Exhibit 10.20



THIS NOTE AND THE COMMON SHARES
ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.  THIS NOTE
AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT AND ANY APPLICABLE STATES
SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO HOME
SOLUTIONS OF AMERICA, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.


SECURED REVOLVING NOTE


FOR VALUE RECEIVED, HOME SOLUTIONS OF AMERICA, INC. a Delaware
corporation (the "Borrower") promises to pay to LAURUS MASTER FUND,
LTD., c/o Ironshore Corporate Services Ltd., P.O. Box 1234 G.T., Queensgate
House, South Church Street, Grand Cayman, Cayman Islands, Fax: 345-949-9877
(the "Holder") or its registered assigns, on order, the sum of TWO
MILLION FIVE HUNDRED THOUSAND DOLLARS ($2,500,000) without duplication of any
amounts owing by Borrower to Holder under the Minimum Borrowing Notes (as
defined in the Security Agreement referred to below), or, if different, the
aggregate principal amount of all "Loans" (as such term is defined in the
Security Agreement referred to below), together with any accrued and unpaid
interest hereon, on January 22, 2006 (the "Maturity Date").


Capitalized terms used herein without definition shall have the
meanings ascribed to such terms in the Security Agreement between Borrower and
the Holder dated as of January 22, 2004 (as amended, modified and supplemented
from time to time, the "Security Agreement").


The following terms shall apply to this
Note:


ARTICLE I

INTEREST & PREPAYMENTS


1.1.           
Interest Rate and Payments.  Subject to Sections 5.3 and 6.7
hereof, interest payable on this Note shall accrue at a rate per annum equal to
the "prime rate" published in The Wall Street Journal from time to time,
plus two and one half percent (2.5%) (the "Contract Rate").  The
Contract  Rate shall be increased or decreased as the case may be for each
increase or decrease in the Prime Rate in an amount equal to such increase or
decrease in the Prime Rate; each change to be effective as of the day of the
change in such rate in accordance with the terms of the Security Agreement.
Subject to the immediately following sentence, the Contract Rate hall not be
less than six and one half percent (6.5%).  The Contract Rate shall be adjusted
as follows: if (i) the Company shall have registered the shares of the
Company's common stock underlying the conversion of all currently issued and
outstanding Minimum Borrowing Notes and that certain warrant issued to Holder
of even date herewith on a registration statement declared effective by the
Securities Exchange Commission, and (ii) the volume weighted average price of
the Common Stock as reported by Bloomberg, L.P. on the principal market for any
of the ten (10) trading days immediately preceding a Interest Payment Date
(defined below) exceeds the then applicable Fixed Conversion Price by twenty
five percent (25%), the Contract Rate for the succeeding calendar month shall
automatically be reduced by twenty five basis points (25 b.p.) for such period.
Interest shall be payable monthly in arrears commencing on March 1, 2004 and on
the first day of each consecutive calendar month thereafter, (each, an "Interest
Payment Date").


 






 


 


 


1.2.           
Optional Prepayment in Cash.  The Borrower will have the option
of prepaying this Note in full (but not in part) in cash, ("Optional
Redemption") by paying to the Holder a sum of money equal to one hundred
ten  (110%) of the principal amount of this Note together with accrued but
unpaid interest thereon and any and all other sums due, accrued or payable to
the Holder arising under this Note, the Security Agreement, or any Ancillary
Agreement  (as defined in the Security Agreement) (the "Redemption Amount")
outstanding on the day written notice of redemption (the "Notice of
Redemption") is given to the Holder. The Notice of Redemption shall specify
the date for such Optional Redemption (the "Redemption Payment Date")
which date shall  be seven (7) days after the date of the Notice of Redemption
(the "Redemption Period") . A Notice of Redemption shall not be
effective with respect to any portion of this Note for which the Holder has a
pending election to convert pursuant to Section 3.1, or for conversions elected
to be made by the Holder pursuant to Section 3.1 during the Redemption Period. 
The Redemption Amount shall be determined as if such Holder's conversion
elections had been completed immediately prior to the date of the Notice of
Redemption. On the Redemption Payment Date, the Redemption Amount must be paid
in good funds to the Holder.  In the event the Borrower fails to pay the
Redemption Amount on the Redemption Payment Date, then such Redemption Notice
will be null and void.


