8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

December 13, 2004
Date of report (date of earliest event reported)

HOME PRODUCTS INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation) 0-17237
(Commission File Number) 36-4147027
(I.R.S. Employer Identification No.)

4501 West 47th Street
Chicago, IL 60632
(Address of principal executive offices)(Zip code)

(773) 890-1010
(Registrant’s telephone number, including area code)

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 (see General Instruction A.2. below):

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))

TABLE OF CONTENTS

Amendments to Bylaws

Employment Agreement with Douglas Ramsdale

Employment Agreement with Richard Hassert

Assignment and Assumption Agreement

Joint Press Release

Press Release

Item 1.01. Entry into a Material Definitive Agreement

On December 14, 2004, Home Products International, Inc. (the “Company”) entered into an employment agreement (the “Ramsdale Agreement”) with Douglas Ramsdale, the new President and Chief Executive Officer of the Company and a member of the Company’s Board of Directors (the “Board”). The Ramsdale Agreement is filed with this report as Exhibit 10.1 and is incorporated by reference into this report. The material terms and conditions of the Ramsdale Agreement are summarized in Item 5.02(c) below.

On December 14, 2004, the Company also entered into an employment agreement (the “Hassert Agreement”) with Richard Hassert, the Company’s new Chief Operating Officer. The Hassert Agreement is filed with this report as Exhibit 10.2 and is incorporated by reference into this report. The material terms and conditions of the Hassert Agreement are summarized in Item 5.02(c) below.

On December 14, 2004 the Board also approved entering into an Assignment and Assumption Agreement (the “Assumption Agreement”) by and among the Company, Storage Acquisition Company, L.L.C. (the “Purchaser”) and James Tennant, the Company’s former Chief Executive Officer and Chairman of the Board. Under the Assumption Agreement, the Company assigned to the Purchaser, and the Purchaser accepted, the right to receive Mr. Tennant’s consulting services that will be provided by him following a termination of his employment after a change in control of the Company pursuant to the Employment Agreement, dated as of May 19, 1999, as amended as of October 14, 1999 and December 15, 1999, by and between the Company and Mr. Tennant, in exchange for Mr. Tennant (a) receiving from the Purchaser a lump sum payment in the amount of $4.1 million in full and final satisfaction of the amount due to Mr. Tennant for such consulting services under Mr. Tennant’s Employment Agreement (which amount the Company previously had estimated to be approximately $4.91 million) and (b) releasing certain potential claims against the Company. The consulting services will be provided to the Purchaser for a period of 24 months following the termination of Mr. Tennant’s employment by the Company (which was effective as of the close of business on December 13, 2004, as further described in Item 5.02(b) below). The Assumption Agreement is filed with this report as Exhibit 10.3 and is incorporated by reference into this report.

On December 14, 2004, the Company amended and restated its existing senior secured credit facility, and approved and signed an Amended and Restated Loan and Security Agreement with Fleet Capital Corporation, as lender and agent (the “Loan and Security Agreement”). The amended and restated credit facility extends the term of the existing facility through December 2008 and provides for asset-based borrowings of up to $60 million. Borrowings under the facility can be used for general operating capital needs, including the payment of costs and expenses incurred in connection with the Tender Offer (as defined in Item 5.01 below). Like the existing facility, borrowings are secured by a security interest in substantially all of the assets of, and a pledge of all of the stock of, Home Products International – North America, Inc., and the Company remains subject to financial covenants requiring minimum gross availability under the facility and maintenance of specific ratios of earnings to cash interest expense. The covenants restricting changes of ownership and changes of control of the Company have been revised to reflect the new ownership structure of the Company following the Tender Offer. Borrowings under the amended and restated facility initially bear interest at LIBOR plus 225 basis points or Fleet Capital Corporation’s prime rate of interest plus 50 basis points (subject to adjustment based on average gross availability). The Loan and Security Agreement will be filed as an exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ending January 1, 2005. As of December 14, 2004, the Company had outstanding borrowings and letters of credit under this facility of approximately $23 million.

Item 3.01. Notice of Delisting

(d) Please see below under Item 8.01.

Item 3.02. Unregistered Sales of Equity Securities

On December 13 and 14, 2004 the Company entered into three stock purchase agreements with the Purchaser pursuant to which the Company agreed to sell to the Purchaser an aggregate of 227,160 shares of the Company’s common stock (the “Shares”) to fund the Company’s payments in respect of (i) the cancellation of certain stock options to purchase Shares, (ii) obligations under the Company’s 1998 Executive Incentive Plan, and (iii) FICA and Medicare obligations of the Company related to the foregoing payments. The issuance and sale of the Shares under these agreements was completed on

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December 14, 2004. As a result of these Share issuances, the Purchaser’s ownership of the Company has increased from approximately 92.9% to approximately 93.1%.

There are no underwriters involved in the issuances of Shares to the Purchaser pursuant to the foregoing agreements, and such issuances are exempt from registration under the Securities Act of 1933, as amended, in reliance on Section 4(2) thereof.

Item 5.01. Change In Control of Registrant

On October 28, 2004, the Company and the Purchaser entered into an Acquisition Agreement (the “Acquisition Agreement”), pursuant to which the Purchaser conducted a tender offer (the “Tender Offer”) to acquire all of the outstanding Shares for $2.25 per share in cash. The Tender Offer expired as scheduled at 5:00 p.m., New York City time, on December 13, 2004. Mellon Investor Services LLC, the Depositary for the Tender Offer, advised the Purchaser that, as of expiration of the Tender Offer, an aggregate of 7,365,360 Shares (including 26,045 Shares tendered pursuant to notices of guaranteed delivery), representing approximately 92.9% of the outstanding Shares, had been validly tendered to the Purchaser pursuant to the Tender Offer. On December 13, 2004 the Purchaser accepted all validly tendered Shares for payment, subject, in the case of any Shares tendered under the guaranteed delivery procedures specified in the Tender Offer documents, to the perfection of those tenders in the manner and within the period specified in such documents. Payments for accepted Shares will be made promptly through the Depositary for the Tender Offer. A copy of the joint press release issued by the Company and the Purchaser announcing the completion of the Tender Offer is attached as Exhibit 99.1 to this report.

Item 5.02. Departure of Directors or Principal Officers; Election of Directors’ Appointment of Principal Officers

(b) The Acquisition Agreement provided that, following the Share Acceptance, the Board would be reconstituted to consist solely of nine new directors, six of whom are designees named by Mr. Gantz pursuant to his right to name those directors granted under the Voting Agreement and Irrevocable Proxy (described below), and the remaining three of whom are designees named by the Purchaser. Pursuant to these provisions, on December 13, 2004 (the date of Share Acceptance), the size of the Board was increased to consist of 13 directors and the following persons were appointed to the Board:

Joseph Gantz
James M. Gould
Ellen Havdala
Robert L. Lawrence
Donald J. Liebentritt
William C. Pate
Terry Savage
Douglas Ramsdale
Mark Weber

The Purchaser has entered into a Voting Agreement with Joseph Gantz (the beneficial owner of 1,530 Shares) and executed an Irrevocable Proxy in favor of Mr. Gantz. The Purchaser’s members, which consist of: (i) EGI-Fund (02-04) Investors, L.L.C., a Delaware limited liability company (“EGI-Fund”); (ii) Triyar Storage Investment Company, LLC (“Triyar”), a Delaware limited liability company and an affiliate of Triyar Capital, LLC; (iii) Joseph Gantz; and (iv) Walnut Investment Partners, L.P. (“Walnut”), an affiliate of Mr. Gantz (EGI-Fund, Triyar, Mr. Gantz and Walnut being collectively referred to as the “Investors”), have entered into a Board Composition Agreement. Under these agreements, Mr. Gantz is entitled to designate a majority of the Board. Pursuant thereto, Mr. Gantz has designated, in addition to himself, Messrs. Gould, Lawrence, Ramsdale and Weber and Ms. Savage. The foregoing description of the Voting Agreement and Irrevocable Proxy and the Board Composition Agreement does not purport to be complete and is qualified in its entirety by reference to the Voting Agreement and Irrevocable Proxy and the Board Composition Agreement, copies of which are incorporated by reference herein from Exhibits 99.5 and 99.6. to the Form 8-K filed by the Company on October 29, 2004. Except as described above, there is no arrangement or understanding between any of the directors named above and any other person pursuant to which any of the directors named above was appointed as a director.

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The following directors named above have a direct or indirect material interest in the transactions contemplated by the Acquisition Agreement as a result of their respective relationships with certain of the Investors, which are as follows:

· Mr. Gantz has been a member of Walnut Investments Holding Company LLC (“WIHC”) for more than five years. WIHC is the General Partner of Walnut, a private equity company.

· Mr. Gould has been a member of WIHC for more than five years.

· Ms. Havdala has been a Managing Director of Equity Group Investments, L.L.C. (“EGI”), a private equity company and an affiliate of EGI-Fund, since June 2001.

· Mr. Liebentritt has served as the President of EGI since May 2000, prior to which Mr. Liebentritt was Executive Vice President and General Counsel of EGI. Mr. Liebentritt also serves as: the Vice President of EGI-Fund; the Vice President of EGI-Managing Member (02-04), L.L.C. (“EGI-Managing Member”), which is the managing member of EGI-Fund; the Vice President of SZ Investments, L.L.C. (“SZI”), which is the managing member of EGI-Managing Member; the Vice President of Zell General Partnership, Inc. (“ZGP”), which manages SZI; and the President and a Manager of Chai Trust Company, L.L.C., the trustee for various trusts established for Samuel Zell and his family.

· Mr. Pate has served as a Managing Director of EGI since 1999. Mr. Pate also serves as the Vice President of EGI-Fund, EGI-Managing Member, SZI and ZGP.

· Mr. Weber has been a Managing Director of Triyar Capital, LLC, a real estate investment and private equity company, since 2003.

Except as provided above, the Company is not aware of any transactions, proposed transactions or series of transactions to which the Company or any of its subsidiaries was or is to be a party, in which the amount involved exceeds $60,000, and in which any of the directors named above or any member of their respective immediate families had, or will have, a direct or indirect material interest.

On December 13, 2004, each person who was a director of the Company prior to such date tendered their resignation as a director of the Company, effective immediately after Share Acceptance. James R. Tennant, the Company’s former Chief Executive Officer and Chairman of the Board of Directors, also tendered his resignation from all positions held with the Company and its subsidiaries, including, without limitation, from his positions as an officer and employee of the Company and as an officer and director of the Company’s wholly owned subsidiary, Home Products International-North America, Inc., effective immediately after Share Acceptance. On December 14, 2004, the Board reduced the number of directors comprising the Board to nine, to reflect the nine directors on the Board as of such date.

(c) On December 14, 2004, the Board appointed Douglas Ramsdale, 58, as the Company’s President and Chief Executive Officer. Mr. Ramsdale is also a director of the Company. Mr. Ramsdale has been President of the Installed Systems Division of L. R. Nelson Corporation, a leading manufacturer of lawn and garden products, since 2000. From 1998 to 2000, Mr. Ramsdale was Executive Vice President of Viking Office Products Inc. Following the acquisition of Viking Office Products Inc. by Office Depot Inc., Mr. Ramsdale was Executive Vice President of Office Depot-Europe, a division of Office Depot Inc. in 2000.

Under the terms of the Ramsdale Agreement (defined in Item 1.01 above), Mr. Ramsdale is employed on an “at will” basis, is entitled to a base salary at a gross annual rate of $258,000, and is eligible to receive an annual incentive cash bonus based on Mr. Ramsdale’s performance and the Company’s profitability during such period in accordance with the Company’s executive bonus plan. The Company also agrees to grant Mr. Ramsdale, as soon as practicable, stock options covering 150,000 shares at an exercise price of $2.25 per share, vesting equally over 3 years. If the Company terminates his employment for any reason other than cause, disability or death, he resigns for good reason, or his employment is terminated by reason of disability or death (all as respectively defined in the

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Ramsdale Agreement), he is entitled to additional benefits specified in the agreement. Mr. Ramsdale also is subject to an 18 month noncompetition agreement and one year nonsolicitation agreement following termination of his employment. This description of the Ramsdale Agreement is qualified by reference to the provisions of the Ramsdale Agreement attached to this report as Exhibit 10.1.

On December 14, 2004, the Board also appointed Richard Hassert, 53, as the Company’s Chief Operating Officer. Mr. Hassert founded the consulting firm of R. A. Hassert Associates in 1988. From March 2001 to October 2003, Mr. Hassert served as Vice President – Operations of Digital Innovations, LLC, a consumer products manufacturing company. From December 1998 until May 2000, Mr. Hassert served in the capacities of Vice President – Supply Chain of Office Depot – Europe, and Vice President – IT of Office Depot – Europe.

Under the terms of the Hassert Agreement (defined in Item 1.01 above), Mr. Hassert is employed on an “at will” basis, is entitled to a base salary at a gross annual rate of $258,000, and is eligible to receive an annual incentive cash bonus based on Mr. Hassert’s performance and the Company’s profitability during such period in accordance with the Company’s executive bonus plan. The Company also agrees to grant Mr. Hassert, as soon as practicable, stock options covering 150,000 shares at an exercise price of $2.25 per share, vesting equally over 3 years. If the Company terminates his employment for any reason other than cause, disability or death, he resigns for good reason, or his employment is terminated by reason of disability or death (all as respectively defined in the Hassert Agreement), he is entitled to additional benefits specified in the agreement. Mr. Hassert also is subject to an 18 month noncompetition agreement and one year nonsolicitation agreement following termination of his employment. This description of the Hassert Agreement is qualified by reference to the provisions of the Hassert Agreement attached to this report as Exhibit 10.2.

Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year

On December 14, 2004, the Board approved amendments to the Company’s Bylaws to delete the requirement that certain officers of the Company be appointed, to clarify the duties of the Chairman of the Board and President, to describe the duties of the office of Chief Operating Officer and to renumber certain sections of the Bylaws. The amendments to the Company’s Bylaws are attached hereto as Exhibit 3.1.

Item 8.01. Other Events

As described under Item 5.01, on December 13, 2004, the Purchaser completed the Tender Offer. As contemplated by the Tender Offer documents filed with the SEC prior to completion of the Tender Offer, on December 14, 2004 the Board approved the deregistration of the Company’s common stock subject to and conditioned upon receipt of a certification from its transfer agent that the Company has fewer than 300 stockholders of record. Upon receipt of such certification, the Company intends promptly to file a Form 15 with the SEC to deregister the Company’s common stock and suspend the Company’s reporting obligations under the Securities Exchange Act of 1934 pursuant to Rule 12g-4(a)(1)(i) thereof.

