Document:

Exhibt 10.1

 

 

EXECUTIVE
EMPLOYMENT AGREEMENT

This Executive
Employment Agreement (this "Agreement") is made and entered into as of December 20, 2004 (the "Effective Date"), by and between Home Solutions of
America, Inc., a Delaware corporation (the "Company") and Frank J. Fradella,
an individual resident of the State of Texas (the "Executive").

WITNESSETH

WHEREAS,
the Executive currently serves as the Company's Chairman, President, and Chief
Executive Officer, and the Executives skills, experience, and abilities have
been, and are expected to continue to be, valuable to the success of the Company's
operations and profitability;

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

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

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:

Article 1:          EMPLOYMENT
TERM AND DUTIES

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

1.02     Term. 
Unless earlier terminated as herein provided, the Executive's employment with
the Company pursuant to this Agreement shall commence on the Effective Date and
shall end on the final day of the Term (as defined in this Section 1.02).  For
purposes of this Agreement, the "Term" shall mean a period of time
commencing on the Effective Date and continuing until December 31, 2007 (the "Expiration
Date"); provided, however, that each year during the Term, on the
anniversary of the Effective Date, the Expiration Date shall automatically be
extended one additional year, unless, prior to such anniversary date, prior
written notice is provided by either party to the other of his or its desire to
not extend the Expiration Date.

1.03     Duties
and Services.  The Executive will be employed as the President and Chief
Executive Officer of the Company, and will have such duties and perform such
services as are customary with such positions, or as otherwise requested by
management officials senior in authority to the Executive.  The Executive will
devote at least 90% of his business time, attention, skill, and energy
exclusively to the business of the Company.

 

 

Article 2:          COMPENSATION

2.01     Salary.
Subject to the provisions of Article 4 of this Agreement that relate to
compensation of the Executive following the termination of the Employment
Period (as defined in Article 8 of this Agreement), the Executive will be paid
an annual base salary of $250,000 (such amount, as it may be increased from
time to time, is hereinafter referred to as "Salary") for the duration
of the Term.  The Company shall withhold from each installment of the Salary
all applicable federal, state, and local income and other payroll taxes.  The Board of Directors of the Company will consider annually, whether or not to
increase the salary of the Executive.

2.02     Benefits. 
For the duration of the Employment Period and as otherwise set forth herein,
the Executive and his dependents (if applicable), will be permitted to
participate in such pension, bonus, health insurance, disability income
insurance, and other employee benefit plans of the Company (including the
health insurance policy set forth in Section 2.03) (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     Life
Insurance Policy.  Upon the execution of this Agreement, the Company shall
obtain a key-man term life insurance policy on the life of the Executive, with
a $3,000,000 policy amount, which policy shall have two beneficiaries:  (a) 50%
of the policy shall be paid to a beneficiary designated by the Executive; and
(b) 50% of the policy shall be paid to the Company as a beneficiary. 

2.04     Annual
Bonus Pool.  Each year the Company and the Company's Board of Directors
shall provide the Executive with sufficient cash to establish a bonus pool and
pay bonuses based on a targeted EBITDA calculation (such bonus pool shall not
be less than 5% of EBITDA if the target EBITDA is achieved) approved by the
Company's Board of Directors (which calculation shall be verified by the
Company's outside auditors), to be disbursed among the Company's management team
(90% of such amount shall be available for payment on January 31, and the
remainder shall be paid upon the completion of the Company's annual audit) at
the Executive's sole discretion, but possibly in the following percentages: 
60% to the Executive, 30% to the Company's Chief Financial Officer, and 10% to
the Company's Controller.

2.05         
Company Sale Bonus.  Upon any type of transaction that results in
50.1% of the Company's assets or voting control changing hands (a "Qualified
Transaction"), the Company shall pay the Executive, simultaneous with the
closing of the Qualified Transaction, a bonus (in kind or in cash, at the
option of the Company) equal to the percentages set forth below of the amount
by which the valuation of the Company in the Qualified Transaction exceeds the
average market capitalization of the Company during the 90 days immediately
prior to the announcement of the Qualified Transaction (the "Market Capital
Premium"):

 

 

	
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                                                            Management
Bonus as a %

                       
Market Capital Premium      of the Market Capital
Premium 

0%-9.9%                                      0%

10%-19.9%                                  5%

20%-29.9%                                  7%

30%-39.9%                                  10%

40%
or above                               15%

2.05     Special
Bonus.  Upon approval by the Company's Board of Directors, the Company
shall deliver the following consideration to the Executive, as a bonus:  (a)
84,586 shares of common stock, $.001 par value ("Common Stock"), of the Company;
and (b) $50,000 cash.