1.3       Allocation of Principal to Minimum Borrowing Note.  In
the event that the amount due and payable hereunder should equal or exceed
$1,500,000, to the extent that the outstanding balance on Minimum Borrowing
Note shall be less than $1,500,000 (the difference of $1,500,000 less the
actual balance of the Minimum Borrowing Note, the "Available Minimum
Borrowing"), such portion of the balance hereof as shall equal the Available
Minimum Borrowing shall be deemed to be simultaneously extinguished on the
Revolving Note and transferred to, and evidenced by, a Minimum Borrowing Note
(e.g., the Available Minimum Borrowing shall be $0).




ARTICLE II

HOLDER'S CONVERSION RIGHTS


2.1.Optional Conversion. Subject to the
terms of this Article II, the Holder shall have the right, but not the
obligation, at any time until the Maturity Date, or thereafter during an Event
of Default (as defined in Article IV), and, subject to the limitations set
forth in Section 2.2 hereof, to convert all or any portion of the outstanding
principal amount and/or accrued interest and fees due and payable into fully
paid and nonassessable shares of the Common Stock at the Fixed Conversion
Price. For purposes hereof, subject to Section 3.5 hereof, the "Fixed
Conversion Price" means $1.88 (105 % of the average of the closing price of
the Common Stock for the ten (10) trading days immediately prior to the date
hereof.)  The shares of Common Stock to be issued upon such conversion are
herein referred to as the "Conversion Shares."  Notwithstanding the
foregoing, the Holder's right to convert all or any portion of the outstanding
principal amount and/or accrued interest and fees due and payable into fully
paid and nonassessable shares of the Common Stock at the Fixed Conversion Price
shall be subject to the limitation that the number of shares of Common Stock
issued in connection with any such conversion shall not exceed 25% of the
aggregate dollar trading volume of the Common Stock for the ten (10) trading
days immediately preceding the date upon which such conversion is made by
Holder (as such volume is reported by Bloomberg, L.P.


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2.2.           
Conversion Limitation. Notwithstanding anything contained herein
to the contrary, the Holder shall not be entitled to convert pursuant to the
terms of this Note an amount that would be convertible into that number of
Conversion Shares which would exceed the difference between the number of
shares of Common Stock beneficially owned by such Holder or issuable upon
exercise of warrants held by such Holder (and its affiliates) and 4.99% of the
outstanding shares of Common Stock of the Borrower.  For the purposes of the
immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Exchange Act and Regulation 13d-3
thereunder.  The Conversion Shares limitation described in this Section 2.2
shall automatically become null and void without any notice to Borrower upon
the occurrence and during the continuance beyond any applicable grace period of
an Event of Default. 


2.3.           
Mechanics of Holder's Conversion. In the event that the Holder
elects to convert this Note into Common Stock, the Holder shall give notice of
such election by delivering an executed and completed notice of conversion ("Notice
of Conversion") to the Borrower and such Notice of Conversion shall provide
a breakdown in reasonable detail of the principal amount, accrued interest and
fees that are being converted.  On each Conversion Date (as hereinafter
defined) and in accordance with its Notice of Conversion, the Holder shall make
the appropriate reduction to the principal amount, accrued interest and fees as
entered in its records and shall provide written notice thereof to the Borrower
within two (2) business days after the Conversion Date.  Each date on which a
Notice of Conversion is delivered or telecopied to the Borrower in accordance
with the provisions hereof shall be deemed a Conversion Date (the "Conversion
Date").  A form of Notice of Conversion to be employed by the Holder is
annexed hereto as Exhibit A.  Pursuant to the terms of the Notice of
Conversion, the Borrower will issue instructions to the transfer agent
accompanied by an opinion of counsel within one (1) business day of the date of
the delivery to Borrower of the Notice of Conversion  and shall cause the
transfer agent to transmit the certificates representing the Conversion Shares
to the Holder by crediting the account of the Holder's designated broker with
the Depository Trust Corporation ("DTC") through its Deposit Withdrawal
Agent Commission ("DWAC") system within three (3) business days after
receipt by the Borrower of the Notice of Conversion (the "Delivery Date"). 
In the case of the exercise of the conversion rights set forth herein the
conversion privilege shall be deemed to have been exercised and the Conversion
Shares issuable upon such conversion shall be deemed to have been issued upon
the date of receipt by the Borrower of the Notice of Conversion.  The Holder
shall be treated for all purposes as the record holder of such Common Stock,
unless the Holder provides the Borrower written instructions to the contrary.



