Document:

Exhibit 10.3

 

SECOND AMENDMENT

 

SECOND AMENDMENT, dated as of May 11, 2011 (this “Amendment”), to the Revolving Credit and Guarantee Agreement, dated as of February 19, 2010, as amended (the “Credit Agreement”), among RDA HOLDING CO. (“Holdings”), THE READER’S DIGEST ASSOCIATION, INC. (the “Borrower”), certain of the Borrower’s Subsidiaries (the “Guarantors”), the lenders from time to time party thereto (the “Lenders”) and JPMORGAN CHASE BANK, N.A., as administrative agent (the “Administrative Agent”).

 

W  I  T  N  E  S  S  E  T  H:

 

WHEREAS, Holdings, the Borrower, the Guarantors, the Lenders and the Administrative Agent are parties to the Credit Agreement;

 

WHEREAS, the Borrower has requested certain amendments and waivers to the Credit Agreement as more fully set forth herein; and

 

WHEREAS, the Administrative Agent and the Lenders are willing to agree to such amendments and waivers but only on the terms and conditions contained in this Amendment.

 

NOW THEREFORE, in consideration of the premises and the mutual covenants hereinafter set forth, the parties hereto agree as follows:

 

1.             Defined Terms.  Unless otherwise defined herein, capitalized terms used herein which are defined in the Credit Agreement (as amended by this Amendment) are used herein as therein defined.

 

2.             Amendments to Section 1.01 (Defined Terms).  (a)  Section 1.01 of the Credit Agreement is amended by inserting the following definitions in appropriate alphabetical order:

 

“Alternate Currency” means each of Euros, Pounds Sterling, Rubles and any other currency other than Dollars approved by the relevant L/C Issuer in which a Letter of Credit is denominated at the request of the Borrower.

 

“Alternate Currency Overnight Rate” means, with respect to an Alternate Currency, the rate per annum determined by the relevant L/C Issuer to represent its cost of overnight or short-term funds in such currency (which determination shall be conclusive absent manifest error) plus the Applicable Rate then in effect with respect to Eurodollar Rate Loans.

 

“Calculation Date” means two Business Days prior to the last Business Day of each calendar month (or any other day selected by the Administrative Agent when an Event of Default has occurred and is continuing); provided, that the second Business Day preceding each issuance of any Letter of Credit denominated in an Alternate Currency shall also be a “Calculation Date”.  The Administrative Agent will notify the Borrower and the relevant L/C Issuer of the applicable amounts recalculated on each Calculation Date.

 

“Dollar Equivalent” means, on any date, with respect to any amount denominated in an Alternate Currency, the equivalent in Dollars that may be purchased with such currency at the Spot Exchange Rate (determined as of the most recent Calculation Date) with respect to such currency at such date.

 

 

“Euro” means the single currency of participating member states of the European Union.

 

“Net Cash Balance” means, at any time, the total cash balance (including cash, Cash Equivalents and restricted cash) of the Borrower and its Subsidiaries at such time, less their respective outstanding checks and drafts, wire transfer instructions and similar payment directions that have not, at such time, cleared the respective accounts of the Borrower and its Subsidiaries.

 

“Pound Sterling” means the currency of the United Kingdom.

 

“Ruble” means the currency of Russia.

 

“Second Amendment” means the Second Amendment to this Agreement, dated as of May 11, 2011.

 

“Second Amendment Effective Date” has the meaning specified in the Second Amendment.

 

“Spot Exchange Rate” means on any day (i) with respect to Euros, Pounds Sterling or Rubles the spot rate at which Dollars are offered on such day by JPMorgan Chase Bank in London for Euros, Pounds Sterling or Rubles, as the case may be, at approximately 11:00 a.m. (London time), for delivery two Business Days later and (ii) with respect to any other Alternate Currency, the spot rate at which Dollars are offered on such day by JPMorgan Chase Bank in the market where its foreign currency exchange operations are then being conducted for such Alternate Currency, at approximately 11:00 a.m. (local time), for delivery two Business Days later.

 

(b)   The definition of “Change of Control” is hereby amended by:

 

(i)            deleting “50%” and substituting in lieu thereof “35%” in clause (a) thereof; and

 

(ii)           deleting clause (e) thereof in its entirety and substituting in lieu thereof:

 

“(e)  the Disposition of all or substantially all of the assets of the Loan Parties other than any Disposition to which Section 7.04 applies, but only to the extent expressly permitted by Section 7.04 and so long as any requirements set forth therein are satisfied.”.

 

(c)   The definition of “Continuing Directors” is hereby amended by:

 

(i)            deleting the phrase “on the Emergence Date” and substituting in lieu thereof the phrase “on the Second Amendment Effective Date” in clause (1) thereof; and

 

(ii)           deleting the phrase “a majority” and substituting in lieu thereof the phrase “at least 75%” in clause (2) thereof.

 

(d)   The definition of “Default Rate” is hereby amended to read in its entirety as follows:

 

“Default Rate” means an interest rate equal to (i) the Base Rate plus (ii) the Applicable Rate applicable to Base Rate Loans plus (iii) 2.0% per annum; provided that with respect to the principal amount of any Eurodollar Rate Loan, the Default Rate shall be an interest rate equal to the interest rate (including the Applicable Rate) otherwise applicable to such Loan plus 2.0% per

 

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annum; provided, further, that with respect to reimbursement obligations for outstanding Letters of Credit (including any L/C Borrowing) denominated in an Alternate Currency, the Default Rate shall be an interest rate equal to the Alternate Currency Overnight Rate plus 2.0%, in each case to the fullest extent permitted by applicable Laws.

 

(e)   The definition of “EBITDA” is hereby amended by inserting the phrase “; provided that the aggregate amount of restructuring charges incurred during 2011 and thereafter added to EBITDA pursuant to this clause (e) or excluded in the calculation of Consolidated Net Income pursuant to clause (1) of the definition thereof shall not exceed $35,000,000 for any twelve-month period, and any restructuring charges incurred during any fiscal quarter of 2011 and thereafter shall be set forth in reasonable detail on a schedule provided to the Administrative Agent, as part of the Compliance Certificate with respect to such quarter required to be delivered pursuant to Section 6.02(b)” after the phrase “the Closing Date” in clause (e) thereof.

 

(f)    The definition of “L/C Obligations” is hereby amended by inserting the following parenthetical at the end of the definition, immediately following the word “Borrowings” and preceding the period:

 

“(in each case based on the Dollar Equivalent thereof with respect to Letters of Credit denominated in an Alternate Currency)”.

 

(g)   The definition of “Suspension Period” is hereby deleted in its entirety.

 

3.             Amendments to Section 2.03 (Letters of Credit).  (a)  Section 2.03(a)(i) of the Credit Agreement is hereby amended by inserting the words “or an Alternate Currency” in clause (A)(1), immediately following the word “Dollars” and preceding the words “for the account of the Borrower”.

