Exhibit 10.7
WARRANT CERTIFICATE
___________________ Warrants
TOMBSTONE CARDS, INC.
REDEEMABLE
UNIT PURCHASE WARRANT
Warrant Number
W- U1 CUSIP:
_______________ _________________
Warrants for the Purchase of Units of the
no par value Common Stock of
TOMBSTONE CARDS, INC.
1. This is to certify that, when this Warrant has been countersigned as
hereinafter provided,
GARDEN STATE SECURITIES, INC.
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("Registered Holder")
or registered assigns, is entitled to purchase, subject to the terms and
conditions hereinafter set forth, at any time from and after August 31, 2006 for
a three-year period until August 31, 2009, which three-year period may be
extended by the Company upon written notice to the Registered Holder hereof,
one (1) Unit, consisting of one Share of Common Stock and two Warrants, an "A"
Warrant and a "B" Warrant to purchase common Stock at $2.00 and $5.00,
respectively ("Unit") of Tombstone Cards, Inc. each one (1) Warrant exercised,
at a purchase price of $0.60 per share, and receive a certificate(s) for the
Units and Warrants so purchased, upon presentation and surrender to the Company,
with the subscription duly executed, and accompanied by payment of the purchase
price of each Unit purchased, either in cash, certified funds, bank cashiers
check or bank check, payable to the order of the Company. Fractional Units will
not be issued upon the exercise of this Warrant.
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2. The Company covenants and agrees that all shares of Common Stock or Warrants
which may be delivered upon the exercise of this Warrant will, upon delivery, be
free from all taxes, liens and charges with respect to the purchase thereof
hereunder. However, the Company shall not be obligated to deliver any Units,
Shares and Warrants pursuant to the exercise of this Warrant, unless and until,
a current Registration Statement under the Securities Act of 1933, as amended,
with respect to such Units, Shares, and Warrants remains effective. The Company
covenants and agrees and will use its best efforts to cause its current
Registration Statement to become effective. This Warrant shall not be
exercisable in any state where such exercise would be unlawful. The Company will
attempt to qualify the shares represented by this Warrant for sale in all
jurisdictions where holders of the Company's Warrants reside.
3. The number of Units and resulting Shares of Common Stock and Warrants
purchasable upon the exercise of this Warrant and the purchase price shall be
subject to adjustment from time to time as set forth below:
REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE.
If 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 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 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 Warrant) such Shares of stock, Units, 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 or Units of such stock immediately
theretofore purchasable and receivable upon the exercise of the rights
represented by this 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 Warrant to the end that the
provisions hereof (including, without limitation, provisions for
adjustments of the Exercise Price and of the number of Shares or Units
purchasable and receivable upon the exercise of this Warrant) shall
thereafter be applicable, in relation to any Shares of stock, Units,
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 ▇▇▇▇▇▇'s exercise of this
Warrant and payment of the purchase price in accordance with the terms
hereof, such Shares of stock, Units, securities or assets as, in
accordance with the foregoing provisions, such Holder may be entitled
to purchase.
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No adjustment of the Exercise Price, however, shall be made in
an amount less than $.01 per Unit, 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 Unit or more.
4. This Warrant shall be callable and redeemable by the Company upon 30 days
written notice to the Registered Holder of this Warrant at $0.001 per warrant,
if not exercised prior thereto.
5. The Company agrees at all times to reserve or hold available a sufficient
number of shares of its Common Stock to cover the number of shares issuable upon
the exercise of this and other Warrants of like tenor then outstanding.
6. This Warrant does not entitle the Registered Holder hereof to any voting
rights or other rights as a shareholder of the Company, or to any other rights
whatsoever except the rights set forth in this Warrant, and no dividend shall be
payable or accrue in respect of this Warrant or the interest represented hereby,
or the share purchasable hereunder, until or unless, and except to the extent
that, this Warrant shall be exercised.
7. This Warrant is exchangeable upon the surrender hereof by the Registered
Holder to the Warrant Agent for new Warrants of like tenor and date,
representing in the aggregate the right to purchase the number of shares
purchasable hereunder, each of such new Warrants to represent the right to
purchase such numbers as may be designated by the Registered Holder at the time
of such surrender. From the date this offering is closed, this Warrant and all
rights hereunder shall be transferable separately from the stock certificate to
which it is attached by the Registered Holder hereof in person or by duly
authorized attorney on the books of the Company upon surrender of this Warrant,
properly endorsed, to the Company. The Company may deem and treat the Registered
Holder of this Warrant at any time as the absolute owner hereof for all purposes
and shall not be affected by any notice to the contrary.
8. REGISTRATION RIGHTS
(a) If at any time the Company proposes to register the sale of Units
or Shares of Common Stock (whether for itself or any of its security holders)
under the Securities Act and the registration form to be used may be used for
the registration of shares underlying this Warrant (a "Piggyback Registration"),
the Company shall give prompt written notice to the Holder of its intention to
effect such a registration and, subject to Section 8 (b) below, shall include in
such registration all Units or Shares of Common Stock underlying this Warrant
with respect to which the Company has received ▇▇▇▇▇▇'s written request for
inclusion in such registration, provided that such request must be received by
Company within 20 days after the date of the Company's notice to Holder. The
Registration Expenses in all Piggyback Registrations shall be paid by the
Company.
