Amendment and Waiver No. 6 to Credit Agreement among Desa International, Desa Holdings, and Lender Parties
Summary
This agreement, dated January 16, 2001, is an amendment and waiver to a prior credit agreement between Desa International, Inc., Desa Holdings Corporation, and various lender parties, including Bank of America and UBS Securities. The amendment extends the maturity date of a specific line of credit, adjusts a financial covenant, and waives a previous default related to an interest coverage ratio. The changes become effective once certain conditions are met, such as approvals, payment of fees, and delivery of required documents.
EX-10.1 2 0002.txt EXHIBIT 10.1 AMENDMENT AND WAIVER NO. 6 TO THE LOAN DOCUMENTS As of January 16, 2001 AMENDMENT AND WAIVER NO. 6 TO THE LOAN DOCUMENTS dated as of January 16, 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 and Amendment No. 5 to the Loan Documents dated as of April 7, 2000, 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 Montgomery 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: (a) permit the Borrower to extend the maturity under the Childs Guaranteed Line of Credit to May 31, 2002; and (b) amend the minimum Interest Coverage Ratio requirement for the Measurement Period ending February 28, 2001. (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 minimum Interest Coverage Ratio requirements set forth in Section 5.04(c) of the Credit Agreement. (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. 6 Effective Date (as hereinafter defined), hereby amended as follows: (a) 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 May 31, 2002 and all amounts outstanding from time to time under which are unconditionally and irrevocably guaranteed by UBS Capital LLC. (b) Section 5.04(c) of the Credit Agreement is hereby amended to change the Interest Coverage Ratio set forth opposite the date February 2001 to 1.55:1. 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 an Interest Coverage Ratio for the Measurement Period ended November 30, 2000 of 1.55:1 in accordance with Section 5.04(c) of the Credit Agreement is, on and as of the Amendment No. 6 Effective Date, hereby waived by the Lender Parties. SECTION 3. Conditions of Effectiveness of this Amendment. Section 1 of this Amendment shall become effective as of the first date (the "Amendment No. 6 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 and (ii) the Consent attached hereto executed by each of the Loan Parties. (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. 6 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. 6 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 12:00 Noon (New York City time) on January 16, 2001, an amendment fee of 0.05% on the aggregate Term A Commitments, Term B Commitments, Term C Commitments, Acquisition Commitments and Working Capital Commitments of such Lender, it being understood, that no amendment fee shall be payable by the 2 Borrower for the account of any Lender if this Amendment has not been approved prior to 12:00 Noon (New York City time) on January 16, 2001 by the Required Lenders. (g) The Administrative Agent shall have received on or before the Amendment No. 6 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. 6 Effective Date (the statements made in which certificate shall be true on and as of the Amendment No. 6 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. 6 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. 6 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. 6 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. 3 (v) A favorable opinion of Sullivan & 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. 6 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. 4 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/ Rick Simpson Name: Rick Simpson Title: Vice President The Parent Guarantor DESA HOLDINGS CORPORATION By /s/ Rick Simpson Name: Rick Simpson Title: Vice President The Agents BANK OF AMERICA, N.A., in each of its capacities as a Lender Party and as Administrative Agent By /s/ David H. Strickert Name: David H. Strickert Title: Principal The Lenders BANK OF AMERICA, N.A. By /s/ David H. Strickert Name: David H. Strickert Title: Principal UBS AG, STAMFORD BRANCH By /s/ Wilfred V. Saint Name: Wilfred V. Saint Title: Associate Director - Banking Products Services, US By /s/ Lynne B. Alfarone Name: Lynne B. Alfarone Title: Associate Director - Banking Products Services, US HELLER FINANCIAL, INC. By /s/ K. Craig Gallehugh Name: K. Craig Gallehugh Title: Senior Vice President IMPERIAL BANK, CALIFORNIA BANKING CORPORATION By /s/ Ray Vadalma Name: Ray Vadalma Title: Senior Managing Director DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES By /s/ James Jerz Name: James Jerz Title: Vice President By /s/ Mark L. Staub Name: Mark L. Staub Title: A.T. FIRST SOURCE FINANCIAL LLP, by FIRST SOURCE FINANCIAL, INC. By /s/ Kathi J. Inorio Name: Kathi J. Inorio Title: Senior Vice President FLEET NATIONAL BANK By /s/ Claire E. Keady Name: Claire E. Keady Title: Assistant Vice President GENERAL ELECTRIC CAPITAL CORPORATION By ----------------------------------------- Name: Title: NATIONAL CITY BANK By ----------------------------------------- Name: Title: COMERICA BANK By /s/ Kathleen M. Kasperek Name: Kathleen M. Kasperek Title: Assistant Vice President VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST By /s/ Darvin D. Pierce Name: Darvin D. Pierce Title: Principal SENIOR DEBT PORTFOLIO, by BOSTON MANAGEMENT AND RESEARCH, as Investment Advisor By ----------------------------------------- Name: Title: MORGAN STANLEY DEAN WITTER PRIME INCOME TRUST By /s/ Peter Gewirtz Name: Peter Gewirtz Title: Vice President PILGRIM PRIME RATE TRUST By /s/ Jason Groom Name: Jason Groom Title: Vice President BOEING CAPITAL CORPORATION By /s/ JD Combs Name: JD Combs Title: Managing Director - Commercial Finance Group ML CBO IV CAYMAN LTD. By /s/ Todd Travers Name: Todd Travers Title: Senior Portfolio Manager BANK POLSKA KASA OPIEKI S.A. By /s/ Barry W. Henry Name: Barry W. Henry Title: Vice President PARIBAS CAPITAL FUNDING LLC By ----------------------------------------- Name: Title: CONSENT Reference is made to (a) Amendment and Waiver No. 6 to the Loan Documents dated as of January 16, 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 and Amendment No. 5 to the Loan Documents dated as of April 7, 2000, 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 Montgomery 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. 6 Effective Date, except that, on and after the Amendment No. 6 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. 6 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 ------------------------------------- Name: Title: DESA HOLDINGS CORPORATION By ------------------------------------- Name: Title: [The schedules and exhibits to this agreement have been omitted and will be supplementally filed with the Securities and Exchange Commission upon request.]
