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                                                                   EXHIBIT 99.13


                  SECURITY AGREEMENT dated as of [April ___, 2002], among
EXCHANGE APPLICATIONS, INC., a Delaware corporation (the "Exchange"), EXSTATIC
SOFTWARE, INC. (f/k/a/ Gino Borland, Inc.), a Washington corporation
("eXstatic", together with the Exchange, the "Grantors"), and INSIGHT VENTURE
PARTNERS IV (COLLATERAL AGENT), LLC together with its successors and assigns
(not in its individual capacity but solely as collateral agent) for the benefit
of the Note Secured Parties (in this capacity, the "Note Collateral Agent").

                  Reference is made to the (i) Guaranty attached as Exhibit A
hereto (the "April Guaranty", (ii) Securities Purchase Agreement, dated as of
[April ____, 2002], among the Grantors and the Note Secured Parties, as defined
below (the "Securities Purchase Agreement"), (iii) a U.S. $4,000,000 million
principal amount Senior Secured Note issued by the Grantors to the Note Secured
Parties (the "Note") pursuant to the Securities Purchase Agreement, (iv) the
Security Agreement dated as of July 26, 2001, among the Grantors and InSight
(the "July CD Security Agreement"), (v) the Security Agreement dated as of
August 29, 2001, among the Grantors, Insight Venture Partners IV (Collateral
Agent), LLC, for the benefit of the August CD Holders (in such capacity, the
"August CD Collateral Agent"), the Note Secured Parties and certain other
parties thereto (the "August CD Security Agreement"), (vi) the Collateral Agency
and Intercreditor Agreement dated as of August 29, 2001, among the Grantors and
the August CD Collateral Agent (the "CD Collateral Agency and Intercreditor
Agreement"), and (vii) Amendment No. 1 to the Collateral Agency and
Intercreditor Agreement dated as of the date hereof, among the Note Collateral
Agent, the Grantors, the Note Secured Parties, the August CD Collateral Agent
and the July CD Holders (as defined in the CD Collateral Agency and
Intercreditor Agreement), as amended, modified, supplemented or replaced from
time to time (the "Amendment No. 1 to the Collateral Agency and Intercreditor
Agreement").

                  The Note Secured Parties have agreed to guaranty up to U.S.
$4,000,000 in cash, in the aggregate, of the Grantors obligations to Silicon
Valley Bank pursuant to the [SVB FACILITY], upon the terms and conditions set
forth in the April Guaranty. The Grantors have agreed to reimburse the Note
Secured Parties for any amounts paid under the April Guaranty on the terms and
conditions set forth in the Note, the Securities Purchase Agreement and the
other Financing Documents. The obligations of the Note Secured Parties to enter
into the April Guaranty are conditioned upon, among other things, the execution
and delivery by the Grantors of this Agreement to secure (A) the due and
punctual payment by the Grantors of (i) the principal of and interest (including
interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Note, when and as due, whether at maturity,
by acceleration, upon one or more dates set for prepayment or otherwise, (ii)
each other amount required to be paid by the Grantors under the Note, when and
as due, including payments in respect of reimbursement of disbursements and
interest thereon and (iii) all other monetary obligations, including fees,
costs, expenses and indemnities, whether primary, secondary, direct, contingent,
fixed or otherwise (including monetary obligations incurred during the pendency
of any bankruptcy, insolvency,
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receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), of the Grantors to the Note Secured Parties under
the Note (the obligations in (i), (ii) and (iii) collectively, the "Note Payment
Obligations") and (B) the due and punctual performance of all covenants,
agreements, obligations and liabilities of the Grantors under or pursuant to the
Financing Documents (the "Note Performance Obligations", together with the Note
Payment Obligations the "Note Obligations"). The rights and priorities with
respect to the Collateral are subject to the Subordination Agreement (as defined
below).

                  Accordingly, each of the Grantors and the Note Collateral
Agent for the benefit of the Note Secured Parties (and each of their respective
successors or assigns), hereby agree as follows:

                                   ARTICLE I

                                   DEFINITIONS

1.1      DEFINITION OF TERMS USED HEREIN.

         All capitalized terms used but not defined herein shall have the
meanings set forth in the Securities Purchase Agreement.

1.2      DEFINITION OF CERTAIN TERMS USED HEREIN.

         As used herein, the following terms shall have the following meanings:

                  "Account Debtor" shall mean any Person who is or who may
become obligated to any Grantor under, with respect to or on account of an
Account.

                  "Accounts" shall mean any and all right, title and interest of
the Grantors to payment for goods and services sold or leased, including any
such right evidenced by chattel paper, whether due or to become due, whether or
not it has been earned by performance, and whether now or hereafter acquired or
arising in the future, including accounts receivable from Affiliates of the
Grantors.

                  "Accounts Receivable" shall mean all Accounts and all right,
title and interest in any returned or repossessed goods, together with all
rights, titles, securities and guarantees with respect thereto, including any
rights to stoppage in transit, replevin, reclamation and resales, and all
related security interests, liens and pledges, whether voluntary or involuntary,
in each case whether now existing or owned or hereafter arising or acquired.

                  "Affiliate" shall mean, with respect to any Person, any
director, officer, parent or subsidiary of such Person, or any Person
controlling, controlled by or under common control with such Person.

                  "Amendment No. 1 to the Collateral Agency and Intercreditor
Agreement" has the meaning assigned to such term on the preliminary statement of
this Agreement.

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                  "August CD Collateral Agent" has the meaning assigned to it in
the preliminary statement of this Agreement.

                  "August CD Security Agreement" has the meaning assigned to it
in the preliminary statement of this Agreement, as such August CD Security
Agreement may be amended, modified, supplemented or replaced from time to time.

                  "CD Collateral Agency and Intercreditor Agreement" has the
meaning assigned to it in the preliminary statement of this Agreement, as such
CD Collateral Agency and intercreditor Agreement may be amended, modified,
supplemented or replaced from time to time.

                  "CD Security Agreements" means, together, the August CD
Security Agreement and the July CD Security Agreement.

                  "Collateral" shall mean all (a) Accounts Receivable, (b)
Documents, (c) Equipment, (d) General Intangibles, (e) Inventory, (f) cash and
cash accounts, (g) Investment Property, (h) Instruments (as defined in the UCC),
and (i) Proceeds. The Note Collateral Agent for the benefit of the Note Secured
Parties may place a "hold" on any Deposit Account pledged as collateral during
the continuance of an Event of Default (as defined in the Notes). The collateral
shall include, without limitation, the following categories of assets as defined
in UCC: goods (including inventory, equipment and any accessions thereto),
instruments (including promissory notes), documents, accounts (including
health-care-insurance receivables, and license fees), chattel paper (whether
tangible or electronic), deposit accounts, letter-of-credit rights (whether or
not the letter of credit is evidenced by a writing), commercial tort claims,
securities and all other investment property, general intangibles (including
payment intangibles and software, but excluding Intellectual Property),
supporting obligations and any and all proceeds of any thereof, wherever
located, whether now owned or hereafter acquired. If the Grantors shall at any
time acquire a commercial tort claim, as defined in the UCC, the Grantors shall
promptly notify the Note Collateral Agent in a writing signed by the Grantors of
the brief details thereof and grant to the Note Collateral Agent for the benefit
of the Note Secured Parties in such writing a security interest therein and in
the proceeds thereof, all upon the terms of this Agreement, with such writing to
be in form and substance satisfactory to the Note Collateral Agent.

                  "Commodity Account" shall mean an account maintained by a
Commodity Intermediary in which a Commodity Contract is carried out for a
Commodity Customer.

                  "Commodity Contract" shall mean a commodity futures contract,
an option on a commodity futures contract, a commodity option or any other
contract that, in each case, is (a) traded on or subject to the rules of a board
of trade that has been designated as a contract market for such a contract
pursuant to the federal commodities laws or (b) traded on a foreign commodity
board of trade, exchange or market, and is carried on the books of a Commodity
Intermediary for a Commodity Customer.

                  "Commodity Customer" shall mean a Person for whom a Commodity
Intermediary carries a Commodity Contract on its books.

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                  "Commodity Intermediary" shall mean (a) a Person who is
registered as a futures commission merchant under the federal commodities laws
or (b) a Person who in the ordinary course of its business provides clearance or
settlement services for a board of trade that has been designated as a contract
market pursuant to federal commodities laws.

