EXHIBIT 10.43
AMENDMENT AND WAIVER NO. 7 TO THE LOAN DOCUMENTS
As of May 23, 2001
AMENDMENT AND WAIVER NO. 7 TO THE LOAN DOCUMENTS dated as of May 23,
2001 to the Credit Agreement dated as of November 26, 1997 (as amended and
otherwise modified by Amendment and Waiver No. 1 dated as of January 23, 1998,
Letter Waiver No. 2 dated as of April 9, 1998, Amendment No. 3 to the Loan
Documents dated as of May 26, 1998, Amendment and Waiver No. 4 to the Loan
Documents dated as of May 25, 1999, Amendment No. 5 to the Loan Documents dated
as of April 7, 2000 and Amendment and Waiver No. 6 to the Loan Documents dated
as of January 16, 2001, the "Credit Agreement") among Desa International, Inc.,
a Delaware corporation (the "Borrower"), Desa Holdings Corporation, a Delaware
corporation (the "Parent Guarantor"), the Lender Parties party thereto, UBS
Securities LLC, as a Co-Arranger and Documentation Agent thereunder, Banc of
America Securities LLC (formerly NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC), as a
Co-Arranger and Syndication Agent thereunder, and Bank of America, N.A.
(formerly NationsBank, N.A.), as Administrative Agent (the "Administrative
Agent") for the Lender Parties thereunder. Capitalized terms not otherwise
defined herein shall have the same meanings as specified therefor in the Credit
Agreement.
PRELIMINARY STATEMENTS
(1) The Borrower has requested that the Lender Parties agree to amend
the Credit Agreement in order to, among other things:
(a) permit the Borrower to extend the maturity under the
Childs Guaranteed Line of Credit to November 26, 2003 and under certain
circumstances to permit prepayment of the principal amount thereunder;
(b) amend the financial covenants in subsections (a), (b) and
(c) of Section 5.04 of the Credit Agreement for certain Measurement
Periods from May 2001 through February 2002;
(c) modify the calculation of EBITDA for purposes of
determining compliance with the financial covenants set forth in
Section 5.04 of the Credit Agreement; and
(d) modify the calculation of Fixed Charge Coverage Ratio.
(2) The Borrower has requested that the Lender Parties agree to waive
the Default under Section 6.01(c) of the Credit Agreement that has occurred and
is continuing as a result of the failure by the Parent Guarantor to comply with
the financial covenants set forth in Section 5.04 of the Credit Agreement for
the Measurement Period ended March 3, 2001.
(3) The Lender Parties have indicated their willingness to agree, among
other things, to the amendments and waivers of the Credit Agreement described
above in Preliminary Statements (1) and (2) on the terms and subject to the
satisfaction of the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the parties hereto hereby agree as
follows:
SECTION 1. Amendments of Certain Provisions of the Credit Agreement.
The Credit Agreement is, upon the occurrence of the Amendment No. 7 Effective
Date (as hereinafter defined), hereby amended as follows:
(a) The definition of "Applicable Margin" set forth in Section
1.01 of the Credit Agreement is hereby amended by deleting the table
set forth therein and replacing it with the following table:
Alternate Base Eurodollar Rate
Eurodollar Rate Rate Advances Under Advances Under Term
Alternate Base Rate Advances Under Term B, Term C, B, Term C,
Advances Under Term Term A and Acquisition and Acquisition and
A and Working Working Capital Acquisition B Acquisition B
Performance Level Capital Facilities Facilities Facilities Facilities
------------------------------------------------------------------------------------------------------------
I 1.000% 2.000% 1.625% 2.625%
II 1.250% 2.250% 1.625% 2.625%
III 1.500% 2.500% 1.875% 2.875%
IV 2.000% 3.000% 2.250% 3.250%
V 2.500% 3.500% 2.750% 3.750%
VI 2.750% 3.750% 3.000% 4.000%
(b) The definition of "Childs Guaranteed Line of Credit" set
forth in Section 1.01 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
"Childs Guaranteed Line of Credit" means the
unsecured line of credit to the Borrower from Bank of America,
N.A. (and/or its successors and assigns) in an aggregate
principal amount of up to $15,000,000 which line of credit has
a maturity date of November 26, 2003 and all amounts
outstanding from time to time under which are unconditionally
and irrevocably guaranteed by UBS Capital LLC.