The filing of the Form 15 will immediately suspend the Company’s obligation to file reports under the Securities Exchange Act, including Forms 10-K, 10-Q and 8-K. The deregistration will not become effective, however, until the SEC terminates the registration, which the Company expects to occur 90 days after the filing of the Form 15.

Notwithstanding the suspension of its obligation to file periodic financial reports, by the terms of the Company’s indenture governing its 9-5/8% Senior Subordinated Notes due 2008, the Company would continue to be required voluntarily to file the same annual, periodic and current reports that it is now required to file as an SEC registrant so long as the indenture covenants remain in effect (the notes issued under the indenture have a stated maturity date of May 14, 2008).

In addition, as contemplated by the Tender Offer documents filed with the SEC prior to completion of the Tender Offer, on December 14, 2004 the Board approved the delisting of the Company’s common stock from the SmallCap Market of The Nasdaq Stock Market. Such delisting is anticipated to be effective prior to the commencement of trading on The Nasdaq Stock Market on December 16, 2004. Following the delisting, it is unlikely that the Company’s shares will be traded on the over-the-counter bulletin board, or that price quotations will be reported through any other sources.

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A copy of the press release the Company issued on December 14, 2004, announcing, among other things, the deregistration and delisting of the Shares, is attached to this report as Exhibit 99.2.

Item 9.01. Financial Statements and Exhibits.

     (c) Exhibits.

Exhibit No.	Description
3.1	Amendments to Bylaws, adopted by the Board of Directors of Home Products International, Inc. on December 14, 2004
10.1	Employment Agreement between Home Products International, Inc. and Douglas Ramsdale, dated December 14, 2004
10.2	Employment Agreement between Home Products International, Inc. and Richard Hassert, dated December 14, 2004
10.3	Assignment and Assumption Agreement by and among Home Products International, Inc., Storage Acquisition Company, L.L.C. and James Tennant, dated December 14, 2004
99.1	Joint press release issued by the Company and the Purchaser on December 14, 2004, announcing the completion of the Tender Offer
99.2	Press release issued by the Company on December 14, 2004, announcing, among other things, the deregistration and delisting of the Company’s common stock

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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 hereunto duly authorized.

	Home Products International, Inc.
Dated December 15, 2004	By:	/s/ James Winslow
	Name: James Winslow
	Title: Executive Vice President, Chief Financial Officer and Secretary

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EXHIBIT INDEX

Exhibit No.	Description
3.1	Amendments to Bylaws, adopted by the Board of Directors of Home Products International, Inc. on December 14, 2004
10.1	Employment Agreement between Home Products International, Inc. and Douglas Ramsdale, dated December 14, 2004
10.2	Employment Agreement between Home Products International, Inc. and Richard Hassert, dated December 14, 2004
10.3	Assignment and Assumption Agreement by and among Home Products International, Inc., Storage Acquisition Company, L.L.C. and James Tennant, dated December 14, 2004.
99.1	Joint press release issued by the Company and the Purchaser on December 14, 2004, announcing the completion of the Tender Offer
99.2	Press release issued by the Company on December 14, 2004, announcing, among other things, the deregistration and delisting of the Company’s common stock

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EX-3.1

EXHIBIT 3.1

AMENDMENT TO BYLAWS
OF
HOME PRODUCTS INTERNATIONAL, INC.

(as adopted by the Board of Directors on December 14, 2004)

1. The first sentence of Section 4.1 shall be amended and restated in its entirety to read as follows:

“The principal officers of the Corporation shall be a Chairman of the Board of Directors (who must be a member of the Board), a President, a Chief Operating Officer, a Treasurer, and a Secretary, and such Vice Presidents (the number thereof to be determined by the Board of Directors), Assistant Treasurers, Assistant Secretaries or other officers as may be elected or appointed by the Board of Directors.”

2. The last sentence of Section 4.2, which currently reads “In its discretion, the Board of Directors may leave unfilled any office except those of President, Treasurer and Secretary,” is hereby deleted in its entirety from Section 4.2.

3. Section 4.5 shall be amended and restated in its entirety to read as follows:

“The Chairman of the Board (if such an officer be appointed) (the “Chairman”) shall be a director and shall perform such duties as shall be assigned to him or her by the Board of Directors and in any employment agreement. The Chairman shall preside at all meetings of the stockholders and at all meetings of the Board of Directors at which he or she is present. The Chairman may sign deeds, mortgages, bonds, contracts, and other instruments, except when the signing thereof has been expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the corporation or is otherwise required by law to be signed by some other officer or in some other manner.”

4. The first sentence of Section 4.6 shall be amended and restated in its entirety to read as follows:

“Subject to such supervisory powers as may be given by the Board of Directors to the Chairman (if such an officer be appointed), the President shall be the chief executive officer of the Corporation and shall, subject to the Board of Directors itself, have general charge of the business and affairs of the Corporation, and in the absence of the Chairman of the Board, the President, if a director, shall preside over all meetings of the stockholders and over all meetings of the Board of Directors.”

5. There is hereby added a new Section 4.7, which shall read in its entirety as follows:

“Section 4.7 Chief Operating Officer. The Chief Operating Officer (if such an officer be appointed) shall report to the President and shall have, subject to the control of the President and the Board of Directors, active supervision and management over the day-to-day operations of the Corporation and over its subordinate officers, assistants, agents, and employees. At the request of the President, or in case of his absence or inability to act, unless otherwise directed by the Board of Directors, the Chief Operating Officer shall perform the duties of the President and, when so acting, shall have all the powers of, and be subject to all the restrictions upon, the President.”

6. Each of Sections 4.7, 4.8, 4.9, 4.10, 4.11 and 4.12 of the Bylaws are hereby renumbered as Sections 4.8, 4.9, 4.10, 4.11, 4.12 and 4.13, respectively.

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EX-10.1

EXHIBIT 10.1

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of this 14th day of December, 2004, by and between Home Products International, Inc., a Delaware corporation (the “Company”), and Douglas S. Ramsdale (the “Executive”). Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to them in Part Five hereof.

RECITALS

     WHEREAS, the Company desires to employ Executive as the Chief Executive Officer of the Company; and

     WHEREAS, Executive desires to be employed by the Company at the salary and benefits provided for herein; and

     WHEREAS, Executive acknowledges and understands that during the course of his employment, Executive will develop certain strategic business relationships and become familiar with certain confidential information of the Company which are exceptionally valuable to the Company and vital to the success of the Company’s business; and

     WHEREAS, the Company and Executive desire to protect such business relationships and such confidential information from use to the detriment of the Company or disclosure to third parties.

     NOW THEREFORE, in consideration of the premises and of the mutual covenants and agreements hereinafter set forth, the parties hereto acknowledge and agree as follows:

TERMS

PART ONE

EMPLOYMENT

     1.01 Employment. The Company hereby agrees to employ Executive, and Executive hereby accepts such employment, as the Chief Executive Officer of the Company. Executive’s employment will be on an at-will basis, terminable at any time by either party, in accordance with and subject to Part Four hereof.

     1.02 Duties. The duties of Executive shall be as determined by the Board of Directors of the Company (the “Board”), and Executive shall report to the Board and shall be subject to the Board’s direction and control. Without limiting the generality of the foregoing, Executive shall manage the business of the Company on a day-to-day basis and shall report to and advise the Board

regarding the management and operation of the Company’s business. Executive agrees to devote his full-time attention and energies to the diligent performance of his duties hereunder and will not during his employment with the Company engage in, accept employment from or provide services to any other person, firm, corporation, governmental agency or other entity; provided, however, that subject to Part Three hereof, Executive may (a) devote a reasonable amount of non-business time to civic activities, (b) maintain not more than two outside board positions (with companies which do not compete directly or indirectly with the Company), in each case subject to the prior consent of the Board, and (c) manage his own investments, provided that such activities do not conflict with or detract from the Executive’s diligent performance of Executive’s duties hereunder.

PART TWO

COMPENSATION AND BENEFITS

     2.01 Salary. During his employment, Executive shall receive a base salary at the rate of $258,000 per annum (the “Base Salary”), subject to applicable deductions, payable in regular installments in accordance with the Company’s general payroll practices for salaried employees. The Base Salary is subject to review for increase by the Board annually beginning January, 2006.

     2.02 Bonus. In addition to his Base Salary, Executive may receive during his employment, as determined annually at the discretion of the Board, an annual incentive cash bonus (“Incentive Bonus”) based upon Executive’s performance and the profitability of the Company during such period in accordance with the Company’s executive bonus plan adopted by the Board annually.

     2.03 Benefits. During Executive’s employment, the Company agrees to provide to Executive such benefits as are provided to other employees of the Company from time to time, including but not limited to, any health, disability, life, profit-sharing or other employee benefit policies, programs or plans which the Company provides to its employees, all at levels determined by the Board and commensurate with Executive’s position.

     2.04 Expenses. Executive shall be reimbursed by the Company for all ordinary and necessary out-of-pocket expenses for travel, lodging, meals, entertainment expenses, or any other similar reasonable expenses incurred by Executive in performing services for the Company in accordance with the policies established by the Board.

     2.05 Vacations. Executive shall be entitled to a vacation of four (4) weeks during each twelve month period of employment, provided, however, that Executive’s vacation shall be scheduled at such times as shall least interfere with the Company’s business and shall otherwise be in accordance with policies established by the Board. Fifty percent (50%) of any unused vacation from a calendar year may be carried over and applied to the following calendar year; provided, that, no more than four (4) weeks of vacation may be accrued and unused at any one time.

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     2.06 Stock Options. As soon as practical after the date hereof, the Board shall issue to Executive options for 150,000 shares of the Company’s common stock, par value $0.01 per share (“Common Stock”) (or, in the event of a recapitalization of the Company, reclassification of the Company’s capital stock or other similar event, shares of one or more other classes or series of capital stock having in the aggregate no less favorable economic rights than those attributable to Common Stock) at an exercise price of $2.25 per share (subject to adjustment for recapitalizations, reclassifications, stock splits and similar events), pursuant to a stock option plan consistent with the terms described on Exhibit A (the “Stock Option Plan”). Such options shall vest at the rate of 50,000 shares on December 31, 2005, 50,000 shares on December 31, 2006 and 50,000 shares on December 31, 2007, subject to the provisions of Part Four hereof. The Board, in its discretion, from time to time, may issue additional options under the Stock Option Plan to Executive with such vesting schedules and exercise prices as the Board shall determine.

PART THREE

CONFIDENTIAL INFORMATION AND COMPETITION

     3.01 Definition of Confidential Information. For the purposes of this Agreement, the term “Confidential Information” shall mean all information and all documents and other tangible items which record information which is non-public, confidential or proprietary in nature with respect to the Company or its customers, clients or investors and shall include, but shall not be limited to: (a) all information, which at the time or times concerned is protectible as a trade secret under applicable law; (b) business and growth plans and strategies; (c) marketing plans and strategies; (d) customer and supplier information; and (e) proprietary software and business records. The Company and Executive acknowledge and agree that the Confidential Information is extremely valuable to the Company and the information referred to in subparagraphs (b) through (d) inclusive of this Section 3.01 is especially sensitive and valuable.

     3.02 Non-Disclosure of Confidential Information. Executive will not either during Executive’s employment, or after termination of Executive’s employment for any or no reason, in any form or manner, directly or indirectly, divulge, disclose or communicate to any person, entity, firm, corporation or any other third party, or utilize for the Employee’s personal benefit of for the benefit of any person, entity, firm or corporation (other than the Company), any Confidential Information.

     3.03 Delivery Upon Termination. Upon termination of Executive’s employment with the Company for any or no reason, Executive will promptly deliver to the Company all correspondence, manuals, letters, notes, notebooks, reports, programs, plans, proposals, financial documents, or any other documents or media concerning the Company and/or which contains Confidential Information, and Executive hereby acknowledges that all such materials are the property of the Company.

     3.04 Covenant-Not-To-Compete. Executive will not during his employment, and for a period of eighteen (18) months following termination of Executive’s employment for any or no

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reason, in any form or manner, directly or indirectly, on his own behalf or in combination with others, engage in or become interested in (as an individual, partner, member, stockholder, director, officer, principal, agent, independent contractor, employee, trustee, or in any other relation or capacity whatsoever, except as a holder of securities of a corporation whose securities are publicly traded and which is subject to the reporting requirements of the Securities Exchange Act of 1934, and then only to the extent of owning less than five percent (5%) of the issued and outstanding securities of such corporation) any business which is competitive with the business of the Company or any the Affiliate of the Company, as conducted or proposed to be conducted as of the date of termination of Executive’s employment.

     3.05 Restriction Against Employing the Company Employees. Executive will not, for a period of (1) one year after termination of Executive’s employment for any or no reason, directly or indirectly, whether individually, as a director, stockholder, partner, member, owner, employee or agent of any business, or in any other capacity, employ or engage, or solicit for employment or engagement, any person who is employed or otherwise engaged by the Company or any Affiliate of the Company on, or within 180 days prior to such termination of Executive; provided, however, that the foregoing prohibition shall apply to a person who ceases to be employed or engaged by the Company or any Affiliate of the Company after such termination of Executive only until the later of (a) 180 days after the termination of such person’s employment or engagement by the Company or any Affiliate of the Company or (b) the date on which such person ceases to be entitled to receive compensation, if any, from the Company or any Affiliate of the Company.

     3.06 Continuing Obligation. The obligations, duties and liabilities of Executive pursuant to Part Three of this Agreement are continuing, absolute and unconditional and shall remain in full force and effect as provided therein despite any termination of Executive’s employment with the Company for any or no reason.

PART FOUR

TERMINATION

     4.01 Termination Notice and Termination Date. Either the Company or Executive may terminate Executive’s employment at any time by delivery to the other party of a written notice (the “Termination Notice”) specifying the effective date of termination of Executive’s employment (the “Termination Date”) (except in the case of termination as a result of Executive’s death, in which case, termination shall be automatic and the Termination Date shall be the date of death). If Executive terminates his employment for any reason other than Good Reason, the Termination Date specified by Executive in his Termination Notice shall be no less than 30 days after the date the Company receives the Termination Notice, but the Company may elect, in its sole discretion, upon written notice to Executive, to change the specified Termination Date to any earlier date which is on or after the date of receipt of the Termination Notice.

