company Balance
Sheet and (ii) pursuant to Contracts entered into after the Company
Balance Sheet Date and disclosed on Schedule 3.15.11
of the Disclosure Schedule.  The Company
is not a party to nor bound by any collective bargaining agreement or other
labor union Contract, no collective bargaining agreement is being negotiated by
the Company and the Company has no duty to bargain with any labor
organization.  There is no pending demand
for recognition or any other request or demand from a labor organization for
representative status with respect to any Person employed by the Company.  The Company has no knowledge of any
activities or proceedings of any labor union or to organize their respective
employees.  There is no labor dispute,
strike or work stoppage against the Company pending or, to the knowledge
of the Company, threatened, which may interfere with the respective business
activities of the Company.  Neither the
Company, nor to the knowledge of the Company, any of its representatives or
employees, has committed any unfair labor practice in connection with the
operation of the respective businesses of the Company, and there is no charge
or complaint against the Company by the National Labor Relations Board or any
comparable Governmental Entity pending or to the knowledge of the Company,
threatened.  No employee of the Company
has resigned or been dismissed in the 12 month period ending on the date of
signing the Original Purchase Agreement, for any reason (including disability
or death).

 

3.15.12.      No employee of the Company is in violation of any
term of any employment agreement, patent disclosure agreement, non-competition
agreement, or any restrictive covenant to a former employer relating to the
right of any such employee to be employed by the Company because of the nature
of the business conducted or presently proposed to be conducted by the Company
or to the use of trade secrets or proprietary information of others.  Except as set forth on Schedule 3.15.12 of the Disclosure
Schedule, no employee of the Company has given notice to the Company, nor does
the Company otherwise has knowledge, that any such employee intends to
terminate his or her employment with the Company.  The employment of each of the employees of
the Company is “at will” (except for non-U.S. employees of the Company located
in a jurisdiction that does not recognize the “at will” employment concept) and
the Company does not have any obligation to provide any particular form or
period of notice prior to terminating the employment of any of their respective
employees, except as set forth on Schedule 3.15.12
of the Disclosure Schedule.  As of the
date of signing the Original Purchase Agreement, the Company has not, and to
the knowledge of Company, no other Person has, (i) entered into any
Contract that obligates or purports to obligate Purchaser to make an offer of
employment to any present or former employee or consultant of the Company
and/or (ii) promised or otherwise provided any assurances (contingent or
otherwise) to any present or former employee or consultant of the Company of
any terms or conditions of employment with Purchaser following the Closing.

 

3.15.13.      The Company has provided to Purchaser a true,
correct and complete list of the names, positions and rates of compensation of
all officers, managers (or directors, as the case may be), and employees of the
Company showing each such person’s name, position, annual remuneration, status
as exempt/non-exempt, bonuses and fringe benefits for the current fiscal year
and the most recently completed fiscal year. 
The Company has provided to Purchaser the additional following
information for each of its international employees: city/country of
employment, citizenship, date of hire, manager’s name and work location, date
of birth, any material special circumstances (including pregnancy, disability
or military service), and whether the employee was recruited from a previous
employer.

 

 

3.15.14.      The Company has provided to Purchaser a true,
correct and complete list of all of its consultants and independent contractors
and for each the initial date of the engagement and whether the engagement has
been terminated by written notice by either party.

 

3.15.15.      The Company has provided to Purchaser true,
correct and complete copies of each of the following: all forms of offer
letters; all forms of employment agreements and severance agreements; all forms
of services agreements and agreements with current and former consultants
and/or advisory board members; all forms of confidentiality, non-competition or
inventions agreements between current and former employees/consultants and the
Company (and a true, correct and complete list of employees, consultants and/or
others not subject thereto); the most current management organization chart(s);
all agreements and/or insurance policies providing for the indemnification of
any officers or managers (or directors, as the case may be) of the Company;
summary of liability for termination payments to current and former managers
(or directors, as the case may be), officers and employees of the Company; and
a schedule of bonus commitments made to employees of the Company.

 

3.15.16.      There are no performance improvement or
disciplinary actions contemplated or pending against any of the Company’s
current employees.

 

3.15.17.      The Worker Adjustment Retraining Notification Act
of 1988, as amended, or any similar state or local law is not, and was never,
applicable to the Company.

 

3.15.18.      The Company has delivered to Purchaser true and
complete copies of all election statements under Section 83(b) of the
Code that are in the Company’s possession or subject to its control with
respect to any unvested securities or other property issued by the Company or
any ERISA Affiliate to any of their respective employees, non-employee managers
(or directors, as the case may be), consultants and other service providers.

 

3.15.19.      Schedule 3.15.19 to the Disclosure
Schedule lists all “nonqualified deferred compensation plans” (within the
meaning of Section 409A of the Code) to which the Company is a party.  Each “nonqualified deferred compensation plan”
to which the Company is a party complies with the requirements of paragraphs
(2), (3) and (4) of Section 409A(a) by its terms and has
been operated in accordance with such requirements, and has been operated since
January 1, 2005 in good faith compliance with Section 409A of the
Code and IRS Notice 2005-1.  No such
nonqualified deferred compensation plan has been materially modified (as
determined under Notice 2005-1) after October 3, 2004.  No event has occurred that would be treated
by Section 409A(b) as a transfer of property for purposes of Section 83
of the Code.

 

3.16.           Interested
Party Transactions.  None
of the Sellers, managers (or directors, as the case may be), officers, employees
or Members of the Company, nor any immediate family member of any of the
foregoing or of the Sellers (each, an “Interested
Party”), has any direct or indirect ownership, participation,
royalty or other interest in, or is an officer, director, employee of or
consultant or contractor for any firm, partnership, entity or corporation that
competes with, or does business with, or has any contractual arrangement with,
the Company (except with respect to any interest in less than 5% of the stock
of any corporation whose stock is publicly traded).  No Interested Party is a party to, or to the
knowledge of the Company, otherwise directly or indirectly interested in, any
Contract to which the Company is a party or by which the Company or any of its
assets or properties may be bound or affected, except for normal compensation
for services as an officer, manager (or director, as the case may be) or
employee thereof.  To the knowledge of
the Company, no Interested Party has any interest in any property, real or personal,
tangible or intangible (including any Intellectual Property) that is used in,
or that relates to, the business of the Company, except for the rights of
Members under applicable Legal Requirements.

 

 

3.17.           Insurance.  The Company maintains the policies of
insurance and bonds set forth in Schedule 3.17
of the Disclosure Schedule, including all legally required workers’
compensation insurance and errors and omissions, casualty, fire and general
liability insurance.  Schedule 3.17 of the Disclosure Schedule
sets forth the name of the insurer under each such policy and bond, the type of
policy or bond, the coverage amount and any applicable deductible and any other
material provisions as of the date of signing the Original Purchase Agreement
as well all material claims made under such policies and bonds since January 1,
2005.  The Company has provided to
Purchaser true, correct and complete copies of all such policies of insurance
and bonds issued at the request or for the benefit of the Company.  There is no claim pending under any of such
policies or bonds as to which coverage has been questioned, denied or disputed
by the underwriters of such policies or bonds. 
All premiums due and payable under all such policies and bonds have been
timely paid and the Company is otherwise in compliance with the terms of such
policies and bonds.  All such policies
and bonds remain in full force and effect, and the Company has no knowledge of
any threatened termination of, or material premium increase with respect to, any
of such policies.

 

3.18.           Books
and Records.  The Company
has provided to Purchaser true, correct and complete copies of each document
that has been requested by Purchaser or its counsel in connection with their
legal and accounting review of the Company (other than any such document that
does not exist or is not in the Company’s possession or subject to its
control).  Without limiting the
foregoing, the Company has provided to Purchaser complete and correct copies of
(a) all documents identified on the Disclosure Schedule, (b) the
minute books containing records of all proceedings, consents, actions and
meetings of the management committee (if any) and Members of the Company, (d) the
list of Members, journal and other records reflecting all Membership Interests
and transfers and all option and warrant grants and agreements of the Company,
and (e) all permits, orders and consents issued by any regulatory agency
with respect to the Company, or any securities of the Company, and all
applications for such permits, orders and consents.  The minute books of the Company provided to
Purchaser contain a complete and accurate summary of all meetings of management
committee (if any) and Members of the Company or actions by written consent
since the time of incorporation of the Company through the date of this
Agreement, and reflect all transactions referred to in such minutes accurately
in all material respects.  The books,
records and accounts of the Company (i) are true, correct and complete in
all material respects, (ii) have been maintained in accordance with
reasonable business practices on a basis consistent with prior years, (iii) are
stated in reasonable detail and accurately and fairly reflect the transactions
and dispositions of the assets and properties of the Company, and (iv) accurately
and fairly reflect the basis for the Financial Statements.

 

3.19.           Material Contracts.

 

3.19.1.        Except for this Agreement, the Trust Agreement
and the Contracts specifically identified in Schedule 3.19
of the Disclosure Schedule, the Company is not a party to nor is it bound by
any of the following Contracts (each a “Material Contract”):

 

3.19.1.1.         any distributor, original
equipment manufacturer, reseller, value added reseller, sales, advertising,
agency or manufacturer’s representative Contract;

 

3.19.1.2.         any continuing Contract
for the purchase, sale or license of content, materials, supplies, equipment,
services, software, Intellectual Property or other assets involving in the case
of any such Contract more than $10,000 over the life of the Contract;

 

3.19.1.3.         any Contract that expires
or may be renewed at the option of any Person other than the Company so as to
expire more than one year after the date of this Agreement;

 

 

3.19.1.4.         any trust indenture,
mortgage, promissory note, loan agreement or other Contract for the borrowing
of money, any currency exchange, commodities or other hedging arrangement or
any leasing transaction of the type required to be capitalized in accordance
with GAAP;

 

3.19.1.5.         any Contract for capital
expenditures in excess of $10,000 in the aggregate;

 

3.19.1.6.         any Contract limiting the
freedom of the Company to engage or participate, or compete with any other
Person, in any line of business, market or geographic area, or to make use of
any Intellectual Property, or any Contract granting most favored nation
pricing, exclusive sales, distribution, marketing or other exclusive rights,
rights of refusal, rights of first negotiation or similar rights and/or terms
to any Person, or any Contract otherwise limiting the right of the Company to
sell, distribute or manufacture any products or services or to purchase or
otherwise obtain any software, components, parts, subassemblies or services;

 

3.19.1.7.         any Contract pursuant to
which the Company is a lessor or lessee of any real property or any machinery,
equipment, motor vehicles, office furniture, fixtures or other personal
property involving in excess of $25,000 per annum;

 

3.19.1.8.         any Contract with an
Interested Party (other than contracts with employees which are terminable by
the Company on notice of thirty (30) days or less without penalty or
further payment) or with any Person with whom the Company does not deal at arms’
length;

 

3.19.1.9.         any Contract of
guarantee, support, indemnification, assumption or endorsement of, or any
similar commitment with respect to, the obligations, liabilities (whether
accrued, absolute, contingent or otherwise) or indebtedness of any other
Person;

 

3.19.1.10.       all licenses, sublicenses
and other Contracts as to which the Company is a party and pursuant to which
any Person is authorized to use any Company IP Rights;

 

3.19.1.11.       other than “shrink wrap”
and similar generally available commercial end-user licenses to software that
is not redistributed with the Company Products that have an individual
acquisition cost of $10,000 or less, all licenses, sublicenses and other
Contracts to which the Company is a party and pursuant to which the Company
acquired or is authorized to use any Third Party Intellectual Property Rights;

 

3.19.1.12.       all licenses, sublicenses
and other Contracts pursuant to which the Company has agreed to any restriction
on the right of the Company to use or enforce any Company-Owned IP Rights or
pursuant to which the Company agrees to encumber, transfer or sell rights in or
with respect to any Company-owned IP Rights;

 

3.19.1.13.       any Contract providing for
the development or provision of any software, content, technology or
Intellectual Property, independently or jointly, by or for or to the Company;

 

3.19.1.14.       any Contract to license or
authorize any third party to manufacture or reproduce any of the products,
services, technology or Intellectual Property of the Company;

 

 

3.19.1.15.   (A) any
joint venture Contract, (B) any Contract that involves a sharing of
revenues, profits, cash flows, expenses or losses with other Persons or (C) any
Contract that involves the payment of royalties to any other Person;

 

3.19.1.16.    any
agreement of indemnification or warranty or any Contract containing any
support, maintenance or service obligation or cost on the part of the Company
(other than under its unmodified form of standard customer or distributor
agreement, the form of which has been made available to Purchaser);

 

3.19.1.17.   any
Contract for the employment of any manager (or director, as the case may be),
officer, employee or consultant of the Company or any other type of Contract
with any officer, employee or consultant of the Company that is not immediately
terminable by the Company without cost or liability, including any Contract
requiring it to make a payment to any manager (or director, as the case may
be), officer, employee or consultant on account of any transaction contemplated
by this Agreement or any Contract that is entered into in connection with this
Agreement;

 

3.19.1.18.   any
Contract or plan (including any stock option, merger and/or stock bonus plan)
relating to the sale, issuance, grant, exercise, award, purchase, repurchase,
forfeiture or redemption of Membership Interests or any other securities of the
Company or any options, warrants, convertible notes or other rights to purchase
or otherwise acquire any Membership Interests other securities or options, warrants
or other rights therefor;

 

3.19.1.19.   any
Contract under which the Company provides any advice or services to any third
party, including any consulting Contract, professional Contract or software
implementation, deployment or development services Contract, or support
services Contract (including, for each such contract, a description of the
percentage of completion and expected additional hours, resources and costs
necessary to complete such services);

 

3.19.1.20.   any
Contract with any labor union or any collective bargaining agreement or similar
contract with its employees;

 

3.19.1.21.   any
Contract with any investment banker, broker, advisor or similar party, or any
accountant, legal counsel or other Person retained by the Company, in connection
with this Agreement and the transactions contemplated hereby;

 

3.19.1.22.   any
Contract pursuant to which the Company has acquired a business or entity, or
assets of a business or entity, whether by way of merger, consolidation,
purchase of stock, purchase of assets, license or otherwise, or any contract
pursuant to which it has any material ownership interest in any other Person;

 

3.19.1.23.   any
Contract with any Governmental Entity or any Company Authorization;

 

3.19.1.24.   any
confidentiality, secrecy or non-disclosure Contract other than any such
Contract entered into with customers and distributors in the ordinary course of
business pursuant to the Company’s standard unmodified form (a copy of which
has been provided to Purchaser);

 

3.19.1.25.   any
settlement agreement;

 

 

3.19.1.26.   any
Contract pursuant to which rights of any third party are triggered or become
exercisable, or under which any other consequence, result or effect arises, in
connection with or as a result of the execution of this Agreement or the
consummation of the transactions contemplated hereunder, either alone or in
combination with any other event; or

 

3.19.1.27.   any
other oral or written Contract or obligation not listed in the above clauses
that individually had or has a value or payment obligation in excess of $25,000
over the life of the Contract or is otherwise material to the Company or its
business, operations, financial condition, properties or assets.

 

3.19.2.                                All Material Contracts
are in written form.  The Company has
performed all of the obligations required to be performed by it and is entitled
to all benefits under, is not alleged to be in default in respect of, any
Material Contract.  Each of the Material
Contracts is in full force and effect, subject only to the effect, if any, of
applicable bankruptcy and other similar laws affecting the rights of creditors
generally and rules of law governing specific performance, injunctive
relief and other equitable remedies. 
There exists no default or event of default or event, occurrence,
condition or act, with respect to the Company or, to the Company’s Subsidiary’s
knowledge, with respect to any other contracting party, which, with the giving
of notice, the lapse of time or the happening of any other event or condition,
would reasonably be expected to (i) become a default or event of default
under any Material Contract or (ii) give any third party (A) the
right to declare a default or exercise any remedy under any Material Contract, (B) the
right to a rebate, chargeback, refund, credit, penalty or change in delivery
schedule under any Material Contract, (C) the right to accelerate the
maturity or performance of any obligation of the Company under any Material
Contract, or (D) the right to cancel, terminate or modify any Material
Contract. The Company has not received any notice or other communication
regarding any actual or possible violation or breach of, default under, or
intention to cancel or modify any Material Contract.  The Company has no liability for renegotiation
of government Contracts.  True, correct
and complete copies of all Material Contracts have been provided to Purchaser
prior to the date of signing the Original Purchase Agreement.

