EXHIBIT 10.1
AMENDMENT NO. 5 TO THE LOAN DOCUMENTS
As of April 7, 2000
AMENDMENT NO. 5 TO THE LOAN DOCUMENTS dated as of April 7, 2000 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 and Amendment and Waiver No. 4 to the Loan Documents
dated as of May 25, 1999, 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 and the other Loan Documents in order to:
(a) finance the acquisition (the "Trine Asset Acquisition") of
certain assets of Trine Product Company, a division of Fred M.
Schildwachter & Sons, Inc., a New York corporation ("FMS"), by the
Borrower pursuant to the Asset Purchase Agreement dated as of April 3,
2000 (the "Trine Asset Purchase Agreement") between the Borrower and
FMS for a cash purchase price not to exceed $11,000,000 (as such amount
may be increased or decreased pursuant to Article 3 of the Trine Asset
Purchase Agreement); and
(b) permit the Parent Guarantor to make an equity contribution
to the Borrower of no less than $5,000,000 (the "Parent Guarantor
Equity Contribution").
The Trine Asset Acquisition and the Parent Guarantor Equity Contribution are
hereinafter collectively referred to as the "Transactions".
(2) The Lender Parties have indicated their willingness to agree, among
other things, to amend the Credit Agreement and the other Loan Documents in
order to permit the Transactions.
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. 5 Effective
Date (as hereinafter defined), hereby amended as follows:
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(a) The definition of "Advance" set forth in Section 1.01 of
the Credit Agreement is hereby amended to add after the phrase "a Term
B Advance," in the first and second lines thereof the phrase "a Term C
Advance,".
(b) The definition of "Applicable Margin" set forth in Section
1.01 of the Credit Agreement is hereby amended (i) to add after the
words "the Term B Facility," in the eighth line thereof the phrase "the
Term C Facility," and (ii) to delete the headings in the last two
columns of the chart set forth therein and to substitute therefor the
phrases "Alternate Base Rate Advances Under Term B, Term C, Acquisition
and Acquisition B Facilities" and "Eurodollar Rate Advances Under Term
B, Term C, Acquisition and Acquisition B Facilities", respectively.
(c) The definition of "Appropriate Lender" set forth in
Section 1.01 of the Credit Agreement is hereby amended to add after the
phrase "the Term B Facility," in the second line thereof the phrase
"the Term C Facility,".
(d) The definition of "Borrowing" set forth in Section 1.01 of
the Credit Agreement is hereby amended to add after the phrase "a Term
B Borrowing," in the first and second lines thereof the phrase "a Term
C Borrowing,".
(e) The definition of "Commitment" set forth in Section 1.01
of the Credit Agreement is hereby amended to add after the phrase "a
Term B Commitment," in the first and second lines thereof the phrase "a
Term C Commitment,".
(f) The definition of "Facility" set forth in Section 1.01 of
the Credit Agreement is hereby amended to add after the phrase "the
Term B Facility," in the first and second lines thereof the phrase "the
Term C Facility,".
(g) The definition of "Note" set forth in Section 1.01 of the
Credit Agreement is hereby amended to add after the phrase "a Term B
Note" in the first line thereof, the phrase ", a Term C Note".
(h) The definition of "Required Lenders" set forth in Section
1.01 of the Credit Agreement is hereby amended (i) to delete clause (c)
thereof in its entirety and to substitute therefor the following new
clause (c):
"(c) the aggregate unused Commitments under the Term
A Facility, the Term B Facility, the Term C Facility and the
Acquisition B Facility at such time",
and (ii) to delete subclause (C) thereof in its entirety and to
substitute therefor the following new subclause (C):
"(C) the aggregate unused Term A Commitment, Term B
Commitment, Term C Commitment and Acquisition B Commitment of
such Lender at such time".
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(i) The following definitions set forth in Section 1.01 of the
Credit Agreement are hereby amended and restated in their entirety to
read as follows:
"Lenders" means the Initial Lenders, the Initial
Acquisition B Lenders, the Initial Term C Lenders and each
Person that shall become a Lender hereunder pursuant to
Section 9.07.
"Term Advances" means, collectively, the Term A
Advances, the Term B Advances and the Term C Advances.
"Term Facilities" means, collectively, the Term A
Facility, the Term B Facility and the Term C Facility.
"Transaction Documents" means, collectively, the FMI
Merger Agreement, the FMI Noncompetition Agreements, the FMI
Voting Agreement, the Desa U.S. Asset Purchase Agreement, the
Desa U.S. Merger Agreement, the Noncompetition Agreement, the
Guaranty Agreement, the License Agreement, the Forbearance
Agreement, the Consulting Agreement, the Supply Agreement, the
Joint Venture Agreement, the Trine Asset Purchase Agreement,
the Trine Indemnity Escrow Agreement, the Trine Noncompetition
and Confidentiality Agreement, and each of the other
agreements, instruments or other documents setting forth the
terms of or entered into in connection with any aspect of the
Transactions (other than the Recapitalization).
