Exhibit 10.8.8
WARRANT
THIS WARRANT AND THE COMMON STOCK WHICH MAY BE ACQUIRED UPON EXERCISE OF THIS
WARRANT ("THE UNDERLYING COMMON STOCK") HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR UNDER ANY APPLICABLE STATE LAW. THIS WARRANT AND THE
UNDERLYING COMMON STOCK MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
PLEDGED WITHOUT (1) REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND ANY
APPLICABLE STATE LAW, OR (2) AN OPINION OF COUNSEL SATISFACTORY TO TRADESTAR
SERVICES, INC. THAT REGISTRATION IS NOT REQUIRED.
Tradestar Services, Inc.
Common Stock Purchase Warrant
-----------------------------
THIS IS TO CERTIFY THAT, for value received, SANDERS MORRIS HARRIS as
registered holder hereof, or any subsequent holder or holders (the "Holder"),
upon due exercise of this warrant (the "Warrant"), dated as of May 23, 2006, is
entitled to purchase from Tradestar Services, Inc., a Nevada corporation (the
"Corporation"), all or any part of the Warrant Shares (as hereinafter defined)
for the applicable Exercise Price (as hereinafter defined) in accordance with
the terms provided below.
1. Exercise Period; Exercise Price; Warrant Shares. This Warrant shall be
exercisable prior to 5:00 p.m. Houston, Texas, time on May 23, 2009 (the
"Termination Date") only as follows:
(a) Calculation of Warrants. The Holder is entitled to purchase 53,476
shares of Common Stock of the Corporation (the "Warrant Shares"). The
exercise price shall be $1.87 per share for each share of Common Stock
acquired, subject to adjustment pursuant to Section 5 below (the "Exercise
Price").
(b) "Common Stock" means full paid and non-assessable shares of common
stock of the Corporation.
2. Exercise of Warrant.
(a) Procedure for Exercise. The Holder of this Warrant may exercise
this Warrant at any time immediately prior to expiration date for the
purchase of all or any part of the Warrant Shares. The purchase price shall
be equal to the Exercise Price multiplied by the number of Warrant Shares
to be acquired pursuant to such exercise of the Warrant. To exercise this
Warrant in whole or in part, the Holder hereof shall deliver to the
Corporation (i) a written notice of exercise ("Notice of Exercise") of such
Holder's election to exercise this Warrant, which notice shall specify the
number of whole shares of Common Stock to be purchased, (ii) payment of the
aggregate Exercise Price for the shares of Common Stock being purchased in
the manner provided herein, (iii) an executed Investor Representation
Letter, and (iv) this Warrant. Upon receipt of the Notice of Exercise, the
payment, the executed Investor Representation Letter and surrender of this
Warrant, the Corporation shall, as promptly as practicable, execute or
cause to be executed and deliver to such Holder a certificate or
certificates representing the aggregate number of shares of Common Stock
specified in such notice. The stock certificate or certificates so
delivered shall be in such denominations as may be specified in such notice
and shall be registered in the name of such Holder or, subject to the
conditions of Section 3 below, such other name as shall be designated in
such notice. Payment of the Exercise Price may be made by wire transfer, by
certified check or cashier's check, or by Holder's personal check, payable
to the order of the Corporation, or by wire transfer.
(b) Cashless Exercise. Notwithstanding anything contained herein to
the contrary, Holder may, at its election (exercised in its sole
discretion), exercise this Warrant as to all or a portion of the Warrant
Shares and, in lieu of making the cash payment otherwise contemplated to be
made to the Corporation upon such exercise, elect instead to receive upon
such exercise the net number of shares of Common Stock determined according
to the following formula:
Net Number = (A x B) - (A x C)
-----------------
B
For purposes of the foregoing formula:
A= the total number of Warrant Shares then being exercised.
B= the closing sale price of the Common Stock on the
trading day immediately preceding the date of the
Notice of Exercise.
C= the Exercise Price then in effect for the applicable
Warrant Shares at the time of such exercise.
