Exhibit 10.4



 


 


THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE
UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THIS WARRANT AND THE COMMON
STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
AS TO THIS WARRANT UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR
AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO HOME SOLUTIONS OF AMERICA,
INC. THAT SUCH REGISTRATION IS NOT REQUIRED.


Right to Purchase 370,000 Shares of Common Stock of

Home Solutions of America, Inc. 

(subject to adjustment as provided herein)


COMMON STOCK PURCHASE WARRANT


	
  No. _________________

  	
  Issue Date:  January 22,
  2004

  





HOME SOLUTIONS OF AMERICA, INC., a corporation
organized under the laws of the State of Delaware, hereby certifies that, for
value received, LAURUS MASTER FUND, LTD., or assigns (the "Holder"),
is entitled, subject to the terms set forth below, to purchase from the Company
(as defined herein) from and after the Issue Date of this Warrant and at any
time or from time to time before 5:00 p.m., New York time, through the close of
business January 22, 2011 (the "Expiration Date"), up to 370,000 fully
paid and nonassessable shares of Common Stock (as hereinafter defined), $0.01
par value per share, at the applicable Exercise Price per share (as defined
below).  The number and character of such shares of Common Stock and the
applicable Exercise Price per share are subject to adjustment as provided
herein.


As used herein the following terms, unless the
context otherwise requires, have the following respective meanings: 


(a)        The term "Company" shall
include Home Solutions of America, Inc. and any corporation which shall
succeed, or assume the obligations of, Home Solutions of America, Inc.
hereunder. 


(b)        The term "Common Stock"
includes (i) the Company's Common Stock, par value 0.01 per share; and (ii) any
other securities into which or for which any of the securities described in (a)
may be converted or exchanged pursuant to a plan of recapitalization,
reorganization, merger, sale of assets or otherwise.


(c)        The term "Other Securities"
refers to any stock (other than Common Stock) and other securities of the
Company or any other person (corporate or otherwise) which the holder of the
Warrant at any time shall be entitled to receive, or shall have received, on
the exercise of the Warrant, in lieu of or in addition to Common Stock, or
which at any time shall be issuable or shall have been issued in exchange for
or in replacement of Common Stock or Other Securities pursuant to Section 4 or
otherwise. 


 











(d)        The "Exercise Price"
applicable under this Warrant shall be as follows:


(i)         a price of
$2.32 [120% of the average closing price of  Common Stock for the five (5)
trading days immediately prior to the date hereof.] for the  first 200,000
shares acquired hereunder;


(ii)        a price of
$2.52 [130% of the average closing price of  Common Stock for the five (5)
trading days immediately prior to the date hereof.] for the next 150,000 shares
acquired hereunder; and


(iii)       a price of
$2.90 [150% of the average closing price of  Common Stock for the five (5)
trading days immediately prior to the date hereof.] for any additional shares
acquired hereunder.


1.                 
Exercise of Warrant. 


1.1             
Number of Shares Issuable upon Exercise.  From and after the date
hereof through and including the Expiration Date, the Holder shall be entitled
to receive, upon exercise of this Warrant in whole or in part, by delivery of
an original or fax copy of an exercise notice in the form attached hereto as
Exhibit A (the "Exercise Notice"), shares of Common Stock of the
Company, subject to adjustment pursuant to Section 4.


1.2             
Fair Market Value.  For purposes hereof, the "Fair Market
Value" of a share of Common Stock as of a particular date (the
"Determination Date") shall mean: 


(a)               
If the Company's Common Stock is traded on the American Stock Exchange
or  another national exchange or is quoted on the National or SmallCap Market
of The Nasdaq Stock Market, Inc. ("Nasdaq"), then the closing or last
sale price, respectively, reported for the last business day immediately
preceding the Determination Date.


(b)              
If the Company's Common Stock is not traded on the American Stock Exchange
or another national exchange or on the Nasdaq but is traded on the NASD OTC
Bulletin Board, then the mean of the average of the closing bid and asked
prices reported for the last business day immediately preceding the
Determination Date.


(c)               
Except as provided in clause (d) below, if the Company's Common Stock is
not publicly traded, then as the Holder and the Company agree or in the absence
of agreement by arbitration in accordance with the rules then in effect of the
American Arbitration Association, before a single arbitrator to be chosen from
a panel of persons qualified by education and training to pass on the matter to
be decided.


