Document:

Filed by Bowne Pure Compliance

Exhibit 10.2

STOCK SUBSCRIPTION AGREEMENT

This STOCK SUBSCRIPTION AGREEMENT, dated as of February 3, 2009 (the “Agreement”), is
by and among NBC Acquisition Corp., a Delaware corporation (the “Company”), and NBC
Holdings Corp., a Delaware corporation (the “Investor”).

WHEREAS, the Company desires to issue and to sell to the Investor, and the Investor desires to
subscribe for and to purchase from the Company, certain shares of the Company’s Series A Preferred
Stock, $0.01 par value per share (the “Series A Preferred Stock”).

NOW, THEREFORE, the parties to this Agreement hereby agree as follows:

1. DEFINITIONS. For all purposes of this Agreement, the following terms shall have the
meanings set forth below:

“Act” is defined in Section 4.1(a).

“Agreement” is defined in the preamble.

“Amended and Restated Certificate” is defined in Section 2.1.

“Closing” is defined in Section 2.4.

“Closing Date” is defined in Section 2.4.

“Common Stock” means the Company’s common stock, par value $0.001 per share.

“Company” is defined in the preamble.

“Investor” is defined in the preamble.

“Person” means an individual, partnership, corporation, limited liability company,
association, trust, joint venture, unincorporated organization, or any government, governmental
department or agency or political subdivision thereof.

“Purchase Price” is defined in Section 2.3.

“Series A Preferred Stock” is defined in the recitals.

“Shares” is defined in Section 2.2.

2. ISSUANCE OF STOCK TO THE INVESTOR.

2.1 The Company shall adopt and file with the Secretary of State of the State of Delaware on
or before the Closing (as hereinafter defined) the First Amended and Restated Certificate of Incorporation of the Corporation in the form attached hereto as Exhibit
A (the “Amended and Restated Certificate”).

 

 

 

2.2 On or prior to the Closing, the Company shall have authorized the sale and issuance to the
Investor of an aggregate 10,000 shares of Series A Preferred Stock (the “Shares”) at a
purchase price of $1,000 per Share. The Shares shall have the designations, rights, preferences,
privileges, restrictions, qualifications and limitations given such stock as set forth in the
Amended and Restated Certificate.

2.3 Subject to the terms and conditions of this Agreement, the Investor agrees to purchase
from the Company, and the Company agrees to sell and issue to the Investor, at the Closing, such
number of Shares set forth on the signature page for the Investor for the aggregate purchase price
set forth on such signature page (the “Purchase Price”).

2.4 Closing. The Closing (the “Closing”) of the purchase and issuance of the
Shares shall take place at the offices of Bingham McCutchen LLP, One Federal Street, Boston MA
02110 at 10:00 a.m., on January 23, 2009 (the “Closing Date”), or at such other time or
place mutually agreed upon by the Company and the Investor.

2.5 Payment of Purchase Price. The Investor shall pay the
Purchase Price for the Shares (against delivery thereof) to one or more accounts as directed by the
Company to the Investor by wire transfer of immediately available funds. On the Closing Date or as
soon as practicable thereafter, the Company shall deliver to the Investor certificates representing
the Shares issued to the Investor, each such share certificate to be registered in the Investor’s
name and bearing the legends set forth or referred to in Section 4.2.

3. THE COMPANY’S REPRESENTATIONS AND WARRANTIES. In order to induce the Investor to enter
into this Agreement and to purchase the Shares as described herein, the Company represents and
warrants to the Investor as follows:

3.1 Organization and Good Standing. The Company is duly
organized and existing in good standing in its jurisdiction of incorporation, is duly qualified as
a foreign corporation and authorized to do business in all other jurisdictions in which the nature
of its business or property makes such qualification necessary, and has the corporate power to own
its properties and to carry on its business as now conducted and as proposed to be conducted.

3.2 Authorization. The execution, delivery and performance by the Company of this
Agreement, and the issuance and sale by the Company of the Shares to the Investor hereunder, (a)
are within the Company’s corporate power and authority, (b) have been duly authorized by all
necessary corporate proceedings, and (c) do not conflict with or result in any breach of any
provision of or the creation of any lien upon any of the property of the Company or require any
consent or approval pursuant to the charter or bylaws of the Company or any law, regulation, order,
judgment, writ, injunction, license, permit, agreement or instrument which has not been obtained.

 

 

 

3.3 Enforceability. This Agreement constitutes a valid, legal and binding obligation
of the Company and is enforceable against the Company in accordance with its respective terms.

3.4 Governmental Approvals. The execution, delivery and performance by the
Company of this Agreement, and issuance and sale by the Company of the Shares to the Investor
hereunder, do not require the approval or consent of, or any filing with, any governmental
authority or agency.

3.5 Capitalization. After giving effect to the transactions contemplated hereby, (i)
the total number of shares of all classes of stock which the Corporation shall have authority to
issue is 5,020,000 shares consisting of (A) 5,000,000 shares of Common Stock, 554,094 of which are
issued and outstanding on the date hereof and (B) 20,000 shares of Series A Preferred Stock, 10,000
of which will be issued and outstanding on the date immediately after giving effect to the
transactions contemplated hereby, and (ii) there are no commitments for the purchase or sale of,
and no options, warrants or other rights to subscribe for or purchase, any securities of the
Company other than as set forth on Schedule 1 hereto.

