Document:

exhibit_10-29.htm

Exhibit 10.29

 

EIGHTH AMENDMENT TO SECOND AMENDED

AND RESTATED LOAN AND SECURITY AGREEMENT

 

This EIGHTH AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “Amendment”), dated as of December 17, 2013, is entered into among Jazz Semiconductor, Inc., a Delaware corporation (“Jazz”), Newport Fab, LLC (d/b/a Jazz Semiconductor Operating Company), a Delaware limited liability company (“Operating Company” and together with Jazz, the “Borrowers” and each individually, a “Borrower”), Jazz Technologies, Inc., formerly known as Acquicor Technology Inc., a Delaware corporation (“Guarantor”), the lenders party to the “Loan Agreement” as defined below (each individually, a “Lender” and collectively, “Lenders”), and Wells Fargo Capital Finance, LLC, a Delaware limited liability company, as successor by merger to Wachovia Capital Finance Corporation (Western), in its capacity as agent for the Lenders (in such capacity, “Agent”).

 

RECITALS

 

A.            Borrowers, Guarantor, Agent, Lenders, and Wachovia Capital Markets, LCC, in its capacity as lead arranger, bookrunner and syndication agent, have previously entered into that certain Second Amended and Restated Loan and Security Agreement, dated as of September 19, 2008, as amended by the First Amendment to Second Amended and Restated Loan and Security Agreement, dated as of March 17, 2009, as further amended by the Second Amendment to Second Amended and Restated Loan and Security Agreement, dated as of July 16, 2009, as further amended by the Third Amendment to Second Amended and Restated Loan and Security Agreement, dated as of April 21, 2010, as further amended by the Fourth Amendment to Second Amended and Restated Loan and Security Agreement, dated as of June 29, 2010, as further amended by the Fifth Amendment to Second Amended and Restated Loan and Security Agreement, dated as of July 19, 2010, as further amended by the Sixth Amendment to Second Amended and Restated Loan and Security Agreement, dated as of June 14, 2011, and as further amended by the Seventh Amendment to Second Amended and Restated Loan and Security Agreement, dated as of August 23, 2011 (as amended, the “Loan Agreement”), pursuant to which Agent and Lenders have made certain loans and financial accommodations available to Borrowers.  Terms used herein without definition shall have the meanings ascribed to them in the Loan Agreement.

 

B.            Borrowers and Guarantor have requested that Agent and Lenders amend the Loan Agreement, which Agent and Lenders are willing to do pursuant to the terms and conditions set forth herein.

 

C.            Borrowers and Guarantor are entering into this Amendment with the understanding and agreement that, except as specifically provided herein, none of Agent’s or any Lender’s rights or remedies as set forth in the Loan Agreement is being waived or modified by the terms of this Amendment.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

 

1.             Amendment to Loan Agreement.

 

a.           Section 1.2 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“1.2       Intentionally Omitted.”

 

  

  

  

 

b.           The grid set forth in Section 1.10 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

	
“Level

	
Consolidated Fixed Charge Coverage Ratio (“CFCCR”)

	
Prime Spread

	
Eurodollar Spread

	
Tier I

	
CFCCR<1.10 to 1.0

	
1.0%

	
2.25%

	
Tier II

	
CFCCR>1.10 to 1.0 and <1.35 to1.0

	
0.75%

	
2.00%

	
Tier III

	
CFCCR>1.35 to 1.0

	
0.50%

	
1.75%”

 

c.           The following is hereby added to the Loan Agreement as Section 1.10A:

 

“1.10A  “Approved Increase” shall have the meaning set forth in Section 2.5(a) hereof.”

 

d.           The following is hereby added to the Loan Agreement as Section 1.11A:

 

“1.11A  “Availability Block” shall mean $0; provided, however, that the Availability Block shall be $5,000,000 during each Availability Block Trigger Period.”

 

e.           The following is hereby added to the Loan Agreement as Section 1.11B:

 

“1.11B   “Availability Block Trigger Period” shall mean the period (a) commencing on any day that: (i) the Senior Leverage Ratio is greater than 2.5 to 1.0, or (ii) the Consolidated Fixed Charge Coverage Ratio is less than 1.10 to 1.0 when measured on a trailing four fiscal quarter basis as of the end of any fiscal quarter of Parent Guarantor; and (b) continuing until the day that the Senior Leverage Ratio has been less than or equal to 2.5 to 1.0 at all times for a full fiscal quarter of Parent Guarantor and the Consolidated Fixed Charge Coverage Ratio is at least 1.10 to 1.0 when measured on a trailing four fiscal quarter basis as of the end of such fiscal quarter.”

 

f.            The following is hereby added to the Loan Agreement as Section 1.11C:

 

“1.11C   “Available Increase Amount” shall mean, as of any date of determination, an amount equal to the result of (a) $20,000,000 minus (b) the aggregate principal amount of increases to the Maximum Credit previously made pursuant to Section 2.5 hereof.”

 

  

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g.           Section 1.12 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“1.12     “Bank Products” shall mean any one or more of the following types of services or facilities provided to Borrowers, Guarantors, or any of their respective Subsidiaries upon Borrowers request by a Bank Product Provider, including but not limited to: (a) credit cards (including commercial cards (including so-called “purchase cards”, “procurement cards” or “p-cards”)), (b) Cash Management Services, (c) credit card processing services, (d) debit cards, (e) stored value cards, and (f) transactions under Hedge Agreements.”

 

h.           Section 1.17 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“1.17     “Borrowing Base” shall mean, at any time, the sum of:

 

(a)          the amount equal to eighty-five percent (85%) of the Eligible Accounts of Borrowers; plus

 

(b)         the amount equal to the lesser of:  (i) the product of (I) seventy-five percent (75%) times (II) the “net forced liquidation value” of the Eligible Equipment of Borrowers as defined in the most recent appraisal of Equipment then received by Agent in accordance with Section 7.4 hereof, and (ii) the Equipment Sublimit; plus

 

(c)          the amount equal to the lesser of:  (i) seventy-five percent (75%) of the Eligible Foreign Accounts of Borrowers, and (ii) the Foreign Accounts Sublimit;

 

(d)         the amount equal to the lesser of: (i) the sum of (A) the amount equal to the lesser of (1) the product of sixty-five percent (65%) multiplied by the value (calculated at the lower of cost or market on a basis consistent with Borrowers’ historical accounting practices) of Eligible Inventory consisting of finished goods (provided that sort and 100% completed wafers included in work in process shall constitute finished goods for purposes of this calculation), and (2) the product of 85% multiplied by the Net Recovery Percentage identified in the most recent inventory appraisal ordered and obtained by Agent multiplied by the value (calculated at the lower of cost or market on a basis consistent with Borrowers’ historical accounting practices) of Eligible Inventory consisting of finished goods (provided that sort and 100% completed wafers included in work in process shall constitute finished goods for purposes of this calculation) (such determination may be made as to different categories of Eligible Inventory based upon the Net Recovery Percentage applicable to such categories) at such time; plus (B) the amount equal to the lesser of (1) the product of sixty-five percent (65%) multiplied by the value (calculated at the lower of cost or market on a basis consistent with Borrowers’ historical accounting practices) of Eligible Inventory consisting of raw materials, and (2) the product of 85% multiplied by the Net Recovery Percentage identified in the most recent inventory appraisal ordered and obtained by Agent multiplied by the value (calculated at the lower of cost or market on a basis consistent with Borrowers’ historical accounting practices) of Eligible Inventory consisting of raw materials (such determination may be made as to different categories of Eligible Inventory based upon the Net Recovery Percentage applicable to such categories) at such time; plus (C) the amount equal to the lesser of (1) the product of sixty-five percent (65%) multiplied by the value (calculated at the lower of cost or market on a basis consistent with Borrowers’ historical accounting practices) of Eligible Inventory consisting of work in process, and (2) the product of 85% multiplied by the Net Recovery Percentage identified in the most recent inventory appraisal ordered and obtained by Agent multiplied by the value (calculated at the lower of cost or market on a basis consistent with Borrowers’ historical accounting practices) of Eligible Inventory consisting of work in process (such determination may be made as to different categories of Eligible Inventory based upon the Net Recovery Percentage applicable to such categories) at such time, and (ii) the Inventory Sublimit; minus

 

  

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(e)          the Availability Block; minus

 

(f)          Reserves and the Equipment Reserve.”

 

i.            The following is hereby added to the Loan Agreement as Section 1.19A:

 

“1.19A  “Capex Loan Commitment” shall mean, at any time, as to each Lender, the principal amount set forth below designated as the Capex Loan Commitment or on Schedule 1 to the Assignment and Acceptance Agreement pursuant to which such Lender became a Lender hereunder in accordance with the provisions of Section 13.7 hereof, as the same may be adjusted from time to time in accordance with the terms hereof; sometimes being collectively referred to herein as “Capex Loan Commitments”:

 

	
Lender

	
Capex Loan Commitments

	
Wells Fargo Capital Finance, LLC

	
$6,000,000”

 

j.            The following is hereby added to the Loan Agreement as Section 1.19B:

 

“1.19B   “Capex Loans” shall have the meaning set forth in Section 2.4 hereof.”

 

k.           The following is hereby added to the Loan Agreement as Section 1.19C:

 

“1.19C   “Capex Purchase Loan Request” shall have the meaning set forth in Section 2.4 hereof.”

 

l.            The following is hereby added to the Loan Agreement as Section 1.19D:

 

“1.19D  “Capex Scheduled Repayment Date” means the first day of the calendar quarter following the date of the initial Capex Loan, and the first day of each calendar quarter thereafter.”

 

m.          The following is hereby added to the Loan Agreement as Section 1.22A:

 

“1.22A  “Cash Dominion Period” means each period (a) commencing on any day that (i) the sum of Excess Availability plus Qualified Cash is less than the greater of (A) $12,500,000, and (B) an amount equal to 12.5% of an amount equal to the Maximum Credit minus the Line Block, (ii) Excess Availability is less than $6,500,000 for three consecutive Business Days, or (iii) an Event of Default occurs; and (b) continuing until at all times for 60 consecutive calendar days: (i) the sum of Excess Availability plus Qualified Cash has been greater than the greater of (A) $12,500,000, and (B) an amount equal to 12.5% of an amount equal to the Maximum Credit minus the Line Block, (ii) Excess Availability has been greater than $6,500,000, and (iii) no Event of Default then exists.”

 

  

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n.           The following is hereby added to the Loan Agreement as Section 1.23A:

 

“1.23A  “Cash Management Services” means any cash management or related services including treasury, depository, return items, overdraft, controlled disbursement,  merchant store value cards, e-payables services, electronic funds transfer, interstate depository network, automatic clearing house transfer (including the Automated Clearing House processing of electronic funds transfers through the direct Federal Reserve Fedline system) and other cash management arrangements.”

 

o.           Section 1.28 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“1.28     “Commitment” shall mean, as to any Lender, the Revolving Loan Commitment of such Lender, the Capex Loan Commitment of such Lender, or the combined Revolving Loan Commitment and Capex Loan Commitment of such Lender, as the context requires.”

 

p.           Section 1.30 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“1.30     “Consolidated EBITDA” shall mean, with respect to any Person for any period, Consolidated Net Income of such Person and its Subsidiaries for such period plus, without duplication and to the extent reflected as a charge in the statement of such Consolidated Net Income for such period, the sum of (a) income tax expense, (b) Consolidated Net Interest Expense of such Person and its Subsidiaries, amortization or write-off of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with Indebtedness (including unused line fees and administrative fees and charges with respect to the  Credit Facility), (c) depreciation and amortization expense (excluding such expense to the extent that the properties or assets being depreciated primarily benefit Foreign Parent Nonguarantor), (d) amortization or impairment of intangibles (including, but not limited to, goodwill) and organization costs, (e) any extraordinary or non-cash non-recurring losses (including, whether or not otherwise includable as a separate item in the statement of such Consolidated Net Income for such period, losses on sales of assets outside of the ordinary course of business), (f) any other non-cash charges, expenses or losses, including in relation to earn-outs and similar obligations (except to the extent such charges, expenses or losses represent an accrual of or reserve for cash expenses in any future period or an amortization of a prepaid cash expense paid in a prior period), (g) stock-option based compensation expenses, (h) to the extent such costs, fees and expenses are incurred after the Effective Date, transaction costs, fees and expenses related to a completed acquisition transaction or a Joint Venture transaction permitted hereby (except to the extent such fees, costs or expenses relate to the acquisition of Parent Guarantor by Foreign Parent Nonguarantor), (i) the non-cash portion of straight-line rent expense, (j) proceeds from any business interruption insurance (in the case of this clause (j) to the extent not reflected as revenue or income in such statement of such Consolidated Net Income), (k) losses recognized and expenses incurred in connection with the effect of currency and exchange rate fluctuations on intercompany balances and other balance sheet items, and (l) cash expenses relating to earn-outs and similar obligations, and minus, to the extent included in the statement of such Consolidated Net Income for such period, the sum of (i) interest income (except to the extent deducted in determining Consolidated Net Interest Expense), (ii) any extraordinary or non-cash non-recurring income or gains (including, without limitation, whether or not otherwise includable as a separate item in the statement of such Consolidated Net Income for such period, (1) gains on the sales of assets outside of the ordinary course of business, (2) one-time settlement gains, and (3) gains on the sale of retired capital assets), (iii) any other non-cash income or gains (other than the accrual of revenue in the ordinary course), all as determined on a consolidated basis, (iv) cash payments in connection with “straight-line” rent expense which exceed the amount expensed in respect of such rent expense, (v) gains realized and income accrued in connection with the effect of currency and exchange rate fluctuations on intercompany balances and other balance sheet items and (vi) gains realized and income accrued in connection with the redemption of the Senior Notes (for the avoidance of doubt, any gains realized and income accrued in connection with the redemption of the Senior Notes incurred prior to the Effective Date shall be excluded from this calculation).”

 

  

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q.           Clause (b) of the definition of “Consolidated Fixed Charges” set forth in Section 1.32 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(b)       all regularly scheduled (as determined at the beginning of such period) principal payments of Indebtedness, other than the repayment of any Senior Notes at their final maturity date (for the avoidance of doubt, repayments of Loans and unscheduled permitted Senior Notes principal payments shall be excluded from the Consolidated Fixed Charges calculation).”

 

r.            Clause (d) of the definition of “Consolidated Fixed Charges” set forth in Section 1.32 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(d)       all unfinanced Capital Expenditures (provided, that, if Borrowers provide Agent with a schedule of projected Capital Expenditures for the 2014 fiscal year by December 31, 2013, in form and substance satisfactory to Agent (the “2014 Schedule”), the first $10,000,000 of unfinanced Capital Expenditures which are made in the 2014 fiscal year in accordance with the 2014 Schedule shall not be included in the calculation of Consolidated Fixed Charges), plus”

 

s.           Clause (e) of the definition of “Consolidated Fixed Charges” set forth in Section 1.32 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(e)        All taxes paid, plus”

 

t.            Clause (h) of the definition of “Consolidated Fixed Charges” set forth in Section 1.32 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(h)       Senior Note repurchases made for cash (other than any repurchases made in connection with a refinancing of such Senior Notes permitted hereunder).”

 

u.           The following is hereby added to the Loan Agreement as Section 1.34A:

 

“1.34A  “Covenant Testing Trigger Period” means each period (a) commencing on any day that (i) the sum of Excess Availability plus Qualified Cash is less than the greater of (A) $12,500,000, and (B) an amount equal to 12.5% of an amount equal to the Maximum Credit minus the Line Block, or (ii) Excess Availability is less than $6,500,000 for three consecutive Business Days, and (b) continuing until at all times for 60 consecutive calendar days: (i) the sum of Excess Availability plus Qualified Cash has been greater than the greater of (A) $12,500,000, and (B) an amount equal to 12.5% of an amount equal to the Maximum Credit minus the Line Block, and (ii) Excess Availability has been greater than $6,500,000.”

 

  

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v.           Section 1.35 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“1.35     “Credit Facility” shall mean the loans and letters of credit provided to or for the benefit of any Borrower pursuant to Sections 2.1, 2.2, and 2.4 hereof.”

 

w.           The following is hereby added to the Loan Agreement as Section 1.43A:

 

“1.43A  “Eighth Amendment Effective Date” shall mean December [___], 2013.”