 

(b)   Section 2.03(a)(i) of the Credit Agreement is hereby further amended by inserting, in the proviso immediately following clause (B), a comma and the words “in each case after having calculated the Dollar Equivalent of such Letter of Credit if it is to be denominated in an Alternate Currency”, immediately following the words “Letter of Credit Sublimit” and preceding the period.

 

(c)   Section 2.03(b) of the Credit Agreement is hereby amended by deleting the sentence in paragraph (i) that begins with the words, “In the case of a request for an initial issuance of a Letter of Credit” in its entirety and substituting in lieu thereof the following new sentence:

 

“In the case of a request for an initial issuance of a Letter of Credit, such Letter of Credit Application shall specify in form and detail reasonably satisfactory to the relevant L/C Issuer:  (a) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (b) the amount thereof; (c) the currency in which such Letter of Credit shall be denominated; (d) the expiry date thereof; (e) the name and address of the beneficiary thereof; (f) the documents to be presented by such beneficiary in case of any drawing thereunder; (g) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; and (h) such other matters as the relevant L/C Issuer may reasonably request.”

 

(d)   Section 2.03(b) of the Credit Agreement is hereby further amended by deleting paragraph (ii) in its entirety and substituting in lieu thereof the following new paragraph (ii):

 

“Promptly after receipt of any Letter of Credit Application, the relevant L/C Issuer will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has received a copy of such Letter of Credit Application from the Borrower and, if not, such L/C

 

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Issuer will provide the Administrative Agent with a copy thereof.  Prior to the issuance or amendment of a requested Letter of Credit, the Administrative Agent shall calculate the Dollar Equivalent of such Letter of Credit if it is to be denominated in an Alternate Currency and shall notify the Borrower and such L/C Issuer of the aggregate Revolving Credit Exposure after giving effect to (i) the issuance or amendment of such Letter of Credit, (ii) the issuance or expiration of any other Letter of Credit that is to be issued or amended or will expire prior to the requested date of issuance or amendment of such Letter of Credit and (iii) the borrowing or repayment of any Revolving Loans that (based upon notices delivered to the Administrative Agent by the Borrower) are to be borrowed or repaid prior to the requested date of issuance or amendment of such Letter of Credit.  A Letter of Credit shall be issued or amended only if (and upon issuance or amendment of each Letter of Credit the Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension, (i) the L/C Obligations shall not exceed the Letter of Credit Sublimit and (ii) the amount of the aggregate Revolving Credit Exposure shall not exceed the aggregate Revolving Credit Commitments.  Upon receipt by the relevant L/C Issuer of confirmation from the Administrative Agent that the requested issuance or amendment is permitted in accordance with the terms hereof, then, subject to the terms and conditions hereof, such L/C Issuer shall, on the requested date, issue a Letter of Credit for the account of the Borrower or enter into the applicable amendment, as the case may be.  Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the relevant L/C Issuer a risk participation in such Letter of Credit in an amount equal to the product of such Lender’s Pro Rata Share times (x) the amount of such Letter of Credit or (y) if such Letter of Credit is denominated in an Alternate Currency, the Dollar Equivalent of the amount of such Letter of Credit.”

 

(e)   Section 2.03(c) of the Credit Agreement is hereby amended by deleting paragraph (i) in its entirety and substituting in lieu thereof the following new paragraph (i):

 

“Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, the relevant L/C Issuer shall notify promptly the Borrower and the Administrative Agent thereof.  The Borrower shall reimburse the L/C Issuer through the Administrative Agent in an amount equal to the amount of such drawing, not later than 1:00 p.m. (New York time), on (A) if such Letter of Credit is denominated in Dollars, (i) the Business Day after the Borrower receives notice of such drawing, if such notice is received on such day prior to 11:00 a.m. (New York time), or (ii) if clause (i) above does not apply, the second Business Day following the day the Borrower receives notice of such drawing or (B) if such Letter of Credit is denominated in an Alternate Currency, three Business Days immediately following the day the Borrower receives notice of such drawing (each such date, an “Honor Date”).  Each such payment shall be made to such L/C Issuer in the currency in which such draft is payable (except that, in the case of any Letter of Credit denominated in an Alternate Currency, upon notice by such L/C Issuer to the Borrower, such payment shall be made in Dollars from and after the date on which the amount of such payment shall have been converted into Dollars at the Spot Exchange Rate on such date of conversion, which date of conversion shall be selected by such L/C Issuer and may be any Business Day after the date on which such payment is due) in immediately available funds.  In order to reimburse any such drawing, the Borrower shall have the option to request in accordance with Section 2.02 a Revolving Credit Borrowing of Base Rate Loans (“Refunding Loans”), without regard to the minimum and multiples specified in Section 2.02 for the principal amount of Base Rate Loans but subject to the amount of the unutilized portion of the Revolving Credit Commitments of the Lenders and the conditions set forth in Section 4.02.  If the Borrower fails to so reimburse such L/C Issuer by such time, the Administrative Agent shall promptly notify each Lender of the Honor Date, the amount of the unreimbursed drawing (the “Unreimbursed Amount”), and the amount of such Lender’s Pro Rata

 

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Share thereof in Dollars (based on the Dollar Equivalent of such amount with respect to Letters of Credit denominated in an Alternate Currency).  Any notice given by an L/C Issuer or the Administrative Agent pursuant to this Section 2.03(c)(i) may be given by telephone if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.”.

 

(f)    Section 2.03(c) of the Credit Agreement is hereby further amended by inserting the following parenthetical immediately following the words “in Dollars” in each of paragraphs (ii) and (iii):

 

“(based on the Dollar Equivalent thereof with respect to Letters of Credit denominated in an Alternate Currency)”.

 

(g)   Section 2.03(h) of the Credit Agreement is hereby amended by inserting the following parenthetical immediately following the words “in Dollars”:

 

“(based on the Dollar Equivalent thereof with respect to Letters of Credit denominated in an Alternate Currency)”.

 

(h)   Section 2.03(i) of the Credit Agreement is hereby amended by deleting the sentence that begins with the words, “Such fronting fees shall be due and payable” in its entirety and substituting in lieu thereof the following new sentence:

 

“Such fronting fees shall be due and payable in Dollars (based on the Dollar Equivalent thereof with respect to Letters of Credit denominated in an Alternate Currency) on the first Business Day after the end of each March, June, September and December, commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand.”.