2.06     Stock
Options.  Upon the execution of this Agreement and the stock option
agreement in the form attached hereto as Exhibit A (the "Stock Option
Agreement"), the Executive shall receive a stock option to purchase 750,000
shares of Common Stock, subject to the terms and conditions contained within
the Stock Option Agreement.  

Article
3:          FACILITIES AND EXPENSES

The
Executive will use the office space, equipment, supplies, and such other
facilities, property, and personnel as are currently being provided by the Company
for such purposes to perform his duties under this Agreement.  The Company will
reimburse the Executive for reasonable expenses incurred by the Executive in
the performance of his duties in accordance with the Company'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 Company's employment policies, before the Executive may receive such
reimbursement.

Article
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.

	
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(b)        Termination by the Company.  The Company
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 Company
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 Company 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 Company to the
Executive, or on such later date as may be set forth in such Notice of
Termination.

(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 Company setting forth facts
that indicate that an event constituting Good Reason (as defined in Section
4.04 of this Agreement) has occurred within the 30 days immediately prior to
the date of delivery of such Notice of Termination, or (ii) immediately upon
his resignation for any reason other than Good Reason.

                        (d)        Notice
of Termination.  For purposes of this Agreement, a "Notice of
Termination" shall mean a written notice (delivered in accordance with
Section 7.06 herein) that indicates the specific termination provision in this
Agreement upon which the person 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) for physical or mental reasons, the
Executive is unable to render and perform substantially and continuously the
Executive's duties and services as required by this Agreement for 12
consecutive weeks, or for 16 nonconsecutive weeks during any 12-month period,
or (b) the prognosis or recommendations of the Examining Doctor (as defined in
this Section 4.02) are such that the Executive would be unable to render and
perform substantially and continuously the Executive's duties and services
under this Agreement for 12 consecutive weeks, or for 16 nonconsecutive weeks
during any 12-month period.  Upon the request of either party hereto following
written notice to the other, the Disability of the Executive will be determined
by a medical doctor (the "Examining Doctor") who shall be selected as
follows: the Company 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 will be binding on both parties hereto.  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 Company
of such determination and the results of such examinations.  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, or the
Executive's material violation of this Agreement or any material inaccuracy of
any representation or warranty of the Executive contained herein, unless, for
any such failure, violation, or inaccuracy that is capable of being cured, the
Executive cures such failure, violation, or inaccuracy within 10 days of the Company
providing written notice to the Executive of such failure, violation, or
inaccuracy; (b) the appropriation (or attempted appropriation) of a material
business opportunity of the Company, including attempting to secure or securing
any personal profit in connection with any transaction entered into on behalf
of the Company; (c) the theft, fraud, or embezzlement of any of the real or
personal property, tangible or intangible, of the Company or any of its
Affiliates; (d) the commission of an act of fraud upon, or bad faith or willful
misconduct toward, the Company or any of its Affiliates; (e) conduct
constituting gross negligence or recklessness, as determined by the  Company in
its sole but reasonable discretion, that is materially injurious to the Company,
a customer of the Company, or any of the Company's Affiliates; or (f) the
conviction of, the indictment for (or its procedural equivalent), or the
entering of a guilty plea or plea of no contest with respect to, a felony, the
equivalent thereof, or any other crime with respect to which imprisonment is a
possible punishment.  The Board of Directors of Company shall determine on
behalf of Company whether "Cause" exists.

4.04     Definition of "Good Reason."  For the
purposes of this Agreement, the phrase "Good Reason" means (i) the Company's
material breach of this Agreement and the Company's failure to remedy such
breach within 10 days following the delivery of written notice of such breach
by the Executive to the Company; (ii) the assignment by the Company 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; or (iii) demotion in
rank, title or duties (except with regard to the title of "President", which
the Company may assign to another individual without constituting "Good 
Reason" hereunder).

4.05     Effect of Termination of Employment Period;
Post-Termination Benefits.  Upon the termination of the Employment Period
in accordance with Section 4.01 of this Agreement, the Executive's obligation
to render to the Company the services described in Section 1.03 of this
Agreement shall cease (although the Term shall not terminate), and the Company
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 Company 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, payable in accordance with the Company's
normal payroll practices, accrued by the Executive as of the date of the
termination of the Employment Period; provided, however, that the Executive
shall not receive, and shall not be entitled to receive, any Salary or Benefits
(except for Salary and Benefits accrued prior to the date of the termination of
the Employment Period) during the remainder of the Term following such
termination, or thereafter, except as otherwise required in accordance with
federal or state law or the terms of the plans governing the benefits provided
hereunder.