 

x.            Clause (m) of the definition of “Eligible Accounts” set forth in Section 1.44 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(m)       the aggregate amount of such Eligible Accounts owing by: (A) a single account debtor (other than Skyworks and RF Micro Devices) does not constitute more than twenty percent (20%) of the aggregate amount of all otherwise Eligible Accounts; (B) Skyworks does not constitute more than forty-five percent (45%) of the aggregate amount of all otherwise Eligible Accounts; (C) RF Micro Devices does not constitute more than forty-five percent (45%) of the aggregate amount of all otherwise Eligible Accounts; and (D) RF Micro Devices and Skyworks, in the aggregate, does not constitute more than sixty percent (60%) of the aggregate amount of all otherwise Eligible Accounts (but the portion of the Accounts not in excess of the applicable percentages shall be deemed Eligible Accounts to the extent that such portion would otherwise be eligible as "Eligible Accounts" pursuant to this Section);”

 

y.           Section 1.45 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“1.45     “Eligible Equipment” shall mean, as to each Borrower, Equipment owned by such Borrower as of the Eighth Amendment Effective Date and used in the ordinary course of such Borrower’s business, that in each case satisfy the criteria set forth below as reasonably determined by Agent.  Eligible Equipment shall not include:  (a) Equipment located outside the United States; (b) items of Equipment that are or have become fixtures other than trade fixtures which are readily removable from the premises on which they are located; (c) leased Equipment; (d) Equipment subject to a lien or security interest of any Person other than Agent except for non-consensual liens or security interests that are permitted under Sections 9.8(b) or (c) hereof; (e) worn-out, obsolete or out-of-service Equipment; (f) Equipment acquired by any Borrower after the date hereof located on or affixed to the Premises (as defined in that certain Landlord Agreement dated on or about the Original Closing Date, by and among Jazz, Conexant and Agent (the "Conexant Landlord Agreement") with respect to which Equipnment the parties to such Conexant Landlord Agreement shall not have agreed upon and delivered a revised Exhibit B to such Conexant Landlord Agreement pursuant to the terms thereof, which revised Exhibit B shall designate such Equipment as added to or included within the definition of "Personal Property" as set forth in the Conexant Landlord Agreement; and (g) any individual items of Equipment with an original cost or purchase price of less than $10,000.  Any new criteria for Eligible Equipment may only be established by Agent in good faith based on either:  (i) an event, condition or other circumstance arising after the date hereof, or (ii) an event, condition or other circumstance existing on the date hereof to the extent Agent has no notice thereof prior to the date hereof, in either case under clause (i) or (ii) which materially adversely affects or could reasonably be expected to materially adversely affect the Eligible Equipment in the good faith determination of Agent.  Any Equipment that is not Eligible Equipment shall nevertheless be part of the Collateral.”

 

  

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z.            The following is hereby added to the Loan Agreement as Section 1.45A:

 

“1.45A  “Eligible Foreign Accounts” shall mean Accounts owing from account debtors that have their chief executive office located outside the United States of America or Canada, and which: (a) the account debtor with respect to such Accounts is acceptable to Agent in its sole discretion, (b) the chief executive office of the account debtor with respect to such Accounts is located in a jurisdiction satisfactory to Agent in its sole discretion, and (c) otherwise satisfy the criteria for Eligible Accounts (other than due to the operation of clause (e) of the definition of Eligible Accounts).”

 

aa.         The following is hereby added to the Loan Agreement as Section 1.45B:

 

“1.45B   “Eligible Inventory” means Inventory of a Borrower that is not excluded as ineligible by virtue of one or more of the excluding criteria set forth below; provided, that such criteria may be revised from time to time by Agent to address the results of any field examination or appraisal performed by Agent from time to time after the Eighth Amendment Effective Date.  In determining the amount to be so included, Inventory shall be valued at the lower of cost or market on a basis consistent with Borrowers’ historical accounting practices.  An item of Inventory shall not be included in Eligible Inventory if: (a) a Borrower does not have good, valid, and marketable title thereto, (b) a Borrower does not have actual and exclusive possession thereof (either directly or through a bailee or agent of a Borrower), (c) it is not located at one of the locations in the continental United States set forth on Schedule E-1 hereto (or in-transit from one such location to another such location), (d) it is in-transit to or from a location of a Borrower (other than in-transit from one location set forth on Schedule E-1 hereto to another location set forth on Schedule E-1 hereto), (e) it is located on real property leased by a Borrower or in a contract warehouse, in each case, unless it is segregated or otherwise separately identifiable from goods of others, if any, stored on the premises and either (i) it is subject to a collateral access agreement, in form and substance satisfactory to Agent, executed by the lessor or warehouseman, as the case may be, or (ii) Agent has established a Reserve in an amount equal to three (3) months' rent with respect to such premises or three (3) months warehouse charges with respect to such premises, as applicable, (f) it is the subject of a bill of lading or other document of title, (g) it is not subject to a valid and perfected first priority security interest of Agent, (h) it consists of goods returned or rejected by a Borrower’s customers, (i) it consists of goods that are obsolete or slow moving, restrictive or custom items, or goods that constitute spare parts, packaging and shipping materials, supplies used or consumed in Borrowers’ business, bill and hold goods, defective goods, returned inventory, or Inventory acquired or sold on consignment, (j) it is subject to third party trademark, licensing or other proprietary rights, unless Agent is satisfied that such Inventory can be freely sold by Agent on and after the occurrence of an Event of a Default despite such third party rights, or (k) Borrowers’ perpetual costing and tracking systems don’t provide Agent with sufficient information with respect to such Inventory as determined by Agent it is sole discretion.”

 

  

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bb.         The following is hereby added to the Loan Agreement as Section 1.45C:

 

“1.45C   “Eligible Additional Equipment” shall mean any additional Equipment acquired by Borrowers after the Eighth Amendment Effective Date and which: (a) meets all of the criteria for Eligible Equipment other than the fact that it was acquired by Borrowers after the Eighth Amendment Effective Date; (b) is not part of, affixed to, or otherwise a supplement to any Eligible Equipment; and (c) is not located on or affixed to the Premises (as defined in the Conexant Landlord Agreement) unless the parties to the Conexant Landlord Agreement have agreed upon and delivered a revised Exhibit B to such Conexant Landlord Agreement pursuant to the terms thereof, which revised Exhibit B shall designate such Equipment as added to or included within the definition of "Personal Property" as set forth in the Conexant Landlord Agreement.”

 

cc.         The following is hereby added to the Loan Agreement as Section 1.48A:

 

“1.48A  “Equipment Reserve” shall mean an amount (as determined by Agent from time to time) equal to the amount by which (a) the sum of: (i) the amount derived under clause (b) of the definition of “Borrowing Base” at such time, plus (ii) the principal amount of Capex Loans outstanding at such time; exceeds (b) the sum of: (i) the product of (A) seventy-five percent (75%) times (B) the “net forced liquidation value” of Eligible Equipment and Eligible Additional Equipment of Borrowers as determined by the most recent appraisal of Equipment received by Agent, plus (ii) to the extent any Eligible Additional Equipment which is the subject of a Capex Loan is not reflected on such appraisal referenced in clause (b)(i)(B), eighty percent (80%) of the Hard Costs of such Eligible Additional Equipment.”

 

dd.        Section 1.49 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“1.49     “Equipment Sublimit” shall mean $27,937,500 provided, however, that beginning on the first day of the first calendar quarter following the Eighth Amendment Effective Date and on the first day of each calendar quarter thereafter, the Equipment Sublimit shall be reduced by $698,438.”

 

ee.         Section 1.55 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“1.55     “Excess Availability” shall mean the amount calculated at any date, equal to: (a) the lesser of: (i) the Maximum Credit, minus the Line Block, minus the principal amount of Capex Loans outstanding at such time, or (ii) the Borrowing Base; minus (b) the sum of:  (i) the amount of all then outstanding and unpaid Obligations of Borrowers (but not including for this purpose the then outstanding principal amount of the Capex Loans) plus (ii) the aggregate amount of all then outstanding and unpaid trade payables and other obligations of each Borrower which are outstanding more than sixty (60) days past due as of the end of the immediately preceding month (other than trade payables or other obligations being contested or disputed by such Borrower in good faith), plus (iii) without duplication, the amount of checks issued by each Borrower to pay trade payables and other obligations which are more than sixty (60) days past due as of the end of the immediately preceding month (other than trade payables or other obligations being contested or disputed by such Borrower in good faith), but not yet sent.”

 

  

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ff.           The last sentence of the definition of “Excluded Subsidiaries” set forth in Section 1.57 of the Loan Agreement is hereby deleted in its entirety.

 

gg.         Section 1.61 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“1.61     “Financing Agreements” shall mean, collectively, this Agreement, the Fee Letter and all notes, guarantees, security agreements, deposit account control agreements, investment property control agreements, intercreditor agreements and all other agreements, documents and instruments now or at any time hereafter executed and/or delivered by any Borrower or any Guarantor in connection with this Agreement.”

 

hh.         The following is hereby added to the Loan Agreement as Section 1.61A:

 

“1.61A  “Foreign Accounts Sublimit” shall mean, at any time, the amount equal to $6,000,000.”

 

ii.           The following is hereby added to the Loan Agreement as Section 1.69A:

 

“1.69A  “Hard Costs” shall mean, with respect to the purchase by any Borrower of an item of Eligible Additional Equipment, the net cash amount actually paid to acquire title to such item, net of all incentives, discounts and rebates, and exclusive of freight, delivery charges, installation costs and charges, software costs, charges and fees, warranty costs, taxes, insurance and other incidental costs or expenses and all indirect costs or expenses of any kind.”

 

jj.           Section 1.71 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“1.71     “Hedge Agreement” shall mean a “swap agreement” as that term is defined in Section 101(53B)(A) of the Bankruptcy Code.”

 

kk.         The following is hereby added to the Loan Agreement as Section 1.71A:

 

“1.71A  “Increase Effective Date” shall have the meaning set forth in Section 2.5(a) hereof.”

 

ll.           The following is hereby added to the Loan Agreement as Section 1.71B:

 

“1.71B   “Increase Joinder” shall have the meaning set forth in Section 2.5(c) hereof.”

 

mm.       Clause (c)(ii) of the definition of “Interest Rate” set forth in Section 1.77 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(ii)        on Revolving Loans and Letters of Credit outstanding in excess of the Borrowing Base (whether or not such excess(es) arise or are made with or without Agent’s or any Lender’s knowledge or consent and whether made before or after an Event of Default).”

 

  

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nn.         The following is hereby added to the Loan Agreement as Section 1.78A:

 

“1.78A  “Inventory Sublimit” shall mean an amount equal to $10,000,000.”

 

oo.        Section 1.85 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“1.85     “Letter of Credit Limit” shall mean $5,000,000.”

 

pp.         Clause (c) of the definition of “Letter of Credit Obligations” set forth in Section 1.86 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(c)        without duplication, the aggregate amount of all payments made by each Lender to the issuer with respect to such Lender’s participation in Letters of Credit as provided in Section 2.2 for which Borrowers have not at such time reimbursed the Lenders, whether by way of a Revolving Loan or otherwise.”

 

qq.         The last sentence of the definition of “Letters of Credit” set forth in Section 1.87 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“The issuer of the Letters of Credit shall be, and all references to such issuer herein shall mean, Wells Fargo Bank, N.A. and its successors and assigns or such other bank as Agent may from time to time designate.”

 

rr.           The following is hereby added to the Loan Agreement as Section 1.88A:

 

“1.88A  “Line Block” shall mean an amount equal to $5,000,000.”

 

ss.         Section 1.89 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“1.89     “Loans” shall mean the Revolving Loans and Capex Loans.”

 

tt.           Section 1.94 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“1.94     “Maximum Credit” shall mean the amount equal to $70,000,000, as reduced by any reduction thereof pursuant to Section 2.1(c) hereof, and as increased by any increase thereof pursuant to Section 2.5 hereof.”

 

uu.         The following is hereby added to the Loan Agreement as Section 1.95A:

 

“1.95A  “Net Recovery Percentage” means, as of any date of determination, the percentage of the book value of Borrowers’ Inventory that is estimated to be recoverable in an orderly liquidation (on a “non-conversion basis”) of such Inventory net of all associated costs and expenses of such liquidation, such percentage to be determined as to each category of Inventory and to be as specified in the most recent appraisal received by Agent from an appraisal company selected by Agent.”

 

  

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vv.        Section 1.112 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“1.112   “Pro Rata Share” shall mean:

 

(a)          with respect to a Lender’s obligation to make Revolving Loans and receive payments relative thereto, participate in Letters of Credit, and with respect to all other computations and other matters related to the Letters of Credit, and the Revolving Loans, the fraction (expressed as a percentage) the numerator of which is such Lender’s Revolving Loan Commitment and the denominator of which is the aggregate amount of all of the Revolving Loan Commitments of Lenders, as adjusted from time to time in accordance with the provisions of Section 13.7 hereof; provided, that, if the Revolving Loan Commitments have been terminated, the numerator shall be the unpaid amount of such Lender’s Revolving Loans and its interest in the Letters of Credit and the denominator shall be the aggregate amount of all unpaid Revolving Loans and outstanding Letters of Credit;

 

(b)         with respect to a Lender’s obligation to make Capex Loans and receive payments relative thereto, and with respect to all other computations and other matters related to the Capex Loans, the fraction (expressed as a percentage) the numerator of which is such Lender’s Capex Loan Commitment and the denominator of which is the aggregate amount of all of the Capex Loan Commitments of Lenders, as adjusted from time to time in accordance with Section 13.7 hereof, provided, that, if the Capex Loan Commitments have been terminated, the numerator shall be the unpaid amount of such Lender’s Capex Loans and the denominator shall be the aggregate amount of all unpaid Capex Loans; and

 

(c)          with respect to all other matters (including the indemnification obligations arising under Section 12.15 hereof), (i) prior to the Commitments being terminated, the fraction (expressed as a percentage) the numerator of which is such Lender’s Commitment, and the denominator of which is the aggregate amount of Commitments of all Lenders, and (ii) from and after the time that the Commitments have been terminated or reduced to zero, the fraction (expressed as a percentage) the numerator of which is the sum of such Lender’s Revolving Loans, Capex Loans and its interest in the Letters of Credit, and the denominator of which is the aggregate amount of all unpaid Revolving Loans, Capex Loans and outstanding Letters of Credit.”

 

ww.       The following is hereby added to the Loan Agreement as Section 1.118A:

 

“1.118A “Reporting Trigger Period” means each period (a) commencing on any day that (i) the sum of Excess Availability plus Qualified Cash is less than the greater of (A) $12,500,000, and (B) an amount equal to 12.5% of an amount equal to the Maximum Credit minus the Line Block, (ii) Excess Availability is less than $6,500,000 for three consecutive Business Days, or (iii) an Event of Default occurs; and (b) continuing until at all times for 60 consecutive calendar days: (i) the sum of Excess Availability plus Qualified Cash has been greater than the greater of (A) $12,500,000, and (B) an amount equal to 12.5% of an amount equal to the Maximum Credit minus the Line Block, (ii) Excess Availability has been greater than $6,500,000, and (iii) no Event of Default then exists.”

 

xx.          Section 1.119 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“1.119   “Required Lenders” shall mean, at any time, those Lenders whose Pro Rata Shares (calculated under clause (c) of the definition of Pro Rata Share) aggregate at least fifty and one tenth of one percent (50.1%).”

