Document:

ex10_1.htm

Exhibit 10.1

 

	

	
Amendment to Credit Agreement

This agreement is dated as of April 8, 2010, by and between ARI Network Services, Inc. (the "Borrower") and JPMorgan Chase Bank, N.A. (together with its successors and assigns the "Bank"). The provisions of this agreement are effective on the date that this agreement has been executed by ail of the signers and delivered to the Bank (the "Effective Date").

WHEREAS, the Borrower and the Bank entered into a credit agreement dated July 9, 2004, as amended (if applicable) (the "Credit Agreement"); and

WHEREAS, the Borrower has requested and the Bank has agreed to amend the Credit Agreement as set forth in this agreement;

NOW, THEREFORE, in mutual consideration of the agreements contained herein and for other good and valuable consideration, the parties agree as follows:

	
1.

	
DEFINED TERMS. Capitalized terms used in this agreement shall have the same meanings as in the Credit Agreement, unless otherwise defined in this agreement.

	
2.

	
MODIFICATION OF CREDIT AGREEMENT. The Credit Agreement is hereby amended as follows:

	
  

	
2.1

	
From and after the Effective Date, section 1.1 "Scope" and 1.2 "Facility A (Line of Credit)" of the Credit Agreement are hereby amended and restated as follows:

1.1             Scope. This agreement governs Facility A, and, unless otherwise agreed to in writing by the Bank and the Borrower or prohibited by any Legal Requirement (as hereafter defined), governs the Credit Facilities as defined below. Advances under any Credit Facilities shall be subject to the procedures established from time to time by the Bank. Any procedures agreed to by the Bank with respect to obtaining advances, including automatic loan sweeps, shall not vary the terms or conditions of this agreement or the other Related Documents regarding the Credit Facilities.

1.2             Facility A (Line of Credit). The Bank has approved a credit facility to the Borrower in the principal sum not to exceed $2,000,000.00 in the aggregate at any one time outstanding ("Facility A"). Credit under Facility A shall be repayable as set forth in a Line of Credit Note dated April 8, 2010, and any renewals, modifications, extensions, rearrangements, restatements thereof and replacements or substitutions therefor.

Non Usage Fee. The Borrower shall pay to the Bank a non-usage fee calculated on the average daily unused portion of Facility A at a rate of 0.25% per annum, payable in arrears within fifteen (15) days of the end of each calendar quarter for which the fee is owing. The Bank may begin to accrue the foregoing fee on the date the Borrower signs or otherwise authenticates this agreement.

	
  

	
2.2

	
From and after the Effective Date, the following are hereby added to section 2. Definitions of the Credit Agreement as follows:

2.12           "Collateral" means all Property, now or in the future subject to any Lien in favor of the Bank, securing or intending to secure, any of the Liabilities.

2.13           "Control" as used with respect to any Person, means the power to direct or cause the direction of, the management and policies of that Person, directly or indirectly, whether through the ownership of Equity Interests, by contract, or otherwise. "Controlling" and "Controlled" have meanings correlative thereto.

  

  

  

2.14           "Equity Interests" means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interest.

2.15           "Equity Owner" means a shareholder, partner, member, holder of a beneficial interest in a trust or other owner of any Equity Interests.

2.16           "GAAP" means generally accepted accounting principles in effect from time to time in the United States of America, consistently applied.

2.17           "Legal Requirement" means any law, ordinance, decree, requirement, order, judgment, rule, regulation (or interpretation of any of the foregoing) of any foreign governmental authority, the United States of America, any state thereof, any political subdivision of any of the foregoing or any agency, department, commission, board, bureau, court or other tribunal having jurisdiction over the Bank, any Pledgor or any Obligor or any of its Subsidiaries or their respective Properties or any agreement by which any of them is bound.

2.18           "Liabilities" means all indebtedness, liabilities and obligations of every kind and character of the Borrower to the Bank, whether the obligations, indebtedness and liabilities are individual, joint and several, contingent or otherwise, now or hereafter existing, including, without limitation, all liabilities, interest, costs and fees, arising under or from any note, open account, overdraft, credit card, lease, Rate Management Transaction, letter of credit application, endorsement, surety agreement, guaranty, acceptance, foreign exchange contract or depository service contract, whether payable to the Bank or to a third party and subsequently acquired by the Bank, any monetary obligations (including interest) incurred or accrued during the pendency of any bankruptcy, insolvency, receivership or other similar proceedings, regardless of whether allowed or allowable in such proceeding, and all renewals, extensions, modifications, consolidations, rearrangements, restatements, replacements or substitutions of any of the foregoing.

2.19           "Lien" means any mortgage, deed of trust, pledge, charge, encumbrance, security interest, collateral assignment or other lien or restriction of any kind.

2.20           "Obligor" means any Borrower, guarantor, surety, co-signer, endorser, general partner or other Person who may now or in the future be obligated to pay any of the Liabilities.

2.21           "Person" means any individual, corporation, partnership, limited liability company, joint venture, joint stock association, association, bank, business trust, trust, unincorporated organization, any foreign governmental authority, the United States of America, any state of the United States and any political subdivision of any of the foregoing or any other form of entity.

2.22           "Pledgor" means any Person providing Collateral.

2.23           "Property" means any interest in any kind of property or asset, whether real, personal or mixed, tangible or intangible.

2.24           "Rate Management Transaction" means any transaction (including an agreement with respect thereto) that is a rate swap, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, forward transaction, currency swap transaction, cross-currency rate swap transaction, currency option, derivative transaction or any other similar transaction (including any option with respect to any of these transactions) or any combination thereof, whether linked to one or more interest rates, foreign currencies, commodity prices, equity prices or other financial measures.

2.25           "Related Documents" means this agreement, the Notes, applications for letters of credit, all loan agreements, credit agreements, reimbursement agreements, security agreements, mortgages, deeds of trust, pledge agreements, assignments, guaranties, and any other instrument or document executed in connection with this agreement or with any of the Liabilities.

  

2

  

	
3.

	
RATIFICATION. The Borrower ratifies and reaffirms the Credit Agreement and the Credit Agreement shall remain in full force and effect as modified by this agreement.

	
4.

	
BORROWER REPRESENTATIONS AND WARRANTIES. The Borrower represents and warrants that (a) the representations and warranties contained in the Credit Agreement are true and correct in all material respects as of the date of this agreement, (b) no condition, event, act or omission which could constitute a default or an event of default under the Credit Agreement, as modified by this agreement, or any other Related Document exists, and (c) no condition, event, act or omission has occurred and is continuing that with the giving of notice, or the passage of time or both, would constitute a default or an event of default under the Credit Agreement, as modified by this agreement, or any other Related Document.

	
5.

	
FEES AND EXPENSES. The Borrower agrees to pay all fees and out-of-pocket disbursements incurred by the Bank in connection with this agreement, both before and after judgment, including legal fees incurred by the Bank in the preparation, consummation, administration and enforcement of this agreement.

	
6.

	
EXECUTION AND DELIVERY. This agreement shall become effective only after it is fully executed by the Borrower and the Bank, and the Bank shall have received from the Borrower the following documents: Line of Credit Note in amount of $2,000,000.00.

	
7.

