Document:

Exhibit 10.2

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

STOCK PURCHASE WARRANT

            This STOCK
PURCHASE WARRANT (the "Warrant") is issued as of this 18th day of April,
2005 by Home Solutions of America, Inc., a Delaware corporation (the
"Company"), to LADDCAP VALUE PARTNERS L.P., a Delaware limited
partnership (Laddcap Value Partners L.P. and any subsequent assignee or
transferee hereof are hereinafter referred to collectively as
"Holder" or "Holders").

AGREEMENT:

            1.         Issuance
of Warrant; Term.

                        (a)        For
and in consideration of Laddcap Value Partners L.P. ("Laddcap")
making a loan (the "Laddcap Loan") to the Company, in an amount of Five
Hundred Thousand Dollars ($500,000) pursuant to the terms of a secured
promissory note of even date herewith (together with any and all extensions,
replacements and renewals thereof, the "Note") and related loan and
security agreement of even date herewith (as amended, supplemented or otherwise
modified from time to time, the "Loan Agreement"), and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company hereby grants to Holder the right to purchase 66,666
shares of the Company's common stock, $0.001 par value per share (the
"Common Stock").

                        (b)        The
shares of Common Stock issuable upon exercise of this Warrant are hereinafter
referred to as the "Shares."  This Warrant shall be exercisable at
any time and from time to time from the date hereof until seven (7) years from
the date hereof (the "Expiration Date").  If this Warrant is not
exercised prior to the Expiration Date, it will expire and all rights hereunder
shall be rendered void.

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

 

 

 

3.         Exercise.

                        (a)        This
Warrant may be exercised by the Holder hereof (but only on the conditions
hereafter set forth) as to all or any increment or increments of one thousand
(1,000) Shares (or the balance of the Shares if less than such number) upon
delivery of written notice of intent to exercise to the Company during normal
business hours on any business day at the address set forth in Section 16
hereof or such other address as the Company shall designate in a written notice
to the Holder hereof, together with this Warrant and payment to the Company of
the aggregate Exercise Price of the Shares so purchased.  The Exercise Price
shall be payable, at the option of the Holder, (i) by certified or bank check
or (ii) by wire transfer of immediately available funds to an account
designated by the Company to the Holder. Upon exercise of this Warrant as
aforesaid, the Company shall as promptly as practicable, and in any event
within five (5) business days thereafter, execute and deliver to the Holder of
this Warrant a certificate or certificates for the total number of whole Shares
for which this Warrant is being exercised in such names and denominations as
are requested by such Holder.  If this Warrant shall be exercised with respect
to less than all of the Shares, the Holder shall be entitled to receive a new
Warrant covering the number of Shares in respect of which this Warrant shall
not have been exercised, which new Warrant shall in all other respects be
identical to this Warrant.  The Company covenants and agrees that it will pay
when due any and all state and federal issue taxes which may be payable in
respect of the issuance of this Warrant or the issuance of any Shares upon
exercise of this Warrant.

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

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

 

 

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

                        (a)        Neither
this Warrant nor the Shares have been registered under the Securities Act of
1933, as amended ("Securities Act") or any state securities laws
("Blue Sky Laws").  The Holder represents that it is an "accredited
investor", as defined under Regulation D of the Securities Act, 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 investments, and has the ability to bear the economic risks of its
investments.  This Warrant has been acquired for investment purposes and not
with a view to distribution or resale and may not be sold or otherwise transferred
(i) without an effective registration statement for such Warrant under the
Securities Act and such applicable Blue Sky Laws, (ii) unless Holder shall have
delivered to the Company an opinion of counsel acceptable to the Company (which
opinion shall be in form, substance and scope customary for opinions of counsel
in comparable transactions) to the effect that the Warrant or such portion of
the Warrant to be sold or transferred may be sold or transferred under an
exemption from such registration, or (iii) unless sold under Rule 144
promulgated under the Securities Act (or successor rule) and any applicable
Blue Sky Laws.    Transfer of Shares issued upon the exercise of this Warrant
shall be restricted in the same manner and to the same extent as the Warrant
and the certificates representing such Shares shall, until such time as the
Shares have been registered under the Securities Act as contemplated pursuant
to Section 12 hereof or otherwise may be sold by Holder under Rule 144, bear
substantially the following legend:

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

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

 

 

	
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                        (b)        The
Company covenants and agrees that this Warrant and all Shares which may be
issued upon exercise of this Warrant will, upon issuance and payment therefor,
be legally and validly issued and outstanding, fully paid and nonassessable,
free from all taxes, liens, charges and preemptive rights, if any, with respect
thereto or to the issuance thereof.  The Company represents and warrants that
the issuance of this Warrant will not result in an adjustment in the number of
shares of Common Stock issuable upon the exercise or conversion of any
Convertible Securities or Option Securities (each as defined in Section 5(b)
below), as the case may be, pursuant to any anti-dilution or similar provisions
contained in such securities.  The Company shall at all times reserve and keep
available for issuance upon the exercise of this Warrant such number of
authorized but unissued shares of Common Stock as will be sufficient to permit
the exercise in full of this Warrant. If any Shares which may be issued upon
exercise of this Warrant require registration or qualification with any
governmental authority under any federal or state law before such shares may be
so issued, the Company will in good faith use its reasonable best efforts as
expeditiously as possible at its expense to cause such Shares to be duly
registered or qualified.  If the Company shall list any shares of Common Stock
on any securities exchange or market it will, at its expense, list thereon, maintain
and increase when necessary such listing, of, all Shares to be issued upon
exercise of this Warrant.

            5.         Adjustment
of Exercise Price and Number of Shares Issuable.

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

                       
(b)        Common Stock Distribution.  If the Company shall issue, sell,
distribute or otherwise grant any shares of Common Stock, other than (i)
pursuant to a Common Stock Reorganization, (ii) shares issued pursuant to the
exercise of options or warrants for the purchase of Common Stock outstanding on
the date hereof or as reserved and ungranted as of the date hereof pursuant to
the Company's 1998 Stock Option Plan, as amended, or the Company's 2001 Stock
Plan (collectively, the "Stock Plan"), (iii) up to 920,000 shares of Common
Stock issued upon the conversion of the convertible notes held by Laurus Master
Fund, up to 1,360,000 shares of Common Stock issued upon the conversion of the
Company's Series A Convertible Preferred Stock and up to 666,667 shares of
Common Stock issued upon the conversion of the Company's Series B Convertible
Preferred Stock, (iv) warrants to purchase Common Stock issued to an Additional
Investor (as defined in the Investors' Rights Agreement (the "Investors' Rights
Agreement"), dated as of the date hereof, by and between the Company, the
Holder and Frank J. Fradella and Rick J. O'Brien), if any, provided such
warrants are exercisable for no more than 333,334 shares of Common Stock and are
on terms reasonably acceptable to Holder (the "Additional Warrants"), or (v)
shares of Common Stock issued upon the conversion or exercise of this Warrant,
the warrant issued to Petra Mezzanine Fund, L.P. (the "Petra Warrant"), or up
to 333,334 shares of Common Stock issued upon conversion or exercise of the
Additional Warrants (any such issuance, sale, distribution or grant being
herein called a "Common Stock Distribution"), for a consideration per share
less than $1.25 per share (the "Investment Price") then the Exercise Price
shall be adjusted as follows: the Exercise Price immediately prior to such
Common Stock Distribution shall be multiplied by a fraction, the numerator of
which shall be the sum of (1) the number of fully-diluted shares of Common Stock
outstanding (assuming the conversion or exercise of all outstanding securities
convertible into or exercisable for shares of Common Stock) prior to such
Common Stock Distribution, plus (2) the number of shares of Common Stock that
the aggregate consideration received by the Company for such Common Stock
Distribution would purchase at the Investment Price, and the denominator of
which shall be the sum of (1) the number of fully-diluted shares of Common
Stock outstanding (assuming the conversion or exercise of all outstanding
securities convertible into or exercisable for shares of Common Stock) prior to
Common Stock Distribution, plus (2) the number of shares of Common Stock issued
in such Common Stock Distribution.