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(b) If a Piggyback Registration is an underwritten primary registration
on behalf of the Company or a successor, and the managing underwriters advise
the Company in writing that in their opinion the number of shares of Common
Stock requested to be included in such registration exceeds the number which can
be sold in such offering without adversely affecting the marketability of the
offering, the Company shall exclude from such registrations the excess amount of
shares of Common Stock, and shall include in such registration (i) first, the
securities the Company proposes to sell; (ii) second, shares of Common Stock
requested to be included in such registration by the holders of all securities
of the Company having registration rights, pro rata among the owners of such
securities on the basis of the number of shares of Common Stock or equivalent
shares of Common Stock owned by each such owner, and (iii) third, other
securities requested to be included in such registration, in the Company's
discretion.
(c) Whenever the Holder has requested that any shares of Common Stock
underlying this Warrant be registered pursuant to this Section 8, the Company
shall use its best efforts to effect the registration and the sale of such Units
or Shares in accordance with the intended method of disposition thereof, and
pursuant thereto the Company shall as expeditiously as possible:
(i) notify the Holder of the effectiveness of each registration
statement filed hereunder and prepare and file with the
Securities and Exchange Commission such amendments and
supplements to such registration statement and the
prospectus used in connection therewith as may be necessary
to keep such registration statement effective for a period
of not less than 180 days and comply with the provisions of
the Securities Act with respect to the disposition of all
securities covered by such registration statement during
such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such
registration statement;
(ii) furnish the Holder such number of copies of such
registration statement, each amendment and supplement
thereto, the prospectus included in such registration
statement (including each preliminary prospectus) and such
other documents as such seller may reasonably request in
order to facilitate the disposition of the shares of Common
Stock underlying this Warrant;
(iii)use its best efforts to register or qualify the Units,
Warrants or Shares of Common Stock underlying this Warrant
under such other securities or blue sky laws of such
jurisdictions as Holder reasonably requests and do any and
all other acts and things which may be reasonably necessary
or advisable to enable Holder to consummate the disposition
in such jurisdictions of the shares of Common Stock
underlying this Warrant (provided that the Company shall not
be required to (A) qualify generally to do business in any
jurisdiction where it would not otherwise be required to
qualify but for this subsection, (B) subject itself to
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taxation in any such jurisdiction or (C) consent to general
service of process in any such jurisdiction);
(iv) notify Holder, at any time when a prospectus relating
thereto is required to be delivered under the Securities
Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains
an untrue statement of a material fact or omits any fact
necessary to make the statements therein not misleading,
whereupon Holder shall cease distributing any shares of
Common Stock until, at the request of Holder, the Company
shall prepare a supplement or amendment to such prospectus
so that, as thereafter delivered to the purchasers of such
shares of Common Stock, such prospectus shall not contain an
untrue statement of a material fact or omit to state any
fact necessary to make the statements therein not
misleading; and
(v) use its best efforts to comply with all applicable rules and
regulations of the Securities and Exchange Commission, and
in the event of the issuance of any stop order suspending
the effectiveness of a registration statement, or of any
order suspending or preventing the use of any related
prospectus or suspending the qualification of any equity
securities included in such registration statement for sale
in any jurisdiction, the Company shall use its best efforts
promptly to obtain the withdrawal of such order.
(d) All expenses incident to the Company's performance of or compliance
with this Section 8, including without limitation all registration and filing
fees, fees and expenses of compliance with securities or blue sky laws, NASD
fees, printing expenses, messenger and delivery expenses, fees arid
disbursements of custodians, and fees and disbursements of counsel for the
Company and all independent certified public accountants, fees (up to $5,000),
and disbursements of one counsel for the Holder, underwriters (excluding
discounts and commissions) and other persons retained by the Company (all such
expenses being herein called "Registration Expenses"), shall be borne by the
Company as provided in this Section 8.
(e) The Company agrees to indemnify, to the extent permitted by law,
Holder, its officers and directors and each person who controls Holder (within
the meaning of the Securities Act) against all losses, claims, damages,
liabilities and expenses caused by any untrue or alleged untrue statement of
material fact contained in any registration statement filed by the Company,
prospectus prepared by the Company or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, except insofar as the same are caused by or contained in any
information furnished in writing to the Company by Holder expressly for use
therein or by ▇▇▇▇▇▇'s failure to deliver a copy of the registration statement
or prospectus or any amendments or supplements thereto after the Company has
furnished Holder with a sufficient number of copies of the same. In connection
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with an underwritten offering, the Company shall indemnify such underwriters,
their officers and directors and each person who controls such underwriters
(within the meaning of the Securities Act) to at least the same extent as
provided above with respect to the indemnification of the Holder issued by the
Company.
