Exhibit 10.2
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("1933
ACT") OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
CLASS B WARRANT TO PURCHASE SHARES
OF THE STOCK OF
TOMBSTONE CARDS, INC.
(VOID AFTER EXPIRATION DATE - _________________)
Issue Date: ________, 2006
This certifies that _______ or his successors or assigns ("HOLDER")
shall be entitled to purchase from TOMBSTONE CARDS, INC., a Colorado corporation
("COMPANY"), having its principal place of business at ________________________,
_______ fully paid and non-assessable shares of the Company's common stock,
("COMMON STOCK"), at a price per share equal to the Exercise Price (as defined
below).
This Class B Warrant is being issued in connection with an offering
("OFFERING") of units consisting of Series A Convertible Preferred Stock
Convertible into Common Stock and Class A and Class B Warrants to purchase
Common Stock(the "Units"). The Offering is being made only to Investors who
qualify as "accredited investors" as such term is defined in Rule 501 of
Regulation D under the Securities Act of 1933, as amended (the "SECURITIES
Act"). Capitalized terms used herein and not otherwise defined shall have the
respective meanings set forth in the Purchase Agreement.
The initial exercise price (the "EXERCISE PRICE") of this Class B
Warrant will be equal to $5.00 per share, subject to adjustment upon the
occurrence of the events described in Section 2 of this Class B Warrant.
This Class B Warrant shall be exercisable into shares of Common Stock
at any time, or from time-to-time, up to and including 5:00 p.m. (New York time)
on _________________ ("EXPIRATION DATE"), provided, however, if such date is not
a Business Day, then on the Business Day immediately following such date). The
Expiration Date shall be modified to equal 120 days from the Effective Date of
the Registration Statement in the event such date is prior to the Expiration
Date. This Class B Warrant is exercisable in whole or in part upon the surrender
to the Company at its principal place of business (or at such other location as
the Company may advise the Holder in writing) of this Class B Warrant properly
endorsed with a form of subscription in substantially the form attached hereto
duly filled in and signed and, if applicable, upon payment in cash or by check
of the aggregate Exercise Price for the number of shares for which this Class B
Warrant is being exercised as determined in accordance with the provisions
hereof.
1. Exercise; Issuance of Certificates; Payment for Shares.
1.1 GENERAL. This Class B Warrant is exercisable in full, or in part
for 10,000 or more shares, in increments of 10,000 shares, except
for the final exercise which may be for the remainder, at the
option of the Holder of record at any time or from time, to time,
up to the Expiration Date for all of the shares of Common Stock
(but not for a fraction of a share) which may be purchased
hereunder. In the case of the exercise of less than all of the
Class B Warrants represented hereby, the Company shall cancel
this Class B Warrant Certificate upon the surrender hereof and
shall execute and deliver a new Class B Warrant Certificate or
Class B Warrant Certificates of like tenor for the balance of
such Class B Warrants. The Company agrees that the shares of
Common Stock purchased under this Class B Warrant shall be and
are deemed to be issued to the Holder hereof as the record owner
of such shares as of the close of business on the date on which
the exercise notice (attached hereto as Schedule A or B) is
delivered to the Company via facsimile; provided, however, that
in such case this Class B Warrant shall be surrendered to the
Company within three (3) business days. Certificates for the
shares of Common Stock so purchased, together with any other
securities or property to which the Holder is entitled upon such
exercise, shall be delivered to the Holder by the Company at the
Company's expense within a reasonable time after the rights
represented by this Class B Warrant have been so exercised, and
in any event, within three business days of such exercise and
delivery of the Exercise Price. The Company shall, no later than
the close of business on the first business day following the
date on which the Company receives the exercise notice by
facsimile transmission issue and deliver to the Company's
Transfer Agent irrevocable instructions to issue and deliver or
cause to be delivered to such Holder the number of Warrant Shares
exercised within two business days thereafter by either express
mail or hand delivery. Each Common Stock certificate so delivered
shall be in such denominations of 10,000 or more shares of Common
Stock, in increments of 10,000, as may be requested by the Holder
hereof and shall be registered on the Company's books in the name
designated by such Xxxxxx, provided that no Holder of this Class
B Warrant shall be permitted to exercise any warrants to the
extent that such exercise would cause any Holder to be the
beneficial owner of more than 4.999% of the then outstanding
Company's Common Stock, at that given time (as determined in
accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended, and the rules thereunder) . This limitation
shall not be deemed to prevent any Holder from acquiring more
than an aggregate of 4.999% of the Common Stock, so long as such
Holder does not beneficially own, or have the right to
beneficially more than 4.999% of the Company's Common Stock at
any given time. The limitations contained herein shall cease to
apply upon sixty-one (61) days prior written notice from the
Holder to the Company.
