EXHIBIT 99.2
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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
AMONG EXCHANGE APPLICATIONS, INC. AND THE PURCHASERS THEREIN, DATED AS OF
FEBRUARY 20, 2001, AS AMENDED FROM TIME TO TIME, AND IS ENTITLED TO THE BENEFITS
THEREOF.
EXCHANGE APPLICATIONS, INC.
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9% BRIDGE PROMISSORY NOTE
New York, New York
UP TO US$3,000,000.00 February 20, 2001
GENERAL.
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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 April 30, 2001 (the
"Maturity Date"). 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 at the rate of nine percent (9%) 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 of this Note set forth opposite each Payee's
name on Schedule 1 hereto, and the accrued and unpaid interest thereon, 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. This Note is being issued pursuant to the Securities Purchase Agreement,
dated as of the date hereof (the "Purchase Agreement"), among the Payor and the
Payees, as amended from time to time. Capitalized terms used and not otherwise
defined herein have the meanings ascribed thereto in the Purchase Agreement.
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. Notwithstanding any
provision of this Note to the contrary, the Payees shall in no way be obligated
to make an Advance after March 15, 2001. 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. This Note, together with interest accrued thereon, may not
be prepaid in whole or in part.
EVENTS OF DEFAULT.
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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 this Note or the
Purchase Agreement and such default shall continue for more than ten
(10) days after notice thereof from any 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;
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), without presentment,
demand, or protest, all of which are hereby 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) or (iii) of this Section 3(a), in which event such indebtedness
shall automatically become due and payable).
Remedies on Default, Etc.
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 in the Purchase Agreement, 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 the
Securities issued in such Equity Financing equal to (i) the portion of the
Subject Amount specified by the Payees to be so converted, divided 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, 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 Payee's name on Schedule 1 hereto by wire transfer of immediately available
funds to a bank account designated by each Payee.
DEFENSES. 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. 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. 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.
AMENDMENTS AND WAIVERS. 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. 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. The terms and provisions of Section 9 of the Purchase
Agreement are expressly incorporated into this Note.
ASSIGNMENT. 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.
* * * * *
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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INITIAL CLOSING DATE: FEBRUARY 20, 2001
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PAYEE PERCENTAGE ALLOCATION INITIAL ADVANCE AMOUNT
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InSight Capital Partners IV, L.P. 78.040899% $ 2,341,226.98
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InSight Capital Partners (Cayman) IV, L.P. 8.632630% $ 258,978.91
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InSight Capital Partners IV (Fund B), L.P. 12.670944% $ 380,128.33
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InSight Capital Partners IV (Co-Investors), L.P. 0.655526% $ 19,665.78
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TOTAL 100.00% $ 3,000,000.00
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