(c) No Fractional Shares. No fractional shares are to be issued upon
the exercise of this Warrant. If this Warrant shall have been exercised
only in part, the Corporation shall, at the time of delivery of such
certificate or certificates, deliver to such Holder a new warrant
evidencing the rights of such Holder to purchase the remaining shares
called for by this Warrant, which new warrant shall in all other respects
be identical with this Warrant, or, at the request of such Holder,
appropriate notation may be made on this Warrant and the same returned to
such Holder.
(d) Expenses. The Corporation shall pay all expenses, taxes and other
charges payable in connection with the preparation, execution and delivery
of stock certificates under this Section, except that, in case such stock
certificates are to be registered in a name or names other than the name of
the Holder of this Warrant, all stock transfer taxes payable upon the
execution and delivery of such stock certificate or certificates shall be
paid by the Holder hereof at the time of delivering the notice of exercise
mentioned above. In such case, the Holder hereof shall deliver with such
notice of exercise evidence, satisfactory to the Corporation, that such
taxes have been paid.
2
(e) Warrant Holder Not a Stockholder. No Holder of this Warrant shall
be entitled, solely by reason of being a Holder hereof, to possess any
right or privilege as a stockholder of the Corporation, including without
limitation, the right to vote or receive dividends or be deemed for any
purpose the holder of Common Stock or of any other securities of the
Corporation which may at any time be issuable on the exercise hereof, until
the Holder shall have exercised all or any part of this Warrant in
accordance with the provisions set forth in Section 2 hereof. Nothing
contained herein shall be construed to confer upon the Holder, as such, any
of the rights of a stockholder of the Corporation or any right to vote upon
any matter submitted to stockholders at any time thereof, or to give or
withhold consent to any corporate action (whether upon any
recapitalization, issue of stock, reclassification of stock, change of par
value, consolidation, merger, conveyance, or otherwise) or, to receive
notice of the meetings, until the Warrant shall have been exercised as
provided in Section 2 hereof.
3. Transfer, Division and Combination.
(a) Transfer of Warrants. The Warrant is a separate and detachable
security, transferable only on the books of the Corporation by the
registered Holder hereof in person or by attorney duly authorized in
writing, upon surrender of this Warrant to the Corporation for transfer.
Upon any such transfer, a new Warrant to purchase a like number of shares
of Common Stock will be issued to the transferee or transferees in exchange
for this Warrant. Upon receipt by the Corporation of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and, in case of loss, theft or destruction, of an agreement of
indemnity (without security therefor, and upon surrender and cancellation
of this Warrant, if mutilated), the Corporation will make and deliver a new
Warrant of like tenor, in lieu of this Warrant. This Warrant shall be
promptly canceled by the Corporation upon the surrender hereof in
connection with any exchange, transfer or replacement.
(b) Division and Combination of Warrants. This Warrant may, subject to
Section 4 hereof, be divided or combined with other warrants upon
presentation hereof at the principal office of the Corporation, together
with a written notice specifying the names and denominations in which new
warrants are to be issued signed by the Holder or his agent or attorney.
Subject to compliance with the preceding paragraph and with Section 4, as
to any transfer which may be involved in such division or combination, the
Corporation shall execute and deliver a new warrant or warrants in exchange
for the warrant or warrants to be divided or combined in accordance with
such notice.
(c) Expenses. The Corporation shall pay all expenses, taxes (other
than stock transfer taxes) and other charges payable in connection with the
preparation, execution and delivery of this Warrant pursuant to this
Section.
3
4. Compliance with Securities Act; Restrictions on Transfer.
(a) Compliance with Securities Act. This Warrant and the related
Warrant Shares shall not be transferable except upon the conditions
specified in this Section, which conditions are intended, among other
things, to ensure compliance with the provisions of the Securities Act of
1933, as amended (the "Securities Act") or any applicable state securities
laws in respect of the transfer of such Warrant or Warrant Shares.