 

4.             Amendment to Section 2.04 (Prepayments).  Section 2.04(b) of the Credit Agreement is hereby amended by deleting paragraph (i) in its entirety and substituting in lieu thereof the following new paragraph (i):

 

“If for any reason (A) the aggregate Revolving Credit Exposures at any time exceed the aggregate Revolving Credit Commitments then in effect, the Borrower shall promptly prepay or cause to be promptly prepaid Revolving Credit Loans and/or Cash Collateralize the L/C Obligations in an aggregate amount equal to such excess or (B) the L/C Obligations on any Calculation Date exceed the Letter of Credit Sublimit, the Borrower shall promptly Cash Collateralize the L/C Obligations in an aggregate amount equal to such excess.  If the Borrower is required to provide an amount of Cash Collateral in respect of L/C Obligations pursuant to this clause (i), such amount plus any accrued interest with respect to such amount shall be returned to the Borrower as and to the extent that, after giving effect to such return, the Borrower would remain in compliance with this clause (i) and no Event of Default shall have occurred and be continuing.”.

 

5.             Amendment to Section 2.09 (Computation of Interest and Fees).  Section 2.09 of the Credit Agreement is hereby amended by inserting the words “as soon as practicable, notify the Borrower of each determination of a rate for an amount owing in an Alternate Currency and shall,” immediately following the comma that follows the words “The Administrative Agent shall” in the last sentence of the paragraph.

 

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6.             Amendments to Section 4.02 (Conditions to All Credit Extensions).  Section 4.02 of the Credit Agreement is hereby amended by:

 

(a)   inserting the following new clause (f) therein:

 

“(f)  The Net Cash Balance as of the date of such Credit Extension shall not exceed $125,000,000 after giving effect to such Credit Extension, the intended application of proceeds of such Credit Extension and the intended use of cash on hand for any transaction contemplated by such application of proceeds (it being understood that (i) at the time of such Credit Extension, the Borrower shall describe in reasonable detail the intended application and use of such proceeds and cash on hand and (ii) to the extent such proceeds and cash on hand are not in fact so applied as intended within 15 days after the date of such Credit Extension, then the Borrower agrees to repay the Revolving Credit Loans within 5 Business Days thereafter by the amount by which the Net Cash Balance exceeds $125,000,000 at such time).”; and

 

(b)   deleting the word “and” after “(c)”, inserting a comma in lieu thereof and inserting the words “and (f)” after “(d)” in the final paragraph thereof.

 

7.             Amendments to Section 6.01 (Financial Statements).  Section 6.01 of the Credit Agreement is hereby amended by:

 

(a)   deleting the phrase “and consolidating (by region)” wherever it appears in clauses (a) and (b) thereof;

 

(b)   deleting the parenthetical “(in the case of the consolidated financial statements)” in clause (a) thereof; and

 

(c)   deleting the parenthetical “(other than the consolidating financial statements, which shall be substantially in the form delivered to the Administrative Agent prior to the Closing Date)” in clause (b) thereof.

 

8.             Amendments to Section 6.02 (Certificates; Other Information).  Section 6.02 of the Credit Agreement is hereby amended by:

 

(a)   deleting paragraph (c) in its entirety and substituting in lieu thereof the following new paragraph (c):

 

“simultaneously with the delivery of the financial statements referred to in Sections 6.01(a) and (b), a narrative discussion and analysis of the financial condition and results of operations of the Borrower and its Subsidiaries (including, without limitation, with respect to Dispositions, cost savings, facility closures, litigation, contingent liabilities and other matters as the Administrative Agent or any Lender through the Administrative Agent may from time to time reasonably request) for the applicable period and for the period from the beginning of the then current fiscal year to the end of such period; provided, however, that so long as (i) the obligations in Sections 6.01(a) and (b) are satisfied by furnishing the Borrower’s or Holdings’ (or any direct or indirect parent thereof), as applicable, Form 10-K or 10-Q, as applicable, filed with the SEC and (ii) such Form 10-K or 10-Q, as applicable, contains such narrative discussion and analysis, the obligations of this Section 6.02(c) shall be deemed satisfied;”and

 

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(b)   deleting paragraph (d) in its entirety and substituting in lieu thereof the following new paragraph (d):

 

“(d)  promptly upon the incurrence thereof of any obligation permitted under Sections 7.02(b)(i)(B), (C) or (D) or upon the entering into of any treasury, depository, cash management, or automated clearing house services permitted under Section 7.02(b)(i)(E) notice of such event, which notice shall set forth the nature of such obligation or service, including (i) in the case of clauses (B) and (C), principal amount, maturity and interest rate, (ii) in the case of clause (D), the principal terms of the applicable Swap Contract, including notional amount, maturity and interest rate, if applicable (but not any ongoing requirement to provide mark-to-market valuations), and (iii) in the case of clause (E), the anticipated range of exposure and any material change thereto;”.

 

9.             Amendment to Section 7.01 (Limitation on Restricted Payments).  Section 7.01 of the Credit Agreement is hereby amended by deleting clause (c) thereof in its entirety and inserting in lieu thereof the following:

 

“(c)  Notwithstanding anything to the contrary in the foregoing, (i) Restricted Investments of assets and property constituting Collateral (other than cash and Cash Equivalents) made pursuant to Section 7.01(a) may only be made in Subsidiary Guarantors and (ii) the Borrower will not, and will not permit any Restricted Subsidiary to, directly or indirectly, (I) declare or pay any dividend or make any distribution (whether cash or noncash) on account of the Borrower’s Equity Interests; (II) purchase or redeem, defease or otherwise acquire or retire for value any Equity Interests of the Borrower or any direct or indirect parent of the Borrower, in the case of each of clauses (I) and (II) to or for the benefit of any holder of common Equity Interests of the Borrower or any direct or indirect parent of the Borrower, or (III) make any principal payment on, or redeem, repurchase, defease, otherwise acquire or retire for value or give any irrevocable notice of redemption with respect thereto in each case, prior to any scheduled repayment, sinking fund payment or maturity, any Indebtedness by means of (A) Section 7.01(a)(vii), (B) Section 7.01(b)(v), Section 7.01(b)(vi), Section 7.01(b)(viii), Section 7.01(b)(ix), Section 7.01(b)(x), Section 7.01(b)(xii), Section 7.01(b)(xiii), Section 7.01(b)(xiv) or Section 7.01(b)(xvi) or (C) clause (o) of the definition of “Permitted Investments,” unless in each case such Restricted Payment is otherwise in compliance with this Agreement and at the time of such Restricted Payment (x) the Consolidated Secured Debt Ratio (calculated without giving effect to clause (1)(e) of the definition of Consolidated Secured Debt Ratio) of the Borrower would have been no greater than 3.25 to 1.00 on a pro forma basis (it being understood that the amount calculated pursuant to clause (1) of the definition of Consolidated Secured Debt Ratio will be reduced by the Liquidity of the Borrower and its Restricted Subsidiaries in excess of $150.0 million for purposes of such calculation), (y) the Borrower and its Restricted Subsidiaries would have Liquidity of no less than $100.0 million on a pro forma basis and (z) the Senior Secured Leverage Ratio (calculated on a pro forma basis in accordance with the last sentence of Section 7.14) would have been no greater than the ratio set forth in Section 7.14 opposite the last day of the then current fiscal quarter less 0.50.”.

