ASSET PURCHASE AGREEMENT

Exhibit 10.5

ASSET PURCHASE AGREEMENT

among

HOME SOLUTIONS OF AMERICA, INC.
as Parent

and

P.W. STEPHENS ENVIRONMENTAL, INC.
as Buyer

dated as of July 3, 2008

CONTENTS

ARTICLE I		DEFINITIONS; INTERPRETATION		1
1.1		Definitions		1
1.2		Terms Defined Elsewhere		5
1.3		Interpretation		6
ARTICLE II		THE ASSET PURCHASE		6
2.1		Agreement to Purchase and Sell		6
2.2		Assets		6
2.3		Excluded Assets		7
2.4		Assumed Liabilities		7
2.5		Excluded Liabilities		8
ARTICLE III		CONSIDERATION		8
3.1		Consideration		8
3.4		Tax Allocation		9
ARTICLE IV		THE CLOSING		9
4.1		Closing		9
4.2		Closing Deliveries		9
ARTICLE V		REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT		11
5.1		Organization		11
5.2		Authorization		11
5.3		Non-Contravention		11
5.4		No Consents		12
5.5		Financial Matters		12
5.6		Tax Matters		12
5.7		Legal Proceedings		12
5.8		Compliance with Laws; Permits		12
5.9		Title to, Condition of, and Sufficiency of, Assets		13
5.10		Material Contracts		13
5.11		Intellectual Property		14
5.12		Insurance		14
5.13		Employment, Labor and Benefits Matters		15
5.14		Absence of Changes		15
5.15		No Brokers		16
5.16		Related Party Transactions; No Improper Payments		16
5.18		Disclosure		16
5.19		Solvency		16
ARTICLE VI		REPRESENTATIONS AND WARRANTIES OF BUYER		17
6.1		Organization		17
6.2		Authority		17
6.3		Non-Contravention		17
6.4		No Brokers		17
6.5		Disclosure		17
ARTICLE VII		ADDITIONAL COVENANTS		18

7.1		Further Assurances; Post-Closing Cooperation		18
7.2		Employees		18
7.3		Transfer Taxes		19
7.4		Publicity		19
7.5		Confidential Information		19
7.6		Expenses		20
7.7		Bulk Sales		20
7.8		Timberline Software License		20
ARTICLE VIII		INDEMNIFICATION		20
8.1		Indemnification Obligations of Seller and Parent		20
8.2		Indemnification Obligations of Buyer		21
8.3		Notice of Claims		21
8.4		Procedure for Third Party Claims		21
8.5		Survival; Limitations		23
ARTICLE IX		MISCELLANEOUS		24
9.1		Entire Understanding		24
9.2		Severability; Joint Drafting		24
9.3		Waiver and Amendment		24
9.4		Headings		24
9.5		Governing Law; Dispute Resolution; Jury Trial Waiver		24
9.6		Notices		25
9.7		Assignment; No Third Party Beneficiaries		25
9.8		Specific Performance		25
9.9		Counterparts		26

INDEX OF EXHIBITS:
Exhibit A		Form of Bill of Sale
Exhibit B		Form of Employee Services Agreement
INDEX OF DISCLOSURE SCHEDULES:
Schedule 2.2(b)		Assumed Contracts
Schedule 2.3(g)		Certain Excluded Assets
Schedule 2.4(b)		Assumed Liabilities
Schedule 3.2		Purchase Price Adjustment
Schedule 3.3		Purchase Price Allocation
Schedule 5.4		Approvals
Schedule 5.5		Financial Statements
Schedule 5.7		Legal Proceedings
Schedule 5.8(a)		Compliance with Applicable Laws
Schedule 5.8(b)		Permits
Schedule 5.9		Condition of Assets
Schedule 5.10(a)		Material Contracts
Schedule 5.10(d)		Leases
Schedule 5.11(a)		IP
Schedule 5.11(b)		Seller’s Rights to IP
Schedule 5.12(a)		Seller Insurance Policies
Schedule 5.13(a)		Employees and Independent Contractors
Schedule 5.13(d)		Plans

