SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No. 1)
eAutoclaims.com, Inc.
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(Name of Issuer)
Common Stock
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(Title of Class of Securities)
278578109
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(CUSIP Number)
Stephen J. Clearman
c/o Geocapital Partners
1 Executive Drive
Suite 160
Fort Lee, NJ 07024
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
May 20, 2004
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(Date of Event which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box [_].
Note: Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See Rule 13d-7 for
other parties to whom copies are to be sent.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
CUSIP No. 278578109
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1. NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Kinderhook Partners, LP
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [_]
(b) [X]
3. SEC USE ONLY
4. SOURCE OF FUNDS
WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) OR 2(e)
[_]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
7. SOLE VOTING POWER
0
8. SHARED VOTING POWER
5,192,858
9. SOLE DISPOSITIVE POWER
0
10. SHARED DISPOSITIVE POWER
5,192,858
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,192,858
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.8%
14. TYPE OF REPORTING PERSON
PN
CUSIP No. 278578109
---------------------
1. NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Kinderhook GP, LP
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [_]
(b) [X]
3. SEC USE ONLY
4. SOURCE OF FUNDS
AF
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) OR 2(e)
[_]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
7. SOLE VOTING POWER
0
8. SHARED VOTING POWER
5,192,858
9. SOLE DISPOSITIVE POWER
0
10. SHARED DISPOSITIVE POWER
5,192,858
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,192,858
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.8%
14. TYPE OF REPORTING PERSON
OO
CUSIP No. 278578109
---------------------
1. NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Stephen J. Clearman
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [_]
(b) [X]
3. SEC USE ONLY
4. SOURCE OF FUNDS
AF
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) OR 2(e)
[_]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
7. SOLE VOTING POWER
0
8. SHARED VOTING POWER
5,192,858
9. SOLE DISPOSITIVE POWER
0
10. SHARED DISPOSITIVE POWER
5,192,858
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,192,858
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.8%
14. TYPE OF REPORTING PERSON
IN
CUSIP No. 278578109
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The Reporting Person's original Schedule 13D (initially filed on May 28, 2004)
erroneously reported deemed beneficial ownership of an additional 164,284 Shares
(for a total of 5,357,142 and 15.31% of the Shares outstanding). This Amendment
No. 1 is being filed to reflect the Reporting Person's actual deemed beneficial
ownership of 5,192,858 Shares, constituting 14.8% of the Shares of the Issuer,
based upon the 35,000,244 Shares outstanding as of May 21, 2004
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Item 1. Security and Issuer.
The name of the issuer is eAutoclaims.com, Inc., a Nevada corporation (the
"Issuer"). The address of the Issuer's offices is 110 East Douglas Road,
Oldsman, Florida 34677. This Schedule 13D relates to the Issuer's Common Stock,
$0.001 par value (the "Shares").
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Item 2. Identity and Background.
(a-c, f) This Schedule 13D is being filed by Kinderhook Partners, LP, a
Delaware limited partnership, (the "Partnership"), Kinderhook GP, LLC, a
Delaware limited liability company, the general partner of the Partnership (the
"General Partner"), and Stephen J. Clearman, the managing member of the General
Partner responsible for making investment decisions with respect to the
Partnership ("Clearman" and, together with the Partnership and the General
Partner, the "Reporting Persons"). The principal business address of the
Reporting Persons is located at 1 Executive Drive, Suite 160, Fort Lee, NJ
07024. The principal business of the Partnership is to serve as a private
investment vehicle. The principal business of the General Partner is to serve as
general partner to the Partnership.
(d) None of the Reporting Persons nor any person affiliated with the
Reporting Persons has, during the last five years, been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors).
(e) None of Reporting Persons has, during the last five years, been a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, Federal or state securities laws or finding any
violation with respect to such laws.
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Item 3. Source and Amount of Funds or Other Consideration.
The Shares are held in accounts beneficially owned by the Partnership. The
purchase price for the Shares was $750,000. The funds used for the purchase of
the Shares by the Partnership came from working capital using contributions made
by the partners of the Partnership.
No borrowed funds were used to purchase the Shares, other than any borrowed
funds used for working capital purposes in the ordinary course of business,
including the use of a margin account in the name of the Partnership.
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Item 4. Purpose of Transaction.
(a-j) The Shares held by the Partnership were acquired for, and are being
held for, investment purposes. The acquisition of the Shares was made in the
ordinary course of the Reporting Persons' business.
In an effort to protect the Partnership's investment, as well as to
maximize investor value, the Reporting Persons may acquire additional Shares,
dispose of all or some of these Shares from time to time, in each case in open
market or private transactions, block sales or purchases or otherwise, or may
continue to hold the Shares, depending on business and market conditions, its
continuing evaluation of the business and prospects of the Issuer and other
factors.
Although they have no concrete plans to do so, the Reporting Persons may
also engage in and may plan for their engagement in:
(1) the acquisition of additional Shares of the Issuer, or the
disposition of Shares of the Issuer;
(2) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer;
(3) a sale or transfer of a material amount of assets of the Issuer;
(4) any change in the present board of directors or management of the
Issuer, including any plans or proposals to change the number or
term of directors or to fill any existing vacancies on the board;
(5) any material change in the present capitalization or dividend
policy of the Issuer;
(6) any other material change in the Issuer's business or corporate
structure;
(7) changes in the Issuer's charter, by-laws or instruments
corresponding thereto or other actions which may impede the
acquisition of control of the Issuer by any person;
(8) causing a class of securities of the Issuer to be delisted from a
national securities exchange or to cease to be authorized to be
quoted on an inter-dealer quotation system of a registered
national securities association;
(9) a class of equity securities of the Issuer becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the
Act; and/or
(10) any action similar to those enumerated above.
Any future decision of the Reporting Persons to take any such actions with
respect to the Issuer or its securities will take into account various factors,
including the prospects of the Issuer, general market and economic conditions
and other factors deemed relevant.
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Item 5. Interest in Securities of the Issuer.
As of the date hereof, the Partnership may be deemed to be the beneficial
owner of 5,192,858 Shares, constituting 14.8% of the Shares of the Issuer, based
upon the 35,000,244 Shares outstanding as of May 21, 2004 (as provided by the
Issuer and, including the 5,192,858 Shares to which this Schedule 13D relates
and an additional 164,284 which were sold to Vinodray R. Shah). The 5,192,858
Shares include 2,596,429 Shares that may be acquired upon the exercise of a
Warrant to Purchase Common Stock (the "Warrant"), which was issued to the
Partnership in connection with the Partnership entering into a Subscription
Agreement (the "Subscription Agreement"), dated as of May 20, 2004, with the
Issuer. The Warrant is immediately exercisable and expires on May 20, 2007.
Each of the Reporting Persons has the sole power to vote or direct the vote
of 0 of the Shares to which this filing relates.
The Reporting Persons have the shared power to vote or direct the vote of
5,192,858 Shares to which this filing relates.
Each of the Reporting Persons has the sole power to dispose or direct the
disposition of 0 of the Shares to which this filing relates.
The Reporting Persons have the shared power to dispose or direct the
disposition of 5,192,858 Shares to which this filing relates.
The General Partner and Clearman each specifically disclaims beneficial
ownership in the Shares reported herein except to the extent of its pecuniary
interest therein.
There were no transactions in the Shares by the Reporting Persons during
the prior 60 days, other than the transactions described herein.
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Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
Subscription Agreement by and between the Issuer and the Partnership dated
May 20, 2004, a copy of which is attached hereto as Exhibit B
Warrant to Purchase Common Stock by and between the Issuer and the
Partnership dated May 20, 2004, a copy of which is attached hereto as Exhibit C.
Registration Rights Agreement by and between the Issuer and the Partnership
dated May 20, 2004, a copy of which is attached hereto as Exhibit D.
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Item 7. Material to be Filed as Exhibits.
Exhibit A: Joint Filing Agreement.
Exhibit B: Subscription Agreement, dated May 20, 2004.
Exhibit C: Warrant to Purchase Common Stock, dated May 20, 2004.
Exhibit D: Registration Rights Agreement, dated May 20, 2004.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
June 18, 2004
KINDERHOOK PARTNERS, LP
By: Kinderhook GP, LLC
General Partner
By: /s/ Stephen J. Clearman
-----------------------
Stephen J. Clearman
Managing Member
KINDERHOOK GP, LLC
By: /s/ Stephen J. Clearman
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Stephen J. Clearman
Managing Member
By: /s/ Stephen J. Clearman
-----------------------
Stephen J. Clearman
Attention. Intentional misstatements or omissions of fact constitute federal
criminal violations (see 18 U.S.C. 1001).
Exhibit A
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AGREEMENT
The undersigned agree that this Schedule 13D dated June 18, 2004 relating
to the Common Stock of eAutoclaims.com, Inc. shall be filed on behalf of the
undersigned.
June 18, 2004
KINDERHOOK PARTNERS, LP
By: Kinderhook GP, LLC
General Partner
By: /s/ Stephen J. Clearman
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Stephen J. Clearman
Managing Member
KINDERHOOK GP, LLC
By: /s/ Stephen J. Clearman
-----------------------
Stephen J. Clearman
Managing Member
Exhibit B
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eAUTOCLAIMS.COM, INC.
