Document:

Filed by Bowne Pure Compliance

 

Exhibit 10.4

RELEASE AGREEMENT

THIS RELEASE AGREEMENT (this “Agreement”) is dated October 16, 2007 to be effective as
of October 1, 2007, and is between Home Solutions of America, Inc., a Delaware corporation
(“Home Solutions”), and Laurus Master Fund, Ltd., a Cayman Islands company
(“Laurus”).

WHEREAS, Fireline Restoration, Inc. (“Fireline”), a wholly-owned subsidiary of Home
Solutions, is a party to that certain Consulting Agreement, dated as of March 2007 (the
“Consulting Agreement”), among Home Solutions, RG America, Inc. (“RGA”) and certain
of RGA’s subsidiaries that are parties thereto (the “RGA Subsidiaries”), whereby, among
other things, RGA and certain of the RGA Subsidiaries granted certain of their respective rights in
and to certain accounts receivable (the “Consulting Assets”) to Fireline; and

WHEREAS, Home Solutions, RGA and the RGA Subsidiaries are proposing to enter into that certain
Asset Purchase and Indemnity Agreement (the “Purchase Agreement”) providing for the sale,
transfer and conveyance of certain equipment (the “Additional Assets”) by RGA and the RGA
Subsidiaries to Fireline; and

WHEREAS, Laurus currently has a lien on the Consulting Assets and the Additional Assets
(collectively, the “Assets”); and

WHEREAS, RGA, Home Solutions and Fireline have determined that it is in their mutual best
interests that the aforementioned liens against the Assets be released; and

WHEREAS, Laurus has agreed to release any and all liens, prior assignments, security
interests, charges, pledges, claims or encumbrances of any kind or character whatsoever relating to
the Assets (collectively, the “Liens”) in exchange for 2,000,000 shares (the “Release
Shares”) of Seller’s common stock, $0.001 par value per share (“Common Stock”), subject
to adjustment as provided in this Agreement; and

WHEREAS, Home Solutions has agreed to grant Laurus certain registration rights with respect to
the resale of the Release Shares, and Laurus has agreed to certain transfer restrictions on the
Release Shares, each on the terms set forth in this Agreement.

NOW, THEREFORE, the parties agree as follows:

ARTICLE I.

RELEASE OF LIENS

Section 1.01 Release of Liens. Laurus hereby agrees to terminate the Liens by (A)
entering into an irrevocable agreement with RGA that terminates the security interest grant
provisions under the Security Agreement dated as of October 31, 2005 among Laurus, RGA and certain
of the RGA Subsidiaries with respect to the Assets (and any other agreement or loan document
executed by RGA and its subsidiaries with Laurus creating or purporting to create a security
interest in the Assets) and (B) by filing UCC-3 terminations for all UCC financing
statements (and amendments thereto, if any) filed by Laurus against RGA and the RGA
Subsidiaries. Laurus will take such further actions and execute such further documents and
instruments as may reasonably be requested by RGA and/or Home Solutions to evidence the termination
of its lien and security interest against the Assets.

 

 

 

Section 1.02 Consideration. In consideration of the release of the Liens, Home
Solutions hereby agrees to issue to Laurus the Release Shares. The parties hereby agree that the
value of the Release Shares is $11,000,000 (the “Agreed Value”).

Section 1.03 Post-Closing Adjustment. In the event that the product of (i) 2,000,000
and (ii) the average of the daily per share closing prices (as such prices may be adjusted for
stock splits or similar events) (the “Average Price”) for the Common Stock as quoted on the
NASDAQ Global Market for the ten (10) consecutive full trading days ending at the close of trading
on the fifth trading day preceding to the first anniversary of the Closing Date (such product being
referred to herein as the “Adjustment Value”) is less than the Agreed Value, Home Solutions
shall, subject to Section 1.04 below, issue to Laurus, within five (5) business days after the
first anniversary of the Closing Date, a number of shares of Common Stock equal to the quotient of
(i) the difference between the Agreed Value and the Adjustment Value, divided by (ii) the Average
Price. If the Adjustment Value is greater than the Purchase Price, there shall be no adjustment.
Any fractional shares of Common Stock to be issued to Laurus hereunder shall be rounded up to the
next whole share of Common Stock.

Section 1.04 Maximum Adjustment. In no event shall the number of shares of Common
Stock issued to Laurus pursuant to the provisions of Section 1.03 above exceed 1,666,667 shares.

ARTICLE II.

CLOSING

Section 2.01 Date, Time and Place of Closing. The closing of the transactions
contemplated by this Agreement (the “Closing”) shall take place at the offices of Home
Solutions’ counsel, Hallett & Perrin, P.C., located at 2001 Bryan Street, Dallas, Texas 75201, at
10:00 a.m., local time, as soon as the conditions set forth in Article VI are satisfied, or at such
other date, time or place fixed by mutual written consent of Laurus and Home Solutions, but in no
event later than October 16, 2007. All proceedings to take place at the Closing shall take place
simultaneously, and no delivery shall be considered to have been made until all such proceedings
have been completed (the date of such Closing is referred to herein as the “Closing Date”).

