Document:

exv10w21

Exhibit 10.21

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:

	 	25,000 Shares
	Class of Stock:

	 	Series B Preferred Stock
	Initial Exercise Price:

	 	$3.27932 per share
	Issue Date:

	 	March 19, 2007
	Expiration Date:

	 	March 19, 2014

     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 nonassessable
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 an Amendment and
Waiver to Loan and Security Agreement between the Company and Holder dated as of March 19, 2007
(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.

 

 

     1.4 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 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.

     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.

     (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, property, 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, 2005 shall be delivered on
or before April 30, 2007.

     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 March 19, 2007, 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:

	 	 	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.

     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/
 Payam Zamani	 
	 	 	Title         CEO	 
	 	 	 	 
	 

Holder:

ORIX Venture Finance LLC

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

 

 

	 	 	 	 	 

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 Tableexv10w22

Exhibit 10.22

Execution Copy

NEITHER THIS WARRANT NOR THE SHARES OF STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR ANY STATE SECURITIES LAWS. NO
OFFER FOR SALE, SALE, PLEDGE, TRANSFER OR OTHER DISPOSITION OF THIS WARRANT OR SAID SHARES
MAY BE EFFECTED WITHOUT (i) AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, (ii) AN
OPINION OF COUNSEL FOR THE HOLDER IN FORM REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED OR (iii) RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES
AND EXCHANGE COMMISSION TO THE EFFECT THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED.

WARRANT TO PURCHASE

SHARES OF PREFERRED STOCK

Expires:
February 14, 2016

     THIS CERTIFIES THAT, for value received, POINT FINANCIAL, INC., an Arizona Corporation, is
entitled to subscribe for and purchase the number of shares determined as set forth below (as
adjusted pursuant to the provisions hereof, the “Shares”) of the Series A Preferred Stock of REPLY!
INC. (the “Company”), at a price per share determined as set forth below (as adjusted pursuant to
the provisions hereof, the “Exercise Price”), subject to the provisions and upon the terms and
conditions hereinafter set forth. As used herein, the term “Preferred Stock” shall mean the
Company’s Series A Preferred Stock, and any stock into or for which such Series A Preferred Stock
may hereafter be converted or exchanged, and the term “Grant Date” shall mean February 14, 2006.
The Exercise Price shall at all times be equal to the Conversion Price, as defined in the Company’s
Amended and Restated Articles of Incorporation (the “Articles”), per share for the Series A
Preferred Stock of the Company which is, as of the date of the issuance of this warrant, $2.727 per
share. This Warrant shall be exercisable for a number of Shares determined by dividing $50,000 by
the Exercise Price. This Warrant is issued in connection with the Equipment Lease Agreement of even
date herewith (as amended, restated and supplemented from time to time, the “Lease Agreement”)
between the Company and Point Financial, Inc.

     1.     Term.  This Warrant is exercisable, in whole or in part, at any time and from time
to time from and after the Grant Date and prior to the earlier of (a) the tenth anniversary of the
Grant Date or (b) the consummation of the Company’s initial public offering (“IPO”) of its Common
Stock pursuant to a registration statement filed under the Securities Act of 1933, as amended (the
“Securities Act”), the aggregate gross proceeds from which exceed $10,000,000. If prior to the
exercise of this Warrant, in whole or in part, an event occurs that pursuant to the Company’s
Articles causes automatic conversion of the Company’s Preferred Stock, then this Warrant shall be
exercisable for the number of shares of Common Stock of the Company into which the Preferred Stock
not purchased upon any prior exercise of this Warrant would have been converted (and, where the
context requires, reference to “Preferred Stock” shall be deemed to include such Common Stock, as
may be appropriate).

