Document:

Filed by Bowne Pure Compliance

 

Exhibit
10.1

FIRST AMENDMENT TO CREDIT AGREEMENT

THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as of March 30,
2007, is between HOME SOLUTIONS OF AMERICA, INC., a Texas corporation (the “Borrower”),
each of the Lenders that is a signatory hereto (individually, together with its successors and
assigns, a “Lender”, and collectively the “Lenders”), and TEXAS CAPITAL BANK, N.A.,
a national banking association (in its individual capacity, “TCB”), and as administrative
agent for the Lenders (in such capacity, together with its successors in such capacity, the
“Administrative Agent”).

R E C I T A L S:

A. Borrower, Administrative Agent and Lenders entered into that certain Credit Agreement dated
November 1, 2006 (as may be amended, modified or supplemented from time to time, the
“Agreement”), pursuant to which Lenders made revolving credit loans and term loans
available to Borrower under the terms and provisions stated therein.

B. Borrower has requested an amendment of certain provisions of the Agreement.

C. Borrower, Administrative Agent and Lenders now desire to amend the Agreement, subject to
the performance and observance in full of each of the covenants, terms and conditions as herein set
forth herein.

NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable
considerations, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

ARTICLE I

Definitions

Section 1.1 Definitions. Capitalized terms used in this Amendment, to the extent not
otherwise defined herein, shall have the same meaning as in the Agreement, as amended hereby.

ARTICLE II

Amendment to Agreement 

Section 2.1 Amendments to Section 1.1 (Definitions). (a) The definition of “Borrowing
Base” found in Section 1.1 of the Agreement is amended and restated in its entirety to read as
follows:

“Borrowing Base” means, at any time based on the current
Borrowing Base Report, an amount equal to the sum of (a) until the
Increase Trigger Date and on January 1, 2008 and thereafter 80% of
the value of Eligible Accounts Receivable, and from the Increase
Trigger Date through December 31, 2007 85% of the value of Eligible
Accounts Receivable plus (b) 50% of the value of
Eligible Poe Receivables, plus (c) the lesser of (i) $5,000,000 and
(ii) 50% of the value of Eligible Inventory.

First Amendment to Credit Agreement

 

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(b) The definition of “Current Ratio” found in Section 1.1 of the Agreement is amended
by inserting at the end of the definition the following sentence:

In addition, Subordinated Debt will not be included in current
liabilities.

(c) The following definition is added, in alphabetical order, to Section 1.1 of the
Agreement:

“Increase Trigger Date” means March 31, 2007 provided that
(a) the Administrative Agent receives a field audit of the
Collateral and systems of the Borrower and the Guarantors from Freed
Maxick satisfactory to it and the Majority Lenders and (b) the
Borrower delivers to the Administrative Agent and the Lenders the
initial monthly Borrowing Base Report contemplated in Section 7.1(e)
hereof.

Section 2.2 Amendment to Section 2.1(b)(iii) (Interest). The parties have agreed that
the interest rate on Revolving Credit Advances shall remain at the Base Rate minus 0.25 percentage
points through December 31, 2007; consequently, the first sentence of Section 2.1(b)(iii) of the
Agreement is amended and restated in its entirety to read as follows:

The unpaid principal amount of the Revolving Credit Advances shall,
subject to the following sentence, bear interest (A) for the period
beginning with the first Advance through and including December 31,
2007, at the Base Rate minus 0.25 percentage points and (B) at all
times thereafter, at the Base Rate minus 0.50 percentage points.

Section 2.3 Amendment to Section 2.1(c)(iii) (Interest). The parties have agreed that
the interest rate on the unpaid principal amount of the Term Loan shall remain at the Base Rate
minus 0.25 percentage points through December 31, 2007; consequently, the first sentence of Section
2.1(c)(iii) of the Agreement is amended and restated in its entirety to read as follows:

The unpaid principal amount of the Term Loan shall, subject to the
following sentence, bear interest (A) for the period beginning with
the first Advance through and including December 31, 2007, at the
Base Rate minus 0.25 percentage points and (B) at all times
thereafter, at the Base Rate minus 0.50 percentage points.

