Document:

Exhibit 4.2

 

 

THIS
WARRANT AND THE SECURITIES ISSUABLE UPON ANY EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED BY ANY PERSON, INCLUDING A PLEDGEE, UNLESS (1) EITHER (A) A
REGISTRATION WITH RESPECT THERETO SHALL BE EFFECTIVE UNDER THE SECURITIES ACT,
OR (B) THE COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY THAT AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT IS
AVAILABLE, AND (2) THERE SHALL HAVE BEEN COMPLIANCE WITH ALL APPLICABLE STATE
SECURITIES LAWS OR "BLUE SKY" LAWS. 

 

W-______                       

WARRANT TO PURCHASE _________ SHARES

OF 

COMMON STOCK 

OF

HOME SOLUTIONS OF AMERICA, INC.

Void after November
30, 2010

This Warrant is issued to __________________________,
or its registered assigns (the "Holder"), by Home Solutions of America,
Inc., a Delaware corporation (the "Company"), on November 30, 2005 (the
"Warrant Issue Date").  This Warrant is issued pursuant to the terms of
a Subscription Agreement, dated November 22, 2005 (the "Subscription Agreement"),
by and among the Company and the Holder.  All capitalized terms not otherwise
defined herein shall have the meaning ascribed thereto in the Subscription Agreement.

1.                              
Number of Shares Subject to
Warrant; Exercise Price.  Subject to
the terms and conditions hereinafter set forth, the Holder is entitled, upon
surrender of this Warrant at the principal office of the Company, to purchase
from the Company, at a per share price equal to the Exercise Price, the Warrant
Stock.  

For purposes of this Warrant: (A) "Warrant Stock"
shall mean the number of Shares purchasable upon exercise of this Warrant, as
reflected on the face of this Warrant, subject to adjustment as described in Section
7; (B) "Shares" shall mean fully paid and non-assessable Common Stock of
the Company; and (C) "Exercise Price" means $5.50 per share, subject to
change as described in Section 7. 

2.                              
Exercise Period.  Except as otherwise provided for herein, this
Warrant shall be exercisable, in whole or in part, at any time and from time to
time after the Warrant Issue Date and ending at 5:00 p.m. Eastern time on the
fifth anniversary of the Warrant Issue Date (the "Expiration Date"). 
Notwithstanding the foregoing, if this Warrant is outstanding and exercisable
for any Shares as of the time of a Sale (as defined below), unless otherwise
agreed to in writing by the Holder, this Warrant shall be deemed automatically
exercised immediately prior to such Sale in accordance with the net exercise
provisions of this Warrant set forth in Section 4(b).

	
   	

   	

   

3.                              
Notice of Sale.  The Company shall provide written notice to the
Holder not less than ten days prior to the consummation of a Sale.  A "Sale"
shall mean a sale of all or substantially all of the assets or shares of the
Company or a merger, reorganization or consolidation of the Company in which
the owners of the outstanding voting power of the Company, immediately prior to
such transaction own, directly or indirectly, less than 51% of the voting power
of the resulting or surviving entity immediately upon completion of such
transaction.

4.                              
Method of Exercise.

(a)                           
Cash Exercise.  While this Warrant remains outstanding and
exercisable in accordance with Section 2, the purchase rights hereby
represented may be exercised in whole or in part, at the election of the
Holder, by the tender of the Notice of Exercise in substantially the form
attached hereto as Exhibit A and the surrender of this Warrant at the
principal office of the Company and by the payment to the Company in cash, by
check, cancellation of indebtedness or other form of payment acceptable to the
Company, of an amount equal to the then applicable Exercise Price multiplied by
the number of Shares then being purchased.

(b)                           
Net Exercise.  In lieu of exercising this Warrant pursuant to Section
4(a), the Holder may elect to receive, without the payment by the Holder of any
additional consideration, Shares equal to the value of this Warrant (or the
portion thereof being canceled) by surrender of this Warrant at the principal
office of the Company together with an executed Notice of Exercise, in
substantially the form attached hereto, in which event the Company shall issue
to the holder hereof a number of Shares computed using the following formula:

                                                                        Y (A - B)

                                                            X =              A

            Where:             X =       The
number of Shares to be issued to the Holder pursuant to this net exercise;

                                    Y =      The
number of Shares in respect of which the net exercise election under this Section
4(b) is made;

                                    A =      The fair
market value of one Share at the time the net exercise election is made; and

                                    B =       The
Exercise Price.

For purposes of this Section 4(b), the fair market
value of a Share as of a particular date shall be the closing sale price of the
Shares on the trading date immediately prior to the date of exercise as quoted
on the American Stock Exchange or any United States automated quotation system
or national securities exchange on which the Shares are then quoted or traded,
as applicable; provided, however, that if the Shares are not then so
quoted or traded, the fair market value of the Shares shall be determined by
the Board of Directors of the Company in its reasonable good faith discretion. 

5.                              
Certificates for Shares.  Upon the exercise of the purchase rights evidenced
by this Warrant, one or more certificates for the number of Shares so purchased
shall be issued as soon as practicable thereafter (with appropriate restrictive
legends, as applicable).  In the event of a partial exercise of the Warrant, a
new warrant or warrants (dated the date hereof) of like tenor shall be issued,
calling in the aggregate on the face or faces thereof for the number of Shares
equal (without giving effect to any adjustment therein) to the number of Shares
called for on the face of this Warrant minus the number of such Shares
purchased by the Holder upon such exercise as provided in Sections 4(a) and 4(b).

	
   	

   	

   

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6.                              
Issuance of Shares.  The Company hereby covenants that it will take all
necessary actions to duly and validly reserve the necessary number of Shares
for issuance hereunder.  The Company covenants that the Shares, when issued
pursuant to the exercise of this Warrant, will be duly and validly issued,
fully paid and non-assessable and free from all taxes, liens and charges with
respect to the issuance thereof.  

7.                              
Adjustment of Exercise Price
and Number of Shares.  The number of
and kind of securities purchasable upon exercise of this Warrant and the
Exercise Price shall be subject to adjustment from time to time as follows:

(a)                           
Subdivisions, Combinations and
Other Issuances.  If the Company
shall at any time after the date hereof and prior to the exercise or expiration
of this Warrant subdivide the Shares by split-up or otherwise, or combine or issue
additional Shares as a dividend with respect to its Shares, the number of
Shares issuable on the exercise of this Warrant shall forthwith be
proportionately increased in the case of a subdivision or stock dividend, or
proportionately decreased in the case of a combination.  Appropriate
adjustments shall also be made to the Exercise Price, provided, however,
that the aggregate exercise price payable hereunder for the total number of
Shares purchasable under this Warrant (as adjusted) shall remain the same.  Any
adjustment under this Section 7(a) shall become effective at the close of
business on the date the subdivision or combination becomes effective, or as of
the record date of such dividend, or in the event that no record date is fixed,
upon the making of such dividend.