Section 2.02 Deliverables. At the Closing, Home Solutions shall deliver to Laurus the
original stock certificate(s) representing the Release Shares, and Laurus shall deliver to Home
Solutions such documents and instruments reasonably requested by Home Solutions to evidence its
release of the Liens on the Assets.

 

2

 

ARTICLE III.

REPRESENTATIONS AND WARRANTIES OF HOME SOLUTIONS

Home Solutions hereby represents and warrants to Laurus as follows:

Section 3.01 Organization and Good Standing; Power and Authority. Home Solutions is a
corporation duly incorporated, validly existing and in good standing under the laws of the State of
Delaware. Home Solutions is qualified to do business and is in good standing in each jurisdiction
in which the failure to so qualify would materially adversely affect Home Solutions.

Section 3.02 Authorization. Home Solutions has the corporate power and authority to
execute and deliver this Agreement and to perform its obligations under this Agreement. The
execution, delivery and performance of this Agreement and all other agreements and instruments
executed and delivered by Laurus in connection with this Agreement, and the consummation of the
transactions contemplated hereby and thereby, have been duly and validly authorized by all
necessary action on the part of Home Solutions. This Agreement has been, and the other agreements
and instruments to be executed and delivered by Home Solutions in connection with this Agreement
will be, on or prior to the Closing Date, duly executed and delivered by Home Solutions, and
constitute, or upon execution and delivery will constitute, the valid, legal and binding
obligations of Home Solutions, enforceable against Home Solutions in accordance with their
respective terms. The Release Shares, when issued in accordance with the terms of this Agreement,
will be validly issued, fully paid and nonassessable. The issuance of the Release Shares will not
give rise to any preemptive rights or rights of first refusal on behalf of any person which have
not been waived

Section 3.03 Absence of Conflicts. The execution and delivery by Home Solutions of
this Agreement and the consummation of the transactions contemplated hereby will not result in the
violation of any material law, statute, rule, regulation, order, writ, injunction, judgment or
decree of any court or governmental authority to or by which Home Solutions is bound, or of any
provision of the Certificate of Incorporation or By-Laws of Home Solutions, and will not conflict
with, or result in a material breach or violation of, any of the terms or provisions of, or
constitute (with due notice or lapse of time or both) a default under, any lease, loan agreement,
mortgage, security agreement, trust indenture or other agreement or instrument to which Home
Solutions is a party or by which it is bound or to which any of its properties or assets is
subject, nor result in the creation or imposition of any lien upon any of the properties or assets
of the Company.

Section 3.04 Governmental Consents. No consent, approval, authorization or other
order of any governmental authority is required to be obtained by the Company in connection with
the authorization, execution and delivery of this Agreement or with the authorization, issue and
sale of the Common Stock, except such filings as may be required to be made with the Securities and
Exchange Commission, the NASDAQ Global Market and with any state or foreign blue sky or securities
regulatory authority.

 

3

 

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES OF LAURUS

Laurus represents and warrants to Home Solutions as follows:

Section 4.01 Organization and Good Standing. Laurus is a corporation duly organized,
validly existing and in good standing under the laws of the Cayman Islands.

Section 4.02 Authorization. Laurus has the corporate power and authority to execute
and deliver this Agreement and to perform its obligations under this Agreement. The execution,
delivery and performance of this Agreement and all other agreements and instruments executed and
delivered by Laurus in connection with this Agreement, and the consummation of the transactions
contemplated hereby and thereby, have been duly and validly authorized by all necessary action on
the part of Laurus. This Agreement has been, and the other agreements and instruments to be
executed and delivered by Laurus in connection with this Agreement will be, on or prior to the
Closing Date, duly executed and delivered by Laurus, and constitute, or upon execution and delivery
will constitute, the valid, legal and binding obligations of Laurus, enforceable against Laurus in
accordance with their respective terms.

Section 4.03 Investment Representations. Laurus further represents and warrants as
follows:

(a) Laurus is acquiring the Release Shares for its own account and not with a view to resale
or redistribution in a manner which would require registration under the Securities Act of 1933
(the “Securities Act”) or any state securities laws, or for sale in connection with a
“distribution,” as that term is used in Section 2 (11) of the Securities Act, of the Release
Shares.

(b) Laurus understands that the Release Shares are not registered under the Securities Act or
the securities laws of any state, may not be disposed of in whole or in part in the absence of
registration under the Securities Act or any state securities laws, unless an exemption from
registration is available, and that the certificates will bear a legend to such effect.

