EXHIBIT 99.2
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EXHIBIT A
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THIS NOTE AND THE SECURITIES REPRESENTED BY THIS NOTE 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 NOTE 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
NOTE 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 NOTE ARE ENTITLED TO THE BENEFITS THEREOF.
EXCHANGE APPLICATIONS, INC.
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12% BRIDGE PROMISSORY NOTE
New York, New York
U.S. $7,000,000.00 June 1, 2001
WHEREAS, the Payees (as defined below) are the holders of (i) a
$3,000,000.00 principal amount 9% Bridge Promissory Note issued by the Payor to
the Payees on February 20, 2001 and (ii) a $1,500,000.00 principal amount 10%
Bridge Promissory Note issued by the Payor to the Payees on March 28, 2001
(together the "Original Notes"); and
WHEREAS, the Payor and the Payees desire to amend and restate the
Original Notes in their entirety as set forth herein in order to, among other
things, extend the existing Maturity Dates of the Original Notes, amend the
interest rate and conversion provisions thereof.
General.
For value received, EXCHANGE APPLICATIONS, INC., a Delaware
corporation (including any successor thereto (by way of merger, consolidation,
sale or otherwise) the "Payor"), hereby promises to pay to the order of each
payee set forth on Schedule 1 hereto, or each such payee's respective assigns
(each, a "Payee" and together, the "Payees"), the principal amount set forth
opposite each Payee's name on Schedule 1 hereto or such greater or lesser
principal amount which may be outstanding hereunder on the earlier to occur of:
(i) January 15, 2002 (the "Maturity Date") and (ii) the date of the occurrence
of any event prior to the Maturity Date, as expressly set forth in Section 2
hereof. All payments hereunder shall be made in such
coin or currency of the United States of America as at the time of payment shall
be legal tender therein for the payment of public and private debts. Interest on
this Note shall accrue daily from the date hereof at the rate of twelve percent
(12%) per annum on the outstanding balance of this Note on the basis of a
365-day year and the actual number of days elapsed. The unpaid principal amount
of this Note set forth opposite each Payee's name on Schedule 1 hereto, and the
accrued and unpaid interest thereon (including the Unpaid Interest (as defined
below)), shall be payable by wire transfer of immediately available funds to the
account of each Payee or by certified or official bank check payable to each
Payee mailed to each Payee at the address of each Payee as set forth on the
records of the Payor or such other address as shall be designated in writing by
each Payee to the Payor. Capitalized terms used and not otherwise defined herein
have the meanings ascribed thereto in the Purchase Agreement. The Payor (and the
Payees by acceptance of this Note) agree that the accrued and unpaid interest on
this Note as of the date hereof is $112,430.54 (the "Unpaid Interest").
The Payor irrevocably authorizes the Payees to make, or cause
to be made, an appropriate notation on the grid attached as Schedule 1 hereto,
or the continuation of such grid, or any other similar record, including
computer records, to reflect additional advances hereunder, any changes to the
allocations of the advances among the Payees and any adjustments thereto, as
appropriate. The Payees shall provide to the Payor an update of Schedule 1 to
reflect any such advances, allocations or adjustments. The outstanding amount of
this Note set forth on such grid, or the continuation of such grid, or any other
similar record, including computer records maintained by the Payees with respect
to the Note, shall be prima facie evidence of the principal amount, and the
accrued interest thereon, owing and unpaid by the Payor to the Payees, but the
failure to record, or any error in so recording any such amount on any such
grid, or any continuation thereof, or other record shall not limit or otherwise
affect the obligation of the Payor hereunder to make payments of principal and
interest on this Note when due. The Payor can rely on the latest copy of
Schedule 1 delivered to the Payor by the Payees.
Prepayment; Mandatory Repayment.
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This Note, together with the accrued and unpaid interest thereon
(including the Unpaid Interest (as defined below)), may not be prepaid in whole
or in part at the option of the Payor at any time, but must be prepaid in full
(including all accrued and unpaid interest thereon (including the Unpaid
Interest (as defined below))) at the option of any Payee, at the closing of the
first to occur of: (i) an Equity Financing (to the extent that this Note is not
converted pursuant to Section 4 hereof), and (ii) a Sale of the Corporation (as
such term is defined in the Certificate of Incorporation, as in effect on the
date hereof); provided, however, that the Payor may prepay this Note, together
with the accrued and unpaid interest thereon (including the Unpaid Interest (as
defined below)), in whole (and not in part) upon consummation of a transaction
(x) which does not constitute an Equity Financing or a Sale of the Corporation
(as defined in the Certificate of Incorporation, as in effect on the date
hereof) and (y) which results in the Payor having at least $25 million in cash
or cash equivalents.
Events of Default.
Definitions.