                  "Copyright License" shall mean any written agreement, now or
hereafter in effect, granting any right to any third party under any Copyright
now or hereafter owned by the Grantors or which the Grantors otherwise has the
right to license, or granting any right to the Grantors under any Copyright now
or hereafter owned by any third party, and all rights of the Grantors under any
such agreement.

                  "Copyrights" shall mean all of the following now owned or
hereafter acquired by the Grantors: (a) all copyright rights in any work subject
to the copyright laws of the United States, whether as author, assignee,
transferee or otherwise, and (b) all registrations and applications for
registration of any such copyright in the United States, including
registrations, recordings, supplemental registrations and pending applications
for registration in the United States Copyright Office.

                  "Deposit Account" has the meaning set forth in Section 9-102
of the UCC.

                  "Documents" shall mean all instruments, files, records, ledger
sheets and documents (including documents as defined in the UCC) covering or
relating to any of the Collateral.

                  "Entitlement Holder" shall mean a Person identified in the
records of a Securities Intermediary as the Person having a Security Entitlement
against the Securities Intermediary. If a Person acquires a Security Entitlement
by virtue of Section 8-501(b)(2) or (3) of the UCC, such Person is the
Entitlement Holder.

                  "Equipment" shall mean all equipment, furniture, furnishings,
machinery, molds, machine tools, motors, fixtures, trade fixtures, motor
vehicles, dyes, jigs, goods and other tangible personal property (other than
Inventory) of every kind and description used in the Grantors' operations or
owned by the Grantors and any interest in any of the foregoing, including tools,
parts and supplies of every kind and description, and all attachments,
accessories, improvements, accessions, replacements, substitutions, additions or
appurtenances thereto, that are now or hereafter owned by the Grantors.

                  "Exchange" shall have the meaning assigned to such term in the
Preamble to this Agreement.

                  "Exim Agreement" shall mean that certain Export-Import Bank
Loan and Security Agreement dated as of April 25, 2001, by and between the
Grantors and SVB and all documents, instruments and agreements executed in
conjunction therewith, each as may be amended from time to time.

                  "Financial Asset" shall mean (a) a Security, (b) an obligation
of a Person or a share, participation or other interest in a Person or in
property or an enterprise of a Person, which is, or is of a type, dealt with in
or traded on financial markets, or which is recognized in any area

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in which it is issued or dealt in as a medium for investment or (c) any property
that is held by a Securities Intermediary for another Person in a Securities
Account if the Securities Intermediary has expressly agreed with the other
Person that the property is to be treated as a Financial Asset under Article 8
of the UCC. As the context requires, the term Financial Asset shall mean either
the interest itself or the means by which a Person's claim to it is evidenced,
including a certificated or uncertificated Security, a certificate representing
a Security or a Security Entitlement.

                  "General Intangibles" shall mean all choses in action and
causes of action and all other assignable intangible personal property of the
Grantors of every kind and nature (other than Accounts Receivable) now owned or
hereafter acquired by the Grantors, including corporate or other business
records, Deposit Accounts, indemnification claims, contract rights (including
rights under leases, whether entered into as lessor or lessee, and other
agreements), Intellectual Property, drawings, blueprints, customer lists,
security and other deposits, goodwill, registrations, franchises, tax refund
claims and any letter of credit, guarantee, claim, security interest or other
security held by or granted to the Grantors to secure payment by an Account
Debtor of any of the Accounts Receivable, rights in all litigation presently or
hereafter pending for any cause or claim (whether in contract, tort or
otherwise), and all judgments now or hereafter arising therefrom, all claims of
Grantors against Note Collateral Agent, rights to purchase or sell real or
personal property, rights as a licensor or licensee of any kind, royalties,
telephone numbers, purchase orders, and all insurance policies and claims
(including without limitation life insurance, key man insurance, credit
insurance, liability insurance, property insurance and other insurance).

                  "Governmental Entity" means any federal, state, municipal, or
other government, governmental or quasi-governmental department, commission,
board, bureau, agency or instrumentality, any self-regulatory organization or
any court or tribunal.

                  "Grantors" shall have the meaning assigned to such term in the
Preamble of this Agreement.

                  "Intellectual Property" shall mean all intellectual and
similar property of the Grantors of every kind and nature now owned or hereafter
acquired by the Grantors, including inventions, designs, Patents, Copyrights,
Licenses, Trademarks, trade secrets, confidential or proprietary technical and
business information, know-how, show-how or other data or information, software
and databases and all embodiments or fixations thereof and related documentation
and registrations, and all additions, improvements and accessions to, and books
and records describing or used in connection with, any of the foregoing, to the
extent a security interest has been granted to SVB pursuant to the SVB Security
Interest.

                  "Inventory" shall mean all goods of the Grantors, whether now
owned or hereafter acquired, held for sale or lease, or furnished or to be
furnished by the Grantors under contracts of service, or consumed in the
Grantors' business, including raw materials, intermediates, work in process,
goods in transit, packaging materials, finished goods, semi-finished inventory,
scrap inventory, manufacturing supplies and spare parts, all materials and
supplies of every kind, nature and description which are or might be used or
consumed in the Grantors' business or used in connection with the manufacture,
packing, shipping, advertising, selling or finishing of such

                                        5
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goods, merchandise or other personal property, all such goods that have been
returned to or repossessed by or on behalf of the Grantors, and all warehouse
receipts, documents of title and other documents representing any of the
foregoing.

                  "Investment Property" shall mean all Securities (whether
certificated or uncertificated), Security Entitlements, Securities Accounts,
Commodity Contracts and Commodity Accounts of the Grantors, whether now owned or
hereafter acquired by the Grantors.

                  "July CD Security Agreement" has the meaning ascribed to it in
the preliminary Statement of this Agreement, as such July CD Security Agreement
may be amended, modified, supplemented, restated or replaced from time to time.

                  "Law" means any constitution, law, statue, treaty, rule,
ordinance, permit, certificate, directive, requirement, regulation or Order (in
each case, whether foreign or domestic of any Governmental Entity.

                  "License" shall mean any Patent License, Trademark License,
Copyright License or other franchise agreement, license or sublicense to which
any Grantor is a party.

                  "Material Adverse Effect" means, with respect to any Person, a
material adverse effect on the business, operations, assets, conditions
(financial or otherwise), operating results, liabilities or prospects of such
Person and its Subsidiaries, taken as a whole.

                  "Note" shall have the meaning assigned to such term in the
Preamble of this Agreement.

                  "Note Collateral Agent" shall have the meaning assigned to
such term in the Preamble to this Agreement.

                  "Note Obligations" shall have the meaning assigned to such
term in the preliminary statement of this Agreement.

                  "Note Payment Obligations" shall have the meaning assigned to
such term in the preliminary statement of this Agreement.

                  "Note Performance Obligations" has the meaning assigned to it
in the preliminary statement of this Agreement.

                  "Note Secured Parties" means, collectively, the persons
identified on Schedule I attached hereto in each case, together with their
heirs, successors and permitted assigns, except for the Note Collateral Agent
and the Grantors.

                  "Note Security Interest" shall have the meaning assigned to
such term in Section 2.1.

                  "Orders" means judgments, writs, decrees, injunctions, orders,
compliance agreements or settlement agreements of or with any Governmental
Entity or arbitrator.

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                  "Patent License" shall mean any written agreement, now or
hereafter in effect, granting to any third party any right to make, use or sell
any invention on which a Patent, now or hereafter owned by the Grantors or which
the Grantors otherwise has the right to license, is in existence, or granting to
the Grantors any right to make, use or sell any invention on which a Patent, now
or hereafter owned by any third party, is in existence, and all rights of the
Grantors under any such agreement.

                  "Patents" shall mean all of the following now owned or
hereafter acquired by the Grantors: (a) all letters patent of the United States,
all registrations and recordings thereof, and all applications for letters
patent of the United States, including registrations, recordings and pending
applications in the United States Patent and Trademark Office, and (b) all
reissues, continuations, divisions, continuations-in-part, renewals or
extensions thereof, and the inventions disclosed or claimed therein, including
the right to make, use and/or sell the inventions disclosed or claimed therein.

                  "Perfection Certificate" shall mean a certificate
substantially in the form of Annex 1 hereto, completed and supplemented with the
schedules and attachments contemplated thereby, and duly executed by a Financial
Officer and the chief legal officer of the Grantors.

