Dated:  June 4, 2003

THIS NOTE HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS.

No.
1                                                                                                                                       
      $1,500,000

P.W. STEPHENS, INC.

REVOLVING LINE OF CREDIT NOTE

            This Note (the "Note") is issued by P.W. Stephens, Inc., a
California corporation (the "Obligor"), to The Vantage Group Ltd. (the
"Holder").

            FOR VALUE RECEIVED, the Obligor hereby promises to pay to the Holder
or its registered assigns up to the principal sum of $1,500,000 on the following
terms:

            Funding.  Subject to the terms of this Note, the Holder shall loan
the Obligor up to $1,500,000.  Funding shall occur within 5 business days from
the Holder's receipt of a written draw request from an authorized officer of the
Obligor.  The Obligor shall have the right, but shall not be required, to from
time to time make partial repayment of the outstanding principal balance hereof
prior to maturity, and in such event, the Obligor shall have the right to
request re-advancement of such partial repayments in accordance with the terms
hereof.

            Payments.  Interest on any outstanding principal balance hereof
shall be due and payable monthly, in arrears, commencing on July 1, 2003 and
shall continue on the first day of each calendar month thereafter that any
amounts under this Note are due and payable (each, an "Interest Payment Date"). 
Principal shall be due and payable in one installment on June 4, 2004 (the
"Maturity Date").  All payments in respect of the indebtedness evidenced hereby
shall be made in collected funds, and shall be applied to principal, accrued
interest and charges and expenses owing under or in connection with this Note in
such order as the Holder elects, except that payments shall be applied to
accrued interest before principal.  This Note may be prepaid at any time without
penalty. 

            Interest.  Interest shall accrue on the outstanding principal
balance hereof at an annual rate equal to seven percent (7%), commencing with
the receipt of funds by the Obligor.  Interest shall be calculated on the basis
of a 360-day year and the actual number of days elapsed, to the extent permitted
by applicable law.  Interest hereunder will be paid to the Person (as defined in
Section 4) in whose name this Note is registered on the records of the Obligor
regarding registration and transfers of Notes (the "Note Register"). 

 

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            Security Agreement.  This Note is secured by a Security Agreement of
even date herewith between the Obligor and the Holder.

This Note is subject to the following additional provisions:

Section 1.        This Note is exchangeable for an equal aggregate principal
amount of Notes of different authorized denominations, as requested by the
Holder surrendering the same. No service charge will be made for such
registration of transfer or exchange.

Section 2.        Events of Default.

(a)        An "Event of Default", wherever used herein, means any one of the
following events (whatever the reason and whether it shall be voluntary or
involuntary or effected by operation of law or pursuant to any judgment, decree
or order of any court, or any order, rule or regulation of any administrative or
governmental body):

(i)         Any default in the payment of the principal of, interest on or other
charges in respect of this Note, free of any claim of subordination, as and when
the same shall become due and payable (whether on an installment, an Interest
Payment Date, or the Maturity Date or by acceleration or otherwise);

(ii)        The Obligor or the Guarantor (defined below) shall commence, or
there shall be commenced against the Obligor or Guarantor under any applicable
bankruptcy or insolvency laws as now or hereafter in effect or any successor
thereto, or the Obligor or Guarantor commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to the Obligor or Guarantor or there is commenced
against the Obligor or Guarantor any such bankruptcy, insolvency or other
proceeding which remains undismissed for a period of 61 days; or the Obligor or
Guarantor is adjudicated insolvent or bankrupt; or any order of relief or other
order approving any such case or proceeding is entered; or the Obligor or
Guarantor suffers any appointment of any custodian or the like for it or any
substantial part of its property which continues undischarged or unstayed for a
period of 61 days; or the Obligor or Guarantor makes a general assignment for
the benefit of creditors; or the Obligor or Guarantor shall fail to pay, or
shall state that it is unable to pay, or shall be unable to pay, its debts
generally as they become due; or the Obligor or Guarantor shall call a meeting
of its creditors with a view to arranging a composition, adjustment or
restructuring of its debts; or the Obligor or Guarantor shall by any act or
failure to act expressly indicate its consent to, approval of or acquiescence in
any of the foregoing; or any corporate or other action is taken by the Obligor
or Guarantor for the purpose of effecting any of the foregoing;

