Document:

<PAGE>

                                                                   EXHIBIT 10.18

                       THIRD AMENDMENT TO CREDIT AGREEMENT

     THIS THIRD AMENDMENT TO CREDIT AGREEMENT, dated as of September 21, 2005
(the "Third Amendment"), is by and among DEI SALES, INC., a Florida corporation
(f/k/a Directed Electronics, Inc., a California corporation) (the "Borrower"),
those Affiliates of the Borrower identified as "Guarantors" on the signature
pages hereto (the "Guarantors"), the financial institutions party hereto
(collectively, the "Lenders"; and individually, a "Lender"), and WACHOVIA BANK,
NATIONAL ASSOCIATION, a national banking association, as administrative agent
for the Lenders (in such capacity, the "Administrative Agent").

                                   WITNESSETH

     WHEREAS, the Borrower, the Guarantors, the Lenders and the Administrative
Agent are parties to that certain Credit Agreement dated as of June 17, 2004 (as
previously amended and modified and as amended, modified, supplemented or
restated from time to time, the "Credit Agreement"; capitalized terms used
herein shall have the meanings ascribed thereto in the Credit Agreement unless
otherwise defined herein);

     WHEREAS, the Borrower has requested an increase of the Revolving Committed
Amount in an aggregate principal amount not to exceed $50,000,000 (the "Revolver
Increase");

     WHEREAS, the Borrower has requested an increase of the Term Loan Committed
Amount in an aggregate principal amount not to exceed $15,000,000 (the "Term
Loan Increase");

     WHEREAS, the Borrower has requested that the Requisite Lenders waive the
mandatory prepayment required under Section 2.8(b)(iv) of the Credit Agreement
(the "Prepayment") in connection with the Term Loan Increase;

     WHEREAS, the Borrower has requested that the Requisite Lenders permit the
Term Loan Increase and agree to certain modifications to the terms of the Credit
Agreement in connection therewith; and

     WHEREAS, the Requisite Lenders have agreed to waive the Prepayment required
by the Term Loan Increase and amend the Credit Agreement on the terms and
conditions set forth herein.

     NOW, THEREFORE, in consideration of the agreements hereinafter set forth,
and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto agree as follows:

<PAGE>

                                    SECTION 1

                               WAIVER AND CONSENT

     1.1 The Requisite Lenders hereby waive the Prepayment in respect of the
proceeds of the Term Loan Increase.

     1.2 The Requisite Lenders hereby waive the Default or Event of Default, if
any, with respect to the delivery of the financial statements for the fiscal
quarter ending June 30, 2005 as required by Section 6.1(i) of the Credit
Agreement.

     1.3 Except for the specific waivers set forth herein, nothing contained
herein shall be deemed to constitute a waiver of (i) any rights or remedies the
Administrative Agent or any Lender may have under the Credit Agreement or any
other Loan Document or under applicable law or (ii) the Loan Parties' obligation
to comply fully with any duty, term, condition, obligation or covenant contained
in the Credit Agreement and the other Loan Documents not specifically waived.
The specific waivers set forth herein are one-time waivers and shall be
effective only in this specific instance and shall not obligate the Lenders to
waive any Default or Event of Default, now existing or hereafter arising.

                                    SECTION 2

                                   AMENDMENTS

     2.1 AMENDMENTS TO SECTION 1.1.

     (a) The following definitions are hereby added to the Credit Agreement to
read as follows:

          "Second Add-On Term Loan" shall have the meaning set forth in Section
     2.2(a).

          "Second Add-On Term Loan Commitment Percentage" shall mean, for any
     Second Add-On Term Loan Lender, the percentage identified as its Second
     Add-On Term Loan Commitment Percentage in a letter or other correspondence
     from the Administrative Agent to such Second Add-On Term Loan Lender.

          "Second Add-On Term Loan Committed Amount" shall have the meaning set
     forth in Section 2.2(a).

          "Second Add-On Term Loan Lender" shall mean a Lender that makes a
     Second Add-On Term Loan, together with its successors and permitted assigns
     pursuant to Section 10.1.

          "Third Amendment Effective Date" shall mean September 21, 2005.

                                        2

<PAGE>

     (b) The definition of "Lender" in Section 1.1 of the Credit Agreement is
hereby amended and restated in its entirety as follows:

          "Lender" and "Lenders" means the persons identified as "Lenders" and
     listed on the signature pages of this Agreement, the Revolving Lenders, the
     Add-On Term Loan Lenders, the Second Add-On Term Loan Lenders and any
     Person that becomes a Lender hereunder pursuant to Section 10.1(c),
     together with their successors and permitted assigns pursuant to Section
     10.1, and the term "Lenders" shall include Swingline Lender unless the
     context otherwise requires.

