**PROMISSORY NOTE**

$700,000.00                                                                                                    July18, 2005

            **FOR VALUE RECEIVED**, on or before March31, 2010 (the "Maturity Date"), the undersigned, HOMESOLUTIONS OF AMERICA, INC., a Delaware corporation ("Maker"),promises to pay to the order of PATRIOT CAPITAL, L.P., a Delaware limitedpartnership ("Payee"; Payee and any subsequent holder[s]hereof are hereinafter referred to individually and collectively as "Holder"),at such place as Holder may designate to Maker in writing from time to time,the principal sum of SEVEN HUNDRED THOUSAND AND NO/100THS DOLLARS ($700,000.00),together with interest on the outstanding principal balance hereof from thedate hereof at the rate of twelve percent (12%) per annum (computed on thebasis of a 360-day year and the actual number of days elapsed, to the extentpermitted by applicable law).

            Interest on the outstanding principal balancehereof shall be due and payable quarterly, in arrears, with the firstinstallment being payable on the last business day of September, 2005, andsubsequent installments being payable on the last business day of eachsucceeding Fiscal Quarter thereafter.  On the Maturity Date, the entireoutstanding principal balance, together with all accrued and unpaid interest,shall be immediately due and payable in full.

            The indebtedness evidenced hereby may be prepaidin whole or in part, at any time and from time to time, without premium orpenalty.  Any such prepayments shall be credited first to any accrued andunpaid interest and then to the outstanding principal balance hereof, ininverse order of maturity.

            Reference is here made to that certain LoanAgreement of even date herewith, by and among Maker, Payee, certain Lenders andPetra Mezzanine Fund, L.P., as Administrative Agent (together with any and allamendments, modifications, supplements, extensions, renewals, substitutionsand/or replacements thereof, herein referred to as the "Loan Agreement";capitalized terms used but not otherwise defined herein shall have the samemeanings as in the Loan Agreement).  This Note is a "Note" as definedand referred to in the Loan Agreement, and this Note is entitled to thebenefits and security of, and is secured by, the Loan Agreement, the otherSecurity Documents and the other Loan Documents.

Upon the occurrence of an Eventof Default, the entire outstanding principal balance of the indebtednessevidenced hereby, together with all accrued and unpaid interest thereon, may bedeclared, and immediately shall become, due and payable in full, as provided inthe Loan Agreement.

 

 

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Upon the occurrence of any Eventof Default, at the option of Holder and without notice to Maker, all accruedand unpaid interest, if any, shall be added to the outstanding principalbalance hereof, and the entire outstanding principal balance, as so adjusted,shall bear interest thereafter until paid at an annual rate (the "DefaultRate") equal to the lesser of (1) the rate that is two percentagepoints (2.0%) in excess of the above-specified interest rate, or (2) themaximum rate of interest allowed to be charged under applicable law (the "MaximumRate"), regardless of whether there has been an acceleration of thepayment of principal as set forth herein.  All such interest shall be paid atthe time of and as a condition precedent to the curing of any such Event ofDefault.

            In the event this Note is placed in the hands ofan attorney for collection or for enforcement or protection of the security, orif Holder incurs any costs incident to the collection of the indebtednessevidenced hereby or the enforcement or protection of the security, Maker andany indorsers hereof agree to pay to Holder an amount equal to all such costs,including without limitation reasonable attorney's fees and all court and othercosts.

            Presentment for payment, demand, protest andnotice of demand, protest and nonpayment are hereby waived by Maker and allother parties hereto.  No failure to accelerate the indebtedness evidencedhereby by reason of default hereunder, acceptance of a past-due installment orother indulgences granted from time to time, shall be construed as a novationof this Note or as a waiver of such right of acceleration or of the right ofHolder thereafter to insist upon strict compliance with the terms of this Noteor to prevent the exercise of such right of acceleration or any other rightgranted hereunder or by applicable laws.  No extension of the time for paymentof the indebtedness evidenced hereby or any installment due hereunder, made byagreement with any person now or hereafter liable for payment of theindebtedness evidenced hereby, shall operate to release, discharge, modify,change or affect the original liability of Maker hereunder or that of any otherperson now or hereafter liable for payment of the indebtedness evidenced hereby,either in whole or in part, unless Holder agrees otherwise in writing.  ThisNote may not be changed orally, but only by an agreement in writing signed bythe party against whom enforcement of any waiver, change, modification ordischarge is sought.

            All agreements herein made are expressly limitedso that in no event whatsoever, whether by reason of advancement of proceedshereof, acceleration of maturity of the unpaid balance hereof or otherwise,shall the interest and loan charges agreed to be paid to Holder for the use ofthe money advanced or to be advanced hereunder exceed the maximum amountscollectible under applicable laws in effect from time to time.  If for anyreason whatsoever the interest or loan charges paid or contracted to be paid inrespect of the indebtedness evidenced hereby shall exceed the maximum amountscollectible under applicable laws in effect from time to time, then, *ipsofacto*, the obligation to pay such interest and/or loan charges shall bereduced to the maximum amounts collectible under applicable laws in effect fromtime to time, and any amounts collected by Holder that exceed such maximumamounts shall be applied to the reduction of the principal balance remainingunpaid hereunder and/or refunded to Maker so that at no time shall the interestor loan charges paid or payable in respect of the indebtedness evidenced herebyexceed the maximum amounts permitted from time to time by applicable law.  Thisprovision shall control every other provision in any and all other agreementsand instruments now existing or hereafter arising between Maker and Holder withrespect to the indebtedness evidenced hereby.

 

 

 

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            This Note isintended as a contract under and shall be construed and enforceable inaccordance with the laws of the State of Tennessee, without reference to theconflicts or choice of law principles thereof, except that with respect to themaximum amount of interest collectable by Holder in respect of the indebtednessevidenced hereby, the law of the jurisdiction in which Payee's principal placeof business is located shall govern the rights and duties of Maker and Holderas to such matters.

            **IN WITNESS WHEREOF**, Maker has executedthis Note, or has caused this Note  to be executed by its duly authorizedofficer or other representative, as of the date first above written.

                                                                        **MAKER:**

                                                                        HomeSolutions of America, Inc.

                                                                        By:_______________________________________                                                                                    FrankJ. Fradella,                                                                                    ChiefExecutive Officer

 

 

 

 

 

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