Document:

Exhibit 10.01

 

AMENDED AND
RESTATED EMPLOYMENT AGREEMENT

            This Amended and
Restated Employment Agreement (this "Agreement") is made and entered
into as of September 8, 2006 (the "Effective Date"), by and between Home
Solutions of America, Inc., a Delaware corporation (the "Employer") and
Frank J. Fradella, an individual resident of the State of Louisiana (the "Executive").

RECITALS:

            A.        The
Employer and the Executive entered into that certain Executive Employment
Agreement, dated December 20, 2004 (the "Original Agreement").

            B.         The
Original Agreement sets forth the terms and conditions pursuant to which the
Executive is employed by the Employer.

            C.        The
Employer and the Executive desire to amend the Original Agreement to implement
certain material changes to the terms and conditions of Executive's
employment.  

            D.        In
connection with amending the Original Agreement to implement the material
changes to the terms and conditions of Executive's employment, the Employer and
the Executive have decided that it would be appropriate to amend and restate
the Original Agreement in its entirety, as follows:

WITNESSETH:

WHEREAS,
the Executive has certain skills, experience, and abilities that may be
valuable to the success of the Employer's operations and future profitability; and

WHEREAS,
the Employer desires to employ and retain the services of the Executive as a
full-time employee in the positions of Chairman and Chief Executive Officer of Employer,
and the Executive desires to work for and be employed by Employer in such positions;
and

WHEREAS, the
Employer and the Executive desire to set forth the terms and conditions
pursuant to which the Executive will be employed by the Employer.

NOW,
THEREFORE, in consideration of the foregoing premises and of the mutual
covenants and undertakings contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties to this Agreement hereby agree as follows:

Section 1:         EMPLOYMENT
TERM AND DUTIES

1.01     Employment. 
The Employer hereby employs the Executive, and the Executive hereby accepts
employment by the Employer, upon the terms and conditions set forth in this
Agreement.

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1.02     Term. 
The term of the Executive's employment with the Employer pursuant to this
Agreement shall commence on the Effective Date and shall continue until
December 31, 2007, subject to the termination provisions in Section 4 of
this Agreement.  

1.03     Duties
and Services.  The Executive will be employed as the Chairman and Chief
Executive Officer of Employer in Dallas, Texas, and will have such duties and
perform such services as are customary with such positions.  The Executive
shall report directly and only to the Employer's Board of Directors (the "Board"). 
The Executive will devote at least 90% of his business time, attention, skill,
and energy exclusively to the business of the Employer.  The Executive will
comply with all applicable Employer policies and procedures as well as with all
applicable laws in performing his duties for the Employer.  The Executive will
be available to travel on Employer business as the needs of the Employer may
reasonably require.

Section 2:         COMPENSATION

2.01     Salary.
 During the Employment Period, the Executive will be paid an annual base salary
of $350,000 (such amount is hereinafter referred to as "Salary").  The
Employer shall withhold from each installment of the Salary, all applicable
federal, state, and local income and other payroll taxes.  

2.02     Benefits. 
During the Employment Period and as otherwise set forth herein, the Executive
and his dependents (if applicable), will be permitted to participate in all of
the Employer's employee benefit plans for its employees and its senior
management (collectively, "Benefits") that may be in effect from time to
time to the extent the Executive and his dependents are eligible for
participation under the terms of such plans.  

2.03     Bonuses;
Long Term Incentive Compensation.  For each of the Employer's fiscal years,
the Executive may be awarded cash and/or equity-based bonuses and long term
incentive compensation based on the recommendation of the Board's Compensation
Committee (the "Committee") and approved by the independent members of
the Board, as set forth in the Executive Compensation Plan for the Executive adopted
by the Committee and the independent members of the Board of Directors, a copy
of which is attached hereto as Exhibit A.

2.04     Indemnification.  The Executive is and
shall be entitled to mandatory indemnification and advancement of expenses from
the Employer to the fullest extent permitted by law and to directors' and
officers' liability insurance coverage to the maximum extent that any other
officer of the Employer is covered.

Section 3:         FACILITIES AND EXPENSES

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            The
Executive will be entitled to use the office space, equipment, supplies, and
such other facilities, property, and personnel as are currently being provided
by the Employer and as such may hereafter be necessary or appropriate for such
purposes to perform his duties under this Agreement.  The Employer will
reimburse the Executive for reasonable expenses incurred by the Executive in
the performance of his duties in accordance with the Employer's employment
policies in effect from time to time; provided, however, that the Executive
must file written expense reports with respect to such expenses, in accordance
with the Employer's employment policies, before the Executive may receive such
reimbursement.

Section 4:         TERMINATION

4.01     Termination of Employment Period.

(a)        Death of the Executive.  The
Employment Period shall terminate immediately and automatically upon the death
of the Executive.

(b)        Termination by the Employer.  The
Employer may terminate the Employment Period (i) immediately upon the delivery
of a Notice of Termination (as defined in Section 4.01(d) of this
Agreement) by the Employer to the Executive setting forth the facts that
indicate that a determination has been made that the Executive has a Disability
in accordance with Section 4.02 of this Agreement; (ii) immediately upon
delivery of a Notice of Termination by the Employer to the Executive setting
forth the facts that indicate that an event constituting Cause (as defined in Section
4.03 of this Agreement) has occurred, or on such later date as may be set
forth in such Notice of Termination; or (iii) at any time without Cause
effective as of the 30th day following the delivery of a Notice of Termination
by the Employer to the Executive.

(c)        Termination by the Executive.  The
Executive may terminate the Employment Period (i) immediately upon delivery of
a Notice of Termination by the Executive to the Employer setting forth facts
that indicate that an event constituting Good Reason (as defined in Section
4.04 of this Agreement) has occurred within the 60 days immediately prior to
the date of delivery of such Notice of Termination, or (ii) at any time without
Good Reason effective as of the 30th day following the delivery of a Notice of
Termination by the Executive to the Employer.

                        (d)        Notice
of Termination.  For purposes of this Agreement, a "Notice of
Termination" shall mean a written notice (delivered in accordance with Section
7.05 herein) that indicates the specific termination provision in this
Agreement upon which the party intending to terminate the Employment Period is relying
and sets forth in reasonable detail the facts and circumstances that provide a
basis for termination of the Employment Period under such termination
provision. 

4.02     Definition of "Disability."  For purposes
of this Agreement, the Executive will be deemed to have a "Disability"
under any of the following conditions: (a) the Executive is unable to render
and perform substantially and continuously the Executive's duties and services
as required  by this Agreement by reason of any medically determinable physical
or mental condition that is expected to result in death or can reasonably be
expected to last for a continuous period of not less than 12 months, (b) the
Executive is determined to be disabled in accordance with a disability income
insurance program sponsored by the Employer, provided the definition of
disability applied under such program complies with the requirements of Section
409A of the Code, or (c) the Executive is determined to be totally disabled by
the Social Security Administration .  Upon the request of either party hereto
following written notice to the other, the Disability of the Executive in
accordance with part (a) of the preceding sentence will be determined by a
medical doctor (the "Examining Doctor") who shall be selected as follows:
the Employer and the Executive shall each select a medical doctor, and those
two medical doctors will select a third medical doctor who will be the
Examining Doctor.  The determination of the Examining Doctor as to whether or
not the Executive has a Disability pursuant to part (a) of this Section 4.02
will be binding on both parties hereto.  For purposes of part (a) of this Section
4.02, the Executive must submit to a reasonable number of examinations by
the Examining Doctor, and the Executive hereby authorizes the disclosure and
release to the Employer of such determination and the results of such
examinations; provided, however, if the Executive is not legally competent, the
Executive's legal guardian or duly authorized attorney-in-fact will act in the
Executive's stead under this Section 4.02 for the purposes of submitting
the Executive to examinations and providing any such authorizations of
disclosure.  

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4.03     Definition of "Cause."  For purposes of
this Agreement, "Cause" shall mean: (a) the Executive's material
and persistent failure to perform his duties and services in accordance with
this Agreement, unless such failure is due to the Executive's Disability; (b)
the Executive's material violation of this Agreement or any material inaccuracy
of any representation or warranty of the Executive contained herein; (c) the
appropriation (or willful attempted appropriation) by Executive of a material
business opportunity of the Employer that is not waived in writing or renounced
in writing by the Employer, including, but not limited to, attempting to secure
or securing any personal profit in connection with any transaction entered into
on behalf of the Employer; (d) the theft or embezzlement by the Executive of
any material real or personal property, tangible or intangible, of the Employer
or any of its Affiliates (as defined in Section 8 of this Agreement);
(e) the commission of an act of fraud by the Executive upon, or bad faith or
willful misconduct toward, the Employer or any of its Affiliates; (f) conduct
by the Executive constituting gross negligence that is materially injurious to
the Employer, a customer of the Employer, or any of the Employer's Affiliates;
or (g) the conviction of, the indictment for (or its procedural equivalent), or
the entering of a guilty plea or plea of no contest by the Executive with
respect to, a felony, the equivalent thereof, or any other crime with respect
to which imprisonment is a possible punishment.  The Board has the exclusive
right on behalf of Employer to determine whether "Cause" exists.  Before making
a decision of whether "Cause" exists, the Board shall grant the Executive a
reasonable period of time to cure the conduct in question, if the Board
determines the matter is curable.  The Board shall provide the Executive with a
written statement of the alleged conduct which it is considering as "Cause" for
termination and provide the Executive with a reasonable opportunity to meet
with the Board to discuss the alleged conduct before the Board makes a final
decision on whether there is "Cause" to terminate the Executive's employment.

4.04     Definition of "Good Reason."  For the
purposes of this Agreement, the phrase "Good Reason" means (i) the
Employer's reduction of the Executive's Salary or any material breach of this Agreement
and the Employer's failure to remedy such breach within 10 days following the
delivery of written notice of such breach by the Executive to the Employer;
(ii) the assignment by the Employer to the Executive, without the prior written
consent of the Executive, of responsibilities or duties that are substantially
different from the duties and services set forth in Section 1.03 of this
Agreement; (iii) the relocation of the Executive from Dallas, Texas; (iv) any demotion
of the Executive in rank, title, duties, authority or reporting status; (v) any
material impairment of Executive's opportunity to earn a bonus or long-term incentive
compensation; or (vi) any failure of the Employer to obtain an assumption
of the Employer's obligations under this Agreement from a successor to the
Employer as provided in Section 7.04 of this Agreement.

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4.05     Effect of Termination of Employment Period;
Post-Termination Benefits.  Upon the termination of the Employment Period
in accordance with Section 4 of this Agreement, the Executive's
obligation to render to the Employer the services described in Section 1.03
of this Agreement shall cease and the Employer shall pay the Executive or, in
the event of his death while amounts remain payable hereunder, his Designated
Beneficiary (as defined in this Section 4.05), if at all, as follows:

                       (a)        Termination
by the Employer with Cause or by the Executive without Good Reason.  If the
Employment Period is terminated in accordance with Section 4.01(b)(ii)
or Section 4.01(c)(ii) of this Agreement, the Executive will be entitled
to receive solely that portion of his Salary accrued by the Executive through
the date on which the Executive's employment is terminated and the Employment Period
ends (the "Employment Termination Date").  The Executive shall not
receive, and shall not be entitled to receive, any Salary or Benefits
thereafter, except as otherwise required in accordance with federal or state
law or the terms of the plans or agreements governing the Benefits provided
hereunder.  Any salary to which the Executive is entitled under this Section
4.05(a) shall be paid in accordance with the Employer's normal payroll
practices as in effect on the date of this Agreement.

