Document:

exv10w19

Exhibit 10.19

THIS WARRANT AND THE SECURITIES EVIDENCED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT COVERING SUCH
SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE ACT, OR THE COMPANY RECEIVES AN
OPINION OF COUNSEL FOR THE HOLDER OF SUCH SECURITIES REASONABLY SATISFACTORY TO THE COMPANY STATING
THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF THE ACT.

WARRANT TO PURCHASE STOCK

of

REPLY!, INC.

(void after December 31, 2010)

     Number of Shares Subject to Warrant.  FOR VALUE RECEIVED, subject to the terms and
conditions herein set forth, including without limitation, Section 10 hereof, the Holder (as
defined below) is entitled to purchase from Reply!, Inc., a California corporation (the
“Company”), at any time before 5:00 p.m. California time on December 31, 2010 (the
“Termination Date”), at a price per share equal to the Warrant Price (as defined below),
the Warrant Stock (as defined below and subject to adjustments as described below) upon exercise of
this Warrant pursuant to Section 6 hereof.

     Definitions.  As used in this Warrant, the following terms shall have the definitions
ascribed to them below:

                    (a)      “Change of Control” shall mean (i) the acquisition of the Company by another
entity by means of any transaction or series of related transactions (including, without
limitation, any reorganization, merger or consolidation); or (ii) a sale of all or substantially
all of the assets of the Company, in either case, in which the stockholders of the Company
immediately prior to the acquisition or sale, as the case may be, do not hold a majority of the
outstanding shares of capital stock of the surviving corporation. Notwithstanding the foregoing, a
transaction shall not be deemed a Change of Control if the sole purpose of the transaction is to
change the state of the Company’s incorporation or to create a holding company that will be owned
in substantially the same proportions by the persons who held the Company’s securities immediately
prior to such transaction.

                    (b)      “Holder” shall mean Payam Zamani or its assigns.

                    (c)      “Securities” shall mean (i) the class or series of preferred stock of the Company
issued in connection with a financing in which the Company raises a minimum of $1,000,000 or (ii)
Common Stock of the Company.

 

 

               (d)     “Warrant Price” shall be equal to $.01 per share, subject to adjustment pursuant
to Section 3 below.

               (e)     “Warrant Stock” shall mean the Securities purchasable upon exercise of this
Warrant or issuable upon conversion of this Warrant. The total number of Securities to be issued
upon exercise of this Warrant, subject to adjustment as described in Section 3 below, shall be
30,000.

1.     Adjustments and Notices.  The Warrant Price shall be subject to adjustment from time
to time in accordance with the following provisions:

               (a)     Subdivision, Stock Dividends or Combinations.  In case the Company shall at any
time subdivide the outstanding shares of stock subject to this Warrant or shall issue a stock
dividend with respect to the Securities, the Warrant Price in effect immediately prior to such
subdivision or the issuance of such dividend shall be proportionately decreased, and in case the
Company shall at any time combine the outstanding shares of the Securities, the Warrant Price in
effect immediately prior to such combination shall be proportionately increased, effective at the
close of business on the date of such subdivision, dividend or combination, as the case may be.

               (b)     Reclassification, Exchange, Substitution, In-Kind Distribution.  Upon any
reclassification, exchange, substitution, or other event that results in a change of the number
and/or class of the Warrant Stock or upon the payment of a dividend in securities or property other
than the Warrant Stock, the Holder shall be entitled to receive, upon exercise or conversion of
this Warrant, the number and kind of securities and property that the Holder would have received
for the Warrant Stock if this Warrant had been exercised immediately before the record date for
such reclassification, exchange, substitution, or other event or immediately prior to the record
date for such dividend. The Company or its successor shall promptly issue to the 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
Section 3 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
3(b) shall similarly apply to successive reclassifications, exchanges, substitutions, or other
events and successive dividends.

               (c)     No Impairment.  The Company shall not, by amendment of its Certificate of
Incorporation or through a reorganization, Change of Control, 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 Section 3 and in taking
all such action as may be necessary or appropriate to protect the Holder’s rights under this
Section 3 against impairment.

               (d)     Notice.  Upon any adjustment of the Warrant Price and any increase or decrease in
the number of shares of Warrant Stock, then, and in each such case, the Company, as promptly as
practicable thereafter, shall give written notice thereof to the Holder of this Warrant at the
address of such Holder as shown on the books of the Company which notice shall state the

 

 

Warrant Price as adjusted and the increased or decreased number of shares of Warrant Stock, setting
forth in reasonable detail the method of calculation of each. The Company also agrees to notify the
Holder of this Warrant in writing of a proposed Change of Control or the initial public offering of
the Company at least fifteen (15) days prior to the effective date thereof.