1

 

     2.     Method of Exercise; Net Issue Exercise.  

          2.1     Method of Exercise; Payment; Issuance of New Warrant.  This Warrant may be
exercised by the holder hereof, in whole or in part and from time to time, either by (a) the
surrender of this Warrant (with the Notice of Exercise form attached hereto as Exhibit A-l duly
executed) at the principal office of the Company and by the payment to the Company, by cash, check,
wire transfer or cancellation of indebtedness, of an amount equal to the Exercise Price per share
multiplied by the number of Shares then being purchased or (b) “cashless exercise” in connection
with any sale of the Company (through a merger, the sale of all or substantially all of its assets,
or the sale of its stock) or any public offering of its stock, the surrender of this Warrant (with
the Notice of Exercise form attached hereto as Exhibit A-l duly executed), which surrender may be
made contingent upon the closing of such offering, at the principal office of the Company together
with notice of arrangements reasonably satisfactory to the Company for payment to the Company from
the proceeds of the sale of shares to be sold by the holder in such public offering, of an amount
equal to the Exercise Price per share multiplied by the number of Shares then being purchased. The
person or persons in whose name(s) any certificate(s) representing Shares shall be issuable upon
exercise of this Warrant shall be deemed to have become the holder(s) of record of, and shall be
treated for all purposes as the record holder(s) of, the Shares represented thereby (and such
Shares shall be deemed to have been issued) immediately prior to the close of business on the date
or dates upon which this Warrant is exercised. In the event of any exercise of this Warrant,
certificates for the Shares so purchased shall be delivered to the holder hereof as soon as
possible and in any event within fifteen (15) days of receipt of such notice (or, following the
IPO, within five (5) days of receipt of such notice) and, unless this Warrant has been fully
exercised or expired, a new Warrant representing the portion of the Shares, if any, with respect to
which this Warrant shall not then have been exercised shall also be issued to the holder hereof as
soon as possible thereafter.

          2.2     Automatic Exercise.  To the extent this Warrant is not previously exercised, and if
the fair market value of one Share is greater than the Exercise Price then in effect, this Warrant
shall be deemed automatically exercised pursuant to Section 2.3 below (even if not surrendered)
immediately before its expiration. For purposes of such automatic exercise, the fair market value
of one Share upon such expiration shall be determined pursuant to Section 2.3 (b) below. To the
extent this Warrant or any portion thereof is deemed automatically exercised pursuant to this
Section 2.2, 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.

          2.3     Right to Convert Warrant into Stock: Net Issuance.

               (a)     In addition to and without limiting the rights of the holder under the terms of this
Warrant, the holder may elect to convert this Warrant or any portion thereof (the “Conversion
Right”) into Shares, the aggregate value of which Shares shall be equal to the value of this
Warrant or the portion thereof being converted. The Conversion Right may be exercised by the holder
by surrender of this Warrant at the principal office of the Company together with notice of the
holder’s intention to exercise the Conversion Right, in which event the Company shall issue to the
holder a number of Shares computed using the following formula:

2

 

	 	 	 
	X =
	 	Y(A-B)
	 	 
	 	A

	Where: 	 	X =  	 	The number of Shares to be issued to the holder.

	 	 Y =	 	The number of Shares purchasable under this Warrant subject to the exercise election.
	 
	 	 A =	 	The fair market value of one Share.
	 
	 	 B =	 	Exercise Price (as adjusted to the date of such calculations).

               (b)     For purposes of this Section 2.3, the “fair market value” per Share shall mean:

                    (i)     If the Conversion Right is exercised in connection with and contingent upon the IPO, and
if the Company’s registration statement relating to such offering has been declared effective by
the Securities and Exchange Commission, then the initial “Price to Public” specified in the final
prospectus with respect to such offering; or

                    (ii)     If the Conversion Right is not exercised in connection with and contingent upon the IPO,
then as follows:

          (A)     If the Company’s Preferred Stock is traded on a national securities exchange or
admitted to unlisted trading privileges on such an exchange, or is listed on the Nasdaq Stock
Market, the fair market value shall be the average of the last reported sale prices of the
Preferred Stock on such exchange or on the Nasdaq Stock Market, whichever is applicable, for
the last ten (10) trading days (or all such trading days such Preferred Stock has been traded
if fewer than 10 trading days) before the effective date of exercise of the Conversion Right or
if no such sale is made on any such day, the mean of the closing bid and asked prices for such
day on such exchange or on the Nasdaq Stock Market;

          (B)     If the Preferred Stock is not so listed or admitted to unlisted trading privileges,
the fair market value shall be the average of the means of the last bid and asked prices
reported on the last ten (10) trading days (or all such trading days such Preferred Stock has
been traded if fewer than 10 trading days) before the date of the election; and

          (C)     If the Preferred Stock is not so listed or admitted to unlisted trading privileges and
bid and ask prices are not reported, the fair market value shall be the price per share which
the Company could obtain from a willing buyer for shares sold by the Company from authorized
but unissued shares, as such price shall be determined by mutual agreement of the Company and
the holder of this Warrant.

