Document:

Second Amendment to Restated Loan Agreement

 Exhibit 10.60 

 

 

 SECOND AMENDMENT TO 
 SECOND AMENDED AND RESTATED LOAN AGREEMENT 
 THIS SECOND AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AGREEMENT (herein called this “Second Amendment”) made as of January [            ], 2010, to be effective for
all purposes as of December 30, 2009 by and between U.S. HOME SYSTEMS, INC., a Delaware corporation (“Borrower”), and THE FROST NATIONAL BANK, a national banking association (“Lender”). 
 W I T N E S S E T H: 
 WHEREAS, Borrower and Lender have entered into that certain Second Amended and Restated Loan Agreement dated as of December 19, 2008 (as from time to time amended, modified or restated, the “Original Agreement”) for the
purposes and consideration therein expressed, pursuant to which Lender became obligated to make loans to Borrower as therein provided; and 
 WHEREAS, Borrower and Lender desire to amend the Original Agreement for the purposes expressed herein; 
 NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein and in the Original Agreement, in consideration of the loans which may hereafter be made by Lender
to Borrower, 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 Original 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 Second Amendment shall have the meanings assigned to them in this § 1.2. 
 “Loan Agreement” means the Original Agreement as amended hereby. 
 “Second Amendment” means this Second Amendment to Second Amended and Restated Loan Agreement. 
 “Second Amendment Documents” means the Arbitration and Notice of Final Agreement executed by Borrower and
Guarantor, a Revolving Promissory Note of even

  

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date herewith in the stated principal amount of $2,000,000, and all other documents, instruments and agreements executed in connection herewith. 
 ARTICLE II. 
 AMENDMENTS TO ORIGINAL AGREEMENT 
 § 2.1. Borrowing Base Line of Credit. Section 1(a) of the
Original Agreement is hereby amended in its entirety to read as follows: 
 (a) Borrowing Base Line of
Credit. Subject to the terms and conditions set forth herein, Lender agrees to lend to Borrower, on a revolving basis from time to time during the period commencing on the date hereof and continuing through the maturity date of the promissory
note evidencing this Credit Facility from time to time, such amounts as Borrower may request hereunder; provided, however, the total principal amount outstanding at any time shall not exceed the lesser of (i) an amount equal to
the Borrowing Base (as defined below), or (ii) $2,000,000 (the “Borrowing Base Line of Credit”). If at any time the aggregate principal amount outstanding under the Borrowing Base Line of Credit shall exceed an amount
equal to the Borrowing Base, Borrower agrees to immediately repay to Lender such excess amount, plus all accrued but unpaid interest thereon. Subject to the terms and conditions hereof, Borrower may borrow, repay and reborrow hereunder. All advances
under the Borrowing Base Line of Credit shall be used for working capital and other general business purposes of Borrower and its operating subsidiaries. 
 § 2.2. Defined Terms. Section 2(f) of the Original Agreement is hereby amended in its entirety to read as follows: 
 (f) “Loans” means all advances under the Credit Facilities and the term loan heretofore made pursuant to
that certain Term Note dated effective as of February 10, 2006, in the original stated principal amount of $1,200,000 (together with any renewals, extensions and increases thereof, the “Term Note”). 
 § 2.3. Financial Covenants. Section 11 of the Original Agreement is hereby amended in its entirety to read as follows:

 11. Financial Covenants. Until (i) the Note and all other obligations and liabilities of
Borrower under this Loan Agreement and the other Loan Documents are fully paid and satisfied, and (ii) the Lender has no further commitment to lend hereunder, beginning with Borrower’s last fiscal quarter of 2009, Borrower will maintain
the following financial covenants: 
 (a) Tangible Net Worth. Borrower will maintain, at all times, its
Tangible Net Worth at not less than $13,500,000. 
  

