Document:

Exhibit 10.2

 

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

SECURED CONVERTIBLE MINIMUM BORROWING NOTE

FOR VALUE RECEIVED, HOME SOLUTIONS OF AMERICA, INC.  a Delaware
corporation (the "Borrower") promises to pay to LAURUS MASTER FUND,
LTD., c/o Ironshore Corporate Services Ltd., P.O. Box 1234 G.T., Queensgate
House, South Church Street, Grand Cayman, Cayman Islands, Fax: 345-949-9877
(the "Holder") or its registered assigns, on order, the sum of ONE
MILLION FIVE HUNDRED THOUSAND DOLLARS ($1,500,000), of, if different, the aggregate
principal amount of all "Loans" (as such term is defined in the Security
Agreement referred to below), together with any accrued and unpaid interest
hereon, on January 22, 2006 (the "Maturity Date").

Capitalized terms used herein without definition shall have the
meanings ascribed to such terms in the Security Agreement between Borrower and
the Holder dated as of January 22, 2004 (as amended, modified and supplemented
from time to time, the "Security Agreement").

The following terms shall apply to this
Minimum Borrowing Note (the "Note"):

ARTICLE I

INTEREST

1.1       Interest Rate and Payments.  Subject to Sections 5.3 and
6.7 hereof, interest payable on this Note shall accrue at a rate per annum
equal to the "prime rate" published in The Wall Street Journal from time
to time, plus two and one half percent (2.5%) (the "Contract Rate"). 
The Contract  Rate shall be increased or decreased as the case may be for each
increase or decrease in the Prime Rate in an amount equal to such increase or
decrease in the Prime Rate; each change to be effective as of the day of the
change in such rate in accordance with the terms of the Security Agreement.
Subject to the immediately following sentence, the Contract Rate shall not be
less than six and one half percent (6.5 %).  The Contract Rate shall be
adjusted as follows: if (i) the Company shall have registered the shares of the
Company's common stock underlying the conversion of this Note and that certain
warrant issued to Holder of even date herewith on a registration statement
declared effective by the Securities Exchange Commission, and (ii) the volume
weighted average price of the Common Stock as reported by Bloomberg, L.P. on
the principal market for any of the ten (10) trading days immediately preceding
a Interest Payment Date (defined below) exceeds the then applicable Fixed
Conversion Price by twenty five percent (25%), the Contract Rate for the
succeeding calendar month shall automatically be reduced by twenty five basis
points (25 b.p.) for such period. Interest shall be payable monthly in arrears
commencing on March 1, 2004 and on the first day of each consecutive calendar
month thereafter, (each, an "Interest Payment Date"). 

 

 

ARTICLE II

ADVANCES, BORROWER CONVERSION RIGHTS, PAYMENTS UNDER NOTE

2.1.           
Mechanics of Advances.  All Loans evidenced by this Note shall be
made in accordance with the terms and provisions of the Security Agreement.

2.2.           
Fixed Conversion Price.  For purposes hereof, subject to Section
3.5 hereof, the "Fixed Conversion Price" means $1.88 (105% of the
average of the closing price of the Common Stock for the ten (10) trading days
immediately prior to the date hereof). 

2.3.           
No Effective Registration.  Notwithstanding anything to the
contrary herein, the Borrower shall be prohibited from exercising its right to
repay any amount hereunder in shares of Common Stock if at any time from the
Call Date (defined below) for such payment through the date upon which such
payment is made by delivery of certificates for shares of Common Stock there
fails to exist an effective current Registration Statement (as defined in the
Registration Rights Agreement) covering the shares of Common Stock to be
issued, or if an Event of Default hereunder exists and is continuing, unless
such requirement is otherwise waived in writing by the Holder in whole or in
part at the Holder's option.

2.4.           
Optional Payments in Common Stock.  (a) Subject to Section 2.2
hereof, if the Company elects to pay interest or prepay principal and the
average closing price of the Common Stock on the Principal Market is greater than
110% of the Fixed Conversion Price for a period of at least five (5)
consecutive trading days, then the Borrower may, at its sole option,
provide the Holder written notice (a "Call Notice") requiring the
conversion at the Fixed Conversion Price of all or a portion of the outstanding
interest or principal of this Note (subject to compliance with Section 2.3 and
3.2, together with accrued interest on the amount being prepaid, as of the date
set forth in such Call Notice (the "Call Date").  The Call Date shall be
at least ten (10) trading days following the date of the Call Notice.  On the
Call Date the Borrower shall deliver to the Holder certificates evidencing the
shares of Common Stock issued in satisfaction of the principal and/or interest
being retired.  Notwithstanding the foregoing, the Borrower's right to issue
shares of Common Stock in payment of obligations under this Note shall be
subject to the limitation that the number of shares of Common Stock issued in
connection with any Call Notice shall not exceed 35% of the aggregate dollar
trading volume of the Common Stock for the ten  (10) trading days immediately
preceding the Call Date (as such volume is reported by Bloomberg, L.P.  If the
price of the Common Stock falls below 110% of the Fixed Conversion Price during
the ten (10) trading day period immediately preceding the Call Date, then the
Holder will then be required to convert only such amount of the Note as shall
equal thirty  five percent (35%) of the aggregate dollar trading volume (as such
volume is reported by Bloomberg L.P.) for each day that the Common Stock has
exceeded 110% of the then applicable Fixed Conversion Price.  The Borrower
shall not be permitted to give the Holder more than one Call Notice under this
Note during any 10 day period.

 

2

 

(b) Subject to Sections 2.4(a) hereof,
if the average closing price of the Common Stock on the Principal Market is
less than one hundred ten percent (110%) of the Fixed Conversion Price for a
period of at least five (5) consecutive trading days, then the Borrower may, at
its sole option (subject to shareholder approval, if required), provide the
Holder with a Prepayment Call Notice (defined below) requiring the conversion
of the Monthly Amount at a Fixed Conversion Price equal to ninety percent (90%)
of the five lowest closing prices of the Common Stock during the twenty two
(22) trading days immediately prior to the date of conversion, but in no event
shall the Fixed Conversion Price for the purposes of this Section 2.4(b) be
less than $1.00. of all or a portion of the outstanding principal, interest and
fees outstanding under this Note (subject to compliance with Section 2.4(a) and
3.2), together with accrued interest on the amount being prepaid, as of the
Prepayment Call Date (defined below).  Notwithstanding anything to the contrary
contained herein, Borrower shall not have the right to pay principal or
interest with respect to this Note with Common Stock pursuant to this
grammatical paragraph, unless Borrower has first obtained approval of its shareholders
permitting this form of payment.

