EX-4.1



 





Exhibit 4.1



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.



THE SALE, ASSIGNMENT, CONVEYANCE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES REPRESENTED
BY THIS WARRANT IS PROHIBITED EXCEPT PURSUANT TO REGISTRATION UNDER THE 1933 ACT; OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT, AND ANY CERTIFICATE REPRESENTING
WARRANT SHARES SHALL BEAR A LEGEND TO SUCH EFFECT.




2007-A-                    




WARRANT TO PURCHASE SHARES

OF THE COMMON STOCK OF

CONSOLIDATION SERVICES, INC..

(Void after Expiration Date – December 31, 2009)




Issue Date: February 21, 2007




     This
certifies that _______ or his successors or assigns (“Holder”) shall be entitled
to purchase from Consolidation Services, Inc., a Delaware corporation (“Company”), having its
principal place of business at 2756 N. Green Valley Parkway,
Suite 225, Henderson, NV 89014, _______ fully paid and non-assessable shares (“Warrant Shares”) of the Company’s common stock, par
value $.001 per share (“Common Stock”), at a price per share equal to the Exercise Price (as
defined below).



     This Warrant is being issued to the Holder in connection with the February 9, 2007 offering
(the “Offering”) of up to 1,000,000 shares (the “Shares”) at a price of $0.05 per Share or an
aggregate of $50,000. For each share issued in the Offering the Holder will receive warrants to
purchase (one) share of Common Stock. This Warrant is one of several which will be identical
except for names and amounts. Capitalized terms used herein and not otherwise defined shall have
the respective meanings set forth in the Subscription Agreement.



     The initial exercise price (“Exercise Price”) of this Warrant will be equal to $3.00 per
share, subject to redemption and/or a temporary reduction by the Company as described in Sections
16 and 2.1, respectively, below.



     This Warrant shall be immediately exercisable into shares of Common Stock at any time, or from
time-to-time, up to and including 5:00 p.m. (Pacific Coast time) on December 31, 2009 (“Expiration
Date”), unless previously called or extended by the



 









 







Company on thirty (30) days’ prior written notice; provided, however, if such date is not a
Business Day, then on the Business Day immediately following such date. This 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
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 Warrant is being exercised as determined in
accordance with the provisions hereof.



     Upon the exercise of this Class A Warrant for the $3.00 Exercise Price, the holder shall
receive one share of Common Stock and a Class B Common Stock Purchase Warrant (“Class B Warrant”)
to purchase one share of Common Stock at $6.00 per share, subject to redemption and/or temporary
reduction by the Company. The 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. (Pacific Coast time) on December 31,
2011 (“Class B Expiration Date”), unless previously called or extended by the Company on thirty
(30) days’ prior written notice; provided, however, if such date is not a Business Day, then on the
Business Day immediately following such date.



     Upon the exercise of the Class B Warrant for the $6.00 Exercise Price, the holder shall
receive one share of Common Stock and a Class C Common Stock Purchase Warrant (“Class C Warrant”)
to purchase one share of the Common Stock at $12.00 per share, subject to redemption and/or
temporary reduction by the Company. The Class C 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. (Pacific Coast time) on
December 31, 2013 (“Class C Expiration Date”), unless previously called or extended by the Company
on thirty (30) days prior written notice; provided, however, if such date is not a Business Day,
then on the Business Day immediately following such date.




	1.	 	Exercise; Issuance of Certificates; Payment for Shares.






	 	1.1	 	General. This Warrant is exercisable in full, or in part for 100 or more
 shares, in increments of 100 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 Warrants represented hereby, the Company shall cancel this Warrant
Certificate upon the surrender hereof and shall execute and deliver a new Warrant
Certificate or Warrant Certificates of like tenor for the balance of such
Warrants. The Company agrees that the shares of Common Stock purchased under
this 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 Warrant shall be surrendered to the





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	 	 	 	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
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. Notwithstanding
the foregoing, delivery of the Warrant Shares is contingent upon receipt of the
Exercise Price in cleared U.S. funds within two business days following the
Company’s receipt of the exercise notice. Each Common Stock certificate so
delivered shall be in such denominations of 100 or more shares of Common Stock, in
increments of 100 or more, as may be requested by the Holder hereof and shall be
registered on the Company’s books in the name designated by such Holder.
	 
	 	1.2	 	Exercise for Cash
	 
	 	 	 	This Warrant may be exercised, in whole at any time or in part from time to time,
prior to 5:00 P.M., Pacific Coast time, December 31, 2009, unless previously called
or extended by the Company, 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
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 Warrant Shares (“Aggregate Warrant Price”), or the proportionate
part thereof if this Warrant is exercised in part. Payment for the Warrant Shares
shall be made by wire, certified or bank check or check payable to the order of the
Company. If this Warrant is exercised in part, this Warrant must be exercised for a
number of whole shares of the Common Stock, and the Holder is entitled to receive a
new Warrant covering the Warrant Shares which have not been exercised and setting
forth the proportionate part of the Aggregate Warrant Price applicable to such
Warrant Shares. Upon such surrender of this 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
Warrant, or the proportionate part thereof if this Warrant is exercised in part,
pursuant to the provisions of this Warrant.




