exv10w20






Exhibit 10.20



THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION THEREOF UNDER SUCH ACT OR OTHERWISE IN ACCORDANCE WITH APPLICABLE LAW.




WARRANT TO PURCHASE STOCK




	 	 	 
	Company:
	 	Reply! Inc.
	Number of Shares:
	 	150,000 Shares
	Class of Stock:
	 	Series A Preferred Stock
	Initial Exercise Price:
	 	$2.727 per share
	Issue Date:
	 	August 30, 2005
	Expiration Date:
	 	August 30, 2012






     THIS WARRANT CERTIFIES THAT, for value received, receipt of which is hereby acknowledged, ORIX
Venture Finance LLC (“Holder”) is entitled to purchase the number of fully paid and non-assessable
shares of the Class of Stock (the “Shares”) of Reply! Inc. (the “Company”) at the initial exercise
price per Share (the “Warrant Price”) set forth above, as constituted on the date hereof and as
adjusted pursuant to the other terms of this Warrant, subject to the provisions and upon the terms
and conditions set forth in this Warrant. This Warrant is being issued pursuant to a Loan and
Security Agreement between the Company and Holder dated as of August 30, 2005 (the “Loan
Agreement”) (Capitalized terms used herein, which are not defined, shall have the meanings set
forth in the Loan Agreement.)


ARTICLE 1. SHARES; EXERCISE.




     1.1     Number of Shares.  The number of Shares initially subject to this Warrant shall
initially be the number of Shares set forth above.



     1.2     Method of Exercise.  Holder may exercise this Warrant by delivering (including a
facsimile transmission) a duly executed Notice of Exercise in substantially the form attached as
Appendix 1 to the principal office of the Company. Unless Holder is exercising the conversion right
set forth in Section 1.3, Holder shall also deliver to the Company the aggregate Warrant Price for
the Shares being purchased (i) by wire transfer or by check, or (ii) by notice of cancellation of
indebtedness of the Company to Holder, or (iii) a combination of (i) or (ii).



     1.3     Conversion Right.  In lieu of exercising this Warrant as specified in Section 1.2,
Holder may from time to time convert this Warrant, in whole or in part, into a number of Shares
determined by dividing (a) the aggregate fair market value of the Shares or other securities
otherwise issuable upon the proposed whole or partial exercise of this Warrant minus the aggregate
Warrant Price of such Shares by (b) the fair market value of one Share. The fair market value of
the Shares shall be determined pursuant to Section 1.6 below.



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     1.4     Effective Date of Exercise.  This Warrant shall be deemed to have been exercised
immediately prior to the close of business on the date of its surrender for exercise as provided
above. The person entitled to receive the Shares issuable upon exercise of this Warrant shall be
treated for all purposes as the holder of record of such shares as of the close of business on the
date the Holder is deemed to have exercised this Warrant.



     1.5     No Rights of Shareholder.  This Warrant does not entitle Holder to any voting
rights as a shareholder of the Company prior to the exercise hereof. Upon exercise hereof, as set
forth herein, the Holder shall be deemed to be a shareholder of the Company holding the number of
shares as to which this Warrant has been exercised on the date the Notice of Exercise in
substantially the form attached as Appendix 1 has been delivered to the principal office of the
Company with any payment or other documents called for by the terms hereof.



     1.6     Fair Market Value.  If the Shares are traded in a public market, the fair market
value of the Shares shall be the closing price of the Shares (or the closing price of the Company’s
stock into which the Shares are convertible) reported for the business day immediately before
Holder delivers its Notice of Exercise to the Company. If the Shares are not traded in a public
market, the Board of Directors of the Company shall determine fair market value in its reasonable
good faith judgment. The foregoing notwithstanding, if Holder advises the Board of Directors in
writing that Holder disagrees with such determination, then the Company and Holder shall promptly
agree upon a reputable investment banking firm to undertake such valuation. If the Company and
Holder are unable to agree on such investment banking firm, then the Holder shall select three
reputable investment banking firms, and from those three firms the Company shall select one to
undertake such valuation. If the valuation of such investment banking firm is greater than that
determined by the Board of Directors by more than 10%, then all fees and expenses of such
investment banking firm shall be paid by the Company. In all other circumstances, such fees and
expenses shall be paid by Holder.