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1.2 EXERCISE FOR CASH
This Class B Warrant may be exercised, in whole at any time or in
part from time to time, commencing on the date hereof and prior
to 5:00 P.M., New York time, on _________________, by the Holder
by the facsimile delivery of the exercise notice, as attached
hereto, on the date of the exercise and by surrender of this
Class B Warrant within three (3) business days from the exercise
day at the address set forth hereof, together with proper payment
of the aggregate Exercise Price payable hereunder for the Class B
Warrant Shares ("AGGREGATE WARRANT PRICE"), or the proportionate
part thereof if this Class B Warrant is exercised in part.
Payment for the Class B Warrant Shares shall be made by wire, or
check payable to the order of the Company. If this Class B
Warrant is exercised in part, this Class B Warrant must be
exercised for a number of whole shares of the Common Stock, and
the Holder is entitled to receive a new Class B Warrant covering
the Class B Warrant Shares which have not been exercised and
setting forth the proportionate part of the Aggregate Warrant
Price applicable to such Class B Warrant Shares. Upon such
surrender of this Class B Warrant the Company will (a) issue a
certificate or certificates in the name of the Holder for the
largest number of whole shares of the Common Stock to which the
Holder shall be entitled and (b) deliver the other securities and
properties receivable upon the exercise of this Class B Warrant,
or the proportionate part thereof if this Class B Warrant is
exercised in part, pursuant to the provisions of this Class B
Warrant.
1.3 SHARES TO BE FULLY PAID; RESERVATION OF SHARES. The Company
covenants and agrees that all shares of Common Stock which may be
issued upon the exercise of the rights represented by this Class
B Warrant will, upon issuance, be duly authorized, validly
issued, fully paid and nonassessable and free from all preemptive
rights of any shareholder and free of all taxes, liens and
charges with respect to the issue thereof. The Company further
covenants and agrees that, during the period within which the
rights represented by this Class B Warrant may be exercised, the
Company will at all times have authorized and reserved, for the
purpose of issue or transfer upon exercise of the subscription
rights evidenced by this Class B Warrant, a sufficient number of
shares of authorized but unissued Common Stock, when and as
required to provide for the exercise of the rights represented by
this Class B Warrant. The Company will take all such action as
may be necessary to assure that such shares of Common Stock may
be issued as provided herein without violation of any applicable
law or regulation, or of any requirements of any domestic
securities exchange upon which the Common Stock or other
securities may be listed; provided, however, that the Company
shall not be required to effect a registration under federal or
state securities laws with respect to such exercise other than as
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required by the Registration Rights Agreement. The Company will
not take any action which would result in any adjustment of the
Exercise Price if the total number of shares of Common Stock
issuable after such action upon exercise of all outstanding
warrants, together with all shares of Common Stock then
outstanding and all shares of Common Stock then issuable upon
exercise of all options and upon the conversion of all
convertible securities then outstanding, would exceed the total
number of shares of Common Stock or Equity Securities then
authorized by the Company's Articles of Incorporation ("COMPANY
CHARTER").