Section 2.4 Amendment to Section 7.1(e) (Borrowing Base Report). The parties have
agreed that advances shall be governed by a monthly Borrowing Base Report; consequently, Section
7.1(e) of the Agreement is amended and restated in its entirety to read as follows:

First Amendment to Credit Agreement

 

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(e) Borrowing Base Report. As soon as available, and in any
event within 50 days after the end of each calendar quarter until
the
Increase Trigger Date and within 30 days after the end of each month
after the Increase Trigger Date, a Borrowing Base Report, certified
by the chief financial officer of the Borrower, which Borrowing Base
Report shall be accompanied by the details of calculation thereof
and by an accounts receivable aging summary and detailed aging
reports, in each case by entity, and shall be based upon publicly
available financial information contained in the Borrower’s Form
10-K and Form 10-Q reports, as applicable and such other non-public
information as may be necessary to accurately report the Borrowing
Base in detail;

Section 2.5 Amendment to Section 9.3 (Maximum Leverage Amount). The parties have
agreed that the maximum leverage amount shall increase for the period beginning January 1, 2007
through December 31, 2007; consequently, Section 9.3 of the Agreement is amended and restated in
its entirety as follows:

Section 9.3 Maximum Leverage Amount. The Borrower will not
allow total Debt, including Letter of Credit Liabilities, to exceed
(a) at any time prior to December 31, 2006, Free Cash Flow of the
Borrower and Subsidiaries for the preceding two calendar quarters
times two and one half (2.5) minus (i) Aged Receivables
plus (ii) Aged Accounts Receivable Reserves; (b) from
January 1, 2007 through December 31, 2007, Free Cash Flow of the
Borrower and Subsidiaries for the preceding two calendar quarters
times three (3) minus (i) Aged Receivables plus (ii)
Aged Accounts Receivable Reserves; and (c) at all times from and
after January 1, 2008, Free Cash Flow of the Borrower and
Subsidiaries for the preceding two calendar quarters times two (2)
minus (i) Aged Receivables plus (ii) Aged Accounts
Receivable Reserves.

Section 2.6 Amendment to Exhibit A (Borrowing Base Report). On the Increase Trigger
Date, Exhibit A to the Agreement is hereby amended, and all the references in the Loan Documents to
Exhibit A are hereby deemed to be references to the attached Exhibit A.

Section 2.7 Amendment to Exhibit B (Compliance Certificate). Exhibit B to the
Agreement is hereby amended, and all the references in the Loan Documents to Exhibit B are hereby
deemed to be references to the attached Exhibit B.

ARTICLE III

Conditions Precedent

Section 3.1 Conditions. This Amendment shall be effective upon the satisfaction of
the following conditions precedent:

(a) Administrative Agent shall have verified or received all of the following (in the
case of documents, each dated or verified not later than (unless otherwise
indicated) the date of this Amendment, in form and substance satisfactory to
Administrative Agent):

First Amendment to Credit Agreement

 

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(i) This Amendment duly executed by Borrower, Administrative Agent and Lenders.

(ii) Payment by Borrower of a $100,000.00 amendment fee.

(iii) Receipt by the Administrative Agent of a backlog report, in such detail
as the Administrative Agent may require, of projects currently in progress and of
progress billings.

(iv) Receipt of a company-wide accounts receivable aging summary, in form and
in such detail acceptable to the Administrative Agent.

(v) Receipt of billing, accounts receivable and accounts payable agings for the
Eligible Poe Receivables related to the del Mar and Vista projects, in form and in
such detail acceptable to the Administrative Agent.

(vi) Receipt of quarterly budget and projections reports for 2007, in form and
in such detail acceptable to the Administrative Agent.