     1.7     Delivery of Certificate and New Warrant.  Promptly after Holder exercises or
converts this Warrant, the Company shall deliver to Holder certificates for the Shares acquired
and, if this Warrant has not been fully exercised or converted and has not expired, a new Warrant
representing the Shares not so acquired shall be delivered to Holder.



     1.8     Replacement of Warrants.  On receipt of an affidavit of an officer of the Holder of
the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or
destruction, on delivery of an indemnity agreement reasonably satisfactory in form and amount to
the Company or, in the case of mutilation, on surrender and cancellation of this Warrant, the
Company at its expense shall execute and deliver, in lieu of this Warrant, a new warrant of like
tenor.



     1.9     Acquisition of the Company.  Upon the closing of any Acquisition the successor
entity shall assume the obligations of this Warrant, and this Warrant shall be exercisable for the
same securities, cash, and property as would be payable for the Shares issuable upon exercise of
the unexercised portion of this Warrant as if such Shares were outstanding on the record date for
the Acquisition and subsequent closing. As used herein, “Acquisition” means any sale, license, or
other disposition of all or substantially all of the assets of the Company, or any reorganization,
consolidation, or merger of the Company in which the holders of the Company’s voting



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securities before the transaction (for such purpose treating all outstanding options and warrants
to purchase voting securities of the Company as having been exercised and treating all outstanding
debt and equity securities convertible into voting securities of the Company as having been
converted) beneficially own less than 50% of the outstanding voting securities of the surviving
entity after the transaction.




     1.10     Automatic Exercise Prior to Expiration,  To the extent this Warrant is not
previously exercised as to all of the Shares subject hereto, and if the fair market value of one
Share is greater than the Warrant Price then in effect, this Warrant shall be deemed automatically
exercised pursuant to Section 1.3 above (even if not yet surrendered) immediately before its
expiration date as set forth in this Warrant. For purposes of such automatic exercise, the fair
market value of one Share upon such expiration shall be determined pursuant to Section 1.6 above.
To the extent this Warrant or any portion thereof is deemed automatically exercised pursuant to
this Section, the Company agrees to promptly notify the holder hereof of the number of Shares, if
any, the holder hereof is to receive by reason of such automatic exercise.


ARTICLE 2. ADJUSTMENTS TO THE SHARES.




     2.1     Stock Dividends, Splits, Etc.  If the Company declares or pays a dividend on its
Stock payable in Common Stock or other securities, or subdivides the outstanding Stock into a
greater amount of Stock, then upon exercise of this Warrant, for each Share acquired, Holder shall
receive, without cost to Holder, the total number and kind of securities to which Holder would have
been entitled had Holder owned the Shares of record as of the date the dividend or subdivision
occurred.



     2.2     Reclassification, Exchange or Substitution.  Upon any reclassification, exchange,
substitution, or other event that results in a change of the number and/or class of the securities
issuable upon exercise or conversion of this Warrant, Holder shall be entitled to receive, upon
exercise or conversion of this Warrant, the number and kind of securities and property that Holder
would have received for the Shares if this Warrant had been exercised immediately before such
reclassification, exchange, substitution, or other event. Such an event shall include any automatic
conversion of the outstanding or issuable securities of the Company of the same class or series as
the Shares to Common Stock pursuant to the terms of the Company’s Articles or Certificate of
Incorporation upon the closing of a registered public offering of the Company’s Common Stock. After
the occurrence of such an event, the Company or its successor shall promptly issue to Holder a new
Warrant for such new securities or other property. The new Warrant shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments provided for in this
Article 2 including, without limitation, adjustments to the Warrant Price and to the number of
securities or property issuable upon exercise of the new Warrant. The provisions of this Section
2.2 shall similarly apply to successive reclassifications, exchanges, substitutions, or other
events.