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2.4.           
Late Payments. The Borrower understands that a delay in the
delivery of the shares of Common Stock in the form required pursuant to this
Article beyond the Delivery Date could result in economic loss to the Holder. 
As compensation to the Holder for such loss, the Borrower agrees to pay late
payments to the Holder for late issuance of such shares in the form required
pursuant to this Article III upon conversion of the Note, in the amount equal
to $400  per business day after the Delivery Date.  The Borrower shall pay any
payments incurred under this Section in immediately available funds upon
demand.  


2.5.           
Adjustment Provisions. The Fixed Conversion Price and number and
kind of shares or other securities to be issued upon conversion determined
pursuant to Section 2.1 shall be subject to adjustment from time to time upon
the happening of certain events while this conversion right remains
outstanding, as follows:


A.                
Reclassification, etc.  If the Borrower at any time shall, by
reclassification or otherwise, change the Common Stock into the same or a
different number of securities of any class or classes, this Note, as to the
unpaid principal amount and accrued interest thereon, shall thereafter be
deemed to evidence the right to purchase an adjusted number of such securities
and kind of securities as would have been issuable as the result of such change
with respect to the Common Stock immediately prior to such reclassification or
other change.


B.                
Stock Splits, Combinations and Dividends.  If the shares of
Common Stock are subdivided or combined into a greater or smaller number of
shares of Common Stock, or if a dividend is paid on the Common Stock in shares
of Common Stock, the Fixed Conversion Price shall be proportionately reduced in
case of subdivision of shares or stock dividend or proportionately increased in
the case of combination of shares, in each such case by the ratio which the
total number of shares of Common Stock outstanding immediately after such event
bears to the total number of shares of Common Stock outstanding immediately
prior to such event.


C.                
Share Issuances.  Subject to the provisions of this
Section 3.6, if the Borrower shall at any time prior to the conversion or
repayment in full of the principal amount issue any shares of Common Stock to a
person other than the Holder (except (i) pursuant to Subsections A or B above;
(ii) pursuant to options, warrants, or other obligations to issue shares
outstanding on the date hereof as disclosed to Holder in writing; or (iii)
pursuant to options that may be issued under any employee incentive stock
option and/or any qualified stock option plan adopted by the Borrower) for a
consideration per share (the "Offer Price") less than the Fixed
Conversion Price in effect at the time of such issuance, then the Fixed
Conversion Price shall be immediately reset pursuant
to the formula below.  For purposes hereof, the issuance of any security of the
Borrower convertible into or exercisable or exchangeable for Common Stock shall
result in an adjustment to the Fixed Conversion Price at the time of issuance
of such securities.  If the Borrower issues any
additional shares pursuant to this Subsection then, and thereafter successively
upon each such issue, the Fixed Conversion Price shall be adjusted by
multiplying the then applicable Fixed Conversion Price by the following
fraction:




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  A + B

  
	
  (A + B) +
  [((C - D) x B) / C]

  








A = Actual shares outstanding prior
to such offering

B =  Actual shares sold in the
offering

C = Fixed Conversion Price

D = Offer Price


D.                
such lower Offer Price. For purposes hereof, the issuance of any
security of the Borrower convertible into or exercisable or exchangeable for
Common Stock shall result in an adjustment to the Fixed Conversion Price only
upon the conversion, exercise or exchange of such securities. 


E.                 
Computation of Consideration. For purposes of any computation
respecting consideration received pursuant to Subsection C above, the following
shall apply:


(a)               
in the case of the issuance of shares of Common Stock for cash, the
consideration shall be the amount of such cash, provided that in no case shall
any deduction be made for any commissions, discounts or other expenses incurred
by the Borrower for any underwriting of the issue or otherwise in connection
therewith;


(b)              
in the case of the issuance of shares of Common Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair market value thereof as determined in good
faith by the Board of Directors of the Borrower (irrespective of the accounting
treatment thereof); and 


(c)               
Upon any such exercise, the aggregate consideration received for such
securities shall be deemed to be the consideration received by the Borrower for
the issuance of such securities plus the additional minimum consideration, if
any, to be received by the Borrower upon the conversion or exchange thereof
(the consideration in each case to be determined in the same manner as provided
in clauses (a) and (b) of this Subsection (D)).


