GUARANTY
AGREEMENT
THIS GUARANTY , dated February 6, 2004, to be effective as
of December 31, 2003 (the " Guaranty "), is given by Home
Solutions of America, Inc., a Delaware corporation (the "
Guarantor "), in favor of Dale W. Mars, Trustee of the Dale
W. Mars Trust Dated 07-16-97 (the " Seller ").
Recitals :
WHEREAS, this Guaranty is
entered into as a condition to that certain Agreement and Plan of
Merger and Stock Purchase Agreement (the " Stock Purchase
Agreement ") of even date herewith between the Guarantor,
Southern Exposure Holdings, Inc., a Florida corporation (the "
Buyer "), the Seller and Dale W. Mars (" Mars "), an
individual resident of the State of Florida. This Guaranty
guaranties the payment and performance of all obligations,
including reasonable attorneys' fees and expenses, whether or not
involving litigation and/or appellate or bankruptcy proceedings
(collectively, the " Obligations "), owed by the Buyer to
the Seller pursuant to that certain Subordinated Promissory Note in
the original principal amount of $4,500,000, and that certain
Subordinated Promissory Note in the original principal amount of
$1,468,189.26 (together the " Notes "), issued by the Buyer
to the Seller in connection with the Stock Purchase Agreement;
WHEREAS, the
Buyer is a wholly owned subsidiary of the Guarantor and the
Guarantor acknowledges that without this Guaranty the Seller would
not be willing to enter into the Stock Purchase Agreement.
Agreement:
NOW, THEREFORE , in consideration of the premises and the
mutual covenants set forth herein, and for other good and valuable
consideration the receipt and sufficiency of which is hereby
acknowledged, the Guarantor hereby agrees as follows:
1. Guaranty
.
1.1 Guaranty
. The Guarantor, as direct obligor and not merely as a
surety, hereby unconditionally, absolutely, and irrevocably
guarantees to the Seller the full and prompt performance and
payment of all of the Obligations under the Notes. If the
Buyer should default in the payment or performance of any of the
Obligations, the Guarantor, as direct obligor and not merely as a
surety, shall forthwith pay or perform such Obligations without
notice or demand by the Seller in the manner and on the day
required by this Guaranty.
1.2 Continuing
Guaranty . The Guarantor agrees that its obligations
pursuant to this Section 1 are unconditional, absolute, and
irrevocable and shall not be released, discharged or affected in
any way by any circumstances or condition, including, without
limitation:
(a) Any amendment or
modification or other change to the Notes;
(b) Any failure, omission
or delay on the part of the Buyer to conform or comply with any
term of any of the Notes or the Pledge and Security Agreement
between the Buyer and the Seller (the " Security Agreement
");
(c) Any release or
discharge by operation of law of the Buyer or any guarantor from
any obligation or agreement contained in the Notes or this
Guaranty; and
(d) Any other occurrence,
circumstance, happening or event, whether similar or dissimilar to
the foregoing and whether foreseen or unforeseen, which otherwise
might constitute a legal or equitable defense or discharge of the
liabilities of a guarantor or surety or which otherwise might limit
recourse against the Buyer or the Guarantor.
1.3. Guaranty of Payment and
Not of Collection . The liability of the
Guarantor shall be continuing, direct and immediate and not
conditional or contingent upon either the pursuit of any remedies
against the Buyer or any other person or foreclosure of any
security interests or liens available to the Seller, its
successors, endorsees or assigns. The Seller may accept any
payment(s), plan for adjustment of debts, plan of reorganization or
liquidation, or plan of composition or extension proposed by, or on
behalf of, the Buyer or any other guarantor without in any way
affecting or discharging the liability of the Guarantor. If
the Obligations are partially paid, the Guarantor shall remain
liable for any balance of such Obligations. This Guaranty
shall be revived and reinstated in the event any payment received
by the Seller on any Obligation is required to be repaid or
rescinded under present or future federal or state law or
regulation relating to bankruptcy, insolvency or other relief of
debtors.
1.4 No Discharge
. The Guarantor covenants and agrees that this Guaranty will
not be discharged, except by complete performance of its
obligations contained herein.
1.5 Costs and
Expenses . Without limiting any obligation of the
Guarantor hereunder, the Guarantor agrees to pay all reasonable
fees and costs incurred by the Seller in collecting or securing or
attempting to collect or secure this Guaranty or the Obligations,
including, without limitation, reasonable attorneys' fees and
expenses, whether or not involving litigation and/or appellate or
bankruptcy proceedings.
1.6 Representations and
Warranties . The Guarantor hereby represents
and warrants to the Seller as follows: (a) the Guarantor has
full power, right and authority to enter into and perform its
obligations under this Guaranty, and (b) this Guaranty has been
duly executed and delivered by the Guarantor and constitutes the
valid and binding obligation of the Guarantor and is enforceable
against the Guarantor in accordance with its terms. No
permits, approvals or consents of or notifications to (a) any
governmental entities, or (b) any other persons or entities are
necessary in connection with the execution, delivery and
performance by the Guarantor of this Guaranty and the consummation
by the Guarantor of the transactions contemplated hereby.
Neither the execution and delivery of this Guaranty by the
Guarantor nor the performance by it of the transactions
contemplated hereby will:
2
(i) Violate or
conflic
