**LIQUIDATINGAGREEMENT**

This LiquidatingAgreement (Agreement) is made and entered into by and between **Home Solutionsof America Inc.**("HSA") and **Acstar Insurance Company** ("Acstar").

**WHEREAS**, Acstar recovered a Judgment against HSAin a lawsuit styled:

Cause No.H-04-CV-534; *Acstar Ins. Co. v. Home Solutions of America, f/k/a U.S. IndustrialServices, Inc.*; In the U.S. District Court for the Southern District ofTexas - Houston Division (the "Lawsuit")

and

**WHEREAS,** the parties understand and agree thatthis Agreement shall not constitute nor be construed as a waiver, a novation, anaccord and satisfaction of the Judgment in the above lawsuit, unless and untilHSA makes all payments due hereunder.

**NOW, THEREFORE,**in consideration of the premises andmutual consideration herein contained, including the recitals and conditionsset forth above, the parties agree as follows:

**AGREEMENT TOPAY**

** **

It is agreed that thejudgment in the above lawsuit ("Judgment") shall be satisfied as follows:

1.          HSA agrees to pay Acstar a total of ONEMILLION FIVE HUNDRED FIFTY THOUSAND DOLLARS ($1,550,000.00) U.S. DOLLARS, free of interest, and agrees to pay that sum as follows:

A.        HSAagrees to pay Seventy Five Thousand Dollars ($75,000.00) to Acstar Insurance by June 1, 2004; and

B.        HSAagrees to pay One Hundred Seventy Five Thousand Dollars ($175,000.00) to AcstarInsurance by July 1, 2004; and

C.        HSAagrees to pay Fifteen Thousand Dollars ($15,000.00) to Acstar Insurance by July 9, 2004; and

D.       HSA agrees to payFifteen Thousand Dollars ($15,000.00) each and every subsequent Friday, untilthe unpaid balance of Judgment is fully paid.

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**ADDITIONALAGREEMENT FOR PAYMENT**

** **

2.         To theextent that it receives moneyor property from Spruce Maclntyre Holdings, Inc. in connection with thismatter, HSA will net the value of same to Acstar Insurance Company within tendays of its receipt, net of its expenses accociated with recovery those monies.

           

3.          Until all parties have signed thisAgreement, payments as set forth above shall be made to:

Williams, Cupples & Chapman IOLTATrust Accountf/b/o Acstar Insurance Company1331 Gemini Ave., Suite 201Houston, Texas 77058-2729

Such funds receivedin trust will be released to Acstar Insurance Company for credit to theJudgment after this Agreement is fully executed.

4.          After full execution of this Agreement,payments are to be made to:

Acstar Insurance Company233 Main StreetNew Britain, CT 06051

or to such otheraddress as Acstar may designate in writing.

**NOTICE**

** **

5.          Notices required or contemplated in theAgreement shall be made by first‐class mail and by facsimile, and shallbe sent to the following address and facsimile phone number, unless anotheraddress and facsimile phone number is designated in writing.

** **

**For Acstar:**

Robert FrazerAcstar Insurance Company233 Main StreetNew Britain, CT 06051(860) 229-1111 - Facsimile

With a copy to:

** **

**LIQUIDATINGAGREEMENTPAGE 2**

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James D. CupplesWilliams, Cupples & Chapman,L.L.P.1331 Gemini, Suite 201Houston, Texas 77058-2729

**For HSA:**

Rick Justin O'BrienHome Solutions ofAmerica, Inc. c/o Fiber SealFabric Care System5565 Red Bird Center  Drive, Suite 150Dallas, Texas 75237(214) 333-9435 -Facsimile

6.         The parties agree to keep each other advisedof their  mailing  and physical addresses. 

**COVENANT NOT TOEXECUTE**

7.         Acstar promises, agrees and covenants  notto execute on, enforce, or collect the Judgment, through any manner or process,and to withhold, abstain and refrain from any and all efforts to do so, so longas HSA is not in default of this Agreement and has failed to cure as providedherein.