(c) Laurus is an “accredited investor” as such term is defined in the Securities Act.

ARTICLE V.

OTHER AGREEMENTS; POST-CLOSING COVENANTS

Section 5.01 Lock-Up Agreement. Laurus hereby agrees to enter into an agreement
setting forth restrictions on the transfer of the Release Shares (the “Lock-Up Agreement”)
in the form attached as Schedule A to this Agreement.

Section 5.02 Registration Rights. Home Solutions hereby grants to Laurus, with
respect to the Release Shares (as such amount may be adjusted), registration rights as set forth in the form of agreement (the “Registration Rights Agreement”) attached as Schedule B to
this Agreement.

 

4

 

Section 5.03 Voting Agreement. Laurus and Home Solutions hereby agree to enter into a
voting agreement (the “Voting Agreement”) with respect to the Shares in the form attached
as Schedule C to this Agreement.

Section 5.04 Additional Listing Application. Within two (2) days following the
Closing Date, Home Solutions shall file an additional listing application with the NASDAQ Global
Market covering the Release Shares, as such shares may be adjusted pursuant to the provisions of
Section 1.03 of this Agreement (without giving effect to the limitation imposed by Section 1.04 of
this Agreement (the “Listing Application”). Home Solutions shall use its commercially
reasonable efforts to obtain approval of the Listing Application within fifteen (15) days following
the Closing Date.

Section 5.05 Release. In consideration of the agreements contained herein and in the
Stock Purchase Agreement dated as of October 1, 2007 entered in between Laurus and Home Solutions
(the “Stock Purchase Agreement”), and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, and Laurus’ receipt of the Release Shares
evidenced by an original stock certificate issued in Laurus’ name (the “Release
Condition”), Laurus, on behalf of itself and its successors, assigns and other legal
representatives, hereby absolutely, unconditionally and irrevocably releases, remises and forever
discharges Home Solutions, Fireline, and each of their respective successors and assigns, and their
respective present divisions, predecessors, directors, officers, and attorneys (the “Released
Parties”) of and from all demands, actions, causes of actions, suits, covenants, contracts,
controversies, agreements, promises, sums of money, accounts, bills, reckonings, damages and any
and all other claims, counterclaims, defenses, rights of set-off, demands and liabilities, without
limitation, to claims both in equity and at law, which Laurus or any of its successors, assigns, or
other legal representatives owned, held, had, or claimed to have had or may now own, hold, have or
claim to have upon, or by reason of any circumstance, action, cause or thing whatsoever against any
of the Released Parties which arises at any time on or prior to the date hereof (“Effective
Date”), including, without limitation, in relation to any claims or causes of action based on
the lawsuits filed August 31, 2007 in the New York County Clerk’s Office entitled Laurus Master
Fund, Ltd. v. Home Solutions of America, Inc. and Fireline Restoration, Inc. and Laurus
Master Fund, Ltd. v. Frank Fradella (together, the “Litigation”); or any claim or cause
of action described therein, or any contract agreement, relationship, action, omission, or other
conduct prior to or as of the Effective Date, including, without limitation, any claims, demands
expenses, losses, rights, interests, or causes of action arising out of or relating in whole or in
part to:

(a) RGA, the Security Agreement dated as of October 31, 2005 by and among Laurus, RGA and each
Eligible Subsidiary (as defined therein), as amended, restated, modified and/or supplemented from
time to time, or the Master Security Agreement dated as of October 31, 2005 by and among RGA and
certain of its subsidiaries (RG Restoration, Inc., RG Risk Management, Inc., RG Roofing, Inc.,
Restoration Group America 2003, Inc., RG Insurance Services, Inc., CTFD, Inc., CTFD Marine, Inc.,
Invvision Funding, Inc., RG Florida GC, Inc.,
RG Florida SC, Inc., Total Professional Restoration, Inc. and Practical Building Solutions
2000) and Laurus, or any rights of Laurus thereunder or any liens or security interests created
thereby;

 

5

 

(b) the Consulting Agreement, dated as of March 2007, among Fireline, RGA and certain of its
subsidiaries (RG Restoration, Inc., RG Risk Management, Inc., RG Roofing, Inc.,) and the
transactions contemplated thereby; and

(c) the Guaranty (Personal) dated April 26, 2007, executed by Frank J. Fradella in favor of
Laurus (the “Guaranty”), and any relationship, contractual or otherwise, of the Released
Parties, RGA, the RGA Subsidiaries and Laurus.

Laurus understands, acknowledges and agrees that the release set forth above may be pleaded as a
full and complete defense and may be used as a basis for an injunction against any action, suit or
other proceeding which may be instituted, prosecuted or attempted in breach of the provisions of
such release. Similarly, Laurus agrees that no fact, event, circumstance, evidence or transaction
which could now be asserted or which may hereafter be discovered shall affect in any manner the
final, absolute and unconditional nature of the release set forth above.

