<PAGE>
<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 15, 1997
REGISTRATION NO. 33-
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
PROFLIGHT MEDICAL RESPONSE, INC.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
------------------------
<TABLE>
<S> <C> <C>
COLORADO 4522 84-1200480
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
12420 EAST CONTROL TOWER ROAD,
ENGLEWOOD, COLORADO 80112
(800) 949-5387
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
12420 EAST CONTROL TOWER ROAD,
ENGLEWOOD, COLORADO 80112
(ADDRESS OF PRINCIPAL PLACE OF BUSINESS OR INTENDED PRINCIPAL PLACE OF BUSINESS)
------------------------
KEVIN L. BURKHARDT
12420 EAST CONTROL TOWER ROAD, ENGLEWOOD, COLORADO 80112
(800) 949-5387
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
------------------------
COPY OF ALL COMMUNICATIONS TO:
<TABLE>
<S> <C>
GERALD A. ADLER, ESQ. LAWRENCE G. NUSBAUM, ESQ.
STACEY R. WOLOSHIN, ESQ. GUSRAE, KAPLAN & BRUNO
LOSELLE GREENAWALT KAPLAN BLAIR & ADLER 120 WALL STREET
140 EAST 45TH STREET NEW YORK, N.Y. 10005
NEW YORK, N.Y. 10017 (212) 269-1400
(212) 986-6850
</TABLE>
------------------------
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable
after this Registration Statement becomes effective.
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
OFFERING AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE PRICE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE(1) PRICE(1) FEE(2)
<S> <C> <C> <C> <C>
Common Stock............................ 900,000 Shares $ 4.25 $ 3,825,000 $ 1,159.09
Redeemable Common Stock Purchase
Warrants.............................. 900,000 Warrants $ .10 $ 90,000 $ 27.27
Total................................... $ 3,915,000 $ 1,186.36
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Calculated pursuant to Rule 457(a) based on a bona fide estimate of the
maximum offering price.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
________________________________________________________________________________
<PAGE>
<PAGE>
PROFLIGHT MEDICAL RESPONSE, INC.
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
FORM SB-2 ITEM NUMBER AND HEADING CAPTION AND LOCATION IN PROSPECTUS
- --------------------------------------------------------------------- ------------------------------------------
<C> <S> <C>
1. Front of Registration Statement and Outside Front Cover of
Prospectus................................................... Front of Registration Statement and
Outside Front Cover of Prospectus
2. Inside Front and Outside Back Cover Pages of Prospectus........ Inside Front and Outside Back Cover Pages
of Prospectus
3. Summary Information and Risk Factors........................... Prospectus Summary and Risk Factors
4. Use of Proceeds................................................ Use of Proceeds
5. Determination of Offering Price................................ Underwriting
6. Dilution....................................................... Dilution
7. Selling Security Holders....................................... Not Applicable
8. Plan of Distribution........................................... Underwriting
9. Legal Proceedings.............................................. Business -- Legal Proceedings
10. Directors, Executive Officers, Promoters and Control Persons... Management
11. Security Ownership of Certain Beneficial Owners and
Management................................................... Principal Shareholders
12. Description of Securities...................................... Description of Securities
13. Interest of Named Experts and Counsel.......................... Legal Matters; Experts
14. Disclosure of Commission Position on Indemnification for
Securities Act Liabilities................................... Management -- Limitations on Personal
Liability of Directors
15. Organization within Last Five Years............................ Business; Certain Transactions
16. Description of Business........................................ Business
17. Management's Discussion and Analysis or Plan of Operation...... Management's Discussion and Analysis of
Financial Condition and Results of
Operations
18. Description Of Property........................................ Business -- Properties
19. Certain Relationships and Related Transactions................. Certain Transactions
20. Market for Common Equity and Related Stockholder Matters....... Description of Securities; Shares Eligible
for Future Sale
21. Executive Compensation......................................... Management -- Executive Compensation
22. Financial Statements........................................... Financial Statements
23. Changes In and Disagreements with Accountants on Accounting and
Financial Disclosure......................................... Not applicable
</TABLE>
<PAGE>
<PAGE>
PROSPECTUS
PROFLIGHT MEDICAL RESPONSE, INC.
900,000 SHARES OF COMMON STOCK AND
900,000 REDEEMABLE COMMON STOCK PURCHASE WARRANTS
Proflight Medical Response, Inc., a Colorado corporation (the 'Company')
hereby offers (the 'Offering') 900,000 shares of common stock, $.001 par value
(the 'Common Stock') of the Company and 900,000 Redeemable Common Stock Purchase
Warrants (the 'Warrants'). The initial public offering prices of the Common
Stock and Warrants are $4.25 and $.10, respectively. The Offering is being
offered through Century City Securities, Inc. (the 'Underwriter'). See
'Underwriting.' The Common Stock and the Warrants offered hereby (sometimes
hereinafter collectively referred to as the 'Securities') will be separately
tradeable immediately upon issuance and may be purchased separately. Investors
will not be required to purchase shares of Common Stock and Warrants together or
in any particular ratio. Each Warrant entitles the holder to purchase one share
of Common Stock at an exercise price of $4.25 (the 'Exercise Price'), subject to
adjustment, for five years commencing twenty-four (24) months after the date the
Offering closes (the 'Closing Date'), provided that with the prior written
consent of the Underwriter the Warrants may be exercised twelve (12) months from
the Closing Date.
The Warrants are redeemable, in whole or in part, by the Company at a price
of $.10 per Warrant, commencing twenty-four (24) months after the Closing Date
(provided that with the prior written consent of the Underwriter the Warrants
may be redeemed twelve (12) months from the Closing Date) and prior to the
expiration, provided that (i) prior written notice of not less than thirty (30)
days is given to the Warrantholders, and (ii) the closing bid price (as defined)
of the Company's Common Stock for the twenty (20) consecutive trading days
immediately prior to the date on which the notice of redemption is given, shall
have exceeded $8.50 per share. Notwithstanding the foregoing, Warrantholders
shall have exercise rights until the close of business the day preceding the
date fixed for redemption.
Prior to this Offering, there has been no public market for the Common
Stock or the Warrants. There can be no assurance that a public market will
develop or be sustained for the Common Stock or the Warrants after the
completion of the Offering. The Offering prices of the Common Stock and the
Warrants, exercise price and other terms of the Warrants were established by
negotiations between the Company and the Underwriter and do not necessarily bear
any direct relationship to the Company's assets, earnings, book value, results
of operations or any other generally accepted criteria of value. The Company has
applied for listing of the Common Stock and the Warrants on the Nasdaq SmallCap
Market'sm' under the trading symbols 'PFLT' and 'PFLTW.' See 'Risk Factors' and
'Underwriting.'
The Securities offered hereby are being offered by the Underwriter on a
'best-efforts, all or none' basis during an initial period of 90 days, which may
be extended for an additional 90 days. Pending the sale of the Securities, all
proceeds from the sale of the Securities offered hereby will be deposited in a
non-interest bearing escrow account at Citibank, N.A. Unless all the Securities
are sold within 90 days from the date of this Prospectus (which period may be
extended for an additional 90 days by agreement of the Underwriter and the
Company), the Offering will terminate and all funds will be returned promptly to
the subscribers by the escrow agent without deduction or interest. During the 90
day selling period (and 90 day extension, if any) potential purchasers will not
have the opportunity to have their funds returned. See 'Risk Factors' and
'Underwriting.'
------------------------
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. SEE 'RISK FACTORS'
BEGINNING ON PAGE 8 OF THIS PROSPECTUS FOR CERTAIN INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(1) COMPANY(2)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share........................................................................ $4.25 $0.425 $3.825
Per Warrant...................................................................... $.10 $.01 $.09
Total(3)......................................................................... $3,915,000 $391,500 $3,523,500
</TABLE>
(SEE NOTES ON FOLLOWING PAGE)
CENTURY CITY SECURITIES, INC.
------------------------
, 1997
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION, OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED MAY 15, 1997
<PAGE>
<PAGE>
(1) All proceeds from subscriptions for the Securities will be deposited in a
non-interest bearing escrow account at Citibank, N.A. If all of the
Securities are not subscribed for within 90 days (which period may be
extended for an additional 90 days), all funds received, will be promptly
refunded to subscribers in full, without interest or deduction, in
accordance with an escrow agreement with Citibank, N.A.
(2) Does not include (i) warrants issued to the Underwriter to purchase 90,000
shares of Common Stock at $5.10 and 90,000 Warrants at $.12 per Warrant or
(ii) a non-accountable expense allowance payable to the Underwriter equal to
3% of the gross proceeds of the Offering. The Underwriter's Warrants are
exercisable for a period of four years commencing one year after the date of
this Prospectus. The Company has agreed to indemnify the Underwriter
against, or contribute to losses arising out of, certain liabilities,
including liabilities under the Securities Act of 1933, as amended. See
'Underwriting.'
(3) Before deducting estimated Offering expenses of $545,450 in the aggregate,
which includes the Underwriter's non-accountable expense allowance all of
which are payable by the Company. See 'Underwriting.'
------------------------
The Securities are being offered by the Underwriter named herein, as agent
for the Company, subject to prior sale, when, as and if accepted by them and
subject to certain legal matters to be approved by counsel and to certain other
conditions. The Company and the Underwriter reserve the right to withdraw,
cancel or modify the Offering and to reject any order in whole or in part.
ALL PAYMENT FOR THE COMMON STOCK AND WARRANTS OFFERED HEREBY SHALL BE MADE
BY CHECK PAYABLE TO 'CITIBANK, N.A., AS ESCROW AGENT FOR PROFLIGHT MEDICAL
RESPONSE, INC.'
The Company intends to furnish its stockholders with annual reports
containing audited financial statements of the Company, after the end of each
fiscal year, and make available such other periodic reports as the Company may
deem appropriate or as may be required by law.
ii
<PAGE>
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information, including the financial
statements and notes thereto, appearing elsewhere in this Prospectus. All share
and per share amounts reflect a fifty-for-one and a 3.85356-for-one stock split
of the Company's issued and outstanding Common Stock effective July 1996 and
January 1996, respectively. In December 1996, the Company contracted to acquire
all of the outstanding shares of capital stock of (i) Air Response, Inc., a New
York corporation ('Air Response') in a stock-for-stock exchange and (ii) Air
Response South, Inc., a Florida corporation ('Air Response South'), for cash.
Each of these corporations provide fixed wing air ambulance services. These
agreements were amended in April and May 1997. Pursuant to the terms of these
agreements, the acquisitions will close simultaneously with the closing of this
initial public offering. Unless the context otherwise requires, the term 'the
Company' includes Air Response and Air Response South. Except where otherwise
indicated, all information in this Prospectus assumes no exercise of the
Underwriter's Warrants or other warrants or options.
THE COMPANY
The Company is a national and international provider of fixed wing air
ambulance transport services for persons who are ill, injured or otherwise
incapacitated who need to be relocated and who may require emergency medical
care during flight. The Company currently operates from facilities located in
Colorado, New York and Florida and upon consummation of the Offering plans to
consolidate its operations into its Colorado facilities. The Company provides
its services throughout the United States, Canada, Europe, Mexico, Central
America, South America, Bermuda and the Mediterranean. In addition, the Company,
when operating at full capacity, has subcontracted its services by brokering its
air ambulance trips to other air transport providers. For the year ended
December 31, 1996, the Company, including Air Response and Air Response South,
had pro forma net sales of approximately $11.2 million.
As of the date hereof, the Company has an air ambulance fleet of 10 fixed
winged aircraft. The Company provides transport services in connection with the
relocation of patients requiring specialized medical procedures such as organ
transplants, cancer treatment, specialized cardiac surgery, burn care, stroke
care and advanced head and spinal cord surgery and rehabilitation to hospitals
recognized as national centers of excellence in these fields, for the
repatriation of patients who are injured or become ill away from home and in
connection with the transportation of non-ambulatory long-term care patients who
need to be relocated. The flights operated are on a non-emergency basis and are
generally long distance in nature. Emergency flights are usually contracted to
helicopters and are generally short distances. The Company's customers include
individual patients, managed care companies, hospitals, government agencies,
national health insurance companies, health maintenance organizations and air
ambulance brokers.
The Company believes that the need for non-emergency ambulance transport
services, will increase as pressure on the health insurance industry to reduce
costs increases. The Company believes that it can capitalize on this market. The
Company believes that the fixed wing segment of the medical air transport
industry will grow as hospital consolidation produces regional health networks
responsible for patients spread over a greater geographic area. The Company also
believes that relocating patients with specialized needs to hospitals recognized
as national centers of excellence and which have pricing agreements with
insurers and health maintenance organizations ('HMOs') will increase as a way to
provide high quality, cost effective health care. The fixed wing air ambulance
market is currently served by a number of small, regional companies lacking a
national presence and the ability to serve an insurance company or HMO on a
national basis. The Company believes that through the acquisitions of Air
Response and Air Response South (the 'Acquisitions') and by implementing its
business strategy, it will begin to establish a national presence while
continuing to ensure that patients receive the highest quality care.
In connection with the Acquisitions, the Companies business strategy over
the next 24 months is to become a leading national provider of fixed wing air
ambulance services by:
2
<PAGE>
<PAGE>
Improving the efficiency of its existing operations by integrating the
operations of Air Response and Air Response South and by providing
additional management expertise, recognizing economies of scale,
introducing sophisticated operating systems and controls, instituting a
centralized dispatching function and providing a stronger, more stable
capital base.
Implementing strategic acquisitions of other air ambulance service
providers. The Company believes that opportunities exist to acquire
additional air ambulance service providers in the future that would
benefit from the efficiency, as well as the capital and management
resources of the Company. The Company regularly evaluates acquisition
possibilities and considers a number of factors in evaluating such
acquisition candidates, including the quality of management and medical
personnel, historical operating results, the demographic characteristics
of service areas, the regulatory environment in which such company
operates and the fee structure and reimbursement levels. In addition, by
combining existing companies, the Company believes it will be able to
deliver fixed wing air ambulance services to insurance companies and other
health care providers at cost effective rates. Except as otherwise
described in this Prospectus, there are no present negotiations,
arrangements or understandings with respect to any potential material
acquisitions.
Increasing its market share and expanding its operations by contracting
with insurers and HMOs seeking an air ambulance provider with national and
international capabilities and by appealing to individual consumers
through a prepaid service package. No assurances can be given that the
Company will be able to successfully negotiate additional contracts with
such parties on favorable terms, if at all, or otherwise expand its
operations.
The Company's senior management has extensive experience in the air
ambulance transport services business. Kevin L. Burkhardt, the Company's Chief
Executive Officer and President, has over 10 years experience in the air
ambulance industry and over 20 years experience in the aviation industry,
including captain, flight instructor and corporate pilot. Jane S. Burkhardt, the
Company's Secretary and medical and legal coordinator, received her B.S. degree
in nursing in 1981 from the University of Wisconsin and her JD degree in law in
1990 from St. Louis University. Mrs. Burkhardt has over 14 years experience in
the nursing industry and was a registered nurse and risk manager for
Presbyterian/St. Lukes Medical Center. Donald Jones will, upon closing of the
Offering, serve as the Company's Vice President of Sales and a Director of the
Company. Mr. Jones has over 13 years experience in the air ambulance industry,
including flight coordinator, and director of marketing and sales. David Cohen,
the Company's Chief Financial Officer and Treasurer, has over 30 years of
management and financial experience. Mr. Cohen was the chief financial officer
of Air Resources Corp., a public company which manufactures adhesives and held
various senior management positions for two aircraft sales corporations.
In April 1997, the Company entered into an Amended Agreement and Plan of
Reorganization with Air Response and Louis R. Capece, Jr., which agreement was
amended in May 1997, pursuant to which the Company agreed to acquire at the
closing of the Offering, subject to the terms and conditions contained therein,
all of the outstanding capital stock of Air Response in exchange for 588,236
shares of Common Stock of the Company to be issued two years from the closing of
the Offering. If the Company completes a second public offering, Mr. Capece has
the option to put such number of shares of Common Stock at the then current
market value, equal to 20% of the net proceeds of such offering, to the Company,
not to exceed $1,000,000. The Company simultaneously entered into an Amended
Stock Purchase and Sale Agreement with Air Response South and Louis R. Capece,
Jr. pursuant to which the Company agreed to acquire at the closing of the
Offering, subject to the terms and conditions contained therein, all of the
outstanding capital stock of Air Response South for $2,000,000 of which
$1,000,000 is payable upon closing of the Offering with the balance due two
years from such date.
The Company was incorporated in May 1992. The Company's executive offices
are located at 12420 East Control Tower Road, Englewood, Colorado 80112 and its
telephone number is (800) 949-5387.
3
<PAGE>
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Common Stock Offered......................... 900,000 shares
Redeemable Common Stock Purchase Warrants
Offered.................................... 900,000 Warrants
Common Stock Outstanding Before the
Offering................................... 3,025,000 shares(1)
Common Stock Outstanding After the
Offering................................... 3,925,000 shares(1)(2)
Warrants Outstanding Before Offering......... -0-
Warrants Outstanding After Offering.......... 900,000 Warrants
Exercise Terms.......................... Each Warrant entitles the holder to purchase one share of Common
Stock for $4.25, during the five (5) year period commencing
twenty-four (24) months after the Closing Date (except the
Warrants with the express written consent of the Underwriter may
be exercised twelve (12) months from the Closing Date), subject to
adjustment in certain circumstances. See 'Description of
Securities -- Warrants.'
Expiration Date......................... , 2003 (six years after the Closing Date).
Redemption.............................. Redeemable by the Company, in whole or in part, at a price of $.10
per Warrant, commencing twenty-four (24) months after the Closing
Date (except the Warrants with the express written consent of the
Underwriter may be redeemed twelve (12) months from the Closing
Date), upon not less than thirty (30) days prior written notice to
the holders of such Warrants, provided that the closing bid price
(as defined) of the Company's Common Stock for the twenty (20)
consecutive trading days immediately prior to the date on which
the notice of redemption is given, shall have exceeded $8.50 per
share.
Use of Proceeds.............................. The net proceeds from the Offering will be used to pay the first
payment in connection with the acquisition of Air Response South,
to pay indebtedness incurred in connection with its bridge
financing and certain short term notes, to fund costs relating to
its expansion strategy and for general corporate purposes,
including working capital. See 'Use of Proceeds.'
Risk Factors................................. An investment in the Securities offered hereby involves a high
degree of risk and immediate substantial dilution to the public
investors. See 'Risk Factors' and 'Dilution.'
Proposed Trading Symbols(3):
Nasdaq SmallCap Market'sm'
Common Stock............................ PFLT
Warrants................................ PFLTW
</TABLE>
- ------------
(1) Does not include: (i) 350,000 shares of Common Stock reserved for issuance
under the Company's stock option plan; (ii) 588,236 shares of Common Stock
which will be issued to Louis R. Capece, Jr.,
(footnotes continued on next page)
4
<PAGE>
<PAGE>
(footnotes continued from previous page)
in connection with the acquisition of Air Response, two years from the
closing of the Offering, (iii) 900,000 shares reserved for issuance upon
exercise of the Warrants offered hereby; (iv) 1,100,000 shares reserved for
issuance upon exercise of other outstanding options and warrants; and (v)
180,000 shares of Common Stock issuable upon exercise of the Underwriter's
Warrants. See 'Management -- Stock Option Plan,' 'Certain Transactions,'
'Description of Securities' and 'Underwriting.'
(2) The Company has applied to have the Common Stock and Warrants approved for
quotation on the Nasdaq SmallCap Market'sm' and believes it will meet the
initial listing requirements upon consummation of the Offering. However, no
assurance can be given that the Company will be approved for listing. There
is also no assurance that, if listed, it will be able to satisfy the
criteria for continued quotation on the Nasdaq SmallCap Market'sm' following
the Offering. See 'Risk Factors -- Listing and Continued Quotation on the
Nasdaq SmallCap Market.sm'
5
<PAGE>
<PAGE>
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
The following table sets forth summary historical financial data of (i)
Proflight for the years ended December 31, 1996 and 1995 and (ii) Air Response
and Air Response South for the seven months ended December 31, 1996 and 1995 and
for the years ended May 31, 1996 and 1995. The historical financial data for the
years ended December 31, 1996 and 1995 and May 31, 1996 and 1995 are derived
from the audited financial statements of Proflight, Air Response and Air
Response South. The financial statements of Proflight have been audited by Grant
Thornton LLP, independent certified public accountants, whose report thereon has
been modified to include an explanatory paragraph which raises substantial doubt
about Proflight's ability to continue as a going concern and are included
elsewhere in this Prospectus. The combined financial statements of Air Response
and Air Response South for the year ended May 31, 1996 have been audited by
Staff, Maikels & Ciampino, P.C. and for the year ended May 31, 1995 by Kaufman,
Rossin & Co., each independent certified public accountants, which statements
are included elsewhere in this Prospectus. The summary historical financial data
should be read in conjunction with the financial statements and notes thereto of
Proflight, Air Response and Air Response South and 'Management's Discussion and
Analysis of Financial Condition and Results of Operations' included elsewhere in
this Prospectus. The financial data for Air Response and Air Response South for
the seven months ended December 31, 1996 and 1995 are unaudited, but, in the
opinion of management, reflect all adjustments (consisting only of normal
recurring adjustments) necessary for a fair representation of results for all
interim periods. The operating results for interim periods are not necessarily
indicative of results for the full fiscal year. The following table also sets
forth pro forma financial data of the Company as if the Acquisitions (which will
close simultaneously with the consummation of this Offering) had occurred as of
December 31, 1996 for balance sheet results and as of January 1, 1996 for
operating data. The pro forma financial data was derived from the unaudited pro
forma financial statements appearing elsewhere in this Prospectus. The summary
pro forma financial data should be read in conjunction with the Company's pro
forma financial statements and the notes thereto. The pro forma balance sheet
data as of December 31, 1996 and the pro forma statement of operations for the
year ended December 31, 1996 are unaudited, but, in the opinion of management,
reflect all adjustments (consisting of only normal recurring adjustments and pro
forma adjustments to reflect the Acquisitions) necessary for a fair presentation
of pro forma results of operations. The pro forma operating results are not
necessarily indicative of the Company's future results of operations.
SUMMARY HISTORICAL FINANCIAL DATA
<TABLE>
<CAPTION>
THE COMPANY AIR RESPONSE AND AIR RESPONSE SOUTH
----------------------- -------------------------------------------------
TWELVE MONTHS ENDED SEVEN MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31, MAY 31,
----------------------- ----------------------- -----------------------
1996 1995 1996 1995 1996 1995
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
OPERATING DATA
Historical:
Net sales.................. $3,906,211 $2,885,535 $4,428,940 $3,656,916 $6,737,095 $4,718,013
Flying operations and
maintenance.............. 3,001,507 1,960,671 2,857,035 2,224,169 4,120,546 2,943,853
Promotion and sales........ 255,616 31,909 330,170 274,268 505,805 543,265
General, administrative
expense.................. 650,036 353,969 899,757 892,849 1,571,974 1,024,259
Depreciation and
amortization............. 377,930 276,538 240,615 210,000 366,139 299,951
Profit (loss) from
operation................ (378,878) 262,448 101,363 55,630 172,631 (93,315)
Interest expense........... (287,188) (150,254) (93,646) (58,624) (100,651) (128,600)
Other income (expense)..... 34 4,915 (120,556) 36,321 (222,292) (40,804)
Income tax benefit......... -- -- -- -- 73,904 150,522
Net profit(loss)........... (666,032) 117,109 (112,839) 33,327 (76,408) (112,197)
Per share data:
Net income (loss).......... $(0.19) $0.03 -- -- -- --
Weighted average number of
shares outstanding....... 3,525,000 3,525,000 -- -- -- --
</TABLE>
6
<PAGE>
<PAGE>
SUMMARY PRO FORMA FINANCIAL DATA
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
DECEMBER 31, 1996
-------------------
<S> <C>
Pro Forma Operating Data:
Net sales............................................................................. $11,165,330
Flying operations..................................................................... 7,400,129
Promotion and sales................................................................... 836,605
General and administrative expense.................................................... 2,268,328
Depreciation and amortization......................................................... 1,037,169
Total operating expense............................................................... 11,542,231
Operating income (loss)............................................................... (376,901)
Other income (expense)................................................................ (903,942)
Income Tax Benefit.................................................................... 73,904
Net loss.............................................................................. (1,206,939)
Per share data:
Net (loss)............................................................................ $ (0.33)(4)
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1996
------------------------------------------
ACTUAL(1) PRO FORMA(2) ADJUSTED(3)
----------- ------------ -----------
<S> <C> <C> <C>
Balance Sheet Data:
Working capital (deficit)................................... $(1,080,311) $(2,091,992) $ 1,386,058
Total assets................................................ 4,975,166 10,966,468 13,108,269
Long term obligations....................................... 3,963,935 6,042,807 6,042,807
Retained earnings (deficit)................................. (111,005) (111,005) (111,005)
Stockholders' equity (deficit).............................. (543,878) 1,956,122 5,461,672
</TABLE>
- ------------
(1) Represents Proflight.
(2) Includes Proflight, Air Response and Air Response South.
(3) The adjusted pro forma data includes adjustments that reflect the effects of
the merger including the sale of 900,000 shares of Common Stock and 900,000
Warrants offered hereby and the application of the net proceeds.
(4) Based on 3,613,236 shares which do not include 900,000 shares of Common
Stock offered hereby.
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RISK FACTORS
An investment in the Securities offered hereby involves a high degree of
risk. Prior to making any investment decision, prospective investors should
carefully consider the following risk factors together with the other
information presented in this Prospectus including the financial statements (and
notes thereto).
HISTORY OF LOSSES; ACCUMULATED DEFICIT; NO HISTORY OF COMBINED OPERATIONS.
Proflight reported a net loss for the year ended December 31, 1996 of $666,032
and net income for the year ended December 31, 1995 of $117,109. Air Response
and Air Response South, on a combined basis, reported a net loss of $76,408 and
$112,197 for the years ended May 31, 1996 and 1995, respectively. On a pro forma
basis, after giving effect to the Acquisitions, the Company would have had a net
loss for the year ended December 31, 1996 of $1,206,939. As of December 31,
1996, Proflight had an accumulated deficit in stockholders' equity of $543,878.
For at least the current fiscal year, the Company may incur additional losses
which may be substantial as a result of, among other things, its expansion
strategy. There can be no assurance that the Company's operations will be
profitable in the future or if achieved, that such profitability will be
sustained. The Company will consummate the Acquisitions on closing of the
Offering, and to date, each of the companies have been operating as separate,
independent entities. The Company's profitability will depend upon the ability
of its management to integrate the companies into a single cohesive business
entity with a single business philosophy. There can be no assurance that the
Company's management will be successful in managing the combined operations or
in implementing the Company's business strategy. See 'Management's Discussion
and Analysis of Financial Condition and Results of Operations.'
MODIFICATION OF AUDITOR'S OPINION; GOING CONCERN. Proflight's independent
accountants have included an explanatory paragraph in their report on
Proflight's financial statements at December 31, 1996 and 1995, which states
that Proflight has accumulated a deficit in stockholders' equity of $543,878
through December 31, 1996 and total current liabilities exceed total current
assets by approximately $1,080,311 as of December 31, 1996, all of which raise
substantial doubt about Proflight's ability to continue as a going concern. See
'Financial Statements and Report of Independent Certified Public Accountants'
included elsewhere in this Prospectus.
EXPANSION STRATEGY. The Company's success will depend, in large measure,
upon management's ability to successfully implement its business strategy to
expand the Company's operations and enhance its national and international
presence by improving the efficiency of its existing operations including
integrating the operations of Air Response and Air Response South, implementing
strategic acquisitions of other air ambulance service providers and increasing
its market share by contracting with insurers and HMOs. The Company currently
has no agreements or understandings, nor is it engaged in any negotiations with
respect to any acquisitions. The Company has a contract with Aetna Health
Management, Inc. to provide air transport services. However, the Company does
not have any other agreements with insurers or HMOs. There can be no assurance
that suitable growth opportunities or acquisitions can be identified,
consummated or successfully implemented or that its expansion strategy will
result in profitability.
NEED FOR ADDITIONAL FINANCING. The Company anticipates that the proceeds
from the Offering, together with projected cash flow from operations, will be
sufficient to fund its operations, including its proposed expansion, for at
least the next 12 months. However, there can be no assurance that events
affecting the Company's operations will not result in the Company depleting its
funds before that time. The Company may need to raise additional funds to
continue to implement its expansion strategy. There can be no assurance that
additional financing will be available, or, if available, that such financing
will be on terms favorable to the Company. Failure to obtain such additional
financing could have a material adverse effect on the Company. The Company
anticipates issuing additional securities to fund its expansion, either to raise
capital to fund internal growth or as principal consideration for acquisitions.
There can be no assurance that the Company will be able to successfully finance
its expansion or that the Company's securities will be acceptable consideration
to acquisition candidates. The failure of the Company to successfully implement
its expansion strategy may negatively impact the Company's competitive position
and its future results of operations. See 'Use of Proceeds,' 'Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources' and the Company's financial
statements and notes thereto.
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PROCEEDS FOR ACQUISITION PAYMENT AND DEBT REPAYMENT; BROAD DISCRETION IN
APPLICATION OF PROCEEDS. Approximately 54% of the net proceeds of this Offering
will be used to pay the first payment in connection with the acquisition of Air
Response South and to repay certain short term notes and to repay the bridge
lenders. In addition, approximately 21% of the net proceeds of this Offering
will be applied for general corporate purposes, including working capital.
Accordingly, management will have a broad discretion over the use of proceeds.
See 'Use of Proceeds.'
GOVERNMENTAL REGULATION. The Company is subject to governmental regulation
at the federal and state levels. At the federal level, the Company is subject to
regulation by the Federal Aviation Administration ('FAA') and the Occupational
Safety and Health Administration ('OSHA'). The FAA regulations are primarily
related to flight safety issues, and govern flight operating procedures,
aircraft and equipment standards, maintenance and inspections, flight crew
standards, training and limitations, weather requirements and record keeping
requirements. The OSHA regulations are primarily designed to protect the
employees of the Company. Certain of the states in which the Company operates
regulate various aspects of its business. The Company's business is subject to
state requirements including, business licenses, training and certification of
medical personnel, the scope of services that may be provided by medical
personnel, staffing requirements, medical control and procedures. Applicable
federal and state laws and regulations are subject to change. Any changes could
adversely affect the Company's operations as well as the air ambulance business
in general. The Company believes it is in substantial compliance with all
regulatory requirements applicable to its business. The failure to be in
compliance with any applicable governmental regulations could adversely affect
the business, financial condition or results of operations of the Company. See
'Business -- Governmental Regulation.'
