Document:

Exhibit 10.2

 

NEITHER THIS
SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH
SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES
ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

Void after
5:00 p.m. (New York time) on the 16th day of June, 2014.

 

	
  Number of Warrants:

  	
  Warrant Certificate No. Class A-   

  

 

ANSWERS
CORPORATION

 

(A corporation existing under the laws of the
State of Delaware)

 

THIS  COMMON STOCK PURCHASE WARRANT (the “Warrant”)
certifies that, for value received,
              
(the “Holder”), is entitled, upon the terms and subject to the
limitations on exercise and the conditions hereinafter set forth, at any time
on or after the date hereof and on or prior to 5:00 p.m. (New York time)
on June 16, 2014 (the “Expiry Time”) but not thereafter, to
subscribe for and purchase from Answers Corporation, a Delaware corporation
(the “Company”), up to
           shares
(the “Warrant Shares”) of Common Stock, par value $.001 per share, of
the Company (the “Common Stock”), subject to adjustment as provided
herein.  The purchase price of one share
of Common Stock under this Warrant shall be equal to the Exercise Price, as
defined in Section 2(b).

 

Section 1.                                            Definitions.  Capitalized terms used and not otherwise
defined herein shall have the meanings set forth in that certain Securities
Purchase Agreement (the “Securities Purchase Agreement”), dated June 16,
2008, among the Company and the purchasers signatory thereto.

 

Section 2.                                            Exercise.

 

a)                                           Exercise
of Warrant.  Exercise of the purchase
rights represented by this Warrant may be made, in whole or in part, at any
time or times on or after the date of issuance of this Warrant and on or before
the Expiry Time by delivery to the principal office of the Company of a duly
executed copy of the Notice of Exercise Form annexed hereto (or to such
other office or agency of the Company as it may designate by notice in writing
to the registered Holder at the address of such Holder appearing on the books
of 

 

 

the Company); provided, however, within five (5) trading
days of the date said Notice of Exercise is delivered to the Company, if this
Warrant is exercised in full, the Holder shall have surrendered this Warrant to
the Company and the Company shall have received 
payment of the aggregate Exercise Price of the shares thereby purchased
by wire transfer or cashier’s check drawn on a United States bank.  Notwithstanding anything herein to the
contrary, the Holder shall not be required to physically surrender this Warrant
to the Company until the Holder has purchased all of the Warrant Shares
available hereunder and the Warrant has been exercised in full.  Partial exercises of this Warrant resulting
in purchases of a portion of the total number of Warrant Shares available
hereunder shall have the effect of lowering the outstanding number of Warrant
Shares purchasable hereunder in an amount equal to the applicable number of
Warrant Shares purchased.  The Holder and
the Company shall maintain records showing the number of Warrant Shares
purchased and the date of such purchases. 
The Company shall deliver any objection to any Notice of Exercise Form within
two (2) Business Days of receipt of such notice.  The Holder and any assignee, by acceptance of
this Warrant, acknowledge and agree that, by reason of the provisions of this
paragraph, following the purchase of a portion of the Warrant Shares hereunder,
the number of Warrant Shares available for purchase hereunder at any given time
may be less than the amount stated on the face hereof.

 

Immediately
prior to the expiration of the Expiry Period, the portion of this Warrant not
exercised prior thereto shall automatically be deemed to be exercised in full
in the manner set forth in Section 2(c), without any further action on
behalf of the Holder; provided, however, that in the event that the cashless
exercise formula set forth in Section 2(c) yields a result that is
less than or equal to zero, then the unexercised portion of this Warrant shall
automatically terminate and become void. 
The Company may not call or redeem any portion of this Warrant without
the prior written consent of the affected Holder.

 

b)            Exercise
Price. The exercise price of the Common Stock under this Warrant shall be
$4.95 per share, subject to adjustment hereunder.

 

c)             Cashless
Exercise. This Warrant may also be exercised by means of a “cashless
exercise” in which the Holder shall be entitled to receive a certificate for
the number of Warrant Shares equal to the quotient obtained by dividing
[(A-B)*(X)] by (A), where:

 

(A) =      the VWAP on the trading day
immediately preceding the date of such election;

 

(B) =      the Exercise Price of this
Warrant, as adjusted; and

 

(X) =      the
number of Warrant Shares issuable upon exercise of this Warrant in accordance
with the terms of this Warrant by means of a cash exercise rather than a
cashless exercise.