2.5       Optional Redemption in Cash.  The Borrower will have the
option of prepaying this Note in full (but not in part) in cash, ("Optional
Redemption") by paying to the Holder a sum of money equal to one hundred
twenty five percent (125%) of the principal amount of this Note together with
accrued but unpaid interest thereon and any and all other sums due, accrued or
payable to the Holder arising under this Note, the Security Agreement, or any
Ancillary Agreement  (as defined in the Security Agreement) (the "Redemption
Amount") outstanding on the day written notice of redemption (the "Notice
of Redemption") is given to the Holder. The Notice of Redemption shall
specify the date for such Optional Redemption (the "Redemption Payment Date")
which date shall  be seven (7) days after the date of the Notice of Redemption
(the "Redemption Period") . A Notice of Redemption shall not be
effective with respect to any portion of this Note for which the Holder has a
pending election to convert pursuant to Section 3.1, or for conversions elected
to be made by the Holder pursuant to Section 3.1 during the Redemption Period. 
The Redemption Amount shall be determined as if such Holder's conversion
elections had been completed immediately prior to the date of the Notice of
Redemption. On the Redemption Payment Date, the Redemption Amount must be paid
in good funds to the Holder.  In the event the Borrower fails to pay the
Redemption Amount on the Redemption Payment Date, then such Redemption Notice
will be null and void.

ARTICLE III

HOLDER'S CONVERSION RIGHTS

3.1.           
Optional Conversion. Subject to the terms of this Article III,
the Holder shall have the right, but not the obligation, at any time until the
Maturity Date, or thereafter during an Event of Default (as defined in Article
V), and, subject to the limitations set forth in Section 3.2 hereof, to convert
all or any portion of the outstanding principal amount and/or accrued interest
and fees due and payable into fully paid and nonassessable shares of the Common
Stock at the Fixed Conversion Price. The shares of Common Stock to be issued
upon such conversion are herein referred to as the "Conversion Shares."
Notwithstanding the foregoing, the Holder's right to convert all or any portion
of the outstanding principal amount and/or accrued interest and fees due and
payable into fully paid and nonassessable shares of the Common Stock at the
Fixed Conversion Price shall be subject to the limitation that the number of
shares of Common Stock issued in connection with any such conversion shall not
exceed 25% of the aggregate dollar trading volume of the Common Stock for the
ten (10) trading days immediately preceding the date upon which such conversion
is made by Holder (as such volume is reported by Bloomberg, L.P.

 

3

 

3.2.           
Conversion Limitation. Notwithstanding anything contained herein
to the contrary, the Holder shall not be entitled to convert pursuant to the
terms of this Note an amount that would be convertible into that number of
Conversion Shares which would exceed the difference between the number of
shares of Common Stock beneficially owned by such Holder or issuable upon
exercise of warrants held by such Holder (and its affiliates) and 4.99% of the
outstanding shares of Common Stock of the Borrower.  For the purposes of the
immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Exchange Act and Regulation 13d-3
thereunder.  The Conversion Shares limitation described in this Section 3.2
shall automatically become null and void without any notice to Borrower upon
the occurrence and during the continuance beyond any applicable grace period of
an Event of Default. 

3.3.           
Mechanics of Holder's Conversion. In the event that the Holder
elects to convert this Note into Common Stock, the Holder shall give notice of
such election by delivering an executed and completed notice of conversion ("Notice
of Conversion") to the Borrower and such Notice of Conversion shall provide
a breakdown in reasonable detail of the  principal amount, accrued interest and
fees that are being converted.  On each Conversion Date (as hereinafter
defined) and in accordance with its Notice of Conversion, the Holder shall make
the appropriate reduction to the principal amount, accrued interest and fees as
entered in its records and shall provide written notice thereof to the Borrower
within two (2) business days after the Conversion Date.  Each date on which a
Notice of Conversion is delivered or telecopied to the Borrower in accordance
with the provisions hereof shall be deemed a Conversion Date (the "Conversion
Date").  A form of Notice of Conversion to be employed by the Holder is
annexed hereto as Exhibit A.  Pursuant to the terms of the Notice of
Conversion, the Borrower will issue instructions to the transfer agent
accompanied by an opinion of counsel within one (1) business day of the date of
the delivery to Borrower of the Notice of Conversion and shall cause the
transfer agent to transmit the certificates representing the Conversion Shares
to the Holder by crediting the account of the Holder's designated broker with
the Depository Trust Corporation ("DTC") through its Deposit Withdrawal
Agent Commission ("DWAC") system within three (3) business days after
receipt by the Borrower of the Notice of Conversion (the "Delivery Date").
In the case of the exercise of the conversion rights set forth herein the
conversion privilege shall be deemed to have been exercised and the Conversion
Shares issuable upon such conversion shall be deemed to have been issued upon
the date of receipt by the Borrower of the Notice of Conversion. The Holder
shall be treated for all purposes as the record holder of such Common Stock,
unless the Holder provides the Borrower written instructions to the contrary.

4

 

3.4.           
Late Payments. The Borrower understands that a delay in the
delivery of the shares of Common Stock in the form required pursuant to this
Article beyond the Delivery Date could result in economic loss to the Holder. 
As compensation to the Holder for such loss, the Borrower agrees to pay late
payments to the Holder for late issuance of such shares in the form required
pursuant to this Article III upon conversion of the Note, in the amount equal
to $400  per business day after the Delivery Date.  The Borrower shall pay any
payments incurred under this Section in immediately available funds upon
demand.  

3.5.           
Adjustment Provisions. The Fixed Conversion Price and number and
kind of shares or other securities to be issued upon conversion determined
pursuant to Section 2.2 shall be subject to adjustment from time to time upon
the happening of certain events while this conversion right remains
outstanding, as follows:

A.                
Reclassification, etc.  If the Borrower at any time shall, by reclassification
or otherwise, change the Common Stock into the same or a different number of
securities of any class or classes, this Note, as to the unpaid principal amount
and accrued interest thereon, shall thereafter be deemed to evidence the right
to purchase an adjusted number of such securities and kind of securities as
would have been issuable as the result of such change with respect to the
Common Stock immediately prior to such reclassification or other change.