4. THE INVESTOR’S REPRESENTATIONS AND WARRANTIES. In order to induce the Company to enter
into this Agreement and to issue and sell the Shares to the Investor as described herein, the
Investor, severally and as to itself, himself or herself only, represents and warrants as follows:

4.1 Investment Representations.

(a) The Investor represents that the Shares are being acquired by the Investor for the
Investor’s own account for investment and not with a view to the distribution thereof. The
Investor understands that the Shares have not been registered under the Securities Act of 1933, as
amended (the “Act”), on the ground that the offer and sale of the Shares to the Investor is
exempt from the registration requirements of the Act under Section 4(2) thereof as a transaction
not involving any public offering of the Shares. The Investor understands that the Company’s
reliance on such exemption is predicated in part on the representations of the Investor which are
contained herein.

(b) The Investor is able to bear the economic risk of its investment in the Shares, and
understands that the Investor must bear such risk for an indefinite period of time because the
Shares have not been registered under the Act and, therefore, cannot be sold unless they are
subsequently registered under the Act or an exemption from such registration is available. The
Investor agrees that the Investor will not offer to sell or otherwise transfer any of the Shares
except as expressly permitted by this Agreement. The Investor represents it was not formed for the
specific purpose of acquiring the Shares and that it is an “accredited investor” (as defined in
Rule 501 promulgated under the Act).

(c) The Investor has, or together with the Investor’s advisors (if any) have, such knowledge
and experience in financial and business matters, that the Investor is, or together with the Investor’s advisors (if any) are, capable of evaluating the merits and risks of the
purchase of the Shares and of making an informed investment decision with respect thereto.

 

 

 

(d) The Investor and the Investor’s advisors (if any) (i) are familiar with the business of
the Company and its Subsidiaries, (ii) have been given the opportunity to obtain information and to
ask questions of, and to receive answers from, the Company or any person acting on the Investor’s
behalf concerning the Company and its Subsidiaries and the terms and conditions of the purchase and
sale of the Shares, and (iii) have been provided access to all available information about the
Company and its Subsidiaries requested by the Investor.

(e) The Investor has adequate means of providing for the Investor’s current needs and possible
contingencies to sustain a complete loss of this investment, and has no need for liquidity of the
Investor’s investment in the Shares. The Investor’s total commitment to investments that are not
readily marketable is not disproportionate to the Investor’s net worth and will not become
disproportionate as a result of the Investor’s investment in the Shares.

4.2 Legend. The Investor agrees that each certificate representing any Shares shall
bear a legend substantially in the following form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND REGISTRATION OR QUALIFICATION UNDER APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT AND SUCH LAWS.”

5. AMENDMENT AND WAIVER. Any term of this Agreement may be amended and the observance of any
term of this Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company and the Investor
purchasing or holding a majority of the Shares. Any amendment or waiver effected in accordance
with this paragraph shall be binding upon each holder of any Shares purchased under this Agreement
at the time outstanding, each future holder of all such Shares, and the Company. The failure of
any party to enforce any of the provisions of this Agreement will in no way be construed as a
waiver of such provisions and will not affect the right of such party thereafter to enforce each
and every provision of this Agreement in accordance with its terms.

6. SEVERABILITY. Whenever possible, each provision of this Agreement will be interpreted in
such manner as to be effective and valid under applicable law, but if any provision of this
Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law
or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any
other provision or any other jurisdiction, this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision had never been contained herein.

 

 

 

7. ENTIRE AGREEMENT. Except as otherwise expressly set forth herein, this Agreement embodies
the complete agreement and understanding among the parties hereto with respect to the subject
matter hereof and thereof and supersedes and preempts any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related to the subject
matter hereof in any way.

8. SUCCESSORS AND ASSIGNS. This Agreement will bind and inure to the benefit of and be
enforceable by the Company and its successors and assigns and the Investor and their respective
permitted successors and assigns.

9. COUNTERPARTS. This Agreement may be executed in separate counterparts each of which will
be an original and all of which taken together will constitute one and the same agreement.

10. REMEDIES. The Investor will be entitled to enforce their rights under this Agreement
specifically (without posting a bond or other security), to recover damages by reason of any breach
of any provision of this Agreement and to exercise all other rights existing in its favor. The
parties hereto agree and acknowledge that money damages may not be an adequate remedy for any
breach of the provisions of this Agreement and that the Investor may in their sole discretion apply
to any court of law or equity of competent jurisdiction for specific performance and/or injunctive
relief in order to enforce or prevent any violation of the provisions of this Agreement. In the
event of any dispute involving the terms of this Agreement, the prevailing party shall be entitled
to collect reasonable legal fees and expenses from the other parties to the dispute.

11. NOTICES. Any notice provided for in this Agreement will be in writing and will be deemed
properly delivered if either personally delivered or mailed certified or registered mail, return
receipt requested, postage prepaid to the recipient (a) in the case of the Investor at the address
listed for the Investor in the stock records of the Company and (b) in the case of the Company, c/o
Nebraska Book Company, Inc., 4700 South 19th Street, Lincoln, NE 68501, Attention: President.

12. GOVERNING LAW. This Agreement and the obligations of the parties hereunder shall be
deemed to be a contract under seal and shall for all purposes be governed by and construed in
accordance with the internal laws (and not the choice-of-law rules) of the State of New York.

13. DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement are inserted for
convenience only and do not constitute a part of this Agreement.

[The remainder of this page is intentionally left blank. Signature pages follow.]

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Stock Subscription Agreement on the
day and year first above written.