 

 

The “VWAP” means, for any date, the
price determined by the first of the following clauses that applies:  (a) if the Common Stock is then listed
or quoted on a Trading Market, the daily volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on the Trading
Market on which the Common Stock is then listed or quoted as reported by
Bloomberg Financial L.P. (based on a Trading Day from 9:30 a.m. Eastern
Time to 4:02 p.m. Eastern Time);  (b) the
volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the OTC Bulletin Board or (c) if the Common Stock is
not then listed or quoted on the OTC Bulletin Board and if prices for the
Common Stock are then reported in the “Pink Sheets” published by the Pink
Sheets, LLC (or a similar organization or agency succeeding to its functions of
reporting prices), the most recent bid price per share of the Common Stock so
reported; or (d) in all other cases, the fair market value of a share of
Common Stock as determined by an independent appraiser selected in good faith
by the  Holder and reasonably acceptable
to the Company.

 

d)                                     Trading
Market Restrictions.  Notwithstanding
anything herein to the contrary, the Company shall not issue to any Holder any
shares of Common Stock, including pursuant to any rights herein, including,
without limitation, any exercise rights, to the extent such shares, when added
to the number of shares of Common Stock issued (A) upon conversion of any
shares of Series A Preferred Stock and (B) upon exercise of any
Common Stock Purchase Warrants issued pursuant to the Securities Purchase
Agreement would cause the total number of shares of Common Stock then
beneficially owned by such Holder and any Persons whose beneficial ownership of
Common Stock would be aggregated with such Holder for purposes of Section 13(d) of
the Securities Exchange Act to exceed 19.999% of the total number of
outstanding shares of Common Stock of the Company at the time of such issuance, or such greater number of shares of
Common Stock permitted pursuant to the corporate governance rules of the
Trading Market that is at the time the principal trading exchange or market for
the Common Stock, based upon share volume, as confirmed in writing by counsel
to the Company (the “Maximum Aggregate Share Amount”), unless and until
the Company obtains stockholder approval permitting such issuances in
accordance with the applicable Trading Market rules (“Stockholder
Approval”).  For purposes of this Section 2(d),
beneficial ownership shall be determined in accordance with Section 13(d) of
the Exchange Act and the rules and regulations promulgated
thereunder.    If on any attempted
exercise of this Warrant, the issuance of Warrant Shares would exceed the
Maximum Aggregate Share Amount and the Company shall not have previously
obtained Stockholder Approval at the time of exercise, then the Company shall
issue to the Holder requesting a Warrant exercise such number of Warrant Shares
as may be issued below the Maximum Aggregate Share Amount and, with respect to
the remainder of the aggregate number of Warrant Shares, this Warrant shall not
be exercisable until and unless Stockholder Approval has been obtained.

 

e)                                      Mechanics
of Exercise.

 

i.                  Authorization
of Warrant Shares.  The Company
covenants that all Warrant Shares which may be issued upon the exercise of the
purchase rights represented by this Warrant will, upon exercise of the 

 

 

purchase rights represented by this Warrant and payment to the Company
of the purchase price therefor, be duly authorized, validly issued, fully paid
and nonassessable and free from all taxes, liens and charges in respect of the
issue thereof (other than taxes in respect of any transfer occurring contemporaneously
with such issue).

 

ii.               Delivery
of Certificates Upon Exercise. 
Certificates for shares purchased hereunder shall be transmitted by the
transfer agent of the Company to the Holder by crediting the account of the
Holder’s prime broker with the Depository Trust Company through its Deposit
Withdrawal Agent Commission (“DWAC”) system if the Company is a
participant in such system, and otherwise by physical delivery to the address
specified by the Holder in the Notice of Exercise within three (3) Trading
Days from the delivery to the Company of the Notice of Exercise Form, surrender
of this Warrant (if required) and payment of the aggregate  Exercise Price (unless exercised by means of
a cashless exercise pursuant to Section 2(c)) (“Warrant Share Delivery Date”).  This Warrant shall be deemed to have been
exercised on the date the Exercise Price is received by the Company (or in the
case of a cashless exercise pursuant to Section 2(c), the date this
Warrant is surrendered).  If all or any
part of a Warrant is exercised at a time when there is an effective
registration statement to cover the issuance or resale of the Warrant Shares or
if the legend is not required under applicable securities laws, such Warrant
Shares shall be issued free of all legends on or before the Warrant Share
Delivery Date.  The Warrant Shares shall
be deemed to have been issued, and Holder or any other Person so designated to
be named therein shall be deemed to have become a holder of record of such
shares for all purposes, as of the date the Warrant has been exercised by
payment to the Company of the Exercise Price, or the cancellation of shares
pursuant to Section 2(c) hereof, and all taxes required to be paid by
the Holder, if any, pursuant to Section 2(d)(vi) prior to the
issuance of such shares, have been paid irrespective of the date such Warrant
Shares are credited to the Holder’s DWAC account, or the date of delivery of
certificates evidencing the Warrant Shares, as the case may be.