SUBSCRIPTION AGREEMENT
1. General. This Subscription Agreement is dated as of May 20, 2004, and
sets forth the terms under which the undersigned investor, Kinderhook Partners,
LP (the "Investor"), will acquire 2,596,428 Units at a price of $.28 per unit
(the "Units") of eAutoclaims.com, Inc., a Nevada corporation (the "Company") for
an aggregate purchase price of $727,000 pursuant to the Confidential Private
Offering Term Sheet ("Term Sheet"), Warrant Agreement, Subscription Agreement
and Registration Rights Agreement. Each Unit consists of one (1) share of Common
Stock and one (1) immediately detachable and redeemable Common Stock Purchase
Warrant.
The Company is offering up to 7,500,000 Units at an initial purchase price
of $.28 per Unit. Investors are granted demand registration rights in connection
with this offering as more fully described in the Registration Rights Agreement.
The offering is being made on a "best efforts" basis. There is no minimum
offering level. All proceeds will be immediately available to the Company. The
offering shall terminate on May 21, 2004. The initial offering date is March 3,
2004. The Company has agreed to pay Noble International Investments, Inc.
selling agent compensation as described in the Confidential Private Offering
Term Sheet.
The Units are being offered by the Company to a suitable Investor pursuant
to Rules 505 or 506 of Regulation D and Section 4(2) of the Securities Act of
1933, as amended. Execution of this Subscription Agreement by the Investor shall
constitute an offer by the Investor to subscribe for the Units on the terms and
conditions specified herein and in the Term Sheet. The Company reserves the
right to reject such subscription offer, or, by executing a copy of this
Subscription Agreement, to accept such offer. If the Investor's offer is
accepted, the Company will execute this Subscription Agreement and issue the
Units. If the Investor's offer is rejected, the payment accompanying this
Subscription Agreement will be returned to the Investor, with no interest
thereon, with the notice of rejection.
The Company hereby agrees and acknowledges that it shall be obligated to
issue additional Units to Investor under certain circumstances as more fully
described in the Term Sheet under the heading "ADP Claims True-Up."
2. Acceptance of Subscription Agreement. The Company's acceptance of this
Subscription Agreement shall be indicated by the execution hereof by an officer
of the Company.
3. Investor's Representations, Warranties and Covenants. The Investor
represents, warrants and covenants to the Company as follows:
a. He acknowledges that he has been furnished with and has been given
access to all underlying documents in connection with this transaction as well
as such other information as he deems necessary or appropriate as a prudent and
knowledgeable investor in evaluating his investment in the Units. He further
acknowledges that the Company has given him the opportunity to obtain additional
information and to evaluate the merits and risks of his investment. He
acknowledges that i he has had the opportunity to ask questions of, and receive
satisfactory answers from, the officers and directors of the Company concerning
the terms and conditions of the offering.
b. He acknowledges that this transaction has not been scrutinized by
the United States Securities and Exchange Commission or by any state securities
commissions.
c. He has adequate means of providing for his current and future needs
and possible personal contingencies, and has no need for liquidity of his
investment in the Units.
d. He can bear the economic risk of losing his entire investment in
the Units.
e. He is acquiring the Units for his own account, for investment only
and not with a view toward the resale, fractionalization, division or
distribution thereof and he has no present plans to enter into any contract,
undertaking, agreement or arrangement for any such resale, distribution,
division or fractionalization thereof.
f. He does not have an overall commitment to investments that are not
readily marketable, including the Units and other similar investments,
disproportionate to his net worth or gross income.
g. He understands that the offer and sale of the Units is being made
by means of a private placement of Units and that he has read or reviewed and is
familiar with this Subscription Agreement and the Company's filings under the
Securities Exchange Act of , as amended ("1934 Act").
h. He was previously informed that all documents, records and books
pertaining to this investment were at all times available at the offices of the
Company, located at 110 East Douglas Road, Oldsmar, Florida 34677; that all such
documents, records and books pertaining to this investment requested by the
Investor have been made available to him and any persons he has retained to
advise him; and that he has no questions concerning any aspect of the investment
for which he has not previously received satisfactory answers.
i. He and his agents or advisers have had an opportunity to ask
questions of and receive answers from the Company, or a person or persons acting
on its behalf, concerning the terms and conditions of this Subscription
Agreement and the transactions contemplated hereby and thereby, as well as the
affairs of the Company and related matters.
j. He has had an opportunity to obtain additional information
necessary to verify the accuracy of the information referred to in subparagraph
(i) hereof. Specifically, the Investor acknowledges receipt and confirms
Investor has thoroughly reviewed and read the Company's Form 10-KSB for the year
ended July 31, 2003 and the Company's Forms 10-QSB for the three (3) months
ended October 31, 2003 and January 31, 2004.
k. HE UNDERSTANDS THAT THE COMPANY HAS A LIMITED FINANCIAL AND
OPERATING HISTORY.
l. HE UNDERSTANDS THAT THE UNITS ARE A SPECULATIVE INVESTMENT, WHICH
INVOLVES A HIGH DEGREE OF RISK OF LOSS BY HIM OF HIS ENTIRE INVESTMENT. THERE IS
NO ASSURANCE THAT THE RISKS SET FORTH IN THIS SUBSCRIPTION AGREEMENT ARE THE
MOST SIGNIFICANT WHICH AN INVESTOR SHOULD CONSIDER.
m. He understands all aspects of and risks associated with this
investment or has consulted with his own financial adviser who has advised him
thereof and he has no further questions with respect thereto.
n. Unless the Units are registered as described in Section 6, the
undersigned will be required to comply with the provisions of Rule 144 adopted
by the Securities and Exchange Commission under the Securities Act. Investor
understands Rule 144 has at least a one (1) year holding period and limits on
the amount of securities that may be sold in any 90 day period. THUS, THE
INVESTOR MAY NOT BE ABLE TO LIQUIDATE HIS INVESTMENT OR TRANSFER ANY UNITS
WITHOUT POTENTIAL ADVERSE FINANCIAL CONSEQUENCES. THEREFORE, THE UNITS SHOULD
NOT BE PURCHASED UNLESS THE INVESTOR HAS LIQUID ASSETS SUFFICIENT TO ASSURE THAT
SUCH PURCHASE WILL CAUSE NO UNDUE FINANCIAL DIFFICULTIES AND UNLESS THE INVESTOR
CAN OTHERWISE PROVIDE FOR HIS CURRENT NEEDS AND POSSIBLE PERSONAL CONTINGENCIES.
o. He is knowledgeable and experienced in financial and business
matters. He and/or his financial or business advisers, if any, are capable of
evaluating the merits and risks of an investment in the Units.
p. All information which he has provided to the Company concerning his
financial position and knowledge of financial and business matters is correct
and complete as of the date set forth at the end of this Subscription Agreement,
and if there should be any material change in such information prior to
acceptance of this Subscription Agreement by the Company, he will immediately
provide the Company with such information.
q. He is a bona fide resident of the State of New Jersey, maintains
his principal residence there or has a driver's license in that state, and is at
least eighteen (18) years of age.
r. If he is executing this Subscription Agreement on behalf of a
corporation, partnership, trust or other entity, he has been duly authorized by
such entity to execute this Subscription Agreement and all other instruments in
connection with the purchase of the Units, his signature is binding upon such
corporation, partnership, trust or other entity and he represents and warrants
that such corporation, partnership, trust or other entity was not organized for
the purpose of acquiring the Units subscribed for pursuant to this Subscription
Agreement and that the acquisition of the Units is an authorized investment of
the corporation, partnership, trust or other entity.
s. This Subscription Agreement shall be binding upon the heirs,
estate, legal representatives, successors and assigns of the undersigned.
4. Regulation FD Confidentiality Covenant of Investor. The Investor
understands that certain of the information made available to Investor in
connection with the purchase of the Units is confidential and not currently
publicly available. Accordingly, the Investor expressly agrees to treat the
information provided to Investor regarding the Company, including possible
future transactions, in strict confidence and not disclose such information to
any other party. Investor understands the Company is relying upon Investor's
agreement of confidentiality to comply with the exemptive provisions of
Regulation FD as set forth in Rule 100(a)(b)(2)(ii) of Regulation FD.