	 	 	 	 	 
	 	 	COMPANY:
	 
	 	 	 	 
	 	 	NBC ACQUISITION CORP.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Alan G. Siemek
	 

	 	 	 	 
	 

	 	 	 	Name: Alan G. Siemek
	 

	 	 	 	Title: Treasurer

 

 

 

	 	 	 	 	 
	 	 	INVESTOR:
	 
	 	 	 	 
	 	 	NBC HOLDINGS CORP.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Alan G. Siemek
	 

	 	 	 	 
	 

	 	 	 	Name: Alan G. Siemek
	 

	 	 	 	Title: Treasurer
	 
	 	 	 	 
	 	 	Shares: 10,000 Shares of Series A Preferred Stock
	 
	 	 	 	 
	 	 	Purchase Price: $10,000,000Filed by Bowne Pure Compliance

Exhibit 4.3

CONFIDENTIAL SETTLEMENT AGREEMENT

This Confidential Settlement Agreement (the “Agreement”) is entered into on this the
22nd day of September, 2008 (the “Effective Date”), by and between Texas Capital
Bank, National Association, as Administrative Agent (the “Agent”) and Amegy Bank, N.A.,
Bank of Oklahoma, N.A., Texas Capital Bank, National Association, Compass Bank, and Amarillo
National Bank (collectively, the “Lenders”) on the one hand, and Home Solutions of America, Inc.,
Cornerstone Marble & Granite, Inc., Fiber-Seal Systems, L.P., Fireline Restoration, Inc., Evenflow
Funding, LLC, Home Solutions Restoration of Louisiana, Inc., Southern Exposure Unlimited of
Florida, Inc., S.E. Tops of Florida, Inc., FSS Holding Corp., Southern Exposure Holdings, Inc., and
Michael J. McGrath, Jr. (collectively, the “Credit Parties”) on the other hand (the Agent,
the Lenders, and the Credit Parties, collectively the “Parties”) for the purposes and
considerations set forth below:

WHEREAS, on or about November 1, 2006, Home Solutions of America, Inc., the Agent, and certain
of the Lenders entered into the Credit Agreement dated as of November 1, 2006 (as it may be amended
from time to time, the “Credit Agreement”);

WHEREAS, on or about February 6, 2008, certain of the Parties entered into a Forbearance
Agreement (as subsequently amended by Amendment No. 1 to Forbearance Agreement dated as of June 3,
2008 and Amendment No. 2 to Forbearance Agreement dated as of June 27, 2008, the “Forbearance
Agreement”) pursuant to which the Lenders agreed to forbear for a specific period of time from
exercising their rights and remedies under the Loan Documents with respect to certain then-existing
Events of Default to the extent the Credit Parties performed certain obligations;

WHEREAS, the Credit Parties are currently in default under the Credit Agreement, the Loan
Documents, and the Forbearance Agreement; and

WHEREAS, the Agent and the Lenders, on the one hand, and the Credit Parties, on the other
hand, wish to avoid the distraction, cost and uncertainty associated with litigation and fully and
finally settle all claims and issues between them relating to or arising in connection with the
Credit Agreement, the Forbearance Agreement, the Loan Documents, the July 1, 2008 Evenflow Funding,
LLC/Michael J. McGrath, Jr. letter agreement and all matters associated therewith.

THEREFORE, in consideration of the mutual promises, covenants, representations, agreements,
and warranties contained in the Agreement, and for other good and valuable consideration which is
expressly recognized by the Parties, the Parties agree as follows:

TERMS

	1.	 	On or before the Effective Date, Home Solutions of America, Inc. shall:

	 	a)	 	Pay (or have paid) to the Agent $1,175,000 (the “Settlement Payment”);
and

	 	b)	 	Issue to the Agent a total of 2,100,000 warrants to purchase shares of Home
Solutions of America, Inc.’s common stock at an exercise price of $.01 per share. The
warrants shall become exercisable as follows: (i) 700,000 warrants become exercisable
on March 1, 2009, (ii) 700,000 warrants become exercisable on September 1, 2009, and
(iii) 700,000 warrants become exercisable on March 1, 2010 (collectively, the
“Warrants”); provided, however, that the Parties agree and
acknowledge that the requirement set forth in this Paragraph 1(b) shall replace the
requirement by Home Solutions of America, Inc. to issue to the Agent the warrants in
the manner set forth in Paragraph 7 of Amendment No. 1 to the Forbearance Agreement.

 

 

 

	 	c)	 	By its signature below, (i) the Agent acknowledges receipt of the Settlement
Payment and the Warrants and, pursuant to Paragraph 3 hereof, the LOC funds and (ii)
acknowledge that it holds the Warrants in its capacity as agent for the Lenders. The
Parties acknowledge and agree that the Warrants may be transferred to individual
lenders and/or West Texas National Bank at a later time, and no Credit Party will
require a legal opinion pursuant to Section 6.c of the Warrant Agreement dated as of
even date herewith in connection with such transfers.

	 	d)	 	The Agent and the Lenders agree and acknowledge that the accrual of interest on
the Credit Parties’ outstanding obligations under the Credit Agreement, the Forbearance
Agreement and the Loan Documents was suspended effective September 12, 2008, and that
all outstanding interest is being satisfied through the Settlement Payment.