Schedule 5.17		Hazardous Substances
Schedule 7.2(a)		Transferred Employees

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this “ Agreement ”) is entered into as of July 3, 2008 (the “ Effective Date ”) among PW STEPHENS, INC., a California corporation (“ Seller ”), Home Solutions of America, Inc., a Delaware corporation (“ Parent ”), and P.W. STEPHENS ENVIRONMENTAL, INC., a Delaware corporation (“ Buyer ”). Seller, Parent and Buyer are sometimes referred to herein interchangeably and collectively, as context requires, as a “ Party ” or the “ Parties .”

WHEREAS , the Parties desire to enter into this Agreement pursuant to which Seller proposes to sell to Buyer, and Buyer proposes to purchase from Seller, substantially all of the assets used or held for use by Seller in the conduct of the Business (as defined below), and Buyer proposes to assume certain liabilities of Seller with respect to the Business; and

WHEREAS , the Parties desire to make and enter into certain representations, warranties and covenants in connection with the transactions contemplated hereby.

NOW, THEREFORE , in consideration of the foregoing and the respective representations, warranties, and covenants set forth herein, intending to be legally bound, the Parties agree as follows:

ARTICLE I DEFINITIONS; INTERPRETATION .

1.1 Definitions . These terms shall, for all purposes of this Agreement, have the following meaning:

     (a) “ Action ” means any action, claim, proceeding, arbitration, suit, investigation or regulatory inquiry or survey (whether civil, criminal, administrative or judicial), or any appeal therefrom (including any claim, audit, litigation, administrative proceeding or arbitration against any Person involving any matter related to employment including, but not limited to, claims of discrimination, claims of unpaid wages, claims of wrongful discharge, claims of unfair labor practices, workers’ compensation claims, and claims related to occupational safety and health law).

     (b) “ Affiliate ” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such Person.

     (c) “ Approval ” means any approval, authorization, consent, license, franchise, order, registration or permit of or by, filing with, or notice to, any Person.

     (d) “ Business ” means the business, as conducted by Seller as of the date hereof.

     (e) “ Business Day ” means any day except Saturday, Sunday or any day on which banks are authorized or required by Law to close in Baltimore, Maryland.

     (f) “ Closing Payment ” means Five Million Dollars ($5,000,000) subject to adjustment as set forth in Section 3.2.

     (g) “ Code ” means the Internal Revenue Code of 1986, as amended.

     (h) “ Confidential Information ” means any confidential or proprietary non-public information concerning the Business that is known by Parent or Seller, but does not include information that is or becomes (through no improper action or inaction, including a breach of this Agreement, by Parent or Seller) generally available to the public after the date hereof.

     (i) “ Contract ” means any written or oral agreement, arrangement, lease, mortgage, contract, note, power of attorney, insurance policy covenant, understanding, commitment or instrument.

     (j) “ Conveyance Documents ” means, interchangeably and collectively as the context requires, the Bill of Sale, the Seller Closing Certificate, the Buyer Closing Certificate, and all other documents executed and delivered by Seller and Buyer at the Closing for the purpose of evidencing the transactions contemplated hereby.

     (k) “ Damages ” means any loss, Liability, diminution of value, fine, penalty, judgment, award, cost or expense (including, without limitation, reasonable attorneys’ fees or any other reasonable out-of-pocket expenses incurred in connection with any Action) or damage.

     (l) “ DeLage Lease ” means that certain Equipment Lease, dated as of February 28, 2005, by and between De Lage Landen Financial Services, Inc. and the Seller.

     (m) “ Employees ” means individuals employed in connection with the Business (including those who are actively employed or on leave, disability or other absence from employment, and including officers and directors).

     (n) “ Environmental Law ” shall mean any federal, state or local laws, statute, ordinance or regulation pertaining to health, industrial hygiene, natural resources, or the environment, including without limitation the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Sections 9601, et. seq. (“ CERCLA ”) and the Resource Conservation and Recovery Act of 1978, as amended, 42 U.S.C. Section 6901, et. seq.(“ RCRA ”).