 

  

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yy.         Section 1.120 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“1.120   “Reserves” shall mean as of any date of determination, such amounts as Agent may from time to time establish and revise in good faith reducing the amount of Loans and Letters of Credit which would otherwise be available to Borrowers under the lending formula(s) provided for herein:  (a) to reflect events, conditions, contingencies or risks which, as determined by Agent in good faith, materially adversely affect, or would have a reasonable likelihood of materially adversely affecting, (i) the Collateral constituting Accounts, Inventory or Equipment, its value or the amount that would reasonably be likely to be received by Agent from the sale or other disposition or realization upon such Collateral, or (ii) the security interests and other rights of Agent in the Collateral constituting Accounts, Inventory or Equipment (including the enforceability, perfection and priority thereof) or (b) to reflect Agent's good faith belief that any collateral report relating to Accounts, Inventory or Equipment furnished by or on behalf of any Borrower or any Guarantor to Agent is or may have been incomplete, inaccurate or misleading in any material respect or (c) to reflect outstanding Letters of Credit as provided in Section 2.2 hereof or (d) in respect of any state of facts which Agent determines in good faith constitutes a Default or an Event of Default.  Without limiting the generality of the foregoing, Reserves may, at Agent’s option, be established to reflect:  (A) dilution with respect to the Accounts (based on the ratio of the aggregate amount of non-cash reductions in Accounts for any period to the aggregate dollar amount of the sales of such Borrower for such period) as calculated by Agent for any period is or is reasonably anticipated to be greater than five percent (5%); (B) returns, discounts, claims, credits and allowances of any nature that are not paid pursuant to the reduction of Accounts; (C) amounts past due to owners and lessors of premises where any Collateral is located, other than for those locations where Agent has received a Collateral Access Agreement that Agent has accepted in writing; (D) amounts due or to become due to owners and licensors of trademarks and other Intellectual Property used by any Borrower; (E) the Bank Products Reserve; and (F) any other Reserve, including without limitation any Reserve for deferred revenue to the extent reserved by any Borrower on its books and records consistent with its historical practices.  The amount of any Reserve established by Agent shall have a reasonable relationship to the event, condition, Event of Default or other matter which is the basis for such reserve as determined by Agent in good faith.  To the extent Agent may revise the lending formulas used to determine the Borrowing Base or establish new criteria (with respect to new information, circumstances or facts) or revise existing criteria for Eligible Accounts, Eligible Foreign Accounts, Eligible Inventory, Eligible Equipment or Eligible Additional Equipment so as to address any circumstances, condition, event or contingency in a manner satisfactory to Agent, Agent shall not establish a Reserve for the same purpose or a Reserve that is otherwise duplicative of any other Reserve or change in criteria.”

 

  

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zz.          Section 1.122 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“1.122   “Revolving Loan Commitment” shall mean, at any time, as to each Lender, the principal amount set forth below designated as the Revolving Loan Commitment or on Schedule 1 to the Assignment and Acceptance Agreement pursuant to which such Lender became a Lender hereunder in accordance with the provisions of Section 13.7 hereof, as the same may be adjusted from time to time in accordance with the terms hereof; sometimes being collectively referred to herein as “Revolving Loan Commitments”:

 

	
Lender

	
Revolving Loan Commitment

	
Wells Fargo Capital Finance, LLC

	
$70,000,000

 

Notwithstanding the foregoing, as of any date of determination, each Lender's Revolving Loan Commitment shall be reduced by the then outstanding amount of such Lender’s Capex Loans.”

 

aaa.       The following is hereby added to the Loan Agreement as Section 1.122A:

 

“1.122A “Revolving Loans” shall mean the loans now or hereafter made by or on behalf of Agent and the Lenders on a revolving basis pursuant to the Credit Facility (involving advances, repayments and readvances) as set forth in Section 2.1 hereof.”

 

bbb.      The following is hereby added to the Loan Agreement as Section 1.123A:

 

“1.123A “Senior Leverage Ratio” shall mean, as of any date of determination, the ratio of (a) the outstanding principal balance of the Obligations as of such date, to (b) Consolidated EBITDA of Parent Guarantor, calculated on a trailing 4 fiscal quarter basis as of the last fiscal quarter for which financial statements have most recently been delivered pursuant to Section 9.6(a) as of such date.”

 

ccc.       Section 1.124 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“1.124   “Senior Notes” shall mean the 8% Non-Convertible Senior Notes due 2015, or “Securities” as defined in the Senior Note Indenture.”

 

ddd.      Section 1.125 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“1.125    “Senior Note Indenture” shall mean that certain Indenture, dated as of July 9, 2010, by and among Parent Guarantor, certain Affiliates of Parent Guarantor, and U.S. Bank National Association, as trustee.”

 

eee.       Section 2.1 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“2.1        Revolving Loans.

 

(a)         Subject to and upon the terms and conditions contained herein, each Lender with a Revolving Loan Commitment severally (and not jointly) agrees to make its Pro Rata Share of revolving loans to Borrowers from time to time on any Business Day on or after the Effective Date in amounts requested by Borrowers up to the aggregate amount outstanding for all Lenders at any time equal to the lesser of: (i) the Borrowing Base at such time, and (ii) an amount equal to the Maximum Credit, minus the Line Block, minus the principal amount of Capex Loans outstanding at such time, minus the Letter of Credit Obligations outstanding at such time.

 

  

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(b)         Except in Agent's discretion, at no time shall, the aggregate amount of the outstanding Revolving Loans and the Letter of Credit Obligations exceed an amount equal to the lesser of: (i) the Borrowing Base, and (ii) an amount equal to the Maximum Credit minus the Line Block, minus the principal amount of Capex Loans outstanding at such time.  If the event set forth in the preceding sentence of this Section 2.1(b) shall have occurred, such event shall not limit, waive or otherwise affect any rights of Agent or Lenders in such circumstances or on any future occasions, and Borrowers shall, upon demand by Agent, which may be made at any time or from time to time, promptly repay to Agent the entire amount of any such excess that results from the occurrence of any such event for which payment is demanded.

 

(c)          By providing ten (10) Business Days' written notice to Agent, Borrowers may request that the amount set forth in the definition of “Maximum Credit” hereof be reduced in an amount or amounts which shall not cause such amount set forth in such definition to be less than $50,000,000, which reduction shall be in increments of no less than $5,000,000; provided, that no Default or Event of Default shall have occurred and be continuing prior to or after giving effect to any such reduction; and further provided, that Borrowers may not make any such request more than two (2) times per year.”

 

fff.         Section 2.2(a) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(a)        Subject to and upon the terms and conditions contained herein and in the Letter of Credit Documents, at the request of Borrowers, Agent agrees to provide or arrange for the account of Borrowers one or more Letters of Credit, for the ratable risk of each Lender with a Revolving Loan Commitment according to its Pro Rata Share, containing terms and conditions acceptable to Agent and the issuer thereof.”

 

ggg.      Section 2.2(e) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(e)        Borrowers shall reimburse immediately the issuer of a Letter of Credit for any draw under any Letter of Credit issued for the account of Borrowers by such issuer and pay such issuer the amount of all other charges and fees payable to such issuer in connection with any Letter of Credit issued for the account of Borrowers immediately when due, irrespective of any claim, setoff, defense or other right which Borrowers, or any of them, may have at any time against such issuer or any other Person.  Each drawing under any Letter of Credit or other amount payable in connection therewith when due shall constitute a request by Borrowers to Agent for a Prime Rate Loan in the amount of such drawing or other amount then due and shall be made by Agent on behalf of Lenders as a Revolving Loan.  The date of such Loan shall be the date of the drawing or as to other amounts, the due date therefor.  Any payments made by or on behalf of Agent or any Lender to an issuer and/or related parties in connection with any Letter of Credit shall constitute additional Revolving Loans to Borrowers pursuant to this Section 2.”

 

  

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hhh.      Section 2.2(i) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(i)        Immediately upon the issuance or amendment of any Letter of Credit, each Lender with a Revolving Loan Commitment shall be deemed to have irrevocably and unconditionally purchased and received, without recourse or warranty, an undivided interest and participation to the extent of such Lender’s Pro Rata Share of the liability with respect to such Letter of Credit and the obligations of Borrowers with respect thereto (including all Letter of Credit Obligations with respect thereto).  Each Lender with a Revolving Loan Commitment shall absolutely, unconditionally and irrevocably assume, as primary obligor and not as surety, and be obligated to pay to the issuer of any such Letter of Credit therefor and discharge when due, its Pro Rata Share of all of such obligations arising under such Letter of Credit.  Without limiting the scope and nature of each Lender’s participation in any Letter of Credit, to the extent that the issuer has not been reimbursed or otherwise paid as required hereunder or under any such Letter of Credit, each such Lender with a Revolving Loan Commitment shall pay to the issuer its Pro Rata Share of such unreimbursed drawing or other amounts then due to issuer in connection therewith.”

 

iii.          The following is hereby added to the Loan Agreement as Section 2.4:

 

“2.4        Capex Loans.

 

(a)          Subject to and upon the terms and conditions contained herein, each Lender with a Capex Loan Commitment severally (and not jointly) agrees to make its Pro Rata Share of capex loans (“Capex Loans”) to Borrowers from time to time on any Business Day on or after the Eighth Amendment Effective Date in amounts requested by Borrowers up to an amount equal to such Lender’s Pro Rata Share of eighty percent (80%) of the Hard Costs of Eligible Additional Equipment purchased by a Borrower after the Eighth Amendment Effective Date; provided, however, that no Lender shall be required to make aggregate Capex Loans in excess of an amount equal to such Lender’s Capex Loan Commitment (without giving effect to any repayments or prepayments thereof).

 

(b)         The proceeds of each Capex Loan shall be used solely for the payment of the purchase price (or to reimburse Borrowers for the cash payments previously paid by Borrowers for the purchase price) for the Eligible Additional Equipment specified in the Capex Purchase Loan Request applicable to such Capex Loan; provided, that, (i) to the extent that the proceeds of any Capex Loan are used to reimburse Borrowers for the cash payments paid by Borrowers for the purchase price of any Eligible Additional Equipment, Borrowers shall have taken possession of such Eligible Additional Equipment within 90 days prior to the date of Borrowers’ request for such Capex Loan, and (ii) no Capex Purchase Loan Request shall include any Eligible Additional Equipment that supports any other Capex Loan.  Each Capex Loan shall be in an amount of not less than $500,000.  A single Capex Loan may be used for the purchase price of one or more items constituting Eligible Additional Equipment specified in the Capex Loan Request required to be delivered to Agent hereunder.

 

(c)          In addition to the other conditions precedent to any Loan set forth in this Agreement, the provision of each Capex Loan shall be subject to the satisfaction of each of the following additional conditions precedent, as determined by Agent:

 

(i)           Agent shall have received from Borrowers not less than 3 Business Days and not more than 20 Business Days prior written notice of the proposed Capex Loan (each such notice being a “Capex Purchase Loan Request”), which notice shall specify and include the following: (1) the proposed date and amount of the Capex Loan, (2) a list and description of the Eligible Additional Equipment (by model, make, manufacturer, serial number and/or such other identifying information as may be reasonably requested by Agent), (3) whether any of such Eligible Additional Equipment has been purchased prior to the date of the proposed Capex Loan and if so, the date of such purchase and identifying the specific Eligible Additional Equipment that has been so purchased, (4) the Hard Costs and total purchase price for such Eligible Additional Equipment (and the terms of payment of such purchase price), and (5) such other information and documents as Agent may from time to time reasonably request with respect thereto;

 

  

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(ii)           Agent shall have a valid and perfected first priority security interest in and lien upon such Eligible Additional Equipment and such Eligible Additional Equipment shall be free and clear of all other liens, security interests, claims or other encumbrances (except for non-consensual liens or security interests that are permitted under Sections 9.8(b) or (c) hereof); and

 

(iii)           Agent shall have received copies, or upon Agent's reasonable request therefor, originals, of all material agreements, documents and instruments relating to the sale of the Eligible Additional Equipment to Borrowers, including, without limitation, any purchase orders, invoices, bills of sale or similar documents.

 

(d)         On each Capex Scheduled Repayment Date, the principal of the Capex Loans (regardless of the date such Capex Loans were made) shall be repaid in an amount equal to 1/28th of the original principal amount of each Capex Loan outstanding on such Capex Scheduled Repayment Date.  In addition to the foregoing, the outstanding unpaid principal balance and all accrued and unpaid interest on the Capex Loans shall be due and payable on the earlier of (i) the Maturity Date, and (ii) the date of the acceleration of the Capex Loans in accordance with the terms hereof.  Any principal amount of the Capex Loans that is repaid or prepaid may not be reborrowed.”

 

jjj.          The following is hereby added to the Loan Agreement as Section 2.5:

 

“2.5        Increase in Maximum Credit.

 

(a)          From time to time the Maximum Credit may be increased (each increase that satisfies the terms and conditions of this Section, an “Approved Increase”) by an amount not in excess of the Available Increase Amount at the option of Borrowers by delivery of a written notice from Borrowers of a proposed increase to Agent if and only if (i) each of the conditions precedent set forth in Section 4.2 are satisfied as of the Increase Effective Date (as if Borrowers were requesting an extension of credit hereunder), (ii) Lenders or other Persons commit to increase or provide Commitments in an aggregate amount equal to the Approved Increase in accordance with Section 2.5(c), and (iii) Borrowers shall have (A) reached agreement with the prospective new Lenders (the “Prospective Lenders”) with respect to the amount of any supplemental closing fee to be paid to such Prospective Lenders on the Increase Effective Date and shall have communicated the amount of such supplemental closing fee to Agent, and (B) paid any fees described in clause (A) above to Agent for the account of the Prospective Lenders and Agent, as applicable.  Each such notice shall specify the date on which the proposed increase is to be effective (the “Increase Effective Date”), which date shall not be less than 10 Business Days after the date of such notice.  Each proposed increase shall be in an amount of at least $5,000,000 and integral multiples of $5,000,000 in excess thereof.

 

  

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(b)          So long as each of the requirements set forth in Section 2.5(a) are satisfied, the increased Maximum Credit with respect to an Approved Increase shall become effective, as of such Increase Effective Date.

 

(c)          Agent shall invite each Lender to increase its Commitment (it being understood that no Lender shall be obligated to increase its Commitment) and, if sufficient Lenders do not agree to increases in their Commitments in an aggregate amount equal to the Approved Increase, may invite any other Person who is reasonably satisfactory to Agent and Borrowers to become a Lender in connection with an Approved Increase by executing a joinder agreement, in form and substance reasonably satisfactory to Agent, to which such Person, Borrowers, and Agent are party (the “Increase Joinder”).  Such Increase Joinder or any other joinder agreement reasonably acceptable to the Borrowers and Agent in connection with any Approved Increase may, with the consent of Borrowers and Agent (but without the consent of the Required Lenders or any other Lender other than Prospective Lenders and any existing Lender participating in the applicable Approved Increase), effect such amendments to this Agreement and the other Financing Agreements as may be necessary or appropriate, in the opinion of Agent, to effectuate the provisions of this Section 2.5; provided, however, that any amendment to cure any ambiguity, defect, or inconsistency as may be necessary or appropriate, in the opinion of Agent shall require only the consent of Borrowers and Agent.

 

(d)          To the extent any Revolving Loans, Capex Loans, or Letters of Credit are outstanding on the Increase Effective Date, each of the Lenders having a Commitment prior to the Increase Effective Date (the “Pre-Increase Revolver Lenders”) shall assign to any Lender which is acquiring a new or additional Commitment on the Increase Effective Date (the “Post-Increase Revolver Lenders”), and such Post-Increase Revolver Lenders shall purchase from each Pre-Increase Revolver Lender, at the principal amount thereof, such interests in the Revolving Loans, Capex Loans and participation interests in Letters of Credit on such Increase Effective Date as shall be necessary in order that, after giving effect to all such assignments and purchases, such Revolving Loans, Capex Loans, and participation interests in Letters of Credit will be held by Pre-Increase Revolver Lenders and Post-Increase Revolver Lenders ratably in accordance with their Pro Rata Share (calculated under clause (c) of the definition of Pro Rata Share) after giving effect to such increased Commitments.

 

(e)          Borrowers shall take any actions reasonably required by Agent to ensure and demonstrate that the liens granted by the Financing Agreements continue to be perfected under the UCC or otherwise after giving effect to the increase in the Maximum Credit and the establishment of any such new Commitments.”

 

kkk.        Section 3.2(a) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(a)        Borrowers shall pay to Agent, for the account of Lenders, monthly, an unused line fee at a rate of .25% per annum, calculated upon the amount by which the Maximum Credit minus the Line Block exceeds the average daily principal balance of the outstanding Loans and Letters of Credit during the immediately preceding month (or part thereof) while this Agreement is in effect and for so long thereafter as any of the Obligations are outstanding, which fee shall be payable on the first day of each month in arrears.”

 

  

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lll.           The following is hereby added to the end of Section 3.3(a) of the Loan Agreement:

 

“Notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith or in implementation thereof, and (y) all requests, rules, guidelines, requirements or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “change in law” as applicable for all purposes of this Agreement, regardless of the date enacted, adopted, issued or implemented.”