(b)                           
Reclassification,
Reorganization and Consolidation.  In
the event of any corporate reclassification, capital reorganization,
consolidation, spin-off or change in the Shares of the Company, other than as a
result of a subdivision, combination or dividend provided for in Section 7(a),
then, as a condition of such event, lawful provision shall be made, and duly
executed documents evidencing the same from the Company or its successor shall
be delivered, to the Holder, so that the Holder shall have the right at any
time prior to the expiration of this Warrant to purchase, at a total price
equal to that payable upon the exercise of this Warrant, the kind and amount of
shares of stock and/or other securities and property receivable in connection
with such event by a holder holding the same number of shares for which this
Warrant could have been exercised immediately prior to such event.  In any such
case appropriate provisions shall be made with respect to the rights and
interest of the Holder so that the provisions hereof shall thereafter be
applicable with respect to any shares of stock or other securities and property
deliverable upon exercise hereof, and appropriate adjustments shall be made to
the Exercise Price, provided, however, that the aggregate exercise price
payable hereunder for the total number of Shares purchasable under this Warrant
(as adjusted) shall remain the same. 

(c)                           
Notice of Adjustment.  When any adjustment is required to be made to the
Exercise Price or in the number or kind of Shares purchasable upon exercise of
the Warrant, the Company shall promptly notify the Holder of such event and of
the adjusted Exercise Price or number of Shares or other securities or property
thereafter purchasable upon exercise of this Warrant.

8.                              
Assumption of Warrant.  If at any time while this Warrant, or any portion
thereof, is outstanding and unexpired there shall be a merger, reorganization
or consolidation of the Company or any other similar transaction that does not
constitute a Sale, then, as a part of such transaction, lawful provision shall
be made so that the Holder shall thereafter be entitled to receive upon
exercise of this Warrant, during the period specified herein and upon payment
of the aggregate Exercise Price then in effect, the number of shares of stock
or other securities or property of the successor corporation resulting from
such transaction that a holder holding the Shares deliverable upon exercise of
this Warrant would have been entitled to receive in such transaction if this Warrant
had been exercised immediately before such transaction.

	
   	

   	

   

3

9.                              
No Fractional Shares.  No fractional Shares shall be issued upon the
exercise of this Warrant, but in lieu of such fractional Shares the Company
shall make a cash payment therefor on the basis of the fair market value of a
Share determined in accordance with Section 4.

10.                          
No Stockholder Rights.  Prior to exercise of this Warrant, the Holder shall
not be entitled to any rights of a stockholder with respect to the Shares,
including (without limitation) the right to vote such Shares, receive dividends
or other distributions thereon, exercise preemptive rights or be notified of stockholder
meetings, and such Holder shall not be entitled to any notice or other
communication concerning the business or affairs of the Company.  However,
nothing in this Section 10 shall limit the right of the Holder to be provided
the notices required under this Warrant.

11.                          
Compliance With Securities Act;
Transferability of Warrant or Shares.

(a)                           
Compliance With Securities Act.  The Holder, by acceptance hereof, agrees that this
Warrant, and the Shares issuable upon exercise of this Warrant, are being
acquired for the Holder's own account and that such Holder will not offer, sell
or otherwise dispose of this Warrant, or any Shares issuable upon exercise of
this Warrant, except under circumstances that will not result in a violation of
the United States Securities Act of 1933, as amended (the "Securities Act"),
or any applicable state securities laws.  This Warrant and all Shares issued
upon exercise of this Warrant (unless registered under the Securities Act and
any applicable state securities laws) shall be stamped or imprinted with a
legend in substantially the following form:

"THE
SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE
SOLD OR OTHERWISE TRANSFERRED BY ANY PERSON, INCLUDING A PLEDGEE, UNLESS (1)
EITHER (A) A REGISTRATION WITH RESPECT THERETO SHALL BE EFFECTIVE UNDER THE
SECURITIES ACT, OR (B) THE COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT IS AVAILABLE, AND (2) THERE SHALL HAVE BEEN COMPLIANCE WITH ALL
APPLICABLE STATE SECURITIES LAWS OR "BLUE SKY" LAWS.  

(b)                           
Transferability.  Subject to compliance with applicable federal and
state securities laws (and, with respect to the rights under the related Registration
Rights Agreement (as defined in the Placement Agent Agreement), subject to
Section 7 of the Registration Rights Agreement), this Warrant and all rights
hereunder are transferable in whole or in part by the Holder to any person or
entity upon written notice to the Company.  The transfer shall be recorded on
the books of the Company upon the surrender of this Warrant, properly endorsed
for transfer by delivery of an Assignment Form in substantially the form
attached hereto as Exhibit B, to the Company at the address set
forth in Section 15, and the payment to the Company of all transfer taxes
and other governmental charges imposed on such transfer.  In the event of a
partial transfer, the Company shall issue to the holders one or more
appropriate new warrants.

	
   	

   	

   

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12.                          
Restricted Securities.  The Holder understands that this Warrant, and the
Shares issuable upon exercise of this Warrant, will not be registered at the
time of their issuance under the Securities Act for the reason that the sale
provided for in this Agreement is exempt pursuant to Section 4(2) of the
Securities Act based on the representations of the Holder set forth herein.  The
Holder represents that it is experienced in evaluating companies such as the
Company, has such knowledge and experience in financial and business matters as
to be capable of evaluating the merits and risks of its investment, and has the
ability to suffer the total loss of the investment.  The Holder further
represents that it has had the opportunity to ask questions of and receive
answers from the Company concerning the terms and conditions of this Warrant,
the business of the Company, and to obtain additional information to such
Holder's satisfaction.  The Holder further represents that it is an "accredited
investor" within the meaning of Regulation D under the Securities Act as
presently in effect.  The Holder further represents that this Warrant is being
acquired for the account of the Holder for investment only and not with a view
to, or with any intention of, a distribution or resale thereof, in whole or in
part, or the grant of any participation therein.

13.                          
Successors and Assigns.  The terms and provisions of this Warrant shall
inure to the benefit of, and be binding upon, the Company and the Holder hereof
and their respective successors and assigns, except as limited herein.

14.                          
Amendments and Waivers.  Any term of this Warrant may be amended, and the
observance of any term of this Warrant may be waived (either generally or in a
particular instance and either retroactively or prospectively), upon the
written consent of the Company and the Holder.

15.                          
Notices.  All notices required under this Warrant shall be
deemed to have been given or made for all purposes (i) upon personal delivery,
(ii) upon confirmation receipt that the communication was successfully sent to
the applicable number if sent by facsimile, (iii) one day after being sent,
when sent by professional overnight courier service, or (iv) five days after
posting when sent by registered or certified mail.  Notices to the Company
shall be sent to the address of the Company set forth below (or at such other
place as the Company shall notify the Holder hereof in writing) and notices to
the Holder shall be sent to the address of the Holder set forth on the
signature page hereto (or at such other place as the Holder shall notify the
Company hereof in writing):

            

	 	To the Company: 	

Home Solutions of America, Inc.

1500 Dragon, Suite B

Dallas, Texas 75207

Attention: Rick J. O'Brien,
Chief Financial Officer

Facsimile:  (214) 333-9435

e-mail:
Rick@HomCorp.com

	 	 
	 	 
	 	 
	 	 
	 	 
	 	With a Copy to: 	

Hallett & Perrin, P.C.

2001 Bryan Street,
Suite 3900

Dallas, Texas 
75201

Attention: Melissa
H. Youngblood, Esq.

