Document:

Third Amendment to Second Amended and Restated Loan Agreeement

  
 Exhibit 10.65

 

 

 THIRD AMENDMENT TO 
 SECOND AMENDED AND RESTATED LOAN AGREEMENT 
 THIS THIRD AMENDMENT TO
SECOND AMENDED AND RESTATED LOAN AGREEMENT (herein called this “Third Amendment”) made effective as of September 2, 2010, by and between U.S. HOME SYSTEMS, INC., a Delaware corporation (“Borrower”), and
THE FROST NATIONAL BANK, a national banking association (“Lender”). 
 WITNESSETH: 

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 1 
 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 Third
Amendment shall have the meanings assigned to them in this Section 1.2. 
 “Loan Agreement” means the
Original Agreement as amended hereby. 
 “Third Amendment” means this Third Amendment to Second Amended and
Restated Loan Agreement. 
 “Third Amendment Documents” means the Arbitration and Notice of
Final Agreement executed by Borrower and Guarantor, a Revolving Promissory Note of even date herewith in the stated principal amount of $2,000,000, and all other documents, instruments and agreements executed in connection herewith, 

  

			
	 THIRD AMENDMENT TO SECOND AMENDED
 AND RESTATED LOAN AGREEMENT
	 	Page 1

  
 ARTICLE 2

 AMENDMENTS TO ORIGINAL AGREEMENT 

2.1 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, 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.

 (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) Debt Service Coverage Ratio. Borrower will maintain, as of the end of each fiscal quarter, a ratio of (a) EBITDA for the twelve (12) month period ending with such fiscal quarter, to
(b) interest expense and current maturities of long-term debt for such 12 month period, of not less than 1.50 to 1.0; provided, however, for the calculation of such ratio to be made as of September 30, 2010, the foregoing
amounts shall be determined on a nine (9) month basis. “EBITDA” means, for any period, net income for such period, plus the following to the extent reflected as an expense in the determination of net income: (a) interest expense,
(b) tax expense, and (c) depreciation and amortization of tangible and intangible assets of the Borrower. 
 (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. 

  

			
	 THIRD AMENDMENT TO SECOND AMENDED
 AND RESTATED LOAN AGREEMENT
	 	Page 2

  
 2.2 Negative
Covenants. Effective as of the date hereof, Section 10(i) of the Original Agreement is hereby amended in its entirety to read as follows: 
 (i) Redemptions; Transfer of Assets. Declare or make any payment on account of the purchase, redemption, or other acquisition or retirement of any shares of Borrower’s or the Guarantor’s
capital stock other than the Permitted Repurchases, or make any other distribution, sale, transfer or lease of any of Borrower’s or the Guarantor’s assets other than in the ordinary course of business, unless any such amounts are directly
utilized for the payment of principal or interest on indebtedness and obligations owing from time to time by Borrower to Lender. As used herein, the term “Permitted Repurchases” means the repurchase by Borrower of its capital stock from
time to time so long as the aggregate amount of such repurchases after August 19, 2010 does not exceed $500,000.00. 

ARTICLE 3 
 CONDITIONS OF EFFECTIVENESS 
 3.1 Effective
Date. This Third 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 Third Amendment duly
executed and delivered by Borrower, the attached Consent and Agreement duly executed and delivered by Guarantor, and the Third Amendment Documents. 
 ARTICLE 4 
 REPRESENTATIONS AND WARRANTIES 

4.1 Representations and Warranties of Borrower. In order to induce Lender to enter into this Third Amendment,
Borrower represents and warrants to Lender that: 
 (a) The representations and warranties contained in the
Original Agreement, as amended by this Third 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 Third 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 Third Amendment and to authorize the performance of the obligations of Borrower hereunder. 

(c) The execution and delivery by Borrower of this Third 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 Third Amendment or to consummate the transactions contemplated hereby. 

  

			
	 THIRD AMENDMENT TO SECOND AMENDED
 AND RESTATED LOAN AGREEMENT
	 	Page 3

  
 (d)
When duly executed and delivered, each of this Third 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 5 
 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 Third 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 Third 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. 