	
ACKNOWLEDGEMENTS OF BORROWER / RELEASE. The Borrower acknowledges that as of the date of this agreement it has no offsets with respect to all amounts owed by the Borrower to the Bank arising under or related to the C edit Agreement, as modified by this agreement, or any other Related Document on or prior to the date of this agreement. The Borrower fully, finally and forever releases and discharges the Bank, its successors and assigns and their respective directors, officers, employees, agents and representatives (each a "Bank Party") from any and all claims, causes of action, debts, demands and liabilities, of whatever kind or nature, in law or in equity, of the Borrower, whether now known or unknown to the Borrower, which may have arisen in connection with the Credit Agreement or the actions or omissions of any Bank Party related to the Credit Agreement on or prior to the date hereof. The Borrower acknowledges and agrees that this agreement is limited to the terms outlined above, and shall not be construed as an agreement to change any other terms or provisions of the Credit Agreement. This agreement shall not establish a course of dealing or be construed as evidence of any willingness on the Bank's part to grant other or future agreements, should any be requested.

	
8.

	
INTEGRATION, ENTIRE AGREEMENT, CHANGE, DISCHARGE, TERMINATION, OR WAIVER. The Credit Agreement, as modified by this agreement, and the other Related Documents contain the complete understanding and agreement of the Borrower and the Bank in respect of the Credit Facilities and supersede all prior understandings and negotiations. If any one or more of the obligations of the Borrower under this agreement or the Credit Agreement, as amended by this agreement, is invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining obligations of the Borrower shall not in any way be affected or impaired, and the invalidity, illegality or unenforceability in one jurisdiction shall not affect the validity, legality or enforceability of the obligations of the Borrower under this agreement, the Credit Agreement, as modified by this agreement, or any other Related Document in any other jurisdiction. No provision of the Credit Agreement, as modified by this agreement, or the other Related Documents, may be changed, discharged, supplemented, terminated, or waived except in a writing signed by the party against whom it is being enforced.

	
9.

	
Governing Law and Venue. This agreement shall be governed by and construed in accordance with the laws of the State of Wisconsin (without giving effect to its laws of conflicts). The Borrower agrees that any legal action or proceeding with respect to any of its obligations under this agreement may be brought by the Bank in any state or federal court located in the State of Wisconsin, as the Bank in its sole discretion may elect. By the execution and delivery of this agreement, the Borrower submits to and accepts, for itself and in respect of its property, generally and unconditionally, the non-exclusive jurisdiction of those courts. The Borrower waives any claim that the State of Wisconsin is not a convenient forum or the proper venue for any such suit, action or proceeding.

	
10.

	
NOT A NOVATION. This agreement is a modification only and not a novation. Except as expressly modified by this agreement, the Credit Agreement, any other Related Documents, and all the terms and conditions thereof, shall be and remain in full force and effect with the changes herein deemed to be incorporated therein. This agreement is to be considered atached to the Credit Agreement and made a part thereof. This agreement shall not release or affect the liability of any guarantor of any promissory note or credit facility executed in reference to the Credit Agreement or release any owner of collateral granted as security for the Credit Agreement. The validity, priority and enforceability of the Credit Agreement shall not be impaired hereby. To the extent that any provision of this agreement conflicts with any term or condition set forth in the Credit Agreement, or any other Related Documents, the provisions of this agreement shall supersede and control. The Bank expressly reserves all rights against all parties to the Credit Agreement and the other Related Documents.

  

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11.

	
TIME IS OF THE ESSENCE. Time is of the essence under this agreement and in the performance of every term, covenant and obligation contained herein.

	  	
Borrower:

	  	  
	  	  	  	  
	  	
ARI Network Services, Inc.

	  	  	  	  
	  	By:	/s/ Brian Dearing	  
	  	 	Brian E. Dearing	  
	  	 	Printed Name	
Title

	  	  	  	  
	  	
Date Signed:   

	
April 15, 2010

	  

 

	  	
Bank:

	  	  
	  	  	  	  
	  	
JPMorgan Chase Bank, N.A.

	  	  	  	  
	  	By:	/s/ J. Anthony U. Sartill	  
	  	 	J. Anthony U. Sartill	
(illegible)

	  	 	Printed Name	
Title

	  	  	  	  
	  	
Date Signed:   

	
April 15, 2010

	  

  

4

  

Board Resolution

V1.2_08_28_08

	
Name of the Company

	
ARI Network Services, Inc.

	  	
Updated FULL Legal Name as appearing In Corporate Documents

	
Date of Board Meeting

	  

By my signature below, I hereby certify that the following Is a true extract of the minutes of a meeting of the board of directors of the Company which was duly called and held on the date specified above and at which a duly qualified quorum was present throughout and entitled to vote;

The directors reviewed a copy of the Account Terms and Account Application Forms and related documents (the "Documents") provided by JPMorgan Chase Bank N.A., Its branches and/or Its subsidiaries and affiliates (collectively, the "Bank") selling out the terms and conditions which will apply to the establishment, operation end maintenance of account(s)(the "Account(a)") with the Bank, and the provision by the Bank and use by the Company of any services related to the Accounts which shall be subject to separate terms as applicable (the "Services').

After due and careful consideration of the Documents, IT WAS RESOLVED that the Documents be and they are hereby approved and that the signatories holding the positions mentioned below (or any other persons holding such positions In the future) are hereby individually (unless otherwise Indicated below) authorized on behalf of the Company to (i) sign and deliver the Documentation and any document necessary or desirable to be executed in connection with such Documents; (ii) open any Accounts and request any Services which they consider necessary or desirable for the Company for the purpose of its business, and execute documentation thereto on behalf of the Company, (iii) authorize the operation of such Accounts by manual and electronic means Including the use of the Services and (iv) delegate authority to such persons as (hey consider appropriate to operate and act In relation to the Account(s) and Services Jointly or severally, subject to satisfactory documentation having been provided to the Bank:

	
Name

	
Position Held

	
Signature

	
Special

Instructions/Limits

	
Roy Olivier

	
President, CEO

	
/s/ Roy Olivier

	  
	  	  	  	  
	
Darin Janecek

	
VP Finance

	
/s/ Darin Janecek

	  
	  	  	  	  
	
Brian Dearing

	
Chief Corporate Development and Strategy Officer, Interim CFO

	
/s/ Brian Dearing

	  
	  	  	  	  
	 	 	 	 
	 	 	 	 
	  	  	  	  

The above resolutions were adopted In accordance with all requirements of law and of the Company's organizational documents, have been entered upon the regular minute books of the Company, have not been modified and will continue in full force and effect until the Bank receives written notice from the Company revoking or modifying the same and has had a reasonable opportunity to act on it.

	
Signature of Company Secretary, Director or other Certifying Officer(s)

	
/s/ Brian Dearing

	
Print Name

	
Brian Dearing

	
Date 4/15/10

	  

	
PN: 276849 DOC ID: 5

	
Mar, 31, 2010

	
Page 9 of 23

  

 

  

	
[INSERT “logo1.jpg” HERE

	
Line of Credit Note

$2,000,000.00

Date: April 8, 2010

Promise to Pay. On or before June 30, 2012, for value received, ARI Network Services, Inc. (the "Borrower") promises to pay to JPMorgan Chase Bank, N.A., whose address is 111 E. Wisconsin Ave, Milwaukee, WI 53202 (the "Bank") or order, in lawful money of the United States of America, the sum of Two Million and 00/100 Dollars ($2,000,000.00) or so much thereof as may be advanced and outstanding, plus interest on the unpaid principal balance computed on the basis of the actual number of days elapsed in a year of 360 days at the rate of 1.00% per annum (the "Applicable Margin") above the CB Floating Rate (the interest rate of this Note on any day is referred to herein as the "Note Rate"), and at the rate of 3.00% per annum above the Note Rate, at the Bank's option, upon the occurrence of any default under this Note, whether or not the Bank elects to accelerate the maturity of this Note, from the date such increased rate is imposed by the Bank.