 

3.20.                        Export Control Laws.  The Company has conducted its export transactions
in accordance in all respects with applicable provisions of United States and
applicable foreign export control laws and regulations, including but not
limited to the Export Administration Act and implementing Export Administration
Regulations.  There are no pending or, to
the knowledge of the Company, threatened claims against the Company with
respect to such export licenses or other approvals, and there are no actions,
conditions or circumstances pertaining to the Company’s export transactions
that would reasonably be expected to give rise to any future claims.

 

3.21.                        Customers and Suppliers.

 

3.21.1.                                The Company has no
outstanding material disputes concerning its products and/or services with any
customer or distributor who, in the year ended December 31, 2006 or the 3
months ended March 31, 2007, was one of the 5 largest sources of revenues
for the Company, based on amounts paid or payable (each, a “Significant Customer”), and the Company has no knowledge
of any material dissatisfaction on the part of any Significant Customer.  Each Significant Customer is listed on Schedule  of the Disclosure Schedule.  The Company has not received any information
from any Significant Customer that such customer shall not continue as a
customer of the Company (or Purchaser) after the Closing or that such customer
intends to terminate or materially modify existing Contracts with the Company
(or Purchaser).  The Company has not had
any of its products returned by a purchaser thereof except for normal warranty
returns consistent with past history and those returns that would not result in
a reversal of any revenue by the Company.

 

 

3.21.2.                                The Company has no
outstanding material dispute concerning products and/or services provided by
any supplier (including, without limitations, content providers) who, in the
year ended December 31, 2006 or the 3 months ended March 31, 2007,
was one of the 5 largest suppliers of products and/or services to the Company,
based on amounts paid or payable (each, a “Significant Supplier”),
and the Company has no knowledge of any material dissatisfaction on the part of
any Significant Supplier.  Each
Significant Supplier is listed on Schedule  of the Disclosure Schedule.  The Company has not received any information
from any Significant Supplier that such supplier shall not continue as a
supplier to the Company (or Purchaser) after the Closing or that such supplier
intends to terminate or materially modify existing Contracts with the Company
(or Purchaser).  The Company has access,
on commercially reasonable terms, to all products and services reasonably
necessary to carry on its business, and the Company has no knowledge of any
reason why they will not continue to have such access on commercially
reasonable terms.

 

3.22.                        Broker’s and Finder’s Fees.  Except as set forth in Schedule 3.19 of the Disclosure
Schedule with respect to Section 3.19.1.21  (provided, that any fees or
other payments due thereunder are borne solely by the Sellers), neither the
Sellers, the Company nor any Affiliate thereof is obligated for the payment of
any fees or expenses of any investment banker, broker, advisor, finder or
similar party in connection with the origin, negotiation or execution of this
Agreement or in connection with the transactions contemplated by this Agreement.

 

3.23.                        Representations Complete.  None of the representations or warranties
made by the Company herein or in any exhibit or schedule hereto, including the
Disclosure Schedule, or in any certificate furnished by the Company pursuant to
this Agreement, when all such documents are read together in their entirety,
contains or will contain at the Closing any untrue statement of a material
fact, or omits or will omit at the Closing to state any material fact necessary
in order to make the statements contained herein or therein, in the light of
the circumstances under which made, not misleading. No information furnished to Purchaser by the Company or the
Sellers to be included in the Registration Statement will contain any
untrue statement of a material fact, or will omit to state any material fact
necessary in order to make the statements contained therein, in the light of
the circumstances under which made, not misleading.

 

4.                                      REPRESENTATIONS AND WARRANTIES OF PURCHASER.

 

Purchaser represents and warrants to the Company as follows:

 

4.1.                              Organization and Standing.  Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization.  Purchaser is not in
violation of any of the provisions of its Certificate of Incorporation.

 

4.2.                              Authority; Non-contravention.

 

4.2.1.                                      Purchaser has all
requisite corporate power and authority to enter into this Agreement and each
of the Transaction Agreements to which it is a party, and to consummate the
transactions contemplated hereby and thereby. 
The execution and delivery of this Agreement and each of the Transaction
Agreements to which they are a party, and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of Purchaser. 
This Agreement and each of the Transaction Agreements to which they are
a party has been duly executed and delivered by Purchaser and constitutes the
valid and binding obligation of Purchaser enforceable against Purchaser, in
accordance with its terms, subject only to the effect, if any, of (i) applicable
bankruptcy and other similar laws affecting the rights of creditors generally
and (ii) rules of law governing specific performance, injunctive
relief and other equitable remedies.

 

 

4.2.2.                                      The execution and
delivery of this Agreement and each of the Transaction Agreements to which they
are a party by Purchaser do not, and the consummation of the transactions
contemplated hereby and thereby will not, conflict with, or result in any
violation of, or default under (with or without notice or lapse of time, or
both), or give rise to a right of termination, cancellation or acceleration of
any obligation or loss of a benefit under (i) any provision of its Certificate
of Incorporation, or (ii) any Contract to which Purchaser is a party or
applicable Legal Requirement, except where such conflict, violation, default,
termination, cancellation or acceleration, individually or in the aggregate,
would not be material to the ability of Purchaser to perform its obligations
under this Agreement.

 

4.2.3.                                      No consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity, is required by or with respect to Purchaser in
connection with the execution and delivery of this Agreement, each of the
Transaction Agreements to which they are a party, or the consummation of the
transactions contemplated hereby and thereby, except for (i) the filing of
the Registration Statement and any filings required by applicable securities
laws and NASDAQ rules in connection with the execution of this Agreement, (ii) such
filings and notifications as may be required to be made by Purchaser in
connection with this Agreement under Antitrust Laws and the expiration or early
termination of applicable waiting periods under such laws, and (iii) such
other consents, authorizations, filings, approvals, notices and registrations
which, if not obtained or made, would not be material to the ability of
Purchaser to perform its obligations under this Agreement.

 

4.2.4.                                      Financing.  Purchaser does not currently have the
sufficient financing resources to pay the Purchase Price and the Employee Bonus
Amount, however, subject to and conditional upon the successful completion of
the financing pursuant to the Registration Statement by which Purchaser shall
have raised net proceeds (after deducting fees, expenses and commissions) in an
amount sufficient in order to pay the Purchase Price and the Employee Bonus
Amount at Closing, Purchaser will have the cash on hand to pay the Purchase
Price and the Employee Bonus Amount at Closing.

 

5.                                      CONDUCT PRIOR TO THE CLOSING

 

5.1.                              Conduct of Business of the Company and Subsidiaries.  During the period from the date of signing
the Original Purchase Agreement and continuing until the earlier of the
termination of this Agreement and the Closing:

 

5.1.1.                                      The Company
shall, and shall cause each Subsidiary to, conduct its business in the usual,
regular and ordinary course in the same manner as heretofore conducted and in
material compliance all applicable Legal Requirements (except to the extent
expressly provided otherwise in this Agreement or as consented to in writing by
Purchaser);

 

5.1.2.                                      The Company
shall, and shall cause each Subsidiary to, (A) pay all of its debts and
Taxes when due, subject to good faith disputes over such debts or Taxes, (B) pay
or perform its other obligations when due, (C) use commercially reasonable
efforts consistent with past practice and policies to collect accounts
receivable when due and not extend credit outside of the ordinary course of
business consistent with past practice, (D) sell Company Products
consistent with past practice as to license, service and maintenance terms,
incentive programs, and in accordance with GAAP requirements as to revenue
recognition, and (E) 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 and key
employees and preserve its relationships with customers, suppliers,
distributors, licensors, licensees, and others having business dealings with
it, to the end that its goodwill and ongoing businesses shall be unimpaired at
the Closing;

 

 

5.1.3.                                      The Company shall
promptly notify Purchaser of any change, occurrence or event not in the
ordinary course of its or any Subsidiary’s business, or of any change,
occurrence or event which, individually or in the aggregate with any other
changes, occurrences and events, would reasonably be expected to be materially
adverse to the Company and its Subsidiaries taken together or cause any of the
conditions to closing set forth in Section 7 not to be satisfied;

 

5.1.4.                                      The Company
shall, and shall cause each Subsidiary to, assure that each of its Contracts
entered into after the date of signing the Original Purchase Agreement will not
require the procurement of any consent, waiver or novation or provide for any
change in the obligations of any party in connection with, or terminate as a
result of the consummation of the transaction contemplated hereby, and shall
give reasonable advance notice to Purchaser prior to allowing any Material
Contract or right thereunder to lapse or terminate otherwise in accordance with
its terms; and

 

5.1.5.                                      The Company
shall, and shall cause each Subsidiary to, maintain each of its leased premises
in accordance with the terms of the applicable lease.

 

5.2.                              Restrictions on Conduct of Business of the Company and
Subsidiaries.  Without
limiting the generality or effect of the provisions of Section 1, during
the period from the date of signing the Original Purchase Agreement and
continuing until the earlier of the termination of this Agreement or Closing,
the Sellers and the Company shall not, and shall cause each Subsidiary not to,
do, cause or permit any of the following (except to the extent expressly
provided otherwise in this Agreement, or each of the Transaction Agreements to
which they are a party, or as consented to in writing by Purchaser):

 

5.2.1.                                      Charter
Documents.  Cause or permit any
amendments to its Charter Documents or equivalent organizational or governing
documents;

 

5.2.2.                                      Dividends;
Changes in Equity.  Declare or pay
any dividends on or make any other distributions (whether in cash, equity or
property) in respect of any of its Membership Interest or reclassify any of its
equity interests or issue or authorize the issuance of any other equity
interests in respect of, in lieu of or in substitution for Membership Interest,
except pursuant to Section 1.2.2.2 hereof;

 

5.2.3.                                      Material
Contracts.  Enter into any Contract
that would constitute a Material Contract, other material Contract or a
Contract requiring a novation or consent in connection with the transaction
contemplated hereby, or violate, terminate, amend, or otherwise modify
(including by entering into a new Contract with such party or otherwise) or
waive any of the terms of any of its Material Contracts;

 

5.2.4.                                      Issuance of
Securities.  Admit any new Members to
the Company, issue, deliver or sell or authorize or propose the issuance,
delivery or sale of, or purchase or propose the purchase of, any Company Voting
Debt or any equity interest or securities convertible into, or subscriptions,
rights, warrants or options to acquire, or other Contracts of any character
obligating it to issue any such shares or other convertible securities;

 

5.2.5.                                      Employees;
Consultants; Independent Contractors. 
(i) Hire any additional officers or other employees, or any
consultants or independent contractors, (ii) terminate the employment,
change the title, office or position, or materially reduce the responsibilities
of any management, supervisory or other key personnel of the Company or any
Subsidiary, (iii) enter into, amend or extend the term of any employment
or consulting agreement with any officer, employee, consultant or independent
contractor, or (iv) enter into any Contract with a labor union or
collective bargaining agreement (unless required by applicable Legal
Requirements);

 

 

5.2.6.                                      Loans and
Investments.  Make any loans or
advances (other than routine expense advances to employees of the Company or
any Subsidiary consistent with past practice) to, or any investments in or
capital contributions to, any Person or from any Subsidiary (other than
ordinary course funding to its existing Subsidiaries in order to fund
operations in amounts consistent with past practice), or forgive or discharge
in whole or in part any outstanding loans or advances, or prepay any
indebtedness for borrowed money;

 

5.2.7.                                      Intellectual
Property.  Transfer or license from
any Person any rights to any Intellectual Property, or transfer or license to
any Person any rights to any Company IP Rights (other than non-exclusive
end-user licenses in connection with the sale of Company Products in the
ordinary course of business consistent with past practice), or transfer or
provide a copy of any Company Source Code to any Person (other than providing
access to Company Source Code to current employees and consultants of the
Company or its Subsidiaries involved in the development of the Company Products
on a need to know basis, consistent with past practice);

 

5.2.8.                                      Exclusive
Rights and Most Favored Party Provisions. 
Enter into or amend any agreement pursuant to which any other party is
granted exclusive rights or “most favored party” rights of any type or scope
with respect to any of its products, technology, Intellectual Property or
business, or containing any non-competition covenants or other restrictions
relating to its or Purchaser’s business activities;

 

5.2.9.                                      Dispositions.  Sell, lease, license or otherwise dispose of
or encumber (other than Permitted Encumbrances) any of its properties or
assets, other than sales and nonexclusive licenses of Company Products in the ordinary
course of business consistent with its past practice, or enter into any
Contract with respect to the foregoing;

 

5.2.10.                                Indebtedness.  Incur any indebtedness for borrowed money or
guarantee any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of others;

 

5.2.11.                                Leases.  Enter into any operating lease in excess of
$10,000 or any leasing transaction of the type required to be capitalized in
accordance with GAAP;

 

5.2.12.                                Payment of
Obligations; Collection of  Receivables.  Pay, discharge or satisfy, (i) any
amounts due under any promissory note issued by the Company to any Person who
is an officer or manager (or director, as the case may be) of the Company or
any Subsidiary, or (ii) any amount in excess of $10,000 in any one case or
$25,000 in the aggregate, any claim, liability or obligation (absolute,
accrued, asserted or unasserted, contingent or otherwise) arising otherwise
than in the ordinary course of business pursuant to Contracts made available to
Purchaser, other than the payment, discharge or satisfaction of liabilities
reflected or reserved against in the Financial Statements or defer payment of
any accounts payable other than in the ordinary course of business consistent
with past practice, or in an amount in excess of $10,000, or give any discount,
accommodation or other concession other than in the ordinary course of business
consistent with past practice, in order to accelerate or induce the collection
of any receivable;

 

5.2.13.                                Capital Expenditures.  Make any capital expenditures, capital
additions or capital improvements in excess of $10,000 individually or $25,000
in the aggregate;

 

5.2.14.                                Insurance.  Materially change the amount of any insurance
coverage;

 

5.2.15.                                Termination or
Waiver.  Terminate or waive any right
of substantial value;

 

 

5.2.16.                                Employee Benefit
Plans; Pay Increases.  (i) Adopt
or amend any Company Employee Plan,
or amend any compensation, benefit, entitlement, grant or award provided or
made under any such plan, except in each case as required under ERISA,
applicable Legal Requirements or as necessary to maintain the qualified status
of such plan under the Code; (ii) materially amend any deferred
compensation plan within the meaning of Section 409A of the Code and
Internal Revenue Service Notice 2005-1, except to the extent necessary to meet
the requirements of such Section or Notice; (iii) pay any special
bonus or special remuneration to any employee or non-employee manager (or
director, as the case may be) or consultant or increase the salaries, wage
rates or fees of its employees or consultants, other than pursuant to
preexisting plans, policies or Contracts which have been disclosed to Purchaser
and are set forth on Schedule 
of the Disclosure Schedule; or (iv) establish or add any new members to
the management committee or board of directors, as the case may be, of the
Company or any Subsidiary;

 

5.2.17.                                Severance
Arrangements.  Grant or pay, or enter
into any Contract providing for the granting of any severance, retention or
termination pay, or the acceleration of benefits, to any Person, other than
payments or acceleration made pursuant to preexisting plans, policies or
Contracts which have been disclosed to Purchaser and are set forth on Schedule  of the Disclosure Schedule;

 

5.2.18.                                Lawsuits;
Settlements.  (i) Commence a
lawsuit or legal proceeding, other than (A) for the routine collection of
bills, (B) in such cases where it in good faith determines that failure to
commence suit would result in the material impairment of a valuable aspect of
its business (provided that it consults with Purchaser prior to the filing of
such a suit), or (C) for a breach of this Agreement; or (ii) settle
or agree to settle any pending or threatened lawsuit, legal proceeding or other
dispute;

 

5.2.19.                                Acquisitions;
Subsidiaries.  Acquire or agree to
acquire by merging or consolidating with, or by purchasing a substantial
portion of the assets of, or by any other manner, any business or any
corporation, partnership, association or other business organization or
division thereof, or otherwise acquire or agree to acquire any assets which are
material, individually or in the aggregate, to its and its Subsidiaries’
business, or enter into any Contract with respect to a joint venture, strategic
alliance or partnership, or establish any Subsidiary;

 

5.2.20.                                Taxes.  Make or change any election in respect of
Taxes, adopt or change any accounting method in respect of Taxes, file any Tax
Return or any amendment to a Tax Return, enter into any Tax sharing or similar
agreement or closing agreement, settle any claim or assessment in respect of
Taxes, or consent to any extension or waiver of the limitation period
applicable to any claim or assessment in respect of Taxes, or enter into
intercompany transactions giving rise to deferred gain or loss of any kind;

 

5.2.21.                                Accounting.  Change accounting methods or practices
(including any change in depreciation or amortization policies) or revalue any
of its assets (including writing down the value of inventory or writing off
notes or accounts receivable otherwise than in the ordinary course of
business), except in each case as required by changes in GAAP as concurred with
its independent accountants and after notice to Purchaser;

 

5.2.22.                                Real Property.  Enter into any agreement for the purchase,
sale or lease of any real property or owned tenant improvements;

 

5.2.23.                                Encumbrances.  Place or allow the creation of any
Encumbrance (other than a Permitted Encumbrance) on any of its properties, and,
in the respect of the Sellers, on the Interest;

 

5.2.24.                                Warranties,
Discounts.  Materially change the
manner in which it provides warranties, discounts or credits to customers;

 

 

5.2.25.                                Interested Party
Transactions.  Enter into any
Contract in which any Interested Party has an interest under circumstances
that, if entered immediately prior to the date of signing the Original Purchase
Agreement, would require that such Contract be listed on Schedule  of the Disclosure Schedule;

 

5.2.26.                                Grants.  Apply for, progress or obtain funds under any
grant, incentives, tax benefits and subsidies filed with any Governmental
Entity;

 

5.2.27.                                Web Site. Engage
in any action that will be of detriment to the validity or value of the domain
names or URLs included in the Company Registered Intellectual Property, or
change the “look and feel” of any Company Web Site at any such URLs; and

 

5.2.28.                                Other.  Take or agree in writing or otherwise to
take, any of the actions described in clauses 
through , or any action which would reasonably be expected to make any
of the Company’s representations or warranties contained in this Agreement
untrue or incorrect such that the condition set forth in Section 7.3.1 or 7.3.4
would not be satisfied, or prevent the Company from performing or cause the
Company not to perform one or more covenants required hereunder to be performed
by the Company such that the condition set forth in Section 7.3.1 would
not be satisfied.