1.4 BUY-IN. In addition to any other rights available to a Holder, if
the Company fails to deliver to the Holder a certificate
representing Warrant Shares by the third Trading Day after the
date on which delivery of such certificate is required by this
Warrant, and if after such third Trading Day the Holder purchases
(in an open market transaction or otherwise) shares of Common
Stock to deliver in satisfaction of a sale by the Holder on or
after the Exercise Date of the Warrant Shares that the Holder
anticipated receiving from the Company (a "BUY-IN"), then the
Company shall, within three Trading Days after the Holder's
request and in the Holder's discretion, either (i) pay cash to
the Holder in an amount equal to the Holder's total purchase
price (including brokerage commissions, if any) for the shares of
Common Stock so purchased (the "BUY-IN PRICE"), at which point
the Company's obligation to deliver such certificate (and to
issue such Common Stock) shall terminate, or (ii) promptly honor
its obligation to deliver to the Holder a certificate or
certificates representing such Common Stock and pay cash to the
Holder in an amount equal to the excess (if any) of the Buy-In
Price over the product of (A) such number of shares of Common
Stock, times (B) the Closing Price on the date of the event
giving rise to the Company's obligation to deliver such
certificate. Notwithstanding the foregoing, the Company shall
have no liability under this subsection for the Buy-In Price if
it has compiled with the requirements of subsection 1.1 above and
notwithstanding it using its best efforts to have its transfer
agent deliver the Warrant Shares to the Holders within three
trading days of the Holder's request such Warrant Shares are not
delivered on a timely basis.
2. DETERMINATION OR ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. The
Exercise Price and the number of shares purchasable upon the exercise of this
Class B Warrant shall be subject to adjustment from time to time upon the
occurrence of certain events described in this Section 2. Upon each adjustment
of the Exercise Price, the Holder of this Class B Warrant shall thereafter be
entitled to purchase, at the Exercise Price resulting from such adjustment, the
number of shares obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment, and dividing the product
thereof by the Exercise Price resulting from such adjustment.
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2.1 SUBDIVISION OR COMBINATION OF COMMON STOCK. In case the Company
shall at any time subdivide or reclassify its outstanding shares
of Common Stock into a greater number of shares, the Exercise
Price in effect immediately prior to such subdivision shall be
proportionately reduced, and conversely, in case the outstanding
shares of Common Stock of the Company shall be combined or
reclassified into a smaller number of shares, the Exercise Price
in effect immediately prior to such combination shall be
proportionately increased.
2.2 DIVIDENDS IN COMMON STOCK, OTHER STOCK, PROPERTY,
RECLASSIFICATION. If at any time or from time to time the holders
of Common Stock (or any shares of stock or other securities at
the time receivable upon the exercise of this Class B Warrant)
shall have received or become entitled to receive, without
payment therefore:
2.2.1Stock, Common Stock or any shares of capital stock or other
securities which are at any time directly or indirectly
convertible into or exchangeable for Common Stock, or any
rights or options to subscribe for, purchase or otherwise
acquire any of the foregoing by way of dividend or other
distribution,
2.2.2Any cash paid or payable otherwise than as a cash dividend,
or
2.2.3Stock, Common Stock or additional capital stock or other
securities or property (including cash) by way of spinoff,
split-up, reclassification, combination of shares or similar
corporate rearrangement, (other than shares of Common Stock
issued as a stock split or adjustments in respect of which
shall be covered by the terms of Section 2.1 above), then
and in each such case, the Holder hereof shall, upon the
exercise of this Class B Warrant, be entitled to receive, in
addition to the number of shares of Common Stock or other
capital stock receivable thereupon, and without payment of
any additional consideration therefor, the amount of stock
and other securities and property (including cash in the
cases referred to in clause (2.2.2) above and this clause
(2.2.3)) which such Holder would hold on the date of such
exercise had he been the holder of record of such Common
Stock as of the date on which holders of Common Stock
received or became entitled to receive such shares or all
other additional stock and other securities and property.