"Transactions" means, collectively:
(a) at any time and from time to time on or
prior to the Amendment No. 3 Effective Date, (i) the
Recapitalization, (ii) the consummation of the Heath
Mergers, (iii) the entering into by the Borrower and
the Parent Guarantor of Amendment No. 3 and all of
the documents, instruments and other agreements
(including, without limitation, amendments and
supplements to the Collateral Documents required
under, or delivered in connection with, Section
3(j)(vi) of Amendment No. 3), (iv) the entering into
by the Borrower and the Parent Guarantor of the
Related Documents to which they are or are intended
to be a party and (v) the payment of the fees and
expenses incurred in connection with the consummation
of the foregoing;
(b) at any time and from time to time after
the Amendment No. 3 Effective Date and on or prior to
the Amendment No. 5 Effective Date, (i) the
Recapitalization, (ii) the consummation of the Heath
Mergers, the Desa U.S. Merger, the FMI Merger and the
Parent Guarantor Equity Issuances, (iii) the entering
into by the Borrower and the Parent Guarantor of
Amendment No. 3 and all of the documents, instruments
and other agreements (including, without limitation,
amendments and supplements to the Collateral
Documents required under, or delivered in connection
with, Section 4(j)(v) of Amendment No. 3), (iv) the
entering into by the Borrower and the Parent
Guarantor of Amendment No.
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5 and all of the documents, instruments and other
agreements (including, without limitation, amendments
and supplements to the Collateral Documents required
under, or delivered in connection with, Section
4(j)(vi) of Amendment No. 5), (v) the entering into
by the Borrower and the Parent Guarantor of the
Related Documents to which they are or are intended
to be a party and (vi) the payment of the fees and
expenses incurred in connection with the consummation
of the foregoing; and
(c) at any time and from time to time after
the Amendment No. 5 Effective Date, (i) the
Recapitalization, (ii) the consummation of the Heath
Mergers, the Desa U.S. Merger, the FMI Merger, the
Trine Asset Acquisition, the Parent Guarantor Equity
Issuances and the Parent Guarantor Equity
Contribution, (iii) the entering into by the Borrower
and the Parent Guarantor of Amendment No. 3 and all
of the documents, instruments and other agreements
(including, without limitation, amendments and
supplements to the Collateral Documents required
under, or delivered in connection with, Section
4(j)(v) of Amendment No. 3, (iv) the entering into by
the Borrower and the Parent Guarantor of Amendment
No. 5 and all of the documents, instruments and other
agreements (including, without limitation, amendments
and supplements to the Collateral Documents required
under, or delivered in connection with, Section
4(j)(vi) of Amendment No. 5), (v) the entering into
by the Borrower and the Parent Guarantor of the
Related Documents to which they are or are intended
to be a party and (vi) the payment of the fees and
expenses incurred in connection with the consummation
of the foregoing.
(j) Section 1.01 of the Credit Agreement is hereby further
amended to add the following new definitions:
"Amendment No. 5" means the fifth amendment to this
Agreement entered into as of April 7, 2000.
"Amendment No. 5 Effective Date" has the meaning
specified in Section 4 to Amendment No. 5.
"FMS" means Fred M. Schildwachter & Sons, Inc., a New
York corporation.
"Initial Term C Lenders" means the banks, financial
institutions and other institutional lenders listed on the
signature pages to Amendment No. 5 under the caption "The
Initial Term C Lenders".
"Parent Guarantor Equity Contribution" means the
equity contribution made by the Parent Guarantor to the
Borrower in an aggregate amount of not less than $5,000,000.
"Term C Advance" has the meaning specified in Section
2.01(h).
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"Term C Borrowing" means a borrowing consisting of
simultaneous Term C Advances of the same Type made by the Term
C Lenders.
"Term C Commitment" means, with respect to any Term C
Lender at any time, the amount set forth opposite such
Lender's name on Schedule I hereto under the caption "Term C
Commitment" or, if such Lender has entered into one or more
Assignments and Acceptances, set forth for such Lender in the
Register maintained by the Administrative Agent pursuant to
Section 9.07(d) as such Lender's "Term C Commitment", as such
amount may be reduced at or prior to such time pursuant to
Section 2.05.
"Term C Facility" means, at any time, the aggregate
amount of the Term C Lenders' Term C Commitments at such time.
"Term C Lender" means any Lender that has a Term C
Commitment.
"Term C Note" means a promissory note of the Borrower
payable to the order of any Term C Lender, in substantially
the form of Exhibit A-6 hereto, evidencing the aggregate
indebtedness of the Borrower to such Lender resulting from the
Term C Advances made by such Lender.
"Term C Termination Date" means the earlier of (a)
November 26, 2003 and (b) the date of termination in whole of
the Term C Commitments pursuant to Section 2.05 or 6.01.
"Trine Asset Acquisition" means the acquisition of
certain assets of FMS by the Borrower on the Amendment No. 5
Effective Date pursuant to the terms of the Trine Asset
Purchase Agreement.
"Trine Asset Purchase Agreement" means the Asset
Purchase Agreement dated as of April 3, 2000 between the
Borrower and FMS, as amended, supplemented or otherwise
modified from time to time after the Amendment No. 5 Effective
Date in accordance with the terms hereof and thereof.