 

iii.            Delivery
of New Warrants Upon Exercise.  If
this Warrant shall have been exercised in part, the Company shall, at the
request of a Holder and upon surrender of this Warrant certificate, at the time
of delivery of the certificate or certificates representing Warrant Shares,
deliver to Holder a new Warrant evidencing the rights of Holder to purchase the
unpurchased Warrant Shares called for by this Warrant, which new Warrant shall
in all other respects be identical with this Warrant.

 

iv.           Rescission
Rights.  If the Company fails to
cause its transfer agent to transmit to the Holder a certificate or
certificates representing the 

 

 

Warrant Shares pursuant to this Section 2(e) by the Warrant
Share Delivery Date, then the Holder will have the right to rescind such
exercise.

 

v.              Buy-In.   In addition to any other rights available to
the Holder, if by the Warrant Share Delivery Date the Company fails to deliver
the required number of Warrant Shares in the manner required pursuant to Section 2(e)(ii),
and if after such date and prior to the receipt of such Warrant Shares, the
Holder is required by its broker to purchase (in an open market transaction or
otherwise), or the Holder’s broker purchases, 
shares of Common Stock to deliver in satisfaction of a sale by the
Holder of the Warrant Shares which the Holder was entitled to receive upon such
exercise relating to such Warrant Share Delivery Date (a “Buy-In”), then
the Company shall (1) pay in cash to the Holder (in addition to any other
remedies available to or elected by such Holder) the amount by which (x) the
Holder’s total purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased exceeds (y) the product of (A) the
aggregate number of Warrant Shares that the Company was required to deliver to
the Holder in connection with the exercise at issue and (B) the actual
sale price at which the sell order giving rise to such purchase obligation was
executed (including any brokerage commissions) and (2) at the option of
the Holder, either reinstate the portion of the Warrant and equivalent number
of Warrant Shares for which such exercise was not honored or deliver to the
Holder the number of shares of Common Stock that would have been issued had the
Company timely complied with its exercise and delivery obligations hereunder.  The Holder shall provide the Company written
notice indicating the amounts payable to the Holder in respect of the Buy-In.

 

vi.           No
Fractional Shares or Scrip.  No
fractional shares or scrip representing fractional shares shall be issued upon
the exercise of this Warrant.  As to any
fraction of a share that Holder would otherwise be entitled to purchase upon
such exercise, the Company shall pay a cash adjustment in respect of such final
fraction in an amount equal to such fraction multiplied by the Exercise Price.

 

vii.        Charges,
Taxes and Expenses.  Issuance of
certificates for Warrant Shares shall be made without charge to the Holder for
any issue or transfer tax or other incidental expense in respect of the
issuance of such certificate, all of which taxes and expenses shall be paid by
the Company, and such certificates shall be issued in the name of the Holder or
in such name or names as may be directed by the Holder; provided, however,
that in the event certificates for Warrant Shares are to be issued in a name
other than the name of the Holder, this Warrant when surrendered for exercise
shall be accompanied by the Assignment Form attached hereto duly executed
by the Holder; and the Company may require, as a condition thereto, the payment
of a sum sufficient to reimburse it for any transfer tax incidental thereto.

 

 

f)                                             The
Company’s obligations to issue and deliver Warrant Shares in accordance with
the terms hereof are absolute and unconditional, irrespective of any action or
inaction by the Holder to enforce the same, any waiver or consent with respect
to any provision hereof, the recovery of any judgment against any Person or any
action to enforce the same, or any setoff, counterclaim, recoupment, limitation
or termination, or any breach or alleged breach by the Holder or any other
Person of any obligation to the Company or any violation or alleged violation
of law by the Holder or any other Person, and irrespective of any other
circumstance which might otherwise limit such obligation of the Company to the
Holder in connection with the issuance of Warrant Shares.  Nothing herein shall limit a Holder’s right
to pursue any other remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or injunctive
relief with respect to the Company’s failure to timely deliver the Warrant
Shares upon exercise of the Warrant as required pursuant to the terms hereof.