2.3 REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE.
2.3.1If any recapitalization, reclassification or reorganization
of the capital stock of the Company, or any consolidation or
merger of the Company with another corporation, or the sale
of all or substantially all of its assets or other
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transaction shall be effected in such a way that holders of
Common Stock shall be entitled to receive stock, securities,
or other assets or property (an "ORGANIC CHANGE"), then, as
a condition of such Organic Change, lawful and adequate
provisions shall be made by the Company whereby the Holder
hereof shall thereafter have the right, upon exercise of
this Class B Warrant, to purchase and receive (in lieu of
the shares of the Common Stock of the Company immediately
theretofore purchasable and receivable upon the exercise of
the rights represented by this Class B Warrant) such shares
of stock, securities or other assets or property as may be
issued or payable with respect to or in exchange for a
number of outstanding shares of such Common Stock equal to
the number of shares of such stock immediately theretofore
purchasable and receivable upon the exercise of the rights
represented by this Class B Warrant. In the event of any
Organic Change, appropriate provision shall be made by the
Company with respect to the rights and interests of the
Holder of this Class B Warrant to the end that the
provisions hereof (including, without limitation, provisions
for adjustments of the Exercise Price and of the number of
shares purchasable and receivable upon the exercise of this
Class B Warrant) shall thereafter be applicable, in relation
to any shares of stock, securities or assets thereafter
deliverable upon the exercise hereof. The Company will not
effect any such consolidation, merger or sale unless, prior
to the consummation thereof, the successor corporation (if
other than the Company) resulting from such consolidation or
the corporation purchasing such assets shall assume by
written instrument executed and mailed or delivered to the
Holder hereof at the last address of such Holder appearing
on the books of the Company, the obligation to deliver to
such Holder, upon Xxxxxx's exercise of this Class B Warrant
and payment of the purchase price in accordance with the
terms hereof, such shares of stock, securities or assets as,
in accordance with the foregoing provisions, such Holder may
be entitled to purchase.
2.3.2No adjustment of the Exercise Price, however, shall be made
in an amount less than $.01 per Share, but any such lesser
adjustment shall be carried forward and shall be made at the
time and together with the next subsequent adjustment which
together with any adjustments so carried forward shall
amount to $.01 per Share or more.
6
2.4 CERTAIN EVENTS. If any change in the outstanding Common Stock of the Company
or any other event occurs as to which the other provisions of this Section 2 are
not strictly applicable or if strictly applicable would not fairly protect the
purchase rights of the Holder of the Class B Warrant in accordance with such
provisions, then the Board of Directors of the Company shall make an adjustment
in the number and class of shares available under the Class B Warrant, the
Exercise Price or the application of such provisions, so as to protect such
purchase rights as aforesaid. The adjustment shall be such as will give the
Holder of the Class B Warrant upon exercise for the same aggregate Exercise
Price the total number, and kind of shares as he would have owned had the Class
B Warrant been exercised prior to the event and had he continued to hold such
shares until after the event requiring adjustment.
2.5 NOTICES OF CHANGE.
2.5.1Upon any determination or adjustment in the number or class
of shares subject to this Class B Warrant and of the
Exercise Price, the Company shall give written notice
thereof to the Holder, setting forth in reasonable detail
and certifying the calculation of such determination or
adjustment.
2.5.2The Company shall give written notice to the Holder at
least 20 business days prior to the date on which the
Company closes its books or takes a record for determining
rights to receive any dividends or distributions.
2.5.3The Company shall also give written notice to the Holder at
least 20 days prior to the date on which an Organic Change
shall take place.
3. ISSUE TAX. The issuance of certificates for shares of Common Stock upon the
exercise of the Class B Warrant shall be made without charge to the Holder of
the Class B Warrant for any issue tax (other than any applicable income taxes)
in respect thereof; provided, however, that the Company shall not be required to
pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of any certificate in a name other than that of the then
Holder of the Class B Warrant being exercised.
4. CLOSING OF BOOKS. The Company will at no time close its transfer books
against the transfer of any warrant or of any shares of stock issued or issuable
upon the exercise of any warrant in any manner which interferes with the timely
exercise of this Class B Warrant.