                  "Permitted Liens" shall mean the following: (i) purchase money
security interests (including, without limitation, any leases which may be
deemed purchase money security interests) in specific items of Equipment; (ii)
leases of specific items of Equipment; (iii) liens for taxes not yet payable;
(iv) additional security interests and liens consented to in writing by the Note
Collateral Agent for the benefit of the Note Secured Parties, which consent
shall not be unreasonably withheld; (v) liens of materialmen, mechanics,
warehousemen, carriers, or other similar liens arising in the ordinary course of
business and securing obligations which are not delinquent; (vi) liens incurred
in connection with the extension, renewal or refinancing of the indebtedness
secured by liens of the type described above in clauses (i) or (ii) above,
provided that any extension, renewal or replacement lien is limited to the
property encumbered by the existing lien and the principal amount of the
indebtedness being extended, renewed or refinanced does not increase; (vii)
liens in favor of customs and revenue authorities which secure payment of
customs duties in connection with the importation of goods; (viii) the SVB
Security Interest; (ix) liens arising from the Exim Agreement; and (x) liens
securing the Convertible Debentures as defined in the CD Collateral Agency and
Intercreditor Agreement, as amended. The Note Collateral Agent, for the benefit
of the Note Secured Parties, will have the right to require, as a condition to
its consent under subsection (iv) above, that the holder of the additional
security interest or lien sign intercreditor and subordination agreements
satisfactory to the Note Collateral Agent and the Note Secured Parties in their
sole and absolute judgement.

                  "Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, government, or any agency or political division thereof, or any
other entity.

                  "Proceeds" shall mean any consideration received from the
sale, exchange, license, lease or other disposition of any asset or property
that constitutes Collateral, any value received as a consequence of the
possession of any Collateral and any payment received from any insurer or other
person or entity as a result of the destruction, loss, theft, damage or other

                                        7
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involuntary conversion of whatever nature of any asset or property which
constitutes Collateral, and shall include, (a) any claim of the Grantors against
any third party for (and the right to sue and recover for and the rights to
damages or profits due or accrued arising out of or in connection with) (i)
past, present or future infringement of any Patent now or hereafter owned by the
Grantors, or licensed under a Patent License, (ii) past, present or future
infringement or dilution of any Trademark now or hereafter owned by the Grantors
or licensed under a Trademark License or injury to the goodwill associated with
or symbolized by any Trademark now or hereafter owned by the Grantors, (iii)
past, present or future breach of any License and (iv) past, present or future
infringement of any Copyright now or hereafter owned by any Grantor or licensed
under a Copyright License and (b) any and all other amounts from time to time
paid or payable under or in connection with any of the Collateral.

                  "Purchasers" means, collectively, the persons identified on
the signature pages hereto, except for the Note Collateral Agent and the
Grantors.

                  "Required Investors" means the holders of 51% of the Notes,
based on outstanding principal amount.

                  "Securities" shall mean any obligations of an issuer or any
shares, participations or other interests in an issuer or in property or an
enterprise of an issuer which (a) are represented by a certificate representing
a security in bearer or registered form, or the transfer of which may be
registered upon books maintained for that purpose by or on behalf of the issuer,
(b) are one of a class or series or by its terms is divisible into a class or
series of shares, participations, interests or obligations and (c)(i) are, or
are of a type, dealt with or traded on securities exchanges or securities
markets or (ii) are a medium for investment and by their terms expressly provide
that they are a security governed by Article 8 of the UCC.

                  "Securities Account" shall mean an account to which a
Financial Asset is or may be credited in accordance with an agreement under
which the Person maintaining the account undertakes to treat the Person for whom
the account is maintained as entitled to exercise rights that comprise the
Financial Asset.

                  "Securities Purchase Agreement" shall have the meaning
assigned to such term in the Preamble to this Agreement.

                  "Security Entitlements" shall mean the rights and property
interests of an Entitlement Holder with respect to a Financial Asset.

                  "Security Intermediary" shall mean (a) a clearing corporation
or (b) a Person, including a bank or broker, that in the ordinary course of its
business maintains securities accounts for others and is acting in that
capacity.

                  "SVB" shall mean Silicon Valley Bank.

                  "SVB Facilities" shall mean collectively, the Existing SVB
Facility and the New SVB Facility.

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                  "SVB Security Interest" shall mean the security interest
granted by the Grantors to SVB in connection with the SVB Facilities.

                  "SVB Subordination Agreement" means the [Subordination
Agreement] among the Note Collateral Agent and SVB, dated as of the date hereof,
as such agreement may be amended from time to time.

                  "Trademark License" shall mean any written agreement, now or
hereafter in effect, granting to any third party any right to use any Trademark
now or hereafter owned by any Grantor or which any Grantor otherwise has the
right to license, or granting to the Grantors any right to use any Trademark now
or hereafter owned by any third party, and all rights of any Grantor under any
such agreement.

                  "Trademarks" shall mean all of the following now owned or
hereafter acquired by the Grantors: (a) all trademarks, service marks, trade
names, corporate names, company names, business names, fictitious business
names, trade styles, trade dress, logos, other source or business identifiers,
designs and general intangibles of like nature, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
registration and recording applications filed in connection therewith, including
registrations and registration applications in the United States Patent and
Trademark Office, any State of the United States, and all extensions or renewals
thereof, (b) all goodwill associated therewith or symbolized thereby and (c) all
other assets, rights and interests that uniquely reflect or embody such
goodwill.

                  "UCC" shall mean the Uniform Commercial Code as in effect in
the State of New York.

1.3      RULES OF CONSTRUCTION.

         The rules of construction specified in Section 1.2 of the Securities
Purchase Agreement shall be applicable to this Agreement.

                                   ARTICLE II

                                SECURITY INTEREST

2.1      SECURITY INTEREST.

                  As security for the payment or performance, as the case may
be, in full of the Note Obligations (including, without limitation, obligations
owing to the Note Collateral Agent under the CD Collateral Agency and
Intercreditor Agreement as amended by Amendment No. 1 to the Collateral Agency
and Intercreditor Agreement), each Grantor hereby bargains, sells, conveys,
assigns, sets over, mortgages, pledges, hypothecates and transfers to the Note
Collateral Agent, its successors and assigns, for the ratable benefit of the
Note Secured Parties, and hereby grants to the Note Collateral Agent, for the
ratable benefit of the Note Secured Parties, a security interest in, all of such
Grantor's right, title and interest in, to and under the Collateral (the "Note
Security Interest"). Without limiting the foregoing, the Note Collateral Agent
for the benefit of the Note Secured Parties is hereby authorized to file one or
more financing statements, continuation statements, filings with the United
States Patent and Trademark Office or United

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States Copyright Office (or any successor office) or other documents for the
purpose of perfecting, confirming, continuing, enforcing or protecting the Note
Security Interest granted by the Grantors, without the signature of the
Grantors, and naming the Grantors as debtors and the Note Collateral Agent for
the benefit of the Note Secured Parties as secured party.

2.2      NO ASSUMPTION OF LIABILITY.

         The Note Security Interest is granted as security only and shall not
subject the Note Collateral Agent or any other Note Secured Party to, or in any
way alter or modify, any obligation or liability to the Grantors with respect to
or arising out of the Collateral.

                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

                  Each Grantor represents and warrants to the Note Collateral
Agent and the other Note Secured Parties that:

3.1      NAME; TRADE NAMES AND STYLES; STATE OF INCORPORATION.

         The name of each Grantor and state of incorporation set forth in the
Preamble to this Agreement is its correct name and state of incorporation.
Listed on Schedule I are all prior names of each Grantor and all of such
Grantor's present and prior trade names. Each Grantor has complied, and will in
the future comply, with all laws relating to the conduct of business under a
fictitious business name.

3.2      PLACE OF BUSINESS; LOCATION OF COLLATERAL.

         The address set forth in the Notice Section of the Securities Purchase
Agreement is each Grantor's chief executive office. In addition, each Grantor
has places of business and Collateral is located only at the locations set forth
on Schedule 3.2.

3.3      TITLE AND AUTHORITY.

         Each Grantor has good and valid rights in and title to the Collateral
with respect to which it has purported to grant the Note Security Interest
hereunder and has full power and authority to grant to the Note Collateral Agent
the Note Security Interest in such Collateral pursuant hereto and to execute,
deliver and perform its obligations in accordance with the terms of this
Agreement, without the consent or approval of any other Person other than any
consent or approval which has been obtained or the failure of which to obtain
could not reasonably be expected to have a Material Adverse Effect.