5. Company's Representations and Warranties. The Company hereby represents
and warrants as follows:
a. (i) It is duly organized, validly existing and in good standing
under the laws of Nevada and is duly qualified to do business and is in good
standing in each jurisdiction in which such qualification is required by law;
(ii) the Company has all requisite power and authority to enter into
this Subscription Agreement and to sell the Units as provided herein;
(iii) the Company is current in its periodic reporting obligations
under the 1934 Act;
(iv) this Subscription Agreement has been duly executed and
delivered on its behalf and constitutes its legal, valid and binding agreement,
enforceable in accordance with its terms (which include the Shares as part of
Unit and Shares underlying the Warrant);
(v) the execution, delivery and performance of this Subscription
Agreement, the sale and delivery of the Units, and compliance with the
provisions hereof by the Company, do not and will not, with or without the
passage of time or the giving of notice or both, (i) violate its organizational
documents or any provision of law, statute, ordinance, rule or regulation or any
ruling, writ, injunction, order, judgment or decree of any court, administrative
agency or other governmental body, or (ii) result in any breach of any of the
terms, conditions or provisions of, or constitute a default (or give rise to any
right of termination, cancellation or acceleration) under any note, indenture,
mortgage or lease, or any other material contract or other instrument, document
or agreement, to which the Company is a party or by which it or any of its
property is bound or affected;
(vi) all consents, approvals or authorizations of, or registrations,
filings or declarations with, any governmental authority, stock exchange or
market, the Company's board of directors and shareholders, or any other person,
required in connection with the execution, delivery and performance of this
Subscription Agreement or the transactions contemplated hereby have been
obtained by the Company and are in full force and effect;
(vii) there are no actions, investigations, demands, suits or
proceedings pending or threatened against or affecting the Company or affecting
the rights of the Company to enter into this Subscription Agreement or
consummate the transactions contemplated hereby;
(viii) the Company has complied with all applicable laws, statutes,
codes, acts, ordinances, orders, judgments, decrees, injunctions, rules,
regulations, permits, licenses, authorizations, directions and requirements of
governmental entities, except for such non-compliance which would not reasonably
be expected to have a material adverse effect on it;
(ix) the Company has correctly prepared and filed all tax returns or
reports that are required to have been filed in any jurisdiction, and has timely
paid in full all taxes due and payable with respect thereto;
(x) upon consummation of the purchase contemplated hereby, the
Common Stock issued to Investor shall have been duly and validly authorized and
issued, fully paid and non-assessable and free and clear of all liens, pledges,
security interests and encumbrances;
(xi) in reliance on the investment representations made by the
Investor contained herein, the offer, issuance, sale and delivery of the Units,
are exempt from the registration requirements of the 1933 Act and all applicable
state securities laws;
(xii) each report, schedule, effective registration statement,
definitive proxy statement and each other document filed by the Company with the
SEC since December 31, 2002 (as the documents may have been amended since the
time of their filing, the "Commission Documents") has been made available to the
Investor either by physical delivery or via the SEC's EDGAR System. As of their
respective filing dates, each Commission Document complied in all material
respects with the requirements of the 1933 Act or the 1934 Act, as applicable,
and the rules and regulations of the SEC thereunder applicable to the Commission
Documents, and no Commission Document contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements included in the Commission Documents were prepared in accordance with
United States generally accepted accounting principles, applied consistently
with the past practices of the Company (except as may be indicated in the notes
thereto), and as of their respective dates, fairly present, in all material
respects, the consolidated financial position of the Company and the results of
its operations as of the time and for the periods indicated therein and complied
as to form in all material respects with then applicable accounting requirements
and with the published rules and regulations of the SEC with respect thereto;
(xiii) since January 31, 2004, except as disclosed in the Commission
Documents filed subsequent to that date, there has not been any material adverse
change in the business, financial condition or operating results of the Company;
and
(xiv) the Company has not since December 31, 2002, received notice
(written or oral) from any stock exchange or market on which its common stock is
or has been listed (or on which it has been quoted) to the effect that it is not
in compliance with the continuing listing or maintenance requirements of such
exchange or market.
6. Responsibility and Indemnification. The Company will exercise its best
judgment in the conduct of all matters arising under this Subscription
Agreement. The undersigned acknowledges that he understands the meaning and
legal consequences of the representations and warranties contained herein, and
he hereby agrees to indemnify and hold harmless the Company, its officers,
directors, shareholders and employees, and any of their affiliates and their
officers, directors, shareholders and employees, or any professional advisor or
entity thereto, from and against any and all loss, damage, liability or expense,
including costs and reasonable attorney's fees, to which said entities and
persons may be put or which they may incur by reason of, or in connection with,
any misrepresentation made by the Investor, any breach of any of his warranties,
or his failure to fulfill any of his covenants or agreements under this
Subscription Agreement. The Company hereby agrees to indemnify and hold harmless
the undersigned, its officers, directors, managers, shareholders, members,
partners and employees, and any of their affiliates and their officers,
directors, managers, shareholders, members, partners and employees, or any
professional advisor or entity thereto, from and against any and all loss,
damage, liability or expense, including costs and reasonable attorney's fees, to
which said entities and persons may be put or which they may incur by reason of,
or in connection with, any misrepresentation made by the Company, any breach of
any of his warranties, or his failure to fulfill any of his covenants or
agreements under this Subscription Agreement.
7. Company Solely Responsible for Disclosure; No Independent Review or
Opinions. The Company has assumed sole responsibility for compliance with the
disclosure requirements of federal and state securities laws in connection with
the offer and sale of the Units. No law firm, accounting firm, securities
broker/dealer or other third party has conducted any due diligence review of the
Company and its business and affairs or any disclosures with respect thereto,
written or oral, made by the Company or others. Notwithstanding the preparation
of any documents or agreements related to the Company or this investment, the
Company's law firm has not rendered any legal opinions concerning any aspect of
the Company's business and affairs, including but not limited to, the validity
or enforceability of any contracts, agreements, obligations or security
interests related to an investment in the Company. By execution of this
Subscription Agreement, the undersigned acknowledges that the Company is solely
responsible for all disclosures to potential Investors concerning the Company
and its business and affairs and that no legal opinions have been rendered by
the Company's law firm as described above.
8. Survival of Representations, Warranties, Covenants and Agreements. The
representations, warranties, covenants and agreements contained herein shall
survive the delivery of, and the payment for, the Units.
9. Notices. Any and all notices, designations, consents, offers,
acceptances or any other communication provided for herein shall be given in
writing by registered or certified mail which shall be addressed, in the case of
the Company, to 110 East Douglas Road, Oldsmar, Florida 34677, and in the case
of the Investor, to the address set forth in this Subscription Agreement or
otherwise appearing on the books of the Company or his residence or to such
other address as may be designated by him in writing.
10. Miscellaneous. This Subscription Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Florida, both
substantive and remedial. The section headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Subscription Agreement. This Subscription Agreement shall
be enforceable in accordance with its terms and be binding upon and shall inure
to the benefit of the parties hereto and their respective successors, assigns,
executors and administrators. This Subscription Agreement, the Warrant
Agreement, the Registration Rights Agreement and the Term Sheet represent the
entire understanding and agreement between the parties hereto with respect to
the subject matter hereof; supersede all prior negotiations, letters and
understandings relating to the subject matter hereof; and cannot be amended,
supplemented or modified except by an instrument in writing signed by the party
against whom enforcement of any such amendment, supplement or modification is
sought. In the event of any litigation between the parties to this Subscription
Agreement relating to, or arising out of, this Subscription Agreement, the
prevailing party shall be entitled to an award of reasonable attorney's fees and
costs, whether incurred before, during or after trial or at the appellate level.
The failure or finding of invalidity of any provision of this Subscription
Agreement shall in no manner affect the right to enforce the other provisions of
same, and the waiver by any party of any breach of any provision of this
Subscription Agreement shall not be construed to be a waiver by such party of
any subsequent breach of any other provision.
11. State Blue Sky Notices:
The following special provisions are applicable solely to the
residents of the various states mentioned:
FOR FLORIDA RESIDENTS: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE FLORIDA SECURITIES ACT, BY REASON
OF SPECIFIC EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE
OFFERING. THESE SECURITIES CANNOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF
TO ANY PERSON OR ENTITY UNLESS THEY ARE SUBSEQUENTLY REGISTERED OR EXEMPTION
FROM REGISTRATION IS AVAILABLE.
THE UNITS REFERRED TO HEREIN WILL BE SOLD TO, AND ACQUIRED BY, THE
HOLDER IN A TRANSACTION EXEMPT UNDER SECTION 517.061 OF THE FLORIDA SECURITIES
ACT. THE UNITS HAVE NOT BEEN REGISTERED UNDER SAID ACT IN THE STATE OF FLORIDA.
IN ADDITION, ALL FLORIDA RESIDENTS SHALL HAVE THE PRIVILEGE OF VOIDING THE
PURCHASE WITHIN THREE (3) DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS MADE
BY SUCH PURCHASER TO THE ISSUER, AN AGENT OF THE ISSUER, OR AN ESCROW AGENT OR
WITHIN THREE (3) DAYS AFTER THE AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED
TO SAID PURCHASER, WHICHEVER OCCURS LATER.
FOR NEW YORK RESIDENTS: THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE NEW YORK FRAUDULENT
PRACTICES ("MARTIN") ACT, BY REASON OF SPECIFIC EXEMPTIONS THEREUNDER RELATING
TO THE LIMITED AVAILABILITY, OR OTHERWISE DISPOSED OF TO ANY PERSON OR ENTITY
UNLESS SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE NEW YORK FRAUDULENT PRACTICES ("MARTIN") ACT, IF SUCH REGISTRATION IS
REQUIRED.
THIS PRIVATE OFFERING MEMORANDUM HAS NOT BEEN FILED WITH OR REVIEWED
BY THE ATTORNEY GENERAL PRIOR TO ITS ISSUANCE AND USE. THE ATTORNEY GENERAL OF
THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING.
ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
PURCHASE OF THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK. THIS
PRIVATE OFFERING MEMORANDUM DOES NOT CONTAIN AN UNTRUE STATEMENT OF A MATERIAL
FACT OR OMIT TO STATE A MATERIAL FACT NECESSARY TO MAKE THE STATEMENTS MADE, IN
LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING, IT
CONTAINS A FAIR SUMMARY OF THE MATERIAL TERMS OF DOCUMENTS PURPORTED TO BE
SUMMARIZED HEREIN.
12. Suitability Questions. Please complete all of the following
suitability questions which apply to the Investor.
a. I am an Accredited Investor because I meet one of the following
standards:
[_] (i) An individual whose individual net worth, or joint net
worth with that individual's spouse, exceeds $1,000,000 (including the value of
homes, home furnishings and personal automobiles).