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     4.02 Termination by the Company without Cause or by Executive for Good Reason. If the Company terminates Executive’s employment other than for Cause, Executive’s Disability or Executive’s death, or Executive terminates his employment for Good Reason:

          (a) the Company shall pay to Executive Executive’s Base Salary accrued and unpaid up to the Termination Date;

          (b) the Company shall pay to Executive Executive’s Incentive Bonus to the extent earned and unpaid for the fiscal year ended prior to the Termination Date;

          (c) upon execution and delivery by Executive of the form of Release attached hereto as Exhibit B, and the expiration of the seven-day revocation period provided in said Release, without revocation of said Release by Executive:

               (i) the Company shall pay to Executive a severance payment equal to one hundred fifty percent (150%) of Executive’s annual Base Salary as of the Termination Date, payable over eighteen (18) months beginning on the Termination Date in regular installments in accordance with the Company’s general payroll practices for salaried employees;

               (ii) the Company shall pay to Executive an additional severance payment equal to Executive’s Incentive Bonus, to the extent earned, for the fiscal year during which the Termination Date occurs, pro-rated for that fiscal year based on the portion of Executive’s active employment for that fiscal year, payable when the Company generally pays Incentive Bonuses for other salaried employees; and

               (iii) if Executive elects COBRA continuation coverage, the Company shall maintain for Executive and his eligible family members, until the earlier of (A) the eighteen (18) month anniversary of the Termination Date or (B) such time as Executive shall obtain employment or other engagement offering comparable or better medical insurance coverage, medical insurance coverage that is the same as or comparable to the coverage to which he was entitled immediately preceding the Termination Date, at a cost to Executive no greater than the normal active employee premiums at such time;

          (d) notwithstanding anything to the contrary in the Stock Option Plan, all unvested options granted to Executive under the Stock Option Plan will automatically vest and become immediately exercisable for the total number of shares purchasable thereunder. Notwithstanding anything to the contrary in the Stock Option Plan, such options will expire on the earlier of (A) the expiration date of such options under the Stock Option Plan and (B) six (6) months from the Termination Date;

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          (e) if the Put/Call Option is exercised, the Company shall pay, or cause to be paid, to Executive and his Permitted Transferees the Put/Call Payment in accordance with Section 4.06;

          (f) the Company shall reimburse Executive for his reimbursable out-of-pocket business expenses in accordance with Section 2.04 to the extent incurred prior to the Termination Date and not previously reimbursed; and

          (g) except as set forth in this Section 4.02, Executive shall not be entitled to receive any other severance, benefits or compensation of any kind whatsoever.

     4.03 Termination by the Company for Cause or by Executive without Good Reason. If the Company terminates Executive’s employment for Cause or Executive terminates his employment other than for Good Reason:

          (a) the Company shall pay to Executive Executive’s Base Salary accrued and unpaid up to the Termination Date;

          (b) the Company shall pay to Executive Executive’s Incentive Bonus to the extent earned and unpaid for the fiscal year ended prior to the Termination Date;

          (c) notwithstanding anything to the contrary in the Stock Option Plan, all unvested options granted to Executive under the Stock Option Plan will automatically be forfeited without any payment or other consideration to Executive, and all vested options granted to Executive under the Stock Option Plan will expire on the earlier of (i) the expiration date of such options under the Stock Option Plan and (ii) the date ninety (90) days following the Termination Date;

          (d) if the Put/Call Option is permitted to be, and is, exercised, the Company shall pay, or cause to be paid, to Executive and his Permitted Transferees the Put/Call Payment in accordance with Section 4.06;

          (e) the Company shall reimburse Executive for his reimbursable out-of-pocket business expenses in accordance with Section 2.04 to the extent incurred prior to the Termination Date and not previously reimbursed;

          (f) except as set forth in this Section 4.03, Executive shall not be entitled to receive any other severance, benefits or compensation of any kind whatsoever.

     4.04 Termination upon Death. Upon Executive’s death during his employment:

          (a) the Company shall pay to Executive’s representatives Executive’s Base Salary accrued and unpaid up to the Termination Date;

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          (b) the Company shall pay to Executive’s representatives Executive’s Incentive Bonus to the extent earned and unpaid for the fiscal year ended prior to the Termination Date;

          (c) upon execution and delivery by Executive’s representatives of the form of Release attached hereto as Exhibit B, and the expiration of the seven-day revocation period provided in said Release, without revocation of said Release by Executive’s representatives:

               (i) the Company shall pay to Executive’s representatives a severance payment equal to fifty percent (50%) of Executive’s annual Base Salary as of Executive’s death, payable over six (6) months beginning on the Termination Date in regular installments in accordance with the Company’s general payroll practices for salaried employees; and

               (ii) the Company shall pay to Executive an additional severance payment equal to Executive’s Incentive Bonus, to the extent earned, for the fiscal year during which the Termination Date occurs, pro-rated for that fiscal year based on the portion of Executive’s active employment for that fiscal year, payable when the Company generally pays Incentive Bonuses for other salaried employees;

          (d) notwithstanding anything to the contrary in the Stock Option Plan, all unvested options granted to Executive under the Stock Option Plan will automatically vest and become immediately exercisable for the total number of shares purchasable thereunder. Notwithstanding anything to the contrary in the Stock Option Plan, such options will expire on the earlier of (i) the expiration date of such options under the Stock Option Plan and (ii) six (6) months from the Termination Date;

          (e) if the Put/Call Option is exercised, the Company shall pay, or cause to be paid, to Executive’s representatives and Permitted Transferees the Put/Call Payment in accordance with Section 4.06;

          (f) the Company shall reimburse Executive’s representatives for Executive’s reimbursable out-of-pocket business expenses in accordance with Section 2.04 to the extent incurred prior to the Termination Date and not previously reimbursed; and

          (g) except as set forth in this Section 4.04 neither Executive nor his representatives shall be entitled to receive any other severance, benefits or compensation of any kind whatsoever.

     4.05 Termination upon Disability. If the Company terminates Executive’s employment as a result of his Disability:

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          (a) the Company shall pay to Executive his Base Salary accrued and unpaid up to the Termination Date;

          (b) the Company shall pay to Executive Executive’s Incentive Bonus to the extent earned and unpaid for the fiscal year ended prior to the Termination Date;

          (c) upon execution and delivery by Executive of the form of Release attached hereto as Exhibit B, and the expiration of the seven-day revocation period provided in said Release, without revocation of said Release by Executive:

               (i) Executive shall be entitled to continue to receive his Base Salary, as a severance payment, in accordance with the Company’s general payroll practices for salaried employees, until the earlier of (A) the commencement of payments under Executive’s long-term disability insurance policy or (B) the six (6) month anniversary of the Termination Date; and

               (ii) the Company shall pay to Executive an additional severance payment equal to Executive’s Incentive Bonus, to the extent earned, for the fiscal year during which the Termination Date occurs, pro-rated for that fiscal year based on the portion of Executive’s active employment for that fiscal year, payable when the Company generally pays Incentive Bonuses for other salaried employees;

          (d) notwithstanding anything to the contrary in the Stock Option Plan, all unvested options granted to Executive under the Stock Option Plan will automatically vest and become immediately exercisable for the total number of shares purchasable thereunder. Notwithstanding anything to the contrary in the Stock Option Plan, such options will expire on the earlier of (i) the expiration date of such options under the Stock Option Plan and (ii) six (6) months from the Termination Date;

          (e) if the Put/Call Option is exercised, the Company shall pay, or cause to be paid, to Executive and his Permitted Transferees the Put/Call Payment in accordance with Section 4.06;

          (f) the Company shall reimburse Executive for his reimbursable out-of-pocket business expenses in accordance with Section 2.04 to the extent incurred prior to the Termination Date and not previously reimbursed; and

          (g) except as set forth in this Section 4.05, Executive shall not be entitled to receive any other severance, benefits or compensation of any kind whatsoever.

     4.06 Put/Call Option.

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          (a) Subject to Section 4.06(b), in the event of the termination of Executive’s employment for any reason other than for Cause, Executive shall have the option to sell, or cause to be sold, to the Company all shares of Common Stock (and other capital stock of the Company, if any) held by Executive and his Permitted Transferees, if any, and cancel all unexercised options issued under the Stock Option Plan held by Executive. In the event of the termination of Executive’s employment for any or no reason, the Company shall have the option to purchase from Executive and his Permitted Transferees, if any, all shares of Common Stock (and other capital stock of the Company, if any) held by any of them and cancel all unexercised options issued under the Stock Option Plan held by Executive. The options to sell and purchase referred to in this Section 4.06(a) are hereinafter collectively referred to as the “Put/Call Option.”

          (b) Provided Executive has not terminated his employment without Good Reason and the Company has not terminated Executive’s employment for Cause, Executive may exercise the Put/Call Option, at his discretion, at any time after the Termination Date and until the date which is 180 calendar days after the Termination Date, by delivery of written notice to the Company within such 180-day period. In the event Executive has terminated his employment without Good Reason, Executive may exercise the Put/Call Option, at his discretion, but only during the first 30 calendar days after the first anniversary of the Termination Date, by delivery of written notice to the Company within such 30-day period. Executive may not exercise the Put/Call Option at any time in the event his employment is terminated by the Company for Cause. The Company may (but shall not be obligated to) exercise the Put/Call Option, at its discretion, at any time after the Termination Date (irrespective of the reason for termination) and until the date which is 180 calendar days after the Termination Date, by delivery of written notice to the Executive within such 180-day period. No Permitted Transferee shall be entitled to exercise the Put/Call Option, but any exercise of the Put/Call Option by Executive or the Company shall be binding on each of Executive’s Permitted Transferees, if any. Executive agrees that his and his Permitted Transferees’ stock certificates shall bear an appropriate legend referencing the Put/Call Option.

          (c) Promptly after exercise of the Put/Call Option by Executive or the Company, Executive and his Permitted Transferees, if any, shall execute and deliver to the Company the form of Release attached hereto as Exhibit C. Within thirty (30) days after exercise of the Put/Call Option, the Company shall pay, or cause to be paid, to Executive and/or his Permitted Transferees, if any, as applicable, an aggregate amount in cash equal to the Put/Call Payment (payable among Executive and his Permitted Transferees, if any, pro rata according to the number of shares and options held by them), provided (i) Executive and his Permitted Transferees, if any, have executed and delivered to the Company the form of Release attached hereto as Exhibit C, and (ii) Executive and his Permitted Transferees, if any, have surrendered to the Company all stock certificates representing Common Stock and/or other capital stock of the Company to be sold, together with executed stock powers therefor, and all stock option agreements for cancellation by the Company, and all other transfer or cancellation documents reasonably requested by the Company. Upon payment

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of the Put/Call Payment, none of Executive, his Permitted Transferees, if any, or his or their respective representatives, heirs, executors, administrators, successors or assigns, shall have any ownership or other interest of any kind in, or rights of any kind in respect of, any Common Stock, other capital stock of the Company, or options under the Stock Option Plan, or otherwise in respect of, or any claims or demands of any kind (whether known or unknown, vested or contingent, suspected or unsuspected, concealed or hidden) against, the Company, except for any payments and benefits, if any, which are owed to Executive under this Agreement in connection with the termination of his employment with the Company.

     4.07 Sole Remedy. The amounts payable to Executive or his representatives or Permitted Transferees, if any, under the applicable provisions of this Part Four in connection with the termination of Executive’s employment, voluntarily or involuntarily, for any or no reason, shall be the only remedy, legal or equitable, available to Executive and his representatives and Permitted Transferees in connection with such termination and/or the exercise of the Put/Call Option in connection therewith, and such amounts shall constitute liquidated damages, excluding any remedies which by law cannot be waived.

PART FIVE

CERTAIN DEFINITIONS

     5.01 Certain Definitions. As used in this Agreement, the following terms have the following meanings unless the context otherwise requires:

“Affiliate” means with respect to any Person, any Person that directly or indirectly controls, is controlled by, or is under common control with such Person. For purposes of this definition, “control” shall mean the power to direct, or cause the direction of, the management of policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

“Cause” means:

(i)	fraud, embezzlement or conviction of a felony;
(ii)	misappropriation of any money, proprietary information or other assets or properties of the Company or any Affiliate of the Company other than (A) an isolated, insubstantial and unintentional misappropriation which is promptly remedied by Executive after he learns of the same or (B) any good faith dispute regarding reimbursement of expenses or other similar good faith dispute;
(iii)	willful or material breach by Executive of the terms of this Agreement; or

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(iv) any other verifiable misconduct of Executive materially and adversely affecting the Company.

“Change in Control” means:

(i)	a merger or acquisition involving the Company in which 50% or more of the Company’s voting stock outstanding after the merger or acquisition is held by holders different from those who held the Company’s voting stock immediately prior to such merger or acquisition; or
(ii)	the sale, transfer or other disposition of all or substantially all of the assets of the Company.

“Disability” means, in the reasonable opinion of the Board, Executive has become physically or mentally disabled, whether totally or partially, so that Executive is unable substantially to perform his employment duties for a period of ninety (90) consecutive days, or for shorter periods aggregating one hundred and eighty (180) days during any three hundred and sixty (360) day period.

“EBITDA” means the Company’s aggregate consolidated net income, exclusive of non-recurring income items, plus tax expense, net interest expense, depreciation, amortization expense and non-recurring expenses, for the four full fiscal quarters immediately preceding the date of exercise of the Put/Call Option, determined by the Board in good faith in accordance with accounting practices and policies consistently applied by the Company prior to the exercise of the Put/Call Option.

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“Enterprise Value” means the product of applicable Enterprise Value Multiple multiplied by the applicable EBITDA, less the Company’s consolidated indebtedness for borrowed money and obligations under capital leases; provided, however, that, in the event of the occurrence of a material change in the business, financial condition or prospects of the Company which is not fully reflected in the amount of EBITDA otherwise to be used in calculating Enterprise Value, Executive and the Board will negotiate an appropriate adjustment in good faith to reflect the expected impact of such material adverse change; provided, further, however, that, in the event Executive and the Board fail to reach agreement on whether an adjustment is required or the amount thereof within sixty (60) days after either party gives written notice to the other party that it believes an adjustment is required, the parties shall initiate a voluntary, nonbinding mediation conducted by a mutually agreed upon mediator in Chicago, Illinois, with each of the parties bearing his or its own costs and expenses (including attorneys’ and experts’ fees and expenses) and his or its proportionate share of any other costs, fees or expenses associated with this mediation and endeavoring in good faith to resolve their differences. If, within thirty (30) days after the first day of mediation, the parties shall not have reached agreement as to the dispute in question, then each party shall be entitled to file suit to resolve the dispute, subject to Section 6.08 and Section 6.09.