     2.3     Adjustments for Combinations, Etc.  If the outstanding Shares are combined or
consolidated, by reclassification or otherwise, into a lesser number of shares, the Warrant Price
shall be proportionately increased.



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     2.4     Price Adjustment.  If the Company issues additional common shares (including shares
of Common Stock ultimately issuable upon conversion of a security convertible into Common Stock)
after the date of the Warrant and the consideration per additional common share is less than the
Warrant Price in effect immediately before such issue, the price at which the Shares are converted
to Common Stock shall be adjusted in accordance with the treatment of the series of securities of
which the Shares are part under the Company’s Certificate of Incorporation in effect on the Issue
Date.



     2.5     No Impairment.  The Company shall not, by amendment of its Articles or Certificate
of Incorporation or through a 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 to be observed or performed under this Warrant by the
Company, but shall at all times in good faith assist in carrying out of all the provisions of this
Article 2 and in taking all such action as may be necessary or appropriate to protect Holder’s
rights under this Article against impairment.



     2.6     Fractional Shares.  No fractional Shares shall be issuable upon exercise or
conversion of the Warrant and the number of Shares to be issued shall be rounded down to the
nearest whole Share. If a fractional share interest arises upon any exercise or conversion of the
Warrant, the Company shall eliminate such fractional share interest by paying Holder a cash amount
computed by multiplying the fractional interest by the fair market value of a full Share.



     2.7     Certificate as to Adjustments; Other Adjustments.  Upon each adjustment of the
Warrant Price, the Company at its expense shall promptly compute such adjustment, and furnish
Holder with a certificate of its Chief Financial Officer setting forth such adjustment and the
facts upon which such adjustment is based. The Company shall, upon written request, furnish Holder
a certificate setting forth the Warrant Price in effect upon the date thereof and the series of
adjustments leading to such Warrant Price. If any change in the outstanding securities of the
Company or any other event occurs, as to which the other provisions of this Article 2 are not
strictly applicable, or if strictly applicable would not fairly protect the purchase rights of the
Holder in accordance with such provisions, then the Board of Directors of the Company shall make an
adjustment in the number and class of shares subject to this Warrant, the Warrant Price or the
application of such provisions, so as to protect such purchase rights as aforesaid and to give the
Holder, upon exercise for the same aggregate Warrant Price, the total number, class and kind of
securities as it would have owned had the Warrant been exercised prior to the event and had it
continued to hold such securities until after the event requiring the adjustment.


ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.




     3.1     Representations and Warranties.  The Company hereby represents and warrants to the
Holder as follows:



               (a)     The initial Warrant Price hereunder is not greater than (i) the price per share at which
the Shares were last issued in an arm’s length transaction in which at least $500,000 of the Shares
were sold, or (ii) the fair market value of the Shares as of the date of this Warrant.




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               (b)     All Shares which may be issued upon the exercise of the purchase right represented by this
Warrant, and all securities, if any, issuable upon conversion of the Shares, shall, upon issuance,
be duly authorized, validly issued, fully paid and nonassessable, and free of any liens and
encumbrances except for restrictions on transfer provided for herein or under applicable federal
and state securities laws. The Company shall, at all times, reserve a sufficient number of Shares
and of shares of Common Stock for issuance upon Holder’s exercise of its rights hereunder and
conversion of the Shares.



               (c)     The Capitalization Table attached hereto as Exhibit A is true and complete as of the Issue
Date.