[_] (ii) Natural person(s) who had an income in excess of
$200,000 (individual) or $300,000 (joint) in each of the years 2002 and 2003 and
who reasonably expects an income in excess of $200,000 (individual) or $300,000
(joint) in 2004. For purposes of this offering, individual income shall equal
adjusted income, as reported in the Investor's federal tax return, increased by
the following amounts: (i) the amount of any tax exempt interest received, (ii)
the amount of losses claimed as a limited partner in a limited partnership,
(iii) any deduction claimed for depletion, (iv) amounts contributed to an IRA or
Keogh retirement plan, (v) alimony paid, and (vi) any amount by which income
from long-term capital gains has been reduced in arriving at adjusted gross
income pursuant to the provisions of Section 1202 of the Internal Revenue Code.
For the individual test, income related to a spouse is excluded.
[_] (iii) Employee Benefit Plan which has total assets in excess
of $5,000,000.
[_] (iv) A Self-Directed Plan with investment decisions made
solely by persons that are accredited Investors.
[_] (v) A Trust with total assets in excess of $5,000,000 not
formed for the specific purpose of acquiring the securities offered, whose
purchase is directed by a sophisticated person as described in Rule 506(b) (2)
(ii) of the Securities Act.
[_] (vi) Any entity in which all of the equity owners are
accredited Investors.
[X] (vii) An organization described in section 501(c)(3) of
the Internal Revenue Code, corporation, Massachusetts or similar business trust,
or partnership, not formed for the specific purpose of acquiring the Securities
offered, with total assets in excess of $5,000,000.
b. Do you think you have sufficient knowledge of the Company to
evaluate the risks associated with investing in the Units?
Yes [X] No[_] If so, why? We have reviewed the Company's financial
statements as filed with the SEC, spoken with management, and performed
reference checks with customers and partners.
c. If you answered "No" to the preceding question, do you have an
Investment Advisor or Purchaser Representative upon whom you rely for investment
advice?
Yes[_] No[_]
If so, please provide his name and address _____________________________________
________________________________________________________________________________
________________________________________________________________________________
d. Do you understand the nature of the investment in the Units and the
risks involved?
Yes [X] No[_]
e. Do you understand that unless the Company registers your Units
under the Securities Act, you will not be able to resell the Units which you
purchase, unless you do so in an exempt transaction or unless you comply with
the provisions of Rule 144 and applicable state securities laws?
Yes [X] No[_]
f. Do you understand that there is no assurance of any financial
return on this investment and that you run the risk of losing your entire
investment?
Yes [X] No[_]
g. Are you aware that you have the opportunity to inspect the
Company's financial records, legal documents, and other records?
Yes [X] No[_] Did you do so? Yes [X] No[_]
h. Are you acting for your own account?
Yes [X] No[_]
If No, please complete the following:
(i) Capacity in which you are acting (agent, trustee or
otherwise): ____________________________________________________________________
(ii) Name, address and telephone number(s) of person(s) you
represent: _____________________________________________________________________
(iii) Nature of evidence of authority attached: _________________
________________________________________________________________________________
13. Documents Incorporated by Reference. By execution of this Subscription
Agreement, the Investor acknowledges that he has been provided with a copy of
the following:
o Form 10-KSB for year ended July 31, 2003.
o Forms 10-Q for three (3) months ended October 31, 2003 and
January 31, 2004.
o Confidential Private Offering Term Sheet.
o Warrant Agreement.
o Registration Rights Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement this 20th day of May, 2004.
TYPE OF OWNERSHIP (Check One)
[_] INDIVIDUAL OWNERSHIP [_] COMMUNITY PROPERTY (one
(One Signature Required) signature required if interest
in one name, two signatures
required if interest held in
both names)
[_] JOINT TENANTS WITH RIGHT [_] TENANTS IN COMMON (both or
OF SURVIVORSHIP (both parties all parties must sign)
must sign)
[X] PARTNERSHIP (please include a [_] Grantor Trust
copy of the partnership agreement
authorizing signature)
[_] CORPORATION (please include [_] CUSTODIAN
certified corporate resolution
authorizing signature)
[_] PROFIT SHARING PLAN [_] PENSION PLAN
[_] IRA [_] KEOGH
--------------------------------------------------------------------------------
WITNESSES:
_________________________ _________________________
Investor Signature
_________________________ _________________________
Print Name
_________________________
Social Security Number
_________________________
Street Address
_________________________
City, State and Zip
If additional signatures are required:
WITNESSES:
WITNESSES:
_________________________ _________________________
Investor Signature
_________________________ _________________________
Print Name
_________________________
Social Security Number
_________________________
Street Address
_________________________
City, State and Zip
SUBSCRIPTION ACCEPTED:
eAUTOCLAIMS.COM, INC.
By:______________________
Title:___________________
Exhibit C
---------
Void after 5:00 p.m., New York Time on May 20, 2007
Warrant to Purchase 2,596,428 Shares of Common Stock
_________________________________
WARRANT TO PURCHASE COMMON STOCK
OF
eAUTOCLAIMS.COM, INC.
_________________________________
THIS WARRANT AND THE SHARES OF COMMON STOCK
ISSUABLE PURSUANT TO THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"),
AND ARE BEING OFFERED AND SOLD PURSUANT
TO RULE 506 OF REGULATION D
FOR VALUE RECEIVED, eAutoclaims.com, Inc., a Nevada corporation (the
"Company"), grants the following rights to Kinderhook Partners, LP ("Holder"):
ARTICLE 1. DEFINITIONS.
As used herein, the following terms shall have the following meanings, unless
the context shall otherwise require:
(a) "Common Stock" shall mean the common stock, par value $0.001
per share, of the Company.
(b) "Corporate Office" shall mean the office of the Company (or
its successor) at which at any particular time its principal business shall be
administered.
(c) "Closing" shall have mean the date the Company receives funds
from the Units as described in the Confidential Private Offering Term Sheet and
Subscription Agreement.
(d) "Exercise Date" shall mean any date upon which the Holder
shall give the Company a Notice of Exercise.
(e) "Exercise Price" shall mean the price to be paid to the
Company for each share of Common Stock to be purchased upon exercise of this
Warrant in accordance with the terms hereof. The Exercise Price is $.35 per
Share, subject to the anti-dilution provisions of Section 2.6.
(f) "Expiration Date" shall mean 5:00 p.m. (New York time) on May
20, 2007.
(g) "SEC" shall mean the United States Securities and Exchange
Commission.
(h) ""Underlying Shares" shall mean the shares of the Common
Stock issuable upon exercise of the Warrant.
ARTICLE 2. EXERCISE AND AGREEMENTS.
2.1 Exercise of Warrant. This Warrant shall entitle Holder to purchase
up to two-million five-hundred ninety-six thousand four-hundred twenty-eight
(2,596,428) shares of Common Stock (the "Shares") at the Exercise Price. This
Warrant shall be exercisable at any time and from time to time prior to the
Expiration Date (the "Exercise Period"). This Warrant and the right to purchase
Shares hereunder shall expire and become void at the Expiration Date.
2.2 Manner of Exercise.
(a) Holder may exercise this Warrant at any time, starting at the
time of closing and from time to time during the Exercise Period, in whole or in
part (but not in denominations of fewer than 1,000 Shares, except upon an
exercise of this Warrant with respect to the remaining balance of Shares
purchasable hereunder at the time of exercise), by delivering to the Company)
(i) a duly executed Notice of Exercise in substantially the form attached as
Appendix 1 hereto, and (ii) a wire transfer or check for the aggregate Exercise
Price of the Shares being purchased.
(b) From time to time upon exercise of this Warrant, in whole or
part, in accordance with its terms, the Company will instruct its transfer agent
to will deliver stock certificates to the Holder representing the number of
Shares being purchased pursuant to such exercise, subject to adjustment as
described herein.
(c) Promptly following any exercise of this Warrant, if the
Warrant has not been fully exercised and has not expired, the Company will
deliver to the Holder a new Warrant for the balance of the Shares covered
hereby.
2.3 Termination. All rights of the Holder in this Warrant, to the
extent they have not been exercised, shall terminate on the Expiration Date.
2.4 No Rights Prior to Exercise. Prior to its exercise pursuant to
Section 2.2 above, this Warrant shall not entitle the Holder to any voting or
other rights as holder of Shares.
2.5 Adjustments.
(a) Dilutive Issuances. The Warrant is subject to "full ratchet"
anti-dilution protection relating to the issuance of any future equity
securities or common stock equivalents that contain a purchase, conversion or
exercise price below the Warrant exercise price of $.35 per Share (collectively
"Dilutive Issuance"). If the Company issues any equity securities or common
stock equivalents that equate to a Dilutive Issuance because the issuance,
conversion or exercise price of such security is less than the Exercise Price,
then the Exercise Price shall be immediately adjusted downward to equal the
price in the Dilutive Issuance.
(b) Reclassification. In case of any reclassification, stock
split, or reverse stock split, capital reorganization, stock dividend or other
change of outstanding shares of Common Stock, the Company shall cause effective
provision to be made so that the Holder shall have the right thereafter, by
exercising this Warrant, to purchase the kind and number of shares of stock or
other securities or property (including cash) receivable upon such capital
reorganization, stock dividend, stock split, or reverse stock split, as the
Holder would have been entitled to receive had the Holder exercised this Warrant
in full immediately before such reclassification, capital reorganization, stock
dividend, stock split, or reverse stock split, or conveyance. Any such provision
shall include provision for adjustments that shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Section 2.5. The
foregoing provisions shall similarly apply to successive reclassifications,
capital reorganizations, stock dividends, stock split, or reverse stock split,
and other changes of outstanding shares of Common Stock.