Facsimile: 
(214) 922-4142

e-mail: myoungblood@hallettperrin.com

		

            16.                          
Captions. 
The section and subsection headings of this Warrant are inserted for
convenience only and shall not constitute a part of this Warrant in construing
or interpreting any provision hereof.

            17.                           Governing Law.  This
Warrant shall be governed by the laws of the state of Delaware, without regard
to the choice or conflict of laws principles thereof.

[Signatures on following pages]

5

IN WITNESS WHEREOF, the undersigned have caused this Warrant to be duly
executed as of the date first set forth above.

                                                            HOME
SOLUTIONS OF AMERICA, INC.

                                                            By:                                                                              

                                                            Name: 
Rick J. O'Brien

                                                            Title:  
 Chief Financial Officer

 

                                                            

 

 

 

 

 

6

Exhibit A

NOTICE OF EXERCISE

To: 
Home Solutions of America, Inc.

                                    The
undersigned hereby elects to [check applicable subsection]:

                                    (a)        Purchase                       Shares
(as defined in the attached Warrant) pursuant to the terms of the attached
Warrant and payment of the Exercise Price per Share required under such Warrant
accompanies this notice;

                                    OR

                                    (b)        Exercise the attached Warrant
for all of the Shares in whole but not in part purchasable under the Warrant
pursuant to the net exercise provisions of Section 4 of such Warrant.

The
undersigned hereby represents and warrants that the undersigned is acquiring
such shares for its own account for investment purposes only, and not for
resale or with a view to distribution of such shares or any part thereof.

Date:_______________________                  HOLDER:

                                                                        

                                                                        By:                                                                              

                                                                              Name: 

                                                                              Title: 

                                                                              Address: 

Name
in which Shares should be registered:        _____________________________________________

	
   	

   	

   

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Exhibit B

ASSIGNMENT FORM

TO:      Home Solutions of
America, Inc.

The
undersigned hereby assigns and transfers unto _____________________________ of
__________________________________________________________________________________
   

(Please
typewrite or print in block letters) the right to purchase ____________ Shares
(as defined in the attached Warrant) subject to the Warrant, dated as of ____________,
2005, by and between Home Solutions of America, Inc. and the undersigned (the
"Warrant").

This
assignment complies with the provisions of Section 11 of the Warrant and is
accompanied by funds sufficient to pay all applicable transfer taxes.

Date:_______________________                  

                                                                        By:                                                                   

                                                                       

(Print
Name of Signatory)

                                                                       

(Title
of Signatory)

8Exhibit 4.3

 

REGISTRATION
RIGHTS AGREEMENT

 

            This
Registration Rights Agreement (the "Agreement") is made and entered into
as of the 30th day of November, 2005 (the "Effective Date") between Home
Solutions of America, Inc., a Delaware corporation (the "Company"), and the
parties set forth on the signature page and Exhibit A hereto (each, a "Purchaser"
and collectively, the "Purchasers").

Recitals:

            A.        The
Purchasers have purchased units from the Company (each, a "Unit" and
collectively, the "Units"), each Unit consisting of (i) one share
of the Company's Common Stock (as defined below) and (ii) one Common Stock
purchase warrant (the "Warrants"), each entitling the holder thereof to
purchase 0.20 shares of Common Stock at $5.50 per share, pursuant to
Subscription Agreements (each, a "Subscription Agreement" and
collectively, the "Subscription Agreements") by and between the Company
and each Purchaser.

            B.         The
Company has issued a warrant (the "Placement Agent Warrant") to purchase
shares of the Company's Common Stock to Sanders Morris Harris Inc., a Texas corporation (the "Placement Agent").

C.         The Company, the Purchasers, and the Placement
Agent desire to set forth the registration rights to be granted by the Company
to the Purchasers and the Placement Agent.

            NOW, THEREFORE,
in consideration of the mutual promises, representations, warranties,
covenants, and conditions set forth herein and in the Subscription Agreements,
the parties mutually agree as follows: 

Agreement:

1.         Certain Definitions.  As used in this Agreement, the following terms shall
have the following respective meanings:

            "Approved
Market" means the Nasdaq National Market, the Nasdaq SmallCap Market, the
New York Stock Exchange, Inc., or the American Stock Exchange, Inc.

            "Blackout
Period" means, with respect to a registration, a period in each case
commencing on the day immediately after the Company notifies the Purchasers and
the Placement Agent that they are required, pursuant to Section 4(f), to
suspend offers and sales of Registrable Securities during which the Company, in
the good faith judgment of its Board of Directors, determines (because of the
existence of, or in anticipation of, any acquisition, financing activity, or
other transaction involving the Company, or the unavailability for reasons
beyond the Company's control of any required financial statements, disclosure
of information that is in its best interest not to publicly disclose, or any
other event or condition of similar significance to the Company) that the
registration and distribution of the Registrable Securities to be covered by
such registration statement, if any, may be seriously detrimental to the
Company and its stockholders and ending on the earlier of (1) the date upon
which the material non-public information commencing the Blackout Period is
disclosed to the public or ceases to be material and (2) such time as the
Company notifies the selling Holders that the Company will no longer delay such
filing of the Registration Statement, recommence taking steps to make such Registration
Statement effective, or allow sales pursuant to such Registration Statement to
resume; provided, however, that (a) the Company shall limit its use of
Blackout Periods, in the aggregate, to 30 Trading Days in any 12-month period
and (b) no Blackout Period may commence sooner than 60 days after the end of a
prior Blackout Period.

            "Business
Day" means any day of the year, other than a Saturday, Sunday, or other day
on which the Commission is required or authorized to close.

            "Closing
Date" means November 30, 2005, or such other time as is mutually agreed
between the Company and the Purchasers for the closing of the sale referred to
in Recital A above.

            "Commission"
means the Securities and Exchange Commission or any other federal agency at the
time administering the Securities Act.

            "Common
Stock" means the common stock, par value $0.001 per share, of the Company
and any and all shares of capital stock or other equity securities of: (i) the
Company that are added to or exchanged or substituted for the Common Stock by
reason of the declaration of any stock dividend or stock split, the issuance of
any distribution or the reclassification, readjustment, recapitalization or
other such modification of the capital structure of the Company; and (ii) any other
corporation, now or hereafter organized under the laws of any state or other
governmental authority, with which the Company is merged, that results from any
consolidation or reorganization to which the Company is a party, or to which is
sold all or substantially all of the shares or assets of the Company, if
immediately after such merger, consolidation, reorganization or sale, the
Company or the stockholders of the Company own equity securities having in the
aggregate more than 50% of the total voting power of such other corporation.

            "Exchange
Act" means the Securities Exchange Act of 1934, as amended, and the rules
and regulations of the Commission promulgated thereunder.

            "Family
Member" means (a) with respect to any individual, such individual's spouse,
any descendants (whether natural or adopted), any trust all of the beneficial
interests of which are owned by any of such individuals or by any of such
individuals together with any organization described in Section 501(c)(3) of
the Internal Revenue Code of 1986, as amended, the estate of any such
individual, and any corporation, association, partnership or limited liability
company all of the equity interests of which are owned by those above described
individuals, trusts or organizations and (b) with respect to any trust, the
owners of the beneficial interests of such trust.

