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<P style="font-size: 14pt" align="center"><B>UNITED STATES<BR>
SECURITIES AND
EXCHANGE COMMISSION<BR>
<FONT style="font-size: 12pt">Washington, D.C. 20549
</FONT></B>

<P style="font-size: 18pt" align="center"><B>FORM 8-K</B>

<P style="font-size: 12pt" align="center"><B>CURRENT REPORT<BR>
Pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934</B>

<P style="font-size: 10pt" align="center"><B>Date of Report (Date of earliest
event reported): May 29, 2008</B>


<P style="font-size: 24pt" align="center"><B>Home Solutions of America,
Inc.<BR>
</B><FONT style="font-size: 10pt">(Exact name of registrant as
specified in its charter) </FONT>
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  <TD style="border-bottom: #000000 1px solid"><B>Delaware</B></TD>
  <TD>&nbsp;</TD>
  <TD style="border-bottom: #000000 1px solid"><B>001-31711</B></TD>
  <TD>&nbsp;</TD>
  <TD style="border-bottom: #000000 1px solid"><B>99-0273889</B></TD>
 </TR>
 <TR valign="top">
  <TD>(State or other Jurisdiction of Incorporation)</TD>
  <TD>&nbsp;</TD>
  <TD>(Commission File Number)</TD>
  <TD>&nbsp;</TD>
  <TD>(IRS Employer Identification No.)</TD>
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  <TD style="border-bottom: #000000 1px solid"><B>1340 Poydras Street, Suite
1800, New Orleans, Louisiana<BR>
</B></TD>
  <TD>&nbsp;</TD>
  <TD style="border-bottom: #000000 1px solid"><B>70112</B></TD>
 </TR>
 <TR valign="top">
  <TD>(Address of Principal Executive Offices)</TD>
  <TD>&nbsp;</TD>
  <TD>(Zip Code)</TD>
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<P style="font-size: 10pt" align="center">Registrant&#8217;s telephone number,
including area code: <B>(504) 562-5700</B>
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 </TR>
 <TR>
  <TD nowrap>(Former name or former address if changed since last report.)</TD>
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<P style="font-size: 10pt" align="left">Check the appropriate box below if the
Form 8-K filing is intended to simultaneously satisfy the filing obligation of
the registrant under any of the following provisions:

<P style="font-size: 10pt" align="left"><FONT face="Wingdings">o</FONT> Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)<BR>
<BR>
<FONT face="Wingdings">o</FONT> Soliciting material pursuant
to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)<BR>
<BR>
<FONT
face="Wingdings">o</FONT> Pre-commencement communications pursuant to Rule
14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))<BR>
<BR>
<FONT
face="Wingdings">o</FONT> Pre-commencement communications pursuant to Rule
13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))<BR>


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<P style="display: none; font-size: 10pt" align="center">1
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<P style="font-size: 10pt" align="justify"><B>Item&nbsp;1.01 Entry into a
Material Definitive Agreements</B> <BR>
On September&nbsp;22, 2008, Home
Solutions of America, Inc (the &#8220;Company&#8221;) entered into a
Confidential Settlement Agreement (the &#8220;Settlement Agreement&#8221;) with
its lenders under its Revolving Credit Facility, Term Loan and Letter of Credit
Facility (the &#8220;Credit Agreement&#8221;). The Settlement Agreement, which
supersedes the Forbearance Agreement entered into February&nbsp;6, 2008, as
amended, between the Company and its lenders, effectively settled all
outstanding obligations between the Company and its lenders. Among other
things, the Settlement Agreement provided for the following:

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  <TD nowrap align="left" width="3%">1.</TD>
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<DIV style="text-align: justify">The Company immediately paid $1,175,000 to its
lenders.</DIV>
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  <TD nowrap align="left" width="3%">2.</TD>
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<DIV style="text-align: justify">The Company issued to its lenders a total of
2,100,000 warrants to purchase shares of its common stock at an exercise price
of $.01 per share. The warrants are exercisable as follows: (i)&nbsp;700,000
warrants become exercisable on March&nbsp;1, 2009, (ii)&nbsp;700,000 warrants
become exercisable on September&nbsp;1, 2009, and (iii)&nbsp;700,000 warrants
become exercisable on March&nbsp;1, 2010. These warrants shall replace the
warrants set forth in Paragraph 7 of Amendment No.&nbsp;1 to the Forbearance
Agreement.</DIV>
</TD>
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  <TD nowrap align="left" width="3%">3.</TD>
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  <TD>
<DIV style="text-align: justify">The Lenders agreed that the accrual of
interest on the Company&#8217;s outstanding obligations under the Credit
Agreement and Amendment No.&nbsp;1 to the Forbearance Agreement was suspended
effective September&nbsp;12, 2008, and that all outstanding interest was
satisfied.</DIV>
</TD>
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  <TD nowrap align="left" width="3%">4.</TD>
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  <TD>
<DIV style="text-align: justify">The Company agreed that within three
(3)&nbsp;business days after receipt, the Company would remit any proceeds, net
of reasonable collection expenses, in connection with (a)&nbsp;claims asserted
by the Company against Mr.&nbsp;Brian Marshall (&#8220;<U>Marshall</U>&#8221;)
and (b)&nbsp;receivables booked by Marshall on the Company&#8217;s books and
records; the proceeds shall not include any uncollected FIGA Receivables as
such term is defined in the original Forbearance Agreement.</DIV>
</TD>
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  <TD nowrap align="left" width="3%">5.</TD>
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  <TD>
<DIV style="text-align: justify">EvenFlow Funding, LLC., an entity owned by the
Company&#8217;s then Chairman of the Board, provided $2,000,000 in immediately
available funds to cash secure the Company&#8217;s Letter of Credit which was
issued by Texas Capital Bank, National Association.</DIV>
</TD>
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  <TD nowrap align="left" width="3%">6.</TD>
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  <TD>
<DIV style="text-align: justify">The Lenders released and terminated all
security interests, pledges, guarantees and UCC-1s securing the obligations of
any or all of the Credit Parties under the Credit Agreement, the original
Forbearance Agreement, provided, however, that such release did not extend to
any security interest in any claim against Marshall</DIV>
</TD>
 </TR>

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  <TD nowrap align="left" width="3%">7.</TD>
  <TD width="1%">&nbsp;</TD>
  <TD>
<DIV style="text-align: justify">Effective ninety-one (91)&nbsp;days from the
date of the agreement, the Lenders completely discharged the Company from any
and all claims. In addition, the Lenders filed a voluntary dismissal <B>WITHOUT
PREJUDICE </B>of the lawsuits previously filed against the Company.</DIV>
</TD>
 </TR>

</TABLE>


<P style="font-size: 10pt" align="justify">The Company complied with all
provisions of the Settlement Agreement, filed in its entirety as
Exhibit&nbsp;4.3 to this filing, and, accordingly, has no further obligations
to its lenders.

<P style="font-size: 10pt" align="justify">The Company reached an agreement to
settle the consolidated shareholder class action captioned <I>Home Solutions of
America Investor Group v. Fradella, </I>Civil Action
No.&nbsp;3:06-cv-1096,filed on June&nbsp;20, 2006 (the &#8220;2006
Class&nbsp;Action&#8221;) and the shareholder derivative action captioned
<I>Sved v. Chadwick</I>, Civil Action No.&nbsp;3:06-cv-01135, filed on
June&nbsp;27, 2006 (the &#8220;Derivative Action&#8221;) (the proposed
settlements are hereinafter referred to as the &#8220;2006 Class&nbsp;Action
Settlement&#8221; and the &#8220;Derivative Action Settlement&#8221;). The 2006
Class&nbsp;Action Settlement and the Derivative Action Settlement are subject
to approval by the United States District Court for the Northern District of
Texas, which has set a hearing for March&nbsp;23, 2009 to determine whether the
2006 Class&nbsp;Action Settlement and the Derivative Action Settlement should
be approved. The Company cannot predict whether the Court will grant approval
of the settlements or when the Court will issue its decision.