	2.	 	Within three (3) Business Days after receipt thereof, Home Solutions of America, Inc. shall
remit or cause to be remitted to the Agent any proceeds, net of reasonable collection
expenses, received by Home Solutions of America, Inc. and/or any or all of the Credit Parties
on account of, or in connection with (a) claims, demands, or suits of any kind asserted by
Home Solutions of America, Inc. or its Subsidiaries or affiliates against Mr. Brian Marshall
(“Marshall”) and/or any entities related to or affiliated with Marshall or by which
Marshall was employed in any capacity and (b) receivables from any related party, including,
without limitation, receivables booked by Marshall on Home Solutions of America, Inc.’s or its
Subsidiaries’ or affiliates’ books and records (collectively (a) and (b), the “Marshall
Claim”); provided, however, that the proceeds relating to or arising from the matters
referenced in Paragraphs 2(a) and 2(b) above shall not include any uncollected FIGA
Receivables as such term is defined in the Forbearance Agreement. The Credit Parties’
obligations and commitments under the Agreement are secured by the Marshall Claim, which shall
constitute “cash collateral” (as such term is used in 11 U.S.C. § 363(a)) of the Agent and the
Lenders in any bankruptcy case filed by or against any or all of the Credit Parties pursuant
to title 11 of the United States Code to the extent contemplated by 11 U.S.C. § 363(a).

	3.	 	Michael J. McGrath, Jr. shall, on or before the Effective Date, directly, through or on
behalf of EvenFlow Funding, LLC, provide $2,000,000 in immediately available funds (the
“LOC Funds”) to the Agent to cash secure Home Solutions of America, Inc.’s Letter of
Credit 676 which was issued by Texas Capital Bank, National Association on November 1, 2006
(the “Letter of Credit”). Agent, on or prior to the Effective Date, has placed the
LOC Funds in Certificate of Deposit Account Number 1116000569 at Texas Capital Bank, National
Association in the name of EvenFlow Funding, LLC (with any renewals or extensions thereof,
collectively, the “LOC Account”). Michael J. McGrath, Jr. or EvenFlow Funding, LLC
shall be listed and remain to be listed as the designated beneficiary of the LOC Accounts;
provided that Michael J. McGrath, Jr. and EvenFlow Funding, LLC shall not withdraw any funds
from the LOC Account or transfer, assign, sell, encumber, pledge or otherwise dispose of their
interest in the LOC Account unless and until the Letter of Credit is fully released. The
Credit Parties, including EvenFlow Funding, LLC, and Michael J. McGrath, Jr. hereby grantss Agent 

CONFIDENTIAL SETTLEMENT AGREEMENT

 

Page 2 of 12

 

	 	 	(a) a
 security interest in
such LOC Account solely to secure amounts that Agent may be required to pay pursuant to the
terms of the Letter of Credit (the “LOC Indebtedness”), and (b) the right to take
funds directly from such LOC Account and apply such funds to the LOC Indebtedness. Parties
hereto, including Michael J . McGrath, Jr . and EvenFlow Funding LLC, hereby acknowledge and
agree that Texas Capital Bank, National Association has“control” of the LOC Account
pursuant to §9 .104(a) of the Uniform Commercial Code to the extent the LOC Account
constitutes a deposit account . The Parties hereto, including Michael J. McGrath, Jr. and
EvenFlow Funding LLC, authorize Texas Capital Bank, National Association to file one or more
UCC financing statements with regard to the LOC Account in connection with the security
interest gtanted therein pursuant to this Agreement. At the request of Texas Capital Bank,
National Association, the Credit Parties, including, Michael J . McGrath, Jr. and Evealow
Funding LLC, agree to sign all other documents that are necessary to perfect, protect and
continue Texas Capital Bank, National Association’s security interest in the LOC Account .
The Credit Parties, including Michael J . McGrath, Jr. and EvenFlow Funding LLC, irrevocably
appoint Texas Capital Bank, National Association to execute such documents as may be
necessary to transfer title in the LOC Account should Texas Capital Bank, National
Association pay the LOC Indebtedness, to the extent necessary to pay or cover any draw or
obligations under the Letter of Credit . To the extent permitted by law, Texas Capital Bank,
National Association reserves all rights of setoff with regard to the LOC Account with
regard to the LOC Indebtedness . Within ten (10) Business Days of the release and return of
the Letter of Credit, all rights of the Agent pursuant to this Paragraph 3 shall terminate
and Agent shall promptly pay all amounts remaining in the LOC Account (including, without
limitation, all interest accrued thereon) to Michael J. McGrath, Jr. or EvenFlow Funding,
LLC, as Michael J . McGrath, Jr. may direct in writing.

	4.	 	Effective as of the Effective Date, the Agent and the Lenders hereby release and terminate
all security interests, pledges, guarantees and UCC-1s securing the obligations of any or all
of the Credit Parties under the Credit Agreement, the Forbearance Agreement and the Loan
Documents (and hereby authorize the Credit Parties to make any filings as are necessary to
effect the foregoing), provided, however, that such release shall not extend to any security
interest that the Agent or the Lenders may have in the Marshall Claim. The Agent hereby
assumes the obligations of the Lenders with respect to the Letter of Credit.