     (o) “ Enterprise Fleet Lease ” means that certain Master Equity Lease Agreement, dated as of May 1, 1999, by and between Enterprise Fleet Services and Seller.

     (p) “ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

     (q) “ GAAP ” means United States generally accepted accounting principles consistently applied.

     (r) “ Government Entity ” means any federal, state, local or foreign government, court, agency (administrative, arbitrative, regulatory or otherwise), commission, department or other authority or instrumentality.

     (s) “ Hazardous Substance ” shall mean:

          (i) Those substances within the definitions of “hazardous substances” in CERCLA, or “hazardous wastes” or “solid waste” in RCRA, or the regulations promulgated pursuant to said laws;

          (ii) Those substances listed as a “hazardous material” by the United States Department of Transportation or as “hazardous substances” by the Environmental Protection Agency; and

          (iii) Oil, petroleum, or any other substances, materials and wastes which are listed, classified, defined, or regulated under the Environmental Laws.

     (t) “ Highest Management Authority ” means, with respect to any entity, (i) the Person or group of Persons (as the case may be) who are elected or appointed by the owner(s) of such entity to manage the business and affairs of such entity (by way of example, but not in limitation, the board of

directors of a corporation), including all committees thereof; or (ii) if there is no Person or group of Persons within the scope of the preceding clause (i), the owner(s) of such entity (by way of example, but not in limitation, the members of a member-managed limited liability company).

     (u) “ Indemnified Party ” means any Person entitled to indemnification pursuant to Article VIII .

     (v) “ Indemnifying Party ” means any Person required to indemnify an Indemnified Party pursuant to Article VIII .

     (w) “ Independent Contractors ” means individuals engaged as independent contractors in connection with the Business.

     (x) “ IP ” means, interchangeably and collectively as context requires, the following: (i) copyrights; (ii) patents and invention disclosures, including continuations, divisionals, continuations-in-part, renewals and reissues; (iii) trademarks, service marks, trade names, trade dress, designs, logos, emblems, signs or insignia, slogans, and other similar designations of source or origin, together with all goodwill symbolized by the foregoing; (iv) copyrights and copyrightable material; (v) trade secrets and other confidential information, know-how, customer lists, prospect lists, business plans, inventions, proprietary processes, formulae, algorithms, models and methodologies; (vi) rights of publicity and privacy relating to the use of the names, likenesses, voices, signatures and biographical information of natural Persons; (vii) all rights with respect to computer programs, computer program code, the algorithms underlying any computer program, data and databases, to the extent not otherwise embodied in the foregoing clauses (i)-(vii); (viii) all rights with respect to domain names, internet protocol addresses, software code signing certificates, secure socket layer certificates and telephone numbers, to the extent not otherwise embodied in the foregoing clauses (i)-(viii); (ix) all moral rights and/or rights of attribution and/or integrity in any of the foregoing; (x) registrations and applications for any of the foregoing; and (xi) the right to sue for past infringement of any of the foregoing.

     (y) “ Laws ” means all federal, state, local or foreign laws (including common law), codes, statutes, ordinances, orders, judgments, arbitration awards, decrees, administrative or judicial promulgations, injunctions, determinations, rules, regulations, Permits of, and agreements with, all Governmental Entities, including, to the extent applicable, any of the foregoing regarding (i) human health and safety; (ii) soil, land surface or subsurface strata, surface waters, groundwaters, drinking water supply, stream sediments, ambient air (including indoor air), plant and animal life and any other environmental medium or natural resource; or (iii) any hazardous substances, oils, pollutants, contaminants, chemicals, materials or wastes, including medical and other biohazardous waste, and/or the disposal thereof.

     (z) “ Liability ” means any debt, liability, commitment or obligation of any kind, character or nature whatsoever, secured or unsecured, accrued, fixed, absolute, contingent or otherwise, and whether due or to become due.