(c) The definition of "Consolidated EBITDA" set forth in
Section 1.01 of the Credit Agreement is hereby amended to restate
clause (b) thereof in its entirety to read as follows:
"(b) the sum of each of the following expenses that have been
deducted from the determination of the net income (or net
loss) of such Person and its Subsidiaries for such period: (i)
all interest expense of such Person and its Subsidiaries for
such period, (ii) all income tax expense (whether federal,
state, local, foreign or otherwise) of such Person and its
Subsidiaries for such period, (iii) all depreciation expense
of such Person and its Subsidiaries for such period, (iv) all
amortization expense of such Person and its Subsidiaries for
such period, (v) all extraordinary losses deducted in
determining the net income (or net loss) of such Person and
its Subsidiaries for such period, (vi) all unusual,
non-recurring costs in connection with (A) the Shelbyville
relocation, (B) warehouse relocations, (C) executive
terminations, (D) severance costs, (E) China joint venture
write-offs, (F) barter agreement write-offs, (G) legal expense
write-offs, and (H) amendment fees and other expenses related
to Amendment and Waiver No. 6 to the Loan Documents,
provided, however that the aggregate amount to be included in
the calculation of Consolidated EBITDA pursuant to this clause
(vi) shall not exceed (w) $2,500,000 for the twelve-month
Measurement Period ending May 2001, (x) $2,300,000 for the
twelve-month Measurement Period ending August 2001, (y)
$2,000,000 for the twelve-month Measurement Period ending
November 2001 and (z) $1,000,000 for the twelve-month
Measurement Period ending February 2002, and (vii) amendment
fees and other expenses related to this Amendment, less all
extraordinary gains added in determining the net income (or
net loss) of such Person and its Subsidiaries for such period
plus".
(d) The definition of "Eligible Inventory" set forth in
Section 1.01 of the Credit Agreement is hereby amended and restated in
its entirety to read as follows:
"Eligible Inventory" means the gross dollar value (valued at
the lower of cost or market value, on a first-in-first-out
basis) of (x) the inventory of the Borrower which conforms to
the representations and warranties contained in the Security
Agreement, less (i) any supplies (other than raw materials) or
promotional, marketing or shipping materials, (ii) goods
returned by customers (other than goods that have been
reconditioned and goods returned in the ordinary course of
business representing unsold inventory which remains
marketable at cost or greater), (iii) goods rejected by
customers (other than goods that have been reconditioned),
(iv) goods to be returned to suppliers, (v) goods and other
inventory that are obsolete, unusable or otherwise unavailable
for sale, (vi) reconditioned goods to the extent that the
aggregate gross dollar value thereof is in excess of
$2,500,000, and (vii) at any time on or after February 28,
2002, the aggregate gross dollar value of inventory consisting
of generators in excess of the aggregate amount of cost of
sales by the Borrower and its Subsidiaries of generators
during the 15 calendar months immediately preceding the date
of determination, and less any reserves required in accordance
with GAAP for special order goods, market value declines and
bill and hold (deferred shipment) sales, (y) any inventory to
be purchased by the Borrower to the extent such inventory is
supported by a Letter of Credit and (z) any inventory of DESA
Europe, DESA Canada, Heath Ltd. or Desico stored outside the
United States, to the extent the same meets the requirements
of clause (x) above (with necessary reference changes and
except that same may be owned by DESA Europe, DESA Canada,
Heath Ltd. or Desico, and are not subject to the liens created
under the Security Agreement), in an aggregate amount not to
exceed $15,000,000; provided that, notwithstanding the
foregoing provisions of this definition, the Administrative
Agent may, in its reasonable discretion following an audit
field examination conducted (solely at the expense of the
Borrower) by a qualified independent auditor and based upon
its analysis of factors and circumstances arising after the
date of this Agreement that may affect all or any portion of
the goods and other inventory of the Borrower and its
Subsidiaries or the value thereof, and upon at least five
Business Days' notice to the Borrower of its intention to do
so, exclude one or more other types of goods or other
inventory from Eligible Inventory for all purposes of this
Agreement.