"Trine Indemnity Escrow Agreement" means the
Indemnity Escrow Agreement dated as of April 7, 2000 among the
Borrower, FMS and State Street Bank and Trust Company, as
escrow agent, as amended, supplemented or otherwise modified
from time to time after the Amendment No. 5 Effective Date in
accordance with the terms hereof and thereof.
"Trine Noncompetition and Confidentiality Agreement"
means the Noncompetition and Confidentiality Agreement dated
as of April 7, 2000 among the Borrower, FMS and certain
stockholders of FMS, as amended, supplemented or otherwise
modified from time to time after the Amendment No. 5 Effective
Date in accordance with the terms hereof and thereof.
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(k) Section 2.01 of the Credit Agreement is hereby amended (i)
to add after subsection (g) thereof the following new subsection (h):
"(h) The Term C Advances. Subject to Section 2.14(d),
each Term C Lender severally agrees, on the terms and
conditions set forth herein and in Amendment No. 5, to make a
single advance (a "Term C Advance") to the Borrower on any
Business Day during the period from the date hereof until
April 15, 2000 in an amount not to exceed such Lender's Term C
Commitment at such time. The Term C Borrowing shall consist of
Term C Advances made simultaneously by the Term C Lenders
ratably according to their Term C Commitments. Amounts
borrowed under this Section 2.01(h) and repaid or prepaid may
not be reborrowed."
and (ii) to reletter the existing subsection (h) of Section 2.01 as
subsection (i) thereof.
(l) Section 2.02(c)(ii) of the Credit Agreement is hereby
amended to add after the phrase "more than three separate Borrowings"
in the eighth line thereof the phrase ", the Term C Advances may not be
outstanding as part of more than three separate Borrowings".
(m) Section 2.04 of the Credit Agreement is hereby amended (i)
to add after subsection (d) thereof the following new subsection (e):
"(e) Term C Advances. The Borrower shall repay to the
Administrative Agent for the ratable account of the Term C
Lenders the aggregate outstanding principal amount of the Term
C Advances on the following dates in the amounts indicated for
such dates (which amounts shall be reduced as a result of the
application of prepayments in accordance with the order of
priority set forth in Section 2.06):
Quarterly Payment Date Amount
August, 2000 $200,000
November, 2000 200,000
February, 2001 200,000
May, 2001 200,000
August, 2001 200,000
November, 2001 200,000
February, 2002 200,000
May, 2002 200,000
August, 2002 200,000
November, 2002 200,000
February, 2003 200,000
May, 2003 200,000
August, 2003 200,000
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November, 2003 3,400,000
; provided, however, that the final principal installment
shall be repaid on the Term C Termination Date and in any
event shall be in an amount equal to the aggregate principal
amount of the Term C Advances outstanding on such date."
and (ii) to reletter the existing subsections (e), (f) and (g) of
Section 2.04 as subsections (f), (g) and (h) thereof, respectively.
(n) Section 2.05(a) of the Credit Agreement is hereby amended
to add after the phrase "the Term B Commitments," in the fourth line
thereof the phrase "the Term C Commitments,".
(o) Section 2.05(b) of the Credit Agreement is hereby amended
(i) to add after clause (vi) thereof the following new clauses (vii)
and (viii):
"(vii) If the Amendment No. 5 Effective Date has not
occurred on or prior to April 15, 2000, the Term C Facility
shall, without any further action by or notice to or from the
Borrower, be terminated in whole on such date.
(viii) On the date of a Term C Borrowing, after
giving effect to the Term C Borrowing, and from time to time
thereafter upon each repayment or prepayment of the Term C
Advances, the aggregate Term C Commitments of the Term C
Lenders shall be automatically and permanently reduced, on a
pro rata basis, by an amount equal to the amount by which the
aggregate Term C Commitments immediately prior to such
repayment or prepayment exceed the aggregate unpaid principal
amount of the Term C Advances then outstanding."
and (ii) to renumber the existing clauses (vii) and (viii) of Section
2.05(b) as clauses (ix) and (x) thereof, respectively.
(p) Section 2.08(a) of the Credit Agreement is hereby amended
and restated in its entirety to read as follows:
"(a) Commitment Fees. The Borrower shall pay to the
Administrative Agent for the account of the Appropriate
Lenders (i) a working capital commitment fee, from the date
hereof in the case of each Initial Lender and from the
effective date specified in the Assignment and Acceptance
pursuant to which it became a Working Capital Lender in the
case of each other Working Capital Lender until the Term A
Termination Date and (ii) an acquisition commitment fee, from
the date hereof in the case of each Initial Lender and from
the effective date specified in the Assignment and Acceptance
pursuant to which it became an Acquisition Lender in the case
of each other Acquisition Lender until the Acquisition
Availability Date, and, in the case of clauses (i) and (ii),
payable in arrears on the date of the Initial Extension of
Credit hereunder, thereafter on each Quarterly Payment Date
and on the Term A Termination Date or the Acquisition
Availability Date, respectively, at the Applicable Percentage
in effect from time to time on the average daily
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unused portion of the Facilities (other than the Acquisition B
Facility and the Term C Facility). In addition, the Borrower
shall pay to the Administrative Agent for the account of the
Acquisition B Lenders an acquisition commitment fee, from the
date of Amendment No. 3 in the case of each Initial
Acquisition B Lender and from the effective date specified in
the Assignment and Acceptance pursuant to which it became an
Acquisition B Lender in the case of each other Acquisition B
Lender until the Acquisition B Termination Date, payable in
arrears on the Acquisition B Closing Date, thereafter on each
Quarterly Payment Date and on the Acquisition B Termination
Date, at the Applicable Percentage in effect from time to time
on the average daily unused portion of the Acquisition B
Facility. In addition, the Borrower shall pay to the
Administrative Agent for the account of the Term C Lenders an
acquisition commitment fee, from the date of Amendment No. 5
in the case of each Initial Term C Lender and from the
effective date specified in the Assignment and Acceptance
pursuant to which it became a Term C Lender in the case of
each other Term C Lender until the Term C Termination Date,
payable in arrears on the Amendment No. 5 Effective Date,
thereafter on each Quarterly Payment Date and on the Term C
Termination Date, at the Applicable Percentage in effect from
time to time on the average daily unused portion of the Term C
Facility".