The Released Parties understand, acknowledge, and agree that the release set forth above shall not
extend to or limit in any manner whatsoever any rights or interests of Laurus under this Agreement
and/or under the Stock Purchase Agreement, or any claims or causes of actions that may arise out of
or relate to these agreements.

ARTICLE VI.

CONDITIONS TO CLOSING

Section 6.01 Conditions to Obligations of Home Solutions. The obligations of Home
Solutions to consummate the Closing are subject to the satisfaction of the following conditions:

(a) The representations and warranties of Laurus set forth in this Agreement shall be true,
correct and complete in all material respects as of the Closing Date (as though such
representations and warranties were made anew at and as of such date) except with respect to the
effect of transactions specifically permitted by the provisions of this Agreement, and Laurus shall
have duly performed in all material respects all agreements and covenants in this Agreement
required to be performed by Laurus on or before the Closing Date.

(b) Home Solutions shall have received a signed counterpart of the Voting Agreement from
Laurus.

(c) Home Solutions shall have received a signed copy of the Lock-Up Agreement from Laurus.

Section 6.02 Conditions to Obligations of Laurus. The obligations of Laurus to
consummate the Closing are subject to the satisfaction of the following conditions:

(a) The representations and warranties of Home Solutions set forth in this Agreement shall be
true, correct and complete as of the Closing Date in all material respects (as
though such representations and warranties were made anew at and as of such date) except with
respect to the effect of transactions specifically permitted by the provisions of this Agreement,
and Home Solutions shall have duly performed in all material respects all agreements and covenants
in this Agreement required to be performed by Home Solutions on or before the Closing Date.

 

6

 

(b) Home Solutions shall have furnished to Laurus a certificate, executed by an authorized
officer on behalf of Home Solutions, confirming the matters set forth in Section 6.02(a) above.

(c) Home Solutions shall have furnished to Laurus confirmation that Home Solutions is in good
standing under the laws of the State of Delaware.

(d) All material consents and approvals of third parties and any governmental authorities that
are required to consummate the transactions contemplated by this Agreement shall have been
obtained.

(e) Laurus shall have received a signed counterpart of the Voting Agreement from Home
Solutions.

(f) Laurus shall have received a signed counterpart of the Registration Rights Agreement from
Home Solutions.

(g) There shall not have been any material adverse change in the business or prospects of Home
Solutions.

(h) Laurus shall have received an original stock certificate evidencing the Release Shares.

ARTICLE VII.

MISCELLANEOUS PROVISIONS

Section 7.01 Assignment. This Agreement may not be assigned by either party to this
Agreement without the written consent of the non-assigning party. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective successors, heirs and
assigns.

Section 7.02 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which together shall constitute
one and the same instrument.

Section 7.03 Entire Agreement. This Agreement and the documents referred to herein
contain the entire understanding of the parties hereto in respect of the subject matter contained
herein. This Agreement supersedes any prior agreements and understandings between the parties with
respect to the subject matter of this Agreement.

 

7

 

Section 7.04 Notices. Any notice or communication under this Agreement must be in
writing and given by (a) deposit in the United States mail, addressed to the party to be notified,
postage prepaid and registered or certified with return receipt requested, (b) delivery in person
or by courier service providing evidence of delivery or (c) telecopy transmission. Each notice or
communication that is mailed, delivered or transmitted in the manner described above shall be
deemed sufficiently given, served, sent and received, in the case of mailed notices, on the third
business day following the date on which it is mailed and, in the case of notices delivered by
hand, courier service or telecopy, at such time as it is delivered to the addressee (with the
delivery receipt or the affidavit of messenger) or at such time as delivery is refused by the
addressee upon presentation. Any notice or communication under this Agreement must be addressed as
follows:

(a) if to Home Solutions:

Home Solutions of America, Inc.

Attn: Frank J. Fradella, CEO

1500 Dragon Street, Suite B

Dallas, Texas 75207

Facsimile: (214) 333-9435

(b) if to Laurus:

Laurus Master Fund, Ltd.

Attn: Portfolio Services

c/o Laurus Capital Management, LLC

335 Madison Ave. 10th Fl.

New York, NY 10017

Facsimile: (212) 581-5035

Either party may change his address for notice by written notice to the other party hereto.

Section 7.05 Expenses. The parties shall pay their own respective expenses and the
fees and expenses of their respective counsel and accountants and other experts.

Section 7.06 Survival of Representations and Warranties. Each party hereto covenants
and agrees that each of the representations, warranties, covenants and agreements contained in this
Agreement and in any ancillary document shall survive the Closing of this transaction.