POSSIBLE ADVERSE CHANGES IN REIMBURSEMENT RATES OR COVERAGE; MEDICARE,
MEDICAID AND HEALTH CARE REFORM. A substantial portion (18% the year ended
December 31, 1996) of the Company's revenue are attributable to payments
received from third-party payors, including Medicare, Medicaid, HMOs, state run
insurance pools and private insurers. The revenue, cash flow and profitability
of the Company, like those of other companies in the health care industry, will
be affected by the continuing efforts of third-party payors to control
expenditures for health care. In addition, reimbursement can be influenced by
the financial instabilty of private third-party payors and by budget pressures
and cost shifting by governmental payors. With regard to Medicare and Medicaid
reimbursement, Congress has consistently attempted to curb federal spending on
these programs. The Company cannot predict whether any health care or Medicare
or Medicaid reform measures will be enacted, and if they are enacted, what
effect they may have on the Company's business. No assurances can be given that
future funding and reimbursement levels will be favorable to the Company. A
reduction in coverage or reimbursement rates by third-party payors, whether in
the private or government sector, could have a material adverse effect on the
Company's business, financial condition or results of operations.
LIABILITY INSURANCE. The Company's air ambulance operations involve the
risks of potential liability against the Company in the event of, among other
things, accidents involving the Company's airplanes and medical malpractice. The
Company maintains aircraft insurance with a maximum liability per occurrence of
up to $20,000,000 along with hull coverage (similar to auto collision insurance)
for the value of the aircraft. The annual premiums cost approximately $15,000
per aircraft and $7,000 per piston aircraft. In addition, the Company carries
medical liability insurance in the amount of $1,000,000 per claim and $3,000,000
in the aggregate per incident with an annual premium of approximately $19,000.
Although the Company currently maintains insurance coverage which it believes is
adequate to cover the risks of potential liability against the Company, there
can be no assurance that the coverage limits of its insurance are adequate or
that the Company will be able to continue to obtain such insurance policies in
the future or that the Company will be able to continue to obtain insurance
rates which will not negatively impact the Company's earnings. The inability of
the Company to maintain adequate liability insurance could have a material
adverse effect on its business, financial condition or results of operations.
COMPETITION. The air ambulance service industry is a highly competitive and
highly fragmented industry. The Company competes with other fixed wing air
ambulance companies which operate their own fleets of airplanes. The Company
believes each of these companies are small with a market share of
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less than 5%. The Company also competes with brokers who do not own their own
fleets but act as middlemen who market air ambulance services by generally
auctioning such services to the lowest bidder. The Company believes that brokers
control a large percentage of the air medical transport business and keep prices
in the industry very low. The Company believes that air ambulance service
providers compete primarily on the basis of quality of service, performance and
prices. The Company believes its one-way pricing structure allows the Company to
be competitive in the industry. In addition to present competition, other
companies with significantly greater economic resources than the Company
including potential customers of the Company such as insurance companies, HMOs
and health care facilities that do not currently provide air ambulance services
may enter the air ambulance service business. Entry into such business by such
entities could adversely affect the business, financial condition or results of
operations of the Company. See 'Business -- Competition.'
DEPENDENCE ON KEY PERSONNEL. The Company is dependent on the experience,
abilities and continued service of Kevin L. Burkhardt, the Company's Chief
Executive Officer and President. The Company has entered into an employment
agreement with Mr. Burkhardt and the loss of his services or any other key
personnel could have a material adverse effect on the Company's business,
financial condition and results of operations. The Company intends to obtain
$1,000,000 of key man life insurance on the life of Kevin L. Burkhardt. In
addition, the Company's future success depends in large part upon its ability to
attract and retain highly qualified personnel. The Company faces competition for
such personnel from other companies and organizations, many of which have
significantly greater resources than the Company. There can be no assurance that
the Company will be able to attract and retain the necessary personnel on
acceptable terms or at all. See 'Management.'
ABSENCE OF PUBLIC MARKET; DETERMINATION OF OFFERING PRICE; VOLATILITY.
Prior to the Offering, there has been no public trading market for the Company's
Common Stock or Warrants and there can be no assurance that an active trading
market will develop following the Offering or, if developed, will be sustained.
The initial public offering price of the Securities were determined by
negotiations between the Company and the Underwriter and may not necessarily
bear any relationship to the Company's assets, earnings, book value, results of
operations or any other generally accepted criteria of value. There can be no
assurance that the Common Stock and Warrants will trade in the public market at
or above the initial public offering price following the closing of the
Offering. The trading price of the Common Stock and Warrants could be subject to
significant fluctuations in response to variations in quarterly operating
results and other factors and such fluctuations could cause the market price of
the Common Stock and Warrants to fluctuate substantially. In addition, the stock
markets of the United States have from time to time, experienced significant
price and volume fluctuations that are unrelated or disproportionate to the
operating performance of individual companies. Such fluctuations may adversely
affect the price of the Common Stock and Warrants. See 'Underwriting.'
NO COMMITMENT TO PURCHASE SHARES OF COMMON STOCK OR WARRANTS. Under the
terms of this Offering, the Company is offering 900,000 shares of Common Stock
and 900,000 Warrants on a 'best-efforts, all or none' basis during an initial
period of 90 days, which period may be extended for an additional 90 days. No
commitment exists by anyone to purchase any of the shares of Common Stock or
Warrants offered hereby. Consequently, there is no assurance that the Offering
will be sold. Subscribers' funds may be escrowed for as long as 180 days and
then returned without interest in the event the Offering is not sold, in which
case the Offering will be withdrawn. As a result, prospective purchasers of the
shares of Common Stock and Warrants will not have the use of any funds paid
during the subscription period.
LACK OF UNDERWRITING HISTORY. The Underwriter was incorporated in April
1994 and first registered as a broker-dealer in March 1996. Prior to this
Offering, although the Underwriter has participated as a selling group member in
two underwritings, it has not participated as a sole or co-manager in any public
offerings. Prospective purchasers of the Common Stock and Warrants offered
hereby should consider the Underwriter's lack of experience in being a manager
of an underwritten public offering. See 'Underwriting.'
LISTING AND CONTINUED QUOTATION ON THE NASDAQ SMALLCAP MARKET'sm'. The
Company has applied to have the Common Stock and Warrants approved for quotation
on the Nasdaq SmallCap Market'sm' and believes it will meet the initial listing
requirements upon consummation of the Offering, although
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no assurance can be given that the Company will be approved for listing. There
also can be no assurance that, if listed, it will be able to satisfy the
criteria for continued quotation on the Nasdaq SmallCap Market'sm' following the
Offering. Failure to meet the maintenance criteria in the future may result in
the Common Stock and Warrants not being eligible for quotation on the Nasdaq
SmallCap Market'sm' or otherwise. In such event, an investor may find it more
difficult to dispose of, or to obtain accurate quotations as to the market value
of the Common Stock. See 'Description of Securities.'
POSSIBLE ADVERSE EFFECTS OF ISSUANCE OF PREFERRED STOCK. The Company's
Amended and Restated Articles of Incorporation, as of March 28, 1997, authorizes
the issuance of 500,000 shares of Preferred Stock, par value $1.00, with
designations, rights and preferences as determined from time to time by the
Board of Directors ('Preferred Stock'). As a result of the foregoing, the Board
of Directors can issue, without further stockholder approval, Preferred Stock
with dividend, liquidation, conversion, voting or other rights that could
adversely affect the voting power or other rights of the holders of the Common
Stock. The issuance of Preferred Stock could, under certain circumstances,
discourage, delay or prevent a change in control of the Company. In addition,
the issuance of Preferred Stock could dilute the rights of holders of the Common
Stock and the market price of the Common Stock. Although the Company has no
plans to issue any shares of Preferred Stock, there can be no assurance that it
will not issue Preferred Stock at some future date.
IMMEDIATE AND SUBSTANTIAL DILUTION; NO DIVIDENDS ANTICIPATED. Purchasers of
the shares of Common Stock offered hereby will incur immediate and substantial
dilution of the net tangible book value of the Common Stock of $3.67 per share
(or 86%) from the assumed initial public offering price of $4.25 per share. In
addition, an immediate increase in the Company's net tangible book value of
$0.97 per share to the existing shareholders will result upon the consummation
of the Offering. Thus, the net tangible book value per share will be
significantly lower than the price per share paid by the public investors. The
public investors, therefore, will bear most of the risk of loss, while effective
control of the Company will remain in the hands of the present shareholders. The
Company has never paid any dividends on its Common Stock and does not anticipate
the payment of dividends in the foreseeable future. See 'Dividend Policy' and
'Dilution.'
SHARES ELIGIBLE FOR FUTURE SALE; EXERCISE OF REGISTRATION RIGHTS. Upon the
consummation of the Offering, there will be 3,925,000 shares of Common Stock
outstanding, of which 3,025,000 shares of Common Stock are 'restricted
securities' under Rule 144 under the Securities Act of 1933, as amended (the
'Securities Act'). In the future, these restricted shares may be sold only
pursuant to a registration statement under the Securities Act or an applicable
exemption, including pursuant to Rule 144. The Securities and Exchange
Commission ('Commission') has amended Rule 144, effective April 29, 1997,
reducing the holding period before shares subject to Rule 144 become eligible
for sale in the public market. Under the revised Rule 144, a person who has
owned Common Stock for one year may, under certain circumstances, sell within
any three-month period, a number of shares of Common Stock that does not exceed
the greater of 1% of the then outstanding shares of Common Stock or the average
weekly trading volume during the four calendar weeks prior to such sale. In
addition, a person who is not deemed to have been an affiliate of the Company at
any time during the three months preceding a sale, and who has beneficially
owned the restricted securities for the last two years is entitled to sell all
such shares without regard to the volume limitations, current public information
requirements, manner of sale provisions and notice requirements. Sales or the
expectation of sales of a substantial number of shares of Common Stock in the
public market following this Offering could adversely affect the prevailing
market price of the Common Stock. Except as otherwise described herein, the
Company, its officers and directors and shareholders have agreed with the
Underwriter not to directly or indirectly register, issue, offer, sell, offer to
sell, contract to sell, hypothecate, pledge or otherwise dispose of any shares
of Common Stock (or any securities convertible into or exercisable or
exchangeable for shares of Common Stock) for a period of two years from the date
of this Prospectus, without the prior written consent of the Underwriter. The
Company and the Underwriter have agreed to allow Melinda Cantor to sell 150,000
shares of Common Stock twelve months from the close of the Offering. See
'Underwriting' and 'Shares Eligible for Future Sale.'
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The holders of the Underwriter's Warrants have been granted registration
rights with respect to the 180,000 shares issuable upon exercise of the
Underwriter's Warrants. The sale, or availability for sale, of the outstanding
Common Stock underlying the Underwriter's Warrants and the Cantor shares, in
the public market subsequent to the Offering could adversely affect the
prevailing market price of the Common Stock and could impair the Company's
ability to raise additional capital. See 'Description of Capital Stock --
Registration Rights' and 'Shares Eligible for Future Sale.'
NASDAQ MAINTENANCE REQUIREMENTS; PENNY STOCK REGULATION. The trading of the
Company's Securities on NASDAQ is conditioned upon the Company meeting certain
asset, capital surplus and stock price tests. To maintain eligibility on NASDAQ,
the Company is required to maintain total net tangible assets in excess of
$2,000,000, capital and surplus in excess of $1,000,000 and a bid price of $1.00
per share. If the Company fails any of these tests, the Securities may be
delisted from trading on NASDAQ. In the absence of the Common Stock being quoted
on NASDAQ, or the Company's having $2,000,000 in stockholders' equity, trading
in the Common Stock would be covered by Rule 15g-9 promulgated under the
Securities Exchange Act of 1934 (the 'Exchange Act'), for non-NASDAQ and
non-exchange listed securities. Under such rule, broker-dealers who recommend
such securities to persons other than established customers and accredited
investors must make a special written suitability determination for the
purchaser and receive the purchaser's written agreement to a transaction
prior to sale. Securities are exempt from this rule if the market price is at
least $5.00 per share.
The Commission has adopted regulations that generally define a 'penny
stock' to be any equity security that has a market price of less than $5.00 per
share or an exercise price of less than $5.00 per share, subject to certain
exceptions. Such exceptions include an equity security listed on NASDAQ, and an
equity security issued by an issuer that has (i) net tangible assets of at least
$2,000,000, if such issuer has been in continuous operation for three years,
(ii) net tangible assets of at least $5,000,000, if such issuer has been in
continuous operation for less than three years, or (iii) average revenue of at
least $6,000,000 for the preceding three years. Unless an exception is
available, the regulations require the delivery, prior to any transaction
involving a penny stock, of a risk disclosure schedule explaining the penny
stock market and the risks associated therewith.
If the Company's securities were to become subject to the regulations
applicable to penny stocks, the market liquidity for the securities would be
severely affected, limiting the ability of broker-dealers to sell the securities
and the ability of purchasers in this Offering to sell their securities in the
secondary market. There is no assurance that trading in the Company's securities
will not be subject to these or other regulations that would adversely affect
the market for such securities.
POTENTIAL ADVERSE EFFECT OF REDEMPTION OF WARRANTS. The Warrants offered
hereby are redeemable, in whole or in part, at a price of $.10 per Warrant,
commencing twenty-four (24) months after the Closing Date (except with the prior
written consent of the Underwriter permitting redemption twelve (12) months from
the Closing Date), and prior to their expiration; provided that (i) prior notice
of not less than 30 days is given to the Warrantholders; and (ii) the closing
bid price of the Company's Common Stock for the twenty (20) consecutive trading
days immediately prior to the date on which the notice of redemption is given,
shall have exceeded $8.50 per share. Warrantholders shall have exercise rights
until the close of the business day preceding the date fixed for redemption.
Notice of redemption of the Warrants could force the holders to exercise the
Warrants and pay the Exercise Price at a time when it may be disadvantageous for
them to do so, or to sell the Warrants at the current market price when they
might otherwise wish to hold them, or to accept the redemption price, which may
be substantially less than the market value of the Warrants at the time of
redemption. The Company has agreed to use its best efforts to keep the
registration statement current in connection with any proposed exercise of the
Warrants. Further, the Warrants may not be exercised unless the registration
statement pursuant to the Securities Act covering the underlying shares of
Common Stock is current and such shares have been qualified for sale, or there
is an exemption from applicable qualification requirements, under the securities
laws of the state of residence of the holder of the Warrants. Although the
Company does not presently intend to do so, the Company reserves the right to
call the Warrants for redemption whether or not such underlying shares are not,
or cannot be, registered in the applicable states. Such restrictions could have
the effect of preventing certain Warrantholders from liquidating their Warrants.
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Further, in the event the Company does not have a current registration statement
in effect, the Company would be unable to call the Warrants for redemption. See
'Description of Securities -- Warrants.'
CURRENT PROSPECTUS AND STATE BLUE SKY REGISTRATION REQUIRED TO EXERCISE
WARRANTS. Holders of the Warrants will have the right to exercise the Warrants
for the purchase of shares of Common Stock only if a current prospectus relating
to such shares is then in effect and only if the shares are qualified for sale
under the securities laws of the applicable state or states. The Company has
undertaken and intends to file and keep current a prospectus which will permit
the purchase and sale of the Common Stock underlying the Warrants, but there can
be no assurance that the Company will be able to do so. Although the Company
intends to seek to qualify for sale the shares of Common Stock underlying the
Warrants in those states in which the securities are to be offered, no assurance
can be given that such qualification will occur. In addition, purchasers may buy
Warrants in the aftermarket or may move to jurisdictions in which the shares of
Common Stock issuable upon exercise of the Warrants are not so registered or
qualified during the period that the Warrants are exercisable. In such event,
the Company would be unable to issue shares to those persons desiring to
exercise their Warrants unless and until the shares could be registered or
qualified for sale in the jurisdiction in which such purchasers reside, or an
exemption to such qualification exists or is granted in such jurisdiction. The
Warrants may lose or be of no value if a prospectus covering the shares issuable
upon the exercise thereof is not kept current or if such underlying shares are
not, or cannot be, registered in the applicable states. See 'Description of
Securities -- Warrants.'
RELATIONSHIP OF UNDERWRITERS TO TRADING. The Underwriter may act as a
broker or dealer with respect to the purchase or sale of the Common Stock and
the Warrants in the Nasdaq SmallCap Market where each is expected to trade. The
Underwriter also has the right to act as the Company's exclusive agent in
connection with any future solicitation of warrantholders to exercise their
Warrants. Unless granted an exemption by the Commission from Rule 10b-6 under
the Exchange Act, the Underwriter will be prohibited from engaging in any
market-making activities or solicited brokerage activities with regard to the
Company's securities during a period beginning nine business days prior to the
commencement of any such solicitation and ending on the later of the termination
of such solicitation activity or the termination (by waiver or otherwise) of any
right the Underwriter may have to receive a fee for the exercise of the Warrants
following such solicitation. As a result, the Underwriter and soliciting
broker/dealers may be unable to continue to make a market in the Company's
securities during certain periods while the exercise of Warrants is being
solicited. Such a limitation, while in effect, could impair the liquidity and
market price of the Company's securities.
UNDERWRITERS' WARRANTS AND REGISTRATION RIGHTS. In connection with this
Offering, the Company has agreed to sell to the Underwriters, for $10, the
Underwriters' Warrants which entitle the Underwriters to purchase up to 90,000
shares of Common Stock and/or 90,000 Warrants, respectively. The securities
issuable upon exercise of the Underwriters' Warrants are identical to those
offered pursuant to this prospectus. The Underwriters' Warrants are exercisable
at $5.10 and $.12, respectively, for a period of four years commencing one year
from the Effective Date. The exercise of the Underwriters' Warrants and the
Warrants contained in the Underwriters' Warrants may dilute the value of the
shares of Common Stock to be acquired by holders of the Warrants, may adversely
affect the Company's ability to obtain equity capital, and, if the Common Stock
issuable upon the exercise of the Underwriters' Warrants and the Warrants
contained in the Underwriters' Warrants are sold in the public market, may
adversely affect the market price of the Common Stock. The Underwriters have
been granted certain 'piggyback' and demand registration rights for a period of
five years from the Effective Date with respect to the registration under the
Securities Act of the securities directly or indirectly issuable upon exercise
of the Underwriters' Warrants. The exercise of such rights could result in
substantial expense to the Company. See 'Underwriting.'
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Common Stock offered
hereby at an initial public offering price of $4.25 per share, after deduction
of underwriting discounts and commissions, and other Offering expenses including
the Underwriter's non-accountable expense allowance, will be
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approximately $2,978,050. The Company intends to use the net proceeds as
follows: (i) payment of approximately $1,000,000 to Louis R. Capece, Jr.
pursuant to the amended stock purchase and sale agreement for Air Response
South; (ii) approximately $125,000 to pay bridge lenders; (iii) approximately
$489,000 to repay short term notes; (iii) $750,000 to fund costs related to its
expansion strategy; (iv) approximately $614,050 for general corporate purposes,
including working capital.
The foregoing uses of proceeds are estimates only and there may be
significant variations in the uses of proceeds due to, among other things,
changes in the Company's business or financial condition or economic
circumstances. Accordingly, the Company reserves the right to reallocate among
the foregoing uses upon any such change.
The Company anticipates that the proceeds from the Offering, together with
projected cash flow from operations, will be sufficient to fund its operations,
including its proposed expansion, for approximately 12 months. However, there
can be no assurance that events affecting the Company's operations will not
result in the Company depleting its funds before that time. The Company may need
to raise substantial additional funding through public or private financings,
corporate collaborations or other sources. However, there can be no assurance
that additional financings will be available through any of these sources or, if
available, that such financing will be on acceptable terms. See 'Risk Factors --
Need for Additional Financing' and 'Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources.'
Pending application of the net proceeds of the Offering, the Company will
make temporary investments in certificates of deposit, money market accounts
established by major commercial banks or financial institutions, United States
government obligations or high-grade commercial paper.
DIVIDEND POLICY
The Company has never paid cash dividends on its Common Stock and does not
anticipate paying dividends in the foreseeable future. The Company currently
intends to retain future earnings, if any, to finance its expansion strategy.
The payment of future cash dividends by the Company on its Common Stock will be
at the discretion of the Board of Directors and will depend on the Company's
earnings (if any), financial condition, cash flows, capital requirements, and
contractual prohibitions with respect to the payment of dividends and other
considerations as the Board of Directors may consider relevant.
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CAPITALIZATION
The following table sets forth as of December 31, 1996 (i) the 'actual'
capitalization of Proflight; (ii) the 'pro forma' capitalization of the Company
giving effect to (a) its historical capitalization and (b) the Acquisitions and
(iii) the 'pro forma as adjusted' capitalization of the Company giving effect to
the 'pro forma' capitalization and the issuance of the Securities offered hereby
(at an initial public offering price of $4.25 per share at $.10 per Warrant),
after deduction of underwriting discounts and commissions and estimated Offering
expenses payable by the Company and the application of a portion of the net
proceeds therefrom to repay indebtedness.
<TABLE>
<CAPTION>
DECEMBER 31, 1996
----------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
---------- ----------- -----------
<S> <C> <C> <C>
Total current liabilities......................................... $1,555,109 $ 2,967,539 $ 1,603,790
Long-term debt.................................................... 3,963,935 6,042,807 6,042,807
Stockholders' equity
Common Stock -- $.001 par value
Authorized -- 10,000,000 shares
Issued and outstanding Actual -- 3,225,000 shares
Pro forma -- 3,813,236 shares
As adjusted -- 4,413,236 shares................................... 3,225 3,813 4,513(1)(2)
Additional paid-in capital (deficit).............................. (436,098) 2,063,314 5,568,164(1)(2)(3)
Retained earnings (deficit)....................................... (111,005) (111,005) (111,005)
---------- ----------- -----------
Total Stockholders' equity (deficit).............................. (543,878) 1,956,122 5,461,672
---------- ----------- -----------
Total capitalization......................................... $4,975,166 $10,966,468 $13,108,269
---------- ----------- -----------
---------- ----------- -----------
</TABLE>
- ------------
(1) Reflects the issuance of 900,000 shares of Common Stock and 900,000 Warrants
offered hereby; 300,000 shares of Common Stock issued in January 1997 to
certain bridge lenders; 588,236 shares to be issued for the purchase of Air
Response and 25,000 shares of Common Stock issued in March 1997 to certain
bridge lenders.
(2) Reflects the receipt of $2,978,050 in net proceeds from the issuance of
900,000 shares of Common Stock at $4.25 per share of 900,000 Warrants at
$.10 per Warrant, after deduction of underwriting discounts and commissions
and estimated Offering expenses estimated at $936,950.
(3) Reflects $500,000 of additional capital related to the debt forgiveness of
certain bridge loans in May of 1997. See 'Certain Transactions--Transactions
with Principal Shareholders.'
15
<PAGE>
<PAGE>
DILUTION
At December 31, 1996, the net tangible book value of the Company was a
deficit of approximately $(1,393,174), or $(0.39) per share of Common Stock
after giving effect to the Acquisition as if it occurred on such date. Net
tangible book value (deficit) per share is determined by dividing tangible book
value (total tangible assets less total liabilities) by the number of shares of
Common Stock issued and outstanding at that date. After giving effect to (i) the
sale of the 900,000 shares of Common Stock offered hereby (at an initial public
offering price of $4.25 per share) and the application of the net proceeds
therefrom, after deducting underwriting discounts and commissions and Offering
expenses; (ii) the issuance of 588,236 shares of Common Stock to Louis R.
Capece, Jr. in connection with the acquisition of Air Response two years from
the closing of the Offering; (iii) 300,000 shares of Common Stock issued in
January 1997 to certain bridge lenders and (iv) 25,000 shares of Common Stock
issued in March 1997 to certain bridge lenders, the pro forma net tangible book
value of the Company at December 31, 1996 would have been $2,112,376 or $0.58
per share. This represents an immediate increase in net tangible book value of
$0.97 per share to existing shareholders and an immediate dilution of $3.67 per
share to investors purchasing shares of Common Stock in the Offering. The
following table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price................................................ $4.25
Net tangible book value (deficit) per share at December 31, 1996................ $(0.39)
Increase in net tangible book value per share attributable to new investors..... $ 0.97
Pro forma net tangible book value per share after the Offering....................... $0.58
Dilution per share to new investors.................................................. $3.67
</TABLE>
------------------------
The following table summarizes, on a pro forma basis, as of December 31,
1996 the difference between existing shareholders and new investors with respect
to the number and percentage of shares of Common Stock purchased from the
Company, and the total consideration per share paid (at the assumed initial
public offering price of $4.25 per share):
<TABLE>
<CAPTION>
SHARES
PURCHASED(1)(2) TOTAL CONSIDERATION AVERAGE
-------------------- ---------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
--------- ------- --------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing shareholders.................. 3,613,236 80% 2,944,253 43% $0.81
New investors.......................... 900,000 20 3,915,000 57 4.25
------- -------
100.0% 100.0%
------- -------
------- -------
</TABLE>
- ------------
(1) Does not include: (i) 350,000 shares of Common Stock reserved for issuance
under the Option Plan; (ii) 900,000 shares reserved for issuance upon
exercise of the Warrants offered hereby; (iii) 1,100,000 shares reserved for
issuance upon exercise of other outstanding options and warrants; and (iv)
180,000 shares of Common Stock issuable upon exercise of the Underwriter's
Warrants. See 'Management -- Stock Option Plan.' 'Description of Capital
Stock' and 'Underwriting.'
(2) Includes (i) the issuance of 588,236 shares of Common Stock to Louis R.
Capece, Jr. in connection with the acquisition of Air Response two years
from the closing of the Offering; (ii) 300,000 shares of Common Stock issued
in January 1997 to certain bridge lenders and (iii) 25,000 shares of Common
Stock issued in March 1997 to certain bridge lenders.
16
<PAGE>
<PAGE>
SELECTED FINANCIAL DATA
The following table sets forth summary historical financial data of (i)
Proflight for the years ended December 31, 1996 and 1995 and (ii) Air Response
and Air Response South for the seven months ended December 31, 1996 and 1995 and
for the years ended May 31, 1996 and 1995. The historical financial data for the
years ended December 31, 1996 and 1995 and May 31, 1996 and 1995 are derived
from the audited financial statements of Proflight, Air Response and Air
Response South. The financial statements of Proflight have been audited by Grant
Thornton LLP, independent certified public accountants, whose report thereon has
been modified to include an explanatory paragraph which raises substantial doubt
about Proflight's ability to continue as a going concern and are included
elsewhere in this Prospectus. The combined financial statements of Air Response
and Air Response South for the year ended May 31, 1996 have been audited by
Staff Maikels & Ciampino, P.C. and for the year ended May 31, 1995 by Kaufman,
Rossin & Co., each independent certified public accountants, which statements
are included elsewhere in this Prospectus. The summary historical financial data
should be read in conjunction with the financial statements and notes thereto of
Proflight, Air Response and Air Response South and 'Management's Discussion and
Analysis of Financial Condition and Results of Operations' included elsewhere in
this Prospectus. The financial data for Air Response and Air Response South for
the seven months ended December 31, 1996 and 1995 are unaudited, but, in the
opinion of management, reflect all adjustments (consisting only of normal
recurring adjustments) necessary for a fair representation of results for all
interim periods. The operating results for interim periods are not necessarily
indicative of results for the full fiscal year. The following table also sets
forth pro forma financial data of the Company as if the Acquisitions (which will
close simultaneously with the consummation of this Offering) had occurred as of
December 31, 1996 for balance sheet results and as of January 1, 1996 for
operating data. The pro forma financial data was derived from the unaudited pro
forma financial statements appearing elsewhere in this Prospectus. The summary
pro forma financial data should be read in conjunction with the Company's pro
forma financial statements and the notes thereto. The pro forma balance sheet
data as of December 31, 1996 and the pro forma statement of operations for the
year ended December 31, 1996 are unaudited, but, in the opinion of management,
reflect all adjustments (consisting of only normal recurring adjustments and pro
forma adjustments to reflect the Acquisitions) necessary for a fair presentation
of pro forma results of operations. The pro forma operating results are not
necessarily indicative of the Company's future results of operations.
SUMMARY HISTORICAL FINANCIAL DATA
<TABLE>
<CAPTION>
THE COMPANY AIR RESPONSE AND AIR RESPONSE SOUTH
------------------------ ----------------------------------------------------
TWELVE MONTHS ENDED SEVEN MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31, MAY 31,
------------------------ ------------------------ ------------------------
1996 1995 1996 1995 1996 1995
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
OPERATING DATA
Historical:
Net sales..................... $3,906,211 $2,885,535 $4,428,940 $3,656,916 $6,737,095 $4,718,013
Flying operations and
maintenance................. 3,001,507 1,960,671 2,857,035 2,224,169 4,120,546 2,943,853
Promotion and sales........... 255,616 31,909 330,170 274,268 505,805 543,265
General, administrative
expense..................... 650,036 353,969 899,757 892,849 1,571,974 1,024,259
Depreciation and
amortization................ 377,930 276,538 240,615 210,000 366,139 299,951
Profit (loss) from
operation................... (378,878) 262,448 101,363 55,630 172,631 (93,315)
Interest expense.............. (287,188) (150,254) (93,646) (58,624) (100,651) (128,600)
Other income (expense)........ 34 4,915 (120,556) 36,321 (222,292) (40,804)
Income tax benefit............ -- -- -- -- 73,904 150,522
Net profit(loss).............. (666,032) 117,109 (112,839) 33,327 (76,408) (112,197)
Per share data:
Net income (loss)............. $(0.19) $0.03 -- -- -- --
Weighted average number of
shares outstanding.......... 3,525,000 3,525,000 -- -- -- --
</TABLE>
17
<PAGE>
<PAGE>
SUMMARY PRO FORMA FINANCIAL DATA
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
DECEMBER 31, 1996
-------------------
<S> <C>
Pro Forma Operating Data:
Net sales............................................................................. $11,165,330
Flying operations..................................................................... 7,400,129
Promotion and sales................................................................... 836,605
General and administrative expense.................................................... 2,268,328
Depreciation and amortization......................................................... 1,037,169
Total operating expense............................................................... 11,542,231
Operating income (loss)............................................................... (376,901)
Other income (expense)................................................................ (903,942)
Income Tax Benefit.................................................................... 73,904
Net (loss)............................................................................ (1,206,939)
Per share data:
Net (loss)............................................................................ $ (0.33)(4)
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1996
--------------------------------------------
ACTUAL(1) PRO FORMA(2) ADJUSTED(3)(5)
----------- ------------ -------------
<S> <C> <C> <C>
Balance Sheet Data:
Working capital (deficit)................................... $(1,080,311) $(2,091,992) $ 1,386,058
Total assets................................................ 4,975,166 10,966,468 13,108,269
Long term obligations....................................... 3,963,935 6,042,807 6,042,807
Retained earnings (deficit)................................. (111,005) (111,005) (111,005)
Stockholders' equity (deficit).............................. (543,878) 1,956,122 5,461,672
</TABLE>
- ------------
(1) Represents Proflight.
(2) Includes Proflight, Air Response and Air Response South.
(3) The adjusted pro forma data includes adjustments that reflect the effects of
the merger including the sale of 900,000 shares of Common Stock and 900,000
Warrants offered hereby and the application of the net proceeds.
(4) Based on 3,613,236 shares which do not include 900,000 shares of Common
Stock offered hereby.
(5) Reflects $500,000 of additional capital related to the debt forgiveness of
certain bridge loans in May of 1997. See 'Certain Transactions -- with
Principal Shareholders.'
18
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the financial statements and notes thereto appearing elsewhere in this
Prospectus.