                        (b)        Termination
by the Employer without Cause or by the Executive with Good Reason.  If the
Employment Period is terminated in accordance with Section 4.01(b)(iii)
or Section 4.01(c)(i) of this Agreement, the Executive will be entitled
to receive (i) the Salary that would have been payable to him during the remainder
of the term of this Agreement if his employment hereunder
had continued, and (ii) an amount equal to the product of (x) the Severance
Percentage (as defined below), multiplied by (y) the Executive's
Actual Aggregate Compensation (as defined in Section 4.05(d) below) for
the Employer's fiscal year most recently ended prior to the termination.  For
purposes of this Agreement, the "Severance Percentage" shall mean the
percentage resulting from the following calculation:  (x) the number of days
during the period from January 1, 2006 through the Employment Termination Date
that the Executive was employed by the  Company, divided by (y)
730.  The Executive also will be entitled to receive the amount of Salary, bonus
and long-term incentive compensation which the Executive has earned through the
Employment Termination Date as determined in good faith by the Committee.  In
addition, if the Executive would lose coverage under the group health plan
sponsored or maintained by the Employer as a result of the termination of the
Executive's employment and Executive elects to continue health coverage through
a group health plan sponsored or maintained by the Employer under the
Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), the
Employer will reimburse the Executive for the COBRA premiums for coverage for
the Executive and his dependents for the initial twelve months of coverage,
except that the Employer's obligations in this sentence will expire upon the
Executive's and his dependents' becoming eligible for comparable coverage under
another employer's health benefits plan or policy.  The cost of coverage under
the Employer's group health plan will be payable solely by the Employer.  Except
to the extent otherwise permitted under Section 409A of the Code, the Salary,
bonuses and long-term incentive compensation and the payments for the cost of
group health plan coverage under COBRA shall be accumulated by the Employer and
paid to the Executive on the first day of the seventh calendar month following
the Employment Termination Date or, if earlier, the date of the Executive's
death, and thereafter payments to which the Executive is otherwise entitled
hereunder shall be made in equal monthly installments on the first day of each
calendar month for the remainder of the period.  If, at the Employment
Termination Date, or at any time thereafter, the Salary, bonuses and long-term
incentive compensation or payments for the cost of group health plan coverage
under COBRA to which the Executive is entitled under this Section 4.05(b)
are not required to be deferred under Section 409A of the Code, then such
amounts shall instead be paid in equal monthly installments on the first day of
each calendar month; provided, that the first installment shall be paid on the
later of (i) the first day of the calendar month immediately following the Employment Termination Date or (ii) the date which
is fifteen (15) days following the Employment Termination Date.  In addition,
any restricted stock grants which have been made to the Executive upon the
achievement of LTI Performance Criteria, and any other restricted stock grants
to the Executive, and any outstanding stock options granted to the Executive,
shall become fully vested.

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            (c)        Termination upon Death or
Disability. If the Employment Period is terminated in accordance with Section
4.01(a) or Section 4.01(b)(i), the Employer will pay to the disabled
Executive or to the Executive's Designated Beneficiary, as the case may be, one
year of the Executive's Salary that would have been payable during the
Employment Period following the date of the Executive's death or the date of
the determination that the Executive has a Disability, whichever is applicable,
if his employment hereunder had continued.  The Executive or the
Executive's Designated Beneficiary also will be entitled to receive the amount
of bonus and long-term incentive compensation which the Executive has earned
through the Employment Termination Date as determined in good faith by the
Committee.  In addition, in the event the Executive is determined to have a
Disability and the Executive elects under COBRA to continue his health
insurance through a group health insurance plan sponsored or maintained by the
Employer, the Employer will reimburse the premiums for coverage for the Executive
and his dependents for the initial twelve months of such coverage, except that
the Employer's obligations in this sentence will expire upon the Executive's and
his dependents' becoming eligible for comparable coverage under another
employer's health benefits plan or policy.  Amounts to which the
Executive or the Executive's Designated Beneficiary are entitled to receive
hereunder shall be paid in equal monthly installments on the first day of each
calendar month; provided, that the first installment shall be paid on the later
of (i) the first day of the calendar month immediately following the Employment
Termination Date or (ii) the date which is fifteen (15) days following the
Employment Termination Date; except that benefits which the Executive is
entitled to receive under the disability income insurance maintained by the
Employer, if any, shall be paid in accordance with the terms of such program. 
Further, any restricted stock grants which have been made to the Executive upon
the achievement of LTI Performance Criteria, any other restricted stock grants
to the Executive, and any outstanding stock options granted to the Executive
shall become fully vested.  Except to the extent
otherwise provided in this Section 4.05(c), the Executive or the Executive's
Designated Beneficiary shall have no right to receive, and the Employer shall
have no further obligation to pay to the Executive, further monthly
installments of Salary or Benefits.  For the purposes of this Agreement, the
Executive's "Designated Beneficiary" means such individual beneficiary
or trust, located at such address as the Executive may designate by written
notice to the Employer from time to time or, if the Executive fails to give
written notice to the Employer of such a beneficiary, the Executive's estate;
provided, however, that, notwithstanding the preceding clause of this sentence,
the Employer shall have no duty under any circumstances to attempt to open an
estate on behalf of the Executive, to determine whether any beneficiary designated
by the Executive is alive, to determine the existence of any trust, to
determine whether any person or entity purporting to act as the Executive's
personal representative (or the trustee of a trust established by the
Executive) is duly authorized to act in that capacity, or to locate or attempt
to locate any beneficiary, personal representative, or trustee.

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(d)        Termination within One Year After a
Change in Control.  If the Employment Period is terminated within one year
after a Change of Control (as defined  in this Section 4.05(d)), the
Executive shall be entitled to receive (i) two years of compensation based on
the Executive's Actual Aggregate Compensation (as defined in this Section
4.05(d)) for the Employer's fiscal year most recently ended prior to the
Employment Termination Date and (ii) reimbursement for the cost of
coverage for the Executive and his dependents under the group health plan
sponsored by the Employer, or its successor, to the same extent as provided on
the date immediately preceding the Change of Control or immediately preceding
the Employment Termination Date, whichever is more advantageous to the
Executive and his dependents, during the two years following the Employment
Termination Date.  For purposes of clause (ii), the Employer or its successor
will reimburse the Executive for the COBRA premiums for coverage for the
Executive and his dependents until the end of the COBRA continuation coverage
period applicable to the Executive, and for the remainder of the two-year
period following the Employment Termination Date the Employer or its successor
will arrange and pay for similar health insurance coverage; except that the
Employer's and successor's obligation under clause (ii) will expire upon the
Executive's becoming eligible for comparable coverage under another employer's
health benefits plan or program.  All amounts to which the Executive is
entitled to receive hereunder shall, except to the extent otherwise permitted
under Section 409A of the Code, be paid at the times prescribed in Section
4.05(b) above with respect to such payments.  For the purposes of this
Agreement, "Change in Control" shall mean (A) the acquisition of equity
securities of the Employer resulting in the beneficial ownership by the
acquiring Person of more than 50% of the common stock of the Employer,
occurring by means of any transaction or series of related transactions,
including, without limitation, any reorganization, sale of securities, merger,
exchange or consolidation, but excluding any merger or conversion of the
Employer effected exclusively for the purpose of changing the domicile of the
Employer or (B) if, during the Employment Period, the majority of the persons
who were serving as directors of the Board at the beginning of the Employment
Period no longer serve as directors of the Board as the result of an actual or
threatened proxy contest.  For purposes of this Agreement, the Executive's "Actual
Aggregate Compensation" for the fiscal year in question shall mean the sum
of (i) the Executive's Salary for such fiscal year, (ii) the cash bonuses
earned by the Executive for his performance in such fiscal year, and (iii) the
value of the long term incentive compensation awarded to the Executive for his
performance in such fiscal year, as set forth in (or, if not so set forth,
measured at the time of) the resolutions adopted by the Compensation Committee
or the independent members of the Board of Directors, or both, in granting the
award.  In addition, if not otherwise vested because of the Change of Control,
any restricted stock grants which have been made to the Executive upon the
achievement of the LTI Performance Criteria, any other restricted stock grants
to the Executive, and any outstanding stock options granted to the Executive
shall become fully vested.

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(e)       Accrued Benefits.  Unless otherwise
required by this Agreement, federal or state law, or the terms of the relevant
plans and agreements providing Benefits hereunder, the Executive's accrual of
the Benefits pursuant to Section 2.02 hereof will cease on the date of
the termination of the Employment Period, and the Executive will thereafter be
entitled to the payment of accrued Benefits pursuant to such plans only as
provided in such plans and agreements. 

(f)       
Release.  No amount shall be payable to the Executive under
Section 4.05(b), (c), or (d) following the termination of the
Employment Period unless the Executive (or the Executive's Designated
Beneficiary in the event of termination of employment due to the Executive's
death) signs and delivers to the Employer the General Release attached as Exhibit
B to this Agreement.

(g)      
No Mitigation.  The
Executive shall not be obligated to seek or secure new employment or to become
self-employed after the Employment Termination Date, and except as stated in Section
4.05(b) or Section 4.05(d), there shall be no offset against any
severance payment or other post-employment amount or benefit under this
Agreement on account of any compensation or benefits from any subsequent
employment (including, without limitation, self-employment) that the Executive
may obtain after the Employment Termination Date.

Section 5:         NON-DISCLOSURE COVENANT

5.01     Confidential Information Defined. 
For the purposes of this Section 5, the phrase "Confidential
Information" means any and all of the following information or items that
the Employer treats as confidential:  trade secrets concerning the business and
affairs of the Employer or its Affiliates, product specifications, data,
know-how, formulae, compositions, processes, designs, sketches, photographs,
graphs, drawings, samples, inventions and ideas, past, current, and planned
research and development, current and planned distribution methods and
processes, customer lists, current and anticipated customer requirements, price
lists, market studies, business plans, computer software and programs
(including object code, machine code, and source code), computer software and
database technologies, systems, structures, and architecture (and related
formulae, compositions, processes, improvements, devices, know-how, inventions,
discoveries, concepts, ideas, designs, and methods); information concerning the
business and affairs of the Employer or its Affiliates (which includes
historical financial statements, financial projections and budgets, historical
and projected sales, capital spending budgets and plans, the names and
backgrounds of key personnel, personnel training techniques and materials,
however documented); and notes, analysis, compilations, studies, summaries, and
other material prepared by or for the Employer or its Affiliates containing or
based, in whole or in part, on any information included in the foregoing. 
Notwithstanding the foregoing, Confidential Information shall not include any
information that was or became or is or becomes available to the public or to
the Employer's industry other than as a result of a disclosure of such
information by the Executive or any other person under a duty to keep such
information confidential.  

 

 

 

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5.02     Executive's Access to the Confidential
Information.  Immediately upon the Executive's execution of this Agreement
and continuing throughout his employment with the Employer, the Employer shall
provide the Executive with access to Confidential Information that Executive
had not previously received.  The Executive acknowledges:  (a) that the
Employer has devoted substantial time, effort, and resources to develop and
compile the Confidential Information; (b) unauthorized or improper public
disclosure of such Confidential Information by the Executive would have an
adverse effect on the Employer and its business; (c) the Employer would not
disclose such information to the Executive, nor employ or continue to employ
the Executive without the agreements and covenants set forth in this Section
5; and (d) the provisions of this Section 5 are reasonable and
necessary to prevent the improper use or disclosure of Confidential
Information. 

5.03     Executive's Nondisclosure Duties Regarding the
Confidential Information.

(a)        Nondisclosure Commitment.  The Executive
will hold in strictest confidence the Confidential Information and will not
disclose it to any Person (as defined in Section 8 of this Agreement)
except with the specific prior written consent of the Employer or as may be
required by court order, law, government agencies with which the Employer deals
in the ordinary course of its business, or except to the extent such disclosure
is necessary or appropriate for the Executive to perform his duties under this
Agreement.  Any trade secrets of the Employer will be entitled to all of the
protections and benefits afforded under applicable laws.  If any Confidential Information
that the Employer deems to be a trade secret is ruled by a court of competent
jurisdiction not to be a trade secret, such information will, nevertheless, be
considered Confidential Information for purposes of this Agreement.  The
Executive hereby waives any requirement that the Employer submit proof of the
economic value of any trade secret or post a bond or other security.  The
Executive will not remove from the Employer's premises or record (regardless of
the media) any Confidential Information of the Employer or its Affiliates,
except to the extent such removal or recording is necessary or appropriate for
the Executive to perform his duties or as may be required by court order, law,
or governmental agencies with which the Employer deals in the ordinary course
of its business.  The Executive acknowledges and agrees that all Confidential
Information, and physical embodiments thereof, whether or not developed by the
Executive, are the exclusive property of the Employer or its Affiliates, as the
case may be. 

(b)        Third Party Information.  The Executive
recognizes that the Employer and its Affiliates have received and in the future
will receive from third parties their confidential or proprietary information
subject to a duty on the part of the Employer and its Affiliates to maintain
the confidentiality of such information and to use it only for certain limited
purposes.  The Executive agrees that he owes the Employer, its Affiliates, and
such third parties, during the Employment Period and thereafter, a duty to hold
all such confidential or proprietary information in the strictest confidence
and not to disclose it to any Person (except as necessary or appropriate in
carrying out his duties for the Employer consistent with the Employer's
agreement with such third party or as may required by court order, law, or
government agencies with which the Employer deals in the ordinary course of its
business), or to use it for the benefit of anyone other than for the Employer
or such third party (consistent with the Employer's agreement with such third
party) without the express written authorization of the Employer or its
Affiliate, as the case may be.