 

mmm.    Section 4.2(b) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(b)       no law, regulation, order, judgment or decree of any Governmental Authority shall exist, and no action, suit, investigation, litigation or proceeding shall be pending or threatened in any court or before any arbitrator or Governmental Authority, which purports to enjoin, prohibit or restrain the making of the Loans or providing the Letters of Credit;”

 

nnn.      Section 6.3(d) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(d)       Notwithstanding the foregoing in this Section 6.3, Agent shall exercise control over the Blocked Accounts and shall be entitled to receive payments on and/or proceeds of Accounts and other Collateral only during a Cash Dominion Period.  Following any exercise of control by Agent over the Blocked Accounts pursuant to this clause (d), Agent shall relinquish control over the Blocked Accounts upon the termination of the applicable Cash Dominion Period.”

 

ooo.      Section 7.1 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“7.1        Collateral Reporting.

 

(a)          Borrowers shall provide Agent with the following documents in a form reasonably satisfactory to Agent:

 

(i)           on a monthly basis as required by Agent (or weekly basis during a Reporting Trigger Period), schedules of sales made, credits issued and cash received;

 

(ii)           as soon as possible after the end of each calendar month (but in any event within ten (10) Business Days after the end thereof), on a monthly basis (or weekly basis (within 3 Business Days after the end of each week) for any week ending during a Reporting Trigger Period), (A) a completed borrowing base certificate pertaining to the fiscal month (or week, as applicable) then ended substantially in the form of Exhibit D hereto (each such certificate, a "Borrowing Base Certificate"), which Borrowing Base Certificate shall not include, in the case of Eligible Equipment, any items subject to capital leases or similar arrangements, (B) agings of accounts receivable (together with a reconciliation to the previous month’s aging and general ledger), (C) agings of accounts payable, and (D) perpetual inventory reports and such other inventory reports requested by Agent from time to time; and

 

  

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(iii)          upon Agent's reasonable request, but no more frequently than once a month (or once a week during any Reporting Trigger Period), (A) copies of customer statements, purchase orders, sales invoices, credit memos, remittance advices and reports, and copies of deposit slips and bank statements, (B) copies of shipping and delivery documents, and (C) copies of purchase orders, invoices and delivery documents for Inventory and Equipment acquired by any Borrower or Guarantor.

 

(b)         If any of any Borrower's or Guarantor’s records or reports of the Collateral are prepared or maintained by an accounting service, contractor, shipper or other agent, such Borrower and Guarantor hereby irrevocably authorizes such service, contractor, shipper or agent to deliver such records, reports, and related documents to Agent and to follow Agent's instructions with respect to further services at any time that an Event of Default exists or has occurred and is continuing.

 

(c)         In addition to providing the foregoing documents within the time frames set forth in this Section 7.1, Borrowers shall provide Agent with any of the documents set forth in this Section 7.1 at any intervals requested by Agent while an Event of Default exists.”

 

ppp.      Section 7.2(a) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(a)        Borrowers shall notify Agent promptly of: (i) with respect to Eligible Accounts and Eligible Foreign Accounts, any material delay in any Borrower's performance of any of its material obligations to any account debtor or the assertion of any material claims, offsets, defenses or counterclaims by any account debtor, or any material disputes with account debtors, or any material settlement, adjustment or compromise thereof, (ii) with respect to Eligible Accounts and Eligible Foreign Accounts, all material adverse information known to any Borrower or Guarantor relating to the financial condition of any account debtor and (iii) any event or circumstance which, to the best of any Borrower's or Guarantor’s knowledge, would cause Agent to consider any then existing Eligible Accounts and Eligible Foreign Accounts as no longer constituting Eligible Accounts and Eligible Foreign Accounts, respectively.  No credit, discount, allowance or extension or agreement for any of the foregoing shall be granted to any account debtor without Agent's consent, except in the ordinary course of a Borrower's or Guarantor’s business in accordance with past practices and except as set forth in the schedules delivered to Agent pursuant to Section 7.1(a) above.  So long as no Event of Default exists or has occurred and is continuing, Borrowers and Guarantors shall settle, adjust or compromise any claim, offset, counterclaim or dispute with any account debtor.  At any time that an Event of Default exists or has occurred and is continuing, Agent shall, at its option, have the exclusive right to settle, adjust or compromise any claim, offset, counterclaim or dispute with account debtors or grant any credits, discounts or allowances.”

 

  

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qqq.      Section 7.2(b)(iv) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(iv)      none of the transactions giving rise thereto will violate any applicable foreign, Federal, State or local laws or regulations, all documentation relating thereto will be legally sufficient under such laws and regulations and all such documentation will be legally enforceable in accordance with its terms; and with respect to Eligible Accounts and Eligible Foreign Accounts, there shall be no setoffs, deductions, contras, defenses, counterclaims or disputes existing or asserted with respect thereto except as reported to Agent in accordance with the terms of this Agreement.”

 

rrr.         Section 7.3 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“7.3       Inventory Covenants.  With respect to the Inventory:  (a) none of the Borrowers or Guarantors shall remove any Inventory with a fair market value in excess of $1,000,000 in the aggregate for all such Inventory of the Borrowers or Guarantors from the locations set forth or permitted herein, without prior notice to Agent, except for sales of Inventory in the ordinary course of its business and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to a Borrower or Guarantor which is in transit to the locations set forth or permitted herein; (b) each Borrower and Guarantor shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (c) none of the Inventory or other Collateral constitutes farm products or the proceeds thereof; (d) each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory; (e) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Agent, keeping correct and accurate records itemizing and describing the kind, type and quantity of Inventory, such Borrower's or Guarantor’s cost therefor and daily withdrawals therefrom and additions thereto; (f) Borrowers and Guarantors shall conduct a physical count of the Inventory at least once each year but at any time or times as Agent may request on or after an Event of Default, and promptly following such physical inventory shall supply Agent, if requested by Agent, with a report in the form and with such specificity as may be satisfactory to Agent concerning such physical count; and (g) upon Agent's request, Borrowers shall, at their expense, no more than one (1) time in any twelve (12) month period (or two (2) times if the second such appraisal is commenced during a Cash Dominion Period), but at any time or times as Agent may request while an Event of Default is continuing, deliver or cause to be delivered to Agent written appraisals as to the Inventory in form, scope and methodology acceptable to Agent and by an appraiser acceptable to Agent, addressed to Agent and Lenders and upon which Agent and Lenders are expressly permitted to rely; without limiting in any way the foregoing in this clause (g), Agent, at its expense, shall have the right to have such an appraiser, at any time, perform such additional appraisals as to the Inventory.”

 

  

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sss.       Section 7.4 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“7.4       Equipment Covenants.  With respect to the Equipment:  (a) upon Agent’s request, Borrowers and Guarantors shall, at their expense, no more than two (2) times in any twelve (12) month period, but at any time or times as Agent may request on or after an Event of Default has occurred and is continuing, deliver or cause to be delivered to Agent written full appraisals as to the Equipment, each such full appraisal to be in form, scope and methodology reasonably acceptable to Agent and by an appraiser reasonably acceptable to Agent, addressed to Agent and upon which Agent is expressly permitted to rely; without limiting in any way the foregoing in this clause (a), Agent, at its expense, shall have the right to have such an appraiser, at any time, perform such additional appraisals as to the Equipment; (b) Borrowers and Guarantors shall keep the Equipment necessary in the conduct of their business in good order, repair, running and marketable condition (ordinary wear and tear excepted); (c) Borrowers and Guarantors shall use the Equipment, with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity in all material respects with all applicable laws; (d) the Equipment is and shall be used in the business of Borrowers and Guarantors and not for personal, family, household or farming use; (e) without prior notice to Agent, Borrowers and Guarantors shall not remove (i) any Eligible Equipment or Eligible Additional Equipment, or (ii) any other Equipment with a fair market value in excess of $1,000,000 in the aggregate for all such Equipment of the Borrowers or Guarantors from the locations set forth or permitted herein, except to the extent the Equipment is not in use anymore or to the extent necessary to have any Equipment repaired or maintained in the ordinary course of its business or to move Equipment directly from one location set forth or permitted herein to another such location and except for the movement of motor vehicles used by or for the benefit of Borrowers or Guarantors in the ordinary course of business; (f) the Equipment is now and shall remain personal property and Borrowers and Guarantors shall not permit any of the Equipment to be or become a part of or affixed to real property; and (g) each Borrower and Guarantor assumes all responsibility and liability arising from the use of the Equipment.”

 

ttt.         The following is hereby added to the Loan Agreement as Section 8.19:

 

“8.19     Hedge Agreements.  On each date that any Hedge Agreement is executed by any Bank Product Provider, each Borrower and Guarantor satisfies all eligibility, suitability and other requirements under the Commodity Exchange Act (7 U.S.C. § 1, et seq., as in effect from time to time) and the Commodity Futures Trading Commission regulations.”

 

uuu.      Section 9.6 of the Loan Agreement is hereby amended by replacing the period at the end of clause (a)(iii) thereof with “, and”, and adding the following as clause (a)(iv) thereof:

 

“(iv)      within thirty (30) days after the end of each fiscal month of Borrowers ending during a Reporting Trigger Period, a schedule in a form reasonably satisfactory to Agent of the calculations used in determining, as of the end of such month, whether Borrowers and Guarantors were in compliance with the covenants set forth in Section 9.24 of this Agreement for such month, in addition to operational and other metrics that will be reasonably satisfactory to the Agent, including, without limitation, monthly starts, layers, shipments, revenues and headcount.”

 

vvv.      Section 9.7(a)(i) is hereby amended and restated in its entirety to read as follows:

 

“(i)        a Domestic Subsidiary of any Borrower (other than another Borrower, a Guarantor, or an Excluded Subsidiary) may merge with and into such Borrower with such Borrower being the surviving entity, provided, that following the consummation of any such merger, the assets owned by such Domestic Subsidiary prior to such merger shall not be deemed Eligible Accounts, Eligible Foreign Accounts, Eligible Inventory, or Eligible Additional Equipment unless the criteria set forth in Sections 9.10(i)(x), (xi) and (xii) hereof shall have been fully satisfied with respect to such assets and such Credit Party (in place of any subject Target or New Subsidiary as referred to in such Sections), as applicable, and such assets shall meet the criteria set forth in the definition of “Eligible Accounts”, “Eligible Foreign Accounts”, “Eligible Inventory” or “Eligible Additional Equipment”, as applicable;”

 

  

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www.    Section 9.7(b)(ii) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(ii)       the sale or other disposition of worn-out, surplus or obsolete Equipment (other than Eligible Additional Equipment which is the subject of a Capex Loan) or Equipment (other than Eligible Additional Equipment which is the subject of a Capex Loan) no longer used or useful in the business of any Borrower or any Guarantor so long as (A) before and after giving effect to any such sale or disposition, no Default or Event of Default has occurred and is continuing, (B) the proceeds of any such sale or disposition are paid to Agent for application to the Obligations as set forth herein, and (C) such Equipment is sold for at least the appraised value thereof as set forth on the most recent appraisal of Equipment then received by Agent in accordance with Section 7.4 hereof,”

 

xxx.        Section 9.7(b)(iii) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(iii)      the sale or other disposition of Equipment (excluding worn-out, surplus and obsolete Equipment and Equipment no longer used or useful in the business of any Borrower or Guarantor) so long as (A) such sales or other dispositions do not involve such Equipment having an aggregate fair market value in excess of $5,000,000 for all such Equipment disposed of by all of the Borrowers and Guarantors in any fiscal year of Borrowers or as Agent may otherwise agree, (B) before and after giving effect to any such sale or disposition, no Default or Event of Default has occurred and is continuing, (C) the proceeds of any such sale or disposition are paid to Agent for application to the Obligations as set forth herein (it being understood that to the extent such Equipment is Eligible Additional Equipment, such proceeds shall be applied first to any Capex Loan which was made on account of such Eligible Additional Equipment (with the remaining proceeds being applied to the other Obligations)), and (D) such Equipment is sold for at least: (x) the appraised value thereof as set forth on the most recent appraisal of Equipment then received by Agent in accordance with Section 7.4 hereof, and (y) in the case of Eligible Additional Equipment which is the subject of a Capex Loan, the amount of such Capex Loan, and”

 

yyy.      Section 9.7(b)(v) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(v)       the transfer, sale, lease or licensing of all or part of such Borrower's or Guarantor’s Intellectual Property or any items of Equipment (other than Eligible Equipment and Eligible Additional Equipment) with a fair market value not to exceed $10,000,000 in the aggregate for all such Equipment of the Borrowers or Guarantors to a Domestic Subsidiary (other than an Excluded Subsidiary) of such Borrower or Guarantor or to any other Borrower or Guarantor; provided, that: (A) immediately prior to and as a result of such transfer, sale, lease or licensing, no Default or Event of Default shall have occurred and be continuing; and (B) to the extent such transfer, sale, lease or licensing is to a Domestic Subsidiary which is not a Borrower or Guarantor, (1) prior to such transfer, sale, lease or licensing to such Domestic Subsidiary, Agent shall have had a reasonable opportunity to conduct customary and other business, legal, and collateral due diligence with respect to such Domestic Subsidiary, including, but not limited to, ordering, in form and substance reasonably satisfactory to Agent, and reviewing to its satisfaction, UCC, tax lien, litigation, bankruptcy and intellectual property searches from all offices that Agent deems reasonably appropriate in its sole discretion, certificates of status with respect to such Domestic Subsidiary, in form and substance satisfactory to Agent, which certificates shall be issued by the appropriate officer of the jurisdiction of organization of such Domestic Subsidiary and by the appropriate officers of each other jurisdiction in which such Domestic Subsidiary is qualified to do business, which certificates shall indicate that such Domestic Subsidiary is in good standing in such jurisdictions; and (2) such Domestic Subsidiary shall have executed and delivered a Guaranty, a joinder to this Agreement, and such other documents (including but not limited to a non-restrictive license to use) as Agent may reasonably request to protect and perfect its interest in such Collateral each in form and substance reasonably satisfactory to Agent in its sole discretion,”

 

  

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zzz.        Section 9.7(b)(viii) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(viii)    the transfer or sale of assets to any Joint Venture (other than any Joint Venture involving Foreign Parent Nonguarantor or any of its Affiliates), Foreign Subsidiary of any Borrower or Guarantor, Excluded Subsidiary or to Jazz WOFE in connection with any investment or other transaction permitted by Section 9.10(h); provided, that (A) all transfers or sales of items of Equipment of any Credit Party (other than an Excluded Subsidiary) to any Joint Venture (other than any Joint Venture involving Foreign Parent Nonguarantor or any of its Affiliates), Foreign Subsidiary of any Borrower or Guarantor, or Excluded Subsidiary shall be limited to Equipment with a fair market value not to exceed $2,500,000 in the aggregate for all such Equipment of the Credit Parties (other than Excluded Subsidiaries) and for all such transfers and sales and shall be only permitted to the extent that any such transfer or sale is in the ordinary course of the applicable Credit Parties’ business; (B) no Eligible Additional Equipment may be transferred or sold unless any Capex Loan which was made on account of such Eligible Additional Equipment is repaid in full at the time of such transfer or sale, and (C) immediately prior to and after giving effect to such transfer or sale, no Default or Event of Default shall have occurred and be continuing,”

 

aaaa.     Section 9.7(b)(xiv) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(xiv)    other dispositions (other than Eligible Additional Equipment which is the subject of a Capex Loan) which do not in the aggregate exceed $1,000,000 per fiscal year,”

 

bbbb.    Section 9.8(l) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(l)        any other security interest, lien or other encumbrance (other than any security interest, lien or other encumbrance that would encumber any Accounts, Inventory, Eligible Equipment, or Eligible Additional Equipment) created or incurred in connection with any Indebtedness not to exceed $1,000,000 in the aggregate at any one time outstanding for all Credit Parties (other than Excluded Subsidiaries);”

 

  

24

  

 

cccc.     Section 9.8(n) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(n)       liens on any asset (other than any lien that encumbers any Accounts, Inventory, Eligible Equipment, or Eligible Additional Equipment) existing at the time of acquisition of such asset by any Credit Party so long as (i) the lien shall apply only to the asset so acquired and the proceeds thereof, and (ii) the Indebtedness secured by such lien is otherwise permitted hereunder;”

 

dddd.    Section 9.9(e) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(e)        the incurrence by a Credit Party of Indebtedness under Hedge Agreements that are incurred for the bona fide purpose of hedging the interest rate, commodity, or foreign currency risks associated with such Credit Party’s operations and not for speculative purposes;”

 

eeee.     Section 9.9(g) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(g)       Indebtedness incurred or created in connection with Existing Letters of Credit or any letter of credit (other than any Letter of Credit) issued to any Credit Party in the ordinary course of its business by any issuer other than WFCF and its Affiliates, or their respective  successors and assigns;”

 

ffff.        Section 9.10(i)(iii) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(iii)       as of the date of the Subsidiary Investment or acquisition of the subject Target and any related Targets, as applicable, and after giving effect thereto, Borrowers’ Excess Availability shall not be less than $13,750,000 and Borrowers’ Excess Availability shall be projected, to the Agent’s reasonable satisfaction, to be $13,750,000 or more for 90 consecutive days following the consummation of such Subsidiary Investment or such acquisition, as applicable;”

 

gggg.    Section 9.10(i)(ix) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(ix)       Agent shall have received such further agreements, documents and instruments, and such further acts shall have been completed, with respect to the subject Target or New Subsidiary (as applicable), as required by Section 9.23 hereof;

 

at Borrowers’ request, the subject Target or the Person acquiring the subject Target or the subject New Subsidiary (as applicable) may be added as a borrower hereunder, but only at the election of Agent; regardless of whether the subject Target or the Person acquiring the subject Target or the subject New Subsidiary (as applicable) is or becomes a Borrower hereunder, and regardless of whether the Accounts or Inventory (which term shall mean Accounts and Inventory as applied to the subject Target or New Subsidiary for the purposes of this Section) of the subject Target or New Subsidiary qualify under the definition of “Eligible Accounts”, “Eligible Inventory” or “Eligible Foreign Accounts”, or whether the Equipment (which term shall mean Equipment as applied to the subject Target or New Subsidiary for the purposes of this Section) of the subject Target or New Subsidiary qualify under the definition of “Eligible Equipment” or “Eligible Additional Equipment”, the inclusion of such Accounts in Eligible Accounts or Eligible Foreign Accounts, Inventory in Eligible Inventory, or Equipment in Eligible Equipment or Eligible Additional Equipment shall be subject to:”

 

  

25

  

 

hhhh.    Section 9.10(i)(xii) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(xii)      the chief executive office of the subject Target or New Subsidiary (as applicable) shall be in the United States, and in any event, only those Accounts generated and invoiced from the United States may be deemed Eligible Accounts.”