 

5.3.                              Point
of Contact.  All notices, request for
consents and other communications pursuant to this  shall be in writing, delivered in accordance
with Section 10.2 and shall be sent by Sellers Representative, as the
Company’s point of contact to Purchaser’s point of contact as detailed in Section 10.2.

 

6.                                      ADDITIONAL AGREEMENTS

 

6.1.                                       Access to Information.

 

6.1.1.                                      During the period
commencing on the date of signing the Original Purchase Agreement and
continuing until the earlier of the termination of this Agreement or the
Closing, (i) the Company and the Sellers shall afford Purchaser and its
accountants, counsel and other representatives, reasonable access during
business hours to (A) all of the Company’s and each of its Subsidiaries’
properties, books, Contracts and records, and (B) all other information
concerning the business, properties and personnel of the Company or any of its
Subsidiaries as Purchaser may reasonably request, and (ii) the Company and
Sellers shall provide to Purchaser and its accountants, counsel and other
representatives true, correct and complete copies of the Company’s and each of
its Subsidiaries’ (A) internal financial statements, (B) Tax Returns,
Tax elections and all other records and workpapers relating to Taxes, (C) a
schedule of any deferred intercompany gain or loss with respect to transactions
to which the Company or any Subsidiary has been a party, and (D) receipts
for any Taxes paid to foreign Tax Authorities.

 

6.1.2.                                      From the date of
signing the Original Purchase Agreement until the earlier of the termination of
this Agreement and the Closing, the Company shall confer from time to time as
requested by Purchaser with one or more representatives of Purchaser to discuss
any material changes or developments in the operational matters of the Company
and each of its Subsidiaries and the general status of the ongoing operations
of the Company and each of its Subsidiaries.

 

6.1.3.                                      Unless this
Agreement terminated, Sellers agree to cooperate with the Purchaser and its
representatives, and if so reasonably requested, to provide for copies of, the
books and records of the Sellers, insofar as they relate to the Company, during
regular business hours and at no expense to the Sellers, in order for the
Purchaser to obtain information relevant to the Company’s Tax Returns, or as
otherwise reasonably required for the conduct of the Company’s business.

 

 

6.1.4.                                      No information or
knowledge obtained in any investigation pursuant to this Section 6.1 shall
affect or be deemed to modify any representation or warranty contained herein
or the conditions to the obligations of the parties hereto to consummate the
transactions contemplated hereby.

 

6.2.                                      Confidentiality; Public Disclosure.

 

6.2.1.                                      The parties
hereto acknowledge that Purchaser, the Sellers and the Company have previously
executed a Mutual Non-Disclosure Agreement dated April 10, 2007 (the “Confidentiality Agreement”), which shall continue in full
force and effect in accordance with its terms.

 

6.2.2.                                      The Sellers and
the Company shall not, and the Company shall cause each Subsidiary and each
Company Representative not to, directly or indirectly, issue any press release
or other public statement relating to the terms of this Agreement or the
transactions contemplated hereby,
including, if applicable, the termination of this Agreement, or use
Purchaser’s name or refer to Purchaser directly or indirectly in connection
with Purchaser’s relationship with the Company in any media interview,
advertisement, news release, press release or professional or trade
publication, or in any print media, whether or not in response to an inquiry,
without the prior written approval of Purchaser, unless required by law (in
which event a satisfactory opinion of outside counsel to that effect shall be
first delivered to Purchaser prior to any such disclosure) and except as
reasonably necessary for the Company to obtain the consents and approvals of
third parties contemplated by this Agreement. 
Notwithstanding anything herein or in the Confidentiality Agreement,
Purchaser may issue such press releases or make such other public statements
regarding this Agreement or the transactions contemplated hereby as Purchaser
may, in its reasonable discretion, determine, including in order to comply with Purchaser’s obligations under applicable
securities laws and the NASDAQ rules.

 

6.2.3.                                      This section
shall survive the consummation, termination or expiration of this Agreement and
the transactions contemplated hereby.

 

6.3.                              No Solicitation.

 

6.3.1.                                      From and after
the date of this Agreement until the Closing or termination of this Agreement,
neither the Sellers, the Company nor any of its Subsidiaries will, nor will any
of them authorize or permit any of their respective officers, managers (or
directors, as the case may be), affiliates, members (or stockholders, as the
case may be) or employees or any investment advisor or banker, attorney or
other advisor or representative retained by any of them (all of the foregoing
collectively being the “Company
Representatives”) to, directly or indirectly, (i) solicit,
initiate, seek, entertain, encourage, facilitate, support or induce the making,
submission or announcement of any inquiry, expression of interest, proposal or
offer that constitutes, or would reasonably be expected to lead to, an
Acquisition Proposal, (ii) enter into, participate in, maintain or
continue any communications (except solely to provide written notice as to the
existence of these provisions) or negotiations regarding, or deliver or make
available to any Person any non-public information with respect to, or take any
other action regarding, any inquiry, expression of interest, proposal or offer
that constitutes, or would reasonably be expected to lead to, an Acquisition
Proposal, (iii) agree to, accept, approve, endorse or recommend (or
publicly propose or announce any intention or desire to agree to, accept, approve,
endorse or recommend) any Acquisition Proposal, (iv) enter into any letter
of intent or any other Contract contemplating or otherwise relating to any
Acquisition Proposal, or (v) submit any Acquisition Proposal to the vote
of any Members (or securityholders, as the case may be) of Company or any
Subsidiary.  Each of the Company and its
Subsidiaries will immediately cease and cause to be terminated any and all
existing activities, discussions or negotiations with any Persons conducted
prior to or on the date of this Agreement with respect to any Acquisition
Proposal.  If any Company Representative,
whether in his or her capacity as such or in any other capacity, takes any
action that the Company is obligated pursuant to this Section 6.3 to cause
such

 

 

Company Representative not to take, then the
Company shall be deemed for all purposes of this Agreement to have breached
this Section 6.3.

 

6.3.2.                                      The Sellers and
the Company shall immediately (and in no event later than 24 hours) notify
Purchaser orally and in writing after receipt by the Sellers, the Company
and/or any Subsidiary (or, to the knowledge of the Company, by any of the
Company Representatives), of (i) any Acquisition Proposal, (ii) any
inquiry, expression of interest, proposal or offer that constitutes, or would
reasonably be expected to lead to, an Acquisition Proposal, (iii) any
other notice that any Person is considering making an Acquisition Proposal, or (iv) any
request for nonpublic information relating to the Company or any Subsidiary or
for access to any of the properties, books or records of the Company or any
Subsidiary by any Person or Persons other than Purchaser.  Such notice shall describe (A) the
material terms and conditions of such Acquisition Proposal, inquiry, expression
of interest, proposal, offer, notice or request, and (B) the identity of
the Person or Group making any such Acquisition Proposal, inquiry, expression
of interest, proposal, offer, notice or request.  The Sellers and the Company shall keep
Purchaser fully informed of the status and details of, and any modification to,
any such inquiry, expression of interest, proposal or offer and any
correspondence or communications related thereto and shall provide to Purchaser
a true, correct and complete copy of such inquiry, expression of interest,
proposal or offer and any amendments, correspondence and communications related
thereto, if it is in writing, or a reasonable written summary thereof, if it is
not in writing.  The Sellers and the
Company shall provide Purchaser with 48 hours prior notice (or such lesser
prior notice as is provided to the members of its management) of any meeting of
the Members of the Company at which it is reasonably expected to discuss any
Acquisition Proposal.

 

6.4.                                      Non-Competition;
Non-Disclosure.

 

6.4.1.                                      In order to
induce Purchaser to purchase the Interest pursuant to this Agreement, Sellers
covenant and agree that during the period commencing on the Closing Date and
ending on the second (2nd) anniversary thereof (the “Non-Competition Period”), neither Sellers
nor any of their respective Affiliates shall directly or indirectly, whether as
an officer, director, stockholder, investor, partner, proprietor, business
associate, employee, representative or otherwise, (i) promote, market,
become or be financially interested in, consult with or for, or associate in a
business relationship with, any other person, corporation, firm, partnership or
other entity whatsoever (other then the Company) whose business is a
Competitive Business (as defined below); (ii) solicit or otherwise
encourage any customers or vendors of the Company to cease doing business with
the Company or undertake any action, either directly or indirectly, that would
reasonably be expected to cause any customer or vendors of the Company to
cease, terminate or materially adversely change its relationship with the
Company, or (iii) solicit the services of any of the Company’s employees,
consultants or independent contractor, or otherwise encourage any such
employees, consultants or independent contractor to terminate their employment
with, or services to, the Company or to become an employee, consultant or
independent contractor or otherwise provide services to any Person other than
the Company.  Notwithstanding the
foregoing, this Section shall not prohibit a Seller or its Affiliates from
owning up to 5% of the equity of any publicly traded company, whether or not
such company is engaged in whole, or in part, in a Competitive Business. The
term “Competitive Business” shall
mean any business (or any component thereof) that is competitive with the
business conducted by the Company during the twelve (12) months period prior to
the Closing Date, including, without limitations, Internet reference content
related business and any business associated with language reference, general
reference or question and answer information delivered over the Internet. For
the purpose of this Section 6.4, the term “Company” shall include the
Company, Purchaser and their respective Affiliates.

 

6.4.2.                                      Without limiting
the generality of Section 6.4.1, during the  Non-Competition Period, neither Sellers nor any of their
respective Affiliates shall register, cause to be registered, claim,

 

 

cause to be claimed or take any action to
register or claim any rights in and to any trademark, service mark or any marks
that are confusingly similar to any Company Web Site, domain names or URLs
included (or which should have been included) in the Company Registered
Intellectual Property, and shall not register any domain name that contains the
word “Reference”, “Dictionary”, “Thesaurus” or any word which is a misspelling
of, or potentially confusingly similar name to, any Company Web Site, domain
names or URLs included (or which should have been included) in the Company
Registered Intellectual Property.  In
addition, neither Sellers nor any of their respective Affiliates shall register
or challenge any rights of the Company in any Company-Owned IP Rights.

 

6.4.3.                                      Each of the
Sellers expressly acknowledges that damages alone will be an inadequate remedy
for any breach or violation of any of the provisions of this Section 6.4,
and Purchaser, in addition to all other remedies available at law or hereunder,
shall be entitled, as a matter of right, to injunctive relief, including specific
performance, with respect to any such breach or violation, in any court of
competent jurisdiction.  If any of the
provisions of this Section 6.4 are held to be in any respect an
unreasonable restriction upon any party restricted hereby, then they shall be
deemed to extend only over the maximum period of time, geographic area or range
of activities as to which they may be enforceable.  In the event that a Seller shall be in
violation of the provisions of this Section 6.4, then the running of the
Non-Competition Period with respect to such Seller shall be automatically
suspended upon the date of such violation and shall resume on the date such
violation ceases, and accordingly the Non-Competition Period shall be extended
for a period of time equal to the period of time during which such breach shall
occur; and, in the event that Purchaser should be required to seek relief from
such breach in any court, board of arbitration or other tribunal, then the
Non-Competition Period shall be extended for the period of time required for
the pendency of such proceedings, including all appeals.

 

6.4.4.                                      Each of the
Sellers acknowledges that he has had access to, and became familiar with,
Proprietary Information of the Company (as defined in the Confidentiality
Agreement) and that such Proprietary Information is a valuable and unique asset
of the Company and is and will remain the exclusive property of the Company.
Therefore, each of the Sellers agrees and undertakes that he (i) will
maintain securely and hold in strict confidence all Proprietary Information
received, acquired or developed by him whether following or prior to the
Closing, (ii) will not, in whole or in part, disclose Proprietary
Information to any Person under any circumstances, and (iii) will not, in
whole or in part, use any Proprietary Information for any purpose (other than
for and as authorized in writing by the Company).  Each Seller agrees to instruct his
Representatives who obtain Proprietary Information to comply with the terms and
conditions of this Agreement.  The
obligation of non-disclosure and non-use imposed shall not apply to information
that (a) appears in issued patents or other printed publications; (b) received
by Seller not in connection with his relationship to the Company and from a
source that was not prohibited from disclosing such information to Seller by a
confidentiality obligation or other fiduciary or legal duty, (c) is or
becomes generally known to the public through no wrongful act or breach of
Seller or any of his Representatives. 
Each Seller shall not be prohibited from disclosing Proprietary
Information to the extent required by a court order or applicable law, provided
that he shall notify the Company of such disclosure and shall use reasonable
efforts to (and cooperate with Company in seeking to) seal, redact, or
otherwise minimize such disclosure. The obligations contained in this Section 6.4.4
shall survive the Closing of the transactions contemplated by this Agreement
and remain in force and effect in accordance with their respective terms.

 

6.4.5.                                      Each
Seller agrees that documents, copies, records and other property or materials
made or received by Seller that pertain to the business and affairs of the
Company or its Affiliates, including all Proprietary Information, which is in
Seller’s possession or under his control, are the property of the Company and
that the Seller will return same and any copies of same to the Company promptly
after the Closing and shall not retain any copy, summary or reproduction of
same.

 

 

6.5.                              Financials; Metric Reports. From and after the date of
this Agreement until the earlier of Closing or termination of this Agreement:

 

6.5.1.                                      The Sellers and the Company shall
cause the Company’s employees, auditors and other representatives to cooperate
with and assist Purchaser,
as Purchaser may
reasonably request, to enable Purchaser to prepare and file with the SEC, in connection with the
transaction contemplated hereby, the Current Report on Form 8-K and any
additional amendments or supplements that may be required by the Exchange Act
of 1934 and/or the Securities Act (and, in each case, the rules and
regulations promulgated thereunder).  The
Company shall use its commercially reasonable efforts to cause its auditors to
deliver any opinions or consents necessary for Purchaser to file the Company’s financials
statements, to the extent necessary.  Any
financial statements of the Company prepared pursuant to this paragraph shall
be prepared in accordance with GAAP.

 

6.5.2.                                      The Sellers and the Company shall promptly
prepare and deliver to Purchaser the unaudited consolidated financial
statements of the Company prepared
in accordance with GAAP (including, in each case, balance sheets, income
statements, statement of changes in shareholders equity and statement of cash
flows, and comparative financial information for the periods specified
therein), reviewed by independent
auditors associated with one of the “Big 4” accounting firms, for the fiscal
quarter ended March 31, 2007 (in
no event later than July 27, 2007) and for the fiscal quarter ended
June 30, 2007 (in no event later
than August 15, 2007).