(e) The definition of "Eligible Receivable" set forth in
Section 1.01 of the Credit Agreement is hereby amended and restated in
its entirety to read as follows:
"Eligible Receivable" means (x) the gross amount of the
accounts receivable of the Borrower, DESA Canada and Desico
which conform to the representations and warranties contained
herein and in the Security Agreement (with necessary reference
changes in the case of DESA Canada and Desico and except that
the accounts receivable of DESA Canada and Desico are owned
by, and owed to, DESA Canada and Desico, respectively, and are
not subject to the liens created pursuant to the Security
Agreement), less any
returns, discounts, claims, credits and allowances of any
nature (whether issued, owing, granted or outstanding) and
less reserves for any other matter affecting the
creditworthiness of account debtors owing any of the accounts
receivable (including, without limitation, accounts receivable
owing from any Person that shall take or be the subject of any
action or proceeding of the type described in Section 6.01(f))
and excluding (i) governmental sales (except to the extent
supported by a letter of credit issued by an issuer
satisfactory to the Administrative Agent), (ii) bill and hold
(or deferred shipment) transactions, guaranteed sales,
sales-or-return, sales on approval or on a consignment basis
or sales subject to any right of return, setoff or chargeback,
(iii) contracts or sales to any Affiliate of the Borrower or
to the Parent Guarantor or any of its Subsidiaries, (iv) all
accounts receivable which have not been paid in full within 60
days of the due date thereof, (v) all accounts receivable
owing by Nanjing, a corporation organized under the laws of
China, or any of its Affiliates, and (vi) all accounts
receivable owing by Quality Stores, Inc., a Delaware
corporation, or any of its Affiliates that are either (A) not
required to be paid in full within 60 days of the original
billing date therefor, or (B) more than 30 days past the date
payment is due thereon, and (y) the gross amount of those
accounts receivable of DESA Europe or Heath Ltd. where the
payment of at least 75% of the amount of the respective
accounts receivable is assured pursuant to credit insurance
issued by an insurer acceptable to the Administrative Agent,
which insurance is in full force and effect; provided that,
notwithstanding the foregoing provisions of this definition,
the Administrative Agent may, in its reasonable discretion
following an audit field examination conducted (and solely at
the expense of the Borrower) by a qualified independent
auditor and based upon its analysis of factors and
circumstances arising after the date of this Agreement that
may affect all or any portion of the accounts receivable of
the Borrower and its Subsidiaries or the value thereof, and
upon at least five Business Days' notice to the Borrower of
its intention to do so, exclude one or more other types of
accounts receivable from Eligible Receivables for all purposes
of this Agreement.
(f) The definition of "Fixed Charge Coverage Ratio" set forth
in Section 1.01 of the Credit Agreement is hereby amended to restate
clause (a) thereof in its entirety to read as follows:
"(a) (i) Consolidated EBITDA of the Parent Guarantor and its
Subsidiaries for such period plus (ii) for the Measurement
Periods ending May 2001, August 2001, November 2001 and
February 2002, the $7,500,000 of Net Cash Proceeds received by
the Parent Guarantor from its shareholders and received by the
Borrower from the Parent Guarantor from the issuance of equity
interests by the Parent Guarantor to the Borrower in
connection with Amendment and Waiver No. 7 to the Loan
Documents plus (iii) for the Measurement Periods ending May
2001, August 2001 and November 2001, $15,000,000, and for the
Measurement Period ending February 2002, $1,550,000, less (iv)
the aggregate amount of all Capital Expenditures made by the
Parent Guarantor and its Subsidiaries during such period."