3.4      VALIDITY OF SECURITY INTEREST.

         The Note Security Interest constitutes (a) a legal and valid security
interest in all the Collateral securing the payment and performance of the Note
Obligations, (b) subject to the filings described in Section 2.1, a perfected
security interest in all Collateral in which a security interest may be
perfected by filing, recording or registering a financing statement or analogous

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document in the United States (or any political subdivision thereof) pursuant to
the UCC or other applicable law in such jurisdictions. The Note Security
Interest is and shall be prior to any other Lien on any of the Collateral, other
than the Permitted Liens described in clauses (i) and (viii) of the definition
thereof or as may arise nonconsensually by, and have priority solely by,
operation of applicable laws.

3.5      MAINTENANCE OF COLLATERAL.

         Each Grantor will maintain the Collateral in good working condition,
and each Grantor will not use the Collateral for any unlawful purpose. Each
Grantor will immediately advise the Note Collateral Agent in writing of any
material loss or damage to the Collateral.

3.6      COMPLIANCE WITH LAW.

         Each Grantor has complied, and will comply, in all material respects,
with all provisions of all foreign, federal, state and local laws and
regulations relating to the Collateral, including, but not limited to, those
relating to such Grantor's ownership of real or personal property, the conduct
and licensing of such Grantor's business, and all environmental matters.

3.7      ABSENCE OF OTHER LIENS.

         The Collateral is owned by the Grantors free and clear of any Lien,
except for Permitted Liens. No Grantor has filed nor consented to the filing of
(a) any financing statement or analogous document under the UCC or any other
applicable Laws covering any Collateral, (b) any assignment in which any Grantor
assigns any Collateral or any security agreement or similar instrument covering
any Collateral in the United States Patent and Trademark Office or the United
States Copyright Office or (c) any assignment in which any Grantor assigns any
Collateral or any security agreement or similar instrument covering any
Collateral with any foreign governmental, municipal or other office, which
financing statement or analogous document is still in effect, except, in each
(a), (b) and (c) above, for filings in connection with Permitted Liens and the
CD Security Agreements.

                                   ARTICLE IV

                                    COVENANTS

4.1      RECORDS.

         Each Grantor agrees to maintain, at its own cost and expense, such
complete and accurate records with respect to the Collateral owned by it as is
consistent with its current practices and in accordance with such prudent and
standard practices used in industries that are the same as or similar to those
in which such Grantor is engaged, but in any event to include complete
accounting records indicating all payments and proceeds received with respect to
any part of the Collateral, and, at such time or times as the Note Collateral
Agent may reasonably request, promptly to prepare and deliver to the Note
Collateral Agent a duly certified schedule or schedules in form and detail
reasonably satisfactory to the Note Collateral Agent showing the identity,
amount and location of any and all Collateral.

                                       11
<PAGE>
4.2      PROTECTION OF SECURITY.

         Each Grantor shall, at its own cost and expense, take any and all
actions necessary to defend title to the Collateral against all persons and to
defend the Note Security Interest of the Note Collateral Agent, for the benefit
of the Note Secured Parties, in the Collateral and the priority thereof against
any Lien which is not a Permitted Lien.

4.3      NAMES, PLACES OF BUSINESS.

         Each Grantor shall give the Note Collateral Agent 30 days' prior
written notice before changing its name or doing business under any other name.
Each Grantor will give the Note Collateral Agent at least 30 days' prior written
notice before opening any additional place of business, changing its chief
executive office, changing its state of formation or moving any of the
Collateral to a location other than each Grantor's address or the present
address of such Collateral. Simultaneous with this notice, each Grantor will
provide the Note Collateral Agent with a corrected Schedule 3.2 to reflect any
additional information necessary to make Schedule 3.2 correct.

4.4      FURTHER ASSURANCES.

         Each Grantor agrees, at its own expense, to execute, acknowledge,
deliver and cause to be duly filed all such further instruments and documents
and take all such actions as the Note Collateral Agent may from time to time
reasonably request to better assure, preserve, protect and perfect the Note
Security Interest and the rights and remedies created hereby, including the
payment of any fees and taxes required in connection with the execution and
delivery of this Agreement, the granting of the Security Interest and the filing
of any financing statements or other documents in connection herewith or
therewith. If any amount payable under or in connection with any of the
Collateral shall be or become evidenced by any promissory note or other
instrument, such note or instrument shall be immediately pledged and delivered
to the Note Collateral Agent for the benefit of the Note Secured Parties, duly
endorsed in a manner satisfactory to the Note Collateral Agent.

4.5      TAXES; ENCUMBRANCES.

         At its option, the Note Collateral Agent for the benefit of the Note
Secured Parties may discharge past due taxes, assessments, charges, fees, Liens,
security interests or other encumbrances at any time levied or placed on the
Collateral other than Permitted Liens, and may pay for the maintenance and
preservation of the Collateral to the extent the Grantors fail to do so as
required this Agreement, and the Grantors jointly and severally agree to
reimburse the Note Collateral Agent on demand for any payment made or any
expense incurred by the Note Collateral Agent pursuant to the foregoing
authorization; provided, however, that nothing in this Section 4.5 shall be
interpreted as excusing the Grantors from the performance of, or imposing any
obligation on the Note Collateral Agent to cure or perform, any covenants or
other promises of the Grantors with respect to taxes, assessments, charges,
fees, liens, security interests or other encumbrances and maintenance as set
forth herein or in the Financing Documents.

                                       12
<PAGE>
4.6      ASSIGNMENT OF SECURITY INTEREST.

         If at any time the Grantors shall take a security interest in any
property of an Account Debtor or any other Person to secure payment and
performance of an Account, the Grantors shall promptly assign such security
interest to the Note Collateral Agent for the benefit of the Note Secured
Parties subject only to Permitted Liens. Such assignment need not be filed of
public record unless necessary to continue the perfected status of the security
interest against creditors of and transferees from the Account Debtor or other
Person granting the security interest.

4.7      CONTINUING OBLIGATIONS OF THE GRANTORS.

         The Grantors shall remain liable to observe and perform all the
conditions and obligations to be observed and performed by it under each
contract, agreement or instrument relating to the Collateral, all in accordance
with the terms and conditions thereof, and each Grantor agrees to indemnify and
hold harmless the Note Collateral Agent from and against any and all liability
for such performance.

4.8      LIMITATION ON MODIFICATION OF ACCOUNTS.

         During the continuation of an Event of Default, no Grantor shall
without the Note Collateral Agent's prior written consent, grant any extension
of the time of payment of any of the Accounts Receivable, compromise, compound
or settle the same for less than the full amount thereof, release, wholly or
partly, any Person liable for the payment thereof or allow any credit or
discount whatsoever thereon, other than extensions, credits, discounts,
compromises or settlements granted or made in the ordinary course of business
and consistent with its current practices and in accordance with such prudent
and standard practices used in industries that are the same as or similar to
those in which such Grantor is engaged.

4.9      LEGEND.

         Each Grantor shall legend, in form and manner reasonably satisfactory
to the Note Collateral Agent, its Accounts Receivable and its books, records and
documents evidencing or pertaining thereto with an appropriate reference to the
fact that such Accounts Receivable have been assigned to the Note Collateral
Agent for the benefit of the Note Secured Parties and that the Note Collateral
Agent has a security interest therein.

4.10     USE AND DISPOSITION OF COLLATERAL.

         No Grantor shall make or permit to be made an assignment, pledge or
hypothecation of the Collateral or shall grant any other Lien in respect of the
Collateral, except for Permitted Liens. Unless and until the Note Collateral
Agent for the benefit of the Note Secured Parties, shall notify the Grantors
that (i) an Event of Default (as defined in the Note) shall have occurred and be
continuing and (ii) during the continuance thereof, no Grantor shall sell,
convey, lease, assign, transfer or otherwise dispose of any Collateral (which
notice may be given by telephone if promptly confirmed in writing), each Grantor
may use and dispose of the Collateral in any lawful manner not inconsistent with
the provisions of this Agreement, the Notes or any other Financing Document.
Without limiting the generality of the foregoing, each Grantor agrees that it
shall not permit any Collateral to be in the possession or control of any
warehouseman, bailee,

                                       13
<PAGE>
agent or processor at any time, other than Collateral that is in transit by any
means, unless such warehouseman, bailee, agent or processor shall have been
notified of the Security Interest and each Grantor shall have obtained therefrom
a written agreement in form and substance reasonably satisfactory to the Note
Collateral Agent and the Required Investors to hold the Grantor subject to the
Note Security Interest and the instructions of the Note Collateral Agent and to
waive and release any Lien held by it with respect to such Collateral, whether
arising by operation of law or otherwise.

