NEITHER THIS STOCKPURCHASE WARRANT NOR THE SECURITIES ISSUABLE UPON ITS EXERCISE OR CONVERSIONHAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE"ACT"), OR ANY APPLICABLE STATE SECURITIES LAW AND MAY NOT BETRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER THE ACT OR SUCH APPLICABLESTATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II)IN THE OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY, REGISTRATION UNDER SUCHSECURITIES ACTS OR SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED INCONNECTION WITH SUCH PROPOSED TRANSFER.

STOCK PURCHASE WARRANT

            This STOCKPURCHASE WARRANT (the "Warrant") is issued as of this 18th day of July,2005 by HOME SOLUTIONS OF AMERICA, INC., a Delaware corporation (the"Company"), to PATRIOT CAPITAL, L.P., a Delaware limited partnership(Patriot Capital, L.P. and any subsequent assignee or transferee hereof arehereinafter referred to collectively as "Holder" or"Holders").

**AGREEMENT:**

            1.         Issuanceof Warrant; Term.

                        (a)        Forand in consideration of Patriot Capital, L.P. making a loan to the Company, inan amount of Seven Hundred Thousand Dollars ($700,000) pursuant to the terms ofa secured promissory note of even date herewith (together with any and allextensions, replacements and renewals thereof, the "Note") andrelated loan and security agreement of even date herewith (as amended,supplemented or otherwise modified from time to time, the "LoanAgreement"), and other good and valuable consideration, the receipt andsufficiency of which are hereby acknowledged, the Company hereby grants toHolder the right to purchase 93,333 shares of the Company's common stock,$0.001 par value per share (the "Common Stock").

                        (b)        Theshares of Common Stock issuable upon exercise of this Warrant are hereinafterreferred to as the "Shares."  This Warrant shall be exercisable atany time and from time to time from the date hereof until seven (7) years fromthe date hereof (the "Expiration Date").  If this Warrant is notexercised prior to the Expiration Date, it will expire and all rights hereundershall be rendered void.

            2.         ExercisePrice.  The exercise price per share for which all or any of the Shares maybe purchased pursuant to the terms of this Warrant shall be one cent ($.01) (asadjusted from time to time pursuant to Section 5, the "ExercisePrice").

 

 

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3.         Exercise.

                        (a)        ThisWarrant may be exercised by the Holder hereof (but only on the conditionshereafter set forth) as to all or any increment or increments of one thousand(1,000) Shares (or the balance of the Shares if less than such number) upondelivery of written notice of intent to exercise to the Company during normalbusiness hours on any business day at the address set forth in Section 16hereof or such other address as the Company shall designate in a written noticeto the Holder hereof, together with this Warrant and payment to the Company ofthe aggregate Exercise Price of the Shares so purchased.  The Exercise Priceshall be payable, at the option of the Holder, (i) by certified or bank checkor (ii) by wire transfer of immediately available funds to an accountdesignated by the Company to the Holder. Upon exercise of this Warrant asaforesaid, the Company shall as promptly as practicable, and in any eventwithin five (5) business days thereafter, execute and deliver to the Holder ofthis Warrant a certificate or certificates for the total number of whole Sharesfor which this Warrant is being exercised in such names and denominations asare requested by such Holder.  If this Warrant shall be exercised with respectto less than all of the Shares, the Holder shall be entitled to receive a newWarrant covering the number of Shares in respect of which this Warrant shallnot have been exercised, which new Warrant shall in all other respects beidentical to this Warrant.  The Company covenants and agrees that it will paywhen due any and all state and federal issue taxes which may be payable inrespect of the issuance of this Warrant or the issuance of any Shares uponexercise of this Warrant.

                        (b)        Inlieu of exercising this Warrant pursuant to Section 3(a) above, the Holdershall have the right to require the Company to convert this Warrant, in wholeor in part and at any time or times into Shares (the "ConversionRight"), upon delivery of written notice of intent to convert to theCompany at its address in Section 3(a) or such other address as the Companyshall designate in a written notice to the Holder hereof, together with thisWarrant.  Upon exercise of the Conversion Right, the Company shall deliver tothe Holder (*without* payment by the Holder of any Exercise Price) thatnumber of Shares which is equal to the quotient obtained by dividing (x) thevalue of the number of Shares with respect to which the Conversion Right is beingexercised (determined by subtracting the aggregate Exercise Price for theShares with respect to which the Conversion Right is being exercised from anumber equal to the product of (i) the Fair Market Value per Share (as suchterm is defined in Section 10(c)) as at such time, *multiplied* by (ii)the number of Shares with respect to which the Conversion Right is beingexercised), by (y) such Fair Market Value per Share. Any references in thisWarrant to the "exercise" of this Warrant, and the use of the term exerciseherein, shall be deemed to include (without limitation) any exercise of theConversion Right. 

