Document:

Revolving Promissory Note

 Exhibit 10.42 
 

 
 REVOLVING PROMISSORY NOTE 
  

			
	 $6,000,000.00
	  	April 2, 2007

 For value received, U.S. HOME SYSTEMS, INC., a corporation (“Borrower”,
whether one or more) does hereby promise to pay to the order of THE FROST NATIONAL BANK (“Lender”), at P.O. Box 1600, San Antonio, Texas 78296, or at such other address as Lender shall from time to time specify in writing, in
lawful money of the United States of America, the sum of SIX MILLION AND 00/100 DOLLARS ($6,000,000.00), or so much thereof as from time to time may be disbursed by Lender to Borrower under the “Borrowing Base Line of Credit”
pursuant to the terms of that certain First Amended and Restated Loan Agreement dated as of February 9, 2006, to be effective for all purposes as of February 10, 2006, between Borrower and Lender (as from time to time amended, modified or
restated, the “Loan Agreement”), and be outstanding, together with interest from date hereof on the principal balance outstanding from time to time as hereinafter provided. Interest shall be computed on a per annum basis of a year
of 360 days and for the actual number of days elapsed, unless such calculation would result in a rate greater than the highest rate permitted by applicable law, in which case interest shall be computed on a per annum basis of a year of 365 days or
366 days in a leap year, as the case may be. 
 1. Payment Terms. Interest only on amounts outstanding hereunder shall be due
and payable monthly as it accrues, on the 2nd day of each and every calendar month, beginning May 2, 2007, and continuing regularly and monthly thereafter until April 2, 2009, when the entire amount hereof, principal and interest then
remaining unpaid, shall be then due and payable; interest being calculated on the unpaid principal each day principal is outstanding and all payments made credited to any collection costs and late charges, to the discharge of the interest accrued
and to the reduction of the principal, in such order as Lender shall determine. 
 2. Late Charge. If a payment is made 10 days
or more late, Borrower will be charged, in addition to interest, a delinquency charge of (i) 5% of the unpaid portion of the regularly scheduled payment, or (ii) $250.00, whichever is less. Additionally, upon maturity of this Note, if the
outstanding principal balance (plus all accrued but unpaid interest) is not paid within 10 days of the maturity date, Borrower will be charged a delinquency charge of (i) 5% of the sum of the outstanding principal balance (plus all accrued but
unpaid interest), or (ii) $250.00, whichever is less. Borrower agrees with Lender that the charges set forth herein are reasonable compensation to Lender for the handling of such late payments. 
 3. Interest Rate. Interest on the outstanding and unpaid principal balance hereof shall be computed at a per annum rate equal to the lesser
of (a) a rate equal to the Wall Street Journal London Interbank Offered Rate (as defined below) plus two percent (2%) per annum, with said rate to be adjusted to reflect any change in The Wall Street Journal London Interbank Offered Rate
at the time of any such change or (b) the highest rate permitted by applicable law, but in no event shall interest contracted for, charged or received hereunder plus any other charges in connection herewith which constitute interest exceed the
maximum interest permitted by applicable law. As used herein, for any date, the “Wall Street Journal London Interbank Offered 