(q) Section 2.14 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
"(a) The proceeds of the Advances (other than the
Acquisition Advances, the Acquisition B Advances and the Term
C Advances) and issuances of Letters of Credit shall be
available (and the Borrower agrees that it shall use such
proceeds and Letters of Credit) solely (i) to finance in part
the Recapitalization, (ii) to pay fees and expenses incurred
in connection therewith, (iii) to refinance all of the Debt of
the Borrower in existence on the date of the Initial Extension
of Credit (other than the Surviving Debt of the Borrower),
(iv) to finance a portion not to exceed $9,500,000 (subject to
adjustment as provided in the Heath Stock Purchase Agreement)
of the acquisition of Heath Holding Corp., at the time of such
acquisition, pursuant to the Heath Stock Purchase Agreement,
(v) to pay fees and expenses incurred in connection with the
foregoing transactions, and (vi) from time to time, to provide
working capital for the Borrower and its Subsidiaries.
(b) The proceeds of the Acquisition Advances shall be
available (and the Borrower agrees that it shall use such
proceeds) solely to finance all or a portion of the purchase
price of the Investments permitted pursuant to the provisions
of Section 5.02(e)(viii) or 5.02(e)(x).
(c) The proceeds of the Acquisition B Advances shall
be available (and the Borrower agrees that it shall use such
proceeds) solely (i) to finance the payment to existing
holders of the shares of capital stock of FMI (other than the
Borrower) of the cash consideration for their shares in the
FMI Merger, which payment shall not exceed $25,200,000 in the
aggregate, and (ii) to finance in part the payment to existing
holders of the shares of capital stock of Desa U.S. of the
cash consideration for their shares in the Desa U.S. Merger,
which payment shall not exceed $5,000,000 in the aggregate.
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(d) The proceeds of the Term C Advances shall be
available (and the Borrower agrees that it shall use such
proceeds) solely to finance the payment to FMS of the cash
consideration for the purchase of certain assets of FMS
pursuant to the Trine Asset Purchase Agreement, which payment
shall not exceed $11,000,000 in the aggregate (as such amount
may be increase or decreased pursuant to Article 3 of the
Trine Asset Purchase Agreement).".
(r) Section 3.02 of the Credit Agreement is hereby amended by
replacing the phrase "each Loan Document and Amendment No. 3" in
subsection (i) thereof with the phrase "each Loan Document, Amendment
No. 3 and Amendment No. 5".
(s) Section 4.01 of the Credit Agreement is hereby amended so
that each reference to "the date hereof" set forth in subsections (bb)
and (cc) thereto shall also (and not instead) mean and be a reference
to the Amendment No. 5 Effective Date.
(t) Section 5.01(m) of the Credit Agreement is hereby amended
to add at the end thereof the following new clause (iii):
"(iii) As promptly as practicable and in any event
within 90 days after the Amendment No. 5 Effective Date, in
connection with the assets acquired in connection with the
Trine Asset Acquisition, establish and thereafter maintain,
one or more Blocked Accounts with Bank of America or one or
more other banks selected by the Borrower and reasonably
acceptable to the Administrative Agent which have accepted the
assignment of such Blocked Accounts maintained thereby to the
Administrative Agent pursuant to the terms of the Security
Agreement and the respective Blocked Accounts referred to
therein."
(u) Section 5.02(e) of the Credit Agreement is hereby amended
(i) to restate clause (ii) thereof in its entirety to read as follows:
"(ii) Investments by the Borrower and its
Subsidiaries outstanding on (A) the date hereof and described
on Part A of Schedule 4.01(kk) hereto, (B) the date of
Amendment No. 3 and described on Part B of Schedule 4.01(kk)
hereto, and (C) the date of Amendment No. 5 and described on
Part C of Schedule 4.01(kk) hereto;",
(ii) to delete the word "and" at the end of subclause (xi) thereof,
(iii) to delete the punctuation "." at the end of clause (xii) thereof
and to substitute therefor the following phrase "; and" and (iv) to add
the following new clause (xiii) at the end thereof:
"(xiii) Investments (A) by the Parent Guarantor in
the Borrower pursuant to the Parent Guarantor Equity
Contribution and (B) by the Borrower in connection with the
consummation of the Trine Asset Acquisition on the Amendment
No. 5 Effective Date.".
