EXHIBIT 99.7
------------
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 AMONG EXCHANGE APPLICATIONS, INC. AND THE PURCHASERS THEREIN, DATED AS
OF MARCH 28, 2001, AS AMENDED FROM TIME TO TIME, AND IS ENTITLED TO THE BENEFITS
THEREOF.
EXCHANGE APPLICATIONS, INC.
---------------------------
WARRANT
NO.: W-2 MARCH 28, 2001
VOID AFTER MARCH 28, 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"), at anytime after the Maturity Date, up to that number of shares of
(i) Common Stock, $.001 par value per share (the "Common Stock"), of the Company
equal to the quotient obtained by dividing (x) $450,000, by (y) the Exercise
Price, (ii) if, prior to May 28, 2001, an Equity Financing is consummated
pursuant to which the Holders have elected to participate pursuant to the terms
of the Purchase Agreement (as defined below) and the Note, then Common Stock
equal to the quotient obtained by dividing (a) $375,000, by (b) the Exercise
Price, or (iii) if, prior to April 28, 2001, an Equity Financing is consummated
pursuant to which the Holders have elected to participate pursuant to the terms
of the Purchase Agreement (as defined below) and the Note, then Common Stock
(the Common Stock referred to in clauses (i), (ii) and (iii) above, in any case,
the "Warrant Shares"), equal to the quotient obtained by dividing (1)
$300,000, by (2) the Exercise Price. This Warrant is being issued pursuant to
the Securities Purchase Agreement dated as of the date hereof (as amended from
time to time, the "Purchase Agreement") among the Company and the Purchasers
listed therein. 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 by the Holders at any
time or from time to time after the Maturity Date and on or prior to March 28,
2011 (such period being herein referred to as the "Exercise Period").
EXERCISE PRICE. The exercise price (the "Exercise Price") at any time
for each Warrant Share shall be $1.53.
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 Quotations 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(a) above is
referred to herein as an "Exercise Date." As soon as practicable after each
exercise, the Company shall issue and deliver a 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
-2-
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.
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.
NO SHAREHOLDER RIGHTS. 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
-3-
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).
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 Second Amended and Restated
Registration Rights Agreement.
* * * *
-4-
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
----------
INITIAL CLOSING: MARCH 28, 2001
---------------- --------------
----------------------------- -------------------- ------------------- --------------- ------------------- ----------------
HOLDER NUMBER OF
WARRANT NUMBER OF WARRANT NUMBER OF
SHARES AT 30% SHARES AT 25% WARRANT SHARES
PERCENTAGE OF INITIAL ADVANCE WARRANT WARRANT AT 20% WARRANT
WARRANT SHARES AMOUNT COVERAGE COVERAGE COVERAGE
----------------------------- -------------------- ------------------- --------------- ------------------- ----------------
Insight Capital Partners 78.211447% $1,173,171.70 230,034 191,695 153,356
IV, L.P.
----------------------------- -------------------- ------------------- --------------- ------------------- ----------------
Insight Capital Partners 9.056941% $135,854.12 26,638 22,198 17,759
(Cayman) IV, L.P.
----------------------------- -------------------- ------------------- --------------- ------------------- ----------------
Insight Capital Partners IV 12.105748% $181,586.22 35,605 29,671 23,737
(Fund B), L.P.
----------------------------- -------------------- ------------------- --------------- ------------------- ----------------
Insight Capital Partners IV 0.625864% $9,387.96 1,841 1,534 1,226
(Co-Investors), L.P.
----------------------------- -------------------- ------------------- --------------- ------------------- ----------------
TOTAL: 100.00% $1,500,000.00 294,118 245,098 196,078
----------------------------- -------------------- ------------------- --------------- ------------------- ----------------
EXHIBIT A
---------
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:____________________________________
EXHIBIT B
---------
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:
-----------------------------------
(Signature must conform in all respects to the
name of the holder of the Warrant as specified
on the face of the Warrant)
Address:
-----------------------------------
Date:
-----------------------------------
Signed in the presence of:
-----------------------------