<P style="font-size: 10pt" align="justify">Under the terms of the 2006
Class&nbsp;Action Settlement, the Company agreed to pay $3.5&nbsp;million to
settle all claims brought by a certified class of all persons who purchased the
common stock of Home Solution during the period between April&nbsp;11, 2006 and
March&nbsp;5, 2007, inclusive (the &#8220;2006 Settlement Class&#8221;). If all
required payments are made and the 2006 Class&nbsp;Action Settlement is
approved by the District Court, all claims asserted by 2006 Settlement Class
will be dismissed with prejudice, and a portion of the $3.5&nbsp;million
settlement amount will be used to pay the attorneys&#8217; fees of counsel for
the plaintiffs.

<P style="font-size: 10pt" align="center">&nbsp;

<P style="display: none; font-size: 10pt" align="center">2
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<P style="font-size: 10pt" align="justify">Under the terms of the Derivative
Action Settlement, the Company agreed to undertake a series of remedial
measures in exchange for the dismissal of the Derivative Action with prejudice
as to all defendants. These remedial measures include, but are not limited to,
the separation of the positions of Chairman of the Board and Chief Executive
Officer for at least four years, the appointment of a new Chairman of the
Board, the appointment of a new interim Chief Financial Officer, an agreement
not to make strategic equity investments in any company in which a director or
executive director of Home Solutions has a direct ownership of more than 5%
subject to the Company&#8217;s ability, through reasonable efforts, to
determine ownership interests in any such company, and the adoption by Home
Solutions of enhanced procedures to ensure the accuracy of its press releases
and public announcements.

<P style="font-size: 10pt" align="justify">The Company has agreed not to oppose
an application by plaintiff&#8217;s counsel in the Derivative Action for an
attorney&#8217;s fee award of up to $200,000 in cash and $50,000 in Home
Solutions common stock.

<P style="font-size: 10pt" align="justify">The Company also reached an
agreement to settle a purported class action captioned <I>Melms v. Home
Solutions of America et al.</I>, Civil Action No.&nbsp;3L07-CV-1961, filed on
February&nbsp;15, 2008 and amended on May&nbsp;29, 2008 (the proposed
settlement is hereinafter referred to as the &#8220;Melms Settlement&#8221;).
The Melms Settlement is subject to approval by the United States District Court
for the Northern District of Texas. The Company cannot predict whether the
Court will grant approval of the settlement. Under the terms of the Melms
Settlement, the Company agreed to pay $5.1&nbsp;million to settle all claims
brought by a class of all persons who purchased common stock of Home Solutions
from May&nbsp;10, 2007 through February&nbsp;15, 2008.

<P style="font-size: 10pt" align="justify"><B>Item&nbsp;5.02 Departure of
Directors or Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain Officers.</B>

<P style="font-size: 10pt" align="justify">On May&nbsp;29, 2008, the Company
entered into an employment agreement with Frank J. Fradella (the
&#8220;Employment Agreement&#8221;), the Company&#8217;s Chief Executive
Officer. The Employment Agreement has a term of three years, provides for an
annual base salary of $350,000 and includes an annual bonus equal up to 3% of
annual EBITDA, as defined; the Employment Agreement, filed in its entirety as
Exhibit&nbsp;10.1 to this public filing, also provides severance benefits equal
up to one year of the annual base salary plus health benefits.

<P style="font-size: 10pt" align="justify">Concurrently while entering into the
Employment Agreement, the Company also provided a letter detailing a grant of
stock options (the &#8220;Grant&#8221;). The Grant provided for the issuance of
stock options equal to 10% of the Company&#8217;s outstanding shares at the
date of grant; on May&nbsp;29, 2008, the Company had 50,700,850 shares issued
and outstanding.. Further, the Grant provided that the 10% grant would be
broken into tranches with three strike prices. Five percent, or 50% of the
grant, would be at the money on the date of grant, while 2.5%, or 25% of the
grant, would be at $1.25 per share while the remaining 2.5%, or 25% of the
grant, would be at $1.75 per share. Sixty percent (60%) of the at the money
options vest at the grant date while the remaining 40% vest on
December&nbsp;31, 2008. The above market options each vest 50% on first
anniversary of the date grant and 50% on the second anniversary of the date of
grant. The Grant replaces Mr.&nbsp;Fradella&#8217;s previously granted
restricted stock purchase rights, contains accelerated vesting provisions in
the case of a change of control and has term whereby the options issued
pursuant to the Grant, expire on the fifth anniversary of the grant date.