	
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(c)       
Consideration Received.  In the case of the issuance, sale,
distribution or grant of Common Stock for cash, the consideration shall be
deemed to be the amount of cash paid therefor before deducting any reasonable
discounts, commissions or other expenses allowed, paid or incurred by this
corporation for any underwriting or otherwise in connection with the issuance
and sale thereof.  In the case of the issuance, sale, distribution or grant of
the 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 value thereof at
the time of such issuance or sale as determined in good faith by the Board of
Directors irrespective of any accounting treatment.

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

                                    (i)         any
stock or other securities convertible into or exchangeable for Common Stock,
whether or not the rights to exchange or convert thereunder are immediately
exercisable (such convertible or exchangeable stock or securities being herein
called "Convertible Securities"), or

                                    (ii)        any
rights to subscribe for or to purchase, or any warrants or options (other than
options to purchase shares of Common Stock outstanding on the date hereof as
reserved as of the date hereof and ungranted pursuant to the Stock Option Plan)
for the purchase of, Common Stock or Convertible Securities, whether or not
immediately exercisable, (such rights, warrants or options being herein called
"Option Securities"),

 

 

 

	
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and the lowest aggregate
consideration per share for which Common Stock is issuable upon the conversion
or exercise of such Convertible Securities or Option Securities (and, if
applicable, upon conversion or exchange of Convertible Securities issuable upon
exercise of Option Securities) shall be less than the Investment Price, then
the Exercise Price shall be reduced to the price determined in accordance with
the formula provided above in Section 5(b).  In the case of the issuance, sale,
distribution or grant of Convertible Securities or Option Securities (i) the
aggregate maximum number of shares of Common Stock deliverable upon exercise of
Option Securities (assuming the satisfaction of any conditions to
exercisability, including without limitation, the passage of time, but without
taking into account potential antidilution adjustments) shall be deemed to have
been issued at the time such Option Securities were issued or granted and for a
consideration equal to the consideration (determined in the manner provided in
Section 5(c)), if any, received by the Company upon the issuance of such Option
Securities plus the minimum exercise price provided in such Option Securities
(without taking into account potential antidilution adjustments) for the Common
Stock covered thereby, and (ii) the aggregate maximum number of shares of
Common Stock deliverable upon conversion of, or in exchange (assuming the
satisfaction of any conditions or convertibility or exchangeability, including,
without limitation, the passage of time, but without taking into account
potential antidilution adjustments) for, any such Convertible Securities or
upon the exercise of options to purchase or rights to subscribe for such
Convertible Securities and subsequent conversion or exchange thereof shall be
deemed to have been issued at the time such securities were issued or such
options or rights were issued and for a consideration equal to the
consideration, if any, received by the Company for any such securities and
related options or rights (excluding any cash received on account of accrued
interest or accrued dividends), plus the minimum additional consideration, if
any, to be received by the Company (without taking into account potential
antidilution adjustments) upon the conversion or exchange of such securities or
the exercise of any related options or rights (the consideration in each case
to be determined in the manner provided in Section 5(c)).  If any of such
Convertible Securities or Option Securities shall have terminated, lapsed or expired
prior to exercise, exchange or conversion, the Exercise Price then in effect
shall forthwith be readjusted (effective only with respect to any exercise of
this Warrant after such readjustment) to the Exercise Price which would then be
in effect had the adjustment not been made upon the issuance, sale,
distribution or grant of such Convertible Securities or Option Securities. 
Nothing provided in this paragraph 5(d), however, shall cause any adjustment in
the Exercise Price solely due to the vesting of any Option Securities that are
outstanding on the date hereof.