(g) The definition of "Loan Value" set forth in Section 1.01
of the Credit Agreement is hereby amended and restated in its entirety
to read as follows:
"Loan Value" means, as at any date on which the
amount thereof is being determined, an amount equal to the sum
of (a)(i) if Consolidated EBITDA for the twelve-month
Measurement Period ending on or prior to such date is equal to
or greater than $55,000,000, 85% of Eligible Receivables, and
(ii) if Consolidated EBITDA for the twelve-month Measurement
Period ending on or prior to such date is less than
$55,000,000, 80% of Eligible Receivables, plus (b) 65% of
Eligible Inventory, each as
determined from the Borrowing Base Certificate most recently
delivered pursuant to Section 5.03(r), less (c) if at any time
on or after November 30, 2001 the lessor of any of the
Borrower's distribution facility located in Bowling Green,
Kentucky or the Borrower's two warehouse facilities located in
Manchester, Tennessee has not entered into an agreement
providing the Administrative Agent with the right to receive
notices of default and the right to take possession of those
goods or other inventory located at such facility, an amount
equal to the rental payments required to be made during the
three months immediately following the date of determination
with respect to any such facility; provided that during the
period from January 1 to May 31 in each year, the Loan Value
of all Eligible Collateral shall be deemed to be an amount
equal to the greater of (i) $30,000,000 and (ii) the sum of
(A)(I) if Consolidated EBITDA for the twelve-month Measurement
Period ending on or prior to the date of determination is
equal to or greater than $55,000,000, 85% of Eligible
Receivables, and (II) if Consolidated EBITDA for the
twelve-month Measurement Period ending on or prior to the date
of determination is less than $55,000,000, 80% of Eligible
Receivables, plus (B) 65% of Eligible Inventory, each as
determined from the Borrowing Base Certificate most recently
delivered pursuant to Section 5.03(r), less (C) if at any time
on or after November 30, 2001 the lessor of any of the
Borrower's distribution facility located in Bowling Green,
Kentucky or the Borrower's two warehouse facilities located in
Manchester, Tennessee has not entered into an agreement
providing the Administrative Agent with the right to receive
notices of default and the right to take possession of those
goods or other inventory located at such facility, an amount
equal to the rental payments required to be made during the
three months immediately following the date of determination
with respect to any such facility.
(h) Section 1.01 of the Credit Agreement is hereby amended to
add the following new definition in its appropriate alphabetic order:
"Desico" means Desico, S.A. de C.V., a corporation
organized and existing under the laws of Mexico and a wholly
owned Subsidiary of the Borrower."
(i) Section 5.02(j) of the Credit Agreement is hereby amended
to restate clause (i)(D) thereof in its entirety to read as follows:
"(D) the prepayment of the "Loans" outstanding under the
Childs Guaranteed Line of Credit by the Borrower in the
following amounts: (x) if Consolidated EBITDA of the Borrower
for any twelve-month Measurement Period ending on or after May
31, 2002 is at least $65,000,000, $5,000,000 in the aggregate
since the effective date of Amendment and Waiver No. 7 to the
Loan Documents, (y) if Consolidated EBITDA of the Borrower for
any twelve-month Measurement Period ending on or after August
31, 2002 is at least $70,000,000, $10,000,000 in the aggregate
since the effective date of Amendment and Waiver No. 7 to the
Loan Documents and (z) if Consolidated EBITDA of the Borrower
for any twelve-month Measurement Period ending on or after
February 28, 2003 is at least $75,000,000, $15,000,000 in the
aggregate since the effective date of Amendment and Waiver No.
7 to the Loan Documents; provided that at the time of any such
prepayment no Default shall have occurred and be continuing or
shall occur as a result thereof".
(j) Section 5.04 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
"SECTION 5.04. Financial Covenants. So long as any
Advance shall remain unpaid, any Letter of Credit shall be
outstanding or any Lender Party shall have any Commitment
hereunder, the Parent Guarantor will:
(a) Total Leverage Ratio. Maintain a Total
Leverage Ratio as of the last day of each Measurement
Period of not more than the amount set forth below
for each Measurement Period set forth below:
Measurement Period
Ending In Ratio
------------------- -------------
May 2001 7.45:1
August 2001 7.40:1
November 2001 6.40:1
February 2002 5.50:1
May 2002 5.50:1
August 2002 5.25:1
November 2002 5.00:1
February 2003 4.75:1
May 2003 4.50:1
August 2003 4.50:1
November 2003 and
thereafter 4.25:1
(b) Fixed Charge Coverage Ratio. Maintain a
Fixed Charge Coverage Ratio as of the last day of
each Measurement Period of not less 1.00:1, other
than the last day of the Measurement Period ending in
August 2001, in which case maintain a Fixed Charge
Coverage Ratio as of such last day of not less than
0.98:1.