<P style="font-size: 10pt" align="justify">On November&nbsp;18, 2008, James M.
Grady, the Company&#8217;s Interim-Chief Financial Officer and a Senior
Director with Alvarez &amp; Marshal (A&amp;M), submitted his formal resignation
to the Company.

<P style="font-size: 10pt" align="justify">On January&nbsp;20, 2009, the
Company appointed V. Chase McCrea III as its Interim Chief Financial Officer.
Mr.&nbsp;McCrea, a 1991 graduate of the University of Southern California, has
been employed with the Company since July&nbsp;2, 2007. Mr McCrea is a CPA with
over 17&nbsp;years of experience working with and for public companies,
including over 8&nbsp;years experience working for Big Four accounting firms,
where he attained the level of assurance manager. Mr.&nbsp;McCrea, who makes
his home in Texas, is not currently under contract with the Company and has
agreed to lead the finance department until such time as all public filings
become current and a permanent, New Orleans-based replacement, can be hired.

<P style="font-size: 10pt" align="justify">On February&nbsp;2, 2009 Michael J.
McGrath tendered his resignation as Chairman of the Board of Directors for
personal reasons. At the time of his resignation, Mr.&nbsp;McGrath had no
disagreements with the Company. On February&nbsp;3, 2009, Michael S. Chadwick
resigned his position as a member of the Company&#8217;s Board of Directors.

<P style="font-size: 10pt" align="center">&nbsp;

<P style="display: none; font-size: 10pt" align="center">3
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<P style="font-size: 10pt" align="justify"><B>FORWARD LOOKING STATEMENTS</B>
<BR>
This Current Report on Form 8-K contains forward-looking statements made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995 under Section&nbsp;27A of the Securities Act of 1933, as
amended, and Section&nbsp;21E of the Securities Exchange Act of 1934, as
amended.

<P style="font-size: 10pt" align="justify">Forward-looking statements include
statements with respect to our beliefs, plans, objectives, goals, expectations,
anticipations, assumptions, estimates, intentions, and future performance, and
involve known and unknown risks, uncertainties and other factors, which may be
beyond our control, and which may cause our actual results, performance or
achievements to be materially different from future results, performance or
achievements expressed or implied by such forward-looking statements. All
statements other than statements of historical fact are statements that could
be forward-looking statements. You can identify these forward-looking
statements through our use of words such as &#8220;may,&#8221;
&#8220;will,&#8221; &#8220;can&#8221; &#8220;anticipate,&#8221;
&#8220;assume,&#8221; &#8220;should,&#8221; &#8220;indicate,&#8221;
&#8220;would,&#8221; &#8220;believe,&#8221; &#8220;contemplate,&#8221;
&#8220;expect,&#8221; &#8220;seek,&#8221; &#8220;estimate,&#8221;
&#8220;continue,&#8221; &#8220;plan,&#8221; &#8220;point to,&#8221;
&#8220;project,&#8221; &#8220;predict,&#8221; &#8220;could,&#8221;
&#8220;intend,&#8221; &#8220;target,&#8221; &#8220;potential,&#8221; and other
similar words and expressions of the future. Forward-looking statements may not
be realized due to a variety of factors, including, without limitation, future
economic, competitive and market conditions, regulatory framework, and future
business decisions, and the other factors referenced in our Annual Report on
Form 10-K for the year ended December&nbsp;31, 2006, which contains a list of
specific risk factors that could cause actual results to differ materially from
those indicated by our forward-looking statements made in this Current Report
on Form 8-K.
<DIV align="center">
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<DIV
style="margin-left: 0px; text-indent: 0px"><B>Item&nbsp;9.01</B>&nbsp;</DIV>
</TD>
  <TD>&nbsp;</TD>
  <TD valign="top" align="left"><B>Financial Statements and Exhibits</B></TD>
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</DIV>