(v) Section 5.02(o)(ii) of the Credit Agreement is hereby
amended and restated in its entirety to read as follows:
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"(ii) the amount set forth below for such Fiscal Year:
Fiscal Year Ending In Amount
2001 6,000,000
2002 6,000,000
2003 6,000,000
2004 6,000,000
2005 $6,000,000".
(w) Section 6.01(b) of the Credit Agreement is hereby amended
and restated in its entirety to read as follows:
"(b) any representation or warranty made by any Loan
Party (or any of its officers) under or in connection with any
Loan Document, Amendment No. 3 or Amendment No. 5 shall prove
to have been incorrect in any material respect when made; or".
(x) Section 7.05(a) of the Credit Agreement is hereby amended
to replace the phrase "Term A Commitments and Term B Commitments" in
the twenty-eighth line thereof with the phrase "Term A Commitments,
Term B Commitments and Term C Commitments".
(y) Section 7.05(b) of the Credit Agreement is hereby amended
to restate the fourth sentence thereof in its entirety to read as
follows:
"For purposes of this Section 7.05(b), the Lender Parties'
respective ratable shares of any amount shall be determined,
at any time, according to the sum of (i) the aggregate
principal amount of the Advances outstanding at such time and
owing to the respective Lender Parties, (ii) their respective
Pro Rata Shares of the aggregate Available Amount of all
Letters of Credit outstanding at such time, (iii) the
aggregate unused portions of their respective Acquisition
Commitments, Acquisition B Commitments, Term A Commitments,
Term B Commitments and Term C Commitments at such time and
(iv) their respective Unused Working Capital Commitments at
such time; provided that the aggregate principal amount of
Swing Line Advances owing to the Swing Line Bank and of Letter
of Credit Advances owing to the Issuing Bank shall be
considered to be owed to the Working Capital Lenders ratably
in accordance with their respective Working Capital
Commitments.".
(z) Section 9.04(c) of the Credit Agreement is hereby amended
to replace the phrase "determined pursuant to" in the second sentence
thereof with the phrase "referenced in clause (b) of".
(aa) Schedules I, III, 4.01(b), 4.01(d), 4.01(n), 4.01(u),
4.01(v), 4.01(aa), 4.01(cc), 4.01(ii), 4.01(jj), 4.01(kk) and 4.01(ll)
to the Credit Agreement are hereby deleted in their entirety and
replaced with the new respective Schedules thereto attached hereto as
part of Annex A.
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(bb) A new Exhibit A-6 to the Credit Agreement is added to the
Credit Agreement in the form attached hereto as Annex B.
(cc) Exhibit B to the Credit Agreement is hereby amended to
(i) add after the language "[Term A] [Term B]" in the second line of
clause (ii) thereof the language "[Term C]" and (ii) to replace the
phrase "each Loan Document and Amendment No. 3" in Paragraph (A) on
page two thereof with the phrase "each Loan Document, Amendment No. 3
and Amendment No. 5".
(dd) All references in the Credit Agreement and in the other
Loan Documents to (i) "NationsBank" shall be deemed to be references to
"Bank of America", and (ii) "NationsBanc Montgomery Securities LLC"
shall be deemed to be references to "Banc of America Securities LLC".
SECTION 2. Amendments of Certain Provisions of the Collateral
Documents. The Collateral Documents are, upon the occurrence of the Amendment
No. 5 Effective Date, hereby amended to read as follows:
(a) Schedules II, III, IV and V of the Security Agreement are
hereby deleted in their entirety and replaced with the new respective
Schedules thereto attached hereto as Annex C.
(b) Schedules I, II, III, IV and V of the Intellectual
Property Security Agreement are hereby deleted in their entirety and
replaced with the new respective Schedules thereto attached hereto as
Annex D.
SECTION 3. Further Agreements With Respect to the Term C Facility. The
Borrower hereby agrees that it will not approve any amendment or waiver of any
provision of the Credit Agreement or any Notes or any other Loan Document, nor
consent to any departure by the Borrower therefrom, shall, unless the same shall
be in writing and signed (or in the case of the Collateral Documents, consent
to) by each Lender that has a Commitment under the Term C Facility if affected
by such amendment, waiver or consent, (i) increase the Term C Commitments of
such Lender or subject such Lender to any additional obligations, (ii) reduce
the principal of, or interest on, the Term C Advances payable to such Lender or
any fees or other amounts payable hereunder to such Lender, (iii) postpone any
date fixed for any payment of principal of, or interest on, the Term C Advances
payable to such Lender or any fees or other amounts payable hereunder to such
Lender or (iv) change the order of application of any prepayment set forth in
Section 2.06 in any manner that materially affects such Lender
SECTION 4. Conditions of Effectiveness of this Amendment. The
obligation of each of the Term C Lenders to make a Term C Advance on the
occasion of the initial Term C Borrowing is subject to the satisfaction of the
following conditions precedent prior to or concurrently with the making of the
Term C Borrowing, and Sections 1, 2 and 3 of this Amendment shall become
effective as of the first date (the "Amendment No. 5 Effective Date") on which,
but only if on or before April 7, 2000, 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, the Required Lenders and each of the Initial
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Term C Lenders (as defined in Section 1) 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) The Administrative Agent and each of the Lender Parties
shall have received certified copies of all of the documents,
instruments and agreements related to the Trine Asset Acquisition,
including without limitation, the Trine Asset Purchase Agreement, the
Trine Indemnity Escrow Agreement and the Trine Noncompetition and
Confidentiality Agreement, and all amendments to all of the other
Transaction Documents which, in each case shall be in form and
substance reasonably satisfactory to the Required Lenders and all of
the Term C Lenders and shall be in full force and effect. The Borrower
shall have received at least $5,000,000 in Net Cash Proceeds from the
consummation of the Parent Guarantor Equity Contribution. Each aspect
of the Transactions shall have been consummated or shall be consummated
concurrently with the initial Term C Borrowing in accordance with the
applicable Transaction Documents and in compliance with all applicable
laws, rules and regulations.