(b) Restrictions on Transfer. By acceptance of this Warrant, the
Holder of this Warrant agrees, prior to any transfer or attempted transfer
of such Warrant or the related Warrant Shares, to give written notice to
the Corporation of such Holder's intention to effect such transfer. The
notice shall describe the manner and circumstances of the proposed transfer
in detail and shall contain an undertaking by the Holder to furnish such
other information as may be required to enable the Corporation's counsel to
render the opinions referred to below, and shall give the identity and
address of the Holder's counsel. By acceptance of this Warrant, the Holder
agrees to bear the reasonable expense of the Corporation's counsel for
delivery of all additional opinions requested by the Holder, if any
(whether such opinions would permit the proposed transfer or not). The
Holder shall submit a copy of the notice to the counsel designated in the
notice and the Corporation shall submit a copy thereof to its counsel, and
the following provisions shall apply:
(i) If, in the opinion of both the Corporation's and the Holder's
counsel, the proposed transfer of the Warrant or Warrant Shares may be
effected without registration of the Warrant or Warrant Shares under
the Securities Act, the Corporation shall, as promptly as practicable,
so notify the Holder who will then be entitled to transfer the Warrant
or Warrant Shares in accordance with the terms of the notice delivered
by the Holder to the Corporation.
(ii) If, in the opinion of either the Corporation's or the
Holder's counsel, the proposed transfer of the Warrant or Warrant
Shares may not be effected without registration of the Warrant or
Warrant Shares under the Securities Act, the Corporation shall, as
promptly as practicable, so notify the Holder, and the Corporation
shall not be obligated to effect the proposed transfer, except
pursuant to an offering registered under the Securities Act.
(c) Legend. Each certificate for Warrant Shares issued upon exercise
of this Warrant shall bear a legend to the effect that the Warrant Shares
may not be transferred except upon compliance with the provisions of this
Section 4, and each certificate for Warrant Shares transferred pursuant to
Section 4 shall also bear the legend listed below, unless, in the opinion
of counsel acceptable to the Corporation, such a legend is not required.
4
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES ACT OF ANY
STATE. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES, AND SUCH
SECURITIES MAY NOT BE SOLD OR TRANSFERRED FOR VALUE IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION OF THEM UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND/OR APPLICABLE STATE SECURITIES ACTS OR AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER SUCH ACT OR ACTS.
(d) Certain Covenants, Representations and Warranties of Holder.
(i) Investment Purposes. The Holder is acquiring the Warrant for
investment purposes and not with a view to the resale or distribution
of all or any part thereof. The Holder acknowledges that neither the
Warrant nor the underlying Warrant Shares have been registered under
the Securities Act, or the securities or "blue sky" laws of any state
or other domestic or foreign jurisdiction, and that none of such
securities may be sold, transferred or otherwise disposed of except
pursuant to an effective registration statement thereunder or an
applicable exemption therefrom.
(ii) Accredited Investor. The Holder (i) has such knowledge and
experience in financial and business matters that such Holder is
capable of evaluating the merits and risks of his or her investment in
the Warrant and the underlying Warrant Shares and has the financial
ability to assume the monetary risk associated therewith; (ii) is able
to bear the complete loss of his or her investment in the Warrant and
the underlying Warrant Shares; has received such documents and
information from the Corporation as such Holder has requested and has
had the opportunity to ask questions of and receive answers from the
Corporation and the terms and conditions of the offering of the notes
and to obtain additional information; (iv) is an "accredited investor"
as defined in Rule 501(a) of Regulation D promulgated under the
Securities Act; and (v) is not relying upon any statements or
instruments made or issued by any person other than the Corporation in
making a decision to invest in the Warrant and the Warrant Shares.