	5.	 	Effective ninety-one (91) days from the Effective Date (such ninety-one day period commencing
on the Effective Date, the “Ninety-One Day Period”), the Agent and the Lenders, on
behalf of themselves, their subsidiaries, affiliates, parent entities, officers, directors,
shareholders, employees, agents, and their respective predecessors, successors, and assigns
hereby completely and forever discharges, releases, and acquits each of the Credit Parties and
their predecessors and successors, and the Credit Parties and their predecessors’ and
successors’ current and former stockholders, members, agents, assigns, officers, directors,
managers, employees, representatives, attorneys, trustees, partners, subsidiaries, parent
entities, affiliates, and all other of the Credit Parties’ representatives from and against
any and all claims, issues, demands, damages, grievances, violations, complaints, liabilities,
debts and/or causes of action of any kind whatsoever (other than claims, issues, demands,
damages, grievances, violations, complaints, liabilities, debts and/or causes of action of any
kind whatsoever (other than for the matters expressly set forth in this Agreement, which
include, without limitation, the obligations of the Credit Parties (as applicable) with
respect to the Warrants, the Letter of Credit, the LOC Account, and  

CONFIDENTIAL SETTLEMENT AGREEMENT

 

Page 3 of 12

 

	 	 	the Marshall Claim),
including, but not limited to, costs, expenses, and  legal fees, whether arising in contract,
in tort, by statute, by regulation, at law, in equity,
or otherwise, and whether fixed or contingent, known or unknown, actual or potential, and/or
asserted or not, even though unknown or unsuspected, including, but not limited to, those
claims, issues, demands, damages, grievances, violations, complaints, liabilities, debts
and/or causes of action that are based on or relate in any way whatsoever to the Credit
Agreement, the Forbearance Agreement, the Loan Documents, and/or the July 1, 2008 EvenFlow
Funding, LLC/Michael J . McGrath, Jr. letter agreement, or otherwise (except for the Letter
of Credit and LOC Account). As soon as practicable after the Effective Date, but in no event
later than 17 days after the Effective Date, the Agent shall file a voluntary dismissal
WITHOUT PREJUDICE of the lawsuits previously filed by the Agent against certain of the
Credit Parties in Texas state court (collectively, the “Existing Litigation”); provided,
however, that (i) from and after the Effective Date and through and including the last day
of the Ninety-One Day Period, any and all statute of limitations or statute of repose shall
be and are tolled and stayed in their entirety to the extent they relate to or concern in
any way the Existing Litigation and/or the claims and/or causes of action asserted or
assertable by the Agent or Lenders in the Existing Litigation and (ii) the Credit Parties
agree, warrant, and acknowledge that any defenses, causes of action, and/or claims based on
the passage of time (laches, waiver, estoppel, statute of limitations, statue of repose,
prejudice, or any other defenses or claims based on the passage of time) during or related
to the Ninety-One Day Period are hereby forever and completely waived and relinquished and
shall not be used or asserted by any Credit Party against, or in defense of or response to,
any claim, case, proceeding, action, cause of action, or lawsuit by the Agent or Lenders
that relates to or concerns in any way the Existing Litigation and/or the claims asserted or
assertable by the Agent or Lenders in the Existing Litigation. No act or omission of the
Agent and Lenders prior to the Effective Date in connection with or relating to the Existing
Litigation, including, but not limited to, commencement and service of the Existing
Litigation, shall constitute a breach of the Agreement by the Agent and/or the Lenders.
During the Ninety-One Day Period, the Agent and the Lenders shall forbear from exercising
any rights or remedies under the Credit Agreement the Forbearance Agreement, the Loan
Documents, and/or the July 1, 2008 EvenFlow Funding, LLC/Michael J. McGrath, Jr. letter
agreement and the obligations of the Credit Parties thereunder shall be suspended during the
Ninety-One Day Period; provided, however, that nothing herein shall preclude the Agent or
the Lenders from exercising (including during the Ninety-One Day Period) any rights or
remedies they may have with respect to the Warrants, the Letter of Credit, the LOC Account,
and the Marshall Claim. At the expiration of the Ninety-One Day Period, all Claims will be
fully and finally discharged and released (as is more particularly described in Paragraph 5
hereof) without further action by any of the Parties ; and the Agent and the Lenders shall
take such actions as are necessary to dismiss the Existing Litigation with prejudice.

	6.	 	Notwithstanding anything to the contrary, if for any reason whatsoever (a) during the
Ninety-One Day Period, any or all of the Credit Parties fail to perform or satisfy any or all
of their obligations, debts, payments, and commitments as specifically and expressly provided
for and required by the Agreement or (b) any voluntary or involuntary insolvency proceeding
(including, but not limited to, any proceeding before any court or other governmental
authority in any jurisdiction relating to bankruptcy, reorganization, insolvency, arrangement,
liquidation, receivership, dissolution, winding-up of debtors, assignment for the benefit of
the creditors or similar arrangement for creditors) is commenced by or against any Credit
Party during the Ninety-One Day Period, then Paragraph 5 of the Agreement shall be and is null
and void, shall be and is struck from the Agreement, and shall be unenforceable in its
entirety, and the Agent and Lenders shall retain, maintain, possess, and hold all rights,
claims, causes of action, and remedies
against the Credit Parties, including, but not limited to, under the Credit Agreement, the
Loan Documents, the Agreement, the Forbearance Agreement, the July 1, 2008 Evenflow Funding,
LLC/Michael J. McGrath, Jr. Funding Commitment, the Letter of Credit, the LOC Account or
otherwise.