     2.2 AMENDMENT TO SECTION 2.1.

     Section 2.1(a) of the Credit Agreement is amended and restated in its
entirety to read as follows:

          (a) Revolving Commitment. During the Commitment Period, subject to the
     terms and conditions hereof, each Revolving Lender severally agrees to make
     revolving credit loans ("Revolving Loans") to Borrower from time to time
     for the purposes hereinafter set forth; provided, however, that (i) with
     regard to each Revolving Lender individually, the sum of such Revolving
     Lender's share of outstanding Revolving Loans plus such Revolving Lender's
     Revolving Commitment Percentage of outstanding Swingline Loans plus such
     Revolving Lender's Revolving Commitment Percentage of outstanding LOC
     Obligations shall not exceed such Revolving Lender's Revolving Commitment
     and (ii) with regard to the Revolving Lenders collectively, the sum of the
     aggregate amount of outstanding Revolving Loans plus outstanding Swingline
     Loans plus outstanding LOC Obligations shall not exceed the Revolving
     Committed Amount then in effect. For purposes hereof, the aggregate maximum
     amount available hereunder shall be FIFTY MILLION DOLLARS ($50,000,000) (as
     such aggregate maximum amount may be reduced from time to time as provided
     in Section 2.7, the "Revolving Committed Amount"). Revolving Loans may
     consist of Alternate Base Rate Loans or LIBOR Rate Loans, or a combination
     thereof, as Borrower may request, and may be repaid and reborrowed in
     accordance with the provisions hereof. LIBOR Rate Loans shall be made by
     each Revolving Lender at its LIBOR Lending Office and Alternate Base Rate
     Loans at its Domestic Lending Office.

     2.3 AMENDMENT TO SECTION 2.2.

     Sections 2.2(a) and 2.2(b) of the Credit Agreement are amended and restated
in their entireties to read as follows:

          (a) Term Loan. Subject to the terms and conditions hereof and in
     reliance upon the representations and warranties set forth herein, each
     Term Loan Lender severally agrees to make available to Borrower on the
     Closing Date such Term Loan Lender's Term Loan Commitment Percentage of a
     term loan in Dollars (the "Initial Term Loan") in the aggregate principal
     amount of ONE HUNDRED ELEVEN MILLION DOLLARS ($111,000,000) (the "Initial
     Term Loan Committed Amount") for

                                        3

<PAGE>

     the purposes hereinafter set forth. Subject to the terms and conditions
     hereof and in reliance upon the representations and warranties set forth
     herein, each Add-On Term Loan Lender severally agrees to make available to
     Borrower on the First Amendment Effective Date such Add-On Term Loan
     Lender's Add-On Term Loan Commitment Percentage of a term loan in Dollars
     (the "Add-On Term Loan") in the aggregate principal amount of FORTY-FIVE
     MILLION DOLLARS ($45,000,000) (the "Add-On Term Loan Committed Amount") for
     the purposes hereinafter set forth. Subject to the terms and conditions
     hereof and in reliance upon the representations and warranties set forth
     herein, each Second Add-On Term Loan Lender severally agrees to make
     available to Borrower on the Third Amendment Effective Date such Second
     Add-On Term Loan Lender's Second Add-On Term Loan Commitment Percentage of
     a term loan in Dollars (the "Second Add-On Term Loan", together with the
     Initial Term Loan and the Add-On Term Loan, the "Term Loan") in the
     aggregate principal amount of FIFTEEN MILLION DOLLARS ($15,000,000) (the
     "Second Add-On Term Loan Committed Amount", together with the Initial Term
     Loan Committed Amount and the Add-On Term Loan Committed Amount, the "Term
     Loan Committed Amount") for the purposes hereinafter set forth. The Term
     Loan may consist of Alternate Base Rate Loans or LIBOR Rate Loans, or a
     combination thereof, as Borrower may request; provided that on the Third
     Amendment Effective Date and on the two Business Days following the Third
     Amendment Effective Date, the Second Add-On Term Loan shall bear interest
     at the Alternate Base Rate. LIBOR Rate Loans shall be made by each Term
     Loan Lender at its LIBOR Lending Office and Alternate Base Rate Loans at
     its Domestic Lending Office. Amounts repaid or prepaid on the Term Loan may
     not be reborrowed.

          (b) Repayment of Term Loan. The principal amount of the Term Loan
     shall be repaid in eighteen (18) consecutive quarterly installments (as
     reduced pursuant to Section 2.8) as follows:

<TABLE>
<CAPTION>
 PRINCIPAL AMORTIZATION                  TERM LOAN
      PAYMENT DATE            PRINCIPAL AMORTIZATION PAYMENT
-----------------------   --------------------------------------
<S>                       <C>
     March 31, 2006                     $   424,797
     June 30, 2006                      $   424,797
   September 30, 2006                   $   424,797
   December 31, 2006                    $   424,797
     March 31, 2007                     $   424,797
     June 30, 2007                      $   424,797
   September 30, 2007                   $   424,797
   December 31, 2007                    $   424,797
     March 31, 2008                     $   424,797
     June 30, 2008                      $   424,797
</TABLE>

                                        4

<PAGE>

<TABLE>
<CAPTION>
 PRINCIPAL AMORTIZATION                  TERM LOAN
      PAYMENT DATE            PRINCIPAL AMORTIZATION PAYMENT
-----------------------   --------------------------------------
<S>                       <C>
   September 30, 2008                   $   424,797
   December 31, 2008                    $   424,797
     March 31, 2009                     $   424,797
     June 30, 2009                      $   424,797
   September 30, 2009                   $40,215,710
   December 31, 2009                    $40,215,710
     March 31, 2010                     $40,215,710
Term Loan Maturity Date   $40,015,712 or the remaining principal
                                 amount of the Term Loan
</TABLE>

     2.4 AMENDMENT TO SECTION 2.5. Section 2.5 of the Credit Agreement is
amended and restated in its entirety to read as follows:

          2.5 [RESERVED].

