Document:

EX-4.2

 

Exhibit 4.2

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.
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.

20   -B-                    

CLASS B WARRANT TO PURCHASE SHARES

OF THE COMMON STOCK OF

CONSOLIDATION SERVICES, INC..

(Void after Expiration Date — December 31, 2011)

Issue Date:                     , 20   

     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 $.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 $6.00 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,
2011 (“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 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 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

 

 

	 	 	 	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, 2011, 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.

 

 

	 	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

 

 

	 	 	 	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.

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

 

 

	 	 	 	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

 

 

	 	 	 	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.

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 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.

 

 

	 	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 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

 

 

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

 

 

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

     ___st day of ___, 20___.

	 	 	 	 	 
	 	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 
	 	 	 	 	 
	 	 	 	 

 

 

	 	 	 	 	 

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 ___, (“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.EX-4.3

 

Exhibit 4.3

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.
20_-C-                    

CLASS C WARRANT TO PURCHASE SHARES

OF THE COMMON STOCK OF

CONSOLIDATION SERVICES, INC..

(Void after Expiration Date — December 31, 2013)

Issue Date:                     , 20__

     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 $.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 $12.00 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,
2013 (“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.

     This Warrant shall be exercisable into shares of Common Stock at any time, or from
time-to-time, up to and including the 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

 

 

	 	 	 
	 

	 	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, 2013, 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.

 

 

	 	 	 
	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
	 
	 	 
	 

	 	 

 

 

	 	 	 
	 

	 	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.

 

 

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

 

 

	 	 	 
	 

	 	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

 

 

	 	 	 
	 

	 	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.

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
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.

 

 

	 	 	 
	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

 

 

	 	 	 
	 

	 	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

 

 

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

 

 

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

     ___st day of                     , 20___.

	 	 	 	 	 
	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
	 
	 	 	 	 
	 	 	 

 

 

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                     , 20___, (“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.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00124-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00124-of-00352.parquet"}]]