 

6.5.3.                                      The Sellers and the Company shall
promptly prepare at the end of each calendar month and promptly deliver to Purchaser, but in no event later than ten (10) calendar
days after the end of each calendar month, an internal management accounts of
income, balance sheet, retained earnings and cash flows of the Company and its
Subsidiaries, on a consolidated basis, for the preceding month.  In addition, the Company shall promptly
prepare at the end of each fiscal quarter and promptly deliver to Purchaser, but in no event later than twenty
(20) calendar days after the end of each fiscal quarter, unaudited,
consolidated balance sheets and related unaudited consolidated statements of
income, shareholders’ equity and cash flows of the Company as of the end of
such fiscal quarter, including comparative financial
information for the periods specified therein with the corresponding
periods of the preceding fiscal year,
reviewed by independent auditors associated with one of the “Big 4”
accounting firms.  The Company hereby represents and warrants
that such unaudited consolidated balance sheets and related unaudited
consolidated statements of income, shareholders’ equity and cash flows of the
Company shall (i) be complete in all material respects except for the
omission of notes and schedules contained in annual financial statements; (ii) present
fairly in all material respects the consolidated financial position of the
Company as of the date thereof and the consolidated results of its operation,
cash flows and changes in financial position for the periods then ended (except
for normal year-end adjustments which are, individually or in the aggregate,
not material); and (iii) have been prepared in accordance with the GAAP
applied on a consistent basis.  In
addition, the Company shall promptly prepare and deliver to Purchaser such other financial information
reasonably requested by Purchaser.  Purchaser hereby agrees that the financial
information provided to Purchaser pursuant to this Section 6.5.3  shall
be governed by the terms of the Confidentiality Agreement, provided however
that Purchaser is permitted to disclose any such information in connection with
the Offering.

 

6.5.4.                                      The Sellers and the Company shall
promptly prepare at the end of each calendar month and promptly deliver to Purchaser, but in no event later than ten (10) calendar
days after the end of each calendar month, updated traffic metrics
information on each Company Web Site, individually and in the aggregate,
according to the parameters requested by Purchaser in connection with Schedule (i) of the Disclosure
Schedule, and the updated number of registered users of each Company Web Site,
as of the end of each such month.

 

 

6.6.                                      Regulatory Approvals.

 

6.6.1.                                      The Sellers and
the Company shall, and shall cause each Subsidiary to, promptly after the date
of signing the Original Purchase Agreement, execute and file, or join in the
execution and filing of, any application, notification (including any
notification or provision of information, if any, that may be required under
the Antitrust Laws) or other document that may be necessary in order to obtain
the authorization, approval or consent of any Governmental Entity, whether
federal, state, local or foreign, which may be reasonably required, or which
Purchaser may reasonably request, in connection with the consummation of the
transactions contemplated by this Agreement. 
The Sellers and the Company shall use commercially reasonable efforts to
obtain, and to cooperate with Purchaser to promptly obtain, all such
authorizations, approvals and consents. 
Sellers shall pay any associated filing fees payable by the Company with
respect to such authorizations, approvals and consents.  The Sellers and the Company shall promptly
inform Purchaser of any material communication between the Company and any
Governmental Entity regarding any of the transactions contemplated hereby.  If Sellers and the Company or any affiliate
of the Company receives any formal or informal request for supplemental
information or documentary material from any Governmental Entity with respect
to the transactions contemplated hereby, then the Sellers and Company shall
make, or cause to be made, as soon as reasonably practicable, a response in
compliance with such request.  The
Sellers and the Company shall direct, in its sole discretion, the making of
such response, but shall consider in good faith the views of Purchaser.

 

6.6.2.                                      Purchaser shall
promptly after the date of signing the Original Purchase Agreement execute and
file, or join in the execution and filing of, any application, notification
(including any notification or provision of information, if any, that may be
required under the Antitrust Laws) or other document that may be necessary in
order to obtain the authorization, approval or consent of any Governmental
Entity, whether foreign, federal, state, local or municipal, which may be
reasonably required in connection with the consummation of the transactions
contemplated by this Agreement. 
Purchaser shall use commercially reasonable efforts to obtain all such
authorizations, approvals and consents. 
Purchaser shall pay any associated filing fees payable by Purchaser with
respect to such authorizations, approvals and consents.  Purchaser shall promptly inform the Sellers
of any material communication between Purchaser and any Governmental Entity
regarding any of the transactions contemplated hereby.  If Purchaser or any affiliate of Purchaser
receives any formal or informal request for supplemental information or
documentary material from any Governmental Entity with respect to the
transactions contemplated hereby, then Purchaser shall make, or cause to be
made, as soon as reasonably practicable, a response in compliance with such
request.  Purchaser shall direct, in its
sole discretion, the making of such response, but shall consider in good faith
the views of the Sellers and the Company.

 

6.6.3.                                      Notwithstanding
anything in this Agreement to the contrary, if any administrative or judicial
action or proceeding is instituted (or threatened to be instituted) challenging
any transaction contemplated by this Agreement as violative of any Antitrust
Laws, it is expressly understood
and agreed that:  (i) Purchaser
shall not have any obligation to litigate or contest any administrative or
judicial action or proceeding or any decree, judgment, injunction or other
order, whether temporary, preliminary or permanent; and (ii) Purchaser
shall be under no obligation to make proposals, execute or carry out agreements
or submit to orders providing for (A) the sale, license or other
disposition or holding separate (through the establishment of a trust or
otherwise) of the Interest or any assets or categories of assets of Purchaser
or any of its affiliates or the Company or its Subsidiaries, (B) the
imposition of any limitation or regulation on the ability of Purchaser or any
of its affiliates to freely conduct their business or own such assets, or (C) the
holding separate of the Interests or any limitation or regulation on the
ability of Purchaser or any of its affiliates to exercise full rights of
ownership of the Interest (any of the foregoing, an “Antitrust Restraint”). 
Nothing in this Section 6.6 shall limit a party’s right to
terminate

 

 

this Agreement pursuant to Section 8.1.12
if such party has, until such date, complied in all material respects with its
obligations under this Section 6.6.

 

6.7.                              Third Party Consents; Notices.

 

6.7.1.                                      The Sellers and
the Company shall use their commercially reasonable efforts to obtain or
deliver prior to the Closing all consents, waivers and approvals or notices
under each Contract or from each Person listed or described on Schedule (ii)(B) of the Disclosure
Schedule (and any Contract entered into after the date of signing the Original
Purchase Agreement that would have been required to be listed or described on Schedule (ii)(B) of the Disclosure
Schedule if entered into prior to the date of signing the Original Purchase
Agreement).

 

6.7.2.                                      After prior
coordination and consultation with Purchaser regarding the timing and content
thereof, the Sellers and Company shall give all notices and other information
required to be given to the employees of the Company or any Subsidiary, any
collective bargaining unit representing any group of employees of the Company
or any Subsidiary, and any applicable government authority under the National
Labor Relations Act, as amended, the Code, COBRA and other applicable Legal
Requirements in connection with the transactions contemplated by this
Agreement.

 

6.8.                              Litigation.  The Sellers and the Company will (i) notify
Purchaser in writing promptly after learning of any action, suit, arbitration,
mediation, proceeding, claim, or investigation by or before any Governmental
Entity or arbitrator initiated by or against any of them or any of the Company’s
Subsidiaries, or known by any of them to be threatened against any of them, any
of the Company’s Subsidiaries or any of their respective mangers (or directors,
as the case may be) officers, employees or members (or stockholders, as the
case may be) in their capacity as such (a “New
Litigation Claim”), (ii) notify Purchaser of ongoing material
developments in any New Litigation Claim and (iii) consult in good faith with
Purchaser regarding the conduct of the defense of any New Litigation Claim.

 

6.9.                              Purchaser’s Financing. Purchaser shall
prepare and file or cause to be prepared and filed with the SEC within 45 days
after the date of signing the Original Purchase Agreement, a registration
statement on Form S-3 or another appropriate registration statement for the purpose of
an offering to be made in order to raise net proceeds (after deducting fees,
expenses and commissions) in an amount sufficient in order to pay the Purchase
Price and the Employee Bonus Amount at Closing (the “Offering”).  Sellers and
the Company shall furnish to the Purchaser, Purchaser’s advisors, the
underwriters of such offering and such underwriters’ advisors, such relevant
information, in oral and written form, regarding the Sellers and the Company as
the Purchaser may reasonably request and as shall be reasonably required in
connection with the preparation and filing of the Registration Statement and
any amendments thereto and in connection with the Offering.  In addition, the Sellers and the Company shall, and shall cause the Company’s
employees, auditors and other representatives to cooperate with and assist Purchaser, as Purchaser may reasonably request, to enable Purchaser to prepare and file with the SEC
the Registration Statement, including by participating in drafting sessions and
conference calls regarding the Registration Statement and the contents thereof
and by signing such documents as may be reasonably requested by Purchaser, the underwriters of the Offering
and their respective advisors in connection with the closing of the Offering.

 

6.10.                        Termination of Affiliated Agreements.  The Sellers and the Company undertake that
all Contracts between the Company, on the one hand, and Sellers or any of their
Affiliates, on the other hand, if any, that require, or could require with the
passage of time, the payment by the Company of any amounts or other
consideration to any Seller or its Affiliate shall have been terminated on or
before the Closing Date, without any further liability or obligation whatsoever
thereunder on the part of the Company, and Purchaser may request to received
reasonably satisfactory written evidence thereof.

 

 

6.11.                        Reasonable  Efforts.  Subject to the limitations set forth in Section 6.3,
each of the parties hereto agrees to use its commercially reasonable efforts,
and to cooperate with each other party hereto, to take, or cause to be taken,
all actions, and to do, or cause to be done, all things necessary, appropriate
or desirable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated hereby, including the satisfaction
of the respective conditions set forth in Article VI, and including to
execute and deliver such other instruments and do and perform such other acts
and things as may be necessary or reasonably desirable for effecting completely
the consummation of the transactions contemplated hereby.

 

6.12.                        Rank of Escrow Amount.  Only if Purchaser elects to effect the Holdback,
then with respect to such portion of the Escrow Funds subject to Holdback and
for as long as any such Escrow Amount remains payable to the Sellers hereunder
(the “Outstanding Escrow Amount”):

 

6.12.1.                                                   If
Purchaser issues Senior Notes (as defined below), then:

 

6.12.1.1.                              Such
Outstanding Escrow Amount shall be subordinated in right of payment to any
amounts due and outstanding (at or prior to the time of payment of any
Outstanding Escrow Amount) under the Purchaser’s Senior Convertible Notes (as
amended, the “Senior Notes”)
issued pursuant to the Securities Purchase Agreement dated on or about the date
hereof (as amended, collectively, the “Senior
Debt”), provided that, Senior Debt shall not include any
amount of principal under the Senior Notes in excess of the Maximum Priority
Senior Note Amount, as defined and set forth in the Subordination Agreement.

 

6.12.1.2.                              Without
derogating from the provisions of Section 6.12.1.1, any indebtedness
incurred by the Purchaser after the date hereof that is subordinated by its
terms in right of payment to the Senior Debt, shall also be subordinated in
right of payment to such Outstanding Escrow Amount.

 

6.12.1.3.                              Purchaser
shall grant to the Sellers, for the ratable interest of the Sellers, a second
priority perfected security interest in any property or other assets in which a
first priority security interest has been (or will be) granted to secure the
Senior Debt, but subject to such first priority interest, as set forth in the
Security and Pledge Agreement and the Subordination Agreement.  Sellers shall receive such security
agreements, assignments and other documents, and the Purchaser shall make such
filings and take such other actions, as granted to holders of Senior Debt, to
create and perfect such second priority security interest, subject to the
subordination, in all respects, of the Outstanding Escrow Amount to the rights
of such holders of Senior Debt and clarifying the junior status of any liens
securing such Outstanding Escrow Amount as set forth in the Security and Pledge
Agreement and the Subordination Agreement.

 

6.12.2.                                                   If
Purchaser does not issue Senior Notes, then:

 

6.12.2.1.                              Such
Outstanding Escrow Amount (a) shall rank pari passu with unsecured
indebtedness to trade creditors incurred in the ordinary course of business,
consistent with past practice and not outstanding for more than 120 days after
the date such payable was created, and (b) shall be senior to all other
indebtedness of the Purchaser other than Permitted Senior Indebtedness (as
defined below).

 

“Permitted Senior Indebtedness” shall mean
means the principal of (and premium, if any), interest on, and all fees and
other amounts (including, without limitation, any

 

 

reasonable out-of-pocket costs, enforcement
expenses (including reasonable out-of-pocket legal fees and disbursements),
collateral protection expenses and other reimbursement or indemnity obligations
relating thereto) payable by Purchaser under or in connection with any
inventory and receivables credit facility based on a customary borrowing base
entered into by Purchaser with one or more financial institutions (and on terms
and conditions) to fund the working capital needs of Purchaser; provided,
however, that the aggregate outstanding amount of such indebtedness
permitted hereunder (taking into account the maximum amounts which may be
advanced under the loan documents evidencing such Permitted Senior
Indebtedness) does not at any time exceed (i) five million dollars
($5,000,000) prior to December 31, 2009 and (ii) ten million dollars
($10,000,000) thereafter.

 

6.12.2.2.                              Purchaser
shall grant to the Sellers, for the ratable interest of the Sellers, a first
priority perfected security interest in any property or other assets in which a
first priority security interest may have been granted to secure the Senior
Debt, substantially as set forth in the Security and Pledge Agreement (but
without regards to the subordination provisions therein, which shall be
removed).  Sellers shall receive such
security agreements, assignments and other documents, and the Purchaser shall
make such filings and take such other actions, as may have been granted to
holders of Senior Debt, to create and perfect such first priority security
interest substantially as set forth in the Security and Pledge Agreement (but
without regards to the subordination provisions therein, which shall be
removed).

 

7.                                     CONDITIONS
TO THE CLOSING

 

7.1.                              Conditions to Obligations of Each Party to Effect the
Closing.  The obligations
of each party hereto to consummate the transactions contemplated hereby shall
be subject to the satisfaction at or prior to the Closing of each of the
following conditions:

 

7.1.1.                                      No Order.  No temporary restraining order, preliminary
or permanent injunction or other order issued by any Governmental Entity which
has or could have the effect of making the transaction contemplated hereby
illegal or otherwise prohibiting or preventing the consummation of the
transactions contemplated by this Agreement or the Offering shall be in effect,
nor shall any action have been taken by any Governmental Entity seeking or
threatening any of the foregoing, and no statute, rule, regulation or order
shall have been enacted, entered, enforced or deemed applicable to the
transaction contemplated, which makes the consummation of the transactions
contemplated by this Agreement illegal.

 

7.1.2.                                      Governmental
Approvals.  Purchaser, Sellers and
the Company shall have timely obtained from each Governmental Entity all
approvals, waivers and consents, if any, necessary for consummation of, or in
connection with, the transactions contemplated hereby.  All applicable waiting periods under the
Antitrust Laws shall have expired or early termination of such waiting periods
shall have been granted by both the Federal Trade Commission and the United
States Department of Justice (or, with respect to foreign antitrust laws, the
applicable foreign Governmental Entity).

 

7.2.                              Additional Conditions to Obligations of the Sellers.  The obligations of the Sellers to consummate
the transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Closing of each of the following conditions (it being understood
that each such condition is solely for the benefit of the Sellers and may be
waived by the Sellers Representative in writing in its sole discretion without
notice, liability or obligation to any Person):

 

 

7.2.1.                                      Representations,
Warranties and Covenants.  The
representations and warranties of Purchaser in this Agreement shall be true and
correct in all material respects (except for such representations and
warranties that are qualified by their terms by a reference to materiality,
which representations and warranties as so qualified shall be true and correct
in all respects) on and as of the date hereof and on and as of the Closing Date
as though such representations and warranties were made on and as of such date
(except for representations and warranties which specifically relate to another
date, which representations and warranties shall be true and correct with respect
to such date).  Purchaser shall have
performed and complied in all material respects with all covenants, obligations
and conditions of this Agreement required to be performed and complied with by
it at or prior to the Closing.

 

7.3.                              Additional Conditions to the Obligations of Purchaser.  The obligations of Purchaser to consummate
the transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Closing of each of the following conditions (it being understood
that each such condition is solely for the benefit of Purchaser and may be
waived by Purchaser in writing in its sole discretion without notice, liability
or obligation to any Person):

 

7.3.1.                                      Representations,
Warranties and Covenants.  The
representations and warranties of the Sellers and the Company in this Agreement
shall be true and correct in all material respects (except for such
representations and warranties that are qualified by their terms by a reference
to materiality, which representations and warranties as so qualified shall be
true and correct in all respects) on and as of the date of signing the Original
Purchase Agreement and on and as of the Closing Date as though such
representations and warranties were made on and as of such date (except for
representations and warranties which specifically relate to another earlier,
which representations and warranties shall be true and correct with respect to
such date).  The Sellers and the Company
shall have performed and complied in all material respects with all covenants,
obligations and conditions of this Agreement required to be performed and
complied with by the Sellers and Company at or prior to the Closing.