     3.2     Notice of Certain Events.  If the Company proposes at any time (a) to declare any
dividend or distribution upon its Common Stock, whether in cash, properly, stock, or other
securities and whether or not a regular cash dividend; (b) to offer for subscription pro rata to
the holders of any class or series of its stock any additional shares of stock of any class or
series or other rights; (c) to effect any reclassification or recapitalization of Common Stock; (d)
to merge or consolidate with or into any other corporation, or sell, lease, license, or convey all
or substantially all of its assets, or to liquidate, dissolve or wind up; or (e) offer holders of
registration rights the opportunity to participate in an underwritten public offering of the
company’s securities for cash, then, in connection with each such event, the Company shall give
Holder (1) at least 20 days prior written notice of the date on which a record will be taken for
such dividend, distribution, or subscription rights (and specifying the date on which the holders
of Common Stock will be entitled thereto) or for determining rights to vote, if any, in respect of
the matters referred to in (a) and (b) above; (2) in the case of the matters referred to in (c) and
(d) above at least 20 days prior written notice of the date when the same will take place (and
specifying the date on which the holders of Common Stock will be entitled to exchange their Common
Stock for securities or other property deliverable upon the occurrence of such event); and (3) in
the case of the matter referred to in (e) above, the same notice as is given to the holders of such
registration rights.



     3.3     Information Rights.  So long as the Holder holds this Warrant and/or any of the
Shares, and the Company is not filing quarterly and annual financial statements with the Securities
Exchange Commission, the Company shall deliver to the Holder the following:




	 	(a)	 	promptly after mailing, copies of all notices or other written
communications to the shareholders of the Company;
	 
	 	(b)	 	Monthly financial statements within 30 days after the end of each month;
	 
	 	(c)	 	Quarterly financial statements within 45 days after the end of each fiscal
quarter;
	 
	 	(d)	 	Annual, unqualified financial statements, audited by its independent
certified public accountants, within 180 days after the end of each fiscal year of
Borrower, provided that the annual financial statements for the year ended December
31, 2004 shall be delivered on or before October 31, 2005.





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     3.4     Registration Under Securities Act of 1933, as amended.  The Company agrees that
with respect to the Shares or, if the Shares are convertible into Common Stock of the Company, such
Common Stock, Holder shall have the registration rights set forth in the Company’s Investor Rights
Agreement dated August 17, 2005, as the same is in effect on the date hereof. In the event of any
subsequent changes to said Agreement which would be advantageous to the Holder, the Holder shall
have the benefit of such changes, but no changes to said Agreement which would be less advantageous
to the Holder shall be binding on the Holder.


ARTICLE 4. REPRESENTATIONS, WARRANTIES OF THE HOLDER.  The Holder represents and warrants to
the Company as follows:




     4.1     Purchase for Own Account.  Except for transfers to Holder’s affiliates, this
Warrant and the securities to be acquired upon exercise of this Warrant by the Holder will be
acquired for investment for the Holder’s account, not as a nominee or agent, and not with a view to
the public resale or distribution within the meaning of the 1933 Act, and the Holder has no present
intention of selling, granting any participation in, or otherwise distributing the same. The Holder
also represents that the Holder has not been formed for the specific purpose of acquiring this
Warrant or the Shares.



     4.2     Disclosure of Information.  The Holder has received or has had full access to all
the information it considers necessary or appropriate to make an informed investment decision with
respect to the acquisition of this Warrant and its underlying securities. The Holder further has
had an opportunity to ask questions and receive answers from the Company regarding the terms and
conditions of the offering of this Warrant and its underlying securities and to obtain additional
information (to the extent the Company possessed such information or could acquire it without
unreasonable effort or expense) necessary to verify any information furnished to the Holder or to
which the Holder has access.



     4.3     Investment Experience.  The Holder: (i) has experience as an investor in securities
and acknowledges that the Holder is able to fend for itself, can bear the economic risk of the
Holder’s investment in this Warrant and its underlying securities and has such knowledge and
experience in financial or business matters that the Holder is capable of evaluating the merits and
risks of its investment in this Warrant and its underlying securities and/or (ii) has a preexisting
personal or business relationship with the Company and certain of its officers, directors or
controlling persons of a nature and duration that enables the Holder to be aware of the character,
business acumen and financial circumstances of such persons.