<P style="font-size: 10pt" align="justify">(d)&nbsp;Exhibits
<DIV align="center">
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<DIV style="margin-left: 0px; text-indent: 0px">4.3 </DIV>
</TD>
  <TD>&nbsp;</TD>
  <TD valign="top" align="left">Confidential Settlement Agreement, which is
filed pursuant to Item&nbsp;1.01</TD>
 </TR>
 <TR valign="bottom">
  <TD valign="top">
<DIV style="margin-left: 0px; text-indent: 0px">10.1 </DIV>
</TD>
  <TD>&nbsp;</TD>
  <TD valign="top" align="left">Employment Agreement between Home Solutions of
America, Inc. and Frank J. Fradella, which is filed pursuant to
Item&nbsp;5.02</TD>
 </TR>
 <TR valign="bottom">
  <TD valign="top">
<DIV style="margin-left: 0px; text-indent: 0px">10.2 </DIV>
</TD>
  <TD>&nbsp;</TD>
  <TD valign="top" align="left">Grant of Stock Options Letter from Home
Solutions of America, Inc. to Frank J. Fradella, which is filed pursuant to
Item&nbsp;5.02</TD>
 </TR>
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</TABLE>
</DIV>

<P style="font-size: 10pt" align="justify">&nbsp;

<P style="font-size: 10pt" align="center">&nbsp;

<P style="display: none; font-size: 10pt" align="center">4
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<P style="font-size: 10pt" align="justify"><B>SIGNATURES</B>

<P style="font-size: 10pt; text-indent: 3%" align="justify">Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized. &nbsp;
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  <TD>&nbsp;</TD>
  <TD valign="top" align="left" colspan="3">Home Solutions of America, Inc.</TD>
 </TR>
 <TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD valign="top">
<DIV style="margin-left: 0px; text-indent: 0px"><BR>By: </DIV>
</TD>
  <TD>&nbsp;</TD>
  <TD valign="top" align="left"><BR>/s/ V. Chase McCrea III</TD>
 </TR>
 <TR style="font-size: 1px">
  <TD>&nbsp;</TD>
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<DIV style="margin-left: 0px; text-indent: 0px">&nbsp;</DIV>
</TD>
  <TD>&nbsp;</TD>
  <TD style="border-top: #000000 1px solid" valign="top"
align="left">&nbsp;</TD>
 </TR>
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  <TD>&nbsp;</TD>
  <TD valign="top">
<DIV style="margin-left: 0px; text-indent: 0px">&nbsp;</DIV>
</TD>
  <TD>&nbsp;</TD>
  <TD valign="top" align="left">V. Chase McCrea III</TD>
 </TR>
 <TR valign="bottom">
  <TD>&nbsp;</TD>
  <TD valign="top">
<DIV style="margin-left: 0px; text-indent: 0px">&nbsp;</DIV>
</TD>
  <TD>&nbsp;</TD>
  <TD valign="top" align="left">Interim &#8212; Chief Financial
Officer&nbsp;</TD>
 </TR>
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</TABLE>
</DIV>

<P style="font-size: 10pt" align="justify">Dated: February&nbsp;3, 2009

<P style="font-size: 10pt; text-indent: 4%" align="justify">&nbsp;

<P style="font-size: 10pt; text-indent: 4%" align="center">&nbsp;