5. NO VOTING OR DIVIDEND RIGHTS; LIMITATION OF LIABILITY. Nothing contained in
this Class B Warrant shall be construed as conferring upon the Holder hereof the
right to vote as a shareholder of the Company. No dividends or interest shall be
payable or accrued in respect of this Class B Warrant, the interest represented
hereby, or the shares purchasable hereunder until, and only to the extent that,
7
this Class B Warrant shall have been exercised, subject to the Holder's rights
under Section 2 of this Class B Warrant. The Holder of this Class B Warrant
shall receive all notices as if a shareholder of the Company. No provisions
hereof, in the absence of affirmative action by the Holder to purchase shares of
Common Stock, and no mere enumeration herein of the rights or privileges of the
Holder hereof, shall give rise to any liability of such Holder for the Exercise
Price or as a shareholder of the Company, whether such liability is asserted by
the Company or by its creditors.
6. RIGHTS AND OBLIGATIONS SURVIVE EXERCISE OF WARRANT. The rights and
obligations of the Company, of the Holder of this Class B Warrant and of the
holder of shares of Common Stock issued upon exercise of this Class B Warrant,
shall survive the exercise of this Class B Warrant.
7. FURTHER REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
7.1 ARTICLES AND BYLAWS. The Company has made available to Holder true,
complete and correct copies of the Company Charter and Bylaws, as
amended, through the date hereof.
7.2 DUE AUTHORITY. The execution and delivery by the Company of this Class
B Warrant and the performance of all obligations of the Company
hereunder, including the issuance to Holder of the right to acquire
the shares of Common Stock, have been duly authorized by all necessary
corporate action on the part of the Company, and the Class B Warrant
is not inconsistent with the Company Charter or Bylaws and constitutes
a legal, valid and binding agreement of the Company, enforceable in
accordance with its terms.
7.3 CONSENTS AND APPROVALS. No consent or approval of, giving of notice
to, registration with, or taking of any other action in respect of any
state, federal or other governmental authority or agency is required
with respect to the execution, delivery and performance by the Company
of its obligations under this Class B Warrant, except for any filing
required by applicable federal and state securities laws, which filing
will be effective by the time required thereby.
7.4 ISSUED SECURITIES. All issued and outstanding shares of capital stock
of the Company have been duly authorized and validly issued and are
fully paid and nonassessable. All outstanding shares of capital stock
were issued in full compliance with all federal and state securities
laws.
7.5 EXEMPT TRANSACTION. Subject to the accuracy of the Holders
representations in Section 8 hereof, the issuance of the Common Stock
upon exercise of this Class B Warrant will constitute a transaction
exempt from (i) the registration requirements of Section 5 of the
Securities Act of 1933, as amended ("1933 ACT"), in reliance upon
8
Section 4(2) thereof, or upon the applicable exemption under
Regulation D, and (ii) the qualification requirements of the
applicable state securities laws.
7.6 COMPLIANCE WITH RULE 144. At the written request of the Holder, who
proposes to sell Common Stock issuable upon the exercise of the Class
B Warrant in compliance with Rule 144 promulgated by the Securities
and Exchange Commission, the Company shall furnish to the Holder,
within five (5) days after receipt of such request, a written
statement confirming the Company's compliance with the filing
requirements of the Securities and Exchange Commission as set forth in
such Rule, as such Rule may be amended from time to time.
7.7 REGISTRATION. The shares of Common Stock underlying this Class B
Warrant are subject to a Registration Rights Agreement dated as of the
date hereof between the Company and the Holder, the terms of which are
incorporated by reference herein.
8. REPRESENTATIONS AND COVENANTS OF THE HOLDER.
8.1 This Class B Warrant has been entered into by the Company in reliance
upon the following representations and covenants of the Holder:
8.1.1INVESTMENT PURPOSE. The Class B Warrant or the Common Stock
issuable upon exercise of the Class B Warrant will be acquired
for investment and not with a view to the sale or distribution of
any part thereof, and the Holder has no present intention of
selling or engaging in any public distribution of the same except
pursuant to a registration or exemption.