	
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                       (b)        Termination
by the Company 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 Company shall pay the Executive the
Salary and the Benefits for the remainder of the Term.  In addition, notwithstanding
any provision in this agreement or any stock option agreement between the
Executive and the Company to the contrary, upon a termination without Cause (i)
all stock options previously granted to the Executive shall immediately vest, (ii)
all such stock option agreements shall be amended, if necessary, to include a
cashless exercise provision, and (iii) upon the written request of the
Executive, the Company shall be required to immediately register all shares of
Common Stock underlying such stock options that are not registered under an
effective registration statement at such time.

(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 Company will pay to the disabled Executive or to the
Executive's Designated Beneficiary, as the case may be, in accordance with its
normal payroll practices, the customary installments of the Salary and the
Benefits that were provided to the Executive during the Employment Period, if
applicable, until the earlier of the Expiration Date or the 90th day
following the date of the Executive's death or the date of the determination by
the Examining Doctor that the Executive has a Disability, as the case may be. 
Following such date, the Executive or the Executive's Designated Beneficiary
shall have no right to receive, and the Company shall have no further
obligation to pay to the Executive, further monthly installments of Salary or
Benefits; provided, however, that, in the event the Executive is determined to
have a Disability, the Company has maintained the disability income insurance
referred to in Section 2.02 of this Agreement and the Executive is entitled to
benefits under that insurance.  In the event the Company has not maintained
such disability income insurance, then the Company shall continue to pay the
Salary and the Benefits to the Executive for the remainder of the Term.  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 Company from time to time or,
if the Executive fails to give written notice to the Company of such a
beneficiary, the Executive's estate; provided, however, that, notwithstanding
the preceding sentence, the Company 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.

(d)        Accrued Benefits.  Unless otherwise
required by this Agreement, federal or state law, or the terms of the relevant
plans 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 accrued
Benefits pursuant to such plans only as provided in such plans. 

 

	
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Article 5:          NON-DISCLOSURE COVENANT5.01     Confidential Information Defined.  For the
purposes of this Article 5, the phrase "Confidential Information" means
any and all of the following: trade secrets concerning the business and affairs
of the Company 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 Company 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 Company 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 the Executive
demonstrates was or became generally available to the public 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.  

5.02     Acknowledgment by the Executive.  The
Executive acknowledges that (a) during the Employment Period and as part of his
employment, the Executive will be afforded access to Confidential Information
that the Company has devoted substantial time, effort, and resources to develop
and compile; (b) public disclosure of such Confidential Information would have
an adverse effect on the Company and its business; (c) the Company 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 Article 5;
and (d) the provisions of this Article 5 are reasonable and necessary to
prevent the improper use or disclosure of Confidential Information. 

5.03     Maintaining Confidential Information.  In
consideration of the compensation and benefits to be paid or provided to the
Executive by the Company under this Agreement and the acknowledgments set forth
above, the Executive, during the Employment Period, the Term, and at all times
thereafter, agrees and covenants as follows:

(a)        Company Information.  The Executive will
hold in strictest confidence the Confidential Information and will not disclose
it to any Person (defined below) except with the specific prior written consent
of the Company or as may be required by court order, law, government agencies
with which the Company deals in the ordinary course of its business, or except
as otherwise expressly permitted by the terms of this Agreement.  Any trade
secrets of the Company will be entitled to all of the protections and benefits
afforded under applicable laws.  If any information that the Company 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 Company submit proof of the economic value of any trade
secret or post a bond or other security.  The Executive will not remove from
the Company's premises or record (regardless of the media) any Confidential
Information of the Company or its Affiliates, except to the extent such removal
or recording is necessary for the performance of the Executive's duties.  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 Company or its Affiliates, as the case may be. 

	
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(b)        Third Party Information.  The Executive
recognizes that the Company and its Affiliates have received and in the future
will receive from third parties their confidential or proprietary information
subject to a duty on their parts to maintain the confidentiality of such
information and to use it only for certain limited purposes.  The Executive
agrees that he owes the Company, 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 in carrying out his duties for the Company
consistent with the Company's agreement with such third party) or to use it for
the benefit of anyone other than for the Company or such third party
(consistent with the Company's agreement with such third party) without the
express written authorization of the Company or its Affiliate, as the case may
be.

(c)        Returning Company Documents.  The
Executive agrees that, at the time of the termination of the Employment Period,
he will deliver to the Company  (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 belonging to the Company 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.  In the event of the termination of the Employment Period, the
Executive agrees to sign and deliver the "Termination Certification"
attached hereto as Exhibit B.

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 relating to any
such adjudication will be maintained in secrecy and will be available for
inspection by the Company, the Executive, and their respective attorneys and
experts, who will agree, in advance and in writing, to receive and maintain all
such information in secrecy, except as may be limited by them in writing.