(c) 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 any aspect of the Transactions, the Transaction Documents, any of
the Loan Documents or any of the other transactions contemplated
thereby shall have been obtained (without the imposition of any
conditions that are not reasonably acceptable to the Required Lenders
and all of the Term C Lenders) and shall remain in full force and
effect; all applicable waiting periods shall have expired without any
action being taken by any competent authority; and no law, rule or
regulation shall be applicable in the reasonable judgment of the
Required Lenders and the Term C Lenders that restrains, prevents or
imposes materially adverse conditions upon any aspect of the
Transactions, the Transaction Documents, or any of the Loan Documents
or any of the other transactions contemplated thereby.
(d) Before giving effect to the Transactions and the other
transactions contemplated by this Amendment and by the other Loan
Documents, there shall have occurred no Material Adverse Change since
February 28, 1999.
(e) The representations and warranties contained in each of
the Loan Documents (including, without limitation, in Section 5 of this
Amendment) shall be correct in all material respects on and as of the
Amendment No. 5 Effective Date, before and after giving effect to the
initial Term C Borrowing and the application of proceeds therefrom, 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. 5 Effective Date, in which case as of such specific
date).
(f) No event shall have occurred and be continuing, or shall
result from the initial Term C Borrowing or the application of the
proceeds therefrom, that constitutes a Default.
(g) 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.
12
<PAGE>
(h) The Administrative Agent shall have received on or before
the Amendment No. 5 Effective Date the following, each dated such date
(unless otherwise specified), in form and substance satisfactory to the
Required Lenders and all of the Term C Lenders (unless otherwise
specified) and (except for the Term C Notes) in sufficient copies for
each Lender Party:
(i) The Term C Notes payable to the order of the Term
C Lenders.
(ii) Certified copies of the resolutions of the Board
of Directors of the Borrower and the Parent Guarantor
approving this Amendment, the Term C Notes, the Transactions,
the Transaction Documents and all of the other amendments,
supplements and other modifications to the Loan Documents
being effected in connection with the Transactions and this
Amendment to which it is or is to be a party, 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, the Term C Notes, the
Transactions, the Transaction Documents and all of the other
amendments, supplements and other modifications to the Loan
Documents being effected in connection with the Transactions
and this Amendment.
(iii) 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. 5 Effective Date (the statements made in which
certificate shall be true on and as of the Amendment No. 5
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 (ii) of this Section 4(h) were
adopted and on the Amendment No. 5 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 (including, without limitation, Section 5 of
this Amendment) to which it is or is to be a party as though
made on and as of the Amendment No. 5 Effective Date, before
and after giving effect to the initial Term C Borrowing and to
the application of proceeds therefrom, 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. 5 Effective Date, in which case
as of such specific date); and (E) the absence of any event
occurring and continuing, or resulting from the initial Term C
Borrowing or the application of proceeds therefrom, that would
constitute a Default.
13
<PAGE>
(iv) 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, the
Term C Notes, all of the Transaction Documents and all of the
other amendments, supplements and other modifications to the
Loan Documents being effected in connection with the
Transactions and this Amendment to which it is or is to be a
party and the other documents to be delivered hereunder and
thereunder.
(v) Such financial, business and other information
regarding the Borrower, the Parent Guarantor and Trine and
their respective property, assets and businesses as the
Administrative Agent or the Lender Parties shall have
requested, including, without limitation, (A) information as
to possible contingent liabilities, tax matters, environmental
matters, obligations under Plans, Multiemployer Plans and
Welfare Plans, collective bargaining agreements and other
arrangements with employees and (B) a pro forma Consolidated
financial statements of the Parent Guarantor and its
Subsidiaries, after giving effect to the Transactions (which,
among other things, reflects all estimated costs savings
adjustments associated with the Transactions).