“Enterprise Value Multiple” means:

(i)	Six (6), in the event the Company terminates Executive’s employment for any reason other than Cause, including his death or Disability, or Executive terminates his employment for Good Reason; and
(ii)	Five (5), in the event the Company terminates Executive’s employment for Cause, or Executive terminates his employment without Good Reason.

“Good Reason” means Executive’s termination of his employment with the Company within one year following a Change of Control if:

(i)	Executive is assigned any duties inconsistent in any respect with Executive’s position (including status, offices, titles and reporting requirements), authority, duties, or responsibilities, or there is a material diminution of such position, authority, duties or responsibilities, but excluding for this purpose an isolated, insubstantial or inadvertent action not taken in bad faith and which is remedied promptly after receipt of notice thereof given by Executive; or
(ii)	Executive is required, without his consent, to be based at any office or location outside of a 75 mile radius of Cook County, Illinois; or
(iii)	there is a material diminution in Executive’s Base Salary or percentage of Base Salary potentially awardable as Incentive Bonus; or

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(iv) the acquirer is for any reason not bound by any material term of this Agreement to the same extent as the Company immediately prior to such Change in Control.

“Permitted Transferee” means any initial or subsequent transferee of Common Stock or other capital of the Company originally held by Executive, except as otherwise determined by the Board in its sole discretion; it being understood that Executive is not entitled to make any such transfer except as otherwise expressly permitted by any other written agreement with, or written permission from, the Company, which permission shall not be unreasonably withheld or delayed for transfers of issued and outstanding Common Stock or other capital stock of the Company from Executive to either (i) family trusts or partnerships for the benefit of Executive and his family members, provided Executive retains voting and dispositive power over the transferred shares and the transferee executes an agreement with the Company restricting further transfer, or (ii) other senior management shareholders of the Company who at the time of transfer are employed and in good standing with the Company.

“Person” means any individual, corporation, association, partnership, limited liability the Company, estate, trust and any other entity or organization, governmental or otherwise.

“Put/Call Payment” means the sum of (i) the product of the Put/Call Price multiplied by the number of share of Common Stock held by Executive and his Permitted Transferees as of the date of exercise of the Put/Call Option, plus (ii) for each vested option issued under the Stock Option Plan, the excess, if any, of the Put/Call Price over the exercise price of the option, multiplied by the number of shares covered by the vested option (options, to the extent not vested, shall be excluded); provided, however, that, notwithstanding the foregoing, in the event the Company terminates Executive’s employment for Cause, the Put/Call Payment shall not exceed the aggregate cash amount (including any option exercise price) paid by Executive for Common Stock held by Executive and/or his Permitted Transferees, as applicable.

“Put/Call Price” means the applicable Enterprise Value divided by the sum of the number of fully diluted shares of Common Stock outstanding or issuable upon exercise of outstanding stock options, warrants, convertible debt or equity or other rights to acquire Common Stock, as of the date of exercise of the Put/Call Option. In the event of the recapitalization of the Company, reclassification of the Common stock into one or more classes or series of capital stock, stock split or similar event, the Board shall adjust the Put/Call Price in good faith, so that the aggregate Put/Call Payment is no smaller or larger as a result of such event than it would have been had such event not occurred.

PART SIX

MISCELLANEOUS

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     6.01 Assignment. Executive and the Company acknowledge and agree that the covenants, terms and provisions contained in this Agreement constitute a personal employment contract and the rights of the parties thereunder cannot be transferred, sold, assigned, pledged or hypothecated, excepting that the rights and obligations of the Company under this Agreement may be assigned or transferred by operation of law pursuant to a merger, consolidation, share exchange, sale of substantially all of the Company’s assets, or other reorganization, or through liquidation, dissolution or otherwise, whether or not the Company is the continuing entity, provided that the assignee or transferee is the successor to all or substantially all of the assets of the Company and such assignee or transferee assumes the rights and duties of the Company, if any, as contained in this Agreement, either contractually or as a matter of law.

     6.02 Capacity. Executive hereby represents and warrants that, in entering into this Agreement, he is not in violation of any contract or agreement, whether written or oral, with any other Person to which he is a party or by which he is bound and will not violate or interfere with the rights of any other Person. In the event that such a violation or interference does occur, or is allleged to occur, notwithstanding the representation and warranty made hereunder, Executive shall indemnify the Company from and against any and all manner of expenses and liabilities incurred by the Company or any Affiliate of the Company of the Company in connection with such violation or interference or alleged violation or interference.

     6.03 Severability. If any phrase, clause or provision of this Agreement is declared invalid or unenforceable by a court of competent jurisdiction, such phrase, clause or provision shall be deemed severed from this Agreement, but will not affect any other provisions of this Agreement, which shall otherwise remain in full force and effect. If any restriction or limitation in this Agreement is deemed to be unreasonable, onerous and unduly restrictive by a court of competent jurisdiction, it shall not be stricken in its entirety and held totally void and unenforceable, but shall remain effective to the maximum extent permissible within reasonable bounds.

     6.04 Notices. Any notice, request or other communication required to be given pursuant to the provisions hereof shall be in writing and shall be deemed to have been given when delivered in person, one (1) day after being sent by overnight courier, or five (5) days after being deposited in the United States mail, certified or registered, postage pre-paid, return receipt requested and addressed to the party at its or his last known addresses. The address of any party may be changed by notice in writing to the other parties duly served in accordance herewith.

     6.05 Waiver. The waiver by the Company or Executive of any breach of any term or condition of this Agreement shall not be deemed to constitute the waiver of any other breach of the same or any other term or condition hereof.

     6.06 Executive Acknowledgment/Injunctive Relief. Executive acknowledges and agrees that Executive’s covenants set forth in this Agreement are reasonable and necessary for the protection of the Company’s business interests, that such covenants will not result in undue economic hardship to Executive, that irreparable injury will result to the Company if Executive breaches any of the terms of Executive’s covenants in this Agreement, and that in the event of

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Executive’s actual or threatened breach of any of his covenants, the Company will have no adequate remedy at law. Executive accordingly agrees that in the event of any actual or threatened breach by him of any of his covenants in this Agreement, the Company shall be entitled to immediate injunctive and other equitable relief, without bond and without the necessity of showing, any actual monetary damages, and Executive shall pay the Company any and all of the Company’s, costs and expenses in enforcing Executive’s covenants in this Agreement (including court costs and reasonable attorney’s, accountant’s, financial advisor’s and expert witness’s fees). Nothing herein shall be construed as prohibiting the Company from pursuing any other remedies available to it for any breach or threatened breach by Executive of any of his covenants contained in this Agreement, including the recovery of any damages which it is able to prove.

     6.07 Governing Law. This Agreement and the enforcement thereof shall be governed and controlled in all respects by the laws of the State of Illinois (applicable to agreements to be performed wholly within such state), without regard to conflicts of law principles.

     6.08 Jurisdiction and Service of Process. EXECUTIVE AND THE COMPANY HEREBY CONSENT TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN COOK COUNTY, ILLINOIS, AND IRREVOCABLY AGREE THAT, SUBJECT TO THE OTHER PROVISIONS OF THIS AGREEMENT, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT WHICH MAY BE LITIGATED SHALL BE LITIGATED IN SUCH COURTS. EACH OF EXECUTIVE AND THE COMPANY ACCEPTS FOR SUCH PARTY AND IN CONNECTION WITH SUCH PARTY’S PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. ALL PROCESS IN ANY SUCH PROCEEDINGS IN ANY SUCH COURT SHALL BE MAILED BY REGISTERED MAIL TO THE APPLICABLE PARTY, SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY EACH SUCH PARTY TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

     6.09 TRIAL. EACH OF EXECUTIVE AND THE COMPANY HEREBY WAIVES SUCH PARTY’S RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THE PARTIES HERETO RELATING TO THE SUBJECT MATTER HEREOF. EACH OF EXECUTIVE AND THE COMPANY ALSO WAIVES ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF ANY PARTY TO THIS AGREEMENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT. EACH OF EXECUTIVE AND THE COMPANY ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO AN EMPLOYMENT AND BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING

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INTO THIS AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH OF EXECUTIVE AND THE COMPANY FURTHER WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH SUCH PARTY’S LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES SUCH PARTY’S JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first hereinabove written.

HOME PRODUCTS INTERNATIONAL, INC.
By:	/s/ Joseph Gantz
	Joseph Gantz, Chairman of the Board
EXECUTIVE:
/s/ Douglas S. Ramsdale
Douglas S. Ramsdale

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EXHIBIT A

STOCK OPTION PLAN TERM SHEET

• Aggregate of 10% of Common Stock (or approximately 787,000 shares) available for a combination of options to Hassert, Ramsdale and a third senior executive and SARs to other employees.

• All options and SARs expire on fifth anniversary of issuance.

• All options and SARs vest 1/3 on each of the first three anniversaries of issuance.

• Accelerated vesting on change of control.

• Initial grant of 150,000 options with an exercise price of $2.25 per share to each of Hassert, Ramsdale and the third senior executive.

• The Board will determine subsequent grants and the exercise prices therefor.

EXHIBIT B

SEVERANCE RELEASE

     1. In consideration for the payments and, if applicable, benefits to be provided to me pursuant to Section 4.0      of my Employment Agreement with Home Products International, Inc., a Delaware corporation (the “Company”), dated                          ,      , I, Douglas S. Ramsdale, on behalf of myself and my heirs, executors, administrators, assigns, and attorneys (hereinafter collectively referred to as the “Releasing Parties”) do hereby fully and forever waive, release, relieve and discharge the Company, its direct and indirect parent corporation(s), subsidiaries and affiliates and its and their respective directors, officers, employees, members, partners, shareholders, attorneys and agents, past, present and future, and each of their respective successors and assigns (hereinafter collectively referred to as the “Released Parties”) of and from any and all actions, causes of action, claims, judgments, orders, attorneys’ fees, damages, controversies, lawsuits, demands or liabilities of any kind of nature, known or unknown, vested or contingent, suspected or unsuspected, concealed or hidden, and all other claims and demands whatsoever in law or in equity which any Releasing Parties have had or now have against any Released Party from the beginning of the world to the date of this Agreement, as a result of, arising from or in any way pertaining to, my employment, or the termination of my employment, with the Company or any direct and indirect parent corporation(s), subsidiaries and affiliates of the Company, including, for purposes of illustration and not limitation:

(a)	claims, actions, causes of action, demands, or liabilities arising under Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act, as amended, the Employee Retirement Income Security Act, as amended, the Rehabilitation Act of 1973, as amended, the Americans with Disabilities Act, and/or any other federal, state, municipal or local employment discrimination statues (including, but not limited to, claims based on age, sex, attainment of benefit plan rights, race, religion, marital status, national origin, handicap, retaliation, and veteran status); and/or
(b)	claims, actions, causes of action, demands, or liabilities under any other federal, state, municipal or local statute, common law, order, ordinance or regulation; and/or
(c)	any other claim whatsoever, including, but not limited to, claims based upon breach of contract (express or implied), tort, public policy, wrongful termination, claims for compensatory or punitive damages, defamation, intentional infliction of emotional distress, personal injury claims, negligence and/or any other common law, statutory, or other claim,

but excluding any claims which by law cannot be waived.

     2. I UNDERSTAND THAT THIS RELEASE AND SETTLEMENT AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS AGAINST THE

COMPANY AND THE OTHER RELEASED PARTIES AS A RESULT OF, ARISING FROM OR IN ANY WAY PERTAINING TO, MY EMPLOYMENT, OR THE TERMINATION OF MY EMPLOYMENT, WITH THE COMPANY OR ANY DIRECT AND INDIRECT PARENT CORPORATION(S), SUBSIDIARIES AND AFFILIATES OF THE COMPANY TO THE DATE OF THIS AGREEMENT.

     3. I also agree that I have been paid for all hours worked, all pay earned and owed, not suffered any on-the-job injury for which I have not already filed a claim, and have received all of the sick pay and vacation pay that I am owed.

     4. I covenant and agree never to institute any suit, charge, complaint, proceeding or action at law, in equity, or otherwise in any court of the United States or any state thereof or in any administrative agency of either the United States or any state, county or municipality thereof or before any other tribunal, public or private, against the Company or any other Released Party, or in any way voluntarily aid in the institution or prosecution of any suit, action, or claim of any kind, or any other kind of relief, in any way against the Company or any other Released Party as a result of, arising from or in any way pertaining to, my employment, or the termination of my employment, with the Company or any direct and indirect parent corporation(s), subsidiaries and affiliates of the Company.

     5. I understand that neither I nor the Company shall reveal the contents of this Agreement and both expressly agree that if asked about my separation from the Company, both I and the Company will say nothing more than that I have left the Company to pursue other interests. In addition, I shall not in any manner make any defamatory, derogatory, disparaging or denigrating statements about the Company or its products or services. I acknowledge that the absolute confidentiality of this Agreement and compliance with the non-disparagement terms of this Agreement are of utmost importance to the Company and without the unequivocal commitment by myself regarding these provisions, the Company would not have entered into this Agreement or my Employment Agreement. As such, if I breach this Paragraph 5, I shall, in addition to any other relief, return all moneys paid to me by the Company.

     6. I have been given at least twenty-one (21) days to consider this Agreement, and understand that I may revoke this Agreement within seven (7) days after its signing and that any revocation must be made in writing and submitted within such seven (7) day period to the Company. I further understand that if I revoke this Agreement, I will not be entitled to the payments and benefits otherwise to be provided to me pursuant to Section 4.0    of my Employment Agreement.

     7. I acknowledge and agree that I have carefully read and fully understand all of the provisions of this Agreement and that I voluntarily and knowingly enter into this Agreement.

     8. I understand that neither this Agreement nor any of the events which have led to its execution may be used as evidence in any proceedings of any kind between the parties (except for a

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claim of breach of this Agreement) and that this Agreement does not constitute an admission by the Company of any wrongdoing or liability.

     9. This Agreement constitutes the complete Agreement between myself and the Company. No other promises or agreement, either express or implied, shall be binding upon myself or the Company unless signed in writing by myself and the Company. Each of the Released Parties is an intended third party beneficiary of this Release and may enforce this Release against any Releasing Party.