**SATISFACTION OFTHIS AGREEMENT & JUDGMENT**

8.         Once Acstar has received the total amountof ONE MILLION, FIVE HUNDRED FIFTY THOUSAND DOLLARS ($1,550,000.00) U.S.DOLLARS, this Agreement shall immediately terminate, the Judgment shallimmediately become void, and Acstar shall immediately execute and deliver toHSA such documents as are reasonably necessary to evidence satisfaction andrelease of the Judgment upon payment in full.

9.         Acstar agrees to waive payment ofinterest on the sums due under this Agreement and under the Judgment so long asHSA makes the payments agreed to in accordance with this Agreement.  Acstarfurther waives the accrual of interest under the judgment up to the day afterthe date of any uncured default that may occur under the Agreement and furthercovenants that its waiver of interest under the judgment and as set forth herewill survive any breach or default that may occur.

**ACSTAR'SINDEMNITY OF CLAIMS FROM UNITED COASTAL**

            10.       Acstar hereby indemnifiesand holds harmless HSA from any claim, damage, or liability HSA may sustain resultingfrom any claim asserted against it by United Coastal Insurance Company arisingout of the Hanford Nuclear Reservation Clean-up Project.

 

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**DEFAULT, CURE& NOTICE**

11.       In the event HSA  fails to make anypayment to Acstar in accordance with Paragraph 1 above, HSA will be in defaultof this Agreement. Upon such default, Acstar will immediately provide writtennotice to HSA in accordance with paragraph 5 above. HSA  has the right to curethe default by causing Acstar to receive the full amount due within  ten (10) calendardays after HSA is given written notice of default from Acstar.  Notwithstandingthe foregoing, only  five (5) separate notices of default will be given to HSAover the life of this Agreement, and only  five (5) opportunities to cure areallowed under this Agreement.  No act, failure to act or forbearance by eitherparty shall be deemed a waiver of any default or of either party's rights asset forth in this Agreement, and shall not operate as a bar to the exercise ofany rights and remedies that either party has under this Agreement or maysubsequently have under the Judgment.

12.       If HSA defaults and fails to cure thedefault, or upon the sixth default, the full unpaid principal balance of theJudgment, free of interest, will immediately become due, and Acstar mayexercise all rights of a judgment creditor under the Judgment, with allpayments made being credited to the Judgment.

13.       Filing bankruptcy is not an event ofdefault under this Agreement.

**LIMITED MUTUALRELEASE and WARRANTY OF NO KNOWN CLAIMS**

14.       Acstar on its own behalf and for itssuccessors, assigns, attorneys, and legal representatives, affiliates, andanyone or entity in concert or privity with them, releases and foreverdischarges HSA, its successors and assigns, attorneys, and legalrepresentatives, from any and all claims, demands, damages, actions, causes ofaction, remedies or rights to recovery, legal or equitable (including but notlimited to claims for injunctive relief, exoneration, relief *qui timet*,and specific performance), known or unknown, contingent or liquidated, whichAcstar has or may  have against such parties, including but not limited to: (1)any claims that were asserted or could have been asserted in the Lawsuit, and(2) any claims, known or unknown, arising under that certain IndemnityAgreement entered into on or about November 17, 1999 by and among Acstar andU.S. Industrial Services, Inc., among others, same being the basis of Acstar'sclaims in the Lawsuit.  

15.       Acstar does not here release HSA from itspayment and other obligations included in this Agreement.  Acstar does not hererelease HSA from the Judgment.  Acstar further acknowledges that HSA's rightsagainst anyone not a party to this Agreement, remain fully and strictlyreserved.

16.       HSA on its own behalf and for itssuccessors, assigns, attorneys, and legal representatives, releases anddischarges Acstar, its respective successors and assigns attorneys, and legalrepresentatives from any and all claims, demands, damages, actions, causes ofaction, which HSA may presently have against Acstar.  HSA does not here releaseAcstar from its obligations included in this Agreement.  HSA furtheracknowledges that Acstar's rights against anyone not a party to this Agreement,remain fully and strictly reserved.

 

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**REPRESENTATION**

17.       Eachof the undersigned personally represents and warrants that they have the fullright, power and authority to execute and deliver this Agreement on behalf oftheir respective Party, and that no consent of any other person or entity isnecessary in order for this Agreement to be fully and completely binding uponthe Party,

**SEVERABILITY**

18.       In the event any portion of thisAgreement shall for any reason be held invalid, illegal, or unenforceable,then, in such event, such portion shall be deemed voidable and severable fromthis Agreement, and shall not affect the other provisions of this Agreement.