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<P style="font-size: 10pt; text-indent: 4%"
align="justify"><B>Exhibit&nbsp;Index</B>
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<DIV style="margin-left: 0px; text-indent: 0px">4.3 </DIV>
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  <TD>&nbsp;</TD>
  <TD valign="top" align="left">Confidential Settlement Agreement, which is
filed pursuant to Item&nbsp;1.01</TD>
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<DIV style="margin-left: 0px; text-indent: 0px">10.1 </DIV>
</TD>
  <TD>&nbsp;</TD>
  <TD valign="top" align="left">Employment Agreement between Home Solutions of
America, Inc. and Frank J. Fradella, which is filed pursuant to
Item&nbsp;5.02</TD>
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<DIV style="margin-left: 0px; text-indent: 0px">10.2 </DIV>
</TD>
  <TD>&nbsp;</TD>
  <TD valign="top" align="left">Grant of Stock Options Letter from Home
Solutions of America, Inc. to Frank J. Fradella, which is filed pursuant to
Item&nbsp;5.02</TD>
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{"company-data": {"conformed-name": "HOME SOLUTIONS OF AMERICA INC", "cik": "0000855424", "assigned-sic": "8741", "irs-number": "990273889", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-31711", "film-number": "09570443"}, "business-address": {"street1": "1500 DRAGON STREET - SUITE B", "street2": "-", "city": "DALLAS", "state": "TX", "zip": "75207", "phone": "214-623-8446"}, "mail-address": {"street1": "1500 DRAGON STREET - SUITE B", "street2": "-", "city": "DALLAS", "state": "TX", "zip": "75207"}, "former-company": [{"former-conformed-name": "NEXTGEN COMMUNICATIONS CORP", "date-changed": "20010814"}, {"former-conformed-name": "U S INDUSTRIAL SERVICES INC", "date-changed": "19980629"}, {"former-conformed-name": "EIF HOLDINGS INC", "date-changed": "19930621"}]}
Filed by Bowne Pure Compliance
UNITED STATES
SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest
event reported): May 29, 2008
Home Solutions of America,
Inc.
(Exact name of registrant as
specified in its charter)
Delaware
001-31711
99-0273889
(State or other Jurisdiction of Incorporation)
(Commission File Number)
(IRS Employer Identification No.)
1340 Poydras Street, Suite
1800, New Orleans, Louisiana
70112
(Address of Principal Executive Offices)
(Zip Code)
Registrant's telephone number,
including area code:
(504) 562-5700
(Former name or former address if changed since last report.)
Check the appropriate box below if the
Form 8-K filing is intended to simultaneously satisfy the filing obligation of
the registrant under any of the following provisions:
o
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o
Soliciting material pursuant
to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule
14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule
13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a
Material Definitive Agreements
On September 22, 2008, Home
Solutions of America, Inc (the "Company") entered into a
Confidential Settlement Agreement (the "Settlement Agreement") with
its lenders under its Revolving Credit Facility, Term Loan and Letter of Credit
Facility (the "Credit Agreement"). The Settlement Agreement, which
supersedes the Forbearance Agreement entered into February 6, 2008, as
amended, between the Company and its lenders, effectively settled all
outstanding obligations between the Company and its lenders. Among other
things, the Settlement Agreement provided for the following:
1.
The Company immediately paid $1,175,000 to its
lenders.
2.
The Company issued to its lenders a total of
2,100,000 warrants to purchase shares of its common stock at an exercise price
of $.01 per share. The warrants are exercisable as follows: (i) 700,000
warrants become exercisable on March 1, 2009, (ii) 700,000 warrants
become exercisable on September 1, 2009, and (iii) 700,000 warrants
become exercisable on March 1, 2010. These warrants shall replace the
warrants set forth in Paragraph 7 of Amendment No. 1 to the Forbearance
Agreement.
3.
The Lenders agreed that the accrual of
interest on the Company's outstanding obligations under the Credit
Agreement and Amendment No. 1 to the Forbearance Agreement was suspended
effective September 12, 2008, and that all outstanding interest was
satisfied.
4.
The Company agreed that within three
(3) business days after receipt, the Company would remit any proceeds, net
of reasonable collection expenses, in connection with (a) claims asserted
by the Company against Mr. Brian Marshall ("
Marshall
")
and (b) receivables booked by Marshall on the Company's books and
records; the proceeds shall not include any uncollected FIGA Receivables as
such term is defined in the original Forbearance Agreement.
5.
EvenFlow Funding, LLC., an entity owned by the
Company's then Chairman of the Board, provided $2,000,000 in immediately
available funds to cash secure the Company's Letter of Credit which was