4.11     COVENANTS REGARDING PATENT, TRADEMARK AND COPYRIGHT COLLATERAL.

                  (a) Each Grantor agrees that it will not, nor will it permit
any of its licensees to, do any act, or omit to do any act, whereby any Patent
which is material to the conduct of such Grantor's business may become
invalidated or dedicated to the public, and agrees, to the extent practicable,
that it shall continue to mark any products covered by a Patent with the
relevant patent number as necessary and sufficient to establish and preserve its
maximum rights under applicable patent laws.

                  (b) Each Grantor (either itself or through its licensees or
its sublicensees) will, for each Trademark material to the conduct of such
Grantor's business, (i) maintain such Trademark in full force free from any
claim of abandonment or invalidity for non-use, (ii) maintain the quality of
products and services offered under such Trademark, (iii) display such Trademark
with notice of Federal or foreign registration to the extent necessary and
sufficient to establish and preserve its maximum rights under applicable law and
(iv) not knowingly use or knowingly permit the use of such Trademark in
violation of any third party rights.

                  (c) Each Grantor (either itself or through licensees) will,
for each work covered by a material Copyright, continue to publish, reproduce,
display, adopt and distribute the work with appropriate copyright notice as
necessary and sufficient to establish and preserve its maximum rights under
applicable copyright laws.

                  (d) Each Grantor shall notify the Note Collateral Agent
promptly if it knows that any Patent, Trademark or Copyright material to the
conduct of its business may become abandoned, lost or dedicated to the public,
or of any adverse determination or development (including the institution of, or
any such determination or development in, any proceeding in the United States
Patent and Trademark Office or United States Copyright Office) regarding such
Grantor's ownership of any Patent, Trademark or Copyright, its right to register
the same, or to keep and maintain the same.

                  (e) In no event shall any Grantor, either itself or through
any agent, employee, licensee or designee, file an application for any Patent,
Trademark or Copyright (or for the registration of any Trademark or Copyright)
with the United States Patent and Trademark Office, United States Copyright
Office or any office or agency in any political subdivision of the United
States, unless it promptly informs the Note Collateral Agent, and, upon request
of the Note Collateral Agent, executes and delivers any and all agreements,
instruments, documents and papers as the Note Collateral Agent may request to
evidence the Note Collateral Agent' security interest in such Patent, Trademark
or Copyright, and each Grantor hereby appoints the Note Collateral Agent as its
attorney-in-fact to execute and file such writings for the foregoing

                                       14
<PAGE>
purposes (and, prior to the occurrence of any Event of Default or Default (as
defined in the Notes), such Grantors shall be notified of such filing), all acts
of such attorney being hereby ratified and confirmed; such power, being coupled
with an interest, is irrevocable.

                  (f) Each Grantor will take all necessary steps that are
consistent with the practice in any proceeding before the United States Patent
and Trademark Office, United States Copyright Office or any office or agency in
any political subdivision of the United States, to maintain and pursue each
material application relating to the Patents, Trademarks and/or Copyrights (and
to obtain the relevant grant or registration) and to maintain each issued Patent
and each registration of the Trademarks and Copyrights that is material to the
conduct of any Grantors' business, including timely filings of applications for
renewal, affidavits of use, affidavits of incontestability and payment of
maintenance fees, and, if consistent with good business judgment, to initiate
opposition, interference and cancellation proceedings against third parties.

                  (g) In the event that any Grantor has reason to believe that
any Collateral consisting of a Patent, Trademark or Copyright material to the
conduct of any Grantors' business has been or is about to be infringed,
misappropriated or diluted by a third party, such Grantors promptly shall notify
the Note Collateral Agent and shall, if consistent with good business judgment,
promptly sue for infringement, misappropriation or dilution and to recover any
and all damages for such infringement, misappropriation or dilution, and take
such other actions as are appropriate under the circumstances to protect such
Collateral.

                  (h) Upon and during the continuance of an Event of Default (as
defined in the Notes), each Grantor shall use its reasonable commercial efforts
to obtain all requisite consents or approvals by the licensor of each Copyright
License, Patent License or Trademark License to effect the assignment of all of
such Grantor's right, title and interest thereunder to the Note Collateral Agent
or its designees.

                                   ARTICLE V

                                POWER OF ATTORNEY

                  Each Grantor irrevocably makes, constitutes and appoints the
Note Collateral Agent for the benefit of the Note Secured Parties (and all
officers, employees or agents designated by the Note Collateral Agent) as such
Grantor's true and lawful agent and attorney-in-fact, and in such capacity the
Note Collateral Agent shall have the right, with power of substitution for each
Grantor and in each Grantor's name or otherwise, for the use and benefit of the
Note Collateral Agent for the benefit of the Note Secured Parties, upon the
occurrence and during the continuance of an Event of Default (as defined in the
Notes) (a) to receive, endorse, assign and/or deliver any and all notes,
acceptances, checks, drafts, money orders or other evidences of payment relating
to the Collateral or any part thereof; (b) to demand, collect, receive payment
of, give receipt for and give discharges and releases of all or any of the
Collateral; (c) to sign the name of any Grantor on any invoice or bill of lading
relating to any of the Collateral; (d) to send verifications of Accounts
Receivable to any Account Debtor; (e) to commence and prosecute any and all
suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect or otherwise realize on all or any of the Collateral or
to

                                       15
<PAGE>
enforce any rights in respect of any Collateral; (f) to settle, compromise,
compound, adjust or defend any actions, suits or proceedings relating to all or
any of the Collateral; (g) to notify, or to require any Grantor to notify,
Account Debtors to make payment directly to the Note Collateral Agent for the
benefit of the Note Secured Parties; and (h) to use, sell, assign, transfer,
pledge, make any agreement with respect to or otherwise deal with all or any of
the Collateral, and to do all other acts and things necessary to carry out the
purposes of this Agreement, as fully and completely as though the Note
Collateral Agent for the benefit of the Note Secured Parties, were the absolute
owner of the Collateral for all purposes; provided, however, that nothing herein
contained shall be construed as requiring or obligating the Note Collateral
Agent to make any commitment or to make any inquiry as to the nature or
sufficiency of any payment received by the Note Collateral Agent, or to present
or file any claim or notice, or to take any action with respect to the
Collateral or any part thereof or the moneys due or to become due in respect
thereof or any property covered thereby, and no action taken or omitted to be
taken by the Note Collateral Agent with respect to the Collateral or any part
thereof shall give rise to any defense, counterclaim or offset in favor of any
Grantor or (unless such action is the result of gross negligence or willful
misconduct) to any claim or action against the Note Collateral Agent. It is
understood and agreed that the appointment of the Note Collateral Agent as the
agent and attorney-in-fact of the Grantors for the purposes set forth above is
coupled with an interest and is irrevocable. The provisions of this Section
shall in no event relieve any Grantor of any of its obligations hereunder or
under any other Financing Documents with respect to the Collateral or any part
thereof or impose any obligation on the Note Collateral Agent to proceed in any
particular manner with respect to the Collateral or any part thereof, or in any
way limit the exercise by the Note Collateral Agent of any other or further
right which it may have on the date of this Agreement or hereafter, whether
hereunder, under any Notes, by Law or otherwise.