(c)               No fractional Shares shall beissuable upon the exercise of this Warrant, and the Company shall in lieu ofissuing fractional Shares pay the holder hereof an amount of cash equal to thefractional Share that otherwise would be issuable multiplied by the Fair MarketValue per Share (as defined in Section 10(c)) at the time of exercise.  

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            4.         Covenantsand Conditions.  The above provisions are subject to the following:

                        (a)        Neitherthis Warrant nor the Shares have been registered under the Securities Act of1933, as amended ("Securities Act") or any state securities laws("Blue Sky Laws").  The Holder represents that it is an "accreditedinvestor", as defined under Regulation D of the Securities Act, experienced inevaluating companies such as the Company, has such knowledge and experience infinancial and business matters as to be capable of evaluating the merits andrisks of its investments, and has the ability to bear the economic risks of itsinvestments.  This Warrant has been acquired for investment purposes and notwith a view to distribution or resale and may not be sold or otherwisetransferred (i) without an effective registration statement for such Warrantunder the Securities Act and such applicable Blue Sky Laws, (ii) unless Holdershall have delivered to the Company an opinion of counsel acceptable to theCompany (which opinion shall be in form, substance and scope customary foropinions of counsel in comparable transactions) to the effect that the Warrantor such portion of the Warrant to be sold or transferred may be sold ortransferred under an exemption from such registration, or (iii) unless soldunder Rule 144 promulgated under the Securities Act (or successor rule) and anyapplicable Blue Sky Laws.    Transfer of Shares issued upon the exercise ofthis Warrant shall be restricted in the same manner and to the same extent asthe Warrant and the certificates representing such Shares shall, until suchtime as the Shares have been registered under the Securities Act ascontemplated pursuant to Section 12 hereof or otherwise may be sold by Holderunder Rule 144, bear substantially the following legend:

THE SHARES OF COMMON STOCK REPRESENTED BY THISCERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, ASAMENDED (THE "ACT"), OR ANY APPLICABLE STATE SECURITIES LAW AND MAY NOT BETRANSFERRED (I) UNTIL A REGISTRATION STATEMENT UNDER THE ACT OR SUCH APPLICABLESTATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II)UNLESS REGISTRATION UNDER SUCH SECURITIES ACTS OR SUCH APPLICABLE STATESECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER.

The Holder hereof and theCompany agree to execute such other documents and instruments as counsel forthe Company reasonably deems necessary to effect the compliance of the issuanceof this Warrant and any shares of Common Stock issued upon exercise hereof withapplicable federal and state securities laws.

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                        (b)        TheCompany covenants and agrees that this Warrant and all Shares which may beissued upon exercise of this Warrant will, upon issuance and payment therefor,be legally and validly issued and outstanding, fully paid and nonassessable,free from all taxes, liens, charges and preemptive rights, if any, with respectthereto or to the issuance thereof.  The Company represents and warrants thatthe issuance of this Warrant will not result in an adjustment in the number ofshares of Common Stock issuable upon the exercise or conversion of anyConvertible Securities or Option Securities (each as defined in Section 5(b)below), as the case may be, pursuant to any anti-dilution or similar provisionscontained in such securities.  The Company shall at all times reserve and keepavailable for issuance upon the exercise of this Warrant such number ofauthorized but unissued shares of Common Stock as will be sufficient to permitthe exercise in full of this Warrant. If any Shares which may be issued upon exerciseof this Warrant require registration or qualification with any governmentalauthority under any federal or state law before such shares may be so issued,the Company will in good faith use its reasonable best efforts as expeditiouslyas possible at its expense to cause such Shares to be duly registered orqualified.  If the Company shall list any shares of Common Stock on anysecurities exchange or market it will, at its expense, list thereon, maintainand increase when necessary such listing, of, all Shares to be issued uponexercise of this Warrant.

            5.         Adjustmentof Exercise Price and Number of Shares Issuable.

                        (a)        CommonStock Reorganization.  If the Company shall (i) subdivide or consolidateits outstanding shares of Common Stock (or any class thereof) into a greater orsmaller number of shares, (ii) pay a dividend or make a distribution on itsCommon Stock (or any class thereof) in shares of its capital stock, or (iii)issue by reclassification of its Common Stock (or any class thereof) any sharesof its Common Stock (any such event described in clauses (i), (ii) or (iii)being called a "Common Stock Reorganization"), then the ExercisePrice and the number and type of securities for which this Warrant isexercisable shall be adjusted immediately such that the Holder thereafter shallbe entitled to receive upon exercise of this Warrant the aggregate number andtype of securities that it would have received if this Warrant had beenexercised immediately prior to such Common Stock Reorganization.  