Article
6:          NON-COMPETITION AND NON-INTERFERENCE

6.01     Covenants Regarding Competitive Protection.
The Company and the Executive hereby mutually agree that the nature of the Company's
business and the Executive's employment hereunder are based on the Company's
goodwill, public perception, and customer relations.  Therefore, in
consideration of the acknowledgments set forth in Section 5.02 herein and the
compensation and benefits to be paid to the Executive pursuant to this
Agreement, the Executive hereby agrees and covenants to each and all of the
following:

(a)        Noncompete.  For the duration of the
Restricted Period, the Executive will not, directly or indirectly, in any capacity
whatsoever, individually or on behalf of 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 or
advice to, any business engaged or about to become engaged in the Business of
the Company, or any of its Affiliates, in the Market Area.  For purposes of
this Agreement, the "Business" of the Company is providing specialty
residential services.

	
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(b)        Solicitation of Customers.  For the
duration of the Restricted Period, the Executive hereby covenants and agrees
that he will not, either directly or through an Affiliate, solicit any Person
that is a Current Customer (defined below) of the Company or its Affiliates for
purposes of selling products or services to such Person that are in competition
with the products and services offered or sold by the Company or its
Affiliates. 

(c)        Solicitation of Employees.  For the
duration of the Restricted Period, the Executive hereby agrees not to employ,
either directly or through an Affiliate, any current employee of the Company or
its Affiliates or any individual who was an employee of the Company or its
Affiliates at any time during Term, and agrees not to solicit, or contact in
any manner that could reasonably be construed as a solicitation, either
directly or through an Affiliate, any employee of the Company or its Affiliates
for the purpose of encouraging such employee to leave or terminate his or her
employment with the Company or its Affiliates.

(d)        Solicitation of Vendors.  For the
duration of the Restricted Period, the Executive hereby agrees not to solicit,
either directly or through an Affiliate, a current vendor or supplier of the Company
or its Affiliates for purposes of encouraging such vendor or supplier to cease
or diminish providing products or services to the Company or its Affiliates, or
to change adversely the terms under which such vendor or supplier provides such
products or services to the Company or its Affiliates.

(e)        Interference.  For the duration of the
Restricted Period, the Executive hereby agrees not to interfere with the Company's
relationship with any person who at the relevant time is an employee,
contractor, supplier, or customer of the Company or its Affiliates.  

(f)         Restricted Period.  For purposes of this
Section 6.01, the term "Restricted Period" means the period commencing
with the Effective Date and terminating on the latter of (i) the Expiration Date, or (ii) the final date that the Executive receives severance
compensation from the Company following the termination of the Executive's
employment with the Company. 

(g)        Market Area.  For purposes of this
Section 6.01, the term "Market Area" means the States of Texas, Florida,
California, and any other state or province in which the Company or its
Affiliates have provided goods or services within the twelve months prior to
the earlier of (i) the last day of the Employment Period or (ii) the Expiration
Date.

	
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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 Company.  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 Company 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 Company for any reason, the Executive
consents to the Company communicating with the Executive's new Company, any
entity in the Business or through or in connection with which the Executive is
restricted hereunder, or any other party about the restrictions and obligations
imposed on the Executive under this Agreement.

Article
7:          GENERAL PROVISIONS

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

7.02     Covenants of Articles 5 and 6 are Essential and
Independent Covenants.  The covenants by the Executive in Articles 5 and 6
are essential elements of this Agreement, and without the Executive's agreement
to comply with such covenants, the Company would not have entered into this
Agreement or employed or continued the employment of the Executive.  The Company
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 Company.  If the Executive's employment hereunder expires or is terminated,
this Agreement will continue in full force and effect as is necessary or
appropriate to enforce the covenants and agreements of the Executive in
Articles 5 and 6.

7.03     Representations and Warranties by the Executive. 
The Executive represents and warrants to the Company 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     Obligations Contingent on Performance.  The
obligations of the Company hereunder, including its obligation to pay the
compensation provided for herein, are contingent upon the Executive's
performance of the Executive's obligations hereunder.

7.05     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 Company may merge or
consolidate or to which all or substantially all of its assets may be
transferred.  The covenants of the Executive under this Agreement, being
personal, may not be delegated.

	
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7.06     Notices.  All notices, consents, waivers,
and other communications under this Agreement must be in writing and will be
deemed to have been duly given 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) 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 Company:	

Home Solutions of America, Inc.