               (e)     Fractional Shares.  No fractional shares shall be issuable upon exercise or
conversion of the Warrant and the number of shares of Warrant Stock 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 the
Holder an amount computed by multiplying the fractional interest by the Fair Market Value (as
defined in Section 7 hereof) of a full share of the Warrant Stock.

     2.     No Stockholder Rights.  This Warrant, by itself, as distinguished from any shares
purchased hereunder, shall not entitle the Holder to any of the rights of a stockholder of the
Company.

     3.     Reservation of Stock.  The Company has reserved (or will reserve) from its
authorized and unissued Securities a sufficient number of shares to provide for the issuance of the
Warrant Stock upon the exercise or conversion of this Warrant and shall reserve from its authorized
and unissued Common Stock a sufficient number of shares to provide for the issuance of Common Stock
upon the conversion of the Warrant Stock. Issuance of this Warrant shall constitute full authority
to the Company’s officers who are charged with the duty of executing stock certificates to execute
and issue the necessary certificates for shares of Warrant Stock issuable upon the exercise or
conversion of this Warrant.

     4.     Exercise of Warrant.  This Warrant may be exercised in whole or part by the Holder,
at any time after the date hereof and prior to the termination of this Warrant, as provided in
Section 10 hereof, by the surrender of this Warrant, together with the Notice of Exercise and
Investment Representation Statement in the forms attached hereto as Attachments 1 and 2,
respectively, duly completed and executed at the principal office of the Company, specifying the
portion of the Warrant to be exercised and accompanied by payment in full of the Warrant Price in
cash or by check with respect to the shares of Warrant Stock being purchased. 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, and the person entitled to receive the shares of Warrant
Stock issuable upon such exercise shall be treated for all purposes as the Holder of such shares of
record as of the close of business on such date. As promptly as practicable after such date, the
Company shall issue and deliver to the person or persons entitled to receive the same a certificate
or certificates for the number of full shares of Warrant Stock issuable upon such exercise. If the
Warrant shall be exercised for less than the total number of shares of Warrant Stock then issuable
upon exercise, promptly after surrender of the Warrant upon such exercise, the Company will execute
and deliver a new Warrant, dated the date hereof, evidencing the right of the Holder to the balance
of the Warrant Stock purchasable hereunder upon the same terms and conditions set forth herein.

     5.     Conversion.  In lieu of exercising this Warrant or any portion hereof, the Holder
shall have the right to convert this Warrant or any portion hereof into Warrant Stock by executing
and delivering to the Company at its principal office the written Notice of Conversion

 

 

and Investment Representation Statement in the forms attached hereto as Attachments 2 and
3, respectively, specifying the portion of the Warrant to be converted, and accompanied by this
Warrant. The number of shares of Warrant Stock to be issued to the Holder upon such conversion
shall be computed using the following formula:

X = (P)(Y)(A-B)/A

	 	 	 	 	 
	where X =

	 	the number of shares of Warrant Stock to be issued to the Holder for the portion of the Warrant being
converted.

	 
	 	 	 	 
	 

	 	P =
	 	the portion of the Warrant being converted expressed as a decimal fraction.
	 
	 	 	 	 
	 

	 	Y =
	 	the total number of shares of Warrant Stock issuable upon exercise of the Warrant in full.
	 
	 	 	 	 
	 

	 	A =
	 	the Fair Market Value of one share of Warrant Stock which shall mean (i) the fair market
value of the Company’s Common Stock issuable upon conversion of such share as of the last
business day immediately prior to the date the notice of conversion is received by the
Company, as determined in good faith by the Company’s Board of Directors, or (ii) if this
Warrant is being converted in conjunction with the initial public offering of the
Company, the price to the public per share pursuant to such offering.
	 
	 	 	 	 
	 

	 	B =
	 	the Warrant Price on the date of conversion.

Any portion of this Warrant that is converted shall be immediately canceled. This Warrant or any
portion hereof shall be deemed to have been converted immediately prior to the close of business on
the date of its surrender for conversion as provided above, and the person entitled to receive the
shares of Warrant Stock issuable upon such conversion shall be treated for all purposes as the
Holder of such shares of record as of the close of business on such date. As promptly as
practicable after such date, the Company shall issue and deliver to the person or persons entitled
to receive the same a certificate or certificates for the number of full shares of Warrant Stock
issuable upon such conversion. If the Warrant shall be converted for less than the total number of
shares of Warrant Stock then issuable upon conversion, promptly after surrender of the Warrant upon
such conversion, the Company will execute and deliver a new Warrant, dated the date hereof,
evidencing the right of the Holder to the balance of the Warrant Stock purchasable hereunder upon
the same terms and conditions set forth herein.

