Contract
Exhibit 4.6
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
OFFERED, SOLD OR TRANSFERRED (OTHER THAN IN RELIANCE UPON RULE 144 PROMULGATED UNDER SUCH ACT) IN
THE ABSENCE OF A REGISTRATION STATEMENT UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL
REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT.
HOME SOLUTIONS OF AMERICA, INC.
Right to Purchase 1,500,000 Shares
(Subject to Adjustment)
(Subject to Adjustment)
Warrant for Common Stock
Home Solutions of America, Inc. (hereinafter referred to as the “Company”), a Delaware
corporation, hereby certifies that, for value received,
Xxxxxxx X. Xxxxxxx
or registered assigns (the “Holder”), is entitled to purchase from the Company at any time or from
time to time during the Exercise Period (as hereinafter defined) an aggregate of ONE MILLION FIVE
HUNDRED THOUSAND (1,500,000) fully paid and nonassessable shares (the “Warrant Shares”), subject to
adjustment as provided below, of the Common Stock, $0.001 par value per share (the “Stock” or
“Common Stock”) of the Company, on the payment therefore of the aggregate exercise price which
shall be $0.01 per share (the “Exercise Price per Share”) multiplied by the number of shares to be
issued (the “Exercise Price”), upon the surrender of this Warrant duly signed by the registered
Holder hereof at the time of exercise, accompanied by payment of the Exercise Price, upon the terms
and subject to the conditions hereinafter set forth.
The Warrant represented hereby is delivered pursuant to and is subject to that certain
Settlement Agreement, Mutual Release and Indemnity Agreement dated as of January 26, 2009, by and
among the Company, Home Solutions of Restoration of Louisana, Inc. and the Holder (the
“Agreement”).
EXERCISE OF WARRANT. Subject to the terms and conditions hereof, this Warrant may be
exercised by the Holder at any time or times on or after the date hereof, but not
after 5:00 p.m. on the date sixty (60) months after the date set forth on the signature page hereto
(the “Exercise Period”).
In the event of a proposed Change of Control, the Company shall give the Holder ten (10) days
prior notice of the proposed closing date of the Change of Control and, to the extent the Warrant
has not been exercised by such date, then this Warrant shall terminate. “Change of Control” shall
mean (x) the acquisition of the Company by another entity by means of any transaction or series of
related transactions (including, without limitation, any merger, consolidation or other form of
reorganization in which outstanding shares of the Company are exchanged for securities or other
consideration issued, or caused to be issued, by the acquiring entity or its subsidiary, but
excluding any transaction effected primarily for the purpose of changing the Company’s jurisdiction
of incorporation), unless the Company’s stockholders of record as constituted immediately prior to
such transaction or series of related transactions will, immediately after such transaction or
series of related transactions hold at least a majority of the voting power of the surviving or
acquiring entity or (y) a sale of all or substantially all of the assets of the Company.
Subject to the foregoing restrictions, during the Exercise Period this Warrant may be
exercised, in whole or in part, as follows:
A. Exercise for Cash. The Holder may, at its option, elect to exercise this Warrant,
in whole or in part and at any time or from time to time during the Exercise Period, by
surrendering this Warrant, with the Exercise of Warrant and Declaration appended hereto duly
executed by or on behalf of the Holder, at the principal office of the Company, or at such other
office or agency as the Company may designate, accompanied by payment in full, in lawful money of
the United States, of the Exercise Price payable in respect of the number of shares of Stock
purchased upon such exercise.
B. Cashless Exercise.
(i) The Holder may, at its option, elect to exercise this Warrant, in whole or in part and at
any time or from time to time during the Exercise Period, on a cashless basis, by surrendering this
Warrant, with the Exercise of Warrant and Declaration appended hereto duly executed by or on behalf
of the Holder, at the principal office of the Company, or at such other office or agency as the
Company may designate, by canceling a portion of this Warrant in payment of the Exercise Price
payable in respect of the number of shares of Stock purchased upon such exercise. In the event of
an exercise pursuant to this subsection B, the number of shares of Stock issued to the Holder shall
be determined according to the following formula:
| X= | Y(A-B) | |||||
Where X= the number of shares of Stock that shall be issued to
the Holder;
Y= the number of shares of Stock for which this Warrant is
being exercised (which shall include both the number of
shares of Stock issued to the Holder and the number of
shares of Stock subject to the portion of the Warrant
being cancelled in payment of the Exercise Price);
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A= the Fair Market Value (as calculated pursuant to the
terms set forth below) of one share of Common Stock; and
B= the Exercise Price per Share.