Signed:

EXECUTIVE:

Douglas S. Ramsdale	date
HOME PRODUCTS INTERNATIONAL, INC.
By
	date

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EXHIBIT C

PUT/CALL PAYMENT RELEASE

     KNOW ALL MEN BY THESE PRESENTS, that the undersigned,                                     (the “Releasing Party”), for and in consideration of the sum of $[applicable Put/Call Payment Amount], which has been paid, or caused to be paid, to the Releasing Party by Home Products International, Inc., a Delaware corporation (the “Company”), the Releasing Party has remised, released and forever discharged, and by these presents does, for both himself and his respective representatives, successors and assigns, remise, release, and forever discharge the Company, its direct and indirect parent corporation(s), subsidiaries and affiliates and its and their respective directors, officers, employees, members, partners, shareholders, attorneys and agents, past, present and future), and each of their respective successors and assigns (collectively the “Released Parties”), of and from any and all actions, causes of action, claims, judgments, orders, attorneys’ fees, damages, controversies, lawsuits, demands or liabilities of any kind of nature, known or unknown, vested or contingent, suspected or unsuspected, concealed or hidden, and all other claims and demands whatsoever in law or in equity, that the Releasing Party may have as a result of, arising from or in any way pertaining to, the Releasing Party’s direct or indirect ownership of Common Stock or other capital stock of the Company, options to acquire Common Stock or other capital stock of the Company, or membership or other equity interests in direct and indirect parent corporation of the Company, which the Releasing Party may now have against the Released Parties, or any of them, or which he ever had, or which he, his respective representatives, successors or assigns hereafter can, shall or may have, for, upon, or by reason of any matter, cause or thing whatsoever which shall have arisen at any time prior to the date of these presents.

     The Releasing Party covenants and agrees never to institute any suit, charge, complaint, proceeding or action at law, in equity, or otherwise in any court of the United States or any state thereof or in any administrative agency of either the United States or any state, county or municipality thereof or before any other tribunal, public or private, against the Company or any other Released Party, or in any way voluntarily aid in the institution or prosecution of any suit, action, or claim of any kind, or any other kind of relief, in any way against the Company or any other Released Party as a result of, arising from or in any way pertaining to, the Releasing Party’s direct or indirect ownership of Common Stock or other capital stock of the Company, options to acquire Common Stock or other capital stock of the Company, or membership or other equity interests in direct and indirect parent corporation of the Company.

     THE RELEASING PARTY FURTHER STATES THAT HE HAS READ AND UNDERSTANDS THIS RELEASE AND THAT HE INTENDS TO BE LEGALLY BOUND BY IT. EACH OF THE RELEASED PARTIES IS AN INTENDED THIRD PARTY BENEFICIARY OF THIS RELEASE AND MAY ENFORCE THIS RELEASE AGAINST ANY RELEASING PARTY.

     IN WITNESS WHEREOF, this Release is made as of                             ,         ,         .

EX-10.2

EXHIBIT 10.2

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of this 14th day of December, 2004, by and between Home Products International, Inc., a Delaware corporation (the “Company”), and Richard Hassert (the “Executive”). Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to them in Part Five hereof.

RECITALS

     WHEREAS, the Company desires to employ Executive as the Chief Operating Officer of the Company; and

     WHEREAS, Executive desires to be employed by the Company at the salary and benefits provided for herein; and

     WHEREAS, Executive acknowledges and understands that during the course of his employment, Executive will develop certain strategic business relationships and become familiar with certain confidential information of the Company which are exceptionally valuable to the Company and vital to the success of the Company’s business; and

     WHEREAS, the Company and Executive desire to protect such business relationships and such confidential information from use to the detriment of the Company or disclosure to third parties.

     NOW THEREFORE, in consideration of the premises and of the mutual covenants and agreements hereinafter set forth, the parties hereto acknowledge and agree as follows:

TERMS

PART ONE

EMPLOYMENT

     1.01 Employment. The Company hereby agrees to employ Executive, and Executive hereby accepts such employment, as the Chief Operating Officer of the Company. Executive’s employment will be on an at-will basis, terminable at any time by either party, in accordance with and subject to Part Four hereof.

     1.02 Duties. The duties of Executive shall be as determined by the Chief Executive Officer of the Company (the “CEO”), and Executive shall report to the CEO and shall be subject to the CEO’s direction and control. Without limiting the generality of the foregoing, Executive shall manage the operations of the Company on a day-to-day basis and shall report to and advise the

CEO and the Board of Directors of the Company (the “Board”) regarding the management and operation of the Company’s business. Executive agrees to devote his full-time attention and energies to the diligent performance of his duties hereunder and will not during his employment with the Company engage in, accept employment from or provide services to any other person, firm, corporation, governmental agency or other entity; provided, however, that subject to Part Three hereof, Executive may (a) devote a reasonable amount of non-business time to civic activities, (b) maintain not more than two outside board positions (with companies which do not compete directly or indirectly with the Company), in each case subject to the prior consent of the Board, and (c) manage his own investments, provided that such activities do not conflict with or detract from the Executive’s diligent performance of Executive’s duties hereunder.

PART TWO

COMPENSATION AND BENEFITS

     2.01 Salary. During his employment, Executive shall receive a base salary at the rate of $258,000 per annum (the “Base Salary”), subject to applicable deductions, payable in regular installments in accordance with the Company’s general payroll practices for salaried employees. The Base Salary is subject to review for increase by the Board annually beginning January, 2006.

     2.02 Bonus. In addition to his Base Salary, Executive may receive during his employment, as determined annually at the discretion of the CEO and the Board, an annual incentive cash bonus (“Incentive Bonus”) based upon Executive’s performance and the profitability of the Company during such period in accordance with the Company’s executive bonus plan adopted by the Board annually.

     2.03 Benefits. During Executive’s employment, the Company agrees to provide to Executive such benefits as are provided to other employees of the Company from time to time, including but not limited to, any health, disability, life, profit-sharing or other employee benefit policies, programs or plans which the Company provides to its employees, all at levels determined by the Board and commensurate with Executive’s position.

     2.04 Expenses. Executive shall be reimbursed by the Company for all ordinary and necessary out-of-pocket expenses for travel, lodging, meals, entertainment expenses, or any other similar reasonable expenses incurred by Executive in performing services for the Company in accordance with the policies established by the Board.

     2.05 Vacations. Executive shall be entitled to a vacation of four (4) weeks during each twelve month period of employment, provided, however, that Executive’s vacation shall be scheduled at such times as shall least interfere with the Company’s business and shall otherwise be in accordance with policies established by the Board. Fifty percent (50%) of any unused vacation from a calendar year may be carried over and applied to the following calendar year; provided, that, no more than four (4) weeks of vacation may be accrued and unused at any one time.

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     2.06 Stock Options. As soon as practical after the date hereof, the Board shall issue to Executive options for 150,000 shares of the Company’s common stock, par value $0.01 per share (“Common Stock”) (or, in the event of a recapitalization of the Company, reclassification of the Company’s capital stock or other similar event, shares of one or more other classes or series of capital stock having in the aggregate no less favorable economic rights than those attributable to Common Stock) at an exercise price of $2.25 per share (subject to adjustment for recapitalizations, reclassifications, stock splits and similar events), pursuant to a stock option plan consistent with the terms described on Exhibit A (the “Stock Option Plan”). Such options shall vest at the rate of 50,000 shares on December 31, 2005, 50,000 shares on December 31, 2006 and 50,000 shares on December 31, 2007, subject to the provisions of Part Four hereof. The Board, in its discretion, from time to time, may issue additional options under the Stock Option Plan to Executive with such vesting schedules and exercise prices as the Board shall determine.

PART THREE

CONFIDENTIAL INFORMATION AND COMPETITION

     3.01 Definition of Confidential Information. For the purposes of this Agreement, the term “Confidential Information” shall mean all information and all documents and other tangible items which record information which is non-public, confidential or proprietary in nature with respect to the Company or its customers, clients or investors and shall include, but shall not be limited to: (a) all information, which at the time or times concerned is protectible as a trade secret under applicable law; (b) business and growth plans and strategies; (c) marketing plans and strategies; (d) customer and supplier information; and (e) proprietary software and business records. The Company and Executive acknowledge and agree that the Confidential Information is extremely valuable to the Company and the information referred to in subparagraphs (b) through (d) inclusive of this Section 3.01 is especially sensitive and valuable.

     3.02 Non-Disclosure of Confidential Information. Executive will not either during Executive’s employment, or after termination of Executive’s employment for any or no reason, in any form or manner, directly or indirectly, divulge, disclose or communicate to any person, entity, firm, corporation or any other third party, or utilize for the Employee’s personal benefit of for the benefit of any person, entity, firm or corporation (other than the Company), any Confidential Information.

     3.03 Delivery Upon Termination. Upon termination of Executive’s employment with the Company for any or no reason, Executive will promptly deliver to the Company all correspondence, manuals, letters, notes, notebooks, reports, programs, plans, proposals, financial documents, or any other documents or media concerning the Company and/or which contains Confidential Information, and Executive hereby acknowledges that all such materials are the property of the Company.

     3.04 Covenant-Not-To-Compete. Executive will not during his employment, and for a period of eighteen (18) months following termination of Executive’s employment for any or no

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reason, in any form or manner, directly or indirectly, on his own behalf or in combination with others, engage in or become interested in (as an individual, partner, member, stockholder, director, officer, principal, agent, independent contractor, employee, trustee, or in any other relation or capacity whatsoever, except as a holder of securities of a corporation whose securities are publicly traded and which is subject to the reporting requirements of the Securities Exchange Act of 1934, and then only to the extent of owning less than five percent (5%) of the issued and outstanding securities of such corporation) any business which is competitive with the business of the Company or any the Affiliate of the Company, as conducted or proposed to be conducted as of the date of termination of Executive’s employment.

     3.05 Restriction Against Employing the Company Employees. Executive will not, for a period of (1) one year after termination of Executive’s employment for any or no reason, directly or indirectly, whether individually, as a director, stockholder, partner, member, owner, employee or agent of any business, or in any other capacity, employ or engage, or solicit for employment or engagement, any person who is employed or otherwise engaged by the Company or any Affiliate of the Company on, or within 180 days prior to such termination of Executive; provided, however, that the foregoing prohibition shall apply to a person who ceases to be employed or engaged by the Company or any Affiliate of the Company after such termination of Executive only until the later of (a) 180 days after the termination of such person’s employment or engagement by the Company or any Affiliate of the Company or (b) the date on which such person ceases to be entitled to receive compensation, if any, from the Company or any Affiliate of the Company.

     3.06 Continuing Obligation. The obligations, duties and liabilities of Executive pursuant to Part Three of this Agreement are continuing, absolute and unconditional and shall remain in full force and effect as provided therein despite any termination of Executive’s employment with the Company for any or no reason.

PART FOUR

TERMINATION

     4.01 Termination Notice and Termination Date. Either the Company or Executive may terminate Executive’s employment at any time by delivery to the other party of a written notice (the “Termination Notice”) specifying the effective date of termination of Executive’s employment (the “Termination Date”) (except in the case of termination as a result of Executive’s death, in which case, termination shall be automatic and the Termination Date shall be the date of death). If Executive terminates his employment for any reason other than Good Reason, the Termination Date specified by Executive in his Termination Notice shall be no less than 30 days after the date the Company receives the Termination Notice, but the Company may elect, in its sole discretion, upon written notice to Executive, to change the specified Termination Date to any earlier date which is on or after the date of receipt of the Termination Notice.

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     4.02 Termination by the Company without Cause or by Executive for Good Reason. If the Company terminates Executive’s employment other than for Cause, Executive’s Disability or Executive’s death, or Executive terminates his employment for Good Reason:

     (a) the Company shall pay to Executive Executive’s Base Salary accrued and unpaid up to the Termination Date;

     (b) the Company shall pay to Executive Executive’s Incentive Bonus to the extent earned and unpaid for the fiscal year ended prior to the Termination Date;

     (c) upon execution and delivery by Executive of the form of Release attached hereto as Exhibit B, and the expiration of the seven-day revocation period provided in said Release, without revocation of said Release by Executive:

          (i) the Company shall pay to Executive a severance payment equal to one hundred fifty percent (150%) of Executive’s annual Base Salary as of the Termination Date, payable over eighteen (18) months beginning on the Termination Date in regular installments in accordance with the Company’s general payroll practices for salaried employees;

          (ii) the Company shall pay to Executive an additional severance payment equal to Executive’s Incentive Bonus, to the extent earned, for the fiscal year during which the Termination Date occurs, pro-rated for that fiscal year based on the portion of Executive’s active employment for that fiscal year, payable when the Company generally pays Incentive Bonuses for other salaried employees; and

          (iii) if Executive elects COBRA continuation coverage, the Company shall maintain for Executive and his eligible family members, until the earlier of (A) the eighteen (18) month anniversary of the Termination Date or (B) such time as Executive shall obtain employment or other engagement offering comparable or better medical insurance coverage, medical insurance coverage that is the same as or comparable to the coverage to which he was entitled immediately preceding the Termination Date, at a cost to Executive no greater than the normal active employee premiums at such time;

     (d) notwithstanding anything to the contrary in the Stock Option Plan, all unvested options granted to Executive under the Stock Option Plan will automatically vest and become immediately exercisable for the total number of shares purchasable thereunder. Notwithstanding anything to the contrary in the Stock Option Plan, such options will expire on the earlier of (A) the expiration date of such options under the Stock Option Plan and (B) six (6) months from the Termination Date;

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     (e) if the Put/Call Option is exercised, the Company shall pay, or cause to be paid, to Executive and his Permitted Transferees the Put/Call Payment in accordance with Section 4.06;

     (f) the Company shall reimburse Executive for his reimbursable out-of-pocket business expenses in accordance with Section 2.04 to the extent incurred prior to the Termination Date and not previously reimbursed; and

     (g) except as set forth in this Section 4.02, Executive shall not be entitled to receive any other severance, benefits or compensation of any kind whatsoever.