(c) Merger. In the case of any consolidation or merger of the
Company with or into another corporation (other than a consolidation or merger
in which the Company is the continuing corporation and which does not result in
any reclassification, capital reorganization, stock dividend or other change of
outstanding change of outstanding common stock), or in the case of any sale or
conveyance to another corporation of the property of the corporation as, or
substantially as, an entirety (collectively "Sale of the Business") the Company
shall give the warrant holder at least twenty (20) business days advance notice
of the material terms and conditions of the Sale of Business transaction. The
Warrant Holder shall notify the Company within five (5) business days of the
expected closing date of the Sale of Business as disclosed in the notification
by the Company to the Warrant Holder of the Warrant Holder's intent to exercise
this Warrant, which exercise shall include the notice of exercise and a bank
cashier's or certified check for the aggregate Exercise Price of the underlying
Shares being purchased. If the Warrant Holder does not timely elect to exercise
the Warrant in accordance with these provisions the Warrant shall terminate and
be null and void.
2.6 Fractional Shares. No fractional Shares shall be issuable upon
exercise of this Warrant and the number of Shares to be issued shall be rounded
up to the nearest whole Share. If a fractional Share interest arises upon any
exercise of the Warrant, the Company shall eliminate such fractional Share
interest by issuing Holder an additional full Share.
ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
3.1 Representations and Warranties. The Company hereby represents and
warrants to the Holder as follows:
(a) All Shares which may be issued upon the exercise of the
purchase right represented by this Warrant shall, upon issuance, be duly
authorized, validly issued, fully-paid and nonassessable, and free of any liens
and encumbrances except for restrictions on transfer provided for herein or
under applicable federal and state securities laws, and not subject to any
pre-emptive rights.
(b) The Company is a corporation duly organized and validly
existing under the laws of the State of Nevada, and has the full power and
authority to issue this Warrant and to comply with the terms hereof. The
execution, delivery and performance by the Company of its obligations under this
Warrant, including, without limitation, the issuance of the Shares upon any
exercise of the Warrant have been duly authorized by all necessary corporate
action. This Warrant has been duly executed and delivered by the Company and is
a valid and binding obligation of the Company, enforceable in accordance with
its terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting enforceability of
creditors' rights generally and except as the availability of the remedy of
specific enforcement, injunctive relief or other equitable relief is subject to
the discretion of the court before which any proceeding therefor may be brought.
(c) The Company is not subject to or bound by any provision of
any certificate or articles of incorporation or by-laws, mortgage, deed of
trust, lease, note, bond, indenture, other instrument or agreement, license,
permit, trust, custodianship, other restriction or any applicable provision of
any law, statute, rule, regulation, judgment, order, writ, injunction or decree
of any court, governmental body, administrative agency or arbitrator which could
prevent or be violated by or under which there would be a default (or right of
termination) as a result of the execution, delivery and performance by the
Company of this Warrant.
(d) The Company is subject to the reporting requirements of
Section 13 or Section 15d of the Securities Exchange Act of 1934, as amended.
The Company is eligible to issue the Warrants and the Underlying Shares pursuant
to Rule 506 of Regulation D promulgated under the Securities Act.
ARTICLE 4. REDEMPTION OF WARRANTS
4. Redemption of Warrants. The Warrants are not redeemable for one (1)
year from the Closing. Therefore the Company, at its option, may redeem all or
any portion on a pro rata basis, of the outstanding Warrants at a price of $.01
per Warrant, upon at least 10 days' notice to the registered Holders of
Warrants, provided that the average closing price per share of Common Stock
(determined as hereinafter provided) shall have been $.50 or greater than the
applicable Exercise Price for a period of 20 consecutive business days ended
immediately prior to the date of such notice. For the purpose of determining
whether the Company may redeem the Warrants pursuant to this Section 4, the
closing price per share of Common Stock for each day shall be the last reported
sales price, regular way, or, in case no such reported sale takes place on such
day, the average of the reported closing bid and asked prices, regular way, in
either case, on any exchange (NASDAQ or OTC:BB) on which the Common Stock is
listed or admitted to trading, or, if there is no such representative closing
bid on NASDAQ or OTC.BB on such day, a price determined in any reasonable manner
approved by the Board of Directors of the Company.
If the Company shall elect to redeem the Warrants pursuant to this
Section 4, notice of redemption shall be given to the Holders of all outstanding
Warrants at least 10 days prior to the date fixed for redemption, to their last
addresses as they shall appear on the warrant register, but failure to give such
notice by mail to the Holder of any Warrant, or any defect therein, shall not
affect the validity of the proceedings for the redemption of any other Warrants.
The notice shall state that the Company is redeeming the Warrant pursuant to the
Section 4 at the redemption price of $.01 per Warrant, and the date fixed for
redemption; shall state that payment of the redemption price of the Warrants
will be made at the corporate offices of the Company upon presentation and
surrender of such Warrants; shall state that the right to exercise the Warrants
will terminate as provided in this Agreement (stating the date of such
termination); and shall state the Exercise Price. The date of redemption for the
Warrants pursuant to this Section 4 shall be any date chosen by the Company
which complies with the notice requirement set forth in this Section 4. Warrant
Holders shall have the right to exercise the Warrants during this ten (10) day
notice period by complying with the manner of exercise provisions of Section
2.2. If a Warrant Holder does not elect to exercise during this ten (10) day
redemption notice period, the Warrants shall be considered redeemed and
cancelled. If the giving of notice of redemption shall have been completed as
provided above, and if funds sufficient for the redemption of the Warrants
pursuant to this Section 4 shall have been deposited into a separate bank
account for such purpose, the right to exercise the Warrants shall terminate,
provided the Warrant holder does not exercise during the ten (10) day redemption
notice period, at the close of business on the business day preceding the date
fixed for redemption, and the Holder of each Warrant shall thereafter be
entitled upon surrender of his Warrant, only to receive $.01 per Warrant,
without interest.
ARTICLE 5. MISCELLANEOUS.
5.1 Transfer. This Warrant may not be transferred or assigned, in
whole or in part, at any time, except in compliance with applicable federal and
state securities laws by the transferor and the transferee (including, without
limitation, the delivery of an investment representation letter and a legal
opinion reasonably satisfactory to the Company), provided that this Warrant may
not be transferred or assigned such that either the Holder or any transferee
will, following such transfer or assignment, hold a Warrant for the right to
purchase fewer than 1,000 Shares.
5.2 Transfer Procedure. Subject to the provisions of Section 5.1,
Holder may transfer or assign this Warrant by giving the Company notice setting
forth the name, address and taxpayer identification number of the transferee or
assignee, if applicable (the "Transferee") and surrendering this Warrant to the
Company for reissuance to the Transferee (and the Holder, in the event of a
transfer or assignment of this Warrant in part). (Each of the persons or
entities in whose name any such new Warrant shall be issued are herein referred
to as a Holder").
5.3 Loss, Theft, Destruction or Mutilation. If this Warrant shall
become mutilated or defaced or be destroyed, lost or stolen, the Company shall
execute and deliver a new Warrant in exchange for and upon surrender and
cancellation of such mutilated or defaced Warrant or, in lieu of and in
substitution for such Warrant so destroyed, lost or stolen, upon the Holder
filing with the Company evidence satisfactory to it that such Warrant has been
so mutilated, defaced, destroyed, lost or stolen. However, the Company shall be
entitled, as a condition to the execution and delivery of such new Warrant, to
demand indemnity satisfactory to it and payment of the expenses and charges
incurred in connection with the delivery of such new Warrant. Any Warrant so
surrendered to the Company shall be canceled.
5.4 Notices. All notices and other communications from the Company to
the Holder or vice versa shall be deemed delivered and effective when given
personally, by facsimile transmission and confirmed in writing or mailed by
first-class registered or certified mail, postage prepaid at such address and/or
facsimile number as may have been furnished to the Company or the Holder, as the
case may be, in writing by the Company or the Holder from time to time.
5.5 Waiver. This Warrant and any term hereof may be changed, waived,
or terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought.
5.6 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 its
principles regarding conflicts of law.
Dated: eAUTOCLAIMS.COM, INC.
Attest: ____________________ By:_________________________
Name: Eric Seidel
Title: President
HOLDER:
(Individual) ____________________________
Print Name:
(Entity)
By: ________________________
Print Name: ________________
Title: ____________________
APPENDIX 1
NOTICE OF EXERCISE
1. The undersigned hereby elects to purchase __________ shares of the
Common Stock of eAutoclaims.com, Inc. pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price of such shares in
full.
2. Please issue a certificate or certificates representing said shares
in the name of the undersigned or in such other name as is specified below:
3. The undersigned represents it is acquiring the shares solely for
its own account and not with a view toward the resale or distribution thereof
except in compliance with applicable securities laws.
___________________________
(Signature)
_____________
(Date)
Exhibit D
---------
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of May 20, 2004,
by and between EAUTOCLAIMS.COM, INC., a Nevada corporation with offices located
at 110 East Douglas Road, Oldsmar, Florida 34677, (the "Company"), and
Kinderhook Partners, LP (the "Investor").