     3.     Stock Fully Paid; Reservation of Shares.  All Shares that may be issued upon the
exercise of this Warrant, and all Common Stock issuable upon conversion of the Shares shall, upon
issuance, be validly issued, fully paid and nonassessable, and free from all taxes, liens and
charges with respect to the issue thereof. During the period within which this Warrant may be
exercised, the Company will at all times have duly authorized and reserved, for the purpose of
issuance upon exercise of this Warrant, a sufficient number of shares of Preferred Stock (and
Common Stock issuable upon conversion thereof).

3

 

     4.     Notices of Record Date.  In the event of any taking by the Company of a record of
its stockholders for the purpose of determining stockholders who are entitled to receive payment of
any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire any
share of any class or any other securities or property, or to receive any other right, or for the
purpose of determining stockholders who are entitled to vote in connection with any proposed merger
or consolidation of the Company with or into any other corporation, or any proposed sale, lease or
conveyance of all or substantially all of the assets of the Company, or any proposed liquidation,
dissolution or winding up of the Company, then, in connection with each such event, the Company
shall mail to the holder of this Warrant at least twenty (20) days prior written notice of the date
on which any such record is to be taken for the purpose of such dividend, distribution, right(s) or
vote of the stockholders. Each such written notice shall specify the amount and character of any
such dividend, distribution or right(s), and shall set forth, in reasonable detail, the matter
requiring any such vote of the stockholders.

     5.     Fractional Shares.  No fractional shares of Preferred Stock will be issued in
connection with any exercise hereunder, but in lieu of such fractional shares the Company shall
make a cash payment therefor based upon the per share fair market value of the Preferred Stock on
the date of exercise.

     6.     Compliance with Securities Act; Disposition of Warrant or Shares.

          (a)     Compliance with Securities Act.  The holder of this Warrant, by acceptance hereof,
agrees that this Warrant, the Shares to be issued upon exercise hereof and the Common Stock to be
issued upon conversion of such Shares and any other securities issued in respect to the Preferred
Stock or Common Stock issued upon conversion of the Preferred Stock, upon any stock split, stock
dividend, recapitalization, merger consolidation or similar event (collectively the “Securities”)
are being acquired for investment and that such holder will not offer, sell or otherwise dispose of
this Warrant or any Shares to be issued upon exercise hereof (or Common Stock issued upon
conversion of such Shares) except under circumstances which will not result in a violation of the
Securities Act or applicable state securities laws. This Warrant and all Shares issued upon
exercise of this Warrant (unless registered under the Securities Act) shall be stamped or imprinted
with a legend in substantially the following form (in addition to any legend required under
applicable state securities laws or any agreement between holder and the Company):

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR ANY
STATE SECURITIES LAWS. NO OFFER FOR SALE, SALE, PLEDGE, TRANSFER OR OTHER DISPOSITION MAY
BE EFFECTED WITHOUT (i) AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, (ii) AN
OPINION OF COUNSEL FOR THE HOLDER IN FORM REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED OR (iii) RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES
AND EXCHANGE COMMISSION TO THE EFFECT THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED.

          (b)     Disposition of Securities.  With respect to any offer, sale or other disposition of
any of the Securities prior to registration thereof, the holder hereof and each subsequent holder
of any Securities agrees to give written notice to the Company prior thereto, describing briefly
the manner thereof, together with a written opinion of such holder’s counsel, if reasonably
requested by the Company, to the effect that such offer, sale or other disposition may be effected
without registration or qualification (under the Securities Act as then in effect or any federal or
state law then in effect) of such Securities and indicating whether or not under the Securities Act
certificates for such Securities to be sold or otherwise disposed of require any