 
Rate” shall mean the London Interbank Offered Rate (LIBOR) for three (3) months quoted in the most recently published issue of The
Wall Street Journal (Central Edition) in the “Money Rates” column. If the Wall Street Journal London Interbank Offered Rate ceases to be made available by the publisher, or any successor to the publisher of The Wall Street
Journal, (Central Edition) the interest rate will be determined by using a comparable index. If more than one Wall Street Journal London Interbank Offered Rate for three (3) months is quoted, the higher rate shall apply. The Wall Street
Journal London Interbank Offered Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer. 
 4. Default Rate. Matured unpaid principal and interest shall bear interest from date of maturity until paid at the highest rate permitted by applicable law, or if no such maximum rate is established by
applicable law, at the rate stated above plus five percent (5%) per annum. 
 5. Revolving Line of Credit. Under the Loan
Agreement, Borrower may request advances and make payments hereunder from time to time; provided that it is understood and agreed that the aggregate principal amount outstanding from time to time hereunder shall not at any time exceed $6,000,000.
The unpaid balance of this Note shall increase and decrease with each new advance or payment hereunder, as the case may be. This Note shall not be deemed terminated or canceled prior to the date of its maturity, although the entire principal balance
hereof may from time to time be paid in full. Borrower may borrow, repay and re-borrow hereunder. All payments and prepayments of principal of or interest on this Note shall be made in lawful money of the United States of America in immediately
available funds, at the address of Lender indicated above, or such other place as the holder of this Note shall designate in writing to Borrower. If any payment of principal of or interest on this Note shall become due on a day which is not a
Business Day (as hereinafter defined), such payment shall be made on the next succeeding Business Day and any such extension of time shall be included in computing interest in connection with such payment. As used herein, the term “Business
Day” shall mean any day other than a Saturday, Sunday or any other day on which national banking associations are authorized to be closed. The books and records of Lender shall be prima facie evidence of all outstanding principal of
and accrued and unpaid interest on this Note. 
 6. Prepayment. Borrower reserves the right to prepay, prior to maturity, all
or any part of the principal of this Note without penalty. Any prepayments shall be applied first to accrued interest and then to principal. Borrower will provide written notice to the holder of this Note of any such prepayment of all or any part of
the principal at the time thereof. All payments and prepayments of principal or interest on this Note shall be made in lawful money of the United States of America in immediately available funds, at the address of Lender indicated above, or such
other place as the holder of this Note shall designate in writing to Borrower. All partial prepayments of principal shall be applied to the last installments payable in their inverse order of maturity. 
 7. Default. It is expressly provided that upon default in the punctual payment of this Note or any part hereof, principal or interest,
within five (5) days of the date the same shall become due and payable, or upon the occurrence of an event of default specified in any of the other Loan Documents (as defined below), the holder of this Note may, at its option, without further
notice or demand, (i) declare the outstanding principal balance of and accrued but unpaid 

  

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interest on this Note at once due and payable, (ii) refuse to advance any additional amounts under this Note, (iii) foreclose all liens securing
payment hereof, (iv) pursue any and all other rights, remedies and recourses available to the holder hereof, including but not limited to any such rights, remedies or recourses under the Loan Documents, at law or in equity, or (v) pursue
any combination of the foregoing; and in the event default is made in the prompt payment of this Note when due or declared due, and the same is placed in the hands of an attorney for collection, or suit is brought on same, or the same is collected
through probate, bankruptcy or other judicial proceedings, then the Borrower agrees and promises to pay all costs of collection, including reasonable attorney’s fees. 
 8. No Usury Intended; Usury Savings Clause. In no event shall interest contracted for, charged or received hereunder, plus any other
charges in connection herewith which constitute interest, exceed the maximum interest permitted by applicable law. The amounts of such interest or other charges previously paid to the holder of the Note in excess of the amounts permitted by
applicable law shall be applied by the holder of the Note to reduce the principal of the indebtedness evidenced by the Note, or, at the option of the holder of the Note, be refunded. To the extent permitted by applicable law, determination of the
legal maximum amount of interest shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the period of the full stated term of the loan and indebtedness, all interest at any time contracted for, charged or
received from the Borrower hereof in connection with the loan and indebtedness evidenced hereby, so that the actual rate of interest on account of such indebtedness is uniform throughout the term hereof. 
 9. Security. This Note has been executed and delivered pursuant the Loan Agreement, and is secured by, inter alia, the following:

 (a) a First Amended and Restated Security Agreement dated as of February 9, 2006, to be effective as of
February 10, 2006 (as amended or modified from time to time), by and between Borrower and Lender, covering certain collateral as more particularly described therein; 
 (b) First Amended and Restated Security Agreements dated as of February 9, 2006, to be effective as of February 10, 2006 (as
amended or modified from time to time), by and between each Guarantor (as defined in the Loan Agreement) and Lender, covering certain collateral as more particularly described therein; 
 (c) an Indemnity Deed of Trust, Security Agreement – Assignment of Rents dated as of February 9, 2006, to be effective as of
February 10, 2006, by U.S. Remodelers, Inc. in favor of Lender, covering certain real property situated in Charles City County, Virginia, as more particularly described therein. 
 This Note, the Loan Agreement and all other documents evidencing, securing, governing, guaranteeing and/or pertaining to this Note, including but not limited to those documents described above, are hereinafter
collectively referred to as the “Loan Documents”. The holder of this Note is entitled to the benefits and security provided in the Loan Documents. 
  