(vi) (A) Proper financing statement amendments (Form
UCC-3 or a comparable form) under the Uniform Commercial Code
of all jurisdictions that the Administrative Agent may deem
necessary or desirable in order to terminate or amend existing
liens on and security interests in the Collateral described in
the Security Agreement, in each case completed in a manner
satisfactory to the Administrative Agent, (B) proper financing
statements (Form UCC-1 or a comparable form) under the Uniform
Commercial Code of all jurisdictions that the Administrative
Agent may deem necessary or desirable in order to perfect and
protect the liens and security interests created or purported
to be created under the Security Agreement, covering the
Collateral described in the Security Agreement, in each case
completed in a manner satisfactory to the Administrative Agent
and duly executed by the Borrower, (C) copies of the Assigned
Agreements referred to in Part B of the new Schedule V to the
Security Agreement attached hereto as part of Annex C,
together with any of the other Transaction Documents that the
Administrative Agent in its sole discretion may designate as
additional Assigned Agreements, together with, in the case of
each such Assigned Agreement which by its terms is not
assignable by the Loan Party that is or is to be a party
thereto in a manner satisfactory to the Administrative Agent,
a consent to the assignment thereof to the Administrative
Agent, on behalf of the Secured Parties, in form and substance
reasonably satisfactory to the Administrative Agent and duly
executed by each of the parties to such Assigned Agreement
other than the Loan Parties and Trine, as applicable, (D) a
certificate or certificates representing 66% of the issued and
outstanding shares of capital stock in Trine Products Mexico
S.A. de C.V., a Mexican corporation, accompanied by undated
stock powers, duly executed in blank, and (E) evidence that
all of the other actions (including, without limitation, the
completion of all other recordings and filings of or with
respect to the Security Agreement and the Intellectual
Property Security Agreement) that the Administrative Agent may
deem necessary or desirable in order to perfect and protect
14
<PAGE>
the liens and security interests created under the Security
Agreement and the Intellectual Property Security Agreement
have been taken.
(vii) Certificates, in form and substance reasonably
satisfactory to the Required Lenders and all of the Term C
Lenders, attesting to the Solvency of the Parent Guarantor and
the Borrower, in each case individually and together with its
Subsidiaries, taken as a whole, immediately before and
immediately after giving effect to the Transactions and the
other transactions contemplated by the Loan Documents (as
amended by this Amendment), from the chief financial officer
(or person performing similar functions) of each of the Parent
Guarantor and the Borrower.
(viii) Evidence of insurance delivered to the Lender
Parties on the date of the Amendment No. 5 Effective Date,
naming the Administrative Agent as insured and loss payee with
such responsible and reputable insurance companies or
associations, and in such amounts and covering such risks, as
is satisfactory to the Lender Parties, including, without
limitation, product liability and business interruption
insurance.
(ix) A Notice of Borrowing for the initial Term C
Borrowing.
(x) A favorable opinion of Sullivan & Worcester,
counsel for the Parent Guarantor and the Borrower, in form and
substance reasonably satisfactory to the Required Lenders and
all of the Term C Lenders.
(xi) Letters from Marino & Chambers, special counsel
for Trine addressed to the Administrative Agent and each of
the Lender Parties and otherwise in form and substance
reasonably satisfactory to the Administrative Agent, stating
that the Administrative Agent and each such Lender Party may
rely upon the favorable opinion of such counsel being
delivered in connection with the applicable aspects of the
Transactions, together with a copy of such opinions (which
shall be in form and substance satisfactory to the Required
Lenders and all of the Term C Lenders).
(xii) Such other opinions, certificates, documents
and information as the Administrative Agent or the Required
Lenders or any Term C Lender through the Administrative Agent
may reasonably request.
(xiii) Short-form amendments to the Intellectual
Property Security Agreement to be filed with the U.S. Patent
and Trademark Office and the U.S. Copyright Office, together
with evidence that all action that the Administrative Agent
may deem necessary or desirable in order to perfect and
protect the first priority liens and security interests
created thereunder have been taken or will be taken.
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 Section 4, nor consent to any departure by the
15
<PAGE>
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 and all
of the Term C Lenders.
SECTION 5. Representations and Warranties. Each of the Parent Guarantor
and the Borrower hereby represents and warrants as follows:
(a) The pro forma Consolidated balance sheet of the Parent
Guarantor and its Subsidiaries as of January 31, 2000, and the related
pro forma Consolidated statements of income and cash flows of the
Parent Guarantor and its Subsidiaries for the 11 months then ended,
duly certified by the chief financial officer (or person performing
similar functions) of the Parent Guarantor, copies of all of which have
been or will on or prior to the Amendment No. 5 Effective Date be
furnished to the Lender Parties, fairly present the pro forma
Consolidated financial condition of the Parent Guarantor and its
Subsidiaries as at such date and the pro forma Consolidated results of
operations of the Parent Guarantor and its Subsidiaries for the period
ended on such date, in each case giving effect to the Transactions and
the other transactions contemplated by this Amendment.
(b) The projected Consolidated balance sheets, income
statements and cash flows statements of the Parent Guarantor and its
Subsidiaries most recently furnished to the Lender Parties prior to the
date of this Amendment were prepared in good faith on the basis of the
assumptions stated therein, which assumptions were fair in the light of
conditions existing at the time of delivery of such projections, and
represented, at the time of delivery, each of the Parent Guarantor's
and the Borrower's best estimate of its future financial performance.
(c) Set forth on Part B of Schedule 4.01(kk) hereto is a
complete and accurate list, as of the Amendment No. 5 Effective Date,
of all Investments (other than Investments in Cash Equivalents) held by
Trine and transferred to the Borrower pursuant to the Trine Asset
Acquisition, showing, as of such date, the amount, obligor or issuer
and maturity, if any, thereof.