4

 

restrictive legend as to applicable restrictions on transferability in order to insure compliance
with the Securities Act and applicable state securities laws. Each holder of any of the Securities
will cause any proposed transferee of any of the Securities to agree to take and hold such
Securities subject to the provisions and upon the conditions specified in this Section 6. Each
certificate representing Securities thus transferred (except a transfer pursuant to Rule 144 under
the Securities Act) shall bear a legend as to the applicable restrictions on transferability in
order to insure compliance with the Securities Act unless, in the aforesaid opinion of counsel for
the holder, such legend is not required in order to insure compliance with the Securities Act and
applicable state securities laws. Nothing herein shall restrict the transfer of this Warrant or any
portion hereof by the initial holder hereof to any partnership affiliated with the initial holder,
or to any partner of any such partnership provided such transfer may be made in compliance with
applicable federal and state securities laws. The Company may issue stop transfer instructions to
its transfer agent in connection with the foregoing restrictions.

     7.     Rights as Stockholder.

          7.1     Stockholder Rights.  Except as set forth herein, no holder of this Warrant, as
such, shall be entitled to vote upon any matter submitted to stockholders at any meeting thereof,
or to receive notice of meetings, or be deemed the holder of Preferred Stock until this Warrant
shall have been exercised and the Shares purchasable upon such exercise shall have become
deliverable, as provided herein.

          7.2     Financial Statements and Information.  The Company shall deliver to the registered
holder the same financial reports and information which it is contractually bound to provide to
Major Investors as that term is defined in that certain Investor’s Rights Agreement of the Company,
dated August 18, 2005 (“Rights Agreement”).

          7.3     Limitation of Liability.  Without limiting the generality of the foregoing, no
dividends or interest shall be payable or accrued in respect of this Warrant or the interest
represented hereby or the shares purchasable hereunder until, and only to the extent that, this
Warrant shall have been exercised. No provisions hereof, in the absence of affirmative action taken
by the holder to purchase shares of Preferred Stock or automatic exercise of this Warrant pursuant
to the terms hereof, and no mere enumeration herein of the rights or privileges of the holder
hereof, shall give rise to any liability of such holder for the Exercise Price or as a stockholder
of the Company, whether such liability is asserted by the Company or by its creditors.

     8.     Registration Rights.  The registered holder shall be entitled to receive the same
registration rights as provided to the Holders (as defined in the Rights Agreement) of the
Company’s Series A Preferred Stock with respect to the shares of the Company’s common stock
issuable upon conversion of the Shares.

     9.     Additional Rights.

          (a)     Participation Rights.  With respect to any Additional Shares, as defined in the
Rights Agreement, the registered holder will have the same participation rights as a Major Investor
as set forth in Section 3.3 of the Rights Agreement, regardless of whether or not this warrant has
been exercised in whole or in part. On or about February 3, 2006, the Company will amend the Rights
Agreement as required to reflect the terms of this Section 9(a).

          (b)     Mergers.  The Company agrees to provide the holder of this Warrant with at least
thirty (30) days’ prior written notice of the terms and conditions of any proposed transaction, in
which the Company would (i) sell, lease, exchange, convey or otherwise dispose of all or
substantially all of its property or business, or (ii) merge into or consolidate with any other
corporation (other than a wholly owned subsidiary

5

 

of the Company), or effect any transaction (including a merger or other reorganization) or series
of related transactions, in which more than fifty percent (50%) of the voting power of the Company
is disposed of (Sections 9(b)(i) and 9(b)(ii), individually or collectively, are referred to as a
“Merger Transaction”).

               (i)     If on the record date for any Merger Transaction, the fair market value per Share (as
determined in Section 2.3(b) hereof) is greater than or equal to three (3) times the Exercise
Price, then the successor entity may, at its option, either assume the obligations of the Company
under this Warrant or not assume the obligations of the Company under this Warrant. If, on the
record date for any Merger Transaction, the fair market value per Share (as determined in Section
2.3(b) hereof) is less than three (3) times the Exercise Price, then the successor entity shall
assume the obligations of the Company under the Warrant. If the successor entity assumes the
obligations of the Company under this Warrant (whether voluntary or involuntary), then this Warrant
shall be exercisable for the same class and amount of securities, cash or other property as would
be payable for the Shares issuable upon exercise of this Warrant as if such Shares were outstanding
on the record date for the Merger Transaction. If the successor entity does not assume the
obligations of the Company under this Warrant, then this Warrant shall be deemed to have been
automatically converted pursuant to Section 2.2 and thereafter holder shall participate in the
Merger Transaction as a holder of the Shares (or other securities issuable upon exercise of this
Warrant) on the same terms as other holders of the same class of securities of the Company.