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	 	1.3	 	Cashless Exercise
	 
	 	 	 	The Holder may effect a Cashless Exercise by surrendering this Warrant to the
Company and noting on the Exercise Notice that the Holder wishes to effect a Cashless
Exercise, upon which the Company shall issue to the Holder the number of Warrant
Shares determined as follows:






X = Y x (A-B)/A



     where:




X = the number of Warrant Shares to be issued to the Holder;




Y = the number of Warrant Shares with respect to which this Warrant is being exercised;




A = the Market Price (as defined elsewhere in this Warrant) as of the
Exercise Date; and




B = the Exercise Price.




	 	 	 	For purposes of Rule 144, it is intended and acknowledged that the Warrant Shares
issued in a Cashless Exercise transaction shall be deemed to have been acquired by
the Holder, and the holding period for the Warrant Shares required by Rule 144 shall
be deemed to have been commenced, on the Issue Date.
	 
	 	1.4	 	Exercise for Non-Cash Consideration:
	 
	 	 	 	In case any portion of the consideration to be received by the Company shall be in a
form other than cash, then such Exercise Price shall be measured to that extent by
the fair market value of such non-cash consideration. The Exercise Price may be
tendered in shares of the Company’s Common Stock owned by the Holder and having a
fair market value equal to the Exercise Price. Such non-cash consideration may also
be in the form of notes, exchanges, services, goods and any and all consideration
deemed acceptable by the Company. The fair market value shall be determined solely
in good faith by the Board of Directors of the Company, without need for disclosure
of fair market value calculation.
	 
	 	1.5	 	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 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





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	 	 	 	which the rights represented by this 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 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 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 required by Section 7.7 herein. 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 Certificate of Incorporation, as amended (“Company
Charter”).
	 
	 	1.6	 	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.




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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 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 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.





	 	2.1	 	Adjustment of Exercise Price: Temporary Reduction. Upon written Notice as
provided for herein, at the sole discretion of the Company, the Exercise Price of this
Warrant may be temporarily reduced. At the end of such discretionary reduction period,
the price shall revert back to the defined Exercise Price.
	 
	 	2.2	 	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.
	 
	 	2.3	 	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 Warrant) shall have
received or become entitled to receive, without payment therefore:






	 	2.3.1	 	Stock, 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,
	 
	 	2.3.2	 	Any cash paid or payable otherwise than as a cash dividend, or
	 
	 	2.3.3	 	Stock, 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 Warrant,
be entitled




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	 	 	 	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.






	 	2.4	 	Reorganization, Reclassification, Consolidation, Merger or Sale.






	 	2.4.1	 	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, 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 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 purchasable and receivable upon
the exercise of this 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





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	 	 	 	last address of such Holder appearing on the books of the Company,
the obligation to deliver to such Holder, upon Holder’s exercise of
this 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.
	 
	 	2.4.2	 	No 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.






2.5 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 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
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
Warrant upon exercise for the same aggregate Exercise Price the total number, and kind of
 shares as he would have owned had the Warrant been exercised prior to the event and had he
continued to hold such shares until after the event requiring adjustment.




	 	2.6	 	Notices of Change.






	 	2.6.1	 	Upon any determination or adjustment in the number or class of
 shares subject to this 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.
	 
	 	2.6.2	 	The 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.
	 
	 	2.6.3	 	The 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.




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3. Issue Tax.  The issuance of certificates for shares of Common Stock upon the exercise
of the Warrant shall be made without charge to the Holder of the 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 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 Warrant.



5. No Voting or Dividend Rights; Limitation of Liability. Nothing contained in
this 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 Warrant, the interest represented hereby, or the shares purchasable hereunder until, and only
to the extent that, this Warrant shall have been exercised, subject to the Holder’s rights under
Section 2 of this Warrant. The Holder of this 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 Warrant and of the holder of shares of Common Stock issued upon
exercise of this Warrant, shall survive the exercise of this Warrant.



7. Further Representations, Warranties and Covenants of the Company.





	 	7.1	 	Articles and Bylaws. The Company has made available to the Holder true,
complete and correct copies of the Company’s Charter and Bylaws, as amended, through
the date hereof.
	 
	 	7.2	 	Due Authority. The execution and delivery by the Company of this 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 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





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	 	 	 	obligations under this 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 Warrant will
constitute a transaction exempt from (i) the registration requirements of Section 5 of
the 1933 Act, in reliance upon 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 Warrant in compliance with Rule
144 promulgated by the SEC, 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 SEC as set forth in such Rule, as such
Rule may be amended from time to time.
	 
	 	7.7	 	Registration. The Company hereby grants to the Holder in respect of the
Warrant Shares, and any securities of the Company into which the Warrant Shares are
convertible, “piggy-back” registration rights. For a seven-year period commencing with
the final closing of the Offering, if the Company shall file a registration statement
other than on Form S-4, S-8, or their successor forms, it shall provide the Holder with
at least ten (10) days prior notice of its filing such registration statement and the
opportunity for the Holder to register its Shares, subject to any limitations issued by
an underwriter in an underwritten public offering.