 

Section 3.                                            Certain
Adjustments.

 

a)                                           Stock
Dividends and Splits. If the Company, at any time while this Warrant is
outstanding: (A) pays a stock dividend or otherwise makes a distribution
or distributions on shares of its Common Stock or any other equity or equity
equivalent securities payable in shares of Common Stock (which, for avoidance
of doubt, shall not include any shares of Common Stock issued by the Company
pursuant to this Warrant), (B) subdivides outstanding shares of Common
Stock into a larger number of shares, (C) combines (including by way of
reverse stock split) outstanding shares of Common Stock into a smaller number
of shares, or (D) issues by reclassification of shares of the Common Stock
any shares of capital stock of the Company, then in each case the Exercise
Price shall be multiplied by a fraction of which the numerator shall be the
number of shares of Common Stock (excluding treasury shares, if any)
outstanding immediately before such event and of which the denominator shall be
the number of shares of Common Stock outstanding immediately after such event
and the number of shares issuable upon exercise of this Warrant shall be
proportionately adjusted.  Any adjustment
made pursuant to this Section 3(a) shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or re-classification.

 

b)                                          Subsequent
Equity Sales.  If the Company shall
sell or grant any option to purchase or otherwise dispose of or issue any
Common Stock or Common Stock Equivalents entitling any Person to acquire shares
of Common Stock, at an effective price per share less than the then Exercise
Price (such lower price, the “Base Share Price” and such issuances
collectively, a “Dilutive Issuance”), as adjusted hereunder (if the
holder of the Common Stock or Common Stock Equivalents so issued shall at any
time, whether by operation of purchase price adjustments, reset provisions,
floating conversion, exercise or exchange prices or otherwise, or due to
warrants, options or rights per share which is issued in connection with such
issuance, be entitled to receive shares of Common Stock at an effective price
per share which is less than the Exercise Price, such issuance shall be deemed to
have occurred for less than the Exercise Price), then, the Exercise Price shall
be reduced by multiplying the Exercise Price by a fraction, the numerator of
which is the 

 

 

number of shares of Common Stock issued and outstanding immediately
prior to the Dilutive Issuance plus the number of shares of Common Stock and
Common Stock Equivalents which the aggregate consideration received or
receivable by the Company in connection with such Dilutive Issuance would
purchase at the then effective Exercise Price, and the denominator of which
shall be the sum of the number of shares of Common Stock issued and outstanding
immediately prior to the Dilutive Issuance plus the number of shares of Common
Stock and Common Stock Equivalents so issued or issuable in connection with the
Dilutive Issuance. Such adjustment shall be made whenever such Common Stock or
Common Stock Equivalents are issued.  The
Company shall notify the Holder in writing, no later than the Trading Day
following the issuance of any Common Stock or Common Stock Equivalents subject
to this section, indicating therein the applicable issuance price, or of
applicable reset price, exchange price, conversion price and other pricing
terms (such notice the “Dilutive Issuance Notice”).  For purposes of clarification, whether or not
the Company provides a Dilutive Issuance Notice pursuant to this Section 3(b),
upon the occurrence of any Dilutive Issuance, after the date of such Dilutive
Issuance the Holder is entitled to receive a number of Warrant Shares calculated
based upon the Base Share Price regardless of whether the Holder accurately
refers to the Base Share Price in the Notice of Exercise.

 

c)                                      Pro
Rata Distributions.  If the Company,
at any time prior to the Expiry Time, shall declare, or distribute any dividend
or other distribution to all holders of Common Stock (and not to Holders of the
Warrants) evidences of its indebtedness or assets (including cash and cash
dividends) or rights or warrants to subscribe for or purchase any security
other than the Common Stock, then in each such case the Exercise Price shall be
adjusted by multiplying the Exercise Price in effect immediately prior to the
record date fixed for determination of stockholders entitled to receive such
distribution by a fraction of which the denominator shall be the VWAP
determined as of the record date mentioned above, and of which the numerator
shall be such VWAP on such record date less the then per share fair market
value at such record date of the portion of such assets or evidence of indebtedness
so distributed applicable to one outstanding share of the Common Stock as
determined by the Board of Directors of the Company in good faith.  The adjustment shall be described in a
statement provided to the Holder.  Such
adjustment shall be made whenever any such distribution is made and shall
become effective immediately after the record date mentioned above.