     4.03 Termination by the Company for Cause or by Executive without Good Reason. If the Company terminates Executive’s employment for Cause or Executive terminates his employment other than for Good Reason:

     (a) the Company shall pay to Executive Executive’s Base Salary accrued and unpaid up to the Termination Date;

     (b) the Company shall pay to Executive Executive’s Incentive Bonus to the extent earned and unpaid for the fiscal year ended prior to the Termination Date;

     (c) notwithstanding anything to the contrary in the Stock Option Plan, all unvested options granted to Executive under the Stock Option Plan will automatically be forfeited without any payment or other consideration to Executive, and all vested options granted to Executive under the Stock Option Plan will expire on the earlier of (i) the expiration date of such options under the Stock Option Plan and (ii) the date ninety (90) days following the Termination Date;

     (d) if the Put/Call Option is permitted to be, and is, exercised, the Company shall pay, or cause to be paid, to Executive and his Permitted Transferees the Put/Call Payment in accordance with Section 4.06;

     (e) the Company shall reimburse Executive for his reimbursable out-of-pocket business expenses in accordance with Section 2.04 to the extent incurred prior to the Termination Date and not previously reimbursed;

     (f) except as set forth in this Section 4.03, Executive shall not be entitled to receive any other severance, benefits or compensation of any kind whatsoever.

     4.04 Termination upon Death. Upon Executive’s death during his employment:

     (a) the Company shall pay to Executive’s representatives Executive’s Base Salary accrued and unpaid up to the Termination Date;

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     (b) the Company shall pay to Executive’s representatives Executive’s Incentive Bonus to the extent earned and unpaid for the fiscal year ended prior to the Termination Date;

     (c) upon execution and delivery by Executive’s representatives of the form of Release attached hereto as Exhibit B, and the expiration of the seven-day revocation period provided in said Release, without revocation of said Release by Executive’s representatives:

          (i) the Company shall pay to Executive’s representatives a severance payment equal to fifty percent (50%) of Executive’s annual Base Salary as of Executive’s death, payable over six (6) months beginning on the Termination Date in regular installments in accordance with the Company’s general payroll practices for salaried employees; and

          (ii) the Company shall pay to Executive an additional severance payment equal to Executive’s Incentive Bonus, to the extent earned, for the fiscal year during which the Termination Date occurs, pro-rated for that fiscal year based on the portion of Executive’s active employment for that fiscal year, payable when the Company generally pays Incentive Bonuses for other salaried employees;

     (d) notwithstanding anything to the contrary in the Stock Option Plan, all unvested options granted to Executive under the Stock Option Plan will automatically vest and become immediately exercisable for the total number of shares purchasable thereunder. Notwithstanding anything to the contrary in the Stock Option Plan, such options will expire on the earlier of (i) the expiration date of such options under the Stock Option Plan and (ii) six (6) months from the Termination Date;

     (e) if the Put/Call Option is exercised, the Company shall pay, or cause to be paid, to Executive’s representatives and Permitted Transferees the Put/Call Payment in accordance with Section 4.06;

     (f) the Company shall reimburse Executive’s representatives for Executive’s reimbursable out-of-pocket business expenses in accordance with Section 2.04 to the extent incurred prior to the Termination Date and not previously reimbursed; and

     (g) except as set forth in this Section 4.04 neither Executive nor his representatives shall be entitled to receive any other severance, benefits or compensation of any kind whatsoever.

     4.05 Termination upon Disability. If the Company terminates Executive’s employment as a result of his Disability:

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     (a) the Company shall pay to Executive his Base Salary accrued and unpaid up to the Termination Date;

     (b) the Company shall pay to Executive Executive’s Incentive Bonus to the extent earned and unpaid for the fiscal year ended prior to the Termination Date;

     (c) upon execution and delivery by Executive of the form of Release attached hereto as Exhibit B, and the expiration of the seven-day revocation period provided in said Release, without revocation of said Release by Executive:

          (i) Executive shall be entitled to continue to receive his Base Salary, as a severance payment, in accordance with the Company’s general payroll practices for salaried employees, until the earlier of (A) the commencement of payments under Executive’s long-term disability insurance policy or (B) the six (6) month anniversary of the Termination Date; and

          (ii) the Company shall pay to Executive an additional severance payment equal to Executive’s Incentive Bonus, to the extent earned, for the fiscal year during which the Termination Date occurs, pro-rated for that fiscal year based on the portion of Executive’s active employment for that fiscal year, payable when the Company generally pays Incentive Bonuses for other salaried employees;

     (d) notwithstanding anything to the contrary in the Stock Option Plan, all unvested options granted to Executive under the Stock Option Plan will automatically vest and become immediately exercisable for the total number of shares purchasable thereunder. Notwithstanding anything to the contrary in the Stock Option Plan, such options will expire on the earlier of (i) the expiration date of such options under the Stock Option Plan and (ii) six (6) months from the Termination Date;

     (e) if the Put/Call Option is exercised, the Company shall pay, or cause to be paid, to Executive and his Permitted Transferees the Put/Call Payment in accordance with Section 4.06;

     (f) the Company shall reimburse Executive for his reimbursable out-of-pocket business expenses in accordance with Section 2.04 to the extent incurred prior to the Termination Date and not previously reimbursed; and

     (g) except as set forth in this Section 4.05, Executive shall not be entitled to receive any other severance, benefits or compensation of any kind whatsoever.

     4.06 Put/Call Option.

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     (a) Subject to Section 4.06(b), in the event of the termination of Executive’s employment for any reason other than for Cause, Executive shall have the option to sell, or cause to be sold, to the Company all shares of Common Stock (and other capital stock of the Company, if any) held by Executive and his Permitted Transferees, if any, and cancel all unexercised options issued under the Stock Option Plan held by Executive. In the event of the termination of Executive’s employment for any or no reason, the Company shall have the option to purchase from Executive and his Permitted Transferees, if any, all shares of Common Stock (and other capital stock of the Company, if any) held by any of them and cancel all unexercised options issued under the Stock Option Plan held by Executive. The options to sell and purchase referred to in this Section 4.06(a) are hereinafter collectively referred to as the “Put/Call Option.”

     (b) Provided Executive has not terminated his employment without Good Reason and the Company has not terminated Executive’s employment for Cause, Executive may exercise the Put/Call Option, at his discretion, at any time after the Termination Date and until the date which is 180 calendar days after the Termination Date, by delivery of written notice to the Company within such 180-day period. In the event Executive has terminated his employment without Good Reason, Executive may exercise the Put/Call Option, at his discretion, but only during the first 30 calendar days after the first anniversary of the Termination Date, by delivery of written notice to the Company within such 30-day period. Executive may not exercise the Put/Call Option at any time in the event his employment is terminated by the Company for Cause. The Company may (but shall not be obligated to) exercise the Put/Call Option, at its discretion, at any time after the Termination Date (irrespective of the reason for termination) and until the date which is 180 calendar days after the Termination Date, by delivery of written notice to the Executive within such 180-day period. No Permitted Transferee shall be entitled to exercise the Put/Call Option, but any exercise of the Put/Call Option by Executive or the Company shall be binding on each of Executive’s Permitted Transferees, if any. Executive agrees that his and his Permitted Transferees’ stock certificates shall bear an appropriate legend referencing the Put/Call Option.

     (c) Promptly after exercise of the Put/Call Option by Executive or the Company, Executive and his Permitted Transferees, if any, shall execute and deliver to the Company the form of Release attached hereto as Exhibit C. Within thirty (30) days after exercise of the Put/Call Option, the Company shall pay, or cause to be paid, to Executive and/or his Permitted Transferees, if any, as applicable, an aggregate amount in cash equal to the Put/Call Payment (payable among Executive and his Permitted Transferees, if any, pro rata according to the number of shares and options held by them), provided (i) Executive and his Permitted Transferees, if any, have executed and delivered to the Company the form of Release attached hereto as Exhibit C, and (ii) Executive and his Permitted Transferees, if any, have surrendered to the Company all stock certificates representing Common Stock and/or other capital stock of the Company to be sold, together with executed stock powers therefor, and all stock option agreements for cancellation by the Company, and all other transfer or cancellation documents reasonably requested by the Company. Upon payment

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of the Put/Call Payment, none of Executive, his Permitted Transferees, if any, or his or their respective representatives, heirs, executors, administrators, successors or assigns, shall have any ownership or other interest of any kind in, or rights of any kind in respect of, any Common Stock, other capital stock of the Company, or options under the Stock Option Plan, or otherwise in respect of, or any claims or demands of any kind (whether known or unknown, vested or contingent, suspected or unsuspected, concealed or hidden) against, the Company, except for any payments and benefits, if any, which are owed to Executive under this Agreement in connection with the termination of his employment with the Company.

     4.07 Sole Remedy. The amounts payable to Executive or his representatives or Permitted Transferees, if any, under the applicable provisions of this Part Four in connection with the termination of Executive’s employment, voluntarily or involuntarily, for any or no reason, shall be the only remedy, legal or equitable, available to Executive and his representatives and Permitted Transferees in connection with such termination and/or the exercise of the Put/Call Option in connection therewith, and such amounts shall constitute liquidated damages, excluding any remedies which by law cannot be waived.

PART FIVE

CERTAIN DEFINITIONS

     5.01 Certain Definitions. As used in this Agreement, the following terms have the following meanings unless the context otherwise requires:

“Affiliate” means with respect to any Person, any Person that directly or indirectly controls, is controlled by, or is under common control with such Person. For purposes of this definition, “control” shall mean the power to direct, or cause the direction of, the management of policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

“Cause” means:

(i)	fraud, embezzlement or conviction of a felony;
(ii)	misappropriation of any money, proprietary information or other assets or properties of the Company or any Affiliate of the Company other than (A) an isolated, insubstantial and unintentional misappropriation which is promptly remedied by Executive after he learns of the same or (B) any good faith dispute regarding reimbursement of expenses or other similar good faith dispute;
(iii)	willful or material breach by Executive of the terms of this Agreement; or

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(iv) any other verifiable misconduct of Executive materially and adversely affecting the Company.

“Change in Control” means:

(i)	a merger or acquisition involving the Company in which 50% or more of the Company’s voting stock outstanding after the merger or acquisition is held by holders different from those who held the Company’s voting stock immediately prior to such merger or acquisition; or
(ii)	the sale, transfer or other disposition of all or substantially all of the assets of the Company.

“Disability” means, in the reasonable opinion of the Board, Executive has become physically or mentally disabled, whether totally or partially, so that Executive is unable substantially to perform his employment duties for a period of ninety (90) consecutive days, or for shorter periods aggregating one hundred and eighty (180) days during any three hundred and sixty (360) day period.

“EBITDA” means the Company’s aggregate consolidated net income, exclusive of non-recurring income items, plus tax expense, net interest expense, depreciation, amortization expense and non-recurring expenses, for the four full fiscal quarters immediately preceding the date of exercise of the Put/Call Option, determined by the Board in good faith in accordance with accounting practices and policies consistently applied by the Company prior to the exercise of the Put/Call Option.

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“Enterprise Value” means the product of applicable Enterprise Value Multiple multiplied by the applicable EBITDA, less the Company’s consolidated indebtedness for borrowed money and obligations under capital leases; provided, however, that, in the event of the occurrence of a material change in the business, financial condition or prospects of the Company which is not fully reflected in the amount of EBITDA otherwise to be used in calculating Enterprise Value, Executive and the Board will negotiate an appropriate adjustment in good faith to reflect the expected impact of such material adverse change; provided, further, however, that, in the event Executive and the Board fail to reach agreement on whether an adjustment is required or the amount thereof within sixty (60) days after either party gives written notice to the other party that it believes an adjustment is required, the parties shall initiate a voluntary, nonbinding mediation conducted by a mutually agreed upon mediator in Chicago, Illinois, with each of the parties bearing his or its own costs and expenses (including attorneys’ and experts’ fees and expenses) and his or its proportionate share of any other costs, fees or expenses associated with this mediation and endeavoring in good faith to resolve their differences. If, within thirty (30) days after the first day of mediation, the parties shall not have reached agreement as to the dispute in question, then each party shall be entitled to file suit to resolve the dispute, subject to Section 6.08 and Section 6.09.

“Enterprise Value Multiple” means:

(i)	Six (6), in the event the Company terminates Executive’s employment for any reason other than Cause, including his death or Disability, or Executive terminates his employment for Good Reason; and
(ii)	Five (5), in the event the Company terminates Executive’s employment for Cause, or Executive terminates his employment without Good Reason.

“Good Reason” means Executive’s termination of his employment with the Company within one year following a Change of Control if:

(i)	Executive is assigned any duties inconsistent in any respect with Executive’s position (including status, offices, titles and reporting requirements), authority, duties, or responsibilities, or there is a material diminution of such position, authority, duties or responsibilities, but excluding for this purpose an isolated, insubstantial or inadvertent action not taken in bad faith and which is remedied promptly after receipt of notice thereof given by Executive; or
(ii)	Executive is required, without his consent, to be based at any office or location outside of a 75 mile radius of Cook County, Illinois; or
(iii)	there is a material diminution in Executive’s Base Salary or percentage of Base Salary potentially awardable as Incentive Bonus; or

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(iv) the acquirer is for any reason not bound by any material term of this Agreement to the same extent as the Company immediately prior to such Change in Control.

“Permitted Transferee” means any initial or subsequent transferee of Common Stock or other capital of the Company originally held by Executive, except as otherwise determined by the Board in its sole discretion; it being understood that Executive is not entitled to make any such transfer except as otherwise expressly permitted by any other written agreement with, or written permission from, the Company, which permission shall not be unreasonably withheld or delayed for transfers of issued and outstanding Common Stock or other capital stock of the Company from Executive to either (i) family trusts or partnerships for the benefit of Executive and his family members, provided Executive retains voting and dispositive power over the transferred shares and the transferee executes an agreement with the Company restricting further transfer, or (ii) other senior management shareholders of the Company who at the time of transfer are employed and in good standing with the Company.

“Person” means any individual, corporation, association, partnership, limited liability the Company, estate, trust and any other entity or organization, governmental or otherwise.

“Put/Call Payment” means the sum of (i) the product of the Put/Call Price multiplied by the number of share of Common Stock held by Executive and his Permitted Transferees as of the date of exercise of the Put/Call Option, plus (ii) for each vested option issued under the Stock Option Plan, the excess, if any, of the Put/Call Price over the exercise price of the option, multiplied by the number of shares covered by the vested option (options, to the extent not vested, shall be excluded); provided, however, that, notwithstanding the foregoing, in the event the Company terminates Executive’s employment for Cause, the Put/Call Payment shall not exceed the aggregate cash amount (including any option exercise price) paid by Executive for Common Stock held by Executive and/or his Permitted Transferees, as applicable.