                                   ARTICLE VI

                                    REMEDIES

6.1      REMEDIES UPON DEFAULT.

                  (a) Upon the occurrence and during the continuance of an Event
of Default (as defined in the Note), each Grantor agrees to deliver each item of
Collateral to the Note Collateral Agent for the benefit of the Note Secured
Parties on demand, and it is agreed that the Note Collateral Agent for the
benefit of the Note Secured Parties shall have the right to take any of or all
the following actions at the same or different times: (a) with respect to any
Collateral consisting of Intellectual Property, on demand, to cause the Note
Security Interest to become an assignment, transfer and conveyance of any of or
all such Collateral by the applicable Grantors to the Note Collateral Agent for
the benefit of the Note Secured Parties, or to license or sublicense, whether
general, special or otherwise, and whether on an exclusive or non-exclusive
basis, any such Collateral throughout the world on such terms and conditions and
in such manner as the Note Collateral Agent shall determine (other than in
violation of any then-existing licensing or contractual arrangements to the
extent that waivers cannot be obtained), and (b) with or without legal process
and with or without prior notice or demand for performance, to take possession
of the Collateral and without liability for trespass to enter any premises where
the Collateral may be located for the purpose of taking possession of or
removing the Collateral and, generally, to exercise any and all rights afforded
to a secured party under the UCC or other

                                       16
<PAGE>
applicable law. Without limiting the generality of the foregoing, each Grantor
agrees that the Note Collateral Agent shall have the right, subject to the
mandatory requirements of applicable law, to sell or otherwise dispose of all or
any part of the Collateral, at public or private sale or at any broker's board
or on any securities exchange, for cash, upon credit or for future delivery as
the Note Collateral Agent shall deem appropriate. The Note Collateral Agent
shall be authorized at any such sale (if it deems it advisable to do so) to
restrict the prospective bidders or Note Secured Parties to persons who will
represent and agree that they are purchasing the Collateral for their own
account for investment and not with a view to the distribution or sale thereof,
and upon consummation of any such sale the Note Collateral Agent shall have the
right to assign, transfer and deliver to the purchaser or Note Secured Parties
thereof the Collateral so sold. Each such purchaser at any such sale shall hold
the property sold absolutely, free from any claim or right on the part of any
Grantor, and each Grantor hereby waives (to the extent permitted by law) all
rights of redemption, stay and appraisal which such Grantor now has or may at
any time in the future have under any rule of law or statute now existing or
hereafter enacted.

                  (b) The Note Collateral Agent shall give the Grantors 10 days'
prior written notice (which each Grantor agrees is reasonable notice within the
meaning of Section 9-611 of the UCC or its equivalent in other jurisdictions) of
the Note Collateral Agent's intention to make any sale of Collateral. Such
notice, in the case of a public sale, shall state the time and place for such
sale and, in the case of a sale at a broker's board or on a securities exchange,
shall state the board or exchange at which such sale is to be made and the day
on which the Collateral, or portion thereof, will first be offered for sale at
such board or exchange. Any such public sale shall be held at such time or times
within ordinary business hours and at such place or places as the Note
Collateral Agent may fix and state in the notice (if any) of such sale. At any
such sale, the Collateral, or portion thereof, to be sold may be sold in one lot
as an entirety or in separate parcels, as the Note Collateral Agent may (in its
sole and absolute discretion) determine. The Note Collateral Agent shall not be
obligated to make any sale of any Collateral if it shall determine not to do so,
regardless of the fact that notice of sale of such Collateral shall have been
given. The Note Collateral Agent may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may, without
further notice, be made at the time and place to which the same was so
adjourned. In case any sale of all or any part of the Collateral is made on
credit or for future delivery, the Collateral so sold may be retained by the
Note Collateral Agent until the sale price is paid by the purchaser or Note
Secured Parties thereof, but the Note Collateral Agent shall not incur any
liability in case any such purchaser or Note Secured Parties shall fail to take
up and pay for the Collateral so sold and, in case of any such failure, such
Collateral may be sold again upon like notice. At any public (or, to the extent
permitted by law, private) sale made pursuant to this Section, any Note
Collateral Agent for the benefit of the Note Secured Parties may bid for or
purchase, free (to the extent permitted by law) from any right of redemption,
stay, valuation or appraisal on the part of any Grantor (all said rights being
also hereby waived and released to the extent permitted by law), the Collateral
or any part thereof offered for sale and may make payment on account thereof by
using any claim then due and payable to such Note Collateral Agent from any
Grantor as a credit against the purchase price, and such Note Collateral Agent
may, upon compliance with the terms of sale, hold, retain and dispose of such
property without further accountability to any Grantor therefor. For purposes
hereof, a written agreement to purchase the Collateral or any portion thereof
shall be treated as a sale thereof; the Note Collateral Agent shall be free to
carry out such sale pursuant to such

                                       17
<PAGE>
agreement and no Grantor shall be entitled to the return of the Collateral or
any portion thereof subject thereto, notwithstanding the fact that after the
Note Collateral Agent shall have entered into such an agreement all Events of
Default (or defined in the Notes) shall have been remedied and the Note
Obligations paid in full. As an alternative to exercising the power of sale
herein conferred upon it, the Note Collateral Agent may proceed by a suit or
suits at law or in equity to foreclose this Agreement and to sell the Collateral
or any portion thereof pursuant to a judgment or decree of a court or courts
having competent jurisdiction or pursuant to a proceeding by a court-appointed
receiver.

6.2      APPLICATION OF PROCEEDS.

         The Note Collateral Agent 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 CD Collateral Agency and Intercreditor
Agreement as amended by Amendment No. 1 of the CD Collateral Agency and
Intercreditor Agreement.

                  The Note Collateral Agent shall have absolute discretion as to
the time of application of any such proceeds, moneys or balances in accordance
with this Agreement and the CD Collateral Agency and Intercreditor Agreement as
amended by Amendment No. 1 to the Collateral Agency and Intercreditor Agreement.
Upon any sale of the Collateral by the Note Collateral Agent (including pursuant
to a power of sale granted by statute or under a judicial proceeding), the
receipt of the Note Collateral Agent or of the officer making the sale shall be
a sufficient discharge to the purchaser or Note Secured Parties of the
Collateral so sold and such purchaser or Note Secured Parties shall not be
obligated to see to the application of any part of the purchase money paid over
to the Note Collateral Agent, Note Secured Parties, or such officer or be
answerable in any way for the misapplication thereof.

6.3      GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY.

         For the purpose of enabling the Note Collateral Agent to exercise
rights and remedies under this Article at such time as the Note Collateral Agent
shall be lawfully entitled to exercise such rights and remedies, each Grantor
hereby grants to the Note Collateral Agent for the benefit of the Note Secured
Parties an irrevocable, non-exclusive license (exercisable without payment of
royalty or other compensation to the Grantors) to the extent that such license
does not violate any then existing licensing arrangements (to the extent that
waivers cannot be obtained) to use, license or sub-license any of the Collateral
consisting of Intellectual Property now owned or hereafter acquired by such
Grantor, and wherever the same may be located, and including in such license
reasonable access to all media in which any of the licensed items may be
recorded or stored and to all computer software and programs used for the
compilation or printout thereof and sufficient rights of quality control in
favor of Grantor to avoid the invalidation of the Trademarks subject to the
license. The use of such license by the Note Collateral Agent shall be
exercised, at the option of the Note Collateral Agent upon the occurrence and
during the continuation of an Event of Default (as defined in the Note);
provided that any license, sub-license or other transaction entered into by the
Note Collateral Agent in accordance herewith shall be binding upon the Grantors
notwithstanding any subsequent cure of an Event of Default (as defined in the
Note).

                                       18
<PAGE>
                                  ARTICLE VII

                                  MISCELLANEOUS

7.1      NOTICES.

         All communications and notices hereunder to the Note Secured Parties
and to the Grantors shall (except as otherwise expressly permitted herein) be in
writing and given as provided in Section 8.5 of the Securities Purchase
Agreement. Any notice properly delivered to the Borrower shall be deemed notice
properly delivered to eXstatic. All notices, demands and requests of any kind to
be delivered to the Note Collateral Agent in connection with this Agreement
shall be in writing and shall be deemed to have been duly given if personally
delivered or if sent by internationally-recognized overnight courier or by
registered or certified mail, return receipt requested and postage prepaid,
addressed as follows:

         InSight Venture Partners IV (Note Collateral Agent), LLC
         680 Fifth Avenue, 8th Floor
         New York, N.Y. 10019
         Attention:  Deven Parekh
         Telephone:  (212) 230-9200
         Telecopy:  (212) 230-9272

         with a copy to:

         O'Sullivan LLP
         30 Rockefeller Plaza
         New York, NY  10112
         Attention:  Ilan S. Nissan, Esq.

7.2      SECURITY INTEREST ABSOLUTE.

         All rights of the Note Collateral Agent hereunder, the Note Security
Interest and all obligations of the Grantors hereunder shall be absolute and
unconditional irrespective of (a) any lack of validity or enforceability of the
Notes, any Financing Document, any agreement with respect to any of the Note
Obligations or any other agreement or instrument relating to any of the
foregoing, (b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Note Obligations, or any other amendment or
waiver of or any consent to any departure from the Note, any Financing Document
or any other agreement or instrument relating to any of the foregoing, (c) any
exchange, release or non-perfection of any Lien on other collateral, or any
release or amendment or waiver of or consent under or departure from any
guarantee, securing or guaranteeing all or any of the Note Obligations, or (d)
any other circumstance that might otherwise constitute a defense available to,
or a discharge of, the Grantors in respect of the Note Obligations or this
Agreement (other than payment in full of the indebtedness evidenced by the Note
and full satisfaction of all Note Obligations).