8.1.2PRIVATE ISSUE. a) The Holder understands (i) that the Class B
Warrant and the Common Stock issuable upon exercise of this Class
B Warrant are not registered under the 1933 Act or qualified
under applicable state securities laws on the ground that the
issuance contemplated by this Class B Warrant will be exempt from
the registration and qualifications requirements thereof, and
(ii) that the Company's reliance on such exemption is predicated
on the representations set forth in this Section 8.
b) The Company will file a Registration Statement covering the
shares underlying the warrants at or before exercise date.
8.1.3DISPOSITION OF HOLDERS RIGHTS. In no event will the Holder make
a disposition of the Class B Warrant or the Common Stock issuable
upon exercise of the Class B Warrant unless and until (i) it
shall have notified the Company of the proposed disposition, and
(ii) if requested by the Company, it shall have furnished the
Company with an opinion of counsel (which counsel may either be
inside or outside counsel to the Holder) satisfactory to the
9
Company and its counsel to the effect that (A) appropriate action
necessary for compliance with the 1933 Act has been taken, or (B)
an exemption from the registration requirements of the 1933 Act
is available. Notwithstanding the foregoing, the restrictions
imposed upon the transferability of any of its rights to acquire
Common Stock issuable on the exercise of such rights do not apply
to transfers from the beneficial owner of any of the
aforementioned securities to its nominee or from such nominee to
its beneficial owner, and shall terminate as to any particular
share of stock when (1) such security shall have been effectively
registered under the 1933 Act and sold by the Holder thereof in
accordance with such registration or (2) such security shall have
been sold without registration in compliance with Rule 144 under
the 1933 Act, or (3) a letter shall have been issued to the
Holder at its request by the staff of the Securities and Exchange
Commission or a ruling shall have been issued to the Holder at
its request by such Commission stating that no action shall be
recommended by such staff or taken by such Commission, as the
case may be, if such security is transferred without registration
under the 1933 Act in accordance with the conditions set forth in
such letter or ruling and such letter or ruling specifies that no
subsequent restrictions on transfer are required. Whenever the
restrictions imposed hereunder shall terminate, as hereinabove
provided, the Holder or holder of a share of stock then
outstanding as to which such restrictions have terminated shall
be entitled to receive from the Company, without expense to such
Holder, one or more new certificates for the Class B Warrant or
for such shares of stock not bearing any restrictive legend.
8.1.4FINANCIAL RISK. The Holder has such knowledge and experience in
financial and business matters as to be capable of evaluating the
merits and risks of its investment, and has the ability to bear
the economic risks of its investment.
8.1.5RISK OF NO REGISTRATION. The Holder understands that if the
Company does not file reports pursuant to Section 15(d) and/or
Section 12(g), of the Securities Exchange Act of 1934 ("1934
ACT"), or if a registration statement covering the securities
under the 1933 Act is not in effect when it desires to sell (i)
the Class B Warrant, or (ii) the Common Stock issuable upon
exercise of the Class B Warrant, it may be required to hold such
securities for an indefinite period. The Holder also understands
that any sale of the Class B Warrant or the Common Stock issuable
upon exercise of the Class B Warrant which might be made by it in
reliance upon Rule 144 under the 1933 Act may be made only in
accordance with the terms and conditions of that Rule.
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8.1.6ACCREDITED INVESTOR. The Holder is an "accredited investor"
within the meaning of Regulation D promulgated under the 1933
Act.
9. MODIFICATION AND WAIVER. This Class B Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by (a) the party against which enforcement of the same is sought or (b)
the Company and the holders of at least a majority of the number of shares into
which the Class B Warrants are exercisable (without regard to any limitation
contained herein on such exercise), it being understood that upon the
satisfaction of the conditions described in (a) and (b) above, each Class B
Warrant (including any Class B Warrant held by the Holder who did not execute
the agreement specified in (b) above) shall be deemed to incorporate any
amendment, modification, change or waiver effected thereby as of the effective
date thereof. Notwithstanding the foregoing, no modification to this Section 9
will be effective against any Holder without his consent.