(d)              
If the Determination Date is the date of a liquidation, dissolution or
winding up, or any event deemed to be a liquidation, dissolution or winding up
pursuant to the Company's charter, then all amounts to be payable per share to
holders of the Common Stock pursuant to the charter in the event of such
liquidation, dissolution or winding up, plus all other amounts to be payable
per share in respect of the Common Stock in liquidation under the charter,
assuming for the purposes of this clause (d) that all of the shares of Common
Stock then issuable upon exercise of the Warrant are outstanding at the
Determination Date.


 


2











 


1.3             
Company Acknowledgment.  The Company will, at the time of the
exercise of the Warrant, upon the request of the holder hereof acknowledge in
writing its continuing obligation to afford to such holder any rights to which
such holder shall continue to be entitled after such exercise in accordance
with the provisions of this Warrant. If the holder shall fail to make any such
request, such failure shall not affect the continuing obligation of the Company
to afford to such holder any such rights. 


1.4             
Trustee for Warrant Holders.  In the event that a bank or trust
company shall have been appointed as trustee for the holders of the Warrant
pursuant to Subsection 3.2, such bank or trust company shall have all the
powers and duties of a warrant agent (as hereinafter described) and shall
accept, in its own name for the account of the Company or such successor person
as may be entitled thereto, all amounts otherwise payable to the Company or
such successor, as the case may be, on exercise of this Warrant pursuant to
this Section 1.


2.                 
Procedure for Exercise.


2.1             
Delivery of Stock Certificates, Etc., on Exercise.  The Company
agrees that the shares of Common Stock purchased upon exercise of this Warrant
shall be deemed to be issued to the Holder as the record owner of such shares
as of the close of business on the date on which this Warrant shall have been
surrendered and payment made for such shares in accordance herewith.  As soon
as practicable after the exercise of this Warrant in full or in part, and in
any event within three (3) business days thereafter, the Company at its expense
(including the payment by it of any applicable issue taxes) will cause to be
issued in the name of and delivered to the Holder, or as such Holder (upon
payment by such Holder of any applicable transfer taxes) may direct in
compliance with applicable securities laws, a certificate or certificates for
the number of duly and validly issued, fully paid and nonassessable shares of
Common Stock (or Other Securities) to which such Holder shall be entitled on
such exercise, plus, in lieu of any fractional share to which such holder would
otherwise be entitled, cash equal to such fraction multiplied by the then Fair
Market Value of one full share, together with any other stock or other
securities and property (including cash, where applicable) to which such Holder
is entitled upon such exercise pursuant to Section 1 or otherwise.


2.2             
Exercise.  Payment may be made either (i) in cash or by certified
or official bank check payable to the order of the Company equal to the applicable
aggregate Exercise Price, (ii) by delivery of the Warrant, or shares of Common
Stock and/or Common Stock receivable upon exercise of the Warrant in accordance
with Section (b) below, or (iii) by a combination of any of the foregoing
methods, for the number of Common Shares specified in such Exercise Notice (as
such exercise number shall be adjusted to reflect any adjustment in the total
number of shares of Common Stock issuable to the Holder per the terms of this
Warrant) and the Holder shall thereupon be entitled to receive the number of
duly authorized, validly issued, fully-paid and non-assessable shares of Common
Stock (or Other Securities) determined as provided herein.  Notwithstanding any
provisions herein to the contrary, if the Fair Market Value of one share of
Common Stock is greater than the Exercise Price (at the date of calculation as
set forth below), in lieu of exercising this Warrant for cash, the Holder may
elect to receive shares equal to the value (as determined below) of this
Warrant (or the portion thereof being exercised) by surrender of this Warrant
at the principal office of the Company together with the properly endorsed
Exercise Notice in which event the Company shall issue to the Holder a number
of shares of Common Stock computed using the following formula:


3











	
  X=Y

  	
  (A-B)

  
	

  	
  A

  





Where X =       the number of shares of Common Stock
to be issued to the Holder


Y =                  the number of shares of Common
Stock purchasable under the Warrant or, if only a portion of the Warrant is
being exercised, the portion of the Warrant being exercised (at the date of
such calculation)


A =                  the Fair Market Value of one
share of the Company's Common Stock (at the date of such calculation)


B =                  Exercise Price (as adjusted to
the date of such calculation)


3.                 
Effect of Reorganization, Etc.; Adjustment of Exercise Price.


3.1             
Reorganization, Consolidation, Merger, Etc.  In case at any time
or from time to time, the Company shall (a) effect a reorganization, (b)
consolidate with or merge into any other person, or (c) transfer all or substantially
all of its properties or assets to any other person under any plan or
arrangement contemplating the dissolution of the Company, then, in each such
case, as a condition to the consummation of such a transaction, proper and
adequate provision shall be made by the Company whereby the Holder of this
Warrant, on the exercise hereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation or merger or the effective
date of such dissolution, as the case may be, shall receive, in lieu of the
Common Stock (or Other Securities) issuable on such exercise prior to such
consummation or such effective date, the stock and other securities and
property (including cash) to which such Holder would have been entitled upon such
consummation or in connection with such dissolution, as the case may be, if
such Holder had so exercised this Warrant, immediately prior thereto, all
subject to further adjustment thereafter as provided in Section 4.


3.2             
Dissolution.  In the event of any dissolution of the Company
following the transfer of all or substantially all of its properties or assets,
the Company, concurrently with any distributions made to holders of its Common
Stock, shall at its expense deliver or cause to be delivered to the Holder the
stock and other securities and property (including cash, where applicable)
receivable by the Holder of the Warrant pursuant to Section 3.1, or, if the
Holder shall so instruct the Company, to a bank or trust company specified by
the Holder and having its principal office in New York, NY as trustee for the
Holder of the Warrant.


 


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3.3             
Continuation of Terms.  Upon any reorganization, consolidation,
merger or transfer (and any dissolution following any transfer) referred to in
this Section 3, this Warrant shall continue in full force and effect and the
terms hereof shall be applicable to the shares of stock and other securities
and property receivable on the exercise of this Warrant after the consummation
of such reorganization, consolidation or merger or the effective date of
dissolution following any such transfer, as the case may be, and shall be
binding upon the issuer of any such stock or other securities, including, in
the case of any such transfer, the person acquiring all or substantially all of
the properties or assets of the Company, whether or not such person shall have
expressly assumed the terms of this Warrant as provided in Section 4.  In the
event this Warrant does not continue in full force and effect after the
consummation of the transactions described in this Section 3, then the
Company's securities and property (including cash, where applicable) receivable
by the Holders of the Warrant will be delivered to Holder or the Trustee as
contemplated by Section 3.2.


4.                 
Extraordinary Events Regarding Common Stock.  In the event
that the Company shall (a) issue additional shares of the Common Stock as a
dividend or other distribution on outstanding Common Stock, (b) subdivide its
outstanding shares of Common Stock, or (c) combine its outstanding shares of the
Common Stock into a smaller number of shares of the Common Stock, then, in each
such event, the Exercise Price shall, simultaneously with the happening of such
event, be adjusted by multiplying the then Exercise Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such event and the denominator of which shall be the
number of shares of Common Stock outstanding immediately after such event, and
the product so obtained shall thereafter be the Exercise Price then in effect.
The Exercise Price, as so adjusted, shall be readjusted in the same manner upon
the happening of any successive event or events described herein in this
Section 4.  The number of shares of Common Stock that the holder of this
Warrant shall thereafter, on the exercise hereof as provided in Section 1, be
entitled to receive shall be increased to a number determined by multiplying
the number of shares of Common Stock that would otherwise (but for the
provisions of this Section 4) be issuable on such exercise by a fraction of
which (a) the numerator is the Exercise Price that would otherwise (but for the
provisions of this Section 4) be in effect, and (b) the denominator is the
Exercise Price in effect on the date of such exercise.


5.                 
Certificate as to Adjustments.  In each case of any
adjustment or readjustment in the shares of Common Stock (or Other Securities)
issuable on the exercise of the Warrant, the Company at its expense will
promptly cause its Chief Financial Officer or other appropriate designee to
compute such adjustment or readjustment in accordance with the terms of the
Warrant and prepare a certificate setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or readjustment is
based, including a statement of (a) the consideration received or receivable by
the Company for any additional shares of Common Stock (or Other Securities)
issued or sold or deemed to have been issued or sold, (b) the number of shares
of Common Stock (or Other Securities) outstanding or deemed to be outstanding,
and (c) the Exercise Price and the number of shares of Common Stock to be
received upon exercise of this Warrant, in effect immediately prior to such
adjustment or readjustment and as adjusted or readjusted as provided in this
Warrant.  The Company will forthwith mail a copy of each such certificate to
the holder of the Warrant and any Warrant agent of the Company (appointed
pursuant to Section 11 hereof).


5











6.                 
Reservation of Stock, Etc., Issuable on Exercise of Warrant. 
The Company will at all times reserve and keep available, solely for issuance
and delivery on the exercise of the Warrant, shares of Common Stock (or Other
Securities) from time to time issuable on the exercise of the Warrant.