                        (e)        Adjustment
in Number of Shares.  Upon each adjustment to the Exercise Price pursuant
to subsection (a), (b) or (d) of this Section 5, this Warrant shall thereafter
evidence the right to receive upon payment of the adjusted Exercise Price that
number of Shares obtained by multiplying the number of Shares previously
issuable upon exercise of this Warrant by a fraction the numerator of which is
the Exercise Price prior to adjustment and the denominator of which is the
adjusted Exercise Price; provided, however, that in no event, after taking into
account any adjustments required pursuant to this subsection (e), shall the
aggregate number of Shares issuable under this Warrant, the Petra Warrant, or
the Additional Warrants, if any, exceed an amount equal to 19.99% of 16,967,785
(the number of outstanding shares of the Company's Common Stock on March 31,
2005, prior to the loan by Petra Mezzanine Fund, L.P.), as such number of
shares may be adjusted for stock splits, stock dividends and other
recapitalizations, without the prior approval of the Company's stockholders as
required by Section 713 of the American Stock Exchange Company Guide.

	
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                        (f)         Capital
Reorganizations.  If there shall be any consolidation, merger or
amalgamation of the Company with another person or entity or any acquisition of
capital stock of the Company by means of a share exchange, other than a
consolidation, merger or share exchange in which the Company is the continuing
corporation or any sale or conveyance of the property of the Company as an
entirety or substantially as an entirety, or any reorganization or
recapitalization of the Company (any such event being called a "Capital
Reorganization"), then simultaneously with the consummation of such
Capital Reorganization the Holder of this Warrant shall be entitled to receive
warrants to purchase, on the same terms and conditions as are set forth in this
Warrant, the kind and amount of shares of stock and other securities and property
(including cash) which a holder of the number of Shares for which this Warrant
is exercisable immediately prior to such Capital Reorganization would be
entitled to receive pursuant to such Capital Reorganization; provided, however,
that if so required by the acquirer in connection with any Capital
Reorganization described above, this Warrant shall be deemed exercised pursuant
to Section 3(b), or if the Exercise Price is greater than the fair market value
of each Share as determined by reference to the consideration paid per share of
Common Stock in such Capital Reorganization, shall be deemed cancelled, in each
case immediately prior to the consummation of such Capital Reorganization. 
Subject to the immediately preceding proviso, as a condition to effecting any
Capital Reorganization, the Company or the successor or surviving corporation,
as the case may be, shall assume by a supplemental agreement, satisfactory in
form, scope and substance to the Holder (which shall be mailed or delivered to
the Holder of this Warrant at the last address of such Holder appearing on the
books of the Company), the obligation to deliver to such Holder such shares of
stock, securities, cash or property as, in accordance with the foregoing
provisions, such Holder may be entitled to purchase, and all other obligations
of the Company set forth in this Warrant.

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

                        (h)        Proceedings
Prior to Any Action Requiring Adjustment.  As a condition precedent to the
taking of any action which would require an adjustment pursuant to this Section
5, the Company shall take any action which may be necessary, including
obtaining regulatory approvals or exemptions, in order that the Company may
thereafter validly and legally issue as fully paid and nonassessable all shares
of Common Stock which the Holder of this Warrant is entitled to receive upon
exercise thereof.

                        (i)         Notice
of Adjustment.  Not less than five (5) business days prior to the record
date or effective date, as the case may be, of any action which requires or
might require an adjustment or readjustment pursuant to this Section 5, the
Company shall give notice to the Holder of such event, describing such event in
reasonable detail and specifying the record date or effective date, as the case
may be, and, if determinable, the required adjustment and the computation
thereof.  If the required adjustment is not determinable at the time of such
notice, the Company shall give notice to the Holder of such adjustment and
computation promptly after such adjustment becomes determinable.

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

            7.         Warrant
Holder Not Stockholder; Rights Offering; Preemptive Rights.  Except as
otherwise provided herein, this Warrant does not confer upon the Holder, as
such, any right whatsoever as a stockholder of the Company.  Notwithstanding
the foregoing, the Holder shall be entitled to the rights set forth in the
Investors' Rights Agreement (as defined below).  The Company shall not grant
any preemptive rights with respect to any of its capital stock if such
preemptive rights are exercisable upon exercise of this Warrant. 