 

7.3.2.                                      Receipt of
Closing Deliveries.  Purchaser shall
have received each of the deliveries agreements, instruments and other
documents set forth in Section 2.2; provided, however, that such receipt
shall not be deemed to be an agreement by Purchaser that the amounts set forth
on any of agreements, instruments or documents set forth in Section 2.2 is
accurate and shall not prejudice Purchaser’s remedies hereunder if any of the
foregoing documents is not accurate.

 

7.3.3.                                      No Injunctions
or Restraints on Conduct of Business. 
No temporary restraining order, preliminary or permanent injunction or
other order issued by any Governmental Entity which has or could have the
effect of limiting or restricting Purchaser’s ownership, conduct or operation
of the business of the Company and/or any Subsidiary following the Closing
shall be in effect, nor shall there be pending or threatened any suit, action
or proceeding seeking any of the foregoing or any other Antitrust Restraint.

 

7.3.4.                                      No Material
Adverse Effect.  There shall not have
occurred a Material Adverse Effect with respect to the Company.

 

7.3.5.                                      Employees.  Each employee set forth on Schedule  hereto shall have remained
continuously employed with the Company from the date of this Agreement through
the Closing, and no action shall have been taken by any such individual to
rescind such employee’s employment agreements and/or the a non-competition,
non-solicitation and assignment of proprietary information and inventions
agreement.

 

7.3.6.                                      Third Party
Consents.  All consents, waivers,
approvals or notices under each Contract or from each Person listed or
described on Schedule (ii)(B) of
the Disclosure Schedule (or

 

 

that would have been required to be listed or
described thereon) shall have been obtained or delivered, as the case may be.

 

7.3.7.                                      Financing.
The Offering shall have successfully closed and the net proceeds to Purchaser
therefrom deposited in the back accounts of Purchaser.

 

8.                                     TERMINATION

 

8.1.                              Termination.  At any time prior to the Closing, this
Agreement may be terminated and the transactions contemplated hereby abandoned
by authorized action taken by the terminating party:

 

8.1.1.                                      by mutual written
of the Sellers and Purchaser;

 

8.1.2.                                      by either
Purchaser or the Sellers, if the Closing shall not have occurred by a date
being 228(1) days from the initial filing date of the registration
statement in respect of the Offering by the Purchaser with the SEC or such
other date that Purchaser and the Sellers Representative may agree upon in
writing (the “Termination Date”); provided,
however, that (i) in case the registration statement in respect of the
Offering is still under the SEC review at such date, then the Termination Date
shall be extended by such additional period; and (ii) in case that the
review of the Company’s financial statements for the first and second fiscal
quarters shall not have been completed within 30 days following the date of
signing the Original Purchase Agreement, then the Termination Date shall be
extended by such additional period); and provided, further, that the right to
terminate this Agreement under this Section 8.1.2 shall not be available
to any party whose breach of this Agreement has resulted in the failure of the
Closing to occur on or before the Termination Date;

 

8.1.3.                                      by either
Purchaser or the Sellers, if any permanent injunction or other order of a
Governmental Entity of competent authority preventing the consummation of the
transactions contemplated hereby shall have become final and non-appealable;
provided, however, that the right to terminate this Agreement under this Section 8.1.3  shall not be available to any party whose breach of this
Agreement has been the cause of or resulted in such injunction or other order;

 

8.1.4.                                      by Purchaser, if (i) the
Sellers shall have breached any representation, warranty, covenant or agreement
of the Sellers or the Company contained herein, which breach shall not have
been cured within five Business Days after receipt by the Sellers of written
notice of such breach (provided, however, that no such cure period shall be
available or applicable to any such breach which by its nature cannot be cured),
and if Closing were to occur on the date of such termination such breach would
result in the failure of any of the conditions set forth in Section 7.1 or
Section 7.3 to be satisfied, (ii) Section 6.3 has been breached
prior to the Termination Date, (iii) the circumstances or events described
in Section 7.3.3 shall have occurred, or (iv) there shall have been a
Material Adverse Effect with respect to the Company; or

 

8.1.5.                                      by the Sellers,
if Purchaser shall have breached any representation, warranty, covenant or
agreement contained herein, which breach shall not have been cured within five
Business Days after receipt by Purchaser of written notice of such breach
(provided, however, that no such cure period shall be available or applicable
to any such breach which by its nature cannot be cured) and such breach would
result in the failure of any of the conditions set forth in Section 7.1 or
Section 7.2 to be satisfied.

 

(1) Second Amendment to the Purchase Agreement dated November 12,
2007

 

 

8.2.                              Effect of Termination.  In the event of termination of this Agreement
as provided in Section 8.1, this Agreement shall forthwith become void and
there shall be no liability or obligation on the part of Purchaser, Sellers,
the Company or their respective officers, managers (or directors, as the case
may be), stockholders or affiliates; provided, however, that (i) the
provisions of Section 2.3 (Expenses), 6.2 (Confidentiality; Public
Disclosure), this Sections 8.2 (Effect of Termination), Section 8.3
(Termination Fees and Expenses), Section 10 (General Provisions) and the
Confidentiality Agreement shall remain in full force and effect and survive any
termination of this Agreement and (ii) the termination of this Agreement
shall not relieve any party from any liability for any material breach of any
covenant or obligation or for any intentional and material breach of any
representation or warranty contained in this Agreement.

 

8.3.                              Termination Fees and Expenses.

 

8.3.1.                                                         Purchaser
shall reimburse Sellers for direct out-of-pocket expenses for counsel and
accountants that the Sellers have incurred in connection with the preparation,
negotiation, execution and delivery of this Agreement and the transactions
contemplated hereby, not to exceed $400,000, as Sellers’ sole and exclusive
remedy upon termination of this Agreement pursuant to Section 8.1.2 in the
event that Closing does not occur due to failure to satisfy the conditions set
forth in Section 7.3.7. Such payment shall be paid within 10 Business Days following such termination and upon the receipt by Purchaser of an invoice from Sellers setting
forth such expenses in reasonable detail, accompanied by reasonable
documentation.

 

8.3.2.                                                         Sellers
shall pay Purchaser a fee in the amount of $2,000,000, as Purchaser’s sole and
exclusive remedy upon termination of this Agreement pursuant to Section 8.1.4.
Such payment shall be paid within
10 Business Days following
the date of such termination.

 

8.3.3.                                                         Purchaser
shall pay Sellers (in the same allocation as the allocation of the Purchase
Price) a fee in the amount of $2,000,000, as Sellers’ sole and exclusive remedy
upon termination of this Agreement pursuant to Section 8.1.5. Such payment
shall be paid within
10 Business Days following
the date of such termination.

 

8.3.4.                                                         The parties acknowledges that the
agreements contained in this Section 8.3
are an integral part
of the transactions contemplated by this Agreement, and that if this Agreement
is terminated as provided in the applicable sub-sections of Section 8.1,
that
the amounts payable pursuant to Sections 8.3.1 through 8.3.3 are reasonable
forecasts of the actual damages which may be incurred by such party under such
circumstances and constitute liquidated damages and not a
penalty, and further that, without these agreements, the parties would not
enter into this Agreement.

 

8.3.5.                                                         All
payments to be made under this Section 8.3 shall be paid in U.S. Dollars by wire transfer in immediately available
funds to such bank accounts the details of which shall be provided by
the relevant payee(s) to the relevant payor upon the time of payment.

 

8.4.                              Nothing in this Section 8 is intended to nor shall it derogate from
or limit the rights and/or remedies any party may have pursuant to this
Agreement, by law or equity at any time prior to termination of this Agreement,
including, without limitation, the right to seek injunctive relief or
specific performance in any court of competent jurisdiction.

 

9.                                     ESCROW
FUND AND INDEMNIFICATION

 

9.1.                              Escrow Fund.  The Escrow Amount subject to Holdback shall
be held back by the Purchaser (if Purchaser elects to effect the Holdback with
respect to the entire or any part of the Escrow

 

 

Amount),
and/or deposited with the Escrow Agent (if Purchaser elects to effect the
Indemnity Escrow with respect to the entire or any part of the Escrow Amount),
as the case may be (such Escrow Amount, together with any interest that may be
earned thereon, to constitute an escrow fund (the “Escrow Fund”)) and to be governed by the provisions set forth
herein.  The Escrow Fund shall be
available to compensate Purchaser on behalf of itself or any other Indemnified
Person or Sellers, as the case may be, for Indemnifiable Damages pursuant to
the indemnification obligations of the applicable Indemnifying Party hereunder.

 

9.2.                              Indemnification by Sellers.  Subject to the limitations set forth in this Section 9,
the Sellers shall, jointly and severally, indemnify and hold harmless
Purchaser, its Affiliates and their respective officers, directors, agents and
employees, and each person, if any, who controls or may control Purchaser
within the meaning of the Securities Act from
and against any and all losses, liabilities, damages, reductions in value,
costs and expenses, including costs of investigation and defense and reasonable
fees and expenses of lawyers, experts and other professionals
(collectively, “Indemnifiable Damages”) directly or indirectly
arising out of, resulting from or in connection with:

 

9.2.1.                                                         any failure of any
representation or warranty made by the Sellers or the Company in this Agreement
or the Disclosure Schedule (including any exhibit or schedule to the Disclosure
Schedule), and any certificate to be delivered pursuant to this Agreement, to
be true and correct as of the date of this Agreement and as of the Closing Date
as though such representation or warranty were made as of the Closing Date
(except in the case of representations and warranties which specifically relate
to another date, which representations and warranties shall be true and correct
as of such date);

 

9.2.2.                                                         any
breach of or default in connection with any of the covenants or agreements made
by the Sellers or the Company in this Agreement or the Disclosure Schedule
(including any exhibit or schedule to the Disclosure Schedule) and any
certificate to be delivered pursuant to this Agreement;

 

9.2.3.                                                         imposition,
assessment or assertion of any Taxes of the Company or any Subsidiary or any
Taxes for which the Company or Subsidiary is or may become liable (including,
without limitation, by reason of non-recognition of deductions, changes in
accounting methods, failure to fully comply with applicable laws or failure to
qualify in any foreign jurisdiction and including those incurred in a contest
of good faith by appropriate proceedings of the imposition, assessment or
assertion of any such Taxes) on account of (A) any taxable periods that
ends on or before the Closing Date, and (B) any taxable period that both
includes and ends after the Closing Date, for the portion of such taxable
period that ends on the Closing Date;

 

9.2.4.                                                         any
amounts determined following the Closing that should have been deducted from
the Purchase Price pursuant to the adjustments in accordance with the
provisions of Section 1.2.2.1 but were not so deducted or any amount
determined following the Closing that should not have been deducted from the
Purchase Price or permitted to be paid as dividend pursuant in accordance with
the provisions of Section 1.2.2.2 but were so deducted or paid.

 

9.2.5.                                                         any
Transaction Expenses paid by the Company prior to the Closing or which were not
assumed and paid by the Sellers after the Closing.

 

9.2.6.                                                         any
obligations of the Sellers to make contributions as provided in Chapter 5 of
the Corporations Code (commencing with Section 17200), to return any unlawful
distributions made under Chapter 6 (commencing with Section 17250) or
Chapter 8 (commencing with Section 17350).

 

 

In determining the amount of any Indemnifiable Damages in respect of
the failure of any representation or warranty to be true and correct as of any
particular date, any materiality standard or qualification contained in such
representation or warranty shall be disregarded.

 

9.3.                              Indemnification by Purchaser.  Subject to the limitations set forth in this Section 9,
Purchaser shall indemnify and hold harmless Sellers from and against any Indemnifiable
Damages directly
arising out of, resulting from or in connection with any failure of any representation or warranty made by the
Purchaser in this Agreement to be true and correct as of the date of this
Agreement and as of the Closing Date as though such representation or warranty
were made as of the Closing Date (except in the case of representations and
warranties which specifically relate to another date, which representations and
warranties shall be true and correct as of such date), up to an amount equal to
the Escrow Amount, as the sole and exclusive remedy for the indemnity
obligations hereunder.

 

9.4.                              Indemnifiable Damage Threshold; Other Limitations.

 

9.4.1.                                                         No
Indemnified Person shall be entitled to indemnification pursuant to
Sections 9.2.1 or 9.2.2 (and that does not involve fraud, willful breach
or intentional misrepresentation by the Sellers, the Company or any Subsidiary,
any inaccuracy or breach of any of the representations and warranties in Section 3.3
(Capital Structure), Section 3.4 (Title to Interest), 3.5 (Authority;
Non-Contravention), Section 3.12 (Intellectual Property and Internet
Practices) or Section 3.14 (Tax Matters), or breach of Section 6.4),
or pursuant to Section 9.3, unless and until an Officer’s Certificate
describing Indemnifiable Damages in an aggregate amount greater than $100,000
(the “Threshold”) has been delivered, in
which case the Indemnified Person shall be entitled to indemnification for all
Indemnifiable Damages in excess of the Threshold, subject to the limitations
set forth in this Section 9.

 

9.4.2.                                                         If
the Closing occurs, offset against (in case Purchaser elects to effect the
Holdback) and/or recovery from (in case Purchaser elects to effect the Indemnity
Escrow) the Escrow Fund, as the case may be, shall be the sole and exclusive
remedy for the indemnity obligations under this Agreement for the matters
listed in Sections 9.2.1 or 9.2.2, except in the case of (i) fraud,
willful breach or intentional misrepresentation by the Sellers, the Company or
any Subsidiary, (ii) any failure of any of the representations and
warranties contained in Section 3.3 (Capital Structure), Section 3.4
(Title to Interest), 3.5 (Authority; Non-Contravention), Section 3.12 (Intellectual
Property and Internet Practices) or Section 3.14 (Tax Matters) to be true
and correct as aforesaid, and (iii) any breach of or default in connection
with any covenant or agreement to the extent such covenant or agreement is to
survive or be performed also after the Escrow Period (including, without
limitation, pursuant to Section 6.4); with respect to each the Sellers
shall be liable for any Indemnifiable Damages resulting therefrom after
Indemnified Persons have exhausted or made claims upon all amounts in the
Escrow Fund (after taking into account all other claims for indemnification
from the Escrow Fund made by Indemnified Persons). Notwithstanding anything to
the contrary, this Section 9 shall in no way limit an Indemnified Party’s
right to seek injunctive relief or specific performance.

 

9.4.3.                                                         The
amount of Indemnifiable Damages for which indemnification is provided under
this Agreement will be (i) increased to take account of any Tax cost
incurred (grossed up for such increase) by the Indemnified Persons arising from
the receipt of indemnity payments hereunder and (ii) reduced to take
account of any Tax benefit realized by the Indemnified Persons arising from the
incurrence or payment of any such Indemnifiable Damages.  In computing the amount of any such Tax cost
or Tax benefit, the Indemnified Persons will be deemed to be subject to the
applicable federal, state, local and/or local country income Taxes at the
maximum statutory rate then in effect.

 

9.5.                              Period for Claims Against Escrow Fund.  The period during which indemnification
claims for Indemnifiable Damages may be made (the “Claims
Period”) shall commence at the Closing

 

 

and terminate
on the date that is 12 months following the Closing Date (the “Escrow Period”), provided, however, that
the Claims Period for Indemnifiable Damages pursuant to Section 9.2 (i) resulting
from or in connection with fraud, willful breach or intentional
misrepresentation by the Company or any Subsidiary, (ii) arising from any
breach of the representations and warranties contained in Section 3.3
(Capital Structure), Section 3.4 (Title to Interest), 3.5 (Authority;
Non-Contravention), Section 3.12 (Intellectual Property and Internet
Practices) or Section 3.14 (Tax Matters), (iii) arising from any
breach of or default in connection with any covenant or agreement to the extent
such covenant or agreement is to survive or be performed also after the Escrow
Period (including, without limitation, pursuant to Section 6.4), or (iv) arising
pursuant to either of Sections 9.2.3 through 9.2.6, shall terminate upon
the date that is 30 days after expiration of the applicable statute of
limitations with respect to any theretofore unasserted claims arising out of or
otherwise in respect of the items covered by Sections (i) through (iv) above.  Notwithstanding anything contained herein to
the contrary, such portion of the Escrow Fund at the end of the Escrow Period
(in case of Indemnity Escrow) or the Holdback Release Date (in case of
Holdback) as may be necessary to satisfy any unresolved or unsatisfied claims
for Indemnifiable Damages specified in any Officer’s Certificate delivered to
the Sellers Representative prior to expiration of the Escrow Period shall
remain in the Escrow Fund until such claims for Indemnifiable Damages have been
resolved or satisfied.  The remainder of
the Escrow Fund, if any, shall be paid to the Sellers promptly after the Escrow
Period (in case of Indemnity Escrow) or the Holdback Release Date (in case of
Holdback) in the same allocation as that of the Purchase Price.