CONFIDENTIAL SETTLEMENT AGREEMENT

 

Page 4 of 12

 

	7.	 	Each Credit Party hereby represents, agrees, and warrants that there are no liabilities,
claims, suits, debts, liens, losses, causes of action, demands, rights, damages or costs, or
expenses of any kind, character or nature whatsoever, known or unknown, fixed or contingent
that any Credit Party may have or claim to have against the Agent or any Lender or any of
their respective affiliates, agents, employees, officers, directors, representatives,
attorneys, successors, predecessors, and assigns, which might arise out of or be related to or
connected with any act of commission or omission of the Agent or Lenders existing or occurring
on or prior to the date of the execution of the Agreement, including, without limitation, any
claims arising with respect to the Credit Agreement, the Forbearance Agreement, the Loan
Documents, the July 1, 2008 Evenflow Funding, LLC/Michael J. McGrath, Jr. letter agreement, or
otherwise. In furtherance of the foregoing, each Credit Party, on behalf of themselves, their
subsidiaries, affiliates, parent entities, officers, directors, shareholders, employees,
agents, and their respective predecessors, successors, and assigns hereby completely and
forever discharges, releases, and acquits the Agent and the Lenders, the Agent’s and Lenders’
predecessors and successors, and the Agent’s and Lenders’ and their predecessors’ and
successors’ current and former stockholders, agents, assigns, officers, directors, employees,
representatives, attorneys, trustees, partners, subsidiaries, parent entities, affiliates, and
all other of the Agent’s and Lenders’ representatives from all claims, issues, demands,
damages, grievances, violations, complaints, liabilities, and/or causes of action of any kind
whatsoever (other than for the matters expressly set forth in this Agreement), including, but
not limited to, costs, expenses, and legal fees, whether arising in contract, in tort, by
statute, by regulation, at law, in equity, or otherwise, and whether fixed or contingent,
known or unknown, actual or potential, and/or asserted or not, even though unknown or
unsuspected, including, but not limited to, those claims, issues, demands, damages,
grievances, violations, complaints, liabilities, and/or causes of action that are based on or
relate in any way whatsoever to the Credit Agreement, the Forbearance Agreement, the July 1,
2008 Evenflow Funding, LLC/Michael J. McGrath, Jr. letter agreement, the Loan Documents, or
otherwise.

	8.	 	Each Credit Party further agrees forever to refrain from commencing, instituting, or
prosecuting any lawsuit, action, or other proceeding against the Agent or any Lender with
respect to any and all claims released in the Agreement, including demands or causes of action
brought pursuant to or under chapter 5 of the Bankruptcy Code.

CONFIDENTIALITY

	9.	 	The Credit Parties and their representatives shall maintain in strict confidence the
Agreement, the existence of the Agreement and its terms, the negotiation of the Agreement and
its terms, and all matters relating to the Agreement and its contents and they shall not
disclose the Agreement or its contents to any party, person, or entity, except as may be
expressly allowed by the Agreement or required by governmental regulation or court order, and
shall take all reasonable and necessary actions to prevent the disclosure of the Agreement or
its terms. The Credit Parties understand, agree, and acknowledge that any breach of this
provision is a material breach of the Agreement. The Credit Parties understand, agree, and
acknowledge that this provision is a material inducement to the Agent and the Lenders entering
into the Agreement. Additionally, the
Credit Parties understand, agree, and acknowledge that the Agent and/or the Lenders may seek
a temporary retraining order to enforce this paragraph without posting a bond. This
provision shall not prohibit the use of the Agreement as evidence in a lawsuit to enforce
the terms of the Agreement.

CONFIDENTIAL SETTLEMENT AGREEMENT

 

Page 5 of 12

 

	10.	 	Should the Credit Parties be required or compelled to file the Agreement in any forum, they
shall file the Agreement and any documents or filings regarding the terms of the Agreement
under seal or in a similar manner so as to protect their confidentiality and not place them in
the public record or domain. If the Credit Parties receive a request or demand for the
Agreement or its contents, they shall immediately, and in no case in less than ten (10) days
from receipt of the request, notify the Agent in accordance with Paragraph 30 of the
Agreement. Notwithstanding anything to the contrary, the Agreement shall not prohibit any
necessary disclosure of the Agreement (a) pursuant to State or Federal securities laws or the
rules or regulations of a securities exchange, (b) to the Parties’ accountants, bookkeepers,
attorneys, employees, or tax consultants, (c) as required by law or (d) in connection with
the enforcement of the Agreement or the exercise any rights hereunder.

WARRANTIES AND REPRESENTATIONS

	11.	 	The Parties and their undersigned representatives hereby warrant and represent that they are
authorized to bind the persons and entities on whose behalf they enter into the Agreement.

	12.	 	The Parties each warrant and represent that they are legally competent to execute the
Agreement.

	13.	 	The Parties each warrant and represent that they own the claims, liabilities, and causes of
action they have released herein and that they have not assigned, transferred, conveyed,
pledged, or in any way encumbered any claim, damage, liability, or cause of action they have
released herein.

	14.	 	The Parties each warrant and represent that they are fully authorized to execute the
Agreement without the necessity of obtaining the consent of any other party, entity, or person
and that no other person or entity needs to be joined in the Agreement in order to accomplish
the Agreement’s purpose and intent. The individuals executing the Agreement on behalf of each
Party warrant and represent by their signatures that they are duly authorized to execute and
deliver the Agreement, and that by executing the Agreement they bind the Party for who they
are signing.

	15.	 	The Parties each warrant and represent that they have had reasonable time to consult with
their attorneys and have consulted with their attorneys before executing the Agreement.

	16.	 	The Parties each warrant and represent that they have read the Agreement, that they
understand the Agreement, and that they freely and voluntarily entered into the Agreement.

	17.	 	The Parties each warrant and represent that no promise, agreement, representation, or
statement not explicitly and expressly contained in the Agreement has been made or relied upon
by any of the Parties in entering the Agreement.

CONFIDENTIAL SETTLEMENT AGREEMENT

 

Page 6 of 12

 

	18.	 	The Parties each warrant and represent that they entered the Agreement with full and complete
knowledge of its contents and the effects thereof and are solely motivated by their own free
will and accord.

