**HOMESOLUTIONS OF AMERICA, INC.**

**RepurchaseOption Agreement**

                This Repurchase Option Agreement(the "***Agreement***") is executed as of July 31, 2003 (the "***EffectiveDate***") by and among **Home Solutions of America, Inc.**, a Delawarecorporation ("***HSOA***"), FSS Holding Corp., a Texas corporation andwholly-owned subsidiary of HSOA ("SUBSIDIARY"), Grassmere Computer Products,Inc. a Texas corporation ("***GRASSMERE***"), and Merritt ComputerProducts, L.P. d/b/a Amherst Merritt International, a Texas limited partnership("***AMHERST***").

**R E C I T A L S**

**                WHEREAS**, pursuant to aPartnership Interest Purchase Agreement (the "***Purchase Agreement***")entered into as of the date hereof, HSOA and SUBSIDIARY have acquired 100% ofthe partnership interests of Fiber-Seal Systems, L.P., a Texas limitedpartnership (the "***FIBER-SEAL Interests***"), from GRASSMERE andAMHERST, respectively; and

**                WHEREAS**, as an inducementto enter into the Purchase Agreement, HSOA and SUBSIDIARY hereby grantGRASSMERE and AMHERST the repurchase option for the FIBER-SEAL Interests underthe terms and conditions set forth in this Agreement.

                NOW THEREFORE, the parties heretoagree as follows:

1.     Repurchase Option.

                (a)    HSOAhereby grants AMHERST, and SUBSIDIARY hereby grants GRASSMERE, in the eventthat, on or before 5:00pm on December 31, 2003, either (i) the promissory notein the original principal amount of $520,000 that HSOA has issued to AMHERST onthe date hereof  (the "***Note***") has not been repaid in full, or(ii) HSOA has not completed a debt or equity financing in which at least$2,000,000 of additional capital (excluding any refinanced debt) israised in a single transaction, an irrevocable, exclusive option (the "***RepurchaseOption***") to repurchase all of the FIBER-SEAL Interests for thefollowing consideration to be paid to HSOA:

                               (i)           The delivery to HSOA of the original copy of the Note, marked"cancelled" or "paid in full" on the first page of the Note, along with thesignature and date of AMHERST as the initial holder of the Note;

                               (ii)           The delivery to HSOA of any amounts that had previously been paid on theNote ("***Note Payments***"); 

                               (iii)           The delivery to HSOA of the original copy of the warrant (the "***Warrant***")for up to 250,000 shares of common stock, $.001 par value per share ("***CommonStock***") of HSOA, marked "cancelled" or "paid in full" on the first pageof the Warrant, along with the signature and date of AMHERST as the initialholder of the Warrant;

 

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                (b)   The RepurchaseOption shall be exercised by AMHERST or GRASSMERE by delivery of a writtennotice and the Note, any Note Payments, and the Warrant to HSOA at any timefrom 9:00am until 5:00pm on January 2, 2004 (the "***Exercise Date***");if such items are not received by HSOA by 5:01pm on the Exercise Date (the "***ExpirationTime***"), this Agreement shall automatically expire and shall be null andvoid and have no legal effect.  Upon delivery of the required items to HSOA,AMHERST and GRASSMERE shall again become the legal and beneficial owner of the FIBER-SEALInterests and all rights and interests therein or relating thereto.  ThisRepurchase Option may only be exercised in whole, and not in part, for all ofthe FIBER-SEAL Interests.

                (c)   Whenever AMHERST or GRASSMERE shall have the right to repurchase the FIBER-SEALInterests hereunder, AMHERST or GRASSMERE may designate and assign one or moreother persons or organizations to exercise his purchase rights under thisAgreement and purchase all of the FIBER-SEAL Interests.

2.     Option to Purchase Franchise.  In the sole event that AMHERST andGRASSMERE repurchase the FIBER-SEAL Interests pursuant to this Agreement, inconsideration for the remaining purchase price that HSOA paid AMHERST andGRASSMERE pursuant to the Purchase Agreement, HSOA shall have the option, for30 days from the Exercise Date, to purchase from AMHERST, GRASSMERE, or anaffiliate thereof an exclusive "Fiber-Seal" franchise for the City of Houston,Texas, on the terms set forth in FIBER-SEAL's standard uniform franchiseoffering circular, provided that HSOA dedicates at least $125,000 of capital tothe franchise.