     2.5 AMENDMENT TO SECTION 7.6. Sections 7.6(A) and (B) of the Credit
Agreement are hereby amended and restated in their entireties to read as
follows:

          A. Maximum Consolidated Total Leverage Ratio. Borrower shall not
     permit the Consolidated Total Leverage Ratio as of the last day of any
     Fiscal Quarter ending during any of the periods set forth below to exceed
     the correlative ratio indicated:

<TABLE>
<CAPTION>
                                       MAXIMUM CONSOLIDATED
               PERIOD                  TOTAL LEVERAGE RATIO
               ------                  --------------------
<S>                                    <C>
July 1, 2005 to December 31, 2005           5.50 to 1.0
January 1, 2006 to June 30, 2006            5.00 to 1.0
July 1, 2006 to December 31, 2006           4.75 to 1.0
January 1, 2007 to December 31, 2007        4.50 to 1.0
January 1, 2008 to December 31, 2008        4.00 to 1.0
January 1, 2009 to December 31, 2009        3.50 to 1.0
July 1, 2010 and thereafter                 3.00 to 1.0
</TABLE>

          B. Maximum Consolidated Senior Leverage Ratio. Borrower shall not
     permit the Consolidated Senior Leverage Ratio as of the last day of any
     Fiscal Quarter ending during any of the periods set forth below to exceed
     the correlative ratio indicated:

                                        5

<PAGE>

<TABLE>
<CAPTION>
                                        MAXIMUM CONSOLIDATED
               PERIOD                  SENIOR LEVERAGE RATIO
               ------                  ---------------------
<S>                                    <C>
July 1, 2005 to December 31, 2005           4.00 to 1.0
January 1, 2006 to June 30, 2006            3.75 to 1.0
July 1, 2006 to December 31, 2006           3.50 to 1.0
January 1, 2007 to December 31, 2007        3.25 to 1.0
January 1, 2008 to December 31, 2008        2.75 to 1.0
January 1, 2009 and thereafter              2.50 to 1.0
</TABLE>

     2.6 AMENDMENT TO SCHEDULES. Schedule 2.1(a) of the Credit Agreement is
hereby amended and replaced with Schedule 2.1(a) attached hereto as Exhibit A.

                                    SECTION 3

                                 LENDER JOINDER

     From and after the Third Amendment Effective Date, by execution of this
Third Amendment, each Person identified on the signature pages hereto as a new
lender (a "New Lender") hereby acknowledges, agrees and confirms that, by its
execution of this Third Amendment, such Person will be deemed to be a party to
the Credit Agreement as amended hereby and a "Lender" for all purposes of the
Credit Agreement as amended hereby, and shall have all of the obligations of a
Lender thereunder as if it had executed the Credit Agreement as amended hereby.
Such Person hereby ratifies, as of the date hereof, and agrees to be bound by,
all of the terms, provisions and conditions applicable to the Lenders contained
in the Credit Agreement as amended hereby.

                                    SECTION 4

                               CLOSING CONDITIONS

     4.1 CONDITIONS PRECEDENT. This Third Amendment shall become effective as of
the date hereof upon the receipt by the Administrative Agent of the following:

     (a) Executed Agreement. Receipt by the Administrative Agent of a duly
executed signature page to the Third Amendment to the Credit Agreement from each
of the Borrower, the Guarantors, the Requisite Lenders and the Second Add-On
Term Loan Lenders;

     (b) Consents. All consents and approvals of the boards of directors,
shareholders, governmental authorities and other applicable third parties
necessary in connection with the Second Add-On Term Loan shall have been
obtained;

                                        6

<PAGE>

     (c) Authority Documents.

          (i) Articles of Incorporation; Partnership Agreement. Copies of the
     articles of incorporation, partnership agreement, or other charter
     documents of each Loan Party certified to be true and complete as of a
     recent date by the appropriate Governmental Authority of the state of its
     organization or formation;

          (ii) Resolutions. Copies of resolutions of the board of directors or
     other comparable governing body of each Loan Party approving and adopting
     this Third Amendment, the transactions contemplated herein and authorizing
     execution and delivery hereof, certified by an officer of such Loan Party
     as of the Third Amendment Effective Date to be true and correct and in
     force and effect as of such date;

          (iii) Bylaws. A copy of the bylaws or other operating agreement of
     each Loan Party certified by an officer of such Loan Party as of the Third
     Amendment Effective Date to be true and correct and in force and effect as
     of such date;

          (iv) Good Standing. Copies of (i) certificates of good standing,
     existence or its equivalent with respect to each Loan Party certified as of
     a recent date by the appropriate Governmental Authorities of the state of
     incorporation and each other state in which such Loan Party is qualified to
     do business and (ii) to the extent readily available, a certificate
     indicating payment of all corporate and other franchise taxes certified as
     of a recent date by the appropriate governmental taxing authorities; and

          (v) Incumbency. An incumbency certificate of each Loan Party certified
     by a secretary or assistant secretary of such Loan Party to be true and
     correct as of the Third Amendment Effective Date;