“Put/Call Price” means the applicable Enterprise Value divided by the sum of the number of fully diluted shares of Common Stock outstanding or issuable upon exercise of outstanding stock options, warrants, convertible debt or equity or other rights to acquire Common Stock, as of the date of exercise of the Put/Call Option. In the event of the recapitalization of the Company, reclassification of the Common stock into one or more classes or series of capital stock, stock split or similar event, the Board shall adjust the Put/Call Price in good faith, so that the aggregate Put/Call Payment is no smaller or larger as a result of such event than it would have been had such event not occurred.

PART SIX

MISCELLANEOUS

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     6.01 Assignment. Executive and the Company acknowledge and agree that the covenants, terms and provisions contained in this Agreement constitute a personal employment contract and the rights of the parties thereunder cannot be transferred, sold, assigned, pledged or hypothecated, excepting that the rights and obligations of the Company under this Agreement may be assigned or transferred by operation of law pursuant to a merger, consolidation, share exchange, sale of substantially all of the Company’s assets, or other reorganization, or through liquidation, dissolution or otherwise, whether or not the Company is the continuing entity, provided that the assignee or transferee is the successor to all or substantially all of the assets of the Company and such assignee or transferee assumes the rights and duties of the Company, if any, as contained in this Agreement, either contractually or as a matter of law.

     6.02 Capacity. Executive hereby represents and warrants that, in entering into this Agreement, he is not in violation of any contract or agreement, whether written or oral, with any other Person to which he is a party or by which he is bound and will not violate or interfere with the rights of any other Person. In the event that such a violation or interference does occur, or is allleged to occur, notwithstanding the representation and warranty made hereunder, Executive shall indemnify the Company from and against any and all manner of expenses and liabilities incurred by the Company or any Affiliate of the Company of the Company in connection with such violation or interference or alleged violation or interference.

     6.03 Severability. If any phrase, clause or provision of this Agreement is declared invalid or unenforceable by a court of competent jurisdiction, such phrase, clause or provision shall be deemed severed from this Agreement, but will not affect any other provisions of this Agreement, which shall otherwise remain in full force and effect. If any restriction or limitation in this Agreement is deemed to be unreasonable, onerous and unduly restrictive by a court of competent jurisdiction, it shall not be stricken in its entirety and held totally void and unenforceable, but shall remain effective to the maximum extent permissible within reasonable bounds.

     6.04 Notices. Any notice, request or other communication required to be given pursuant to the provisions hereof shall be in writing and shall be deemed to have been given when delivered in person, one (1) day after being sent by overnight courier, or five (5) days after being deposited in the United States mail, certified or registered, postage pre-paid, return receipt requested and addressed to the party at its or his last known addresses. The address of any party may be changed by notice in writing to the other parties duly served in accordance herewith.

     6.05 Waiver. The waiver by the Company or Executive of any breach of any term or condition of this Agreement shall not be deemed to constitute the waiver of any other breach of the same or any other term or condition hereof.

     6.06 Executive Acknowledgment/Injunctive Relief. Executive acknowledges and agrees that Executive’s covenants set forth in this Agreement are reasonable and necessary for the protection of the Company’s business interests, that such covenants will not result in undue economic hardship to Executive, that irreparable injury will result to the Company if Executive breaches any of the terms of Executive’s covenants in this Agreement, and that in the event of

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Executive’s actual or threatened breach of any of his covenants, the Company will have no adequate remedy at law. Executive accordingly agrees that in the event of any actual or threatened breach by him of any of his covenants in this Agreement, the Company shall be entitled to immediate injunctive and other equitable relief, without bond and without the necessity of showing, any actual monetary damages, and Executive shall pay the Company any and all of the Company’s, costs and expenses in enforcing Executive’s covenants in this Agreement (including court costs and reasonable attorney’s, accountant’s, financial advisor’s and expert witness’s fees). Nothing herein shall be construed as prohibiting the Company from pursuing any other remedies available to it for any breach or threatened breach by Executive of any of his covenants contained in this Agreement, including the recovery of any damages which it is able to prove.

     6.07 Governing Law. This Agreement and the enforcement thereof shall be governed and controlled in all respects by the laws of the State of Illinois (applicable to agreements to be performed wholly within such state), without regard to conflicts of law principles.

     6.08 Jurisdiction and Service of Process. EXECUTIVE AND THE COMPANY HEREBY CONSENT TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN COOK COUNTY, ILLINOIS, AND IRREVOCABLY AGREE THAT, SUBJECT TO THE OTHER PROVISIONS OF THIS AGREEMENT, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT WHICH MAY BE LITIGATED SHALL BE LITIGATED IN SUCH COURTS. EACH OF EXECUTIVE AND THE COMPANY ACCEPTS FOR SUCH PARTY AND IN CONNECTION WITH SUCH PARTY’S PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. ALL PROCESS IN ANY SUCH PROCEEDINGS IN ANY SUCH COURT SHALL BE MAILED BY REGISTERED MAIL TO THE APPLICABLE PARTY, SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY EACH SUCH PARTY TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

     6.09 TRIAL. EACH OF EXECUTIVE AND THE COMPANY HEREBY WAIVES SUCH PARTY’S RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THE PARTIES HERETO RELATING TO THE SUBJECT MATTER HEREOF. EACH OF EXECUTIVE AND THE COMPANY ALSO WAIVES ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF ANY PARTY TO THIS AGREEMENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT. EACH OF EXECUTIVE AND THE COMPANY ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO AN EMPLOYMENT AND BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING

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INTO THIS AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH OF EXECUTIVE AND THE COMPANY FURTHER WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH SUCH PARTY’S LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES SUCH PARTY’S JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first hereinabove written.

HOME PRODUCTS INTERNATIONAL, INC.
By:	/s/ Joseph Gantz
	Joseph Gantz, Chairman of the Board
EXECUTIVE:
/s/ Richard Hassert
Richard Hassert

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EXHIBIT A

STOCK OPTION PLAN TERM SHEET

• Aggregate of 10% of Common Stock (or approximately 787,000 shares) available for a combination of options to Hassert, Ramsdale and a third senior executive and SARs to other employees.

• All options and SARs expire on fifth anniversary of issuance.

• All options and SARs vest 1/3 on each of the first three anniversaries of issuance.

• Accelerated vesting on change of control.

• Initial grant of 150,000 options with an exercise price of $2.25 per share to each of Hassert, Ramsdale and the third senior executive.

• The Board will determine subsequent grants and the exercise prices therefor.

EXHIBIT B

SEVERANCE RELEASE

     1. In consideration for the payments and, if applicable, benefits to be provided to me pursuant to Section 4.0   of my Employment Agreement with Home Products International, Inc., a Delaware corporation (the “Company”), dated                     ,                     , I, Richard Hassert, on behalf of myself and my heirs, executors, administrators, assigns, and attorneys (hereinafter collectively referred to as the “Releasing Parties”) do hereby fully and forever waive, release, relieve and discharge the Company, its direct and indirect parent corporation(s), subsidiaries and affiliates and its and their respective directors, officers, employees, members, partners, shareholders, attorneys and agents, past, present and future, and each of their respective successors and assigns (hereinafter collectively referred to as the “Released Parties”) of and from any and all actions, causes of action, claims, judgments, orders, attorneys’ fees, damages, controversies, lawsuits, demands or liabilities of any kind of nature, known or unknown, vested or contingent, suspected or unsuspected, concealed or hidden, and all other claims and demands whatsoever in law or in equity which any Releasing Parties have had or now have against any Released Party from the beginning of the world to the date of this Agreement, as a result of, arising from or in any way pertaining to, my employment, or the termination of my employment, with the Company or any direct and indirect parent corporation(s), subsidiaries and affiliates of the Company, including, for purposes of illustration and not limitation:

(a)	claims, actions, causes of action, demands, or liabilities arising under Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act, as amended, the Employee Retirement Income Security Act, as amended, the Rehabilitation Act of 1973, as amended, the Americans with Disabilities Act, and/or any other federal, state, municipal or local employment discrimination statues (including, but not limited to, claims based on age, sex, attainment of benefit plan rights, race, religion, marital status, national origin, handicap, retaliation, and veteran status); and/or
(b)	claims, actions, causes of action, demands, or liabilities under any other federal, state, municipal or local statute, common law, order, ordinance or regulation; and/or
(c)	any other claim whatsoever, including, but not limited to, claims based upon breach of contract (express or implied), tort, public policy, wrongful termination, claims for compensatory or punitive damages, defamation, intentional infliction of emotional distress, personal injury claims, negligence and/or any other common law, statutory, or other claim,

but excluding any claims which by law cannot be waived.

     2. I UNDERSTAND THAT THIS RELEASE AND SETTLEMENT AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS AGAINST THE

COMPANY AND THE OTHER RELEASED PARTIES AS A RESULT OF, ARISING FROM OR IN ANY WAY PERTAINING TO, MY EMPLOYMENT, OR THE TERMINATION OF MY EMPLOYMENT, WITH THE COMPANY OR ANY DIRECT AND INDIRECT PARENT CORPORATION(S), SUBSIDIARIES AND AFFILIATES OF THE COMPANY TO THE DATE OF THIS AGREEMENT.

     3. I also agree that I have been paid for all hours worked, all pay earned and owed, not suffered any on-the-job injury for which I have not already filed a claim, and have received all of the sick pay and vacation pay that I am owed.

     4. I covenant and agree never to institute any suit, charge, complaint, proceeding or action at law, in equity, or otherwise in any court of the United States or any state thereof or in any administrative agency of either the United States or any state, county or municipality thereof or before any other tribunal, public or private, against the Company or any other Released Party, or in any way voluntarily aid in the institution or prosecution of any suit, action, or claim of any kind, or any other kind of relief, in any way against the Company or any other Released Party as a result of, arising from or in any way pertaining to, my employment, or the termination of my employment, with the Company or any direct and indirect parent corporation(s), subsidiaries and affiliates of the Company.

     5. I understand that neither I nor the Company shall reveal the contents of this Agreement and both expressly agree that if asked about my separation from the Company, both I and the Company will say nothing more than that I have left the Company to pursue other interests. In addition, I shall not in any manner make any defamatory, derogatory, disparaging or denigrating statements about the Company or its products or services. I acknowledge that the absolute confidentiality of this Agreement and compliance with the non-disparagement terms of this Agreement are of utmost importance to the Company and without the unequivocal commitment by myself regarding these provisions, the Company would not have entered into this Agreement or my Employment Agreement. As such, if I breach this Paragraph 5, I shall, in addition to any other relief, return all moneys paid to me by the Company.

     6. I have been given at least twenty-one (21) days to consider this Agreement, and understand that I may revoke this Agreement within seven (7) days after its signing and that any revocation must be made in writing and submitted within such seven (7) day period to the Company. I further understand that if I revoke this Agreement, I will not be entitled to the payments and benefits otherwise to be provided to me pursuant to Section 4.0 __ of my Employment Agreement.

     7. I acknowledge and agree that I have carefully read and fully understand all of the provisions of this Agreement and that I voluntarily and knowingly enter into this Agreement.

     8. I understand that neither this Agreement nor any of the events which have led to its execution may be used as evidence in any proceedings of any kind between the parties (except for a

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claim of breach of this Agreement) and that this Agreement does not constitute an admission by the Company of any wrongdoing or liability.

     9. This Agreement constitutes the complete Agreement between myself and the Company. No other promises or agreement, either express or implied, shall be binding upon myself or the Company unless signed in writing by myself and the Company. Each of the Released Parties is an intended third party beneficiary of this Release and may enforce this Release against any Releasing Party.

Signed:

EXECUTIVE:

Richard Hassert                date

HOME PRODUCTS INTERNATIONAL, INC.

By
	date

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EXHIBIT C

PUT/CALL PAYMENT RELEASE

     KNOW ALL MEN BY THESE PRESENTS, that the undersigned,                     (the “Releasing Party”), for and in consideration of the sum of $[applicable Put/Call Payment Amount], which has been paid, or caused to be paid, to the Releasing Party by Home Products International, Inc., a Delaware corporation (the “Company”), the Releasing Party has remised, released and forever discharged, and by these presents does, for both himself and his respective representatives, successors and assigns, remise, release, and forever discharge the Company, its direct and indirect parent corporation(s), subsidiaries and affiliates and its and their respective directors, officers, employees, members, partners, shareholders, attorneys and agents, past, present and future), and each of their respective successors and assigns (collectively the “Released Parties”), of and from any and all actions, causes of action, claims, judgments, orders, attorneys’ fees, damages, controversies, lawsuits, demands or liabilities of any kind of nature, known or unknown, vested or contingent, suspected or unsuspected, concealed or hidden, and all other claims and demands whatsoever in law or in equity, that the Releasing Party may have as a result of, arising from or in any way pertaining to, the Releasing Party’s direct or indirect ownership of Common Stock or other capital stock of the Company, options to acquire Common Stock or other capital stock of the Company, or membership or other equity interests in direct and indirect parent corporation of the Company, which the Releasing Party may now have against the Released Parties, or any of them, or which he ever had, or which he, his respective representatives, successors or assigns hereafter can, shall or may have, for, upon, or by reason of any matter, cause or thing whatsoever which shall have arisen at any time prior to the date of these presents.

     The Releasing Party covenants and agrees never to institute any suit, charge, complaint, proceeding or action at law, in equity, or otherwise in any court of the United States or any state thereof or in any administrative agency of either the United States or any state, county or municipality thereof or before any other tribunal, public or private, against the Company or any other Released Party, or in any way voluntarily aid in the institution or prosecution of any suit, action, or claim of any kind, or any other kind of relief, in any way against the Company or any other Released Party as a result of, arising from or in any way pertaining to, the Releasing Party’s direct or indirect ownership of Common Stock or other capital stock of the Company, options to acquire Common Stock or other capital stock of the Company, or membership or other equity interests in direct and indirect parent corporation of the Company.

     THE RELEASING PARTY FURTHER STATES THAT HE HAS READ AND UNDERSTANDS THIS RELEASE AND THAT HE INTENDS TO BE LEGALLY BOUND BY IT. EACH OF THE RELEASED PARTIES IS AN INTENDED THIRD PARTY BENEFICIARY OF THIS RELEASE AND MAY ENFORCE THIS RELEASE AGAINST ANY RELEASING PARTY.

     IN WITNESS WHEREOF, this Release is made as of                                        ,                    ,                    .