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(b)              Common Stock Distribution.  If the Company shall issue, sell,distribute or otherwise grant any shares of Common Stock, other than (i)pursuant to a Common Stock Reorganization, (ii) shares issued pursuant to theexercise of options or warrants for the purchase of Common Stock outstanding onthe date hereof or as reserved and ungranted as of the date hereof pursuant tothe Company's 1998 Stock Option Plan, as amended, or the Company's 2001 StockPlan (collectively, the "Stock Plan"), (iii) up to 920,000 shares of CommonStock issued upon the conversion of the convertible notes held by Laurus MasterFund, up to 1,360,000 shares of Common Stock issued upon the conversion of theCompany's Series A Convertible Preferred Stock and up to 666,667 shares of CommonStock issued upon the conversion of the Company's Series B ConvertiblePreferred Stock, or (iv) shares of Common Stock issued upon the conversion orexercise of this Warrant, the warrant issued to Petra Mezzanine Fund, L.P("Petra") under that certain Stock Purchase Warrant by and between the Companyand Petra dated as of March 31, 2005 (the "Petra Warrant"), the warrant (the"Laddcap Warrant") issued to Laddcap Value Partners L.P. ("Laddcap") or thatcertain Stock Purchase Warrant (the "Initial Patriot Warrant") by and betweenPatriot Capital, L.P. and the Company dated as of May 27, 2005 (any suchissuance, sale, distribution or grant being herein called a "Common StockDistribution"), for a consideration per share less than $1.25 per share (the"Investment Price") then the Exercise Price shall be adjusted as follows: theExercise Price immediately prior to such Common Stock Distribution shall bemultiplied by a fraction, the numerator of which shall be the sum of (1) thenumber of fully-diluted shares of Common Stock outstanding (assuming theconversion or exercise of all outstanding securities convertible into orexercisable for shares of Common Stock) prior to such Common StockDistribution, plus (2) the number of shares of Common Stock that the aggregateconsideration received by the Company for such Common Stock Distribution wouldpurchase at the Investment Price, and the denominator of which shall be the sumof (1) the number of fully-diluted shares of Common Stock outstanding (assumingthe conversion or exercise of all outstanding securities convertible into orexercisable for shares of Common Stock) prior to Common Stock Distribution,plus (2) the number of shares of Common Stock issued in such Common StockDistribution.

(c)               Consideration Received.  In the case of the issuance, sale,distribution or grant of Common Stock for cash, the consideration shall bedeemed to be the amount of cash paid therefor before deducting any discounts,commissions or other expenses allowed, paid or incurred by the Company for anyunderwriting or otherwise in connection with the issuance and sale thereof.  Inthe case of the issuance, sale, distribution or grant of the Common Stock for aconsideration in whole or in part other than cash, the consideration other thancash shall be deemed to be the fair value thereof at the time of such issuanceor sale as determined in good faith by the Board of Directors irrespective ofany accounting treatment.

(d)              Convertible Securities and Option Securities.  If, after the datehereof,  the Company shall issue, sell, distribute or otherwise grant(including by assumption):

                                    (i)         anystock or other securities convertible into or exchangeable for Common Stock,whether or not the rights to exchange or convert thereunder are immediatelyexercisable (such convertible or exchangeable stock or securities being hereincalled "Convertible Securities"), or

                                    (ii)        anyrights to subscribe for or to purchase, or any warrants or options (other thanoptions to purchase shares of Common Stock outstanding on the date hereof asreserved as of the date hereof (subject to stockholder approval) and ungrantedpursuant to the Stock Option Plans) for the purchase of, Common Stock orConvertible Securities, whether or not immediately exercisable, (such rights,warrants or options being herein called "Option Securities"),

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and the lowest aggregateconsideration per share for which Common Stock is issuable upon the conversionor exercise of such Convertible Securities or Option Securities (and, ifapplicable, upon conversion or exchange of Convertible Securities issuable uponexercise of Option Securities) shall be less than the Investment Price, thenthe Exercise Price shall be reduced to the price determined in accordance withthe formula provided above in Section 5(b).  In the case of the issuance, sale,distribution or grant of Convertible Securities or Option Securities (i) theaggregate maximum number of shares of Common Stock deliverable upon exercise ofOption Securities (assuming the satisfaction of any conditions toexercisability, including without limitation, the passage of time, but withouttaking into account potential antidilution adjustments) shall be deemed to havebeen issued at the time such Option Securities were issued or granted and for aconsideration equal to the consideration (determined in the manner provided inSection 5(c)), if any, received by the Company upon the issuance of such OptionSecurities plus the minimum exercise price provided in such Option Securities(without taking into account potential antidilution adjustments) for the CommonStock covered thereby, and (ii) the aggregate maximum number of shares ofCommon Stock deliverable upon conversion of, or in exchange (assuming thesatisfaction of any conditions or convertibility or exchangeability, including,without limitation, the passage of time, but without taking into accountpotential antidilution adjustments) for, any such Convertible Securities orupon the exercise of options to purchase or rights to subscribe for suchConvertible Securities and subsequent conversion or exchange thereof shall bedeemed to have been issued at the time such securities were issued or suchoptions or rights were issued and for a consideration equal to theconsideration, if any, received by the Company for any such securities andrelated options or rights (excluding any cash received on account of accruedinterest or accrued dividends), plus the minimum additional consideration, ifany, to be received by the Company (without taking into account potentialantidilution adjustments) upon the conversion or exchange of such securities orthe exercise of any related options or rights (the consideration in each caseto be determined in the manner provided in Section 5(c)).  If any of suchConvertible Securities or Option Securities shall have terminated, lapsed orexpired prior to exercise, exchange or conversion, the Exercise Price then ineffect shall forthwith be readjusted (effective only with respect to anyexercise of this Warrant after such readjustment) to the Exercise Price whichwould then be in effect had the adjustment not been made upon the issuance,sale, distribution or grant of such Convertible Securities or OptionSecurities.  Nothing provided in this paragraph 5(d), however, shall cause anyadjustment in the Exercise Price solely due to the vesting of any OptionSecurities that are outstanding on the date hereof.