B.                
Stock Splits, Combinations and Dividends.  If the shares of
Common Stock are subdivided or combined into a greater or smaller number of
shares of Common Stock, or if a dividend is paid on the Common Stock in shares
of Common Stock, the Fixed Conversion Price shall be proportionately reduced in
case of subdivision of shares or stock dividend or proportionately increased in
the case of combination of shares, in each such case by the ratio which the
total number of shares of Common Stock outstanding immediately after such event
bears to the total number of shares of Common Stock outstanding immediately
prior to such event.

C.                
Share Issuances.  Subject to the provisions of this
Section 3.5, if the Borrower shall at any time prior to the conversion or
repayment in full of the principal amount issue any shares of Common Stock to a
person other than the Holder (except (i) pursuant to Subsections A or B above;
(ii) pursuant to options, warrants, or other obligations to issue shares
outstanding on the date hereof as disclosed to Holder in writing; or (iii)
pursuant to options that may be issued under any employee incentive stock
option and/or any qualified stock option plan adopted by the Borrower) for a
consideration per share (the "Offer Price") less than the Fixed
Conversion Price in effect at the time of such issuance, then the Fixed
Conversion Price shall be immediately reset pursuant
to the formula below.  For purposes hereof, the issuance of any security of the
Borrower convertible into or exercisable or exchangeable for Common Stock shall
result in an adjustment to the Fixed Conversion Price at the time of issuance
of such securities.  If the Borrower issues any
additional shares pursuant to this Subsection then, and thereafter successively
upon each such issue, the Fixed Conversion Price shall be adjusted by
multiplying the then applicable Fixed Conversion Price by the following
fraction:

 

5

 

	
  A + B

  
	
  (A + B) +
  [((C - D) x B) / C]

  

A = Actual shares outstanding prior
to such offering

B =  Actual shares sold in the
offering

C = Fixed Conversion Price

D = Offer Price

D.                
Computation of Consideration. For purposes of any computation
respecting consideration received pursuant to Subsection C above, the following
shall apply:

(a)               
in the case of the issuance of shares of Common Stock for cash, the
consideration shall be the amount of such cash, provided that in no case shall
any deduction be made for any commissions, discounts or other expenses incurred
by the Borrower for any underwriting of the issue or otherwise in connection
therewith;

(b)              
in the case of the issuance of shares of Common Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair market value thereof as determined in good
faith by the Board of Directors of the Borrower (irrespective of the accounting
treatment thereof); and 

(c)               
Upon any such exercise, the aggregate consideration received for such
securities shall be deemed to be the consideration received by the Borrower for
the issuance of such securities plus the additional minimum consideration, if
any, to be received by the Borrower upon the conversion or exchange thereof
(the consideration in each case to be determined in the same manner as provided
in clauses (a) and (b) of this Subsection (D)).

3.6.           
Reservation of Shares. During the period the conversion right
exists, the Borrower will reserve from its authorized and unissued Common Stock
a sufficient number of shares to provide for the issuance of Common Stock upon
the full conversion of this Note.  The Borrower represents that upon issuance,
such shares will be duly and validly issued, fully paid and non-assessable. 
The Borrower agrees that its issuance of this Note shall constitute full
authority to its officers, agents, and transfer agents who are charged with the
duty of executing and issuing stock certificates to execute and issue the
necessary certificates for shares of Common Stock upon the conversion of this
Note.

3.7.           
Registration Rights.  The Holder has been granted registration
rights with respect to the shares of Common Stock issuable upon conversion of
this Note as more fully set forth in a Registration Rights Agreement dated the
date hereof.

ARTICLE IV

EVENTS OF DEFAULT

The occurrence of any of the following events is an Event of
Default ("Event of Default"):

4.1.           
Failure to Pay Principal, Interest or other Fees.  The Borrower
fails to pay when due any installment of principal, interest or other fees
hereon or on any other promissory note issued pursuant to the Security
Agreement, when due in accordance with the terms of such note.  

 

6

 

4.2.           
Breach of Covenant.  The Borrower breaches any covenant or other
term or condition of this Note in any material respect and such breach, if
subject to cure, continues for a period of thirty (30) days after the
occurrence thereof.

4.3.           
Breach of Representations and Warranties.  Any material
representation or warranty of the Borrower made herein, or the Security
Agreement, or in any Ancillary Agreement shall be materially false or
misleading.

4.4.           
Stop Trade.  An SEC stop trade order or Principal Market trading
suspension of the Common Stock shall be in effect for 5 consecutive days or 5
days during a period of 10 consecutive days, excluding in all cases a
suspension of all trading on a Principal Market, provided that the Borrower
shall not have been able to cure such trading suspension within 30 days of the
notice thereof or list the Common Stock on another Principal Market within 60
days of such notice.  The "Principal Market" for the Common Stock shall include
the NASD OTC Bulletin Board, NASDAQ SmallCap Market, NASDAQ National Market
System, American Stock Exchange, or New York Stock Exchange (whichever of the
foregoing is at the time the principal trading exchange or market for the
Common Stock), or any securities exchange or other securities market on which
the Common Stock is then being listed or traded.

4.5.           
Default Under Related Agreement.  The occurrence of an Event of
Default under and as defined in the Security Agreement and/or the Ancillary
Agreements.

4.6       Failure to Deliver Common Stock or Replacement Note. 
The Borrower's failure to timely deliver Common Stock to the Holder pursuant to
and in the form required by this Note, and Section 9 of the Security Agreement,
or if required, a replacement Note if such failure to timely deliver Common
Stock shall not be cured within two (2) business days or such failure to
deliver a replacement Note is not cured within seven (7) business days.

4.7       Payment Grace Period.  The Borrower shall have
a three (3) business day grace period to pay any monetary amounts due under
this Note or the Security Agreement or any Ancillary Agreements, after which
grace period a default interest rate of five percent (5%) per annum above the
then applicable interest rate hereunder shall apply to the monetary amounts
due.

ARTICLE V

DEFAULT PAYMENTS

5.1.           
Default Payment.  If an Event of Default occurs, the Holder, at
its option, may elect, in addition to all rights and remedies of Holder under
the Security Agreement and all obligations of Borrower under the Security
Agreement, to require the Borrower to make a Default Payment ("Default
Payment").  The Default Payment shall be the outstanding principal amount
of the Note, plus accrued but unpaid interest, all other fees then remaining
unpaid, and all other amounts payable hereunder. 