 

10.           Amendment to Section 7.02 (Limitation on incurrence of Indebtedness and issuance of Disqualified and Preferred Stock).  Section 7.02 of the Credit Agreement is hereby amended by inserting the new clause (h):

 

“(h)  Notwithstanding anything to the contrary in the foregoing, the incurrence (as defined in Section 7.02(a)) of (a) any Senior Secured Indebtedness under Section 7.02(b)(i)(B), (C), (D) or (E) or (b) Senior Secured Indebtedness in a principal amount greater than $5,000,000 under any other provision of this Section 7.02 shall only be permitted under this Section 7.02 to

 

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the extent that, both immediately before and after giving pro forma effect to the incurrence of such Senior Secured Indebtedness (x) no Default or Event of Default shall have occurred and be continuing and (y) the Borrower shall be in compliance with in Section 7.14.”.

 

11.           Amendment to Section 7.14 (Financial Condition Covenant).  Section 7.14 of the Credit Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:

 

“Section 7.14         Financial Condition Covenant.  The Borrower will not permit the Senior Secured Leverage Ratio as of any date set forth below to be greater than the ratio set forth below opposite such date:

 

	
Date
    	
 
    	
Senior Secured
   Leverage Ratio
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
March 31, 2010
    	
 
    	
4.50 : 1.00
    	
 
    
	
June 30, 2010
    	
 
    	
4.50 : 1.00
    	
 
    
	
September 30, 2010
    	
 
    	
4.50 : 1.00
    	
 
    
	
December 31, 2010
    	
 
    	
4.50 : 1.00
    	
 
    
	
March 31, 2011
    	
 
    	
4.25 : 1.00
    	
 
    
	
June 30, 2011
    	
 
    	
4.25 : 1.00
    	
 
    
	
September 30, 2011
    	
 
    	
4.25 : 1.00
    	
 
    
	
December 31, 2011
    	
 
    	
4.00 : 1.00
    	
 
    
	
March 31, 2012
    	
 
    	
3.75 : 1.00
    	
 
    
	
June 30, 2012
    	
 
    	
3.75 : 1.00
    	
 
    
	
September 30, 2012
    	
 
    	
3.75 : 1.00
    	
 
    
	
December 31, 2012
    	
 
    	
3.75 : 1.00
    	
 
    

 

For all purposes of determining pro forma compliance with this Section 7.14 on any day, the applicable ratio shall be the one in effect on the last day of the fiscal quarter in which such day falls (it being understood that the EBITDA used in determining such pro forma compliance will be the EBITDA for the most recently ended period for which financial statements have been or are required to have been delivered pursuant to Section 6.01(a) or (b)).”.

 

12.           Waiver.  The Lenders party hereto, constituting the Required Lenders, hereby waive any Event of Default that may have occurred pursuant to Section 8.01(j) prior to the Second Amendment Effective Date and the payment of any interest which accrued at the Default Rate pursuant to Section 2.07(b) as a result thereof prior to the Second Amendment Effective Date.

 

13.           Conditions to Effectiveness of this Amendment.  This Amendment shall become effective upon the date (the “Second Amendment Effective Date”) upon which:

 

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(a)   this Amendment shall have been executed and delivered by the Borrower, the Administrative Agent and the Required Lenders;

 

(b) each Lender that has provided its written consent to this Amendment on or prior to 5:00 p.m., New York City time, on May 11, 2011 shall have received an amendment fee (or the Administrative Agent shall have received such fee for the account of such Lender) in an amount equal to 0.25% of such Lender’s Revolving Credit Commitment; and

 

(c) the Administrative Agent shall have received all fees and expenses required to be paid under the Credit Agreement.

 

14.           Representation and Warranties.  To induce the Administrative Agent and the Lenders to enter into this Amendment, the Borrower hereby represents and warrants to the Administrative Agent and each Lender that:

 

(a)   As of the Second Amendment Effective Date, and after giving effect to this Amendment, each of the representations and warranties made by the Borrower in or pursuant to the Loan Documents is true and correct in all material respects as if made on and as of such date (it being understood and agreed that any representation or warranty that by its terms is made as of a specific date shall be required to be true and correct in all material respects only as of such specified date).

 

(b)   As of the Second Amendment Effective Date, and after giving effect to this Amendment, no Default or Event of Default has occurred and is continuing.

 

15.           Effect of Amendment.  (a)  This Amendment shall not constitute an amendment or waiver of or consent to any provision of the Credit Agreement or the other Loan Documents not expressly referred to herein and shall not be construed as an amendment, waiver or consent to any action on the part of the Borrower or any other Loan Party that would require an amendment, waiver or consent of the Administrative Agent or the Lenders except as expressly stated herein.  Except as expressly amended hereby, the provisions of the Credit Agreement and the other Loan Documents are and shall remain in full force and effect in accordance with its terms.

 

(b)   On and after the Second Amendment Effective Date, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein”, or words of like import, and each reference to the Credit Agreement in any other Loan Document shall be deemed a reference to the Credit Agreement as amended hereby.  This Amendment shall constitute a “Loan Document” for all purposes of the Credit Agreement and the other Loan Documents.

 

16.           Counterparts.  This Amendment may be executed by one or more of the parties to this Amendment on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.  Delivery of an executed counterpart of a signature page by facsimile or by electronic mail in portable document format (.pdf) shall be effective as delivery of a manually executed counterpart.

 

17.           Severability.  Any provision of this Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

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18.           Integration.  This Amendment and the other Loan Documents represent the agreement of the Loan Parties, the Administrative Agent and the Lenders with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by the Administrative Agent or any Lender relative to the subject matter hereof or thereof not expressly set forth or referred to herein or in the other Loan Documents.

 

19.           GOVERNING LAW.  THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

[The remainder of this page is intentionally left blank.]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.