     (d) Corporate Structure. The corporate and capital structure and the
management of the Borrower and its Subsidiaries after giving effect to the
Second Add-On Term Loan, and all legal, tax, accounting, environmental and other
matters relating to the Borrower and its Subsidiaries after giving effect
thereto, shall be reasonably satisfactory in all material respects to the
Agents;

     (e) Material Adverse Change. No material adverse change shall have occurred
in the business, properties, operations or condition (financial or otherwise) of
the Borrower and its Subsidiaries taken as a whole;

     (f) Litigation and Bankruptcy. There shall be no material pending or
overtly threatened litigation, bankruptcy or insolvency, injunction, order or
claim with respect to the Borrower or any of its Subsidiaries that would have a
Material Adverse Effect whole;

     (g) Legal Opinions. The Borrower shall deliver opinions of counsel
(including local counsel opinions) in form and substance reasonably acceptable
to the Agents and the Lenders;

                                        7

<PAGE>

     (h) Solvency Certificate. Administrative Agent shall have received an
Officers' Certificate prepared by the chief financial officer of Borrower as to
the financial condition, solvency and related matters of the Borrower,
individually, and the Loan Parties and their Subsidiaries taken as a whole,
after giving effect to the Third Amendment and the borrowings under the Loan
Documents in form and substance satisfactory to the Administrative Agent; and

     (i) Fees and Expenses. The Agents and the Lenders shall have received from
the Borrower the aggregate amount of fees and expenses payable in connection
with the consummation of the transactions contemplated hereby.

                                    SECTION 5

                                  MISCELLANEOUS

     5.1 AMENDED TERMS. The term "Credit Agreement" as used in each of the Loan
Documents shall hereafter mean the Credit Agreement as amended by this Third
Amendment. Except as specifically amended hereby or otherwise agreed, the Credit
Agreement is hereby ratified and confirmed and shall remain in full force and
effect according to its terms.

     5.2 REPRESENTATIONS AND WARRANTIES OF LOAN PARTIES. Each of the Loan
Parties hereby represents and warrants as follows:

     (a) Such Person has taken all necessary action to authorize the execution,
delivery and performance of this Third Amendment.

     (b) This Third Amendment has been duly executed and delivered by such
Person and constitutes such Person's legal, valid and binding obligations,
enforceable in accordance with its terms, except as such enforceability may be
subject to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance or
transfer, moratorium or similar laws affecting creditors' rights generally and
(ii) general principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity).

     (c) No consent, approval, authorization or order of, or filing,
registration or qualification with, any court or governmental authority or third
party is required in connection with the execution, delivery or performance by
such Person of this Third Amendment.

     (d) After giving effect to this Third Amendment, the representations and
warranties set forth in Section 5 of the Credit Agreement are, subject to the
limitations set forth therein, true and correct in all respects as of the date
hereof (except for those which expressly relate to an earlier date).

     (e) After giving effect to this Third Amendment, no Default or Event of
Default has occurred and is continuing.

                                        8

<PAGE>

     5.3 LOAN DOCUMENT. This Third Amendment shall constitute a Loan Document
under the terms of the Credit Agreement and shall be subject to the terms and
conditions thereof (including, without limitation, Sections 10.17 and 10.18 of
the Credit Agreement).

     5.4 ENTIRETY. This Third Amendment and the other Loan Documents embody the
entire agreement between the parties hereto and supersede all prior agreements
and understandings, oral or written, if any, relating to the subject matter
hereof.

     5.5 COUNTERPARTS. This Third Amendment may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall constitute one and the same instrument. Delivery of
executed counterparts of this Third Amendment by telecopy or electronic mail
shall be effective as an original and shall constitute a representation that an
original shall be delivered.

     5.6 GOVERNING LAW. THIS THIRD AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF
THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES.

                                        9

<PAGE>

     IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Third Amendment to be duly executed and delivered as of the date first
above written.

BORROWER:                               DEI SALES, INC.
                                        F/K/A DIRECTED ELECTRONICS, INC.,
                                        a Florida corporation

                                        By: /s/ Richard Hirshberg
                                            ------------------------------------
                                        Name: Richard Hirshberg
                                        Title: Vice President and
                                               Chief Financial Officer

GUARANTORS:                             DIRECTED ELECTRONICS, INC.
                                        F/K/A DEI HOLDINGS, INC.,
                                        a Florida corporation

                                        By: /s/ Richard Hirshberg
                                            ------------------------------------
                                        Name: Richard Hirshberg
                                        Title: Vice President and
                                               Chief Financial Officer

                                        DEI HEADQUARTERS, INC.,
                                        a Florida corporation

                                        By: /s/ Richard Hirshberg
                                            ------------------------------------
                                        Name: Richard Hirshberg
                                        Title: Vice President and
                                               Chief Financial Officer

<PAGE>

ADMINISTRATIVE AGENT AND LENDERS:       WACHOVIA BANK, NATIONAL ASSOCIATION,
                                        as Administrative Agent and as a Lender

                                        By: /s/ Louis K. Beasley, III
                                            ------------------------------------
                                        Name: Louis K. Beasley, III
                                              ----------------------------------
                                        Title: Director
                                               ---------------------------------

                           [signature pages continue]

<PAGE>

LENDERS (continued):                    CIBC INC.