 

iiii.         Section 9.11(g) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(g)       Parent Guarantor may repurchase any of its Indebtedness arising under any Senior Notes; provided that at the time of such repurchase and after giving effect thereto, (A) no Default or Event of Default shall have occurred and be continuing, (B) Borrowers’ Excess Availability shall not be less than $13,750,000 after giving effect to the purchase of such Senior Notes; and (C) Borrowers’ Excess Availability shall be projected, to Agent’s reasonable satisfaction, to be $13,750,000 or more for 60 consecutive days following the consummation of such repurchase.”

 

jjjj.         Section 9.18 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“9.18     Financial Covenants.  Upon the occurrence and during the continuance of a Covenant Testing Trigger Period, Parent Guarantor and its Subsidiaries (other than any Excluded Subsidiaries) shall have a Consolidated Fixed Charge Coverage Ratio of at least 1.10 to 1.0 when measured on a trailing four fiscal quarter basis as of the end of: (a) the last fiscal quarter immediately preceding the occurrence of such Covenant Testing Trigger Period for which financial statements have most recently been delivered pursuant to Section 9.6(a) hereof, and (b) each fiscal quarter for which financial statements are delivered pursuant to Section 9.6(a) hereof during such Covenant Testing Trigger Period.”

 

kkkk.     Section 9.22(f) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(f)        (i) all out-of-pocket expenses and costs heretofore and from time to time hereafter incurred by Agent during the course of periodic field examinations of the Collateral and each Borrower's or Guarantor’s operations; provided that Borrowers shall not have to reimburse Agent for more than two (2) such field examinations in any twelve (12) month period, except that, on or after the occurrence and continuation of an Event of Default or at any time during a Cash Dominion Period, all such field examinations shall be at Borrowers’ expense without regard to such limitation, plus (ii) a per diem charge at Agent’s then standard rate for Agent’s examiners in the field and office (which rate as of the date hereof is $1,000.00 per person per day); and”

 

  

26

  

 

llll.         Section 10.1(h) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(h)        a case or proceeding under the bankruptcy laws of the United States of America now or hereafter in effect or under any insolvency, reorganization, receivership, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction now or hereafter in effect (whether at a law or equity) is filed (i) by any Borrower or any Guarantor seeking to adjudicate it bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to its debts, or (ii) against all or any part of the Collateral constituting Accounts, Inventory, Equipment, deposit accounts and proceeds thereof; provided that, notwithstanding anything to the contrary in this clause (h), any such case or proceeding filed by any Borrower or Guarantor as set forth in subclause (i) above shall constitute an Event of Default;”

 

mmmm. The first sentence of Section 11.2(d) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“The consent of Agent shall be required for any amendment, waiver or consent affecting the rights or duties of Agent hereunder or under any of the other Financing Agreements, in addition to the consent of the Lenders otherwise required by this Section and the exercise by Agent of any of its rights hereunder with respect to Reserves or Eligible Accounts, Eligible Foreign Accounts, Eligible Inventory, Eligible Equipment or Eligible Additional Equipment shall not be deemed an amendment to the advance rates provided for in this Section 11.2.”

 

nnnn.    Section 12.18 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“12.18   Additional Loans.  Agent shall not make any Revolving Loans or provide any Letter of Credit to any Borrower on behalf of Lenders intentionally and with actual knowledge that such Revolving Loans or Letter of Credit would cause the aggregate amount of the total outstanding Revolving Loans and Letters of Credit to Borrowers to exceed the Borrowing Base, without the prior consent of all Lenders, except, that, Agent may make such additional Revolving Loans or provide such additional Letter of Credit on behalf of Lenders, intentionally and with actual knowledge that such Revolving Loans or Letter of Credit will cause the total outstanding Revolving Loans and Letters of Credit to Borrowers to exceed the Borrowing Base, as Agent may deem necessary or advisable in its discretion, provided, that: (a) the total principal amount of the additional Revolving Loans or additional Letters of Credit to any Borrower which Agent may make or provide after obtaining such actual knowledge that the aggregate principal amount of the Revolving Loans equal or exceed the Borrowing Bases of Borrowers, plus the amount of Special Agent Advances made pursuant to Section 12.21(a)(ii) hereof then outstanding, shall not exceed the aggregate amount equal to ten percent (10%) of the Maximum Credit and shall not cause the total principal amount of the Loans and Letters of Credit to exceed the Maximum Credit and (b) no such additional Revolving Loan or Letter of Credit shall be outstanding more than ninety (90) days after the date such additional Revolving Loan or Letter of Credit is made or issued (as the case may be), except as the Required Lenders may otherwise agree.  Each Lender shall be obligated to pay Agent the amount of its Pro Rata Share of any such additional Revolving Loans or Letters of Credit.”

 

  

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oooo.    Section 12.21(a)(ii)(A) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(A)      the aggregate principal amount of the Special Agent Advances pursuant to this clause (ii) outstanding at any time, plus the then outstanding principal amount of the additional Revolving Loans and Letters of Credit which Agent may make or provide as set forth in Section 12.18 hereof, shall not exceed the amount equal to ten percent (10%) percent of the Maximum Credit and”

 

pppp.    Section 13.1(a) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(a)        This Agreement and the other Financing Agreements shall continue in full force and effect for a term ending on December 31, 2018 (the “Maturity Date”), unless sooner terminated pursuant to the terms hereof.  Borrowers may terminate this Agreement at any time upon ten (10) Business Days’ prior written notice to Agent (which notice shall be irrevocable); provided, that this Agreement and all other Financing Agreements must be terminated simultaneously.  In addition, Agent may terminate this Agreement at any time that an Event of Default has occurred and is continuing.  In addition, upon written notice to Borrowers, Agent may terminate this Agreement effective 120 days prior (or anytime thereafter) to the final maturity date of any of the Senior Notes unless prior to such date: (i) such Senior Notes are refinanced on terms and conditions satisfactory to Agent (including having a final maturity date at least 120 days after the Maturity Date); (ii) such Senior Notes have been paid in accordance with the terms of this Agreement; (iii) Borrowers deposit into a deposit account under the sole control of Agent pursuant to a Deposit Account Control Agreement, an amount at least equal to the then current outstanding balance of such Senior Notes as of the date of such deposit, or (iv) a combination of the above (i), (ii) and (iii) with respect to such Senior Notes.  Upon the Maturity Date or any other effective date of termination of the Financing Agreements, Borrowers shall pay to Agent all outstanding and unpaid Obligations and shall furnish cash collateral to Agent (or at Agent’s option, a letter of credit issued for the account of Borrowers and at Borrowers’ expense, in form and substance satisfactory to Agent, by an issuer acceptable to Agent and payable to Agent as beneficiary) in such amounts as Agent determines are reasonably necessary to secure Agent and Lenders from loss, cost, damage or expense, including reasonable attorneys’ fees and expenses, in connection with any contingent Obligations that are known or ascertainable or that are likely to ripen, including issued and outstanding Letter of Credit Obligations and checks or other payments provisionally credited to the Obligations and/or as to which Agent or any Lender has not yet received final and indefeasible payment and any continuing obligations of Agent or any Lender pursuant to any Deposit Account Control Agreement.  The amount of such cash collateral (or letter of credit, as Agent may determine) as to any Letter of Credit Obligations shall be in the amount equal to one hundred two percent (102%) of the amount of the Letter of Credit Obligations plus the amount of any fees and expenses payable in connection therewith through the end of the latest expiration date of the Letters of Credit giving rise to such Letter of Credit Obligations.  Such payments in respect of the Obligations and cash collateral shall be remitted by wire transfer in Federal funds to the Agent Payment Account or such other bank account of Agent, as Agent may, in its discretion, designate in writing to Borrowers for such purpose.  Interest shall be due until and including the next Business Day, if the amounts so paid by Borrowers to the Agent Payment Account or other bank account designated by Agent are received in such bank account later than 12:00 noon, Pasadena, California time.”

 

  

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qqqq.    Section 13.1(c) of the Loan Agreement is hereby deleted.

 

rrrr.        Section 13.3(a) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(a)        All notices, requests and demands hereunder shall be in writing and deemed to have been given or made:  if delivered in person, immediately upon delivery; if by telex, telegram or facsimile transmission, immediately upon sending and upon confirmation of receipt; if by nationally recognized overnight courier service with instructions to deliver the next Business Day, one (1) Business Day after sending; and if by certified mail, return receipt requested, five (5) days after mailing.  Notices delivered through electronic communications shall be effective to the extent set forth in Section 13.3(b) below.  All notices, requests and demands upon the parties are to be given to the following addresses (or to such other address as any party may designate by notice in accordance with this Section):

 

	
If to any Borrower:

	
Jazz Semiconductor, Inc.

4321 Jamboree Road

Newport Beach, California  92660

Attention: Chief Financial Officer

Telephone No.:  (949) 435-8000

Telecopy No.:    (949) 435-8111

 

	
If to Parent Guarantor:

	
Jazz Technologies, Inc.

4321 Jamboree Road

Newport Beach, California  92660

Attention: Chief Financial Officer

Telephone No.:  (949) 435-8000

Telecopy No.:   (949) 435-8111

 

	
If to Foreign Parent Nonguarantor:

	
Tower Semiconductor Ltd.

Ramat Gavriel Industrial Area

P.O. Box 619

Migdal Haemek Israel 23105

Attention: Chief Financial Officer

Telephone No.: +972-(4)-650-6418

Telecopy No.: +972-(4)-604-7242

 

	
with a copy to:

	
Yigal Arnon & Co.

1 Azrieli Center

Tel-Aviv 67021

Israel

Attention: David Schapiro

Telephone No.:  972-(3)-607-7726

Telecopy No.:    +972-(3)-608-7714

 

	
If to Agent:

	
Wells Fargo Capital Finance, LLC

2450 Colorado Avenue, Suite 3000 West

Santa Monica, California 90404

Attention:  Business Finance Division Manager

Telephone No.:  (310) 453-7300

Telecopy No.:    (310) 453-7413

 

  

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with a copy to:

	
Morgan, Lewis & Bockius LLP

300 S. Grand Avenue, Twenty-Second Floor

Los Angeles, CA 90071-3132

Attention:  Marshall Stoddard

Telephone No.:  (213) 612-7428

Telecopy No.:    (213) 612-2501”

 

ssss.     Schedule E-1 attached hereto is hereby added to the Loan Agreement as Schedule E-1 thereto.

 

2.             Effectiveness of this Amendment. The effectiveness of this Amendment is subject to the satisfaction of each of the following conditions precedent:

 

a.           Amendment. Agent shall have received this Amendment, fully executed by Borrowers, Guarantor, Agent and Lenders in a sufficient number of counterparts for distribution to all parties.

 

b.           Amended and Restated Fee Letter. Agent shall have received an Amended and Restated Fee Letter, in form and substance satisfactory to Agent, fully executed by Borrowers and Agent in a sufficient number of counterparts for distribution to all parties.

 

c.           Representations and Warranties. The representations and warranties set forth herein and in the Loan Agreement must be true and correct.

 

d.           Other Required Documentation. All other documents and legal matters in connection with the transactions contemplated by this Amendment shall have been delivered or executed or recorded and shall be in form and substance satisfactory to Agent.

 

3.             Representations and Warranties. Each Borrower and Guarantor represents and warrants as follows:

 

a.           Authority. Each Borrower and Guarantor has the requisite company power and authority to execute and deliver this Amendment, and to perform its obligations hereunder and under the Financing Agreements (as amended or modified hereby) to which it is a party. The execution, delivery and performance by each Borrower and Guarantor of this Amendment have been duly approved by all necessary company action and no other company proceedings are necessary to consummate such transactions.

 

b.           Enforceability. This Amendment has been duly executed and delivered by each Borrower and Guarantor. This Amendment and each Financing Agreement (as amended or modified hereby) are the legal, valid and binding obligation of each Borrower and Guarantor, enforceable against each Borrower and Guarantor in accordance with their terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or similar laws limiting creditors’ rights generally or by general equitable principles, and are in full force and effect.

 

c.           Representations and Warranties.  The representations and warranties contained in each Financing Agreement (other than any such representations or warranties that, by their terms, are specifically made as of a date other than the date hereof) are correct on and as of the date hereof as though made on and as of the date hereof.

 

  

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d.           Due Execution. The execution, delivery and performance of this Amendment are within the power of each Borrower and Guarantor, have been duly authorized by all necessary company action, have received all necessary governmental approval, if any, and do not contravene any law or any contractual restrictions binding on any Borrower or Guarantor.

 

e.           No Default. No event has occurred and is continuing that constitutes an Event of Default.

 

4.             Choice of Law. The validity of this Amendment, its construction, interpretation and enforcement, the rights of the parties hereunder, shall be determined in accordance with the internal laws of the State of California governing contracts only to be performed in that State.

 

5.             Counterparts. This Amendment may be executed in any number of counterparts and by different parties and separate counterparts, each of which when so executed and delivered, shall be deemed an original, and all of which, when taken together, shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Amendment by telefacsimile shall be effective as delivery of a manually executed counterpart of this Amendment.

 

6.             Capitalized Terms. Capitalized terms not express defined elsewhere in this Amendment have the meanings set forth in the Loan Agreement.

 

7.             Reference to and Effect on the Financing Agreements.

 

a.           Upon and after the effectiveness of this Amendment, each reference in the Loan Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Loan Agreement, and each reference in the other Financing Agreements to “the Loan Agreement”, “thereof”, or words of like import referring to the Loan Agreement, shall mean and be a reference to the Loan Agreement as modified and amended hereby.

 

b.           Except as specifically amended above, the Loan Agreement and all other Financing Agreements, are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed.

 

c.           The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of Agent or any Lender under any of the Financing Agreements, nor constitute a waiver of any provision of any of the Financing Agreements.

 

d.           To the extent that any terms and conditions in any of the Financing Agreements shall contradict or be in conflict with any terms or conditions of the Loan Agreement, after giving effect to this Amendment, such terms and conditions are hereby deemed modified or amended accordingly to reflect the terms and conditions of the Loan Agreement as modified or amended hereby.

 

8.             Estoppel. To induce Agent and Lenders to enter into this Amendment and to induce Agent and Lenders to continue to make advances to Borrowers under the Loan Agreement, each Borrower and Guarantor hereby acknowledges and agrees that, after giving effect to this Amendment, as of the date hereof, there exists no Default or Event of Default and no right of offset, defense, counterclaim or objection in favor of any Borrower or Guarantor as against Agent or any Lender with respect to the Obligations.