5565 Red Bird Center Drive, Suite 150

Dallas, TX 75237

Facsimile: (214) 333-9435

 

	     With a copy to: 	

J. Paul Caver, Esq.

2724 Routh Street

Dallas, Texas 75201

Facsimile: (214) 468-8867

 

	     If to the Executive: 	

Frank J. Fradella

18 miles south on Hwy 83 - YO Ranch

Mountain Home, TX 78058

 

	     With a copy to:	14 Ibis Lane

			Mandeville, LA 70471

7.07     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.  This Agreement may not be amended orally; but only by an agreement in
writing signed by the parties hereto.

7.08     GOVERNING LAW; VENUE.  THIS AGREEMENT SHALL BE GOVERNED BY 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 PROPER EXCLUSIVELY IN DALLAS COUNTY, TEXAS.

7.09     Headings; Construction.  The headings in
this Agreement are provided for convenience only and will not affect its
construction or interpretation.  All references to "Article,"  "Articles,"
"Section," or "Sections" refer to the corresponding Article, Articles, 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. 

	
  11

  

7.10     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.

7.11     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.

7.12     Survival of Obligations.  The obligations
of the Company 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.

7.13     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 Company is further authorized to
withhold and setoff against any such payments and benefits any amounts that the
Executive may come to owe the Company, whether as a result of any breach of
this Agreement or otherwise.

7.14     Arbitration. Any controversy or
claim arising out of or relating to this Agreement, or violation of this
Agreement, shall be settled by arbitration in accordance with the Rules of the
American Arbitration Association, and judgment rendered by the arbitrator may
be entered in any court having jurisdiction thereover. The arbitration shall be
conducted in Dallas, Texas, unless otherwise agreed by the parties thereto. The
arbitrator shall be deemed to possess the power to issue mandatory orders and
restraining orders in connection with such arbitration; provided, however, that
nothing in this Section 7.14 shall be construed as to deny the Company the
right and power to seek and obtain injunctive relief in a court of competent
jurisdiction for any breach or threatened breach of the restrictive covenants
contained in this Agreement.

Article
8:          CERTAIN DEFINITIONS

For purposes of this Agreement, the following terms shall
have the meanings indicated below:

	
  12

  

"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.

"Current Customer" shall mean any Person who is
currently utilizing any product or service sold or provided by the Company
through the facility managed by the Executive; any Person who utilized any such
product or service within the previous 12 months; and any Person with whom the Company
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 to render to the Company all or any portion of the services
described in Section 1.03 of this Agreement.  The Employment Period shall in no
event, however, extend past the Expiration Date.

"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]

 

 

 

 

	
  13

  

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

COMPANY:

 

HOME SOLUTIONS OF
AMERICA, INC.

 

By: ___________________________

      Rick J. O'Brien

      Chief Financial Officer

EXECUTIVE:

____________________________________

Frank
J. Fradella

 

 

 

 

 

 

 

	
  14

  

 

 

 

EXHIBIT A

FORM OF STOCK OPTION AGREEMENT

 

 

 

 

 

 

 

 

 

	
  Exhibit A

  

 

 

 

EXHIBIT B

TERMINATION CERTIFICATION

This is to certify that the undersigned has complied with
all the terms of the Executive Employment Agreement (the "Employment Agreement")
signed by the undersigned with Home Solutions of America, Inc. (the "Company").  
It is further certified that the undersigned does not possess, nor has the
undersigned failed to return to the Executive any Confidential Information (as
defined in the Employment Agreement).  It is further certified that the
undersigned has destroyed all tangible copies and have erased any electronic,
digital, or magnetic representations or manifestations of the foregoing.  The
undersigned further agrees that, in compliance with the Employment Agreement,
the undersigned will preserve as confidential all Confidential Information and
information of third parties as provided in the Employment Agreement.

Date:    ______________________

__________________________________________

Frank
J. Fradella 

 

 

 

 

 

	
  Exhibit BExhibit 10.2

 

 

 

 

 

HOME SOLUTIONS OF AMERICA, INC.

1998 STOCK OPTION PLAN

STOCK OPTION AGREEMENT

Unless otherwise defined herein, the terms defined in
the Plan (defined below) shall have the same defined meanings in this Stock
Option Agreement (this "Stock Option Agreement"), which is
executed this 20th day of December 2004.