     10.     Representations and Warranties of the Company.  This Warrant is issued and
delivered on the basis of the following:

          (a)     This Warrant has been duly authorized, executed and delivered by the Company and
constitutes the valid and binding obligation of the Company, enforceable in accordance with its
terms;

          (b)     The Shares have been duly authorized and reserved for issuance by the Company and, when
issued in accordance with the terms hereof, will be validly issued, fully paid and nonassessable;

          (c)     The rights, preferences, privileges and restrictions granted to or imposed upon the Shares
and the holders thereof are as set forth in the Company’s Articles, as amended, a true and complete
copy of which has been delivered to the original holder of this Warrant;

          (d)     The shares of Common Stock issuable upon conversion of the Shares have been duly
authorized and reserved and, when issued in accordance with the terms of the Company’s Articles,
will be validly issued, fully paid and nonassessable;

          (e)     As of the Grant Date, the capitalization of the Company shall be as set forth in the
Capitalization Schedule attached hereto as Appendix I, which indicates the following: (i) the
authorized capital stock of the Company (including the authorized number of shares of Common Stock
and each series of Preferred Stock); (ii) the number of shares of Common Stock and each series of
Preferred Stock issued and outstanding; (iii) the number of shares of Common Stock reserved for
issuance upon conversion of any Preferred Stock; (iv) the number of shares for which options have
been granted under the Company’s Stock Option Plan; and (v) any other securities that are
convertible into or exchangeable for Common Stock or options to purchase or rights to subscribe for
Common Stock or such convertible or exchangeable securities, and the number of shares of Common
Stock issuable upon any conversion, exchange or exercise of such securities, options or rights. All
issued and outstanding shares of the Company’s Common Stock and Preferred Stock have been duly
authorized and validly issued, and are fully paid and nonassessable. Except as set forth in
Appendix I, there are no outstanding rights, options, warrants, conversion rights, preemptive

6

 

rights, rights of first refusal or similar rights for or understandings relating to the purchase or
acquisition from the Company of any securities of the Company; and

          (f)     The execution and delivery of this Warrant, the issuance of the Shares upon exercise of
this Warrant in accordance with the terms hereof and the compliance by the Company with the
provisions hereof (i) are not and will not be inconsistent with the Company’s Articles or Bylaws,
(ii) do not and will not contravene any law, governmental rule or regulation, judgment or order
applicable to the Company, and (iii) do not and will not contravene any provision of, or constitute
a default under, any indenture, mortgage, contract or other instrument of which the Company is a
party or by which it is bound or require the consent or approval of, the giving of notice to, the
registration with or the taking of any action in respect of or by, any Federal, state or local
government authority or agency or other person.

     11.     Modification and Waiver.  This Warrant and any provision hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the party against which
enforcement of the same is sought.

     12.     Notices.  Any notice, request or other document required or permitted to be given
or delivered to the holder hereof or the Company shall be delivered or sent to each such holder at
its address as shown on the books of the Company or to the Company at the address indicated
therefor on the signature page of this Warrant and shall be deemed received by the holder upon the
earlier of actual receipt or if sent by certified mail (postage pre-paid), five (5) days after
deposit in the U.S. mail.

     13.     Binding Effect on Successors.  This Warrant shall be binding upon any corporation
succeeding the Company by merger, consolidation or acquisition of all or substantially all of the
Company’s assets. All of the obligations of the Company relating to the Shares, or the Company’s
Common Stock issuable upon conversion thereof, shall survive the exercise and termination of this
Warrant. All of the covenants and agreements of the Company shall inure to the benefit of the
successors and assigns of the holder hereof. The Company will, at the time of the exercise of this
Warrant, in whole or in part, upon request of the holder hereof but at the Company’s expense,
acknowledge in writing its continuing obligation to the holder hereof in respect of any rights to
which the holder hereof shall continue to be entitled after such exercise in accordance with this
Warrant; provided, that the failure of the holder hereof to make any such request shall not affect
the continuing obligation of the Company to the holder hereof in respect of such rights.