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(c)        Returning Employer Property.  The
Executive agrees that, at the time of the termination of the Employment Period,
he will deliver to the Employer  (and will not keep in his possession or
deliver to any other Person) any and all devices, records, data, notes, reports,
proposals, lists, correspondence, specifications, drawings, blueprints,
sketches, materials, equipment, other documents or property, or reproductions
of any of the aforementioned items or any property belonging to the Employer or
any of its Affiliates, and their respective successors or assigns, regardless
of whether such items are represented in tangible, electronic, digital,
magnetic or any other media, to the extent that any of the foregoing are in the
Executive's possession or within his control.  In the event of the termination
of the Employment Period, the Executive agrees to promptly sign and deliver to
the Employer the "Termination Certification" attached hereto as Exhibit
C.

5.04     Disputes or Controversies.  The Executive
recognizes that should a dispute or controversy arising from or relating to
this Agreement be submitted for adjudication to any court or other third party,
the preservation of the secrecy of Confidential Information may be
jeopardized.  All pleadings, documents, testimony, and records in Executive's
possession or under his control relating to any such adjudication will be
maintained in secrecy and will be available for inspection by the Employer, the
Executive, and their respective attorneys and experts, who will agree, in
advance and in writing, to receive, use, and maintain all such Confidential
Information in secrecy, except as may be agreed by them in writing.

Section 6:         NON-COMPETITION AND NON-INTERFERENCE

6.01     Restrictive Covenants.  The
Executive agrees that the Employer's
commitment described in Section 5.02 above to provide its Confidential
Information to him gives rise to the Employer's interest in restraining
Executive from competing against it and that the restrictions in this Section
are designed to enforce Executive's promise in Section 5.03 not to use
or disclose Confidential Information belonging to the Employer, except as
permitted in Section 5.03.  The Executive agrees that the restrictions
in this Section are reasonable and do not impose a greater restraint than is
necessary to protect the goodwill or other business interests of the Employer. 
For these reasons, the Executive agrees to the following:

(a)        Noncompete.  During the Restricted Period
the Executive will not, directly or indirectly, on behalf of himself or any
other person or entity, engage or invest in, own, manage, operate, finance,
control, or participate in the ownership, management, operation, financing, or
control of, be employed by, associated with, or in any manner connected with,
lend the Executive's name or any similar name to, lend the Executive's credit
to or render services that are similar to the services he rendered to the
Employer under this Agreement to any business engaged or about to become
engaged in the Business of the Employer, or any of its Affiliates, in the
Market Area (defined below).  For purposes of this Agreement, the "Business"
of the Employer is providing recovery, restoration,
rebuilding/remodeling, and other specialty interior services to residential and
commercial properties.  Nothing in this Section shall prohibit the Executive
from purchasing or owning less than 5% of the stock of a publicly owned
Business.

10

(b)        Solicitation of Customers.  During the
Restricted Period the Executive will not, directly or indirectly, on behalf of
himself or any other person or entity, solicit a Current Customer (as defined in
Section 8 below) of the Employer or its Affiliates with whom he had
contact during the Employment Period, for purposes of selling products or
services to such Current Customer that are in competition with the products and
services offered or sold by the Employer or its Affiliates as part of the
Business. 

(c)        Solicitation of Employees.  During the
Restricted Period the Executive will not, directly or indirectly, on behalf of
himself or any other person or entity, employ any current employee of the
Employer or its Affiliates or any individual who was an employee of the
Employer or its Affiliates at any time during Term, and will not solicit any
employee of the Employer or its Affiliates for the purpose of encouraging such
employee to leave or terminate his or her employment with the Employer or its
Affiliates.

(d)        Solicitation of Vendors.  During the
Restricted Period, the Executive will not, either directly or indirectly, on
behalf of himself or any other person or entity, solicit a current vendor or
supplier of the Employer or its Affiliates for purposes of encouraging such
vendor or supplier to cease or diminish providing products or services to the
Employer or its Affiliates, or to change adversely to the Employer or its
Affiliates the terms under which such vendor or supplier provides such products
or services to the Employer or its Affiliates.

(e)        Non-interference.  Following the
termination of the Employment Period, the Executive will not, either directly
or indirectly, access the Employer's computer systems, download files or any
other information from the Employer's computer systems or in any way interfere,
disrupt, modify or change any computer program used by the Employer or any data
stored on the Employer's computer systems.

(f)         Restricted Period.  For
purposes of this Section 6.01, the term "Restricted Period" means
the period commencing with the Effective Date and terminating two years after
the Employment Termination Date.

(g)        Market Area.  For purposes of this Section
6.01, the term "Market Area" includes any state or province in
which, during the Employment Period, (i) the Employer has provided goods or
services and (ii) the Executive has overseen, directed, managed, or otherwise
participated in the operations of the Employer.

11

6.02     Scope.  The Executive acknowledges and
agrees that the geographic area, length and scope of the restrictions contained
in Section 6.01 are reasonable and necessary to protect the legitimate
business interests of the Employer.  The duration of the agreements contained
in Section 6.01 shall be extended for the amount of any time of any
violation thereof and the time, if greater, necessary to enforce such
provisions or obtain any relief or damages for such violation through the court
system.  The Employer may, at any time on written notice approved by its Board
of Directors, reduce the geographic area, length or scope of any restrictions contained
in Section 6.01 and, thereafter, the Executive shall comply with the
restriction as so reduced, subject to subsequent reductions.  If any covenant
in Section 6.01 of this Agreement is held to be unreasonable, arbitrary,
or against public policy, such covenant will be considered to be divisible with
respect to scope, time, and geographic area, and such lesser scope, time, or
geographic area, or all of them, as an arbitrator or a court of competent
jurisdiction may determine to be reasonable, not arbitrary, and not against
public policy, will be effective, binding, and enforceable against the
Executive.  In the event of termination of the Executive's employment with the
Employer for any reason, the Executive shall inform any subsequent employer within
the Restricted Period (if applicable) of the continuing restrictions and
obligations imposed on the Executive under this Agreement.

6.03     Required
Notice.  Executive agrees that during the Restricted Period following the
termination of his employment with Employer, he will provide Employer with
written notice of any new employment within 30 days after he commences that
employment.  The notice will identify the Executive's new employer and include
the Executive's representation that he has informed his new employer of his
applicable confidentiality and other obligations under this Agreement. 

Section
7:         GENERAL PROVISIONS

7.01     Injunctive Relief and Additional Remedy. 
The Executive acknowledges that the injury that would be suffered by the
Employer as a result of a breach of the provisions of Sections 5 or 6
hereof might be irreparable and that an award of monetary damages to the
Employer for such a breach would be an inadequate remedy.  Consequently, the
Employer will have the right, in addition to any other rights it may have, to
obtain injunctive relief to restrain any breach or overtly threatened breach or
otherwise to specifically enforce the provisions of Sections 5 and 6
hereof.

7.02     Covenants of Sections 5 and 6 are Essential
Covenants.  The covenants by the Executive in Sections 5 and 6
are essential elements of this Agreement, and without the Executive's agreement
to comply with such covenants, the Employer would not have entered into this
Agreement or employed or continued the employment of the Executive.  The
Employer and the Executive have independently consulted their respective
counsel and have been advised in all respects concerning the reasonableness and
propriety of such covenants, with specific regard to the nature of the business
conducted by the Employer.  If, following the Employment Period, the Employer
has any obligation to pay severance or other amounts to or for the benefit of
the Executive or provide any Benefits to the Executive and the Employer has
failed to pay such severance or other amounts and/or provide such Benefits when
due under this Agreement, then after written notice to the Employer regarding
the failure to pay such severance or other amounts or provide such Benefits and
a reasonable time to cure such failures, the Executive's obligations under Section
6 shall terminate.

12

7.03     Representations and Warranties by the Executive. 
The Executive represents and warrants to the Employer that (a) the Executive
has never taken any action of the types set forth in Section 4.03(b)
though (f) and (b) the execution and delivery by the Executive of this
Agreement does not, and the performance by the Executive of the Executive's
obligations hereunder will not, with or without the giving of notice or the
passage of time, or both: (i) violate any judgment, writ, injunction, or order
of any court, arbitrator, or governmental agency applicable to the Executive;
or (ii) conflict with, result in the breach of any provisions of or the
termination of, or constitute a default under, any agreement to which the
Executive is a party or by which the Executive is or may be bound.

7.04     Binding Effect; Delegation of Duties Prohibited. 
This Agreement shall inure to the benefit of, and shall be binding upon, the
parties hereto and their respective successors, assigns, heirs, and legal
representatives, including any entity with which the Employer may merge or
consolidate or to which all or substantially all of its assets may be
transferred, and the Employer agrees it will not assign or delegate any of its
obligations under this Agreement other than as part of any merger,
consolidation, or transfer of all or substantially all of its assets, and in
the event of such assignment, the Employer agrees that it will obtain from the
legal successor of this Agreement an assumption of the Employer's obligations
hereunder (although no such assumption shall be required if the successor
assumes such obligations by operation of law).  The covenants of the Executive
under this Agreement, being personal, may not be delegated.

7.05     Notices.  All notices, consents, waivers,
and other communications under this Agreement must be in writing and will be
deemed to have been duly given and delivered when (a) delivered by hand (with
written confirmation of receipt), (b) sent by facsimile (with written
confirmation of receipt), provided that a copy is mailed by registered mail,
return receipt requested, or (c) when received by the addressee, if sent by a
nationally recognized overnight delivery service (receipt requested) or, (d) on
the fifth business day after mailing or when received by the addressee,
whichever is earlier, if mailed by registered or certified mail, postage
prepaid and return receipt requested, in each case to the appropriate addresses
and facsimile numbers set forth below (or to such other addresses and facsimile
numbers as a party may designate by notice to the other parties):

 

		 	 If to Employer:	

Home Solutions of America, Inc.

			
	 	 	

1500 Dragon Street, Suite B

			
	 	 	

Dallas, TX 75207

			
	 	 	

Facsimile:
(214) 333-9435

			
	 	 	 
	 	With a copy to: 	

Melissa Youngblood, Esq.

			
	 	 	

Hallett
& Perrin, P.C.

			
	 	 	

2001 Bryan Street, Suite 3900

			
	 	 	

Dallas, TX 75201

			
	 	 	

Facsimile:
(214) 922-4170

			
	 	 	 
	 	If to the Executive: 	

Frank J. Fradella

			
	 	 	

1500 Dragon Street, Suite B

			
	 	 	

Dallas, TX 75207

			
	 	 	

Facsimile: (214) 333-9435

			

                        

13

7.06     Entire Agreement; Amendments.  This
Agreement contains the entire agreement between the parties with respect to the
subject matter hereof and supersedes all prior agreements and understandings,
oral or written, between the parties hereto with respect to the subject matter
hereof; except that this Agreement does not affect any existing equity
compensation plan or agreement between the parties.  This Agreement may be
amended but only by an agreement in writing signed by the parties hereto.

7.07     GOVERNING LAW; VENUE.  THIS AGREEMENT
SHALL BE GOVERNED BY, ENFORCED UNDER, AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS RULES OR
CHOICE OF LAWS RULES THEREOF.  VENUE FOR ANY ACTION BROUGHT HEREUNDER SHALL BE
IN DALLAS COUNTY, TEXAS.

7.08     Headings; Construction.  The headings in
this Agreement are provided for convenience only and will not affect its
construction or interpretation.  All references to "Section" or "Sections"
refer to the corresponding Section or Sections of this Agreement unless
otherwise specified.  All words used in this Agreement will be construed to be
of such gender or number as the circumstances require. 

7.09     Severability.  If any provision of this
Agreement is held invalid or unenforceable by an arbitrator or any court of
competent jurisdiction, the other provisions of this Agreement will remain in
full force and effect.  Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to
the extent not held invalid or unenforceable.

7.10     Counterparts.  This Agreement may be
executed in one or more counterparts, including by facsimile signature, each of
which will be deemed to be an original copy of this Agreement and all of which,
when taken together, will be deemed to constitute one and the same agreement.

7.11     Survival of Obligations.  The obligations
of the Employer and the Executive under this Agreement which by their nature
may require either partial or total performance after the expiration of the
Term shall survive such expiration.

7.12     Withholding and Set Off.  All payments and
benefits made or provided under this Agreement shall be subject to withholding
as required under applicable law.  The Employer is further authorized to
withhold and setoff against any such payments and benefits any amounts that the
Executive owes the Employer, whether as a result of any breach of this
Agreement or otherwise.