10. TRANSFER OF THIS CLASS B WARRANT. The Holder may sell, transfer, assign,
pledge or otherwise dispose of this Class B Warrant, in whole or in part, as
long as such sale or other disposition is made pursuant to an effective
registration statement or an exemption from the registration requirements of the
Securities Act. Upon such transfer or other disposition (other than a pledge),
the Holder shall deliver this Warrant to the Company together with a written
notice to the Company, substantially in the form of the Transfer Notice attached
hereto as Exhibit B (the "TRANSFER NOTICE"), indicating the person or persons to
whom this Class B Warrant shall be transferred and, if less than all of this
Class B Warrant is transferred, the number of Warrant Shares to be covered by
the part of this Class B Warrant to be transferred to each such person. Within
three (3) Business Days of receiving a Transfer Notice and the original of this
Class B Warrant, the Company shall deliver to the each transferee designated by
the Holder a Class B Warrant(s) of like tenor and terms for the appropriate
number of Warrant Shares and, if less than all this Class B Warrant is
transferred, shall deliver to the Holder a Class B Warrant for the remaining
number of Warrant Shares.
11. NOTICES. Any notice required or permitted hereunder shall be given in
writing (unless otherwise specified herein) and shall be deemed effectively
given upon (i) personal delivery, against written receipt thereof, (ii) delivery
via facsimile or e-mail as set forth below (iii) two business days after deposit
with Federal Express or another nationally recognized overnight courier service,
or (iv) five business days after being forwarded, postage paid, via certified or
registered mail, return receipt requested, addressed to each of the other
parties thereunto entitled at the following addresses, or at such other
addresses as a party may designate by ten days advance written notice.
12. BINDING EFFECT ON SUCCESSORS; BENEFIT. As provided in Section 2.3 above,
this Class B Warrant shall be binding upon any corporation succeeding the
Company by merger, consolidation or acquisition of all or substantially all of
the Company's assets. All of the obligations of the Company relating to the
Common Stock issuable upon the exercise of this Class B Warrant shall survive
the exercise and termination of this Class B Warrant. All of the covenants and
agreements of the Company shall inure to the benefit of the successors and
11
assigns of the Holder hereof. This Series A Warrant shall be for the sole and
exclusive benefit of the Holder and nothing in this Series A Warrant shall be
construed to confer upon any person other than the Holder any legal or equitable
right, remedy or claim hereunder.
13. DESCRIPTIVE HEADINGS AND GOVERNING LAW. The description headings of the
several sections and paragraphs of this Class B Warrant are inserted for
convenience only and do not constitute a part of this Class B Warrant. This
Class B Warrant shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by the laws of the State of Colorado.
14. LOST WARRANTS. The Company represents and warrants to the Holder hereof that
upon receipt of evidence reasonably satisfactory to the Company of the loss,
theft, destruction, or mutilation of this Class B Warrant and, in the case of
any such loss, theft or destruction, upon receipt of an indemnity reasonably
satisfactory to the Company, or in the case of any such mutilation upon
surrender and cancellation of such Class B Warrant, the Company, at its expense,
will make and deliver a new Class B Warrant, of like tenor, in lieu of the lost,
stolen, destroyed or mutilated Class B Warrant.
15. FRACTIONAL SHARES. No fractional shares shall be issued upon exercise of
this Class B Warrant. The Company shall, in lieu of issuing any fractional
share, pay the Holder entitled to such fraction a sum in cash equal to such
fraction multiplied by the then effective Exercise Price.