(ii) The Fair Market Value per share of Common Stock shall be determined as follows:
(1) If the Common Stock is listed on a national securities exchange, a nationally recognized
trading system or on the over the counter market, as of the Exercise Date, the Fair Market Value
per share of Common Stock shall be deemed to be the average of the high and low reported sale
prices per share of Common Stock thereon on the trading day immediately preceding the Exercise Date
(provided that if no such price is reported on such day, then on the date nearest preceding
such date).
(2) If the Common Stock is not listed on a national securities exchange, a nationally
recognized trading system or on the over the counter market as of the Exercise Date, the Fair
Market Value per share of Common Stock shall be determined in good faith by the Board of Directors
of the Company, subject to the approval of the Holder. If the parties hereto cannot reach
agreement, then the cashless exercise option shall not be available to the Holder.
DELIVERY OF STOCK CERTIFICATE UPON EXERCISE. As soon as practicable after the
exercise of this Warrant and payment of the Exercise Price (which payment shall be deemed to have
occurred when funds are immediately available to the Company), and in no event more than three (3)
business days thereafter, the Company will cause to be issued in the name of and delivered to the
registered Holder hereof or its assigns, or such Holder’s nominee or nominees, a certificate or
certificates for the number of full shares of Stock of the Company to which such Holder shall be
entitled upon such exercise (and in the case of a partial exercise, a Warrant of like tenor for the
unexercised portion remaining subject to exercise prior to the expiration of the Exercise Period
set forth herein). For all corporate purposes, such certificate or certificates shall be deemed to
have been issued and such Holder or such Holder’s designee to be named therein shall be deemed to
have become a holder of record of such shares of Stock as of
the date the duly executed exercise form pursuant to this Warrant, together with full payment of
the Exercise Price, is received by the Company as aforesaid. No fraction of a share or scrip
certificate for such fraction shall be issued upon the exercise of this Warrant; in lieu thereof,
the Company will pay or cause to be paid to such Holder cash equal to a like fraction at the
prevailing fair market price for such share as determined in good faith by the Company.
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ANTI-DILUTION PROVISIONS. A. Certain Dividends and Distributions. In the
event that a dividend or other distribution shall be declared upon the Stock of the Company payable
in shares of said stock, then, in each event, the number of shares of Stock covered by this Warrant
shall be adjusted by adding thereto the number of shares which would have been distributable
thereon if such shares had been outstanding on the date fixed for determining the stockholders
entitled to receive such stock dividend or other distribution.
B. Other Dividends and Distributions. In the event that a dividend or other
distribution shall be declared upon the Stock of the Company payable in securities of the Company
other than Stock, then, and in each event, the Holder shall receive upon exercise hereof, in
addition to the number of shares of Stock issuable hereunder, the kind and amount of securities of
the Company, cash or other property which the Registered Holder would have been entitled to receive
had this Warrant been exercised on the date of such event and had the Registered Holder thereafter,
during the period from the date of such event to and including the date that this warrant is
exercised in full, retained any such securities receivable during such period, giving application
to all adjustments called for during such period under this Section with respect to the rights of
the Holder.
C. Stock Splits and Combinations. If the Company shall at any time or from time to
time after the date hereof, effect a stock split of the outstanding shares of Stock, the number of
shares of Stock covered by this Warrant shall be proportionately increased. If the Company shall
at any time or from time to time after the Issuance Date, combine the outstanding shares of Stock,
the number of shares of Stock covered by this Warrant shall be proportionately decreased. Any
adjustments under this subsection C shall be effective at the close of business on the date the
stock split or combination becomes effective.