In no event shall the interest rate exceed the maximum rate allowed by law. Any interest payment that would for any reason be unlawful under applicable law shall be applied to principal.

Interest will be computed on the unpaid principal balance from the date of each borrowing.

Until maturity, the Borrower will pay consecutive monthly installments of interest only commencing May 9, 2010.

The Borrower shall make all payments on this Note and the other Related Documents, without setoff, deduction, or counterclaim, to the Bank at the Bank's address above or at such other place as the Bank may designate in writing. If any payment of principal or interest on this Note shall become due on a day that is not a Business Day, the payment will be made on the next succeeding Business Day. Payments shall be allocated among principal, interest and fees at the discretion of the Bank unless otherwise agreed or required by applicable law. Acceptance by the Bank of any payment that is less than the payment due at that time shall not constitute a waiver of the Bank's right to receive payment in full at that time or any other time.

Authorization for Direct Payments (ACH Debits). To effectuate any payment due under this Note or under any other Related Documents, the Borrower hereby authorizes the Bank to initiate debit entries to Account Number 660612953 at the Bank and to debit the same to such account. This authorization to initiate debit entries shall remain in full force and effect until the Bank has received written notification of its termination in such time and in such manner as to afford the Bank a reasonable opportunity to act on it. The Borrower represents that the Borrower is and will be the owner of all funds in such account. The Borrower acknowledges: (1) that such debit entries may cause an overdraft of such account which may result in the Bank's refusal to honor items drawn on such account until adequate deposits are made to such account; (2) that the Bank is under no duty or obligation to initiate any debit entry for any purpose; and (3) that if a debit is not made because the above-referenced account does not have a sufficient available balance, or otherwise, :he payment may be late or past due.

Late Fee. Any principal or interest which is not paid within 10 days after its due date (whether as stated, by acceleration or otherwise) shall be subject to a late payment charge of five percent (5.00%) of the total payment due, in addition to the payment of interest, up to the maximum amount of One Thousand Five Hundred and 00/100 Dollars ($1,500.00) per late charge. The Borrower agrees to pay and stipulates that five percent (5.00%) of the total payment due is a reasonable amount for a late payment charge. The Borrower shall pay the late payment charge upon demand by the Bank or, if billed, within the time specified.

Purpose of Loan. The Borrower acknowledges and agrees that this Note evidences a loan for a business, commercial, agricultural or similar commercial enterprise purpose, and that no advance shall be used for any personal, family or household purpose. The proceeds of the loan shall be used only for the Borrower's working capital purposes and to refinance the Borrower's indebtedness to the Bank.

Credit Facility. The Bank has approved a credit facility to the Borrower in a principal amount not to exceed the face amount of this Note. The credit facility is in the form of advances made from time to time by the Bank to the Borrower. This Note evidences the Borrower's obligation to repay those advances. The aggregate principal amount of debt evidenced by this Note is the amount reflected from time to time in the records of the Bank. Until the earliest to occur of maturity, any default, event of default, or any event that would constitute a default or event of default but for the giving of notice, the lapse of time or both, the Borrower may borrow, pay down and reborrow under this Note subject to the terms of the Related Documents.

General Definitions. As used in this Note, the following terms have the following respective meanings:

  

 

  

	
1.

	
"Adjusted One Month LIBOR Rate" means, for any day, the sum of (i) 2.50% per annum plus (ii) the quotient of (a) the interest rate determined by the Bank by reference to the Page to be the rate at approximately 11:00 a.m. London time, on such date or, if such date is not a Business Day, on the immediately preceding Business Day for dollar deposits with a maturity equal to one (1) month divided by (b) one minus (he Reserve Requirement (expressed as a decimal) applicable to dollar deposits in the London interbank market with a maturity equal to one (1) month.

	
2.

	
"Affiliate" means any Person which, directly or indirectly, Controls or is Controlled by or under common Control with, another Person, and any director or officer thereof. The Bank is under no circumstances to be deemed an Affiliate of the Borrower or any of its Subsidiaries.

	
3.

	
"Business Day" means (i) with respect to the Adjusted One Month LIBOR Rate, a day (other than a Saturday or Sunday) on which banks generally are open in Wisconsin and/or New York for the conduct of substantially all of their commercial lending activities and on which dealings in United States dollars are carried on in the London interbank market and (ii) for all other purposes, a day other than a Saturday, Sunday or any other day on which national banking associations are authorized to be closed

	
4.

	
"CB Floating Rate" means the Prime Rate; provided that the CB Floating Rate shall, on any day, not be less than the Adjusted One Month LIBOR Rate. The CB Floating Rate is a variable rate and any change in the CB Floating Rate due to any change in the Prime Rate or the Adjusted One Month LIBOR Rate is effective from and including the effective date of such change in the Prime Rate or the Adjusted One Month LIBOR Rate, respectively.

	
5.

	
"Collateral" means all Property, now or in the future subject to any Lien in favor of the Bank, securing or intending to secure, any of the Liabilities.

	
6.

	
"Control" as used with respect to any Person, means the power to direct or cause the direction of, the management and policies of that Person, directly or indirectly, whether through the ownership of Equity Interests, by contract, or otherwise. "Controlling" and "Controlled" have meanings correlative thereto.

	
7.

	
"Equity Interests" means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interest.

	
8.

	
"GAAP" means generally accepted accounting principles in effect from time to time in the United States of America, consistently applied.

	
9.

	
"Liabilities" means all debts, obligations, and liabilities of every kind and character of the Borrower, whether individual, joint and several, contingent or otherwise, now or hereafter existing in favor of the Bank, including without limitation, all liabilities, interest, costs and fees, arising under or from any note, open account, overdraft, credit card, lease, Rate Management Transaction, letter of credit application, endorsement, surety agreement, guaranty, acceptance, foreign exchange contract or depository service contract, whether payable to the Bank or to a third party and subsequently acquired by the Bank, any monetary obligations (including interest) incurred or accrued during the pendency of any bankruptcy, insolvency, receivership or other similar proceedings, regardless of whether allowed or allowable in such proceeding, and all renewals, extensions, modifications, consolidations, rearrangements, restatements, replacements or substitutions of any of the foregoing.

	
10.

	
"Lien" means any mortgage, deed of trust, pledge, charge, encumbrance, security interest, collateral assignment or other lien or restriction of any kind.

	
11.

	
"Obligor" means any Borrower, guarantor, surety, co-signer, endorser, general partner or other Person who may now or in the future be obligated to pay any of the Liabilities.

	
12.

	
"Page" means Reuters Screen LIBOR01, formerly known as Page 3750 of the Moneyline Telerate Service (together with any successor or substitute, the "Service") or any successor or substitute page of the Service providing rate quotations comparable to those currently provided on such page of the Service, as determined by the Bank from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market.

	
13.

	
"Person" means any individual, corporation, partnership, limited liability company, joint venture, joint stock association, association, bank, business trust, trust, unincorporated organization, any foreign governmental authority, the United States of America, any state of the United States and any political subdivision of any of the foregoing or any other form of entity.

  

2

  

	
14.

	
"Pledgor" means any Person providing Collateral.

	
15.

	
"Prime Rate" means the rate of interest per annum announced from time to time by the Bank as its prime rate. The Prime Rate is a variable rate and each change in the Prime Rate is effective from and including the date the change is announced as being effective. THE PRIME RATE IS A REFERENCE RATE AND MAY NOT BE THE BANK'S LOWEST RATE.

	
16.