issued by Texas Capital Bank, National Association.
6.
The Lenders released and terminated all
security interests, pledges, guarantees and UCC-1s securing the obligations of
any or all of the Credit Parties under the Credit Agreement, the original
Forbearance Agreement, provided, however, that such release did not extend to
any security interest in any claim against Marshall
7.
Effective ninety-one (91) days from the
date of the agreement, the Lenders completely discharged the Company from any
and all claims. In addition, the Lenders filed a voluntary dismissal
WITHOUT
PREJUDICE
of the lawsuits previously filed against the Company.
The Company complied with all
provisions of the Settlement Agreement, filed in its entirety as
Exhibit 4.3 to this filing, and, accordingly, has no further obligations
to its lenders.
The Company reached an agreement to
settle the consolidated shareholder class action captioned
Home Solutions of
America Investor Group v. Fradella,
Civil Action
No. 3:06-cv-1096,filed on June 20, 2006 (the "2006
Class Action") and the shareholder derivative action captioned
Sved v. Chadwick
, Civil Action No. 3:06-cv-01135, filed on
June 27, 2006 (the "Derivative Action") (the proposed
settlements are hereinafter referred to as the "2006 Class Action
Settlement" and the "Derivative Action Settlement"). The 2006
Class Action Settlement and the Derivative Action Settlement are subject
to approval by the United States District Court for the Northern District of
Texas, which has set a hearing for March 23, 2009 to determine whether the
2006 Class Action Settlement and the Derivative Action Settlement should
be approved. The Company cannot predict whether the Court will grant approval
of the settlements or when the Court will issue its decision.
Under the terms of the 2006
Class Action Settlement, the Company agreed to pay $3.5 million to
settle all claims brought by a certified class of all persons who purchased the
common stock of Home Solution during the period between April 11, 2006 and
March 5, 2007, inclusive (the "2006 Settlement Class"). If all
required payments are made and the 2006 Class Action Settlement is
approved by the District Court, all claims asserted by 2006 Settlement Class
will be dismissed with prejudice, and a portion of the $3.5 million
settlement amount will be used to pay the attorneys' fees of counsel for
the plaintiffs.
Under the terms of the Derivative
Action Settlement, the Company agreed to undertake a series of remedial
measures in exchange for the dismissal of the Derivative Action with prejudice
as to all defendants. These remedial measures include, but are not limited to,
the separation of the positions of Chairman of the Board and Chief Executive
Officer for at least four years, the appointment of a new Chairman of the
Board, the appointment of a new interim Chief Financial Officer, an agreement
not to make strategic equity investments in any company in which a director or
executive director of Home Solutions has a direct ownership of more than 5%
subject to the Company's ability, through reasonable efforts, to
determine ownership interests in any such company, and the adoption by Home
Solutions of enhanced procedures to ensure the accuracy of its press releases
and public announcements.
The Company has agreed not to oppose
an application by plaintiff's counsel in the Derivative Action for an
attorney's fee award of up to $200,000 in cash and $50,000 in Home
Solutions common stock.
The Company also reached an
agreement to settle a purported class action captioned
Melms v. Home
Solutions of America et al.
, Civil Action No. 3L07-CV-1961, filed on
February 15, 2008 and amended on May 29, 2008 (the proposed
settlement is hereinafter referred to as the "Melms Settlement").
The Melms Settlement is subject to approval by the United States District Court
for the Northern District of Texas. The Company cannot predict whether the
Court will grant approval of the settlement. Under the terms of the Melms
Settlement, the Company agreed to pay $5.1 million to settle all claims
brought by a class of all persons who purchased common stock of Home Solutions
from May 10, 2007 through February 15, 2008.
Item 5.02 Departure of
Directors or Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain Officers.
On May 29, 2008, the Company
entered into an employment agreement with Frank J. Fradella (the
"Employment Agreement"), the Company's Chief Executive
Officer. The Employment Agreement has a term of three years, provides for an
annual base salary of $350,000 and includes an annual bonus equal up to 3% of
annual EBITDA, as defined; the Employment Agreement, filed in its entirety as
Exhibit 10.1 to this public filing, also provides severance benefits equal
up to one year of the annual base salary plus health benefits.
Concurrently while entering into the
Employment Agreement, the Company also provided a letter detailing a grant of