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 (b) Debt to Adjusted Tangible Net Worth Ratio. Borrower will
maintain, at the end of each fiscal quarter, a ratio of (a) total liabilities minus Subordinated Debt to (b) Tangible Net Worth of not greater than 1.25 to 1.0. 
 (c) Intentionally Omitted. 
 (d) Quick Ratio. Borrower will maintain, a ratio of (a) Borrower’s unencumbered cash, cash equivalents,
marketable securities and accounts receivable net of reserves, to (b) current liabilities of not less than 1.0 to 1.0. For purposes of this ratio, current maturities of the Term Note shall be excluded from current liabilities. 
 As used herein, the term “Tangible Net Worth” means, as of any date, the sum of (i) the par value (or
value stated on the books of the corporation) of the capital stock (but excluding treasury stock and capital stock subscribed and unissued) of Borrower and its subsidiaries plus (ii) the amount of the paid-in capital and retained earnings of
Borrower and its subsidiaries, minus all intangible assets, plus Subordinated Debt. As used herein, the term “Subordinated Debt” means any indebtedness owing by Borrower or the Guarantor which has been subordinated by written
agreement to all indebtedness now or hereafter owing by Borrower or the Guarantor to Lender, such agreement to be in form and substance acceptable to Lender. Unless otherwise specified, all accounting and financial terms and covenants set forth
above are to be determined according to generally accepted accounting principles, consistently applied. 
 § 2.4.
Representations and Warranties. Section 7(e) of the Original Agreement is hereby amended in its entirety to read as follows: 
 (e) Litigation. Except as set forth in Schedule 7(e) attached hereto, there are no actions, suits or proceedings, pending or, to the knowledge of Borrower or the Guarantor, threatened against
or affecting Borrower or the Guarantor or the properties of Borrower or the Guarantor, before any court or governmental department, commission or board, which, if determined adversely to Borrower or Guarantor, could reasonably be expected to result
in either a money judgment of $50,000 per action, suit or proceeding or an aggregate amount of $100,000 for all such actions, suits and proceedings. 
 ARTICLE III. 
 CONDITIONS OF EFFECTIVENESS 
 § 3.1. Effective Date. This Second Amendment shall become effective as of the date first written above, when and only when
Lender shall have received, at Lender’s office, in form and substance satisfactory to Lender, this Second Amendment duly executed and delivered by Borrower, the attached Consent and Agreement duly executed and delivered by Guarantor, and the
Second Amendment Documents. 
 ARTICLE IV. 
  

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 REPRESENTATIONS AND WARRANTIES 
 § 4.1. Representations and Warranties of Borrower. In order to induce Lender to enter into this Second Amendment, Borrower
represents and warrants to Lender that: 
 (a) The representations and warranties contained in Section 7 of
the Original Agreement, as amended by this Second Amendment, are true and correct at and as of the time of the effectiveness hereof. 
 (b) Borrower is duly authorized to execute and deliver this Second Amendment and is and will continue to be duly authorized to borrow and to perform its obligations under the Loan Agreement. Borrower has
duly taken all action necessary to authorize the execution and delivery of this Second Amendment and to authorize the performance of the obligations of Borrower hereunder. 
 (c) The execution and delivery by Borrower of this Second Amendment, the performance by Borrower 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 organizational documents of Borrower, or of any material agreement, judgment, license, order
or permit applicable to or binding upon Borrower, or result in the creation of any lien, charge or encumbrance upon any assets or properties of Borrower. 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 Borrower of this Second Amendment or to consummate the transactions contemplated hereby. 
 (d) When duly executed and delivered, each of this Second Amendment and the Loan Agreement will be a legal and binding
instrument and agreement of Borrower, 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 V. 
 MISCELLANEOUS 
 § 5.1. Ratification of Agreements. The Original
Agreement as hereby amended is hereby ratified and confirmed in all respects. The execution, delivery and effectiveness of this Second 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 Note, or any other Loan Document nor constitute a waiver of any provision of the Loan Agreement, the Note or any other Loan Document. 
 § 5.2. Survival of Agreements. All representations, warranties, covenants and agreements of Borrower herein shall survive the
execution and delivery of this Second Amendment and the performance hereof, including without limitation the making or granting of the Loan and shall further survive until the Loan is paid in full. 
  

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 § 5.3. Loan Documents. This Second Amendment is a Loan Document, and all
provisions in the Loan Agreement pertaining to Loan Documents apply hereto. 
 § 5.4. Governing Law. This Second
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. 
 § 5.5. Counterparts. This Second 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
SECOND 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. 
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 IN WITNESS WHEREOF, this Second Amendment is executed as of the date first written above.