3.      Restrictionon HSOA.  Except for the transfer of the FIBER-SEAL Interests to AMHERST orGRASSMERE or their assignees contemplated by this Agreement, none of the FIBER-SEALInterests or any beneficial interest therein shall be transferred, encumberedor otherwise disposed of by HSOA in any way until the Expiration Time.  Inaddition, from the date of this Agreement until the Expiration Time, (a) HSOAshall not sell FIBER-SEAL or any of its material assets, (b) FIBER-SEAL'sexpenses from the date of this Agreement through December 31, 2003 shall notexceed the budget attached hereto as Exhibit A; and (c) no FIBER-SEALemployees shall be terminated without the consent of Rick J. O'Brien. 

4.     General Provisions.

                (a)   THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS BY THE LAWS OF THESTATE OF DELAWARE AS SUCH LAWS ARE APPLIED TO AGREEMENTS BETWEEN DELAWARERESIDENTS ENTERED INTO AND TO BE PERFORMED ENTIRELY WITHIN DELAWARE WITHOUTREGARD TO CONFLICT OF LAWS RULES.  THE PARTIES TO THIS AGREEMENT HEREBY MUTUALLYAGREE THAT VENUE FOR ANY ACTION BROUGHT WITH RESPECT TO THIS AGREEMENT SHALL BEIN ACCORDANCE WITH THE PURCHASE AGREEMENT.

                (b)  This Agreement represents the entire agreement between the parties withrespect to the subject matter herein and may only be modified or amended inwriting signed by both parties.

                (c)   All notices and other communications required or permitted hereundershall be effective upon receipt and shall be in writing and may be delivered inperson, by facsimile, overnight delivery service or U.S. mail, in which eventit may be mailed by first-class, certified or registered, postage prepaid,addressed (a) if to AMHERST or GRASSMERE, at such address as set forth onthe signature page hereto, or at such other address as AMHERST or GRASSMEREshall, from time to time, designate to HSOA in writing or (b) if to HSOA,at its address set forth on the signature page of this Agreement, or at suchother address as HSOA shall have furnished to AMHERST or GRASSMERE in writing.

 

 

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                (d)  The rights and benefits of AMHERST and GRASSMERE under this Agreementshall be transferable to any one or more persons or entities, and all covenantsand agreements hereunder shall inure to the benefit of, and be enforceable byAMHERST's or GRASSMERE's successors and assigns.  The rights and obligations ofHSOA under this Agreement may only be assigned with the prior written consentof AMHERST or GRASSMERE.

                (e)   Either party's failure to enforce any provision or provisions of thisAgreement shall not in any way be construed as a waiver of any such provisionor provisions, nor prevent that party thereafter from enforcing each and everyother provision of this Agreement.  The rights granted both parties herein arecumulative and shall not constitute a waiver of either party's right to assertall other legal remedies available to it under the circumstances.

                (f)    HSOA, SUBSIDIARY,AMHERST, and GRASSMERE each agrees upon request of theother party to execute any further documents or instruments necessary ordesirable to carry out the purposes or intent of this Agreement.

[Remainder of page intentionally left blank.]

 

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IN WITNESS WHEREOF, the partieshave duly executed this Agreement as of the day, month and year first set forthabove.

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| **HOMESOLUTIONS OF AMERICA, INC.**                                                                                                                                                                                                                                                                                                                                                                                                                                               | **GRASSMERE COMPUTER PRODUCTS, INC.**                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| By:                                                                            R. Andrew White | By:                                                                              RickJ. O'Brien |
|       President and ChiefExecutive Officer                                                                                                                                                                                                                                                                                                                                                                                                         |        President                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | **MERRITTCOMPUTER PRODUCTS, L.P.**                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | **(d/b/a  AmherstMerritt International)**                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | By:       Grassmere Computer Products,Inc.                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Its:        General Partner                                                                                                                                                                                                                                                                                                                                                                                                                              |
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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | By:                                                                                                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Rick J. O'Brien                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | President                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
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| Address:                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | Address:                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
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| 11850 Jones Road                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 5565  Red Bird Center Drive, Ste. 150                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Houston, TX 77070      {Please provide address for notice purposes}                                                                                                                                                                                                                                                                                                                                                                                                              | Dallas,TX 75237{Please provideaddress for notice purposes}                                                                                                                                                                                                                                                                                                                                                                                                                                  |

 

 

HOME SOLUTIONS OF AMERICA, INC.REPURCHASE OPTION AGREEMENT SIGNATURE PAGE

 

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**EXHIBIT A**

 

**FIBER-SEAL BUDGET**