(iii) The Holder, if an individual, is not less than twenty-one
years of age;
(iv) The Holder, either alone or with his Purchaser
Representative, if any, named below has such knowledge and experience
in financial and business matters that he is capable of evaluating the
merits and risks of an investment in the Corporation, and, if a
resident of a certain state, meets any additional suitability
standards applicable to him under state law;
(v) If the Holder is utilizing a Purchaser Representative for
this investment:
5
(a) Such Purchaser Representative, if any, named at the
beginning of this Agreement (the "Purchaser Representative"). has
acted as his "Purchaser Representative" as defined in Regulation
D under the Securities Act of 1933, as amended (the "1933 Act);
(b) The Holder has relied upon the advice of such Purchaser
Representative as to the merits of an investment in the
Corporation and the suitability of such investment for the
undersigned; and
(c) Such Purchaser Representative has heretofore confirmed
to the Holder in writing (a true and correct copy of which is
furnished to the Corporation herewith) during the course of this
transaction any past, present or future material relationship,
actual or contemplated, between the Purchaser Representative
and/or its affiliates and the Corporation and/or any of its
affiliates, and any compensation received or to he received as a
result thereof;
(d) If the Holder is a partnership, corporation, trust or
other entity:
(i) it was not formed for the purpose of this
investment;
(ii) it is authorized and otherwise duly qualified to
purchase and hold shares of Common Stock; and
(iii) this Warrant has been duly and validly authorized
and executed and, when delivered, will constitute the legal,
valid, binding and enforceable obligation of the
undersigned;
(e) if the Holder is subject to the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), to the best of
the Holder's knowledge, neither the Corporation nor any affiliate
of the Corporation is a party in interest or disqualified person,
as defined in ERISA Section 3(14) and the Internal Revenue Code
of 1954, as amended, section 4975(e)(2), respectively, with
respect to such plan;
(f) Holder is not subject to a statutory disqualification,
as set forth in Section 3(a)(39) of the 1934 Act;
(g) Holder undersigned and his Purchaser Representative, if
any, have been given full and complete access to all information
with respect to the Corporation and the Corporation's proposed
activities that the undersigned and his Purchaser Representative,
if any, have deemed necessary to evaluate the merits and risks of
an investment in the Corporation;
(h) Holder and, if applicable, his Purchaser Representative,
have had a full opportunity to ask questions of and to receive
satisfactory answers from a representative of the Corporation
concerning the terms and conditions of this investment and all
such questions have been answered to the full satisfaction of the
undersigned;
6
(i) Holder and, if applicable, his Purchaser Representative,
have had the opportunity to receive documents related to the
Corporation and to ask questions of and receive answers from the
Corporation regarding the Corporation, its business and the terms
and conditions of the Warrant and have read carefully copies of
the Corporation's SEC Filings, including the exhibits hereto, if
any, and the undersigned is familiar with and agrees to all the
terms and conditions of the Warrant (As used herein, "SEC
Filings" means all forms, reports, schedules, statements and
other documents required to be filed by the Corporation under the
Securities Act and the rules and regulations promulgated
thereunder);
(j) Holder is aware of the risks associated with an
investment in the Corporation, including those described in the
"Risk Factors" section of the Corporation's SEC Filings, if any;
(k) Holder has adequate means of providing for his current
needs and possible personal contingencies. has no need for
liquidity with respect to his investment in the Corporation, and
has financial resources sufficient to bear the economic risk of
such investment;
(1) Holder has been advised and understands that an
investment in the Corporation is highly speculative and has
received no representations or warranties from the Corporation
with respect to such investment;
(m) Holder acknowledges that there are substantial
restrictions on the transferability of, and there will be no
public market for, the Warrant Shares and, accordingly, it may
not be possible for the undersigned to liquidate his investment
in case of an emergency or otherwise, and the undersigned has
been advised that while Rule 144 of the 1933 Act is presently
applicable to the Warrant Shares, the undersigned understands
that Rule 144 may not be available in the future to such shares;
(n) Holder is aware that no securities administrator of any
state or federal government has made or will make any finding or
determination relating to this investment;
(o) Warrant Shares and the Warrants subscribed for hereby
are being purchased for the undersigned's own account (or a trust
account if the undersigned is a trustee), for investment purposes
only and are not being purchased with a view to or for any
resale, fractionalization, subdivision or distribution of such
Warrant Shares; and,
(p) All information which the Holder and his Purchaser
Representative, if any, has provided to the Corporation,
including (but not limited to) the information, representations
and warranties of the undersigned contained any "Purchaser
Suitability Statement" executed by the undersigned and submitted
7
to the Corporation in connection with this Warrant, is true and
correct in all material respects as of the date set forth below
and the undersigned agrees to furnish any additional information
which the Corporation may request so as to determine the
suitability of the undersigned, and to notify the Corporation
immediately should any material changes in such information
occur.