     (aa) “ Liens ” means all mortgages, liens, pledges, security interests, charges, claims, restrictions, leases, possessory rights, options, rights of first refusal, covenants, easements, title and survey matters and any other encumbrance, right or interest of any kind or character, whether vested or contingent, including any (i) interest of joint tenants, tenants in common and tenants by the entirety; (ii) community or other marital property interest; or (iii) interests arising from any divorce decree, separation agreement, prenuptial agreement or other similar domestic relations order or agreement.

     (bb) “ Material Adverse Effect ” means (i) a material adverse effect on the condition (financial or otherwise), operating results, operations, assets or properties of the Business taken as a whole, or (ii) a material adverse effect on the ability of Seller or Parent to consummate the transactions contemplated by this Agreement, other than, in either case, an effect resulting from an Excluded Matter. “ Excluded Matter ” means any one or more of the following: (a) the effect of any economic, financial or market change that generally affects the industry in which the Business operates; (b) the effect of any change arising in connection with earthquakes, hostilities, acts of war, sabotage or terrorism or military actions or any escalation or material worsening of any such hostilities, acts of war, sabotage or terrorism or military actions existing or underway as of the date hereof; (c) the effect of any changes in applicable Laws or accounting rules; or (d) any effect resulting from the public announcement of this Agreement, compliance with terms of this Agreement or the consummation of the transactions contemplated by this Agreement.

     (cc) “ Ordinary Course ” means the ordinary course of the Business, consistent with past practice in nature, scope and magnitude.

     (dd) “ Organizational Documents ” means, (i) with respect to a corporation, the corporation’s articles or certificate of incorporation and bylaws; or (ii) with respect to a limited liability company, the limited liability company’s articles or certificate of organization or formation and operating agreement; and (iii) all amendments and supplements to any of the foregoing.

     (ee) “ Permits ” means all Approvals, permits (including environmental, construction and operation permits), certificates, exemptions, classifications, registrations and other similar documents, rights and authorizations issued by any Government Entity (but not including patents, copyrights and trademarks).

     (ff) “ Permitted Liens ” means: (i) liens imposed by Law for Taxes, assessments or charges or claims by Governmental Entities that are not yet due or are being properly contested (provided such contest tolls collection of such taxes and the lien thereof and provided that reasonably acceptable reserves are being maintained); (ii) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, landlords’ and other like liens imposed by Law or contract, arising in the Ordinary Course and securing obligations that are not due and payable; (iii), solely with respect to personal property, pledges and deposits made in the Ordinary Course in compliance with workers’ compensation, unemployment insurance and other social security Laws or regulations; and (iv), solely with respect to personal property, deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety, indemnity and appeal bonds, performance and return-of-money and fiduciary bonds and other obligations of a like nature, in each case in the Ordinary Course.

     (gg) “ Person ” means an individual, a sole proprietorship, a partnership, a corporation, an association, an institution, a joint stock company, a limited liability company, a trust, a joint venture, an unincorporated organization, or a Government Entity or any other legal entity.

     (hh) “ Plans ” means, interchangeably and collectively as context requires, all deferred compensation and incentive compensation, stock purchase, stock option and other equity compensation plans, programs, Contracts or arrangements; all severance or termination pay, medical, surgical, hospitalization, life insurance and other “welfare” plans, funds or programs (within the meaning of section 3(1) of ERISA); all profit-sharing, stock bonus or other “pension” plans, funds or programs (within the meaning of section 3(2) of ERISA); all employment, termination or severance Contracts; and all other employee benefit plans, funds, programs or Contracts, in each case that is sponsored, maintained or contributed to or required to be contributed to by Seller or either Subsidiary for the benefit of any current or former Employees.

     (ii) “ Retained Employees ” means Employees and who are not Transferred Employees.

     (jj) “ Seller Receivables ” means all accounts receivable, other rights to payment from customers, and notes receivable of Seller, and the full benefit of all security for all of the foregoing, and all claims, remedies and other rights related to all of the foregoing.

     (kk) “ Seller’s Knowledge ” means all facts actually known, or with reasonable investigation would have been known, by Frank Fradella and the executive officers of the Parent.

