EXHIBIT 10.20
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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.
EXCHANGE APPLICATIONS, INC.
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WARRANT
NO.: W-3 APRIL 16, 2001
VOID AFTER APRIL 16, 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"), (i) as of the date hereof, 818,182 shares of Common Stock, $.001 par
value per share (the "Common Stock") of the Company and (ii) after the date
hereof, up to that number of additional shares of Common Stock equal to the
product of (a) 700,909 and (b) a fraction (not to exceed 1), the numerator of
which is the number of days elapsed since the date hereof to and including the
Warrant Vesting Date and the denominator of which is 262 (collectively, the
"Warrant Shares"). The "Warrant Vesting Date" shall mean the earliest of (a)
December 31, 2001, (b) the date that the Holders' obligations, if any, under
clause (ii) of the first paragraph of the letter, dated April 16, 2001 (the
"Letter"), among the Holders and the Company, terminate due to notification from
the Company to that effect or (C) the date of the consummation of a Sale of the
Corporation (as such term is defined therein).
SECTION 1. EXERCISE PERIOD. This Warrant may be exercised by the
Holders at any time or from time to time after the date hereof and on or prior
to April 16, 2011 (such period being herein referred to as the "Exercise
Period").
SECTION 2. EXERCISE PRICE. The exercise price (the "Exercise Price") at
any time for each Warrant Share shall be equal to the lowest Market Price for a
share of Common Stock of the Company for the period from the date hereof until
the earlier of (a) the date of first exercise of this Warrant and (b) the
Warrant Vesting Date.
SECTION 3. EXERCISE OF WARRANT; WARRANT SHARES.
(a) (a) 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
as of the Exercise Date. As used herein, "Market Price" at any date of one
Warrant Share or one share of Common Stock 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 or Common Stock 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 or Common Stock 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.
(b) 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 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.
(c) 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.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Company
represents and warrants to the Holders that all corporate action to authorize
and issue this Warrant has been taken and 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
the Company shall issue 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 and with such other terms and
conditions to be mutually determined by the Company and the Holders and payable
in cash.
SECTION 5. NO SHAREHOLDER RIGHTS. This Warrant shall not entitle the
Holders to any voting rights or other rights as a shareholder of the Company.
SECTION 6. 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.
SECTION 7. 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 obligation of the Company, whether or not the allegedly
lost, stolen, mutilated or destroyed Warrant shall be at any time enforceable by
anyone.
SECTION 8. 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).
SECTION 9. 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.
SECTION 10. 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.
SECTION 11. REGISTRATION RIGHTS; EXPENSES. All of the Warrant Shares
shall be deemed to be "Registrable Shares" as defined under the Second Amended
and Restated Registration Rights Agreement of the Company, dated as of March 28,
2001. The Company shall reimburse the Holders for all legal and other expenses
related to the preparation, negotiation and enforcement of this Warrant.
* * * *
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its duly authorized officer as of the date first written above.
EXCHANGE APPLICATIONS, INC.
By: __________________________
Name:
Title:
SCHEDULE I
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PERCENTAGE OF
HOLDER WARRANT SHARES
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Insight Capital Partners IV, L.P. 78.211447%
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Insight Capital Partners (Cayman) IV, L.P. 9.056941%
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Insight Capital Partners IV (Fund B), L.P. 12.105748%
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Insight Capital Partners IV (Co-Investors), L.P. 0.625864%
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TOTAL: 100.00%
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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: _________________________________
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: ____________________________
(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:
____________________________
