EXHIBIT 99.3
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EXHIBIT B
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THIS WARRANT AND THE SECURITIES REPRESENTED BY THIS WARRANT HAVE BEEN
ACQUIRED FOR INVESTMENT PURPOSES ONLY AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY
APPLICABLE STATE SECURITIES LAWS. THIS WARRANT MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED OR PLEDGED, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR SUCH APPLICABLE STATE SECURITIES LAWS, OR IF THE
PROPOSED TRANSFER MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE SECURITIES ACT
OR REGISTRATION OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS. THIS
WARRANT IS SUBJECT TO THE TERMS AND PROVISIONS OF THE SECURITIES PURCHASE
AGREEMENT (THE "PURCHASE AGREEMENT") AMONG EXCHANGE APPLICATIONS, INC. AND THE
PURCHASERS THEREIN, DATED AS OF JUNE 1, 2001, AS AMENDED FROM TIME TO TIME, AND
THE HOLDERS OF THIS WARRANT ARE ENTITLED TO THE BENEFITS THEREOF.
EXCHANGE APPLICATIONS, INC.
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WARRANT
NO.: W-4 JUNE 1, 2001
VOID AFTER JUNE 1, 2011
(OR EARLIER UPON THE OCCURRENCE OF
CERTAIN EVENTS DESCRIBED BELOW)
THIS CERTIFIES that, for value received, each holder listed on Schedule
1 hereto, or each such holder's respective assigns (each, a "Holder" and
together, the "Holders"), and in accordance with the percentages opposite such
Holder's name on Schedule I, shall be entitled to subscribe for and purchase
from EXCHANGE APPLICATIONS, INC., a Delaware corporation (including any
successor thereto (by way of merger, consolidation, sale or otherwise), the
"Company"), up to that number of shares of Common Stock, $.001 par value per
share (the "Common Stock"), of the Company equal to the sum of (i) 487,026 (the
"Bridge Warrant Shares") and (ii) 876,646 (the "Original Warrant Shares",
together with the Bridge Warrant Shares, the "Warrant Shares"). This Warrant is
being issued in exchange for Warrant No. W-1 issued by the Company to the
Holders on February 20, 2001, Warrant No. W-2 issued by the Company to the
Holders on March 28, 2001 (the "Original Warrants") and the additional
consideration provided by the Holders to the Company pursuant to the Purchase
Agreement dated as of the date hereof (as amended from time to time) among the
Company and the Holders.
This Warrant amends and restates the Original Warrants
and does not constitute a novation. Capitalized terms used herein but not
otherwise defined herein have the meanings ascribed thereto in the Purchase
Agreement.
EXERCISE PERIOD. This Warrant may be exercised, in whole or in part, by
the Holders at any time or from time to time on or prior to June 1, 2011 (such
period being herein referred to as the "Exercise Period").
EXERCISE PRICE. The exercise price (the "Exercise Price") on each
Exercise Date (as defined below) for each Warrant Share shall be the lowest
Market Price (as defined below) for the period commencing on February 20, 2001
and ending on the earlier of (i) such Exercise Date (as defined below), (ii) the
date on which payment in full by the Company of the outstanding principal amount
of the Replacement Note, and all accrued and unpaid interest thereon, is made to
the Payees and (ii) the date on which all of the Company's obligations under the
Replacement Note are terminated due to a conversion of the Replacement Note
pursuant to its terms.
EXERCISE OF WARRANT; WARRANT SHARES.
The rights represented by this Warrant may be exercised, in whole or in
any part (but not as to a fractional Warrant Share), by (i) the surrender of
this Warrant (properly endorsed) at the office of the Company (or at such other
agency or office of the Company as it may designate by notice in writing to the
Holder at the address of the Holder appearing on the books of the Company), (ii)
delivery to the Company of a notice of election to exercise in the form of
EXHIBIT A attached hereto, and (iii) payment to the Company of the aggregate
Exercise Price by (A) cash, wire transfer funds or check and/or (B) Warrant
Shares or Warrants to purchase Warrant Shares (net of the Exercise Price for
such Warrant Shares), valued for such purposes at the Market Price per share on
the date of exercise. As used herein, "Market Price" at any date of one Warrant
Share shall be (i) the last reported sales price regular way or, in case no such
reported sales took place on such day, the average of the last reported bid and
ask price regular way on the principal national securities exchange on which the
class or series of the Company's securities to which the Warrant Shares belong
is listed or admitted to trading (or if such class or series is not at the time
listed or admitted for trading on any such exchange, then such price as shall be
equal to the last reported sale price, or if there is no such sale price, the
average of the last reported bid and ask price, as reported by the National
Association of Securities Dealers' Automated Quotation System ("NASDAQ") on such
day, or if, on any day in question, the security shall not be quoted on the
NASDAQ, then such price shall be equal to the average of the last reported bid
and ask price on such day as reported by the National Quotation Bureau, Inc. or
any similar reputable quotation and reporting service, if such quotation is not
reported by the National Quotation Bureau, Inc.) or (ii) if the class or series
of the Company's securities to which the Warrant Shares belong is not listed or
admitted to trading on a principal national securities exchange, the value given
such share as determined in good faith by the Company's Board of Directors.