            "Holder"
means each Purchaser, the Placement Agent, or any of such person's respective
successors and Permitted Assigns who acquire rights in accordance with this
Agreement with respect to the Registrable Securities directly or indirectly
from a Purchaser or the Placement Agent, including from any Permitted Assignee.

            "Inspector"
means any attorney, accountant, or other agent retained by a Purchaser for the
purposes provided in Section 4(j).

            "Majority
Holders" means at any time Holders of a majority of the Registrable
Securities (excluding those issued or to be issued to the Placement Agent
pursuant to the Warrant).

            "Offering
Price" means the $5.50 per share of Common Stock.

	
  2

  

            "Permitted
Assignee" means (a) with respect to a partnership, its partners or
former partners in accordance with their partnership interests, (b) with
respect to a corporation, its stockholders in accordance with their interest in
the corporation, (c) with respect to a limited liability company, its
members or former members in accordance with their interest in the limited
liability company, (d) with respect to an individual party, any Family
Member of such party, (e) an entity that is controlled by, controls, or is
under common control with a transferor, or (f) a party to this Agreement.

            The
terms "register," "registered," and "registration" refers
to a registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.

            "Registrable
Securities" means (i) the Shares issued to the Purchasers as part of
the private placement of Units pursuant to the Subscription Agreement,
(ii) the Shares issued to the Purchasers upon the exercise of the Warrants
and (iii) shares of Common Stock issued to the Placement Agent upon
exercise of the Placement Agent Warrant, excluding (i) any Registrable
Securities that have been publicly sold or may be sold immediately without
registration under the Securities Act either pursuant to Rule 144 of the
Securities Act or otherwise; (ii) any Registrable Securities sold by a person
in a transaction pursuant to a registration statement filed under the Securities
Act or (iii) any Registrable Securities that are at the time subject to an
effective registration statement under the Securities Act. 

"Registration Default Date" means the date that is 90 days following the Closing
Date; provided, however, if the Registration Statement is subject to
review by the Commission staff, the Registration Default Date shall be the date
that is 120 days following the Closing Date. 

            "Registration
Default Period" means the period following the Registration Default Date
during which any Registration Event occurs and is continuing.

            "Registration
Event" means the occurrence of any of the following events:

            (a)        the Company fails to file with
the Commission the Registration Statement on or before the Registration Filing
Date pursuant to Section 3(a),

            (b)        the Registration Statement
covering Registrable Securities is not declared effective by the Commission on
or before the Registration Default Date,

            (c)        after the SEC Effective Date,
sales cannot be made pursuant to the Registration Statement for any reason
(including without limitation by reason of a stop order, or the Company's
failure to update the Registration Statement) but except as excused pursuant to
Section 3(a) or for the reasons specified in clause (d), or

            (d)        the Common Stock generally or
the Registrable Securities specifically are not listed or included for
quotation on an Approved Market, or trading of the Common Stock is suspended or
halted on the Approved Market, that at the time constitutes the principal
market for the Common Stock, for more than two full, consecutive Trading Days; provided,
however, a Registration Event shall not be deemed to occur if all or
substantially all trading in equity securities (including the Common Stock) is
suspended or halted on the Approved Market for any length of time.

	
  3

  

"Registration Statement" means the registration statement required to be filed
by the Company pursuant to Section 3(a).

            "Securities
Act" means the Securities Act of 1933, as amended, or any similar federal
statute promulgated in replacement thereof, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at the time.

            "SEC
Effective Date" means the date the Registration Statement is declared
effective by the Commission.

            "Share"
means a share of Common Stock.

            "Trading
Day" means a day on whichever (a) the national securities exchange, (b) the
Nasdaq Stock Market, or (c) such other securities market, that at the time
constitutes the principal securities market for the Common Stock, is open for
general trading of securities.

            2.         Term. 
This Agreement shall continue in full force and effect for a period of three
(3) years from the Effective Date, or such shorter period ending on the date
that all Registrable Securities as of the date hereof have ceased to be registrable
securities, unless terminated sooner hereunder.

3.         Registration.

            (a)        Registration
on Form S-3.  As promptly as reasonably practicable after the date hereof,
but in any event not later than 15 days after the Closing Date (the "Registration
Filing Date"), the Company shall file with the Commission a registration
statement on Form S-3, or such other form for which the Company then qualifies
if the Company is not then eligible to use Form S-3, relating to the resale by
the Holders of all of the Registrable Securities, and the Company shall use its
commercially reasonable best efforts to cause such registration statement to be
declared effective within 90 days after the Closing Date; provided, however,
that the Company shall not be obligated to effect any such registration,
qualification, or compliance pursuant to this Section 3(a), or keep such
registration effective pursuant to Section 4: (i) in any particular
jurisdiction in which the Company would be required to qualify to do business
as a foreign corporation or as a dealer in securities under the securities or
blue sky laws of such jurisdiction or to execute a general consent to service
of process in effecting such registration, qualification or compliance, in each
case where it has not already done so; or (ii) during any Blackout Period, in
which case the Registration Filing Date shall be extended to the date
immediately following the last day of such Blackout Period. 

	
  4

  

(b)        Piggyback Registration. 
If the Company shall determine to register for sale for cash any of its Common
Stock, for its own account or for the account of others (other than the
Holders), other than (i) a registration relating solely to employee benefit
plans or securities issued or issuable to employees, consultants (to the extent
the securities owned or to be owned by such consultants could be registered on
Form S-8) or any of their Family Members (including a registration on Form S-8)
or (ii) a registration relating solely to a Commission Rule 145 transaction, a
registration on Form S-4 in connection with a merger, acquisition, divestiture,
reorganization, or similar event, the Company shall promptly give to the
Holders written notice thereof (and in no event shall such notice be given less
than 20 calendar days prior to the filing of such registration statement), and
shall, subject to Section 3(c), include in such registration (and any related
qualification under blue sky laws or other compliance) (a "Piggyback
Registration"), all of the Registrable Securities specified in a written
request or requests, made within 10 calendar days after receipt of such written
notice from the Company, by any Holder or Holders.  However, the Company may,
without the consent of the Holders, withdraw such registration statement prior
to its becoming effective if the Company or such other stockholders have
elected to abandon the proposal to register the securities proposed to be
registered thereby. 

(c)        Underwriting.  Subject to the
restrictions in Section 3(e), if a Piggyback Registration is for a registered
public offering involving an underwriting, the Company shall so advise the
Holders in writing or as a part of the written notice given pursuant to Section
3(b).  In such event the right of any Holder to registration pursuant to
Section 3(b) shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein.  All Holders proposing to
distribute their securities through such underwriting shall (together with the
Company and any other stockholders of the Company distributing their securities
through such underwriting) enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such underwriting by the
Company or selling stockholders, as applicable.  Notwithstanding any other
provision of this Section 3(c), if the underwriter or the Company determines
that marketing factors require a limitation of the number of shares to be
underwritten, the underwriter may exclude some or all Registrable Securities
from such registration and underwriting.  The Company shall so advise all
Holders (except those Holders who failed to timely elect to distribute their
Registrable Securities through such underwriting or have indicated to the
Company their decision not to do so), and the number of shares of Registrable
Securities that may be included in the registration and underwriting, if any,
shall be allocated among such Holders as follows:  the number of shares that
may be included in the registration and underwriting shall be allocated first
to the Company and then, subject to obligations and commitments existing as of
the date hereof, to all selling stockholders, including the Holders, who have
requested to sell in the registration on a pro rata basis according to the
number of shares requested to be included.  