 

d)                                     Fundamental
Transaction. If, at any time while this Warrant is outstanding, (A) the
Company effects any merger or consolidation of the Company with or into another
Person, (B) the Company effects any sale of all or substantially all of
its assets in one or a series of related transactions, (C) any tender
offer or exchange offer (whether by the Company or another Person) is completed
pursuant to which holders of Common Stock are permitted to tender or exchange
their shares for other securities, cash or property, or (D) the Company
effects any reclassification of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively converted into or
exchanged for other securities, cash or property (in any such case, a “Fundamental
Transaction”), then, upon any subsequent exercise of this Warrant, the
Holder shall have the right to receive, for each Warrant Share that would have
been issuable upon such exercise immediately prior to the occurrence of such
Fundamental 

 

 

Transaction, at the option of the Holder, (a) the number of shares
of Common Stock of the successor or acquiring corporation or of the Company, if
it is the surviving corporation, and any additional consideration (the “Alternate
Consideration”) receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a Holder of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event or (b) if the Company is acquired in an
all cash transaction, cash equal to the value of this Warrant as determined in
accordance with the Black-Scholes option pricing formula.  For purposes of any such exercise, the
determination of the Exercise Price shall be appropriately adjusted to apply to
such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Company shall apportion the Exercise Price among the
Alternate Consideration in a reasonable manner reflecting the relative value of
any different components of the Alternate Consideration.  If holders of Common Stock are given any
choice as to the securities, cash or property to be received in a Fundamental
Transaction, then the Holder shall be given the same choice as to the Alternate
Consideration it receives upon any exercise of this Warrant following such
Fundamental Transaction.  To the extent
necessary to effectuate the foregoing provisions, any successor to the Company
or surviving entity in such Fundamental Transaction shall issue to the Holder a
new warrant consistent with the foregoing provisions and evidencing the Holder’s
right to exercise such warrant into Alternate Consideration. The terms of any
agreement pursuant to which a Fundamental Transaction is effected shall include
terms requiring any such successor or surviving entity to comply with the
provisions of this Section 3(d) and insuring that this Warrant (or
any such replacement security) will be similarly adjusted upon any subsequent
transaction analogous to a Fundamental Transaction.

 

e)                                      Calculations.
All calculations under this Section 3 shall be made to the nearest cent or
the nearest 1/100th of a share, as the case may be. For purposes of this Section 3,
the number of shares of Common Stock deemed to be issued and outstanding as of
a given date shall be the sum of the number of shares of Common Stock (excluding
treasury shares, if any) issued and outstanding.

 

f)                                        Voluntary
Adjustment By Company. Subject to the Exercise Floor Price, the Company may
at any time during the term of this Warrant reduce the then current Exercise
Price to any amount and for any period of time deemed appropriate by the Board
of Directors of the Company (including the Preferred Director, as such term is
defined in the Certificate of Designation) and with the approval of the Holder.

 

g)                                     Notice
to Holders.

 

i.                  Adjustment
to Exercise Price. Whenever the Exercise Price is adjusted pursuant to this
Section 3, the Company shall promptly mail to each Holder a notice setting
forth the Exercise Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment.

 

ii.               Notice
to Allow Exercise by Holder. If (A) the Company shall declare a
dividend (or any other distribution) on the Common Stock; 

 

 

(B) the Company shall declare a special nonrecurring cash dividend
on or a redemption of the Common Stock; (C) the Company shall authorize
the granting to all holders of the Common Stock rights or warrants to subscribe
for or purchase any shares of capital stock of any class or of any rights; (D) the
approval of any stockholders of the Company shall be required in connection
with any reclassification of the Common Stock, any consolidation or merger to
which the Company is a party, any sale or transfer of all or substantially all
of the assets of the Company, of any compulsory share exchange whereby the
Common Stock is converted into other securities, cash or property; (E) the
Company shall authorize the voluntary or involuntary dissolution, liquidation
or winding up of the affairs of the Company; then, in each case, the Company
shall cause to be mailed to the Holder at its last address as it shall appear
upon the Warrant Register of the Company, at least 10 calendar days prior to
the applicable record or effective date hereinafter specified, a notice stating
(x) the date on which a record is to be taken for the purpose of such
dividend, distribution, redemption, rights or warrants, or if a record is not
to be taken, the date as of which the holders of the Common Stock of record to
be entitled to such dividend, distributions, redemption, rights or warrants are
to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to become
effective or close, and the date as of which it is expected that holders of the
Common Stock of record shall be entitled to exchange their shares of the Common
Stock for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer or share exchange;
provided, in each case that such information shall be made known to the public
through a press release, filing with the Commission, or other public
announcement prior to or in conjunction with such notice being provided to the
Holder, and provided further that the failure to mail such notice or any defect
therein or in the mailing thereof shall not affect the validity of the
corporate action required to be specified in such notice.  The Holder is entitled to exercise this
Warrant during the 10-day period commencing on the date of such notice to the
effective date of the event triggering such notice.