     (ll) “ Subsidiaries ” means Ronnie Tassin Enterprises, Inc., a California corporation, d/b/a “Marble Man Stone Shapers,” and Fiber-Seal of Los Angeles, Inc., a California corporation.

     (mm) “ Taxes ” means all taxes, assessments, charges, duties, fees, levies or other governmental charges (including interest, penalties or additions associated therewith), including income, franchise, capital stock, real property, personal property, tangible, withholding, employment, payroll, social security, unemployment compensation, disability, transfer, sales, use, excise, gross receipts, value-added and all other taxes of any kind imposed by any Government Entity, whether disputed or not, and any charges, interest or penalties imposed or that may be imposed thereon by any Government Entity.

     (nn) “ Tax Return ” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

1.2 Terms Defined Elsewhere . In addition to the terms defined in Section 1.1 , each of the following terms is defined in the Section set forth opposite such term:

Term		Section
Agreement		Preamble
Annual Financials		5.5(a)
Assets			2.2
Assumed Contracts			2.2(b)
Assumed Liabilities			2.4
Basket Amount			8.5(c)
Bill of Sale			4.2(a)(i)
Buyer		Preamble
Buyer Parties			8.1
Buyer Closing Certificate		4.2(b)(vii)
Claim Notice			8.3
Claims Period			8.5(a)
Closing			4.1
Closing Date			2.1
De Minimis Investment			5.16(a)
Effective Date		Preamble
Employee Services Agreement		4.2(a)(ii)
Excluded Assets			2.3
Excluded Contracts			2.5(c)
Excluded Liabilities			2.5
Financial Statements			5.5(a)
HSRL Loan			4.2(a)(x)
Interim Balance Sheet			5.5(a)

Term		Section
Interim Financials			5.5(a)
License Agreements			5.10(a)(x)
Lien Releases			4.2(a)(x)
Material Contracts			5.10(a)
Parent		Preamble
Parent Stockholder Claim			8.1(d)
Parties		Preamble
Payoff Letters		4.2(a)(ix)
Purchase Price			3.1
Related Party			5.16(a)
Response Period			8.4(a)
Seller		Preamble
Seller Insurance Policies			5.12(a)
Seller Parties			8.2
Seller Closing Certificate		4.2(a)(iv)
Third Party Action			8.4(a)
Third Party Action Notice			8.4(a)
Transferred IP			2.2(c)
Transferred Employees			7.2(a)

1.3 Interpretation . Unless the context of this Agreement otherwise clearly requires, (a) references to the plural include the singular, and references to the singular include the plural, (b) references to any gender include the other genders, (c) the words “include,” “includes” and “including” do not limit the preceding terms or words and shall be deemed to be followed by the words “without limitation”, (d) the terms “hereof”, “herein”, “hereunder”, “hereto” and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement, (e) the terms “day” and “days,” if not capitalized, mean and refer to calendar day(s), and (f) the terms “year” and “years” mean and refer to calendar year(s). Unless otherwise set forth herein, references in this Agreement to any document, instrument or agreement (including this Agreement) (A) includes and incorporates all schedules and other attachments thereto, (B) includes all documents, instruments or agreements issued or executed in replacement thereof and (C) means such document, instrument or agreement, or replacement or predecessor thereto, as amended, modified or supplemented from time to time in accordance with its terms and in effect at any given time. Unless otherwise specified, (x) all Article, Section and Schedule references herein are to Articles, Sections and Schedules of this Agreement; (y) all accounting terms not defined in this Agreement shall be construed in accordance with GAAP; and (z) the terms “financing statement” and “termination statement” shall have the meanings assigned thereto in Article 9 of the Uniform Commercial Code.

ARTICLE II THE ASSET PURCHASE .

2.1 Agreement to Purchase and Sell . Subject to the terms, conditions and other provisions of this Agreement, at the Closing, Seller is granting, selling, assigning, transferring and delivering to Buyer, and Buyer is purchasing from Seller, all right, title and interest of Seller in and to all of the Assets (as hereinafter defined), free and clear of all Liens except for Permitted Liens, and Buyer is assuming only the Assumed Liabilities. The date of the Closing is referred to as the “ Closing Date .”