No Registrable Securities excluded from the
underwriting by reason of the underwriter's marketing limitation shall be included
in such registration.  If any Holder disapproves of the terms of any such
underwriting, such Holder may elect to withdraw therefrom by written notice to
the Company and the underwriter.  The Registrable Securities and/or other
securities so withdrawn from such underwriting shall also be withdrawn from
such registration; provided, however, that, if by the withdrawal of such
Registrable Securities a greater number of Registrable Securities held by other
Holders may be included in such registration (up to the maximum of any
limitation imposed by the underwriters), then the Company shall offer to all
Holders who have included Registrable Securities in the registration the right
to include additional Registrable Securities pursuant to the terms and limitations
set forth herein in the same proportion used above in determining the
underwriter limitation. 

            (d)        Other
Registrations.  Prior to the SEC Effective Date the Company shall not,
without the prior written consent of the Majority Holders, file or request the
acceleration of any other registration statement filed with the Commission, and
during any time subsequent to the SEC Effective Date when the Registration
Statement for any reason is not available for use by any Holder for the resale
of any Registrable Securities, the Company shall not, without the prior written
consent of the Majority Holders, file any other registration statement or any
amendment thereto with the Commission under the Securities Act or request the
acceleration of the effectiveness of any other registration statement
previously filed with the Commission, other than (A) any registration statement
on Form S-8 or Form S-4 and (B) any registration statement or amendment that
the Company is required to file or as to which the Company is required to
request acceleration pursuant to any obligation in effect on the date of
execution and delivery of this Agreement.

	
  5

  

            (e)        Failure
to File Registration Statement.  If a Registration Event occurs, then the
Company will make payments to each Purchaser and the Placement Agent (to the
extent it has exercised the Placement Agent Warrant) (a "Qualified
Purchaser"), as partial liquidated damages for the minimum amount of
damages to the Qualified Purchaser by reason thereof, and not as a penalty, at
a rate equal to one percent of the Offering Price per share of Common Stock 
held by such Qualified Purchaser per month, for each calendar month of the
Registration Default Period (pro rated for any period less than 30 days); provided,
however, if a Registration Event occurs (or is continuing) on a date more
than one-year after the Qualified Purchaser acquired the Registrable Securities
(and thus the one-year holding period under Rule 144(d) has elapsed),
liquidated damages shall be paid only with respect to that portion of a
Qualified Purchaser's Registrable Securities that cannot then be resold in
reliance on Rule 144. Each such payment shall be due and payable within five
days after the end of each calendar month of the Registration Default Period
until the termination of the Registration Default Period and within five days
after such termination.  Such payments shall be in partial compensation to the
Qualified Purchaser, and shall not constitute the Qualified Purchaser's
exclusive remedy for such events.  The Registration Default Period shall
terminate upon (i) the filing of the Registration Statement in the case of
clause (a) of the definition of "Registration Event," (ii) the SEC Effective
Date in the case of clause (b) of the definition of "Registration Event," (iii)
the ability of the Qualified Purchaser to effect sales pursuant to the
Registration Statement in the case of clause (c) of the definition of
"Registration Event," (iv) the listing or inclusion and/or trading of the
Common Stock on an Approved Market, as the case may be, in the case of clause
(d) of the definition of "Registration Event," and (v) in the case of the
events described in clauses (b) and (c) of the definition of "Registration
Event," the earlier termination of the Registration Default Period.  The
amounts payable as partial liquidated damages pursuant to this paragraph shall
be payable in lawful money of the United States.  Amounts payable as partial
liquidated damages to each Qualified Purchaser hereunder with respect to each
share of Registrable Securities shall cease when the Qualified Purchaser no
longer holds such share of Registrable Securities or such share of Registrable
Securities can be immediately sold by the Qualified Purchaser in reliance on
Rule 144.  The Placement Agent acknowledges and agrees that the partial
liquidated damages provided for in this Section 3(e) shall apply to Registrable
Securities and the Placement Agent only to the extent the Placement Agent has
exercised the Placement Agent Warrant.  

4.         Registration Procedures.  In the
case of each registration, qualification, or compliance effected by the Company
pursuant to Section 3, the Company will keep each Holder reasonably advised in
writing (which may include e-mail) as to the initiation of each registration, qualification,
and compliance and as to the completion thereof.  At its expense with respect
to any registration statement filed pursuant to Section 3, the Company will:

	
  6

  

(a)        prepare and file with the Commission with
respect to such Registrable Securities, a registration statement on Form S-3, or
such other form for which the Company then qualifies if the Company is not then
eligible to use Form S-3, and which form shall be available for the sale of the
Registrable Securities in accordance with the intended method(s) of
distribution thereof, and use its commercially reasonable efforts to cause such
registration statement to become and remain effective at least for a period
ending with the first to occur of (i) the sale of all Registrable Securities
covered by the registration statement, (ii) the availability under Rule 144 for
the Holder to immediately, freely resell without restriction all Registrable
Securities covered by the registration statement, and (iii) one year after a
registration statement filed pursuant to Section 3(a) is declared effective by
the Commission  (in either case, the "Effectiveness Period"); provided,
however, if at the end of such one-year period, any Holder is not able to
immediately, freely resell all Registrable Securities that it owns, the
Effectiveness Period shall continue until terminated pursuant to clause (i) or
(ii); provided, further, however, that (i) no later than five Business Days
before filing with the Commission a registration statement or prospectus (or
any amendments or supplements thereto affecting the "Plan of Distribution" or
"Selling Stockholder" portions thereof), the Company shall furnish to each
Holder a copy of the "Plan of Distribution" and "Selling Stockholder" portions
of the registration statement and the other portions of such documents proposed
to be filed that the Company considers not to contain material, non-public
information (excluding any exhibits other than applicable underwriting
documents), in substantially the form proposed to be filed and (ii) the Company
shall promptly notify each Holder of Registrable Securities covered by such
registration statement of any stop order issued or threatened by the Commission
and take all reasonable actions required to prevent the entry of such stop order
or to remove it if entered;

            (b)        if
a registration statement is subject to review by the Commission, promptly
respond to all comments and diligently pursue resolution of any comments to the
satisfaction of the Commission;

(c)        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 keep such registration
statement effective during the Effectiveness Period, (but in any event at least
until expiration  of the 90-day period referred to in Section 4(3) of the
Securities Act and Rule 174, or any successor thereto, thereunder, if
applicable), and comply with the provisions of the Securities Act with respect
to the disposition of all securities covered by such registration statement
during such period in accordance with the intended method(s) of disposition by
the sellers thereof set forth in such registration statement;

(d)        furnish, without charge, to each Holder of
Registrable Securities covered by such registration statement (i) a reasonable
number of copies of such registration statement (including any exhibits thereto
other than exhibits incorporated by reference), each amendment and supplement
thereto as such Holder may request, (ii)  such number of copies of the
prospectus included in such registration statement (including each preliminary
prospectus and any other prospectus filed under Rule 424 under the Securities
Act) as such Holders may request, in conformity with the requirements of the
Securities Act, and (iii) such other documents as such Holder may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such Holder, but only during the Effectiveness Period;