(e) Certain Covenants, Representations and Warranties of the
Corporation.
Representations and Warranties of the Corporation. The Corporation
hereby represents and warrants to the undersigned, as of the date hereof,
as follows:
(i) Organization and Qualification. The Corporation is duly
organized, validly existing and in good standing under the laws of the
State of Nevada and has all requisite corporate power and authority to
own and lease its properties, to carry on its business as presently
conducted and as proposed to be conducted and to consummate the
transactions contemplated hereby. The Corporation is duly qualified as
a foreign corporation and in good standing to do business in each
jurisdiction in which the nature of the business conducted or the
property owned by it requires such qualification, except where the
failure to be so qualified would not, individually or in the
aggregate, have a material adverse effect on the business, assets,
liabilities (contingent or otherwise), operations, condition
(financial or otherwise), or prospects of the Corporation (a
"Corporation Material Adverse Effect").
(ii) Capitalization. The authorized capital stock of the
Corporation as of the Corporation consists of 50,000,000 shares of
Common Stock and 1,000,000 shares of preferred stock. As of the date
hereof, the Corporation has reserved a sufficient number of shares of
Common Stock for issuance upon exercise hereof. This Warrant, when
issued against payment herefor in accordance with the terms hereof,
will be duly and validly issued, and the Warrant Shares, upon exercise
hereof, will be duly and validly issued, fully paid and
non-assessable.
(iii) Authorization of Transaction Documents. The Corporation has
full corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. The execution,
delivery and performance by the Corporation of this Agreement shall be
duly authorized by all requisite corporate action by the Corporation
and this Agreement will be the valid and binding obligations of the
Corporation, enforceable against the Corporation in accordance with
their respective terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization or similar laws affecting the
rights of creditors generally and subject to general principles of
equity.
8
(iv) No Violations. The execution, delivery and performance by
the Corporation of this Agreement and the compliance with the
provisions hereof by the Corporation do not and will not violate,
conflict with or constitute or result in a breach of or default under
(or an event which with notice or passage of time or both would
constitute a default) or give rise to any right of termination,
cancellation or acceleration under, or result in the creation of any
Encumbrance (as defined below) upon any properties or assets of the
Corporation under (a) the Articles of Incorporation or bylaws of the
Corporation, (b) any applicable law, statute, rule or regulation, or
any ruling, writ, injunction, order, judgment or decree of any court,
arbitrator, administrative agency or other governmental body
applicable to the Corporation or any of its properties or assets or
(c) any contract, indenture, mortgage, deed of trust, lease, agreement
or other instrument, to which the Corporation is a party or by which
the Corporation or any of its property is bound, except, in each case,
where such violation, conflict, breach, default, termination,
cancellation, acceleration or Encumbrance would not, individually or
in the aggregate, have a Corporation Material Adverse Effect. As used
herein, the term "Encumbrance" shall mean any material lien, charge,
encumbrance, claim, option, proxy, pledge, security interest, or other
similar right of any nature other than statutory liens securing
payments not yet due and payable or due but not yet delinquent.
(v) Absence of Certain Events. Since March 31, 2006, (a) the
Corporation has not (i) varied its business plan or practices, in any
material respect, from past practices, (ii) entered into any
financing, joint venture, license or similar arrangement that would
limit or restrict its ability to perform its obligations hereunder or
(iii) suffered or permitted to be incurred any liability or obligation
or any Encumbrance against any of its properties or assets that would
limit or restrict its ability to perform its obligations hereunder;
and (b) there has not been any change or development which has had, or
could reasonably be expected to have, a Corporation Material Adverse
Effect.