(d) Set forth on Part B of Schedule 4.01(ll) hereto is a
complete and accurate list, as of the Amendment No. 5 Effective Date,
of all patents, trademarks, trade names, service marks and copyrights,
and all applications therefor and licenses thereof, of Trine and
transferred to the Borrower pursuant to the Trine Asset Acquisition,
showing, as of such date, the jurisdiction in which registered, the
registration number, the date of registration and the expiration date.
(e) Any amendment, supplement or other modification to any
Schedule or Exhibit to any Loan Document attached hereto made after the
Amendment No. 5 Effective Date shall be in form and substance
reasonably satisfactory to the Required Lenders and all of the Term C
Lenders.
SECTION 6. Reference to and Effect on the Loan Documents. (a) On and
after the Amendment No. 5 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.
16
<PAGE>
(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 7. 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 8. 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 9. Governing Law. This Amendment shall be governed by, and
construed in accordance with, the laws of the State of New York.
17
<PAGE>
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/ Edward G. Patrick
Name: Edward G. Patrick
Title: Vice President
The Parent Guarantor
DESA HOLDINGS CORPORATION
By /s/ Edward G. Patrick
Name: Edward G. Patrick
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
<PAGE>
The Initial Term C Lenders
BANK OF AMERICA, N.A.
By /s/ David H. Strickert
Name: David H. Strickert
Title: Principal
UBS AG, STAMFORD BRANCH
By /s/ Renata Jacobson
Name: Renata Jacobson
Title: Director
By /s/ David Barth
Name: David Barth
Title: Director
<PAGE>
The Lenders
BANK OF AMERICA, N.A.
By /s/ David H. Strickert
Name: David H. Strickert
Title: Principal
<PAGE>
UBS AG, STAMFORD BRANCH
By /s/ Renata Jacobson
Name: Renata Jacobson
Title: Director
By /s/ David Barth
Name: David Barth
Title: Director
<PAGE>
HELLER FINANCIAL, INC.
By /s/ K. Craig Gallehugh
Name: K. Craig Gallehugh
Title: Vice President
<PAGE>
IMPERIAL BANK, CALIFORNIA
BANKING CORPORATION
By /s/ Ray Vadalma
Name: Ray Vadalma
Title: Senior Managing Director
<PAGE>
FIRST SOURCE FINANCIAL LLP, as a Lender
By: First Source Financial, Inc., its
Agent/Manager
By /s/ Pamela D. Eskra
Name: Pamela D. Eskra
Title: Vice President
<PAGE>
FLEET NATIONAL BANK
By /s/ Stephen M. Curran
Name: Stephen M. Curran
Title: Vice President
<PAGE>
FLEET BUSINESS CREDIT CORPORATION
By /s/ Wes Manus
Name: Wes Manus
Title: Vice President
<PAGE>
VAN KAMPEN
PRIME RATE INCOME TRUST
By: Van Kampen Investment Advisory Corp.
By /s/ Brian T. Buscher
Name: Brian T. Buscher
Title: Manager Operations & Compliance
<PAGE>
CANADIAN IMPERIAL BANK OF COMMERCE
By /s/ Koren Volk
Name: Koren Volk
Title: Authorized Signatory
<PAGE>
BANK POLSKA KASA OPIEKI S.A. -
PEKAO S.A. GROUP, NEW YORK
BRANCH
By /s/ Barry W. Henry
Name: Barry W. Henry
Title: Vice President
Senior Lending Officer
<PAGE>
PILGRIM AMERICA PRIME RATE
TRUST
By: Pilgrim Investments, Inc.,
as its investment manager
By /s/ Jason T. Groom
Name: Jason T. Groom
Title: Assistant Vice President
<PAGE>
BOEING CAPITAL CORPORATION
By /s/ James C. Hammersmith
Name: James C. Hammersmith
Title: Senior Documentation Officer
<PAGE>
CONSENT
Reference is made to (a) Amendment No. 5 to the Loan Documents
dated as of April 7, 2000 (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 and Amendment and Waiver
No. 4 to the Loan Documents dated as of May 25, 1999, 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 and delivery of the Amendment, the prior execution and delivery of
the Credit Agreement and the performance of each of the Amendment and the Credit
Agreement 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. 5 Effective
Date, except that, on and after the Amendment No. 5 Effective Date, (1)
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, (2) each reference to "the
Security Agreement", "thereunder", "thereof", "therein" or words of
like import referring to the Security Agreement shall mean and be a
reference to the Security Agreement, as amended and otherwise modified
by the Amendment, and (3) each reference to "the Intellectual Property
Security Agreement", "thereunder", "thereof", "therein" or words of
like import referring to the Intellectual Property Security Agreement
shall mean and be a reference to the Intellectual Property Security
Agreement, as amended and otherwise modified by the Amendment; and
(B) as of the Amendment No. 5 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.
<PAGE>
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/ Edward Patrick
Name: Edward Patrick
Title: Vice President Finance
DESA HOLDINGS CORPORATION
By /s/ Edward Patrick
Name: Edward Patrick
Title: Vice President Finance
[The schedules and exhibits to this agreement have been omitted and will be
supplementally filed with the Securities and Exchange Commission upon request.]