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 10. Joint and Several Liability; Waiver. Each maker, signer, surety and endorser hereof, as
well as all heirs, successors and legal representatives of said parties, shall be directly and primarily, jointly and severally, liable for the payment of all indebtedness hereunder. Lender may release or modify the obligations of any of the
foregoing persons or entities, or guarantors hereof, in connection with this loan without affecting the obligations of the others. All such persons or entities expressly waive presentment and demand for payment, notice of default, notice of intent
to accelerate maturity, notice of acceleration of maturity, protest, notice of protest, notice of dishonor, and all other notices and demands for which waiver is not prohibited by law, and diligence in the collection hereof; and agree to all
renewals, extensions, indulgences, partial payments, releases or exchanges of collateral, or taking of additional collateral, with or without notice, before or after maturity. No delay or omission of Lender in exercising any right hereunder shall be
a waiver of such right or any other right under this Note. 
 11. Texas Finance Code. In no event shall Chapter 346 of the
Texas Finance Code (which regulates certain revolving loan accounts and revolving tri-party accounts) apply to this Note. To the extent that Chapter 303 of the Texas Finance Code are applicable to this Note, the “weekly ceiling” specified
in such article is the applicable ceiling; provided that, if any applicable law permits greater interest, the law permitting the greatest interest shall apply. 
 12. Governing Law, Venue. This Note is being executed and delivered, and is intended to be performed in the State of Texas. Except to the extent that the laws of the United States may apply to the terms
hereof, the substantive laws of the State of Texas shall govern the validity, construction, enforcement and interpretation of this Note. In the event of a dispute involving this Note or any other instruments executed in connection herewith, the
undersigned irrevocably agrees that venue for such dispute shall lie in any court of competent jurisdiction in Bexar County, Texas. 
 13.
Purpose of Loan. Borrower agrees that no advances under this Note shall be used for personal, family or household purposes, and that all advances hereunder shall be used solely for business, commercial, investment, or other similar
purposes. 
 14. Captions. The captions in this Note are inserted for convenience only and are not to be used to limit the
terms herein. 
 15. Financial Information. Borrower agrees to promptly furnish such financial information and statements,
including financial statements in a format acceptable to Lender, lists of assets and liabilities, agings of receivables and payables, inventory schedules, budgets, forecasts, tax returns, and other reports with respect to Borrower’s financial
condition and business operations as Lender may request from time to time. This provision shall not alter the obligation of Borrower to deliver to Lender any other financial statements or reports pursuant to the terms of any other loan documents
executed in connection with this Note. 
 16. Renewal, Extension and Increase. This Note is given in renewal and extension but
not extinguishment, of all amounts left owing and unpaid on (i) that certain Revolving Promissory Note dated February 9, 2006, to be effective for all purposes as of February 10, 2006, executed and delivered by Borrower and payable to
the order of Lender in the original principal amount of $4,000,000, as modified by that certain Modification Agreement dated as of January 

  

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1, 2007, which note was given in renewal, extension and increase, but not extinguishment of certain indebtedness described therein, and (ii) that
certain Revolving Promissory Note dated February 9, 2006, to be effective for all purposes as of February 10, 2006, executed and delivered by Borrower and payable to the order of Lender in the original principal amount of $3,000,000, as
modified by that certain Modification Agreement dated as of January 1, 2007, which note was given in renewal, extension and increase, but not in extinguishment of certain indebtedness described therein. 
  

			
	 BORROWER:

	
	 U.S. HOME SYSTEMS, INC.