OVERVIEW AND PLAN OF OPERATION
The Company was formed in May 1992 under the name Proflight, Inc. and is a
national and international provider of fixed wing air ambulance transport
services for persons who are ill, injured or otherwise incapacitated who need to
be relocated and who may require emergency medical care during flight. The
Company has contracted to acquire Air Response and Air Response South which
Acquisitions will close simultaneously with the closing of the Offering. See
'Certain Transactions -- Acquisition of Air Response and Air Response South.'
The revenues of the Company are primarily derived from service fees for air
medical transport services. The number of transports and rates effect revenues
as well as the source. Greater revenues are derived from third party and direct
patient paid trips as compared to transports arranged by brokers.
The Company's business strategy over the next 24 months is to become a
leading national provider of fixed wing air ambulance services by:
Improving the efficiency of its existing operations by integrating the
operations of Air Response and Air Response South and by providing
additional management expertise, recognizing economies of scale,
introducing sophisticated operating systems and controls, instituting a
centralized dispatching function and providing a stronger, more stable
capital base.
Implementing strategic acquisitions of other air ambulance service
providers. The Company believes that opportunities exist to acquire
additional air ambulance service providers in the future that would
benefit from the efficiency, as well as the capital and management
resources of the Company. The Company regularly evaluates acquisition
possibilities and considers a number of factors in evaluating such
acquisition candidates, including the quality of management and medical
personnel, historical operating results, the demographic characteristics
of service areas, the regulatory environment in which such company
operates and the fee structure and reimbursement levels. In addition, by
combining existing companies, the Company believes it will be able to
deliver fixed wing air ambulance services to insurance companies and other
health care providers at cost effective rates. Except as otherwise
described in this Prospectus, there are no present negotiations,
arrangements or understandings with respect to any potential material
acquisitions.
Increasing its market share and expanding its operations by contracting
with insurers and HMOs seeking an air ambulance provider with national and
international capabilities and by appealing to individual consumers
through a prepaid service package. No assurances can be given that the
Company will be able to successfully negotiate additional contracts with
such parties on favorable terms, if at all, or otherwise expand its
operations.
The Company is continuing to expand services through the purchase of
additional aircraft resulting in increased revenues, more efficient use of
current aircraft, proportionately lower operating costs and the acquisition of
Air Response and Air Response South. Overall, the Company believes this should
provide higher gross margins. This combination will allow all three companies to
operate more efficiently through elimination of certain duplicative general and
administrative costs, purchasing discounts on fuel, and more efficient use of
each aircraft. The Company believes that these actions will provide growth and
improve the Company's operating and financial condition, providing the
opportunity to continue as a going concern. See ' -- Effects of Combination.'
19
<PAGE>
<PAGE>
RESULTS OF OPERATIONS
PROFLIGHT MEDICAL RESPONSE, INC.
The following sets forth, in tabular form, a comparison of the results of
operations for Proflight, Inc. for the years ended December 31, 1996 and 1995.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1996 1995
---------- ------------
<S> <C> <C>
Sales.................................................. 100.0% 100.0%
Flying operations and maintenance...................... 76.8% 67.9%
Promotion and sales.................................... 6.5% 1.1%
General and administrative expenses.................... 16.6% 12.2%
Depreciation and amortization.......................... 9.7% 9.5%
Interest expenses...................................... 7.4% 5.2%
Net income (loss)...................................... (17.0%) 4.1%
</TABLE>
THE YEARS ENDED DECEMBER 31, 1996 AND 1995
Net Sales. Net sales increased by $1,020,676 to $3,906,211 for the year
ended December 31, 1996 as compared to $2,885,535 for the year ended December
31, 1995. This increase was attributable to the addition of an aircraft which
allowed the Company to provide transport services to customers previously turned
down. The Company also provided more non-medical charter flights than in the
previous year. In addition, the Company increased its marketing efforts in 1996.
Flying Operations and Maintenance: Flying operations and maintenance
increased $1,040,836 to $3,001,507 for the year ended December 31, 1996 as
compared to $1,960,671 for the year ended December 31, 1995. This increase was
primarily due to increased fuel, parts and other expenses related to higher
sales.
Promotion and Sales: Promotion and sales increased $223,707 to $255,616 for
the year ended December 31, 1996 as compared to $31,909 for the year ended
December 31, 1995. This increase was due to increased marketing expenditures
including direct mailings, attending medical conventions, and travel to
potential customers.
General and Administrative Expenses: General and administrative expenses
increased by $296,067 to $650,036 for the year ended December 31, 1996 as
compared to $353,969 for the year ended December 31, 1995. The increase was
primarily due to hiring additional employees and training them. In addition, the
Company had one time expenses consisting of employee severance pay and increased
costs in connection with the acquisition of Air Response.
Depreciation and Amortization. Depreciation and amortization increased by
$101,392 to $377,930 for the year ended December 31, 1996 as compared to
$276,538 for the year ended December 31, 1995. This increase was primarily due
to the purchase of a more expensive aircraft and an increase in the number of
hours flown.
Interest Expense. Interest expense was $287,188 for the year ended December
31, 1996 as compared to $150,254 for the year ended December 31, 1995. This
increase in interest expense was primarily due to the purchase of a more
expensive aircraft and bridge financing.
Net Income (Loss). Net income (loss) for the year ended December 31, 1996
was $(666,032) as compared to $117,109 for the year ended December 31, 1995. The
loss was due to the increase in costs and expenses described above.
20
<PAGE>
<PAGE>
AIR RESPONSE AND AIR RESPONSE SOUTH
RESULTS OF OPERATIONS
The following sets forth, in tabular form, a comparison of the results of
operations for Air Response and Air Response South for the seven months ended
December 31, 1996 and 1995 and the years ended May 31, 1996 and 1995.
<TABLE>
<CAPTION>
SEVEN MONTHS
ENDED DECEMBER 31, YEAR ENDED MAY 31,
---------------------- ---------------------
1996 1995 1996 1995
--------- --------- ---------- -------
<S> <C> <C> <C> <C>
Sales.................................................. 100.0% 100.0% 100.0% 100.0%
Flying operations and maintenance...................... 61.1% 60.8% 61.1% 62.4%
Promotion and sales.................................... 7.4% 7.5% 7.5% 11.5%
General and administrative expenses.................... 23.7% 24.4% 23.3% 21.7%
Depreciation and amortization.......................... 5.4% 5.7% 5.4% 6.4%
Interest expenses...................................... 2.1% 1.6% 1.5% 2.7%
Other income (expense)................................. (2.7%) 1.0% (3.3%) (0.9%)
Net income (loss)...................................... (2.5%) 0.9% (1.1%) (2.4%)
</TABLE>
SEVEN MONTHS ENDED DECEMBER 31, 1996 AND 1995
Net Sales. Net sales increased by $772,024 to $4,428,940 for the seven
months ended December 31, 1996 as compared to $3,656,916 for the seven months
ended December 31, 1995. This increase was attributable to increased marketing
efforts and an increase in demand for air ambulance services.
Flying Operations and Maintenance. Flying operations and maintenance
increased $632,866 to $2,857,035 for the seven months ended December 31, 1996 as
compared to $2,224,169 for the seven months ended December 31, 1995. This
increase was primarily due to increased sales. In addition, fuel costs and pilot
and nurses salaries increased, and the Company had increased expenses due to
engine overhauls and the lease of a new aircraft.
Promotion and Sales: Promotion and sales increased $55,902 to $330,170 for
the seven months ended December 31, 1996 as compared to $274,268 for the seven
months ended December 31, 1995. The increase was primarily due to increased
marketing which included more direct mailings and yellow page advertising. As a
percentage, promotion and sales expense remained relatively constant.
General and Administrative Expenses. General and administrative expenses
increased by $6,908 to $899,757 for the seven months ended December 31, 1996 as
compared to $892,849 for the seven months ended December 31, 1995.
Depreciation and Amortization. Depreciation and amortization increased by
$30,615 to $240,615 for the seven months ended December 31, 1996 as compared to
$210,000 for the seven months ended December 31, 1995. This increase was
primarily due to additional equipment asset base.
Interest Expense. Interest expense was $93,646 for the seven months ended
December 31, 1996 as compared to $58,624 for the seven months ended December 31,
1995. The increase in interest expense was primarily due to the refinancing of
aircraft.
Other Income (Expense). Other income (expense) was ($120,556) for the seven
months ended December 31, 1996 compared to $36,321 for the seven months ended
December 31, 1995. This increase in expense was due to a charge for asset
abandonment.
Net Income(Loss). Net loss for the seven months ended December 31, 1996 was
$112,839 as compared to a net income of $33,327 for the seven months ended
December 31, 1995. The loss was due to the increase in costs and expenses
described above.
THE YEARS ENDED MAY 31, 1996 AND 1995
Net Sales. Net sales increased by $2,019,082 to $6,737,095 for the year
ended May 31, 1996 as compared to $4,718,013 for the year ended May 31, 1995.
This increase was attributable to higher sales due to increased marketing
efforts and a greater demand for air ambulance services.
Flying Operations and Maintenance: Flying operations and maintenance
increased $1,176,693 to $4,120,546 for the year ended May 31, 1996 as compared
to $2,943,853 for the year ended May 31, 1995. This increase was primarily due
to increased sales. In addition, fuel costs and pilot and nurses salaries
21
<PAGE>
<PAGE>
increased along with direct maintenance aircraft lease costs and sub-contractor
fees. However, as a percentage of sales, flying operations and maintenance
decreased by 1.3%.
Promotion and Sales: Promotion and sales decreased $37,460 to $505,805 as
compared to $543,265 for the year ended May 31, 1995. This decrease was mainly
to savings on yellow page advertising by eliminating or reducing ads that were
not productive.
General and Administrative Expenses: General and administrative expenses
increased by $547,715 to $1,571,974 for the year ended May 31, 1996 as compared
to $1,024,259 for the year ended May 31, 1995. The increase was primarily due to
increased sales and the hiring of additional staff.
Depreciation and Amortization. Depreciation and amortization increased by
$66,188 to $366,139 for the year ended May 31, 1996 as compared to $299,951 for
the year ended May 31, 1995. This increase was attributable to additional
equipment asset base. As a percentage of sales these increases were more than
offset by increased volume.
Interest Expense. Interest expense was $100,651 for the year ended May 31,
1996 as compared to $128,600 for the year ended May 31, 1995. The decrease in
interest expense was primarily due to interest on more favorable rates on
certain notes.
Other Income (Expense). Other expense was ($222,292) for the year ended May
31, 1996 as compared to ($40,804) for the year ended May 31, 1995. This increase
was primarily due to the write off of a $201,892 receivable from an affiliated
company.
Net Loss. Net loss for the year ended May 31, 1996 was $76,408 as compared
to a net loss of $112,197 for the year ended May 31, 1995. This decrease was a
result of the factors described above.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1996, Proflight had a cash overdraft of $(19,910) as
compared to cash of $1,684 at December 31, 1995. As of December 31, 1996 and
1995, Proflight had a working capital deficiency of $1,080,311 and $157,341,
respectively. This deficiency increase was the result of increased operating
losses and certain long term obligations becoming current. As of December 31,
1996 and 1995, Air Response and Air Response South had cash and cash equivalents
of $292,297 and $75,193, respectively. As of December 31, 1996 and 1995, Air
Response and Air Response South had a working capital deficiency of $211,681 and
$753,111, respectively. This deficiency was the result of increased short term
debt. Historically, Proflight has financed its working capital requirements to
date from internally generated cash flow, borrowings, issuance of its Common
Stock and through private bridge financing. Air Response and Air Response South
have financed its working capital requirements by internally generated cash flow
and factoring accounts receivable.
As of December 31, 1996, the Company had total current liabilities of
$1,555,109 of which $1,176,000 will be paid out of the proceeds. The balance of
$379,109 will be paid out of operations.
In October 1996, the Company loaned $200,000 to Air Response. The note
bears interest at the rate of 10% per annum and is payable in two installments
of $100,000 plus accrued interest on May 14, 1998 and May 14, 2000. See 'Certain
Transactions -- Loan to Air Response.'
In October 1996, Proflight, in a private placement, sold an aggregate of
$350,000 principal amount notes bearing interest at the rate of 10% per annum
and in connection therewith issued 700,000 shares of Common Stock. In May 1997,
the subscribers in the private placement released and discharged the Company
from any and all obligations arising out of the promissory notes and agreed to
cancel such notes.
In January 1997, Proflight, in a private placement, sold an aggregate of
$150,000 principal amount notes bearing interest at the rate of 10% per annum
and in connection therewith issued 300,000 shares of Common Stock. In May 1997,
the subscribers in the private placement released and discharged the Company
from any and all obligations arising out of the promissory notes and agreed to
cancel such notes.
In March 1997, Proflight, in a private placement, sold an aggregate of
$125,000 principal amount notes bearing interest at the rate of 10% per annum
and in connection therewith issued 25,000 shares of Common Stock.
The Company anticipates that the net proceeds from the Offering, together
with cash flow from operations should be sufficient to fund the Company's
operations, including its proposed expansion, for approximately 12 months.
However, there can be no assurance that events affecting the Company's
22
<PAGE>
<PAGE>
operations will not result in the Company depleting its funds before that time.
The Company may be required to raise substantial additional funds to continue to
fund operating expenses or its expansion strategy. There can be no assurance
that the Company will be able to obtain such additional financing or that such
financing, if available, will be on acceptable terms. See 'Risk Factors -- Need
for Additional Financing' and 'Use of Proceeds.'
EFFECTS OF COMBINATION
The Company believes that operating efficiencies will be achieved through
integration of the operations. The Company anticipates cost savings after the
combination in the areas of fuel, parts, marketing and advertising and
personnel. The Company has obtained preliminary quotes from aviation fuel and
part suppliers which will provide the Company with fuel and part cost
reductions. Fuel reductions are available because of the anticipated increase in
the volume of aviation fuel to be purchased as well as an increase in the number
of fueling sites needed and part reductions are available because the Company
plans to purchase larger quantities at one time. The Company believes that it
will realize cost savings in marketing and advertising expenses by eliminating
duplicated efforts. The Company also believes cost savings will also be realized
by the elimination of overstaffing and duplicative positions which will arise
through combination and the closing of the Company's facilities in New York and
Florida. For example, the Company believes cost savings will be realized in
areas such as accounts receivable and bookkeeping, which will be centralized.
The Company believes that effective aircraft and crew deployment will be a
significant factor in reducing operational costs. The Company intends to enhance
its computer system which will detail the ready status and location positions of
its aircraft and crews. The computer system will be able to analyze data on
demographics, usage frequency and similar factors to help determine optimal
fleet deployment.
The Company will begin to incur increased expenses not reflected in the
Company's historical financial statements, including increased salaries for
senior management and key employees as well as other costs related to the
establishment of its corporate and administrative infrastructure, such as lease
costs, accounting and legal costs.
BUSINESS
THE COMPANY
The Company is a national and international provider of fixed wing air
ambulance transport services for persons who are ill, injured or otherwise
incapacitated who need to be relocated and who may require emergency medical
care during flight. The Company currently operates from facilities located in
Colorado, New York and Florida and upon consummation of the Offering plans to
consolidate its operations into its Colorado facilities. The Company provides
its services throughout the United States, Canada, Europe, Mexico, Central
America, South America, Bermuda and the Mediterranean. In addition, the Company,
when operating at full capacity, has subcontracted its services by brokering its
air ambulance trips to other air transport providers. For the year ended
December 31, 1996, the Company, including Air Response and Air Response South,
had pro forma net sales of approximately $11.2 million.
As of the date hereof the Company has an air ambulance fleet of 10 fixed
winged aircraft. The Company provides transport services in connection with the
relocation of patients requiring specialized medical procedures such as organ
transplants, cancer treatment, specialized cardiac surgery, burn care, stroke
care and advanced head and spinal cord surgery and rehabilitation to hospitals
recognized as national centers of excellence in these fields, for the
repatriation of patients who are injured or become ill away from home and in
connection with the transportation of non-ambulatory long-term care patients who
need to be relocated. The flights operated are on a non-emergency basis and are
generally long distance in nature. Emergency flights are usually contracted to
helicopters and are generally short distances. The Company's customers include
individual patients, managed care companies, hospitals, government agencies,
national health insurance companies, health maintenance organizations and air
ambulance brokers.
The Company believes that the need for non-emergency ambulance transport
services, will increase as pressure on the health insurance industry to reduce
costs increases. The Company believes that it can capitalize on this market. The
Company believes that the fixed wing segment of the medical air
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transport industry will grow as hospital consolidation produces regional health
networks responsible for patients spread over a greater geographic area. The
Company also believes that relocating patients with specialized needs to
hospitals recognized as national centers of excellence and which have pricing
agreements with insurers and HMOs will increase as a way to provide high
quality, cost effective health care. The fixed wing air ambulance market is
currently served by a number of small, regional companies lacking a national
presence and the ability to serve an insurance company or HMO on a national
basis. The Company believes that through the acquisitions of Air Response and
Air Response South (the 'Acquisitions') and by implementing its business
strategy, it will begin to establish a national presence while continuing to
ensure that patients receive the highest quality care.
The Company's senior management has extensive experience in the air
ambulance transport services business. Kevin L. Burkhardt, the Company's Chief
Executive Officer and President, has over 10 years experience in the air
ambulance industry and over 20 years experience in the aviation industry,
including captain, flight instructor and corporate pilot. Jane S. Burkhardt, the
Company's Secretary and medical and legal coordinator, received her B.S. degree
in nursing in 1981 from the University of Wisconsin and her JD degree in law in
1990 from St. Louis University. Mrs. Burkhardt has over 14 years experience in
the nursing industry and was a registered nurse and risk manager for
Presbyterian/St. Lukes Medical Center. Donald Jones will, upon consummation of
the Offering, serve as the Company's Vice President of Sales and a Director of
the Company. Mr. Jones has over 13 years exerience in the air ambulance
industry, including flight coordinator, and director of marketing and sales.
David Cohen, the Company's Chief Financial Officer and Treasurer, has over 30
years of management and financial experience. Mr. Cohen was the chief financial
officer of Air Resources Corp., a public company which manufacturers adhesives
and held various senior management positions for two aircraft sales
corporations.
In April 1997, the Company entered into an Amended Agreement and Plan of
Reorganization with Air Response and Louis R. Capece, Jr., which agreement was
amended in May 1997, pursuant to which the Company agreed to acquire at the
closing of the Offering, subject to the terms and conditions contained therein,
all of the outstanding capital stock of Air Response in exchange for 588,236
shares of Common Stock of the Company to be issued two years from the closing of
the Offering. If the Company completes a second public offering, Mr. Capece has
the option to put such number of shares of Common Stock at the then current
market value, equal to 20% of the net proceeds of such offering to the Company,
not to exceed $1,000,000. The Company simultaneously entered into an Amended
Stock Purchase and Sale Agreement with Air Response South and Louis R. Capece,
Jr. pursuant to which the Company agreed to acquire at the closing of the
Offering, subject to the terms and conditions contained therein, all of the
outstanding capital stock of Air Response South for $2,000,000 of which
$1,000,000 is payable upon closing of the Offering with the balance due two
years from such date.
BUSINESS STRATEGY
The Companies business strategy over the next 24 months is to become a
leading national provider of fixed wing air ambulance services by:
Improving the efficiency of its existing operations by integrating the
operations of Air Response and Air Response South and by providing
additional management expertise, recognizing economies of scale,
introducing sophisticated operating systems and controls, instituting a
centralized dispatching function and providing a stronger, more stable
capital base.
Implementing strategic acquisitions of other air ambulance service
providers. The Company believes that opportunities exist to acquire
additional air ambulance service providers in the future that would
benefit from the efficiency, as well as the capital and management
resources of the Company. The Company regularly evaluates acquisition
possibilities and considers a number of factors in evaluating such
acquisition candidates, including the quality of management and medical
personnel, historical operating results, the demographic characteristics
of service areas, the regulatory environment in which such company
operates and the fee structure and reimbursement levels. In addition, by
combining existing companies, the Company believes it will be able to
deliver fixed wing air ambulance services to insurance companies and other
health care providers at cost effective rates. Except as otherwise
described in this Prospectus, there are no
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present negotiations, arrangements or understandings with respect to any
potential material acquisitions.
Increasing its market share and expanding its operations by contracting
with insurers and HMOs seeking an air ambulance provider with national and
international capabilities and by appealing to individual consumers
through a prepaid service package. No assurances can be given that the
Company will be able to successfully negotiate additional contracts with
such parties on favorable terms, if at all, or otherwise expand its
operations.
MEDICAL TRANSPORT SERVICES
The Company provides fixed wing air ambulance transport services for
individual patients, HMOs, insurance companies and individual hospitals and
other providers of medical care. If necessary the Company provides 'bed to bed'
service, arranging for ground ambulance transportation, specialized medical care
during transport, overnight accommodations, and any other incidentals necessary
to a successful transport. The Company is able to provide air transport services
at any of the three recognized levels of medical care, Basic Life Support
(patients who may need CPR), Advanced Life Support (patients who need medication
and respiratory monitoring) and Critical Care (patients who are severely ill or
injured).
The level of treatment provided to a patient during transportation is
dependent upon the patient's condition. Basic Life Support is mostly
preventative in nature. It is appropriate for patients needing minimal external
life support, but in need of monitoring or potential care during flight.
Aircraft involved in the transport of patients requiring Basic Life Support must
have both the equipment and personnel on board capable of reacting to a medical
emergency.
The Company provides air transport for patients needing Advanced Life
Support services. Aircraft suited to transporting these patients must have all
personnel and equipment necessary to provide Basic Life Support functions as
well as the capability to perform cardiac defibrillation, control dysrhythmias,
administer drugs and establish and maintain respiratory airways. In addition,
medical personnel on board the aircraft must be capable of providing care for
the condition causing the need for the transport. Patients requiring Advanced
Life Support care may typically be suffering from trauma, burns, or cardiac
failure, as well as a variety of other conditions.
Finally, the Company provides air transport services to patients who are
severely ill or injured in need of Critical Care, the highest level of care. To
properly provide Critical Care services, highly and specifically trained
physicians and flight nurses must be part of the on board aircraft crew. It is
important that these medical personnel have specialized training to enable them
to perform services in an aeromedical environment. The Company has the required
personnel and equipment to provide these high level medical services.
The Company employs full-time registered nurses that accompany patients on
all medical flights. The nurses are given air ambulance training when they are
hired and on-going training every six months. In addition, the Company can
supply other medical professionals including medical doctors, respiratory
therapists and other medical personnel, if required by the patient.
The Company charges for its services on a retail and wholesale basis.
Flights are charged by the hour with additional costs for medical and
international fees. Cost per flight hour range from approximately $500 for
piston aircraft to $1500 for jet aircraft. Generally, high volume users like air
ambulance brokers and insurance companies receive up to a 20% discount.
Catering, ground medical, and other services are added to the basic charges.
MEDICAL PERSONNEL AND QUALITY ASSURANCE
The Company believes that hiring and maintaining highly qualified
personnel, including physicians and nurses is essential to its future success.
Although the Company has not had a problem attracting such persons to date, the
loss of these persons or the inability to attract and retain sufficient numbers
of qualified personnel could have a material adverse effect on the Company's
business, financial condition and results of operations.
The medical care provided during transports is provided pursuant to
established medical treatment protocols which were established based upon the
professional advice and direction of the Company's
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medical directors. Proflight, Air Response and Air Response South each has its
own medical director. Initially, the Company will retain the medical directors
of each Company. However, these positions may be consolidated where legally and
operationally practical. Any medical treatment beyond that contained in the
treatment protocols requires an order from the patient's attending physician.
Physician orders are submitted to the Company with all case documentation, prior
to delivery of the patient to the Company for transport. Physician orders are
then reviewed by the Company's medical director.
DISPATCHING
The Company intends to implement a centralized dispatching system for the
air ambulance operations. The Company plans to purchase a dispatch program
called 'Omnis 7' which is designed to schedule transports as well as keep track
of those in progress. The program features a visual mapped display of the
location of the aircraft which can help dispatchers select the aircraft in the
best proximity for a future flight. In addition, the program has an extensive
database with airport, hotel, and fueling information. An additional module can
be added that allows the aircraft's maintenance and pilot data to be stored and
analyzed. The cost of the entire program is approximately $25,000. Computer
hardware for the dispatch system will cost about $15,000. When implemented, this
system will allow the Company to dispatch aircraft from the most advantageous of
its locations and enhance the Company's ability to avoid one way trips with
empty return flights. By ensuring that the Company's aircraft are efficiently
used, the dispatching system is expected to reduce the Company's cost per
transport.
The Company plans to have a dispatch center comprising of 3 full-time
dispatch personnel that work in shifts 24 hours a day. They will be supported by
sales personnel that price the trips to the customers.
MARKETING
Presently, the Company relies on advertising in national telephone
directories and direct mail to attract customers. The Company will enhance its
current marketing strategy by hiring, under a long term employment contract, Don
Jones, an air ambulance marketing specialist. Mr. Jones has an extensive
customer list of hospitals, insurance companies, and other users of air medical
transport. Mr. Jones will implement a sales strategy using the companies
existing sales and marketing staff.
The Company believes that the air ambulance transport market may be broken
down into two distinct market segments, the 'directed' market and the
'independent' market. The directed market segment consists of accounts that send
all or most of their ambulance service needs to a single designated service
provider, whether by contract or practice. These accounts include insurance
companies, HMOs, other managed care providers and hospitals. The Company intends
to market this segment both through the use of personal contacts and media
advertising, which will include direct mail, advertising in national telephone
directories, advertising in trade publication, advertising on the internet and
participation in trade shows.
The independent market consists of transport requests originating from
individual patients and referral sources such as individual physicians. The
Company's marketing campaign addresses this segment of the market by local
advertising in telephone directories, advertising on the internet, and direct
mail campaigns.
BILLING AND COLLECTION
Since the Company's air ambulance services are on a non-emergency basis,
the Company is not required to transport patients without regard to a patient's
insurance coverage or ability to pay. The Company ensures that a prospective
patient is able to pay the Company's fees, either through appropriate insurance
coverage or other resources and frequently is paid in advance for its services.
Consequently, the Company's provisions for uncompensated care is generally lower
than it would be if the Company provided emergency air ambulance transportation.
On a consolidated basis for the year ended December 31, 1996, the Company
derived approximately 9% of its net revenue directly from private insurers,
including prepaid health plans and other non-government sources, 3% from
governmental payors and 88% directly from patients and private sources.
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INSURANCE
The Company's air ambulance operations involve the risks of potential
liability against the Company in the event of, among other things, accidents
involving the Company's airplanes and medical malpractice. The Company maintains
aircraft insurance with a maximum liability per occurrence of up to $20,000,000
along with hull coverage (similar to auto collision insurance) for the value of
the aircraft. The annual premiums cost approximately $15,000 per aircraft and
$7,000 per piston aircraft annually. In addition, the Company carries medical
liability insurance in the amount of $1,000,000 per claim and $3,000,000 in the
aggregate per incident with an annual premium of approximately $19,000. Although
the Company currently maintains insurance coverage which it believes is
adequate, there can be no assurance that the coverage limits of its insurance
are adequate or that the Company will be able to continue to obtain such
insurance in the future or that the Company will be able to continue to obtain
such insurance rates which will not negatively impact the Company's earnings.
The inability of the Company to maintain adequate liability insurance could have
a material adverse effect on its business, financial condition or results of
operations.
COMPETITION
The air ambulance service industry is a highly competitive and highly
fragmented industry. The Company competes with other fixed wing air ambulance
companies which operate their own fleets of airplanes. The Company believes each
of these companies are small with a market share of less than 5%. The Company
also competes with brokers who do not own their own fleets but act as middlemen
who market air ambulance services by generally auctioning the service to the
lowest bidder. The Company believes that brokers control a large percentage of
the air medical transport business and keep prices in the industry very low. The
Company believes that air ambulance service providers compete primarily on the
basis of quality of service, performance and prices. The Company believes its
one-way pricing structure allows the Company to be competitive in the industry.
In addition to present competition, other companies with significantly
greater economic resources than the Company including potential customers of the
Company such as insurance companies, HMOs and health care facilities not
currently providing air ambulance services, may enter the air ambulance service
business. Entry into such business by such entities could adversely affect the
business, financial condition or results of operations of the Company.
GOVERNMENT REGULATION
The Company is subject to governmental regulation at the federal and state
levels. At the federal level, the Company is subject to regulation by the
Federal Aviation Administration ('FAA') and the Occupational Safety and Health
Administration ('OSHA'). The FAA regulations are primarily related to flight
safety issues, and govern flight operating procedures, aircraft and equipment
standards, maintenance and inspections, flight crew standards, training and
limitations, weather requirements and record keeping requirements. The OSHA
regulations are primarily designed to protect the employees of the Company.
Certain of the states in which the Company operates regulate various
aspects of its business. The Company's business is subject to state requirements
including, business licenses, training and certification of medical personnel,
the scope of services that may be provided by medical personnel, staffing
requirements, medical control and procedures.
Applicable federal and state laws and regulations are subject to change.
Any changes could adversely affect the Company's operations as well as the air
ambulance business in general. The Company believes it is in substantial
compliance with all regulatory requirements applicable to its business. The
failure to be in compliance with any applicable governmental regulations could
adversely affect the business, financial condition or results of operations of
the Company.
EMPLOYEES
As of the date hereof, the Company employed 34 full-time employees and 5
part-time employees, of whom 14 are employed as flight crew, 8 are employed as
medical personnel, 6 are employed as mechanics, 3 are employed as dispatchers, 3
are employed in sales and 5 are employed in general or administrative positions.
The Company believes that the success of its business will depend, in part, on
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its ability to attract and retain highly qualified personnel. The Company's
employees are not a party to any collective bargaining agreements. The Company
believes that it has good relations with its employees.
LEGAL PROCEEDINGS
In March 1997, the Company and the Company's President were named in a
lawsuit Susan Fuller v. Proflight, Inc., Kevin Burkhardt, Andrew Hiestand and
James Fuller, Arapahoe County District Court, Colorado which alleges that the
plaintiff's former husband merged a business into the Company to conceal and
otherwise preclude plaintiff from receiving plaintiff's share of her former
husband's interest in the Company. The amount sought is not determinable from
the complaint. The lawsuit is in its early stages and the Company is unable to
predict the outcome of this matter and no provision has been provided for in the
financial statements. In April 1997, the Company filed a motion to dismiss as is
the alternative for summary judgement. The Company, through its counsel, intends
to vigorously defend against this action.
PROPERTIES
The Company's executive offices and airplane hangar are located in
approximately 2300 square feet of office space and 12,000 square feet of hangar
space at Arapahoe County Airport, 12420 East Control Tower Road, Englewood,
Colorado 80112. The Company's lease expired on March 31, 1997. The Company
entered into a two month lease at a rental of approximately $5,130 per month.
