EXHIBIT 99.3
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AMENDMENT NO. 1, dated as of
August 29, 2001 (this "Amendment No. 1"),
to the Security Agreement, dated as of
July 26, 2001 (the "Security Agreement"),
by and among EXCHANGE APPLICATION, INC.,
a Delaware corporation ("Exap"), EXSTATIC
SOFTWARE, INC., a Washington corporation
company ("eXstatic" and collectively with
Exap, the "Grantors"), and the secured
parties (each a "Secured Party" and
together, the "Secured Parties")
identified on the signature page hereto.
RECITALS
The Grantors and the Secured Parties agree to amend the
Security Agreement, on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
Section 1. Defined Terms.
Unless otherwise defined herein, terms defined in the Security
Agreement are used herein as therein defined.
Section 2. Amendment to the Security Agreement.
(a) The defined terms "Cash Debenture", "Note Debenture" and
"Convertible Debentures" shall be read to include such debentures as such
debentures are amended, modified or supplemented from time to time.
(b) The second sentence of the definition of the term
"Collateral" shall be amended and restated to read in its entirety as follows:
"The Purchasers may place a "hold" on any Deposit Account pledged as collateral
during the continuance of an Event of Default (as defined in the Convertible
Debentures)."
(c) The phrase "subordination agreements satisfactory to the
Purchasers" set forth in the last sentence of the definition of the term
"Permitted Liens" shall be deleted and replaced with the phrase "subordination
agreements satisfactory to the Required Investors."
(d) The following definitions shall be added to Section 1.2:
(i) "Collateral Agency and Intercreditor Agreement"
means the Collateral Agency and Intercreditor Agreement, dated August
29, 2001, among Exchange, eXstatic, the Secured Parties and Insight
Venture Partners IV (Collateral Agent), LLC, as amended, modified or
supplemented from time to time.
(ii) "Required Investors" has the meaning ascribed to
such term in the Collateral Agency and Intercreditor Agreement.
(e) The phrase "in form and substance reasonably satisfactory
to the Purchasers" set forth in the last sentence of Section 4.9 shall be
deleted and replaced with the phrase "in form and substance reasonably
satisfactory to the Required Investors."
(f) Section 6.2 shall be deleted in its entirety and shall be
amended and restated to read in its entirety as follows:
"6.2 APPLICATION OF PROCEEDS.
The Secured Parties shall apply the proceeds of any collection
or sale of the Collateral, as well as any Collateral consisting of cash, as
required pursuant to the terms of the Collateral Agency and Intercreditor
Agreement.
The Secured Parties shall have absolute discretion as to the
time of application of any such proceeds, moneys or balances in accordance with
this Agreement and the Collateral Agency and Intercreditor Agreement. Upon any
sale of the Collateral by the Secured Parties (including pursuant to a power of
sale granted by statute or under a judicial proceeding), the receipt of the
Secured Parties or of the officer making the sale shall be a sufficient
discharge to the purchaser or purchasers of the Collateral so sold and such
purchaser or purchasers shall not be obligated to see to the application of any
part of the purchase money paid over to the Secured Parties, or such officer or
be answerable in any way for the misapplication thereof."
(g) The following language shall be added to the Agreement as
Section 7.16:
"7.16 COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT CONTROLS.
Notwithstanding anything contrary herein, the rights,
benefits, priorities and interests of the Secured Parties (including, without
limitation, with respect to the Collateral, the Proceeds thereof and exercise of
rights, powers and remedies) shall be subject in all respects to the provisions
of the Collateral Agency and Intercreditor Agreement."
Section 3. Effectiveness. This Amendment No. 1 shall become effective,
with effect as of the date hereof (the "Effective Date").
Section 4. References to the Purchase Agreement.
From and after the Effective Date, all references in the
Security Agreement shall be deemed to be references to the Security Agreement
after giving effect to this Amendment No. 1.
Section 5. No Other Amendments.
Except as expressly set forth herein, the Security Agreement
remains in full force and effect in accordance with its terms and nothing
contained herein shall be deemed (i) to be a waiver, amendment, modification or
other
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change of any term, condition or provision of the Security Agreement (or a
consent to any such waiver, amendment, modification or other change), (ii) to be
a consent to any transaction or (iii) to prejudice any right or rights which the
Purchasers, the Sellers or the Company may have under the Security Agreement.
Section 6. Further Assurances.
The parties hereto agree to do such further acts and things,
and to execute and deliver such additional conveyances, assignments, agreements
and instruments, as may be reasonably requested in connection with the
administration and enforcement of this Amendment No. 1 and to permit the
exercise thereof in compliance with any Law.
Section 7. Notices.
All notices, demands and requests of any kind to be delivered
to any party hereto in connection with this Amendment No. 1 shall be delivered
in accordance with the notice provisions contained in the Purchase Agreement.
Section 8. Headings.
The headings used herein are for convenience of reference only
and shall not affect the construction of, nor shall they be taken into
consideration in interpreting, this Amendment No. 1.
Section 9. Counterparts.
This Amendment No. 1 may be executed in any number of separate
counterparts, each of which shall be an original and all of which taken together
shall constitute one and the same instrument.
Section 10. Applicable Law.
THIS AMENDMENT NO. 1 SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK (WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICTS OF LAW).
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 1 to be duly executed and delivered as of the day and year first
above written.
GRANTORS:
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EXCHANGE APPLICATIONS, INC.,
By:
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Name: F. Xxxxxx Xxxxx
Title: CFO
EXSTATIC SOFTWARE, INC.
By:
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Name: F. Xxxxxx Xxxxx
Title: CFO
SECURED PARTIES:
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INSIGHT VENTURE PARTNERS IV, L.P.
INSIGHT VENTURE PARTNERS (CAYMAN) IV, L.P.
INSIGHT VENTURE PARTNERS IV (FUND B), L.P.
INSIGHT VENTURE PARTNERS IV (CO-INVESTORS), L.P.
By: Insight Venture Associates IV, L.L.C.,
the general partner to each of the
above-referenced entities:
By:
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Name: Xxxxx Xxxxxx
Title: Managing Director