WHEREAS, In connection with the Subscription Agreement by and between the
Company and the Investor of even date herewith (the "Subscription Agreement"),
the Company has agreed to issue to the Investor 2,596,428 Units. Each Unit
consists of (i) one share of the Company's common stock, $.001 par value per
share (the "Common Stock") and (ii) a warrant to purchase one share of Common
Stock (the "Warrant"); and
WHEREAS, To induce the Investor to execute and deliver the Subscription
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "1933 Act"), and
applicable state securities laws, with respect to the shares of Common Stock
issuable (i) pursuant to the Subscription Agreement and (ii) upon exercise of
the Warrant.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants contained hereinafter and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Investor hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the following
meanings:
a. "Investor" shall have the meaning set forth in the first paragraph of this
Agreement.
b. "Person" means a corporation, a limited liability company, an association, a
partnership, an organization, a business, an individual, a governmental or
political subdivision thereof or a governmental agency.
c. "Potential Material Event" means any of the following: (i) the possession by
the Company of material information not ripe for disclosure in a Registration
Statement, which shall be evidenced by determinations in good faith by the Board
of Directors of the Company that disclosure of such information in the
Registration Statement would be detrimental to the business and affairs of the
Company, or (ii) any material engagement or activity by the Company which would,
in the good faith determination of the Board of Directors of the Company, be
adversely affected by disclosure in a Registration Statement at such time, which
determination shall be accompanied by a good faith determination by the Board of
Directors of the Company that the Registration Statement would be materially
misleading absent the inclusion of such information.
d. "Principal Market" means the principal market for the Common Stock, currently
the OTC Bulletin Board.
e. "Register," "Registered," and "Registration" refer to a registration effected
by preparing and filing one or more Registration Statements in compliance with
the 1933 Act and pursuant to Rule 415 under the 1933 Act or any successor rule
providing for offering securities on a continuous basis ("Rule 415"), and the
declaration or ordering of effectiveness of such Registration Statement(s) by
the United States Securities and Exchange Commission (the "SEC").
f. "Registrable Securities" means the shares of Common Stock issued or issuable
(i) pursuant to the Subscription Agreement, (ii) upon exercise of the Warrant
and (iii) any shares of capital stock issued or issuable with respect to the
such shares of Common Stock and Warrant, as a result of any stock split, stock
dividend, recapitalization, exchange or similar event or otherwise, which have
not been (x) included in a Registration Statement that has been declared
effective by the SEC or (y) sold under circumstances meeting all of the
applicable conditions of Rule 144 (or any similar provision then in force) under
the 1933 Act.
g. "Registration Statement" means a registration statement of the Company filed
under the 1933 Act.
All capitalized terms used in this Agreement and not otherwise defined
herein shall have the same meaning ascribed to them as in the Subscription
Agreement.
2. REGISTRATION.
a. The Company shall prepare, and, as soon as practicable but in no event later
than thirty (30) calendar days from the date hereof (the "Filing Deadline"),
file with the SEC a Registration Statement or Registration Statements (as is
necessary) on Form SB-2 (or, if such form is unavailable for such a
registration, on such other form as is available for such a registration),
covering the resale of all of the Registrable Securities, which Registration
Statement(s) shall state that, in accordance with Rule 416 promulgated under the
1933 Act, such Registration Statement(s) also covers such indeterminate number
of additional shares of Common Stock as may become issuable upon stock splits,
stock dividends or similar transactions.
If the Company shall not have filed a Registration Statement with respect
to the Registrable Securities by the Filing Deadline, the Company shall issue
shares of Common Stock to the Investor, as liquidated damages, in an amount
equal to ten percent (10%) of the Registrable Securities purchased by the
Investor pursuant to the Subscription Agreement.
b. The Company shall use its best efforts to have the Registration Statement(s)
declared effective by the SEC within one hundred twenty (120) calendar days
after the filing thereof.
If the Registration Statement with respect to the Registrable Securities
shall not have been declared effective by the SEC within one hundred twenty
(120) calendar days after the Filing Deadline (the "Effective Deadline"), the
Company shall issue shares of Common Stock to the Investor, as liquidated
damages, in an amount equal to ten percent (10%) per month of the Registrable
Securities purchased by the Investor pursuant to the Subscription Agreement
(which amount shall be prorated on a daily basis for any period of less than one
month) for each month after the Effective Deadline that the Registration
Statement has not been declared effective by the SEC.
c. If at any time after the Filing Deadline there is not an effective
Registration Statement covering all of the Registrable Securities and the
Company shall determine to prepare and file with the SEC a Registration
Statement relating to an offering for its own account or the account of others
under the 1933 Act of any of its equity securities, other than on Form S-4 or
Form S-8 (each as promulgated under the 1933 Act) or their then equivalents
relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans, then the Company
shall send to Investor written notice of such determination and, if within
fifteen days after receipt of such notice, Investor shall so request in writing,
the Company shall include in the Registration Statement all or any part of such
Registrable Securities Investor requests to be registered; provided, that, the
Company shall not be required to register any Registrable Securities pursuant to
this section (c) that are eligible for resale pursuant to Rule 144(k)
promulgated under the 1933 Act or that are the subject of a then effective
Registration Statement.
3. RELATED OBLIGATIONS.
At such time as the Company is obligated to prepare and file a Registration
Statement with the SEC pursuant to Section 2(a), the Company will use its best
efforts to effect the registration of the Registrable Securities in accordance
with the intended method of disposition thereof and, with respect thereto, the
Company shall have the following obligations:
a. The Company shall use its best efforts to cause such Registration Statement
relating to the Registrable Securities to become effective within one hundred
twenty (120) days after the date of the filing thereof, and shall keep such
Registration Statement effective pursuant to Rule 415 until the earlier of (i)
the date as of which the Investor may sell all of the Registrable Securities
without restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or
successor thereto) or (ii) the date on which (A) the Investor shall have sold
all the Registrable Securities, and (B) the Investor has no right to receive
Common Stock underlying the Warrant (the "Registration Period"), which
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein) shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein, or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading.
b. The Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to a Registration Statement and the
prospectus used in connection with such Registration Statement, which prospectus
is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may be
necessary to keep such Registration Statement effective during the Registration
Period, and, during such period, comply with the provisions of the 1933 Act with
respect to the disposition of all Registrable Securities of the Company covered
by such Registration Statement until such time as all of such Registrable
Securities shall have been disposed of in accordance with the intended methods
of disposition by the Investor as set forth in such Registration Statement.
c. The Company shall furnish to the Investor and its legal counsel without
charge (i) promptly after the same is prepared and filed with the SEC at least
one copy of such Registration Statement and any amendment(s) thereto, including
financial statements and schedules, all documents incorporated therein by
reference and all exhibits, the prospectus included in such Registration
Statement (including each preliminary prospectus) and, with regards to such
Registration Statement(s), any correspondence by or on behalf of the Company to
the SEC or the staff of the SEC and any correspondence from the SEC or the staff
of the SEC to the Company or its representatives, (ii) upon the effectiveness of
any Registration Statement, ten (10) copies of the prospectus included in such
Registration Statement and all amendments and supplements thereto (or such other
number of copies as the Investor may reasonably request) and (iii) such other
documents, including copies of any preliminary or final prospectus, as the
Investor may reasonably request from time to time in order to facilitate the
disposition of the Registrable Securities owned by the Investor.
d. The Company shall (i) register and qualify the Registrable Securities covered
by a Registration Statement under such other securities or "blue sky" laws of
such states in the United States as the Investor reasonably requests, (ii)
prepare and file in those jurisdictions, such amendments (including
post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof during
the Registration Period, (iii) take such other actions as may be necessary to
maintain such registrations and qualifications in effect at all times during the
Registration Period, and (iv) take all other actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (x) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3(d), (y) subject itself to general taxation in any such jurisdiction,
or (z) file a general consent to service of process in any such jurisdiction.
The Company shall promptly notify the Investor who holds Registrable Securities
of the receipt by the Company of any notification with respect to the suspension
of the registration or qualification of any of the Registrable Securities for
sale under the securities or "blue sky" laws of any jurisdiction in the United
States or its receipt of actual notice of the initiation or threatening of any
proceeding for such purpose.
e. As promptly as practicable after becoming aware of such event, the Company
shall notify the Investor in writing of the happening of any event as a result
of which the prospectus included in a Registration Statement, as then in effect,
includes an untrue statement of a material fact or omission to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading (a
"Registration Default") and use all diligent efforts to promptly prepare a
supplement or amendment to such Registration Statement and take any other
necessary steps to cure the Registration Default, (which, if such Registration
Statement is on Form SB-2, may consist of a document to be filed by the Company
with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act (as
defined below) and to be incorporated by reference in the prospectus) to correct
such untrue statement or omission, and deliver ten (10) copies of such
supplement or amendment to the Investor (or such other number of copies as the
Investor may reasonably request). The Company shall also promptly notify the
Investor in writing (i) when a prospectus or any prospectus supplement or
post-effective amendment has been filed, and when a Registration Statement or
any post-effective amendment has become effective (notification of such
effectiveness shall be delivered to the Investor by facsimile on the same day of
such effectiveness), (ii) of any request by the SEC for amendments or
supplements to a Registration Statement or related prospectus or related
information, (iii) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate, (iv)
in the event the Registration Statement is no longer effective or (v) the
Registration Statement is stale for a period of more than five (5) Trading Days
as a result of the Company's failure to timely file its financials.