                                        By: /s/ Cedric Henley
                                            ------------------------------------
                                        Name: Cedric Henley
                                        Title: Managing Director
                                               CIBC World Markets Corp.,
                                               AS AGENT

LENDERS (continued):                    JPMORGAN CHASE BANK, N.A.

                                        By: /s/ Robert P. Kellas
                                            ------------------------------------
                                        Name: Robert P. Kellas
                                        Title: Vice President

LENDERS (continued):                    AIB DEBT MANAGEMENT, LIMITED

                                        By: /s/ John Farrace
                                            ------------------------------------
                                        Name: John Farrace
                                        Title: Senior Vice President
                                               Investment Advisor to AIB Debt
                                               Management, Limited

LENDERS (continued):                    ALLSTATE LIFE INSUARNCE COMPANY

                                        By: /s/ Chris Goergen
                                            ------------------------------------
                                        Name: Chris Georgen
                                        Title: Authorized Signatory

                                        By: /s/ Judith P. Greffin
                                            ------------------------------------
                                        Name: Judith P. Greffin
                                        Title: Authorized Signatory

LENDERS (continued):                    AIMCO CDO, SERIES 2000-A

                                        By: /s/ Chris Goergen
                                            ------------------------------------
                                        Name: Chris Georgen
                                        Title: Authorized Signatory

                                        By: /s/ Judith P. Greffin
                                            ------------------------------------
                                        Name: Judith P. Greffin
                                        Title: Authorized Signatory

<PAGE>

LENDERS (continued):                    AIMCO CLO, SERIES 2005-A

                                        By: /s/ Chris Goergen
                                            ------------------------------------
                                        Name: Chris Georgen
                                        Title: Authorized Signatory

                                        By: /s/ Judith P. Greffin
                                            ------------------------------------
                                        Name: Judith P. Greffin
                                        Title: Authorized Signatory

LENDERS (continued):                    ANTARES CAPITAL CORPORATION

                                        By: /s/ Michael P. King
                                            ------------------------------------
                                        Name: Michael P. King
                                        Title: Director

LENDERS (continued):                    JPMORGANCHASE BANK, AS TRUSTEE OF THE
                                        ANTARES FUNDING TRUST CREATED UNDER THE
                                        TRUST AGREEMENT DATED AS OF
                                        NOVEMBER 30, 1999

                                        By: /s/ Baris Akkaya
                                            ------------------------------------
                                        Name: Baris Akkaya
                                        Title: Assistant Treasurer

                                        NAVIGATOR CDO 2003, LTD.

                                        By: Antares Asset Management, Inc.
                                            as Collateral Manager

                                        By: /s/ David Mahon
                                            ------------------------------------
                                        Name: David Mahon
                                        Title: Vice President

                                        NAVIGATOR CDO 2004, LTD.

                                        By: Antares Asset Management, Inc.
                                            as Collateral Manager

                                        By: /s/ David Mahon
                                            ------------------------------------
                                        Name: David Mahon
                                        Title: Vice President

<PAGE>

LENDERS (continued):                    APEX (IDM) CDO I, LTD.
                                        BABSON CLO LTD. 2003-I
                                        BABSON CLO LTD. 2004-I
                                        BABSON CLO LTD. 2004-II
                                        BABSON CLO LTD. 2005-II
                                        ELC (CAYMAN) LTD. 1999-II
                                        SEABOARD CLO 2000 LTD.
                                        SUFFIELD CLO, LIMITED

                                        By: Babson Capital Management LLC
                                            as Collateral Manager

                                        By: /s/ David P. Wells
                                            ------------------------------------
                                        Name: David P. Wells, CFA
                                        Title: Managing Director

LENDERS (continued):                    SIMSBURY CLO, LIMITED

                                        By: Babson Capital Management LLC under
                                            delegated authority from
                                            Massachusetts Mutual Life Insurance
                                            Company as Collateral Manager

                                        By: /s/ David P. Wells
                                            ------------------------------------
                                        Name: David P. Wells, CFA
                                        Title: Managing Director

LENDERS (continued):                    MAPLEWOOD (CAYMAN) LIMITED

                                        By: Babson Capital Management LLC
                                            as Investment Manager

                                        By: /s/ David P. Wells
                                            ------------------------------------
                                        Name: David P. Wells, CFA
                                        Title: Managing Director

LENDERS (continued):                    COLTS 2005-1 LTD.

                                        By: Wachovia Bank, National Association
                                            as its servicer

                                        By: /s/ Dominic Barakat
                                            ------------------------------------
                                        Name: Dominic Barakat
                                        Title: Vice President

<PAGE>

LENDERS (continued):                    FRANKLIN CLO II, LIMITED

                                        By: /s/ David Ardini
                                            ------------------------------------
                                        Name: David Ardini
                                        Title: Vice President

LENDERS (continued):                    FRANKLIN CLO III, LIMITED

                                        By: /s/ David Ardini
                                            ------------------------------------
                                        Name: David Ardini
                                        Title: Vice President

LENDERS (continued):                    FRANKLIN CLO IV, LIMITED

                                        By: /s/ David Ardini
                                            ------------------------------------
                                        Name: David Ardini
                                        Title: Vice President

LENDERS (continued):                    FRANKLIN FLOATING RATE DAILY ACCESS FUND

                                        By: /s/ Richard Hsu
                                            ------------------------------------
                                        Name: Richard Hsu
                                        Title: Vice President

LENDERS (continued):                    FRANKLIN FLOATING RATE MASTER SERIES

                                        By: /s/ Richard Hsu
                                            ------------------------------------
                                        Name: Richard Hsu
                                        Title: Vice President

LENDERS (continued):                    GENERAL ELECTRIC CAPITAL CORP.