(vi) Intellectual Property. The Corporation owns or possesses
sufficient legal rights to use, pursuant to license, sublicense,
agreement or permission, all intellectual property used in the
operation of its business as presently conducted ("Intellectual
Property"), in each case, subject to no Encumbrances required to be
disclosed in the Corporation's financial statements, except as set
forth therein, other than any failure to own or possess sufficient
legal rights which, individually or in the aggregate, would not have a
Corporation Material Adverse Effect. All of the Intellectual Property
which is owned by the Corporation is owned free and clear of all
Encumbrances; none of the Corporation's rights in or use of the
Intellectual Property has been or, to the Corporation's knowledge, is
currently threatened to be challenged; to the Corporation's knowledge,
without making any inquiry other than those, if any, routinely
conducted by the Corporation in the ordinary course of business, no
current or currently planned product based upon the Corporation's
Intellectual Property would infringe any patent, trademark, service
mark, trade name or copyright of any other person or entity issued or
pending on the Closing Date if the Corporation were to distribute,
sell, market or manufacture such products, and the Corporation is not
aware of any actual or threatened claim by any person or entity
9
alleging any infringement by the Corporation of a patent, trademark,
service mark, trade name or copyright possessed by such person or
entity. None of such Intellectual Property, whether foreign or
domestic, has been canceled, abandoned, or otherwise terminated, other
than such cancellations, abandonments or terminations which,
individually or in the aggregate, would not have a Corporation
Material Adverse Effect.
(vii) Legal Proceedings, etc. Except as set forth under the
Corporation's SEC Filings, if any, there is no legal, administrative,
arbitration or other action or proceeding or governmental or
investigation pending, or to the Corporation's knowledge, threatened
against the Corporation, or any director, officer or employee of the
Corporation in their capacities as such that (i) challenges the
validity or performance of this Agreement or (ii) could reasonably be
expected to have a Corporation Material Adverse Effect. The
Corporation is not in violation of, or default under, any material
laws, judgments, injunctions, orders or decrees of any court,
governmental department, commission, agency, instrumentality or
arbitrator applicable to its business, other than any violations or
defaults which, individually or in the aggregate, would not have a
Corporation Material Adverse Effect.
5. Anti-dilution.
(a) Reorganization Transactions. The applicable Exercise Price and the
number of Warrant Shares issuable upon exercise of this Warrant are subject
to adjustment from time to time upon the occurrence hereafter of certain
transactions by the issuer of the Warrant Shares, including dividends of
stock or other securities or property, stock splits, reverse stock splits,
subdivisions, combinations, recapitalizations, reorganizations,
reclassifications, consolidations and any liquidation or dissolution of
such issuer (each a "Reorganization"). In the event that the outstanding
Common Stock issued by the Corporation is at any time increased or
decreased solely by reason of a Reorganization, appropriate adjustments in
the number and kind of such securities then subject to this Warrant shall
be made effective as of the date of such occurrence so that the interest of
the Holder upon exercise will be the same as it would have been had such
Holder owned the underlying securities immediately prior to the occurrence
of such event. Such adjustment shall be made successively whenever any
Reorganization shall occur.
(b) Notice. Notice of matters arising under this Section 5 shall be
given pursuant to Section 7 below.
(c) Adjustments. Except as otherwise provided herein, the effective
date of any adjustment pursuant to Section 5(a) shall be the effective date
of the event that causes such adjustment.
10
6. Special Agreements of the Corporation.
(a) Reservation of Common Stock. The Corporation covenants and agrees
that it will reserve and set apart and have at all times, a sufficient
number of shares of authorized but unissued Common Stock for delivery upon
the exercise of the Warrant or any other rights or privileges provided for
therein sufficient to enable it at any time to fulfill all of its
obligations thereunder; and if at any time the number of authorized but
unissued shares of Common Stock shall not be sufficient to effect the
exercise of the Warrant at the Exercise Price then in effect, the
Corporation will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of
Common Stock to such number of shares as shall be sufficient for such
purpose.
(b) Par Value. As a condition precedent to the taking of any action
which would cause an adjustment reducing the Exercise Price below the then
par value, if any, per share of the Warrant Shares, the Corporation will
take such corporate action as may, in the opinion of its counsel, be
necessary in order that the Corporation may validly and legally issue its
Common Stock at the Exercise Price upon exercise of this Warrant in
accordance with the provisions hereof.
