EXHIBIT 10.34

REVOLVING LINE OF CREDIT NOTE

 

$2,500,000.00    Plano, Texas    August 22, 2011

FOR VALUE RECEIVED, the undersigned U.S. HOME SYSTEMS, INC. (“Borrower”)
promises to pay to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”)
at its office at 4975 Preston Park Blvd, Suite 280, Plano, TX 75093, or at such
other place as the holder hereof may designate, in lawful money of the United
States of America and in immediately available funds, the principal sum of Two
Million Five Hundred Thousand Dollars ($2,500,000.00), or so much thereof as may
be advanced and be outstanding, with interest thereon, to be computed on each
advance from the date of its disbursement as set forth herein.

DEFINITIONS:

As used herein, the following terms shall have the meanings set forth after
each, and any other term defined in this Note shall have the meaning set forth
at the place defined:

(a) “Business Day” means any day except a Saturday, Sunday or any other day on
which commercial banks in Texas are authorized or required by law to close.

(b) “Daily One Month LIBOR” means, for any day, the rate of interest equal to
LIBOR then in effect for delivery for a one (1) month period.

(c) “LIBOR” means the rate per annum (rounded upward, if necessary, to the
nearest whole 1/8 of 1%) and determined pursuant to the following formula:

 

LIBOR =  

Base LIBOR

  100% - LIBOR Reserve Percentage

(i) “Base LIBOR” means the rate per annum for United States dollar deposits
quoted by Bank as the Inter-Bank Market Offered Rate, with the understanding
that such rate is quoted by Bank for the purpose of calculating effective rates
of interest for loans making reference thereto, for delivery of funds for one
(1) month in an amount equal to the outstanding principal balance of this Note.
Borrower understands and agrees that Bank may base its quotation of the
Inter-Bank Market Offered Rate upon such offers or other market indicators of
the Inter-Bank Market as Bank in its discretion deems appropriate including, but
not limited to, the rate offered for U.S. dollar deposits on the London
Inter-Bank Market.

(ii) “LIBOR Reserve Percentage” means the reserve percentage prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
“Eurocurrency Liabilities” (as defined in Regulation D of the Federal Reserve
Board, as amended), adjusted by Bank for expected changes in such reserve
percentage during the applicable term of this Note.

INTEREST:

(a) Interest. The outstanding principal balance of this Note shall bear interest
(computed on the basis of a 360-day year, actual days elapsed, unless such
calculation would result in a usurious rate, in which case interest shall be
computed on the basis of a 365/366-day year, as the case may be, actual days
elapsed) at the lesser of (i) a fluctuating rate per annum

LOGO [g224518g81p69.jpg]

 

-1-

--------------------------------------------------------------------------------

determined by Bank to be two and three quarters percent (2.75%) above Daily One
Month LIBOR in effect from time to time, or (ii) the Maximum Rate. Each change
in the rate of interest hereunder shall become effective on each Business Day a
change in Daily One Month LIBOR is announced within Bank. Bank is hereby
authorized to note the date and interest rate applicable to this Note and any
payments made thereon on Bank’s books and records (either manually or by
electronic entry) and/or on any schedule attached to this Note, which notations
shall be prima facie evidence of the accuracy of the information noted.

(b) Taxes and Regulatory Costs. Borrower shall pay to Bank immediately upon
demand, in addition to any other amounts due or to become due hereunder, any and
all (i) withholdings, interest equalization taxes, stamp taxes or other taxes
(except income and franchise taxes) imposed by any domestic or foreign
governmental authority and related in any manner to LIBOR, and (ii) future,
supplemental, emergency or other changes in the LIBOR Reserve Percentage,
assessment rates imposed by the Federal Deposit Insurance Corporation, or
similar requirements or costs imposed by any domestic or foreign governmental
authority or resulting from compliance by Bank with any request or directive
(whether or not having the force of law) from any central bank or other
governmental authority and related in any manner to LIBOR to the extent they are
not included in the calculation of LIBOR. In determining which of the foregoing
are attributable to any LIBOR option available to Borrower hereunder, any
reasonable allocation made by Bank among its operations shall be conclusive and
binding upon Borrower.

(c) Payment of Interest. Interest accrued on this Note shall be payable on the
22nd day of each month, commencing September 22, 2011.