5.2.           
Default Payment Date and Default Notice Period.  The Default
Payment shall be due and payable on the fifth business day after an Event of
Default as defined in Article IV ("Default Payment Date") has occurred
and is continuing beyond any applicable grace period.  The period between date
upon which of an Event of Default has occurred and is continuing beyond any
applicable grace period and the Default Payment Date shall be the "Default
Period."  If during the Default Period, the Borrower cures the Event of
Default, the Event of Default will no longer exist and any additional rights
the Holder had triggered by the occurrence and continuance of an Event of
Default will no longer exist.  If the Event of Default is not cured during the
Default Notice Period, all amounts payable hereunder shall be due and payable
on the Default Payment Date, all without further demand, presentment or notice,
or grace period, all of which hereby are expressly waived.  

 

7

 

 

5.3.           
 Default Interest Rate.  Following the occurrence and during the
continuance of an Event of Default, interest on this Note shall automatically
be increased to one and one half percent (1.5%) per month, and all outstanding
Obligations, including unpaid interest, shall continue to accrue interest from
the date of such Event of Default at such interest rate applicable to such
Obligations until such Event of Default is cured or waived.

5.4.           
Cumulative Remedies.  The remedies under this Note shall be
cumulative.

ARTICLE VI

MISCELLANEOUS

6.1.           
Failure or Indulgence Not Waiver.  No failure or delay on the
part of the Holder hereof in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege.  All rights and
remedies existing hereunder are cumulative to, and not exclusive of, any rights
or remedies otherwise available.

6.2.           
Notices.  Any notice herein required or permitted to be given
shall be in writing and provided in accordance with the terms of the Security
Agreement.

6.3.           
 Amendment Provision.  The term "Note" and all reference thereto,
as used throughout this instrument, shall mean this instrument as originally
executed, or if later amended or supplemented, then as so amended or
supplemented, and any successor instrument as it may be amended or
supplemented.

6.4.           
Assignability.  This Note shall be binding upon the Borrower and
its successors and assigns, and shall inure to the benefit of the Holder and
its successors and assigns, and may be assigned by the Holder in accordance
with the requirements of the Security Agreement.

6.5.           
Cost of Collection.  If default is made in the payment of this
Note, the Borrower shall pay the Holder hereof reasonable costs of collection,
including reasonable attorneys' fees.

 

8

 

 

6.6.           
Governing Law.  This Note shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of laws.  Any action brought by either party against the other
concerning the transactions contemplated by this Agreement shall be brought
only in the state courts of New York or in the federal courts located in the
state of New York.  Both parties and the individual signing this Note on behalf
of the Borrower agree to submit to the jurisdiction of such courts.  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 Note 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 unenforceability of any other provision of
this Note.  Nothing contained herein shall be deemed or operate to preclude the
Holder from bringing suit or taking other legal action against the Borrower in
any other jurisdiction to collect on the Borrower's obligations to Holder, to
realize on any collateral or any other security for such obligations, or to
enforce a judgment or other court order in favor of Holder.

6.7.           
Maximum Payments.  Nothing contained herein shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law.  In the event that the rate
of interest required to be paid or other charges hereunder exceed the maximum
permitted by such law, any payments in excess of such maximum shall be credited
against amounts owed by the Borrower to the Holder and thus refunded to the
Borrower.

6.8.           
Security Interest.  The Holder of this Note has been granted a
security interest in certain assets of the Borrower more fully described in a
Security Agreement dated as of January 22, 2004.

6.9.           
Construction.  Each party acknowledges that its legal counsel
participated in the preparation of this Note 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 Note to favor
any party against the other.

[Balance of page
intentionally left blank; signature page follows.]

 

 

9

IN WITNESS WHEREOF, the Borrower has caused this Secured
Convertible Revolving Note to be signed in its name effective as of this 22nd
day of January, 2004.

HOME SOLUTIONS OF AMERICA, INC. 

By:__________________________________

Name:

Title:

WITNESS:

                                                            

 

 

10

 

NOTICE OF CONVERSION

(To be executed by the Holder
in order to convert the Note)

The undersigned hereby elects to convert $_________ of the
principal and $_________ of the interest due on the Secured Convertible
Revolving Note issued by HOME SOLUTIONS OF AMERICA, INC.  on January __, 2004
into Shares of Common Stock of HOME SOLUTIONS OF AMERICA, INC.  (the
"Borrower") according to the conditions set forth in such Note, as of the date
written below.

	
  Date of Conversion:

  	
                                                                                                               

  
	
  Conversion Price:

  	
                                                                                                               

  
	
  Shares To Be Delivered:

  	
                                                                                                               

  
	
  Signature:

  	
                                                                                                               

  
	
  Print Name:

  	
                                                                                                               

  
	
  Address:

  	
                                                                                                               

  
	

  

  
	
                                                                                                               

  
	
  Holder  DWAC instructions

  	
  _______________________________________________________

  
	

  

  
	
   

  

 

 

 

 

11Exhibit 10.3

MINIMUM BORROWING NOTE REGISTRATION RIGHTS AGREEMENT  

This Registration Rights Agreement (this "Agreement") is made
and entered into as of January 22, 2004, by and between Home Solutions of
America, Inc., a Delaware corporation (the "Company"), and Laurus Master Fund,
Ltd. (the "Purchaser"). 

This Agreement is made pursuant to the Security Agreement, dated
as of the date hereof, by and between the Purchaser and the Company (the
"Security Agreement"), and pursuant to the Notes and the Warrants referred to
therein.

The Company and the Purchaser hereby agree as follows: 

1.                 
Definitions.  Capitalized terms used and not otherwise defined
herein that are defined in the Security Agreement shall have the meanings given
such terms in the Security Agreement.  As used in this Agreement, the following
terms shall have the following meanings: 

"Commission" means the Securities and Exchange
Commission.

"Common Stock" means shares of the Company's common
stock, par value $0.001 per share. 

"Effectiveness Date" means the 105th day following the
applicable Filing Date. 

"Effectiveness Period" shall have the meaning set forth
in Section 2(a). 

"Exchange Act" means the Securities Exchange Act of 1934,
as amended, and any successor statute.

 "Filing Date" means, with respect to (1) the
Registration Statement which is required to be filed with respect to the Loans
made on the initial funding date, the date which is thirty (30)  days after
such initial funding date, and (2) with respect to each $1,500,000 tranche of
Loans funded after the initial funding date, the date which is forty five (45)
days after such funding of such additional $1,500,000 of Loans evidenced by a
Minimum Borrowing Note thereafter.