                        (e)        Adjustmentin Number of Shares.  Upon each adjustment to the Exercise Price pursuantto subsection (a), (b) or (d) of this Section 5, this Warrant shall thereafterevidence the right to receive upon payment of the adjusted Exercise Price thatnumber of Shares obtained by multiplying the number of Shares previouslyissuable upon exercise of this Warrant by a fraction the numerator of which isthe Exercise Price prior to adjustment and the denominator of which is theadjusted Exercise Price; provided, however, that in no event, after taking intoaccount any adjustments required pursuant to this subsection (e), shall theaggregate number of Shares issuable under this Warrant, the Petra Warrant, theLaddcap Warrant, or the Initial Patriot Warrant, exceed  an amount equal to19.99% of 17,022,486 (the number of outstanding shares of the Company's CommonStock on March 31, 2005, prior to the loan by Petra), as such number of sharesmay be adjusted for stock splits, stock dividends and other recapitalizations,without the prior approval of the Company's stockholders as required by Section713 of the American Stock Exchange Company Guide.

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                        (f)         CapitalReorganizations.  If there shall be any consolidation, merger oramalgamation of the Company with another person or entity or any acquisition ofcapital stock of the Company by means of a share exchange, other than aconsolidation, merger or share exchange in which the Company is the continuingcorporation or any sale or conveyance of the property of the Company as anentirety or substantially as an entirety, or any reorganization orrecapitalization of the Company (any such event being called a "CapitalReorganization"), then simultaneously with the consummation of suchCapital Reorganization the Holder of this Warrant shall be entitled to receivewarrants to purchase, on the same terms and conditions as are set forth in thisWarrant, the kind and amount of shares of stock and other securities andproperty (including cash) which a holder of the number of Shares for which thisWarrant is exercisable immediately prior to such Capital Reorganization wouldbe entitled to receive pursuant to such Capital Reorganization; provided,however, that if so required by the acquirer in connection with any CapitalReorganization described above, this Warrant shall be deemed exercised pursuantto Section 3(b), or if the Exercise Price is greater than the fair market valueof each Share as determined by reference to the consideration paid per share ofCommon Stock in such Capital Reorganization, shall be deemed cancelled, in eachcase immediately prior to the consummation of such Capital Reorganization. Subject to the immediately preceding proviso, as a condition to effecting anyCapital Reorganization, the Company or the successor or surviving corporation,as the case may be, shall assume by a supplemental agreement, satisfactory inform, scope and substance to the Holder (which shall be mailed or delivered tothe Holder of this Warrant at the last address of such Holder appearing on thebooks of the Company), the obligation to deliver to such Holder such shares ofstock, securities, cash or property as, in accordance with the foregoingprovisions, such Holder may be entitled to purchase, and all other obligationsof the Company set forth in this Warrant.

                        (g)        AdjustmentRules.  Any adjustments pursuant to this Section 5 shall be madesuccessively whenever an event referred to herein shall occur.  No adjustmentshall be made pursuant to this Section 5 in respect of the issuance from timeto time of shares of Common Stock upon the exercise of this Warrant.

                        (h)        ProceedingsPrior to Any Action Requiring Adjustment.  As a condition precedent to thetaking of any action which would require an adjustment pursuant to this Section5, the Company shall take any action which may be necessary, includingobtaining regulatory approvals or exemptions, in order that the Company maythereafter validly and legally issue as fully paid and nonassessable all sharesof Common Stock which the Holder of this Warrant is entitled to receive uponexercise thereof.