14

7.13     Arbitration. 
Any controversy or claim arising out of or relating to this Agreement, or the
Executive's employment by the Employer under
this Agreement, shall be settled by arbitration in accordance with the Employment
Arbitration Rules and Mediation Procedures of the American Arbitration Association
("AAA"), and judgment rendered by the arbitrator may be entered in any
court having jurisdiction thereover.  Provided, however, that nothing in this
Section shall be construed as to deny the Employer or the Executive the right
and power to seek and obtain injunctive relief in a court of competent
jurisdiction for any breach or threatened breach by Executive of the covenants
in this Agreement.  The arbitration shall be conducted in Dallas, Texas, unless otherwise agreed by the parties thereto. A party
hereto shall initiate arbitration by sending written notice of its intention to
arbitrate to the other party and to the AAA office located in Dallas, Texas.  Parties shall have the same period of time to file claims as provided by the
applicable statute of limitation for such claim.  Such written notice will
contain a description of the dispute and the remedy sought.  In the event that
the parties have not mutually agreed on an acceptable arbitrator within thirty
(30) days after the demand for arbitration is filed, the arbitrator shall be
appointed in the manner provided by the AAA's Employment Arbitration Rules and
Mediation Procedures.  The decision of the arbitrator will be final and binding
on the parties hereto and their successors and assignees.  Where consistent
with applicable law, the arbitrator shall have the authority to order the
non-prevailing party to pay the prevailing party's attorney's fees and all
costs of the arbitration.  The parties will participate in good faith in a
non-binding mediation of their dispute at least 60 days prior to the date of
the arbitration hearing.  The parties shall jointly select the mediator but if
they are unable to agree on a mediator, then the arbitrator shall appoint the
mediator.  The parties hereto intend that this agreement to arbitrate be
irrevocable.

7.14         
Income Taxation of Deferred Payments.  This Agreement
shall be administered subject to and in compliance with the requirements of
Section 409A of the Code.  The parties acknowledge that there are uncertainties
in regard to the interpretation of Section 409A and agree to cooperate in good
faith to preserve their respective economic rights and obligations in light of
future amendments to, regulations under, or interpretations of Section 409A.

Section
8:         CERTAIN DEFINITIONS

In and for purposes of this Agreement, the following terms
shall have the meanings indicated below:

"Affiliate" shall mean, as to any Person, any Person
controlled by, controlling, or under common control with such Person, and, in
the case of a Person who is an individual, a member of the family of such
individual consisting of a spouse, sibling, in-law, lineal descendant, or
ancestor (including by adoption), and the spouses of any such individuals.  For
purposes of this definition, "control" (including the terms "controlling",
"controlled by" and "under common control with") of a Person means the
possession, directly or indirectly, alone or in concert with others, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of securities, by contract or otherwise,
and no Person shall be deemed in "control" of another solely by virtue of being
a director, officer or holder of voting securities of any entity.  A Person
shall be presumed to "control" any partnership of which such Person is a
general partner.

"Code" shall mean the Internal Revenue Code of 1986,
as amended.

"Current Customer" shall mean any person or entity
who is currently utilizing any product or service sold or provided by the
Employer through the facility managed by the Executive; any person or entity
who utilized any such product or service within the previous 12 months; and any
person or entity with whom the Employer or any of its Affiliates is currently
conducting negotiations concerning the utilization of such products or
services.

15

"Employment
Period" shall mean the period during which the Executive
has an obligation under this Agreement to render to the Employer all or any
portion of the services described in Section 1.03 of this Agreement.

"Person" shall have the meaning given in Section
3(a)(9) of the Securities Exchange Act of 1934, as amended, as modified and
used in Sections 13(d)(3) and 14(d)(2) of such act.  

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]

 

 

 

 

 

 

 

16

IN
WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first written above.

EMPLOYER:

HOME SOLUTIONS OF AMERICA, INC.

 

 

 

By:       /s/ Rick J. O'Brien                

Name:  Rick J. O'Brien

Title:     President

EXECUTIVE:

/s/
Frank J. Fradella                          

                                                                        Frank
J. Fradella

 

 

 

 

 

 

 

 

17

EXHIBIT A

 

 

	
  Executive Compensation Plan - Frank J. Fradella,
  Chairman and CEO

  Fiscal Years 2006 and 2007

  
	
   
	
  Annual
  Base Salary:

  	
  $350,000.00,
  payable in accordance with the Company's current payroll procedures 

  
	
   
	
  Level
  I Bonus Potential:

  	
  up
  to $350,000.00 annually, (100% of Annual Base Salary), based on achievement
  of Level I Bonus Performance Criteria (see Page A-2) 

  
	
   
	
  Level
  II Bonus Potential:

  	
  up
  to $262,500.00 annually, (75% of Annual Base Salary), based on achievement of
  Level II Bonus Performance Criteria (see Page A-2) 

  
	
   
	
  Long Term Incentive
  Compensation ("LTI"):

  	
  Restricted
  Common Stock grants under the Company's 2001 Stock Option Plan, or any other
  plan adopted by the Company, valued in an amount up to $525,000.00 annually
  (150% of Annual Base Salary), based on achievement of LTI Performance
  Criteria (see Page A-2), vesting monthly in thirty-six equal increments over
  three years (subject to acceleration of vesting as agreed by the Company)

  
	
   
	
  Additional Cash and Equity
  Compensation:

  	
  May
  be granted at the discretion of the Independent Board Members upon
  recommendation by the Compensation Committee

  
	
   
	
  Potential Value of Aggregate
  Remuneration Annually  (based on Annual Base Salary, full achievement of Level
  I Bonus, Level II Bonus, and LTI, without additional compensation):

  	

  $1,487,500.00
  

  

A-1

	
  Performance Criteria For Executive Officers - Fiscal
  Years 2006 and 2007

  
	
   
	
  General:

  	
  The
  annual Level I Bonus, Level II Bonus, and LTI awards (collectively, the "Awards")
  shall be granted to the executive officers based upon both Objective Criteria
  and Subjective Criteria, as described below.  All Level I Bonus, Level II
  Bonus, and LTI awards are discretionary and subject to the approval of the
  Compensation Committee and the Independent Board Members.  

  
	
   	
   
	
  Objective Criteria:

  	
  The
  Objective Criteria for each Award shall be based on one or more measures of
  the Company's performance for the fiscal year, such as revenues, operating income,
  EBITDA, net income, EPS, aggregate indebtedness, net working capital, and
  stockholders equity, as compared to the budget for such fiscal year adopted
  prior to the commencement of such fiscal year (the "Budget"), as
  determined by the Compensation Committee and the Independent Board Members. 
  In analyzing the performance of the Company as compared to the Budget for
  such fiscal year, the Compensation Committee and the Independent Board
  Members may disregard the impact on the Company's financial statements of any
  acquisitions that occurred during such fiscal year (as the impact of such
  acquisitions would not have been included in the Budget). 

  
	
   	
   
	
  Level I Bonus Performance
  Criteria:

  	
  For
  the executive to be eligible for the Level I Bonus, the Company must have
  achieved at least 100% of the Objective Criteria determined by the Compensation
  Committee as compared to the Budget for the fiscal year in question.  
  For example, if the Objective Criteria consists of EBITDA and EPS, then in
  order for the executive to be eligible for the Level I Bonus, the performance
  of the Company for the fiscal year in question, as verified by the Company's
  audited financial statements for that year, must be equal to or greater than
  100% of the Budget amount of EBITDA and EPS for the fiscal year in question. 
  

  
	
   	
   
	
  Level II Bonus Performance
  Criteria:

  	
  For
  the executive to be eligible for the Level II Bonus, the Company must have
  achieved at least 120% of the Objective Criteria determined by the Committee as
  compared to the Budget for the fiscal year in question.  For example, if the
  Objective Criteria consists of EBITDA and EPS, then in order for the
  executive to be eligible for the Level II Bonus, the performance of the
  Company for the fiscal year in question, as verified by the Company's audited
  financial statements for that year, must be equal to or greater than 120% of
  the Budget amount of EBITDA and EPS for the fiscal year in question.  

  
	
   	
   

A-2

	
  Long
  Term Incentive Compensation Performance Criteria:

  	
  For
  the executive to be eligible for the LTI, the Company must have achieved 
  90%-120% of the Objective Criteria set forth on the Budget for the fiscal
  year in question, with the amount of LTI to be granted to be proportionate to
  the level of Company's achievement within the 90-120% range. For example, if
  the Objective Criteria consists of EBITDA and EPS, then in order for the
  executive to be eligible for the LTI, the performance of the Company for the
  fiscal year in question, as verified by the Company's audited financial
  statements for that year, must be in the range of 90% to 120% of the Budget
  amount of EBITDA and EPS for the fiscal year in question.  

  
	
   	
   
	
  Subjective Criteria:

  	
  In
  determining whether to grant each Award and the amount and type of the Awards
  (within the levels stated above) to be granted to the executive, the
  Compensation Committee and the Independent Board Members shall give consideration
  to various subjective criteria that they deem material to the performance of
  the executive, including the Company's public market capitalization, the
  position of the Company's assets and business operations in various
  geographic markets and industry segments, long term growth opportunities,
  enhancement of stockholder value and strategic objectives to ensure the
  survival and growth of the Company, customer satisfaction, public relations
  and similar variables appropriate to the executive's duties and performance
  in the fiscal year in question.  

  
	
   	
   
	
  Award Terms and Payment
  Policies:

  	
  The
  Awards, if any, shall be based upon the Company's audited financial
  statements for the fiscal year in question and shall be paid or issued in the
  calendar year in which the Company's financial statements for the fiscal year
  in question are audited.    

  
	
   	
   
	
  Compliance
  with Tax Laws: 

  	
  Any
  Award issued under the Executive Compensation Plan that constitutes a
  deferral of compensation under a "nonqualified deferred compensation plan",
  as such term is defined under Section 409A(d)(1) of the Internal Revenue Code
  (the "Code") (or a successor provision thereto), shall comply with the
  requirements of Section 409A of the Code (or a successor provision thereto)
  and applicable guidance published in the Internal Revenue Bulletin.

  

 

 

 

A-3

EXHIBIT B

GENERAL RELEASE

            For good and
sufficient consideration, including but not limited to payments which Home
Solutions of America, Inc. (the "Company") would not be obligated to pay
to Frank J. Fradella ("Fradella") without Fradella signing this Release,
the receipt and sufficiency of which is hereby acknowledged, Fradella does
hereby forever release, remise, and discharge for himself and his heirs,
executors, legal representatives, administrators, successors and assigns, the
Company, its shareholders, directors, officers, employees and agents and their
respective heirs, executors, administrators, successors, legal representatives
and assigns, and all persons or entities related to or affiliated with any of
the aforementioned persons (the "Releasees") of and from all claims,
causes of action, suits, debts, agreements, promises and demands, of whatever
nature or kind, in law or in equity which Fradella now has, ever had, or but
for this release hereafter would or could have against any of the Releasees
arising in any manner out of Fradella's employment with the Company and/or
Fradella's serving as an officer and/or director of the Company or any
affiliated entity.

            Fradella warrants
that he has read this General Release and fully understands it to be a
compromise and settlement and release of all claims, known or unknown, present
or future, that the undersigned has or may have against the Company and its
affiliates as described above.

Home Solutions of America, Inc.

		By:	 	 
	

 
	 	
			Frank J. Fradella
	 	 	 
	 	 	 
	 	 	 
	

Date Signed
	 	
			Date Signed

 

 

 

 

B-1

EXHIBIT C

TERMINATION
CERTIFICATION

            I
hereby certify that my employment with Home Solutions of America, Inc. (the "Company")
has terminated effective as of ______________________________, and that as of
________________________________, I have fully complied with all of my
obligations in Section 5.03(c) of the Amended and Restated Employment
Agreement I entered into with the Company as of September 8, 2006.

                                                                                                                                                           

                                                                                    Frank
J. Fradella

                                                                                                                                                           

                                                                                    Date
signed

 

 

 

 

 

 

 

C-1Exhibit 10.02

 

 

AMENDED AND
RESTATED EMPLOYMENT AGREEMENT

            This Amended and
Restated Employment Agreement (this "Agreement") is made and entered
into as of September 8, 2006 (the "Effective Date"), by and between Home
Solutions of America, Inc., a Delaware corporation (the "Employer") and
Rick J. O'Brien, an individual resident of the State of Texas (the "Executive").

RECITALS:

            A.        The
Employer and the Executive, along with Fiber-Seal Systems, L.P., a Texas
limited partnership ("FIBER-SEAL") entered into that certain Executive
Employment Agreement, dated July 31, 2003, as amended by that certain Agreement
dated December 2, 2003 (as amended, the "Original Agreement").

            B.         The
Original Agreement sets forth the terms and conditions pursuant to which the
Executive is employed jointly by the Employer and FIBER-SEAL as the Vice
President of Employer and the President of FIBER-SEAL.