 

 

	
 
    	
THE   READER’S DIGEST ASSOCIATION, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    	
/s/   Thomas A. Williams
    
	
 
    	
 
    	
Name:   Thomas A. Williams
    
	
 
    	
 
    	
Title:   President and Chief Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
RDA   HOLDING CO.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    	
/s/   Thomas A. Williams
    
	
 
    	
 
    	
Name:   Thomas A. Williams
    
	
 
    	
 
    	
Title:   President and Chief Executive Officer
    

 

[Signature Page to Second Amendment to The Reader’s Digest Revolving Credit and Guarantee Agreement]

 

 

	
 
    	
JPMORGAN   CHASE BANK, N.A., as Administrative
   Agent and as a Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Charles Holmes
    
	
 
    	
 
    	
Name:
    	
Charles   K. Holmes
    
	
 
    	
 
    	
Title:
    	
Vice   President
    

 

[Signature Page to Second Amendment to The Reader’s Digest Revolving Credit and Guarantee Agreement]

 

 

	
 
    	
CREDIT   SUISSE AG, CAYMAN ISLANDS BRANCH, as a Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Mikhail Faybusovich
    
	
 
    	
 
    	
Name:
    	
Mikhail   Faybusovich
    
	
 
    	
 
    	
Title:
    	
Director
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Vipul Dhadda
    
	
 
    	
 
    	
Name:
    	
Vipul   Dhadda
    
	
 
    	
 
    	
Title:
    	
Associate
    

 

[Signature Page to Second Amendment to The Reader’s Digest Revolving Credit and Guarantee Agreement]

 

 

	
 
    	
GOLDMAN   SACHS CREDIT PARTNERS L.P., as a Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Lauren Day
    
	
 
    	
 
    	
Name:
    	
Lauren   Day
    
	
 
    	
 
    	
Title:
    	
Authorized   Signatory
    

 

[Signature Page to Second Amendment to The Reader’s Digest Revolving Credit and Guarantee Agreement]

 

 

	
 
    	
BANK   OF AMERICA, N.A., as a Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Mark Short
    
	
 
    	
 
    	
Name:
    	
Mark   Short
    
	
 
    	
 
    	
Title:
    	
Director
    

 

[Signature Page to Second Amendment to The Reader’s Digest Revolving Credit and Guarantee Agreement]Exhibit 10.1

 

EXECUTION VERSION

 

FOURTH AMENDMENT TO CREDIT AGREEMENT

 

THIS FOURTH AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as of March 28, 2011, is among ALLIED MOTION TECHNOLOGIES INC., a Colorado corporation (the “US Borrower”), ALLIED MOTION TECHNOLOGIES B.V., a Dutch Closed Company with Limited Liability (the “EUR Borrower,” and together with the US Borrower, the “Borrowers”), the Lenders under the Credit Agreement (as defined below), JPMORGAN CHASE BANK, N.A., as a Lender and as Administrative Agent (in such capacity, the “Administrative Agent”) under the Credit Agreement, and J.P. MORGAN EUROPE LIMITED, as EUR Agent (the “EUR Agent,” and together with the Administrative Agent, the “Agents”) under the Credit Agreement.  Capitalized terms used and not otherwise defined in this Amendment shall have the same meanings in this Amendment as set forth in the Credit Agreement.

 

RECITALS

 

A.                                   The Borrowers, the Lenders, the Administrative Agent and the EUR Agent are parties to that certain Credit Agreement, dated as of May 7, 2007, as amended by that certain Waiver and First Amendment to Credit Agreement, dated as of August 3, 2009, that certain Second Amendment to Credit Agreement, dated as of July 30, 2010, and that certain Third Amendment to Credit Agreement, dated as of October 26, 2010 (as so amended, the “Credit Agreement”).

 

B.                                     Pursuant to that certain Share Purchase Agreement dated December 16, 2010 (the “Share Purchase Agreement”), between Östergrens Holding AB, a limited liability company incorporated under the laws of Sweden, and EUR Borrower, EUR Borrower acquired 100% of the Equity Interests of Östergrens Elmotor AB, a limited liability company incorporated under the laws of Sweden (“Östergrens”), a wholly owned subsidiary of Östergrens Holdings AB, effective as of the Closing Date as defined in the Share Purchase Agreement (such transaction, the “Specified Acquisition”).

 

C.                                     The Lenders and the Agents consented to the Specified Acquisition pursuant to and subject to the terms of that certain Consent to Credit Agreement dated as of December 16, 2010 (the “Consent”).

 

D.                                    The Parties desire to amend the Credit Agreement to reflect certain changes related to the Specified Acquisition.

 

AGREEMENT

 

IN CONSIDERATION of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrowers, the Lenders and the Agents agree as follows:

 

 

1.                                       Amendments to Credit Agreement.  Effective as of the Effective Date (as defined below), except as otherwise provided herein, and upon the terms and subject to the conditions set forth in this Amendment, the Credit Agreement is hereby amended as follows:

 

A.                                   Section 1.01 of the Credit Agreement is hereby amended as follows:

 

1.                                       A new definition of “Fourth Amendment” is added as follows:

 

“Fourth Amendment” means that certain Fourth Amendment to Credit Agreement, dated as of March 28, 2011.

 

2.                                       The definition of “Indebtedness” is amended by adding the following sentence at the end thereof:

 

The Indebtedness of the Loan Parties shall exclude the Purchase Price (as defined in the Share Purchase Agreement) payable under clauses (d) and (e) of Section 4.1.2 of such Share Purchase Agreement.

 

3.                                       The definition of “Obligations” is deleted in its entirety and substituted therefor is the following:

 

“Obligations” means all Loans, advances, debts, liabilities, obligations, covenants and duties owing by (i) any Loan Party to any of the Secured Parties of any kind or nature arising under this Agreement, any Collateral Document, any Swap Agreement (to the extent such Swap Agreement is with a Lender or any Affiliate of any Lender and is permitted under Section 6.05), any cash management agreement between any Loan Party and any Lender (or an Affiliate of a Lender) or any other Loan Document, whether or not evidenced by any note, guaranty or other instrument, whether or not for the payment of money, whether arising by reason of an extension of credit, loan, guaranty, indemnification, or in any other manner, whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, now existing or hereafter arising (including interest, fees and other monetary obligations that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any bankruptcy, insolvency, receivership or similar law now or hereafter in effect naming such Person as the debtor in such proceeding, regardless of whether such interest, fees or other monetary obligations are allowed claims in such proceeding, and payments for early termination of Swap Agreements (to the extent such Swap Agreements are with a Lender or Affiliate of any Lender and are permitted under Section 6.05), fees, expenses, indemnification or otherwise) and however acquired and (ii) Östergrens (Changzhou) Elmotor Co., Ltd. and Östergrens (Changzhou) Trading Co., Ltd. to JPMorgan Chase Bank (China) Company Limited, Shanghai Branch of any kind or nature arising under the RMB Facility (as defined in Section 6.01(i)).  The term includes, without limitation, all interest, charges,

 

2

 

expenses, fees, and reasonable attorneys’ fees and disbursements, and any other sum chargeable to any Loan Party under this Agreement or any other Loan Document, or to Östergrens (Changzhou) Elmotor Co., Ltd. or Östergrens (Changzhou) Trading Co., Ltd. under the RMB Facility.

 

B.                                     Section 6.01 of the Credit Agreement is amended as follows:

 

(i) Clause (g) thereof is deleted in its entirety and substituted therefor is the following:

 

(g) Indebtedness in respect of netting services and overdraft protections of (x) Östergrens Elmotor AB, in connection with deposit accounts in favor of SwedBank (Sweden), not in excess of SEK 2,100,000 at any one time outstanding, and (y) Premotec, in connection with deposit accounts in favor of Fortis Bank, not in excess of 300,000 euros.  To the extent the Indebtedness permitted by this Section 6.01(g) is otherwise permitted under the Credit Agreement, it shall be without duplication.