(vii) Receipt of an opinion of Borrower’s counsel satisfactory to the
Administrative Agent.

(viii) Such additional documents, instruments and information as Administrative
Agent or its legal counsel, Winstead PC, may reasonably request.

(b) The representations and warranties contained herein and in all other Loan
Documents, as amended hereby, shall be true and correct in all material respects as of the
date hereof as if made on the date hereof.

(c) After giving effect to this Amendment, no Event of Default shall have occurred and
be continuing and no event or condition shall have occurred and be continuing that with the
giving of notice or lapse of time or both would be an Event of Default.

(d) All corporate proceedings taken in connection with the transactions contemplated by
this Amendment and all documents, instruments, and other legal matters incident thereto
shall be reasonably satisfactory to the Administrative Agent and its legal counsel, Winstead
PC.

ARTICLE IV

Ratifications, Representations and Warranties

Section 4.1 Ratifications. The terms and provisions set forth in this Amendment shall
modify and supersede all inconsistent terms and provisions set forth in the Agreement and except as
expressly modified and superseded by this Amendment, the terms and provisions of the
Agreement are ratified and confirmed and shall continue in full force and effect. Borrower
and Lenders agree that the Agreement as amended hereby shall continue to be legal, valid, binding
and enforceable in accordance with its terms.

First Amendment to Credit Agreement

 

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Section 4.2 Representations and Warranties. Borrower hereby represents and warrants
to Lenders that (i) the execution, delivery and performance of this Amendment and any and all other
Loan Documents executed and/or delivered in connection herewith have been authorized by all
requisite organizational action on the part of Borrower and will not violate the organizational
documents of Borrower, (ii) the resolutions delivered in connection with the Agreement remain in
full force and effect; (iii) after giving effect to this Amendment, the representations and
warranties contained in the Agreement, as amended hereby, and any other Loan Document are true and
correct in all material respects and as of the date hereof as though made on and as of the date
hereof, (iv) after giving effect to this Amendment, no Event of Default has occurred and is
continuing and no event or condition has occurred and is continuing that with the giving of notice
or lapse of time or both would be an Event of Default, (v) after giving effect to this Amendment,
Borrower is in full compliance in all material respects with all covenants and agreements contained
in the Agreement as amended hereby, and (vi) it has read, understood and will comply with the
restrictions on payments contained in the subordination agreements relating to the Subordinated
Debt, which restrictions prohibit, among other things, payment while an Event of Default exists.

ARTICLE V

Miscellaneous

Section 5.1 Reference to the Agreement. Each of the Loan Documents, including the
Agreement and any and all other agreements, documents or instruments now or hereafter executed and
delivered pursuant to the terms hereof or pursuant to the terms of the Agreement as amended hereby,
are hereby amended so that any reference in such Loan Documents to the Agreement shall mean a
reference to the Agreement as amended hereby.

Section 5.2 Expenses of Administrative Agent; Etc. As provided for in the Agreement,
Borrower agrees to pay on demand all reasonable costs and expenses incurred by Administrative Agent
in connection with the preparation, negotiation, and execution of this Amendment, and the other
Loan Documents executed pursuant hereto and any and all matters related to the Loan Documents
including, without limitation, the reasonable fees and expenses of Administrative Agent’s legal
counsel, and all reasonable costs and expenses incurred by Administrative Agent (including legal
fees and expenses) in connection with the administration of the Loan Documents and the enforcement
or preservation of any rights under the Agreement, as amended hereby, or any other Loan Documents.

Section 5.3 Severability. Any provisions of this Amendment held by court of competent
jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this
Amendment and the effect thereof shall be confined to the provisions so held to be invalid or
unenforceable.

First Amendment to Credit Agreement

 

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Section 5.4 Applicable Law. This Amendment and all other Loan Documents executed
pursuant hereto shall be governed by and construed in accordance with the laws of the State of
Texas.