(c) Interest Coverage Ratio. Maintain an
Interest Coverage Ratio as of the last day of each
Measurement Period of not less than the amount set
forth below for each Measurement Period set forth
below:
Measurement Period
Ending In Ratio
------------------- -------------
May 2001 1.30:1
August 2001 1.30:1
November 2001 1.55:1
February 2002 1.85:1
May 2002 2.00:1
August 2002 2.00:1
November 2002 2.00:1
February 2003 2.00:1
May 2003 2.25:1
August 2003 2.25:1
November 2003 2.25:1
February 2004 2.25:1
May 2004 2.25:1
August 2004 2.25:1
November 2004 and
thereafter 2.50:1"
(k) Section 6.01 of the Credit Agreement is hereby amended (i)
to add at the end of clause (o) thereof the word "or" and (ii) to add a
new subsection (p) thereof to read as follows:
"(p) on or prior to May 31, 2001, the Parent Guarantor shall
not have received from its shareholders, and the Borrower
shall not have received from the Parent Guarantor, in each
case, in connection with Amendment and Waiver No. 7 to the
Loan Documents, at least $7,500,000 in Net Cash Proceeds from
the issuance of equity interests by the Parent Guarantor to
its shareholders;".
(l) Exhibit H to the Credit Agreement is hereby deleted in its
entirety and replaced with the new Exhibit H thereto attached hereto as
Annex A.
SECTION 2. Waiver of Certain Provisions of the Credit Agreement. The
Default under Section 6.01(c) of the Credit Agreement that has occurred and is
continuing as a result of the failure of the Parent Guarantor to maintain the
required Total Leverage Ratio, Fixed Charge Ratio and Interest Coverage Ratio
for the Measurement Period ended March 3, 2001 in accordance with Sections
5.04(a), (b) and (c) of the Credit Agreement is, on and as of the Amendment No.
7 Effective Date, hereby waived by the Lender Parties.
SECTION 3. Conditions of Effectiveness of this Amendment. Sections 1
and 2 of this Amendment shall become effective as of the first date (the
"Amendment No. 7 Effective Date") on which each of the following conditions
precedent shall have been satisfied:
(a) The Administrative Agent shall have received (i)
counterparts of this Amendment executed by the Borrower, the Parent
Guarantor and the Required Lenders or, as to any of the Lender Parties,
advice satisfactory to the Administrative Agent that such Lender Party
has executed this Amendment, (ii) the Consent attached hereto executed
by each of the Loan Parties, (iii) the Consent of UBS Capital LLC
attached hereto executed by UBS Capital LLC and (iv) an executed copy
of Amendment No. 3 to the Credit Agreement dated as of May 23, 2001,
between the Borrower and Bank of America, N.A. (formerly NationsBank,
N.A.).
(b) All of the consents, approvals and authorizations of, and
notices and filings to or with, and other actions by, any governmental
or regulatory authority or any other Person necessary in connection
with this Amendment or any of the other transactions contemplated
hereby shall have been obtained (without the imposition of any
conditions that are not reasonably acceptable to the Required Lenders)
and shall remain in full force and effect; and no law, rule or
regulation shall be applicable in the reasonable judgment of the
Required Lenders that restrains, prevents or imposes materially adverse
conditions upon this Amendment or any of the other transactions
contemplated hereby.
(c) The representations and warranties contained in each of
the Loan Documents shall be correct in all material respects on and as
of the Amendment No. 7 Effective Date, as though made on and as of such
date (other than any such representations or warranties that, by their
terms,
refer to a specific date other than the Amendment No. 7 Effective Date,
in which case as of such specific date).
(d) No event shall have occurred and be continuing that
constitutes a Default, other than the Defaults waived pursuant to
Section 2 of this Amendment.
(e) All of the accrued fees and expenses of the Administrative
Agent and the Lender Parties (including the accrued fees and expenses
of counsel for the Administrative Agent) shall have been paid in full.
(f) The Borrower shall have paid to the Administrative Agent,
for the ratable account of each of the Appropriate Lenders that has
executed and delivered a counterpart of this Amendment to the
Administrative Agent prior to 5:00 P.M. (New York City time) on May 23,
2001, an amendment fee of 0.175% on the aggregate Term A Commitments,
Term B Commitments, Term C Commitments, Acquisition Commitments,
Acquisition B Commitments and Working Capital Commitments of such
Lender, it being understood, that no amendment fee shall be payable by
the Borrower for the account of any Lender if this Amendment has not
been approved prior to 5:00 P.M. (New York City time) on May 23, 2001
by the Required Lenders.