"Holder" or "Holders" means the Purchaser or any
of its affiliates or transferees to the extent any of them hold Registrable
Securities.

 

 

 

"Indemnified Party" shall have the meaning set forth in
Section 5(c).

"Indemnifying Party" shall have the meaning set forth in
Section 5(c).

"Notes" has the meaning set forth in the Security Agreement.

"Proceeding" means an action, claim, suit, investigation
or proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened. 

"Prospectus" means the prospectus included in a Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by such Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus. 

"Registrable Securities" means the shares of Common Stock
issued upon the conversion of the each Note and issuable upon exercise of the
Warrants.

"Registration Statement" means each registration
statement required to be filed hereunder, including the Prospectus therein,
amendments and supplements to such registration statement or Prospectus,
including pre- and post-effective amendments, all exhibits thereto, and all
material incorporated by reference or deemed to be incorporated by reference in
such registration statement. 

"Rule 144" means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

"Rule 415" means Rule 415 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

 

 

 

"Rule 424" means Rule 424 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

"Securities Act" means the Securities Act of 1933, as
amended, and any successor statute.

"Trading Market" means any of the NASD OTC Bulletin
Board, NASDAQ SmallCap Market, the Nasdaq National Market, the American Stock
Exchange or the New York Stock Exchange 

"Warrants" means the Common Stock purchase warrants
issued pursuant to the Security Agreement.

2.                 
Registration.

(a)               
On or prior to each Filing Date, the Company shall use its best efforts
to prepare and file with the Commission a Registration Statement covering the
Registrable Securities for an offering to be made on a continuous basis
pursuant to Rule 415.  Each Registration Statement shall be on Form S-3 (except
if the Company is not then eligible to register for resale the Registrable
Securities on Form S-3, in which case such registration shall be on another
appropriate form in accordance herewith).  The Company shall cause each
Registration Statement to become effective and remain effective as provided
herein.  The Company shall use its reasonable commercial efforts to cause the
first such Registration Statement to be declared effective under the Securities
Act as promptly as possible after the filing thereof, but in any event no later
than the Effectiveness Date.  The Company shall use its reasonable commercial
efforts to cause any subsequent such Registration Statement to be declared
effective under the Securities Act as promptly as possible after the filing
thereof, but in any event no later than sixty (60) days after the filing
thereof.  The Company shall use its reasonable commercial efforts to keep each
Registration Statement continuously effective under the Securities Act until
the date which is the earlier date of when (i) all Registrable Securities
covered by such Registration Statement have been sold or (ii) all Registrable
Securities covered by such Registration Statement may be sold immediately
without registration under the Securities Act and without volume restrictions
pursuant to Rule 144(k), as determined by the counsel to the Company pursuant
to a written opinion letter to such effect, addressed and acceptable to the
Company's transfer agent and the affected Holders (each, an "Effectiveness
Period").

 

 

(b)              
If: (i) any Registration Statement is not filed on or prior to the
applicable Filing Date for such Registration Statement; (ii) a Registration
Statement filed hereunder is not declared effective by the Commission by the
date required hereby with respect to such Registration Statement; (iii) after a
Registration Statement is filed with and declared effective by the Commission,
such Registration Statement ceases to be effective (by suspension or otherwise)
as to all Registrable Securities to which it is required to relate at any time
prior to the expiration of the Effectiveness Period applicable to such
Registration Statement (without being succeeded immediately by an additional
Registration Statement filed and declared effective) for a period of time which
shall exceed 30 days in the aggregate per year or more than 20 consecutive
calendar days (defined as a period of 365 days commencing on the date such
Registration Statement is declared effective); or (iv) the Common Stock is not
listed or quoted, or is suspended from trading on any Trading Market for a
period of three (3) consecutive Trading Days (provided the Company shall not
have been able to cure such trading suspension within 30 days of the notice
thereof or list the Common Stock on another Trading Market); (any such failure
or breach being referred to as an "Event," and for purposes of clause (i) or
(ii) the date on which such Event occurs, or for purposes of clause (iii) the
date which such 30 day or 20 consecutive day period (as the case may be) is
exceeded, or for purposes of clause (iv) the date on which such three (3)
Trading Day period is exceeded, being referred to as "Event Date"), then until
the applicable Event is cured, the Company shall pay to each Holder an amount
in cash, as liquidated damages and not as a penalty, equal to 2.0% for each
thirty (30) day period (prorated for partial periods) on a daily basis of the
original principal amount of each applicable Note.  While such Event continues,
such liquidated damages shall be paid not less often than each thirty (30)
days.  Any unpaid liquidated damages as of the date when an Event has been
cured by the Company shall be paid within three (3) days following the date on
which such Event has been cured by the Company.

(c)        Within
three business days of the Effectiveness Date, the Company shall cause its
counsel to issue a blanket opinion in the form attached hereto as Exhibit A, to
the transfer agent stating that the shares are subject to an effective
registration statement and can be reissued free of restrictive legend upon
notice of a sale by Laurus and confirmation by Laurus that it has complied with
the prospectus delivery requirements, provided that the Company has not advised
the transfer agent orally or in writing that the opinion has been withdrawn.
Copies of the blanket opinion required by this Section  2(c) shall be delivered
to Laurus within the time frame set forth above. 

 

 

3.                 
Registration Procedures.  If and whenever the Company is required
by the provisions hereof to effect the registration of any Registrable
Securities under the Securities Act, the Company will, as expeditiously as
possible: 

(a)               
prepare and file with the Commission a registration statement with
respect to such Registrable Securities, respond as promptly as possible to any
comments received from the Commission, and use its best efforts to cause such
Registration Statement to become and remain effective for the Effectiveness
Period with respect thereto, and promptly provide to the Purchaser copies of
all filings and Commission letters of comment relating thereto;

(b)              
prepare and file with the Commission such amendments and supplements to
such Registration Statement and the Prospectus used in connection therewith as
may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all Registrable Securities covered by such
Registration Statement and to keep such Registration Statement effective until
the expiration of the Effectiveness Period applicable to such Registration
Statement;

(c)               
furnish to the Purchaser such number of copies of the Registration
Statement and the Prospectus included therein (including each preliminary
Prospectus) as the Purchaser reasonably may request to facilitate the public sale
or disposition of the Registrable Securities covered by such Registration
Statement;