 

9.6.                              Claims.

 

9.6.1.                                                         On
or before the last day of the Escrow Period, Purchaser may deliver to the
Sellers Representative (in case Purchaser elects to effect the Holdback) and/or
to the Escrow Agent with a duplicate copy to the Sellers Representative (in
case Purchaser elects to effect the Indemnity Escrow), as the case may be, a
certificate signed by any officer of Purchaser (in case of an indemnification
claim pursuant to Section 9.2), or Sellers Representative may deliver to
the Purchaser a certificate (in case of an indemnification claim pursuant to Section 9.3)  (an “Officer’s
Certificate”):

 

9.6.1.1.            stating that an
Indemnified Person has incurred, paid, reserved or accrued, or reasonably
anticipates that it may incur, pay, reserve or accrue, Indemnifiable Damages
(or that with respect to any Tax matters, that any Tax Authority may raise such
matter in audit of Purchaser or its Affiliates, which could give rise to
Indemnifiable Damages);

 

9.6.1.2.                                  stating
the amount of such Indemnifiable Damages (which, in the case of Indemnifiable
Damages not yet incurred, paid, reserved or accrued, may be the amount
reasonably anticipated by Purchaser to be incurred, paid, reserved or accrued);
and

 

9.6.1.3.            specifying in
reasonable detail (based upon the information then possessed by Purchaser) the
individual items of such Indemnifiable Damages included in the amount so stated
and the nature of the claim to which such Indemnifiable Damages are related.

 

No delay in
providing such Officer’s Certificate within the Escrow Period shall affect an
Indemnified Person’s rights hereunder, unless (and then only to the extent
that) the Indemnifying Person is materially prejudiced thereby.

 

9.6.2.                                                         In
case of an indemnification claim pursuant to Section 9.2, then, as
applicable:

 

9.6.2.1.            If the Purchaser
elected to effect the Holdback: at the time of delivery of any Officer’s
Certificate to the Sellers Representative by or on behalf of Purchaser (on

 

 

behalf of itself or any other
Indemnified Person) and for a period of 20 days after such delivery of such
Officer’s Certificate, the Purchaser shall not be entitled to offset amounts
against the Escrow Fund unless the Purchaser shall have received written
authorization from the Sellers Representative to make such offset.  After the expiration of such 20-day period,
the Purchaser shall be entitled to offset amounts against the Escrow Fund;
provided, however, that no such offset may be made if and to the extent the
Sellers Representative shall in good faith object in a written statement to any
claim or claims made in the Officer’s Certificate, and such statement shall
have been delivered to the Purchaser prior to the expiration of such 20-day
period.

 

9.6.2.2.                          If the
Purchaser elected to effect the Indemnity Escrow: at the time of delivery of
any Officer’s Certificate to the Escrow Agent, a duplicate copy of such Officer’s
Certificate shall be delivered to the Sellers Representative by or on behalf of
Purchaser (on behalf of itself or any other Indemnified Person) and for a
period of 20 days after such delivery to the Escrow Agent of such Officer’s
Certificate, the Escrow Agent shall make no payment pursuant to this Section 9.6.2.2
unless the Escrow Agent shall have received written authorization from the
Sellers Representative to make such delivery. 
After the expiration of such 20-day period, the Escrow Agent shall make
delivery of cash from the Escrow Fund to Purchaser in accordance with this Section 9.6;
provided, however, that no such delivery may be made if and to the extent the
Sellers Representative shall in good faith object in a written statement to any
claim or claims made in the Officer’s Certificate, and such statement shall
have been delivered to the Escrow Agent and to Purchaser prior to the
expiration of such 20-day period.

 

9.7.                              Resolution of Objections to Claims.

 

9.7.1.                                                         In
case of an indemnification claim pursuant to Section 9.2, if the Sellers
Representative in good faith objects in writing to any claim or claims by
Purchaser made in any Officer’s Certificate within such 20-day period,
Purchaser and the Sellers Representative shall attempt in good faith for 20
days after Purchaser’s receipt of such written objection to resolve such
objection.  If Purchaser and the Sellers
Representative shall so agree, a memorandum setting forth such agreement shall
be prepared and signed by both parties, and, if the Purchaser elected to effect
the Indemnity Escrow, shall also be delivered to the Escrow Agent.  The Purchaser and, if applicable, the Escrow
Agent, shall be entitled to conclusively rely on any such memorandum and offset
amounts against, or distribute cash from, the Escrow Fund, as the case may be,
in accordance with the terms of such memorandum.

 

9.7.2.                                                         In
case of an indemnification claim pursuant to Section 9.3, Purchaser and
the Sellers Representative shall attempt in good faith for 20 days after
Purchaser’s receipt of an Officer’s Certificate to resolve such objection.  If Purchaser and the Sellers Representative
shall so agree, a memorandum setting forth such agreement shall be prepared and
signed by both parties.

 

9.7.3.                                                         If
no such agreement pursuant to Sections 9.7.1 or 9.7.2, as the case may be, can
be reached during the 20-day period for good faith negotiation, but in any
event upon the expiration of such 20-day period, either Purchaser or the
Sellers Representative may refer the matter to arbitration in accordance with Section 10.10
hereof to resolve the matter. The decision of the arbitrator as to the validity
and amount of any claim in such Officer’s Certificate shall be non-appealable,
binding and conclusive upon the parties to this Agreement and (if applicable)
the Escrow Agent, and Purchaser or the Escrow Agent, as the case may be shall
be entitled to act in accordance with such decision and offset or distribute
cash, as the case may be, from the Escrow Fund in accordance therewith.

 

9.7.4.                                                         Judgment
upon any award rendered by the arbitrator may be entered in any court having
jurisdiction.  For purposes of this Section 9.7.4,
in any suit hereunder in which any claim or the amount thereof stated in the
Officer’s Certificate is at issue, the Indemnified Person shall be deemed

 

 

to be the
non-prevailing party unless the arbitration awards the Indemnified Person more
than one-half of the amount in dispute, in which case the Indemnifying Person
shall be deemed to be the non-prevailing party. 
The non-prevailing party to a suit shall pay its own expenses and the
expenses and the fees and expenses of the prevailing party, including attorneys’
fees and costs, reasonably incurred in connection with such suit.

 

9.8.                              Sellers Representative.

 

9.8.1.                                                         By
virtue of their signature on this Agreement, the Sellers have appointed the Sellers Representative as the agent
and attorney-in-fact for and on behalf of the Sellers to: (i) give and
receive notices and communications, as an Indemnified Person or an Indemnifying
Person, to or from Purchaser (on behalf of itself or any other Indemnified
Person, or as an Indemnifying Person) relating to this Agreement or any of the
transactions and other matters contemplated hereby or thereby (except to the
extent that this Agreement expressly contemplates that any such notice or
communication shall be given or received by such Seller individually); (ii) authorize
deliveries to or offset by Purchaser of cash from the Escrow Fund in
satisfaction of claims asserted by Purchaser (on behalf of itself or any other
Indemnified Person, including by not objecting to such claims); (iii) object
to claims made by or on behalf of an Indemnified Person, including pursuant to Section 9.6,
or make claims as or on behalf of an Indemnified Person; (iv) consent or
agree to, negotiate, enter into settlements and compromises of, and comply with
orders of courts or arbitration awards with respect to, such claims; (v) consent
or agree to any amendment to this Agreement; and (vi) take all actions
necessary or appropriate in the judgment of the Sellers Representative for the
accomplishment of the foregoing, in each case without having to seek or obtain
the consent of any Person under any circumstance.  The Person serving as the Sellers
Representative may be replaced from time to time by the Sellers upon not less
than ten days’ prior written notice to Purchaser.  The Sellers Representative shall receive no
compensation for its services.

 

9.8.2.                                                         The
Sellers Representative shall not be liable to any Seller for any act done or
omitted hereunder as the Sellers Representative while acting in good faith (and
any act done or omitted pursuant to the advice of counsel shall be conclusive
evidence of such good faith) and without gross negligence or willful
misconduct.  The Sellers shall severally
indemnify the Sellers Representative and hold the Sellers Representative
harmless against any loss, liability or expense incurred without gross
negligence, willful misconduct or bad faith on the part of the Sellers
Representative and arising out of or in connection with the acceptance or
administration of the duties of the Sellers Representative hereunder, including
any out-of-pocket costs and expenses and legal fees and other legal costs
reasonably incurred by the Sellers Representative.  If not paid directly to the Sellers
Representative by the Sellers, such losses, liabilities or expenses may be recovered
by the Sellers Representative from Escrow Fund otherwise distributable to the
Sellers (and not distributed or distributable to an Indemnified Person or
subject to a pending indemnification claim of an Indemnified Person) at the end
of the Escrow Period (in case of Indemnity Escrow) or the Holdback Release Date
(in case of Holdback) pursuant to the terms hereof, at the time of
distribution, and such recovery will be made from the Sellers according to
their respective pro rata share of the Purchase Price.

 

9.8.3.                                                         Any
notice or communication given or received by, and any decision, action, failure
to act within a designated period of time, agreement, consent, settlement,
resolution or instruction of, the Sellers Representative that is within the
scope of the Sellers Representative’s authority under Section 9.8.1 shall
constitute a notice or communication to or by, or a decision, action, failure
to act within a designated period of time, agreement, consent, settlement,
resolution or instruction of all the Sellers and shall be final, binding and
conclusive upon each such Sellers; and each Indemnified Person shall be
entitled to rely upon any such notice, communication, decision, action, failure
to act within a designated period of time, agreement, consent, settlement,
resolution or instruction as being a notice or communication to or by, or a
decision, action, failure to act within a designated period of time, agreement,

 

 

consent, settlement, resolution or instruction of, each and every such
Seller.

 

9.9.                              Third-Party Claims.  In the event an Indemnified Person becomes
aware of a third-party claim that it believes may result in an indemnification
or offset claim against the Escrow Fund or the Indemnifying Person by or on
behalf of an Indemnified Person, the Indemnified Person shall promptly notify
the Indemnifying Person in writing and in reasonable detail of such third-party
claim, provided however that no delay in providing such notice shall affect an
Indemnified Person’s rights hereunder, unless (and then only to the extent
that) the Indemnifying Person  is
materially prejudiced thereby.  The
Indemnifying Person shall have the right in its sole discretion to conduct the
defense of and to settle or resolve any such claim (and the costs and expenses
incurred by it in connection with such defense, settlement or resolution
(including reasonable attorneys’ fees, other professionals’ and experts’ fees
and court or arbitration costs) shall be included in the Indemnifiable Damages
for which the Indemnifying Person may seek indemnification pursuant to a claim
made hereunder).  The Sellers
Representative or Purchaser, as the case may be, shall have the right to
receive copies of all pleadings, notices and communications with respect to the
third-party claim to the extent that receipt of such documents does not affect
any privilege relating to any Indemnified Person and shall be entitled, at its
expense, to participate in, but not to determine or conduct, any defense of the
third-party claim or settlement negotiations with respect to the third-party
claim.  However, except with the consent
of the Sellers Representative or Purchaser, as the case may be (which consent
shall not be unreasonably withheld, conditioned or delayed and which shall be
deemed to have been given unless the Sellers Representative or Purchaser, as
the case may be, shall have objected within 15 days after a written request for
such consent by Purchaser or Sellers Representative, as the case may be), no
settlement or resolution of any such claim with any third-party claimant shall
be determinative of the existence of or amount of Indemnifiable Damages
relating to such matter.  In the event
that the Sellers Representative has consented to any such settlement or
resolution, neither the Sellers Representative nor any Seller shall have any
power or authority to object (including pursuant to Section 9.6 or any
other provision of this Section 9) to the amount of any claim by or on
behalf of any Indemnified Person against the Escrow Fund for indemnity with
respect to such settlement or resolution.

 

9.10.                        Sellers Claims Against the Company.  If Closing occurs, the Sellers agree that
they will not seek, nor will they be entitled to, contribution from, or
indemnification by, the Company, under its Charter Document, this Agreement,
applicable corporate laws or other laws or otherwise, whether in respect of
amounts due from the Sellers to the Purchaser under this Section 9 or
otherwise under this Agreement, or for any other reason, and the Sellers will
hold the Company, Purchaser and or any Indemnified Person harmless in respect
of all such amounts and shall not seek to join the Company in connection with
any suit arising under this Agreement or arising in connection with their
service as a mangers, directors, officers, employees or agents of the Company
prior to the Closing Date.  Without
limiting the foregoing, the Sellers, as Members of the Company, shall not
demand nor shall any of them be entitled to receive a return of its
contribution to the Company, and any such demand or right shall be deemed
satisfied in full and waived by the payment of the Purchase Price in accordance
with the provisions of this Agreement. 
The Sellers also agrees that they will not make claim against any
directors and officers insurance policy maintained or to be maintained by the Company
in respect of amounts due by the Sellers to the Purchaser or any Indemnified
Person under this Section 9, this Agreement or otherwise, if the carrier
of such insurance policy would have any right of subrogation against the
Company in respect of such claim and shall indemnify and hold harmless the
Purchaser from any such action.  The
provisions of this Section 9.10 shall not be deemed a waiver by any of the
Sellers for any indemnification or other rights any of them may have by reason
of their employment by, or services to, the Company (or any successor thereto)
following Closing.

 

9.11.                        Apportionment.  In the case of any
Taxes that are payable for a taxable period that includes (but does not end on)
the Closing Date, the portion of such Taxes that relates to the portion of

 

 

such taxable
period ending on the Closing Date shall (a) in the case of any real
property, personal property or other ad valorem Taxes be deemed to be the
amount of such Tax for the entire taxable period multiplied by a fraction, the
numerator of which is the number of days in the taxable period ending on the
Closing Date and the denominator of which is the number of days in the entire
taxable period, and (b) in the case of any other Tax be deemed equal to
the amount that would be payable if the relevant taxable period ended on the
Closing Date based on a closing of the books as of the close of business on the
Closing Date.

 

10.                                GENERAL PROVISIONS.

 

10.1.                        Survival of Representations, Warranties and Covenants.  If the Closing occurs, the representations
and warranties of the Sellers and the Company contained in this Agreement, the
Disclosure Schedule (including any exhibit or schedule to the Disclosure
Schedule), and the other certificates contemplated hereby shall survive the Closing
and remain in full force and effect, regardless of any investigation or
disclosure made by or on behalf of any of the parties to this Agreement, until
the end of the Escrow Period; provided, however, that (i) the
representations and warranties of the Company contained in Section 3.3
(Capital Structure), Section 3.4 (Title to Interest), 3.5 (Authority;
Non-Contravention), Section 3.12 (Intellectual Property and Internet
Practices)  or Section 3.14 (Tax
Matters) will remain operative and in full force and effect, regardless of any
investigation or disclosure made by or on behalf of any of the parties to this
Agreement, until the date that is 30 days after the expiration of the
applicable statute of limitations for claims against the Sellers, which seek recovery
of Indemnifiable Damages arising out of an inaccuracy or breach of such
representations or warranties, and then expire with respect to any theretofore
unasserted claims arising out of or otherwise in respect of any breach of such
representations and warranties; (ii) no right to indemnification pursuant
to Section 9 in respect of any claim that is set forth in an Officer’s
Certificate delivered to the Escrow Agent (in case of Holdback) or Sellers
Representative (in case of Indemnity Escrow), as the case may be, prior to the
expiration of the Escrow Period shall be affected by the expiration of such
representations and warranties; and (iii) such expiration shall not affect
the rights of any Indemnified Person under Section 9 or otherwise to seek
recovery of Indemnifiable Damages arising out of any fraud, willful breach or
intentional misrepresentation by the Company or any Subsidiary until the date
that is 30 days after the expiration of the applicable statute of limitations.  If the Closing occurs, the representations,
warranties and convents of Purchaser contained in this Agreement and the other
certificates contemplated hereby shall expire and be of no further force or
effect as of the Closing.  If the Closing
occurs, all covenants of the parties shall expire and be of no further force or
effect as of the Closing, except to the extent such covenants provide that they
are to survive or be performed after the Closing; provided, however, that no
right to indemnification pursuant to Section 9 in respect of any claim
based upon any breach of a covenant shall be affected by the expiration of such
covenant.