                        (i)         Noticeof Adjustment.  Not less than five (5) business days prior to the recorddate or effective date, as the case may be, of any action which requires ormight require an adjustment or readjustment pursuant to this Section 5, theCompany shall give notice to the Holder of such event, describing such event inreasonable detail and specifying the record date or effective date, as the casemay be, and, if determinable, the required adjustment and the computationthereof.  If the required adjustment is not determinable at the time of suchnotice, the Company shall give notice to the Holder of such adjustment andcomputation promptly after such adjustment becomes determinable.

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            6.         Transferof Warrant.  Subject to the provisions of Section 4 hereof, this Warrantmay be transferred, in whole or in part, to any person or business entity, bypresentation of the Warrant to the Company with written instructions for suchtransfer; provided, however that the transfer shall be made in compliance withall applicable state and federal securities laws and that Holder shall give theCompany not less than five (5) business days prior written notice of suchtransfer.  Upon such presentation for transfer, the Company shall promptlyexecute and deliver a new Warrant or Warrants in the form hereof in the name ofthe assignee or assignees and in the denominations specified in suchinstructions.  The Company shall pay all expenses incurred by it in connectionwith the preparation, issuance and delivery of Warrants under this Section. 

            7.         WarrantHolder Not Stockholder; Rights Offering; Preemptive Rights.  Except asotherwise provided herein, this Warrant does not confer upon the Holder, assuch, any right whatsoever as a stockholder of the Company.  Notwithstandingthe foregoing, the Holder shall be entitled to the rights set forth in theInvestors' Rights Agreement dated as of March 31, 2005, as amended on April 15,2005 and as amended and modified by that certain Joinder Agreement dated April18, 2005 and that certain Joinder Agreement dated as of May 27, 2005 (the"Investors' Rights Agreement") by and among the Company, Petra, PatriotCapital, L.P., Laddcap and Frank J. Fradella and Rick J. O'Brien (Frank J.Fradella and Rick J. O'Brien, collectively, the "Management Stockholders"). The Company shall not grant any preemptive rights with respect to any of itscapital stock if such preemptive rights are exercisable upon exercise of thisWarrant. 

            8.         InterimDividends.  If the Company pays a dividend or makes a distribution to theholders of its capital stock of any securities (other than its capital stock)or property (including cash and securities of other companies) of the Company,or any rights, options or warrants to purchase securities (other than itscapital stock) or property (including securities of other companies) of theCompany, then, simultaneously with the payment of such dividend or the makingof such distribution, and as a condition precedent to its right to do so, itwill pay or distribute to the Holder of this Warrant an amount of property(including without limitation cash) and securities (including withoutlimitation securities of other companies) of the Company as would have beenreceived by such Holder had it exercised this Warrant and received all of theShares of Common Stock issuable upon the exercise of this Warrant immediately priorto the record date (or other applicable date) used for determining stockholdersof the Company entitled to receive such dividend or distribution.

            9.         CertainNotices.  In case at any time the Company shall propose to:

                        (a)        declareany cash dividend upon its Common Stock;

                        (b)        declareany dividend upon its Common Stock payable in stock or make any specialdividend or other distribution to the holders of its Common Stock;

                        (c)        offergenerally for subscription to the holders of any of its Common Stock anyadditional shares of stock of any class or other rights;

                        (d)        reorganize,or reclassify the capital stock of the Company, or consolidate, merge orotherwise combine with, or sell all or substantially all of its assets to,another corporation; 

                        (e)        voluntarilyor involuntarily dissolve, liquidate or wind up of the affairs of the Company;or

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                        (f)         redeemor purchase any shares of its capital stock or securities convertible into itscapital stock;

then, in any one or more ofsaid cases, the Company shall give to the Holder, by certified or registeredmail, (i) at least ten (10) business days' prior written notice of  the date onwhich the books of the Company shall close or a record shall be taken for suchdividend, distribution or subscription rights or for determining rights to votein respect of any such reorganization, reclassification, consolidation, merger,sale, dissolution, liquidation or winding up, and (ii) in the case of suchreorganization, reclassification, consolidation, merger, sale, dissolution,liquidation or winding up, at least ten (10) business days' prior writtennotice of the date when the same shall take place.  Any notice required byclause (i) shall also specify, in the case of any such dividend, distributionor subscription rights, the date on which the holders of Common Stock shall beentitled thereto, and any notice required by clause (ii) shall specify the dateon which the holders of Common Stock shall be entitled to exchange their CommonStock for securities or other property deliverable upon such reorganization,reclassification, consolidation, merger, sale, dissolution, liquidation orwinding up, as the case may be.