2.2 Assets . Except as otherwise expressly set forth in Section 2.3 , the term “ Assets ” shall mean all the assets, properties and rights of Seller used, or held for use, in the Business, including, without limitation:

     (a) all furnishings, furniture, supplies, tools, machinery, equipment, vehicles and other personal property and fixed assets that are owned by Seller and are used in the Business;

     (b) the Contracts listed on Schedule 2.2(b) (the “ Assumed Contracts ”);

     (c) all IP used or held for use in the Business, and all rights of Seller therein (the “ Transferred IP ”);

     (d) all goodwill of the Business;

     (e) all prepaid expenses of the Business;

     (f) all inventory of the Business;

     (g) all original books and records of the Business, including, to the extent permitted by applicable Law, all personnel records for Transferred Employees (after the termination of the Employee Services Agreement), but not including personnel records for any Retained Employees;

     (h) all Permits related to the Business, to the extent transferable to Buyer pursuant to applicable Law;

     (i) all cash and cash equivalents of Seller and all Seller Receivables;

     (j) the Enterprise Fleet Lease and the DeLage Lease;

     (k) The Seller’s rights under the HSRL Loan, unless Buyer waived the requirement of the HSRL Loan; and

     (l) 100% of the ownership interest in each Subsidiary.

2.3 Excluded Assets . Notwithstanding anything herein to the contrary, the Assets will not include the following assets, properties and rights of Seller (collectively, the “ Excluded Assets ”):

     (a) all insurance policies of Seller;

     (b) all Plans;

     (c) all Permits that Seller is prohibited by applicable Law from transferring to Buyer;

     (d) personnel records for Retained Employees and, to the extent Seller is prohibited by applicable Law from transferring such records to Buyer, for Transferred Employees;

     (e) the Organizational Documents of Seller and the minute books of Seller;

     (f) the rights that accrue to Seller under this Agreement and any other agreements between Seller and Buyer to be delivered pursuant to this Agreement; and

     (g) the assets, properties and/or rights listed on Schedule 2.3(g) .

2.4 Assumed Liabilities . In connection with the purchase by Buyer of the Assets, at and effective as of the Closing, Buyer is assuming the following Liabilities relating to the Business (collectively, the “ Assumed Liabilities ”), and no other Liabilities:

     (a) Liabilities of Seller under the Assumed Contracts that are to be paid, performed or discharged by such Seller after the Closing;

     (b) the accounts payable and accrued expenses listed on Schedule 2.4(b) ;

     (c) Liabilities under the Enterprise Fleet Lease and the DeLage Lease; and

     (d) Liabilities attributable to, or arising out of, the ownership of the Assets and the operation of the Business after the Closing.

2.5 Excluded Liabilities . Notwithstanding anything herein to the contrary, the Assumed Liabilities will not include, and in no event will Buyer assume, agree to pay, discharge or satisfy, or otherwise have any responsibility for, any Liability of Parent or Seller of any kind, whether known, unknown, contingent or otherwise other than those expressly described in Section 2.4 (collectively, the “ Excluded Liabilities ”), including all Liabilities of Seller of any kind:

     (a) for any Taxes of Parent, Seller or any Affiliate of Parent or Seller, including any payroll Taxes with respect to any Employee or Independent Contractor;

     (b) pertaining to any Excluded Asset;

     (c) under any Contract other than the Assumed Contracts (the “ Excluded Contracts ”);

     (d) arising out of or related to any Plan;

     (e) related to Retained Employees;

     (f) related to Transferred Employees to the extent such Liability is attributable to events or circumstances occurring or existing at or prior to the Closing;

     (g) under the Assumed Contracts arising prior to the Closing;

     (h) relating to any payables from Seller to Parent or any affiliate of Parent or Seller;

     (i) owed to any former employee, contractor, officer, director, owner, member, shareholder or partner of Seller, Parent or any of their Affiliate, including any Parent Stockholder Claims; or

     (j) without limiting any of the foregoing, otherwise attributable to or arising out of the ownership or operation of any Assets or the Business (including any liabilities owed to stockholders of the Seller) as of or prior to the Closing.