Section 7.07 Waivers. No action taken pursuant to this Agreement, including any
investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action, or compliance with any representation, warranty, covenant or agreement
contained herein. The waiver by any party hereto of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any subsequent breach. The waiver by any party
hereto at or before the closing of this transaction of any condition to its obligations hereunder
that is not fulfilled shall preclude such party from seeking redress from the other party hereto
for breach of any representation, warranty, covenant or agreement contained in this Agreement.

 

8

 

Section 7.08 Governing Law. This Agreement shall be construed as to both validity and
performance and enforced in accordance with and governed by the laws of the state of Delaware,
without giving effect to its conflict of laws principles.

Section 7.09 Prevailing Party. In the event of any dispute among the parties hereto
with respect to any of the terms or provisions of this Agreement, the non-prevailing party shall
pay or reimburse the prevailing party for all fees and expenses incurred with respect thereto,
including without limitation any legal and attorneys’ fees and expenses incurred by the prevailing
party in connection therewith.

Section 7.10 Amendments. This Agreement may not be modified or changed except by an
instrument or instruments in writing signed by the party against whom enforcement of any such
modification or amendment is sought.

Section 7.11 Listing of Shares. Within fifteen (15) business days following the
Closing Date, Home Solutions shall have received no objection to its approval of an additional
listing application with respect to the Release Shares from the NASDAQ Global Market.

Section 7.12 Discontinuance of Litigation. Upon satisfaction of the Release
Condition, Laurus shall discontinue with prejudice all claims and causes of action that were
asserted or that could have been asserted in the Litigation. The Released Parties agree that any
notices of discontinuance shall be served on their attorneys by mail.

Section 7.13 Release of Guaranty. Upon satisfaction of the Release Condition, the
Guaranty shall be deemed hereby released.

Section 7.14 Representation and Warranty. It is expressly warranted by Laurus that it
is the sole owner of all demands, actions, causes of actions, suits, covenants, contracts,
controversies, agreements, promises, sums of money, accounts, bills, reckonings, damages and any
and all other claims, counterclaims, defenses, rights of set-off, demands and liabilities, without
limitation, to claims both in equity and at law, that it or any of its successors, assigns, or
other legal representatives has, owns, holds, or claims or has ever had, owned, held, or claimed to
have had against any of the Released Parties, and that it has not assigned, transferred, or sold
any such demands, actions, causes of actions, suits, covenants, contracts, controversies,
agreements, promises, sums of money, accounts, bills, reckonings, damages and any and all other
claims, counterclaims, defenses, rights of set-off, demands and liabilities, without limitation, to
claims both in equity and at law, to any third party, and that such demands, actions, causes of
actions, suits, covenants, contracts, controversies, agreements, promises, sums of money, accounts,
bills, reckonings, damages and any and all other claims, counterclaims, defenses, rights of
set-off, demands and liabilities, without limitation, to claims both in equity and at law, are free
and clear of any and all encumbrances.

 

9

 

IN WITNESS WHEREOF, the parties are executing this Agreement on the date set forth in the
introductory clause.

	 	 	 	 	 
	 	HOME SOLUTIONS OF AMERICA, INC.

 	 
	 	By:  	/s/ Frank J. Fradella
 	 
	 	 	Name:  	Frank J. Fradella 	 
	 	 	Title:  	Chairman and CEO 	 
	 

	 	 	 	 	 
	 	 	LAURUS MASTER FUND, LTD.
	 
	 	 	 	 
	 

	 	By:
	 	Laurus Capital Management, LLC,
	 

	 	 	 	its investment manager

	 	 	 	 	 
	 	 	 
	 	By:  	                                              /s/ Scott Bluestein
 	 
	 	 	Name:  	Scott Bluestein 	 
	 	 	Title:  	Authorized Signatory 	 
	 

Acknowledged and Agreed to

as of this 1st day of October, 2007 by:

	 	 	 	 	 
	FIRELINE RESTORATION, INC.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Brian Marshall
 

Name: Brian Marshall
	 	 
	 

	 	Title: President	 	 

	 	 	 
	/s/ Frank J. Fradella
 

FRANK J. FRADELLA, Individually

	 	 

 

SIGNATURE PAGE TO

RELEASE AGREEMENTFiled by Bowne Pure Compliance

 

Exhibit 10.5

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (this “Agreement”) is dated October 16, 2007 to be
effective as of October 1, 2007, and is between Home Solutions of America, Inc., a Delaware
corporation (“Seller”), and Laurus Master Fund, Ltd., a Cayman Islands company
(“Purchaser”).

WHEREAS, Purchaser desires to purchase from Seller, and Seller desires to sell to Purchaser,
1,000,000 shares (the “SPA Shares”) of Seller’s common stock, $0.001 par value per share
(“Common Stock”), subject to adjustment as provided in this Agreement; and

WHEREAS, Seller has agreed to grant Purchaser certain registration rights with respect to the
resale of the SPA Shares, and Purchaser has agreed to certain transfer restrictions on the SPA
Shares, each on the terms set forth in this Agreement.