2.6.           
Reservation of Shares. During the period the conversion right
exists, the Borrower will reserve from its authorized and unissued Common Stock
a sufficient number of shares to provide for the issuance of Common Stock upon
the full conversion of this Note.  The Borrower represents that upon issuance,
such shares will be duly and validly issued, fully paid and non-assessable. 
The Borrower agrees that its issuance of this Note shall constitute full
authority to its officers, agents, and transfer agents who are charged with the
duty of executing and issuing stock certificates to execute and issue the
necessary certificates for shares of Common Stock upon the conversion of this
Note.


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ARTICLE III

EVENTS OF DEFAULT


The occurrence of any of the following events is an Event of
Default ("Event of Default"):


3.1.           
Failure to Pay Principal, Interest or other Fees.  The Borrower
fails to pay when due any installment of principal, interest or other fees
hereon or on any other Note issued pursuant to the Security Agreement, when due
in accordance with the terms of such Note.  


3.2.           
Breach of Covenant.  The Borrower breaches any covenant or other
term or condition of this Note in any material respect and such breach, if
subject to cure, continues for a period of thirty (30) days after the
occurrence thereof.


3.3.           
Breach of Representations and Warranties.  Any material
representation or warranty of the Borrower made herein, or the Security
Agreement, or in any Ancillary Agreement shall be materially false or
misleading.


3.4.           
Stop Trade.  An SEC stop trade order or Principal Market trading
suspension of the Common Stock shall be in effect for 5 consecutive days or 5
days during a period of 10 consecutive days, excluding in all cases a
suspension of all trading on a Principal Market, provided that the Borrower
shall not have been able to cure such trading suspension within 30 days of the
notice thereof or list the Common Stock on another Principal Market within 60
days of such notice.  The "Principal Market" for the Common Stock shall include
the NASD OTC Bulletin Board, NASDAQ SmallCap Market, NASDAQ National Market
System, American Stock Exchange, or New York Stock Exchange (whichever of the
foregoing is at the time the principal trading exchange or market for the
Common Stock), or any securities exchange or other securities market on which
the Common Stock is then being listed or traded.


3.5.           
Default Under Related Agreement.  The occurrence of an Event of
Default under and as defined in the Security Agreement.


4.6    Failure to Deliver Common Stock or Replacement Note. 
The Borrower's failure to timely deliver Common Stock to the Holder pursuant to
and in the form required by this Note and Section 9 of the Security Agreement
if such failure to timely deliver Common Stock shall not be cured within two
(2) business days, or if required, the Borrower is required to issue to Holder
a replacement Note, and the Borrower's failure to deliver a replacement Note is
not cured within seven (7) business days.


4.7       Payment Grace Period.  The Borrower shall have
a three (3) business day grace period to pay any monetary amounts due under
this Note or the Security Agreement or any Related Document, after which grace
period a default interest rate of five percent (5%) per annum above the then
applicable interest rate hereunder shall apply to the monetary amounts due.




ARTICLE IV

DEFAULT PAYMENTS


4.1.           
Default Payment.  If an Event of Default occurs, the Holder, at
its option, may elect, in addition to all rights and remedies of Holder under
the Security Agreement and all obligations of Borrower under the Security
Agreement, to require the Borrower to make a Default Payment ("Default
Payment").  The Default Payment shall be the outstanding principal amount
of the Note, plus accrued but unpaid interest, all other fees then remaining
unpaid, and all other amounts payable hereunder. 


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4.2.           
Default Payment Date and Default Notice Period.  The Default
Payment shall be due and payable on the fifth business day after an Event of
Default as defined in Article III ("Default Payment Date") has occurred
and is continuing beyond any applicable grace period.  The period between date
upon which of an Event of Default has occurred and is continuing beyond any
applicable grace period and the Default Payment Date shall be the "Default
Period."  If during the Default Period, the Borrower cures the Event of
Default, the Event of Default will no longer exist and any additional rights
the Holder had triggered by the occurrence and continuance of an Event of
Default will no longer exist.  If the Event of Default is not cured during the
Default Notice Period, all amounts payable hereunder shall be due and payable
on the Default Payment Date, all without further demand, presentment or notice,
or grace period, all of which hereby are expressly waived.  