		
	 By:
	 	 /s/ Robert A. DeFronzo

	 Name:
	 	Robert A. DeFronzo
	 Title:
	 	CFO

  

 5First Amendment to First Amended and Restated Security Agreement by U.S Home

 Exhibit 10.43 
 

 
 FIRST AMENDMENT TO FIRST AMENDED AND RESTATED 
 SECURITY AGREEMENT 
 THIS FIRST
AMENDMENT TO FIRST AMENDED AND RESTATED SECURITY AGREEMENT (herein called this “Amendment”) made as of the 2nd day of April, 2007 by and between U.S. HOME SYSTEMS, INC., a Delaware corporation (“Debtor”), and THE FROST NATIONAL
BANK, a national banking association (“Lender”). 
 W I T N E S S E T H: 
 WHEREAS, Debtor and Lender have entered into that certain First Amended and Restated Loan Agreement dated as of February 9, 2006, to be effective
for all purposes as of February 10, 2006 (as from time to time amended, modified or restated, the “Loan Agreement”) for the purposes and consideration therein expressed, pursuant to which Lender became obligated to make loans to
Debtor as therein provided; and 
 WHEREAS, Debtor and Lender have entered into that certain First Amended and Restated Security Agreement
dated as of February 9, 2006, to be effective for all purposes as of February 10, 2006 (as from time to time amended, modified or restated, the “Original Security Agreement”) for the purposes and consideration therein expressed,
pursuant to which Debtor pledged and granted to Lender a continuing security interest in Collateral; and 
 WHEREAS, Debtor and Lender desire
to amend the Original Security Agreement for the purposes expressed herein; 
 NOW, THEREFORE, in consideration of the promises and the
mutual covenants and agreements contained herein and in the Original Security Agreement, in consideration of the loans which may hereafter be made by Lender to Debtor, and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto do hereby agree as follows: 
 ARTICLE I. 
 DEFINITIONS AND REFERENCES 
 §
1.1 Terms Defined in the Original Agreement. Unless the context otherwise requires or unless otherwise expressly defined herein, the terms defined in the Loan Agreement or the Original Security Agreement shall have the same meanings whenever
used in this Amendment. 
 § 1.2. Other Defined Terms. Unless the context otherwise requires, the following terms when used in
this Amendment shall have the meanings assigned to them in this § 1.2. 
 “Amendment” means this First
Amendment to First Amended and Restated Security Agreement. 
  

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 “Security Agreement” means the Original Security Agreement as amended
hereby. 
 ARTICLE II. 
 AMENDMENTS TO ORIGINAL SECURITY AGREEMENT 
 § 2.1. Indebtedness. Section 1(d) of the Original Security
Agreement is hereby amended to read: 
 (d) The term “Indebtedness” shall mean (i) all indebtedness,
obligations and liabilities of Obligor to Secured Party of any kind or character, now existing or hereafter arising, whether direct, indirect, related, unrelated, fixed, contingent, liquidated, unliquidated, joint, several or joint and several, and
regardless of whether such indebtedness, obligations and liabilities may, prior to their acquisition by Secured Party, be or have been payable to or in favor of a third party and subsequently acquired by Secured Party (it being contemplated that
Secured Party may make such acquisitions from third parties), including without limitation all indebtedness, obligations and liabilities of Obligor to Secured Party now existing or hereafter arising by note, draft, acceptance, guaranty, endorsement,
letter of credit, assignment, purchase, overdraft, discount, indemnity agreement or otherwise, including, without limitation (a) that one certain Revolving Promissory Note dated as of April 2, 2007, executed by Obligor and payable to the
order of Secured Party, in the original principal amount of $6,000,000, which note was executed in renewal and replacement (but not in extinguishment or novation) of (1) that one certain Revolving Promissory Note dated as of February 9,
2006, to be effective as of February 10, 2006, executed by Obligor and payable to the order of Secured Party, in the original principal amount of $3,000,000, and (2) that one certain Revolving Promissory Note dated as of February 9,
2006, to be effective as of February 10, 2006, executed by Obligor and payable to the order of Secured Party, in the original principal amount of $4,000,000, (b) that one certain Term Note dated as of February 9, 2006, to be effective
as of February 10, 2006, executed by Obligor and payable to the order of Secured Party, in the original principal amount of $1,200,000, and (c) that one certain Term Note dated as of February 9, 2006, to be effective as of
February 10, 2006, executed by Obligor and payable to the order of Secured Party, in the original principal amount of $875,000; (ii) all accrued but unpaid interest on any of the indebtedness described in (i) above, (iii) all
obligations of Obligor to Secured Party under any documents evidencing, securing, governing and/or pertaining to all or any part of the indebtedness described in (i) and (ii) above, (iv) all costs and expenses incurred by Secured
Party in connection with the collection and administration of all or any part of the indebtedness and obligations described in (i), (ii) and (iii) above or the protection or preservation of, or realization upon, the collateral securing all
or any part of such indebtedness and obligations, including without limitation all reasonable attorneys’ fees, and (v) all renewals, extensions, modifications and rearrangements of the indebtedness and obligations described in (i), (ii),
(iii) and (iv) above. 
  