	
"Property" means any interest in any kind of property or asset, whether real, personal or mixed, tangible or intangible.

	
17.

	
"Rate Management Transaction" means any transaction (including an agreement with respect thereto) that is a rate swap, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, forward transaction, currency swap transaction, cross-currency rate swap transaction, currency option, derivative transaction or any other similar transaction (including any option with respect to any of these transactions) or any combination thereof, whether linked to one or more interest rates, foreign currencies, commodity prices, equity prices or other financial measures.

	
18.

	
"Regulation D" means Regulation D of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor thereto or other regulation or official interpretation of said Board of Governors relating to reserve requirements applicable to member banks of the Federal Reserve System.

	
19.

	
"Reserve Requirement" means the maximum aggregate reserve requirement (including all basic, supplemental, marginal and other reserves) which is imposed under Regulation D.

	
20.

	
"Related Documents" means this Note, all loan agreements, credit agreements, reimbursement agreements, security agreements, mortgages, deeds of trust, pledge agreements, assignments, guaranties, and any other instrument or document executed in connection with this Note or in connection with any of the Liabilities.

	
21.

	
"Subsidiary" means, as to any particular Person (the "parent"), a Person the accounts of which would be consolidated with those of the parent in the parent's consolidated financial statements if such financial statements were prepared in accordance with GAAP as of the date of determination, as well as any other Person of which fifty percent (50%) or more of the Equity Interests is at the time of determination directly or indirectly owned, Controlled or held, by the parent or by any Person or Persons Controlled by the parent, either alone or together with the parent.

Bank's Right of Setoff. The Borrower grants to the Bank a security interest in the Deposits, and the Bank is authorized to setoff and apply, all Deposits, Securities and Other Property, and Bank Debt against any and all Liabilities. This right of setoff may be exercised at any time and from time to time after the occurrence of any default, without prior notice to or demand on the Borrower and regardless of whether any Liabilities are contingent, unmatured or unliquidated. In this paragraph: (a) the term "Deposits" means any and all accounts and deposits of the Borrower (whether general, special, time, demand, provisional or final) at any time held by the Bank (including all Deposits held jointly with another, but excluding any IRA or Keogh Deposits, or any trust Deposits in which a security interest would be prohibited by law); (b) the term "Securities and Other Property" means any and all securities and other personal property of the Borrower in the custody, possession or control of the Bank, JPMorgan Chase & Co. or their respective Subsidiaries and Affiliates (other than Property held by the Bank in a fiduciary capacity); and (c) the term "Bank Debt" means all indebtedness at any time owing by the Bank, to or for the credit or account of the Borrower and any claim of the Borrower (whether individual, joint and several or otherwise) against the Bank now or hereafter existing.

Representations by Borrower. The Borrower represents and warrants that each of the following is and will remain true and correct until the later of maturity or the date on which all Liabilities evidenced by this Note are paid in full: (a) the execution and delivery of this Note and the performance of the obligations it imposes do not violate any law, conflict with any agreement by which it is bound, or require he consent or approval of any other Person; (b) this Note is a valid and binding agreement of the Borrower, enforceable according to its terms, except as may be limited by bankruptcy, insolvency or other laws affecting the enforcement of creditor's rights generally and by general principles of equity; (c) all balance sheets, profit and loss statements, other financial statements and applications for credit furnished to the Bank in connection with the Liabilities are accurate and fairly reflect the financial condition of the Persons to which they apply on their effective dates, including contingent liabilities of every type, which financial condition has not materially and adversely changed since those dates; and, if the Borrower is not a natural Person: (i) it is duly organized, validly existing and in good standing under the laws of the state where it is organized and in good standing in each state where it is doing business; and (ii) the execution and delivery of this Note and the performance of the obligations it imposes (A) are within its powers and have been duly authorized by all necessary action of its governing body, and (B) do not contravene the terms of its articles of incorporation or organization, its by-laws, regulations or any partnership, operating or other agreement governing its organization and affairs.

  

3

  

Events of Default/Acceleration. If any of the following events occurs, this Note shall become due immediately, without notice, at the Bank's opt on:

	
1.

	
Any Obligor fails to pay when due any of the Liabilities or any other debt to any Person, or any amount payable with respect to any of the Liabilities, or under this Note, any other Related Document, or any agreement or instrument evidencing other debt to any Person.

	
2.

	
Any Obligor or any Pledgor: (a) fails to observe or perform or otherwise violates any other term, covenant, condition or agreement of any of the Related Documents; (b) makes any materially incorrect or misleading representation, warranty, or certificate to the Bank; (c) makes any materially incorrect or misleading representation in any financial statement or other information delivered to the Bank; or (d) defaults under the terms of any agreement or instrument relating to any debt for borrowed money (other than the debt evidenced by the Related Documents) and the effect of such default will allow the creditor to dec are the debt due before its stated maturity.

	
3.

	
In the event (a) there is a default under the terms of any Related Document, (b) any Obligor terminates or revokes or purports to terminate or revoke its guaranty or any Obligor's guaranty becomes unenforceable in whole or in part, (c) any Obligor fails to perform promptly under its guaranty, or (d) any Obligor fails to comply with, or perform under any agreement, now or hereafter in effect, between the Obligor and the Bank, or any Affiliate of the Bank or their respective successors and assigns.

	
4.

	
There is any loss, theft, damage, or destruction of any Collateral having an aggregate fair market value in excess of $100,000.00 not covered by insurance.

	
5.

	
Any event occurs that would permit the Pension Benefit Guaranty Corporation to terminate any employee benefit plan of any Obligor or any Subsidiary of any Obligor.

	
6.

	
Any obligor or any of its Subsidiaries or any Pledgor: (a) becomes insolvent or unable to pay its debts as they become due; (b) makes an assignment for the benefit of creditors; (c) consents to the appointment of a custodian, receiver, or trustee for itself or for a substantial part of its Property; (d) commences any proceeding under any bankruptcy, reorganization, liquidation, insolvency or similar laws; (e) conceals or removes any of its Property, with intent to hinder, delay or defraud any of its creditors; (f) makes or per nits a transfer of any of its Property, which may be fraudulent under any bankruptcy, fraudulent conveyance or similar law; or (g) makes a transfer of any of its Property to or for the benefit of a creditor at a time when other creditors similarly situated have not been paid.

	
7.

	
A custodian, receiver, or trustee is appointed for any Obligor or any of its Subsidiaries or any Pledgor or for a substantial part of their respective Property.

	
8.

	
Any Obligor or any of its Subsidiaries, without the Bank's written consent: (a) liquidates or is dissolved; (b) merges or consolidates with any other Person; (c) leases, sells or otherwise conveys a material part of its assets or business outside the ordinary course of its business; (<l) leases, purchases, or otherwise acquires a material part of the assets of any other Person, except in the ordinary course of its business; or (e) agrees to do any of the foregoing; provided, however, that any Subsidiary of an Obligor may merge or consolidate with any other Subsidiary of that Obligor, or with the Obligor, so long as the Obligor is the survivor.

	
9.

	
Proceedings are commenced under any bankruptcy, reorganization, liquidation, or similar laws against any Obligor or any of its Subsidiaries or any Pledgor and remain undismissed for thirty (30) days after commencement; or any Obligor or any of its Subsidiaries or any Pledgor consents to the commencement of those proceedings.

	
10.

	
Any judgment is entered against any Obligor or any of its Subsidiaries, or any attachment, seizure, sequestration, levy, or garnishment is issued against any Property of any Obligor or any of its Subsidiaries or of any Pledgor or any Collateral.