ARTICLE III CONSIDERATION .

3.1 Consideration . The consideration for the Assets (the “ Purchase Price ”) is (a) the Closing Payment (subject to adjustment in accordance with Section 3.2 below), and (b) the assumption of the Assumed Liabilities by Buyer.

3.2 Purchase Price Adjustment . The Closing Payment shall be adjusted on a dollar-for-dollar basis (a) upward, to the extent that Parent provided Seller cash for working capital purposes between May 31, 2008 and Closing; and (b) downward, to the extent that Seller provided cash to Parent between May 31, 2008 and Closing, to (i) to pay any liability of the Parent (ii) to pay liabilities of Seller to Parent or (iii) for any purpose other than the payment of liabilities of the Seller. One day prior to Closing, Parent and

Seller shall provide Buyer a statement (with reasonable supporting documentation) of the amounts contemplated by this Section 3.2, which statement shall, as of the Closing Date, become Schedule 3.2 to this Agreement.

3.3 Tax Allocation . The Purchase Price shall be allocated in accordance with Schedule 3.3 , which shall be prepared by Buyer prior to Closing. The Parties agree to make consistent use of such allocation for all Tax purposes and in all filings with, and declarations and reports to, all Governmental Entities. In any Action relating to the determination of any Tax, no Party shall contest such allocation or assert that such allocation is not correct.

ARTICLE IV THE CLOSING .

4.1 Closing . The closing of the transactions contemplated by this Agreement (the “ Closing ”) is occurring simultaneously with the execution of this Agreement at the offices of Venable LLP in Baltimore, Maryland or, at the election of the Parties, the Closing may take place by facsimile or electronic mail delivery of closing documents.

4.2 Closing Deliveries . At the Closing:

     (a) Seller and Parent will deliver (executed as applicable) to Buyer:

	(i)		possession of the Assets and a Bill of Sale, Assignment and Assumption Agreement from Seller in the form of Exhibit A (the “ Bill of Sale ”);
	(ii)		Employee Services Agreement from Seller in the form of Exhibit B (the “ Employee Services Agreement ”);
	(iii)		An opinion of counsel to Parent in a the form previously approved by Buyer;
	(iv)		written certification by Parent and Seller that (A) the representations and warranties of Seller and Parent set forth in this Agreement are true and correct in all material respects (except that those representations and warranties that are limited by materiality are true and correct in all respects) as of the Effective Date (except where such representations or warranties are made expressly as of a specific date and then as of such date); and (B) Seller and Parent have performed in all material respects all obligations required to be performed by each of them under this Agreement at or prior to the Closing (the “ Seller and Parent Closing Certificate ”);
	(v)		a certificate of good standing issued by the appropriate state office with respect to Parent, Seller and the Subsidiaries within twenty (20) days prior to the Effective Date;
	(vi)		a copy of the resolutions of Seller’s Highest Management Authority and owner(s) and resolutions of the Board of Directors of Parent approving this Agreement and the transactions contemplated hereby, all of which shall be certified by an authorized officer of Parent or Seller, as applicable;
	(vii)		the approval of the lenders under the Credit Agreement dated on or about November 1, 2006, as amended, among Parent, Texas Capital Bank, National

			Association, as Administrative Agent and a lender, the other lenders party thereto and certain other parties;
	(viii)		a payoff letter executed by each creditor to whom Seller is indebted, or to whom Parent or any Affiliate of Seller or Parent is indebted in connection with the Business (collectively, the “ Creditors ”), (A) pursuant to which such creditor acknowledges and agrees as to the total payoff amount required to completely satisfy such indebtedness, and (B) containing wire transfer or other transmittal instructions for delivery of such payoff amount (the “ Payoff Letters ”);
	(ix)		documents executed by each Creditor terminating and releasing all of the Creditor’s Liens on assets owned by Seller or otherwise used or held for use in the Business (the “ Lien Releases ”);
	(x)		Evidence of a loan in the amount of $500,000 from Seller to Home Solutions Restoration of Louisiana, in a form reasonably acceptable to Buyer (the “HSRL Loan”); and
	(xi)		such other documents as are required under this Agreement.