  

			
	U.S. HOME SYSTEMS, INC.
		
	By:	 	/s/ Robert A. DeFronzo
		 	 Name: Robert A. DeFronzo
 Title: Secretary – Treasurer,
     Chief Financial Officer

	
	THE FROST NATIONAL BANK
		
	By:	 	/s/ Grant Simmons
		 	 Name: Grant Simmons
 Title:
Assistant Vice President

 Second Amendment 
 CONSENT AND AGREEMENT 
 The undersigned hereby consents to the
provisions of this Second Amendment and the transactions contemplated herein, and hereby ratifies and confirms the Second Amended and Restated Guaranty Agreement dated as of December 19, 2008, made by it for the benefit of Lender, and agrees
that its obligations and covenants thereunder are unimpaired hereby and shall remain in full force and effect. 
  

			
	U.S. REMODELERS, INC.
		
	By:	 	/s/ Robert A. DeFronzo
		 	 Name: Robert A. DeFronzo
 Title: Secretary – Treasurer,
 Chief Financial Officer

 SCHEDULE 7(e) 
 LITIGATION 
 1. Kenneth John Lodge and Judson Lertzman v. U.S. Remodelers, Inc., U.S. Home
Systems, Et al.; U.S. District Court for the Central District of California Western Division; Case No: CV07-05409 CAS (AJWx) 
 2. Matthew
Ozga v. U.S. Remodelers, U.S. Remodelers, Inc. dba U.S. Home Services; Superior Court of California, County of Alameda, CA; Case No: RG09436268 
 3. Anthony Zascone v. U.S. Remodelers, Inc. and U.S. Home Systems, Inc.; U.S. District Court for the District of New Jersey; Case No: 09-5950 (JHR) (kw)Arbitration and Notice of Final Agreement

 Exhibit 10.61 
  

					
	

	 	ARBITRATION AND NOTICE OF FINAL AGREEMENT	 	

  

	To:	U.S. HOME SYSTEMS, INC. 

	  	405 State Highway 

	  	121 Bypass, Suite 250 

	  	Lewisville, Texas 75067 

  

	  	(collectively, whether one or more, “Borrower”) 

 As of the effective date of this Notice, Borrower and THE FROST NATIONAL BANK, a national banking association (“Lender”) have consummated a transaction pursuant to which Lender has agreed
to make a loan or loans to Borrower, and/or to otherwise extend credit or make financial accommodations to or for the benefit of Borrower (collectively, whether one or more, the “Loan”). 
 ARBITRATION 
 Upon
written request of either Lender or Borrower, any controversy or claim between or among the parties hereto including but not limited to those arising out of or relating to the Loan, any of the loan documents or any related agreements or instruments
executed in connection with the Loan (the “Loan Documents”), including any claim based on or arising from an alleged tort, shall be determined by binding arbitration in accordance with the Federal Arbitration Act (or if not
applicable, the applicable state law), the Commercial Arbitration Rules of the American Arbitration Association, and the “Special Rules” set forth below unless both Lender and Borrower, in their respective sole discretion, agree in writing
to mediate the dispute prior to submitting to binding arbitration. In the event of any inconsistency, the Special Rules shall control. Judgment upon any arbitration award may be entered in any court having jurisdiction. Any party to this Agreement
may bring an action, including a summary or expedited proceeding, to compel arbitration of any controversy or claim to which this agreement applies in any court having jurisdiction over such action. The party that requests arbitration has the burden
to initiate the arbitration proceedings pursuant to and by complying with the Commercial Arbitration Rules of the American Arbitration Association and shall pay all associated administrative and filing fees. 
 The arbitration shall be conducted in the City of San Antonio, Bexar County, Texas and administered by the American Arbitration Association. All arbitration
hearings will be commenced within sixty (60) days of the written request for arbitration, and if the arbitration hearing is not commenced within the sixty (60) days, the party that requested arbitration shall have waived its election to
arbitrate. Nothing in this Agreement shall be deemed to (i) limit the applicability of any otherwise applicable statutes of limitation or repose and any waivers contained in this Agreement; or (ii) be a waiver by Lender of the protection
afforded to it by 12 U.S.C. Sec. 91 or any substantially equivalent state law; or (iii) limit the right of Lender hereto (A) to exercise self help remedies such as (but not limited to) setoff, or (B) to foreclose against any real
or personal property collateral in accordance with applicable law, or (C) to obtain from a