            C.        The
Employer, FIBER-SEAL, and the Executive have mutually agreed that the Executive
will no longer be employed by FIBER-SEAL.  The Employer and the Executive
desire to amend the Original Agreement to implement this change and certain other
material changes to the terms and conditions of Executive's employment.  

            D.        In
connection with amending the Original Agreement to implement the material changes
to the terms and conditions of Executive's employment, the Employer and the
Executive have decided that it would be appropriate to amend and restate the
Original Agreement in its entirety, as follows:

WITNESSETH:

WHEREAS,
the Executive has certain skills, experience, and abilities that may be
valuable to the success of the Employer's operations and future profitability;
and

WHEREAS,
the Employer desires to employ and retain the services of the Executive as a
full-time employee in the positions of President and Chief Operating Officer of
Employer, and the Executive desires to work for and be employed by Employer in
such positions; and

WHEREAS, the
Employer and the Executive desire to set forth the terms and conditions
pursuant to which the Executive will be employed by the Employer.

NOW,
THEREFORE, in consideration of the foregoing premises and of the mutual
covenants and undertakings contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties to this Agreement hereby agree as follows:

 

 

	
  1

  

Section 1:         EMPLOYMENT
TERM AND DUTIES

1.01     Employment.  The Employer hereby employs the Executive,
and the Executive hereby accepts employment by the Employer, upon the terms and
conditions set forth in this Agreement.

1.02     Term. 
The term of the Executive's employment with the Employer pursuant to this
Agreement shall commence on the Effective Date and shall continue until
December 31, 2007, subject to the termination provisions in Section 4 of
this Agreement. 

1.03     Duties
and Services.  The Executive will be employed as the President and Chief
Operating Officer of Employer in Dallas, Texas, and will have such duties and
perform such services as are customary with such positions.  The Executive
shall report directly and only to the Employer's Chief Executive Officer and to
the Employer's Board of Directors (the "Board"). The Executive will
devote at least 90% of his business time, attention, skill, and energy
exclusively to the business of the Employer.  The Executive will comply with
all applicable Employer policies and procedures as well as with all applicable
laws in performing his duties for the Employer.  The Executive will be
available to travel on Employer business as the needs of the Employer may
reasonably require.

Section 2:         COMPENSATION

2.01     Salary.
 During the Employment Period, the Executive will be paid an annual base salary
of $250,000 (such amount is hereinafter referred to as "Salary").  The
Employer shall withhold from each installment of the Salary, all applicable
federal, state, and local income and other payroll taxes.

2.02     Benefits. 
During the Employment Period and as otherwise set forth herein, the Executive
and his dependents (if applicable), will be permitted to participate in all of
the Employer's employee benefit plans for its employees and its senior
management (collectively, "Benefits") that may be in effect from time to
time to the extent the Executive and his dependents are eligible for
participation under the terms of such plans.  

2.03     Bonuses;
Long Term Incentive Compensation.  For each of the Employer's fiscal years,
the Executive may be awarded cash and/or equity-based bonuses and long term
incentive compensation based on the recommendation of the Board's Compensation
Committee (the "Committee") and approved by the independent members of
the Board, as set forth in the Executive Compensation Plan for the Executive
adopted by the Committee and the independent members of the Board of Directors,
a copy of which is attached hereto as Exhibit A.

2.04     Indemnification. 
The Executive is and shall be entitled to mandatory indemnification and
advancement of expenses from the Employer to the fullest extent permitted by
law and to directors' and officers' liability insurance coverage to the maximum
extent that any other officer of the Employer is covered.

 

	
  2

  

 

Section 3:         FACILITIES AND EXPENSES

            The Executive will be entitled to use the
office space, equipment, supplies, and such other facilities, property, and
personnel as are currently being provided by the Employer and as such may
hereafter be necessary or appropriate for such purposes to perform his duties
under this Agreement.  The Employer will reimburse the Executive for reasonable
expenses incurred by the Executive in the performance of his duties in
accordance with the Employer's employment policies in effect from time to time;
provided, however, that the Executive must file written expense reports with
respect to such expenses, in accordance with the Employer's employment
policies, before the Executive may receive such reimbursement.

Section 4:         TERMINATION

4.01     Termination of Employment Period.

(a)        Death of the Executive.  The
Employment Period shall terminate immediately
and automatically upon the death of the Executive.

(b)        Termination by the Employer.  The
Employer may terminate the Employment Period (i)
immediately upon the delivery of a Notice of Termination (as defined in Section
4.01(d) of this Agreement) by the Employer to the Executive setting forth
the facts that indicate that a determination has been made that the Executive
has a Disability in accordance with Section 4.02 of this Agreement; (ii)
immediately upon delivery of a Notice of Termination by the Employer to the
Executive setting forth the facts that indicate that an event constituting
Cause (as defined in Section 4.03 of this Agreement) has occurred, or on
such later date as may be set forth in such Notice of Termination; or (iii) at
any time without Cause effective as of the 30th day following the delivery of a
Notice of Termination by the Employer to the Executive.

(c)        Termination by the Executive.  The
Executive may terminate the Employment Period (i)
immediately upon delivery of a Notice of Termination by the Executive to the
Employer setting forth facts that indicate that an event constituting Good
Reason (as defined in Section 4.04 of this Agreement) has occurred
within the 60 days immediately prior to the date of delivery of such Notice of
Termination, or (ii) at any time without Good Reason effective as of the 30th
day following the delivery of a Notice of Termination by the Executive to the
Employer.

                        (d)        Notice
of Termination.  For purposes of this Agreement, a "Notice of
Termination" shall mean a written notice (delivered in accordance with Section
7.05 herein) that indicates the specific termination provision in this
Agreement upon which the party intending to terminate the Employment Period is
relying and sets forth in reasonable detail the facts and circumstances that
provide a basis for termination of the Employment Period under such termination
provision. 

	
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4.02     Definition of "Disability."  For purposes
of this Agreement, the Executive will be deemed to have a "Disability"
under any of the following conditions: (a) the Executive is unable to render
and perform substantially and continuously the Executive's duties and services
as required  by this Agreement by reason of any medically determinable physical
or mental condition that is expected to result in death or can reasonably be
expected to last for a continuous period of not less than 12 months, (b) the
Executive is determined to be disabled in accordance with a disability income
insurance program sponsored by the Employer, provided the definition of
disability applied under such program complies with the requirements of Section
409A of the Code, or (c) the Executive is determined to be totally disabled by
the Social Security Administration .  Upon the request of either party hereto
following written notice to the other, the Disability of the Executive in
accordance with part (a) of the preceding sentence will be determined by a
medical doctor (the "Examining Doctor") who shall be selected as
follows: the Employer and the Executive shall each select a medical doctor, and
those two medical doctors will select a third medical doctor who will be the
Examining Doctor.  The determination of the Examining Doctor as to whether or
not the Executive has a Disability pursuant to part (a) of this Section 4.02
will be binding on both parties hereto.  For purposes of part (a) of this Section
4.02, the Executive must submit to a reasonable number of examinations by
the Examining Doctor, and the Executive hereby authorizes the disclosure and
release to the Employer of such determination and the results of such
examinations; provided, however, if the Executive is not legally competent, the
Executive's legal guardian or duly authorized attorney-in-fact will act in the
Executive's stead under this Section 4.02 for the purposes of submitting
the Executive to examinations and providing any such authorizations of
disclosure.  

4.03     Definition of "Cause."  For purposes of
this Agreement, "Cause" shall mean: (a) the Executive's material and
persistent failure to perform his duties and services in accordance with this
Agreement, unless such failure is due to the Executive's Disability; (b) the
Executive's material violation of this Agreement or any material inaccuracy of
any representation or warranty of the Executive contained herein; (c) the
appropriation (or willful attempted appropriation) by the Executive of a
material business opportunity of the Employer that is not waived in writing or
renounced in writing by the Employer, including, but not limited to, attempting
to secure or securing any personal profit in connection with any transaction
entered into on behalf of the Employer; (d) the theft or embezzlement by the
Executive of any material real or personal property, tangible or intangible, of
the Employer or any of its Affiliates (as defined in Section 8 of this
Agreement); (e) the commission of an act of fraud by the Executive upon, or bad
faith or willful misconduct toward, the Employer or any of its Affiliates; (f)
conduct by the Executive constituting gross negligence that is materially
injurious to the Employer, a customer of the Employer, or any of the Employer's
Affiliates; or (g) the conviction of, the indictment for (or its procedural
equivalent), or the entering of a guilty plea or plea of no contest by the
Executive with respect to, a felony, the equivalent thereof, or any other crime
with respect to which imprisonment is a possible punishment.  The Board has the
exclusive right on behalf of Employer to determine whether "Cause" exists. 
Before making a decision of whether "Cause" exists, the Board shall grant the Executive
a reasonable period of time to cure the conduct in question, if the Board
determines the matter is curable.  The Board shall provide the Executive with a
written statement of the alleged conduct which it is considering as "Cause" for
termination and provide the Executive with a reasonable opportunity to meet
with the Board to discuss the alleged conduct before the Board makes a final
decision on whether there is "Cause" to terminate the Executive's employment.

 

 

 

	
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4.04     Definition of "Good Reason."  For the
purposes of this Agreement, the phrase "Good Reason" means (i) the
Employer's reduction of the Executive's Salary or any material breach of this
Agreement and the Employer's failure to remedy such breach within 10 days
following the delivery of written notice of such breach by the Executive to the
Employer; (ii) the assignment by the Employer to the Executive, without the
prior written consent of the Executive, of responsibilities or duties that are
substantially different from the duties and services set forth in Section
1.03 of this Agreement; (iii) the relocation of the Executive from Dallas,
Texas; (iv) any demotion of the Executive in rank, title, duties, authority or
reporting status; (v) any material impairment of Executive's opportunity to
earn a bonus or long-term incentive compensation; or (vi) any failure of the
Employer to obtain an assumption of the Employer's obligations under this
Agreement from a successor to the Employer as provided in Section 7.04
of this Agreement.

4.05     Effect of Termination of Employment Period;
Post-Termination Benefits.  Upon the termination of the Employment
Period in accordance with Section 4 of this
Agreement, the Executive's obligation to render to the Employer the services
described in Section 1.03 of this Agreement shall cease and the Employer
shall pay the Executive or, in the event of his death while amounts remain
payable hereunder, his Designated Beneficiary (as defined in this Section
4.05), if at all, as follows:

                       (a)        Termination
by the Employer with Cause or by the Executive without Good Reason.  If the
Employment Period is terminated in accordance
with Section 4.01(b)(ii) or Section 4.01(c)(ii) of this
Agreement, the Executive will be entitled to receive solely that portion of his
Salary accrued by the Executive through the date on which the Executive's
employment is terminated and the Employment Period ends (the "Employment
Termination Date").  The Executive shall not receive, and shall not be
entitled to receive, any Salary or Benefits thereafter, except as otherwise
required in accordance with federal or state law or the terms of the plans or
agreements governing the Benefits provided hereunder.  Any salary to which the
Executive is entitled under this Section 4.05(a) shall be paid in
accordance with the Employer's normal payroll practices as in effect on the
date of this Agreement.

                       (b)        Termination
by the Employer without Cause or by the Executive with Good Reason.  If the
Employment Period is terminated in accordance with Section 4.01(b)(iii)
or Section 4.01(c)(i) of this Agreement, the Executive will be entitled
to receive (i) the Salary that would have been payable to him during the
remainder of the term of this Agreement if his employment hereunder had
continued, and (ii) an amount equal to the product of (x) the Severance
Percentage (as defined below), multiplied by (y) the Executive's
Actual Aggregate Compensation (as defined in Section 4.05(d) below) for
the Employer's fiscal year most recently ended prior to the termination.  For purposes of this Agreement, the "Severance
Percentage" shall mean the percentage resulting from the following
calculation:  (x) the number of days during the period from January 1, 2006
through the Employment Termination Date that the Executive was employed by the 
Company, divided by (y) 730.  The Executive also will be entitled
to receive the amount of Salary, bonus and long-term incentive compensation
which the Executive has earned through the Employment Termination Date as
determined in good faith by the Committee.  In addition, if the Executive would
lose coverage under the group health plan sponsored or maintained by the
Employer as a result of the termination of the Executive's employment and
Executive elects to continue health coverage through a group health plan
sponsored or maintained by the Employer under the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA"), the Employer will reimburse the
Executive for the COBRA premiums for coverage for the Executive and his dependents
for the initial twelve months of coverage, except that the Employer's
obligations in this sentence will expire upon the Executive's and his
dependents' becoming eligible for comparable coverage under another employer's
health benefits plan or policy.  The cost of coverage under the Employer's
group health plan will be payable solely by the Employer.  Except to the
extent otherwise permitted under Section 409A of the Code, the Salary, bonuses
and long-term incentive compensation and the payments for the cost of group
health plan coverage under COBRA shall be accumulated by the Employer and paid
to the Executive on the first day of the seventh calendar month following the
Employment Termination Date or, if earlier, the date of the Executive's death,
and thereafter payments to which the Executive is otherwise entitled hereunder
shall be made in equal monthly installments on the first day of each calendar
month for the remainder of the period.  If, at the Employment Termination Date,
or at any time thereafter, the Salary, bonuses and long-term incentive
compensation or payments for the cost of group health plan coverage under COBRA
to which the Executive is entitled under this Section 4.05(b) are not
required to be deferred under Section 409A of the Code, then such amounts shall
instead be paid in equal monthly installments on the first day of each calendar
month; provided, that the first installment shall be paid on the later of (i)
the first day of the calendar month immediately following the Employment Termination Date or (ii) the date which
is fifteen (15) days following the Employment Termination Date.  In addition,
any restricted stock grants which have been made to the Executive upon the
achievement of LTI Performance Criteria, and any other restricted stock grants
to the Executive, and any outstanding stock options granted to the Executive,
shall become fully vested.