stock options (the "Grant"). The Grant provided for the issuance of
stock options equal to 10% of the Company's outstanding shares at the
date of grant; on May 29, 2008, the Company had 50,700,850 shares issued
and outstanding.. Further, the Grant provided that the 10% grant would be
broken into tranches with three strike prices. Five percent, or 50% of the
grant, would be at the money on the date of grant, while 2.5%, or 25% of the
grant, would be at $1.25 per share while the remaining 2.5%, or 25% of the
grant, would be at $1.75 per share. Sixty percent (60%) of the at the money
options vest at the grant date while the remaining 40% vest on
December 31, 2008. The above market options each vest 50% on first
anniversary of the date grant and 50% on the second anniversary of the date of
grant. The Grant replaces Mr. Fradella's previously granted
restricted stock purchase rights, contains accelerated vesting provisions in
the case of a change of control and has term whereby the options issued
pursuant to the Grant, expire on the fifth anniversary of the grant date.
On November 18, 2008, James M.
Grady, the Company's Interim-Chief Financial Officer and a Senior
Director with Alvarez & Marshal (A&M), submitted his formal resignation
to the Company.
On January 20, 2009, the
Company appointed V. Chase McCrea III as its Interim Chief Financial Officer.
Mr. McCrea, a 1991 graduate of the University of Southern California, has
been employed with the Company since July 2, 2007. Mr McCrea is a CPA with
over 17 years of experience working with and for public companies,
including over 8 years experience working for Big Four accounting firms,
where he attained the level of assurance manager. Mr. McCrea, who makes
his home in Texas, is not currently under contract with the Company and has
agreed to lead the finance department until such time as all public filings
become current and a permanent, New Orleans-based replacement, can be hired.
On February 2, 2009 Michael J.
McGrath tendered his resignation as Chairman of the Board of Directors for
personal reasons. At the time of his resignation, Mr. McGrath had no
disagreements with the Company. On February 3, 2009, Michael S. Chadwick
resigned his position as a member of the Company's Board of Directors.
FORWARD LOOKING STATEMENTS
This Current Report on Form 8-K contains forward-looking statements made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995 under Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended.
Forward-looking statements include
statements with respect to our beliefs, plans, objectives, goals, expectations,
anticipations, assumptions, estimates, intentions, and future performance, and
involve known and unknown risks, uncertainties and other factors, which may be
beyond our control, and which may cause our actual results, performance or
achievements to be materially different from future results, performance or
achievements expressed or implied by such forward-looking statements. All
statements other than statements of historical fact are statements that could
be forward-looking statements. You can identify these forward-looking
statements through our use of words such as "may,"
"will," "can" "anticipate,"
"assume," "should," "indicate,"
"would," "believe," "contemplate,"
"expect," "seek," "estimate,"
"continue," "plan," "point to,"
"project," "predict," "could,"
"intend," "target," "potential," and other
similar words and expressions of the future. Forward-looking statements may not
be realized due to a variety of factors, including, without limitation, future
economic, competitive and market conditions, regulatory framework, and future
business decisions, and the other factors referenced in our Annual Report on
Form 10-K for the year ended December 31, 2006, which contains a list of
specific risk factors that could cause actual results to differ materially from
those indicated by our forward-looking statements made in this Current Report
on Form 8-K.
Item 9.01
Financial Statements and Exhibits
(d) Exhibits
4.3
Confidential Settlement Agreement, which is
filed pursuant to Item 1.01
10.1
Employment Agreement between Home Solutions of
America, Inc. and Frank J. Fradella, which is filed pursuant to
Item 5.02
10.2
Grant of Stock Options Letter from Home
Solutions of America, Inc. to Frank J. Fradella, which is filed pursuant to
Item 5.02
SIGNATURES
Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
Home Solutions of America, Inc.
By:
/s/ V. Chase McCrea III
V. Chase McCrea III
Interim — Chief Financial
Officer
Dated: February 3, 2009
Exhibit Index
4.3
Confidential Settlement Agreement, which is
filed pursuant to Item 1.01
10.1
Employment Agreement between Home Solutions of
America, Inc. and Frank J. Fradella, which is filed pursuant to
Item 5.02
10.2
Grant of Stock Options Letter from Home
Solutions of America, Inc. to Frank J. Fradella, which is filed pursuant to
Item 5.02