            8.         Interim
Dividends.  If the Company pays a dividend or makes a distribution to the
holders of its capital stock of any securities (other than its capital stock)
or property (including cash and securities of other companies) of the Company,
or any rights, options or warrants to purchase securities (other than its
capital stock) or property (including securities of other companies) of the
Company, then, simultaneously with the payment of such dividend or the making
of such distribution, and as a condition precedent to its right to do so, it
will pay or distribute to the Holder of this Warrant an amount of property
(including without limitation cash) and securities (including without
limitation securities of other companies) of the Company as would have been
received by such Holder had it exercised this Warrant and received all of the
Shares of Common Stock issuable upon the exercise of this Warrant immediately
prior to the record date (or other applicable date) used for determining
stockholders of the Company entitled to receive such dividend or distribution.

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

                        (a)        declare
any cash dividend upon its Common Stock;

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

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

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

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

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

 

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

            10.       Put
Right  

            (a)        Exercise
of Put Right.  If at any time on or after March 31, 2010 the Company's
Common Stock is not listed on at least one of The American Stock Exchange,
Inc., the Nasdaq National Market, the Nasdaq SmallCap Market, The New York
Stock Exchange, Inc. or the OTC Bulletin Board, each Holder shall have the
right (a "Put Right") beginning on March 31, 2010 and continuing for a period
of two (2) years thereafter, to require that the Company purchase all or any
portion of the Warrant or Shares then owned by such Holder in accordance with this
Section 10, by delivery of a written notice to the Company to the effect that
such Holder is exercising a Put Right under this Section 10 (a "Put
Exercise Notice").  Upon receipt by the Company of a Put Exercise Notice,
the Company will promptly (and in any event within five (5) business days) give
written notice (a "Company Notice") to each of the other Holders, if
any, and to the holders of the Petra Warrant and the Additional Warrants, if
any, that a Put Exercise Notice has been received by the Company.  Each such
other Holder will have the right to exercise a Put Right and require the
Company to purchase (on the same Put Closing Date (as defined below) relating
to the Put Exercise Notice) all or any portion of the Warrant or Shares held by
such Holder by delivering written notice to the Company within ten (10) days
following receipt of the Company Notice.  All such notices delivered by such
other Holders will be deemed to have been delivered as of the date of the Put
Exercise Notice and will be deemed to be an exercise of a Put Right by each
such other Holder as of such date.  Upon the exercise of a Put Right by a
Holder, the purchase price payable by the Company to such Holder (a "Put
Purchase Price") shall be as follows:

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

 

 

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

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

                        (b)        Closing. 
Each closing of the purchase and sale of any Warrant or Shares pursuant to this
Section 10 shall take place on a date (a "Put Closing Date") which is
the later of (i) thirty (30) days after the giving of the Put Exercise Notice,
and (ii) ten (10) days after determination of the Fair Market Value per Share,
provided that if such day is not a Business Day such closing shall be on the
next succeeding Business Day.  Payment of the Put Purchase Price shall be due
and payable in full on the Put Closing Date to the extent the Company may then
legally pay such price pursuant to provisions of applicable law. To the extent
that all of the Put Purchase Price payable under this Warrant, the Petra
Warrant, and the Additional Warrants, if applicable, may not legally be paid
under the provisions of applicable law, the Put Purchase Price payable under
this Warrant and the Additional Warrants, if any, shall be paid ratably among
the Holder and the holder of the Petra Warrant and the holders of the Additional
Warrants, if any, based on the total number of Shares held or issuable upon
exercise of this Warrant or the Additional Warrants, if any, as the case may
be.  The portion of the Put Purchase Price not paid in full on the Put Closing
Date shall be evidenced by a promissory note delivered to the Holder, the
principal of which or such portion thereof as may be paid shall be payable as
and when the Company may legally pay it under applicable law. Unpaid principal
on such promissory note shall bear interest at the maximum rate allowable under
applicable law.  The closing shall take place at 10:00 a.m. on the Put Closing Date at such location as the Holder(s) may determine and notify the Company or at
such other location as may be agreed to by the Company and the Holder(s).  The
Put Purchase Price as may be paid under applicable law shall be paid in full at
each such closing, by wire transfer of immediately available federal funds.  