NOW, THEREFORE, the parties agree as follows:

ARTICLE I

PURCHASE AND SALE

	1.1	 	Sale of SPA Shares. Upon the terms and conditions set forth in this Agreement,
Seller hereby agrees to sell the SPA Shares to Purchaser, and Purchaser hereby agrees to
purchase the SPA Shares from Seller.

	 
	1.2	 	Purchase Price. The per share purchase price for the SPA Shares (the “Purchase
Price”) shall be equal to $3.39. The Purchase Price shall be paid by wire transfer to
Seller’s account pursuant to transfer instructions provided by Seller. Notwithstanding the
Purchase Price, the parties hereby agree to a value for the SPA Shares of $5,500,000 (the
“Agreed Value”).

	 
	1.3	 	Post-Closing Adjustment. In the event that the product of (i) 1,000,000 and (ii) the
average of the daily per share closing prices (as such prices may be adjusted for stock splits
or similar events) (the “Average Price”) for the Common Stock as quoted on the NASDAQ
Global Market for the ten (10) consecutive full trading days ending at the close of trading on
the fifth trading day preceding to the first anniversary of the Closing Date (such product
being referred to herein as the “Adjustment Value”) is less than the Agreed Value,
Home Solutions shall, subject to Section 1.4 below, issue to Purchaser, within five (5)
business days after the first anniversary of the Closing Date, a number of shares of Common
Stock equal to the quotient of (i) the difference between the Agreed Value and the Adjustment
Value, divided by (ii) the Average Price. If the Adjustment Value is greater than the Agreed
Value, there shall be no adjustment. Any fractional shares of Common Stock to be issued to
Purchaser hereunder shall be rounded up to the next whole share of Common Stock.

	 
	1.4	 	Maximum Adjustment. In no event shall the number of shares of Common Stock issued to
Purchaser pursuant to the provisions of Section 1.3 above exceed 833,333 shares.

 

 

 

ARTICLE II

CLOSING

	2.1	 	Date, Time and Place of Closing. The closing of the transactions contemplated by this
Agreement (the “Closing”) shall take place at the offices of Sellers’s counsel,
Hallett & Perrin, P.C., located at 2001 Bryan Street, Dallas, Texas 75201, at 10:00 a.m.,
local time, on October 1, 2007, or as promptly as practicable thereafter as soon as the
conditions set forth in Article VI are satisfied, or at such other date, time or place fixed
by mutual written consent of Purchaser and Seller, but in no event later than October 16,
2007. All proceedings to take place at the Closing shall take place simultaneously, and no
delivery shall be considered to have been made until all such proceedings have been completed
(the date of such Closing is referred to herein as the “Closing Date”).

	 
	2.2	 	Deliverables. At the Closing, Seller shall deliver to Purchaser the stock
certificate(s) representing the SPA Shares, and Purchaser shall deliver to Seller, by wire
transfer, the Purchase Price.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLER

Seller hereby represents and warrants to Purchaser as follows:

	3.1	 	Organization and Good Standing; Power and Authority. Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of the State of Delaware.
Seller is qualified to do business and is in good standing in each jurisdiction in which the
failure to so qualify would materially adversely affect Seller.

	 
	3.2	 	Authorization. Seller has the corporate power and authority to execute and deliver
this Agreement and to perform its obligations under this Agreement. The execution, delivery
and performance of this Agreement and all other agreements and instruments executed and
delivered by Purchaser in connection with this Agreement, and the consummation of the
transactions contemplated hereby and thereby, have been duly and validly authorized by all
necessary action on the part of Seller. This Agreement has been, and the other agreements and
instruments to be executed and delivered by Seller in connection with this Agreement will be,
on or prior to the Closing Date, duly executed and delivered by Seller, and constitute, or
upon execution and delivery will constitute, the valid, legal and binding obligations of
Seller, enforceable against Seller in accordance with their respective terms. The SPA Shares,
when issued and fully paid for in accordance with the terms of this Agreement, will be validly
issued, fully paid and nonassessable. The issuance and sale of the SPA Shares will not give
rise to any preemptive rights or rights of first refusal on behalf of any person which have
not been waived

	 
	3.3	 	Absence of Conflicts. The execution and delivery by Seller of this Agreement and the
consummation of the transactions contemplated hereby will not result in the violation of any
material law, statute, rule, regulation, order, writ, injunction, judgment or decree of any
court or governmental authority to or by which Seller is bound, or of any provision of the
Certificate of Incorporation or By-Laws of Seller, and will not conflict with, or result

 

2

 

	 	 	in a material breach or violation of, any of the terms or provisions of, or constitute (with
due notice or lapse of time or both) a default under, any lease, loan agreement, mortgage,
security agreement, trust indenture or other agreement or instrument to which Seller is a
party or by which it is bound or to which any of its properties or assets is subject, nor
result in the creation or imposition of any lien upon any of the properties or assets of the
Company.