            10.       PutRight  

            (a)        Exerciseof Put Right.  If at any time on or after March 31, 2010 the Company'sCommon Stock is not listed on at least one of The American Stock Exchange,Inc., the NASDAQ National Market, the NASDAQ SmallCap Market, The New YorkStock Exchange, Inc. or the OTC Bulletin Board, each Holder shall have theright (a "Put Right") beginning on March 31, 2010 and continuing for a periodof two (2) years thereafter, to require that the Company purchase all or anyportion of the Warrant or Shares then owned by such Holder in accordance withthis Section 10, by delivery of a written notice to the Company to the effectthat such Holder is exercising a Put Right under this Section 10 (a "PutExercise Notice").  Upon receipt by the Company of a Put Exercise Notice,the Company will promptly (and in any event within five (5) business days) givewritten notice (a "Company Notice") to each of the other Holders, ifany, and to the holders of the Petra Warrant, the Laddcap Warrant, and the InitialPatriot Warrant, if any, that a Put Exercise Notice has been received by theCompany.  Each such other Holder will have the right to exercise a Put Rightand require the Company to purchase (on the same Put Closing Date (as definedbelow) relating to the Put Exercise Notice) all or any portion of the Warrantor Shares held by such Holder by delivering written notice to the Companywithin ten (10) days following receipt of the Company Notice.  All such noticesdelivered by such other Holders will be deemed to have been delivered as of thedate of the Put Exercise Notice and will be deemed to be an exercise of a PutRight by each such other Holder as of such date.  Upon the exercise of a PutRight by a Holder, the purchase price payable by the Company to such Holder (a"Put Purchase Price") shall be as follows:

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                        (i)         inthe case of such Holder's Warrant, an amount determined by subtracting (A) theaggregate Exercise Price then in effect for the portion of such Holder'sWarrant with respect to which the Put Right is being exercised from (B) theproduct of (1) the Fair Market Value per Share as of the date of exercise ofthe Put Right (i.e., the date of receipt of the Put Exercise Notice) multipliedby (2) the number of Shares that would be received upon exercise of theportion of the Holder's Warrant with respect to which the Put Right is beingexercised; and

                        (ii)        inthe case of Shares, an amount equal to the product of (A) the Fair Market Valueper Share as of the date of exercise of the Put Right, multiplied by (B)the number of Shares with respect to which the Put Right is being exercised.

Promptly and in any eventwithin five (5) business days following the Company's receipt of a Put ExerciseNotice, the Company shall initiate the process for determination of the FairMarket Value per Share, shall use its commercially reasonable best efforts tocause such process to proceed expeditiously, and in any event, shall cause suchprocess to be completed within sixty (60) days of the receipt of the PutExercise Notice, and shall give prompt written notice of the determinationthereof to each Holder.  

                        (b)        Closing. Each closing of the purchase and sale of any Warrant or Shares pursuant to thisSection 10 shall take place on a date (a "Put Closing Date") which isthe later of (i) thirty (30) days after the giving of the Put Exercise Notice,and (ii) ten (10) days after determination of the Fair Market Value per Share,provided that if such day is not a Business Day such closing shall be on thenext succeeding Business Day.  Payment of the Put Purchase Price shall be dueand payable in full on the Put Closing Date to the extent the Company may thenlegally pay such price pursuant to provisions of applicable law. To the extentthat all of the Put Purchase Price payable under this Warrant, the PetraWarrant, the Laddcap Warrant, and the Initial Patriot Warrant may not legallybe paid under the provisions of applicable law, the Put Purchase Price payableunder this Warrant, the Petra Warrant, the Laddcap Warrant and the InitialPatriot Warrant, if any,  shall be paid ratably among the Holder, the holder ofthe Petra Warrant, the holder of the Laddcap Warrant, and the holder of the InitialPatriot Warrant based on the total number of Shares held or issuable uponexercise of this Warrant, the Petra Warrant, the Laddcap Warrant or the InitialPatriot Warrant, as the case may be.  The portion of the Put Purchase Price notpaid in full on the Put Closing Date shall be evidenced by a promissory notedelivered to the Holder, the principal of which or such portion thereof as maybe paid shall be payable as and when the Company may legally pay it underapplicable law. Unpaid principal on such promissory note shall bear interest atthe maximum rate allowable under applicable law or, if none, twenty-fourpercent (24%) per annum.  The closing shall take place at 10:00 a.m. on the Put Closing Date at such location as the Holder(s) may determine and notify theCompany or at such other location as may be agreed to by the Company and theHolder(s).  The Put Purchase Price as may be paid under applicable law shall bepaid in full at each such closing, by wire transfer of immediately availablefederal funds.  