                                       19
<PAGE>
7.3      SURVIVAL OF AGREEMENT.

         All covenants, agreements, representations and warranties made by the
Grantors herein and in the certificates or other instruments prepared or
delivered in connection with or pursuant to this Agreement shall be considered
to have been relied upon by the Note Collateral Agent and the Note Secured
Parties and shall survive the consummation of the transactions contemplated by
each Financing Document, and the execution and delivery to the Note Secured
Parties of the Notes, regardless of any investigation made by the Note
Collateral Agent or on their behalf, and shall continue in full force and effect
until this Agreement shall terminate.

7.4      BINDING EFFECT ASSIGNMENT.

         This Agreement shall be binding upon the Grantors and the Note
Collateral Agent for the benefit of the Note Secured Parties and their
respective successors and assigns, and shall inure to the benefit of the
Grantors, the Note Collateral Agent for the benefit of the Note Secured Parties
and their respective successors and assigns, except that no Grantor shall have
the right to assign or transfer its rights or obligations hereunder or any
interest herein or in the Collateral (and any such assignment or transfer shall
be void) except as expressly contemplated by this Agreement or the other
Financing Documents.

7.5      SUCCESSORS AND ASSIGNS.

         Whenever in this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the successors and assigns of such
party; and all covenants, promises and agreements by or on behalf of the
Grantors or the Note Collateral Agent for the benefit of the Note Secured
Parties that are contained in this Agreement shall bind and inure to the benefit
of their respective successors and assigns.

7.6      NOTE COLLATERAL AGENT' EXPENSES; INDEMNIFICATION.

                  (a) The Grantors agree to pay upon demand to the Note
Collateral Agent the amount of any and all reasonable expenses, including the
reasonable fees, disbursements and other charges of its counsel and of any
experts or agents, which the Note Collateral Agent may incur in connection with
(i) the administration of this Agreement, (ii) the custody or preservation of,
or the sale of, collection from or other realization upon any of the Collateral,
(iii) the exercise, enforcement or protection of any of the rights of the Note
Collateral Agent hereunder or (iv) the failure of the Grantors to perform or
observe any of the provisions hereof.

                  (b) Without limitation of its indemnification obligations
under the Financing Documents, the Grantors jointly and severally agree to
indemnify the Note Collateral Agent against, and hold the Note Collateral Agent
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including reasonable fees, disbursements and other charges of counsel,
incurred by or asserted against any of them arising out of, in any way connected
with, or as a result of, the execution, delivery or performance of this
Agreement or any claim, litigation, investigation or proceeding relating hereto
or to the Collateral; provided that such indemnity shall not, as to the Note
Collateral Agent, be available to the extent that such losses, claims, damages,
liabilities or related expenses have resulted from the gross negligence or
willful misconduct of the Note Collateral Agent.

                                       20
<PAGE>
                  (c) Any such amounts payable as provided hereunder or under
the CD Collateral Agency and Intercreditor Agreement as amended by Amendment No.
1 to the CD Collateral Agency and Intercreditor Agreement shall be additional
Note Obligations secured hereby and by the Financing Documents. The provisions
of this Section 7.6 shall remain operative and in full force and effect
regardless of the termination of this Agreement or any other Financing Document,
the consummation of the transactions contemplated hereby or thereby, the
repayment of any of the Notes, the invalidity or unenforceability of any term or
provision of this Agreement or any Notes, or any investigation made by or on
behalf of the Note Collateral Agent. All amounts due under this Section 7.6
shall be payable on written demand therefor.

7.7      GOVERNING LAW.

         All questions concerning the construction, interpretation and validity
of this Agreement shall be governed by and construed and enforced in accordance
with the domestic Laws of the State of New York without giving effect to any
choice or conflict of Laws provision or rule (whether in the State of New York
or any other jurisdiction) that would cause the application of the Laws of any
jurisdiction other than the State of New York. In furtherance of the foregoing,
the internal Law of the State of New York will control the interpretation and
construction of this Agreement, even if under such jurisdiction's choice of Law
or conflict of Law analysis, the substantive Law of some other jurisdiction
would ordinarily or necessarily apply.

7.8      WAIVERS; AMENDMENT.

                  (a) No failure or delay of the Note Collateral Agent in
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Note Collateral Agent hereunder
and of the Note Secured Parties under the Financing Documents are cumulative and
are not exclusive of any rights or remedies that they would otherwise have, and
no exercise of any rights hereunder by the Note Collateral Agent shall limit any
rights available to the Note Secured Parties, or any obligations of the
Grantors, pursuant to any other Financing Document. No waiver of any provisions
of this Agreement or any Financing Document or consent to any departure by the
Grantors therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice to or demand on the Grantors in any case shall entitle the Grantors to
any other or further notice or demand in similar or other circumstances.

                  (b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Note Collateral Agent and the Grantors with respect
to which such waiver, amendment or modification is to apply.

7.9      WAIVER OF JURY TRIAL.

         EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY

                                       21
<PAGE>
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE FINANCING DOCUMENTS. EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE FINANCING DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.9.

7.10     SEVERABILITY.

         In the event any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby (it being understood
that the invalidity of a particular provision in a particular jurisdiction shall
not in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.

7.11     COUNTERPARTS.

         This Agreement may be executed in two or more counterparts, each of
which shall constitute an original but all of which when taken together shall
constitute but one contract. Delivery of an executed signature page to this
Agreement by facsimile transmission shall be effective as delivery of a manually
executed counterpart hereof.

7.12     HEADINGS.

         Article and Section headings used herein are for the purpose of
reference only, are not part of this Agreement and are not to affect the
construction of, or to be taken into consideration in interpreting, this
Agreement.

7.13     JURISDICTION; CONSENT TO SERVICE OF PROCESS.

                  (A) EACH GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY
SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY
NEW YORK STATE COURT OR FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN
THE CITY OF NEW YORK IN THE COUNT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY
THEREOF, IN ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
FINANCING DOCUMENTS, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH
OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL
CLAIMS IN RESPECT OF ANY SUCH PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW
YORK STATE OR, TO THE EXTENT

                                       22
<PAGE>
PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO
AGREES THAT A FINAL JUDGMENT IN ANY SUCH PROCEEDING SHALL BE CONCLUSIVE AND MAY
BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER
MANNER PROVIDED BY APPLICABLE LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY
RIGHT THAT THE NOTE COLLATERAL AGENT MAY OTHERWISE HAVE TO BRING ANY PROCEEDING
RELATING TO THIS AGREEMENT OR THE FINANCING DOCUMENTS AGAINST THE GRANTORS OR
ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

                  (b) EACH GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE FINANCING
DOCUMENTS IN ANY NEW YORK STATE COURT OR FEDERAL COURT OF THE UNITED STATES OF
AMERICA SITTING IN NEW YORK CITY. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH PROCEEDING IN ANY SUCH COURT.

                  (c) EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO
SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 7.1. NOTHING IN
THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

7.14     TERMINATION.

         This Agreement and the Note Security Interest shall terminate when all
the Note Obligations have been indefeasibly paid and satisfied in full, at which
time the Note Collateral Agent shall, subject to the approval of the Note
Secured Parties (which shall not be unreasonably withheld or delayed), execute
and deliver to each Grantor, at each Grantor's expense, all UCC termination
statements and similar documents which the Grantors shall reasonably request to
evidence such termination. Any execution and delivery of termination statements
or documents pursuant to this Section 7.14 shall be without recourse to or
warranty by the Note Collateral Agent.

7.15     RIGHT OF SET-OFF.

         Each Grantor hereby grants to the Note Collateral Agent for the benefit
of the Note Secured Parties a lien, security interest and right of setoff as
security for all Note Obligations to the Note Secured Parties, whether now
existing or hereafter arising upon and against all deposits, credits, collateral
and property, now or hereafter in the possession, custody, safekeeping or
control of the Note Collateral Agent or any entity under the control of the Note
Collateral Agent. At any time after the occurrence and during the continuance of
an Event of Default (as defined in the Notes), without demand or notice, the
Note Collateral Agent may set off the same or any part

                                       23
<PAGE>
thereof and apply the same to any Liability of the Grantors and any guarantor
even though unmatured and regardless of the adequacy of any other collateral
securing the Note Obligations. ANY AND ALL RIGHTS TO REQUIRE THE NOTE COLLATERAL
AGENT TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL
WHICH SECURES THE NOTE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH
RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE GRANTORS OR ANY
GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED BY THE
GRANTORS.