     4.4     Accredited Investor Status.  The Holder is an “accredited investor” within the
meaning of Regulation D promulgated under the 1933 Act.


ARTICLE 5. MISCELLANEOUS




     5.1     Term.  This Warrant is exercisable, in whole or in part, at any time and from time
to time on or before the Expiration Date set forth above.



     5.2     Legends.   This Warrant and the Shares (and the securities issuable, directly or
indirectly, upon conversion of the Shares, if any) shall be imprinted with a legend in
substantially the following form:



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THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT
BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH
ACT OR AS PERMITTED UNDER APPLICABLE LAW.



     5.3     Compliance with Securities Laws on Transfer.  This Warrant and the Shares issuable
upon exercise of this Warrant (and the securities issuable, directly or indirectly, upon conversion
of the Shares, if any) may not be transferred or assigned in whole or in part without
compliance with applicable federal and state securities laws by the transferor and the transferee.



     5.4     Transfer Procedure.  Subject to the provisions of Section 5.2, Holder may transfer
all or part of this Warrant or the Shares issuable upon exercise of this Warrant (or the securities
issuable, directly or indirectly, upon conversion of the Shares, if any) by giving the Company
notice of the portion of the Warrant being transferred setting forth the name, address and taxpayer
identification number of the transferee and surrendering this Warrant to the Company for reissuance
to the transferee(s) (and Holder if applicable).



     5.5     Notices.  All notices and other communications from the Company to the Holder, or
vice versa, shall be deemed delivered and effective when given personally or mailed by first-class
registered or certified mail, postage prepaid, to such address as may have been furnished to the
Company or the Holder, as the case may be, in writing by the Company or the Holder from time to
time.



     5.6     Waiver; Amendment.  This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought.



     5.7     Issue Tax.  The issuance of the securities subject to this Warrant shall be made
without charge to the Holder for any issue tax (other than applicable income taxes) in respect
thereof.



     5.8     Attorneys Fees.  In the event of any dispute between the parties concerning the
terms and provisions of this Warrant, the party prevailing in such dispute shall be entitled to
collect from the other party all costs reasonably incurred in such dispute, including reasonable
attorneys’ fees.



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     5.9     Governing Law.  This Warrant and all acts, transactions, disputes and controversies
arising hereunder or relating hereto, and all rights and obligations of Holder and Company shall be
governed by, and construed in accordance with the internal laws (and not the conflict of laws
rules) of the State of California.



	 	 	 	 	 
	 	Company:



Reply! Inc.

 	 
	 	By  	/s/ Frank M. Siskowski   /s/ Payam Zamani
 	 
	 	 	Title       CFO/CEO 	 
	 



	 	 	 	 	 
	Holder:



ORIX Venture Finance LLC

 	 	 
	By  	/s/ Kevin P. Sheehan
 	 	 
	 	Kevin P. Sheehan, 	 	 
	 	President and CEO 	 	 
	 



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APPENDIX 1




NOTICE OF EXERCISE




     1.     The undersigned hereby elects to purchase                        shares of the Series             
Preferred Stock of [Company] pursuant to the terms of the attached Warrant, and tenders herewith
payment of the purchase price of such shares in full.



     1.     The undersigned hereby elects to convert the attached Warrant into Shares in the manner
specified in the Warrant. This conversion is exercised with respect to                        of the Shares
covered by the Warrant.



[Strike paragraph that does not apply.]




     2.     Please issue a certificate or certificates representing said shares in the name of the
undersigned or in such other name as is specified below:




                  
                       
                       
                    




                  
                       
                       
                    




                  
                       
                       
                    



     3.     The undersigned represents it is acquiring the Shares solely for its own account and
not as a nominee for any other party and not with a view toward the resale or distribution thereof
except in compliance with applicable securities laws.



	 	 	 	 	 
	 
	 	(Signature)

 	 
	 	
 	 
	 	Date 	 
	 







 









 








Exhibit A




Capitalization Table