The Company has entered into a seven year lease agreement for approximately
9,364 square feet of office space at Arapahoe County Airport at 7211 South
Peoria Street, Suite 200, Englewood, Colorado 80112. The lease commences ten
days following the date of issuance of a Certificate of Occupancy for the
Premises which space shall be used as the Company's executive offices. The lease
is at a rental of approximately $11,700 per month. Pursuant to an oral agreement
the Company will continue to occupy a portion of its current hanger space for
aircraft maintenance at a monthly rental rate of approximately $2,000 per month.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
directors and executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
- -------------------------------------------------------- --- ------------------------------------
<S> <C> <C>
Kevin L. Burkhardt...................................... 38 Chief Executive Officer, President,
Director
Jane S. Burkhardt....................................... 39 Secretary, Director
David Cohen............................................. 54 Chief Financial Officer, Treasurer
Donald Jones............................................ 37 Vice President of Sales, Director
Charles W. Bartholomew.................................. 61 Director
Steven B. Myers......................................... 37 Director
Arthur G. Rosenberg..................................... 59 Director
Louis R. Capece, Jr..................................... 49 Director
</TABLE>
The business experience of each of the directors and executive officers of
the Company for at least the last five years is as follows:
Kevin L. Burkhardt has served as Chief Executive Officer, President and a
Director of Proflight since its inception in May 1992. From April 1991 to March
1992, Mr. Burkhardt was a learjet captain for HPH Aviation, a learjet charter
corporation. From July 1990 to April 1991, Mr. Burkhardt was a learjet captain
and corporate pilot for Great Plains Resources, a company engaged in the oil
industry. From February 1989 to April 1990, Mr. Burkhardt was a learjet captain
for PC Air, a learjet charter corporation. From January 1987 to February 1989,
Mr. Burkhardt was a learjet captain for American Jet, an air ambulance
corporation. Kevin L. Burkhardt and Jane S. Burkhardt are husband and wife.
Jane S. Burkhardt has served as Secretary and a Director of Proflight since
its inception in May 1992 and is responsible for establishing all medical
policies and procedures, establishing required medical equipment, establishing
risk management of medical operations and liaison between medical director and
medical staff. From December 1989 to July 1994, Mrs. Burkhardt was a RN and then
a risk manager for Presbyterian/St. Lukes Medical Center. From June 1989 to July
1991, Mrs. Burkhardt was an associate attorney at Wood, Ris & Hames. Kevin L.
Burkhardt and Jane S. Burkhardt are husband and wife.
David Cohen has served as Chief Financial Officer and Treasurer of
Proflight since August 1993. From January 1990 to June 1993, Mr. Cohen was the
chief financial officer of Air Resources Corp., a manufacturer of adhesives.
From January 1982 to January 1990, Mr. Cohen was the chief executive officer of
Aim Aircraft, Inc., an aircraft sales corporation and from 1979 to 1982, Mr.
Cohen was the sales manager for Aim Aircraft. From 1975 to 1978, Mr. Cohen was
the president of Basin Aviation, an aircraft sales, charter and flight training
corporation. Mr. Cohen is the author of a book entitled FBO (fixed based
operations) Management as well as the author of an aircraft brokering manual.
Donald Jones will, upon consummation of the Offering, serve as the
Company's Vice President of Sales and a Director. From August 1992 to the
present, Mr. Jones has been the director of sales and marketing and the flight
coordinator for Air Response and Air Response South. From August 1984 to August
1992, Mr. Jones held various positions at Air Ambulance Network, an air
ambulance brokerage company, including director of sales and flight coordination
and director of marketing.
Charles W. Bartholomew has served as a Director of Proflight since November
1993. From September 1988 to September 1994, Mr. Bartholomew was the program
manager for CTA Incorporated, a company which was an aerospace and information
systems contractor to the United States government. Mr. Bartholomew was
responsible for several information system engineering contracts with the United
States Air Force and directed approximately 30 engineering professionals.
Steven B. Myers has served as a Director of Proflight since February 1996.
Since 1993, Mr. Myers has been the Company's director of marketing and
contracting. From 1980 to 1993, Mr. Myers was engaged in real estate investing
and property management.
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Arthur G. Rosenberg has served as a Director of Proflight since January
1997. Since 1986, Mr. Rosenberg has served as vice president of acquisitions for
The Associated Companies, a real estate development company. Mr. Rosenberg is a
practicing attorney admitted to the New York State Bar in 1962. For five years,
Mr. Rosenberg was general counsel to ITT Levitt & Sons, Inc., an international
home builder. Mr. Rosenberg is also a director of Mike's Original, Inc. and
EcoTyre Technologies, Inc. which are publicly traded companies.
Louis R. Capece, Jr. will, upon consummation of the Offering, become a
director of the Company and a consultant. Since 1986 and 1993, Mr. Capece has
served as president of Air Response and Air Response South, respectively. Since
1982 and 1993, Mr. Capece has served as president of Response Medical Transport
Service, Inc. and Response Aviation, Inc., respectively. Response Medical
Transport Service, Inc. provides ground ambulance transportation services.
Response Aviation, Inc. provides airport services.
All directors hold office until the next annual meeting of shareholders or
until their successors are elected and qualified. Officers are appointed by the
Board of Directors and serve at the discretion of the Board. All of the
executive officers of the Company have employment agreements with the Company.
See ' -- Employment Agreements.'
EXECUTIVE COMPENSATION
The Company did not pay any compensation exceeding $100,000 to its
executive officers for the year ended December 31, 1996. Kevin L. Burkhardt, the
Company's President and Chief Executive Officer received approximately $71,000
during this period. See ' -- Employment Agreements.'
EMPLOYMENT AGREEMENTS
In March 1997, the Company entered into an amended employment agreement
with Donald Jones to serve as the Company's Vice President of Sales. The
employment agreement is for a six-year term effective upon consummation of the
Offering and is subject to successive automatic renewal periods of one year
unless earlier terminated. Mr. Jones is to receive a 5% increase in his base
salary in years four, five and six. Pursuant to the terms of this employment
agreement, Mr. Jones is required to devote his full business time and attention
to fulfill his duties and responsibilities to the Company. Mr. Jones will
receive a base salary of $150,000 per annum. The Company has agreed to pay Mr.
Jones a relocation bonus of $100,000 and reasonable relocation expenses. Mr.
Jones will also have the right to participate in all benefit plans afforded to
other comparable officers during the term of the agreement, including, executive
incentive plan, stock option plan, monetary bonus plan, participation or extra
compensation plan, pension plan, profit sharing plan, disability insurance,
health and major medical insurance. Mr. Jones's employment agreement contains
certain confidentiality and non-competition provisions. Either the Company or
Mr. Jones may cancel the agreement for any reason after six years upon 60 days
prior notice.
On March 31, 1997, the Company entered into an employment agreement with
Kevin L. Burkhardt, the Company's President and Chief Executive Officer for a
term of five years with successive automatic renewal periods of one year with a
base salary of $90,000 for the first year and 10% increases in each of the
following years. Mr. Burkhardt will receive a $25,000 one time bonus if he
consummates another acquisition. Pursuant to the terms of this employment
agreement, Mr. Burkhardt is required to devote his full business time and
attention to fulfill his duties and responsibilities to the Company. Mr.
Burkhardt will also have the right to participate in all benefit plans afforded
to all executive officers during the term of the agreement, including, executive
incentive plan, stock option plan, monetary bonus plan, participation or extra
compensation plan, pension plan, profit sharing plan, disability insurance,
health and major medical insurance.
On March 31, 1997, the Company entered into an employment agreement with
David Cohen, the Company's Chief Financial Officer and Treasurer for a term of
three years with successive automatic renewal periods of one year with a base
salary of $70,000. Pursuant to the terms of this employment agreement, Mr. Cohen
is required to devote his full business time and attention to fulfill his duties
and responsibilities to the Company. Mr. Cohen will also have the right to
participate in all benefit plans afforded to all executive officers during the
term of the agreement, including, executive incentive plan,
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stock option plan, monetary bonus plan, participation or extra compensation
plan, pension plan, profit sharing plan, disability insurance, health and major
medical insurance.
On March 31, 1997, the Company entered into an employment agreement with
Jane S. Burkhardt, the Company's Secretary for a term of three years with
successive automatic renewal periods of one year with a base salary of $36,000.
Pursuant to the terms of this employment agreement, Mrs. Burkhardt is required
to devote 20 hours per week to fulfill her duties and responsibilities to the
Company. Mrs. Burkhardt will also have the right to participate in all benefit
plans afforded to all executive officers during the term of the agreement,
including, executive incentive plan, stock option plan, monetary bonus plan,
participation or extra compensation plan, pension plan, profit sharing plan,
disability insurance, health and major medical insurance.
CONSULTING AGREEMENTS
In April, 1997, the Company entered into a three year consulting agreement
with Louis R. Capece, Jr. Under the terms of the agreement, Mr. Capece has
agreed to devote a minimum of 100 hours per month to the Company. Mr. Capece
will be paid an aggregate of $52,000 per year. The Company or Mr. Capece may
cancel the consulting agreement for any reason upon one year after 60 days prior
notice.
STOCK OPTION PLAN
The Board of Directors plans to submit to the shareholders a stock option
plan (the 'Option Plan'). The Option Plan provides for the grant of incentive
stock options ('ISOs'), intended to qualify for preferential tax treatment under
Section 422 of the Internal Revenue Code of 1986, as amended, and nonstatutory
stock options ('NSOs') that do not qualify for such treatment. Only employees
(including officers and directors who are also employees) of the Company or any
of its subsidiaries are eligible to receive grants of ISOs. Employees, officers,
directors, consultants, contractors and advisers of the Company or any
subsidiary are eligible to receive grants of NSOs. The purpose of the Option
Plan is to enable the Company to attract and retain exemplary directors,
employees, agents and consultants. No options can be granted under the Option
Plan at less than 100% of the fair market value of the Company's securities on
the date of grant.
The Option Plan provides that a maximum of 350,000 shares of Common Stock
may be issued upon the exercise of options granted under the Option Plan. If an
option granted under the Option Plan expires or terminates for any reason
without having been exercised in full, then the unpurchased shares subject to
that option will be available for additional option grants.
The Option Plan will be administered by the Board of Directors of the
Company which will determine, in its discretion, among other things, the
recipients of grants, whether a grant will consist of ISOs or NSOs, or a
combination thereof, and the number of shares of Common Stock to be subject to
such options. The Board of Directors of the Company may, in its discretion,
delegate its powers, duties and responsibilities under the Option Plan to a
committee consisting of two or more directors who are 'disinterested persons'
within the meaning of Rule 16b-3 promulgated under the Securities Exchange Act
of 1934, as amended.
LIMITATIONS ON PERSONAL LIABILITY OF DIRECTORS
The Colorado Corporation Code, as revised, in general, allows corporations
to indemnify their directors and officers against reasonable expenses incurred
in connection with a proceeding if the director and/or officer acted in good
faith and in a manner the person believed to be in or not opposed to the best
interests of the corporation. In the case of a criminal action, the director or
officer must have had no reasonable cause to believe that the person's conduct
was unlawful. Under current law, a corporation may not indemnify a director or
officer in connection with a proceeding by or in the right of the corporation in
which the director or officer was adjudged liable to the corporation or if the
director or officer derived an improper personal benefit.
The Company's Articles of Incorporation and Bylaws provide that the Company
shall indemnify its directors and officers to the fullest extent permitted by
the Colorado Law.
The Company will enter into an indemnification agreement ('Indemnification
Agreement') with each of its directors and officers. Each Indemnification
Agreement will provide that the Company will
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indemnify the indemnitee against expenses, including reasonable attorneys' fees,
judgments, penalties, fines and amounts paid in settlement actually and
reasonably incurred by him or her in connection with any civil or criminal
action or administrative proceeding arising out of his or her performance of his
or her duties as a director or officer, other than an action instituted by the
director or officer. Such indemnification is available if the indemnitee acted
in good faith and in a manner he or she reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to any criminal
action, had no reasonable cause to believe his or her conduct was unlawful. Each
Indemnification Agreement also will require that the Company indemnify the
director or other party thereto in all cases to the fullest extent permitted by
applicable law. The term of the Indemnification Agreement will be the later of
(i) ten (10) years after the date that the indemnitee ceases to serve as a
director or officer of the Company, or (ii) the final termination of all
proceedings, as defined in the Indemnification Agreement, in which the
indemnitee is granted rights of indemnification.
Each Indemnification Agreement will permit the indemnitee to bring suit to
seek recovery of amounts due under such Indemnification Agreement and will
require that the Company indemnify the director or other party thereto in all
cases to the fullest extent permitted by applicable law. Although the Company
intends to seek to obtain directors' and officers' liability insurance, such
insurance is generally very expensive. If the Company is not able to obtain
directors' and officers' liability insurance to cover amounts, any payments made
by the Company under an Indemnification Agreement will have an adverse impact on
the Company.
It is the position of the Commission that insofar as indemnification for
liabilities arising under the Securities Act may be permitted to directors,
officers and controlling persons of the Company pursuant to the foregoing
provisions, or otherwise, that such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of Common Stock, as of the date of this Prospectus, and as
adjusted to reflect the sale by the Company of the Securities offered hereby, by
(i) each person who is known by the Company to beneficially own more than five
percent of the outstanding Common Stock, (ii) each director of the Company,
(iii) each of the Company's named executive officers, and (iv) all directors and
executive officers of the Company as a group. The information presented assumes
no exercise of the Warrants offered hereby.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF CLASS (1)
BENEFICIALLY OWNED ---------------------------------
BENEFICIAL OWNER PRIOR TO OFFERING BEFORE OFFERING AFTER OFFERING
- ------------------------------------------------------------- ------------------ --------------- --------------
<S> <C> <C> <C>
Kevin L. Burkhardt and Jane S. Burkhardt(2).................. 606,237 17.5% 13.9%
David Cohen(3)............................................... -- -- --
Charles W. Bartholomew(4).................................... 361,933 11.0% 8.7%
Steven B. Myers(5)........................................... 416,223 12.5% 9.5%
Arthur G. Rosenberg(6)....................................... 25,000 * *
Melinda Cantor(7)............................................ 775,000 25.6% 19.8%
Louis R. Capece, Jr.(8)...................................... -- -- --
Donald Jones(9).............................................. -- -- --
Planet Auto Group, Inc.(10).................................. 700,000 23.1% 17.8%
All executive officers and directors as a group (7
persons)................................................... 1,409,393 46.6% 35.9%
</TABLE>
- ------------
* Less than 1%.
(1) Unless otherwise indicated, each person has sole investment and voting
power with respect to the shares indicated, subject to community property
laws, where applicable. The number of shares of Common Stock outstanding
prior to the Offering is 3,025,000. For purposes of this table, a person or
group of persons is deemed to have 'beneficial ownership' of any shares
which such person has the right to acquire within 60 days. For purposes of
computing the percentage of outstanding shares held by each person or group
of persons named above, any security which such person or group of persons
has the right to acquire within 60 days after such date is deemed to be
outstanding for the
(footnotes continued on next page)
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(footnotes continued from previous page)
purpose of computing the percentage ownership for such person or persons,
but is not deemed to be outstanding for the purpose of computing the
percentage of ownership of any other person.
(2) Includes options to purchase 437,908 shares of Common Stock at an exercise
price of $4.25 per share. Mr. and Mrs. Burkhardt's business address is
12420 East Control Tower Road, Englewood, Colorado 80112. Mr. and Mrs.
Burkhardt are husband and wife and own their shares as joint tenants.
(3) Mr. Cohen's business address is 12420 East Control Tower Road, Englewood,
Colorado 80112.
(4) Includes options to purchase 261,438 shares of Common Stock at an exercise
price of $4.25 per share. Mr. Bartholomew's home address is 2150 Oak Hills
Drive, Colorado Springs, CO 80919.
(5) Includes options to purchase 300,654 shares of Common Stock at an exercise
price of $4.25 per share. Mr. Myers's home address is 2890 South Golden
Way, Denver, Colorado 80227.
(6) Includes options to purchase 25,000 shares of Common Stock exercisable at
$1.00 per share. Mr. Rosenberg's business address is 7979 Old Georgetown
Road, Suite 800, Bethesda, Maryland 20814.
(7) Ms. Cantor's mailing address is 485 Nicolls Road, Deer Park, NY 11729. Ms.
Cantor is the wife of Steven A. Cantor. Mr. Cantor has provided investment
banking services to the Company. Mr. Cantor through Srotnac Group, LLC.
transferred his shares to his wife Melinda Cantor. See 'Certain
Transactions--Transactions with Principal Shareholders.'
(8) Excludes 588,236 shares of Common Stock which will be issued to Mr. Capece
in connection with the acquisition of Air Response two years from the
closing of the Offering. Mr. Capece's address is 10845 Bayshore Drive,
Windermere, Florida 34786. See 'Certain Transactions.'
(9) Mr. Jones's address is 2163 Turkey Run, Winter Park, Florida 32789.
(10) Planet Auto Group, Inc. is a Delaware corporation engaged in providing
business and related consulting services in the transportation area. In
January 1997, Steven A. Cantor sold 700,000 shares to Planet Auto Group,
Inc. in a private transaction.
CERTAIN TRANSACTIONS
ACQUISITION OF AIR RESPONSE AND AIR RESPONSE SOUTH
In April 1997, the Company entered into an Amended Agreement and Plan of
Reorganization with Air Response and Louis R. Capece, Jr., which agreement was
amended in May 1997, pursuant to which the Company agreed to acquire at the
closing of the Offering, subject to the terms and conditions contained therein,
all of the outstanding capital stock of Air Response in exchange for 588,326
shares of Common Stock of the Company to be issued two years from the closing of
the Offering. If the Company completes a second public offering, Mr. Capece has
the option to put to the Company such number of shares of Common Stock at the
then current market value, equal to 20% of the net proceeds of such offering to
the Company, not to exceed $1,000,000. Simultaneously, the Company entered into
an Amended Stock Purchase and Sale agreement with Air Response South and Louis
R. Capece, Jr. pursuant to which the Company agreed to acquire at the closing of
the Offering, subject to the terms and conditions contained therein, all of the
outstanding capital stock of Air Response South for $2,000,000 of which
$1,000,000 is payable upon closing of the Offering with the balance payable two
years from the Closing of the Offering.
The Acquisitions will close simultaneously with the closing of the
Offering. The Company entered into a consulting agreement with Louis R. Capece,
Jr. which agreement is effective as of the closing of the Offering. In
connection with the Acquisitions, Mr. Capece covenanted that he will not, for a
period of five years from closing, compete with the Company. Mr. Capece has the
right to nominate two members to the Company's Board of Directors. Mr. Capece
has nominated himself and Donald Jones as nominees to the Board of Directors.
See 'Management.'
LOAN TO AIR RESPONSE
In October 1996, the Company loaned $200,000 to Air Response. The note
bears interest at the rate of 10% per annum and is payable in two installments
of $100,000 plus accrued interest thereon on May 14, 1998 and May 14, 2000.
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TRANSACTIONS WITH DIRECTORS AND EXECUTIVE OFFICERS
In October 1993, Charles W. Bartholomew, a Director of the Company, entered
into a stock purchase agreement pursuant to which he purchased 18% of the then
outstanding shares of Common Stock of the Company for $75,000 and loaned an
additional $75,000 to the Company. Interest for the first 24 months of the loan
was in the form of an additional 2% ownership interest in the Company.
Thereafter, interest on the loan was at the rate of 10% per annum due March
1997.
As of December 31, 1996, Air Response and Air Response South have a
receivable due from its sole shareholder, Louis R. Capece, Jr., in the amount of
$322,421. This amount is due on demand and is non-interest bearing. Mr. Capece,
upon consummation of the Offering, will be a director of the Company.
In January 1996, Steven B. Myers, a Director of the Company, purchased
231,214 shares of Common Stock from the Company for $100,000 or $.43 per share.
In February 1997, Donald Jones entered into a six year employment agreement
with the Company to serve as the Company's Vice President of Sales upon
consummation of the Offering. See 'Management -- Employment Agreement.'
In April 1997, Kevin L. Burkhardt, the Company's Chief Executive Officer,
President and a Director entered into a five-year employment agreement with the
Company. See 'Management -- Employment Agreement.'
In April 1997, Jane S. Burkhardt, the Company's Secretary and a Director,
entered into a three-year employment agreement with the Company. See
'Management -- Employment Agreement.'
In April 1997, David Cohen, the Company's Chief Financial Officer and
Treasurer, entered into a three-year employment agreement with the Company. See
'Management -- Employment Agreement.'
In May 1997, Kevin L. Burkhardt and Jane S. Burkhardt agreed to return
218,954 shares of Common Stock to the Company in exchange for options to
purchase 437,908 shares of Common Stock at an exercise price of $4.25 per share.
The options are five-year options exercisable upon closing of the Offering.
In May 1997, Charles W. Bartholomew agreed to return 130,719 shares of
Common Stock to the Company in exchange for options to purchase 261,438 shares
of Common Stock at an exercise price of $4.25 per share. The options are
five-year options exercisable upon closing of the offering.
In May 1997, Steven B. Myers agreed to return 150,327 shares of Common
Stock to the Company in exchange for options to purchase 300,654 shares of
Common Stock at an exercise price of $4.25 per share. The options are five-year
options exercisable upon closing of the Offering.
TRANSACTIONS WITH PRINCIPAL SHAREHOLDERS
In January 1996, the Company issued Steven A. Cantor, 1,475,000 shares of
Common Stock for business and financial services valued at $50,000. Mr. Cantor
has provided investment banking services to the Company. Mr. Cantor transferred
his shares to Srotnac Group, LLC, a company which is 98% owned by Mr. Cantor. In
January 1997, Srotnac Group, LLC sold 700,000 shares for $.25 per share to
Planet Auto Group, Inc. in a private transaction. In May 1997, Srotnac Group,
LLC transferred the remainder of its shares to Melinda Cantor, Mr. Cantor's
wife.
In May 1997, the bridge lenders in the October 1996 and January 1997
private placements released and discharged the Company from any and all
obligations arising out of promissory notes aggregating $500,000 and agreed to
cancel such notes.
In May 1997, Annette Cantor a 10% shareholder sold her shares for $.50
per share to 10 unrelated persons in a private transaction.
DESCRIPTION OF SECURITIES
GENERAL
The Company amended its articles of incorporation in February 1997, which
increased the authorized capital stock of the Company to 10,500,000 shares, of
which 10,000,000 shares are Common
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Stock, par value $.001 per share, and 500,000 are Preferred Stock, par value
$1.00 per share. The shareholders have approved increasing the authorized shares
of capital stock to 20,000,000 shares, which amendment will be filed shortly.
COMMON STOCK
As of the date of this Prospectus, there are 3,025,000 shares of Common
Stock outstanding and 32 record stockholders. Upon consummation of the Offering,
3,925,000 shares of Common Stock will be issued and outstanding, excluding (i)
350,000 shares of Common Stock reserved for issuance under the Company's stock
option plan (ii) 588,236 shares of Common Stock which will be issued to Louis R.
Capece, Jr., in connection with the acquisition of Air Responses, two years from
the closing of the Offering; (iii) 900,000 shares reserved for issuance upon
exercise of the Warrants offered hereby; (iv) 1,100,000 shares reserved for
issuance upon exercise of other outstanding options and warrants; and (v)
180,000 shares of Common Stock issuable upon exercise of the Underwriter's
Warrants.
Holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the shareholders. Holders of Common
Stock do not have any cumulative voting rights for the election of directors.
Subject to preferences that may be applicable to any outstanding shares of
Preferred Stock, the holders of Common Stock are entitled to receive ratably
such dividends, if any, as may be declared by the Board of Directors from time
to time out of funds legally available for that purpose. Upon any liquidation,
dissolution or winding up of the Company, whether voluntary or involuntary,
holders of Common Stock are entitled to receive pro rata all assets of the
Company available for distribution to its shareholders after payment or
provision for payment of debts and other liabilities of the Company and the
liquidation preferences of any then outstanding shares of Preferred Stock. The
shares of Common Stock are neither redeemable nor convertible, except for the
put which will be issued to Mr. Capece and the holders thereof have no
preemptive or subscription rights to purchase any securities of the Company. See
'Certain Transactions -- Acquisition of Air Response and Air Response South.'
PREFERRED STOCK
As of the date of this Prospectus, no shares of Preferred Stock are
outstanding. The Board of Directors has the authority to issue Preferred Stock
in one or more series and to determine the powers, preferences and rights and
the qualifications, limitations or restrictions granted to or imposed upon any
series of Preferred Stock and to fix the number of shares constituting any
series and the designation of such series without any further vote or action by
the shareholders of the Company. Any Preferred Stock designated by the Board may
have voting, conversion, liquidation preference, redemption, dividend and other
rights which are superior to the Common Stock. The issuance of Preferred Stock
may have the effect of delaying, deferring or preventing a change in control of
the Company without further action by the shareholders, may discourage bids for
the Company's Common Stock and may adversely affect the market price of and the
voting and other rights of the Common Stock.
OPTIONS AND WARRANTS
As of the date hereof, other than as described in the Registration
Statement, there are no outstanding options or warrants to purchase, or
securities convertible into, Common Stock of the Company.
REDEEMABLE COMMON STOCK PURCHASE WARRANTS
The Warrants will be issued pursuant to a warrant agreement (the 'Warrant
Agreement') among the Company, the Underwriter and American Securities Transfer
& Trust, Inc., the warrant agent and will be evidenced by warrant certificates
in registered form.
Each Warrant entitles the holder to purchase one share of Common Stock at
an exercise price of $4.25 per share, subject to adjustment, for five years
commencing twenty-four (24) months from the Closing Date, provided the Warrants
may be exercised twelve (12) months from the Closing Date with the Underwriter's
express written consent.
The exercise price of the Warrants and the number and the shares of Common
Stock or other securities and property issuable upon exercise of the Warrants
are subject to adjustment in certain circumstances, including stock splits,
stock dividends, subdivisions, combinations, reclassification or
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issuances of stock at a price lower than the current market price. Additionally,
an adjustment will be made upon the sale of all or substantially all of the
assets of the Company in order to enable the holders of the Warrants to purchase
the kind and number of shares of stock or other securities or property
(including cash) receivable in such event by a holder of the number of shares of
Common Stock that might otherwise have been purchased upon exercise of the
Warrants.
The Warrants do not confer upon the holder any voting or any other rights
of a stockholder of the Company. Upon notice to the holders of the Warrants, the
Company has the right to reduce the exercise or extend the expiration date of
the Warrants.
Warrants may be exercised upon surrender of the Warrant certificate
evidencing those Warrants on or prior to the expiration date (or earlier
redemption date) of the Warrants to the Warrant Agent, with the form of
'Election to Purchase' on the reverse side of the Warrant certificate completed
and executed as indicated, accompanied by payment of the full exercise price (in
United States funds, by cash or certified bank check payable to the order of the
Warrant Agent) for the number of Warrants being exercised.
No fractional shares will be issued upon exercise of the Warrants. However,
if a holder of a Warrant exercised all Warrants then owned of record by him, the
Company will pay to that holder in lieu of the issuance of any fractional share
which would otherwise be issuable, an amount in cash based on the market value
of the Common Stock on the last trading day prior to the exercised date.
No Warrant will be exercisable unless at the time of exercise the Company
has filed with the Securities and Exchange Commission a current prospectus
covering the issuance of shares of Common Stock issuable upon exercise of the
Warrants and the issuance of shares has been registered or qualified or is
deemed to be exempt from registration or qualification under the securities laws
of the state of residence of the holder of the Warrant. The Company has
undertaken to use its best efforts to maintain a current prospectus relating to
the issuance of shares of Common Stock upon the exercise of the Warrants until
the expiration of the Warrants, subject to the terms of the Warrant Agreement.
While it is the Company's intention to maintain a current prospectus, there is
no assurance that it will be able to do so.
The Warrants are redeemable, in whole or in part, by the Company at a price
of $.10 per Warrant, commencing twenty-four (24) months the Closing Date (except
the Warrants may be redeemed twelve (12) months following the Closing Date with
the Underwriter's express written consent), and prior to their expiration,
provided that (i) prior written notice of not less than 30 days is given to the
Warrantholders (ii) the closing bid price (as defined) of the Company's Common
Stock for the twenty (20) consecutive trading days immediately prior to the date
on which the notice of redemption is given, shall have exceeded $8.50 per share.
The Warrantholders shall have exercise rights until the close of business the
day preceding the date fixed for redemption. The Warrants shall be exercisable
until the close of business day preceding the date fixed for redemption.
REGISTRATION RIGHTS
In connection with the acquisition of Air Response, the Company has granted
Louis R. Capece, Jr., upon the issuance of 588,236 shares of Common Stock two
years from the closing of the Offering, certain 'piggyback' registration rights
(other than a Registration Statement on Form S-4 or Form S-8 or successor form
thereto). These registration rights are not limited to a term and are subject to
approval of any underwriter for the Company. See 'Certain Transactions.'
Upon the consummation of the Offering, the Company will sell to the
Underwriter a warrant to purchase 90,000 shares of Common Stock and 90,000
Warrants for $10. The Underwriter's Warrant will be exercisable for a period of
four years commencing one year from the date of this Prospectus. In addition,
holders of the Underwriter's Warrants will have demand registration rights
during the period the Underwriter's Warrants are exercisable and piggy back
registration rights for a period of seven years from the date of this Prospectus
with respect to the Underwriter's Warrants and the underlying shares of Common
Stock. See 'Underwriting.'
TRANSFER AGENT
American Securities Transfer & Trust, Inc., 1825 Lawrence Street, Denver,
CO 80202-1817, will serve as the Company's transfer agent for the Common Stock.
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SHARES ELIGIBLE FOR FUTURE SALE
Upon the consummation of the Offering, the Company will have outstanding an
aggregate of 3,925,000 shares of Common Stock of which 3,025,000 are 'restricted
securities' under Rule 144 under the Securities Act of 1933, as amended (the
'Securities Act') (exclusive of (i) the 350,000 shares of Common Stock reserved
for issuance under the Option Plan,(ii) 588,236 shares of Common Stock which
will be issued to Louis R. Capece, Jr. in connection with the acquisition of Air
Response, two years from the closing of the Offering; (iii) 900,000 shares
reserved for issuance upon exercise of the Warrants offered hereby, (iv)
1,100,000 shares reserved for issuance upon exercise of other outstanding
options and warrants; (iv) 180,000 shares of Common Stock issuable upon exercise
of the Underwriter's Warrants. All of the 900,000 shares of Common stock sold in
the Offering will be freely tradeable without restriction under the Securities
Act except for any shares purchased by 'affiliates' of the Company (as that term
is defined in the rules and regulations under the Securities Act).
In the future, these restricted shares may be sold only pursuant to a
registration statement under the Securities Act or an applicable exemption,
including the exemption provided by Rule 144. The Securities and Exchange
Commission ('Commission') has amended Rule 144, effective April 29, 1997,
reducing the holding period before shares subject to Rule 144 become eligible
for sale in the public market. Under the revised Rule 144, a person who has
owned Common Stock for one year may, under certain circumstances, sell within
any three-month period, a number of shares of Common Stock that does not exceed
the greater of 1% of the then outstanding shares of Common Stock or the average
weekly trading volume during the four calendar weeks prior to such sale. In
addition, a person who is not deemed to have been an affiliate of the Company at
any time during the three months preceding a sale, and who has beneficially
owned the restricted securities for the last two years is entitled to sell all
such shares without regard to the volume limitations, current public information
requirements, manner of sale provisions and notice requirements. Sales or the
expectation of sales of a substantial number of shares of Common Stock in the
public market following this Offering could adversely affect the prevailing
market price of the Common Stock. In addition, the sale of substantial amounts
of Common Stock acquired through the exercise of the (i) options granted or (ii)
Underwriter's Warrants could adversely affect prevailing market prices for the
Common Stock. The Company and its officers and directors and shareholders have
agreed with the Underwriter not to, directly or indirectly, register, issue,
offer, sell, offer to sell, contract to sell, hypothecate, pledge or otherwise
dispose of any shares of Common Stock, (or any securities convertible into or
exercisable or exchangeable for shares of Common Stock), for a period of two
years from the date of this Prospectus, without the prior written consent of the
Underwriter. The Company and the Underwriter have agreed to allow Melinda
Cantor, to sell 150,000 shares of Common Stock twelve months from the close of
Offering.