	3.4	 	Governmental Consents. No consent, approval, authorization or other order of any
governmental authority is required to be obtained by the Company in connection with the
authorization, execution and delivery of this Agreement or with the authorization, issue and
sale of the Common Stock, except such filings as may be required to be made with the
Securities and Exchange Commission, the NASDAQ Global Market and with any state or foreign
blue sky or securities regulatory authority.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser represents and warrants to Seller as follows:

	4.1	 	Organization and Good Standing. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the Cayman Islands.

	 
	4.2	 	Authorization. Purchaser has the corporate power and authority to execute and
deliver this Agreement and to perform its obligations under this Agreement. The execution,
delivery and performance of this Agreement and all other agreements and instruments executed
and delivered by Purchaser in connection with this Agreement, and the consummation of the
transactions contemplated hereby and thereby, have been duly and validly authorized by all
necessary action on the part of Purchaser. This Agreement has been, and the other agreements
and instruments to be executed and delivered by Purchaser in connection with this Agreement
will be, on or prior to the Closing Date, duly executed and delivered by Purchaser, and
constitute, or upon execution and delivery will constitute, the valid, legal and binding
obligations of Purchaser, enforceable against Purchaser in accordance with their respective
terms.

	 
	4.3	 	Investment Representations. Purchaser further represents and warrants as follows:

(a) Purchaser is purchasing the SPA Shares for its own account and not with a view to resale
or redistribution in a manner which would require registration under the Securities Act of 1933
(the “Securities Act”) or any state securities laws, or for sale in connection with a
“distribution,” as that term is used in Section 2(11) of the Securities Act, of the SPA Shares.

(b) Purchaser understands that the SPA Shares are not registered under the Securities Act or
the securities laws of any state, may not be disposed of in whole or in part in the absence of
registration under the Securities Act or any state securities laws, unless an exemption from
registration is available, and that the certificates will bear a legend to such effect.

 

3

 

(c) Purchaser is an “accredited investor” as such term is defined in the Securities Act and
has such knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of an investment in the SPA Shares.

ARTICLE V

OTHER AGREEMENTS

	5.1	 	Lock-Up Agreement. Purchaser hereby agrees to enter into an agreement setting forth
restrictions on the transfer of the SPA Shares (the “Lock-Up Agreement”) in the form
attached as Schedule A to this Agreement.

	 
	5.2	 	Registration Rights. Seller hereby grants to Purchaser, with respect to the SPA
Shares (as such amount may be adjusted), registration rights as set forth in the form of
agreement (the “Registration Rights Agreement”) attached as Schedule B to this
Agreement.

	 
	5.3	 	Voting Agreement. Purchaser and Seller hereby agree to enter into a voting agreement
(the “Voting Agreement”) with respect to the Shares in the form attached as Schedule C
to this Agreement.

ARTICLE VI

CONDITIONS TO CLOSING

	6.1	 	Conditions to Obligations of Seller. The obligations of Seller to consummate the
Closing are subject to the satisfaction of the following conditions:

(a) The representations and warranties of Purchaser set forth in this Agreement shall be true,
correct and complete in all material respects as of the Closing Date (as though such
representations and warranties were made anew at and as of such date) except with respect to the
effect of transactions specifically permitted by the provisions of this Agreement, and Purchaser
shall have duly performed in all material respects all agreements and covenants in this Agreement
required to be performed by Purchaser on or before the Closing Date.

(b) All material consents and approvals of third parties and any governmental authorities that
are required to consummate the transactions contemplated by this Agreement shall have been
obtained.

(c) Seller shall have received a signed counterpart of the Voting Agreement from Purchaser.

(d) Seller shall have received a signed copy of the Lock-Up Agreement from Purchaser.

	6.2	 	Conditions to Obligations of Purchaser. The obligations of Purchaser to consummate
the Closing are subject to the satisfaction of the following conditions:

(a) The representations and warranties of Seller set forth in this Agreement shall be true,
correct and complete as of the Closing Date in all material respects (as though such
representations and warranties were made anew at and as of such date) except with respect to the
effect of transactions specifically permitted by the provisions of this Agreement, and Seller
shall have duly performed in all material respects all agreements and covenants in this Agreement
required to be performed by Seller on or before the Closing Date.

 

4

 

(b) Seller shall have furnished to Purchaser a certificate, executed by an authorized officer
on behalf of Seller, confirming the matters set forth in Section 6.2(a) above.

(c) Seller shall have furnished to Purchaser confirmation that Seller is in good standing
under the laws of the State of Delaware.

(d) All material consents and approvals of third parties and any governmental authorities that
are required to consummate the transactions contemplated by this Agreement shall have been
obtained.