(g) The Administrative Agent shall have received on or before
the Amendment No. 7 Effective Date the following, each dated such date
(unless otherwise specified), in form and substance satisfactory to the
Required Lenders (unless otherwise specified) and in sufficient copies
for each Lender Party:
(i) Certified copies of the resolutions of the Board
of Directors of the Borrower and the Parent Guarantor
approving this Amendment and all of the other amendments,
supplements and other modifications to the Loan Documents
being effected in connection with this Amendment, and of all
documents evidencing other necessary corporate action and
governmental and other third party approvals and consents, if
any, with respect to this Amendment and all of the other
amendments, supplements and other modifications to the Loan
Documents being effected in connection with this Amendment.
(ii) A certificate of the Borrower and the Parent
Guarantor, signed on behalf of the Borrower and the Parent
Guarantor, respectively, by its President or a Vice President
and its Secretary or any Assistant Secretary, dated the
Amendment No. 7 Effective Date (the statements made in which
certificate shall be true on and as of the Amendment No. 7
Effective Date), certifying as to (A) the absence of any
amendments to the charter of such Person since the date of the
Secretary of State's certificate referred to in Section
3.01(j)(iv) of the Credit Agreement, or any steps taken by the
board of directors (or persons performing similar functions)
or the shareholders of such Person to effect or authorize any
further amendment, supplement or other modification thereto;
(B) the accuracy and completeness of the bylaws of such Person
as in effect on the date on which the resolutions of the board
of directors (or persons performing similar functions) of such
Person referred to in clause (i) of this Section 2(g) were
adopted and on the Amendment No. 7 Effective Date (a copy of
which, if different from the bylaws of such Person delivered
to the Lender Parties on the date of the Initial Extension of
Credit, shall be attached to such certificate); (C) the due
incorporation and good standing of such Person as a
corporation organized under the laws of the jurisdiction of
its incorporation, and the absence of any proceeding (either
pending or contemplated) for the dissolution, liquidation or
other termination of the existence of such Person or any of
its Subsidiaries; (D) the accuracy in all material respects of
the representations and warranties made by such Person
in the Loan Documents to which it is or is to be a party as
though made on and as of the Amendment No. 7 Effective Date as
though made on and as of such date (other than any such
representations or warranties that, by their terms, refer to a
specific date other than the Amendment No. 7 Effective Date,
in which case as of such specific date); and (E) the absence
of any event occurring and continuing that would constitute a
Default.
(iii) A certificate of the Secretary or an Assistant
Secretary of the Borrower and the Parent Guarantor certifying
the names and true signatures of the officers of the Borrower
or the Parent Guarantor authorized to sign this Amendment and
all of the other amendments, supplements and other
modifications to the Loan Documents being effected in
connection with this Amendment and the other documents to be
delivered hereunder.
(iv) Such financial, business and other information
regarding the Borrower and the Parent Guarantor and their
respective property, assets and businesses as the
Administrative Agent or the Lender Parties shall have
requested.
(v) A favorable opinion of ▇▇▇▇▇▇▇▇ & Worcester,
counsel for the Parent Guarantor and the Borrower, in form and
substance reasonably satisfactory to the Required Lenders.
(vi) Such other opinions, certificates, documents and
information as the Administrative Agent or the Required
Lenders may reasonably request.
The effectiveness of this Amendment is further conditioned upon the accuracy of
all of the factual matters described herein. This Amendment is subject to the
provisions of Section 9.01 of the Credit Agreement, except that no amendment or
waiver of any provision of this Section 3, nor consent to any departure by the
Parent Guarantor or the Borrower therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Required Lenders.
SECTION 4. Reference to and Effect on the Loan Documents. (a) On and
after the Amendment No. 7 Effective Date, each reference in the Credit Agreement
to "this Agreement", "hereunder", "hereof" or words of like import referring to
the Credit Agreement, and each reference in the Notes and the other Loan
Documents to "the Credit Agreement", "thereunder", "thereof" or words of like
import referring to the Credit Agreement, shall mean and be a reference to the
Credit Agreement, as amended and otherwise modified hereby.
(b) The Credit Agreement, the Notes and each of the other Loan
Documents, except to the extent of the amendments and other modifications
specifically provided above, are and shall continue to be in full force and
effect and are hereby in all respects ratified and confirmed. Without limiting
the generality of the foregoing, the Collateral Documents and all of the
Collateral described therein do and shall continue to secure the payment of all
Obligations of the Loan Parties under and in respect of the Loan Documents, as
amended and otherwise modified by this Amendment.