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In each case of the happening of the following events (each of which is
an "Event of Default"):
if a default occurs in the due observance or
performance of any covenant or agreement on the part of the Payor to be
observed or performed pursuant to the terms of the Financing Documents
and the Series A Documents (as defined in the Purchase Agreement)
between the Payor and any Payee and such default shall continue for
more than ten (10) days after notice thereof from any such Payee;
if the Payor shall (1) discontinue its business, (2)
apply for or consent to the appointment of a receiver, trustee,
custodian or liquidator of it or any of its property, (3) admit in
writing its inability to pay its debts as they mature, (4) make a
general assignment for the benefit of creditors, or (5) file a
voluntary petition in bankruptcy, or a petition or an answer seeking
reorganization or an arrangement with creditors, or to take advantage
of any bankruptcy, reorganization, insolvency, readjustment of debt,
dissolution or liquidation Laws, or an answer admitting the material
allegations of a petition filed against it in any Proceeding under any
such Law;
there shall be filed against the Payor an involuntary
petition seeking reorganization of the Payor or the appointment of a
receiver, trustee, custodian or liquidator of the Payor or a
substantial part of its assets, or an involuntary petition under any
bankruptcy, reorganization or insolvency Law of any jurisdiction,
whether now or hereafter in effect;
if final judgment(s) for the payment of money in
excess of an aggregate amount of $500,000 shall be rendered against the
Payor;
if indebtedness of the Payor to any holder of such
indebtedness in an aggregate principal amount in excess of $500,000 or
more shall become due, whether by maturity, default, acceleration or
otherwise, and such holder of such indebtedness commences an
enforcement action against the Payor or any Subsidiary to collect such
indebtedness or otherwise enforce its rights;
if the Company fails to obtain, and provide to the
Payees, the requisite approval of the Board of Directors for all of the
transactions contemplated by the Purchase Agreement by 5 p.m. EST on
June 6, 2001, provided, that the failure to obtain and provide to the
Payees such approval by June 6, 2001 shall not constitute an Event of
Default if such failure to obtain and provide such approvals is caused
only by the failure of the Company to obtain the consent of Xx. Xxxxx
Xxxxxx in his capacity as a member of the Board of Directors.
then, upon each and every such Event of Default and at any time thereafter
during the continuance of such Event of Default, at the election of the Payees,
any and all indebtedness of the Payor to the Payees under this Note shall
immediately become due and payable, both as to principal and interest (including
any deferred interest and any accrued and unpaid interest (including the Unpaid
Interest ), without presentment, demand, or protest, all of which are hereby
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expressly waived, anything contained herein or in the Purchase Agreement or
other evidence of such indebtedness to the contrary notwithstanding (except in
the case of an Event of Default under paragraphs (ii), (iii) or (vi) of this
Section 3(a), in which event such indebtedness shall automatically become due
and payable).
Remedies on Default, Etc.
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In case any one or more Events of Default shall occur and be continuing
and acceleration of this Note or any other indebtedness of the Payor to the
Payees shall have occurred, each Payee may, among other things, proceed to
protect and enforce its rights by an action at law, suit in equity or other
appropriate Proceeding, whether for the specific performance of any agreement
contained herein or the Financing Documents or Series A Documents (as defined in
the Purchase Agreement) between the Payor and such Payee, or for an injunction
against a violation of any of the terms hereof or thereof or in and of the
exercise of any power granted hereby or thereby or by Law. No right conferred
upon each Payee hereby or by the Purchase Agreement shall be exclusive of any
other right referred to herein or therein or now or hereafter available at law,
in equity, by statute or otherwise.
Conversion of this Note.
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If the closing of an Equity Financing occurs prior to the Maturity
Date, the Payees may elect, in their sole discretion, by delivering notice to
the Payor within 5 Business Days of delivery by the Payor to the Payees of the
final term sheet with respect to such Equity Financing, to convert all or any
portion of the principal amount of this Note and the accrued and unpaid interest
thereon (the "Subject Amount"), into the number of shares of Securities issued
in such Equity Financing equal to the quotient obtained by dividing: (i) the
portion of the Subject Amount specified by the Payees to be so converted by (ii)
the lowest price per equity Security paid in such Equity Financing; provided,
however, that the Payees may not elect to convert all or any portion of the
Subject Amount to the extent that such conversion will violate any law, rule,
regulation or requirement applicable to the Payor, including any rule or
requirement of the NASDAQ Stock Market or any other exchange or market on which
any of the Payor's Securities may be listed.