(b)        During the time that any portion of this Note is outstanding, if any
Event of Default occurs and is continuing, the full principal amount of this
Note, together with interest and other amounts owing in respect thereof, to the
date of acceleration shall become at the Holder's election, immediately due and
payable in cash.  The Holder need not provide and the Obligor hereby waives any
presentment, demand, protest or other notice of any kind, and the Holder may
immediately and without expiration of any grace period enforce any and all of
its rights and remedies hereunder and all other remedies available to it under
applicable law. Such declaration may be rescinded and annulled by Holder at any
time prior to payment hereunder. No such rescission or annulment shall affect
any subsequent Event of Default or impair any right consequent thereon.

 

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Section 3.        Notices.  Any notices, consents, waivers or other
communications required or permitted to be given under the terms hereof must be
in writing and will be deemed to have been delivered:  (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one (1) Business Day (defined
below) after deposit with a nationally recognized overnight delivery service, in
each case properly addressed to the party to receive the same.  The addresses
and facsimile numbers for such communications shall be:

 

If to Obligor or the Guarantor:

Home Solutions of America, Inc.

 

11850 Jones Road

 

Houston, Texas 77070

 

Attn: R. Andrew White, President

 

Facsimile No.: (281) 970-9859

 

 

 

 

If to the Holder:

The Vantage Group Ltd.

 

67 Wall Street, Suite 2211

 

New York, NY 10005

 

Attn: Lyle Hauser

 

Facsimile No.: (212) 785-3888

 

or at such other address and/or facsimile number and/or to the attention of such
other person as the recipient party has specified by written notice given to
each other party three (3) business days prior to the effectiveness of such
change.  Written confirmation of receipt (i) given by the recipient of such
notice, consent, waiver or other communication, (ii) mechanically or
electronically generated by the sender's facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (iii) provided by a nationally recognized overnight delivery
service, shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.

Section 4.        Definitions.  For the purposes hereof, the following terms
shall have the following meanings:

"Business Day" means any day except Saturday, Sunday and any day which shall be
a federal legal holiday in the United States or a day on which banking
institutions are authorized or required by law or other government action to
close.

 

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"Person" means a corporation, an association, a partnership, organization, a
business, an individual, a government or political subdivision thereof or a
governmental agency.

Section 5.        Except as expressly provided herein, no provision of this Note
shall alter or impair the obligations of the Obligor, which are absolute and
unconditional, to pay the principal of, interest and other charges (if any) on,
this Note at the time, place, and rate, and in the coin or currency, herein
prescribed.  This Note is a direct obligation of the Obligor. This Note ranks
pari passu with all other Notes now or hereafter issued under the terms set
forth herein. As long as this Note is outstanding, the Obligor shall not and
shall cause their subsidiaries not to, without the consent of the Holder, (i)
amend its certificate of incorporation, bylaws or other charter documents so as
to adversely affect any rights of the Holder; (ii) repay, repurchase or offer to
repay, repurchase or otherwise acquire shares of its Common Stock or other
equity securities other than as to the Underlying Shares to the extent permitted
or required under the Transaction Documents, or pursuant to an employment plan
or agreement; or (iii) enter into any agreement with respect to any of the
foregoing.

Section 6.        Guaranty.  Home Solutions of America, Inc., a Delaware
corporation and sole shareholder of the Obligor, hereby guarantees payment of
all amounts owed by the Obligor to the Holder under this Note.