(c) The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of any Lender Party or any Agent under any of the Loan
Documents, nor constitute a waiver of any provision of any of the Loan
Documents.
SECTION 5. Costs and Expenses. The Borrower hereby agrees to pay, upon
demand, all costs and expenses of the Administrative Agent (including, without
limitation, the reasonable fees and expenses of counsel for the Administrative
Agent) in connection with the preparation, execution, delivery,
administration, syndication, modification and amendment of this Amendment and
the other documents, instruments and agreements to be delivered hereunder, all
in accordance with the terms of Section 9.04 of the Credit Agreement.
SECTION 6. Execution in Counterparts. This Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Amendment by
telecopier shall be effective as delivery of a manually executed counterpart of
this Amendment.
SECTION 7. Governing Law. This Amendment shall be governed by, and
construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
The Borrower
DESA INTERNATIONAL, INC.
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Treasurer
The Parent Guarantor
DESA HOLDINGS CORPORATION
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Treasurer
The Agents
BANK OF AMERICA, N.A., in each of its
capacities as a Lender Party and as
Administrative Agent
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
The Lenders
BANK OF AMERICA, N.A.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
UBS AG, STAMFORD BRANCH
By
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Name:
Title:
By
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Name:
Title:
▇▇▇▇▇▇ FINANCIAL, INC.
By /s/ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Name: ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Senior Vice President
IMPERIAL BANK, CALIFORNIA
BANKING CORPORATION
By /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Assistant and Vice President
DRESDNER BANK AG, NEW YORK
AND GRAND CAYMAN BRANCHES
By
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Name:
Title:
By
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Name:
Title:
FIRST SOURCE FINANCIAL LLP, by
FIRST SOURCE FINANCIAL, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
FLEET NATIONAL BANK
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Assistant Vice President
GENERAL ELECTRIC CAPITAL
CORPORATION
By /s/
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Name:
Title: Duly Authorized Signatory
NATIONAL CITY BANK
By /s/
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Name:
Title: Vice President
COMERICA BANK
By /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Assistant Vice President
▇▇▇ ▇▇▇▇▇▇ AMERICAN CAPITAL
PRIME RATE INCOME TRUST
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Principal
SENIOR DEBT PORTFOLIO, by
BOSTON MANAGEMENT AND
RESEARCH, as Investment Advisor
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ PRIME
INCOME TRUST
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
PILGRIM PRIME RATE TRUST
By
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Name:
Title:
BOEING CAPITAL CORPORATION
By /s/ ▇ ▇ ▇▇▇▇▇
Name: ▇ ▇ ▇▇▇▇▇
Title: Managing Director -
Commercial Finance
ML CBO IV CAYMAN LTD.
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Senior Portfolio Manager
▇▇▇ CAPITAL FUNDING LP
By: Highland Capital Management, L.P.,
as Collateral Manager
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Senior Portfolio Manager
BANK POLSKA KASA OPIEKI S.A.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
PARIBAS CAPITAL FUNDING LLC
By
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Name:
Title:
CONSENT
Reference is made to (a) Amendment and Waiver No. 7 to the Loan
Documents dated as of May 23, 2001 (the "Amendment"; capitalized terms not
otherwise defined herein being used herein as defined in the Amendment and in
the Credit Agreement referred to therein), (b) the Credit Agreement dated as of
November 26, 1997 (as amended and otherwise modified by Amendment and Waiver No.
1 dated as of January 23, 1998, Letter Waiver No. 2 dated as of April 9, 1998,
Amendment No. 3 to the Loan Documents dated as of May 26, 1998, Amendment and
Waiver No. 4 to the Loan Documents dated as of May 25, 1999, Amendment No. 5 to
the Loan Documents dated as of April 7, 2000 and Amendment and Waiver No. 6 to
the Loan Documents dated as of January 16, 2001, the "Credit Agreement") among
Desa International, Inc., a Delaware corporation, Desa Holdings Corporation, a
Delaware corporation, the Lender Parties party thereto, UBS Securities LLC, as a
Co-Arranger and Documentation Agent thereunder, Banc of America Securities LLC
(formerly NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC), as a Co-Arranger and
Syndication Agent thereunder, and Bank of America, N.A. (formerly NationsBank,
N.A.), as Administrative Agent (the "Administrative Agent") for the Lender
Parties thereunder, and (c) the other Loan Documents referred to therein.