 

  

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9.             Integration. This Amendment incorporates all negotiations of the parties hereto with respect to the subject matter hereof and is the final expression and agreement of the parties hereto with respect to the subject matter hereof.

 

10.           Severability. In case any provision of this Amendment shall be invalid, illegal or unenforceable, such provision shall be severable from the remainder of this Amendment and the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

[Remainder of Page Intentionally Left Blank]

  

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IN WITNESS WHEREOF, the parties have entered into this Amendment as of the date first above written.

 

	  	
JAZZ SEMICONDUCTOR, INC.,

	  
	  	
as a Borrower

 

	  
	  	
By:

	  	  
	  	
Name:

	
Nabil Alali

	  
	  	
Title: 

	
General Manager and Site  Manager

 

	  
	  	
By:

	  	  
	  	
Name:

	
Ronit Vardi

	  
	  	
Title: 

	CFO	  
	  	  	  	  
	  	
NEWPORT FAB, LLC,

	  
	  	
as a Borrower

 

	  
	  	
By:

	  	  
	  	
Name:

	
Nabil Alali

	  
	  	
Title: 

	
General Manager and Site  Manager

 

	  
	  	
By:

	  	  
	  	
Name:

	
Ronit Vardi

	  
	  	
Title: 

	CFO	  
	  	  	  	  
	  	
JAZZ TECHNOLOGIES, INC.,

	  
	  	
as a Guarantor

 

	  
	  	
By:

	  	  
	  	
Name:

	
Nabil Alali

	  
	  	
Title: 

	
General Manager and Site  Manager

 

	  
	  	
By:

	  	  
	  	
Name:

	
Ronit Vardi

	  
	  	
Title: 

	CFO	  
	  	  	  	  
	  	
WELLS FARGO CAPITAL FINANCE, LLC,

	  
	  	
as Agent and a Lender

	  
	  	  	  	  
	  	
By:

	  	  
	  	
Name:

	  	  
	  	
Title:

	  	  

 

  

33

  

 

Schedule E-1

 

Eligible Inventory Locations

 

(see attached)EXHIBIT 10.9

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

This AMENDED AND
RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is made as of this ____ day of September, 2012 (the “Effective
Date”), by and between AIR METHODS CORPORATION, a Delaware corporation (the “Company”), and Crystal
Gordon (“Executive”).

RECITAL

WHEREAS, the parties
entered into that Employment Agreement dated April 4, 2011 (the “Original Agreement”) setting forth the terms
and conditions for the employment relationship between Executive and the Company; and

 

WHEREAS, the parties
desire to enter into this Agreement to update and amend certain terms and conditions set forth in the Original Agreement, including
to clarify the intent of the parties that certain cash incentive payments are not used to compute severance amounts payable hereunder.

 

NOW, THEREFORE,
in consideration of the promises and mutual covenants and agreements herein contained and intending to be legally bound hereby,
the Company and Executive hereby agree as follows:

 

AGREEMENT

1.                 
Employment Period. The Company hereby employs Executive, and Executive hereby accepts such employment, upon the terms
and conditions hereinafter set forth. Subject to termination as provided herein, the initial term of Executive’s employment
hereunder shall continue through August 31, 2014 (the “Initial Term”). Upon expiration of the Initial Term and
each Renewal Term, this Agreement will automatically renew for subsequent one (1) year terms (each a “Renewal Term”)
unless either the Company or Executive provides ninety (90) days’ advance written notice to the other party that such
party does not wish to renew the Agreement for a subsequent Renewal Term. In the event either party gives notice of nonrenewal
pursuant to this Section 1, this Agreement will expire at the end of the then current term. The Initial Term and each subsequent
Renewal Term are referred to collectively as the “Employment Period”. Executive and the Company acknowledge
that, except as may otherwise be provided by this Agreement or under any other written agreement between Executive and the Company,
the employment of Executive by the Company is “at will” and Executive’s employment may be terminated by either
Executive or the Company at any time for any reason, or no reason.

2.                 
Position and Duties.

(a)               
During the Employment Period, Executive shall be employed as and hold the title of Senior Vice President, General Counsel
and Secretary of the Company, with such duties and responsibilities that are customary for public company Senior Vice President,
General Counsel and Secretary positions. In addition, the Board or the Chief Executive Officer may

    	1

    	 

    

assign Executive such duties and responsibilities
that are not substantially inconsistent with Executive’s position as Senior Vice President, General Counsel and Secretary
of the Company.

(b)              
During the Employment Period, Executive shall devote substantially all of Executive’s skill, knowledge and working
time to the business and affairs of the Company and its subsidiaries; provided that in no event shall this sentence prohibit Executive
from performing personal and charitable activities approved by the Board, so long as such activities are in compliance with the
Company’s policies and do not materially and adversely interfere with Executive’s duties for the Company. Executive
shall use Executive’s best efforts to carry out Executive’s responsibilities under this Agreement faithfully and efficiently.

3.                 
Compensation.

(a)               
Base Salary. During the Employment Period, Executive shall receive from the Company an annual base salary (“Annual
Base Salary”) at the rate of two hundred and fifty thousand dollars ($250,000), with such salary to be adjusted at such
times, if any, and in such amounts as recommended by the Chief Executive Officer and approved by the Board or a committee thereof.
Executive’s Annual Base Salary shall be subject to annual review by the Chief Executive Officer and the Board (or a committee
thereof) during the Employment Term. The Company shall pay the Annual Base Salary to Executive in accordance with the Company’s
normal payroll policy.

(b)              
Annual Cash Bonus. In addition to the Annual Base Salary, Executive is eligible to receive an annual cash bonus each
fiscal year during the Employment Period as determined in accordance with the Company’s annual bonus plan and as approved
by the Compensation Committee (the “Annual Bonus”). The actual amount of any Annual Bonus shall depend on the
level of achievement of the applicable performance criteria established with respect to the Annual Bonus by the Board and the Compensation
Committee in their sole discretion.

(c)               
Equity Awards. During the Employment Period, Executive shall be eligible to receive annual equity awards customarily
granted in the first quarter of each fiscal year. Annual equity awards granted under the Company’s 2006 Amended and Restated
Equity Compensation Plan, as amended (or any successor plan), if any, shall be made by the Compensation Committee in its sole discretion.
All annual equity awards granted to Executive shall be contingent on the attainment of certain performance criteria established
with respect to such award by the Board and the Compensation Committee in their sole discretion.

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(d)              
 Other Benefits.

(i)                
Welfare and Benefit Plans. During the Employment Period: (A) Executive shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and programs of the Company generally available to similarly situated
employees of the Company; provided that, Executive may not be entitled to certain benefits provided to the Company’s Chief
Executive Officer; and (B) Executive and/or Executive’s family, as the case may be, shall be eligible to participate
in, and shall receive all benefits under, all welfare benefit plans, practices, policies and programs provided by the Company (including,
to the extent provided, without limitation, medical, prescription, dental, vision, disability, salary continuance, employee life
insurance, group life insurance, accidental death and travel accident insurance plans and programs) generally available to similarly
situated employees of the Company.

(ii)              
Expenses. During the Employment Period, Executive shall be entitled to receive prompt reimbursement for all reasonable
travel and other expenses incurred by Executive in carrying out Executive’s duties under this Agreement, provided that Executive
complies with the policies, practices and procedures of the Company for submission of expense reports, receipts or similar documentation
of the incurrence and purpose of such expenses.

(iii)            
Vacation. Executive shall be entitled to no less than four (4) weeks of paid vacation and/or paid time off per calendar
year (as prorated for partial years) in accordance with the Company’s policies on accrual and use applicable to executive
officers as in effect from time to time.

(e)               
Reservation of Rights. The Company reserves the right to modify, suspend or discontinue any and all of the employee
benefit plans, practices, policies and programs referenced in subsections (d)(i), (ii) and (iii) above at any time without recourse
by Executive.

4.                 
Termination.

(a)               
Cause. The Company may terminate Executive’s employment at any time for Cause subject to any notice and cure
provisions set forth in the definition thereof.

(b)              
By the Company without Cause. The Company may terminate Executive’s employment at any time without Cause.

(c)               
By Executive without Good Reason. With thirty (30) days prior written notice, Executive may terminate Executive’s
employment at any time without Good Reason.

(d)              
By Executive for Good Reason. Executive may terminate Executive’s employment for Good Reason subject to the
notice and cure provisions set forth in the definition thereof.

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(e)               
 Change in Control Termination. Executive’s employment may be terminated by the Company in a “Change
in Control Termination.” For purposes of this Agreement, a “Change in Control Termination” shall mean
Executive’s employment with the Company is involuntarily terminated for a reason other than Cause or Executive voluntary
terminates for Good Reason on or within twelve months following a Change in Control Event (defined below).

(f)               
Death. Executive’s employment shall terminate automatically upon Executive’s death.

(g)              
Disability. Executive’s employment may be terminated by the Company on account of any Disability (defined below)
that has prevented the performance of Executive’s duties for a period of (i) ninety (90) consecutive days or (ii) one
hundred and twenty (120) non-consecutive days during any six (6) month period.

5.                 
Obligations of the Company Upon Termination.

(a)               
For Cause; Resignation without Good Reason; Death; Disability; Expiration of Employment Period. If Executive’s
employment is terminated during the Employment Period by the Company for Cause or upon the Death or Disability of Executive, or
if Executive resigns without Good Reason during the Employment Period, or if Executive’s employment is terminated by the
Company upon expiration of the Employment Period, this Agreement shall terminate without further obligations to Executive under
this Agreement, other than for (A) payment of the sum of (1) Executive’s Annual Base Salary through the date of
termination to the extent not theretofore paid, and (2) any accrued vacation pay, in each case to the extent not theretofore paid
(the sum of the amounts described in clauses (1) and (2) shall be hereinafter referred to as the “Accrued Obligations”),
which Accrued Obligations shall be paid to Executive or Executive’s estate or beneficiary, as applicable, in a lump sum in
cash within thirty (30) days of the effective date of termination; and (B) payment to Executive or Executive’s estate or
beneficiary, as applicable, of any amounts due pursuant to the terms of any applicable employee benefit plans.

(b)              
Change in Control Termination. If Executive’s employment terminates in a Change in Control Termination, this
Agreement shall terminate without further obligations to Executive other than:

(i)                
payment of Accrued Obligations through the effective date of termination in a lump sum in cash within thirty (30) days of
the effective date of termination;

(ii)              
payment of an amount equal to two times the sum of (A) Executive’s Annual Base Salary as in effect immediately prior
to the date of termination (or immediately prior to the Change in Control Event, if greater) and (B) an amount equal to the highest
annual average of the Annual Bonuses earned by Executive for performance in any two consecutive fiscal years in the last three
completed fiscal years immediately preceding the fiscal year in which the date of termination occurs for which bonuses have been
paid or are payable (or the last

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two fiscal years immediately preceding
the fiscal year in which the date of the Change in Control Event occurs for which bonuses have been paid or are payable, if greater),
payable in equal installments over a period consisting of twenty-four (24) months following the effective date of termination (such
payments to be made in accordance with the Company’s normal payroll practices) to begin on the first payroll date following
the sixtieth (60th) day after termination of employment, and with the first of such payments to include any regularly
scheduled payments that were missed pending the sixty (60) day waiting period; and

(iii)            
monthly payments (or reimbursement to Executive) of the cost of continuing coverage under the Consolidated Omnibus Budget
Reconciliation Act of 1985 (“COBRA”) or similar state law (to be made no later than the last day of the month
following the month for which the payment or reimbursement is made), for Executive and Executive’s spouse (if so elected)
under the Company’s then existing medical, dental and prescription insurance plans for a period equal to the twelve months;
provided that (A) Executive elects such continuing coverage in accordance with the requirements of each such plan (provided that
during any period when Executive is eligible to receive such benefits under any other employer-provided plan or through any government-sponsored
program such as Medicare, the benefits provided under this clause (iii) may be made secondary to those provided under such other
plan) or (B) if Executive is not eligible to receive such coverage under COBRA for any month during such twelve month period, then
the Company shall pay to Executive on the first day of such month an amount equal to that which the Company would otherwise have
been obligated to pay to provide COBRA coverage for Executive and Executive’s spouse (if so elected) for such month.

provided, however,
that as conditions precedent to receiving the payments and benefits provided for in this Section 5(b) (other than payment of the
Accrued Obligations), Executive shall first execute and deliver to the Company a general release agreement substantially in the
form attached hereto as Exhibit A (a “Release”), and all rights of Executive thereunder or under applicable
law to rescind or revoke the release shall have expired no later than the forty-five (45) days after the date of termination. If
Executive fails to timely execute a Release, all payments and benefits set forth in this Section 5(b) (other than the payment of
the Accrued Obligations) shall be forfeited.

(c)               
By the Company without Cause or by Executive for Good Reason. If during the Employment Period the Company terminates
Executive’s employment for any reason other than for Cause or Executive terminates Executive’s employment for Good
Reason during the Employment Period (in either case other than in a Change in Control Termination), this Agreement shall terminate
without further obligations to Executive other than:

(i)                
payment of Accrued Obligations through the effective date of termination in a lump sum in cash within thirty (30) days of
the effective date of termination;

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(ii)              
 payment of an amount equal to one times the sum of (A) Executive’s Annual Base Salary as in effect immediately prior
to the date of termination and (B) an amount equal to the highest annual average of the Annual Bonuses earned by Executive for
performance in any two consecutive fiscal years in the last three completed fiscal years immediately preceding the fiscal year
in which the date of termination occurs for which bonuses have been paid or are payable, payable in equal installments over a period
consisting of twelve (12) months following the effective date of termination (such payments to be made in accordance with the Company’s
normal payroll practices) to begin on the first payroll date following the sixtieth (60th) day after termination of
employment, and with the first of such payments to include any regularly scheduled payments that were missed pending the sixty
(60) day waiting period;

(iii)            
if the effective date of such termination is prior to July 1, 2014, payment in full on the earlier of (A) September 12,
2014 or (B) a Change in Control (as defined in the 2014 Bonus Program) of an amount equal to Executive’s pro rata portion
of the Bonus Amount (as defined in the 2014 Bonus Program) that otherwise would have been payable to Executive under the 2011-2014
Bonus Program established under the Company’s Performance Pay Plan (the “2014 Bonus Program”) had Executive’s
employment not been terminated prior to full payment thereof, which pro rata portion shall be calculated by dividing the number
of days Executive was employed during the Performance Period (as defined in the 2014 Bonus Program) by 1,096; and

(iv)            
monthly payments (or reimbursement to Executive) of the cost of continuing coverage under COBRA or similar state law (to
be made no later than the last day of the month following the month for which the payment or reimbursement is made), for Executive
and Executive’s spouse (if so elected) under the Company’s then existing medical, dental and prescription insurance
plans for a period equal to the lesser of (A) the duration of such coverage or (B) twelve months; provided that (A) Executive elects
such continuing coverage in accordance with the requirements of each such plan (provided that during any period when Executive
is eligible to receive such benefits under any other employer-provided plan or through any government-sponsored program such as
Medicare, the benefits provided under this clause (iii) may be made secondary to those provided under such other plan) or (B) if
Executive is not eligible to receive such coverage under COBRA for any month during such twelve month period, then the Company
shall pay to Executive on the first day of such month an amount equal to that which the Company would otherwise have been obligated
to pay to provide COBRA coverage for Executive and Executive’s spouse (if so elected) for such month;

provided, however,
that as conditions precedent to receiving the payments and benefits provided for in this Section 5(c) (other than payment of the
Accrued Obligations), Executive shall first execute and deliver to the Company a Release, and all rights of Executive thereunder
or under applicable law to rescind or revoke the Release shall have expired no later than the forty-five (45) days after the date

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of termination. If Executive fails
to timely execute a Release, all payments and benefits set forth in this Section 5(c) (other than the payment of the Accrued Obligations)
shall be forfeited.

(d)              
Exclusive Remedy. Executive agrees that payments made pursuant to this Section 5 shall constitute the exclusive
and sole remedy for any termination of Executive’s employment, and Executive covenants not to assert or pursue any other
remedies, at law or in equity, with respect to any termination of employment; provided, however, that nothing contained
in this Section 5(d) shall prevent Executive from otherwise challenging in a subsequent arbitration proceeding a determination
by the Company that it was entitled to terminate Executive’s employment hereunder for Cause. The foregoing shall not limit
any of Executive’s rights with regard to equity or incentives (which shall be controlled by the relevant plan and grants)
or any rights to indemnification, advancement or payment of legal fees and costs, and coverage under directors and officers liability
insurance.