16. REDEMPTION. This Class B Warrant may be called for redemption and redeemed
at the option of the Company, at a redemption price of $.50 per Class B Warrant,
at any time between the Effective Date of the Registration Statement and the
Expiration Date upon 10 day written notice delivered to the Holder, provided:
(a) the Closing Bid or last sales price of the Common Stock issuable upon
exercise of such Class B Warrant has been at least 175% of the Exercise Price
for twenty (20) consecutive trading days ending not more than 3 days prior to
the date of notice of redemption; (b) there is an effective registration
statement with a current prospectus available covering the shares of Common
Stock issuable upon exercise of this Class B Warrant; and (c) no public
announcement of a pending or proposed Organic Change has occurred that has not
been consummated. If any of the foregoing conditions shall cease to be satisfied
at any time during the required period, then the Holder may elect to nullify the
Redemption Notice in which case the Redemption Notice shall be null and void, ab
initio. On and after the date fixed for redemption, the Holder shall have no
rights with respect to this Class B Warrant except to receive the $.50 per Class
B Warrant upon surrender of this Certificate. All Class B Warrants must be
redeemed if any are redeemed. The Company covenants and agrees that it will
honor all Exercise Notices tendered through the Business Day immediately
preceding the Redemption Date. The redemption payment shall be made in cash on
date fixed for redemption in the Company's notice of redemption, as described
below (the "Redemption Date"). The redemption payment is due in full on the
Redemption Date.
12
The notice of redemption shall specify: (i) the Redemption Price; (ii)
the date fixed for redemption (the "REDEMPTION DATE"); (iii) the place where
Class B Warrant Certificates shall be delivered and the redemption price paid;
and (iv) that the right to exercise the Class B Warrants shall terminate at 5:00
p.m. EST on the Business Day immediately preceding the Redemption Date. An
affidavit of the Secretary or an Assistant Secretary of the Company that notice
of redemption has been mailed shall, in the absence of fraud, be conclusive
evidence of the facts stated therein.
From and after the Redemption Date, the Company shall, at the place
specified in the notice of redemption, upon presentation and surrender to the
Company by or on behalf of the Holder thereof of this Class B Warrant, deliver
or cause to be delivered to or upon the written order of such holder a sum of
cash equal to the Redemption Price of each such Class B Warrant. From and after
the Redemption Date and upon the deposit or setting aside by the Company of a
sum sufficient to redeem all the Class B Warrants called for redemption, such
Class B Warrants shall expire and become void and all rights hereunder and shall
cease, except the right, if any, to receive payment of the Redemption Price.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its officers, thereunto duly authorized this [ ] day of _________,
200__.
Tombstone Cards, Inc.
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13
SCHEDULE A
SUBSCRIPTION FORM
Date: _________________, _______
Tombstone Cards, Inc. - Attn: President
Ladies and Gentlemen:
The undersigned hereby elects to exercise the Class B Warrant issued to
it by Tombstone Cards, Inc. ("COMPANY") and dated ______ ___ ____, ("WARRANT")
and to purchase thereunder __________________________________ shares of the
Common Stock of the Company ("SHARES") at a purchase price of five dollars
($5.00) per Share or an aggregate purchase price of __________________
________________ Dollars ($__________) ("EXERCISE PRICE").
Pursuant to the terms of the Warrant, the undersigned has delivered the
Exercise Price herewith in full in cash or by certified check or wire transfer.
Very truly yours,
ASSIGNMENT
To Be Executed by the Holder
in Order to Assign Warrants
FOR VALUE RECEIVED, ______________________________________________________
hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
--------------------------------------
--------------------------------------
--------------------------------------
[please print or type name and address]
_____________________of the Class B Warrants represented by this Class B Warrant
Certificate, and hereby irrevocably constitutes and appoints
_________________________________________ Attorney to transfer this Class B
Warrant Certificate on the books of the Company, with full power of substitution
in the premises.
Dated: x
----------------------------- ---------------------------------
Signature Guaranteed
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO THE
NAME AS WRITTEN UPON THE FACE OF THIS CLASS A WARRANT CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST
BE GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE
AMERICAN STOCK EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE OR
MIDWEST STOCK EXCHANGE.