Each of the undersigned, in its capacity as (a) a Grantor under the
Security Agreement, (b) a Grantor under the Intellectual Property Security
Agreement, and/or (c) a Subsidiary Guarantor under the Subsidiary Guaranty
executed and delivered by such Subsidiary Guarantor, hereby consents to the
execution, delivery and performance of the Amendment and agrees that:
(A) each of the Security Agreement, the Intellectual Property
Security Agreement and the Subsidiary Guaranty to which it is a party
is, and shall continue to be, in full force and effect and is hereby in
all respects ratified and confirmed on the Amendment No. 7 Effective
Date, except that, on and after the Amendment No. 7 Effective Date,
each reference to "the Credit Agreement", "thereunder", "thereof",
"therein" or words of like import referring to the Credit Agreement
shall mean and be a reference to the Credit Agreement, as amended and
otherwise modified by the Amendment; and
(B) as of the Amendment No. 7 Effective Date, the Security
Agreement and the Intellectual Property Security Agreement to which it
is a party and all of the Collateral of such Person described therein
do, and shall continue to, secure the payment of all of the Secured
Obligations.
This Consent shall be governed by, and construed in accordance with,
the laws of the State of New York.
Delivery of an executed counterpart of a signature page of this Consent
by telecopier shall be effective as the delivery of a manually executed
counterpart of this Consent.
DESA INTERNATIONAL, INC.
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Treasurer
DESA HOLDINGS CORPORATION
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Treasurer
CONSENT OF UBS CAPITAL LLC
Reference is made to (a) the Amendment and Waiver No. 7 to the Credit
Agreement dated as of May 23, 2001 (the "Amendment"; capitalized terms not
otherwise defined herein being used herein as defined in the Waiver and in the
Credit Agreement referred to therein), (b) the Credit Agreement dated as of
November 26, 1997 (as amended and otherwise modified by Amendment and Waiver No.
1 dated as of January 23, 1998, Letter Waiver No. 2 dated as of April 9, 1998,
Amendment No. 3 to the Loan Documents dated as of May 26, 1998, Amendment and
Waiver No. 4 to the Loan Documents dated as of May 25, 1999, Amendment No. 5 to
the Loan Documents dated as of April 7, 2000 and Amendment and Waiver No. 6 to
the Loan Documents dated as of January 16, 2001, the "Credit Agreement") among
Desa International, Inc., a Delaware corporation (the "Borrower"), Desa Holdings
Corporation, a Delaware corporation, the Lender Parties party thereto, UBS
Securities LLC, as a Co-Arranger and Documentation Agent thereunder, Banc of
America Securities LLC (formerly NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC), as a
Co-Arranger and Syndication Agent thereunder, and Bank of America, N.A.
(formerly NationsBank, N.A.), as Administrative Agent (the "Administrative
Agent") for the Lender Parties thereunder, (c) the other Loan Documents referred
to therein, (d) the Credit Agreement dated as of May 26, 1999 between the
Borrower and Bank of America, N.A., (e) all promissory notes issued to Bank of
America, N.A. and evidencing indebtedness of the Borrower under the Childs
Guaranteed Line of Credit and (f) the guaranty dated July 28, 2000 from UBS
Capital LLC ("UBS") in favor of Bank of America, N.A. (the "UBS Guaranty").
The undersigned, in its capacity as a guarantor of the Obligations of
the Borrower now or hereafter existing under and in respect of the Childs
Guaranteed Line of Credit and pursuant to the UBS Guaranty executed and
delivered by UBS, hereby consents to the execution, delivery and performance of
the Amendment and agrees that the UBS Guaranty to which it is a party is, and
shall continue to be, in full force and effect and is hereby in all respects
ratified and confirmed on the Amendment No. 7 Effective Date, except that, on
and after the Amendment No. 7 Effective Date, each reference to "the Credit
Agreement", "thereunder", "thereof", "therein" or words of like import referring
to the Credit Agreement shall mean and be a reference to the Credit Agreement,
as amended and otherwise modified by the Amendment.
This Consent shall be governed by, and construed in accordance with,
the laws of the State of New York.
Delivery of an executed counterpart of a signature page of this Consent
by telecopier shall be effective as the delivery of a manually executed
counterpart of this Consent.
UBS CAPITAL LLC
By /s/
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Name:
Title: