Void after 5:00 p.m., New York Time on ______ ___, 200__
Warrant to Purchase _________ Shares of Common Stock
---------------------------------
WARRANT TO PURCHASE COMMON STOCK
OF
eAUTOCLAIMS, 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, Inc., a Nevada corporation (the
"Company"), grants the following rights to _____________________ ("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 $.30 per Share, subject
to the anti-dilution provisions of Section 2.5.
(f) "Expiration Date" shall mean 5:00 p.m. (New York time) on __________,
200__.
1
(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 ____________________________________________ (______________) 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
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. Subject to the provisions and exclusions set forth
herein, the Warrant is subject to "full ratchet" anti-dilution protection
relating to the issuance of any future equity securities or common stock
equivalents that are not currently outstanding, which contain a purchase,
conversion or exercise price below the Warrant exercise price of $.30 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. Notwithstanding the foregoing, it
is understood that the conversion of currently outstanding Series A Preferred
Stock and currently outstanding convertible notes are excluded from the
definition of a Dilutive Issuance. The issuance of equity securities pursuant to
employee/consultant/director equity compensation arrangements shall apply to
2
this anti-dilution provision only if they are issued below the common stock
current market value at the time of issuance and the issuance has not been
approved by the Placement Agent, which approval shall not be unreasonably
withheld.
(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
3
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
shall to issue the Warrants and the Underlying Shares pursuant to Rule 506 of
Regulation D promulgated under the Securities Act.
(e) The Company shall enter into a registration rights agreement with
respect to the underlying shares.
ARTICLE 4. REDEMPTION OF WARRANTS
4. Redemption of Warrants. The Warrants are not redeemable for one (1) year
from the Closing. Thereafter, as along as the underlying shares are covered by
an effective registration statement 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 XXX.XX 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
4
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.
5
Dated: eAUTOCLAIMS, INC.
Attest: ____________________ By:
____________________________________________
Name: Xxxx Xxxxxx
Title: President
HOLDER:
(Individual) _______________________________________________
Print Name:____________________________________
(Entity) By: __________________________________________
Print Name:___________________________________
Title:________________________________________
MTC/as/317473
6
APPENDIX 1
NOTICE OF EXERCISE
1. The undersigned hereby elects to purchase __________ shares of the
Common Stock of eAutoclaims, 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)
MTC/as/317473
21702.0001 #487639
7