	
11.

	
Any individual Obligor or Pledgor dies, or a guardian or conservator is appointed for any individual Obligor or Pledgor or all or . any portion of their respective Property, or the Collateral.

	
12.

	
Any material adverse change occurs in: (a) the reputation, Property, financial condition, business, assets, affairs, prospects, liabilities, or operations of any Obligor or any of its Subsidiaries; (b) any Obligor's or Pledgor's ability to perform its obligations under the Related Documents; or (c) the Collateral.

Cure Periods. Except as expressly provided to the contrary in this Note or any of the other Related Documents, the Bank shall not exercise its option to accelerate the maturity of this Note upon the occurrence of a default unless the default has not been fully cured (i) within five (5) days after its occurrence, if the condition, event or occurrence giving rise to such default can be cured by the payment of money, or (ii) within thirty (30) days after its occurrence, if the condition, event or occurrence giving rise to such default is of a nature that it can be cured only by means other than the payment of money.

Provided, however, that the Borrower shall have no cure rights if the condition, event or occurrence giving rise to the default: (a) is described in any of clauses 3(b), (6), (7), (8), (9), or (11) above or (b) constitutes a breach of any covenant in any of the Related Documents prohibiting the sale or transfer of (i) any assets of any Borrower, Mortgagor, Pledgor, Debtor, Assignor, Trustor or any similar pledging or borrowing party or (ii) any of the Collateral; or (c) during the twelve (12) month period immediately preceding the occurrence of the default, either (i) the same default has occurred or (ii) three (3) or more other defaults of any nature have occurred. Notwithstanding the existence of any cure period, the Bank shall have no obligation to extend credit governed by this Note, whether by advance, disbursement of a loan or otherwise after the occurrence of any default or event which with the giving of notice or the passage of time or both could become a default or during any cure period. The inclusion of any cure period in this Note shall have no bearing on the due dates for payments under any of the Related Documents, whether for purposes of calculating late payment charges or otherwise.

  

4

  

Remedies. If this Note is not paid at maturity, whether by acceleration or otherwise, the Bank shall have all of the rights and remedies provided by any law or agreement, in equity or otherwise. The Bank is authorized to cause all or any part of the Collateral to be transferred to or registered in its name or in the name of any other Person, with or without designating the capacity of that nominee. Without limiting any other available remedy, the Borrower is liable for any deficiency remaining after disposition of any Collateral. The Borrower is liable to the Bank for all reasonable costs and expenses of every kind incurred (or charged by internal allocation) in connection with the negotiation, preparation, execution, filing, recording, modification, supplementing and waiver of this Note or the other Related Documents and the making, servicing and collection of this Note or the other Related Documents and any other amounts owed under this Note or the other Related Documents, both before and after judgment, including without limitation reasonable attorneys' fees and court costs. These costs and expenses include without limitation any costs or expenses incurred by the Bank in any bankruptcy, reorganization, insolvency or other similar proceeding.

Waivers. Each Obligor waives: (a) to the extent not prohibited by law, all rights and benefits under any laws or statutes regarding sureties, as may be amended; (b) any right to receive notice of the following matters before the Bank enforces any of its rights: (i) the Bank's acceptance of this Note, (ii) any credit that the Bank extends to the Borrower, (iii) the Borrower's default, (iv) any demand, diligence, presentment, dishonor and protest, or (v) any action that the Bank takes regarding the Borrower, anyone else, any Collateral, or any of the Liabilities, that it might be entitled to by law, under any other agreement, in equity or otherwise; (c) any right to require the Bank to proceed against the Borrower, any other Obligor, or any Collateral, or pursue any remedy in the Bank's power to pursue; (d) any defense based on any claim that any endorser's or other Obligor's obligations exceed or are more burdensome than those of the Borrower; e) the benefit of any statute of limitations affecting liability of any endorser or other Obligor or the enforcement hereof; (f) any defense arising by reason of any disability or other defense of the Borrower or by reason of the cessation from any cause whatsoever (other than payment in full) of the obligation of the Borrower for the Liabilities; and (g) any defense based on or arising out of any defense that the Borrower may have to the payment or performance of the Liabilities or any portion thereof. Each Obligor consents to any extension or postponement of time of its payment without limit as to the number or period, to any substitution, exchange or release of all or any part of the Collateral, to the addition of any other Person, and to the release or discharge of, or suspension of any rights and remedies against, any Obligor. The Bank may waive or delay enforcing any of its rights without losing them. Any waiver affects only the specific terms and time period stated in the waiver. No modification or waiver of any provision of this Note i; effective unless it is in writing and signed by the Person against whom it is being enforced.

Cooperation. The Borrower agrees to fully cooperate with the Bank and not to delay, impede or otherwise interfere with the efforts of the Bank to secure payment from the Collateral including actions, proceedings, motions, orders, agreements or other matters relating to relief from automatic stay, abandonment of Property, use of cash Collateral and sale of (he Collateral free and clear of all Liens.

Rights of Subrogation. Each Obligor waives and agrees not to enforce any rights of subrogation, contribution or indemnification that it may have against the Borrower, any other Obligor, or the Collateral, until the Borrower and such Obligor have fully performed all their obligations to the Bank, even if those obligations are not covered by this Note.

Reinstatement. The Borrower agrees that to the extent any payment or transfer is received by the Bank in connection with the Liabilities evidenced by this Note, and all or any part of the payment or transfer is subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be transferred or repaid by the Bank or transferred or paid over to a trustee, receiver or any other Person, whether under any bankruptcy act or otherwise (any of those payments or transfers is hereinafter referred to as a "Preferential Payment"), then this Note shall continue to be effective or shall be reinstated, as the case may be, even if all those Liabilities lave been paid in full and whether or not the Bank is in possession of this Note, or whether the Note has been marked paid, released or canceled, or returned to the Borrower and, to the extent of the payment, repayment or other transfer by the Bank, the Liabilities or part intended to be satisfied by the Preferential Payment shall be revived and continued in full force and effect as if the Preferential Payment had not been made.

Governing; Law and Venue. This Note shall be governed by and construed in accordance with the laws of the State of Wisconsin (without giving effect to its laws of conflicts). The Borrower agrees that any legal action or proceeding with respect to any of its obligation; under this Note may be brought by the Bank in any state or federal court located in the State of Wisconsin, as the Bank in its sole discretion may elect. By the execution and delivery of this Note, the Borrower submits to and accepts, for itself and in respect of its property, generally and unconditionally, the non-exclusive jurisdiction of those courts. The Borrower waives any claim that the State of Wisconsin is not a convenient forum or the proper venue for any such suit, action or proceeding.

Renewal and Extension. This Note is given in replacement, renewal and/or extension of, but not in extinguishment of the indebtedness evidenced by, that Line of Credit Note dated July 9, 2004 executed by the Borrower in the original principal amount of Five Hundred Thousand and 00/100 Dollars ($500,000.00), including previous renewals or modifications thereof, if any (the "Prior Note" and together with all loan agreements, credit agreements, reimbursement agreements, security agreements, mortgages, deeds of trust, pledge agreements, assignments, guaranties, and any other instrument or document executed in connection with (he Prior Note, the "Prior Related Documents"), and is not a novation thereof. All interest evidenced by the Prior Note shall continue to be due and payable until paid. The Borrower fully, finally, and forever releases and discharges the Bank and its successors, assigns, directors, officers, employees, agents, and representatives (each a "Bank Party") from any and all causes of action, claims, debts, demands, and liabilities, of whatever kind or nature, in law or equity, of the Borrower, whether now known or unknown to the Borrower (i) in respect of the Liabilities evidenced by the Prior Note and the Prior Related Documents, or of the actions or omissions of any Bank Party in any manner related to the Liabilities evidenced by the Prior Note or the Prior Related Documents and (ii) arising from events occurring prior to the date of this Note. If applicable, all Collateral continues to secure the payment of this Note and the Liabilities. The provisions of this Note are effective on the date that this Note has been executed by all of the signers and delivered to the Bank.