Section 5.5 Successors and Assigns. This Amendment is binding upon and shall inure to
the benefit of Lenders and Borrower and their respective successors and assigns.

Section 5.6 Counterparts. This Amendment may be executed in one or more counterparts,
each of which when so executed shall be deemed to be an original but all of which when taken
together shall constitute one and the same instrument.

Section 5.7 Headings. The headings, captions, and arrangements used in this Amendment
are for convenience only and shall not affect the interpretation of this Amendment.

Section 5.8 NO ORAL AGREEMENTS. THIS AMENDMENT AND ALL OTHER INSTRUMENTS, DOCUMENTS
AND AGREEMENTS EXECUTED AND DELIVERED IN CONNECTION HEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES, AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

[Intentionally Left Blank; Signature Page Follows]

First Amendment to Credit Agreement

 

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EXECUTED as of the day and year first above written.

	 	 	 	 	 
	 	 	BORROWER:
	 
	 	 	 	 
	 	 	HOME SOLUTIONS OF AMERICA, INC.
	 
	 	 	 	 
	 
	 	By:	 	/s/ Jeffrey M. Mattich
	 

	 	 	 	 
	 
	 	 	 	Jeffrey M. Mattich
	 
	 	 	 	Chief Financial Officer
	 
	 	 	 	 
	 	 	ADMINISTRATIVE AGENT:
	 
	 	 	 	 
	 	 	TEXAS CAPITAL BANK, N.A.
	 
	 	 	 	 
	 
	 	By:	 	/s/ Ronald K. Baker
	 
	 	 	 	 
	 
	 	 	 	Ronald K. Baker
	 
	 	 	 	Executive Vice President

First Amendment to Credit Agreement — Signature Page

 

 

 

	 	 	 	 	 
	 	 	LENDERS:
	 
	 	 	 	 
	 	 	TEXAS CAPITAL BANK,
	 	 	NATIONAL ASSOCIATION,
	 	 	as Lender
	 
	 	 	 	 
	 

	 	By:	 	/s/ Ronald K. Baker
	 

	 	 	 	 
	 

	 	 	 	Ronald K. Baker
	 

	 	 	 	Executive Vice President
	 
	 	 	 	 
	 	 	Address for Notices:
	 	 	2100 McKinney Avenue, Suite 900
	 	 	Dallas, TX 75201
	 	 	Phone No.: (214) 932-6665
	 	 	Fax No.: (214) 932-6604
	 	 	Attention: Ronald K. Baker
	 	 	e-mail: ron.baker@texascapitalbank.com

First Amendment to Credit Agreement — Signature Page

 

 

 

	 	 	 	 	 
	 	 	AMEGY BANK, N.A.,
	 	 	as Lender
	 
	 	 	 	 
	 

	 	By:	 	/s/ Stephanie Flores
	 

	 	 	 	 
	 

	 	 	 	Stephanie Flores
	 

	 	 	 	Vice President
	 
	 	 	 	 
	 	 	Address for Notices:
	 	 	1807 Ross Avenue, Suite 400
	 	 	Dallas, Texas 75201
	 	 	Phone No.: (214) 754-9437
	 	 	Fax No.: (214) 754-6640
	 	 	Attention: Stephanie Flores
	 	 	e-mail: Stephanie.flores@amegybank.com

First Amendment to Credit Agreement — Signature Page

 

 

 

	 	 	 	 	 
	 	 	BANK OF OKLAHOMA, NA,
	 	 	as Lender
	 
	 	 	 	 
	 

	 	By:	 	/s/ David Lamb
	 

	 	 	 	 
	 

	 	 	 	David Lamb
	 

	 	 	 	Senior Vice President, Lending Officer
	 
	 	 	 	 
	 	 	Address for Notices:
	 	 	P.O. Box 2300, 8th Floor
	 	 	Tulsa, Oklahoma 74192
	 	 	Phone No.: (918) 588-8685
	 	 	Fax No.: (918) 295-0400
	 	 	Attention: David Lamb
	 	 	e-mail: dlamb@bokf.com