(d)              
use its commercially reasonable efforts to register or qualify the
Purchaser's Registrable Securities covered by such Registration Statement under
the securities or "blue sky" laws of such jurisdictions within the United
States as the Purchaser may reasonably request, provided, however, that
the Company shall not for any such purpose be required to qualify generally to
transact business as a foreign corporation in any jurisdiction where it is not
so qualified or to consent to general service of process in any such
jurisdiction;

(e)               
list the Registrable Securities covered by such Registration Statement
with any securities exchange on which the Common Stock of the Company is then
listed; 

 

 

(f)                
immediately notify the Purchaser at any time when a Prospectus relating
thereto is required to be delivered under the Securities Act, of the happening
of any event of which the Company has knowledge as a result of which the
Prospectus contained in such Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing; and

(g)               
make available for inspection by the Purchaser and any attorney,
accountant or other agent retained by the Purchaser, all publicly available,
non-confidential financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers, directors and
employees to supply all publicly available, non-confidential information
reasonably requested by the attorney, accountant or agent of the Purchaser.

4.                 
Registration Expenses.  All expenses relating to the Company's
compliance with Sections 2 and 3 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel and independent public accountants for the Company, fees and expenses
(including reasonable counsel fees) incurred in connection with complying with
state securities or "blue sky" laws, fees of the NASD, transfer taxes, fees of
transfer agents and registrars, fees of, and disbursements incurred by, one
counsel for the Holders are called "Registration Expenses". All selling
commissions applicable to the sale of Registrable Securities, including any
fees and disbursements of any special counsel to the Holders beyond those
included in Registration Expenses, are called "Selling Expenses."  The Company
shall only be responsible for Registration Expenses.

5.                 
Indemnification.

(a)               
In the event of a registration of any Registrable Securities under the
Securities Act pursuant to this Agreement, the Company will indemnify and hold
harmless the Purchaser, and its officers, directors and each other person, if
any, who controls the Purchaser within the meaning of the Securities Act,
against any losses, claims, damages or liabilities, joint or several, to which
the Purchaser, or such persons may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any Registration Statement
under which such Registrable Securities were registered under the Securities
Act pursuant to this Agreement, any preliminary Prospectus or final Prospectus
contained therein, or any amendment or supplement thereof, or arise out of or
are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and will reimburse the Purchaser, and each such person for any
reasonable legal or other expenses incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case if and to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission so made in conformity with information furnished by or on behalf of
the Purchaser or any such person in writing specifically for use in any such document.

 

 

(b)              
In the event of a registration of the Registrable Securities under the
Securities Act pursuant to this Agreement, the Purchaser will indemnify and
hold harmless the Company, and its officers, directors and each other person,
if any, who controls the Company within the meaning of the Securities Act,
against all losses, claims, damages or liabilities, joint or several, to which
the Company or such persons may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact which was furnished in writing by
the Purchaser to the Company expressly for use in (and such information is
contained in) the Registration Statement under which such Registrable
Securities were registered under the Securities Act pursuant to this Agreement,
any preliminary Prospectus or final Prospectus contained therein, or any
amendment or supplement thereof, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse the Company and each such person for any reasonable legal or other
expenses incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action, provided, however, that
the Purchaser will be liable in any such case if and only to the extent that
any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission so
made in conformity with information furnished in writing to the Company by or
on behalf of the Purchaser specifically for use in any such document. 
Notwithstanding the provisions of this paragraph, the Purchaser shall not be
required to indemnify any person or entity in excess of the amount of the
aggregate net proceeds received by the Purchaser in respect of Registrable
Securities in connection with any such registration under the Securities Act.

 

 

 

(c)               
Promptly after receipt by a party entitled to claim indemnification
hereunder (an "Indemnified Party") of notice of the commencement of any action,
such Indemnified Party shall, if a claim for indemnification in respect thereof
is to be made against a party hereto obligated to indemnify such Indemnified
Party (an "Indemnifying Party"), notify the Indemnifying Party in writing
thereof, but the omission so to notify the Indemnifying Party shall not relieve
it from any liability which it may have to such Indemnified Party other than
under this Section 5(c) and shall only relieve it from any liability which it
may have to such Indemnified Party under this Section 5(c) if and to the extent
the Indemnifying Party is prejudiced by such omission. In case any such action
shall be brought against any Indemnified Party and it shall notify the
Indemnifying Party of the commencement thereof, the Indemnifying Party shall be
entitled to participate in and, to the extent it shall wish, to assume and
undertake the defense thereof with counsel satisfactory to such Indemnified
Party, and, after notice from the Indemnifying Party to such Indemnified Party
of its election so to assume and undertake the defense thereof, the
Indemnifying Party shall not be liable to such Indemnified Party under this
Section 5(c) for any legal expenses subsequently incurred by such Indemnified
Party in connection with the defense thereof; if the Indemnified Party retains
its own counsel, then the Indemnified Party shall pay all fees, costs and
expenses of such counsel, provided, however, that, if the defendants in
any such action include both the indemnified party and the Indemnifying Party
and the Indemnified Party shall have reasonably concluded that there may be
reasonable defenses available to it which are different from or additional to
those available to the Indemnifying Party or if the interests of the
Indemnified Party reasonably may be deemed to conflict with the interests of
the Indemnifying Party, the Indemnified Party shall have the right to select
one separate counsel and to assume such legal defenses and otherwise to
participate in the defense of such action, with the reasonable expenses and
fees of such separate counsel and other expenses related to such participation
to be reimbursed by the Indemnifying Party as incurred. 

(d)              
In order to provide for just and equitable contribution in the event of
joint liability under the Securities Act in any case in which either (i) the
Purchaser, or any officer, director or controlling person of the Purchaser,
makes a claim for indemnification pursuant to this Section 5 but it is
judicially determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of
the last right of appeal) that such indemnification may not be enforced in such
case notwithstanding the fact that this Section 5 provides for indemnification
in such case, or (ii) contribution under the Securities Act may be required on
the part of the Purchaser or such officer, director or controlling person of
the Purchaser in circumstances for which indemnification is provided under this
Section 5; then, and in each such case, the Company and the Purchaser will
contribute to the aggregate losses, claims, damages or liabilities to which
they may be subject (after contribution from others) in such proportion so that
the Purchaser is responsible only for the portion represented by the percentage
that the public offering price of its securities offered by the Registration
Statement bears to the public offering price of all securities offered by such
Registration Statement, provided, however, that, in any such case, (A)
the Purchaser will not be required to contribute any amount in excess of the
public offering price of all such securities offered by it pursuant to such Fegistration
Statement; and (B) no person or entity guilty of fraudulent misrepresentation
(within the meaning of Section 10(f) of the Act) will be entitled to
contribution from any person or entity who was not guilty of such fraudulent
misrepresentation.