**ENTIREAGREEMENT**

19.       It is intended, understood and agreedthat this Agreement contains the entire Agreement between the parties, andsupersedes any and all prior Agreements, arrangements or understandings betweenthe parties relating to the subject matter.  No oral understandings,statements, promises or inducements contrary to the terms of this Agreementexist.  The parties acknowledge and warrant that they have read this Agreementand fully understand it to be a liquidating agreement, which is contingent uponfull performance.

**MODIFICATIONS**

20.       This Agreement may not be changed ormodified orally.  No change or modification shall be effective unlessspecifically agreed in writing, and signed by both parties.

**ORIGINAL ANDCOUNTERPARTS**

21.       This Agreement may be executed in anumber of identical counterparts, each of which shall be deemed an original forall purposes.

**GOVERNING LAWAND VENUE**

22.       This Agreement will be governed by thelaws of the State of Texas.  Any disputes arising under or related to thisAgreement shall be brought in a court of competent jurisdiction in Houston,Harris County, Texas.  Any prevailing party in any suit to enforce or interpretthis Agreement shall be entitled to recover court costs and reasonableattorneys fees.

 

 

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CONSTRUCTION

23.       Theparties to this agreement have both reviewed and revised this Agreement, and inthe event this Agreement is construed or interpreted no rule of constructionshall be utilized to resolve and affect any ambiguities against the drafter.

EFFECTIVE DATE

24.       This Agreement shall become effective on May 24, 2004.

25.       The terms of this Agreement arecontractual and not mere recitals, and that the provisions, representation,releases, warranties and covenants in this Agreement and the consideration paidare to compromise and buy peace.

26.       This Agreement may be executed in anumber of identical counterparts, each of which for all purposes is to bedeemed an original, and all of which collectively constitute one Agreement; andin the event making proof of this Agreement is required, it shall not benecessary to produce or account for any more than one counterpart.

27.       Acstar and HSA agree that facsimilesignatures shall serve in lieu of and shall have the same effect as deliveredoriginals.

 

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**IN WITNESS WHEREOF,** the Parties execute this Agreement inmultiple originals on the dates indicated below.

ACSTAR INSURANCE COMPANY

By __________________________      Robert H. Frazer      Vice President

Date:___________________________

 

 

 

HOME SOLUTIONSOF AMERICA, INC.

By__________________________       Rick JustinO'Brien      Senior VicePresident & CFO

Date:___________________________

 

 

 

 

**LIQUIDATINGAGREEMENTPAGE****7**

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STATE OF CONNECTICUT§

                                                                        §COUNTY OF HARTFORD                            §

BEFORE ME, theundersigned authority, on this day personally appeared **Robert H. Frazer**,Vice President of Acstar Insurance Company, a corporation, known to me to bethe person whose name is subscribed to this Liquidating Agreement, and afterhaving been duly sworn, acknowledged to me that he executed the same for thepurposes and consideration expressed, in the capacity stated, and as the actand deed of Acstar Insurance Company.

SWORN TO ANDSUBSCRIBED before me on this the ______ day of May 2004, to certify whichwitness my hand and seal of office.

________________________________NOTARYPUBLIC - STATE OF CONNECTICUT

 

 

 

**LIQUIDATINGAGREEMENTPAGE****8**

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STATE OF TEXAS                                           §                                                                          §COUNTY OF __________                              §

BEFORE ME, theundersigned authority, on this day personally appeared**Rick Justin O'Brien**,Senior Vice President & CFO of Home Solutions of America, Inc,, acorporation, known to me to be the person whose name is subscribed to thisLiquidating Agreement, and after having been duly sworn, acknowledged to methat he executed the same for the purposes and consideration expressed, in thecapacity stated, and as the act and deed of Home Solutions of America, Inc.

SWORN TO ANDSUBSCRIBED before me on this the _____ day of May 2004, to certify whichwitness my hand and seal of office.

_________________________________NOTARY PUBLIC - STATE OF TEXAS

 

 

 

 

 

 

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