(c) Shares to be Fully Paid and Nonassessable. The Corporation
covenants that all shares of Common Stock which may be issued upon exercise
of this Warrant will be, upon issuance and payment of the Exercise Price,
fully paid and nonassessable.
(d) Exchange Act Reports. If the Corporation becomes subject to the
reporting requirements of Sections 13(a) or 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act"), then the Corporation shall
prepare and timely file all such reports which it is required to file under
the Exchange Act until the earlier of such time as Holder has sold all of
the Warrant Shares or such time as the Corporation is no longer subject to
such reporting requirements under the Exchange Act; provided, however, that
nothing in this Warrant shall obligate the Corporation to become subject to
or remain subject to the reporting requirements of Sections 13(a) or 15(d)
of the Exchange Act.
7. Notices.
(a) All notices, requests and other communications hereunder must be
in writing and will be deemed to have been duly given only if delivered
personally or by facsimile transmission or mailed (first class postage
prepaid) to the parties at the following addresses or facsimile numbers:
(i) if to the Holder, to Sanders Morris Harris, 600 Travis, Suite 3100,
Houston, Texas 77002, Attention Don Wier, or any other address or facsimile
number delivered to the Corporation in writing by the Holder, or to the
name, address and facsimile number of any transferee of this Warrant
recorded on the books of the Corporation and (ii) if to the Corporation, to
3451 Candelaria N.E., Suite A, Albuquerque, New Mexico 81301, facsimile:
(213) 593-8727. With respect to any Holder of Warrant Shares, such notices,
requests and other communications shall be sent to the addresses set forth
in the stock transfer records regularly maintained by the Corporation.
11
(b) All such notices, requests and other communications will (i) if
delivered personally to the address as provided in this Section, be deemed
given upon delivery, (ii) if delivered by facsimile transmission to the
facsimile number as provided in this Section, be deemed given upon receipt,
and (iii) if delivered by mail in the manner described above to the address
as provided in this Section, be deemed given upon receipt (in each case
regardless of whether such notice, request or other communication is
received by any other person to whom a copy of such notice is to be
delivered pursuant to this Section 7). Any party from time to time may
change its address, facsimile number or other information for the purpose
of notices to that party by giving notice specifying such change to the
other parties hereto.
8. Limitation of Liability. No provision hereof, in the absence of
affirmative action by the Holder to purchase the Warrant Shares as provided in
Section 2 above, 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 stockholder of the Corporation, whether such liability is
asserted by the Corporation or by creditors of the Corporation.
9. Indemnification. The Holder acknowledges and understands the meaning and
legal consequences of the representations and warranties herein and hereby
agrees to indemnify and hold harmless the Corporation and its officers,
directors, controlling persons, agents, employees, attorneys and accountants
from and against any and all loss, damage or liability, together with all costs
and expenses (including attorneys fees and disbursements) which any of them may
incur by reason of:
(a) any breach of any representation, warranty or agreement of the
undersigned contained in this Subscription Agreement; or
(b) any false, misleading or inaccurate information, or any breach of
any representation, warranty or agreement of the undersigned, contained in
any agreement executed by the Holder in favor of the corporation.
Notwithstanding the foregoing, no representation, warranty,
acknowledgment or agreement made herein by the Holder shall in any manner
be deemed to constitute a waiver of any rights of the undersigned under
federal or state securities laws. All representations and warranties
contained in this Agreement and indemnification contained in paragraph 10,
shall survive the acceptance of this subscription and any other transaction
contemplated herein.
[Signature page follows]
12
IN WITNESS WHEREOF, the Corporation has caused this Warrant to be effective
by its signed by its duly authorized officer as of the 23rd day of May, 2006.
Tradestar Services, Inc.,
a Nevada corporation
By: /s/ Clarence J. Downs
----------------------------------------
Clarence J. Downs
Chairman and Chief Executive Officer
13