 

h)                                           Floor
Price.  Until such time as the Company obtains
Stockholder Approval in order to allow the Exercise Price to be
less than the Exercise Floor Price (as defined below), no adjustment pursuant
to Sections 3(a) or 3(b) shall cause the Exercise Price to be less
than $3.82, as adjusted for any stock dividend, stock split, stock combination,
reclassification or similar transaction (the “Exercise Floor Price”).

 

Section 4.                                            Transfer
of Warrant.

 

a)                                            Transferability.  This Warrant and all rights hereunder are
transferable, in whole or in part and without the Company’s consent, upon
surrender of this Warrant at the principal office of the Company, together with
a written assignment of this Warrant substantially in the form attached hereto duly
executed by the Holder or its agent or 

 

 

attorney and funds sufficient to pay any transfer taxes payable upon
the making of such transfer.  Upon such
surrender and, if required, such payment, the Company shall execute and deliver
a new Warrant or Warrants in the name of the assignee or assignees and in the
denomination or denominations specified in such instrument of assignment, and
shall issue to the assignor a new Warrant evidencing the portion of this
Warrant not so assigned, and this Warrant shall promptly be cancelled.  A Warrant, if properly assigned, may be
exercised by a new holder for the purchase of Warrant Shares without having a
new Warrant issued.

 

b)                                          New
Warrants. This Warrant may be divided or combined with other Warrants upon
presentation hereof at the aforesaid office of the Company, together with a
written notice specifying the names and denominations in which new Warrants are
to be issued, signed by the Holder or its agent or attorney.  Subject to compliance with Section 4(a),
as to any transfer which may be involved in such division or combination, the
Company shall execute and deliver a new Warrant or Warrants in exchange for the
Warrant or Warrants to be divided or combined in accordance with such notice.

 

c)                                           Warrant
Register. The Company shall register this Warrant, upon records to be
maintained by the Company for that purpose (the “Warrant Register”), in
the name of the record Holder hereof. 
The Company may deem and treat the registered Holder of this Warrant as
the absolute owner hereof for the purpose of any exercise hereof or any
distribution to the Holder, and for all other purposes, absent actual notice to
the contrary.

 

Section 5.                                            Miscellaneous.

 

a)                                           Title
to Warrant.  Prior to the Expiry Time
and subject to compliance with applicable laws and Section 4 of this
Warrant, this Warrant and all rights hereunder are transferable, in whole or in
part, at the office or agency of the Company by the Holder in person or by duly
authorized attorney, upon surrender of this Warrant together with the
Assignment Form annexed hereto properly endorsed.

 

b)                                          No
Rights as Stockholder Until Exercise. 
This Warrant does not entitle the Holder to any voting rights or other
rights as a stockholder of the Company prior to the exercise hereof.  Upon the surrender of this Warrant and the
payment of the aggregate Exercise Price (or by means of a cashless exercise),
the Warrant Shares so purchased shall be and be deemed to be issued to such
Holder as the record owner of such shares as of the close of business on the
later of the date of such surrender or payment.

 

c)                                           Loss,
Theft, Destruction or Mutilation of Warrant. The Company covenants that
upon receipt by the Company of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant or any stock certificate
relating to the Warrant Shares, and in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to it (which, in the case of the
Warrant, shall not include the posting of any bond), and upon surrender and
cancellation of such Warrant or stock certificate, if mutilated, the Company
will make and deliver a new Warrant or stock certificate of like tenor and
dated as of such cancellation, in lieu of such Warrant or stock certificate.

 

 

d)                                     Saturdays,
Sundays, Holidays, etc.  If the last
or appointed day for the taking of any action or the expiration of any right
required or granted herein shall be a Saturday, Sunday or a legal holiday, then
such action may be taken or such right may be exercised on the next succeeding
day not a Saturday, Sunday or legal holiday.