	
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                        (c)        Fair
Market Value per Share.  "Fair Market Value per Share" as of any date
shall mean an amount per Share issued or issuable pursuant to this Warrant
determined as follows: (i) if the Common Stock is traded on the American Stock
Exchange or another registered national stock exchange or through the Nasdaq
National Market, the Fair Market Value per Share shall be deemed to be the
average of the closing prices of the Common Stock on such exchange over the five
(5) trading day period ending one (1) trading day prior to the delivery of the
Put Exercise Notice; (ii) if the Common Stock is actively traded on the
over-the-counter market, as reported by the OTC Bulletin Board or the National
Quotation Bureau Incorporated (or similar organization or agency succeeding to
its functions of reporting prices), the Fair Market Value per Share shall be
deemed to be the average of the closing bid prices over the five (5) trading
day period ending one (1) trading day prior to the delivery of the Put Exercise
Notice and (iii) if there is no active public market for the Common Stock, the
Fair Market Value per Share shall be determined by an independent competent
appraiser mutually agreed to by the Company and the Holders of at least a
majority of the shares of Common Stock issued or issuable pursuant to this
Warrant, the Petra Warrant, and the Additional Warrants, if any, requesting
redemption (the "Requisite Majority").  In the event the Company and the
Requisite Majority cannot mutually agree upon an independent appraiser within
fifteen (15) days of receipt by the Company of a Put Exercise Notice, the
Company and the Requisite Majority will each select an independent competent
appraiser of national reputation to determine the Fair Market Value per Share. 
The respective appraisals will be provided to the Company and the Holders
requesting redemption promptly upon completion.  If the Fair Market Value per
Share appraisals are within 10% of one another, the Fair Market Value per Share
shall be the average of the two appraisals.  In the event the appraisal
valuations differ by more than ten percent (10%), the two appraisers chosen by
the Company and the Requisite Majority, respectively, shall choose a third
independent competent appraiser of national reputation and the third appraiser
shall conduct an appraisal to determine the Fair Market Value per Share (the
"Third Appraisal").  Upon completion, the Third Appraisal shall be
promptly delivered to the Company and the Holders requesting redemption.  The
Third Appraisal valuation shall be averaged with the prior appraisal that is
closer in value to the Third Appraisal.  The average of these two appraisals
shall be the Fair Market Value per Share and shall be binding on the Company
and the Holders requesting redemption.  All appraisals required herein shall be
paid for by the Company.  In determining the Fair Market Value per Share, each
of the appraisers shall evaluate the Company as a whole, on a going concern
basis, without application of any discount whatsoever, including any discount
for a minority ownership interest and/or lack of marketability of such interest. 
In determining the Fair Market Value per Share pursuant to this Section 10(c),
none of the appraisers shall take into account or otherwise make any discount
in respect of (i) any restriction on the transfer of the Shares, any other
shares of Common Stock of the Company or this Warrant, (ii) the fact that this
Warrant and the Shares represent a minority interest in the Company, (iii) any
lack of liquidity of the Shares, any other shares of Common Stock of the
Company or this Warrant due to the fact that there may not be a public or
private market therefor, (iv) any rights of the Company set forth in this
Warrant or (v) the voting rights or status of the Shares, any other shares of
Common Stock of the Company or this Warrant, whether under the certificate of
incorporation or bylaws of the Company, by agreement or otherwise.

                        (d)        The
Company agrees and acknowledges that the rights set forth in Section 10 shall
expressly survive the exercise of all or any portion of this Warrant and shall
inure to the Holder of any Shares issued upon exercise of the Warrant. 

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

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

	
  11

  

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

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

            15.       Article
and Section Headings.  Numbered and titled article and section headings are
for convenience only and shall not be construed as amplifying or limiting any
of the provisions of this Warrant.

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

The Address of Holder is:                     Laddcap
Value Partners L.P.

                                                            650 Fifth Avenue, Suite 600

                                                           
New York, NY 10019

                                                            Attention:
Robert B. Ladd, Managing Partner

                                                            Telecopy No.: (212) 259-2052

                                                            

The Address of Company is:                 Home
Solutions of America, Inc.                 