  

5

  

Inability to Determine Interest Rate. If the Bank determines on any day that quotations of interest rates for the relevant deposits referred to in the definition of Adjusted One Month LIBOR Rate are not being provided for purposes of determining the interest rate on any advance on any day, then each advance evidenced by this Note shall bear interest at the Prime Rate plus the Applicable Margin until the Bank determines that quotations of interest rates for the relevant deposits referred to in the definition of Adjusted One Month LIBOR Rate are being provided.

Miscellaneous. If more than one Borrower executes this Note: (i) each Borrower is liable jointly and severally for the Liabilities evidenced by this Note; (ii) the term "Borrower" means any one or more of them; and (iii) the receipt of value by any one of them constitutes the receipt of value by the others. This Note binds the Borrower and its successors, and benefits the Bank, its successors and assigns. Any reference to the Bank includes any holder of this Note. This Note is subject to that certain Credit Agreement by and between the Borrower and the Bank, dated July 9, 2004, and all amendments, restatements and replacements thereof (the "Credit Agreement") to which reference is hereby made for a more complete statement of the terms and conditions under which the loan evidenced hereby is made and is to be repaid. The terms and provisions of the Credit Agreement are hereby incorporated and made a part hereof by this reference thereto with the same force and effect as if set forth at length herein. No reference to the Credit Agreement and no provisions of this Note or the Credit Agreement shall alter or impair the absolute and unconditional obligation of the Borrower to pay the principal and interest on this Note as herein prescribed. Capitalized terms not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement. Section headings are for convenience of reference only and do not affect the interpretation of this Note. Any notices and demands under or related to this Note shall be in writing and delivered to the intended party at its address stated herein, and if to the Bank, at its main office if no other address of the Bank is specified herein, by one of the following means: (a) by hand; (b) by a nationally recognized overnight courier service; or (c) by certified mail, postage prepaid, with return receipt requested. Notice shall be deemed given: (a) upon receipt if delivered by hand; (b) on the Delivery Day after the day of deposit with a nationally recognized courier service; or (c) on the third Delivery Day after the notice is deposited in the mail. "Delivery Day" means a day other than a Saturday, a Sunday, or any other day on which national banking associations are authorized to be closed. Any party may change its address for purposes of the receipt of notices and demands by giving notice of such change in he manner provided in this provision. This Note and the other Related Documents embody the entire agreement between the Borrower and the Bank regarding the terms of the loan evidenced by this Note and supercede all oral statements and prior writings relating to that loan. No delay on the part of the Bank in the exercise of any right or remedy waives that right or remedy. No single or partial exercise by the Bank of any right or remedy precludes any other future exercise of it or the exercise of any other right or remedy. No waiver or indulgence by the Bank of any default is effective unless it is in writing and signed by the Bank, nor shall a waiver on one occasion bar or waive that right on any future occasion. The rights of the Bank under this Note and the other Related Document: are in addition to other rights (including without limitation, other rights of setoff) the Bank may have contractually, by law, in equity or otherwise, all of which are cumulative and hereby retained by the Bank, If any provision of this Note cannot be enforced, the remaining portions of this Note shall continue in effect. The Borrower agrees that the Bank may provide any information or knowledge the Bank may have about the Borrower or about any matter relating to this Note or the Related Documents to JPMorgan Chase & Co., or any of its Subsidiaries or Affiliates or their successors, or to any one or more purchasers or potential purchasers of this Note or the Related Documents. The Borrower agrees that the Bank may at any time sell, assign or transfer one or more interests or participations in all or any part of its rights and obligations in this Note to one or more purchasers whether or not related to the Bank. Time is of the essence under this Note and in the performance of every term, covenant and obligation contained herein.

Government Regulation. The Borrower shall not (a) be or become subject at any time to any law, regulation, or list of any government agency (including, without limitation, the U.S. Office of Foreign Asset Control list) that prohibits or limits the Bank from making any advance or extension of credit to the Borrower or from otherwise conducting business with the Borrower, or (b) fail to provide do documentary and other evidence of the Borrower's identity as may be requested by the Bank at any time to enable the Bank to verify the Borrowers identity or to comply with any applicable law or regulation, including, without limitation, Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318.

USA PATRIOT ACT NOTIFICATION. The following notification is provided to the Borrower pursuant to Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318:

  

6

  

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT. To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each Person that opens an account, including any deposit account, treasury management account, loan, other extension of credit, or other financial services product. What this means for the Borrower: When the Borrower opens an account, if the Borrower is an individual, the Bank will ask for the Borrower's name, taxpayer identification number, residential address, date of birth, and other information that will allow the Bank to identify the Borrower, and if the Borrower is not an individual, the Bank will ask for the Borrower's name, taxpayer identification number, business address, and, other information that will allow the Bank to identify the Borrower. The Bank may also ask, if the Borrower is an individual, to see the Borrower's driver's license or other identifying documents, and if the Borrower is not an individual, to see the Borrower's legal organizational documents or other identifying documents.

WAIVER OF SPECIAL DAMAGES. THE BORROWER WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT THE UNDERSIGNED MAY HAVE TO CLAIM OR RECOVER FROM THE BANK IN ANY LEGAL ACTION OR PROCEEDING ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES.

JURY WAIVER. THE BORROWER AND THE BANK (BY ITS ACCEPTANCE HEREOF) HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) BETWEEN THE BORROWER AND THE BANK ARISING OUT OF OR IN ANY WAY RELATED TO THIS NOTE OR THE OTHER RELATED DOCUMENTS. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE BANK TO PROVIDE THE FINANCING EVIDENCED BY THIS NOTE.

 

	  	
Borrower:

	  	  
	  	  	  	  
	Address: 10850 W. Park Place, Suite 1200	
ARI Network Services, Inc.

	                  Milwaukee, WI 53224	  	  	  
	  	By:	 /s/ Brian Dearing	  
	  	 	Brian E. Dearing	  
	  	 	Printed Name	
Title

	  	  	  	  
	  	
Date Signed:   

	
April 15, 2010

	  

 

 

7ex10_1.htm

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

This is an Agreement by and between AIR METHODS CORPORATION, a Delaware corporation (the “Company”), and HOWARD L. RAGSDALE (the “Executive”), effective as of June 1, 2010.

RECITALS

Executive is presently employed by the Company and has been since the year 2009.  As of the date of this Agreement, the Executive has been appointed to the position of Senior Vice President of Business Development.  The Company and the Executive desire to set forth in this Agreement the terms and conditions of the Executive’s continued employment by the Company, effective as the date first set forth above.

AGREEMENT

In consideration of the mutual promises contained herein, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

1.             Employment; Position; Term.  The Company hereby employs the Executive, and the Executive hereby accepts employment with the Company, in the capacity of Senior Vice President of Business Development.  Subject to Section 4, the term of the Executive’s employment under this Agreement shall be through May 31, 2011.  The term of this Agreement shall be extended for successive one-year periods on June 1 of each year beginning June 1, 2011, unless on or before three months prior to any such renewal date the Company or the Executive provides written notice to the other of its or his intention not to renew.