7.                 
Assignment; Exchange of Warrant.  Subject to compliance
with applicable securities laws, this Warrant, and the rights evidenced hereby,
may be transferred by any registered holder hereof (a "Transferor")
in whole or in part.  On the surrender for exchange of this Warrant, with the
Transferor's endorsement in the form of Exhibit B attached hereto (the
"Transferor Endorsement Form") and together with evidence reasonably
satisfactory to the Company demonstrating compliance with applicable securities
laws, which shall include, without limitation, a legal opinion from the
Transferor's counsel that such transfer is exempt from the registration
requirements of applicable securities laws, the Company at its expense but with
payment by the Transferor of any applicable transfer taxes) will issue and
deliver to or on the order of the Transferor thereof a new Warrant of like
tenor, in the name of the Transferor and/or the transferee(s) specified in such
Transferor Endorsement Form (each a "Transferee"), calling in the
aggregate on the face or faces thereof for the number of shares of Common Stock
called for on the face or faces of the Warrant so surrendered by the
Transferor.


8.                 
Replacement of Warrant.  On 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 of this
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of this Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a new Warrant of like tenor.


9.                 
Registration Rights.  The Holder of this Warrant has been
granted certain registration rights by the Company.  These registration rights
are set forth in a Registration Rights Agreement entered into by the Company
and Purchaser dated as of even date of this Warrant.


10.             
Maximum Exercise.  The Holder shall not be entitled to
exercise this Warrant on an exercise date, in connection with that number of
shares of Common Stock which would be in excess of the sum of (i) the number of
shares of Common Stock beneficially owned by the Holder and its affiliates on
an exercise date, and (ii) the number of shares of Common Stock issuable upon
the exercise of this Warrant with respect to which the determination of this
proviso is being made on an exercise date, which would result in beneficial
ownership by the Holder and its affiliates of more than 4.99% of the outstanding
shares of Common Stock of the Company on such date.  For the purposes of the
proviso to the immediately preceding sentence, beneficial ownership shall be
determined in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended, and Regulation 13d-3 thereunder.  Notwithstanding the
foregoing, the restriction described in this paragraph may be revoked upon 75
days prior notice from the Holder to the Company and is automatically null and
void upon an Event of Default under the Note.


11.             
Warrant Agent.  The Company may, by written notice to the
each Holder of the Warrant, appoint an agent for the purpose of issuing Common
Stock (or Other Securities) on the exercise of this Warrant pursuant to Section
1, exchanging this Warrant pursuant to Section 7, and replacing this Warrant
pursuant to Section 8, or any of the foregoing, and thereafter any such
issuance, exchange or replacement, as the case may be, shall be made at such
office by such agent.


6











12.             
Transfer on the Company's Books.  Until this Warrant is
transferred on the books of the Company, the Company may treat the registered
holder hereof as the absolute owner hereof for all purposes, notwithstanding
any notice to the contrary.


13.             
Notices, Etc.  All notices and other communications from
the Company to the Holder of this Warrant shall be mailed by first class
registered or certified mail, postage prepaid, at such address as may have been
furnished to the Company in writing by such Holder or, until any such Holder
furnishes to the Company an address, then to, and at the address of, the last
Holder of this Warrant who has so furnished an address to the Company.


14.             
Voluntary Adjustment by the Company.  The Company may at
any time during the term of this Warrant reduce the then current Exercise Price
to any amount and for any period of time deemed appropriate by the Board of
Directors of the Company.


15.             
No Shorting.  The Purchaser or any of its affiliates and
investment partners will not and will not cause any person or entity, directly
or indirectly, to engage in "short sales" of the Company's Common
Stock or any other hedging strategies.


16.             
Miscellaneous.  This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought. This Warrant shall be governed by and construed in
accordance with the laws of State of New York without regard to principles of
conflicts of laws.  Any action brought concerning the transactions contemplated
by this Warrant shall be brought only in the state courts of New York or in the
federal courts located in the state of New York; provided, however, that the
Holder may choose to waive this provision and bring an action outside the state
of New York.  The individuals executing this Warrant on behalf of the Company
agree to submit to the jurisdiction of such courts and waive trial by jury. 
The prevailing party shall be entitled to recover from the other party its
reasonable attorney's fees and costs.  In the event that any provision of this
Warrant is invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law.  Any such provision which may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any other provision
of this Warrant.  The headings in this Warrant are for purposes of reference
only, and shall not limit or otherwise affect any of the terms hereof.  The
invalidity or unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision.  The Company
acknowledges that legal counsel participated in the preparation of this Warrant
and, therefore, stipulates that the rule of construction that ambiguities are
to be resolved against the drafting party shall not be applied in the
interpretation of this Warrant to favor any party against the other party.