UNDERWRITING
Century City Securities, Inc. (the 'Underwriter') has agreed, subject to
the terms and conditions of an Underwriting Agreement, to act as the exclusive
agent for the Company to sell on a 'best efforts, all or none' basis 900,000
shares of Common Stock and 900,000 Warrants offered hereby. The Underwriter has
made no commitment to purchase any or all of the shares of Common Stock or
Warrants. It has agreed only to use its best efforts to find purchasers for the
shares of Common Stock within a period of 90 days from the date of this
Prospectus, subject to extension for an additional period of 90 days on mutual
consent of the Company and the Underwriter.
All proceeds from subscriptions will be deposited promptly into a
non-interest bearing account with Citibank, N.A., as escrow agent pursuant to an
escrow agreement between the Company, the Underwriter and such escrow agent.
Funds will be transmitted to the escrow agent for deposit in the escrow account
no later than noon of the business day following receipt. All checks must be
made payable to 'Citibank, N.A., as escrow agent for Proflight Medical Response,
Inc.' In the event the 900,000 shares of Common Stock and 900,000 Warrants are
not sold within the 90 day initial offering period and the 90 day extension
period described above, funds will be refunded promptly to subscribers in full
without deduction therefrom or interest thereon. During the 90 day offering
period and any extension, no subscriber will be entitled to a refund of any
subscription, and no funds will be released
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from escrow until completion or termination of the Offering. There are none nor
will there be any arrangements between the Company and the Underwriter whereby
shares of Common Stock or Warrants will be reserved for sales to persons
associated or affiliated with management of the Company or its affiliated
persons, although such persons may purchase shares of Common Stock or Warrants
in order to assure the completion of this Offering.
The Underwriter has advised the Company that it proposes to offer the
Securities to the public at the public offering price set forth on the cover
page of this Prospectus and that it may allow to certain dealers who are members
of the National Association of Securities Dealers, Inc. ('NASD') concessions not
in excess of $ per share of Common Stock and $ per Warrant.
The Company has agreed to pay to the Underwriter a non-accountable expense
allowance of 3% of the gross proceeds of this offering. The Company has also
agreed to pay all expenses in connection with qualifying the Common Stock and
Warrants offered hereby for sale under the laws of such states as the
Underwriter may designate, including expenses of counsel retained for such
purpose by the Underwriter.
The Company has agreed to sell to the Underwriter for $10, upon
consummation of this offering, the Underwriter's Warrant exercisable to purchase
up to 90,000 shares of Common Stock and/or 90,000 Warrants at an exercise price
of $5.10 per share of Common Stock and $.12 per Warrant. The Underwriter's
Warrant may not be sold, transferred, assigned or hypothecated for one year from
the date of this Prospectus, except to the officers or partners of the
Underwriter and members of the selling group, and are exercisable during the
four-year period commencing one year from the Effective Date (the 'Warrant
Exercise Term'). During the Warrant Exercise Term, the holders of the
Underwriter's Warrants are given, at nominal cost, the opportunity to profit
from a rise in the market price of the Common Stock. To the extent that the
Underwriter's Warrants are exercised, dilution to the interests of the Company's
shareholders will occur. Further, the terms upon which the Company will be able
to obtain additional equity capital may be adversely affected since the holders
of the Underwriter's Warrants can be expected to exercise them at a time when
the Company would, in all likelihood, be able to obtain any needed capital on
terms more favorable to the Company than those provided in the Underwriter's
Warrants. Any profit realized by the Underwriter on the sale of the
Underwriter's Warrants may be deemed additional underwriting compensation.
Subject to certain limitations and exclusions, the Company has agreed, at the
request of the holders of a majority of the Underwriter's Warrants to register
the Underwriter's Warrants, the underlying shares of Common Stock and the
underlying warrants under the Securities Act on two occasions (one at the
Company's expense and one at the holder's expense) during the Warrant Exercise
Term and to include such Underwriter's Warrants, the underlying shares of Common
Stock and the underlying warrants in any appropriate registration statement
which is filed by the Company during the seven years following the date of this
Prospectus.
In the event the Underwriter exercises its registration rights to effect
the distribution of the Common Stock and/or Warrants underlying the
Underwriter's Warrants, the Underwriter and any holder of such securities who is
a market maker in the Company's securities, prior to such distribution, will be
unable to make a market in the Company's securities for up to a period of nine
days prior to the commencement of such distribution and until such distribution
is completed. If the Underwriter ceases making a market, the market and market
prices for the Securities may be adversely affected, and the holders thereof may
be unable to sell such securities.
Additionally, the Underwriter has been engaged as the Company's warrant
solicitation agent and pursuant thereto may participate in the solicitation of
the exercise of the Warrants. Upon the exercise of the Warrants, the Company
will pay the Underwriter a commission of 5% of the aggregate exercise price of
the Warrants exercised. In accordance with the NASD Notice to Members 92-98, no
fee shall be paid: (i) upon the exercise of warrants where the market price of
the underlying Common Stock is lower than the exercise price; (ii) upon the
exercise of any Warrants not solicited by the Underwriter, (iii) for the
exercise of Warrants held in any discretionary account; or (iv) upon the
exercise of Warrants where disclosure of compensation arrangements has not been
made and documents have not been provided to customers both as part of the
original offering and at the time of exercise. Further, the exercise of any
Warrant shall be presumed unsolicited unless the holder of such Warrant states
in writing that the transaction was solicited by the Underwriter.
Notwithstanding the foregoing, no fees
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will be paid to the Underwriter or any other NASD members upon exercise of the
Warrants within the first twelve months from the Effective Date.
In connection with the solicitation of Warrant exercises, unless granted an
exemption by the Commission from Regulation M under the Exchange Act, the
Underwriter and any other soliciting broker-dealer will be prohibited from
engaging in any market-making activities with respect to the Securities for the
period commencing either two or nine business days (depending on the market
price of the Company's shares of Common Stock) prior to any solicitation
activity with respect to the exercise of Warrants until the later of (i) the
termination of such solicitation activity or (ii) the termination (by waiver or
otherwise) of any rights which the Underwriter or any other soliciting
broker-dealer may have to receive a fee for the exercise of Warrants following
such solicitation. As a result, the Underwriter or other soliciting
broker-dealer may be unable to provide a market for the Company's securities,
should it desire to do so, during certain periods in which the Warrants are
exercisable.
Except as otherwise described herein, the Company has agreed not to issue
equity securities for a period of two (2) years from the date hereof without the
prior consent of the Underwriter.
In addition, the Company has agreed to enter into a financial advisory
agreement with the Underwriter, which will act as a management and financial
consultant for the Company for a period of three years, commencing upon the
consummation of this Offering, for an aggregate fee of $108,000, all of which is
payable at the closing of this Offering.
Although the Underwriting Agreement will provide that the Underwriter may
designate for election one person to the Company's Board of Directors, the
Underwriter has advised the Company that it has not selected such individual and
has no immediate plans to do so. If the Underwriter elects not to assert such
right, then it may designate one person to attend all Board of Directors
meetings as an observer. In the event that such an individual is designated,
such individual shall receive reimbursement of expenses for attending the
meetings of the Board of Directors.
The Company has agreed to indemnify the Underwriter against certain civil
liabilities, including liabilities under the Securities Act. To the extent this
section may purport to provide exculpation from possible liabilities arising
under the Federal securities laws, it is the opinion of the Commission that such
indemnification is against public policy and is therefore unenforceable.
The foregoing is a summary of the principal terms of the Underwriting
Agreement, the Underwriter's Warrant and the Financial Advisory and Investment
Banking Agreement. Reference is made to the copies of the Underwriting
Agreement, the Underwriter's Warrants and the Financial Advisory and Investment
Banking Agreement which are filed as exhibits to the Registration Statement of
which this Prospectus forms a part.
The Underwriter was incorporated in April 1994, and first registered as a
broker-dealer in March 1996. Prior to this Offering, although the Underwriter
has participated as a selling group member in two underwritings, it has not
participated as a sole or co-manager in any public offerings. Prospective
purchasers of the Common Stock and Warrants offered hereby should consider the
Underwriter's lack of experience in being a manager of an underwritten public
offering.
Prior to this Offering, there has been no public market for the Common
Stock or the Warrants. Accordingly, the Offering and exercise price of such
Securities being offered hereby was determined, in large part, by negotiations
between the Company and the Underwriters on an arbitrary basis and bear no
direct relationship to the assets, earnings or other recognized criterion of
value. Factors considered in determining such prices, in addition to prevailing
market conditions, include the history of and the business prospects of the
Company, as well as such other factors as were deemed relevant, including an
evaluation of management and the general economic climate. The prices should in
no event, however, be regarded as an indication of any future market price of
the Common Stock or the Warrants.
LEGAL MATERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Loselle Greenawalt Kaplan Blair and Adler, New York,
N.Y. The partners of Loselle Greenawalt Kaplan Blair & Adler own an aggregate of
5,000 shares of Common Stock of the Company. Certain legal matters will be
passed upon for the Underwriter by Gusrae, Kaplan & Bruno, New York, New York.
39
<PAGE>
<PAGE>
EXPERTS
The audited balance sheets of Proflight as of December 31, 1996 and 1995,
the audited statements of operations, cash flows and stockholders' equity
(deficit) for the year ended December 31, 1996 and 1995 have been included
herein and in the Registration Statement in reliance upon the report appearing
elsewhere herein of Grant Thornton LLP, independent certified public
accountants, whose report thereon has been modified to include an explanatory
paragraph which raises substantial doubt about Proflight's ability to continue
as a going concern and upon the authority of said firm as experts in accounting
and auditing. The audited combined balance sheet of Air Response and Air
Response South as of May 31, 1996, the audited combined statements of operations
and retained earnings and cash flows, for the year ended May 31, 1996 have been
included herein and in the Registration Statement in reliance upon the report
appearing elsewhere herein of Staff, Maikels & Ciampino, P.C., independent
certified public accountants, and upon the authority of said firm as experts in
accounting and auditing. The audited combined statements of operations and
retained earnings and cash flows of Air Response and Air Response South for the
year ended May 31, 1995 have been included herein and in the Registration
Statement in reliance upon the report appearing elsewhere herein of Kaufman,
Rossin & Co., independent certified public accountants, and upon the authority
of said firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed a Registration Statement on Form SB-2 (together with
all amendments, schedules and exhibits thereto, the 'Registration Statement')
under the Securities Act with respect to the Common Stock offered hereby. This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all the information set forth in the Registration Statement to which
reference is hereby made. Statements made in this Prospectus as to the contents
of any contract, agreement or other document referred to are not necessarily
complete. With respect to each such contract, agreement or other document filed
as an exhibit to the Registration Statement, reference hereby is made to the
exhibit for a more complete description of the matter involved, and each such
statement shall be deemed qualified in its entirety by such reference. For
further information with respect to the Company and the Common Stock offered
hereby, reference is made to the Registration Statement. The Registration
Statement filed by the Company may be inspected, without charge, at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, NW, Washington, DC 20549 and at the Commission's regional
offices at 1801 California Street, Suite 4800, Denver, Colorado 80202-2648 and 7
World Trade Center, Suite 1300, New York, NY 10048. Copies of such material also
may be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, NW, Washington, DC 20549, upon payment of certain fees prescribed by the
Commission. Electronic registration statements made through the Electronic Data
Gathering, Analysis and Retrieval system are publicly available through the
Commission's Web site (http://www.sec.gov).
40
<PAGE>
<PAGE>
PROFLIGHT MEDICAL RESPONSE, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
PROFLIGHT MEDICAL RESPONSE, INC.
Report of Independent Certified Public Accountants................................................ F-2
Balance Sheet as at December 31, 1996 and 1995.................................................... F-3
Statements of Operations For the Years Ended December 31, 1996 and 1995........................... F-4
Statements of Stockholders' Deficit For the Years Ended December 31, 1996 and 1995................ F-5
Statements of Cash Flows For the Years Ended December 31, 1996 and 1995........................... F-6
Notes to Financial Statements..................................................................... F-7
AIR RESPONSE, INC. AND AIR RESPONSE SOUTH, INC.
Independent Auditors' Report -- Staff Maikels & Ciampino, P.C..................................... F-13
Independent Auditors' Report -- Kaufman Rossin & Co............................................... F-14
Combined Balance Sheet as at May 31, 1996......................................................... F-15
Combined Statements of Operations and Retained Earnings For the Years Ended May 31, 1996 and
1995............................................................................................. F-16
Combined Statements of Cash Flows For the Years Ended May 31, 1996 and 1995....................... F-17
Notes to Financial Statements..................................................................... F-18
AIR RESPONSE, INC. AND AIR RESPONSE SOUTH, INC. (UNAUDITED)
Condensed Combined Balance Sheets as at December 31, 1996 and 1995 (Unaudited).................... F-23
Condensed Combined Statements of Operations For the Seven Month Period Ended December 31, 1996 and
1995 (Unaudited)................................................................................. F-24
Condensed Combined Statements of Cash Flows For the Seven Months Ended December 31, 1996 and 1995
(Unaudited)...................................................................................... F-25
Notes to Financial Statements (Unaudited)......................................................... F-26
PROFLIGHT MEDICAL RESPONSE, INC. PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
Pro Forma Consolidated Balance Sheet as at December 31, 1996 (Unaudited).......................... F-28
Pro Forma Statement of Operations For the Year Ended December 31, 1996 (Unaudited)................ F-29
</TABLE>
F-1
<PAGE>
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
PROFLIGHT MEDICAL RESPONSE, INC.
We have audited the accompanying balance sheets of Proflight Medical
Response, Inc. (a Colorado corporation) as of December 31, 1996 and 1995 and the
related statements of operations, stockholders' deficit and cash flows for each
of the years then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Proflight Medical Response,
Inc. as of December 31, 1996 and 1995 and the results of its operations and cash
flows for each of the years then ended, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in note B to the
financial statements, the Company's total liabilities exceed total assets as of
December 31, 1996. This factor and others discussed in note B raise substantial
doubt about the Company's ability to continue as a going concern. Management's
plans in regard to these matters are also described in note B. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Denver, Colorado
January 16, 1997 (except for note J,
Subsequent Events, as to which the
date is February 17, 1997, and note E,
Commitments and Contingencies -- Litigation,
as to which the date is April 24, 1997)
F-2
<PAGE>
<PAGE>
PROFLIGHT MEDICAL RESPONSE, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1996 1995
---------- ----------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents........................................................ $ -- $ 1,684
Accounts receivable, trade
Air Response, Inc.............................................................. 131,887 46,600
Other.......................................................................... 369,908 313,782
---------- ----------
501,795 360,382
Less allowance for doubtful accounts........................................ 40,000 28,647
---------- ----------
461,795 331,739
Other current assets............................................................. 13,003 8,705
---------- ----------
Total current assets................................................... 474,798 342,124
Property and equipment -- at cost
Aircraft......................................................................... 4,281,883 1,760,873
Furniture and fixtures........................................................... 22,997 17,755
Medical equipment................................................................ 160,262 102,185
---------- ----------
4,465,142 1,880,813
Less accumulated depreciation and amortization.............................. (337,013) (405,233)
---------- ----------
4,128,129 1,475,580
Other assets
Note receivable -- Air Response, Inc............................................. 200,000 --
Deferred loan costs, less accumulated amortization of $16,250 in 1996............ 93,750 --
Deferred offering costs.......................................................... 10,000 --
Cost of intangible business asset, less accumulated amortization of $4,000....... 26,000 --
Other............................................................................ 42,489 --
---------- ----------
372,239 --
---------- ----------
Total assets........................................................... $4,975,166 $1,817,704
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Current portion of notes payable
Stockholders................................................................ $ 369,694 $ 56,160
Other....................................................................... 572,253 143,502
Bank overdraft................................................................... 19,910 --
Accounts payable -- trade........................................................ 495,791 281,031
Accrued liabilities.............................................................. 97,461 18,772
---------- ----------
Total current liabilities.............................................. 1,555,109 499,465
Notes payable, less current portion
Stockholders..................................................................... -- 10,000
Other............................................................................ 3,963,935 1,360,520
---------- ----------
3,963,935 1,370,520
---------- ----------
Total liabilities...................................................... 5,519,044 1,869,985
Commitments and contingencies......................................................... -- --
Stockholders' deficit
Common stock -- authorized 10,000,000 shares of $.001 par value; issued and
outstanding, 3,225,000 and 1,156,068 for 1996 and 1995, respectively............ 3,225 1,156
Paid-in capital (deficit)........................................................ (436,098) 143,662
Preferred stock -- authorized 500,000 shares of $1.00 par value; none issued and
outstanding..................................................................... -- --
---------- ----------
(432,873) 144,818
Accumulated deficit.............................................................. (111,005) (197,099)
---------- ----------
Total stockholders' deficit............................................ (543,878) (52,281)
---------- ----------
Total liabilities and stockholders' deficit....................... $4,975,166 $1,817,704
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of these statements.
F-3
<PAGE>
<PAGE>
PROFLIGHT MEDICAL RESPONSE, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------------------
1996 1995
---------- ----------
<S> <C> <C>
Operating revenue
Air ambulance.................................................................... $3,090,527 $2,310,276
Medical.......................................................................... 607,490 515,578
Passenger........................................................................ 175,068 14,486
Maintenance...................................................................... 33,126 45,195
---------- ----------
Total operating revenue..................................................... 3,906,211 2,885,535
Operating expenses
Flying operations................................................................ 2,410,300 1,617,651
Maintenance...................................................................... 591,207 343,020
Promotion and sales.............................................................. 255,616 31,909
General and administrative....................................................... 650,036 353,969
Depreciation and amortization.................................................... 377,930 276,538
---------- ----------
Total operating expenses.................................................... 4,285,089 2,623,087
---------- ----------
Operating income (loss)............................................................... (378,878) 262,448
Nonoperating expenses (income)
Interest expense................................................................. 287,188 150,254
Other, net....................................................................... (34) (4,915)
---------- ----------
Total nonoperating expenses................................................. 287,154 145,339
---------- ----------
Net earnings (loss)......................................................... $ (666,032) $ 117,109
---------- ----------
---------- ----------
Net earnings (loss) per share......................................................... $(.19) $.03
Weighted average number of shares outstanding......................................... 3,525,000 3,525,000
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE>
<PAGE>
PROFLIGHT MEDICAL RESPONSE, INC.
STATEMENTS OF STOCKHOLDERS' DEFICIT
YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
COMMON STOCK
------------------- PAID-IN (ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT) TOTAL
--------- ------ --------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1995....................... 1,156,068 $1,156 $ 137,162 $ (314,208) $(175,890)
Net earnings..................................... -- -- 117,109 117,109
Capital contribution recognized in lieu of
interest payment............................... -- -- 6,500 -- 6,500
--------- ------ --------- ------------ ---------
Balance at December 31, 1995..................... 1,156,068 1,156 143,662 (197,099) (52,281)
Net loss......................................... -- -- -- (666,032) (666,032)
Transfer of S-corporation accumulated deficit to
paid-in capital................................ -- -- (752,126) 752,126 --
Cost of 387,282 shares of common stock retired... (387,282) (387 ) (12,678) -- (13,065)
Common stock issued for cash..................... 231,214 231 99,769 -- 100,000
Common stock, issued for promotion services...... 1,475,000 1,475 48,525 -- 50,000
Common stock issued for bridge loans............. 700,000 700 34,300 -- 35,000
Common stock issued for services................. 30,000 30 1,470 -- 1,500
Common stock issued in conjunction with loan..... 20,000 20 980 -- 1,000
--------- ------ --------- ------------ ---------
Balance at December 31, 1996..................... 3,225,000 $3,225 $(436,098) $ (111,005) $(543,878)
--------- ------ --------- ------------ ---------
--------- ------ --------- ------------ ---------
</TABLE>
The accompanying notes are an integral part of these statements.
F-5
<PAGE>
<PAGE>
PROFLIGHT MEDICAL RESPONSE, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
-----------------------
1996 1995
---------- ---------
<S> <C> <C>
Increase (decrease) in cash and cash equivalents.......................................
Cash flows from operating activities
Net earnings (loss)............................................................... $ (666,032) $ 117,109
Adjustment to reconcile net earnings (loss)
to net cash provided by operating activities
Depreciation and amortization................................................ 377,930 276,538
Stock issued for services.................................................... 2,500 --
Imputed interest on note..................................................... -- 6,500
Changes in assets and liabilities............................................
(Increase) in accounts receivable....................................... (130,060) (127,248)
(Increase) in other assets.............................................. (76,787) (8,705)
Increase in accounts payable............................................ 214,760 39,184
Increase in accrued liabilities......................................... 78,689 4,219
---------- ---------
Net cash provided by (used in) operating activities................ (199,000) 307,597
Cash flows from investing activities
Acquisition of property and equipment............................................. (3,858,564) (384,743)
Issuance of note receivable....................................................... (200,000) --
---------- ---------
Net cash flows used in investing activities........................ (4,058,564) (384,743)
Cash flows from financing activities...................................................
Increase in deferred costs........................................................ (35,000) --
Proceeds from sale of stock....................................................... 100,000 --
Retirement of common stock........................................................ (13,065) --
Increase (decrease) in bank overdraft............................................. 19,910 (43,419)
Principal payments on notes payable............................................... (175,745) (133,071)
Proceeds from notes payable....................................................... 4,359,780 255,320
---------- ---------
Net cash provided by financing activities.......................... 4,255,880 78,830
---------- ---------
Net increase (decrease) in cash and cash equivalents............... (1,684) 1,684
Cash and cash equivalents, beginning of year........................................... 1,684 --
---------- ---------
Cash and cash equivalents, end of year................................................. $ -- $ 1,684
---------- ---------
---------- ---------
Supplemental disclosure of cash flow information
Cash paid during the year for interest....................................... $ 262,808 $ 148,215
Supplemental schedule of noncash investing and financing activities
Common stock issued for promotion and financing services..................... 85,000 --
Capital contribution recognized in lieu of interest payment.................. -- 6,500
Property and equipment acquired through long-term debt financing............. -- 480,000
Refinancing of long-term debt................................................ 435,687 836,680
</TABLE>
The accompanying notes are an integral part of these statements.
F-6
<PAGE>
<PAGE>
PROFLIGHT MEDICAL RESPONSE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of Proflight Medical Response, Inc.'s (the Company) significant
accounting policies consistently applied in the preparation of the accompanying
financial statements follows:
1. HISTORY AND BUSINESS ACTIVITY
Proflight Medical Response, Inc. provides airborne transport for patients
who are critically ill, injured or otherwise incapacitated such that they may
require emergency medical care during flight. Services are provided by the
Company for hospital patients who need to be transported to other hospitals;
hospital patients who need to be transported to residences or nursing homes and
other convalescent facilities; organ transplant harvest teams and harvested
organs and significant numbers of vacationers who become ill or injured during
trips. The flights operated are generally long distance in nature and they
include international as well as domestic transport.
2. CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all
highly liquid cash investments with an original maturity of three months or less
to be cash equivalents.
3. PROPERTY AND EQUIPMENT
Property and equipment are carried at cost. Major additions, betterments,
and renewals are capitalized. Maintenance and repairs are charged to operating
expenses as they are incurred. Depreciation and amortization to estimated
residual values are computed on the straight-line basis for the aircraft; the
units of production method for aircraft engines/overhauls; the double-declining
method is used for all other property and equipment, over the estimated useful
lives of the related assets as follows:
<TABLE>
<S> <C>
Aircraft.......................................................... 20 years
Aircraft engines/overhauls........................................ Estimated flight hours
Furniture and fixtures............................................ 5 - 7 years
Medical equipment................................................. 7 years
</TABLE>
4. DEFERRED OFFERING COSTS
The Company has deferred the costs in connection with the proposed public
offering (note B). The costs will be charged against common stock if the
offering is successful, or will be charged to expense if the offering is
unsuccessful.
5. EARNINGS (LOSS) PER SHARE
Earnings (loss) per share is computed by dividing net income (loss) by the
weighted average number of shares outstanding during the period. During the
years ended December 31, 1995 and 1996, the Company effected a 50 to 1 and
3.85356 to one stock split, respectively. All shares and per share amounts have
been retroactively restated to reflect the splits. In addition, the weighted
average calculation considers all stock issued in 1996 and 300,000 shares issued
in January, 1997 to be outstanding as of January 1, 1995.
6. INCOME TAXES
In 1995, income taxes on net earnings are payable personally by the
stockholders pursuant to an election under Subchapter S of the Internal Revenue
Code not to have the Company taxed as a corporation. Accordingly, no provision
has been made for Federal income taxes.
In October 1996, the Company lost its S corporation status as a result of
issuing stock to the corporation. Therefore, the Company will be taxed as a C
corporation for a portion of 1996. Accordingly, the accumulated deficit has been
closed to paid-in capital as of November 1, 1996. For
F-7
<PAGE>
<PAGE>
PROFLIGHT MEDICAL RESPONSE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
1996, deferred income taxes are provided for items which are reported for tax
purposes in different periods than in the financial statements. See note H for a
summary of the income tax provision.
7. USE OF ESTIMATES
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
NOTE B -- REALIZATION OF ASSETS
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of the
Company as a going concern. However, as shown in the accompanying financial
statements, the Company has accumulated a deficit in stockholders' equity of
$543,878 through December 31, 1996. In addition, total current liabilities
exceed total current assets by approximately $1,080,000 as of December 31, 1996.
In view of the matters described in the preceding paragraph, recoverability
of a major portion of the recorded asset amounts shown in the accompanying
balance sheet is dependent upon continued operations of the Company, which in
turn is dependent upon the Company's ability to meet its financing requirements
on a continuing basis, to maintain present financing, and to succeed in its
future operations. The financial statements do not include any adjustments
relating to the recoverability and classification of recorded asset amounts or
amounts and classification of liabilities that might be necessary should the
Company be unable to continue in existence.
Management plans to continue expanding services through the purchase of
additional aircraft, resulting in increased revenues, more efficient use of
current aircraft, and proportionately lower operating costs. Management believes
this should provide a higher gross margin. In addition, the Company is pursuing
additional financing from outside sources, including an initial public offering
(IPO) (see note E). With the proceeds of the IPO, management intends to acquire
a company which will more than double current sales. Management believes this
combination will allow both companies to operate more efficiently through
elimination of certain duplicate general and administrative costs, purchasing
discounts on aircraft fuel, and more efficient use of each aircraft. Management
believes that these actions will provide growth and improve the Company's
operating and financial condition, providing the opportunity to continue as a
going concern.
NOTE C -- NOTE RECEIVABLE - AIR RESPONSE, INC.
In 1996, the Company loaned $200,000 to Air Response, Inc., a company it
intends to purchase (see note E -- Acquisition), who is also a major customer.
The note bears interest at 10%. The note is payable in two installments of
$100,000 plus accrued interest on May 14, 1998 and May 14, 2000.
F-8
<PAGE>
<PAGE>
PROFLIGHT MEDICAL RESPONSE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
NOTE D -- NOTES PAYABLE
Notes payable at December 31 consisted of the following:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Shareholders
10.0% note to a shareholder, issued on October 28, 1993, with interest
on the loan for the first 24 months to be in the form of additional
ownership in the Company. Thereafter, to be paid in sixteen monthly
installments of $5,026, including interest; due March 1997. At
December 31, 1996, the entire balance is in default and is reflected
as current........................................................... $ 19,694 $ 66,160
10.0% notes with nineteen shareholders payable in full, principal and
interest, on the earlier of one year from date of each note or upon
closing of an initial public offering................................ 350,000 --
---------- ----------
369,694 66,160
Less current maturities................................................ 369,694 56,160
---------- ----------
$ -- $ 10,000
---------- ----------
---------- ----------
Other
9.75% note due in monthly installments of $5,304 including interest,
due December 20, 2002; refinanced in 1996; collateralized by a 1969
Learjet 24B and other key components................................. $ -- $ 322,000
11.0% note due in monthly installments of $7,576 including interest,
due March 20, 2005; refinanced in 1996; collateralized by a 1971
Learjet 25C and other key components. Guaranteed by certain
stockholders......................................................... -- 526,334
10.5% note due in monthly installments of $8,023 including interest,
due February 14, 2000; refinanced in 1996; collateralized by a 1973
Learjet 25B-XR and other key components. Guaranteed by certain
stockholders......................................................... -- 435,688
9.75% note due in monthly installments of $19,419 including interest,
due November 10, 2006; collateralized by a 1978 Learjet 35A and other
equipment............................................................ 1,477,646 --
9.75% note due in 60 monthly installments of $14,720, including
interest, beginning December 15, 1996, with a balloon payment of
$322,284 due on December 15, 2001; collateralized by a 1973 Learjet
25B and other equipment. Guaranteed by certain stockholders.......... 886,139 --
10.5% note due in 59 monthly installments of $17,717, including
interest, beginning June 30, 1996, with a balloon payment of $841,995
due on May 31, 2001, collateralized by a 1978 Learjet 35A. Guaranteed
by certain stockholders.............................................. 1,268,241 --
10.5% note due in 55 monthly installments of $6,513, including
interest, beginning November 15, 1996, with a balloon payment of
$324,627 due on June 15, 2001; collateralized by a 1978 Learjet 35A.
Guaranteed by certain stockholders................................... 478,053 --
10.0% note, issued January 16, 1996, due in monthly installments of
$1,500, with the balance due on July 16, 1996. Defaulted in 1996 and
interest rate increased to 20.0%; entire balance reflected as
current.............................................................. 85,009 --
10.25% line of credit with bank, due February 27, 1997................. 43,100 --
</TABLE>
(table continued on next page)
F-9
<PAGE>
<PAGE>
PROFLIGHT MEDICAL RESPONSE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(table continued from previous page)
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
3% plus prime note with monthly interest only payments, due May 20,
1997; secured by a third lien on a 1973 Learjet 25B-XR and a second
interest in all accounts receivable and certain medical equipment.... 100,000 --
11.0% note with monthly interest only payments and annual principal
payments of $22,000 for March 1996, $44,000 for March 1997 and
$154,000 for March, 1998; secured by a secondary lien in a 1973
Learjet 25B-XR and other key components, as well as all accounts
receivable, and certain medical equipment and other assets as
specified in the agreement........................................... $ 198,000 $ 220,000
---------- ----------
4,536,188 1,504,022
Less current maturities..................................................... 572,253 143,502
---------- ----------
$3,963,935 $1,360,520
---------- ----------
---------- ----------
</TABLE>
The aggregate maturities of the notes payable are as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
- ------------------------
<S> <C>
1997 ...................................... $ 941,947
1998 ...................................... 485,679
1999 ...................................... 366,532
2000 ...................................... 405,054
2001 ...................................... 1,799,327
Thereafter ...................................... 907,343
----------
$4,905,882
----------
----------
</TABLE>
NOTE E -- COMMITMENTS AND CONTINGENCIES
LEASES
The Company leased aircraft, office space and office equipment under
operating lease arrangements. Total lease payments were $86,738 and $24,734 for
the years ended December 31, 1996 and 1995, respectively. In addition, as part
of the aircraft lease, the Company is required to make monthly payments of $150
per engine hour flown. A total of $12,720 was recognized in 1996 as maintenance
expense.