I.          NOTICE
OF STOCK OPTION GRANT

            The
undersigned Optionee has been granted an Option to purchase Common Stock of
Home Solutions of America, Inc. (the "Company"), subject to the
terms and conditions of the Company's 1998 Stock Option Plan (the "Plan")
and this Stock Option Agreement, as follows:

Optionee                                              FRANK
J. FRADELLA                    

Date of Grant                                       December 20, 2004

Vesting Commencement Date               December 20, 2004

Exercise Price per Share                       First
250,000 Shares Purchased under Option- $1.50

                                                            Next
250,000 Shares Purchased under Option- $1.75

                                                            Next
250,000 Shares Purchased under Option- $2.00

Total Number of Shares Granted          750,000

Total Exercise Price                              $1,500,000

Type of Option:                                     
X       Incentive Stock Option

                                                                       
            Non-Qualified Stock Option

Term/Expiration Date:               September 17, 2009

            Vesting
Schedule:         The Option shall become exercisable as to the earlier of (a)
(i) 33% of the Shares subject to the Option on September 17, 2005, (ii) 33% of
the Shares subject to the Option on September 17, 2006, and (iii) the remaining
Shares subject to the Option on September 17, 2007, subject to Optionee's
continued status as a Service Provider on each such date, or (b) upon the
transfer of 50.1% of the Company's assets or voting control in which the
per-share valuation of the Company's Common Stock in such transaction equals or
exceeds $2.50 per share (as adjusted for any stock splits or reverse splits
subsequent to the Date of Grant). 

Termination Period:  The vested portion of this Option shall be exercisable for 90 days
after Optionee ceases to be a Service Provider.  Upon Optionee's death or
disability, the vested portion of this Option may be exercised for such longer
period as provided in the Plan.  In no event may Optionee exercise this Option
after the Term/Expiration Date as provided above.

II.               
AGREEMENT

            1.         Grant
of Option.

                        (a)        The
Administrator of the Plan hereby grants to the Optionee named in the Notice of
Stock Option Grant (the "Notice") in Section I. above (the "Optionee"),
an option (the "Option") to purchase the number of Shares set
forth in the Notice, at the exercise price per Share set forth in the Notice
(the "Exercise Price"), and subject to the terms and conditions
of the Plan, which is incorporated herein by reference.  In the event of a
conflict between the terms and conditions of the Plan and this Stock Option
Agreement, the terms and conditions of the Plan shall prevail.

                        (b)        If
designated in the Notice of Stock Option Grant as an Incentive Stock Option ("ISO"),
this Option is intended to qualify as an Incentive Stock Option as defined in
Section 422 of the Code.  Nevertheless, to the extent that it exceeds the
$100,000 rule of Code Section 422(d), this Option shall be treated as a
Non-Qualified Stock Option ("NSO").

            2.         Exercise
of Option.

                        (a)        Right
to Exercise.  This Option shall be exercisable during its term in
accordance with the Vesting Schedule set out in the Notice of Stock Option
Grant and with the applicable provisions of the Plan and this Stock Option
Agreement.

                        (b)        Method
of Exercise.  This Option shall be exercisable by delivery of an exercise
notice in the form attached as Exhibit A (the "Exercise Notice")
which shall state the election to exercise the Option, the number of Shares
with respect to which the Option is being exercised (the "Exercised
Shares"), and such other representations and agreements as may be
required by the Company. The Exercise Notice shall be accompanied by payment of
the aggregate Exercise Price as to all Exercised Shares.  This Option shall be
deemed to be exercised upon receipt by the Company of such fully executed
Exercise Notice accompanied by the aggregate Exercise Price.

            3.         Optionee's
Representations.  In the event the Shares have not been registered under
the Securities Act of 1933, as amended (the "Securities Act"), at
the time this Option is exercised, the Optionee shall, if required by the
Company, concurrently with the exercise of all or any portion of this Option,
deliver to the Company his or her Investment Representation Statement in the
form attached hereto as Exhibit B.

            4.         Method
of Payment.  Payment of the aggregate Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Optionee

                        (a)        cash
or check;

2

                        (b)        Shares
surrendered to the Company in a Cashless Exercise; or

                        (c)        surrender
of other Shares that, (i) in the case of Shares acquired upon exercise of an
option, have been owned by the Optionee for more than six months on the date of
surrender, and (ii) have a Fair Market Value on the date of surrender equal to
the aggregate Exercise Price of the Exercised Shares.

            5.         Restrictions
on Exercise.  This Option may not be exercised (a) until such time as the
stockholders of the Company have approved the grant of this Option, to the
extent such approval is required by law, or (b) if the issuance of such Shares
upon such exercise or the method of payment of consideration for such shares
would constitute a violation of any Applicable Law.

            6.         Non-Transferability
of Option.  This Option may not be transferred in any manner otherwise than
by will or by the laws of descent or distribution and may be exercised during
the lifetime of Optionee only by Optionee.  The terms of the Plan and this
Stock Option Agreement shall be binding upon the executors, administrators,
heirs, successors and assigns of the Optionee.

            7.         Term
of Option.  This Option may be exercised only within the term set out in
the Notice of Stock Option Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Stock Option Agreement.