 

(ii) The phrase “$1,000,000” in clause (h) thereof is deleted and substituted therefor is the phrase “$500,000”;

 

(iii) The following new clauses (i) and (j) are added at the end thereof:

 

(i)  Östergrens (Changzhou) Elmotor Co., Ltd. and Östergrens (Changzhou) Trading Co., Ltd. shall be permitted to incur (i) a RMB denominated working capital loan facility (the “RMB Facility”); provided that (w) the sole lender with respect to the RMB Facility shall be JPMorgan Chase Bank (China) Company Limited, Shanghai Branch (“JPMCB Shanghai”), (x) the RMB Facility shall be guaranteed by the US Borrower, and (y) the documents evidencing the RMB Facility shall contain such other terms and conditions as the Administrative Agent and JPMCB Shanghai shall require; provided further that this provision does not constitute a commitment by JPMCB Shanghai, any Agent or any Lender to provide the RMB Facility or any other financing, and (ii) Indebtedness from the EUR Borrower described in the proviso set forth in Section 6.04(h).  All principal of, interest on and other amounts owing from time to under the RMB Facility shall be Obligations, shall be cross collateralized with and shall be cross defaulted to the other Obligations, to the same extent as the Obligations relating to the EUR Loans; and

 

(j)  Indebtedness of any subsidiary of either the EUR Borrower or the US Borrower, subject to the terms of Section 6.04(h).

 

C.                                     Section 6.02 of the Credit Agreement is amended as follows:

 

(i)  The phrase “permitted by 6.01(h)” in clause (e) thereof is deleted and substituted therefor is the phrase “permitted by 6.01(g)”;

 

3

 

(ii)  By adding the following new clauses (f) and (g) at the end thereof:

 

(f)  any Liens in favor of JPMCB Shanghai to secure the RMB Facility; and

 

(g)  Liens on accounts and inventory of Östergrens Elmotor AB to secure Indebtedness, not in excess of SEK 2,100,000 at any one time outstanding, in favor of SwedBank (Sweden) that is permitted by 6.01(g).

 

D.                                    Section 6.04 of the Credit Agreement is amended by adding the following new clause (h) at the end thereof:

 

(h)                                 investments, loans or advances by (i) the EUR Borrower in or to any of its subsidiaries that are not EUR Facility Guarantors, and (ii) the US Borrower in or to any of its Subsidiaries that are not US Facility Guarantors; provided that the aggregate amount of all such Investments under this clause (h) (including without limitation any loans or advances) outstanding at any one time in or to the subsidiaries of the EUR Borrower that are not EUR Facility Guarantors or of the US Borrower that are not US Facility Guarantors, in total, shall not exceed $1,150,000 prior to the closing of the RMB Facility and $1,000,000 upon and after closing of the RMB Facility.

 

E.                                      Section 6.14(c)(i) of the Credit Agreement is amended by replacing the phrase “85% of Consolidated Tangible Net Worth as of the Third Amendment Effective Date” with the phrase “85% of Consolidated Tangible Net Worth based on US Borrower’s audited financial statements for the period ended December 31, 2010”.  The amendment provided by this Section 1(E) shall, subject to the satisfaction of the conditions set forth in Section 3(a)-(c) of this Amendment, be effective as of December 31, 2010.

 

F.                                      Schedule 3.01 of the Credit Agreement is hereby deleted in its entirety, and substituted therefor is Schedule 3.01 attached to this Amendment.

 

2.                                       Other Agreements.

 

(a)                                  The Borrowers, Lenders and Agents agree that all of the Loan Documents are hereby amended to reflect the amendments set forth herein and that no further amendments to any Loan Documents are required to reflect the foregoing.

 

(b)                                  All references in any document to “Credit Agreement” or any “Loan Document” shall refer to the Credit Agreement or any such Loan Document, as amended pursuant to this Amendment.

 

3.                                       Conditions Precedent.  The effectiveness of this Amendment is subject to the satisfaction of the following conditions (the date that all such conditions are satisfied, the “Effective Date”):

 

(a)                                  The Agents shall have received:

 

4

 

(i)                                     from each party hereto a counterpart of this Amendment signed on behalf of such party;

 

(ii)                                  the documentation required by Section 5 hereto;

 

(iii)                               each item set forth on the Closing Documents Checklist attached hereto as Exhibit A (the “Closing Documents Checklist”), other than post-closing deliveries;

 

(iv)                              all other definitive documents and instruments evidencing or relating to the Specified Acquisition (including without limitation any letters of intent, purchase agreements and all related transfer documents), which shall be in form and substance satisfactory to the Agents and the Lenders (together with the executed version of the Share Purchase Agreement, the “Acquisition Documents”); and

 

(v)                                 such other documents, certificates and instruments as the Agents or any Lender or its counsel may have reasonably requested, such documents, certificates and instruments to be satisfactory to the Agents, the Lenders and their counsel in all respects in their sole discretion.

 

(b)                                  All governmental and third party approvals necessary or, in the discretion of the Lenders, advisable in connection with the financing contemplated hereby and the continuing operations of the Borrower and its Subsidiaries shall have been obtained and be in full force and effect.

 

(c)                                  The Agents and the Lenders shall have received all fees and other amounts due and payable on or prior to the Effective Date, including to the extent invoiced, reimbursement or payment of all out-of-pocket expenses (including, without limitation, reasonable fees, disbursements and other charges of counsel) required to be reimbursed or paid by the Borrowers or any other Loan Party hereunder or under any separate agreements.

 

4.                                       Representations, Warranties and Covenants.  The Borrowers hereby certify to the Lenders that as of the date of this Amendment and as of the Effective Date (after giving effect to this Amendment, the Specified Acquisition and the transactions contemplated hereby and thereby) all of the Borrowers’ representations and warranties contained in the Credit Agreement and each of the Loan Documents are true, accurate and complete, and no “Default” or “Event of Default” exists under (and as defined in) the Credit Agreement or any of the Loan Documents.  Without limiting the generality of the foregoing, each Borrower represents and warrants that (i) the execution and delivery of this Amendment has been authorized by all necessary action on the part of such Borrower, (ii) the person executing this Amendment on behalf of such Borrower is duly authorized to do so, and (iii) this Amendment constitutes the legal, valid, binding and enforceable obligation of such Borrower, enforceable against such Borrower in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.  The Borrowers acknowledge that,

 