The minimum rental commitments under the noncancelable lease agreements are
as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
- ------------------------
<S> <C>
1997 ........................................ $181,788
1998 ........................................ 143,495
--------
$325,283
--------
--------
</TABLE>
ACQUISITION
As of December 31, 1996, the Company has signed a letter of intent to
acquire Air Response, Inc. and Air Response South, Inc., air ambulance companies
based in New York and Florida. The purchase price for these companies is
$2,000,000, of which $1,000,000 is payable on the closing by the Company of an
initial public offering (IPO) and $1,000,000 is payable two years from the date
of the closing of the IPO. In addition, the Company will issue shares of common
stock equal to $2,500,000 based upon the initial public offering price within
two years from the closing of the offering to the former shareholder of Air
Response, Inc. and Air Response South, Inc.
F-10
<PAGE>
<PAGE>
PROFLIGHT MEDICAL RESPONSE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
In conjunction with the proposed public offering, the Company has also
signed an agreement to retain its attorneys for anticipated legal work. The
estimated range of legal fees for this work is between $75,000 and $100,000.
LITIGATION
In March 1997, the Company and the Company's President were named in a
lawsuit Susan Fuller v. Proflight, Inc., Kevin Burkhardt, Andrew Hiestand and
James Fuller, Arapahoe County District Court, Colorado which alleges that the
plaintiff's former husband merged a business into the Company to conceal and
otherwise preclude plaintiff from receiving plaintiff's share of her former
husband's interest in the Company. The lawsuit is in its early stages and the
Company's unable to predict the outcome of this matter and no provision has been
provided for in the financial statements. In April 1997, the Company filed a
motion to dismiss as is the alternative for summary judgment. The Company,
through its counsel, intends to vigorously defend against this action.
NOTE F -- MAJOR CUSTOMERS
The Company had approximate sales to major customers as follows:
<TABLE>
<CAPTION>
CUSTOMER 1996 1995
- ---------------------------------------------------------------------- ---- ----
<S> <C> <C>
A..................................................................... 13% 17%
B..................................................................... 10% 12%
C..................................................................... 8% 10%
D (Air Response, Inc.)................................................ 8% 10%
</TABLE>
In addition, the Company is due approximately $132,000 in accounts
receivable and $200,000 in a note receivable (see note C) from Air Response,
Inc. This customer is the company Proflight intends to purchase as discussed in
note E -- Acquisition.
NOTE G -- ACCOMMODATION AGREEMENT
In order for the Company to obtain sufficient financing to purchase a 1973
Learjet 25B-XR, it was necessary for the Company to have an accommodator
guarantee repayment of a loan. In exchange, the accommodator is paid a fee of
$100 per month for each month that the loan is outstanding.
NOTE H -- INCOME TAXES
There is no income tax expense or benefit for 1996. The provision for
income taxes differs from the amount determined by applying the statutory rate
to net income before taxes, due to the following reasons for the year ended
December 31, 1996:
<TABLE>
<S> <C>
Income tax benefit at statutory rate............................................. $(246,000)
Benefit for Subchapter S loss.................................................... 205,000
Change in valuation allowance.................................................... 52,000
Other............................................................................ (11,000)
---------
Income tax benefit............................................................... $ --
---------
---------
</TABLE>
Components of deferred tax assets at December 31, 1996 are as follows:
<TABLE>
<S> <C>
Net operating loss carryforwards................................................. $ 34,000
Allowance for bad debts.......................................................... 15,000
Accruals......................................................................... 3,000
---------
52,000
Valuation allowance.............................................................. (52,000)
---------
Net assets....................................................................... $ --
---------
---------
</TABLE>
F-11
<PAGE>
<PAGE>
PROFLIGHT MEDICAL RESPONSE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
For pro forma purposes, there would be no income tax expense for 1995, as
the Company would have net operating loss carryovers available from prior years
to offset any taxable income. The Company has net operating loss carryforwards
for tax purposes of approximately $93,000 which expire in the year 2011.
NOTE I -- DISCLOSURES ABOUT FAIR VALUES OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value
of each class of financial instrument for which it is practicable to estimate
that value.
CASH AND CASH EQUIVALENTS
The carrying amount approximates fair value because of the short maturity
of those instruments.
NOTES RECEIVABLE
It is not considered practicable to estimate the fair value of the note
receivable due to the related-party nature of the transaction.
NOTES PAYABLE
Carrying amount approximates fair value as the interest rates approximate
market rates at December 31, 1996 and 1995.
NOTE J -- SUBSEQUENT EVENTS
On January 14, 1997, the Company paid $42,600 on a note payable that was in
default at December 31, 1996. The balance of the note was $85,009 at December
31, 1996.
On January 13, 1997, the Company received an additional $150,000 in a
bridge loan from an existing shareholder. The Company issued 300,000 shares of
common stock to the noteholder. The note bears interest at 10% and is due on the
earlier of one year from the date of the note or upon closing of an initial
public offering.
On February 17, 1997, the Company amended its Articles of Incorporation to
have the authority to issue 500,000 shares of $1 par value preferred stock. In
addition, the Company changed its name from Proflight, Inc. to Proflight Medical
Response, Inc. These changes have been given retroactive treatment.
F-12
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
AIR RESPONSE, INC. and
AIR RESPONSE SOUTH, INC.
Fort Plain, New York 13339
We have audited the accompanying combined balance sheet of Air Response,
Inc. (a New York corporation) and Air Response South, Inc. (a Florida
corporation) (combined 'the Companies') as of May 31, 1996, and the related
combined statements of operations and retained earnings, and cash flows for the
year then ended. These financial statements are the responsibility of the
Companies' management. Our responsibility is to express an opinion on the
finanical statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the combined financial position of Air Response, Inc.
and Air Response South, Inc. as of May 31, 1996, and the combined results of
their operations and their cash flows for the year then ended in conformity with
generally accepted accounting principles.
STAFF MAIKELS & CIAMPINO, P.C.
December 18, 1996
F-13
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholder
AIR RESPONSE, INC. and
AIR RESPONSE SOUTH, INC.
Fort Plain, New York
We have audited the accompanying combined statements of operations and
retained earnings and cash flows of Air Response, Inc., and Air Response South,
Inc. (combined 'the Companies') for the year ended May 31, 1995. These financial
statements are the responsibility of the Companies' management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the results of operations and cash flows of
Air Response, Inc., and Air Response South, Inc. for the year ended May 31,
1995, in conformity with generally accepted accounting principles.
KAUFMAN, ROSSIN & CO., P.A.
Miami, Florida
November 26, 1996
F-14
<PAGE>
<PAGE>
AIR RESPONSE, INC. AND AIR RESPONSE SOUTH, INC.
COMBINED BALANCE SHEET
MAY 31, 1996
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents...................................................................... $ 91,093
Cash and cash equivalents -- restricted........................................................ 37,438
Accounts receivable, net of allowance for doubtful accounts of $45,000......................... 489,273
Prepaid expenses............................................................................... 296,390
Refundable income taxes........................................................................ 53,105
----------
Total current assets...................................................................... 967,299
----------
Property and equipment:
Aircraft fleet................................................................................. 2,549,491
Machinery and equipment........................................................................ 142,559
Office equipment............................................................................... 20,960
----------
2,713,010
Less -- accumulated depreciation............................................................... 1,213,261
----------
Total property and equipment.............................................................. 1,499,749
----------
Other assets:
Due from officer............................................................................... 24,895
Deposits....................................................................................... 22,800
----------
Total other assets........................................................................ 47,695
----------
Total assets......................................................................... $2,514,743
----------
----------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Line of credit................................................................................. $ 374,384
Accounts payable............................................................................... 998,877
Current maturities of long-term debt........................................................... 299,262
Accrued expenses............................................................................... 42,114
Income taxes payable........................................................................... 14,358
Due to affiliate............................................................................... 133,833
----------
Total current liabilities................................................................. 1,862,828
Long-term debt, less current maturities............................................................. 519,151
----------
Total liabilities......................................................................... 2,381,979
----------
Commitments and contingencies:
Stockholder's equity:
Common stock................................................................................... 2,000
Retained earnings.............................................................................. 130,764
----------
Total stockholder's equity................................................................ 132,764
----------
Total liabilities and stockholder's equity........................................... $2,514,743
----------
----------
</TABLE>
See accompanying notes to financial statements.
F-15
<PAGE>
<PAGE>
AIR RESPONSE, INC. AND AIR RESPONSE SOUTH, INC.
COMBINED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
FOR THE YEARS ENDED MAY 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Air ambulance revenue................................................................. $6,737,095 $4,718,013
---------- ----------
Operating expenses
Flying operations................................................................ 3,847,723 2,586,297
Advertising...................................................................... 505,805 543,265
Repairs and maintenance.......................................................... 272,823 357,556
Depreciation..................................................................... 366,139 299,951
General and administrative....................................................... 1,571,974 1,024,259
---------- ----------
Total operating expenses.................................................... 6,564,464 4,811,328
---------- ----------
Income (loss) from operations......................................................... 172,631 (93,315)
---------- ----------
Other income (expense)
Loss on disposal of property and equipment....................................... (38,283) (63,875)
Bad debt expense -- affiliate.................................................... (201,892) -0-
Interest income.................................................................. 6,313 10,820
Interest expense................................................................. (100,651) (128,600)
Miscellaneous.................................................................... 11,570 12,251
---------- ----------
Total other income (expense)................................................ (322,943) (169,404)
---------- ----------
Loss before income taxes.............................................................. (150,312) (262,719)
Income tax benefit.................................................................... 73,904 150,522
---------- ----------
Net loss.............................................................................. (76,408) (112,197)
Retained earnings -- beginning of year................................................ 207,172 319,369
---------- ----------
Retained earnings -- end of year...................................................... $ 130,764 $ 207,172
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to financial statements.
F-16
<PAGE>
<PAGE>
AIR RESPONSE, INC. AND AIR RESPONSE SOUTH, INC.
COMBINED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MAY 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Cash flows from operating activities
Net loss........................................................................... $ (76,408) $(112,197)
Adjustments to reconcile net loss to net cash provided by operations:
Depreciation.................................................................. 366,139 299,951
Loss on disposal of property and equipment.................................... 38,283 63,875
Deferred income taxes......................................................... (35,157) (10,520)
Provision for doubtful accounts............................................... 54,422 13,694
Bad debt expense -- affiliate................................................. 201,892 --
(Increase) decrease in assets:
Accounts receivable...................................................... (57,319) (54,009)
Refundable income taxes.................................................. 89,097 (142,202)
Prepaid expenses......................................................... (283,318) (1,012)
Deposits................................................................. (22,800) --
Increase (decrease) in liabilities:
Accounts payable......................................................... 411,902 198,331
Income taxes payable..................................................... (40,990) (5,343)
Accrued expenses......................................................... (85,878) 91,742
--------- ---------
Net cash provided by operating activities................................ 559,865 342,310
--------- ---------
Cash flows from investing activities
Purchases of property and equipment................................................ (322,700) (394,424)
Net advances to officer............................................................ (23,054) --
Net borrowing from (advances to) affiliates........................................ 1,385 (59,513)
--------- ---------
Net cash used by investing activities.................................... (344,369) (453,937)
--------- ---------
Cash flows from financing activities
Net borrowings under line of credit................................................ 193,077 186,307
Proceeds from long-term debt....................................................... -- 151,932
Repayments of long-term debt....................................................... (306,413) (225,550)
--------- ---------
Net cash (used) provided by financing activities......................... (113,336) 112,689
--------- ---------
Net increase in cash and cash equivalents............................................... 102,160 1,062
Cash and cash equivalents -- beginning of year.......................................... 26,371 25,309
--------- ---------
Cash and cash equivalents -- end of year................................................ $ 128,531 $ 26,371
--------- ---------
--------- ---------
</TABLE>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Income taxes paid......................................................................... $ 55,348 $ 20,000
-------- --------
-------- --------
Interest paid............................................................................. $103,466 $115,727
-------- --------
-------- --------
</TABLE>
See accompanying notes to financial statements.
F-17
<PAGE>
<PAGE>
AIR RESPONSE, INC. AND AIR RESPONSE SOUTH, INC.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1996 AND 1995
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF COMBINATION
The accompanying financial statements present the combined financial
results of Air Response, Inc. ('Response') and Air Response South, Inc.
('Response South') (combined 'the Companies'), which are wholly-owned by a
common shareholder. All significant intercompany accounts have been eliminated
in combination.
The accompanying financial statements do not include the accounts of
Response Medical Transport Services, Inc. ('Medical') or Response Aviation, Inc.
('Aviation'), which are also wholly-owned by the common shareholder.
ORGANIZATION AND BUSINESS ACTIVITY
The Companies provide air ambulance services throughout the United States
and coordinate air ambulance services internationally through other carriers.
The Companies' aircraft are located in New York and Florida.
USE OF ESTIMATES
The process of preparing financial statements in conformity with generally
accepted accounting principles requires the use of estimates and assumptions
regarding certain types of assets, liabilities, income and expenses. Such
estimates primarily relate to unsettled transactions and events as of the date
of the financial statements. Accordingly, upon settlement, actual results may
differ from estimated amounts.
REVENUE RECOGNITION
Revenue is recognized when services have been performed and is reported net
of contractual allowances.
CASH AND CASH EQUIVALENTS
The Companies consider all short-term investments having a maturity of
three months or less, when purchased, to be cash equivalents.
ACCOUNTS RECEIVABLE -- ALLOWANCE FOR DOUBTFUL ACCOUNTS
The Companies provide for doubtful accounts receivable using the allowance
method based on outstanding accounts at year-end and management's estimation of
collectibility of these accounts.
MEDICAL SUPPLIES
It is the Companies' policy to expense all purchases of medical supplies as
incurred as large quantities of these items are generally not held in an
inventory for long periods.
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost. Depreciation is computed on the
double-declining balance and straight-line methods over the estimated useful
lives of the assets, which range from 5 to 7 years.
Expenditures for maintenance and repairs which do not extend the useful
lives of the assets are charged to income as incurred.
F-18
<PAGE>
<PAGE>
AIR RESPONSE, INC. AND AIR RESPONSE SOUTH, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
MAY 31, 1996 AND 1995
INCOME TAXES
The Companies account for income taxes under the provisions of the
Financial Accountant Standards Board Statement No. 109, 'Accounting for Income
Taxes'.
GOVERNMENTAL REGULATION
Response is subject to the rules and regulations of the Federal Aviation
Administration (FAA) and the New York State Department of Health. Response South
is regulated by the State of Florida Department of Health and Rehabilitative
Services.
(2) LONG-TERM DEBT
Long-term debt as of May 31, 1996 consisted of the following:
<TABLE>
<S> <C>
Note Payable to Central National Bank, payable in monthly installments of $7,061 including
interest at 10.25%, maturing December 1997; secured by aviation equipment, mortgage on real
estate owned by stockholder and the personal guarantee of the stockholder.................. $ 76,045
Note payable to Central National Bank, payable in monthly installments of $385 including
interest at 10.25%, maturing February 1998; secured by aviation equipment, mortgage on real
estate owned by stockholder and the personal guarantee of the stockholder.................. 8,161
Note payable to Cessna Finance Corporation, payable in monthly installments of $2,728
including interest at prime + 1.5% (9.75% at May 31, 1996), maturing December 2000; secured
by aviation equipment and equipment installed therein...................................... 123,776
Note payable to Cessna Finance Corporation, payable in monthly installments of $2,069
including interest at prime + 2% (10.25% at May 31, 1996), maturing July 1999; secured by
aviation equipment and equipment installed therein......................................... 73,546
Note payable to Cessna Finance Corporation, payable in monthly installments of $3,142
including interest at 11%, maturing June 1999; secured by aviation equipment and equipment
installed therein.......................................................................... 99,198
Note Payable to Cessna Finance Corporation, payable in monthly installments of $2,407
including interest at prime + 2.25% (10.5% at May 31, 1996), maturing October 1997; secured
by aviation equipment and equipment installed therein...................................... 41,231
Note payable to Banc One Leasing Corporation, payable in monthly installments of $12,477
including interest at 8.13%, maturing March, 1999; secured by an aircraft and all of its
installed equipment and the personal guarantee of the stockholder.......................... 396,456
--------
Total long-term debt.................................................................... 818,413
Less current maturities................................................................. 299,262
--------
Total long-term debt, less current maturities........................................... $519,151
--------
--------
</TABLE>
Based on borrowing rates currently available to the Companies for loans
with similar terms and maturities, the fair value of long-term debt approximates
the recorded amounts.
F-19
<PAGE>
<PAGE>
AIR RESPONSE, INC. AND AIR RESPONSE SOUTH, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
MAY 31, 1996 AND 1995
Maturities of long-term debt as of May 31, 1996 on a fiscal year basis are
as follows:
<TABLE>
<CAPTION>
YEAR ENDING MAY 31, PRINCIPAL REPAYMENT
- ------------------------------------------------------------------------- -------------------
<S> <C>
1997.............................................................. $ 299,262
1998.............................................................. 228,217
1999.............................................................. 228,658
2000.............................................................. 42,045
2001.............................................................. 20,231
---------
Total........................................................ $ 818,413
---------
---------
</TABLE>
(3) LINE OF CREDIT/CASH AND CASH EQUIVALENTS-RESTRICTED
Response has a $375,000 line of credit with Central National Bank, with a
balance outstanding of $374,384 as of May 31, 1996. The line is secured by
specific accounts receivable as designated at the time of advance, a cash
reserve of 10% of the receivables as required by the line of credit agreement
and the personal guarantee of the stockholder. A finance charge of 2.85% of the
receivables is charged by the bank and deducted from the loan proceeds.
Repayments are made upon collection of the receivables. In addition, the bank is
entitled to a finance charge of 1.5% of the unremitted receivables outstanding
over thirty days. Total charges incurred by Response for the years ended May 31,
1996 and 1995 pursuant to this facility were $89,318 and $10,975, respectively.
(4) STOCKHOLDER'S EQUITY
Common stock of the entities consists of the following:
<TABLE>
<CAPTION>
SHARES
-----------------------------------
AUTHORIZED ISSUED OUTSTANDING
---------- ------ -----------
<S> <C> <C> <C>
Response:
Voting common stock; no par value.............................. 200 100 100
Response South:
Non-voting, Series A common stock;
$.01 par value............................................... 100,000 0 0
Voting, Series B common stock;
$.01 par value............................................... 100,000 51,000 51,000
</TABLE>
(5) INCOME TAXES
The Companies provide for income taxes using the applicable statutory
rates. The components of income taxes for the years ended May 31, 1996 and 1995
are as follows:
<TABLE>
<CAPTION>
1996 1995
-------- ---------
<S> <C> <C>
Current:
Current tax expense....................................................... $ 14,358 $ 2,200
Fuel tax credit........................................................... (53,105) (82,000)
Benefit from net operating loss carryback................................. 0 (60,202)
Deferred:
Deferred tax benefit, net................................................. (45,230) (10,520)
Change in valuation allowance............................................. 10,073 0
-------- ---------
Income tax benefit................................................... $(73,904) $(150,522)
-------- ---------
-------- ---------
</TABLE>
F-20
<PAGE>
<PAGE>
AIR RESPONSE, INC. AND AIR RESPONSE SOUTH, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
MAY 31, 1996 AND 1995
The following are the differences between the income tax provision
(benefit) and the amount computed by applying the federal statutory income tax
rate of 34% to income (loss) before income taxes for the years ended May 31,
1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
-------- ---------
<S> <C> <C>
Tax (benefit) at U.S. statutory rates.......................................... $(51,106) $ (89,324)
State income taxes (benefit), net of federal tax benefit....................... (7,937) (22,529)
Fuel tax credit................................................................ (30,801) (82,000)
Other credits.................................................................. (18,244) (18,472)
Permanent differences.......................................................... 28,856 46,284
Change in valuation allowance.................................................. 10,073 13,122
Other.......................................................................... (4,745) 2,397
-------- ---------
Income tax benefit........................................................ $(73,904) $(150,522)
-------- ---------
-------- ---------
</TABLE>
Deferred income taxes were recognized in the balance sheet at May 31, 1996
due principally to the tax effect of temporary differences, alternative minimum
tax credits and loss carryforwards as follows:
<TABLE>
<S> <C>
Deferred tax assets:
Non-deductible reserves............................................................... $ 18,956
Alternative minimum tax credit carryforwards -- Federal............................... 91,205
Net operating loss carryforwards -- Federal........................................... 16,252
Net operating loss carryforwards -- State............................................. 26,507
---------
152,920
Valuation allowance.............................................................. (23,195)
---------
Total deferred tax assets........................................................ 129,725
Deferred tax liabilities:
Accelerated depreciation.............................................................. (129,725)
---------
Net deferred tax liabilities..................................................... $ 0
---------
---------
</TABLE>
At May 31, 1996, Response had approximately $91,000 in alternative minimum
tax credit carryforwards which may be used to offset future federal income tax.
At May 31, 1996, Response had net operating loss carryforwards for Federal
and State purposes of approximately $48,000 and $331,000, respectively. These
carryforwards begin to expire in 2009.
(6) ADVERTISING COSTS
The Companies incur costs for yellow page advertising in local phone
directories. The advertisements remain listed for the life of the directory,
generally twelve months. The Companies pay the cost of this advertising prior to
publication of the directory and amortize those costs over a twelve month period
beginning with the month that the phone directory is distributed to the public.
At May 31, 1996, $266,527 of advertising was reported as assets and is
included as a prepaid expense. Advertising expense was $505,805 and $543,265 for
the years ended May 31, 1996 and 1995, respectively.
(7) COMMITMENTS AND CONTINGENCIES
Response is a defendant in a lawsuit with alleged claims approximating
$100,000 plus unspecified damages, which arose from a transaction in 1991
related to the purchase of an aircraft. Management believes the suit is
completely without merit and will continue to vigorously defend its position.
F-21
<PAGE>
<PAGE>
AIR RESPONSE, INC. AND AIR RESPONSE SOUTH, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
MAY 31, 1996 AND 1995
(8) RELATED PARTY TRANSACTIONS
Response purchases both fuel and oil from Response Aviation, Inc.
('Aviation'), a company wholly-owned by Response's shareholder. The total amount
of purchases for the years ended May 31, 1996 and 1995 approximated $175,000 and
$149,000, respectively. Due to the common ownership between Response and
Aviation, the prices for fuel and oil charged by Aviation to Response may not be
indicative of the prices that Response may be able to obtain if common ownership
did not exist.
Response advanced a total of $201,892 to Aviation in the form of notes
receivable and working capital advances. These balances were deemed
uncollectible and written off to expense as a bad debt in 1996.
The Companies have a receivable due from an officer, the sole shareholder
of the Companies, amounting to $24,895 at May 31, 1996. This amount is due on
demand and is non-interest bearing. It is not the Companies' intent to collect
these balances within the next fiscal year.
Response owes Response Medical Transport, Inc. ('Medical') $133,833 at May
31, 1996. This amount represents net advances to Response for working capital
purposes. No interest is charged on these outstanding balances.
Response leases hangar space from Aviation at Fulton County New York
Airport under a lease agreement expiring May 31, 1997. Related rental expense
for the years ended May 31, 1996 and 1995 was $18,000 and $18,000, respectively.
Response leases lodging facilities from its stockholder on a month-to-month
basis. This lease was terminated in November 1995. Minimum rentals amounted to
$500 per month plus real estate tax and maintenance.
Certain of Response's expenses are paid by Medical and allocated back to
Response. These charges, including office salaries and benefits, and rent and
utilities at the Nelliston, New York office, were approximately $97,500 and
$122,000 for the years ended May 31, 1996 and 1995, respectively.
(9) EMPLOYEE BENEFIT PLANS
Response and Response South both have voluntary defined contribution
savings plans covering all of their employees who have met certain age and
length of service requirements. The plan qualifies under Section 401(k) of the
Internal Revenue Code. The Companies may provide discretionary matching
contributions each year. Matching contributions totaled $15,291 and $9,565 for
the years ended May 31, 1996 and 1995, respectively.
(10) SUBSEQUENT EVENT
In November 1996, the Companies entered into a letter of intent with
Proflight, Inc. whereby Proflight will purchase all of the outstanding shares of
Response and Response South in exchange for cash and stock of Proflight. It is
contemplated that the closing of the acquisition will be completed concurrently
with the consummation of the initial public offering of Proflight's common
shares.
F-22
<PAGE>
<PAGE>
AIR RESPONSE, INC. AND AIR RESPONSE SOUTH, INC.
CONDENSED COMBINED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents...................................................... $ 292,297 $ 75,193
Accounts receivable............................................................ 595,355 683,767
Less allowance for doubtful debts......................................... (16,659) (10,309)
Officer receivable............................................................. 322,421 13,529
Refundable income taxes........................................................ 53,105 142,202
Due from affiliate............................................................. 5,748 189,312
Prepaid expenses............................................................... 297,369 157,239
------------ ------------
Total current assets...................................................... 1,549,636 1,250,933
Property and Equipment
Aircraft fleet................................................................. 2,535,598 2,550,519
Office, shop, and medical equipment............................................ 224,749 150,753
Less accumulated depreciation.................................................. (1,320,008) (1,079,393)
------------ ------------
1,440,339 1,621,879
Other assets........................................................................ 12,800 550
------------ ------------
Total other assets........................................................ 1,453,139 1,622,429
------------ ------------
Total Assets.............................................................. $ 3,002,775 $ 2,873,362
------------ ------------
------------ ------------
LIABILITIES
Current Liabilities:
Accounts payable -- trade...................................................... $ 997,504 $ 1,008,334
Line of credit................................................................. 374,749 374,533
Current maturities of long term debt........................................... 299,262 313,944
Accrued income taxes........................................................... 14,358 31,445
Due to affiliate............................................................... 66,601 124,650
Accrued liabilities............................................................ 8,843 151,138
------------ ------------
Total current liabilities................................................. 1,761,317 2,004,044
Long term debt, less current maturites.............................................. 1,221,533 626,819
------------ ------------
Total Liabilities......................................................... $ 2,982,850 $ 2,630,863
------------ ------------
------------ ------------
Equity:
Common Stock................................................................... $ 2,000 $ 2,000
Retained Earnings.............................................................. 17,925 240,499
------------ ------------
Total Equity.............................................................. 19,925 242,499
------------ ------------
Total Liabilities and Equity.............................................. $ 3,002,775 $ 2,873,362
------------ ------------
------------ ------------
</TABLE>
F-23
<PAGE>
<PAGE>
AIR RESPONSE, INC. AND AIR RESPONSE SOUTH, INC.
CONDENSED COMBINED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
SEVEN MONTHS ENDED
DECEMBER 31,
------------------------
1996 1995
---------- ----------
<S> <C> <C>
Net Sales............................................................................. $4,428,940 $3,656,916
Flying operations and maintenance..................................................... 2,857,035 2,224,169
Promotion and Sales................................................................... 330,170 274,268
General and Administrative expense.................................................... 899,757 892,849
Interest expense...................................................................... 93,646 58,624
Depreciation and amortization......................................................... 240,615 210,000
Other (expense) income................................................................ (120,556) 36,321
---------- ----------
Income (loss) before taxes............................................................ (112,839) 33,327
Income taxes.......................................................................... -- --
---------- ----------
Net income (loss)..................................................................... (112,839) 33,327
---------- ----------
</TABLE>
F-24
<PAGE>
<PAGE>
AIR RESPONSE, INC. AND AIR RESPONSE SOUTH, INC.
CONDENSED COMBINED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SEVEN MONTHS ENDED
DECEMBER 31,
------------------------
1996 1995
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss).............................................................. $ (112,839) $ 33,327
Adjustment to reconcile net earnings (loss) to net cash provided by operating
activities
Depreciation and amortization............................................... 242,100 210,000
Changes in assets and liabilities:
(Increase) in prepaids................................................. (979) (1,745)
(Increase) in refundable due taxes..................................... -- (142,202)
(Increase) in accounts payable......................................... (1,373) 421,366
Increase (decrease) in accrued liabilities............................. (33,271) 21,207
(Decrease) in accrued taxes............................................ -- (59,060)
---------- ----------
Net cash provided (used) by operating activities............................ 93,638 482,893
Cash flows from investing activities:
Acquisition of property and equipment............................................ (182,690) (250,629)
(Increase) in accounts and officer's receivable.................................. (386,949) (198,770)
(Increase) decrease is due to/from affiliate..................................... (72,980) 4,782
---------- ----------
Net cash provided (used) by investing activities............................ (642,619) (444,617)
Cash flows from financing activities:
(Increase) decrease in deposits.................................................. 10,000 (550)
Increase in line of credit....................................................... 365 175,813
Principal payments on long-term debt............................................. (653,468) (164,719)
Proceeds from long-term debt..................................................... 1,355,850 --
---------- ----------
Net cash provided by financing activities................................... 712,747 10,544
---------- ----------
Net increase in cash and cash equivalents................................... $ 163,766 $ 48,820
---------- ----------
---------- ----------
Cash at beginning of period........................................................... $ 128,531 $ 26,373
---------- ----------
Cash at end of period................................................................. $ 292,297 $ 75,193
---------- ----------
---------- ----------
</TABLE>
F-25
<PAGE>
<PAGE>
AIR RESPONSE, INC. AND AIR RESPONSE SOUTH, INC.
NOTES TO CONDENSED COMBINED STATEMENTS
DECEMBER 31, 1996 AND 1995
(UNAUDITED)
NOTE 1 -- SUMMARY OF ACCOUNTING POLICIES
The accompanying unaudited condensed combined financial statements of Air
Response and Air Response South (collectively, the 'Company') have been prepared
in accordance with generally accepted accounting principles for interim
financial information and pursuant to the rules and regulations of the
Securities and Exchange Commission. Accordingly, they do not include all of the
information and notes required by generally accepted accounting principles for
annual financial statements.
The accompanying unaudited condensed combined financial statements and
disclosures reflect all adjustments which, in the opinion of the management, are
necessary for a fair presentation of the results of operations, financial
position, and cash flow of the Company. The results of operations for the
periods indicated are not necessarily indicative of the results for the full
year.
NOTE 2 -- The Company owns the following aircraft.
<TABLE>
<CAPTION>
AMOUNT OWED
AS OF
TYPE OF AIRCRAFT DATE OF PURCHASE PURCHASE PRICE 12/31/96
- ------------------------------------------ ----------------- -------------- ------------
<S> <C> <C> <C>
Lear 24................................... 10/90 $447,860 $257,000
Lear 25................................... 5/94 629,964 494,085
Navajo.................................... 6/93 136,500 63,956
C-340..................................... 10/92 129,000 140,944
C-421..................................... 9/94 160,085 111,564
MU2....................................... 6/91 243,919 247,114
</TABLE>
NOTE 3 -- The Company has notes to the following lenders on each of its
aircraft:
<TABLE>
<CAPTION>
AMOUNT MO.