 

10.2.                        Notices.  All notices and other communications
hereunder shall be in writing and shall be deemed given if as follows: (a) if
sent by registered or certified mail return receipt requested, upon receipt; (b) if
sent designated for overnight delivery by nationally recognized overnight air
courier (such as DHL or Federal Express), three business days after delivery to
such courier; (c) if sent by facsimile transmission on a business day
before 5:00 p.m. in time zone of the recipient, when transmitted and full
receipt is electronically confirmed; (d) if sent by facsimile transmission
on a business day after 5:00 p.m. in the time zone of the recipient or on
a non-business day and full receipt is electronically confirmed, on the
following business day; and (e) if otherwise actually personally
delivered, when delivered, provided that such notices, requests, demands and
other communications are delivered to the address set forth below, or to such
other address as any party shall provide by like notice to the other parties to
this Agreement:

 

 

If to Purchaser, to:                                              Answers
Corporation

237
West 35th Street

Suite 1101

New York, NY 10001

Attention:  Robert S. Rosenschein, Chief Executive
Officer

Facsimile No.:  646-502-4778 

Telephone No.:  646-502-4777

 

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

 

Meitar, Liquornik, Geva &
Leshem, Brandwein — Law Offices

16 Abba Hillel Silver Rd.

Ramat Gan 52506, Israel

Attention: Clifford Felig
and David Glatt

Facsimile: +972-3-610-3111

If
to the Sellers

or
the Company (prior to Closing), to:

 

Daniel Fierro

312 E. Mandalay Drive

Olmos Park TX 78212

Telephone No.:  (210) 826-1939

 

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

 

DLA Piper
US LLP

1251 Avenue of the Americas

New York, New York 10020-1104

Attention:  James E. Nelson

Facsimile
No.:  (212) 884-8731

Telephone
No.:  (212) 335-4631

 

and

 

Brian Kariger

3120 E. 2nd Street

Long Beach

California 90803

Facsimile No.:  (562) 439-4301

Telephone No.: (310)
738-3777

 

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

 

Eric Adler,
Magee & Adler, APC

400
Oceangate, Suite 1030

Long Beach,
CA 90803

Attention:  Eric R. Adler, Esq.

Facsimile No.:  562-432-1060

Telephone No.:  562-432-1154

 

If
to the Sellers Representative, to:

 

 

Brian Kariger

3120 E. 2nd Street

Long Beach

California 90803

Facsimile No.:  (562) 439-4301

Telephone
No.: (310) 738-3777

 

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

 

Eric Adler,
Magee & Adler, APC

400
Oceangate, Suite 1030

Long Beach,
CA 90803

Attention:  Eric R. Adler, Esq.

Facsimile No.:  562-432-1060

Telephone No.:  562-432-1154

 

10.3.                        Interpretation.  When a reference is made in this Agreement to
sections, schedules or exhibits, such reference shall be to a section of,
schedule or an exhibit to this Agreement unless otherwise indicated.  The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.  The words
“include,” “includes” and “including” when used herein shall be deemed in each
case to be followed by the words “without limitation”.  The phrases “provided to,” “furnished to,” or
“made available” and phrases of similar import when used herein, unless the
context otherwise requires, shall mean that a true, correct and complete paper
or electronic copy of the information or material referred to has been provided
to the party or its counsel to whom such information or material is to be
provided, and in case such information or material was made available
electronically by posting it on the Company’s virtual data room (provided it
was (i) posted under the relevant section of the due diligence request
list calling for such disclosure and was indicated in the Company’s written
response to such list, or (ii) was requested by Purchaser or was posted in
such virtual data room pursuant to a request from Purchaser).  Unless the context of this Agreement
otherwise requires: (i) words of any gender include each other gender; (ii) words
using the singular or plural number also include the plural or singular number,
respectively; (iii) the terms “hereof,” “herein,” “hereunder” and
derivative or similar words refer to this entire Agreement; (iv) all
references to “$” shall be denominated in U.S. dollars; and (v) unless
indicated otherwise, all mathematical calculations contemplated hereby shall be
rounded to the hundredth decimal place.

 

10.4.                        Entire Agreement; Parties in Interest.  This Agreement and the documents and
instruments and other agreements specifically referred to herein or delivered
pursuant hereto, including all the exhibits attached hereto, the Schedules,
including the Disclosure Schedule, (a) constitute the entire agreement
among the parties hereto with respect to the subject matter hereof and
supersede all prior agreements and understandings, both written and oral, among
the parties hereto with respect to the subject matter hereof (including, the
Original Purchase Agreement, which shall be amended and restated in its
entirety by this Agreement), but except for the Confidentiality Agreement,
which shall continue in full force and effect, and shall survive any
termination of this Agreement, in accordance with its terms, and (b) are
not intended to confer, and shall not be construed as conferring, upon any
Person other than the parties hereto any rights or remedies hereunder (except
that Section 9 is intended to benefit Indemnified Persons).

 

10.5.                        Amendment.  Any
term of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and
either retroactively or prospectively) with the written consent of Purchaser and the Sellers Representative. Any
amendment or waiver effected in accordance with this Section shall be
binding upon all parties of this Agreement and

 

 

their respective successors and assignees.

 

10.6.                        Extension; Waiver.  Any party hereto may (a) extend the time
for the performance of any of the obligations or other acts of the other
parties hereto, (b) waive any inaccuracies in the representations and
warranties made to such party contained herein or in any document delivered
pursuant hereto, and (c) waive compliance with any of the agreements or
conditions for the benefit of such party contained herein.  The Sellers Representative and Purchaser may,
(i) extend the time for the performance of any of the obligations or other
acts of the other, (ii) waive any inaccuracies in the representations and
warranties made to such party contained herein or in any document delivered
pursuant hereto, and (iii) waive compliance with any of the agreements or
conditions for the benefit of such Person contained herein.  Any
waiver effected in accordance with the preceding sentence shall be binding upon
all parties of this Agreement and their respective successors and assignees. Any
agreement on the part of a party hereto to any such extension or waiver shall
be valid only if set forth in an instrument in writing.  Without limiting the generality or effect of
the preceding sentence, no delay in exercising any right under this Agreement
shall constitute a waiver of such right, and no waiver of any breach or default
shall be deemed a waiver of any other breach or default of the same or any other
provision in this Agreement.

 

10.7.                        Assignment.  Neither this Agreement nor any of the rights,
interests or obligations under this Agreement may be assigned or delegated, in
whole or in part, by operation of law or otherwise by any of the parties hereto
without the prior written consent of the other parties hereto, and any such
assignment without such prior written consent shall be null and void, except
that Purchaser may assign this Agreement to any of Purchaser’s Affiliates
without the prior consent of the Sellers or the Company; provided, however,
that Purchaser shall remain liable for all of its obligations under this
Agreement.  Subject to the preceding
sentence, this Agreement shall be binding upon, inure to the benefit of, and be
enforceable by, the parties hereto and their respective successors and assigns.

 

10.8.                        Severability.  In the event that any provision of this
Agreement, or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Agreement shall continue in full force and effect and shall be interpreted
so as reasonably to effect the intent of the parties hereto.  The parties hereto shall use all reasonable
efforts to replace such void or unenforceable provision of this Agreement with
a valid and enforceable provision that shall achieve, to the extent possible,
the economic, business and other purposes of such void or unenforceable
provision.

 

10.9.                        Remedies Cumulative.  Except as otherwise provided herein, any and
all remedies herein expressly conferred upon a party hereto shall be deemed
cumulative with and not exclusive of any other remedy conferred hereby, or by
law or equity upon such party, and the exercise by a party hereto of any one
remedy shall not preclude the exercise of any other remedy and nothing in this
Agreement shall be deemed a waiver by any party of any right to specific
performance or injunctive relief.

 

10.10.                  Governing Law; Arbitration; Jurisdiction.

 

10.10.1.         This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
without reference to such state’s principles of conflicts of law, provided,
however, that any matter involving the internal corporate affairs of the any
party hereto shall be governed by the provisions of the jurisdictions of its
incorporation.

 

10.10.2.         Any
controversy or claim arising out of or relating to this Agreement, including,
without limitation, the breach or termination thereof, shall be settled by
arbitration by a single arbitrator administered by the American Arbitration
Association in accordance with its Commercial Arbitration Rules, including the
Optional Rules for Emergency Measures of Protection, to be held in New

 

 

York,
New York, USA. The award rendered by the arbitrator shall be final and binding
upon the parties. Judgment on the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. The existence and resolution
of the arbitration shall be kept confidential by the parties and by the arbitrator.
The award of the arbitrator shall be accompanied by a reasoned opinion. Each
party shall bear its own costs and expenses and an equal share of the
arbitrator’s and administrative fees of arbitration, unless otherwise
determined by the arbitrator. Notwithstanding the foregoing, the parties may
apply to any court of competent jurisdiction for a temporary restraining order,
preliminary injunction, or other interim or conservatory relief, as necessary.

 

10.10.3.         Subject to Section 10.10.2,
the parties hereto hereby irrevocably submit to the exclusive jurisdiction (or,
in the case of enforcement of or seeking remedies with respect to Section 6.4,
non-exclusive jurisdiction) of the courts of the New York, New York in
connection with any matter based upon or arising out of this Agreement or the
matters contemplated herein (including resolution of disputes under Section 9.7),
agrees that process may be served upon them in any manner authorized by the
laws of such jurisdiction for such persons and waives and covenants not to
assert or plead any objection which they might otherwise have to such
jurisdiction, venue and such process.

 

10.11.                  Cooperation.  The parties agrees to cooperate fully with
each other and to execute and deliver such further documents, certificates,
agreements and instruments and to take such other actions as may be reasonably
requested by a party to evidence or reflect the transactions contemplated
hereby and to carry out the intent and purposes of this Agreement.

 

10.12.                  Rules of Construction.  The parties hereto have been represented by
counsel during the negotiation, preparation and execution of this Agreement
and, therefore, hereby waive, with respect to this Agreement, each Schedule and
each Exhibit attached hereto, the application of any law, regulation,
holding or rule of construction providing that ambiguities in an agreement
or other document shall be construed against the party drafting such agreement
or document.

 

10.13.                  WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY AND ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE ACTIONS OF ANY PARTY HERETO IN NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.

 

10.14.                  Counterparts.  This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same instrument and
shall become effective when one or more counterparts have been signed by each of
the parties hereto and delivered to the other parties hereto; it being
understood that all parties hereto need not sign the same counterpart. The
exchange of a fully executed Agreement (in counterparts or otherwise) by
facsimile or by electronic delivery in .pdf format shall be sufficient to bind
the parties to the terms and conditions of this Agreement, as an original.

 

 - SIGNATURE PAGES FOLLOW -

 

 

 

 

IN WITNESS WHEREOF, the parties have caused this AMENDED
AND RESTATED PURCHASE AGREEMENT to be executed and delivered by
their respective officers thereunto duly authorized, all as of the date first
written above.

 

 

	
   

  	
  Answers
  Corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Robert S. Rosenschein

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Robert
  Rosenschein

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  CEO

  

 

 

 

 

 

IN WITNESS WHEREOF, the parties have caused this Amended and Restated
Purchase Agreement to be executed and delivered by their respective officers
thereunto duly authorized, all as of the date first written above.

 

	
   

  	
  BRIAN KARIGER, AS TRUSTEE OF THE BRIAN PATRICK
  KARIGER CHARITABLE REMAINDER UNITRUST TRUST DATED APRIL 9, 2007

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  Brian Kariger

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BRIAN KARIGER AS TRUSTEE OF THE BRIAN PATRICK
  KARIGER REVOCABLE TRUST DATED FEBRUARY 9, 2007

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  Brian Kariger

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DANIEL FIERRO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  Daniel Fierro

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LEXICO PUBLISHING GROUP, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian Kariger

  
	
   

  	
  Name:

  	
  Brian
  Kariger and Daniel Fierro

  
	
   

  	
  Title:

  	
  Authorized
  Signatories and Members

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BRIAN KARIGER, AS SELLERS REPRESENTATIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  Brian Kariger

  

 

 

 

 

List of
Exhibits

 

	
  Exhibit
  A

  	
   

  	
  -

  	
   

  	
  Certain
  Definitions

  
	
  Exhibit
  B

  	
   

  	
  -

  	
   

  	
  Form
  of Indemnity Escrow Agreement

  
	
  Exhibit
  C

  	
   

  	
  -

  	
   

  	
  Form
  of Bonus Plan/Documents Escrow Agreement

  
	
  Exhibit
  D

  	
   

  	
  -

  	
   

  	
  Form
  of Legal Opinion of Counsel to the Company

  
	
  Exhibit
  E

  	
   

  	
  -

  	
   

  	
  Form
  of Pledge and Security Agreement

  
	
  Exhibit
  F

  	
   

  	
  -

  	
   

  	
  Form
  of Subordination Agreement

  

 

 

List of
Schedules

 

	
  Schedule A

  	
   

  	
  -

  	
   

  	
  List of Sellers and Interests

  
	
  Schedule 1.2.2

  	
   

  	
  -

  	
   

  	
  Estimated Closing Adjustments Certificate

  
	
  Schedule 2.2.1.1

  	
   

  	
  -

  	
   

  	
  Certificate of Sellers

  
	
  Schedule 2.2.1.2

  	
   

  	
  -

  	
   

  	
  Transaction Expenses Certificate

  
	
  Schedule  7.3.5

  	
   

  	
  -

  	
   

  	
  List of Employees

  

 

 

Disclosure
Schedule

 

 

 

Schedule A

 

List of Sellers and Interests

 

	
  Seller’s Name

  	
   

  	
  % of Membership Interest

  
	
   

  	
   

  	
   

  
	
  Brian
  Kariger as trustee of the Brian Patrick Kariger Charitable Remainder Unitrust
  Trust dated April 9, 2007

  	
   

  	
  5%

  
	
   

  	
   

  	
   

  
	
  Brian
  Kariger as trustee of the Brian Patrick Kariger Revocable Trust dated
  February 9, 2007

  	
   

  	
  70%

  
	
   

  	
   

  	
   

  
	
  Daniel
  Fierro

  	
   

  	
  25%

  

 

 

 

 

 

 

Exhibit A

 

Certain
Definitions

 

For
purposes of the Agreement (including this Exhibit A):

 

1.     Defined Terms. As used
herein, the following terms have the following meanings: 

 

        1.1.          “Acquisition Proposal”
shall mean, with respect to the Company or any of its Subsidiaries, any
agreement, offer, proposal or bona fide indication of interest (other than this
Agreement or any other offer, proposal or indication of interest by Purchaser),
or any public announcement of intention to enter into any such agreement or of
(or intention to make) any offer, proposal or bona fide indication of interest,
relating to, or involving: (i) any acquisition or purchase from the Company or
any of its Subsidiaries, or from the Member of the Company, by any Person or
Group of more than a 10% interest in the total Membership Interest, outstanding
voting interest or Economic Interest of Company or any of its Subsidiaries or
any tender offer or exchange offer that if consummated would result in any
Person or Group beneficially owning 10% or more of the total Membership
Interest, outstanding voting interest or Economic Interest of the Company or
any of its Subsidiaries, or any merger, consolidation, business combination or
similar transaction involving the Company or any of its Subsidiaries; (ii) any
sale, lease, mortgage, pledge, exchange, transfer, license (other than in the
ordinary course of business), acquisition, or disposition of more than 10% of
the assets of the Company and its Subsidiaries in any single transaction or
series of related transactions; or (C) any liquidation, dissolution,
recapitalization or other significant corporate reorganization of the Company
or any of its Subsidiaries, or any extraordinary dividend, whether of cash or
other property.

 

        1.2.          “Affiliate” has
the meaning set forth in Rule 145 promulgated under the US Securities Act.

 

        1.3.          “Antitrust Laws” means
the HSR Act and applicable foreign competition, antitrust or investment or
trade regulatory Legal Requirements. 

 

        1.4.          “Bonus Plan/Documents
Escrow Agreement” means an Escrow Agreement, substantially in the
form attached hereto as Exhibit C, entered into as of the date of signing
the Original Purchase Agreement by and among Purchaser, the Escrow Agent, the
Company, the Sellers and the Sellers Representative, in respect of the Employee
Bonus Amount and the instruments evidencing the transfer of Interests, as
amended.