                                        By: /s/ James R. Miller
                                            ------------------------------------
                                        Name: James R. Miller
                                        Title: Duly Authorized Signatory

<PAGE>

LENDERS (continued):                    GOLDMAN SACHS CREDIT PARTNERS, L.P.

                                        By: /s/ William Archer
                                            ------------------------------------
                                        Name: William Archer
                                        Title: Managing Director

LENDERS (continued):                    GRANITE VENTURES I LTD.

                                        By: Stone Tower Debt Advisors
                                        as it's Collateral Manager

                                        By: /s/ W. Anthony Edson
                                            ------------------------------------
                                        Name: W. Anthony Edson
                                              ----------------------------------
                                        Title: Authorized Signatory

LENDERS (continued):                    GSC PARTNERS CDO FUND IV, LIMITED

                                        By: GSCP (NJ), L.P., as Collateral
                                        Manager

                                        By: /s/ Seth M. Katzenstein
                                            ------------------------------------
                                        Name: Seth M. Katzenstein
                                        Title: Authorized Signatory

LENDERS (continued):                    GSC PARTNERS CDO FUND V, LIMITED

                                        By: GSCP (NJ), L.P., as Collateral
                                        Manager

                                        By: /s/ Seth Katzenstein
                                            ------------------------------------
                                        Name: Seth Katzenstein
                                        Title: Authorized Signatory

LENDERS (continued):                    GULF STREAM-COMPASS CLO 2002-1 LTD

                                        By: Gulf Stream Asset Management LLC
                                        As Collateral Manager

                                        By: /s/ Barry K. Love
                                            ------------------------------------
                                        Name: Barry K. Love
                                        Title: Chief Credit Officer

<PAGE>

LENDERS (continued):                    GULF STREAM-COMPASS CLO 2004-1 LTD

                                        By: Gulf Stream Asset Management LLC
                                        As Collateral Manager

                                        By: /s/ Barry K. Love
                                            ------------------------------------
                                        Name: Barry K. Love
                                        Title: Chief Credit Officer

LENDERS (continued):                    HUDSON STRAITS CLO 2004, LTD

                                        By: GSO Capital Partners LP as
                                        Collateral Manager

                                        By: /s/ Melissa Marano
                                            ------------------------------------
                                        Name: Melissa Marano
                                        Title: Authorized Signatory

LENDERS (continued):                    LIGHTPOINT CLO III, LTD.

                                        By: /s/ Thomas A. Kramer
                                            ------------------------------------
                                        Name: Thomas A. Kramer
                                        Title: Chief Executive Officer

LENDERS (continued):                    OFSI FUND II, LLC

                                        By: Orchard First Source Asset
                                        Management, LLC its attorney in fact

                                        By: Orchard First Source Capital, Inc.
                                        its attorney in fact

                                        By: /s/ James M. Cassady
                                            ------------------------------------
                                        Name: James M. Cassady
                                        Title: Director

LENDERS (continued):                    PREMIUM LOAN TRUST I, LTD.

                                        By: /s/ Thomas A. Kramer
                                            ------------------------------------
                                        Name: Thomas A. Kramer
                                        Title: Senior Managing Director &
                                               Chief Executive Officer

<PAGE>

LENDERS (continued):                    STONE TOWER CDO LTD.

                                        By: Stone Tower Debt Advisors
                                        as its Collateral Manager

                                        By: /s/ W. Anthony Edson
                                            ------------------------------------
                                        Name: W. Anthony Edson
                                              ----------------------------------
                                        Title: Authorized Signatory

LENDERS (continued):                    STONE TOWER CLO II LTD.

                                        By: Stone Tower Debt Advisors
                                        as its Collateral Manager

                                        By: /s/ W. Anthony Edson
                                            ------------------------------------
                                        Name: W. Anthony Edson
                                              ----------------------------------
                                        Title: Authorized Signatory

LENDERS (continued):                    STONE TOWER CLO III LTD.

                                        By: Stone Tower Debt Advisors
                                        as its Collateral Manager

                                        By: /s/ W. Anthony Edson
                                            ------------------------------------
                                        Name: W. Anthony Edson
                                              ----------------------------------
                                        Title: Authorized Signatory

LENDERS (continued):                    VENTURE CDO 2002 LIMITED

                                        By: Its investment advisor,
                                        MJX Asset Management LLC

                                        By: /s/ Martin Davey
                                            ------------------------------------
                                        Name: Martin Davey
                                        Title: Managing Director

<PAGE>

LENDERS (continued):                    VENTURE II CDO 2002 LIMITED

                                        By: Its investment advisor,
                                        MJX Asset Management LLC

                                        By: /s/ Martin Davey
                                            ------------------------------------
                                        Name: Martin Davey
                                        Title: Managing Director

LENDERS (continued):                    VENTURE III CDO LIMITED

                                        By: Its investment advisor,
                                        MJX Asset Management LLC

                                        By: /s/ Martin Davey
                                            ------------------------------------
                                        Name: Martin Davey
                                        Title: Managing Director

LENDERS (continued):                    VENTURE IV CDO LIMITED

                                        By: Its investment advisor,
                                        MJX Asset Management LLC

                                        By: /s/ Martin Davey
                                            ------------------------------------
                                        Name: Martin Davey
                                        Title: Managing Director

LENDERS (continued):                    VICTORIA FALLS CLO, LTD

                                        By: /s/ Wade T. Winter
                                            ------------------------------------
                                        Name: Wade T. Winter
                                        Title: S.V.P.