 

e)                                      Authorized
Shares.  The Company covenants that
during the period the Warrant is outstanding, it will maintain a reserve, free
from preemption rights, from its duly authorized shares of Common Stock for
issuance pursuant to the Transaction Documents in such amount as may be
required to fulfill its obligations in full under the Transaction
Documents.  The Company further covenants
that its issuance of this Warrant shall constitute full authority to its
officers who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for the Warrant Shares upon the
exercise of the purchase rights under this Warrant.  The Company will take all such reasonable
action as may be necessary to assure that such Warrant Shares may be issued as
provided herein without violation of any applicable law or regulation, or of
any requirements of the Trading Market upon which the Common Stock may be
listed.  If at any time during the Expiry
Period the number of authorized but unissued shares of Common Stock shall not
be sufficient to permit exercise of this Warrant, the Company will take such
corporate action as may, in the opinion of its counsel, be necessary to
increase its authorized but unissued shares of Common Stock (or other
securities as provided herein) to such number of shares as shall be sufficient
for such purposes.

 

Except and to
the extent as waived or consented to by the Holder, the Company hereby covenants
to not by any action, including, without limitation, amending its certificate
of incorporation, bylaws or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any
of the terms of this Warrant, and will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions as may be
necessary or appropriate to protect the rights of Holder as set forth in this
Warrant against impairment.  Without
limiting the generality of the foregoing, the Company will (a) not
increase the par value of any Warrant Shares above the Exercise Price then in
effect and (b) take all such action as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable Warrant Shares upon the exercise of this Warrant.

 

f)                                        Jurisdiction.
All questions concerning the construction, validity, enforcement and
interpretation of this Warrant shall be determined in accordance with the
provisions of the Securities Purchase Agreement.

 

g)                                     Restrictions.  The Holder acknowledges that the Warrant
Shares acquired upon the exercise of this Warrant, if not registered, will have
restrictions upon resale imposed by state and federal securities laws.

 

h)                                     Nonwaiver
and Expenses.  No course of dealing
or any delay or failure to exercise any right hereunder on the part of Holder
shall operate as a waiver of such right or otherwise prejudice Holder’s rights,
powers or remedies, notwithstanding the fact that all rights hereunder
terminate on the Expiry Time.  If the
Company willfully and 

 

 

knowingly fails
to comply with any provision of this Warrant, which results in any material
damages to the Holder, the Company shall pay to Holder such amounts as shall be
sufficient to cover any costs and expenses incurred by Holder in collecting any
amounts due pursuant hereto or in otherwise enforcing any of its rights, powers
or remedies hereunder.

 

i)                                         Notices.  Any notice, request or other document
required or permitted to be given or delivered to the Holder by the Company
shall be delivered in accordance with the notice provisions of the Securities
Purchase Agreement.

 

j)                                         Limitation
of Liability.  No provision hereof,
in the absence of any affirmative action by Holder to exercise this Warrant or
purchase Warrant Shares, and no enumeration herein of the rights or privileges
of Holder, shall give rise to any liability of Holder for the purchase price of
any Common Stock or as a stockholder of the Company, whether such liability is
asserted by the Company or by creditors of the Company.

 

k)                                      Remedies.  The remedies provided in this Warrant shall
be cumulative and in addition to all other remedies available or granted by
law, including recovery of damages. Each of the parties hereto will be entitled
to specific performance of its rights under this Warrant.  The Company acknowledges that a breach by it of
its obligations hereunder will cause irreparable harm to the Holder and agrees
that monetary damages would not be adequate compensation for any loss incurred
by reason of a breach or threatened breach by it of the provisions of this
Warrant and hereby agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate including making a showing
of economic loss and the posting of a bond or other security.

 

l)                                         Successors
and Assigns.  Subject to applicable
securities laws, this Warrant and the rights and obligations evidenced hereby
shall inure to the benefit of and be binding upon the successors of the Company
and the successors and permitted assigns of Holder.  The provisions of this Warrant are intended
to be for the benefit of all Holders from time to time of this Warrant and
shall be enforceable by any such Holder or holder of Warrant Shares.

 

m)                                   Amendment.  This Warrant may be modified or amended or
the provisions hereof waived only with the written consent of the Company and
the Holder.

 

n)                                     Severability.  Wherever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Warrant.

 

o)                                     Headings.  The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.

 

********************

 

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officer thereunto duly authorized.

 

 

Dated:  June 16, 2008

 

 

	
   

  	
  ANSWERS CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

NOTICE OF EXERCISE

 

TO:     ANSWERS
CORPORATION

 

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

 

(2)          Payment shall take the form of (check
applicable box):

 

o
in lawful money of the United States; or (if
available)

 

o
the cancellation of such number of Warrant Shares as
is necessary, in accordance with the formula set forth in subsection 2(c), to
exercise this Warrant with respect to the maximum number of Warrant Shares
purchasable pursuant to the cashless exercise procedure set forth in subsection
2(c).