     14.     Lost Warrants or Stock Certificates.  The Company covenants to the holder hereof
that upon receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction, or mutilation of this Warrant or any stock certificate issued upon exercise thereof
and, in the case of any such loss, theft or destruction, upon receipt of an indemnity reasonably
satisfactory to the Company, or in the case of any such mutilation upon surrender and cancellation
of such Warrant or stock certificate, the Company shall make and deliver a new Warrant or stock
certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant or stock
certificate.

     15.     No Impairment.  The Company will not, by amendment of its Articles or through any
reorganization, recapitalization, 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 hereunder by the Company, but will at
all times in good faith assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may be necessary or appropriate in order to protect the rights of the
holder of this Warrant against impairment.

7

 

     16.     Descriptive Headings.  The descriptive headings of the several paragraphs of this
Warrant are inserted for convenience only and do not constitute a part of this Warrant.

     17.     Recovery of Litigation Costs.  If any legal action or other proceeding is brought
for the enforcement of this Warrant, or because of an alleged dispute, breach, default, or
misrepresentation in connection with any of the provisions of this Warrant, the successful or
prevailing party or parties shall be entitled to recover reasonable attorneys’ fees and other costs
incurred in that action or proceeding, in addition to any other relief to which it or they may be
entitled.

     18.     Governing Law.  THIS WARRANT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAWS OF THE STATE OF CALIFORNIA.

	 	 	 	 	 
	Date: February 14, 2006       	REPLY! INC., a California corporation

 	 
	 	By:  	/s/ Frank M. Siskowski
 	 
	 	 	Name:  	Frank M. Siskowski 	 
	 	 	Title:  	CFO 	 
	 
	 	 	  	ADDRESS:	 
	 
	 	 	  	3000 Danville Boulevard, Suite 151

Alamo, California 94507 	 

8

 

	 	 	 	 	 

EXHIBIT A-l

NOTICE OF EXERCISE

			
	To:	 	REPLY! INC.

(Company Name)

     1.     The undersigned hereby:

	 	þ	 	elects to purchase                      shares of Series A Preferred Stock of the Company
pursuant to the terms of the attached Warrant, and tenders herewith payment of the
purchase price of such shares in full; or
	 
	 	þ	 	elects to exercise its net issuance rights pursuant to Section 2.3 of the attached
Warrant with respect to                      shares of Series A Preferred Stock.

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

 

(Name)

 

(Address)

 

(Address)

     3.     The undersigned represents that the aforesaid shares being acquired for the account of the
undersigned for investment and not with a view to, or for resale in connection with, the
distribution thereof and that the undersigned has no present intention of distributing or reselling
such shares.

	 	 	 	 	 	 
	 
	(Date)

 	 	 	 	 	 
	 	 	 	 
	 	 	(Signature) 	 
	 	 	 	 
	 

 

 

EXHIBIT A-2

NOTICE OF EXERCISE

			
	To:	 	REPLY! INC.

(Company Name)

     1.     Contingent upon and effective immediately prior to the closing (the “Closing”) of the
Company’s public offering contemplated by the Registration Statement on Form S-___, filed on
                    , ___, the undersigned hereby:

	 	þ	 	elects to purchase                      shares of Series A Preferred Stock of the Company
(or such lesser number of shares as may be sold on behalf of the undersigned at the
Closing) pursuant to the terms of the attached Warrant; or
	 
	 	þ	 	elects to exercise its net issuance rights pursuant to Section 2.3 of the attached
Warrant with respect to                      shares of Series A   Preferred Stock.

     2.     Please deliver to the custodian for the selling shareholders a stock certificate
representing such                      shares.

     3.     The undersigned has instructed the custodian for the selling shareholders to deliver to the
Company $                     or, if less, the net proceeds due the undersigned from the sale of shares in the
aforesaid public offering. If such net proceeds are less than the purchase price for such shares,
the undersigned agrees to deliver the difference to the Company prior to the Closing.

	 	 	 	 	 	 
	 
	(Date)

 	 	 	 	 	 
	 	 	 	 
	 	 	(Signature)

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