AIRCRAFT LENDER FINANCED (APR) PAYMENT
- -------------------------- --------------- ---------- ---------------- -------
<S> <C> <C> <C> <C>
Lear 24................... Textron $ 257,000 Prime +1.5% $5,429
Lear 25................... Textron 500,000 Prime +1.5% 6,526
Navajo.................... Cessna Finance 118,000 8.0% 2,069
C-340..................... Textron 145,000 Prime +1.5% 3,057
C-421..................... Cessna Finance 150,300 9.25% 2,728
MU2....................... Cessna Finance 253,850 Prime +1.5% 4,149
</TABLE>
NOTE 4
The Company have a receivable due from an officer, the sole shareholder of
the Companies, amounting to $322,421 at December 31, 1996. This amount is due on
demand and is non-interest bearing.
NOTE 5 -- SUBSEQUENT EVENTS
In April 1997, the sole stockholder entered into an agreement which
agreement was amended in May 1997, to sell all of the outstanding stock of Air
Response and Air Response South in exchange for $2,000,000 in cash of which
$1,000,000 is payable upon closing of an initial public offering of Proflight
Medical Response, Inc. ('Proflight') with the balance due two years from closing
of the offering and 588,236 shares of common stock of Proflight to be issued two
years from closing of the offering. If
F-26
<PAGE>
<PAGE>
Proflight completes a secondary offering, the shareholder has the option to put
such number of shares of Common Stock at the then current market value, equal to
20% of the net proceeds of such offering to Proflight, not to exceed $1,000,000.
In October 1996, Proflight advanced $200,000 to Air Response, Inc. Air
Response, Inc. refinanced the Lear 25 and Cessna 340 for approximately $500,000
and $145,000 in November 1996 with Textron, Inc. In December, 1996, Air Response
refinanced the Lear 24 for approximately $257,000. Prior balances owed on the
airplanes with other funding agencies were paid off with the monies received
from refinancing.
F-27
<PAGE>
<PAGE>
PROFLIGHT MEDICAL RESPONSE, INC.
PRO FORMA BALANCE SHEET
DECEMBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
AIR RESPONSE AND PRO FORMA ADJUSTMENTS TO
PROFLIGHT AIR RESPONSE SOUTH COMBINED ADJUSTMENTS(A) PRO FORMA(B) PRO FORMA(C)
---------- ------------------- ---------- -------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents...... -- $ 292,297 $ 292,297 $ (1,000,000)(1) $ (707,703 ) $ 2,978,050(1)
275,000(2)
(1,138,749)(3)
Accounts receivable............ $ 461,795 578,696 1,040,491 (148,887)(2) 891,604
Other current assets........... 13,003 678,643 691,646 691,646
---------- ------------------- ---------- -------------- ------------ --------------
Total current assets....... 474,798 1,549,636 2,024,434 (1,148,887) 875,547 2,114,301
---------- ------------------- ---------- -------------- ------------ --------------
Fixed Assets:
Aircraft, property and
equipment at cost............ 4,465,142 2,760,347 7,225,489 1,117,868(1) 8,343,357
Less accumulated depreciation
and amortization............. (337,013) (1,320,008) (1,657,021) (1,657,021 )
Other assets................... 372,239 12,800 385,039 (200,000)(2) 185,039 27,500(2)
Goodwill....................... 3,219,546(1) 3,219,546
---------- ------------------- ---------- -------------- ------------ --------------
Total assets............... $4,975,166 $ 3,002,775 $7,977,941 $ 2,988,527 $10,966,468 $ 2,141,801
---------- ------------------- ---------- -------------- ------------ --------------
---------- ------------------- ---------- -------------- ------------ --------------
Current Liabilities:
Accounts payable............... $ 495,791 $ 997,504 $1,493,295 $ (148,887)(2) $ 1,344,408
Bank overdraft................. 19,910 -- 19,910 19,910
Current portion of notes....... 941,947 674,011 1,615,958 (200,000)(2) 1,415,958 $ 275,000(2)
(500,000)(4)
(1,138,749)(3)
Accrued liabilities............ 97,461 89,802 187,263 187,263
---------- ------------------- ---------- -------------- ------------ --------------
Total current
liabilities.............. 1,555,109 1,761,317 3,316,426 (348,887) 2,967,539 (1,363,749)
Long Term Debt..................... 3,963,935 1,221,533 5,185,468 857,339(1) 6,042,807 --
---------- ------------------- ---------- -------------- ------------ --------------
Total Liabilities.......... 5,519,044 2,982,850 8,501,894 508,452 9,010,346 (1,363,749)
---------- ------------------- ---------- -------------- ------------ --------------
Stockholders' Equity:
Common Stock, par value .001
for Proflight and no par
value for Air Response and
.01 for Response South
Proflight has 3,225,000
shares issued and
outstanding. Air Response has
100 shares issued and
outstanding and Air Response
South has 51,000 shares
issued and outstanding....... 3,225 2,000 5,225 (1,412)(1) 3,813 700(1)
Additional paid-in capital
(deficit).................... (436,098) -- (436,098) 2,499,412(1) 2,063,314 3,914,300(1)
(909,450)(1)
500,000(4)
Retained Earnings (deficit).... (111,005) 17,925 (93,080) (17,925)(1) (111,005 )
---------- ------------------- ---------- -------------- ------------ --------------
Total Stockholders'
Equity................... (543,878) 19,925 (523,953) 2,480,075 1,956,122 3,505,550
---------- ------------------- ---------- -------------- ------------ --------------
$4,975,166 $ 3,002,775 $7,977,941 $ 2,988,527 $10,966,468 $ 2,141,801
---------- ------------------- ---------- -------------- ------------ --------------
---------- ------------------- ---------- -------------- ------------ --------------
<CAPTION>
ADJUSTED
PRO FORMA(D)
------------
<S> <C>
Current Assets:
Cash and cash equivalents...... $ 1,406,598
Accounts receivable............ 891,604
Other current assets........... 691,646
------------
Total current assets....... 2,989,848
------------
Fixed Assets:
Aircraft, property and
equipment at cost............ 8,343,357
Less accumulated depreciation
and amortization............. (1,657,021 )
Other assets................... 212,539
Goodwill....................... 3,219,546
------------
Total assets............... $13,108,269
------------
------------
Current Liabilities:
Accounts payable............... $ 1,344,408
Bank overdraft................. 19,910
Current portion of notes....... 1,690,958
(500,000)
(1,138,749)
Accrued liabilities............ 187,263
------------
Total current
liabilities.............. 1,603,790
Long Term Debt..................... 6,042,807
------------
Total Liabilities.......... 7,646,597
------------
Stockholders' Equity:
Common Stock, par value .001
for Proflight and no par
value for Air Response and
.01 for Response South
Proflight has 3,225,000
shares issued and
outstanding. Air Response has
100 shares issued and
outstanding and Air Response
South has 51,000 shares
issued and outstanding....... 4,513
Additional paid-in capital
(deficit).................... 5,568,164
Retained Earnings (deficit).... (111,005)
------------
Total Stockholders'
Equity................... 5,461,672
------------
$13,108,269
------------
------------
</TABLE>
- ------------
(A) Adjustments relating to the acquisition.
(B) Total Pro Forma including acquisition adjustments.
(C) Adjustments relating to the offering.
(D) Total Pro Forma and adjustments relating to the offering.
Pro Forma adjustments:
(1) To record purchase of Air Response including allocation of purchase
price and recognition of goodwill.
(2) To eliminate intercompany receivables/payables and sales.
Adjustments to Pro Forma as a result of the offering:
(1) To record proceeds and stock issue related to the offering.
(2) To recognize additional bridge loan proceeds and related issuance of
stock in anticipation of the offering.
(3) To recognize payment of debt with proceeds from the offering.
(4) To reflect forgiveness of loans by investors.
F-28
<PAGE>
<PAGE>
PROFLIGHT MEDICAL RESPONSE, INC.
PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
AIR RESPONSE AND PRO FORMA
PROFLIGHT AIR RESPONSE SOUTH COMBINED ADJUSTMENTS(A) PRO FORMA(B)
---------- ------------------ ----------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Net Sales............................... $3,906,211 $7,509,119 $11,415,330 $ (250,000)(1) $ 11,165,330
Operating expense
Flying operations and
maintenance...................... 3,001,507 4,648,622 7,650,129 (250,000)(1) 7,400,129
Promotion and sales................ 255,616 580,989 836,605 836,605
General and administrative......... 650,036 1,618,292 2,268,328 2,268,328
Depreciation and amortization...... 377,930 398,239 776,169 261,000(2) 1,037,169
---------- ------------------ ----------- -------------- ------------
Total operating expense....... 4,285,089 7,246,142 11,531,231 11,000 11,542,231
Operating income (loss)....... (378,878) 262,977 (115,901) (376,901)
Nonoperating expenses (income)
Interest expense................... 287,188 135,673 422,861 71,331(3) 494,192
Other expense and (income)......... (34) 409,784 409,750 -- 409,750
---------- ------------------ ----------- -------------- ------------
287,154 545,457 832,611 903,942
Income tax benefit...................... 73,904 73,904 73,904
---------- ------------------ ----------- -------------- ------------
Net income (loss)....................... $ (666,032) $ (208,576) $ (874,608) $ (332,331) $ (1,206,939)
---------- ------------------ ----------- -------------- ------------
---------- ------------------ ----------- -------------- ------------
Per share data
Net income (loss).................. $(0.33)
Average shares..................... 3,613,236
</TABLE>
- ------------
(A) Adjustments relating to the acquisition.
(B) Total Pro Forma including acquisition adjustments.
(1) To eliminate intercompany receivables/payables and sales.
(2) To record depreciation and amortization of goodwill.
(3) Interest on new debt to stockholder.
F-29
<PAGE>
<PAGE>
_____________________________ _____________________________
NO UNDERWRITER, DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS
OFFERING, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE UNDERWRITER. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFERING TO SELL OR A SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE
HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary.......................................................................................................... 2
Risk Factors................................................................................................................ 8
Use of Proceeds............................................................................................................. 13
Dividend Policy............................................................................................................. 14
Capitalization.............................................................................................................. 15
Dilution.................................................................................................................... 16
Selected Financial Data..................................................................................................... 17
Management's Discussion and Analysis of Financial Condition and Results of Operations....................................... 19
Business.................................................................................................................... 23
Management.................................................................................................................. 29
Principal Shareholders...................................................................................................... 32
Certain Transaction......................................................................................................... 33
Description of Securities................................................................................................... 34
Shares Eligible For Future Sale............................................................................................. 37
Underwriting................................................................................................................ 37
Legal Matters............................................................................................................... 39
Experts..................................................................................................................... 40
Additional Information...................................................................................................... 40
Index to Financial Statements............................................................................................... F-1
</TABLE>
------------------------
UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS),
ALL DEALERS EFFECTING TRANSACTIONS IN THE SHARES OF COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
900,000 SHARES OF
COMMON STOCK
AND 900,000 REDEEMABLE COMMON STOCK
PURCHASE WARRANTS
PROFLIGHT MEDICAL
RESPONSE, INC.
--------------------------
PROSPECTUS
--------------------------
CENTURY CITY
SECURITIES, INC.
, 1997
_____________________________ _____________________________
<PAGE>
<PAGE>
PART II
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Colorado Corporation Code, as revised, in general, allows corporations
to indemnify their directors and officers against reasonable expenses incurred
in connection with a proceeding, if the person acted in good faith and in a
manner the person believed to be in or not opposed to the best interests of the
corporation. In the case of a criminal action, the director or officer must have
had no reasonable cause to believe that the person's conduct was unlawful. Under
current law, a corporation may not indemnify a director or officer in connection
with a proceeding by or in the right of the corporation in which the director or
officer was adjudged liable to the corporation or if the director or officer
derived an improper personal benefit.
The Company's Articles of Incorporation and By-Laws provide that the
Company shall indemnify its directors and officers to the fullest extent
permitted by the Colorado Law.
The Company will enter into an indemnification agreement ('Indemnification
Agreement') with each of its directors and officers. Each Indemnification
Agreement will provide that the Company will indemnify the indemnitee against
expenses, including reasonable attorneys' fees, judgments, penalties, fines and
amounts paid in settlement actually and reasonably incurred by him or her in
connection with any civil or criminal action or administrative proceeding
arising out of his performance of his duties as a director or officer, other
than an action instituted by the director or officer. Such indemnification is
available if the indemnitee acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Company, and, with
respect to any criminal action, had no reasonable cause to believe his conduct
was unlawful. Each Indemnification Agreement also will require that the Company
Indemnify the director or other party thereto in all cases to the fullest extent
permitted by applicable law. The term of the Indemnification Agreement will be
the later of (i) ten (10) years after the date that the indemnitee ceases to
serve as a director or officer of the Company, or (ii) the final termination of
all proceedings, as defined in the Indemnification Agreement, in which the
indemnitee is granted rights of indemnification.
Each Indemnification Agreement will permit the indemnitee to bring suit to
seek recovery of amounts due under such Indemnification Agreement and will
require that the Company indemnify the director or other party thereto in all
cases to the fullest extent permitted by applicable law. Although the Company
intends to seek to obtain directors' and officers' liability insurance, such
insurance is generally very expensive. If the Company is not able to obtain
directors' and officers' liability insurance to cover amounts, any payments made
by the Company under an Indemnification Agreement will have an adverse impact on
the Company.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses to be borne by the
Company (also referred to herein as the Registrant) in connection with the
issuance and distribution of the shares of Common Stock pursuant to the Offering
(other than underwriting discounts and commissions).
<TABLE>
<S> <C>
SEC registration fee....................................................................... $1,186.36
NASD filing fee............................................................................ $ *
Nasdaq SmallCap Market'sm'................................................................. $ *
Legal fees and expenses.................................................................... $ *
Accounting fees............................................................................ $ *
Blue Sky fees and expenses................................................................. $ *
Printing and engraving expenses............................................................ $ *
Miscellaneous.............................................................................. $ *
---------
Total fees and expenses.................................................................... $ *
---------
---------
</TABLE>
- ------------
* To be completed by amendment
II-1
<PAGE>
<PAGE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
The following paragraphs set forth certain information with respect to all
securities sold by the Company within the past three years without registration
under the Securities Act of 1933, as amended (the 'Securities Act'). The
information includes the names of the purchasers, the date of issuance, the
title and number of securities sold and the consideration received by the
Company for the issuance of these shares.
The following shares of Common Stock were issued by the Company without
registration under the Securities Act by reason of the exemption from
registration afforded by the provisions of Section 4(2) thereof, as transactions
by an issuer not involving a public offering:
In January 1996, Steven B. Myers, a Director of the Company, purchased
231,214 shares of Common Stock from the Company for $100,000.
In January 1996, the Company issued Steven A. Cantor, 1,475,000 shares
of Common Stock valued at $50,000. Mr. Cantor has provided investment
banking services to the Company. Mr. Cantor transferred his shares to
Srotnac Group LLC, a company which is 98% owned by Mr. Cantor. In January
1997, Srotnac Group LLC, sold 700,000 shares at $.25 to Planet Auto Group,
Inc. in a private transaction. In May 1997, Srotnac Group LLC transferred
its remaining shares to Melinda Cantor, the wife of Steven Cantor.
In November 1996, the Company issued 5,000 shares of Common Stock to
Loselle Greenawalt valued at $250.
In November 1996, the Company issued 20,000 shares of Common Stock to
Tom Cox valued at $1,000.
In November 1996, the Company issued 25,000 shares of Common Stock to
Brett Abrams valued at $1,250.
In January 1997, the Company issued Arthur G. Rosenberg, a director of
the Company an option to purchase 25,000 shares of Common Stock of the
Company at an exercise price of $1.00 per share as an incentive to become a
director of the Corporation.
In March 1997, the Company issued Tom Cox an option to purchase 25,000
shares of Common Stock of the Company at an exercise price of $4.25 per
share in consideration for Mr. Cox extending the due date of certain notes.
In May 1997, Kevin L. Burkhardt and Jane S. Burkhardt agreed to return
218,954 shares of Common Stock to the Company in exchange for options to
purchase 437,908 shares of Common Stock at an exercise price of $4.25 per
share. The options are five year options exercisable upon closing of the
offering.
In May 1997, Charles W. Bartholomew agreed to return 130,719 shares of
Common Stock to the Company in exchange for options to purchase 261,438
shares of Common Stock at an exercise price of $4.25 per share. The options
are five year options exercisable upon closing of the offering.
In May 1997, Steven B. Myers agreed to return 150,327 shares of Common
Stock to the Company in exchange for options to purchase 300,654 shares of
Common Stock at an exercise price of $4.25 per share. The options are five
year options exercisable upon closing of the offering.
In May 1997, Brett Abrams agreed to return 25,000 shares of Common
Stock to the Company in exchange for options to purchase 50,000 shares of
Common Stock at an exercise price of $4.25 per share. The options are five
year options exercisable upon closing of the offering.
In May 1997, Annette Cantor a 10% shareholder sold her shares at $.50
to 10 unrelated parties in a private transaction.
The following shares of Common Stock were issued by the Company without
registration under the Securities Act in accordance with Rule 506 of Regulation
D of the Securities Act.
II-2
<PAGE>
<PAGE>
In October 1996, the Company completed a private placement issuing 70 Units
of the Company's securities ('Units'), each Unit consisting of a $5,000
principal amount 10% promissory note and 10,000 shares of the Company's common
Stock, as follows:
<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES DATE
- -------------------------------------------------------------------------------- --------- ---------
<S> <C> <C>
Alphanet Communications Corp.................................................... 20,000 10/31/96
Barbara Banach and Sally Miglio................................................. 10,000 10/31/96
Cindy Bermingham custodian for Maverick Bermingham.............................. 5,000 10/31/96
Brite Lite Industries, Inc...................................................... 30,000 10/31/96
Annette Cantor.................................................................. 325,000 10/31/96
Charlene Cantor................................................................. 5,000 10/31/96
Rosemary D'Amato................................................................ 5,000 10/31/96
Tiffany D'Amato................................................................. 5,000 10/31/96
Merchant Investors Management Limited........................................... 30,000 10/31/96
Dolores Miller.................................................................. 30,000 10/31/96
Shane Morrison.................................................................. 10,000 10/31/96
Corey Morrison.................................................................. 5,000 10/31/96
Sherry Cantor Morrison.......................................................... 5,000 10/31/96
Josephine Pace.................................................................. 20,000 10/31/96
Anthony C. Parkes............................................................... 5,000 10/31/96
Gregory Pollack................................................................. 5,000 10/31/96
Sean Reid....................................................................... 5,000 10/31/96
River Rock Equities, Inc. ...................................................... 150,000 10/31/96
RII Partners, Inc............................................................... 30,000 10/31/96
</TABLE>
In January 1997, the Company issued 300,000 additional shares of Common
Stock and $150,000, 10% promissory note, as follows:
<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES DATE
- -------------------------------------------------------------------------------- --------- ---------
<S> <C> <C>
Morbury Corporation............................................................. 160,000 01/13/97
Valinvest Corp.................................................................. 140,000 01/10/97
</TABLE>
In March 1997, the Company issued 25,000 additional shares of Common Stock
and $125,000, 10% promissory note, as follows:
<TABLE>
<CAPTION>
NUMBER OF PROMISSORY
NAME SHARES NOTE DATE
- ------------------------------------------------------------------- --------- ---------- ---------
<S> <C> <C> <C>
Barry and Elizabeth Mevorach JTWROS................................ 2,500 $ 12,500 03/31/97
Raymond G. Hancock................................................. 2,500 $ 12,500 03/31/97
Barbara Banach..................................................... 17,500 $ 87,500 03/31/97
North Shore Financial Money Purchase Plan DLJSC-FBO
Richard Banach................................................... 2,500 $ 12,500 03/31/97
</TABLE>
ITEM 27. EXHIBITS
<TABLE>
<C> <S>
* 1.1 -- Form of Underwriting Agreement.
* 1.2 -- Master Agreement Among underwriters.
* 2.1 -- Amended Agreement and Plan of Reorganization, dated May 1997, by and among, Proflight, Louis R. Capece,
Jr. And Air Response, Inc.
* 2.2 -- Amended Stock Purchase Agreement, dated May 1997, by and among, Proflight, Louis R. Capece, Jr. And Air
Response South, Inc.
3.1 -- Amended and Restated Articles of Incorporation.
3.2 -- Bylaws.
* 4.1 -- Form of Certificate for Shares of Common Stock.
* 4.2 -- Form of Underwriter's Warrant.
5.1 -- Opinion and Consent of Loselle Greenawalt Kaplan Blair & Adler.
10.1 -- Lease Agreement dated February 27, 1997, between the Company and Airplaza Co., Inc.
</TABLE>
(table continued on next page)
II-3
<PAGE>
<PAGE>
(table continued from previous page)
<TABLE>
<C> <S>
10.2 -- Air Ambulance Transport Services Agreement dated February 9, 1996, by and between the Company and Aetna
Health Management, Inc.
10.3 -- Promissory Note and Accommodation Agreement dated March 17, 1995, between the Company and Lear Three,
L.L.C.
*10.4 -- First Promissory Note Extension, dated March 26, 1997, between the Company and Lear Three, L.L.C.
10.5 -- Promissory Note dated May 20, 1996, between the Company and Lear Three, L.L.C.
*10.6 -- Second Promissory Note Extension, dated March 26, 1997, between the Company and Lear Three, L.L.C.
10.7 -- Promissory Note date May 31, 1996, between the Company and Textron Financial Corporation.
10.8 -- Security Agreement dated May 31, 1996, between the Company and Textron Financial Corporation.
10.9 -- Promissory Note dated October 8, 1996, between the Company and Textron Financial Corporation.
10.10 -- Aircraft Lease Agreement dated November 15, 1996, between the Company and Superior Transport Service,
Inc.
10.11 -- Promissory Note dated November 13, 1996, between the Company and Norwest Equipment Finance, Inc.
10.12 -- Agreement Under Standards dated October 13, 1994, between the Company and the Arapahoe County Public
Airport Authority.
*10.13 -- Amended Employment Agreement dated May 1997, by and between the Company and Donald Jones.
10.14 -- Employment Agreement dated March 1997, by and between the Company and Kevin L. Burkhardt.
10.15 -- Employment Agreement dated March 1997, by and between the Company and David Cohen.
10.16 -- Employment Agreement dated March 1997, by and between the Company and Jane S. Burkhardt.
10.17 -- Consulting Agreement dated April 1997, by and between the Company and Louis R. Capece, Jr.
10.18 -- Agreement dated April 30, 1995, between Air Response, Inc. and Central National Bank Canajoharie.
10.19 -- Note and Security Agreement dated February 24, 1993, between Air Response, Inc. and Cessna Finance
Corporation.
10.20 -- Aircraft Lease Agreement dated June 27, 1996, between Air Response, Inc. and U.S. Bancorp Leasing &
Financial.
10.21 -- Promissory Note dated September 20, 1996, between Air Response, Inc. and Cessna Finance Corporation.
10.22 -- Promissory Note dated October 23, 1996, between Air Response, Inc. and Textron Financial Corporation.
10.23 -- Promissory Note dated October 23, 1996, between Air Response, Inc. and Textron Financial Corporation.
*10.24 -- Insurance Policy between the Company and Nationair Insurance Agency.
*10.25 -- Stock Option Plan
23.1 -- Consents of Grant Thornton LLP
23.2 -- Consent of Loselle Greenawalt Kaplan Blair & Adler (included Exhibit 5.1).
23.3 -- Consents of Staff Maikels and Ciampino, P.C.
23.4 -- Consents of Kaufman Rossin & Co., P.C.
24.1 -- Power of Attorney.
</TABLE>
* To be filed by amendment
ITEM 28. UNDERTAKINGS
(a) The Registrant will,
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act;
II-4
<PAGE>
<PAGE>
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if
the total dollar value of securities offered would not exceed that which
was registered) any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the 'Calculation of
Registration Fee' table in the effective registration statement.
(iii) Include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial
bona fide offering.
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
(b) The Registrant will provide to the Underwriter at the closing
certificates in such denominations and registered in such names as required by
the Underwriter to permit prompt delivery to each purchaser.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
II-5
<PAGE>
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as
amended, the registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements of filing on Form SB-2 and authorized this
registration statement to be signed on its behalf by the undersigned, in the
City of New York, State of New York on the 15th day of May, 1997.
PROFLIGHT MEDICAL RESPONSE, INC.
By: /s/ KEVIN L. BURKHARDT
..................................
KEVIN L. BURKHARDT, PRESIDENT
In accordance with the requirements of the Securities Act of 1933, as
amended, this registration statement was signed by the following persons in the
capacities indicated on the dates stated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ -------------------------------------------- -------------------
<C> <S> <C>
/s/ KEVIN L. BURKHARDT Chief Executive Officer, President, 5/15/97
......................................... Director
(KEVIN L. BURKHARDT)
/s/ JANE L. BURKHARDT Secretary, Director 5/15/97
.........................................
(JANE S. BURKHARDT)
/s/ DAVID COHEN Chief Financial Officer, Treasurer 5/15/97
.........................................
(DAVID COHEN)
/s/ ARTHUR G. ROSENBERG Director 5/15/97
.........................................
(ARTHUR G. ROSENBERG)
/s/ CHARLES W. BARTHOLOMEW Director 5/15/97
.........................................
(CHARLES W. BARTHOLOMEW)
/s/ STEVEN B. MYERS Director 5/15/97
.........................................
(STEVEN B. MYERS)
</TABLE>
II-6
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each director and officer whose
signature appears below constitutes and appoints Kevin L. Burkhardt and David
Cohen, or either of them, as such person's true and lawful attorneys-in-fact and
agents, will full powers of substitution and re-substitution, for such person in
name, place and stead, to sign in any and all amendments (including
post-effective amendments) to this Registration Statement on Form SB-2, in any
and all capacities, and to file the same, with all exhibits thereto and all
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto such attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
such attorneys-in-fact and agents, or any of them, may lawfully do or cause to
be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, as
amended, this Registration Statement was signed by the following persons in the
capacities and on the dates stated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ -------------------------------------------- -------------------
<C> <S> <C>
/s/ KEVIN L. BURKHARDT
......................................... Chief Executive Officer, President, 5/15/97
(KEVIN L. BURKHARDT) Director
/s/ JANE S. BURKHARDT Secretary, Director 5/15/97
.........................................
(JANE S. BURKHARDT)
/s/ DAVID COHEN Chief Financial Officer, Treasurer 5/15/97
.........................................
(DAVID COHEN)
/s/ ARTHUR G. ROSENBERG Director 5/15/97
.........................................
(ARTHUR G. ROSENBERG)
/s/ CHARLES W. BARTHOLOMEW Director 5/15/97
.........................................
(CHARLES W. BARTHOLOMEW)
/s/ STEVEN B. MYERS Director 5/15/97
.........................................
(STEVEN B. MYERS)
</TABLE>
II-7
<PAGE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
* 1.1 -- Form of Underwriting Agreement.
* 1.2 -- Master Agreement Among underwriters.
* 2.1 -- Amended Agreement and Plan of Reorganization, dated May 1997, by and among, Proflight, Louis R. Capece,
Jr. And Air Response, Inc.
* 2.2 -- Amended Stock Purchase Agreement, dated May 1997, by and among, Proflight, Louis R. Capece, Jr. And Air
Response South, Inc.
3.1 -- Amended and Restated Articles of Incorporation.
3.2 -- Bylaws.
* 4.1 -- Form of Certificate for Shares of Common Stock.
* 4.2 -- Form of Underwriter's Warrant.
5.1 -- Opinion and Consent of Loselle Greenawalt Kaplan Blair & Adler.
10.1 -- Lease Agreement dated February 27, 1997, between the Company and Airplaza Co., Inc.
10.2 -- Air Ambulance Transport Services Agreement dated February 9, 1996, by and between the Company and Aetna
Health Management, Inc.
10.3 -- Promissory Note and Accommodation Agreement dated March 17, 1995, between the Company and Lear Three,
L.L.C.
*10.4 -- First Promissory Note Extension, dated March 26, 1997, between the Company and Lear Three, L.L.C.
10.5 -- Promissory Note dated May 20, 1996, between the Company and Lear Three, L.L.C.
*10.6 -- Second Promissory Note Extension, dated March 26, 1997, between the Company and Lear Three, L.L.C.
10.7 -- Promissory Note date May 31, 1996, between the Company and Textron Financial Corporation.
10.8 -- Security Agreement dated May 31, 1996, between the Company and Textron Financial Corporation.
10.9 -- Promissory Note dated October 8, 1996, between the Company and Textron Financial Corporation.
10.10 -- Aircraft Lease Agreement dated November 15, 1996, between the Company and Superior Transport Service,
Inc.
10.11 -- Promissory Note dated November 13, 1996, between the Company and Norwest Equipment Finance, Inc.
10.12 -- Agreement Under Standards dated October 13, 1994, between the Company and the Arapahoe County Public
Airport Authority.
*10.13 -- Amended Employment Agreement dated May 1997, by and between the Company and Donald Jones.
10.14 -- Employment Agreement dated March 1997, by and between the Company and Kevin L. Burkhardt.
10.15 -- Employment Agreement dated March 1997, by and between the Company and David Cohen.
10.16 -- Employment Agreement dated March 1997, by and between the Company and Jane S. Burkhardt.
10.17 -- Consulting Agreement dated April 1997, by and between the Company and Louis R. Capece, Jr.
10.18 -- Agreement dated April 30, 1995, between Air Response, Inc. and Central National Bank Canajoharie.
10.19 -- Note and Security Agreement dated February 24, 1993, between Air Response, Inc. and Cessna Finance
Corporation.
10.20 -- Aircraft Lease Agreement dated June 27, 1996, between Air Response, Inc. and U.S. Bancorp Leasing &
Financial.
10.21 -- Promissory Note dated September 20, 1996, between Air Response, Inc. and Cessna Finance Corporation.
10.22 -- Promissory Note dated October 23, 1996, between Air Response, Inc. and Textron Financial Corporation.
10.23 -- Promissory Note dated October 23, 1996, between Air Response, Inc. and Textron Financial Corporation.
*10.24 -- Insurance Policy between the Company and Nationair Insurance Agency.
*10.25 -- Stock Option Plan
23.1 -- Consents of Grant Thornton LLP
23.2 -- Consent of Loselle Greenawalt Kaplan Blair & Adler (included Exhibit 5.1).
23.3 -- Consents of Staff Maikels and Ciampino, P.C.
23.4 -- Consents of Kaufman Rossin & Co., P.C.
24.1 -- Power of Attorney.
</TABLE>
STATEMENT OF DIFFERENCES
------------------------
The service mark symbol shall be expressed as......................'sm'
<PAGE>
<PAGE>
PLEASE INCLUDE A TYPED MAIL TO: SECRETARY OF STATE FOR OFFICE
SELF-ADDRESSED ENVELOPE CORPORATIONS SECTION USE ONLY
MUST BE TYPED FILING FEE: 1560 BROADWAY, SUITE 200
$60.00 DENVER, CO 80202
MUST SUBMIT TWO COPIES (303) 894-2251
FAX (303) 894-2242
RESTATED ARTICLES
OF
INCORPORATION WITH AMENDMENTS
Pursuant to the provisions of the Colorado Business Corporation Act, the
undersigned corporation adopts the following amended and restated Articles of
Incorporation. These articles correctly set forth the provision of the Articles
of Incorporation, as amended, and supersedes the original Articles of
Incorporation and all amendments thereto.