EX-10.3

EXHIBIT 10.3

ASSIGNMENT AND ASSUMPTION AGREEMENT

     This Assignment and Assumption Agreement (this “Agreement”), by and between James R. Tennant (the “Executive”), Home Products International, Inc. (the “Company”) and Storage Acquisition Company, L.L.C. (the “Purchaser”), is made effective as of, and is contingent upon, the Executive’s receipt of the payment described in Section 1 below and the first acceptance (the “Share Acceptance”) for payment of shares of common stock of the Company tendered pursuant to the offer described in that certain Offer to Purchase dated November 12, 2004 (the “Offer to Purchase”) and the related letter of transmittal (the date on which the later of such events occurs, the “Effective Date”) made pursuant to that certain Acquisition Agreement, dated as of October 28, 2004 (the “Acquisition Agreement”) between Purchaser and the Company.

RECITALS

     A. The Company and the Executive have entered into that certain Employment Agreement, dated as of May 19, 1999, as amended as of October 14, 1999 and December 15, 1999 (as amended, the “Employment Agreement”).

     B. As of the Effective Date, the Company will assign to the Purchaser the right to receive the Executive’s consulting services under Section 13(b)(i) of the Employment Agreement, the Purchaser will assume the Company’s obligation under Section 13(b)(i) to pay for such services in the amount described in Section 1 below, and the Executive consents to such assignment and agrees to perform such consulting services to the Purchaser in exchange for the payment described in Section 1 below, which amount shall be in full and final satisfaction of any amounts due the Executive under Section 13(b)(i) of the Employment Agreement.

     NOW, THEREFORE, in consideration of the foregoing, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company, the Purchaser and the Executive hereby agree as follows:

AGREEMENT

     1. The Company hereby assigns to the Purchaser the Company’s right to receive the consulting services from the Executive for a period of 24 months following the Executive’s termination of employment with the Company (the “Consulting Services”). The Purchaser hereby accepts the foregoing assignment of the right to receive the Consulting Services. In consideration of the Consulting Services and the release provided in Section 2 below, the Purchaser hereby agrees to pay the Executive a lump sum cash payment of $4.1 million (the “Payment”), in full and final satisfaction of any amounts due under Section 13(b)(i) of the Employment Agreement on the first business day following the Share Acceptance. The Executive hereby consents to such assignment and agrees to perform the Consulting Services for

the Purchaser, and agrees to accept the Payment in full and final satisfaction of any amounts due under Section 13(b)(i) of the Employment Agreement.

     2. Release by the Executive.

          (a) The Executive hereby unconditionally, irrevocably and absolutely releases and discharges the Company, the Purchaser, each of their respective direct and indirect parents, affiliates and subsidiaries, and each of the foregoing’s respective officers, directors, shareholders, managers, employees, agents, investors, and representatives (collectively, the “Released Parties”) from any actions, causes of action, suits and claims of every kind and description whatsoever, whether known or unknown, which existed or may have existed at any time from the beginning of the world up to the Effective Date, related in any way to any transactions or occurrences involving the Company, or any parent or subsidiary of the Company or any person acting on behalf of or through the Company, and the Executive or any affiliate of Executive through the Effective Date, or any matter, cause or thing whatsoever which shall have arisen at any time from the beginning of the world up to the Effective Date, to the fullest extent permitted by law, including, but not limited to, the Executive’s employment with or service to the Company (as an employee, officer, director or otherwise), claims related to Section 13(b)(i) of the Employment Agreement (except claims for payment of the Payment), claims related to the Acquisition Agreement, the Offer to Purchase, that certain Agreement and Plan of Merger dated as of June 2, 2004, by and between JRT Acquisition, Inc. and the Company (the “JRT Acquisition Agreement”) or the termination of the JRT Acquisition Agreement, and all other losses, liabilities, claims, charges, demands and causes of action, known or unknown, suspected or unsuspected, arising directly or indirectly out of or in any way connected with the any of the foregoing, Executive’s employment with or service to the Company or the ending of those relationships, or Executive’s ownership of Common Stock, other capital stock or stock options of the Company or Executive’s participation or non-participation in any employee benefit plans of the Company, or Purchaser’s acquisition of the Company, in each case except those claims and rights that are specifically excluded from this release below in this Section 2(a). Except as set forth herein, this release includes, but is not limited to, any claims for wages, compensation, bonuses, employment benefits, stock options, equity interests or damages of any kind whatsoever, arising out of any common law torts, arising out of any contracts, express or implied, any covenant of good faith and fair dealing, express or implied, any theory of wrongful discharge, any theory of negligence, any theory of retaliation, any theory of discrimination or harassment in any form, any legal restriction on the Company’s right to terminate employees, or any federal, state, or other governmental statute, executive order, or ordinance, including, without limitation, Title VII of the Civil Rights Act of 1964 as amended, the Civil Rights Act of 1991, the Civil Rights Act of 1866, 42 U.S.C. § 1981, the Americans with Disabilities Act, the Family and Medical Leave Act, the Employment Retirement Income Security Act, or any other legal limitation on or regulation of the employment relationship, any claims for breach of fiduciary duties, negligence or malfeasance, all claims for attorneys’ fees, costs and expenses. Notwithstanding anything to the contrary contained herein, the release set forth in this Section 2 shall not include only: (i) claims

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for those benefits and payments due to the Executive pursuant to employee benefit plans of the Company of which the Executive is a participant or pursuant to the Employment Agreement (other than Executive’s right under Section 13(b)(i) of the Employment Agreement), in accordance with the applicable terms thereof, including, without limitation, as described on Schedule 1 hereto; (ii) claims for payment of the Payment in accordance with this Agreement; (iii) any claim or right of indemnification by the Company under the organizational documents of the Company, by law or under the indemnification provisions of the Employment Agreement or any other applicable agreement with the Company, including any indemnification pursuant to any applicable laws; (iv) any claim or right under the Company’s directors and officers liability coverage; and (v) any claim or right with respect to payment for common stock or stock options of the Company tendered in accordance with the terms of the Offer to Purchase. The parties agree that the benefits and compensation due to Executive under the Employment Agreement and option plan include, but are not limited to, those described on Schedule 1 hereto, and the amounts for each item scheduled in Schedule 1 are the correct and only amounts owing the Executive for each such item.

          (b) The Executive represents that he has not filed any complaints, charges or lawsuits against either the Company or the Purchaser with any governmental agency or any court, and agrees that the Executive will not initiate, assist or encourage any such actions, except as required by law and except as may be required to enforce his rights with respect to those claims that are not released herein. The Executive further agrees that if a commission, agency, or court assumes jurisdiction of such claim, complaint or charge against either the Company or the Purchaser on behalf of the Executive, the Executive will request the commission, agency or court to withdraw from the matter unless such matter is with respect to claims not released herein.

          (c) The Executive represents and warrants that he is the sole owner of the actual or alleged claims, rights, causes of action, and other matters which are released herein, that the same have not been assigned, transferred, or disposed of in fact, by operation of law, or in any manner, and that he has the full right and power to grant, execute and deliver the releases, undertakings, and agreements contained herein.

          (d) The parties acknowledge that they may discover facts or law different from, or in addition to, the facts or law that they know or believe to be true with respect to the claims released in this Agreement and agree, nonetheless, that this Agreement and the releases contained in it shall be and will remain effective in all respects notwithstanding such different or additional facts or the discovery of them.

          (e) Except in the event of fraud and except as specified above, the parties declare and represent that they intend this Agreement to be complete and not subject to any claim of mistake, and that the releases herein express a full and complete release on the part of each party and, regardless of the adequacy or inadequacy of the consideration, the parties intend the releases herein to be final and complete. The parties execute these releases with the full

3

knowledge that they cover all possible claims against each other, except as specified above, to the fullest extent permitted by law.

     3. Knowing and Voluntary Agreement. The Executive agrees that he has carefully read and fully understands all aspects of this Agreement including the fact that this Agreement releases any claims that the Executive might have against the Company, the Purchaser and the other Released Parties except as specified above. Finally, the Executive agrees that he has been advised to consult with an attorney prior to executing this Agreement, and that he has either done so or knowingly waived the right to do so, and now enters into this Agreement without duress or coercion from any source.

     4. Governing Law. The construction and performance of this Agreement shall be governed by the laws of the State of Illinois without giving effect to the choice of law provisions thereof.

     5. Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but each of which together shall constitute one and the same instrument.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date.

COMPANY:

HOME PRODUCTS INTERNATIONAL, INC.

By:	/s/ Douglas S. Ramsdale
	Douglas S. Ramsdale
	Chief Executive Officer

PURCHASER:

STORAGE ACQUISITION COMPANY, L.L.C.

By:	/s/ Ellen Havdala
	Ellen Havdala
	Vice President

4

EXECUTIVE:

By:	/s/ James R. Tennant
	James R. Tennant

5

SCHEDULE 1
ASSIGNMENT AND ASSUMPTION AGREEMENT
PAYMENTS DUE EXECUTIVE

Contract Obligations to J. Tennant	$
Severance - 3 times the sum of the average salary and bonus during each of the two years immediately prior to the change of control; payable within 5 business days of termination.		2,824,317.39
Options		49,000.00
EIP shares — payable within 10 days of the change in control		137,731.50
Payment for 24 month consulting services; payable on date of termination
— $5 million less the value of options cashed out		4,100,000.00
2004 bonus		856,235.95	50.5/52 converts to 53 week salary basis
2004 Profit Sharing Contribution at 1% of eligible pay		13,319.23
Earned but untaken vacation; 2 weeks — vacation is earned in the year prior to when it is taken		18,920.00
2 years medical and other insurance benefits including the $5 million term life insurance policy
Additional payment for excise taxes imposed by Section 4999 of the IRC of 1986
Letter of credit for $375,000 upon request

Fiscal years		Salary		MIP		EIP		Total
	2002		489,512.00		474,501.00		467,484.00		1,431,497.00
	2003		491,920.00		—		—		491,920.00
									1,923,417.00
						Average			961,708.50

Calendar year calculation
	2002	Pay per day	3,932.68
		number of days in 2002, 12/14-12/28	15
			58,990.26
	2003	52 weeks ended 12/27/03 364 days/52 weeks	491,920.00
	2004	Pay per day
		salary	1,351.43
		bonus per day
		MIP	1,419.00
		EIP	1,013.57
			3,784.00
		number of days in 2004, 12/28/03-12/13/04	352
			1,331,968.00
		Total 2 years pay	1,882,878.26
		Three times average pay	2,824,317.39

EX-99.1

EXHIBIT 99.1

STORAGE ACQUISITION COMPANY, L.L.C.
COMPLETES ITS TENDER OFFER FOR
HOME PRODUCTS INTERNATIONAL, INC.

CHICAGO, IL (December 14, 2004) — Storage Acquisition Company, L.L.C., a Delaware limited liability company, and Home Products International, Inc., a Delaware corporation (Nasdaq: HOMZ), jointly announced today that Storage Acquisition Company has completed its tender offer for the outstanding shares of common stock (including the associated preferred stock purchase rights) of Home Products for $2.25 per share, net to the seller, in cash without interest. The closing followed the expiration, at 5:00 p.m., New York City time, on Monday, December 13, 2004, of the tender offer.

Mellon Investor Services LLC, the Depositary for the offer, has advised Storage Acquisition Company that, as of expiration of the offer, an aggregate of 7,365,360 shares of Home Products common stock (including 26,045 shares tendered pursuant to notices of guaranteed delivery), representing approximately 92.9% of the outstanding shares of Home Products’ common stock, had been validly tendered to Storage Acquisition Company pursuant to the offer. Storage Acquisition Company has accepted all validly tendered shares of Home Products’ common stock for payment, subject, in the case of any shares tendered under the guaranteed delivery procedures specified in the tender offer documents, to the perfection of those tenders in the manner and within the period specified in such documents. Payments for accepted shares will be made promptly through the Depositary for the offer.

The members of Storage Acquisition Company are EGI-Fund (02-04) Investors, L.L.C.; an affiliate of Triyar Capital, LLC; Joseph Gantz (a former director of Home Products); and Walnut Investment Partners, L.P. (an affiliate of Mr. Gantz).

About Home Products

Home Products International, Inc. is an international consumer products company specializing in the manufacture and marketing of quality diversified housewares products. The company sells its products through national and regional discounters including Kmart, Wal-Mart and Target, hardware/home centers, food/drug stores, juvenile stores and specialty stores.

EX-99.2

EXHIBIT 99.2

HOME PRODUCTS INTERNATIONAL, INC.
ANNOUNCES ITS INTENTION TO
DEREGISTER AND DELIST ITS COMMON STOCK

CHICAGO, IL (December 14, 2004) — Home Products International, Inc., a Delaware corporation (Nasdaq: HOMZ), announced today that its Board of Directors (as reconstituted in the manner contemplated by the documents governing the terms of the recently completed tender offer by Storage Acquisition Company, L.L.C. for shares of Home Products’ common stock) approved the delisting of Home Products’ common stock, which is anticipated to be effective prior to the commencement of trading on The Nasdaq Stock Market on December 16, 2004. Following the delisting, it is unlikely that Home Products’ shares will be traded on the over-the-counter bulletin board, or that price quotations will be reported through any other sources.

The reconstituted Board of Directors of Home Products also has approved the deregistration of the common stock subject to and conditioned on receipt of a certification from its transfer agent that Home Products has fewer than 300 stockholders of record. Upon receipt of such certification, Home Products intends promptly to file a Form 15 with the Securities and Exchange Commission (“SEC”) to deregister its common stock and suspend its reporting obligations under the Securities Exchange Act of 1934 pursuant to Rule 12g-4(a)(1)(i) thereof.

The filing of the Form 15 will immediately suspend Home Products’ obligation to file reports under the Securities Exchange Act, including Forms 10-K, 10-Q and 8-K. The deregistration will not become effective, however, until the SEC terminates the registration, which Home Products expects to occur 90 days after the filing of the Form 15.

Notwithstanding the suspension of its obligation to file periodic financial reports, by the terms of Home Products’ indenture governing its 9-5/8% Senior Subordinated Notes due 2008, Home Products would continue to be required voluntarily to file the same annual, periodic and current reports that it is now required to file as an SEC registrant so long as the indenture covenants remain in effect (the notes issued under the indenture have a stated maturity date of May 14, 2008).

About Home Products

Home Products International, Inc. is an international consumer products company specializing in the manufacture and marketing of quality diversified housewares products. The company sells its products through national and regional discounters including Kmart, Wal-Mart and Target, hardware/home centers, food/drug stores, juvenile stores and specialty stores.