     6.     Transfer of Warrant.  This Warrant may be transferred or assigned by the Holder
hereof in whole or in part, provided that (i) the Holder shall have notified the Company of the
proposed transfer or assignment and shall have furnished the Company with a statement of the
circumstances surrounding the proposed disposition, (ii) the Holder provides, at the Company’s
request, an opinion of counsel satisfactory to the Company that such transfer does not require
registration under the Securities Act of 1933, as amended (the “Securities Act”), and the
securities laws of any other applicable jurisdiction, and (iii) the transferee or assignee is not

 

 

deemed to be a competitor of the Company, as determined in good faith by the Company’s Board of
Directors.

     7.     Market Stand-Off Agreement.   The Holder hereby agrees that it will not, without the
prior written consent of the managing underwriter, during the period commencing on the date of the
final prospectus relating to the Company’s initial public offering (“IPO”) and ending on
the date specified by the Company and the managing underwriter (such period not to exceed one
hundred eighty (180) days) (i) lend, offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option, right or warrant
to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of common
stock of the Company (the “Common Stock”) or any securities convertible into or exercisable
or exchangeable for Common Stock (whether such shares or any such securities are then owned by the
Holder or are thereafter acquired), or (ii) enter into any swap or other arrangement that transfers
to another, in whole or in part, any of the economic consequences of ownership of the Common Stock,
whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of
Common Stock or other securities, in cash or otherwise. The foregoing provisions of this Section 9
shall apply only to the Company’s IPO, shall not apply to the sale of any shares to an underwriter
pursuant to an underwriting agreement, and shall only be applicable to the Holders if all officers,
directors and greater than one percent (1%) stockholders of the Company enter into similar
agreements. The underwriters in connection with the Company’s IPO are intended third-party
beneficiaries of this Section 9 and shall have the right, power and authority to enforce the
provisions hereof as though they were a party hereto. Each Holder further agrees to execute such
agreements as may be reasonably requested by the underwriters in the Company’s IPO that are
consistent with this Section 9 or that are necessary to give further effect thereto. Any
discretionary waiver or termination of the restrictions of any or all of such agreements by the
Company or the underwriters, except in the case of legal separation, divorce or pursuant to the
terms of a court order, shall apply to all Holders subject to such agreements pro rata based on the
number of shares subject to such agreements, provided that, notwithstanding the foregoing, the
Company and the underwriters may, in their sole discretion, waive or terminate these restrictions
with respect to up to 1% of the Company’s outstanding Common Stock.

     8.     Termination.  This Warrant shall terminate on the first to occur of (i) 5:00 p.m.
California time on the Termination Date, (ii) the consummation of a Change of Control; or (iii) the
consummation of the initial public offering of the Common Stock of the Company.

     9.     Successors and Assigns.  Subject to the restrictions on transfer described in
Section 8 above, and the termination provisions described in Section 10 above, the rights and
obligations of the Company and the Holder shall be binding upon and benefit the successors,
assigns, heirs, administrators and transferees of the parties.

     10.     Miscellaneous.  This Warrant shall be governed by and construed in accordance with
the laws of the State of California, without regard to the conflicts of law provisions of the State
of California or of any other state. Neither this Warrant nor any term hereof may be changed or
waived orally, but only by an instrument in writing signed by the Company and the Holder of this
Warrant. All notices and other communications shall be in writing and shall be deemed effectively
given (i) upon actual delivery to the party to be notified, (ii) 24 hours after

 

 

confirmed facsimile transmission, (iii) one (1) business day after deposit with a recognized
overnight courier, or (iv) three (3) business days after deposit with the U.S. Postal Service by
first class certified or registered mail, postage prepaid, return receipt requested, addressed or
sent (a) if to the Holder, at the address or facsimile number of the Holder last shown on the
records of the Company for the Holder, or at such other address or number as the Holder shall have
furnished to the Company in writing upon 10 days’ notice, or (b) at 1350 Treat Boulevard, Suite
350, Walnut Creek, CA, or at such other address or number as the Company shall have furnished to
the Holder in writing upon 10 days’ notice.

     ISSUED: May 6, 2005

	 	 	 	 	 
	 	REPLY!, INC.

 	 
	 	By:	 	/s/ Frank Siskowski
 	 
	 	 	 	Frank Siskowski 	 
	 	 	 	Chief Financial Officer 	 

 

 

	 	 	 	 	 

Attachment 1

NOTICE OF EXERCISE

TO: REPLY!, INC.