	
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                        (c)        Termination
upon Death or Disability. If the Employment Period is terminated in accordance with Section 4.01(a) or Section
4.01(b)(i), the Employer will pay to the disabled Executive or to the
Executive's Designated Beneficiary, as the case may be, one year of the
Executive's Salary that would have been payable during the Employment
Period following the date of the Executive's death or
the date of the determination that the Executive has a Disability, whichever is
applicable, if his employment hereunder had continued.  The Executive or the
Executive's Designated Beneficiary also will be entitled to receive the amount
of bonus and long-term incentive compensation which the Executive has earned
through the Employment Termination Date as determined in good faith by the
Committee.  In addition, in the event the Executive is determined to
have a Disability and the Executive elects under COBRA to continue his health
insurance through a group health insurance plan sponsored or maintained by the
Employer, the Employer will reimburse the premiums for coverage for the
Executive and his dependents for the initial twelve months of such coverage,
except that the Employer's obligations in this sentence will expire upon the
Executive's and his dependents' becoming eligible for comparable coverage under
another employer's health benefits plan or policy.  Amounts to which the
Executive or the Executive's Designated Beneficiary are entitled to receive
hereunder shall be paid in equal monthly installments on the first day of each
calendar month; provided, that the first installment shall be paid on the later
of (i) the first day of the calendar month immediately following the Employment
Termination Date or (ii) the date which is fifteen (15) days following the Employment
Termination Date; except that benefits which the Executive is entitled to
receive under the disability income insurance maintained by the Employer, if
any, shall be paid in accordance with the terms of such program.  Further, any
restricted stock grants which have been made to the Executive upon the
achievement of LTI Performance Criteria, any other restricted stock grants to
the Executive, and any outstanding stock options granted to the Executive shall
become fully vested.  Except to the extent otherwise
provided in this Section 4.05(c), the Executive or the Executive's
Designated Beneficiary shall have no right to receive, and the Employer shall
have no further obligation to pay to the Executive, further monthly
installments of Salary or Benefits.  For the purposes of this Agreement, the
Executive's "Designated Beneficiary" means such individual beneficiary
or trust, located at such address as the Executive may designate by written
notice to the Employer from time to time or, if the Executive fails to give
written notice to the Employer of such a beneficiary, the Executive's estate;
provided, however, that, notwithstanding the preceding clause of this sentence,
the Employer shall have no duty under any circumstances to attempt to open an
estate on behalf of the Executive, to determine whether any beneficiary
designated by the Executive is alive, to determine the existence of any trust,
to determine whether any person or entity purporting to act as the Executive's
personal representative (or the trustee of a trust established by the
Executive) is duly authorized to act in that capacity, or to locate or attempt
to locate any beneficiary, personal representative, or trustee. 

 

 

 

 

	
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(d)        Termination within One Year After a
Change in Control.  If the Employment Period is terminated within one year after
a Change of Control (as defined in this Section 4.05(d)), the Executive
shall be entitled to receive (i) two years of compensation based on the
Executive's Actual Aggregate Compensation (as defined in this Section
4.05(d)) for the Employer's fiscal year most recently ended prior to the
Employment Termination Date and (ii) reimbursement for the cost of coverage
for the Executive and his dependents under the group health plan sponsored by
the Employer, or its successor, to the same extent as provided on the date immediately
preceding the Change of Control or immediately preceding the Employment
Termination Date, whichever is more advantageous to the Executive and his
dependents, during the two years following the Employment Termination Date.  For
purposes of clause (ii), the Employer or its successor will reimburse the
Executive for the COBRA premiums for coverage for the Executive and his
dependents until the end of the COBRA continuation coverage period applicable
to the Executive, and for the remainder of the two-year period following the
Employment Termination Date the Employer or its successor will arrange and pay
for similar health insurance coverage; except that the Employer's and
successor's obligation under clause (ii) will expire upon the Executive's
becoming eligible for comparable coverage under another employer's health
benefits plan or program.  All amounts to which the Executive is entitled to
receive hereunder shall, except to the extent otherwise permitted under Section
409A of the Code, be paid at the times prescribed in Section 4.05(b)
above with respect to such payments.  For the purposes of this Agreement, "Change
in Control" shall mean (A) the acquisition of equity securities of the
Employer resulting in the beneficial ownership by the acquiring Person of more
than 50% of the common stock of the Employer, occurring by means of any
transaction or series of related transactions, including, without limitation,
any reorganization, sale of securities, merger, exchange or consolidation, but
excluding any merger or conversion of the Employer effected exclusively for the
purpose of changing the domicile of the Employer or (B) if, during the
Employment Period, the majority of the persons who were serving as directors of
the Board at the beginning of the Employment Period no longer serve as
directors of the Board as the result of an actual or threatened proxy contest.  For
purposes of this Agreement, the Executive's "Actual Aggregate Compensation"
for the fiscal year in question shall mean the sum of (i) the Executive's
Salary for such fiscal year, (ii) the cash bonuses earned by the Executive for
his performance in such fiscal year, and (iii) the value of the long term
incentive compensation awarded to the Executive for his performance in such
fiscal year, as set forth in (or, if not so set forth, measured at the time of)
the resolutions adopted by the Compensation Committee or the independent
members of the Board of Directors, or both, in granting the award.  In
addition, if not otherwise vested because of the Change of Control, any
restricted stock grants which have been made to the Executive upon the achievement
of the LTI Performance Criteria, any other restricted stock grants to the
Executive, and any outstanding stock options granted to the Executive shall
become fully vested.

	
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(e)       Accrued Benefits.  Unless otherwise
required by this Agreement, federal or state law, or the terms of the relevant
plans and agreements providing Benefits hereunder, the Executive's accrual of
the Benefits pursuant to Section 2.02 hereof will cease on the date of
the termination of the Employment Period, and
the Executive will thereafter be entitled to the payment of accrued Benefits
pursuant to such plans only as provided in such plans and agreements.

(f)       
Release.  No amount shall be payable to the Executive under
Section 4.05(b), (c), or (d) following the termination of the
Employment Period unless the Executive (or the Executive's Designated
Beneficiary in the event of termination of employment due to the Executive's
death) signs and delivers to the Employer the General Release attached as Exhibit B
to this Agreement.

(g)      
No Mitigation.  The
Executive shall not be obligated to seek or secure new employment or to become
self-employed after the Employment Termination Date, and except as stated in Section
4.05(b) or Section 4.05(d), there shall be no offset against any
severance payment or other post-employment amount or benefit under this
Agreement on account of any compensation or benefits from any subsequent
employment (including, without limitation, self-employment) that the Executive
may obtain after the Employment Termination Date.

Section 5:         NON-DISCLOSURE COVENANT

5.01     Confidential Information Defined.  For the
purposes of this Section 5, the phrase "Confidential Information"
means any and all of the following information or items that the Employer
treats as confidential: trade secrets concerning the business and affairs of
the Employer or its Affiliates, product specifications, data, know-how,
formulae, compositions, processes, designs, sketches, photographs, graphs,
drawings, samples, inventions and ideas, past, current, and planned research
and development, current and planned distribution methods and processes,
customer lists, current and anticipated customer requirements, price lists,
market studies, business plans, computer software and programs (including
object code, machine code, and source code), computer software and database
technologies, systems, structures, and architecture (and related formulae,
compositions, processes, improvements, devices, know-how, inventions,
discoveries, concepts, ideas, designs, and methods); information concerning the
business and affairs of the Employer or its Affiliates (which includes
historical financial statements, financial projections and budgets, historical
and projected sales, capital spending budgets and plans, the names and backgrounds
of key personnel, personnel training techniques and materials, however
documented); and notes, analysis, compilations, studies, summaries, and other
material prepared by or for the Employer or its Affiliates containing or based,
in whole or in part, on any information included in the foregoing. 
Notwithstanding the foregoing, Confidential Information shall not include any
information that was or became or is or becomes available to the public or to
the Employer's industry other than as a result of a disclosure of such
information by the Executive or any other person under a duty to keep such
information confidential.  

 

8

 

5.02     Executive's Access to the Confidential
Information.  Immediately upon the Executive's execution of this Agreement
and continuing throughout his employment with the Employer, the Employer shall
provide the Executive with access to Confidential Information that Executive
had not previously received.  The Executive acknowledges:  (a) that the
Employer has devoted substantial time, effort, and resources to develop and
compile the Confidential Information; (b) unauthorized or improper public
disclosure of such Confidential Information by the Executive would have an
adverse effect on the Employer and its business; (c) the Employer would not disclose
such information to the Executive, nor employ or continue to employ the
Executive without the agreements and covenants set forth in this Section 5;
and (d) the provisions of this Section 5 are reasonable and necessary to
prevent the improper use or disclosure of Confidential Information. 

5.03     Executive's Nondisclosure Duties
Regarding the Confidential Information.  

(a)        Nondisclosure Commitment. 
The Executive will hold in strictest confidence the Confidential Information
and will not disclose it to any Person (as defined in Section 8 of this
Agreement) except with the specific prior written consent of the Employer or as
may be required by court order, law, government agencies with which the
Employer deals in the ordinary course of its business, or except to the extent
such disclosure is necessary or appropriate for the Executive to perform his
duties under this Agreement.  Any trade secrets of the Employer will be
entitled to all of the protections and benefits afforded under applicable
laws.  If any Confidential Information that the Employer deems to be a trade
secret is ruled by a court of competent jurisdiction not to be a trade secret,
such information will, nevertheless, be considered Confidential Information for
purposes of this Agreement.  The Executive hereby waives any requirement that
the Employer submit proof of the economic value of any trade secret or post a
bond or other security.  The Executive will not remove from the Employer's
premises or record (regardless of the media) any Confidential Information of
the Employer or its Affiliates, except to the extent such removal or recording
is necessary or appropriate for the Executive to perform his duties or as may
be required by court order, law, or governmental agencies with which the Employer
deals in the ordinary course of its business.  The Executive acknowledges and
agrees that all Confidential Information, and physical embodiments thereof,
whether or not developed by the Executive, are the exclusive property of the
Employer or its Affiliates, as the case may be. 

(b)        Third Party Information.  The Executive
recognizes that the Employer and its Affiliates have received and in the future
will receive from third parties their confidential or proprietary information
subject to a duty on the part of the Employer and its Affiliates to maintain
the confidentiality of such information and to use it only for certain limited
purposes.  The Executive agrees that he owes the Employer, its Affiliates, and
such third parties, during the Employment Period and thereafter, a duty to hold
all such confidential or proprietary information in the strictest confidence
and not to disclose it to any Person (except as necessary or appropriate in
carrying out his duties for the Employer consistent with the Employer's
agreement with such third party, or as may be required by court order, law, or
government agencies with which the Employer deals in the ordinary course of its
business), or to use it for the benefit of anyone other than for the Employer
or such third party (consistent with the Employer's agreement with such third
party) without the express written authorization of the Employer or its
Affiliate, as the case may be.

 

 

	
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(b)        Third Party Information.  The Executive
recognizes that the Employer and its Affiliates have received and in the future
will receive from third parties their confidential or proprietary information
subject to a duty on the part of the Employer and its Affiliates to maintain
the confidentiality of such information and to use it only for certain limited
purposes.  The Executive agrees that he owes the Employer, its Affiliates, and
such third parties, during the Employment Period and thereafter, a duty to hold
all such confidential or proprietary information in the strictest confidence
and not to disclose it to any Person (except as necessary or appropriate in
carrying out his duties for the Employer consistent with the Employer's
agreement with such third party, or as may be required by court order, law, or
government agencies with which the Employer deals in the ordinary course of its
business), or to use it for the benefit of anyone other than for the Employer
or such third party (consistent with the Employer's agreement with such third
party) without the express written authorization of the Employer or its
Affiliate, as the case may be.