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 ARTICLE III. 
 REPRESENTATIONS AND WARRANTIES 
 § 3.1. Representations and Warranties of Debtor. In
order to induce Lender to enter into this Amendment, Debtor represents and warrants to Lender that: 
 (a) The representations
and warranties contained in Section 4 of the Original Security Agreement are true and correct at and as of the time of the effectiveness hereof. 
 (b) Debtor is duly authorized to execute and deliver this Amendment. Debtor has duly taken all action necessary to authorize the execution and delivery of this Amendment. 
 (c) The execution and delivery by Debtor of this Amendment, the performance by Debtor of its obligations hereunder and the consummation of
the transactions contemplated hereby do not and will not conflict with any provision of law, statute, rule or regulation or of the articles of incorporation of Debtor, or of any material agreement, judgment, license, order or permit applicable to or
binding upon Debtor, or result in the creation of any lien, charge or encumbrance upon any assets or properties of Debtor. Except for those which have been duly obtained, no consent, approval, authorization or order of any court or governmental
authority or third party is required in connection with the execution and delivery by Debtor of this Amendment or to consummate the transactions contemplated hereby. 
 (d) When duly executed and delivered this Amendment will be a legal and binding instrument and agreement of Debtor, enforceable in
accordance with its terms, except as limited by bankruptcy, insolvency and similar laws applying to creditors’ rights generally and by principles of equity applying to creditors’ rights generally. 
 ARTICLE IV. 
 MISCELLANEOUS 

§ 4.1. Ratification of Agreements. The Original Security Agreement as hereby amended is hereby ratified and confirmed in all respects. The
execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein or therein, operate as a waiver of any right, power or remedy of Lender under the Loan Agreement, the Notes, or any other Loan Document nor
constitute a waiver of any provision of the Loan Agreement, the Notes or any other Loan Document. 
 § 4.2. Survival of
Agreements. All representations, warranties, covenants and agreements of Debtor herein shall survive the execution and delivery of this Amendment and the performance hereof. 
 § 4.3. Loan Documents. This Amendment is a Loan Document, and all provisions in the Loan Agreement pertaining to Loan Documents apply hereto.

  

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 § 4.4. Governing Law. This Amendment shall be governed by and construed in accordance with
the laws of the State of Texas and any applicable laws of the United States of America in all respects, including construction, validity and performance. 
 § 4.5. Counterparts. This Amendment may be separately executed in counterparts and by the different parties hereto in separate counterparts, each of which when so executed shall be deemed to constitute one
and the same Amendment. 
 THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS REPRESENT 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 OF THE PARTIES. 
 IN WITNESS WHEREOF, this Amendment is executed as of the date first above written. 
  

			
	U.S. HOME SYSTEMS, INC., a Delaware
corporation
		
	By:	 	 /s/ Robert A. DeFronzo

	Name:	 	Robert A. DeFronzo
	Title:	 	CFO
	
	THE FROST NATIONAL BANK
		
	By:	 	 /s/ Stephen S. Martin

	Name:	 	Stephen S. Martin
	Title:	 	Senior Vice President

  

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