 

        1.5           “Business Day”
means each day that is not a Saturday, Sunday or other day on which commercial
banks located in New York, New York are not generally open for business.

 

        1.6.          “Charter Documents”
means the Articles of Organization and the Operating Agreement, in each case as
in effect on the date of signing the Original Purchase Agreement. 

 

        1.7.          “Closing Net Working
Capital” means the difference between (a) the sum of accounts
receivable, net, prepaid expenses and other current assets of the Company and
its Subsidiaries, on a consolidated basis, and (b) the sum of accounts
payable, accrued compensation, accrued expenses and deferred revenue and other
current liabilities of the Company and its Subsidiaries, on a consolidated
basis; in each case calculated as of the close of business on the Closing Date
in accordance with GAAP applied on a consistent basis with the Company’s past
practice. 

 

        1.8.          “Code” shall
mean the Internal Revenue Code of 1986, as amended.

 

        1.9.          “Company Web Site(s)”
means Reference.com, Dictionary.com (including dictionary.reference.com) and/or
Thesaurus.com (including thesaurus.reference.com), individually or
collectively, as the case may be. 

 

        1.10.        “Contract”
means any written or oral legally binding contract, agreement, instrument,
commitment or undertaking of any nature (including leases, licenses, mortgages,
notes, guarantees, sublicenses, subcontracts, letters of intent, term sheet and
purchase orders) as of the date of signing the Original Purchase Agreement or
as may hereafter be in effect.

 

 

 

 

        1.11.        “Corporations Code”
means Title 2.5 Limited Liability Companies of the California Corporations
Code, as amended from time to time (or any corresponding provisions of
succeeding law).

 

        1.12.        “Disclosure Schedule”
means the Disclosure Schedule delivered to Purchaser and Purchaser concurrently
with the parties’ execution of this Agreement, containing disclosures that, in
order to be effective, shall clearly indicate the Section and, if applicable,
the subsection of Section 3 to which it relates and each of which disclosures
shall also be deemed to be representations and warranties made by the Sellers
and the Company to Purchaser and the Purchaser under Section 3. Any fact or
item disclosed in any particular section of the Disclosure Schedule shall be
deemed to have been disclosed with respect to another section of this Agreement
only if and only to the extent the relevance to other representations and
warranties is readily apparent from the actual text of the disclosures.

 

        1.13.        “Economic Interest”
means a Person's right to share in the income, gains, losses, deductions,
credit, or similar items of, and to receive distributions from, the Company,
but does not include any other rights of a Member, including, without
limitation, the right to vote or to participate in management, or, except as
provided in applicable Legal Requirements, any right to information concerning
the business and affairs of the Company.

 

        1.14.        “Encumbrance”
means any lien, pledge, hypothecation, charge, mortgage, security interest,
encumbrance, adverse claim, interference, option, right of first refusal,
preemptive right or restriction or rights of third parties of any nature
(including any spousal community property rights, any restriction on the voting
of any security, any restriction on the transfer of any security or other
asset, any restriction on the receipt of any income derived from any security
or other asset, any restriction on the use of any asset and any restriction on
the possession, exercise or transfer of any other attribute of ownership of a
security or other asset).

 

        1.15.        “Entity” means
any corporation (including any non-profit corporation), general partnership,
limited partnership, limited liability partnership, joint venture, estate,
trust, company (including any company limited by shares, limited liability
company or joint stock company), firm, society or other enterprise,
association, organization or entity.

 

        1.16.        “Environmental and Safety
Laws” shall mean any federal, state or local laws, ordinances,
codes, regulations, rules, policies and orders that are intended to assure the
protection of the environment, or that classify, regulate, call for the
remediation of, require reporting with respect to, or list or define air,
water, groundwater, solid waste, hazardous or toxic substances, materials,
wastes, pollutants or contaminants, or which are intended to assure the safety
of employees, workers or other persons, including the public.

 

        1.17.        “Employee Bonus Amount”
means a gross amount of US$10,000,000 (which is inclusive of all Taxes, whether
to be borne by the employee or employer).

 

        1.18.        “Employee Bonus Plan”
means a plan established by the Company (and approved by Purchaser), for the
payment of up to the Employee Bonus Amount as bonuses to certain employees of
the Company, upon the terms set forth therein.

 

        1.19.        “Escrow Agent”
means American Stock transfer & Trust Co. or such other escrow agent as
shall be designated by Purchaser and reasonably agreed upon by Sellers
Representative.

 

        1.20.        “Escrow Amount”
means US$10,000,000.

 

        1.21.        “Facilities”
shall mean all buildings and improvements on the Property.

 

        1.22.        “GAAP” means
generally accepted accounting principles in the United States applied on a
consistent basis.

 

        1.23.        “Governmental Entity”
shall mean any: (a) nation, state, commonwealth, province, territory, county,
municipality, district or other jurisdiction of any nature; (b) federal, state,
local or municipal or other government; (c) governmental or quasi-governmental
authority of any nature (including any governmental division, department,
agency, commission, instrumentality, 

 

 

 

official, ministry, fund, foundation, center, organization, unit, body
or Entity and any court or other tribunal); or (d) self-regulatory
organization.

 

        1.24.        “Group” shall
have the definition ascribed to such term under Section 13(d) of the Exchange
Act of 1934, the rules and regulations thereunder, all as amended, and related
case law.

 

        1.25.        “Hazardous Materials”
shall mean any toxic or hazardous substance, material or waste or any pollutant
or contaminant, or infectious or radioactive substance, material or waste
defined in or regulated under any Environmental and Safety Laws, but excludes
office and janitorial supplies properly and safely maintained.

 

        1.26.        “HSR Act” means
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

 

        1.27.        “Indemnified Person(s)” the Person(s) entitled to
indemnification under Section 9.2 or 9.3, as
the case may be.

 

        1.28.        “Indemnifying Person(s)” the Person(s) from whom
indemnification is sought under Section 9.2 or 9.3, as
the case may be.  

 

        1.29.        “Indemnity Escrow Agreement” means the Indemnity Escrow
Agreement, substantially in the form attached hereto as Exhibit B, entered
into as of the date of signing the Original Purchase Agreement by and among
Purchaser, the Escrow Agent, the Sellers and the Sellers Representative, as
amended. 

 

        1.30.        “knowledge” or “known” shall
mean, with respect to the Company and its Subsidiaries, the knowledge of the Sellers and of certain
employees of the Company as set forth on Schedule 0 of the Disclosure
Schedule; an individual shall be deemed to have “knowledge” of a particular
fact or other matter if (i) such individual is actually aware of such
particular fact or other matter; (ii) such individual has made, or reasonably
should have made, reasonable
inquiry of those other employees of the Company and its Subsidiaries whom such
individual reasonably believes would have actual knowledge of the matters
represented; or (iii) such individual, when taking into account his or her
position and responsibilities, could be reasonably expected to discover or otherwise become aware of such fact
or other matter in the course of conducting such reasonable inquiry concerning the existence of such fact or other
matter.

 

        1.31.        “Legal Requirement”
means any law, statute, constitution, principle of common law, resolution,
ordinance, code, edict, decree, rule, regulation, order, award, ruling or
requirement issued, enacted, adopted, promulgated, implemented or otherwise put
into effect by or under the authority of any Governmental Entity.

 

        1.32.        “Material Adverse Effect”
with respect to any entity means any change, event, violation, inaccuracy,
circumstance or effect (each, an “Effect”) that, individually or taken together
with all other Effects, and regardless of whether or not such Effect
constitutes a breach of the representations or warranties made by such entity
in this Agreement, is, or is reasonably likely to, (i) be or become materially
adverse in relation to the near-term or longer-term condition (financial or
otherwise), properties, assets (including intangible assets), liabilities,
business, prospects, capitalization, operations or results of operations of
such entity and its Subsidiaries, taken as a whole (including, without
limitations, a material disruption in the operation of any Company Web Site
continuing for more than 12 consecutive hours); or (ii) materially impede or
delay such entity’s ability to consummate the transactions contemplated by this
Agreement in accordance with its terms.

 

        1.33.        “Members” means
any Person who has been admitted as a member of the Company as provided in the
Corporations Code.

 

        1.34.        “Membership Interest”
shall mean a Member’s rights in the Company, collectively, including the
Member’s Economic Interest, any right to vote or participate in management, and
any right to information concerning the business and affairs of the Company
provided by the Charter Documents and Legal Requirements.

 

 

 

 

 

        1.35.        “Permitted Encumbrances”
means: (i) statutory liens for taxes that are not yet due and payable or
liens for taxes being contested in good faith by any appropriate proceedings
for which adequate reserves have been established; (ii) statutory liens to
secure obligations to landlords, lessors or renters under leases or rental
agreements; (iii) deposits or pledges made in connection with, or to
secure payment of, workers’ compensation, unemployment insurance or similar
programs mandated by applicable law; (iv) statutory liens in favor of
carriers, warehousemen, mechanics and materialmen, to secure claims for labor,
materials or supplies and other like liens; and (v) liens in favor of
customs and revenue authorities arising as a matter of Legal Requirements to
secure payments of customs duties in connection with the importation of goods.

 

        1.36.        “Person” means
an individual, Entity or Governmental Entity.

 

        1.37.        “Property”
shall mean all real property leased, sub-leased or owned by the Company or any
Subsidiary either currently or in the past. 

 

        1.38.        “Registration Statement”
means the registration statement referred to in Section 6.9., including,
any prospectus included therein, as amended or supplemented by any amendment or
prospectus supplement, including post-effective amendments, and all materials
incorporated by reference or explicitly deemed to be incorporated by reference
in such prospectus.

 

        1.39.        “SEC” means the
Securities and Exchange Commission.

 

        1.40.        “Securities Act”
means the United States Securities
Act of 1933, as amended.

 

        1.41.        “Subsidiary” of
a Person is an Entity in which a Person directly or indirectly owns or purports
to own, beneficially or of record: (a) an amount of voting securities of or
other interests in such Entity that is sufficient to enable such Person to
elect at least a majority of the members of such Entity’s board of directors or
other governing body; or (b) at least 50% of the outstanding equity, voting or
financial interests in such Entity.

 

        1.42.        “Tax Authority”
means the Governmental Entity responsible for the imposition of any Tax
(domestic or foreign).

 

        1.43.        “Tax Return”
means any return, statement, report or form (including estimated Tax returns
and reports, withholding Tax returns and reports, any schedule or attachment,
any declaration and claim for refund and information returns and reports)
required to be filed with respect to Taxes. 

 

        1.44.        “Tax” (and,
with correlative meaning, “Taxes” and “Taxable”) means (i) any federal,
state, local or foreign income, capital gain, alternative or add-on minimum
tax, gross income, estimated, gross receipts, sales, use, ad valorem, value
added, transfer, franchise, capital stock, profits, license, registration,
withholding, payroll, social security (or equivalent), Federal Insurance
Contributions Act (FICA) tax, employment, unemployment, disability, excise,
severance, stamp, occupation, premium, property (real, personal, tangible or
intangible), environmental or windfall profit tax, custom duty, business and
occupation, or other tax, governmental fee or other like assessment or charge
of any kind whatsoever, together with any interest or any penalty, addition to
tax or additional amount (whether disputed or not) imposed by any Tax
Authority, (ii) any liability for the payment of any amounts of the type
described in clause (i) of this sentence as a result of being a member of an
affiliated, consolidated, combined, unitary or aggregate group for any Taxable
period, and (iii) any liability for the payment of any amounts of the type
described in clause (i) or (ii) of this sentence as a result of being a
transferee of or successor to any Person or as a result of any express or
implied obligation to assume such Taxes or to indemnify any other Person. 

 

        1.45.        “Transaction Agreements”
means the Indemnity Escrow Agreement and the Bonus Plan/Documents Escrow
Agreement.

 

        1.46.        “Transaction Expenses”
means the amounts of all fees, costs or expenses incurred or expected to be
incurred by the Company and the Subsidiaries in connection with the
preparation, negotiation, execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby (including any fees and
expenses of legal counsel, accountants, financial advisors 

 

 

 

 

and consultants, investment bankers and brokers, notwithstanding any
contingencies for escrows, etc., any bonuses, costs and fees for obtaining or
securing required consents and approvals for the transactions contemplated
hereby, HSR Act filings fees, premiums or other payments in connection with
directors’ and officers’ liability insurance, and any such fees incurred by
Sellers and paid for or to be paid for by the Company), whether or not invoiced
or billed prior to the Closing, and whether incurred on behalf of the Company
or on behalf of the Sellers, in each case, which have not been assumed or paid
(or reimbursed by the Sellers to the Company, if paid by the Company) by the
Sellers. 

 

2.     Each of the following terms
is defined in the Section set forth opposite such term:

 

	
  Term

  	
   

  	
  Section

  
	
  Aggregate Purchase Price

  	
   

  	
  1.2.1

  
	
  Agreement

  	
   

  	
  Preamble

  
	
  Antitrust Restraint

  	
   

  	
  6.6.3

  
	
  Claims Period

  	
   

  	
  9.5

  
	
  Closing

  	
   

  	
  2.1

  
	
  Closing Date

  	
   

  	
  2.1

  
	
  COBRA

  	
   

  	
  3.15.3

  
	
  Company

  	
   

  	
  Recital
  A

  
	
  Company Authorizations

  	
   

  	
  3.10.2

  
	
  Company Balance Sheet

  	
   

  	
  3.6.3

  
	
  Company Balance Sheet Date

  	
   

  	
  3.6.3

  
	
  Company Debt

  	
   

  	
  3.6.6

  
	
  Company Employee Plan

  	
   

  	
  3.15.1

  
	
  Company Employee Plans

  	
   

  	
  3.15.1

  
	
  Company
  IP Rights

  	
   

  	
  3.12.1.2

  
	
  Company Products

  	
   

  	
  3.12.1.6

  
	
  Company Registered
  Intellectual property

  	
   

  	
  3.12.1.4

  
	
  Company Representatives

  	
   

  	
  6.3.1

  
	
  Company Source Code

  	
   

  	
  3.12.1.7

  
	
  Company Voting Debt

  	
   

  	
  3.3.3

  
	
  Company-Owned IP Rights

  	
   

  	
  3.12.1.3

  
	
  Confidential Agreement

  	
   

  	
  6.2.1

  
	
  Confidential Information

  	
   

  	
  3.12.20

  
	
  ERISA

  	
   

  	
  3.15.1

  
	
  ERISA Affiliate

  	
   

  	
  3.15.1

  
	
  Escrow Period

  	
   

  	
  9.5

  
	
  Estimated Closing
  Adjustments Certificate

  	
   

  	
  1.2.2

  
	
  Financial Statements

  	
   

  	
  3.6.1

  
	
  Foreign Plan

  	
   

  	
  3.15.7

  
	
  Forfeited Employee Bonus
  Amount

  	
   

  	
  1.4.2

  
	
  Holdback

  	
   

  	
  1.3.1

  
	
  Holdback Release Date

  	
   

  	
  1.3.1

  
	
  Indemnifiable Damages

  	
   

  	
  9.2

  
	
  Indemnified Person

  	
   

  	
  9.2

  

 

 

 

 

 

	
  Indemnity Escrow

  	
   

  	
  1.3.2

  
	
  Interest

  	
   

  	
  Recital
  B

  
	
  Interested Party

  	
   

  	
  3.16

  
	
  Material Contract

  	
   

  	
  3.19.1

  
	
  Open Source Materials

  	
   

  	
  3.12.21

  
	
  Original Purchase
  Agreement

  	
   

  	
  Recital
  A

  
	
  Outstanding Escrow Amount

  	
   

  	
  6.12

  
	
  Pledge and Security
  Agreement

  	
   

  	
  Recital
  F

  
	
  Purchase Price

  	
   

  	
  1.2.1

  
	
  Purchaser

  	
   

  	
  Preamble

  
	
  Second Installment

  	
   

  	
  1.2.1

  
	
  Seller(s)

  	
   

  	
  Recital
  A

  
	
  Sellers Representative

  	
   

  	
  Preamble

  
	
  Senior Debt

  	
   

  	
  6.12.1

  
	
  Senior Notes

  	
   

  	
  6.12.1

  
	
  Significant Customer

  	
   

  	
  3.21.1

  
	
  Significant Supplier

  	
   

  	
  3.21.2

  
	
  Subordination Agreement

  	
   

  	
  Recital
  F

  
	
  Third Installment

  	
   

  	
  1.2.1

  
	
  Third Party Intellectual
  Property Rights

  	
   

  	
  3.12.15

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