[Balance of page intentionally left blank;

signature page follows.]


 


7







 



IN WITNESS WHEREOF, the Company has executed
this Warrant as of the date first written above. 


	

  	

  	
  HOME SOLUTIONS OF
  AMERICA, INC.

  
	

  	

  	

   
	
  WITNESS:

  	

  	

   
	

  	

  	
  By:

  	

  
	

  	

  	
  Name:

  	

  
	

  	

  	
  Title:

  	

  





 








 








 








 








8













Exhibit A


FORM OF SUBSCRIPTION

(To Be Signed Only On
Exercise Of Warrant)




TO:      Home Solutions of America, Inc. 


            






            Attention:          Chief Financial Officer




The undersigned, pursuant to the provisions set
forth in the attached Warrant (No.____), hereby irrevocably elects to purchase
(check applicable box):


	

  	

  	
  ________ shares of the Common
  Stock covered by such Warrant; or

  
	

  	

  	

   
	

  	

  	
  the maximum number of shares of
  Common Stock covered by such Warrant pursuant to the cashless exercise
  procedure set forth in Section 2.

  
	

  





The undersigned herewith makes payment of the
full Exercise Price for such shares at the price per share provided for in such
Warrant, which is $___________.  Such payment takes the form of (check
applicable box or boxes):


	

  	

  	
  $__________ in lawful money of the
  United States; and/or

  
	

  	

  	

   
	

  	

  	
  the cancellation of such portion
  of the attached Warrant as is exercisable for a total of _______ shares of
  Common Stock (using a Fair Market Value of $_______ per share for purposes of
  this calculation); and/or

  
	

  
	

  	

  	

   
	

  	

  	
  the cancellation of such number of
  shares of Common Stock as is necessary, in accordance with the formula set
  forth in Section 2.2, to exercise this Warrant with respect to the maximum
  number of shares of Common Stock purchasable pursuant to the cashless
  exercise procedure set forth in Section 2.

  
	

  
	

  





The undersigned requests that the certificates
for such shares be issued in the name of,

 and delivered to
______________________________________________ whose address is

 ___________________________________________________________________________.


The undersigned represents and warrants that all
offers and sales by the undersigned of the securities issuable upon exercise of
the within Warrant shall be made pursuant to registration of the Common Stock
under the Securities Act of 1933, as amended (the "Securities Act")
or pursuant to an exemption from registration under the Securities Act.


	
  Dated:

  	

  	

  	

  
	

  	

  	
  (Signature must conform to name of holder as specified on the
  face of the Warrant)

  
	

  	

  	

  
	

  	

  	
  Address:

  	

   
	

  	

  	

  	

   





 

 







Exhibit B


FORM OF TRANSFEROR ENDORSEMENT

(To Be Signed Only On
Transfer Of Warrant)


For value received, the undersigned hereby
sells, assigns, and transfers unto the person(s) named below under the heading
"Transferees" the right represented by the within Warrant to purchase
the percentage and number of shares of Common Stock of Home Solutions of
America, Inc.into which the within Warrant relates specified under the headings
"Percentage Transferred" and "Number Transferred,"
respectively, opposite the name(s) of such person(s) and appoints each such
person Attorney to transfer its respective right on the books of Home Solutions
of America, Inc.with full power of substitution in the premises.


	
  Transferees

  	
   

  	

  Address

  	

  	
  Percentage

  Transferred

  	

  	
  Number Transferred

  
	

   	

  	

  	

  	

  	

  	

  
	

   	

  	

  	

  	

  	

  	

  
	

   	

  	

  	

  	

  	

  	

  
	

   	

  	

  	

  	

  	

  	

  
	

   	

  	

  	

  	

  	

  	

  
	

   	

  	

  	

  	

  	

  	

  
	

   	

  	

  	

  	

  	

  	

  
	

   	

  	

  	

  	

  	

  	

  







	
  Dated:

  	

  	

  	

  
	

  	

  	
  (Signature must conform to name of holder as specified on the
  face of the Warrant)

  
	

  	

  	

   
	

  	

  	
  Address:

  	

  
	

  	

  	

   	

  
	

   	

   	

   	

   
	

   	

   	

   	

   







	

  	
  SIGNED IN THE PRESENCE OF:

  
	

  	

   
	

  	

   
	

  	
  (Name)

  
	
  ACCEPTED AND AGREED:

  	

  
	
  [TRANSFEREE]

  	

  
	

   	

  
	

   	

  
	

   	

  
	
  (Name)

  	

  





 

 

 

B-1