First Amendment to Credit Agreement — Signature Page

 

 

 

	 	 	 	 	 
	 	 	COMPASS BANK,
	 	 	as Lender
	 
	 	 	 	 
	 

	 	By:	 	/s/ Key Coker
	 

	 	 	 	 
	 

	 	 	 	Key Coker
	 

	 	 	 	Executive Vice President
	 
	 	 	 	 
	 	 	Address for Notices:
	 	 	8080 North Central Expressway, Suite 250
	 	 	Dallas, Texas 75206
	 	 	Phone No.: (214) 706-8044
	 	 	Fax No.: (214) 346-2746
	 	 	Attention: Key Coker
	 	 	e-mail: key.coker@compassbank.com

First Amendment to Credit Agreement — Signature PageFiled by Bowne Pure Compliance

 

Exhibit
10.2

RATIFICATION AND CONFIRMATION OF GUARANTY

This RATIFICATION AND CONFIRMATION OF GUARANTY (this “Ratification”) is made as of the
30th day of March, 2007 by the undersigned for the benefit of TEXAS CAPITAL BANK, NATIONAL
ASSOCIATION, as Administrative Agent (“Agent”), on behalf of itself and the other Lenders,
and their Affiliates (Agent, other Lenders and their Affiliates, together with their successors and
assigns, herein sometimes collectively called “Beneficiaries”).

Agent and Home Solutions of America, Inc., a Delaware corporation (the “Borrower”) and
certain lenders entered into that certain Credit Agreement dated as of November 1, 2006 (as
amended, modified, supplemented, and restated from time to time, the “Credit Agreement”).

The Borrower has requested and the Agent and Lenders have agreed to amend the Credit Agreement
upon the terms and conditions contained in that certain First Amendment to Credit Agreement, dated
as of the date hereof, by and among the Borrower, Agent and each of the Lenders that is a signatory
thereto (individually, a “Lender” and collectively, the “Lenders”) (the
“Amendment”).

Capitalized terms used but not otherwise defined herein shall have the meanings assigned to
such terms in Credit Agreement.

Each Guarantor (a) consents and agrees to the terms of the Amendment and all other Loan
Documents executed in connection therewith, (b) affirms that nothing contained in the Amendment
shall modify, limit or otherwise alter in any respect whatsoever its obligations under the
Guaranty, and (c) agrees that the Guaranty remains in full force and effect, continues to be legal,
valid, binding, and enforceable in accordance with its terms, and that such Guaranty continues to
guarantee the repayment Guaranteed Obligations (as defined in the Guaranty).

This Ratification shall be governed by, and construed in accordance with, the laws of the
State of Texas.

This Ratification may be executed and delivered in any number of counterparts, and by
different parties hereto on separate counterparts, each of which when so executed and delivered
shall be deemed to be an original and all of which counterparts taken together shall constitute one
and the same instrument. Facsimile signatures shall be effective for all purposes regardless of
whether Lender receives an originally executed copy of this Ratification.

[Remainder of the Page Intentionally Left Blank.]

 

 

 

EXECUTED as of the 30th day of March, 2007.

	 	 	 	 	 
	 	 	CORNERSTONE MARBLE & GRANITE, INC.
	 
	 	 	 	 
	 
	 	By:	 	/s/ Rick J. O’Brien
	 
	 	 	 	 
	 
	 	 	 	Rick J. O’Brien
	 

	 	 	 	President
	 
	 	 	 	 
	 	 	Address for Notices:
	 	 	1500 Dragon Street, Suite B
	 	 	Dallas, Texas 75207
	 	 	Attn: Rick O’Brien
	 
	 	 	 	 
	 	 	FIBER-SEAL SYSTEMS, L.P.
	 