f. The Company shall use its best efforts to prevent the issuance of any stop
order or other suspension of effectiveness of a Registration Statement, or the
suspension of the qualification of any of the Registrable Securities for sale in
any jurisdiction and, if such an order or suspension is issued, to obtain the
withdrawal of such order or suspension at the earliest possible moment and to
notify the Investor who holds Registrable Securities being sold of the issuance
of such order and the resolution thereof or its receipt of actual notice of the
initiation or threat of any proceeding for such purpose.
g. The Company shall make available for inspection by the Investor and its
counsel all pertinent financial and other records, and pertinent corporate
documents and properties of the Company (collectively, the "Records"), as shall
be reasonably deemed necessary by the Investor, and cause the Company's
officers, directors and employees to supply all information which Investor may
reasonably request; provided, however, that the Investor and its counsel shall
hold in strict confidence and shall not make any disclosure (except to its legal
and financial advisors) or use of any Record or other information which the
Company determines in good faith to be confidential, and of which determination
the Investor and its counsel are so notified, unless (a) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in any
Registration Statement or is otherwise required under the 1933 Act, (b) the
release of such Records is ordered pursuant to a final, non-appealable subpoena
or order from a court or government body of competent jurisdiction, or (c) the
information in such Records has been made generally available to the public
other than by disclosure in violation of this or any other agreement of which
the Investor and its counsel has knowledge. The Investor agrees that it shall,
upon learning that disclosure of such Records is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, the Records deemed confidential.
h. The Company shall hold in confidence and not make any disclosure of
information concerning the Investor provided to the Company unless (i)
disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any Registration Statement, (iii) the
release of such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that disclosure of
such information concerning the Investor is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
written notice to the Investor and allow the Investor, at the Investor's
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.
i. The Company shall use its best efforts to secure designation and quotation of
all the Registrable Securities covered by any Registration Statement on the
Principal Market. If, despite the Company's best efforts, the Company is
unsuccessful in satisfying the preceding sentence, it shall use its best efforts
to cause all the Registrable Securities covered by any Registration Statement to
be listed on each other national securities exchange and automated quotation
system, if any, on which securities of the same class or series issued by the
Company are then listed, if any, if the listing of such Registrable Securities
is then permitted under the rules of such exchange or system.
j. The Company shall cooperate with the Investor to facilitate the timely
preparation and delivery of certificates (not bearing any restrictive legend)
representing the Registrable Securities to be offered pursuant to a Registration
Statement and enable such certificates to be in such denominations or amounts,
as the case may be, as the Investor may reasonably request and registered in
such names of the Persons who shall acquire such Registrable Securities from the
Investor, as the Investor may request.
k. The Company shall provide a transfer agent for all the Registrable Securities
not later than the effective date of the first Registration Statement filed
pursuant hereto.
l. If requested by the Investor, the Company shall (i) as soon as reasonably
practical incorporate in a prospectus supplement or post-effective amendment
such information as the Investor reasonably determines should be included
therein relating to the sale and distribution of Registrable Securities,
including, without limitation, information with respect to the offering of the
Registrable Securities to be sold in such offering; (ii) make all required
filings of such prospectus supplement or post-effective amendment as soon as
notified of the matters to be incorporated in such prospectus supplement or
post-effective amendment; and (iii) supplement or make amendments to any
Registration Statement if reasonably requested by the Investor.
m. The Company shall use its best efforts to cause the Registrable Securities
covered by the applicable Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
to consummate the disposition of such Registrable Securities.
n. The Company shall make generally available to its security holders as soon as
reasonably practical, but not later than ninety (90) calendar days after the
close of the period covered thereby, an earnings statement (in form complying
with the provisions of Rule 158 under the 1933 Act) covering a twelve-month
period beginning not later than the first day of the Company's fiscal quarter
next following the effective date of any Registration Statement.
o. The Company shall otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC in connection with any registration
hereunder.
p. Within one (1) business day after the Registration Statement which includes
Registrable Securities is declared effective by the SEC, the Company shall
deliver, or shall cause its legal counsel to deliver, to the transfer agent for
such Registrable Securities, with a copy to the Investor, confirmation in the
form attached hereto as Exhibit A, that such Registration Statement has been
declared effective by the SEC.
q. The Company shall take all other reasonable actions necessary to expedite and
facilitate disposition by the Investor of Registrable Securities pursuant to a
Registration Statement.
r. Notwithstanding the foregoing, if at any time or from time to time after the
date of effectiveness of the Registration Statement, the Company notifies the
Investor in writing of the existence of a Potential Material Event ("Blackout
Notice"), Investor shall not offer or sell any Registrable Securities, or engage
in any other transaction involving or relating to the Registrable Securities,
from the time of the giving of notice with respect to a Potential Material Event
until Investor receives written notice from the Company that such Potential
Material Event either has been disclosed to the public or no longer constitutes
a Potential Material Event.
4. OBLIGATIONS OF THE HOLDERS.
a. At least fifteen (15) calendar days prior to the first anticipated filing
date of a Registration Statement the Company shall notify the Investor in
writing of the information the Company requires from the Investor if the
Investor elects to have any of its Registrable Securities included in such
Registration Statement. It shall be a condition precedent to the obligations of
the Company to complete the registration pursuant to this Agreement with respect
to the Registrable Securities of the Investor that the Investor shall furnish in
writing to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall reasonably be required to effect the registration
of such Registrable Securities and shall execute such documents in connection
with such registration as the Company may reasonably request. The Investor
covenants and agrees that, in connection with any resale of Registrable
Securities by it pursuant to a Registration Statement, it shall comply with the
"Plan of Distribution" section of the then-current prospectus relating to such
Registration Statement.
b. The Investor, by its acceptance of the Registrable Securities, agrees to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of any Registration Statement hereunder, unless
the Investor has notified the Company in writing of Investor's election to
exclude all of Investor's Registrable Securities from such Registration
Statement.
c. The Investor agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(f) or the first
sentence of 3(e), the Investor will immediately discontinue disposition of
Registrable Securities pursuant to any Registration Statement(s) covering such
Registrable Securities until the Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(f) or the first
sentence of 3(e).
5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts and commissions,
incurred in connection with registrations, filings or qualifications pursuant to
Sections 2 and 3, including, without limitation, all registration, listing and
qualifications fees, printing and accounting fees, and fees and disbursements of
counsel for the Company shall be paid by the Company.
6. INDEMNIFICATION.
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the fullest extent permitted by law, the Company will, and hereby does,
indemnify, hold harmless and defend the Investor, its directors, officers,
partners, employees, agents, representatives of, and each Person, if any, who
controls, the Investor within the meaning of the 1933 Act or the Securities
Exchange Act of 1934, as amended (the "1934 Act"), (each, an "Indemnified
Person"), against any losses, claims, damages, liabilities, judgments, fines,
penalties, charges, costs, attorneys' fees, amounts paid in settlement or
expenses, joint or several (collectively, "Claims"), incurred in investigating,
preparing or defending any action, claim, suit, inquiry, proceeding,
investigation or appeal taken from the foregoing by or before any court or
governmental, administrative or other regulatory agency, body or the SEC,
whether pending or threatened, whether or not an indemnified party is or may be
a party thereto ("Indemnified Damages"), to which any of them may become subject
insofar as such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact in a Registration
Statement or any post-effective amendment thereto or in any filing made in
connection with the qualification of the offering under the securities or other
"blue sky" laws of any jurisdiction in which Registrable Securities are offered
("Blue Sky Filing"), or the omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which the statements therein were made, not
misleading, (ii) any untrue statement or alleged untrue statement of a material
fact contained in the final prospectus (as amended or supplemented, if the
Company files any amendment thereof or supplement thereto with the SEC) or the
omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading, or (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement (the matters in the foregoing
clauses (i) through (iii) being, collectively, "Violations"). Subject to the
restrictions set forth in Section 6(c) with respect to the number of legal
counsel, the Company shall reimburse the Investor and each such controlling
person, promptly as such expenses are incurred and are due and payable, for any
reasonable legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(a): (i) shall not apply to a Claim arising out of or
based upon a Violation which occurs in reliance upon and in conformity with
information furnished in writing to the Company by any Indemnified Person
expressly for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto, if such
prospectus were timely made available by the Company pursuant to Section 3(c);
(ii) shall not be available to the extent such Claim is based on (a) a failure
of the Investor to deliver or to cause to be delivered the prospectus made
available by the Company or (b) the Indemnified Person's use of an incorrect
prospectus despite being promptly advised in advance by the Company in writing
not to use such incorrect prospectus; and (iii) shall not apply to amounts paid
in settlement of any Claim if such settlement is effected without the prior
written consent of the Company, which consent shall not be unreasonably
withheld. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person.
b. In connection with any Registration Statement in which the Investor is
participating, the Investor agrees to indemnify, hold harmless and defend, to
the same extent and in the same manner as is set forth in Section 6(a), the
Company, each of its directors, each of its officers who signs the Registration
Statement, each Person, if any, who controls the Company within the meaning of
the 1933 Act or the 1934 Act (collectively and together with an Indemnified
Person, an "Indemnified Party"), against any Claim or Indemnified Damages to
which any of them may become subject, under the 1933 Act, the 1934 Act or
otherwise, insofar as such Claim or Indemnified Damages arise out of or are
based upon any Violation, in each case to the extent, and only to the extent,
that such Violation occurs in reliance upon and in conformity with written
information furnished to the Company by the Investor expressly for use in
connection with such Registration Statement; and, subject to Section 6(c), the
Investor will reimburse any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such Claim; provided, however,
that the indemnity agreement contained in this Section 6(b) and the agreement
with respect to contribution contained in Section 7 shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the prior
written consent of the Investor, which consent shall not be unreasonably
withheld; provided, further, however, that the Investor shall be liable under
this Section 6(b) for only that amount of a Claim or Indemnified Damages as does
not exceed the net proceeds to the Investor as a result of the sale of
Registrable Securities pursuant to such Registration Statement. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such Indemnified Party and shall survive the resale of the
Registrable Securities by the Investor. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section 6(b)
with respect to any preliminary prospectus shall not inure to the benefit of any
Indemnified Party if the untrue statement or omission of material fact contained
in the preliminary prospectus were corrected on a timely basis in the
prospectus, as then amended or supplemented.