(e)        use its commercially reasonable best
efforts to register or qualify such Registrable Securities under such other
applicable securities or blue sky laws of such jurisdictions as any Holder of
Registrable Securities covered by such registration statement reasonably
requests as may be necessary for the marketability of the Registrable
Securities (such request to be made by the time the applicable registration
statement is deemed effective by the Commission) and do any and all other acts
and things that may be reasonably necessary or advisable to enable such Holder
to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such Holder; provided, however, that the Company
shall not be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
paragraph (e), (ii) subject itself to taxation in any such jurisdiction, or
(iii) consent to general service of process in any such jurisdiction;

(f)        as promptly as practicable after becoming
aware of such event, notify each Holder of such Registrable Securities at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act of the happening of any event that comes to the Company's
attention if as a result of such event the prospectus included in such
registration statement contains an untrue statement of a material fact or omits
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading and the Company shall promptly prepare
and furnish to such Holder a supplement or amendment to such prospectus (or
prepare and file appropriate reports under the Exchange Act) so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus shall not contain an 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 not misleading, unless suspension of the use of such
prospectus otherwise is authorized herein or in the event of a Blackout Period,
in which case no supplement or amendment need be furnished (or Exchange Act
filing made) until the termination of such suspension or  Blackout Period; 

	
  7

  

(g)        comply, and continue to comply during the
period that such registration statement is effective under the Securities Act,
in all material respects with the Securities Act and the Exchange Act and with
all applicable rules and regulations of the Commission with respect to the
disposition of all securities covered by such registration statement and make
available to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least 12 months, but not more than
18 months, beginning with the first full calendar month after the SEC Effective
Date, which earnings statement shall satisfy the provisions of Section 11(a) of
the Securities Act;

(h)        as promptly as practicable
after becoming aware of such event, notify each Holder of Registrable
Securities being offered or sold pursuant to the Registration Statement of the
issuance by the Commission of any stop order or other suspension of
effectiveness of the Registration Statement at the earliest possible time;

(i)         permit the Holders of Registrable
Securities being included in the Registration Statement and their legal
counsel, at such Holders' sole cost and expense (except as otherwise
specifically provided in Section 6) to review and have a reasonable opportunity
to comment on the Registration Statement (and all amendments and supplements
thereto affecting the "Plan of Distribution" or "Selling Stockholder" portions
thereof) at least five Business Days prior to filing thereof with the
Commission and shall not file any such document to which the Majority Holders
reasonably object;

(j)         make available for inspection by any
Holder and any Inspector retained by such Holder, at such Holder's sole
expense, all records as shall be reasonably necessary to enable such Holder to
exercise its due diligence responsibility, and supply all information that such
Holder or any Inspector may reasonably request for purposes of such due
diligence; provided, however, that such Holder shall hold in confidence
and shall not make any disclosure of any record or other information that the
Company determines in good faith to be confidential, and of which determination
such Holder is so notified at the time such Holder receives such information,
unless (i) the disclosure of such record is necessary to avoid or correct a
misstatement or omission in the Registration Statement and a reasonable time
prior to such disclosure the Holder shall have informed the Company of the need
to so correct such misstatement or omission and the Company shall have failed
to correct such misstatement of omission, (ii) the release of such record is
ordered pursuant to a subpoena or other order from a court or governmental body
of competent jurisdiction or (iii) the information in such record has been made
generally available to the public other than by disclosure in violation of this
or any other agreement.  The Company shall not be required to disclose any
confidential information in such records to any Inspector until and unless such
Inspector shall have entered into a confidentiality agreement with the Company
with respect thereto, substantially in the form of this Section 4(j), which
agreement shall permit such Inspector to disclose records to the Holder who has
retained such Inspector.  Each Holder agrees that it shall, upon learning that
disclosure of such records is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice to the
Company and allow the Company, at the Company's expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, the records deemed confidential.  The Company shall hold in confidence and
shall not make any disclosure of information concerning a Holder provided to
the Company pursuant to this Agreement unless (i) disclosure of such
information is necessary to comply with federal or state securities laws, (ii)
disclosure of such information to the Staff of the Division of Corporation
Finance is necessary to respond to comments raised by the Staff in its review
of the Registration Statement, (iii) disclosure of such information is
necessary to avoid or correct a misstatement or omission in the Registration
Statement, (iv) release of such information is ordered pursuant to a subpoena
or other order from a court or governmental body of competent jurisdiction, or
(v) such information has been made generally available to the public other than
by disclosure in violation of this or any other agreement.  The Company agrees
that it shall, upon learning that disclosure of such information concerning a
Holder is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to such Holder and
allow such Holder, at such Holder's expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, such information;

	
  8

  

 

            (k)        use
its commercially reasonable best efforts to cause all the Registrable
Securities covered by the Registration Statement to be quoted on the American
Stock Exchange or such other principal securities market on which securities of
the same class or series issued by the Company are then listed or traded; 

            (l)         provide
a transfer agent and registrar, which may be a single entity, for the
Registrable Securities at all times;

            (m)       cooperate
with the Holders of Registrable Securities being offered pursuant to the
Registration Statement to issue and deliver certificates (not bearing any
restrictive legends) representing Registrable Securities to be offered pursuant
to the Registration Statement within five Trading Days after delivery of
certificates to the Company and enable such certificates to be in such
denominations or amounts as the Holders may reasonably request and registered
in such names as the Holders may request;

            (n)        during
the Effectiveness Period, refrain from bidding for or purchasing any Common
Stock or any right to purchase Common Stock or attempting to induce any person
to purchase any such security or right if such bid, purchase or attempt would
in any way limit the right of the Holders to sell Registrable Securities by
reason of the limitations set forth in Regulation M under the 1934 Act; and

(o)        take all other reasonable
actions necessary to expedite and facilitate disposition by the Holders of the
Registrable Securities pursuant to the Registration Statement.

5.         Suspension of Offers and Sales. 
Each Holder of Registrable Securities agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in Section
4(f) or of the commencement of a Blackout Period, such Holder shall discontinue
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such Holder's receipt of the copies
of the supplemented or amended prospectus contemplated by Section 4(f) or
notice of the end of the Blackout Period, and, if so directed by the Company,
such Holder shall deliver to the Company (at the Company's expense) all copies
(including, without limitation, any and all drafts), other than permanent file
copies, then in such Holder's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice.  In the
event the Company shall give any such notice, the period mentioned in Section
4(a)(iii) shall be extended by the greater of (i) ten business days or (ii) the
number of days during the period from and including the date of the giving of
such notice pursuant to Section 4(f) to and including the date when each Holder
of Registrable Securities covered by such registration statement shall have
received the copies of the supplemented or amended prospectus contemplated by
Section 4(f).

6.         Registration Expenses.  The Company
shall pay all expenses in connection with any registration, including, without
limitation, all registration, filing, stock exchange fees, printing expenses,
all fees and expenses of complying with securities or blue sky laws, and the
fees and disbursements of counsel for the Company and of its independent
accountants; provided, however, that each Holder shall pay for its own
underwriting discounts, sales commissions and transfer taxes. Except as
provided above in this Section 6 and Section 9, the Company shall not be
responsible for the expenses of any attorney or other advisor employed by a
Holder of Registrable Securities.