 

(3)          Please issue a certificate or certificates
representing said Warrant Shares in the name of the undersigned or in such
other name as is specified below:

 

	
   

  	
   

  	
   

  

 

The Warrant
Shares shall be delivered to the following:

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

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

 

[SIGNATURE OF
HOLDER]

 

	
  Name of Investing Entity:

  	
   

  
	
  Signature of Authorized Signatory of
  Investing Entity:

  	
   

  
	
  Name of Authorized Signatory:

  	
   

  
	
  Title of Authorized Signatory:

  	
   

  
	
  Date:

  	
   

  
						

 

 

ASSIGNMENT FORM

 

(To assign the
foregoing warrant, execute

this form and supply required information. 

Do not use this form to exercise the warrant.)

 

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

 

	
   

  	
   whose address is

  
	
   

  	
   

  
	
   

  	
  .

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Dated:

  	
   

  	
  ,

  	
   

  	
   

  
										

 

 

	
   

  	
  Holder’s
  Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Holder’s Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Signature Guaranteed:

  	
   

  	
   

  
					

 

NOTE:  The signature to this Assignment Form must
correspond with the name as it appears on the face of the Warrant, without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank or trust company.  Officers of
corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.Exhibit
10.3

 

WARRANT
AGREEMENT

 

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

 

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

 

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

 

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

 

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

 

2.                                                                                       Exercise
of Warrant.

 

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

 

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

 

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5.                                                                                       Closing
Conditions.

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

8.                                                                                       Non-Solicitation.

 

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

 

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

14.                                                                                 Reservation
and Listing of Securities.

 

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

 

 

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

 

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

 

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

 

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

 

16.                                                                                 Legends.

 

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

 

 

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

 

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

 

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

 

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

 

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

 

 

Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP

155 Constitution Drive

Menlo Park, CA 94025

Attention: Scott C. Dettmer, Bennett L. Yee

Fax: (650) 321-2800.

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

(Signature Pages Follow)

 

 

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

 

	
  ANSWERS CORPORATION

  	
   

  	
  Address for Notice:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Robert S. Rosenschein

  	
   

  	
   

  
	
   

  	
  Name:  Robert S. Rosenschein

  	
   

  	
   

  
	
   

  	
  Title:    Chief Executive
  Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

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

  	
   

  	
   

  
					

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

 

[HOLDER SIGNATURE PAGE TO WARRANT AGREEMENT]

 

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

 

 

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

  
	
  Redpoint Omega, LLC

  
	
   

  	
   

  
	
  Redpoint Omega Associates, LLC, as nominee

  
	
   

  	
   

  
	
  By:

  	
  /s/ W. Allen Beasley

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  W. Allen Beasley

  	
   

  
	
   

  	
  Name

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Managing Director

  	
   

  
	
   

  	
  Title

  
	
   

  	
   

  
	
   

  	
   

  
	
  Address for Notice of Holder:

  
	
   

  	
   

  
	
   

  	
   

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

  
	
   

  
	
   

  
	
  EIN Number:

  
				

 

 

EXHIBIT A

 

[Form of Warrant Certificate]

 

 

EXHIBIT B

 

[Form of Common Stock Purchase Warrant
Certificate]

 

 

EXHIBIT C

 

[Series B Certificate of Designation]

 

 

NOTICE OF EXERCISE

 

TO:     ANSWERS
CORPORATION

 

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

 

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

 

	
   

  	
   

  	
   

  	
   

  

 

The Units shall be
delivered to the following:

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

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

 

[SIGNATURE OF
HOLDER]

 

	
  Name of Investing
  Entity:

  	
   

  
	
  Signature
  of Authorized Signatory of Investing Entity:

  	
   

  
	
  Name of Authorized
  Signatory:

  	
   

  
	
  Title of Authorized
  Signatory:

  	
   

  
	
  Date:

  	
   

  
						

 

 

ASSIGNMENT
FORM

 

(To assign the foregoing warrant, execute

this form and supply required information. 

Do not use this form to exercise the warrant.)

 

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

 

	
   

  	
   whose address is

  
	
   

  	
   

  
	
   

  	
  .

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Dated:

  	
   

  	
  ,

  	
   

  	
   

  
										

 

 

	
   

  	
  Holder’s
  Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Holder’s Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Signature Guaranteed:

  	
   

  	
   

  
					

 

 

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

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