FINANCIAL ADVISORY AGREEMENT

This Financial Advisory Agreement (the "Agreement") is made and entered into as
of July 19, 2004 (the "Effective Date"), by and among Home Solutions of America,
Inc., a Delaware corporation ("Client"), Victus Capital, L.P., and Vicis Capital
Master Fund (together, the "Advisor").

WHEREAS, Client is a publicly traded company that has adopted and is currently
implementing a business strategy of acquiring companies providing niche
residential services;

            WHEREAS, Client has executed a letter of intent to acquire (the "RAM
Acquisition") Rehak Associates Mobile Services, Inc. d/b/a RAM Home Warranty and
RamSpec, Inc. (together, "RAM"), based in Los Angeles, California ("RAM"), the
closing of which, as currently structured and contemplated, would require Client
to raise up to $7.0 million of cash (the "RAM Financing");

WHEREAS, Advisor, having previously purchased shares of Client's Series A
Convertible Preferred Stock and Series B Convertible Preferred Stock, is
knowledgeable about Client's business model, acquisition strategy, and financing
options; and

WHEREAS, it is the desire of Client and Advisor to enter in to this Agreement
whereby Advisor would serve as Client's financial advisor with regard to the RAM
Financing, under the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements hereinafter set forth, the parties agree as follows:

1.                  Client hereby engages and retains Advisor to act as a
non-exclusive financial advisor to Client for the term of this Agreement with
respect to the following areas of Client's business:

(a)       To assist Client with the due diligence review of the financial and
operating history of RAM;

(b)       To assist Client in the raising of debt and/or equity capital for the
RAM Financing, including the preparation and review of historical and pro forma
financial information and underlying assumptions for presentation to third-party
lenders and institutional investors; and

(c)      To perform such other financial advisory services related to the RAM
Financing as Client may from time to time request from Advisor during the term
of this Agreement.

2.                  In consideration of Advisor's engagement and advisory
services rendered in connection with the RAM Financing, and as sole compensation
to Advisor therefor, Client agrees to issue Advisor (in such allocation between
Victus Capital, L.P. and Vicis Capital Master Fund as specified by Advisor) (i)
warrants to purchase up to 666,667 aggregate shares of Client's common stock,
$.001 par value per share ("Common Stock"), with an exercise price of $1.75 per
share, expiring 90 days from the Effective Date, under such terms and conditions
as set forth in the form of warrant attached hereto as Exhibit A (the "Series C
Warrants"), and (ii) warrants to purchase up to 666,667 aggregate shares of
Common Stock, with an exercise price of $1.75 per share, expiring five years
from the Effective Date, under such terms and conditions as set forth in the
form of warrant attached hereto as Exhibit B (the "Series D Warrants") (the
Series C Warrants and the Series D Warrants shall be referred to herein together
as the "Warrants").  Client agrees to register shares of Common Stock that may
be purchased pursuant to the Series C Warrants and Series D Warrants under the
terms of the Registration Rights Agreement (so called herein) attached hereto as
Exhibit C.  Warrant agreements for the Series C Warrants and Series D Warrants
and the Registration Rights Agreement shall be executed and delivered to Advisor
simultaneously with and as a condition to the effectiveness of this Agreement.

 

 

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3.                  The Series C Warrants and Series D Warrants shall be deemed
to be fully and completely earned as of the date of this Agreement and shall not
be subject to vesting, forfeiture, or repurchase by Client in the event that the
RAM Acquisition or RAM Financing are not ultimately consummated.

4.                  The term of this Agreement shall commence on the date
hereinabove and shall terminate on the earlier of: (i) the closing and funding
of the RAM Financing, or (ii) September 30, 2004.

5.                  During the term of this Agreement, Advisor shall be
available for the rendering of the consulting and advisory services described
herein to and for the benefit of Client, at any time upon reasonable notice. 
Such services shall be performed by a duly qualified employee or agent of
Advisor, such employee or agent to be selected in the sole discretion of
Advisor.  Client shall reimburse Advisor for its out-of-pocket expenses incurred
in providing the advisory services described herein, provided that Advisor seeks
Client's preapproval of any individual expense that exceeds $2,500.  Advisor
shall at all times during the pendency hereof be deemed to be an independent
contractor, and this agreement shall not be deemed to create an
employer-employee relationship, agency relationship, or a joint venture or
partnership between the parties.

6.                  This Agreement contains the entire agreement and
understanding of the parties with respect to the subject matter hereof and
supersedes any prior negotiations and agreements of the parties with respect to
said matter.