c. Promptly after receipt by an Indemnified Person or Indemnified Party under
this Section 6 of notice of the commencement of any action or proceeding
(including any governmental action or proceeding) involving a Claim, such
Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is
to be made against any indemnifying party under this Section 6, deliver to the
indemnifying party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses to be paid by the indemnifying party, if, in
the reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any
other party represented by such counsel in such proceeding. The indemnifying
party shall pay for only one separate legal counsel for the Indemnified Persons
or the Indemnified Parties, as applicable, and such counsel shall be selected by
Investor holding a majority-in-interest of the Registrable Securities included
in the Registration Statement to which the Claim relates, if the Investor are
entitled to indemnification hereunder, or the Company, if the Company is
entitled to indemnification hereunder, as applicable. The Indemnified Party or
Indemnified Person shall cooperate fully with the indemnifying party in
connection with any negotiation or defense of any such action or claim by the
indemnifying party and shall furnish to the indemnifying party all information
reasonably available to the Indemnified Party or Indemnified Person which
relates to such action or claim. The indemnifying party shall keep the
Indemnified Party or Indemnified Person fully appraised at all times as to the
status of the defense or any settlement negotiations with respect thereto. No
indemnifying party shall be liable for any settlement of any action, claim or
proceeding effected without its written consent, provided, however, that the
indemnifying party shall not unreasonably withhold, delay or condition its
consent. No indemnifying party shall, without the consent of the Indemnified
Party or Indemnified Person, consent to entry of any judgment or enter into any
settlement or other compromise which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party or
Indemnified Person of a release from all liability in respect to such Claim.
Following indemnification as provided for hereunder, the indemnifying party
shall be surrogated to all rights of the Indemnified Party or Indemnified Person
with respect to all third parties, firms or corporations relating to the matter
for which indemnification has been made. The failure to deliver written notice
to the indemnifying party within a reasonable time of the commencement of any
such action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is prejudiced in its ability to defend such
action.
d. The indemnification required by this Section 6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or Indemnified Damages are incurred.
e. The indemnity agreements contained herein shall be in addition to (i) any
cause of action or similar right of the Indemnified Party or Indemnified Person
against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Section
6 to the fullest extent permitted by law; provided, however, that: (i) no
contribution shall be made under circumstances where the maker would not have
been liable for indemnification under the fault standards set forth in Section
6; (ii) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any seller of Registrable Securities who was not
guilty of fraudulent misrepresentation; and (iii) contribution by any seller of
Registrable Securities shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Registrable Securities.
8. REPORTS UNDER THE 1934 ACT.
With a view to making available to the Investor the benefits of Rule 144
promulgated under the 1933 Act or any other similar rule or regulation of the
SEC that may at any time permit the Investor to sell securities of the Company
to the public without registration ("Rule 144"), the Company agrees to:
a. make and keep public information available, as those terms are understood and
defined in Rule 144;
b. file with the SEC in a timely manner all reports and other documents required
of the Company under the 1933 Act and the 1934 Act so long as the Company
remains subject to such requirements (it being understood that nothing herein
shall limit the Company's obligations under Section 4(c) of the Subscription
Agreement) and the filing of such reports and other documents is required for
the applicable provisions of Rule 144; and
c. furnish to the Investor promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
1933 Act and the 1934 Act, (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably requested to
permit the Investor to sell such securities pursuant to Rule 144 without
registration.
9. ASSIGNMENT.
This Agreement shall inure to the benefit of and be binding upon the
successors and permitted assigns of each of the parties hereto. The Company may
not assign its rights or obligations hereunder without the prior written consent
of the Investor. The Investor may assign its rights hereunder without any prior
written consent to any transferee that acquires Registrable Securities from the
Investor.
10. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance thereof may
be waived (either generally or in a particular instance and either retroactively
or prospectively), only with the written consent of the Company and Investor.
Any amendment or waiver effected in accordance with this Section 10 shall be
binding upon the Investor and the Company.
11. MISCELLANEOUS.
a. If the Company receives conflicting instructions, notices or elections from
two or more Persons with respect to the same Registrable Securities, the Company
shall act upon the basis of instructions, notice or election received from the
registered owner of such Registrable Securities.
b. Any notices, consents, waivers or other communications required or permitted
to be given under the terms of this Agreement must be in writing and will be
deemed to have been delivered (i) upon receipt, when delivered personally; (ii)
upon receipt, when sent by facsimile (provided a confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one (1) day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to receive the
same. The addresses and facsimile numbers for such communications shall be:
If to the Company:
eAutoclaims.com, Inc.
110 East Douglas Road
Oldsmar, Florida 34677
Attention: Eric Seidel, President and CEO
Telephone: 813-749-1020
Facsimile: 813-749-1040
With a copy to:
Michael T. Cronin, Esq.
Johnson, Pope, Bokor, Ruppel & Burns, LLP
911 Chestnut Street
Clearwater, Florida 33756
Telephone: 727-461-1818
Facsimile: 727-441-8617
If to the Investor:
Stephen Clearman
Kinderhook Partners
One Executive Dr. Suite 160
Port Lee, NJ 07024
Telephone: 201-461-9292
Facsimile: 201-461-7793
Each party shall provide five (5) days' prior written notice to the other
party of any change in address or facsimile number.
c. Failure of any party to exercise any right or remedy under this Agreement or
otherwise, or delay by a party in exercising such right or remedy, shall not
operate as a waiver thereof.
d. The laws of the State of Florida shall govern all issues concerning the
relative rights of the Company and its stockholders. All other questions shall
be governed by and interpreted in accordance with the laws of the State of
Florida without regard to the principles of conflict of laws. Each party hereby
irrevocably submits to the non-exclusive jurisdiction of the state and federal
courts sitting in the City of Clearwater, Florida, for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein, and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or
proceeding is brought in an inconvenient forum or that the venue of such suit,
action or proceeding is improper. Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.
e. This Agreement, the Subscription Agreement and the Confidential Private
Offering Term Sheet (the "Transaction Documents") constitute the entire
agreement among the parties hereto with respect to the subject matter hereof and
thereof. There are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein and therein. The Transaction
Documents supersede all prior agreements and understandings among the parties
hereto with respect to the subject matter hereof and thereof.
f. This Agreement shall inure to the benefit of and be binding upon each of the
parties hereto.
g. The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof.
h. This Agreement may be executed in two or more identical counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement. This Agreement, once executed by a party, may be delivered to
the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
i. Each party shall do and perform, or cause to be done and performed, all such
further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.
j. All consents and other determinations to be made by the Investor pursuant to
this Agreement shall be made, unless otherwise specified in this Agreement, by
Investor holding a majority of the Registrable Securities.
k. The language used in this Agreement will be deemed to be the language chosen
by the parties to express their mutual intent and no rules of strict
construction will be applied against any party.
[Signatures appear on the next page]
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of the day and year first above written.
COMPANY: EAUTOCLAIMS.COM, INC.
By: ____________________________________
Name: Eric Seidel
itle: President and CEO
INVESTOR:
By: ____________________________________
Name:
Title:
EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS OF REGISTRATION STATEMENT
Date: __________
Re: eAutoclaims.com, Inc.
Ladies and Gentlemen:
We are counsel to eAutoclaims.com, Inc., a Nevada corporation (the
"Company"), and have represented the Company in connection with that certain
Subscription Agreement (the "Subscription Agreement") entered into by and among
the Company and _________________________ (the "Investor") pursuant to which the
Company has agreed to issue to the Investor shares of the Company's common
stock, $.001 par value per share (the "Common Stock") on the terms and
conditions set forth in the Subscription Agreement. Pursuant to the Subscription
Agreement, the Company also has entered into a Registration Rights Agreement
with the Investor (the "Registration Rights Agreement") pursuant to which the
Company agreed, among other things, to register the Registrable Securities (as
defined in the Registration Rights Agreement), including the shares of Common
Stock issued or issuable under the Subscription Agreement and upon exercise of
the Warrant issued or issuable pursuant to the Subscription Agreement, under the
Securities Act of 1933, as amended (the "1933 Act"). In connection with the
Company's obligations under the Registration Rights Agreement, on ____________
___, 2004, the Company filed a Registration Statement on Form S- ___ (File No.
333-________) (the "Registration Statement") with the Securities and Exchange
Commission (the "SEC") relating to the Registrable Securities which names the
Investor as a selling shareholder thereunder.
In connection with the foregoing, we advise you that a member of the SEC's
staff has advised us by telephone that the SEC has entered an order declaring
the Registration Statement effective under the 1933 Act at [enter the time of
effectiveness] on [enter the date of effectiveness] and to the best of our
knowledge, after telephonic inquiry of a member of the SEC's staff, no stop
order suspending its effectiveness has been issued and no proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.
Very truly yours,
21702.0001 #493624