D. Reorganizations, Consolidations, Mergers. Except as otherwise set forth herein, in
the event that the outstanding shares of Stock of the Company shall be changed into or exchanged
for a different number or kind of shares of stock or other securities of the Company or of another
corporation, whether through reorganization, recapitalization, stock split-up, combination of
shares, merger or consolidation, then upon exercise of this Warrant there shall be substituted for
the shares of Stock covered by this Warrant, the number and kind of shares of stock or other
securities which would have been substituted therefor if such shares had been outstanding on the
date fixed for determining the stockholders entitled to receive such changed or substituted stock
or other securities.
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E. Other Changes. In the event there shall be any change, other than specified above,
in the number or kind of outstanding shares of Stock of the Company or of any stock or other
securities into which such Stock shall be changed or for which it shall have been exchanged, then
if such change equitably requires an adjustment in the number or kind of shares covered by this
Warrant, such adjustment shall be made by the Company and shall be effective and binding for all
purposes on this Warrant.
F. Notice of Adjustments. Whenever the number of Warrant Shares or number or kind of
securities or other property purchasable upon the exercise of this Warrant is adjusted, as herein
provided, the Company shall give notice thereof to the Holder, which notice shall state the number
of Warrant Shares (and other securities or property) purchasable upon the exercise of this Warrant
after such adjustment, setting forth a brief statement of the facts requiring such adjustment and
setting forth the computation by which such adjustment was made.
LOST, STOLEN, DESTROYED OR MUTILATED WARRANT. Upon receipt by the Company of evidence
satisfactory (in the exercise of reasonable discretion) to it of the ownership of and the loss,
theft or destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction)
of indemnity satisfactory (in the exercise or reasonable discretion) to it, and (in the case of
mutilation) upon the surrender and cancellation thereof, the Company will issue and deliver, in
lieu thereof, a new Warrant of like tenor.
TRANSFER AND TRANSFER RESTRICTIONS. A. Owner of Warrant. The Company may
deem and treat the person in whose name this Warrant is registered as the Holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone other than the
Company) for all purposes and shall not be affected by any notice to the contrary, until
presentation of this Warrant for registration of transfer as provided below.
B. Transfer of Warrant. The Company agrees to maintain, at its then principal place
of business, books for the registration of the Warrant and transfers thereof, and, subject to the
provisions of subsections C and D below, this Warrant and all rights hereunder are transferable, in
whole or in part, on said books at said office, upon surrender of this Warrant at said office,
together with a written assignment of this Warrant duly executed by the Holder hereof or his duly
authorized agent or attorney and funds sufficient to pay any transfer taxes payable upon the making
of such transfer. Upon such surrender and payment the Company shall execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the denominations specified in
such instrument of assignment, and this Warrant shall promptly be canceled.
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C. Restrictions on Exercise and Transfer. Neither this Warrant nor the shares of
Stock issuable upon exercise of this Warrant have been registered under the Securities Act of
1933, as amended (the “Act”) or any state securities laws. Therefore, in order, among other
things, to insure compliance with the Act, notwithstanding anything else in the Warrant to
contrary, the Holder of this Warrant, including any successive Holder, agrees by accepting this
Warrant as follows: No Holder shall sell, assign, transfer, pledge, hypothecate, mortgage, encumber
or dispose of all or any portion of this Warrant (or any of the shares of Stock which may be issued
upon the exercise hereof). Notwithstanding the foregoing, a Holder may transfer all or any portion
of this Warrant (or any of the shares of Stock which may be issued upon the exercise hereof) (i) as
part of a registered public offering of the Company’s securities or pursuant to Rule 144 under the
Act, (ii) by pledge that creates a mere security interest in all or any portion of this Warrant (or
any of the shares of Stock which may be issued upon the exercise hereof), provided that the pledgee
thereof agrees in writing in advance to be bound by and comply with all applicable provisions of
this Warrant to the same extent as if it were the Holder making such pledge, (iii) to any member of
the Holder, or to any siblings, ancestors, descendants or spouse of any member of the Holder, or
any custodian or trustee for the account of such member or the account of such siblings, ancestors,
descendants or spouse of such member (or any combination of the foregoing), or (iv) to an affiliate
or a partner of Holder, provided, in each such case (other than a transfer under clause (i) above)
a transferee shall receive and hold all or any portion of this Warrant (or any of the shares of
Stock which may be issued upon the exercise hereof) subject to the provisions of this Warrant and
there shall be no further transfer except in accordance herewith. No party will avoid the
provisions of this Warrant by making one or more transfers to an affiliate of such party and then
disposing of all or any portion of such party’s interest in such affiliate; provided, however, that
in any event, this Warrant and the Stock issuable herefrom may not (other than in connection with
the matters described in sub-sections C(i)-(iv) above (inclusive)) be sold or transferred in the
absence of registration under the Act unless the Company receives an opinion of counsel reasonably
acceptable to it stating that such sale or transfer is exempt from the registration and prospectus
delivery requirements of said Act. For the avoidance of doubt, the Company acknowledges that a
disposition made in reliance upon Rule 144 will not require an opinion of counsel.