	 	 	 	 
	 

	 	By:
	 	FSS Holding Corp.,
	 

	 	 	 	its general partner

	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	/s/ Rick J. O’Brien
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	Rick J. O’Brien
	 

	 	 	 	 	 	President

	 	 	 	 	 
	 	 	Address for Notices:
	 	 	1500 Dragon Street, Suite B
	 	 	Dallas, Texas 75207
	 	 	Attn: Rick O’Brien
	 
	 	 	 	 
	 	 	HOME SOLUTIONS RESTORATION OF LOUISIANA, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Gerald Avery
	 

	 	 	 	 
	 

	 	 	 	Gerald Avery
	 

	 	 	 	President
	 
	 	 	 	 
	 	 	Address for Notices:
	 	 	1500 Dragon Street, Suite B
	 	 	Dallas, Texas 75207
	 	 	Attn: Rick O’Brien

Signature Page of Ratification and Confirmation of Guaranty

 

 

 

	 	 	 	 	 
	 	 	P.W. STEPHENS, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Scott Johnson
	 

	 	 	 	 
	 

	 	 	 	Scott Johnson
	 

	 	 	 	President and Chief Executive Officer
	 
	 	 	 	 
	 	 	Address for Notices:
	 	 	1500 Dragon Street, Suite B
	 	 	Dallas, Texas 75207
	 	 	Attn: Rick O’Brien
	 
	 	 	 	 
	 	 	SOUTHERN EXPOSURE UNLIMITED OF FLORIDA, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Dale Mars
	 

	 	 	 	 
	 

	 	 	 	Dale Mars
	 

	 	 	 	President
	 
	 	 	 	 
	 	 	Address for Notices:
	 	 	1500 Dragon Street, Suite B
	 	 	Dallas, Texas 75207
	 	 	Attn: Rick O’Brien
	 
	 	 	 	 
	 	 	S.E. TOPS OF FLORIDA, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Dale Mars
	 

	 	 	 	 
	 

	 	 	 	Dale Mars
	 

	 	 	 	President
	 
	 	 	 	 
	 	 	Address for Notices:
	 	 	1500 Dragon Street, Suite B
	 	 	Dallas, Texas 75207
	 	 	Attn: Rick O’Brien

Signature Page of Ratification and Confirmation of Guaranty

 

 

 

	 	 	 	 	 
	 	 	FSS HOLDING CORP.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Rick J. O’Brien
	 

	 	 	 	 
	 

	 	 	 	Rick J. O’Brien
	 

	 	 	 	President
	 
	 	 	 	 
	 	 	Address for Notices:
	 	 	1500 Dragon Street, Suite B
	 	 	Dallas, Texas 75207
	 	 	Attn: Rick O’Brien
	 
	 	 	 	 
	 	 	SOUTHERN EXPOSURE HOLDINGS, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Dale Mars
	 

	 	 	 	 
	 

	 	 	 	Dale Mars
	 

	 	 	 	President
	 
	 	 	 	 
	 	 	Address for Notices:
	 	 	1500 Dragon Street, Suite B
	 	 	Dallas, Texas 75207
	 	 	Attn: Rick O’Brien
	 	 	FIRELINE RESTORATION, INC
	 
	 	 	 	 
	 

	 	By:	 	/s/ Brian Marshall
	 

	 	 	 	 
	 

	 	 	 	Brian Marshall
	 

	 	 	 	President
	 
	 	 	 	 
	 	 	Address for Notices:
	 	 	1500 Dragon Street, Suite B
	 	 	Dallas, Texas 75207
	 	 	Attn: Rick O’Brien

Signature Page of Ratification and Confirmation of Guaranty

 

 

 

ACKNOWLEDGED AND AGREED:

ADMINISTRATIVE AGENT:

TEXAS CAPITAL BANK, N.A.

	 	 	 	 	 
	By:
	 	/s/ Ronald K. Baker	 	 
	 

	 	 

Ronald K. Baker
	 	 
	 

	 	Executive Vice President	 	 

Signature Page of Ratification and Confirmation of Guaranty

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