LENDERS (continued):                    VISTA LEVERAGED INCOME FUND

                                        By: Its investment advisor,
                                        MJX Asset Management LLC

                                        By: /s/ Martin Davey
                                            ------------------------------------
                                        Name: Martin Davey
                                        Title: Managing Director

<PAGE>

LENDERS (continued):                    WELLS FARGO BANK, N.A.

                                        By: /s/ David G. James
                                            ------------------------------------
                                        Name: David G.James
                                        Title: Vice President

<PAGE>

                                    EXHIBIT A

                              LENDERS' COMMITMENTS

<TABLE>
<CAPTION>
                                                          Revolving
                                          Revolving      Commitment
               Lender                    Commitment      Percentage    LOC Commitment
------------------------------------   --------------   ------------   --------------
<S>                                    <C>              <C>            <C>
Wachovia Bank, National Association    $11,000,000.00   22.000000000%  $1,100,000.00
CIBC Inc.                              $ 9,000,000.00   18.000000000%  $  900,000.00
Orchard First Source                   $ 2,000,000.00    4.000000000%  $  200,000.00
General Electric Capital Corporation   $ 5,000,000.00   10.000000000%  $  500,000.00
Wells Fargo Bank, N.A.                 $ 7,000,000.00   14.000000000%  $  700,000.00
Antares Capital Corporation            $ 7,000,000.00   14.000000000%  $  700,000.00
JPMorgan Chase Bank, N.A.              $ 4,500,000.00    9.000000000%  $  450,000.00
Goldman Sachs                          $ 4,500,000.00    9.000000000%  $  450,000.00
Total:                                 $   50,000,000            100%  $   5,000,000
</TABLE>Exhibit 4(u)

                      THE EMPIRE DISTRICT ELECTRIC COMPANY

______________________________________________________________________________

                           CERTIFICATE OF DESIGNATION
                   DESCRIPTION AND CERTAIN TERMS OF SERIES __
                         PREFERENCE STOCK, NO PAR VALUE

______________________________________________________________________________

     The Empire District Electric Company (the "Company"), a corporation
organized and existing under and by virtue of the General Corporation Code of
the State of Kansas.

     DOES HEREBY CERTIFY as follows:

          1. That pursuant to Article IV of the Restated Articles of
     Incorporation, as amended, of the Company (the "Articles"), the Company has
     authorized 2,500,000 shares of Preference Stock, no par value, of which [ ]
     shares are now outstanding. The Board of Directors of the Company is
     expressly authorized under the Company's Articles to fix, to the extent
     permitted by law, certain of the terms with respect to each particular
     series of Preference Stock (other than the Series A Participating
     Preference Stock, the terms of which are set forth in Article IV of the
     Articles).

          2. That the Board of Directors of the Company, at a meeting duly
     convened and held on *A*, at which a quorum was present and voting
     throughout, duly adopted the following resolution fixing the designations,
     preferences, voting powers and relative and other rights and
     qualifications, limitations and restrictions other than those which apply
     to all series of Preference Stock of the Company, irrespective of any
     variations between the different Series (for a statement of which reference
     is made to said aforesaid Article IV) and authorizing the issuance of a new
     series of Preference Stock as follows:

     RESOLVED, There has been created by the Board of Directors, a series of
preference stock limited to *B* shares, no par value, authorized and unissued,
known as "Series *C* Preference Stock" (the "Series *C* Preference Stock").
Shares of said series have, in addition to the general terms and characteristics
of all the authorized shares of preference stock of the corporation, as set
forth in its Restated Articles of Incorporation, the following terms and
characteristics as fixed by the Board of Directors:

          (a) The holders of Series *C* Preference Stock shall be entitled to
     receive cumulative dividends, if and when declared payable by the Board of
     Directors, at the rate of *D* % per annum from the date of original issue
     on all shares issued before *E*,

<PAGE>

     which date shall be the first dividend payment date for said series and
     payable thereafter on *F*.