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                        (c)        FairMarket Value per Share.  "Fair Market Value per Share" as of anydate shall mean an amount per Share issued or issuable pursuant to this Warrantdetermined as follows: (i) if the Common Stock is traded on the American StockExchange or another registered national stock exchange or through the NASDAQNational Market, the Fair Market Value per Share shall be deemed to be theaverage of the closing prices of the Common Stock on such exchange over thefive (5) trading day period ending one (1) trading day prior to the delivery ofthe Put Exercise Notice; (ii) if the Common Stock is actively traded on theover-the-counter market, as reported by the OTC Bulletin Board or the NationalQuotation Bureau Incorporated (or similar organization or agency succeeding toits functions of reporting prices), the Fair Market Value per Share shall bedeemed to be the average of the closing bid prices over the five (5) tradingday period ending one (1) trading day prior to the delivery of the Put ExerciseNotice and (iii) if there is no active public market for the Common Stock, theFair Market Value per Share shall be determined by an independent competentappraiser mutually agreed to by the Company and the Holders of at least seventypercent (70%)of the shares of Common Stock issued or issuable pursuant to thisWarrant, the Petra Warrant, the Laddcap Warrant, and the Initial PatriotWarrant requesting redemption (the "Requisite Majority").  In the event theCompany and the Requisite Majority cannot mutually agree upon an independentappraiser within fifteen (15) days of receipt by the Company of a Put ExerciseNotice, the Company and the Requisite Majority will each select an independentcompetent appraiser of national reputation to determine the Fair Market Valueper Share.  The respective appraisals will be provided to the Company and theHolders requesting redemption promptly upon completion.  If the Fair MarketValue per Share appraisals are within 10% of one another, the Fair Market Valueper Share shall be the average of the two appraisals.  In the event theappraisal valuations differ by more than ten percent (10%), the two appraiserschosen by the Company and the Requisite Majority, respectively, shall choose athird independent competent appraiser of national reputation and the thirdappraiser shall conduct an appraisal to determine the Fair Market Value perShare (the "Third Appraisal").  Upon completion, the Third Appraisalshall be promptly delivered to the Company and the Holders requestingredemption.  The Third Appraisal valuation shall be averaged with the priorappraisal that is closer in value to the Third Appraisal.  The average of thesetwo appraisals shall be the Fair Market Value per Share and shall be binding onthe Company and the Holders requesting redemption.  All appraisals requiredherein shall be paid for by the Company.  In determining the Fair Market Valueper Share, each of the appraisers shall evaluate the Company as a whole, on agoing concern basis, without application of any discount whatsoever, includingany discount for a minority ownership interest and/or lack of marketability ofsuch interest.  In determining the Fair Market Value per Share pursuant to thisSection 10(c), none of the appraisers shall take into account or otherwise makeany discount in respect of (i) any restriction on the transfer of the Shares,any other shares of Common Stock of the Company or this Warrant, (ii) the factthat this Warrant and the Shares represent a minority interest in the Company,(iii) any lack of liquidity of the Shares, any other shares of Common Stock ofthe Company or this Warrant due to the fact that there may not be a public orprivate market therefor, (iv) any rights of the Company set forth in thisWarrant or (v) the voting rights or status of the Shares, any other shares ofCommon Stock of the Company or this Warrant, whether under the certificate ofincorporation or bylaws of the Company, by agreement or otherwise.

                        (d)        TheCompany agrees and acknowledges that the rights set forth in Section 10 shallexpressly survive the exercise of all or any portion of this Warrant and shallinure to the Holder of any Shares issued upon exercise of the Warrant. 

11.       RegistrationRights.  As set forth in the Investors' Rights Agreement, each of theHolders shall have certain rights to require the Company to register the Sharesunder the Securities Act pursuant to an effective registration statement.

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12.       Co-SaleRights.  As set forth in the Investors' Rights Agreement, each of theHolders shall have certain rights of co-sale with respect to any transfer ofCommon Stock by any of the Management Stockholders.

            13.       Successors. All the covenants and provisions of this Warrant by or for the benefit of theCompany or the Holder shall bind and inure to the benefit of their respectivesuccessors and assigns, including those by operation of law, merger,consolidation or as otherwise provided in Section 5(e).

            14.       Survival. The rights of the Holder under the Warrant, and the covenants and agreements ofthe Company set forth in this Warrant for the benefit of the Holder, other thanSections 5 and 8 shall survive exercise of all or any portion of this Warrantand shall inure to the Holder of any Shares issued upon exercise of thisWarrant.  Notwithstanding the foregoing, following exercise of all sharesexerciseable under the Warrant, Sections 5 and 8 shall become null and voidwith no further force or effect.

            15.       Articleand Section Headings.  Numbered and titled article and section headings arefor convenience only and shall not be construed as amplifying or limiting anyof the provisions of this Warrant.