            8.         Entire
Agreement; Governing Law.  The Plan is incorporated herein by reference. 
The Plan and this Stock Option Agreement constitute the entire agreement of the
parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee.  This agreement is governed by the internal substantive laws but not
the choice of law rules of the State of Delaware.  Venue for any dispute
arising hereunder shall be proper exclusively in Dallas County, Texas.

 

 

3

            9.         No
Guarantee of Continued Service.  OPTIONEE ACKNOWLEDGES AND AGREES THAT
THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY
CONTINUING AS A SERVICE PROVIDER IN ACCORDANCE WITH THE OPTIONEE'S EMPOYMENT
AGREEMENT, IF ANY, OR OTHERWISE (NOT THROUGH THE ACT OF BEING HIRED, BEING
GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER).  OPTIONEE FURTHER
ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED
HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN
EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR
THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN ANY
WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE OPTIONEE'S
RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME IN ACCORDANCE WITH THE
OPTIONEE'S EMPLOYMENT AGREEMENT, IF ANY, OR OTHERWISE AT ANY TIME, WITH OR
WITHOUT CAUSE.

            10.       Optionee
acknowledges receipt of a copy of the Plan and represents that he or she is familiar
with the terms and provisions thereof, and hereby accepts this Option subject
to all of the terms and provisions thereof.  Optionee has reviewed the Plan and
this Option in their entirety, has had an opportunity to obtain the advice of
counsel prior to executing this Option and fully understands all provisions of
the Option.  Optionee hereby agrees to accept as binding, conclusive and final
all decisions or interpretations of the Administrator upon any questions
arising under the Plan or this Option.  Optionee further agrees to notify the
Company upon any change in the residence address indicated below.

"COMPANY"                                                            "OPTIONEE"

HOME
SOLUTIONS OF AMERICA, INC

 

By:                                                                                                                                                      

Name:
Rick J. O'Brien                                                 Frank J.
Fradella

Title:
  Chief Financial Officer                                        

Address:

18 miles south on Hwy 83 - YO Ranch

Mountain Home, TX 78058

 

 

 

 

4

EXHIBIT A

1998 STOCK PLAN

EXERCISE NOTICE

 

Home
Solutions of America, Inc.

5565
  Red Bird Center Drive, Suite 150

Dallas, Texas 75237

ATTN:  Secretary

1.   Exercise of Option.  Effective as of
today, _______________, 200__, the undersigned ("Optionee")
hereby elects to exercise Optionee's option to purchase ________________ shares
(the "Shares") of the Common Stock of Home Solutions of America,
Inc. (the "Company") under and pursuant to the 1998 Stock Option
Plan (the "Plan") and the Stock Option Agreement dated December 20 , 2004 (the "Stock Option Agreement").

2.   Delivery of Payment.  Optionee herewith
delivers to the Company the full purchase price of the Shares, as set forth in
the Stock Option Agreement.

3.   Representations of Optionee.  Optionee
acknowledges that Optionee has received, read and understood the Plan and the
Stock Option Agreement and agrees to abide by and be bound by their terms and
conditions.

4.   Rights as Stockholder.  Until the issuance
of the Shares (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to
vote or receive dividends or any other rights as a stockholder shall exist with
respect to the Optioned Stock, notwithstanding the exercise of the Option.  The
Shares shall be issued to the Optionee as soon as practicable after the Option
is exercised.  No adjustment shall be made for a dividend or other right for
which the record date is prior to the date of issuance except as provided in
Section 13 of the Plan.

5.   Tax Consultation.  Optionee understands
that Optionee may suffer adverse tax consequences as a result of Optionee's purchase
or disposition of the Shares.  Optionee represents that Optionee has consulted
with any tax consultants Optionee deems advisable in connection with the
purchase or disposition of the Shares and that Optionee is not relying on the
Company for any tax advice.

6.   Restrictive Legends and Stop-Transfer Orders.

(a)  Legends.  Optionee understands and agrees
that the Company shall cause the legends set forth below or legends
substantially equivalent thereto, to be placed upon any certificate(s)
evidencing ownership of the Shares together with any other legends that may be
required by the Company or by state or federal securities laws:

A-1

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER THE ACT OR, IN THE OPINION OF COMPANY COUNSEL SATISFACTORY TO
THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR
HYPOTHECATION IS IN COMPLIANCE THEREWITH.

(b)  Stop-Transfer Notices.  Optionee agrees
that, in order to ensure compliance with the restrictions referred to herein,
the Company may issue appropriate "stop transfer" instructions to its transfer
agent, if any, and that, if the Company  transfers its own securities, it may
make appropriate notations to the same effect in its own records.

(c)  Refusal to Transfer.  The Company shall
not be required (i) to transfer on its books any Shares that have been
sold or otherwise transferred in violation of any of the provisions of this
Agreement or (ii) to treat as owner of such Shares or to accord the right
to vote or pay dividends to any purchaser or other transferee to whom such
Shares shall have been so transferred.