(e) Purchaser shall have received a signed counterpart of the Voting Agreement from Seller.

(f) Purchaser shall have received a signed counterpart of the Registration Rights Agreement
from Seller.

(g) There shall not have been any material adverse change in the business or prospects of
Seller.

ARTICLE VII

MISCELLANEOUS PROVISIONS

	7.1	 	Assignment. This Agreement may not be assigned by either party to this Agreement
without the written consent of the non-assigning party. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors, heirs and
assigns.

	 
	7.2	 	Counterparts. This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original and all of which together shall constitute one and the same
instrument.

	 
	7.3	 	Entire Agreement. This Agreement and the documents referred to herein contain the
entire understanding of the parties hereto in respect of the subject matter contained herein.
This Agreement supersedes any prior agreements and understandings between the parties with
respect to the subject matter of this Agreement.

	 
	7.4	 	Notices. Any notice or communication under this Agreement must be in writing and
given by (a) deposit in the United States mail, addressed to the party to be notified, postage
prepaid and registered or certified with return receipt requested, (b) delivery in person or
by courier service providing evidence of delivery or (c) telecopy transmission. Each notice
or communication that is mailed, delivered or transmitted in the manner described above shall
be deemed sufficiently given, served, sent and received, in the case of mailed notices, on the
third business day following the date on which it is mailed and, in the case of notices
delivered by hand, courier service or telecopy, at such time as it is
delivered to the addressee (with the delivery receipt or the affidavit of messenger) or at
such time as delivery is refused by the addressee upon presentation. Any notice or
communication under this Agreement must be addressed as follows:

 

5

 

(a) if to Seller:

Home Solutions of America, Inc.

Attn: Frank Fradella, CEO

1500 Dragon Street, Suite B

Dallas, Texas 75207

Facsimile: (214) 333-9435

(b) if to Purchaser:

Laurus Master Fund, Ltd.

Attn: Portfolio Services

c/o Laurus Capital Management, LLC

335 Madison Ave. 10th Fl.

New York, NY 10017

Facsimile: (212) 581-5035

Either party may change his address for notice by written notice to the other party hereto.

	7.5	 	Expenses. The parties shall pay their own respective expenses and the fees and
expenses of their respective counsel and accountants and other experts.

	 
	7.6	 	Survival of Representations and Warranties. Each party hereto covenants and agrees
that each of the representations, warranties, covenants and agreements contained in this
Agreement and in any ancillary document shall survive the Closing of this transaction.

	 
	7.7	 	Waivers. No action taken pursuant to this Agreement, including any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party taking such
action, or compliance with any representation, warranty, covenant or agreement contained
herein. The waiver by any party hereto of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any subsequent breach. The waiver by any party
hereto at or before the closing of this transaction of any condition to its obligations
hereunder that is not fulfilled shall preclude such party from seeking redress from the other
party hereto for breach of any representation, warranty, covenant or agreement contained in
this Agreement.

	 
	7.8	 	Governing Law. This Agreement shall be construed as to both validity and performance
and enforced in accordance with and governed by the laws of the state of Delaware, without
giving effect to its conflict of laws principles.

 

6

 

	7.9	 	Prevailing Party. In the event of any dispute among the parties hereto with respect
to any of the terms or provisions of this Agreement, the non-prevailing party shall pay or
reimburse the prevailing party for all fees and expenses incurred with respect thereto,
including without limitation any legal and attorneys’ fees and expenses incurred by the
prevailing party in connection therewith.

	 
	7.10	 	Amendments. This Agreement may not be modified or changed except by an instrument or
instruments in writing signed by the party against whom enforcement of any such modification
or amendment is sought.

[Remainder of Page Intentionally Left Blank; Signatures Appear on Following Page]

 

7

 

IN WITNESS WHEREOF, the parties are executing this Agreement on the date set forth in the
introductory clause.

	 	 	 	 	 
	 	SELLER:

HOME SOLUTIONS OF AMERICA, INC.

 	 
	 	By:  	/s/ Jeff Mattich
 	 
	 	 	Name:  	Jeff Mattich 	 
	 	 	Title:  	Chief Financial Officer 	 
	 

	 	 	 	 	 
	 	 	PURCHASER:
	 
	 	 	 	 
	 	 	LAURUS MASTER FUND, LTD.
	 
	 	 	 	 
	 

	 	By:
	 	Laurus Capital Management, LLC,
	 

	 	 	 	its investment manager

	 	 	 	 	 
	 	 	 
	 	By:  	                                              /s/ Scott Bluestein
 	 
	 	 	Name:  	Scott Bluestein 	 
	 	 	Title:  	Authorized Signatory 	 
	 

 

SIGNATURE PAGE TO

STOCK PURCHASE AGREEMENT

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00131-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00131-of-00352.parquet"}]]