(c)        Returning Employer Property.  The
Executive agrees that, at the time of the termination of the Employment Period,
he will deliver to the Employer  (and will not keep in his possession or
deliver to any other Person) any and all devices, records, data, notes,
reports, proposals, lists, correspondence, specifications, drawings,
blueprints, sketches, materials, equipment, other documents or property, or
reproductions of any of the aforementioned items or any property belonging to
the Employer or any of its Affiliates, and their respective successors or
assigns, regardless of whether such items are represented in tangible,
electronic, digital, magnetic or any other media, to the extent that any of the
foregoing are in the Executive's possession or within his control.  In the
event of the termination of the Employment Period, the Executive agrees to promptly
sign and deliver to the Employer the "Termination Certification"
attached hereto as Exhibit C.

5.04     Disputes or Controversies.  The Executive
recognizes that should a dispute or controversy arising from or relating to
this Agreement be submitted for adjudication to any court or other third party,
the preservation of the secrecy of Confidential Information may be
jeopardized.  All pleadings, documents, testimony, and records in Executive's
possession or under his control relating to any such adjudication will be
maintained in secrecy and will be available for inspection by the Employer, the
Executive, and their respective attorneys and experts, who will agree, in
advance and in writing, to receive, use, and maintain all such Confidential
Information in secrecy, except as may be agreed by them in writing.

Section 6:         NON-COMPETITION AND NON-INTERFERENCE

6.01     Restrictive Covenants.  The
Executive agrees that the Employer's
commitment described in Section 5.02 above to provide its Confidential
Information to him gives rise to the Employer's interest in restraining
Executive from competing against it and that the restrictions in this Section
are designed to enforce Executive's promise in Section 5.03 not to use
or disclose Confidential Information belonging to the Employer, except as
permitted in Section 5.03.  The Executive agrees that the restrictions
in this Section are reasonable and do not impose a greater restraint than is
necessary to protect the goodwill or other business interests of the Employer. 
For these reasons, the Executive agrees to the following:

 

 

	
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(a)        Noncompete.  During the Restricted Period,
the Executive will not, directly or indirectly, on behalf of himself or any
other person or entity, engage or invest in, own, manage, operate, finance,
control, or participate in the ownership, management, operation, financing, or
control of, be employed by, associated with, or in any manner connected with,
lend the Executive's name or any similar name to, lend the Executive's credit
to or render services that are similar to the services he rendered to the
Employer under this Agreement to any business engaged or about to become
engaged in the Business of the Employer, or any of its Affiliates, in the
Market Area (defined below).  For purposes of this Agreement, the "Business"
of the Employer is providing recovery, restoration,
rebuilding/remodeling, and other specialty interior services to residential and
commercial properties.  Nothing in this Section shall prohibit the Executive
from purchasing or owning less than 5% of the stock of a publicly owned
Business.

(b)        Solicitation of Customers.  During the
Restricted Period the Executive will not, directly or indirectly, on behalf of
himself or any other person or entity, solicit a Current Customer (as defined in
Section 8 below) of the Employer or its Affiliates with whom he had
contact during the Employment Period, for purposes of selling products or
services to such Current Customer that are in competition with the products and
services offered or sold by the Employer or its Affiliates as part of the
Business.

(c)        Solicitation of Employees.  During the
Restricted Period the Executive will not, directly or indirectly, on behalf of
himself or any other person or entity, employ any current employee of the
Employer or its Affiliates or any individual who was an employee of the
Employer or its Affiliates at any time during Term, and will not solicit any
employee of the Employer or its Affiliates for the purpose of encouraging such
employee to leave or terminate his or her employment with the Employer or its
Affiliates.

(d)        Solicitation of Vendors.  During the
Restricted Period the Executive will not, either directly or indirectly, on
behalf of himself or any other person or entity, solicit a current vendor or
supplier of the Employer or its Affiliates for purposes of encouraging such
vendor or supplier to cease or diminish providing products or services to the
Employer or its Affiliates, or to change adversely to the Employer or its
Affiliates the terms under which such vendor or supplier provides such products
or services to the Employer or its Affiliates.

(e)        Non-interference.  Following the
termination of the Employment Period, the Executive will not, either directly
or indirectly, access the Employer's computer systems, download files or any
other information from the Employer's computer systems or in any way interfere,
disrupt, modify or change any computer program used by the Employer or any data
stored on the Employer's computer systems.

(f)         Restricted Period.  For
purposes of this Section 6.01, the term "Restricted Period" means
the period commencing with the Effective Date and terminating two years after
the Employment Termination Date.

(g)        Market Area.  For purposes of this Section
6.01, the term "Market Area" includes any state or province in
which, during the Employment Period, (i) the Employer has provided goods or
services and (ii) the Executive has overseen, directed, managed, or otherwise
participated in the operations of the Employer.

 

 

	
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6.02     Scope.  The Executive acknowledges and
agrees that the geographic area, length and scope of the restrictions contained
in Section 6.01 are reasonable and necessary to protect the legitimate
business interests of the Employer.  The duration of the agreements contained
in Section 6.01 shall be extended for the amount of any time of any
violation thereof and the time, if greater, necessary to enforce such
provisions or obtain any relief or damages for such violation through the court
system.  The Employer may, at any time on written notice approved by its Board
of Directors, reduce the geographic area, length or scope of any restrictions
contained in Section 6.01 and, thereafter, the Executive shall comply
with the restriction as so reduced, subject to subsequent reductions.  If any
covenant in Section 6.01 of this Agreement is held to be unreasonable,
arbitrary, or against public policy, such covenant will be considered to be
divisible with respect to scope, time, and geographic area, and such lesser
scope, time, or geographic area, or all of them, as an arbitrator or a court of
competent jurisdiction may determine to be reasonable, not arbitrary, and not
against public policy, will be effective, binding, and enforceable against the
Executive.  In the event of termination of the Executive's employment with the
Employer for any reason, the Executive shall inform any subsequent employer within
the Restricted Period (if applicable) of the continuing restrictions and obligations
imposed on the Executive under this Agreement.

6.03     Required
Notice.  Executive agrees that during the Restricted Period following the
termination of his employment with Employer, he will provide Employer with
written notice of any new employment within 30 days after he commences that employment. 
The notice will identify the Executive's new employer and include the
Executive's representation that he has informed his new employer of his applicable
confidentiality and other obligations under this Agreement. 

Section
7:         GENERAL PROVISIONS

7.01     Injunctive Relief and Additional Remedy. 
The Executive acknowledges that the injury that would be suffered by the
Employer as a result of a breach of the provisions of Sections 5 or 6
hereof might be irreparable and that an award of monetary damages to the
Employer for such a breach would be an inadequate remedy.  Consequently, the
Employer will have the right, in addition to any other rights it may have, to
obtain injunctive relief to restrain any breach or overtly threatened breach or
otherwise to specifically enforce the provisions of Sections 5 and 6
hereof.

7.02     Covenants of Sections 5 and 6 are Essential
Covenants.  The covenants by the Executive in Sections 5 and 6
are essential elements of this Agreement, and without the Executive's agreement
to comply with such covenants, the Employer would not have entered into this
Agreement or employed or continued the employment of the Executive.  The
Employer and the Executive have independently consulted their respective
counsel and have been advised in all respects concerning the reasonableness and
propriety of such covenants, with specific regard to the nature of the business
conducted by the Employer.  If, following the Employment Period, the Employer
has any obligation to pay severance or other amounts to or for the benefit of
the Executive or provide any Benefits to the Executive and the Employer has
failed to pay such severance or other amounts and/or provide such Benefits when
due under this Agreement, then after written notice to the Employer regarding
the failure to pay such severance or other amounts or provide such Benefits and
a reasonable time to cure such failures, the Executive's obligations under Section 6
shall terminate.

 

 

	
  12

  

 

7.03     Representations and Warranties by the Executive. 
The Executive represents and warrants to the Employer that (a) the Executive
has never taken any action of the types set forth in Section 4.03(b)
though (f) and (b) the execution and delivery by the Executive of this
Agreement does not, and the performance by the Executive of the Executive's
obligations hereunder will not, with or without the giving of notice or the
passage of time, or both: (i) violate any judgment, writ, injunction, or order
of any court, arbitrator, or governmental agency applicable to the Executive;
or (ii) conflict with, result in the breach of any provisions of or the
termination of, or constitute a default under, any agreement to which the
Executive is a party or by which the Executive is or may be bound.

7.04     Binding Effect; Delegation of Duties Prohibited. 
This Agreement shall inure to the benefit of, and shall be binding upon, the
parties hereto and their respective successors, assigns, heirs, and legal
representatives, including any entity with which the Employer may merge or
consolidate or to which all or substantially all of its assets may be
transferred, and the Employer agrees it will not assign or delegate any of its
obligations under this Agreement other than as part of any merger,
consolidation, or transfer of all or substantially all of its assets, and in
the event of such assignment, the Employer agrees that it will obtain from the
legal successor of this Agreement an assumption of the Employer's obligations
hereunder (although no such assumption shall be required if the successor
assumes such obligations by operation of law).  The covenants of the Executive
under this Agreement, being personal, may not be delegated.

7.05     Notices.  All notices, consents, waivers,
and other communications under this Agreement must be in writing and will be
deemed to have been duly given and delivered when (a) delivered by hand (with
written confirmation of receipt), (b) sent by facsimile (with written
confirmation of receipt), provided that a copy is mailed by registered mail,
return receipt requested, or (c) when received by the addressee, if sent by a
nationally recognized overnight delivery service (receipt requested) or, (d) on
the fifth business day after mailing or when received by the addressee,
whichever is earlier, if mailed by registered or certified mail, postage
prepaid and return receipt requested, in each case to the appropriate addresses
and facsimile numbers set forth below (or to such other addresses and facsimile
numbers as a party may designate by notice to the other parties):

           

	If to Employer:	

Home Solutions of America, Inc.

		
	 	

1500 Dragon Street, Suite B

		
	 	

Dallas, TX 75207

		
	 	

Facsimile:
(214) 333-9435

		
	 	  
	With a copy to:	

Melissa Youngblood, Esq.

		
	 	

Hallett
& Perrin, P.C.

		
	 	

2001 Bryan Street, Suite 3900

		
	 	

Dallas, TX 75201

		
	 	

Facsimile:
(214) 922-4170

		

                                                

 

	
  13

  

 

	If to the Executive:	Rick J. O'Brien
	 	1500 Dragon Street, Suite B
	 	Dallas, TX 75207
	 	Facsimile: (214) 333-9435

7.06     Entire Agreement; Amendments.  This
Agreement contains the entire agreement between the parties with respect to the
subject matter hereof and supersedes all prior agreements and understandings,
oral or written, between the parties hereto with respect to the subject matter
hereof; except that this Agreement does not affect any existing equity
compensation plan or agreement between the parties.  This Agreement may be
amended only by an agreement in writing signed by the parties hereto.

7.07     GOVERNING LAW; VENUE.  THIS AGREEMENT SHALL BE GOVERNED BY, ENFORCED UNDER, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS RULES OR CHOICE OF LAWS RULES THEREOF. 
VENUE FOR ANY ACTION BROUGHT HEREUNDER SHALL BE IN DALLAS COUNTY, TEXAS.

7.08     Headings; Construction.  The headings in
this Agreement are provided for convenience only and will not affect its
construction or interpretation.  All references to "Section" or "Sections"
refer to the corresponding Section or Sections of this Agreement unless
otherwise specified.  All words used in this Agreement will be construed to be
of such gender or number as the circumstances require. 

7.09     Severability.  If any provision of this
Agreement is held invalid or unenforceable by an arbitrator or any court of
competent jurisdiction, the other provisions of this Agreement will remain in
full force and effect.  Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to
the extent not held invalid or unenforceable.

7.10     Counterparts.  This Agreement may be
executed in one or more counterparts, including by facsimile signature, each of
which will be deemed to be an original copy of this Agreement and all of which,
when taken together, will be deemed to constitute one and the same agreement.

7.11     Survival of Obligations.  The obligations
of the Employer and the Executive under this Agreement which by their nature
may require either partial or total performance after the expiration of the
Term shall survive such expiration.

7.12     Withholding and Set Off.  All payments and
benefits made or provided under this Agreement shall be subject to withholding
as required under applicable law.  The Employer is further authorized to
withhold and setoff against any such payments and benefits any amounts that the
Executive owes the Employer, whether as a result of any breach of this
Agreement or otherwise.