	
  9

  

7.         Assignment of Rights.  No Holder may
transfer or assign its rights under this Agreement to any party without the
prior written consent of the Company; provided, however, that a Holder
may assign its rights under this Agreement without such restrictions to a
Permitted Assignee as long as (a) such transfer or assignment is effected in
accordance with applicable securities laws; (b) such transferee or assignee
agrees in writing to become subject to the terms of this Agreement; and (c) the
Company is given written notice by such Holder of such transfer or assignment,
stating the name and address of the transferee or assignee and identifying the
Registrable Securities with respect to which such rights are being transferred
or assigned.

8.         Information by Holder.  The Holder or
Holders of Registrable Securities included in any registration shall furnish to
the Company such information regarding such Holder or Holders and the
distribution proposed by such Holder or Holders as the Company may request in
writing.

9.         Indemnification.

(a)        In the event of the offer and
sale of Registrable Securities held by Holders under the Securities Act, the
Company shall, and hereby does, indemnify and hold harmless, to the fullest
extent permitted by law, each Holder, its directors, officers, partners, each
other person who participates as an underwriter in the offering or sale of such
securities, and each other person, if any, who controls or is under common
control with such Holder or any such underwriter within the meaning of Section
15 of the Securities Act, against any losses, claims, damages or liabilities,
joint or several, and expenses to which the Holder or any such director,
officer, partner or underwriter or controlling person may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions or proceedings, whether commenced or
threatened, 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 shares were registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein in light of the
circumstances in which they were made not misleading, and the Company shall
reimburse the Holder, and each such director, officer, partner, underwriter and
controlling person for any legal or any other expenses reasonably incurred by
them in connection with investigating, defending or settling any such loss,
claim, damage, liability, action or proceeding; provided, however, that
the Company shall not be liable in any such case (i) to the extent that any
such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of or is based upon an untrue statement or
alleged untrue statement in or omission or alleged omission from such
registration statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in conformity
with written information furnished to the Company through an instrument duly
executed by or on behalf of such Holder specifically stating that it is for use
in the preparation thereof or (ii) if the person asserting any such loss,
claim, damage, liability (or action or proceeding in respect thereof) who
purchased the Registrable Securities that are the subject thereof did not
receive a copy of an amended preliminary prospectus or the final prospectus (or
the final prospectus as amended or supplemented) at or prior to the written
confirmation of the sale of such Registrable Securities to such person because
of the failure of such Holder or underwriter to so provide such amended
preliminary or final prospectus and the untrue statement or alleged untrue
statement or omission or alleged omission of a material fact made in such preliminary
prospectus was corrected in the amended preliminary or final prospectus (or the
final prospectus as amended or supplemented). Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
the Holders, or any such director, officer, partner, underwriter or controlling
person and shall survive the transfer of such shares by the Holder.

	
  10

  

(b)        As a condition to including any Registrable
Securities to be offered by a Holder in any registration statement filed
pursuant to this Agreement, each such Holder agrees to be bound by the terms of
this Section 9 and to indemnify and hold harmless, to the fullest extent
permitted by law, the Company, its directors and officers, and each other
person, if any, who controls the Company within the meaning of Section 15 of
the Securities Act, against any losses, claims, damages or liabilities, joint
or several, to which the Company or any such director or officer or controlling
person may become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon any
untrue statement in or omission from such registration statement, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, if such statement or omission
was made in reliance upon and in conformity with written information about such
Holder furnished to the Company by or on behalf of such Holder expressly for
use in the preparation thereof, and such Holder shall reimburse the Company,
and each such director, officer, and controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating,
defending, or settling and such loss, claim, damage, liability, action, or
proceeding; provided, however, that such indemnity agreement found in
this Section 9(b) shall in no event exceed the gross proceeds from the offering
received by such Holder.  Such indemnity shall remain in full force and effect,
regardless of any investigation made by or on behalf of the Company or any such
director, officer or controlling person and shall survive the transfer by any
Holder of such shares.

(c)        Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in Section 9(a) or (b) (including any governmental action),
such indemnified party shall, if a claim in respect thereof is to be made
against an indemnifying party, give written notice to the indemnifying party of
the commencement of such action; provided, however, that the failure of
any indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under Section 9(a) or (b), except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice.  In case any such action is brought against an indemnified party,
unless in the reasonable judgment of counsel to such indemnified party a
conflict of interest between such indemnified and indemnifying parties may
exist or the indemnified party may have defenses not available to the
indemnifying party in respect of such claim, the indemnifying party shall be
entitled to participate in and to assume the defense thereof, with counsel
reasonably satisfactory to such indemnified party and, after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party shall not be liable to such indemnified
party for any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof, unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties arises in respect of such claim after the assumption of
the defenses thereof or the indemnifying party fails to defend such claim in a
diligent manner, other than reasonable costs of investigation; provided,
however, that the Company shall not be liable for the fees and expenses of
more than one separate counsel for all such indemnified persons.  Neither an
indemnified nor an indemnifying party shall be liable for any settlement of any
action or proceeding effected without its consent.  No indemnifying party
shall, without the consent of the indemnified party, consent to entry of any
judgment or enter into any settlement that does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect of such claim or litigation. 
Notwithstanding anything to the contrary set forth herein, and without limiting
any of the rights set forth above, in any event any party shall have the right
to retain, at its own expense, counsel with respect to the defense of a claim.

	
  11

  

(d)               
In the event that an indemnifying
party does or is not permitted to assume the defense of an action pursuant to
Section 9(c) or in the case of the expense reimbursement obligation set forth
in Section 9(a) and (b), the indemnification required by Section 9(a) and (b)
shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills received or expenses, losses, damages,
or liabilities are incurred.

(e)        If the indemnification provided for in this
Section 9 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage or expense
referred to herein, the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall (i) contribute to the amount paid or payable
by such indemnified party as a result of such loss, liability, claim, damage or
expense as is appropriate to reflect the proportionate relative fault of the
indemnifying party on the one hand and the indemnified party on the other
(determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission relates to information supplied
by the indemnifying party or the indemnified party and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission), or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law or provides a lesser sum to the
indemnified party than the amount hereinafter calculated, not only the
proportionate relative fault of the indemnifying party and the indemnified
party, but also the relative benefits received by the indemnifying party on the
one hand and the indemnified party on the other, as well as any other relevant
equitable considerations.  No indemnified party guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any indemnifying party who was not
guilty of such fraudulent misrepresentation.

(f)        Other Indemnification. 
Indemnification similar to that specified in the preceding subsections of this
Section 9 (with appropriate modifications) shall be given by the Company and
each Holder of Registrable Securities with respect to any required registration
or other qualification of securities under any federal or state law or
regulation or governmental authority other than the Securities Act.