5

 

pursuant to Section 5.09(b) of the Credit Agreement, the Lenders have the right to require the owner of each new Subsidiary acquired in connection with the Specified Acquisition to pledge their Equity Interests in such Subsidiaries, and to require each such Subsidiary to guaranty some or all portions of the Obligations and grant security interests in all of their assets to secure some or all portions of the Obligations, in each case as provided in such Section 5.09(b).  The fact that the Lenders did not require such pledges, guarantees or security interests at this time does not release, affect or mitigate the Borrowers’ obligations under Section 5.09, including without limitation Section 5.09(e) and (f) as amended, and each Borrower agrees that it will take any and all actions required by Section 5.09 as requested by any Agent, regardless of when any such Agent makes any such request.  Pursuant to Section 3 of the Consent, Borrowers agreed to take certain actions required by Section 5.09 of the Credit Agreement within 60 days of the closing of the Specified Acquisition.  The parties hereby agree to extend the 60 day period for fulfillment of such obligations until the date of the closing of this Amendment.  This extension shall be subject in all respects to the satisfaction of the conditions set forth in Section 3(a)-(c) of this Amendment and the actual execution and delivery of this Amendment.  Upon satisfaction of such conditions, the extension shall be effective as of February 28, 2011.  Notwithstanding any of the foregoing and the requirements of Section 3 of the Consent and Section 5.09 of the Credit Agreement, (1) Östergrens shall not be required to grant a security interest in its assets or pledge the equity interests held by it of (a) Östergrens Elmotor GmbH, (b) Östergrens Elmotor, Ltd., (c) Östergrens (Changzhou) Elmotor Co., Ltd. (d) Östergrens (Changzhou) Trading Co., Ltd., or (e) to the extent a holding company is created by Östergrens, Premotec, EUR Borrower or US Borrower for the express purpose of holding the stock of Östergrens (Changzhou) Elmotor Co., Ltd. and Östergrens (Changzhou) Trading Co., Ltd., such holding company (and Östergrens shall be permitted to contribute or assign Östergrens (Changzhou) Elmotor Co., Ltd. and Östergrens (Changzhou) Trading Co., Ltd. to such holding company); (2) the aforementioned Subsidiaries of Östergrens shall not be required to guaranty the Obligations or to grant security interests in any of their respective assets; and (3) no opinions relating to the Specified Acquisition shall be required except as provided in Section 5 hereto.  The Borrowers hereby certify that, effective as of the closing of the Specified Acquisition, (x) all existing credit facilities provided to, or guarantees provided from, Östergrens and its Subsidiaries were terminated and all loans and other amounts owing thereunder were paid in full (other than the SEK facility described in Section 1C above), and the Administrative Agent has received evidence satisfactory to it of the foregoing, and (y) the EUR Borrower has delivered to the Administrative Agent final, signed Acquisition Documents.

 

5.                                       First Amendment to Pledge Agreement; Swedish Legal Opinion; Joinder to EUR Guaranty.  Concurrent with the execution of this Amendment, Borrowers shall and shall cause Östergrens to (i) execute and deliver to the Administrative Agent the First Amendment to Pledge Agreement dated as of the same date hereof, in form and substance satisfactory to Administrative Agent, (ii) deliver to the Administrative Agent certified copies of all governing and authorizing documents of Östergrens referred to in the Closing Documents Checklist (and by execution hereof by Administrative Agent, Administrative Agent acknowledges receipt and sufficiency of the same), and (iii) execute and deliver a Joinder to the EUR Guaranty by Östergrens, in form and substance satisfactory to Administrative Agent.  Within sixty (60) days following the execution of this Amendment, Östergrens shall deliver to the Administrative Agent a legal opinion under Swedish law relating to the Joinder to the EUR Guaranty to be delivered pursuant to the preceding sentence, in form and substance satisfactory to the Administrative Agent

 

6

 

6.                                       Additional Representations, Warranties and Covenants.  Borrowers hereby certify to the Lenders that, as of the date of closing of the Specified Acquisition, (i) the execution and delivery of the Acquisition Documents by any Borrower party thereto were authorized by all necessary action on the part of such Borrower, (ii) the person executing the Acquisition Documents on behalf of such Borrower was duly authorized to do so, (iii) each of the Acquisition Documents to which any Borrower is a party constitutes the legal, valid, binding and enforceable obligation of such Borrower, enforceable against such Borrower in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law and (iv) no breach or default by EUR Borrower or, to Borrowers’ knowledge, Östergrens Holdings, has occurred under the terms of any Acquisition Document.

 

7.                                       Additional Documents.  Borrowers shall execute and deliver, and shall cause to be executed and delivered, to the Agents or the Lenders at any time and from time to time such documents and instruments, including without limitation additional amendments to the Credit Agreement and the Loan Documents, as the Agents or the Lenders may reasonably request to confirm and carry out the transactions contemplated hereby or by any other Loan Documents executed in connection herewith.

 

8.                                       Continuation of the Credit Agreement and Loan Documents.  Except as specified in this Amendment, the provisions of the Credit Agreement and the Loan Documents shall remain in full force and effect, and if there is a conflict between the terms of this Amendment and those of the Credit Agreement or the Loan Documents, the terms of this Amendment shall control.  This Amendment is a Loan Document.

 

9.                                       Ratification and Reaffirmation of Obligations by Borrower.  Each Borrower hereby (a) ratifies and confirms all of its Obligations under the Credit Agreement and each of the other Loan Documents, and acknowledges and agrees that such Obligations remain in full force and effect, and (b) ratifies, reaffirms and reapproves in favor of the Agents and each Lender, as applicable, the terms and provisions of the Credit Agreement and each of the other Loan Documents, including (without limitation), its pledges and other grants of Liens and security interests pursuant to the Collateral Documents.

 

10.                                 Release and Indemnification.

 

(a)                                  Each Borrower and each Guarantor hereby fully, finally, and forever releases and discharges the Agents and each Lender, and their respective successors, assigns, directors, officers, employees, agents and representatives, from any and all causes of action, claims, debts, demands and liabilities, of whatever kind or nature, in law or equity, of any Borrower or any Guarantor, whether now known or unknown to any Borrower or any Guarantor in respect of (a) the Obligations under the Credit Agreement and each of the other Loan Documents or (b) the actions or omissions of any Agent or any Lender in any manner related to the Obligations under the Credit Agreement and each of the other Loan Documents; provided that this Section shall only apply to and be effective with respect to events or circumstances existing or occurring prior to and including the date of this Amendment.