2.             Duties, Responsibilities and Authority.  In his capacity as Senior Vice President of Business Development, the Executive shall have primary responsibility for the Company’s business development initiatives, which shall be conducted in accordance with policies established by the Company’s board of directors (the “Board”).  The Executive shall report to and be subject to the direction and control of the Chief Executive Officer.  The Executive shall devote his full professional and managerial time and effort to the performance of his duties as Senior Vice President of Business Development and he shall not engage in any other business activity or activities which, in the mutual judgment of the Executive and the Board, do, in fact, conflict with the performance of his duties under this Agreement.

3.             Compensation.

(a)           Salary.  For services rendered under this Agreement, the Company shall pay the Executive a salary of $210,000 per annum payable in accordance with such payroll practices that are then in effect for senior personnel of the Company.

(b)           Annual Review and Salary Adjustment.  The Executive’s salary will not be subject to adjustment during the initial calendar year of the Agreement.  The Executive’s first salary review shall occur prior to December 31, 2010, and, as appropriate, his salary shall be adjusted effective January 1, 2011 and shall be reviewed annually thereafter during the term of this Agreement.

 

  

 

  

(c)           Stock Options.  The Executive may participate in equity compensation programs of the Company in accordance with the policies applicable to other officers of the Company upon such terms as the administrators of such programs in their discretion determine.

(d)           Benefits and Vacation.  The Executive shall be eligible to participate in such insurance programs (health, disability, or life) or such other health, dental, retirement, or similar employee benefits programs as the Board may approve, on a basis comparable to that available to other officers and executive employees of the Company.  The Executive shall be entitled to four (4) weeks of paid vacation per year.  The Executive may accumulate up to one and one-half times his annual vacation accrual rate at any one time.  The value of any unforfeited, accrued but unused vacation time shall be paid in cash to the Executive upon termination of his employment for any reason.

(e)           Reimbursement of Expenses.  The Company shall reimburse the Executive for all reasonable out-of-pocket expenses incurred by the Executive in connection with the business of the Company and in the performance of his duties under this Agreement upon the Executive’s presentation to the Company of an itemized accounting of such expenses with reasonable supporting data.

4.             Termination.  Either party may terminate the Executive’s employment under this Agreement, without cause, upon ninety (90) days’ written advance notice to the other party, but subject to the provisions of Section 7 hereof.  The Company may terminate the Executive’s employment for “Cause” (as hereinafter defined) immediately upon written notice stating the basis for such termination.  “Cause” for termination of the Executive’s employment shall only be deemed to exist if the Executive has breached this Agreement and if such breach continues or recurs more than 30 days after notice from the Company specifying the action which constitutes the breach and demanding its discontinuance, exhibited willful disobedience of reasonable directions of the Chief Executive Officer or the Board, or committed gross malfeasance in performance of his duties hereunder or acts resulting in an indictment charging the Executive with the commission of a felony; provided that the commission of acts resulting in such an indictment shall constitute Cause only if a majority of the directors who are not also subject to any such indictment determine that the Executive’s conduct was willful and has substantially adversely affected the Company or its reputation.  A material failure to perform his duties hereunder that results from the disability of the Executive shall not be considered Cause for his termination.

5.             Disability.  If the Executive shall be prevented by illness, accident, or other incapacity from properly performing his duties hereunder (a “Disability”) (and, if required by Company, upon the furnishing of evidence satisfactory to the Company of such Disability), the Company shall, during the continuance of his Disability but only for the remaining term of this Agreement or six (6) months, whichever is greater, pay the Executive his compensation payable under the provisions of Section 3 (above) and continue to provide the Executive all other benefits provided hereunder, provided that any amount received during such time by the Executive under a disability insurance policy carried by the Company shall be credited against the compensation due to the Executive.  The Executive shall only be considered to have a Disability under this Agreement to the extent such Executive is considered disabled under Treasury Regulations § 1.409A-3(i)(4)(i) and no payment shall be made pursuant to this Section 5 except as in compliance with IRC § 409A and the Treasury Regulations promulgated thereunder.

  

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6.             Death.  In the event of the death of the Executive, except with respect to any benefits which have accrued and have not been paid to the Executive hereunder, the provisions of this Employment Agreement shall terminate immediately.  However, the Executive’s estate shall have the right to receive compensation due to the Executive as of and to the date of his death and, furthermore, to receive an additional amount equal to one-twelfth (1/12) of the Executive’s annual compensation then in effect as specified in Section 3, above, payable within thirty days of Executive’s death but in no event later than the March 15th of the year following the year in which Executive’s death occurs.

7.             Severance Pay.

(a)           Severance.  Subject to the conditions set forth below, in the event that the Executive’s employment is terminated by the Company other than for Cause, whether during or after the term of this Agreement, the Executive shall be entitled, for a period of six (6) months following the termination (if such termination occurs on or before May 31, 2011), or for a period of twelve (12) months following the termination (if such termination occurs on or after June 1, 2011), to receive compensation at an annual rate equal to the Executive’s highest cash compensation received during any 12-month period of his employment, payable at the Company’s regular payment intervals.  In addition, the Executive shall be entitled to continue to receive at the Company’s expense, coverage under the Company’s health insurance policies, or comparable coverage, during the term of such severance payments, but only until the Executive begins other employment in connection with which he is entitled to health insurance coverage.  As a condition of the Executive’s right to receive severance compensation as provided above, the Executive shall sign and deliver to the Company a release of all claims that the Executive might otherwise assert against the Company, in a form approved by the Company.  The payments due under this Section 7(a) shall commence on the first regularly scheduled payroll date following the 60th day following Executive’s date of termination and on each regularly scheduled payroll date thereafter for the applicable severance pay period and such initial payment will include any payments that otherwise would have been made on regularly scheduled payroll dates falling between the date of termination and the initial payment date; provided that the Company has timely received the properly executed release by Executive in accordance with this Section 7(a) (which release has not been revoked by the Executive).  If Executive fails to timely and properly execute and deliver the release, Executive agrees that he shall not be entitled to receive the benefits described in this Section 7(a). If the Executive voluntarily resigns his employment hereunder, or if his employment is terminated for Cause, the Executive shall not be entitled to any severance pay or other compensation beyond the date of termination of his employment.

  

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(b)           Section 409A Limitation.  If (i) the Executive is a “specified person” on the date of the Executive’s “separation from service” within the meaning of Sections 409A(a)(2)(A)(i) and 409A(a)(2)(B)(ii) of the Code, and (ii) as a result of such separation from service the Executive would receive any payment under (x) Section 7(a) in connection with an involuntary termination other than for Cause, or (y) Section 8 that, absent the application of this paragraph, would be subject to the interest and additional tax imposed pursuant to Section 409A(a) of the Code as a result of the application of Section 409A(a)(2)(B)(i) of the Code, then such payment shall be made within five (5) business days of, but in no event earlier than, the date that is the earlier of: (iii) 6 months after the Executive’s separation from service or (iv) the Executive‘s date of death, except to the extent that such payment constitutes a payment under a separation pay plan following an “involuntary separation from service” (as defined in Treasury Regulation Section 1.409A-1(n)) that does not provide for a deferral of compensation by reason of the application of Treasury Regulation Section 1.409A-1(b)(9)(iii).  For the avoidance of doubt, the parties agree that this Section 7(c) shall be interpreted so that the Executive will receive payments under (i) Section 7(a) in connection with an involuntary termination other than for Cause, or (ii) Section 8 during the six month period specified in this Section 7(c) to the maximum extent permitted by Treasury Regulation Section 1.409A-1(b)(9)(iii).