 

 

 

6.                 
Representations and Warranties.

(a)               
The Common Stock of the Company is registered pursuant to Section 12(b)
or 12(g) of the Exchange Act and, except with respect to certain matters which
the Company has disclosed to the Purchaser on Exhibit 12(j) to the
Security Agreement, the Company has timely filed all proxy statements, reports,
schedules, forms, statements and other documents required to be filed by it
under the Exchange Act.  The Company has filed (i) its Annual Report on Form
10-K for the fiscal year ended December 31, 2002 and (ii) its Quarterly Report
on Form 10-Q for the fiscal quarters ended March 31, 2003, June 30, 2003 and September
30, 2003 (collectively, the "SEC Reports").  Each SEC Report was, at the time
of its filing, in substantial compliance with the requirements of its
respective form and none of the SEC Reports, nor the financial statements (and
the notes thereto) included in the SEC Reports, as of their respective filing
dates, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.  The financial statements of the Company included in the SEC
Reports comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the Commission or other
applicable rules and regulations with respect thereto.  Such financial
statements have been prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis during the periods involved
(except (i) as may be otherwise indicated in such financial statements or the
notes thereto or (ii) in the case of unaudited interim statements, to the
extent they may not include footnotes or may be condensed) and fairly present
in all material respects the financial condition, the results of operations and
the cash flows of the Company and its subsidiaries, on a consolidated basis, as
of, and for, the periods presented in each such SEC Report.

 

 

 

(b)              
The Common Stock is listed for trading on the American Stock Exchange
and satisfies all requirements for the continuation of such listing.  The
Company has not received any notice that its Common Stock will be delisted from
the American Stock Exchange or that the Common Stock does not meet all
requirements for the continuation of such listing.

(c)               
Neither the Company, nor any of its affiliates, nor any person acting on
its or their behalf, has directly or indirectly made any offers or sales of any
security or solicited any offers to buy any security under circumstances that
would cause the offering of the Securities pursuant to the Security Agreement
to be integrated with prior offerings by the Company for purposes of the
Securities Act which would prevent the Company from selling the Common Stock
pursuant to Rule 506 under the Securities Act, or any applicable
exchange-related stockholder approval provisions, nor will the Company or any
of its affiliates or subsidiaries take any action or steps that would cause the
offering of the Common Stock to be integrated with other offerings (other than such
concurrent offering to the Purchaser).

(d)              
The Warrants, the Notes and the shares of Common Stock which the
Purchaser may acquire pursuant to the Warrants and the Notes are all restricted
securities under the Securities Act as of the date of this Agreement.  The
Company will not issue any stop transfer order or other order impeding the sale
and delivery of any of the Registrable Securities at such time as such Registrable
Securities are registered for public sale or an exemption from registration is
available, except as required by federal or state securities laws.

(e)               
The Company understands the nature of the Registrable Securities
issuable upon the conversion of each Note and the exercise of each Warrant and
recognizes that the issuance of such Registrable Securities may have a
potential dilutive effect.  The Company specifically acknowledges that its
obligation to issue the Registrable Securities is binding upon the Company and
enforceable regardless of the dilution such issuance may have on the ownership
interests of other shareholders of the Company.

(f)                
Except for agreements made in the ordinary course of business, there is
no agreement that has not been filed with the Commission as an exhibit to a
registration statement or to a form required to be filed by the Company under
the Exchange Act, the breach of which could reasonably be expected to have a
material and adverse effect on the Company and its subsidiaries, or would
prohibit or otherwise interfere with the ability of the Company to enter into
and perform any of its obligations under this Agreement in any material
respect.

 

 

(g)               
The Company will at all times have authorized and reserved a sufficient
number of shares of Common Stock for the full conversion of each Note and
exercise of the Warrants.

7.                 
Miscellaneous.

(a)               
Remedies.  In the event of a breach by the Company or by a
Holder, of any of their respective obligations under this Agreement, each
Holder or the Company, as the case may be, in addition to being entitled to
exercise all rights granted by law and under this Agreement, including recovery
of damages, will be entitled to specific performance of its rights under this
Agreement.

(b)              
No Piggyback on Registrations.  Except as set forth on Schedule
7(b) hereto, neither the Company nor any of its security holders (other than
the Holders in such capacity pursuant hereto) may include securities of the
Company in any Registration Statement other than the Registrable Securities,
and the Company shall not after the date hereof enter into any agreement
providing any such right for inclusion of shares in the Registration Statement
to any of its security holders. Except as and to the extent specified in Schedule
7(b) hereto, the Company has not previously entered into any agreement
granting any registration rights with respect to any of its securities to any
Person that have not been fully satisfied. 

(c)               
Compliance.  Each Holder covenants and agrees that it will comply
with the prospectus delivery requirements of the Securities Act as applicable
to it in connection with sales of Registrable Securities pursuant to any
Registration Statement. 

(d)              
Discontinued Disposition.  Each Holder agrees by its acquisition
of such Registrable Securities that, upon receipt of a notice from the Company
of the occurrence of a Discontinuation Event (as defined below), such Holder
will forthwith discontinue disposition of such Registrable Securities under the
applicable Registration Statement until such Holder's receipt of the copies of
the supplemented Prospectus and/or amended Registration Statement or until it
is advised in writing (the "Advice") by the Company that the use of the
applicable Prospectus may be resumed, and, in either case, has received copies
of any additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration Statement.  The
Company may provide appropriate stop orders to enforce the provisions of this
paragraph.  For purposes of this Section 7(d), a "Discontinuation Event" shall
mean (i) when the Commission notifies the Company whether there will be a
"review" of such Registration Statement and whenever the Commission comments in
writing on such Registration Statement (the Company shall provide true and
complete copies thereof and all written responses thereto to each of the
Holders); (ii) any request by the Commission or any other Federal or state
governmental authority for amendments or supplements to such Registration
Statement or Prospectus or for additional information; (iii) the issuance by
the Commission of any stop order suspending the effectiveness of such
Registration Statement covering any or all of the Registrable Securities or the
initiation of any Proceedings for that purpose; (iv) the receipt by the Company
of any notification with respect to the suspension of the qualification or
exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and/or (v) the occurrence of any event or passage of time that makes
the financial statements included in such Registration Statement ineligible for
inclusion therein or any statement made in such Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to such
Registration Statement, Prospectus or other documents so that, in the case of
such Registration Statement or Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.