            16.       Notice. Any and all notices, elections or demands permitted or required to be madeunder this Warrant shall be in writing signed by the party giving such notice,election or demand and shall be delivered personally, by telecopy or sent bycertified mail or overnight via nationally recognized courier service (such asFedEx), to the other party at the address set forth below, or at such otheraddress as may be supplied in writing and of which receipt has beenacknowledged in writing.  The date of personal delivery or telecopy or two (2)business days after the date of mailing (or the next business day afterdelivery to such courier service), as the case may be, shall be the date ofsuch notice, election or demand.  For the purposes of this Warrant:

TheAddress of Holder is:         Patriot Capital, L.P.                                                            16  W. Madison Street                                                            Baltimore, Maryland 21201                                                            Attention:Charles P. McCusker                                                            Facsimile:   (443) 573-3020

witha copy to:                          Miles & Stockbridge P.C.                                                            10  Light Street                                                            Baltimore, Maryland 21202                                                            Attention: Frederick W. Runge, Jr., Esquire                                                            Facsimile:   (410) 385-3700

The Address of Company is:                Home Solutions of America, Inc.                                                                         5565 Red Bird Center Dr., Suite 900                                    Dallas, Texas 75237

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                                                            Attention: RickJ. O'Brien                                                             Telecopy No.: (214) 333-9435

witha copy to:                                      Patton Boggs LLP                                                            2001Ross, Suite 3000                                                            Dallas, TX    75201                                                            Attn:David P. McLean                                                            TelecopyNo.: (214) 758 - 1550

            17.       Severability. If any provision(s) of this Warrant or the application thereof to any person orcircumstances shall be invalid or unenforceable to any extent, the remainder ofthis Warrant and the application of such provisions to other persons orcircumstances shall not be affected thereby and shall be enforced to thegreatest extent permitted by law.

            18.       GoverningLaw and Amendments.  This Warrant shall be construed and enforced under thelaws of the State of Delaware applicable to contracts to be wholly performed insuch State.  No amendment or modification hereof shall be effective except in awriting executed by each of the parties hereto.

            19.       Counterparts. This Warrant may be executed in any number of counterparts and by differentparties to this Warrant in separate counterparts, each of which when soexecuted shall be deemed to be an original and all of which taken togethershall constitute one and the same Warrant.

            20.       Waiverof Trial by Jury.  HOLDER AND THE COMPANY HEREBY KNOWINGLY AND VOLUNTARILYWITH THE BENEFIT OF COUNSEL WAIVE TRIAL BY JURY IN ANY ACTIONS, PROCEEDINGS,CLAIMS OR COUNTER-CLAIMS, WHETHER IN CONTRACT OR TORT OR OTHERWISE, AT LAW ORIN EQUITY, ARISING OUT OF OR IN ANY WAY RELATING TO THIS WARRANT.  THISPROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES TO ENTER INTO THIS WARRANT.

*[Remainder of page intentionally left blank. Signatures on following page(s).]*

 

 

 

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COMPANY'S SIGNATURE PAGE TO STOCK PURCHASE WARRANT

            IN WITNESSWHEREOF, an authorized officer of the Company has set his hand as of the datefirst above written.

                                                            COMPANY:

                                                            HOMESOLUTIONS OF AMERICA, INC.

By:       __________________________            Frank J. Fradella,           Chief Executive Officer

 

 

 

 

 

 

 

 

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PATRIOT'S SIGNATURE PAGE TO STOCK PURCHASE WARRANT

            IN WITNESSWHEREOF, an authorized officer of the general partner of Patriot has set hishand as of the date first above written.

                                                            PATRIOT:

PATRIOTCAPITAL, L.P.

                                                            By:       PatriotCapital, LLC,                                                                         itsgeneral partner

                                                            By:       _______________________(SEAL)                                                                                    Charles P. McCusker,                                                                                    ManagingMember

[Petra's Acknowledgment and Agreement Follows on NextPage]

 

 

 

 

 

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PETRA'S ACKNOWLEDGMENT AND ACCEPTANCE OF STOCKPURCHASE WARRANT

Petra acknowledges andconsents to the terms and provisions of this Warrant as of the date firstwritten above and specifically agrees that this Warrant is acceptable to it inaccordance with, among other provisions, Section 5(b) of the Petra Warrant andin accordance with the fourth (4th) recital paragraph of theInvestors' Rights Agreement.

PETRA:

PETRA MEZZANINE FUND, L.P.

                                                            By:       Petra Partners, LLC,                                                                        itsgeneral partner

                                                            By:       _______________________                                                                                    Michael W. Blackburn,                                                                                    ManagingMember

 

 

 

 

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LADDCAP'S ACKNOWLEDGMENT AND ACCEPTANCE OF STOCKPURCHASE WARRANT

Laddcap acknowledges andconsents to the terms and provisions of this Warrant as of the date firstwritten above and specifically agrees that this Warrant is acceptable to it inaccordance with, among other provisions, Section 5(b) of the Laddcap Warrantand in accordance with the fourth (4th) recital paragraph of theInvestors' Rights Agreement.

LADDCAP:

Laddcap Value PartnersL.P.

                                                            By:       ________________________                                                                        RobertB. Ladd,                                                                         ManagingPartner

 

 

 

 

 

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