(c)           Termination.  The term “termination” for purposes of this Section 7 and Section 8 shall have the meaning ascribed to the term “separation from service” under Treasury Regulation Section 1.409A-1(h).

8.             Change of Control/Constructive Termination.  In the event that a Change of Control of the Company, as hereinafter defined, occurs, and the Executive’s employment by the Company, or a successor to the business of the Company, is terminated by the Company or the successor in connection with, or within one year after, the occurrence of such Change of Control, or if, after a Change of Control, the Executive terminates his employment as a result of a “constructive termination” of his employment by the Company or such successor, the Executive shall be entitled for a period of two (2) years following such termination or constructive termination, to receive compensation at an annual rate equal to the Executive’s highest cash compensation received during any 12-month period of his employment, payable on each regularly scheduled payroll date of the Company.. For purposes of this Section, a “constructive termination” by the Company or its successor shall be deemed to occur if the Executive is assigned to another position, not comparable in terms of salary, duties, status or authority, or substantially reducing the Executive’s job responsibilities and authority from the position, responsibilities and/or authority held by the Executive prior to the Change of Control, or if the Executive’s place of work shall be moved more than 75 miles from the Executive’s place of work with the Company prior to the Change of Control.  For purposes of this Section 8, a Change of Control shall be deemed to have occurred in the event that a merger, sale of assets, sale or exchange of stock, or other corporate reorganization occurs with another corporation or other entity, following which and as a result of which, at least 50% of the ownership interest of the surviving corporation is held by persons other than the shareholders of the Company prior to such transaction, or a majority of the directors of the surviving corporation are persons other than the directors of the Company prior to such transaction.  Any notice by the Executive to the Company or its successor claiming a constructive termination of the Executive shall specify the claimed default by the Company or the successor and the Company or its successor shall have ninety (90) days to make such modifications in the Executive’s working relationship as to overcome the constructive termination.  The term “constructive termination” for purposes of this Section 8 is intended to have the same meaning as a separation from service for “good reason” as described in Treasury Regulation Section 1.409A-1(n)(2) and no constructive termination shall be deemed to have occurred unless the termination would be an involuntary separation from service pursuant to Treasury Regulation Section 1.409A-1(n)(2).

  

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9.             Indemnification.  The Company shall, to the full extent permitted by applicable law, indemnify the Executive and hold him harmless if he is a party, or is threatened to be made a party, to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, or investigative, by reason of the fact that the Executive is or was an officer and employee of the Company or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the Executive in connection with such action, suit or proceeding so long as the Executive acted in good faith and in a manner that he reasonably believed to be in or not opposed to the best interests of the Company and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.  To the fullest extent permitted by law, the Company shall pay such expenses of the Executive in advance of the final disposition of such action upon satisfying such conditions as may be imposed by law with respect to such advances.

10.           Covenant Not to Compete.  During the continuance of his employment by the Company and for a period of six (6) months after termination (if such termination occurs on or before May 31, 2011), or for twelve (12) months after termination of his employment (if such termination occurs on or after June 1, 2011), the Executive shall not, anywhere in the United States, engage in any business which competes directly or indirectly with the Company.  Any company or business which is engaged in the air medical transport business or the business of furnishing or retrofitting aircraft to provide medical transports shall be deemed to be engaged in business in competition with the Company.

11.           Trade Secrets and Confidential Information.  During his employment by the Company, and for a period of five years thereafter, the Executive shall not, directly or indirectly, use, disseminate, or disclose for any purpose other than for the purposes of the Company’s business, any of the Company’s confidential information or trade secrets, unless such disclosure is compelled in a judicial proceeding.  Upon termination of his employment, all documents, records, notebooks, and similar repositories of records containing information relating to any trade secrets or confidential information then in the Executive’s possession or control, whether prepared by him or by others, shall be left with the Company or returned to the Company upon its request.

12.           Severability.  It is the desire and intent of the parties that the provisions of Sections 10 and 11 shall be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought.  Accordingly, if any particular sentence or portion of either Section 10 or 11 shall be adjudicated to be invalid or unenforceable, the remaining portions of such section nevertheless shall continue to be valid and enforceable as though the invalid portions were not a part thereof.  In the event that any of the provisions of Section 10 relating to the geographic areas of restriction or the period of restriction shall be deemed to exceed the maximum area or period of time which a court of competent jurisdiction would deem enforceable, the geographic areas and times shall, for the purposes of this Agreement, be deemed to be the maximum areas or time periods which a court of competent jurisdiction would deem valid and enforceable in any state in which such court of competent jurisdiction shall be convened.

  

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13.           Injunctive Relief.  The Executive agrees that any violation by him of the agreements contained in Sections 10 and 11 are likely to cause irreparable damage to the Company, and therefore agrees that if there is a breach or threatened breach by the Executive of the provisions of said sections, the Company shall be entitled to an injunction restraining the Executive from such breach.  Nothing herein shall be construed as prohibiting the Company from pursuing any other remedies for such breach or threatened breach.

14.           Section 409A.  This Agreement is intended to comply with the requirements of Section 409A of the Code and the regulations and guidance promulgated or issued thereunder (“Section 409A”), and shall be construed and interpreted in accordance with such intent.  To the extent any payment or benefit provided under this Agreement is subject to Section 409A, such benefit shall be provided in a manner that complies with Section 409A, including any IRS guidance promulgated with respect to Section 409A; provided, however, in no event shall any action to comply with Section 409A reduce the aggregate amount payable to Executive hereunder unless expressly agreed in writing by Executive.  Except as otherwise permitted under Section 409A, no payment hereunder shall be accelerated or deferred unless such acceleration or deferral would not result in additional tax or interest pursuant to Section 409A.  Each payment described in this Agreement that is scheduled to be made on a regularly scheduled payroll date shall be a separate payment for purposes of Section 409A to the fullest extent permitted by Section 409A.

15.           Miscellaneous.

(a)           Notices.  Any notice required or permitted to be given under this Agreement shall be directed to the appropriate party in writing and mailed or delivered, if to the Company, to 7301 South Peoria, Englewood, Colorado 80112 or to the Company’s then principal office, if different, and if to the Executive, to such address as the Executive may have furnished to the Company for this purpose or, if the Executive has furnished no such address, to the Executive’s last known address as shown on the Company’s records.

(b)           Binding Effect.  This Agreement is a personal service agreement and may not be assigned by the Company or the Executive, except that the Company may assign this Agreement to a successor by merger, consolidation, sale of assets or other reorganization.  Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, assigns, and legal representatives.

(c)           Amendment.  This Agreement may not be amended except by an instrument in writing executed by each of the parties hereto.

(d)           Applicable Law.  This Agreement is entered into in the State of Colorado and for all purposes shall be governed by the laws of the State of Colorado.

 

  

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(e)           Counterparts.  This instrument may be executed in one or more counterparts, each of which shall be deemed an original.

(f)            Entire Agreement.  This Agreement supersedes and replaces all prior agreements between the parties related to the employment of the Executive by the Company.

IN WITNESS WHEREOF, the parties have executed this Agreement as of this 17th day of June, 2010.

	 	
AIR METHODS CORPORATION

	 	  	  
	 	  	  
	 	
By: 

	/s/ Aaron D. Todd
	 	
 

	Aaron D. Todd, Chief Executive Officer
	 	  	  
	 	  	  
	 	
THE EXECUTIVE:

	 	  	  
	 	  	  
	 	
 /s/ Howard L. Ragsdale

	 	
Howard L. Ragsdale

 

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