          (b) [The holders of Series *C* Preference Stock shall be entitled to
     receive in the case of redemption thereof, at any time, at the option of
     the Company, in whole or in part, $*G* per share prior to *H* and at the
     following applicable prices per share during the respective 12-month
     periods ending *I* of the years indicated:

                      Optional                                 Optional
                     Redemption                               Redemption
     Year             Premium                Year               Premium
     ----             -------                ----               -------
      *J*               *K*                  *J*                  *K*

     and at *L* per share thereafter; in each case, plus accrued and unpaid
     dividends thereon to the date fixed for redemption, whether or not earned
     or declared,] *M* [provided that such Series *C* Preference Stock shall not
     be redeemable, directly or indirectly, prior to *N* with the proceeds of
     borrowed funds, or the issue of any stock ranking prior to or on a parity
     with the Series *C* Preference Stock, having a cost of money (before
     deduction of commissions and expenses) to the Company lower than *O* % per
     annum] *P*

          (c) [In the case of a mandatory sinking fund, except to the extent
     prevented from doing so by restrictions contained in the Articles or in any
     mortgage, indenture or loan agreement of the Company or to the extent
     prevented from doing so for any other reason, on *Q* and on each *R*
     thereafter so long as any shares of the Series *C* Preference Stock are
     outstanding, redeem *S* such shares (or all such shares outstanding on any
     such *R* if less than *S*), in each case at the sinking fund redemption
     price of $*T* per share plus accrued and unpaid dividends thereon to the
     date fixed for redemption. The obligation of the Company to redeem the
     shares of Series *C* Preference Stock pursuant to this sub-paragraph (c)
     shall be cumulative so that if it shall be prevented by the aforesaid
     restriction from redeeming on any such *R* the number of such shares which
     in the absence of such restrictions it would be required to redeem on such
     date, the number of such shares not so redeemed shall be redeemed as soon
     as the Company shall not be so prevented from redeeming the shares of the
     stock of such series] *U*. Any purchase or other acquisition of shares of
     Series *C* Preference Stock pursuant to sub-paragraph (b) and (d) hereof by
     the corporation shall constitute a credit against any sinking fund
     retirement required by this sub-paragraph (c).

          (d) The Company may increase the number of shares of the stock of such
     series to be redeemed on any *R* commencing *Q* pursuant to sub-paragraph
     (c), at the sinking fund redemption price of $*T* per share plus accrued
     and unpaid dividends to the date fixed for redemption, by a number of
     shares not to exceed *V* shares on any one such date; provided, however,
     that the aggregate of such increase in the number of shares redeemed
     pursuant to sub-paragraph (c) which are effected pursuant to this
     sub-paragraph (d) shall not exceed *W*] *X*.

                                      -2-
<PAGE>

          (e) [All redemptions pursuant to sub-paragraphs (b), (c) and (d)
     hereof shall be by lot or pro rata as the Board of Directors may determine,
     among the holders of the Series *C* Preference Stock. All shares of the
     Series *C* Preference Stock redeemed pursuant to sub-paragraph (b), (c) and
     (d), and all such shares purchased or otherwise acquired by the Company
     shall be deemed to be, and shall be restored to the status of, authorized
     and unissued shares of preference stock of no par value, each undesignated
     as to series, and shall not be reissued as shares of such series.] *Y*

          (f) [The holders of Series *C* Preference Stock shall be entitled to
     convert or exchange the Series *C* Preference Stock for shares of *Z* stock
     of the Company [at its option] [upon the happening of [specify event]].
     Appropriate adjustments shall be made to this Certificate of Designation,
     including the term "Preference Stock," to give effect to each such
     conversion or exchange.]

          (g) The holders of Series *C* Preference Stock shall be entitled to
     receive in the case of voluntary or involuntary liquidation, dissolution or
     winding up of the Company, the same amount per share as is then payable in
     the case of redemption, plus accrued and unpaid dividends thereon, whether
     or not earned or declared.

     IN WITNESS WHEREOF, The Empire District Electric Company has caused this
Certificate to be signed by its Vice President - Finance and its corporate seal
to be affixed and attested by its Secretary-Treasurer, this [ ] day of [ ], [ ].

                                  THE EMPIRE DISTRICT ELECTRIC COMPANY

                                  By:
                                       ------------------------------------
                                         Name:
                                         Title: Vice President - Finance

Attest:

________________________
Secretary- Treasurer

                                      -3-
<PAGE>

                                     LEGEND

     The following descriptions correspond to the dates, amounts and other
information not contained in this Form of Certificate of Designation, and are to
be determined as appropriate for each series of Preference Stock.

*A*  Insert applicable Board of Directors meeting date
*B*  Insert number of shares authorized for such series
*C*  Insert applicable series
*D*  Insert applicable dividend payment rate
*E*  Insert first dividend payment date
*F*  Insert dividend payment date(s)
*G*  Insert applicable redemption amount
*H*  Insert first redemption date
*I*  Insert applicable annual redemption date, month and day
*J*  Insert applicable year
*K*  Insert applicable redemption amount
*L*  Insert applicable redemption amount
*M*  Delete or revise to reflect actual redemption provisions, if any
*N*  Insert refunding date
*O*  Insert applicable rate
*P*  Delete or revise to reflect actual refunding protection, if any
*Q*  Insert first sinking fund date
*R*  Insert applicable annual sinking fund date, month and year
*S*  Insert applicable number of shares to be redeemed annually under the
     sinking fund
*T*  Insert applicable sinking fund redemption price
*U*  Delete or revise to reflect actual sinking fund provision, if any
*V*  Insert applicable number of additional shares which the Company may redeem
     annually under the sinking fund
*W*  Insert applicable limit to aggregate number of additional shares which the
     Company may redeem under the sinking fund
*X*  Delete or revise to reflect actual additional sinking fund allowance
     provisions, if any
*Y*  Delete or revise to reflect any redemption or sinking fund provision
*Z*  Insert applicable security.

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