Section 7.        If this Note is mutilated, lost, stolen or destroyed, the
Obligor shall execute and deliver, in exchange and substitution for and upon
cancellation of the mutilated Note, or in lieu of or in substitution for a lost,
stolen or destroyed Note, a new Note for the principal amount of this Note so
mutilated, lost, stolen or destroyed but only upon receipt of evidence of such
loss, theft or destruction of such Note, and of the ownership hereof, and
indemnity, if requested, all reasonably satisfactory to the Obligor.

Section 8.        No indebtedness of the Obligor is senior to this Note in right
of payment, whether with respect to interest, damages or upon liquidation or
dissolution or otherwise.  Without the Holder's consent, the Obligor will not
and will not permit any of their subsidiaries to, directly or indirectly, enter
into, create, incur, assume or suffer to exist any indebtedness of any kind, on
or with respect to any of its property or assets now owned or hereafter acquired
or any interest therein or any income or profits there from that is senior in
any respect to the obligations of the Obligor under this Note.

Section 9.        This Note shall be governed by and construed in accordance
with the laws of the State of Texas, without giving effect to conflicts of laws
thereof.  Venue for any dispute arising hereunder shall be proper exclusively in
Harris County, Texas.

Section 10.      Should any litigation be commenced between the parties hereto
or their personal representatives concerning any provision of this Note or the
rights and duties of any person in relation thereto, the party prevailing in
such litigation shall be entitled to, in addition to such other relief that may
be granted, a reasonable sum as and for her or its attorneys' fees in such
litigation.

Section 11.      Any waiver by the Holder of a breach of any provision of this
Note shall not operate as or be construed to be a waiver of any other breach of
such provision or of any breach of any other provision of this Note. The failure
of the Holder to insist upon strict adherence to any term of this Note on one or
more occasions shall not be considered a waiver or deprive that party of the
right thereafter to insist upon strict adherence to that term or any other term
of this Note. Any waiver must be in writing.

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Section 12.      If any provision of this Note is invalid, illegal or
unenforceable, the balance of this Note shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances. If it shall be found
that any interest or other amount deemed interest due hereunder shall violate
applicable laws governing usury, the applicable rate of interest due hereunder
shall automatically be lowered to equal the maximum permitted rate of interest.
The Obligor covenants (to the extent that it may lawfully do so) that it shall
not at any time insist upon, plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay, extension or usury law or other law which
would prohibit or forgive the Obligor from paying all or any portion of the
principal of or interest on this Note as contemplated herein, wherever enacted,
now or at any time hereafter in force, or which may affect the covenants or the
performance of this indenture, and the Obligor (to the extent it may lawfully do
so) hereby expressly waives all benefits or advantage of any such law, and
covenants that it will not, by resort to any such law, hinder, delay or impeded
the execution of any power herein granted to the Holder, but will suffer and
permit the execution of every such as though no such law has been enacted.

Section 13.      Whenever any payment or other obligation hereunder shall be due
on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day.

Section 14.      No Usury.  The Obligor does not intend or expect to pay, nor
does the Holder intend or expect to charge, collect or accept, any interest
greater than the highest legal rate of interest that may be charged under any
applicable law.  Should the acceleration hereof or any charges made hereunder
result in the computation or earning of interest in excess of such legal rate,
any and all such excess shall be and the same is hereby waived by the Holder,
and any such excess shall be credited by the Holder to the principal balance
hereof.

[Remainder of page intentionally left blank.]

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IN WITNESS WHEREOF, the parties hereto have executed this Revolving Line of
Credit Note as of the date set forth above.

 

THE OBLIGOR:

P.W. STEPHENS, INC.

By:                                                                  
Name:                                                             
Title:                                                                

 

 

THE GUARANTOR:

HOME SOLUTIONS OF AMERICA, INC.

 

By:                                                                  
Name:                                                             
Title:                                                                

 

 
THE HOLDER:

THE VANTAGE GROUP LTD.

 

By:                                                                  
Name:                                                             
Title:                                                                

                                                                                   

 

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