                                   
5565 Red Bird Center Dr., Suite 900

                                     Dallas, Texas 75237

                                     Attention: Rick
J. O'Brien 

                                     Telecopy No.: (214) 333-9435

with
a copy to:                                       Patton Boggs LLP

                                                             2001
Ross, Suite 3000

                                                             Dallas, TX    75201

                                                             Attn:
David P. McLean

                                                             Telecopy
No.: (214) 758 - 1550

 

 

 

	
  12

  

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

            18.       Governing
Law and Amendments.  This Warrant shall be construed and enforced under the
laws of the State of Delaware applicable to contracts to be wholly performed in
such State.  No amendment or modification hereof shall be effective except in a
writing executed by each of the parties hereto.

            19.       Counterparts. 
This Warrant may be executed in any number of counterparts and by different
parties to this Warrant in separate 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 Warrant.

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

[Remainder of page intentionally left blank]

 

 

 

 

 

 

 

 

 

	
  13

  

            
IN WITNESS WHEREOF, the parties hereto have set their hands as of the date
first above written.

 

 

                                                            HOME
SOLUTIONS OF AMERICA, INC.

 

By:________________________________

     Rick J. O'Brien, Chief Financial Officer

                                                            LADDCAP
VALUE PARTNERS L.P.

 

                                                            By:___________________________

                                                                     Robert B. Ladd

                                                                     Managing Partner

 

 

 

 

 

 

 

 

 

 

 

	
  14Exhibit 10.3

 

 

JOINDER AGREEMENT

            THIS JOINDER AGREEMENT (the "Agreement"), dated as of April 18, 2005, is by
and between HOME SOLUTIONS OF AMERICA, INC., a Delaware corporation (the
"Borrower") LADDCAP VALUE PARTNERS, L.P., a Delaware limited
partnership ("New Lender"), PETRA MEZZANINE FUND, L.P., a
Delaware limited partnership, in its
capacities as Lender and as administrative agent for the Lenders (in
such capacity, the "Administrative Agent") under that certain Loan Agreement (as it may be
amended, modified, restated or supplemented from time to time, the "Loan
Agreement"), dated as of March 31, 2005, by and among Borrower, the
Administrative Agent, and the Lenders named therein. Unless otherwise
defined herein, terms which are defined in the Loan Agreement and used herein
shall have the meaning set forth in the Loan Agreement.

RECITALS:

            WHEREAS,
pursuant to Section 10.17 of the Loan Agreement, Borrower has requested an
Additional Advance in the amount of $500,000.00;

            WHEREAS,
the Requisite Lenders have approved the above described Additional Advance; and

            WHEREAS, the parties
hereto desire to execute and deliver this Agreement to evidence the Additional
Advance and the addition of the New Lender as a "Lender" under the
Loan Agreement.

AGREEMENTS:

            NOW, THEREFORE, for
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:

            1.         New
Lender.    The New Lender is hereby added as a Lender to each of the
Loan Documents, and the New Lender hereby agrees to be legally bound by, and to
comply with, all of the terms and conditions thereof to the same extent as if
it were originally party thereto as a Lender.  The address of the New Lender
for purposes of all notices and other communications pursuant to the Loan
Documents is the address set forth beneath its signature hereto.

            2.         Lender;
Loan.  Effective as of the date hereof, and unless the context clearly
indicates otherwise, (a) all references in the Loan Documents to the "Lender"
and the "Lenders" shall be deemed to include, without limitation, the
New Lender, and (b) all references in the Loan Documents to the
"Loan" shall be deemed to include, without limitation, the Additional
Advance.

 

1

            3.         Aggregate
Amount of Additional Advances.   The aggregate amount of Additional
Advances permitted by Section 10.17 of the Loan Agreement includes, and is not
in addition to, the Additional Advance contemplated by this Agreement.  After
taking into consideration the Additional Advance contemplated by this Agreement
and subject to the terms of the Loan Agreement, the Loan amount may be increased by Additional Advances in an aggregate
amount not exceeding $2,500,000.