                                       24
<PAGE>
                  IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.

                                     GRANTORS:

                                     EXCHANGE APPLICATIONS, INC.,


                                     By:
                                           ------------------------------------
                                           Name: J. Chris Wagner
                                           Title:   President and CEO

                                     EXSTATIC SOFTWARE, INC.


                                     By:
                                           ------------------------------------
                                           Name: J. Chris Wagner
                                           Title:   President and CEO


                                     NOTE COLLATERAL AGENT:

                                     INSIGHT VENTURE PARTNERS IV
                                            (COLLATERAL AGENT), LLC



                                     By:
                                           ------------------------------------
                                           Name:  Deven Parekh
                                           Title:  Managing Member


<PAGE>
                                    EXHIBIT A

                                 April Guaranty

                                        i
<PAGE>
                                   SCHEDULE I

<TABLE>
<CAPTION>
                NOTE SECURED PARTY                                      ADDRESS
                ------------------                                      -------
<S>                                                           <C>
INSIGHT VENTURE PARTNERS IV, L.P.                             680 Fifth Avenue, 8th Floor
INSIGHT VENTURE PARTNERS                                      New York, NY 10019
    (CAYMAN) IV, L.P.                                         Attention:  Deven Parekh
INSIGHT VENTURE PARTNERS IV
    (FUND B), L.P.
INSIGHT VENTURE PARTNERS IV (CO-INVESTORS), L.P.
</TABLE>

                                       ii
<PAGE>
                                  SCHEDULE 3.2

                                       iii
<PAGE>
                                 Annex 1 to the
                               Security Agreement
                                    [Form Of]
                             PERFECTION CERTIFICATE

                  Reference is made to the Securities Purchase Agreement dated
as of [April ____, 2002, (as amended, supplemented or otherwise modified from
time to time, the "Securities Purchase Agreement"), among EXCHANGE APPLICATIONS,
INC., a Delaware corporation (the "Borrower"), EXSTATIC SOFTWARE, INC., a
Washington corporation ("eXstatic", together with the Borrower, the "Grantors")
and the secured parties (each a "Secured Party" and together, the "Secured
Parties") identified on the signature page hereto. Capitalized terms used herein
and not defined herein shall have meanings assigned to such terms in the
Securities Purchase Agreement.

                  The undersigned, a Financial Officer and a Legal Officer,
respectively, of each Grantor, hereby certify to the Secured Parties and each
other Secured Parties:

         1. Names. (a) The exact corporate name of each Grantor, as such name
appears in its respective certificate of incorporation, is as follows:

                  (b) Set forth below is each other corporate name each Grantor
         has had in the past five years, together with the date of the relevant
         change:

                  (c) Except as set forth in Schedule 1 hereto, no Grantor has
         changed its identity or corporate structure in any way within the past
         five years. Changes in identity or corporate structure would include
         mergers, consolidations and acquisitions, as well as any change in the
         form, nature or jurisdiction of corporate organization. If any such
         change has occurred, include in Schedule 1 the information required by
         Sections 1 and 2 of this certificate as to each acquiree or constituent
         party to a merger or consolidation.

                  (d) The following is a list of all other names (including
         trade names or similar appellations) used by each Grantor or any of its
         divisions or other business units in connection with the conduct of its
         business or the ownership of its properties at any time during the past
         five years:

                  (e) Set forth below is the Federal Taxpayer Identification
         Number of each Grantor:

         2. Current Locations. (a) The chief executive office of each Grantor is
located at the address set forth opposite its name below:

<TABLE>
<CAPTION>
Grantor           Mailing Address                    County            State
<S>               <C>                                <C>               <C>


</TABLE>

                                       iv
<PAGE>
         (b) Set forth below opposite the name of each Grantor are all locations
where such Grantor maintains any books or records relating to any Accounts
Receivable (with each location at which chattel paper, if any, is kept being
indicated by an "*"):

<TABLE>
<CAPTION>
Grantor           Mailing Address                    County            State
<S>               <C>                                <C>               <C>


</TABLE>

         (c) Set forth below opposite the name of each Grantor are all the
material places of business of such Grantor not identified in paragraph (a) or
(b) above:

<TABLE>
<CAPTION>
Grantor           Mailing Address                    County            State
<S>               <C>                                <C>               <C>


</TABLE>

         (d) Set forth below opposite the name of each Grantor are all the
locations where such Grantor maintains any Collateral not identified above:

<TABLE>
<CAPTION>
Grantor           Mailing Address                    County            State
<S>               <C>                                <C>               <C>


</TABLE>

         (e) Set forth below opposite the name of each Grantor are the names and
addresses of all Persons other than such Grantor that have possession of any of
the Collateral of such Grantor:

<TABLE>
<CAPTION>
Grantor           Mailing Address                    County            State
<S>               <C>                                <C>               <C>


</TABLE>

         3. Unusual Transactions. All Accounts Receivable have been originated
by the Grantors and all Inventory has been acquired by the Grantors in the
ordinary course of business.

         4. UCC Filings. Duly signed financing statements on Form UCC-1 in
substantially the form of Schedule 4 hereto have been prepared for filing in the
Uniform Commercial Code filing office in each jurisdiction where any Grantor is
domicile.

         5. Schedule of Filings. Attached hereto as Schedule 5 is a schedule
setting forth, with respect to the filings described in Section 5 above, each
filing and the filing office in which such filing is to be made.

         6.  [INTENTIONALLY OMITTED].

         7. Stock Ownership. Attached hereto as Schedule 7 is a true and correct
list of all the duly authorized, issued and outstanding stock of each Subsidiary
and the record and beneficial

                                        v
<PAGE>
owners of such stock. Also set forth on Schedule 7 is each Subsidiary that
represents 50% or less of the equity of the entity in which such investment was
made.

         8. Notes. Attached hereto as Schedule 8 is a true and correct list of
all notes held by each Subsidiary and all intercompany notes between each
Grantor and each Subsidiary of such Grantor and between each Subsidiary of such
Grantor and each other such Subsidiary.

         9. Advances. Attached hereto as Schedule 9 is (a) a true and correct
list of all advances made by each Grantor to any Subsidiary of such Grantor or
made by any Subsidiary of such Grantors to such Grantor or any other Subsidiary
of such Grantor, which advances will be on and after the date hereof evidenced
by one or more intercompany notes pledged to the Secured Parties, and (b) a true
and correct list of all unpaid intercompany transfers of goods sold and
delivered by or to any Grantor or any Subsidiary of such Grantor.

         10. Mortgage Filings. Attached hereto as Schedule 10 is a schedule
setting forth, with respect to each Mortgaged Property, (i) the exact corporate
name of the corporation that owns such property as such name appears in its
certificate of incorporation, (ii) if different from the name identified
pursuant to clause (i), the exact name of the current record owner of such
property reflected in the records of the filing office for such property
identified pursuant to the following clause and (iii) the filing office in which
a Mortgage with respect to such property must be filed or recorded in order for
the Secured Parties to obtain a perfected security interest therein.

                                    * * * * *

                                       vi
<PAGE>
                  IN WITNESS WHEREOF, the undersigned have duly executed this
certificate on this [______] day of [April, 2002].

                                    GRANTORS:

                                    EXCHANGE APPLICATIONS, INC.,


                                    By:
                                          -------------------------------------
                                          Name:
                                          Title:


                                    EXSTATIC SOFTWARE, INC.


                                    By:
                                          -------------------------------------
                                          Name:
                                          Title:


                                    NOTE COLLATERAL AGENT:


                                    INSIGHT VENTURE PARTNERS IV
                                           (COLLATERAL AGENT), LLC


                                    By:
                                          -------------------------------------
                                          Name:  Deven Parekh
                                          Title:  Managing Member



                                      vii
<PAGE>
                                   SCHEDULE 1



                                      viii
<PAGE>
                                   SCHEDULE 4


                                       ix
<PAGE>
                                   SCHEDULE 5


                                       x
<PAGE>
                                   SCHEDULE 7


                                       xi
<PAGE>
                                   SCHEDULE 8


                                      xii
<PAGE>
                                   SCHEDULE 9


                                      xiii
<PAGE>
                                   SCHEDULE 10



                                      xiv