7.   Successors and Assigns.  The Company may
assign any of its rights under this Agreement to single or multiple assignees,
and this Agreement shall inure to the benefit of the successors and assigns of
the Company.  Subject to the restrictions on transfer herein set forth, this Agreement
shall be binding upon Optionee and his or her heirs, executors, administrators,
successors and assigns.

8.   Interpretation.  Any dispute regarding the
interpretation of this Agreement shall be submitted by Optionee or by the
Company forthwith to the Administrator, which shall review such dispute at its
next regular meeting.  The resolution of such a dispute by the Administrator
shall be final and binding on all parties.

                  9.
Governing Law; Severability.  This Agreement is governed by the internal
substantive laws, but not the choice of law rules, of Delaware.

10. Entire Agreement.  The Plan and Stock
Option Agreement are incorporated herein by reference.  This Agreement, the
Plan, the Stock Option Agreement and the Investment Representation Statement
constitute the entire agreement of the parties with respect to the subject
matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Optionee with respect to the subject matter
hereof, and may not be modified adversely to the Optionee's interest except by
means of a writing signed by the Company and Optionee.

A-2

Submitted
by:                                                               Accepted
by:

                                                                        Home
Solutions of America, Inc.

_____________________________             

Frank
J. Fradella

By:___________________________

Name:_________________________

Title:
__________________________

 

 

 

 

 

 

A-3

 

 

 

EXHIBIT B

INVESTMENT REPRESENTATION
STATEMENT

 

OPTIONEE:      Frank J. Fradella                          

COMPANY:     Home
Solutions of America, Inc.

SECURITY:      Common
Stock

AMOUNT:        $__________________________    

DATE:               __________________________

            In
connection with the purchase of the above-listed Securities, the undersigned
Optionee represents to the Company the following:

1.   Optionee is aware of the Company's business
affairs and financial condition and has acquired sufficient information about
the Company to reach an informed and knowledgeable decision to acquire the
Securities.  Optionee is acquiring these Securities for investment for
Optionee's own account only and not with a view to, or for resale in connection
with, any "distribution" thereof within the meaning of the Securities Act of
1933, as amended (the "Securities Act").

2.   Optionee acknowledges and understands that the
Securities constitute "restricted securities" under the Securities Act and have
not been registered under the Securities Act in reliance upon a specific
exemption therefrom, which exemption depends upon, among other things, the bona
fide nature of Optionee's investment intent as expressed herein.  In this
connection, Optionee understands that, in the view of the Securities and
Exchange Commission, the statutory basis for such exemption may be unavailable
if Optionee's representation was predicated solely upon a present intention to
hold these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future.  Optionee further understands that the Securities must be
held indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available.  Optionee further
acknowledges and understands that the Company is under no obligation to
register the Securities.  Optionee understands that the certificate evidencing
the Securities will be imprinted with a legend that prohibits the transfer of
the Securities unless they are registered or such registration is not required
in the opinion of counsel satisfactory to the Company and any other legend
required under applicable state securities laws.

B-1

3.   Optionee is familiar with the provisions of
Rule 144, promulgated under the Securities Act, which, in substance,
permits limited public resale of "restricted securities" acquired, directly or
indirectly from the issuer thereof, in a non-public offering subject to the
satisfaction of certain conditions.  The Securities may be resold in certain
limited circumstances subject to the provisions of Rule 144, which requires the
resale to occur not less than one year after the later of the date the
Securities were sold by the Company or the date the Securities were sold by an
affiliate of the Company, within the meaning of Rule 144, and the resale
must take place in a manner described in (1) below; and, in the case of
acquisition of the Securities by an affiliate, or by a non-affiliate who
subsequently holds the Securities less than two years, the satisfaction of the
following conditions: (1) the resale is made through a broker in an unsolicited
"broker's transaction" or in transactions directly with a market maker (as
said term is defined under the Securities Exchange Act of 1934), (2) the
availability of certain public information about the Company, (3) the amount of
Securities being sold during any three-month period not exceeding the
limitations specified in Rule 144(e), and (4) the timely filing of a Form 144.

4.   Optionee further understands that in the event
all of the applicable requirements of Rule 144 are not satisfied,
registration under the Securities Act or some other registration exemption will
be required; and that the Staff of the Securities and Exchange Commission has
expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that
such persons and their respective brokers who participate in such transactions
do so at their own risk.  Optionee understands that no assurances can be given
that any such other registration exemption will be available in such event.

"Optionee"

___________________________________

Frank J. Fradella

Date:______________________________

 

 

 

 B-2

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