     1.     The undersigned hereby elects to purchase ________________ shares of the Warrant Stock of Reply!,
Inc. pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase
price in full, together with all applicable transfer taxes, if any.

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

 

(Name)

 

(Address)

	 	 	 	 	 
	 
	(Date) 	 	
(Name of Warrant Holder)

 	 
	 	 	By:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

Attachment 2

INVESTMENT REPRESENTATION STATEMENT

Shares of Warrant Stock

(as defined in the attached Warrant) of

REPLY!, INC.

     In connection with the purchase of the Warrant Stock, the undersigned hereby represents to
Reply!, Inc. (the “Company”) as follows:

               (a)     The Warrant Stock to be received upon the exercise of the Warrant (the
“Securities”) will be acquired for investment for its own account, not as a nominee or
agent, and not with a view to the sale or distribution of any part thereof, and the undersigned has
no present intention of selling, granting participation in or otherwise distributing the same, but
subject, nevertheless, to any requirement of law that the disposition of its property shall at all
times be within its control. By executing this Investment Representation Statement, the undersigned
further represents that it does not have any contract, undertaking, agreement or arrangement with
any person to sell, transfer, or grant participations to such person or to any third person, with
respect to the Securities.

               (b)     The undersigned understands that the Securities are not registered under the Securities
Act of 1933, as amended (the “Act”), and applicable state securities laws, on the ground
that the issuance of such securities is exempt pursuant to Section 4(2) of the Act and state law
exemptions relating to offers and sales not by means of a public offering, and that the Company’s
reliance on such exemptions is predicated on the undersigned’s representations set forth herein.

               (c)     The undersigned agrees that in no event will it make a disposition of the Securities
unless and until (i) it shall have notified the Company of the proposed disposition and shall have
furnished the Company with a statement of the circumstances surrounding the proposed disposition,
and if requested by the Company, (ii) it shall have furnished the Company with an opinion of
counsel satisfactory to the Company and the Company’s counsel to the effect that (A) appropriate
action necessary for compliance with the Act and any applicable state securities laws has been
taken or an exemption from the registration requirements of the Act and such laws is available, and
(B) the proposed transfer will not violate any of said laws.

               (d)     The undersigned acknowledges that an investment in the Company is highly speculative and
represents that it is able to fend for itself in the transactions contemplated by this Investment
Representation Statement, is an “Accredited Investor” as that term is defined in Rule 501 of
Regulation D promulgated under the Act or has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of its investments, and has
the ability to bear the economic risks (including the risk of a total loss) of its investment. The
undersigned represents that it has had the opportunity to ask questions of the Company concerning
the Company’s business and assets and to obtain any additional information which it considered
necessary to verify the accuracy of or to amplify the Company’s

 

 

disclosures, and has had all questions which have been asked by it satisfactorily answered by the
Company.

               (e)      The undersigned acknowledges that the Securities must be held indefinitely unless
subsequently registered under the Act or an exemption from such registration is available. The
undersigned is aware of the provisions of Rule 144 promulgated under the Act which permit limited
resale of shares purchased in a private placement subject to the satisfaction of certain
conditions, including, among other things, the existence of a public market for the shares, the
availability of certain current public information about the Company, the resale occurring not less
than one year after a party has purchased and paid for the security to be sold, the sale being
through a “broker’s transaction” or in transactions directly with a “market makers” (as provided by
Rule 144(f)) and the number of shares being sold during any three-month period not exceeding
specified limitations.

     Dated: __________________

	 	 	 	 	 
	 	
PAYAM ZAMANI

(Typed or Printed Name)

 	 
	 	By:  	/s/ Payam Zamani
 	 
	 	 	(Signature) 	 
	 	 	 	 
	 	CEO

(Title) 	 

 

 

	 	 	 	 	 

Attachment 3

NOTICE OF CONVERSION

TO: REPLY!, INC.

     1.     The undersigned hereby elects to acquire ______ shares of Warrant Stock of Reply!,
Inc. pursuant to the terms of the attached Warrant, by conversion of ______ percent (___%) of the
Warrant.

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

 

(Name)

 

(Address)

Dated: __________________

	 	 	 	 	 
	 	
PAYAM ZAMANI

(Typed or Printed Name)

 	 
	 	By:  	/s/ Payam Zamani
 	 
	 	 	(Signature)
 	 
	 	 	
 	 
	 	
CEO

(Title)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.

-1-

 

 

     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

-2-

 

 

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.

-3-

 

 

     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

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