 

 

(e)               
Piggy-Back Registrations.  If at any time during any
Effectiveness Period there is not an effective Registration Statement covering
all of the Registrable Securities required to be covered during such
Effectiveness Period and the Company shall determine to prepare and file with
the Commission a registration statement relating to an offering for its own
account or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, then the Company shall send to each Holder written notice of
such determination and, if within fifteen (15) days after receipt of such
notice, any such Holder shall so request in writing, the Company shall include
in such registration statement all or any part of such Registrable Securities
such holder requests to be registered, to the extent the Company may do so
without violating registration rights of others which exist as of the date of
this Agreement, subject to customary underwriter cutbacks applicable to all
holders of registration rights and subject to obtaining any required the
consent of any selling stockholder(s) to such inclusion under such registration
statement.

 

 

 

(f)                
Amendments and Waivers.  The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the same shall be in writing and signed by the Company
and the Holders of the then outstanding Registrable Securities. Notwithstanding
the foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of certain Holders
and that does not directly or indirectly affect the rights of other Holders may
be given by Holders of at least a majority of the Registrable Securities to
which such waiver or consent relates; provided, however, that the
provisions of this sentence may not be amended, modified, or supplemented
except in accordance with the provisions of the immediately preceding sentence.

(g)               
Notices.  Any notice or request hereunder may be given to the
Company or the Purchaser at the respective addresses set forth below or as may
hereafter be specified in a notice designated as a change of address under this
Section 7(g).  Any notice or request hereunder shall be given by registered or
certified mail, return receipt requested, hand delivery, overnight mail or
telecopy (confirmed by mail).  Notices and requests shall be, in the case of
those by hand delivery, deemed to have been given when delivered to any party
to whom it is addressed, in the case of those by mail or overnight mail, deemed
to have been given three (3) business days after the date when deposited in the
mail or with the overnight mail carrier, and, in the case of a telecopy, when
confirmed.  The address for such notices and communications shall be as
follows:

	If to the Company: 	

Home Solutions of America,
Inc. 

    
	 	

11850 Jones Road

    
	 	

Harris, TX 
77070

    
	 	

Attention: 
Chief Financial Officer 

    
	 	

Facsimile: 
(281)970-9854

    
	 	

With a copy to: 

    
	 	

Facsimile:  

    

 

 

If to a Purchaser:          To the address set forth
under

                                               
such Purchaser name on the

                                               
signature pages hereto.

If to any other Person who is then the registered
Holder:

To the address of such Holder as it

appears in the stock transfer books

of the Company

or such other address as may be designated in writing
hereafter in accordance with this Section 7(g) by such Person.

(h)               
Successors and Assigns.  This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of each of
the parties and shall inure to the benefit of each Holder. The Company may not
assign its rights or obligations hereunder without the prior written consent of
each Holder. Each Holder may assign their respective rights hereunder in the
manner and to the Persons as permitted under the Notes and the Securities
Purchase Agreement with the prior written consent of the Company, which consent
shall not be unreasonably withheld.. 

(i)                 
Execution and Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the same
Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the party
executing (or on whose behalf such signature is executed) the same with the
same force and effect as if such facsimile signature were the original thereof.

(j)                
Governing Law. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party agrees that all Proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement shall be
commenced exclusively in the state and federal courts sitting in the City of
New York, Borough of Manhattan. Each party hereto hereby irrevocably submits to
the exclusive jurisdiction of the state and federal courts sitting in the City
of New York, Borough of Manhattan for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to assert in
any Proceeding, any claim that it is not personally subject to the jurisdiction
of any such court, that such Proceeding is improper. Each party hereto hereby
irrevocably waives personal service of process and consents to process being
served in any such Proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating
to this Agreement or the transactions contemplated hereby. If either party
shall commence a Proceeding to enforce any provisions of a Transaction
Document, then the prevailing party in such Proceeding shall be reimbursed by
the other party for its reasonable attorneys fees and other costs and expenses
incurred with the investigation, preparation and prosecution of such Proceeding.

 

 

 

(k)              
Cumulative Remedies. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law.

(l)                 
Severability.  If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the
parties hereto shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.

(m)             
Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

[Balance of page intentionally left
blank; signature page follows.]

 

 

 

 

 

 

IN WITNESS WHEREOF, the parties have
executed this Registration Rights Agreement as of the date first written above.

HOME SOLUTIONS OF AMERICA, INC. 

By:______________________________

Name:___________________________

Title:_____________________________

LAURUS MASTER FUND, LTD. 

By:______________________________

Name:____________________________

Title:_____________________________

Address for Notices:

825 Third Avenue, 14th
Floor

New York, New York 10022

Attention: 
David Grin

Facsimile: 
212-541-4434

EXHIBIT A

[Month  __, 2004]

	
  [Continental
  Stock Transfer

     & Trust Company

  Two Broadway

  New York, NY  10004

  Attn:  William Seegraber]

   

  	

  

  

	
  Re:

  	
  
  [Company Name]. Registration Statement on Form [S-3]

  

  

Ladies and Gentlemen:

As counsel to[company name] , a Delaware
corporation (the "Company"), we have been requested to render our opinion to
you in connection with the resale by the individuals or entitles listed on
Schedule A attached hereto (the "Selling Stockholders"), of an aggregate of
[amount]shares (the "Shares") of the Company's Common Stock.

A Registration Statement on Form [S-3] under the Securities Act
of 1933, as amended (the "Act"), with respect to the resale of the Shares was
declared effective by the Securities and Exchange Commission on [date]. 
Enclosed is the Prospectus dated [date].  We understand that the Shares are to
be offered and sold in the manner described in the Prospectus.

Based upon the foregoing, upon request by the Selling
Stockholders at any time while the registration statement remains effective, it
is our opinion that the Shares have been registered for resale under the Act
and new certificates evidencing the Shares upon their transfer or
re-registration by the Selling Stockholders may be issued without restrictive
legend.  We will advise you if the registration statement is not available or
effective at any point in the future.

Very truly yours,

[Company counsel]

Schedule A

	
  Selling Stockholder

  	
  R/N/O

  	
  Shares

  Being Offered

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