	8.	 	Representations and Covenants of the Holder.






	 	8.1	 	This Warrant has been entered into by the Company in reliance upon the
following representations and covenants of the Holder:






	 	8.1.1	 	Investment Purpose. The Warrant or the Common Stock issuable
upon exercise of the 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.




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	 	8.1.2	 	Private Issue. The Holder understands (i) that the Warrant
and the Common Stock issuable upon exercise of this Warrant are not registered
under the 1933 Act or qualified under applicable state securities laws on the
ground that the issuance contemplated by this 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.
	 
	 	8.1.3	 	Disposition of Holders Rights. In no event will the Holder
make a disposition of the Warrant or the Common Stock issuable upon exercise of
the 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 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
SEC or a ruling shall have been issued to the Holder at its request by the SEC
stating that no action shall be recommended by such staff or taken by the SEC,
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 Warrant or for such shares of stock not bearing
any restrictive legend.
	 
	 	8.1.4	 	Financial Risk. The Holder has such knowledge and experience
in financial and business matters as to be capable of





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	 	 	 	evaluating the merits and risks of its investment, and has the ability to
bear the economic risks of its investment.
	 
	 	8.1.5	 	Risk 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 Warrant, or (ii) the Common Stock issuable upon
exercise of the Warrant, it may be required to hold such securities for an
indefinite period. The Holder also understands that any sale of the Warrant or
the Common Stock issuable upon exercise of the 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.




9. Modification and Waiver. This 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 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 Warrant (including any 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 Warrant. The Holder may sell, transfer, assign, pledge or otherwise dispose
of this 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 1933
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 Warrant shall be transferred and, if less than all of this Warrant
is transferred, the number of Warrant Shares to be covered by the part of this Warrant to be
transferred to each such person. Within three (3) Business Days of receiving a Transfer Notice and
the original of this Warrant, the Company shall deliver to the each transferee designated by the
Holder another Warrant(s) of like tenor and terms for the appropriate number of Warrant Shares and,
if less than all this Warrant is transferred, shall deliver to the Holder another 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


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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 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 Warrant shall survive the
exercise and termination of this Warrant. All of the covenants and agreements of the Company shall
inure to the benefit of the successors and assigns of the Holder hereof. This Warrant shall be for
the sole and exclusive benefit of the Holder and nothing in this 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 Warrant are inserted for convenience only and do not
constitute a part of this Warrant. This 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 Delaware.



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 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 Warrant, the Company, at its expense, will make and deliver a
new Warrant, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant.



15. Fractional Shares. No fractional shares shall be issued upon exercise of
this 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 Warrant may be redeemed at the option of the Company, at a
redemption price (the “Redemption Price”) of $.001 per Warrant at any time upon twenty (20) days’
prior written notice. On and after the date fixed for redemption, the Holder shall have no rights
with respect to this Warrant except to receive the $.001 per Warrant upon surrender of this
Certificate. 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 the 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. Notwithstanding anything to the contrary contained in this Warrant, the Company shall have
the option, without further compensation to the Holder other than the payment of the Redemption
Price per Warrant, to cause any or all of the Warrants (each, a “non-Exercised Warrant”) which were
not properly exercised on or before the Redemption


13









 






Date to be assigned to one or more third parties (each, a “Standby Purchaser”), effectively
immediately upon the Redemption Date, for the consideration equal to $.001 per Non-Exercised
Warrant payable to the Company, and (c) each Standby Purchaser shall have the right to exercise the
Non-Exercised Warrants so assigned to such Standby Purchaser through the tenth business day
following the Redemption Date.




     The notice of redemption shall specify: (i) the Redemption Price; (ii) the date not more than
twenty (20) days from mailing which is fixed for redemption (the “Redemption Date”); (iii) the
place where Warrant Certificates shall be delivered and the redemption price paid; and (iv) that
the right to exercise the Warrants shall terminate at 5:00 p.m. (Pacific Coast Time) 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 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 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 Warrants
called for redemption, such 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



     21st day of February, 2007.



	 	 	 	 	 
	 	Consolidation Services, Inc.

a Delaware corporation

 	 
	 	By:  	 	 
	 	 	Name:  	Johnny R. Thomas 	 
	 	 	Title:  	CEO	 
	 	 	Address:

Consolidation Services, Inc.

2756 N. Green Valley Parkway, Suite 225

Henderson, NV 89014 	 
	 	  	 	 
	 




14









 





SCHEDULE A




SUBSCRIPTION FORM




Date:                                         ,                     




Consolidation Services, Inc. — Attn: President




Ladies and Gentlemen:




     The undersigned hereby elects to exercise the Warrant issued to it by Consolidation Services
Inc. (“Company”) and dated February 21, 2007, (“Warrant”) and to purchase thereunder
_______ shares of the Common Stock of the Company (“Shares”) at a purchase
price of
           
($_____) per Share or an aggregate purchase price
of ______ ______
Dollars ($___) (“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 Warrants represented by this Warrant Certificate, and hereby
irrevocably constitutes and appoints                                          Attorney to transfer
this 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 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.