	
  14

  

 

            7.13     Arbitration. 
Any controversy or claim arising out of or relating to this Agreement, or the
Executive's employment by the Employer under this Agreement, shall be settled
by arbitration in accordance with the Employment Arbitration Rules and
Mediation Procedures of the American Arbitration Association ("AAA"),
and judgment rendered by the arbitrator may be entered in any court having
jurisdiction thereover.  Provided, however, that nothing in this Section shall
be construed as to deny the Employer or the Executive the right and power to
seek and obtain injunctive relief in a court of competent jurisdiction for any
breach or threatened breach of the covenants in this Agreement.  The
arbitration shall be conducted in Dallas, Texas, unless otherwise agreed by the
parties thereto. A party hereto shall initiate
arbitration by sending written notice of its intention to arbitrate to the
other party and to the AAA office located in Dallas, Texas.  Parties shall have
the same period of time to file claims as provided by the applicable statute of
limitation for such claim.  Such written notice will contain a description of
the dispute and the remedy sought.  In the event that the parties have not
mutually agreed on an acceptable arbitrator within thirty (30) days after the
demand for arbitration is filed, the arbitrator shall be appointed in the
manner provided by the AAA's Employment Arbitration Rules and Mediation
Procedures.  The decision of the arbitrator will be final and binding on the
parties hereto and their successors and assignees.  Where consistent with
applicable law, the arbitrator shall have the authority to order the non-prevailing
party to pay the prevailing party's attorney's fees and all costs of the
arbitration.  The parties will participate in good faith in a non-binding
mediation of their dispute at least 60 days prior to the date of the
arbitration hearing.  The parties shall jointly select the mediator but if they
are unable to agree on a mediator, then the arbitrator shall appoint the
mediator.  The parties hereto intend that this agreement to arbitrate be
irrevocable.

            7.14     Income
Taxation of Deferred Payments.  This Agreement shall be administered
subject to and in compliance with the requirements of Section 409A of the Code. 
The parties acknowledge that there are uncertainties in regard to the
interpretation of Section 409A and agree to cooperate in good faith to preserve
their respective economic rights and obligations in light of future amendments
to, regulations under, or interpretations of Section 409A.

Section
8:         CERTAIN DEFINITIONS

In and for purposes of this Agreement, the following terms
shall have the meanings indicated below:

"Affiliate" shall mean, as to any Person, any Person
controlled by, controlling, or under common control with such Person, and, in
the case of a Person who is an individual, a member of the family of such
individual consisting of a spouse, sibling, in-law, lineal descendant, or
ancestor (including by adoption), and the spouses of any such individuals.  For
purposes of this definition, "control" (including the terms "controlling",
"controlled by" and "under common control with") of a Person means the
possession, directly or indirectly, alone or in concert with others, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of securities, by contract or otherwise,
and no Person shall be deemed in "control" of another solely by virtue of being
a director, officer or holder of voting securities of any entity.  A Person
shall be presumed to "control" any partnership of which such Person is a
general partner.

	
  15

  

 

"Code" shall mean the Internal Revenue Code of 1986,
as amended.

"Current Customer" shall mean any person or entity
who is currently utilizing any product or service sold or provided by the
Employer through the facility managed by the Executive; any person or entity
who utilized any such product or service within the previous 12 months; and any
person or entity with whom the Employer or any of its Affiliates is currently
conducting negotiations concerning the utilization of such products or
services.

"Employment
Period" shall mean the period during which the Executive
has an obligation under this Agreement to render to the Employer all or any
portion of the services described in Section 1.03 of this Agreement. 

"Person" shall have the meaning given in Section
3(a)(9) of the Securities Exchange Act of 1934, as amended, as modified and
used in Sections 13(d)(3) and 14(d)(2) of such act.  

 

 

 

 

 

 

	
  16

  

 

IN WITNESS WHEREOF, the parties have executed
and delivered this Agreement as of the date first written above.

EMPLOYER:

 

HOME SOLUTIONS OF
AMERICA, INC.

 

	
  By:      /s/ Frank
	J. Fradella                                  
	
  

	
  Name: Frank J. Fradella                                   

  
	
  Title:    
	Chief Executive Officer                         

  

EXECUTIVE:

/s/  Rick
J. O'Brien                                           

Rick
J. O'Brien

 

	

  Agreed as to Paragraphs A, B, and C of the Recitals:

 

  
	
  FIBER-SEAL SYSTEMS, L.P.

  
	
    

  
	
  By: FSS Holding Corp.

  Its:  General Partner

  
	
    

  
	
  By: /s/ Jeffrey M. Mattich               
	

  
	
  Name: Jeffrey M. Mattich              
	

  
	
  Title: CFO                                     
	

  

	
   

	 

	 

	 

	 

	 

  

17

 

EXHIBIT A

	
  Executive Compensation Plan - Rick J. O'Brien,
  President and COO

  Fiscal Years 2006 and 2007

 

  
	
  Annual
  Base Salary:

  	
  $250,000.00,
  payable in accordance with the Company's current payroll procedures 

  
	
   	
   
	
  Level
  I Bonus Potential:

  	
  up
  to $150,000.00 annually, (60% of Annual Base Salary), based on achievement of
  Level I Bonus Performance Criteria (see Page A-2) 

  
	
   	
   
	
  Level
  II Bonus Potential:

  	
  up
  to $100,000.00 annually, (40% of Annual Base Salary), based on achievement of
  Level II Bonus Performance Criteria (see Page A-2) 

  
	
   	
   
	
  Long Term Incentive
  Compensation ("LTI"):

  	
  Restricted
  Common Stock grants under the Company's 2001 Stock Option Plan, or any other
  plan adopted by the Company, valued in an amount up to $187,500.00 annually
  (75% of Annual Base Salary), based on achievement of LTI Performance Criteria
  (see page A-2), vesting monthly in thirty-six equal increments over three
  years (subject to acceleration of vesting as agreed by the Company)

  
	
   	
   
	
  Additional Cash and Equity
  Compensation:

  	
  May
  be granted at the discretion of the Independent Board Members upon
  recommendation by the Compensation Committee

  
	
   	
   
	
  Potential Value of Aggregate
  Remuneration Annually  (based on Annual Base Salary, full achievement of
  Level I Bonus, Level II Bonus, and LTI without additional compensation):

  	

  $687,500.00
  

  

A-1

	
  Performance Criteria For Executive Officers - Fiscal
  Years 2006 and 2007

  
	
   
	
  General:

  	
  The
  annual Level I Bonus, Level II Bonus, and LTI awards (collectively, the "Awards")
  shall be granted to the executive officers based upon both Objective Criteria
  and Subjective Criteria, as described below.  All Level I Bonus, Level II
  Bonus, and LTI awards are discretionary and subject to the approval of the
  Compensation Committee and the Independent Board Members.  

  
	
   	
   
	
  Objective Criteria:

  	
  The
  Objective Criteria for each Award shall be based on one or more measures of
  the Company's performance for the fiscal year, such as revenues, operating
  income, EBITDA, net income, EPS, aggregate indebtedness, net working capital,
  and stockholders equity, as compared to the budget for such fiscal year
  adopted prior to the commencement of such fiscal year (the "Budget"),
  as determined by the Compensation Committee and the Independent Board
  Members.  In analyzing the performance of the Company as compared to the
  Budget for such fiscal year, the Compensation Committee and the Independent
  Board Members may disregard the impact on the Company's financial statements
  of any acquisitions that occurred during such fiscal year (as the impact of
  such acquisitions would not have been included in the Budget).

  
	
   	
   
	
  Level I Bonus Performance
  Criteria:

  	
  For
  the executive to be eligible for the Level I Bonus, the Company must have
  achieved at least 100% of the Objective Criteria determined by the
  Compensation Committee as compared to the Budget for the fiscal year
  in question.   For example, if the Objective Criteria consists of EBITDA and
  EPS, then in order for the executive to be eligible for the Level I Bonus,
  the performance of the Company for the fiscal year in question, as verified
  by the Company's audited financial statements for that year, must be equal to
  or greater than 100% of the Budget amount of EBITDA and EPS for the fiscal
  year in question.  

  
	
   	
   
	
  Level II Bonus Performance
  Criteria:

  	
  For
  the executive to be eligible for the Level II Bonus, the Company must have
  achieved at least 120% of the Objective Criteria determined by the Committee
  as compared to the Budget for the fiscal year in question.  For example, if
  the Objective Criteria consists of EBITDA and EPS, then in order for the
  executive to be eligible for the Level II Bonus, the performance of the
  Company for the fiscal year in question, as verified by the Company's audited
  financial statements for that year, must be equal to or greater than 120% of
  the Budget amount of EBITDA and EPS for the fiscal year in question.  

  
	
   	
   

A-2

	
  Long
  Term Incentive Compensation Performance Criteria:

  	
  For
  the executive to be eligible for the LTI, the Company must have achieved 
  90%-120% of the Objective Criteria set forth on the Budget for the fiscal
  year in question, with the amount of LTI to be granted to be proportionate to
  the level of Company's achievement within the 90-120% range. For example, if
  the Objective Criteria consists of EBITDA and EPS, then in order for the
  executive to be eligible for the LTI, the performance of the Company for the
  fiscal year in question, as verified by the Company's audited financial
  statements for that year, must be in the range of 90% to 120% of the Budget
  amount of EBITDA and EPS for the fiscal year in question.  

  
	
   	
   
	
  Subjective Criteria:

  	
  In
  determining whether to grant each Award and the amount and type of the Awards
  (within the levels stated above) to be granted to the executive, the
  Compensation Committee and the Independent Board Members shall give
  consideration to various subjective criteria that they deem material to the
  performance of the executive, including the Company's public market
  capitalization, the position of the Company's assets and business operations
  in various geographic markets and industry segments, long term growth
  opportunities, enhancement of stockholder value and strategic objectives to
  ensure the survival and growth of the Company, customer satisfaction, public
  relations and similar variables appropriate to the executive's duties and
  performance in the fiscal year in question.  

  
	
   	
   
	
  Award Terms and Payment
  Policies:

  	
  The
  Awards, if any, shall be based upon the Company's audited financial
  statements for the fiscal year in question and shall be paid or issued in the
  calendar year in which the Company's financial statements for the fiscal year
  in question are audited.    

  
	
   	
   
	
  Compliance
  with Tax Laws: 

  	
  Any
  Award issued under the Executive Compensation Plan that constitutes a
  deferral of compensation under a "nonqualified deferred compensation plan",
  as such term is defined under Section 409A(d)(1) of the Internal Revenue Code
  (the "Code") (or a successor provision thereto), shall comply with the
  requirements of Section 409A of the Code (or a successor provision thereto)
  and applicable guidance published in the Internal Revenue Bulletin.

  

 

 

A-3

 

EXHIBIT B

GENERAL RELEASE

            For good and
sufficient consideration, including but not limited to payments which Home
Solutions of America, Inc. (the "Company") would not be obligated to pay
to Rick J. O'Brien ("O'Brien") without O'Brien signing this Release, the
receipt and sufficiency of which is hereby acknowledged, O'Brien does hereby
forever release, remise, and discharge for himself and his heirs, executors,
legal representatives, administrators, successors and assigns, the Company, its
shareholders, directors, officers, employees and agents and their respective
heirs, executors, administrators, successors, legal representatives and
assigns, and all persons or entities related to or affiliated with any of the
aforementioned persons (the "Releasees") of and from all claims, causes
of action, suits, debts, agreements, promises and demands, of whatever nature
or kind, in law or in equity which O'Brien now has, ever had, or but for this
release hereafter would or could have against any of the Releasees arising in
any manner out of O'Brien's employment with the Company and/or O'Brien's
serving as an officer and/or director of the Company or any affiliated entity.

            O'Brien warrants that
he has read this General Release and fully understands it to be a compromise
and settlement and release of all claims, known or unknown, present or future,
that the undersigned has or may have against the Company and its affiliates as
described above.

Home Solutions of America, Inc.

		By:	 	 
	

 
	 	
			Rick J. O'Brien
	 	 	 
	 	 	 
	 	 	 
	

Date Signed
	 	
			Date Signed

 

 

 

 

B-1

EXHIBIT C

TERMINATION
CERTIFICATION

            I
hereby certify that my employment with Home Solutions of America, Inc. (the "Company")
has terminated effective as of ______________________________, and that as of
________________________________, I have fully complied with all of my
obligations in Section 5.03(c) of the Amended and Restated Employment
Agreement I entered into with the Company as of September 8, 2006.

                                                                       

Rick
J. O'Brien

 

                                                                       

Date
signed 

 

 

 

 

 

 

 

C-1

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