(e)               
Termination of Payments. Anything in this Agreement to the contrary notwithstanding, the Company shall have the right
to terminate all payments and benefits owing to Executive pursuant to this Section 5 upon the Company’s discovery of any
material breach by Executive of Executive’s obligations under a Release or Sections 6 through 10 of this Agreement.

(f)               
Survival of Certain Obligations Following Termination. Notwithstanding any other provision contained in this Agreement,
the provisions in Sections 6 through 23 of this Agreement shall survive any termination of Executive’s employment hereunder
(but shall be subject to Executive’s right to receive the payments and benefits provided under this Section 5).

6.                 
Confidential Information. Except in the good-faith performance of Executive’s duties hereunder, Executive shall
not disclose to any person or entity or use, any information not in the public domain, in any form, acquired by Executive while
Executive was employed or associated with the Company or, if acquired following the termination of such association, such information
which, to Executive’s knowledge, has been acquired, directly or indirectly, from any person or entity owing a duty of confidentiality
to the Company, relating to the Company or its business. Executive agrees and acknowledges that all of such information, in any
form, and copies and extracts thereof are and shall remain the sole and exclusive property of the Company, and Executive shall
on request return to the Company the originals and all copies of any such information provided to or acquired by Executive in connection
with Executive’s association with the Company, and shall return to the Company all files, correspondence and/or other communications
received, maintained and/or originated by Executive during the course of such association.

7.                 
Covenant Not to Compete. Executive agrees that, for the period that Executive is employed by the Company and for
the twelve (12) month period following the termination of Executive’s employment with the Company (the “Restrictive
Period”), Executive shall not, in the United States or in any country in which the Company conducted business during
the Employment Term, directly or indirectly, either for himself or for, with or through any other Person, own, manage, operate,
control, be employed by, participate in, loan money to or be connected in any manner with, or permit Executive’s name to
be used by, any business that, in

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the reasonable judgment of the Board,
competes with the Company and its subsidiaries in the air medical transport business, the business of furnishing or retrofitting
aircraft to provide medical transports or any material business conducted by the Company during the Employment Period (a “Competitive
Activity”). In making its judgment as to whether any business is engaged in a Competitive Activity, the Board shall act
in good faith, and shall first provide Executive with a reasonable opportunity to present such information as Executive may desire
for the Board’s consideration. For purposes of this Agreement, the term “participate” includes any direct or
indirect interest, whether as an officer, director, employee, partner, sole proprietor, trustee, beneficiary, agent, representative,
independent contractor, consultant, advisor, provider of personal services, creditor, owner (other than by ownership of less than
five percent of the stock of a publicly-held corporation whose stock is traded on a national securities exchange (a “Public
Company”).

8.                 
No Interference. During the Restrictive Period, Executive shall not, without the prior written approval of the Company,
directly or indirectly through any other Person (a) induce or attempt to induce any employee of the Company to leave the employ
of the Company, or in any way interfere with the relationship between the Company and any employee thereof, (b) hire any Person
who was an employee of the Company within twelve months after such Person’s employment with the Company was terminated for
any reason or (c) induce or attempt to induce any supplier or other business relation of the Company to cease doing business
with the Company, or in any way interfere with the relationship between any such supplier or business relation and the Company.

9.                 
Non-Disparagement. Executive will not, at any time during the Employment Term or following termination of Executive’s
employment, will not, directly or indirectly, make or ratify any statement, public or private, oral or written, to any person that
is intended to disparage, either professionally or personally, the Company or its parents, subsidiaries and affiliates, past and
present, and each of them, as well as its and their directors, officers, agents, attorneys, and employees.

10.             
Return of Documents. In the event of the termination of Executive’s employment following the Effective Date
for any reason, Executive shall deliver to the Company all of (a) the property of the Company or any of its subsidiaries,
and (b) non-personal documents and data of any nature and in whatever medium of the Company or any of its subsidiaries, and
Executive shall not take with Executive any such property, documents or data or any reproduction thereof, or any documents containing
or pertaining to any Confidential Information.

11.             
Reasonableness of Restrictions. Executive agrees that the covenants set forth in Sections 6 through 10 are reasonable
with respect to their duration, geographical area and scope. In the event that any of the provisions of Sections 6 through 10 relating
to the geographic or temporal scope of the covenants contained therein or the nature of the business or activities restricted thereby
shall be declared by a court of competent jurisdiction to exceed the maximum restrictiveness such court deems enforceable, such
provision shall be deemed to be replaced herein by the maximum restriction deemed enforceable by such court.

12.             
Injunctive Relief. The parties hereto agree that the Company would suffer irreparable harm from a breach by Executive
of any of the covenants or agreements contained

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herein, for which there is no adequate
remedy at law. Therefore, in the event of the actual or threatened breach by Executive of any of the provisions of this Agreement,
the Company, or its respective successors or assigns, may, in addition and supplementary to other rights and remedies existing
in their favor, apply to any court of law or equity of competent jurisdiction for specific performance, injunctive or other relief
in order to enforce compliance with, or prevent any violation of, the provisions hereof; and that, in the event of such a breach
or threat thereof, the Company shall be entitled to obtain a temporary restraining order and/or a preliminary or permanent injunction
restraining Executive from engaging in activities prohibited hereby or such other relief as may be required to specifically enforce
any of the covenants contained herein.

13.             
Extension of Restricted Periods. In addition to the remedies the Company may seek and obtain pursuant to this Agreement,
the restricted periods set forth herein shall be extended by any and all periods during which Executive shall be found by a court
to have been in violation of the covenants contained herein.

14.             
Definitions. As used herein, unless the context otherwise requires, the following terms have the following respective
meanings:

“Cause”
means with respect to the termination by the Company of Executive as an employee of the Company:

(i)    
Executive’s act(s) of gross negligence or willful misconduct in the course of Executive’s employment hereunder
that is injurious to the Company or any of its subsidiaries;

(ii)  
Executive’s material breach of (A) the terms and conditions of this Agreement or (B) any non-competition, non-interference,
non-disclosure, confidentiality or other similar provision contained in this Agreement or in any other agreement executed by Executive
with the Company or any of its subsidiaries;

(iii)
Executive’s failure or refusal to perform substantially Executive’s material duties or responsibilities;

(iv)
Executive’s engaging in conduct that results (or will result if continued) in material injury to the reputation
of the Company or any of its subsidiaries, including, without limitation, commission of misappropriation, fraud, embezzlement or
other crime involving moral turpitude; or

(v)  
Executive’s conviction of, or pleading “guilty” or “no contest” to a felony under United
States state or federal law;

provided,
however, Executive will not be deemed to have been terminated for Cause in the case of clauses (ii)(A) or (iii) above, unless
any such failure or breach is not fully corrected prior to the expiration of the ten (10) business day period following delivery
to Executive of the Company’s written notice that specifies in detail of the alleged Cause event and the Company’s
intention to terminate Executive’s employment for Cause.

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“Change
in Control Event” means:

(i)    
The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange
Act (a “Person”)) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of more than 50% or more of the then-outstanding voting securities of the Company entitled to vote generally in the election of
directors;

(ii)  
In the event the Board is a classified board, a majority of the individuals who serve in the same class of directors
that constitute the Board as of the Effective Date (the “Incumbent Board”) cease for any reason to constitute
at least a majority of that class of directors, or in the event the Board is not a classified board, members of the Incumbent Board
cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director
subsequent to the Effective Date whose election, or nomination for election by the Company’s stockholders, was approved by
a vote of at least two-thirds of the directors then comprising the Incumbent Board (including for these purposes, the new members
whose election or nomination was so approved, without counting the member and her predecessor twice) shall be considered as though
such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption
of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or
other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;

(iii)
Consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction
involving the Company or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of the
Company, or the acquisition of assets or stock of another entity by the Company or any of its subsidiaries (each, a “Business
Combination”), in each case unless, following such Business Combination, (A) all or substantially all of the individuals
and entities that were the beneficial owners of the Company’s outstanding voting securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 50% of the then-outstanding voting securities of the entity resulting
from such Business Combination (including, without limitation, an entity that, as a result of such transaction, owns the Company
or all or substantially all of the Company’s assets directly or through one or more subsidiaries (a “Parent”)),
and (B) at least a majority of the members of the board of directors or trustees of the entity resulting from such Business Combination
or a Parent were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of the Board
providing for such Business Combination; or

(iv)
Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

“Disability”
shall have the meaning set forth in Treasury Regulation 1.409A-3(i)(4). Any question as to the existence, extent, or potentiality
of Executive’s Disability upon which

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Executive and the Company cannot agree
shall be determined by a qualified, independent physician selected by the Company and approved by Executive (which approval shall
not be unreasonably withheld).  The determination of any such physician shall be final and conclusive for all purposes
of this Agreement.

“Good Reason”
shall mean the occurrence, without Executive’s express written consent, of: (i) a reduction in Executive’s Annual Base
Salary unless the annual base salaries of all other executive officers are proportionately decreased; (ii) a change in Executive’s
principal place of employment to a location more than fifty (50) miles from Executive’s principal place of employment without
the consent of Executive; (iii) any willful breach by the Company of any material provision of this Agreement; or (iv) a significant
reduction in the then-effective responsibilities of the Senior Vice President, General Counsel and Secretary; provided that Executive
gives written notice to the Company of the existence of such a condition within ninety (90) days of the initial existence of the
condition, the Company has at least thirty (30) days from the date when such notice is provided to cure the condition without being
required to make payments due to termination by the Company for Good Reason, and the Executive actually terminates Executive’s
employment for Good Reason within six (6) months of the initial occurrence of any of the conditions in (i) – (iv), above.

15.             
Indemnification.

(a)               
Corporate Acts. In Executive’s capacity as a director, manager, officer, or employee of the Company or serving
or having served any other entity as a director, manager, officer, or employee at the Company’s request, Executive shall
be indemnified and held harmless by the Company to the fullest extent allowed by law, the Company’s Certificate of Incorporation
and Bylaws, from and against any and all losses, claims, damages, liabilities, expenses (including legal fees and expenses), judgments,
fines, settlements and other amounts arising from any and all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, in which Executive may be involved, or threatened to be involved, as a party or otherwise by reason
of Executive’s status, which relate to or arise out of the Company, their assets, business or affairs, if in each of the
foregoing cases, (i) Executive acted in good faith and in a manner Executive believed to be in the best interests of the Company,
and, with respect to any criminal proceeding, had no reasonable cause to believe Executive’s conduct was unlawful, and (ii)
Executive’s conduct did not constitute gross negligence or willful or wanton misconduct. The Company shall advance all reasonable
expenses incurred by Executive in connection with the investigation, defense, settlement or appeal of any civil or criminal action
or proceeding referenced in this Section 15, including but not necessarily limited to, reasonable fees of legal counsel, expert
witnesses or other litigation-related expenses. Notwithstanding anything herein to the contrary, the provisions of this Section
15(a) shall survive the termination of this Agreement and the termination of the Employment Term for any reason.

(b)              
Directors & Officers Insurance. Executive shall be entitled to coverage under the Company’s directors and
officers liability insurance policy and any other insurance policy providing coverage to directors or officers of the Company,
subject to the terms of such policies, in effect at any time in the future to no lesser extent than any other officers or directors
of the Company.

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16.             
 Post-Employment Consulting Agreement. Following termination of Executive’s employment with the Company, the
Company, may in its sole discretion, enter into a consulting agreement with Executive pursuant to which Executive will consult
with the Board and senior management of the Company on such transition and management matters as shall be agreed upon between the
Company and Executive.  Any such consulting agreement will contain non-competition and non-solicitation provisions similar
to those contained in this Agreement.

17.             
Clawback/Recoupment Policy. Executive agrees that Executive will be subject to any compensation clawback or recoupment
policies of the Company as approved by the Board or a duly authorized committee thereof that are generally applicable to the Company’s
senior management, as may be in effect from time to time, or as required by applicable law. This Section 17 shall survive the termination
of this Agreement for a period of three (3) years.

18.             
Taxes.

(a)               
Except as otherwise provided in Section 20, Executive shall be solely liable for Executive’s tax consequences of compensation
and benefits payable under this Agreement, including any consequences of the application of Section 409A of the Code.

(b)              
In order to comply with all applicable federal or state income tax laws or regulations, the Company may withhold from any
payments made under this Agreement all applicable federal, state, city or other applicable taxes.

19.             
Section 409A Savings Clause.

(a)               
It is the intention of the parties that compensation or benefits payable under this Agreement not be subject to the additional
tax imposed pursuant to Section 409A of the Code and this Agreement shall be interpreted accordingly. To the extent such potential
payments or benefits could become subject to additional tax under such Section, the parties shall cooperate to amend this Agreement
with the goal of giving Executive the economic benefits described herein in a manner that does not result in such tax being imposed.

(b)              
Each payment or benefit made pursuant to Section 5 of this Agreement shall be deemed to be a separate payment for purposes
of Code Section 409A and each payment made in installments shall be treated as a series of separate payments for purposes of Code
Section 409A, to the extent permitted under applicable law. In addition, payments or benefits pursuant to Section 5 shall be exempt
from the requirements of Code Section 409A to the maximum extent possible as “short-term deferrals” pursuant to Treasury
Regulation Section 1.409A-1(b)(4), as involuntary separation pay pursuant to Treasury Regulation Section 1.409A-1(b)(9)(iii), as
exempt reimbursements under Treasury Regulation Section 1.409A-1(b)(9)(v), and/or under any other exemption that may be applicable,
and this Agreement shall be construed accordingly.

(c)               
For purposes of this Agreement, phrases such as “termination of employment,” when used to describe when cash
severance payments may be made, shall be deemed to mean “separation from service,” as defined in Section 409A of the
Code and the Treasury Regulations thereunder. For clarity, if Executive ceases to be an employmee but does not incur a “separation
from service” under Code Section 409A, the Company shall calculate the

    	12

    	 

    

amount of cash severance pay under Section
5 based on the date of Executive’s state law employment termination, but such cash severance pay will only be paid at such
time as Executive incurs a “separation from service” under Section 409A of the Code and the Treasury Regulations thereunder.

(d)              
If Executive is a specified employee within the meaning of Section 409A(a)(2)(B)(i) of the Code and would receive any payment
sooner than 6 months after Executive’s “separation from service” that, absent the application of this Section
19(d), would be subject to additional tax imposed pursuant to Section 409A of the Code as a result of such status as a specified
employee, then such payment shall instead be payable on the date that is five (5) days following the earliest to occur of (i) 6 months
after Executive’s “separation from service,” or (ii) Executive’s death.

(e)               
All taxable reimbursements provided hereunder that are deferred compensation subjet to the requirements of Code Section
409A shall be made not later than the calendar year following the calendar year in which the expense was incurred. Any such taxable
reimbursements or any taxable in-kind benefits provided in one calendar year shall not affect the expenses eligible for reimbursement
or in-kind benefits to be provided in any other taxable year.

20.             
Excise Tax Provisions. 

(a)               
Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution
by the Company to or for the benefit of Executive (whether paid or payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise) (a “Payment”) including, by example and not by way of limitation, acceleration
(by the Company or otherwise) of the date of vesting or payment under any plan, program, arrangement or agreement of the Company,
would be subject to the excise tax imposed by Code Section 4999 or any interest or penalties with respect to such excise tax (such
excise tax together with any such interest and penalties, shall be referred to as the “Excise Tax”), then there
shall be made a calculation under which such Payments provided to Executive are reduced to the extent necessary so that no portion
thereof shall be subject to the Excise Tax (the “4999 Limit”).  A comparison shall then be made between
(A) Executive’s Net After-Tax Benefit (as defined below) assuming application of the 4999 Limit; and (B) Executive’s
Net After-Tax Benefit without application of the 4999 Limit.  If (B) exceeds (A) by $50,000 or more, then no limit on the
Payments shall be imposed by this Section 20. Otherwise, the amount payable to Executive shall be reduced so that no such Payment
is subject to the Excise Tax.  “Net After-Tax Benefit” shall mean the sum of (x) all payments that Executive
receives or is entitled to receive that are in the nature of compensation and contingent on a change in the ownership or effective
control of the Company or in the ownership of a substantial portion of the assets of the Company within the meaning of Code Section
280G(b)(2) (either, a “Section 280G Transaction”), less (y) the amount of federal, state, local and employment
taxes and Excise Tax (if any) imposed with respect to such payments. 