If the Payees exercise their right not to convert, or are prevented
from exercising their right to convert pursuant to the proviso in Section 4(a)
above, all or any portion of the principal amount of this Note and the accrued
and unpaid interest thereon in connection with the closing of an Equity
Financing occurring prior to the Maturity Date (the "Excluded Amount"), then,
upon the request of the Payees at any time thereafter, the Excluded Amount shall
be immediately paid by the Payor to each Payee in accordance with the percentage
allocation set forth opposite such Xxxxx's name on Schedule 1 hereto by wire
transfer of immediately available funds to a bank account designated by each
Payee. The Payor shall provide the Payees with at least ten days' prior written
notice of the anticipated closing of any Equity Financing.
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Defenses.
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The obligations of the Payor under this Note shall not be subject to
reduction, limitation, impairment, termination, defense, set-off, counterclaim
or recoupment for any reason.
Exchange or Replacement of Notes.
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The Payees collectively may, at their option, in person or by duly
authorized attorney, surrender this Note for exchange, at the principal business
office of the Payor, and receive in exchange therefor, a new Note in the same
principal amount as the unpaid principal amount of this Note and bearing
interest at the same annual rate as this Note, such new Note to be dated as of
the date of this Note and to be in such principal amount as remains unpaid and
payable to such person or persons, or order, as the Payees may designate in
writing.
Upon receipt by the Payor of evidence satisfactory to it of the loss,
theft, destruction, or mutilation of this Note, and (in case of loss, theft or
destruction) of an indemnity reasonably satisfactory to it, and upon surrender
and cancellation of this Note, if mutilated, the Payor will deliver a new Note
of like tenor in lieu of this Note. Any Note delivered in accordance with the
provisions of this Section 6 shall be dated as of the date of this Note.
Extension of Maturity.
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Should the principal of or interest on this Note become due and payable
on other than a Business day, the maturity date thereof shall be extended to the
next succeeding Business day, and, in the case of principal, interest shall be
payable thereon at the rate per annum herein specified during such extension.
Attorneys' and Collection Fees.
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Should the indebtedness evidenced by this Note or any part hereof be
collected at law or in equity or in bankruptcy, receivership or other court
proceedings, or this Note be placed in the hands of attorneys for collection,
the Payor agrees to pay, in addition to principal and interest due and payable
hereon, all reasonable costs of collection, including reasonable attorneys' fees
and expenses, incurred by the Payees in collecting or enforcing this Note.
Waivers.
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The Payor hereby waives presentment, demand for payment, notice of
dishonor, notice of protest and all other notices or demands in connection with
the delivery, acceptance, performance or default of this Note.
No delay by any Payee in exercising any power or right hereunder shall
operate as a waiver of any power or right, nor shall any single or partial
exercise of any power or right preclude other or further exercise thereof, or
the exercise of any other power or right hereunder or otherwise; and no waiver
whatsoever or modification of the terms hereof shall be valid unless set forth
in writing by any Payee and then only to the extent set forth therein.
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Amendments and Waivers.
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Except for amendments to Schedule 1 hereto that are made to reflect
transfers among Payee's and/or its and their affiliates, and do not increase the
overall amount of indebtedness hereunder (and such amendments may be made by
unanimous agreement among Payees), no provision of this Note may be amended or
waived except if such amendment and waiver is in writing and is signed, in the
case of an amendment, by the Payor and the Payees, or, in the case of a waiver,
by the party against whom the waiver is to be effective.
Governing Law.
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This Note is made and delivered in, and 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).
Notices.
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The terms and provisions of Section 9 of the Purchase Agreement are
expressly incorporated into this Note.
No Novation.
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The indebtedness evidenced by this Note was previously evidenced by the
Original Notes. This Note amends, restates and re-evidences the indebtedness
evidenced by the Original Notes and does not constitute a novation.
Severability.
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If any provision of this Note 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 Note 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 Note or
amending or affecting the validity or enforceability of such provision in any
other jurisdiction.
Assignment.
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Neither the Payor nor the Payees may assign their rights or obligations
hereunder to any Person, except that each Payee may assign any of its rights and
obligations hereunder to its limited partners or any affiliate of such Payee.
*****
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IN WITNESS WHEREOF, the Payor has duly executed and delivered this Note
as of the date first written above.
EXCHANGE APPLICATIONS, INC.
By: ________________________
Name:
Title:
SCHEDULE 1
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Payee Percentage Allocation Unpaid Interest Amount Principal Amount Total
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InSight Capital Partners IV, L.P. 76.666130% 86,196.14 5,366,629.10 $5,452,825.24
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InSight Capital Partners (Cayman) IV, L.P. 10.537455% 11,847.32 737,621.85 $ 749,469.17
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InSight Capital Partners IV (Fund B), L.P. 12.136382% 13,645.00 849,546.74 $ 863,191.74
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InSight Capital Partners IV (Co-Investors), L.P. 0.660033% 742.08 46,202.31 $ 46,944.39
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TOTAL 100.00% 112,430.54 7,000,000.00 $7,112,430.54
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