(f) In connection with any registration statement in which Holder is
participating, each Holder shall furnish to the Company in writing such
information and affidavits as the Company reasonably requests for use in
connection with any such registration statement or prospectus and, to the extent
permitted by law, shall indemnify the Company, its directors and officers and
each person who controls the Company (within the meaning of the Securities Act)
against any losses, claims, damages, liabilities and expenses resulting from any
untrue or alleged untrue statement of material fact contained in the
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, but only to the extent that such untrue statement or omission is
contained in any information or affidavit so furnished in writing by ▇▇▇▇▇▇.
(g) Any person entitled to indemnification under this Section 8 shall
(i) give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification (provided that the failure to give
prompt notice shall not impair any person's right to indemnification hereunder
to the extent such failure has not prejudiced the indemnifying party) and (ii)
unless in such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist with respect to such
claim, permit such indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party. If such defense is
assumed, the indemnifying party shall not be subject to any liability for any
settlement made by the indemnified party without its consent. An indemnifying
party who is not entitled to, or elects not to, assume the defense of a claim
shall not be obligated to pay the fees and expenses of more than one counsel for
all parties indemnified by such indemnifying party with respect to such claim,
unless in the reasonable judgment of any indemnified party a conflict of
interest may exist between such indemnified party and any other of such
indemnified parties with respect to such claim.
(h) The indemnification provided for under this Section 8 shall remain
in full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling person of such
indemnified party and shall survive the transfer of securities. In order to
provide for contribution in any case in which either (i) Holder makes a claim
for indemnification pursuant to this Section 8 but it is judicially determined
(by the entry of a final judgment or decree by a court of competent jurisdiction
and the expiration of time to appeal or the denial of the last right of appeal)
that such indemnification may not be enforced in such case notwithstanding the
fact that this Section 8 provides for indemnification in such case, or (ii)
contribution under the Securities Act may be required on the part of Holder in
circumstances for which indemnification is provided under this Section 8; then,
in each such case, the Company and Holder will contribute to the aggregate
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losses, claims, damages or liabilities which they would otherwise be obligated
to indemnify under Sections 8(e) and 8(1) (after contribution from others) in
such proportions so that Holder is responsible for the portion of such aggregate
losses, claims, damages or liabilities represented by the percentage that the
public offering price of its shares of Common Stock offered by the registration
statement bears to the public offering price of all securities offered by such
registration statement, and the Company is responsible for the remaining
portion; provided, however, that, no person or entity guilty of fraudulent
misrepresentation, within the meaning of Section 11(f) of the Securities Act,
shall be entitled to contribution from any person or entity who is not guilty of
such fraudulent misrepresentation.
(i) Holder may not participate in any registration under this Section 8
which is underwritten unless Holder (i) agrees to sell ▇▇▇▇▇▇'s shares of Common
Stock on the basis provided in any underwriting arrangements approved by the
Company and (ii) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents required under the
terms of such underwriting arrangements.
IN WITNESS WHEREOF, the Company has caused this Warrant to be endorsed
by the facsimile signatures of its duly authorized officers, and to be sealed
with the facsimile seal of the Company
TOMBSTONE CARDS, INC. ATTESTED BY:
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President Secretary
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Date Date
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SUBSCRIPTION FORM
To be Executed by the Holder of this Warrant if such Holder
Desires to Exercise this Warrant in Whole or in Part:
To: Tombstone Cards, Inc. (the "Company")
The undersigned ___________________________ (Social Security number
_____________or taxpayer identification number of Subscriber:
_________________________) hereby irrevocably elects to exercise the right of
purchase represented by this Warrant for, and to purchase thereunder,
____________ shares of the Common Stock (the "Common Stock") provided for
therein and tenders payment herewith to the order of the Company in the amount
of $______________, such payment being made as provided on the face of this
Warrant.
The undersigned requests that certificates for such shares of Common Stock be
issued as follows:
Name: ______________________________________________________________________
Address: ______________________________________________________________________
______________________________________________________________________
Deliver to: ____________________________________________________________________
Address: ______________________________________________________________________
______________________________________________________________________
and, if such number of shares of Common Stock shall not be all the shares of
Common Stock purchasable hereunder, that a new Warrant for the balance remaining
of the shares of Common Stock purchasable under this Warrant be registered in
the name of, and delivered to, the undersigned at the address stated above.
Dated: ______________________
Signature ___________________________
Note: The signature on this Subscription Form must
correspond with the name as written upon the face
of this Warrant in every particular, without
alteration or enlargement or any change whatever.
FORM OF ASSIGNMENT
(To Be Signed Only Upon Assignment)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
this Warrant, and appoints __________________________________________ to
transfer this Warrant on the books of the Company with the full power of
substitution in the premises.
Dated: _____________________
In the presence of:
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(Signature must conform in all respects to the
name of the holder as specified on the face of
this Warrant without alteration, enlargement or
any change whatsoever, and the signature must be
guaranteed in the usual manner)