(b)           
In the event that a reduction in Payments is required pursuant to this Section, then, except as provided below with respect
to Payments that consist of health and welfare benefits, the reduction in Payments shall be implemented by determining the “Parachute
Payment Ratio” (as defined below) for each Payment and then reducing the Payments in order

    	13

    	 

    

beginning with the Payment with the
highest Parachute Payment Ratio. For Payments with the same Parachute Payment Ratio, such Payments shall be reduced based on the
time of payment of such Payments, with amounts being paid furthest in the future being reduced first. For Payments with the same
Parachute Payment Ratio and the same time of payment, such Payments shall be reduced on a pro-rata basis (but not below zero) prior
to reducing Payments next in order for reduction. For purposes of this Section, “Parachute Payment Ratio” shall
mean a fraction, the numerator of which is the value of the applicable Payment as determined for purposes of Code Section 280G,
and the denominator of which is the financial present value of such Parachute Payment, determined at the date such payment is treated
as made for purposes of Code Section 280G (the “Valuation Date”). In determining the denominator for purposes
of the preceding sentence (1) present values shall be determined using the same discount rate that applies for purposes of discounting
payments under Code Section 280G; (2) the financial value of payments shall be determined generally under Q&A 12, 13 and 14
of Treasury Regulation 1.280G-1; and (3) other reasonable valuation assumptions as determined by the Company shall be used. Notwithstanding
the foregoing, Payments that consist of health and welfare benefits shall be reduced after all other Payments, with health and
welfare Payments being made furthest in the future being reduced first. Upon any assertion by the Internal Revenue Service that
any such Payment is subject to the Excise Tax, Executive shall be obligated to return to the Company any portion of the Payment
determined by the Professional Services Firm to be necessary to appropriately reduce the Payment so as to avoid any such Excise
Tax.

(c)            
All determinations required to be made under this Section 20, including whether and when a Payment is cut back pursuant
to Section 20(a) and the amount of such cut-back, and the assumptions to be utilized in arriving at such determination, shall be
made by a professional services firm designated by the Board that is experienced in performing calculations under Section 280G
(the “Professional Services Firm”) which shall provide detailed supporting calculations both to the Company
and Executive. If the Professional Services Firm is serving as accountant or auditor for the individual, entity or group effecting
the Section 280G Transaction, the Board shall appoint another qualified professional services firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Professional Services Firm hereunder). All fees and expenses
of the Professional Services Firm shall be borne solely by the Company.

21.             
Governing Law. This Agreement and the legal relations hereby created between the parties hereto shall be governed
by and construed under and in accordance with the internal laws of the State of Colorado, without regard to conflicts of laws principles
thereof. Each party shall submit to the venue and personal jurisdiction of the Colorado state
and federal courts concerning any dispute for which judicial redress is permitted pursuant to this Agreement; however the Company
is not limited in seeking relief in those courts.

22.             
Arbitration. Except as provided in Sections 6 through 12 of this Agreement, the Parties agree that any controversy,
claim or dispute arising out of or relating to this Agreement, or the breach thereof or arising out of or relating to the employment
of Executive, or the termination thereof, including any statutory or common law claims under federal, state, or local law, including
all laws prohibiting discrimination in the workplace, shall be resolved by arbitration in Colorado in accordance with the employment
dispute resolution rules of JAMS. The Parties agree that any award rendered by the arbitrator shall be final and binding, and that

    	14

    	 

    

judgment upon the award may be entered
in any court having jurisdiction thereof. The Parties further acknowledge and agree that, due to the nature of the confidential
information, trade secrets, and intellectual property belonging to the Company to which Executive has or will be given access,
and the likelihood of significant harm that the Company would suffer in the event that such information was disclosed to third
parties, nothing in this Section shall preclude the Company from going to court to seek injunctive relief to prevent Executive
from violating the obligations established in Sections 6 through 10 of this Agreement.

23.             
Miscellaneous.

(a)               
Entire Agreement. This Agreement (including Exhibits) constitutes and contains the entire agreement and final understanding
concerning Executive’s employment with the Company and the other subject matters addressed herein between the parties. It
is intended by the parties as a complete and exclusive statement of the terms of their agreement. It supersedes and replaces all
prior negotiations and all agreements proposed or otherwise, whether written or oral, concerning the subject matter hereof. Any
representation, promise or agreement not specifically included in this Agreement shall not be binding upon or enforceable against
either party. This is a fully integrated agreement.

(b)              
Amendment and Waiver. The provisions of this Agreement may be amended or waived only with the prior written consent
of the Board (or a person expressly authorized thereby) and Executive, and no course of conduct or failure or delay in enforcing
the provisions of this Agreement shall affect the validity, binding effect or enforceability of this Agreement.

(c)               
Binding Effect. This Agreement is intended to bind and inure to the benefit of and be enforceable by Executive, the
Company and their respective heirs, successors and assigns, except that Executive may not assign Executive’s rights or delegate
Executive’s obligations hereunder without the prior written consent of the Company.

(d)              
Notices. All notices required to be given hereunder shall be in writing and shall be deemed to have been given if
(i) delivered personally or by documented courier or delivery service, (ii) transmitted by facsimile during normal business
hours or (iii) mailed by registered or certified mail (return receipt requested and postage prepaid) to the following listed
persons at the addresses and facsimile numbers specified below, or to such other persons, addresses or facsimile numbers as a party
entitled to notice shall give, in the manner hereinabove described, to the others entitled to notice:

If to the Company, to:

 

Air Methods Corporation

7301 South Peoria Street

Englewood, Colorado 80112

Attention: Chief Executive Officer

Facsimile No.: (303) 790-4780

    	15

    	 

    

with a copy to:

Davis Graham & Stubbs LLP

1550 Seventeenth Street, Suite 500

Denver, Colorado 80202

Attention: Kristin Lentz

Facsimile No.: (303) 892-7334

If to Executive, to:

Crystal Gordon

930 St. Paul Street

Denver, CO 80206

If given personally or by documented
courier or delivery service, or transmitted by facsimile, a notice shall be deemed to have been given when it is received. If given
by mail, it shall be deemed to have been given on the third business day following the day on which it was posted.

(e)               
Headings. The section and other headings contained in this Agreement are for the convenience of the parties only
and are not intended to be a part hereof or to affect the meaning or interpretation hereof

(f)               
Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of
which together shall constitute one and the same instrument.

(g)              
Construction. Each party has cooperated in the drafting and preparation of this Agreement. Hence, in any construction
to be made of this Agreement, the same shall not be construed against any party on the basis that the party was the drafter.

(h)              
Savings Clause. If any provision of this Agreement or the application thereof is held invalid, the invalidity shall
not affect other provisions or applications of the Agreement which can be given effect without the invalid provisions or applications
and to this end the provisions of this Agreement are declared to be severable.

    	16

    	 

    

IN WITNESS WHEREOF,
the parties hereto have executed this Agreement as of the day and year first above written.

 

	 	AIR METHODS CORPORATION
	 	 
	 	 
	 	By:	 	 
	 	Name: Aaron D. Todd
	 	Title: Chief Executive Officer
	 	 
	 	EXECUTIVE:
	 	 
	 	 
	 	 	 
	 	Name: Crystal L. Gordon
	 	Title: Senior Vice President, General Counsel

                              and Secretary

	 	 

    	17

    	 

    

STRICTLY CONFIDENTIAL

EXHIBIT A

GENERAL RELEASE

		1.	Definitions.

I intend all words used by this Release
to have their plain meanings in ordinary English. These terms shall have the following meanings:

		A.	I, me, my and Releasor mean me and anyone who has or obtains any legal rights or
claims through me.

		B.	Employer means: (i) Air Methods Corporation and its direct and indirect subsidiaries (collectively,
the “Company”), (ii) any other company affiliated with the Company in the past or present, (iii) limited to their capacities
related to the Company, the past and present officers, directors, employees, shareholders, attorneys, agents and representatives
of the Company, (iv) any present or past employee benefit plan sponsored by the Company and/or officers, directors, trustees, administrators,
employees, attorneys, agents and representatives of such plan, (v) and any person (limited to his or her capacity related to the
Company) who acted on behalf of the Company on instruction from the Company.

		C.	Employment Agreement means that certain Amended and Restated Employment Agreement dated
as of September ___, 2012, between me and the Company.

		D.	My claims means all of my rights to any relief of any kind from the Employer, including
but not limited to:

		1.	All claims I now have, whether or not I now know about such claims, including all claims arising
out of or relating to my past employment with the Company, the termination of that employment or statements or actions of the Employer
including, but not limited to: breach of contract; defamation; infliction of emotional distress; wrongful discharge; workers’
compensation retaliation; violation of the Age Discrimination in Employment Act of 1967; Fair Labor Standards Act; Title VII of
the Civil Rights Act of 1964; the Civil Rights Acts of 1866 and 1871; the Civil Rights Act of 1991; the Family and Medical Leave
Act; the National Labor Relations Act; The Americans with Disabilities Act; COBRA; ERISA; the anti-discrimination laws of the state
in which I reside and of any other state; the Wage Claim Act or corresponding statute of the state in which I reside; and/or any
other federal, state or local statute, law, ordinance, regulation, order or principle of common law;

		2.	All claims I have now, whether or not I know about the claims, for any type of relief from the
Employer, including, but not limited to, all claims for back pay, front pay, lost benefits, reinstatement, liquidated damages,
punitive damages, and damages for any alleged breach of contract, any tort claim and any alleged personal injury or emotional injury
or damage; and

 

A-1

    	

    	 

    

		3.	All claims for attorneys’ fees (except as provided below);

but excluding (i)
my rights to receive payments and benefits pursuant to Section 5(b) or (c) of my Employment Agreement; (ii) my rights to indemnification
(including advancement and reimbursement of attorneys’ fees) and directors and officers liability insurance; (iii) my rights
as a stockholder of the Company; (iii) my rights to any payment or benefit under any employee benefit plan, program or policy or
equity or incentive plan; and (iv) my rights to any vesting and exercise of any equity grant pursuant to the terms of such equity
grant; and (v) any payment or reimbursement as provided for in the Employment Agreement.

		2.	Agreement to Release My Claims.

In exchange for my right to receive
payments and other benefits under Section 5 of my Employment Agreement, I agree to give up all My Claims against the Employer and
give up all other actions, causes of action, claims or administrative complaints that I have against the Employer. I will not bring
any lawsuits or administrative claims against the Employer relating to the claims that I have released nor will I allow any lawsuits
or claims to be brought or continued on my behalf or in my name. The money and other consideration I receive pursuant to Section
5(b) or (c) of my Employment Agreement is a full and fair payment for the release of My Claims and the Employer does not owe me
anything further for My Claims. Separate from this agreement, I will also receive the Accrued Obligations (as defined in my Employment
Agreement). My rights to receive the other payments and benefits due under Section 5(b) or (c) of my Employment Agreement
shall be effective only after receipt by the Employer of this Release, signed by me and properly notarized, and after the expiration
of the seven (7) day revocation period mentioned in Section 5, below. I understand that I will not receive any payments due
me under Section 5(b) or (c) of my Employment Agreement (other than payment of the Accrued Obligations under clause (1)
thereof) if I revoke or rescind this Release, and in any event, until after the seven (7) day revocation period has expired.

		3.	Additional Agreement and Understandings.

Even though the Employer will
pay me to settle and release My Claims, the Employer does not admit that it is legally obligated to me, and the Employer denies
that it is responsible or legally obligated for My Claims or that it has engaged in any improper conduct or wrongdoing against
me.

I have read this Release carefully
and understand its terms. I am hereby being advised by the Employer to consult with an attorney prior to signing this Release.
My decision to sign or not to sign this Release is my own voluntary decision made with full knowledge that the Employer has advised
me to consult with an attorney. In agreeing to sign this Release, I have not relied on any statement or explanation of my rights
or obligations made by the Employer or its attorneys.

I am old enough to sign this Release
and to be legally bound by the agreements that I am making. I represent that I have not filed for personal bankruptcy or been involved
in any

A-2

    	

    	 

    

personal bankruptcy proceeding
between the time any of My Claims accrued and date of my signature below. I am legally able and entitled to receive the entire
sum of money being paid to me by the Employer in settlement of My Claims. I have not assigned or pledged any of My Claims or any
portion of them to any third person. I am a resident of the State of Colorado and have executed this Release within the State of
Colorado. I understand and agree that this Release contains all the agreements between the Employer and me relating to this settlement,
and that it supersedes all prior negotiations and agreements relating to the subject matter hereof.

		4.	Twenty-One Day Period to Consider the Release.

I understand that I have twenty-one
(21) days from the day that I receive this Release, not counting the day upon which I receive it, to consider whether I wish to
sign this Release. If I cannot make up my mind in that time, the Employer may or may not allow more time. I acknowledge that if
I sign this Release before the end of the twenty-one (21) day period, it will be my personal, voluntary decision to do so.

		5.	Seven Day Period to Rescind the Release.

I understand that I may rescind
(that is, cancel) this Release for any reason within seven (7) calendar days after I sign and deliver it to the Employer. I understand
that my notice rescinding this agreement must be in writing and hand-delivered or mailed to the Employer. If mailed, my notice
rescinding this agreement must be:

		A.	Postmarked within seven (7) days after I sign and deliver this agreement to the Employer;

B.
           Properly addressed to:Air Methods Corporation
 7301 South Peoria Street
 Englewood, Colorado 80112
 Attention:
General Counsel

and

		C.	Sent by certified mail, return receipt requested, postage pre-paid.

6.Mutual
Non-Disparagement.

(i) I agree that I will not, directly
or indirectly, make or ratify any statement, public or private, oral or written, to any person that is intended to disparage, either
professionally or personally, the Company or its parents, subsidiaries and affiliates, past and present, and each of them, as well
as its and their trustees, directors and officers, agents, attorneys, and employees and (ii) the Company agrees that the Company
and its subsidiaries and its directors and senior executives will not, directly or indirectly, make or ratify any statement, public
or private, oral or written, to any person that is intended to disparage, either professionally or personally, me or my professional
reputation. Nothing herein shall prohibit any party (1) from disclosing that I am no longer employed by the Company; (2) from responding
truthfully to any governmental investigation, legal

A-3

    	

    	 

    

process or inquiry related thereto,
(3) from making traditional competitive statements in the course of promoting a competing business (other than in violation of
Sections 5 or 6 of the Employment Agreement); or (4) from making a good faith rebuttal of the other party’s untrue or misleading
statement.

		7.	Survival of Certain Provisions of Employment Agreement.

Sections 6 through 15 and 17 through
23 of the Employment Agreement (but subject to Executive’s right to receive the payments and benefits provided under Section 5
of the Employment Agreement) shall survive the termination of my employment and are incorporated herein by reference as if fully
set forth.

		8.	Choice of Law.

This Release shall be deemed to
have been executed and delivered within the State of Colorado, and my rights and obligations and the rights and obligations of
the Employer hereunder shall be construed and enforced in accordance with, and governed by, the laws of the State of Colorado without
regard to principles of conflict of laws.

		9.	Arbitration.

Any dispute or controversy arising
out of interpretation or enforcement of this Release shall be resolved pursuant to the terms set forth in Section 22 of the
Employment Agreement.

		10.	Severability.

If any provision of this Release
is declared by any court of competent jurisdiction to be invalid for any reason, such invalidity shall not affect the remaining
provisions. On the contrary, such remaining provisions shall be fully severable, and this Release shall be construed and enforced
as if such invalid provisions never had been inserted in the Release.

A-4

    	

    	 

    

RELEASOR

 

 

		 
	

Crystal L. Gordon

	 
	 	 
	Date:	 	 
	 	 

 

STATE OF                                               )

COUNTY OF                                            ) ss:

Subscribed and sworn to me a Notary
Public in and for the state of ____________________ by ____________________ this __________ day of ____________________, 20__.

 

	 	 	 
	 	 Notary Public in and for the State of                                                     
         
	 	
My commission expires:                                                                              

                                                                                              

 

 

AGREED AND ACCEPTED FOR EMPLOYER:

AIR METHODS CORPORATION

	 	 
	 	 
	By:	 	 
	Title:	 	 
	Date:	 	 

 

A-5

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