4.3.           
 Default Interest Rate.  Following the occurrence and during the
continuance of an Event of Default, interest on this Note shall automatically
be increased by five percent (5%) per annum, and all outstanding Obligations,
including unpaid interest, shall continue to accrue interest from the date of
such Event of Default at such interest rate applicable to such Obligations
until such Event of Default is cured or waived.


4.4.           
Cumulative Remedies.  The remedies under this Note shall be
cumulative.


ARTICLE V

MISCELLANEOUS


5.1.           
Failure or Indulgence Not Waiver.  No failure or delay on the
part of the Holder hereof in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege.  All rights and
remedies existing hereunder are cumulative to, and not exclusive of, any rights
or remedies otherwise available.


5.2.           
Notices.  Any notice herein required or permitted to be given
shall be in writing and provided in accordance with the terms of the Security
Agreement.


5.3.           
 Amendment Provision.  The term "Note" and all reference thereto,
as used throughout this instrument, shall mean this instrument as originally
executed, or if later amended or supplemented, then as so amended or
supplemented, and any successor instrument as it may be amended or
supplemented.


5.4.           
Assignability.  This Note shall be binding upon the Borrower and
its successors and assigns, and shall inure to the benefit of the Holder and
its successors and assigns, and may be assigned by the Holder in accordance
with the requirements of the Security Agreement.


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5.5.           
Cost of Collection.  If default is made in the payment of this
Note, the Borrower shall pay the Holder hereof reasonable costs of collection,
including reasonable attorneys' fees.


5.6.           
Governing Law.  This Note shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of laws.  Any action brought by either party against the other
concerning the transactions contemplated by this Agreement shall be brought
only in the state courts of New York or in the federal courts located in the
state of New York.  Both parties and the individual signing this Note on behalf
of the Borrower agree to submit to the jurisdiction of such courts.  The
prevailing party shall be entitled to recover from the other party its
reasonable attorney's fees and costs.  In the event that any provision of this
Note is invalid or unenforceable under any applicable statute or rule of law,
then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law.  Any such provision which may prove invalid or unenforceable under
any law shall not affect the validity or unenforceability of any other
provision of this Note.  Nothing contained herein shall be deemed or operate to
preclude the Holder from bringing suit or taking other legal action against the
Borrower in any other jurisdiction to collect on the Borrower's obligations to
Holder, to realize on any collateral or any other security for such
obligations, or to enforce a judgment or other court order in favor of Holder.


5.7.           
Maximum Payments.  Nothing contained herein shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law.  In the event that the rate
of interest required to be paid or other charges hereunder exceed the maximum
permitted by such law, any payments in excess of such maximum shall be credited
against amounts owed by the Borrower to the Holder and thus refunded to the
Borrower.


5.8.           
Security Interest.  The Holder of this Note has been granted a security
interest in certain assets of the Borrower more fully described in a Security
Agreement dated as of  January 22, 2004.


5.9.           
Construction.  Each party acknowledges that its legal counsel
participated in the preparation of this Note and, therefore, stipulates that
the rule of construction that ambiguities are to be resolved against the
drafting party shall not be applied in the interpretation of this Note to favor
any party against the other.


[Balance of page
intentionally left blank; signature page follows.]


 


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IN WITNESS WHEREOF, the Borrower has caused this Secured
Convertible Revolving Note to be signed in its name effective as of this 22nd
day of  January, 2004.


HOME SOLUTIONS OF AMERICA, INC.


By:__________________________________


Name:

Title:


WITNESS:


                                                            




 




 




 




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NOTICE OF CONVERSION


(To be executed by the Holder
in order to convert the Note)


The undersigned hereby elects to convert $_________ of the
principal and $_________ of the interest due on the Secured Convertible
Revolving Note issued by Home Solutions of America, Inc. on January __, 2004
into Shares of Common Stock of Home Solutions of America, Inc. (the "Borrower")
according to the conditions set forth in such Note, as of the date written
below.


	
  Date of Conversion:

  	
                                                                                                               

  
	
  Conversion Price:

  	
                                                                                                               

  
	
  Shares To Be Delivered:

  	
                                                                                                               

  
	
  Signature:

  	
                                                                                                               

  
	
  Print Name:

  	
                                                                                                               

  
	
  Address:

  	
                                                                                                               

  
	

  	
                                                                                                               

  
	
  Holder  DWAC instructions

  	
  _______________________________________________________

  
	

  	
   

  





 

 

 

 

 

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