5.3 Loan Documents. This Third Amendment is a Loan Document, and all provisions in the Loan Agreement pertaining to
Loan Documents apply hereto. 
 5.4 Governing Law. This Third 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 Third 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 THIRD AMENDMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN TUE 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 TUE PARTIES. 

[Remainder of this page intentionally left blank] 

  

			
	 THIRD AMENDMENT TO SECOND AMENDED
 AND RESTATED LOAN AGREEMENT
	 	Page 4

  
 IN WITNESS WHEREOF,
this Third Amendment is executed as of the date first written above. 
  

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

		 	Name: Robert A. DeFronzo
		 	Title: Secretary, Treasurer and CFO
	
	THE FROST NATIONAL BANK
		
	By:	 	 /s/ Martha Martin

		 	Name: Martha Martin
		 	Title: Senior Vice President

  

			
	 THIRD AMENDMENT TO SECOND AMENDED
 AND RESTATED LOAN AGREEMENT
	 	Signature Page 1

  
 CONSENT AND
AGREEMENT 
 The undersigned hereby consents to the provisions of this Third 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.,
	a Delaware corporation
		
	By:	 	 /s/ Robert A. DeFronzo

		 	Name: Robert A. DeFronzo
		 	Title: Secretary, Treasurer and CFO

  

			
	 THIRD AMENDMENT TO SECOND AMENDED
 AND RESTATED LOAN AGREEMENT
	 	Consent Page 1Arbitration and Notice of Final Agreement

  
 Exhibit 10.66

 

 

 ARBITRATION AND NOTICE OF FINAL AGREEMENT 

 

	To:	U.S. Home Systems, Inc. 

 405
State Highway 121 Bypass 
 Building A, 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 renew and extend an existing loan or loans to Borrower in the principal amounts of $2,000,000.00 and $999,999.90 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. 

  

			
	ARBITRATION AND NOTICE OF FINAL AGREEMENT	  	Page 1

  
 FACSIMILE
DOCUMENTS AND SIGNATURES; DESIGN; IMAGING OF DOCUMENTS 
 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. Borrower, Other Obligors and Lender agree that no notices or other communications by electronic means between such parties or
their representatives in connection with the Loan Documents or any instrument executed in connection therewith shall constitute a transaction, agreement, contract or electronic signature under the Electronic Signatures in Global and National
Commerce Act, any version of the Uniform Electronic Transactions Act or any other statute governing electronic transactions, unless otherwise specifically agreed to in writing. Borrower and Other Obligors understand and agree that
(a) Lender’s document retention policy may involve the electronic imaging of executed Loan Documents and the destruction of the paper originals, and (b) Borrower and Other Obligors waive any right that they may have to claim that the
imaged copies of the Loan Documents are not originals. 
 PATRIOT ACT NOTICE 

Lender hereby notifies Borrower and Other Obligors that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record
information that identifies Borrower and Other Obligors, which information includes the name and address of Borrower and other information that will allow Lender to identify Borrower and Other Obligors in accordance with the Act. 

  

			
	ARBITRATION AND NOTICE OF FINAL AGREEMENT	  	Page 2

  
 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 warrants and represents 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.

 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.

 [Signature Page Follows.] 

  

			
	ARBITRATION AND NOTICE OF FINAL AGREEMENT	  	Page 3

  
 Executed:
September 2, 2010. 
  

			
	 THE FROST NATIONAL BANK, a
 national banking association

		
	By:	 	 /s/ Martha Martin

	Name:	 	Martha Martin
	Title:	 	Senior Vice President

  

					
	ACKNOWLEDGED AND AGREED:
	
	BORROWER:
	
	 U.S. HOME SYSTEMS, INC.,
 a Delaware corporation

		
	By:	 	 /s/ Robert A. DeFronzo

		 	Name:	 	Robert A. DeFronzo
		 	Title:	 	Secretary, Treasurer and CFO
	
	OTHER OBLIGORS:
	
	 U.S. REMODELERS, INC.,
 a Delaware corporation

		
	By:	 	 /s/ Robert A. DeFronzo

		 	Name:	 	Robert A. DeFronzo
		 	Title:	 	Secretary, Treasurer and CFO

  

			
	ARBITRATION AND NOTICE OF FINAL AGREEMENT	  	Signature Page 1

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