(b) Buyer is delivering (executed as applicable) to Seller:

	(i)		by wire transfer of immediately available funds to a bank account in the United States specified in advance by Seller, the Closing Payment;
	(ii)		the Employee Services Agreement;
	(iii)		the Bill of Sale;
	(iv)		[Reserved];
	(v)		[Reserved];
	(vi)		written certification by an authorized officer of Buyer that (A) the representations and warranties of Buyer set forth in this Agreement are true and correct in all material respects (except that those representations and warranties that are limited by materiality are true and correct in all respects) as of the Effective Date (except where such representations or warranties are made expressly as of a specific date and then as of such date); and (B) Buyer has performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing (the “ Buyer Closing Certificate ”);
	(vii)		a certificate of good standing issued by the appropriate state office with respect to Buyer within twenty (20) days prior to the Effective Date;
	(viii)		a copy of the resolutions of Buyer’s Highest Management Authority approving this Agreement and the transactions contemplated hereby, which shall be certified by an authorized officer of Buyer; and
	(ix)		such other documents as are required under this Agreement.

ARTICLE V    REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT .

Seller and Parent jointly and severally represent and warrant to Buyer as follows:

5.1 Organization . Seller and each Subsidiary (a) is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation; (b) has corporate power to carry on the Business to the extent it is now being conducted; (c) is not required to be qualified or licensed to do business in any jurisdiction (except where the failure to be so qualified or licensed would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect), and Seller or the Subsidiary, as applicable, is so qualified or licensed in such jurisdictions; (d) has made available to Buyer true and complete copies of Seller’s and each Subsidiaries Organizational Documents, each as amended to date, which Organizational Documents are in full force and effect; and (e) is not in violation of any provision of its Organizational Documents. Seller has no subsidiaries or any direct or indirect ownership interest in any other Person other than the Subsidiaries. No Person other than Parent has any ownership interest in Seller. Parent (a) is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation; and (b) has made available to Buyer true and complete copies of Seller’s and each Subsidiaries Organizational Documents, each as amended to date, which Organizational Documents are in full force and effect.

5.2 Authorization . Seller and Parent each have the right, power and capacity to execute and deliver this Agreement, the Conveyance Documents and any other agreement entered into in connection with this Agreement to which it is a party, and to perform its respective obligations under this Agreement, the Conveyance Documents and any other agreement entered into in connection with this Agreement to which it is a party, and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement, the Conveyance Documents and any other agreement entered into in connection with this Agreement by Parent or Seller, and the performance by Parent or Seller of its respective obligations hereunder and thereunder, and the consummation of the transactions provided for herein and therein have been duly and validly authorized and approved by all necessary corporate action on the part of Parent or Seller, as applicable. This Agreement, the Conveyance Documents and any other agreement entered into in connection with this Agreement (a) has been duly executed and delivered by Seller and Parent, and (b) constitutes a valid and binding agreement of Seller and Parent, enforceable against Seller and Parent in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the enforceability of creditors’ rights generally, general equitable principles and the discretion of courts in granting equitable remedies.

5.3 Non-Contravention . Subject to receipt of the consents and approvals described in Schedule 5.4 , neither the execution and delivery of this Agreement, the Conveyance Documents or any other agreement entered into in connection with this Agreement by Seller or Parent, nor the consummation of the transactions contemplated hereby or thereby, does or would, after the giving of notice or the lapse of time or both, (a) conflict with, result in a breach of, constitute a default under, or violate the Organizational Documents of Parent or Seller, or any Law applicable to Seller or Parent; (b) conflict with, result in a breach of, constitute a default under, result in the acceleration of any rights or obligations under, create in any Person the right to accelerate any rights or obligations under or amend, modify, cancel or