	19.	 	The Parties each warrant and represent that they will cooperate fully in executing,
preparing, and filing any and all documents that may be necessary or appropriate to give full
force and effect to the Agreement.

MERGER/NO OTHER AGREEMENTS

	20.	 	The Credit Parties, on the one hand, and the Agent and the Lenders, collectively on the other
hand, each warrant, represent and covenant that they understand and know that the Agreement
supersedes (except to the extent otherwise provided in the Agreement) all prior agreements or
understandings, written or oral, between the Parties with respect to the matters contained
herein (including, without limitation, the Credit Agreement, the Forbearance Agreement, the
Loan Documents and the July 1, 2008 Evenflow Funding, LLC/Michael J. McGrath, Jr. letter
agreement), and constitutes the entire understanding of the Parties with respect to the
matters contemplated hereby, and that there were no inducements, representations, warranties,
or statements that do not appear within the terms and provisions of the Agreement. For the
avoidance of doubt, the obligations of Home Solutions of America, Inc. to EvenFlow Funding,
LLC/Michael J. McGrath, Jr. under the July 1, 2008 remain in full force and effect.

MISCELLANEOUS

	21.	 	The Parties each understand, agree, and acknowledge that the Agreement’s terms are
contractual and not mere recitals.

	22.	 	The Parties each understand, agree, and acknowledge that the Agreement may not be orally
modified, amended, waived, or terminated. No modification, amendment, termination, or claimed
waiver of the Agreement or of its provisions shall be binding unless made in writing and
signed by each of the Parties.

	23.	 	The Parties each understand, agree, and acknowledge that none of the Parties have made any
representations or statements to the others regarding the taxable or nontaxable status of any
and all consideration exchanged or paid pursuant to the Agreement.

	24.	 	The Parties each understand, agree, and acknowledge that the Agreement is entered into in
good faith and for no collusive purpose.

	25.	 	The headings inside the Agreement have been inserted for convenience of reference only, are
not intended to be considered part of the Agreement, and shall not affect in any way the
meaning, terms, and/or interpretation of the Agreement. Capitalized terms used but not
otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement.

	26.	 	The Parties each understand, agree, and acknowledge that all of the Parties shall be deemed
the drafters of the Agreement and any ambiguity in or dispute regarding the interpretation of
the Agreement shall not be resolved by any rule of interpretation providing for interpretation
against the party that causes the uncertainty to exist or against any party as the drafter.

CONFIDENTIAL SETTLEMENT AGREEMENT

 

Page 7 of 12

 

	27.	 	The Parties each understand, agree, and acknowledge that the Agreement shall inure to the
benefit of and be binding upon the Parties hereto and their legal representatives, heirs,
successors, and assigns.

	28.	 	The Parties hereto agree to do or cause to be done all acts or things necessary to implement
and carry into effect the terms and conditions of this Agreement.

	29.	 	The Agreement shall be governed by and construed in accordance with the laws of the State of
Texas, without regard to Texas’s rules concerning conflicts of laws. The Agreement has been
entered into in Dallas County, Texas, and it shall be performable for all purposes in Dallas
County, Texas. Any action or proceeding against any or all of the Credit Parties under or in
connection with any of the Loan Documents or the Agreement may be brought in any state or
federal court in Dallas County, Texas. The Credit Parties each and all hereby irrevocably (a)
submits to the nonexclusive jurisdiction of such courts, and (b) waive any objection they may
now or hereafter have as to the venue of any such action or proceeding brought in any such
court or that any such court is an inconvenient forum. Subject to the express terms hereof,
nothing in the Agreement shall affect the right of the Agent or Lenders to bring any action or
proceeding against any or all of the Credit Parties or with respect to any of their property
in courts in other jurisdictions. Any action or proceeding by any or all of the Credit
Parties against the Agent and/or any of the Lenders shall be brought only in a court located
in Dallas County, Texas.

	30.	 	Any notices required by, or communication concerning, the Agreement shall be made by hand
delivery or certified mail. Such notices shall be deemed to have been given upon such hand
delivery or mailing. Such notice shall be hand delivered or mailed to:

	 	 	 	 	 
	 

	 	If to the Agent: 

Texas Capital Bank

2100 McKinney, Suite 1225

Dallas, TX 75201

Attn: Bruce Shilcutt, SVP

bruce.shilcutt@texascapitalbank.com
	 	If to the Credit Parties (other than
EvenFlow Funding, LLC lf Michael J.
McGrath, Jr.):

c/o Home Solutions of America, Inc.

1340 Poydras Suite 1800

New Orleans, LA 70112
	 

	 	 	 	If to EvenFlow Funding, LLC:
	 
	 	 	 	 
	 

	 	 	 	c/o Michael J. McGrath, Jr.

15 Hemlock Drive

North Caldwell, NJ 07006
	 
	 	 	 	 
	 

	 	 	 	If to Michael J. McGrath, Jr.:
	 
	 	 	 	 
	 

	 	 	 	Michael J. McGrath, Jr.

15 Hemlock Drive

North Caldwell, NJ 07006

Copy to the Parties’ attorneys does not constitute notice. If either party wishes to change
the address above, such party shall send written notice via any of the above methods to the
other party’s designee above, and provide a fax number and email address for the new
designee.