10.        Rule 144.  For
a period of at least 24 months following the Closing Date, the Company
will use its commercially reasonable best efforts (a) to timely file all
reports required to be filed by the Company after the date hereof under the
Securities Act and the Exchange Act (including the reports pursuant to Section
13(a) or 15(d) of the Exchange Act referred to in subparagraph (c)(1) of Rule
144) and the rules and regulations adopted by the Commission thereunder), (b)
if the Company is not required to file reports pursuant to such sections, it
will prepare and furnish to the Purchasers and make publicly available in
accordance with Rule 144(c) such information as is required for the Purchasers
to sell shares of Common Stock under Rule 144, and (c) to take such further
action as any holder of shares of Common Stock may reasonably request, all to
the extent required from time to time to enable the Purchasers to sell shares
of Common Stock without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144, including causing its
attorneys to issue and deliver any appropriate legal opinion required to permit
a Purchaser to sell shares of Common Stock under Rule 144 upon receipt of
appropriate documentation relating to such sale.

	
  12

  

11.        Independent Nature of Each
Purchaser's Obligations and Rights.  The obligations of each Purchaser
under this Agreement are several and not joint with the obligations of any other
Purchaser, and each Purchaser shall not be responsible in any way for the
performance of the obligations of any other Purchaser under this Agreement. 
The decision of each Purchaser to purchase Common Stock and enter into this
Agreement has been made by each Purchaser independently of any other
Purchaser.  Nothing contained herein and no action taken by any Purchaser
pursuant hereto, shall be deemed to constitute such Purchasers as a
partnership, an association, a joint venture, or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert or as
a group with respect to such obligations or the transactions contemplated by
this Agreement. Each Purchaser acknowledges that no other Purchaser has acted
as agent for the Purchaser in connection with making its investment in Common
Stock and that no other Purchaser will be acting as agent of the Purchaser in
connection with monitoring its investment in the Common Stock or enforcing its
rights under this Agreement.  Each Purchaser shall be entitled to independently
protect and enforce its rights, including without limitation the rights arising
out of this Agreement, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such purpose.

12.        Miscellaneous.

(a)        Governing Law. This Agreement shall
be governed by and construed in accordance with the laws of the State of New
York and the United States of America, both substantive and remedial. Any judicial
proceeding brought against either of the parties to this agreement or any
dispute arising out of this Agreement or any matter related hereto shall be
brought in the courts of the State of New York, New York County, or the State
of Texas, Harris County, or in the United States District Court for the
Southern District of New York or the Southern District of Texas and, by its
execution and delivery of this agreement, each party to this Agreement accepts
the jurisdiction of such courts. The foregoing consent to jurisdiction shall
not be deemed to confer rights on any person other than the parties to this
Agreement.

(b)        Successors and Assigns.  Except as
otherwise provided herein, the provisions hereof shall inure to the benefit of,
and be binding upon, the successors, Permitted Assigns, executors and
administrators of the parties hereto.  In the event the Company merges with, or
is otherwise acquired by, a direct or indirect subsidiary of a publicly traded
company, the Company shall condition the merger or acquisition on the assumption
by such parent company of the Company's obligations under this Agreement.  

(c)        Entire Agreement.  This Agreement
constitutes the full and entire understanding and agreement between the parties
with regard to the subjects hereof.

(d)        Notices, etc.
All notices or other communications that are required
or permitted under this Agreement shall be in writing and sufficient if
delivered by hand, by facsimile transmission, by registered or certified mail,
postage pre-paid, by electronic mail, or by courier or overnight carrier, to
the persons at the addresses set forth below (or at such other address as may
be provided hereunder), and shall be deemed to have been delivered as of the
date so delivered: 

	 	If to the Company: 	

Home Solutions of America, Inc.

1500 Dragon, Suite B

Dallas, Texas 75207

Attention: Rick J. O'Brien,
Chief Financial Officer

Facsimile:  (214) 333-9435

e-mail:
Rick@HomCorp.com

	 	 
	 	 
	 	 
	 	 
	 	 
	 	with a copy to: 	

Hallett & Perrin, P.C.

2001 Bryan Street,
Suite 3900

Dallas, Texas 
75201

Attention: Melissa
H. Youngblood, Esq.

Facsimile: 
(214) 922-4142

e-mail: myoungblood@hallettperrin.com

		

	
  13

  

            

	 	If to the Purchasers:	

To each Purchaser at the address

		
	 	 	

set
forth on Exhibit A

		
	 	 	  
	 	with a copy to: 	

Sanders
Morris Harris Inc.

		
	 	 	

320 Park
Avenue, 17th Floor

		
	 	 	

New York, NY 
10022

		
	 	 	

Attention:  Michael
Fitzgerald, Managing Director

		
	 	 	

Facsimile:  (212) 317-2710

		
	 	 	

e-mail: Michael.Fitzgerald@smhgroup.com

		

or at such other address as any
party shall have furnished to the other parties in writing.

(e)        Delays or Omissions.  No delay or
omission to exercise any right, power or remedy accruing to any Holder of any
Registrable Securities, upon any breach or default of the Company under this
Agreement, shall impair any such right, power or remedy of such Holder nor
shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default thereunder
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring.  Any
waiver, permit, consent or approval of any kind or character on the part of any
Holder of any breach or default under this Agreement, or any waiver on the part
of any Holder of any provisions or conditions of this Agreement, must be in
writing and shall be effective only to the extent specifically set forth in
such writing.  All remedies, either under this Agreement, or by law or
otherwise afforded to any holder, shall be cumulative and not alternative.

(f)        Counterparts.  This Agreement may be
executed in any number of counterparts, each of which shall be enforceable
against the parties actually executing such counterparts, and all of which
together shall constitute one instrument.

(g)        Severability. In the case any
provision of this Agreement shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

(h)        Amendments. The provisions of this
Agreement may be amended at any time and from time to time, and particular
provisions of this Agreement may be waived, with and only with an agreement or
consent in writing signed by the Company and by the holders of an 80% majority
of the number of shares of Registrable Securities outstanding as of the date of
such amendment or waiver. The Purchasers acknowledge that by the operation of
this Section 12(h), the holders of an 80% majority of the outstanding
Registrable Securities may have the right and power to diminish or eliminate
all rights of the Purchasers under this Agreement.

(i)         Limitation on Subsequent Registration
Rights.  After the date of this Agreement, the Company shall not, without
the prior written consent of the Holders of at least a majority of the
Registrable Securities then outstanding, enter into any agreement with any
holder or prospective holder of any securities of the Company that would grant
such holder registration rights senior to those granted to the Holders
hereunder.

[Signatures on following
page]

 

	
  14

  

This Registration Rights Agreement is hereby executed
as of the date first above written.

COMPANY:

HOME SOLUTIONS OF AMERICA, INC.

By:                                                      

                 Name:

                 Its:

                                                                                    PLACEMENT
AGENT:

 

                                                                                    SANDERS
MORRIS HARRIS INC.

By:                                                      

                 Name:

                 Its:

[Counterpart Signature Pages Attached]

 

 

	
  15

  

Counterpart
Signature Page to Registration Rights Agreement

 

PURCHASER:

 

	
   

  
	
    

  
	
    

  
	
  (Print Name)

  
	
    

  
	
    

  
	
  By:

  	
   

  
	
   

  
	
  Name:

  	
   

  
	
   

  
	
  Its:

  	
   

  
	
    

  

 

 

 

 

                                                            

	
  16

  

 

                                                                        Exhibit
A

Purchaser Information

	
  Name

  	
  Address

  	
  Number of Shares

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