            4.         Closing
Fee.  In connection with the making of the Additional Advance,
Borrower shall pay to the New Lender a closing fee in the amount of $20,000
(the "Additional Advance Closing Fee").  The Additional Advance
Closing Fee is due and payable upon the funding of the Additional Advance, and
Borrower hereby authorizes and directs the New Lender to deduct from the
Additional Advance proceeds and retain for its account the sum of $20,000 as
payment of the Additional Advance Closing Fee.

            5.         Representations and
Warranties of Borrower.  To induce the Requisite Lenders to approve, and
the New Lender to make, the Additional Advance contemplated hereby, Borrower
hereby represents and warrants to the
Requisite Lenders and the New Lender:

a.         that the representations and warranties of the Borrower set forth
in each of the Loan Documents to which it is a party or which are contained in
any certificate furnished by or on behalf of the Borrower pursuant to any of
the Loan Documents to which it is a party are true and correct in all material
respects on and as of the date hereof with the same effect as if made on the
date hereof, except for representations and warranties expressly stated to
relate to a specific earlier date, in which case such representations and
warranties were true and correct in all material respects as of such earlier
date;

b.         that
the Cornerstone Acquisition has been consummated in accordance with the terms
of that certain Reorganization Agreement and Plan of Merger by and among
Borrower, Cornerstone Acquisition Corp., Cornerstone, and the sole shareholder
of Cornerstone, effective as of January 3, 2005, and no material provision
thereof has been waived, amended, supplemented or otherwise modified; and

c.         Since the Closing Date,  no
Default or Event of Default has occurred under any of the Loan Documents. 

6.         No Course of
Dealing.  Neither this Agreement nor any other indulgences or approvals
that may have been granted to the Borrower by the Administrative Agent or any
Lender shall constitute a course of dealing or otherwise obligate the
Administrative Agent or any Lender to modify, expand or extend the agreements
contained herein or to agree to any other Additional Advances. 

 

7.         Loan Documents. 
This Agreement shall constitute a Loan Document for all purposes of the Loan
Agreement and the other Loan Documents.  Any noncompliance by the Borrower with
any of the covenants, terms, conditions or provisions of this Agreement shall
constitute an Event of Default.  Except to the extent modified hereby, the Loan
Agreement, the other Loan Documents and all terms, conditions and provisions
thereof shall continue in full force and effect in all respects.

 

2

8.         Counterparts.   This
Agreement may be executed in two or more counterparts, each of which shall
constitute an original but all of which when taken together shall constitute
one contract.

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

 

 

 

 

 

 

 

 

 

 

3

            IN WITNESS WHEREOF, each
party has caused this Joinder Agreement to be duly executed by its authorized
officer as of the day and year first above written.

                        

                                                                        NEW
LENDER

                        

                                                                        LADDCAP
VALUE PARTNERS L.P.

                                                                        By:                                                      

                                                                                    Robert
B. Ladd

                                                                                    Managing
Partner

 

                                                Address
for notice purpose:

                                                                        650 Fifth Avenue, Suite 600

                                                                        New York, NY  10019

                                                                        Facsimile:
(212) 259-2052

                                                                      
Attention:  Robert B. Ladd, Managing Partner

                                                                        ADMINISTRATIVE
AGENT:

                                                                        PETRA MEZZANINE FUND, L.P.

                                                                        By: 
  Petra Partners, LLC, its general partner

                                                                               By:___________________________

                                                                                      Michael W.
Blackburn,

                                                                                     
Managing Member

                                                                        BORROWER:

                                                                        HOME
SOLUTIONS OF AMERICA, INC.

                                                                        By:__________________________________

                                                                             
        Rick J. O'Brien

                                                                                      Chief
Financial Officer

                                                                        REQUISITE
LENDERS:

                                                                        PETRA MEZZANINE FUND, L.P.

                                                                        By: 
  Petra Partners, LLC, its general partner

                                                                   
By:___________________________

                                                                                          Michael W.
Blackburn,

                                                                                         
Managing Member

 

 

 

                                                                                                                                                                                                                                                                     
4

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