Each date on which this Warrant is surrendered and on which payment of
the Exercise Price is made in accordance with Section 3 above is referred to
herein as an "Exercise Date." As soon as practicable after each exercise, the
Company shall issue and deliver a
2
certificate or certificates for the Warrant Shares being purchased pursuant to
such exercise, registered in the name of the Holder or the Holder's designee, to
such Holder or designee, as the case may be. If such exercise shall not have
been for the full number of the Warrant Shares, then the Company shall issue and
deliver to the Holder a new Warrant, registered in the name of the Holder, of
like tenor to this Warrant, for the balance of the Warrant Shares that remain
after exercise of the Warrant.
The person in whose name any certificate for Warrant Shares is issued
upon any exercise shall for all purposes be deemed to have become the holder of
record of such shares as of the Exercise Date, except that if the Exercise Date
is a date on which the share transfer books of the Company are closed, such
person or entity shall be deemed to have become the holder of record of such
shares at the close of business on the next succeeding date on which the share
transfer books are open.
3
REPRESENTATIONS, WARRANTIES AND COVENANTS. The Company represents and
warrants to the Holders that all Warrant Shares that may be issued upon the
exercise of this Warrant will, upon issuance, be validly issued, fully paid and
nonassessable, with no personal liability attaching to the ownership thereof,
and free from all liens and charges with respect to the issue thereof (other
than liens and charges created by any Holder). The Company will from time to
time use its reasonable best efforts to take all such action as may be required
to assure that the stated or par value per Warrant Share is at all times no
greater than the then effective Exercise Price. The Company shall at all times
have authorized and reserved, free from preemptive rights, a sufficient number
of Warrant Shares to provide for the exercise of this Warrant. The Company shall
not take any action which would cause the number of authorized but unissued
Warrant Shares to be less than the number of such shares required to be reserved
hereunder for issuance upon exercise of the Warrant. If any Warrant Shares
reserved for the purpose of issuance upon the exercise of this Warrant require
registration with or approval of any governmental authority under any Federal or
state law before such shares may be validly issued or delivered upon exercise,
then the Company shall in good faith and as expeditiously as possible endeavor
to secure such registration or approval, as the case may be. In the event, and
to the extent, that the issuance of any Warrant Shares would result in a
violation of any law or NASD rule or regulation applicable to the Company, the
Company shall issue three (3) month promissory notes to the Holders in lieu of
the Warrant Shares in a principal amount equal to the product of (x) the number
of Warrant Shares for which this Warrant is exercised that cannot be issued due
to such violation (the "Exercised Shares") and (y) the excess of (A) the Market
Price for the Exercised Shares as of the Exercise Date over (B) the Exercise
Price for the Exercised Shares, at a market rate of interest payable in cash and
with such other terms and conditions to be mutually determined by the Company
and the Holders. If requested by the Company's bank Lenders, the Payees shall
negotiate in good faith with the Company and its bank Lenders to execute and
deliver reasonable and customary documentation required to subordinate the right
of the Payees to receive payments of cash from the Company with respect to such
notes.
NO SHAREHOLDER RIGHTS. Prior to exercise, this Warrant shall not
entitle the Holders to any voting rights or other rights as a shareholder of the
Company.
RESTRICTIONS ON TRANSFER. Each Holder may assign this Warrant, the
Warrant Shares and all rights hereunder, in whole or in part, at the agency or
office of the Company referred to in Section 3 hereof to (i) its limited
partners or any affiliate of such Holder or (ii) any purchaser or transferee
from such Holder of Warrant Shares with the consent of the Company upon (x)
surrender of this Warrant properly endorsed, and (y) delivery of a notice of
transfer in the form of EXHIBIT B hereto. Each permitted transferee of this
Warrant, by accepting or holding the same, consents to be treated as a Holder
under this Warrant and shall be entitled to exercise the rights represented by
this Warrant; provided, however, that until each such transfer is recorded on
such books, the Company may treat the registered holder hereof as the owner
hereof for all purposes.
LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this Warrant is lost,
stolen, mutilated or destroyed, the Company shall, on such terms as to indemnity
or otherwise as it may in its reasonable discretion impose (which shall, in the
case of a mutilated Warrant, include the surrender thereof), issue a new Warrant
of like denomination and tenor as the Warrant so lost, stolen, mutilated or
destroyed. Any such new Warrant shall constitute an original contractual
4
obligation of the Company, whether or not the allegedly lost, stolen, mutilated
or destroyed Warrant shall be at any time enforceable by anyone.
NOTICES. The terms and provisions of Section 9 of the Purchase
Agreement are expressly incorporated in this Warrant.
GOVERNING LAW. This Warrant shall be governed by and construed in
accordance with the laws of the State of New York (without giving effect to
principles of conflicts of laws).
SEVERABILITY. If any provision of this Warrant is held in any
jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Warrant or affecting the validity or
enforceability of such provision in any other jurisdiction. Notwithstanding the
foregoing, such provision shall automatically be amended to the extent (but only
to the extent) necessary to make it not invalid, prohibited or unenforceable in
such jurisdiction, without invalidating the remaining provisions of this Warrant
or amending or affecting the validity or enforceability of such provision in any
other jurisdiction.
HEADINGS. The headings of the various sections contained in this
Warrant have been inserted for convenience of reference only and should not be
deemed to be a part of this Warrant.
AMENDMENTS AND WAIVERS. No provision of this Warrant may be amended or
waived except if such amendment or waiver is in writing and is signed, in the
case of an amendment, by the Company and the Holders, or in the case of a
waiver, by the party against whom the waiver is to be effective.
REGISTRATION RIGHTS. All of the Warrant Shares shall be deemed to be
"Registrable Shares" as defined under the Third Amended and Restated
Registration Rights Agreement, as the same may be amended, modified or
supplemented in accordance with its terms from time to time.
* * * *
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its duly authorized officers as of the date first written above.
EXCHANGE APPLICATIONS, INC.
By: ___________________________
Name:
Title:
SCHEDULE I
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Holder Allocation Percentage Original Warrant Shares Bridge Warrant Shares
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Insight Capital Partners IV, L.P. 76.666130% 672,091 373,384
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Insight Capital Partners (Cayman) 10.537455% 92,376 51,320
IV, L.P.
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Insight Capital Partners IV (Fund 12.136382% 106,393 59,107
B), L.P.
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Insight Capital Partners IV 0.660033% 5,786 3,215
(Co-Investors), L.P.
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TOTAL: 876,646 487,026
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EXHIBIT A
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FORM OF NOTICE OF ELECTION TO EXERCISE
[To be executed only upon exercise
of the Warrant to which this form is attached]
To Exchange Applications, Inc. or its successor
The undersigned, the holder of the Warrant to which this form is
attached, hereby irrevocably elects to exercise the right represented by such
Warrant to purchase _________ Warrant Shares of EXCHANGE APPLICATIONS, INC. or
its successor, and herewith tenders the aggregate payment of $_________ in the
form of (1) cash, wire transfer funds or check and/or (2) Warrant Shares or
Warrants to purchase Warrant Shares (net of the Exercise Price for such shares)
valued for such purposes at the Market Price (as defined in Section 3) per share
on the date of exercise, in full payment of the purchase price for such shares.
The undersigned requests that a certificate for such shares be issued in the
name of ______________, whose address is ___________________________, and that
such certificate be delivered to ________________________, whose address is
__________________________.
If such number of shares is less than all of the shares purchasable
under the current Warrant, the undersigned requests that a new Warrant, of like
tenor as the Warrant to which this form is attached, representing the remaining
balance of the shares purchasable under such current Warrant be registered in
the name of _________________________________, whose address is, and that such
new Warrant be delivered to ________________________________, whose address is
___________________________________.
Signature:________________________________
(Signature must conform in all respects to the name
of the holder of the Warrant as specified on the face
of the Warrant)
Date:____________________________________
A-1
EXHIBIT B
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FORM OF NOTICE OF TRANSFER
[To be executed only upon transfer
of the Warrant to which this form is attached]
For value received, the undersigned hereby sells, assigns and transfers
unto _________________________ all of the rights represented by the Warrant to
which this form is attached to purchase _________________________ Warrant Shares
of, EXCHANGE APPLICATIONS, INC. (including any successor thereto, the
"Company"), to which such Warrant relates, and appoints
__________________________ as its attorney to transfer such right on the books
of the Company, with full power of substitution in the premises.
Signature:
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(Signature must conform in all respects to
the name of the holder of the Warrant as
specified on the face of the Warrant)
Address:
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Date:
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Signed in the presence of:
B-1