7.                  The terms and provisions hereof shall be binding upon and
inure to the benefit of the parties hereto in their respective legal
representatives, successors and assigns.

8.                   Each of the parties hereto represents to the other it has
the proper corporate authorization to enter into and perform this Agreement.

9.                   Additional Representations and Warranties of Client:

(a)      Client has authorized and has reserved and covenants to continue to
reserve, free of preemptive rights and other similar contractual rights of
stockholders, such number of shares of Common Stock as shall from time to time
be sufficient to effect the exercise of the Warrants then outstanding; provided
that the number of shares of Common Stock so reserved shall at no time be less
than 120% of its authorized but unissued shares of its Common Stock required to
effect the exercise of the Warrants.  Any shares of Common Stock issuable upon
exercise of the Warrants (and such shares when issued) are herein referred to as
the "Warrant Shares".

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(b)        Authorization; Enforcement.  Client has the requisite corporate power
and authority to enter into and perform this Agreement, the Registration Rights
Agreement, and the Warrants (collectively, the "Transaction Documents") and to
issue and sell the Warrants in accordance with the terms hereof.

(c)      Issuance of Shares.  The Warrants to be issued hereunder have been duly
authorized by all necessary corporate action.  When the Warrant Shares are
issued in accordance with the terms of the Warrants, such shares will be duly
authorized by all necessary corporate action and validly issued and outstanding,
fully paid and nonassessable, and the holders shall be entitled to all rights
accorded to a holder of Common Stock.

(d)        No Conflicts.  Client is not required under Federal, state or local
law, rule or regulation to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental agency in order
for it to execute, deliver or perform any of its obligations under the
Transaction Documents, or issue and sell the Warrants and the Warrant Shares in
accordance with the terms hereof or thereof (other than any filings which may be
required to be made by Client with the Commission or state securities
administrators subsequent to the Closing).

(e)        Securities Act of 1933.  Based in material part upon the
representations herein of Advisor, Client has complied and will comply with all
applicable federal and state securities laws in connection with the offer,
issuance and sale of the Warrants hereunder.  Neither Client nor anyone acting
on its behalf, directly or indirectly, has or will sell, offer to sell or
solicit offers to buy any of the Warrants or similar securities to, or solicit
offers with respect thereto from, or enter into any preliminary conversations or
negotiations relating thereto with, any person, or has taken or will take any
action so as to bring the issuance and sale of the Warrants under the
registration provisions of the Securities Act and applicable state securities
laws, and neither Client nor any of its affiliates, nor any person acting on its
or their behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D under the Securities Act) in
connection with the offer or sale of any of the Warrants.

(f)         Governmental Approvals.  Except as set forth in Client's most recent
Form 10-KSB/A or Form 10-QSB, and except for the filing of any notice prior or
subsequent to the Effective Date that may be required under applicable state
and/or Federal securities laws (which if required, shall be filed on a timely
basis), including the filing of a Form D and a registration statement or
statements pursuant to the Registration Rights Agreement, no authorization,
consent, approval, license, exemption of, filing or registration with any court
or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, is or will be necessary for, or in
connection with, the execution or delivery of the Warrants, or for the
performance by Client of its obligations under the Transaction Documents.

 

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(g)        Dilutive Effect.  Client understands and acknowledges that the number
of Warrant Shares issuable upon exercise of the Warrants will increase in
certain circumstances.  Client further acknowledges that its obligation to issue
the Warrant Shares upon the exercise of the Warrants in accordance with this
Agreement and the Warrants is, in each case, absolute and unconditional
regardless of the dilutive effect that such issuance may have on the ownership
interest of other stockholders of Client.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first set forth above.

CLIENT:

 

HOME SOLUTIONS OF AMERICA, INC.

By:                                                                  
Rick J. O'Brien
Chief Financial Officer

 

 

ADVISOR:

 

VICTUS CAPITAL, L.P.

By:                                                                  
Name:  Shad L. Stastney
Title:    Managing Director

VICIS CAPITAL MASTER FUND

                                                                                   
By: VICIS CAPITAL, LLC

                                                                                   

By:                                                                  
Name:  Shad L. Stastney
Title:    Managing Director

 

 

 

 

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EXHIBIT A

FORM OF WARRANT FOR SERIES C WARRANTS

 

 

 

EXHIBIT B

FORM OF WARRANT FOR SERIES D WARRANTS

 

 

EXHIBIT C

FORM OF REGISTRATION RIGHTS AGREEMENT

 

 

 

 

 

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