 

7

 

(b)                                  Without limiting Section 9.03 of the Credit Agreement, each Borrower and each Guarantor hereby agrees to indemnify, defend, and hold harmless each and all of the Agents and Lenders (each an “Indemnified Party” and collectively the “Indemnified Parties”) from and against any and all accounts, covenants, agreements, obligations, claims, debts, liabilities, offsets, demands, costs, expenses, actions or causes of action of every nature, character and description, whether arising at law or equity or under statute, regulation or otherwise, and whether liquidated or unliquidated, contingent or noncontingent, known or unknown, suspected or unsuspected (“Claims”), arising from or made under any legal theory, which any of Indemnified Parties may incur as a direct or indirect consequence of or in relation to any acts or omissions of any Borrower or any Guarantor arising from or relating to any of: (i) the Loan Documents; (ii) this Amendment; or (iii) any documents executed by any Borrower or any Guarantor in connection with this Amendment.  Should any Indemnified Party incur any such Claims, or defense of or response to any Claims or demand related thereto, the amount thereof, including costs, expenses and attorneys’ fees, shall be added to the amounts due under the Loan Documents, and shall be secured by any and all liens created under and pursuant to the Loan Documents.  This indemnity shall survive until the Obligations have been indefeasibly paid in full and the termination, release or discharge of any Borrower and any Guarantor.  To the extent permissible under applicable law, this indemnity shall not limit any other rights of indemnification, subrogation or assignment, whether explicit, implied, legal or equitable, that any Indemnified Party may have; provided that no Indemnified Party shall have the right to indemnification to the extent that a Claim arises out of the Indemnified Party’s gross negligence or willful misconduct.

 

11.                                 Miscellaneous.

 

(a)                                  THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS) OF THE STATE OF COLORADO, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.  This Amendment shall be binding upon and inure to the benefit of the parties hereto and their successors and permissible assigns.

 

(b)                                  All representations and warranties made in this Amendment, the Credit Agreement or any Loan Document including any Loan Document furnished in connection with this Amendment shall survive the execution and delivery of this Amendment and the other related Loan Documents, and no investigation by the Agents or any Lender or any closing shall affect the representations and warranties or the right of the Agents or any Lender to rely upon them.

 

(c)                                  This Amendment and all documents to be executed and delivered hereunder may be delivered in the form of a facsimile copy, subsequently confirmed by delivery of the originally executed document.  This Amendment may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.

 

8

 

(d)                                  This Amendment, the Credit Agreement, the other Loan Documents, and all other instruments, documents and agreements executed and delivered in connection with this Amendment, the Credit Agreement and the other Loan Documents, embody the final, entire agreement among the parties hereto with respect to the subject matter hereof.  There are no oral agreements among the parties hereto.  This Amendment may not be amended or modified orally, but only by a written agreement meeting the requirements of Section 9.02 of the Credit Agreement.

 

(e)                                  The section headings herein are for convenience only and shall not affect the construction hereof.

 

(f)                                    Other than as expressly stated herein, this Amendment and the amendments set forth herein do not constitute a waiver by Lenders and Agents of Borrower’s or any other Loan Party’s compliance with any covenants, or a waiver of any Defaults or Events of Default, under the Credit Agreement or any of the Loan Documents, and shall not entitle the Borrowers or any other Loan Party to any similar or other amendments in the future.  Without limiting the foregoing, except as specifically set forth herein, Lenders and Agents continue to reserve all rights and remedies available to Lenders and Agent under the Credit Agreement and the Loan Documents, under law (including without limitation Article 9 of the Uniform Commercial Code) and at equity.

 

(g)                                 In case any provision of or obligation under this Amendment shall be held by any court of competent jurisdiction to be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

 

[Remainder of page intentionally left blank; signature pages follow.]

 

9

 

IN WITNESS WHEREOF, the Borrowers, the Lenders and the Agents have executed this Fourth Amendment to Credit Agreement as of the date first above written.

 

 

	
 
    	
ALLIED   MOTION TECHNOLOGIES INC., as US Borrower
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
ALLIED   MOTION TECHNOLOGIES B.V.,  as   EUR Borrower
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
JPMORGAN   CHASE BANK, N.A., individually and as Administrative Agent
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Karen   Lowe
    
	
 
    	
 
    	
Senior   Vice President
    
	
 
    	
 
    	
 
    
	
 
    	
J.P.   MORGAN EUROPE LIMITED, as EUR Agent
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

[Signature Page to Fourth Amendment to Credit Agreement]

 

 

ACKNOWLEDGMENT AND CONSENT BY GUARANTORS:

 

Each of the undersigned hereby (i) acknowledges the accuracy of the Recitals in the foregoing Amendment, (ii) consents to the modification of the Credit Agreement and the other Loan Documents and to all other matters in the foregoing Amendment, (iii) reaffirms the respective Guaranty Agreement executed by the undersigned and any other agreements, documents and instruments securing or otherwise related thereto (collectively, the “Guarantor Documents”), (iv) acknowledges that the Guarantor Documents continue in full force and effect, remain unchanged (except as specifically modified by the Amendment), are valid, binding and enforceable in accordance with their respective terms and guaranty or secure, as the case may be, the Obligations under the Credit Agreement as increased or otherwise changed pursuant to the Amendment , (v) agrees that all references, if any, in the Guarantor Documents to the Credit Agreement and the other Loan Documents are modified to refer to those documents as modified by the Amendment, and (vi) agrees to be bound by the release of the Agents and the Lenders as set forth in the Amendment.  The undersigned Guarantors hereby certify to the Lenders that, as of the date of the Amendment and as of the Effective Date (after giving effect to the Amendment), all of the Guarantors’ representations and warranties contained in each of the Loan Documents are true, accurate and complete, and no “Default” or “Event of Default” exists under (and as defined in) the Credit Agreement or any of the Loan Documents.  Without limiting the generality of the foregoing, each Guarantor represents and warrants that (i) the execution and delivery of this Acknowledgement and Consent by Guarantors has been authorized by all necessary action on the part of such Guarantor, (ii) the person executing this Acknowledgement and Consent by Guarantors on behalf of such Guarantor is duly authorized to do so, and (iii) this Acknowledgement and Consent by Guarantors constitutes the legal, valid, binding and enforceable obligation of such Guarantor, enforceable against such Guarantor in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.  All capitalized terms above not otherwise defined have the meanings given them in the foregoing Consent and Amendment.

 

 

	
 
    	
ALLIED   MOTION CONTROL  CORPORATION
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
COMPUTER   OPTICAL PRODUCTS, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    

 

[Signature Page to Fourth Amendment to Credit Agreement]

 

 

	
 
    	
EMOTEQ   CORPORATION
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
MOTOR   PRODUCTS CORPORATION
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
AMOT   I, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
AMOT   II, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
AMOT   III, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
STATURE   ELECTRIC, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

[Signature Page to Fourth Amendment to Credit Agreement]

 

 

	
 
    	
PRECISION   MOTOR TECHNOLOGY B.V.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
ÖSTERGRENS   ELMOTOR AB
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

[Signature Page to Fourth Amendment to Credit Agreement]

 

 

SCHEDULE 3.01

SUBSIDIARIES

 

[See attached]

 

 

EXHIBIT A

CLOSING DOCUMENTS CHECKLIST

 

[See attached]

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