(d) Default Interest. From and after the maturity date of this Note, or such
earlier date as all principal owing hereunder becomes due and payable by
acceleration or otherwise, or at Bank’s option upon the occurrence, and during
the continuance of an Event of Default, the outstanding principal balance of
this Note shall bear interest (computed on the basis of a 360-day year, actual
days elapsed, unless such calculation would result in a usurious rate, in which
case interest shall be computed on the basis of a 365/366-day year, as the case
may be, actual days elapsed) at an increased rate equal to the lesser of (i) a
rate per annum equal to four percent (4%) above the rate of interest from time
to time applicable to this Note, or (ii) the Maximum Rate.

BORROWING AND REPAYMENT:

(a) Borrowing and Repayment. Borrower may from time to time during the term of
this Note borrow, partially or wholly repay its outstanding borrowings, and
reborrow, subject to all of the limitations, terms and conditions of this Note
and of any document executed in connection with or governing this Note; provided
however, that the total outstanding borrowings under this Note shall not at any
time exceed the principal amount stated above. The unpaid principal balance of
this obligation at any time shall be the total amounts advanced hereunder by the
holder hereof less the amount of principal payments made hereon by or for
Borrower, which balance may be endorsed hereon from time to time by the holder.
The outstanding principal balance of this Note shall be due and payable in full
on August 22, 2014.

(b) Advances. Advances hereunder, to the total amount of the principal sum
stated above, may be made by the holder at the oral or written request of
(i) Murry H. Gross or Robert A. Defronzo, any one acting alone, who are
authorized to request advances and direct the disposition of any advances until
written notice of the revocation of such authority is received by

 

-2-

--------------------------------------------------------------------------------

the holder at the office designated above, or (ii) any person, with respect to
advances deposited to the credit of any deposit account of Borrower, which
advances, when so deposited, shall be conclusively presumed to have been made to
or for the benefit of Borrower regardless of the fact that persons other than
those authorized to request advances may have authority to draw against such
account. The holder shall have no obligation to determine whether any person
requesting an advance is or has been authorized by Borrower.

(c) Application of Payments. Each payment made on this Note shall be credited
first, to any interest then due and second, to the outstanding principal balance
hereof.

EVENTS OF DEFAULT:

This Note is made pursuant to and is subject to the terms and conditions of that
certain Credit Agreement between Borrower and Bank dated as of August 22, 2011,
as amended from time to time (the “Credit Agreement”). Any default in the
payment or performance of any obligation under this Note, or any defined event
of default under the Credit Agreement, shall constitute an “Event of Default”
under this Note.

MISCELLANEOUS:

(a) Remedies. Upon the occurrence of any Event of Default, the holder of this
Note, at the holder’s option, may declare all sums of principal and accrued and
unpaid interest outstanding hereunder to be immediately due and payable without
presentment, demand, or any notices of any kind, including without limitation
notice of nonperformance, notice of protest, protest, notice of dishonor, notice
of intention to accelerate or notice of acceleration, all of which are expressly
waived by Borrower, and the obligation, if any, of the holder to extend any
further credit hereunder shall immediately cease and terminate. Borrower shall
pay to the holder immediately upon demand the full amount of all payments,
advances, charges, costs and expenses, including reasonable attorneys’ fees (to
include outside counsel fees and all allocated costs of the holder’s in-house
counsel to the extent permissible), expended or incurred by the holder in
connection with the enforcement of the holder’s rights and/or the collection of
any amounts which become due to the holder under this Note, and the prosecution
or defense of any action in any way related to this Note, including without
limitation, any action for declaratory relief, whether incurred at the trial or
appellate level, in an arbitration proceeding or otherwise, and including any of
the foregoing incurred in connection with any bankruptcy proceeding (including
without limitation, any adversary proceeding, contested matter or motion brought
by Bank or any other person) relating to Borrower or any other person or entity.

(b) Obligations Joint and Several. Should more than one person or entity sign
this Note as a Borrower, the obligations of each such Borrower shall be joint
and several.

(c) Governing Law. This Note shall be governed by and construed in accordance
with the laws of the State of Texas.