 
court provisional or ancillary remedies such as (but not limited to) injunctive relief or the appointment of a receiver in accordance with applicable law. Lender may exercise such self help
remedies, foreclose upon such property, or obtain such provisional or ancillary remedies before, during or after the pendency of any arbitration proceeding brought pursuant to this Agreement or any other Loan Document. At Lender’s option,
foreclosure under a deed of trust or mortgage may be accomplished by any of the following: the exercise of a power of sale under the deed of trust or mortgage, or by judicial sale under the deed of trust or mortgage, or by judicial foreclosure.
Neither this exercise of self help remedies nor the institution or maintenance of an action for foreclosure or provisional or ancillary remedies shall constitute a waiver of the right of any party, including the claimant in any such action, to
arbitrate the merits of the controversy or claim occasioning resort to such remedies. 
 FACSIMILE DOCUMENTS AND SIGNATURES

 For purposes of negotiating and finalizing the Written Loan Agreement (as hereinafter defined), if this document or any document
executed in connection with the Loan is transmitted by facsimile machine (“fax”), it shall be treated for all purposes as an original document. Additionally, the signature of any party on this document transmitted by way of a
facsimile machine shall be considered for all purposes as an original signature. Any such faxed document shall be considered to have the same binding legal effect as an original document. At the request of any party, any faxed document shall be
re-executed by each signatory party in an original form. 
 WAIVER OF RIGHT TO TRIAL BY JURY 
 THE PARTIES TO THIS AGREEMENT HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER
TO ENFORCE THIS AGREEMENT, TO COLLECT DAMAGES FOR THE BREACH OF THIS AGREEMENT, OR WHICH IN ANY OTHER WAY ARISE OUT OF, ARE CONNECTED TO OR ARE RELATED TO THIS AGREEMENT OR THE SUBJECT MATTER OF THIS AGREEMENT. ANY SUCH ACTION SHALL BE TRIED BY THE
JUDGE WITHOUT A JURY. 
 NOTICE OF FINAL AGREEMENT 
 In connection with the Loan, Borrower and Lender and the undersigned guarantors and other obligors, if any (collectively, whether one or more, “Other Obligors”) have executed and
delivered and may hereafter execute and deliver certain agreements, instruments and documents (collectively hereinafter referred to as the “Written Loan Agreement”). 
 It is the intention of Borrower, Lender and Other Obligors that this Notice be incorporated by reference into each of the written agreements, instruments and documents comprising the Written Loan
Agreement. Borrower, Lender and Other Obligors each warrant and represent that the entire agreement made and existing by or among Borrower, Lender and Other Obligors with respect to the Loan is and shall be contained within the Written Loan
Agreement, as amended and supplemented hereby, and that no agreements or promises exist or shall exist by or among, Borrower, Lender and Other Obligors that are not reflected in the Written Loan Agreement. 
  

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 THE WRITTEN LOAN AGREEMENT 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. 
 Executed as of December 30, 2009. 
  

			
	 THE FROST NATIONAL BANK, a
 national banking association

		
	By:	 	/s/ Grant Simmons
		 	Name: Grant Simmons
		 	Title: Assistant Vice President

  
 ACKNOWLEDGED AND AGREED: 
  

			
	 BORROWER:
  
 U.S. HOME SYSTEMS, INC.

		
	By:	 	/s/ Robert A. DeFronzo
		 	Name: Robert A. DeFronzo
		 	 Title: Secretary – Treasurer,
 Chief Financial Officer

	
	 OTHER OBLIGORS:
  
 U.S. REMODELERS, INC.

		
	By:	 	/s/ Robert A. DeFronzo
		 	Name: Robert A. DeFronzo
		 	 Title: Secretary – Treasurer,
 Chief Financial Officer

  

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