D. Legend on Shares. Each certificate for shares of Stock issued upon exercise of
this Warrant, unless at the time of exercise such shares are registered under the Act, shall bear
substantially the following legend (and any additional legend required under the Act or otherwise):
“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AS AMENDED, AND MAY NOT BE OFFERED, SOLD, OR TRANSFERRED
(OTHER THAN IN RELIANCE UPON RULE 144 PROMULGATED UNDER SUCH ACT), IN THE ABSENCE OF
A REGISTRATION STATEMENT UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL
REASONABLY
ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT.”
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Any certificate issued at any time in exchange or substitution for any certificate bearing
such legend (except a new certificate issued upon completion of a public distribution pursuant to a
registration statement under the Act of the securities represented thereby) shall also bear such
legend if, in the reasonable opinion of counsel for the Company, the securities represented thereby
are legally required to be subject to the transfer restrictions contained in this Warrant. The
exercise and transfer restriction provisions of this Warrant shall be binding upon all subsequent
Holders of the Warrant.
COVENANTS. The Company covenants that, so long as this Warrant is exercisable, it
will reserve from its authorized and unissued Stock a sufficient number of shares to provide for
the delivery of stock pursuant to the exercise of this Warrant. The Company further covenants that
all shares of Stock which shall be so deliverable upon exercise of this Warrant shall be duly and
validly issued and fully paid and nonassessable.
MISCELLANEOUS. This Warrant does not confer upon the Holder any rights of a
stockholder of the Company, including, without limitation, any right to vote or to consent to or
receive notice as a stockholder of the Company.
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HEADINGS. The headings in this Warrant are for purposes of reference only, and shall
not limit or otherwise affect the meaning hereof.
| Dated: January 26, 2009 | HOME SOLUTIONS OF AMERICA, INC. |
|||
| By: | /s/ Xxxxx X. Xxxxxxxx | |||
| Name: | Xxxxx X. Xxxxxxxx | |||
| Title: | President and Chief Executive Officer | |||
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EXERCISE OF WARRANT AND DECLARATION
To: Home Solutions of America, Inc.
The undersigned Holder hereby exercises the right to purchase shares of
Common Stock of Home Solutions of America, Inc., a Delaware corporation (the “Company”) and
delivers to the Company herewith the Exercise Price.
The undersigned declares and represents to the Company that the intention of this exercise is
to acquire the aforementioned shares for investment only and not for resale or with a view to the
distribution thereof, except as the same may be made in compliance with all applicable securities
laws. The undersigned has been advised that the shares being issued to the undersigned are not
being registered under the Securities Act of 1933 (the “Act”) on the grounds that this transaction
is exempt under the Act as not involving any public offering. As a result of not being registered
under the Act, the undersigned has been advised that the shares may not be sold or offered for sale
(other than in reliance upon Rule 144 promulgated under such Act) in the absence of an effective
registration statement as to the securities under the Act and any applicable state securities acts
or the availability of an exemption from the registration requirements under the Act and any
applicable state securities acts.
You will kindly forward a certificate or certificates for the shares purchased hereby and, if
such shares shall not include all of the shares provided in this Warrant, a new Warrant of like
tenor and date for the balance of the shares issuable thereunder shall be delivered to the
undersigned at the address set forth below.
Date: |
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| Name of Holder | ||||||||||
| By: | ||||||||||
| Address: | ||||||||||