(d) Savings Clause. It is the intention of the parties to comply strictly with
applicable usury laws. Accordingly, notwithstanding any provision to the
contrary in this Note, or in any contract, instrument or document evidencing or
securing the payment hereof or otherwise relating hereto (each, a “Related
Document”), in no event shall this Note or any Related Document require the
payment or permit the payment, taking, reserving, receiving, collection or
charging of any sums constituting interest under applicable laws that exceed the
maximum amount permitted by such laws, as the same may be amended or modified
from time to time

 

-3-

--------------------------------------------------------------------------------

(the “Maximum Rate”). If any such excess interest is called for, contracted for,
charged, taken, reserved or received in connection with this Note or any Related
Document, or in any communication by Bank or any other person to Borrower or any
other person, or in the event that all or part of the principal or interest
hereof or thereof shall be prepaid or accelerated, so that under any of such
circumstances or under any other circumstance whatsoever the amount of interest
contracted for, charged, taken, reserved or received on the amount of principal
actually outstanding from time to time under this Note shall exceed the Maximum
Rate, then in such event it is agreed that: (i) the provisions of this paragraph
shall govern and control; (ii) neither Borrower nor any other person or entity
now or hereafter liable for the payment of this Note or any Related Document
shall be obligated to pay the amount of such interest to the extent it is in
excess of the Maximum Rate; (iii) any such excess interest which is or has been
received by Bank, notwithstanding this paragraph, shall be credited against the
then unpaid principal balance hereof or thereof, or if this Note or any Related
Document has been or would be paid in full by such credit, refunded to Borrower;
and (iv) the provisions of this Note and each Related Document, and any other
communication to Borrower, shall immediately be deemed reformed and such excess
interest reduced, without the necessity of executing any other document, to the
Maximum Rate. The right to accelerate the maturity of this Note or any Related
Document does not include the right to accelerate, collect or charge unearned
interest, but only such interest that has otherwise accrued as of the date of
acceleration. Without limiting the foregoing, all calculations of the rate of
interest contracted for, charged, taken, reserved or received in connection with
this Note and any Related Document which are made for the purpose of determining
whether such rate exceeds the Maximum Rate shall be made to the extent permitted
by applicable laws by amortizing, prorating, allocating and spreading during the
period of the full term of this Note or such Related Document, including all
prior and subsequent renewals and extensions hereof or thereof, all interest at
any time contracted for, charged, taken, reserved or received by Bank. The terms
of this paragraph shall be deemed to be incorporated into each Related Document.

To the extent that either Chapter 303 or 306, or both, of the Texas Finance Code
apply in determining the Maximum Rate, Bank hereby elects to determine the
applicable rate ceiling by using the weekly ceiling from time to time in effect,
subject to Bank’s right subsequently to change such method in accordance with
applicable law, as the same may be amended or modified from time to time.

(e) Right of Setoff; Deposit Accounts. If an Event of Default shall have
occurred and be continuing, the Bank is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other obligations at any time owing by the Bank to or for the
credit or the account of the Borrower against any of and all the obligations of
the Borrower now or hereafter existing under this Note held by the Bank,
irrespective of whether or not the Bank shall have made any demand under this
Note and although such obligations may be unmatured. The rights of the Bank
under this Section are in addition to other rights and remedies the Bank may
have.

(f) Business Purpose. Borrower represents and warrants that all loans evidenced
by this Note are for a business, commercial, investment, agricultural or other
similar purpose and not primarily for a personal, family or household use.

(g) Certain Tri-Party Accounts. Borrower and Bank agree that Chapter 346 of the
Texas Finance Code (which regulates certain revolving credit accounts and
revolving triparty accounts) shall not apply to any revolving loan accounts
created under this Note or maintained in connection herewith.

 

-4-

--------------------------------------------------------------------------------

NOTICE: THIS NOTE AND ALL OTHER DOCUMENTS RELATING TO THE INDEBTEDNESS EVIDENCED
HEREBY CONSTITUTE A WRITTEN LOAN AGREEMENT WHICH REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES RELATING TO THIS NOTE AND THE
INDEBTEDNESS EVIDENCED HEREBY.

IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first
written above.

U.S. HOME SYSTEMS, INC.

By: /s/ Robert A. DeFronzo

Robert A. Defronzo,

CFO, Treasurer, Secretary

 

-5-