CONFIDENTIAL SETTLEMENT AGREEMENT

 

Page 8 of 12

 

	31.	 	The Parties each understand, agree, and acknowledge that if any of the provisions, terms, or
clauses of the Agreement are declared illegal, unenforceable, or ineffective in any forum,
those provisions, terms, and clauses shall be deemed severable, such that all other
provisions, terms, and clauses of the Agreement shall remain valid and binding upon the
Parties.

	32.	 	The warranties, representations, and acknowledgments provided herein are done so by each
Party upon its own behalf.

	33.	 	The Agreement may be executed in one or more counterparts, each of which when so executed and
delivered shall be deemed to be an original, but all of which taken together shall constitute
but one and the same instrument. A facsimile signature of the Agreement shall be effective in
all respects.

EXECUTED on the Effective Date.

[Signature Pages Follow]

CONFIDENTIAL SETTLEMENT AGREEMENT

 

Page 9 of 12

 

	 	 	 	 	 
	 	HOME SOLUTIONS OF AMERICA, INC.

 	 
	 	By:  	/s/  Frank J. Fradella
 	 
	 	 	Name:  	Frank J. Fradella 	 
	 	 	Title:  	Chief Executive Officer 	 
	 
	 	CORNERSTONE MARBLE & GRANITE, INC.

 	 
	 	By:  	/s/  Frank J. Fradella
 	 
	 	 	Name:  	Frank J. Fradella 	 
	 	 	Title:  	Chief Executive Officer 	 
	 
	 	FIBER-SEAL SYSTEMS, L.P.

 	 
	 	By:  	/s/  Frank J. Fradella
 	 
	 	 	Name:  	Frank J. Fradella 	 
	 	 	Title:  	Chief Executive Officer 	 
	 
	 	FIRELINE RESTORATION, INC.

 	 
	 	By:  	/s/  Frank J. Fradella
 	 
	 	 	Name:  	Frank J. Fradella 	 
	 	 	Title:  	Chief Executive Officer 	 
	 
	 	HOME SOLUTIONS RESTORATION OF LOUISIANA, INC.

 	 
	 	By:  	/s/  Frank J. Fradella
 	 
	 	 	Name:  	Frank J. Fradella 	 
	 	 	Title:  	Chief Executive Officer 	 
	 
	 	SOUTHERN EXPOSURE UNLIMITED OF FLORIDA, INC.

 	 
	 	By:  	/s/  Frank J. Fradella
 	 
	 	 	Name:  	Frank J. Fradella 	 
	 	 	Title:  	Chief Executive Officer 	 

CONFIDENTIAL SETTLEMENT AGREEMENT

 

Page 10 of 12

 

	 	 	 	 	 

	 	 	 	 	 
	 	S.E. TOPS OF FLORIDA, INC.

 	 
	 	By:  	/s/  Frank J. Fradella
 	 
	 	 	Name:  	Frank J. Fradella 	 
	 	 	Title:  	Chief Executive Officer 	 
	 
	 	FSS HOLDING CORP.

 	 
	 	By:  	/s/  Frank J. Fradella
 	 
	 	 	Name:  	Frank J. Fradella 	 
	 	 	Title:  	Chief Executive Officer 	 
	 
	 	SOUTHERN EXPOSURE HOLDINGS, INC.

 	 
	 	By:  	/s/  Frank J. Fradella
 	 
	 	 	Name:  	Frank J. Fradella 	 
	 	 	Title:  	Chief Executive Officer 	 
	 
	 	MICHAEL J. MCGRATH, JR.

 	 
	 	By:  	/s/ Michael J. McGrath
 	 
	 	 	Name:  	Michael J. McGrath, Jr. 	 
	 	 	 	 
	 	EVENFLOW FUNDING, LLC

 	 
	 	By:  	/s/ Michael J. McGrath
 	 
	 	 	Name:  	Michael J. McGrath, Jr. 	 
	 	 	Title:  	Manager 	 
	 
	 	TEXAS CAPITAL BANK, NATIONAL ASSOCIATION, as
Administrative Agent

 	 
	 	By:  	/s/ Bruce Shilcutt
 	 
	 	 	Name:  	Bruce Shilcutt 	 
	 	 	Title:  	S.V.P 	 

CONFIDENTIAL SETTLEMENT AGREEMENT

 

Page 11 of 12

 

	 	 	 	 	 

	 	 	 	 	 
	 	TEXAS CAPITAL BANK, NATIONAL ASSOCIATION, as Lender

 	 
	 	By:  	/s/ Bruce Shilcutt
 	 
	 	 	Name:  	Bruce Shilcutt 	 
	 	 	Title:  	S.V.P 	 
	 
	 	AMEGY BANK, N.A., as Lender

 	 
	 	By:  	/s/ Edward E. Stringer
 	 
	 	 	Name:  	Edward E. Stringer 	 
	 	 	Title:  	S.V.P 	 
	 
	 	BANK OF OKLAHOMA, N.A., as Lender

 	 
	 	By:  	/s/ Paul D. Mesner
 	 
	 	 	Name:  	Paul D. Mesner 	 
	 	 	Title:  	S.V.P. 	 
	 
	 	COMPASS BANK, as Lender

 	 
	 	By:  	/s/ Mary Ellen Hensley
 	 
	 	 	Name:  	Mary Ellen Hensley 	 
	 	 	Title:  	A.V.P 	 
	 
	 	AMARILLO NATIONAL BANK, as Lender

 	 
	 	By:  	/s/ Buck Clary
 	 
	 	 	Name:  	Buck Clary 	 
	 	 	Title:  	Vice President 	 

CONFIDENTIAL SETTLEMENT AGREEMENT

 

Page 12 of 12

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