FIRST: The name of the corporation is: PROFLIGHT, INC.
-------------------------------------------------------------
SECOND: The following amendment and restated Articles of Incorporation
were adopted on:
February 17, 1997, in the manner marked with an X below:
_______ The amended and restated Articles of Incorporation were adopted
by the board of directors where no shares have been issued, or no
shareholders action required.
X The amended and restated Articles of Incorporation were adopted
_______ by a vote of the shareholders. The number of shares voted for the
amendment and restated Articles of Incorporation was sufficient
for approval.
_______ The amended and restated Articles of Incorporation were adopted
by the Incorporators where no shares have been issued or
directors elected.
THIRD: The name of the corporation as amended is Proflight Medical
Response, Inc.
ATTACH A COPY OF YOUR AMENDED AND RESTATED ARTICLES OF INCORPORATION
/s/ Kevin L. Burkhardt
By: Kevin L. Burkhardt
Its: President
Title
<PAGE>
<PAGE>
AMENDED AND RESTATED ARTICLES OF INCORPORATION
of
PROFLIGHT MEDICAL RESPONSE, INC.
FIRST: The name of the Corporation is:
PROFLIGHT MEDICAL RESPONSE, INC.
SECOND: The Corporation shall have perpetual existence.
THIRD: (a) PURPOSES. The nature, objects and purposes of the business
to be transacted shall be as follows:
(1) To operate an air ambulance service.
(2) To engage in any business which is considered lawful in
the State of Colorado.
(3) In general, to carry on any other business in connection
with the foregoing and to have and exercise all of the
powers which are now or may hereafter be conferred by the
laws of Colorado upon like corporations and to do any and
all of the things hereinabove set forth to the same extent
as natural persons might or could do.
(b) POWERS. In furtherance of the foregoing purposes, the
Corporation shall have and may exercise all of the rights,
powers, and privileges now or hereafter conferred upon
corporations organized under the laws of Colorado. In
addition, it may do everything necessary, suitable or
proper for the accomplishment of any of its corporate
purposes.
FOURTH: The aggregate number of shares which the Corporation shall
have authority to issue shall be Ten Million Five Hundred
Thousand (10,500,000) shares, as follows:
(a) Common Stock. Of the total authorized capital stock, the
Corporation shall have the authority to issue is Ten
Million (10,000,000) shares of common stock, $.001 par
value per share, which shares shall be designated "Common
Stock."
(b) This Corporation shall also have the authority to issue
Five Hundred Thousand (500,000) shares of preferred stock,
$1.00 par value per share, which shares shall be
designated "Preferred Stock."
The Preferred Shares may be issued from time to time in one or
more series, each of which shall have such number, designation,
relative rights, preferences and
<PAGE>
<PAGE>
limitations as are stated and expressed herein and in a
resolution or resolutions providing for the issue of such series,
adopted by the Board of Directors.
The Board of Directors of the Corporation is hereby
granted the authority to establish and designate series of
Preferred Shares and to fix and determine the following with
respect to each series:
(i) the designation of the series and the limitations,
if any, on the number of shares of the series that
may be issued;
(ii) the dividend payable on the shares of each series,
the payment dates of the shares of each series and
the date or dates from which dividends on the
shares of a series shall accumulate;
(iii) the consideration to be received by the Corporation
in exchange for the shares of stock of each series,
and the terms of its payment; and
(iv) any other powers and preferences, relative,
participating, option, and other special rights,
and qualifications, limitations and restrictions of
each series not inconsistent with the Articles of
Incorporation of the Corporation.
The designation of each series of Preferred Stock and its
terms and provisions shall be fixed and determined by the Board
of Directors of the Corporation in a manner permitted by law and
stated in resolution or resolutions providing for the issuance of
the series.
Except as otherwise provided in the resolution or
resolutions providing for the issuance of a series, the Board of
Directors may from time to time increase the number of shares of
any series already created, by providing that any unissued shares
of Preferred Stock constitute a part of that series, and may from
time to time decrease (but not below the number of shares of the
series then outstanding) the number of shares of any series
already created by providing that any unissued shares previously
assigned to that series no longer constitute a part of that
series.
The Board of Directors may classify and reclassify any
unissued shares of Preferred Stock by fixing or altering the
terms and provisions of the shares with respect to the terms and
provisions of the shares with respect to the terms and provisions
discussed above, and by assigning the shares to an existing or
newly created series from time to time before the issuance of the
shares, except as may otherwise be expressly provided in a
resolution or resolutions providing for the issuance of a
particular series.
(c) Each shareholder of record shall have one vote for each
share of stock standing in his name on the books of the
corporation and entitled to vote.
<PAGE>
<PAGE>
(d) There shall be no cumulative voting allowed.
(e) At all meetings of shareholders, a majority of the shares
entitled to vote at such meeting, represented in person or
by proxy, shall constitute a quorum.
(f) No shareholder of the corporation shall have any
preemptive or other right to subscribe for any additional
shares of stock, or for other securities of any class, or
for rights, warrants, or options to purchase stock or for
script, or for securities of any kind convertible into
stock or carrying stock purchase warrants or privileges.
(g) The board of directors may from time to time distribute to
the shareholders in partial liquidation, out of stated
capital or capital surplus of the corporation, a portion
of its assets, in cash or property, subject to the
limitations contained in the statutes of Colorado.
FIFTH: The number of directors shall be no less than four.
SIXTH: The address of the registered office of the Corporation is 12420 E.
Control Tower Rd., Englewood, Colorado 80112. The name of its registered
agent at such address is Kevin L. Burkhardt. The Corporation may conduct
part or all of its business in any other part of Colorado, of the United
States, or of the world. It may hold, purchase, mortgage, lease and
convey real and personal property in any of such places.
SEVENTH: The following provisions are inserted for the management
of the business and for the conduct of the affairs of the
Corporation, and the same are in furtherance of and not in
limitation or exclusion of the powers conferred by law.
(a) LIABILITY OF DIRECTORS. The liability of a director of the
Corporation to the Corporation shall be eliminated to the
fullest extent permitted under applicable Colorado law, as
well as by any statutory amendments that expand the
elimination or limitation of such liability. Any repeal or
modification of this section under this Article by
stockholders of the Corporation shall not adversely affect
any right or protection of a director of the Corporation
existing at the time of such appeal or modification.
(b) TRANSACTIONS WITH INTERESTED OFFICERS AND DIRECTORS. In
the absence of fraud, no contract or other transaction
between this Corporation and one or more of its directors,
officers or any other corporation, partnership,
association or entity in which any director
<PAGE>
<PAGE>
or officer of the Corporation is financially or otherwise
interested or is a director, member or officer of such other
corporation, partnership, association or entity, shall be
affected or invalidated because of such relationship or
interest, provided that the existence and nature of any such
interest of such director or officer shall be disclosed or
shall have been known to the directors present at any
meeting of the Board at which action on any such contract or
transaction shall have been taken, or that the fact of such
relationship is disclosed or known to the shareholders
entitled to vote and they authorize, approve, or ratify the
contract or transaction by vote or written consent, or the
contract or transaction is fair and reasonable to the
Corporation. Any interest director may be counted in
determining the existence of the quorum and may vote at any
meeting of the Board for the purpose of authorizing any such
contract or transaction with like force and effect as if he
were not so interested or were not a director, member or
officer of such other Corporation, firm, association or
partnership.
(c) INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES,
FIDUCIARIES AND AGENTS. Pursuant to applicable state law,
including but not limited to Section 7-109-102 of the
Colorado Revised Statutes, each director, officer,
employee, fiduciary or agent of the Corporation (and his
heirs, executors and administrators) shall be indemnified
by the Corporation against expenses reasonably incurred by
or imposed upon him which he may be involved or to which
he may be made a party by reason of his being or having
been a director, officer, employee, fiduciary or agent of
the Corporation, or at its request of any other
Corporation of which it is a shareholder or creditor and
from which he is not entitled to be indemnified (whether
or not he continues to be a director, officer, employee,
fiduciary or agent at the time of imposing or incurring
such expenses), except in respect of matters as to which
he shall be finally adjudged in such action, suit or
proceeding to be liable for negligence or misconduct.
Subject to applicable state law, in the event of a
settlement of any such action, suit or proceeding,
indemnification shall be provided only in connection with
such matters covered by the settlement as to which the
Corporation is advised by counsel that the person to be
indemnified did not commit a breach of duty. The foregoing
right of indemnification shall not be exclusive of other
rights to which he may be entitled under applicable state
law.
(d) NEGATION OF EQUITABLE INTERESTS IN SHARES OR RIGHTS. The
Corporation shall be entitled to treat the registered
holder of any shares of the Corporation as the owner
thereof for all purposes, including all rights deriving
from such shares and shall not be bound to recognize any
equitable or other claim to, or interest in, such shares
or rights deriving from such shares, on the part of any
other person, including but without limiting the
generality hereof, a purchaser, assignee or transferee of
such
<PAGE>
<PAGE>
shares or rights deriving from such shares, unless and
until such purchaser, assignee, transferee or other person
becomes the registered holder of such shares, whether or
not the Corporation shall have either actual or
constructive notice of the interest of such purchaser,
assignee, transferee or other person. The purchaser,
assignee or transferee of any of the shares of the
Corporation shall not be entitled: to receive notice of
the meetings of the shareholders; to vote at such
meetings; to examine a list of the shareholders; to be
paid dividends or other sums payable to shareholders; or
to own, enjoy and exercise any other property or rights
deriving from such shares against the Corporation, until
such purchaser, assignee, or transferee has become the
registered holder of such shares.
<PAGE>
<PAGE>
BYLAWS
OF
PROFLIGHT, INC.
ARTICLE I
Offices
The corporation may have such offices, either within or outside the
State of Colorado, as the Board of Directors may designate or as the business of
the corporation may require from time to time. The principal office of the
corporation shall be located in Denver, Colorado.
The registered office of the corporation required by the Colorado
Corporation Act to be maintained in the State of Colorado may be but need not be
identical with the principal office, and the address of the registered office
may be changed from time to time by the Board of Directors.
ARTICLE II
Shareholders
Section 1. ANNUAL MEETING. The annual meeting of the shareholders shall
be held each year for the purpose of electing directors and for the transaction
of such other business as may come before the meeting. The annual meeting shall
be held at such time and place as designated by the Board of Directors of the
corporation.
If the day fixed for the annual meeting shall be a legal holiday in the
State of Colorado, such meeting shall be held on the next succeeding business
day. If the election of directors shall not be held on the day designated herein
for any annual meeting of the shareholders or at any adjournment thereof, the
Board of Directors shall cause the election tc be held at a special meeting of
the shareholders as soon thereafter as may be convenient.
Section 2. SPECIAL MEETING. Special meetings of the shareholders for any
purpose, unless otherwise prescribed by statute, may be called by the president
or by the Board of Directors and shall be called by the president at the request
of the holders of not less than one-third of all the outstanding shares of the
corporation entitled to vote at the meeting.
Section 3. PLACE OF MEETING. The Board of Directors may designate any
place, either within or outside the State of Colorado, as the place for any
annual meeting or for any special meeting called by the Board of Directors. A
waiver of Notice signed by all shareholders entitled to vote at a meeting may
designate any place, either within or outside the State of Colorado as the place
for such meeting. If no designation is made, or if a special meeting shall be
called otherwise than by the Board, the place for such meeting shall be the
registered office of the corporation in Colorado.
<PAGE>
<PAGE>
Section 4. NOTICE OF MEETING. Written or printed notice stating the
place, day and hour of the meeting, and in case of a special meeting the
purposes for which the meeting is called, shall be delivered not less than ten
nor more than fifty days before the date of the meeting, either personally or by
mail, by or at the direction of the president or the secretary or the officer or
persons calling the meeting, to each shareholder of record entitled to vote at
such meeting. If mailed such notice shall be deemed to be delivered when
deposited in the United States Mail, addressed to the shareholder at his address
as it appears on the stock transfer books of the corporation, with postage
thereon prepaid. If requested by the person or persons lawfully calling such
meeting the secretary shall give notice thereof at corporate expense.
Section 5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors may provide
that the stock transfer books shall be closed for any stated period not
exceeding fifty days. If the stock transfer books shall be closed for the
purpose of determining shareholders entitled to notice of or to vote at a
meeting of shareholders, such books shall be closed for at least ten days
immediately preceding such meeting. In lieu of closing the stock transfer books,
the Board of Directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than fifty
days and, in case of a meeting of shareholders, not less than ten days prior to
the date on which the particular action requiring such determination of
shareholders is to be taken. If the stock transfer books are not closed and no
record date is fixed for the determination of shareholders entitled to notice of
or to vote at a meeting of shareholders or shareholders entitled to receive
payment of a dividend, the date on which notice of the meeting is mailed or the
date on which the resolution of the Board of Directors declaring such dividend
is adopted, as the case may be, shall be the record date for such determination
of shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof except where the
determination has been made through the closing of the stock transfer books and
the stated period of closing has expired.
Section 6. VOTING LISTS. The officer or agent having charge of the stock
transfer books for shares of the corporation shall make, at least ten days
before each meeting of shareholders, a complete list of the shareholders
entitled to vote at such meeting, or any adjournment thereof, arranged in
alphabetical order, with the address of and the number of shares held by each,
which list for a period of ten days prior to such meeting shall be kept on file
at the office of the corporation, whether within or outside Colorado, and shall
be subject to inspection by any shareholder at any time during usual business
hours. Such list shall also be produced and kept open at the time and place of
the meeting the whole time of the meeting. The original stock transfer books
shall be prima facie evidence as to who are the shareholders entitled to examine
such list or transfer books or to vote at any meeting of shareholders.
Section 7. QUORUM. A majority of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders. If less than a majority of the
outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice. At
such adjourned
<PAGE>
<PAGE>
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. The shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
If a quorum is present, the affirmative vote of a majority of the shares
represented at the meeting and entitled to vote on the subject matter shall be
the act of the shareholders; unless the vote of a greater number or voting by
classes is required by law or by the Articles of Incorporation.
Section 8. PROXIES. At all meetings of shareholders a shareholder may
vote by proxy executed in writing by the shareholder or by his duly authorized
attorney in fact. Such proxy shall be filed with the secretary of the
corporation before or at the time of the meeting. No proxy shall be valid after
eleven months from the date of its execution unless otherwise provided in the
proxy.
Section 9. VOTING OF SHARES. Each outstanding share, regardless of
class, shall be entitled to one vote, and each fractional share shall be
entitled to a corresponding fraction vote on each matter submitted to a vote at
a meeting of shareholders, except to the extent that the voting rights of the
shares of any class or classes are limited or denied by the Articles of
Incorporation or by the Colorado Corporation Act. In the election of directors
each recordholder of stock entitled to vote at such election shall have the
right to vote the number of shares owned by him for as many persons as there are
directors to be elected and for whose election he has the right to vote.
Section 10. VOTING OF SHARES BY CERTAIN HOLDERS. Neither treasury
shares, nor shares of its own stock held by the corporation in a fiduciary
capacity, nor shares held by another corporation if the majority of the shares
entitled to vote for the election of directors of such other corporation is held
by this corporation, shall be voted at any meeting or counted in determining the
total number of outstanding shares at any given time.
Shares standing in the name of another corporation may be voted by such
officer, agent or proxy as the by-laws of such corporation may prescribe or, in
the absence of such provision, as the Board of Directors of such corporation may
determine.
Shares held by an administrator, executor, guardian or conservator may
be voted by him, either in person or by proxy, without a transfer of such shares
into his name. Shares standing in the name of a trustee may be voted by him,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him without a transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such receiver,
and shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof into his name if authority so to do be
contained in an appropriate order of court by which such receiver was appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
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Section 11. INFORMAL ACTION BY SHAREHOLDERS. Any action required to be
taken at a meeting of the shareholders, or any other action which may be taken
at a meeting of the shareholders, may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof. Such
consent shall have the same force and effect as unanimous vote of the
shareholders and may be stated as such in any articles or document filed with
the Secretary of State of Colorado under the Colorado Corporation Act.
ARTICLE III
Board of Directors
Section 1. GENERAL POWERS. The business and affairs of the corporation
shall be managed by its Board of Directors, except as otherwise provided in the
Colorado Corporation Act or the Articles of Incorporation.
Section 2. NUMBER, TENURE AND QUAIIFICATIONS. The number of directors of
the corporation shall be as set forth by the Articles of Incorporation.
Directors shall be elected at each annual meeting of shareholders. Each director
shall hold office until the next annual meeting of shareholders and thereafter
until his successor shall have been elected and qualified. Directors need not be
residents of Colorado or shareholders of the corporation. Directors shall be
removable in the manner provided by the statutes of Colorado.
Section 3. VACANCIES. Any director may resign at any time by giving
written notice to the president or to the secretary of the corporation. Such
resignation shall take effect at the time specified therein; and unless
otherwise specified therein the acceptance of such resignation shall not be
necessary to make it effective. Any vacancy occurring in the Board of Directors
may be filled by the affirmative vote of a majority of the remaining directors
though less than a quorum. A director elected to fill a vacancy shall be elected
for the unexpired term of his predecessor in office. Any directorship to be
filled by reason of an increase in the number of directors shall be filled by
the affirmative vote of a majority of the directors then in office or by an
election at an annual meeting or at a special meeting of shareholders called for
that purpose.
Section 4. REGULAR MEETINGS. A regular meeting of the Board of Directors
shall be held without other notice than this by-law immediately after and at the
same place as the annual meeting of shareholders. The Board of Directors may
provide by resolution the time and place, either within or outside Colorado, for
the holding of additional regular meetings without other notice than such
resolution.
Section 5. SPECIAL MEETING. Special meetings of the Board of Directors
may be called by or at the request of the president or any two directors. The
person or persons authorized to call special meetings of the Board of Directors
may fix any place, either within or outside Colorado, as the place for holding
any special meeting of the Board of Directors called by them.
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Section 6. NOTICE. Notice of any special meeting shall be given at least
seven days prior thereto by written notice delivered personally or mailed to
each director at his business address or by notice given at least two days prior
thereto by telegram. If mailed such notice shall be deemed to be delivered when
deposited in the United States Mail so addressed with postage thereon prepaid.
If notice be given by telegram, such notice shall be deemed to be delivered when
the telegram is delivered to the telegraph company. Any director may waive
notice of any meeting. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director attends a
meeting for the express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
Board of Directors need be specified in the notice or waiver of notice of such
meeting.
Section 7. QUORUM. A majority of the number of directors shall
constitute a quorum for the transaction of business at any meeting of the Board
of Directors, but if less than such majority is present at a meeting, a majority
of the directors present may adjourn the meeting from time to time without
further notice.
Section 8. MANNER OF ACTING. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors.
Section 9. COMPENSATION. By resolution of the Board of Directors any
director may be paid any one or more of the following: his expenses, if any, of
attendance at meetings; a fixed sum for attendance at each meeting; or a stated
salary as director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
Section 10. PRESUMPTION OF ASSENT. A director of the corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his dissent shall be entered in the minutes of the meeting or unless he shall
file his written dissent to such action with the person acting as the secretary
of the meeting before the adjournment thereof or shall forward such dissent by
registered mail to the secretary of the corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
Section 11. EXECUTIVE COMMITTEE. The Board of Directors, by resolution
adopted by a majority of the number of directors, may designate two or more
directors to constitute an executive committee, which shall have and may
exercise all of the authority of the Board of Directors or such lesser authority
of the Board of Directors or such lesser authority as may be set forth in said
resolution. No such delegation of authority shall operate to relieve the Board
of Directors or any member of the board from any responsibility imposed by law.
Section 12. INFORMAL ACTION BY DIRECTORS. Any action required or
permitted to be taken at a meeting of the directors may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall be
signed by all of the directors entitled to vote with respect to the subject
matter thereof. Such consent shall have the same force and effect as a unanimous
vote of the directors, and may be stated as such in any articles or document
filed with the Secretary of State of Colorado
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under the Colorado Corporation Act.
Section 13. DIVIDENDS. The Board of Directors may from time to time
distribute to the shareholders in partial liquidation, out of stated capital or
earnings or capital surplus of the corporation, a portion of its assets in cash
or property subject to the limitations contained in the statutes of Colorado.
Dividends upon the capital stock of the corporation may be declared by
the Board of Directors at any regular or special meeting pursuant to law.
Dividends may be paid in cash, in property or in shares of the capital stock as
provided by the laws of the State of Colorado and subject to provisions
contained in this article. Before payment of any dividends there may be set
aside out of any funds of the corporation available for dividends such sum or
sums as the directors from time to time in their absolute discretion think
proper as a reserve fund to meet contingencies or for equalizing dividends or
for repairing or maintaining any property of the corporation or for such other
purposes as the directors shall think conducive to the interests of the
corporation, and the directors may abolish any such reserve in the manner in
which it was created.
ARTICLE IV
Officers and Agents
Section 1. GENERAL. The officers of the corporation shall be a
president, one or more vice presidents, a secretary and treasurer. The Board of
Directors may appoint such other officers, assistants to officers, committees
and agents, including a chairman of the board, assistant secretaries and
assistant treasurers, as they may consider necessary, who shall be chosen in
such manner and hold their offices for such terms and have such authority and
duties as from time to time may be determined by the Board of Directors. The
salaries of all the officers of the corporation shall be fixed by the Board of
Directors. One person may hold any two offices, except that no person may
simultaneously hold the offices of president and secretary. In all cases where
the duties of any officer, agent or employee are not prescribed by the by-laws
or by the Board of Directors, such officer, agent or employee shall follow the
orders and instructions of the president.
Section 2. ELECTION AND TERM OF OFFICE. The officers of the corporation
shall be elected by the Board of Directors annually at the first meeting of the
Board held after each annual meeting of the shareholders. If the election of
officers shall not be held at such meeting, such election shall be held as soon
thereafter as may be convenient. Each officer shall hold office until the first
of the following to occur: until his successor shall have been duly elected and
shall have qualified; until his death; until he shall resign; or until he shall
have been removed in the manner hereinafter provided.
Section 3. REMOVAL. Any officer or agent may be removed by the Board of
Directors or by the executive committee whenever in its judgment the best
interests of the corporation will be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
Election or appointment of an officer or agent shall not in itself create
contract rights.
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Section 4. VACANCIES. A vacancy in any office, however occurring, may be
filled by the Board of Directors for the unexpired portion of the term.
Section 5. PRESIDENT. The president shall, subject to the direction and
supervision of the Board of Directors, be the chief executive officer of the
corporation and shall have general and active control of its affairs and
business and general supervision of its officers, agents and employees. He
shall, unless otherwise directed by the Board of Directors, attend in person or
by substitute appointed by him or shall execute on behalf of the corporation
written instruments appointing a proxy or proxies to represent the corporation
at all meetings of the stockholders of any other corporation in which the
corporation shall hold any stock. He may, on behalf of the corporation, in
person or by substitute or proxy, execute written waivers of notice and consents
with respect to any such meetings. At all such meetings and otherwise the
president, in person or by substitute or proxy as aforesaid, may vote the stock
so held by the corporation and may execute written consents and other
instruments with respect to the ownership of said stock subject, however, to the
instructions, if any, of the Board of Directors. The president shall have
custody of the treasurer's bond, if any.
Section 6. VICE PRESIDENTS. The vice presidents shall assist the
president and shall perform such duties as may be assigned to them by the
president or by the Board of Directors. In the absence of the president, the
vice president designated by the Board of Directors or (if there be no such
designation) designated in writing by the president shall have the powers and
perform the duties of the president. If no such designation shall be made, all
vice presidents may exercise such powers and perform such duties.
Section 7. SECRETARY. The secretary shall: (a) keep the minutes of the
proceedings of the shareholders, executive committee and the Board of Directors;
(b) see that all notices are duly given in accordance with the provisions of
these by-laws or as required by law; (c) be custodian of the corporate records
and of the seal of the corporation and affix the seal to all documents when
authorized by the Board of Directors; (d) keep at its registered office or
principal place of business within or outside Colorado a record containing the
names and addresses of all shareholders and the number and class of shares held
by each, unless such record shall be kept at the office of the corporation's
transfer agent or registrar; (e) sign with the president or a vice president
certificates for shares of the corporation the issuance of which shall have been
authorized by resolution of the Board of Directors; (f) have general charge of
the stock transfer books of the corporation, unless the corporation has a
transfer agent; and (g) in general perform all duties incident to the office of
secretary and such other duties as from time to time may be assigned to him by
the president or by the Board of Directors. Assistant secretaries, if any, shall
have the same duties and powers, subject to supervision of the secretary.
Section 8. TREASURER. The treasurer shall be the principal financial
officer of the corporation and shall have the care and custody of all funds,
securities, evidences of indebtedness and other personal property of the
corporation and shall deposit the same in accordance with the instructions of
the Board of Directors. He shall receive and give receipts and acquittances for
monies paid in on account of the corporation and shall pay out of the funds on
hand all bills, payrolls and other just debts of the corporation of whatever
nature upon maturity. He shall perform all other duties incident to the office
of the treasurer and upon request of the board shall make such reports to it as
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may be required at any time. He shall, if required by the board, give the
corporation a bond in such sums and with such sureties as shall be satisfactory
to the board, conditioned upon the faithful performance of his duties and for
the restoration to the corporation of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control belonging
to the corporation. He shall have such other powers and perform such other
duties as may from time to time be prescribed by the Board of Directors or the
president. The assistant treasurers, if any, shall have the same powers and
duties, subject to the supervision of the treasurer.
ARTICLE V
Stock
Section 1. CERTIFICATES. The shares of stock shall be represented by
consecutively numbered certificates signed in the name of the corporation by its
president or a vice president and the secretary or an assistant secretary and
shall be sealed with the seal of the corporation or with a facsimile thereof.
The signature of the company's officers on such certificate may also be
facsimiles if the certificate is countersigned by a transfer agent or registered
by a registrar other than the corporation itself or an employee of the
corporation. In case any officer who has signed or whose facsimile signature has
been placed upon such certificate shall have ceased to be such officer before
such certificate is issued, it may be issued by the corporation with the same
effect as if he were such officer at the date of its issue. Certificates of
stock shall be in such form consistent with law as shall be prescribed by the
Board of Directors. No certificate shall be issued until the shares represented
thereby are fully paid.
Section 2. CONSIDERATION FOR SHARES. Shares shall be issued for such
consideration, expressed in dollars (but not less than the par value thereof),
as shall be fixed from time to time by the Board of Directors. Treasury shares
shall be disposed of for such consideration expressed in dollars as may be fixed
from time to time by the Board of Directors. Such consideration may consist, in
whole or in part of money, other property, tangible or intangible, or in labor
or services actually performed for the corporation, but neither promissory notes
nor future services shall constitute payment or part payment for shares.
Section 3. LOST CERTIFICATES. In case of the alleged loss, destruction
or mutilation of a certificate of stock, the Board of Directors may direct the
issuance of a new certificate in lieu thereof upon such terms and conditions in
conformity with law as it may prescribe. The Board of Directors may in its
discretion require a bond in such form and amount and with such surety as it may
determine before issuing a new certificate.
Section 4. TRANSFER OF SHARES. Upon surrender to the corporation or to a
transfer agent of the corporation of a certificate of stock duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer and such documentary stamps as may be required by law, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto and cancel the old certificate. Every such transfer of stock shall be
entered on the stock book of the corporation which shall be kept at its
principal office or by its registrar duly appointed.
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The corporation shall be entitled to treat the holder of record of any
share of stock as the holder in fact thereof and, accordingly, shall not be
bound to recognize any equitable or other claim to or interest in such share on
the part of any other person whether or not it shall have express or other
notice thereof, except as may be required by the laws of Colorado.
Except as otherwise provided by law the stock of the corporation shall
be transferable or assignable only on the books of the corporation by the holder
thereof in person or by duly authorized attorney, upon surrender of the
certificate or certificates for such shares duly endorsed for transfer.
Section 5. TRANSFER AGENTS, REGISTRARS AND PAYING AGENT. The Board may
at its discretion appoint one or more transfer agents, registrars and agents for
making payment upon any class of stock, bond, debenture or other security of the
corporation. Such agents and registrars may be located either within or outside
Colorado. They shall have such rights and duties and shall be entitled to such
compensation as may be agreed.
ARTICLE VI
Miscellaneous
Section 1. WAIVERS OF NOTICE. Whenever notice is required by law or by
the certificate of incorporation or by these by-laws, a waiver thereof in
writing signed by the director, shareholder or other person entitled to said
notice, whether before, at or after the time stated therein [or his appearance
at such meeting in person or (in the case of a shareholders' meeting) by proxy],
shall be equivalent to such notice, except where the director or shareholder
attends to object to transaction of business because the meeting is not lawfully
called or convened.
Section 2. SEAL. The corporate seal of the corporation shall be circular
in form and shall contain the name of the corporation and the words "Seal,
Colorado".
Section 3. FISCAL YEAR. The fiscal year of the corporation if different
from a calendar year shall be established by resolution of the Board of
Directors.
Section 4. AMENDMENTS. The Board of Directors shall have power to make,
amend and repeal the by-laws of the corporation at any regular meeting of the
Board of Directors or at any special meeting called for that purpose. The
by-laws may be amended, altered or repealed from time to time by the affirmative
vote of the holders of a majority of the stock issued and outstanding at any
annual meeting of the shareholders, if notice of the proposed amendment,
alteration or repeal is contained in the notice of said meeting. The articles of
incorporation may be amended by the shareholders as provided in Section 7-2-107
of the Colorado Revised Statutes.
Section 5. LIABILITY OF OFFICERS AND DIRECTORS. No person shall be
liable to the corporation for any loss or damage suffered by it on account of
any action taken or omitted to be taken by him as a director or officer of the
corporation in good faith, if such person exercised or used the same degree of
care and skill as a prudent man would have exercised or used under the
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circumstances in the conduct of his own affairs or took or omitted to take such
action in reliance upon advice of counsel for the corporation or upon statements
made or information furnished by officers and employees of the corporation which
he had reasonable grounds to believe or in reliance upon financial statements of
the corporation prepared and certified by an independent certified public
accountant or an independent firm of certified public accountants.
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[LETTERHEAD]
May 15, 1997
Board of Directors
Proflight Medical Response, Inc.
12420 East Control Tower Road
Englewood, Colorado 80112
Re: Proflight Medical Response, Inc.
Registration Statement on Form SB-2
Gentlemen:
We refer to the Registration Statement on Form SB-2 (the Registration
Statement) filed by Proflight Medical Response, Inc. (the 'Company') under the
Securities Act of 1933, as amended. The Registration Statement covers up to
900,000 shares of common stock $.001 par value (the 'Common Stock') and 900,000
redeemable common stock purchase warrants (the 'Warrants').
In our opinion, the shares of Common Stock and Warrants of the Company
included in the Registration Statement will, when sold as contemplated therein,
be legally issued, fully paid and non-assessable.
We hereby consent to be named, and to the use of this opinion, in the
above-referenced Registration Statement.
Very truly yours,
/s/ Loselle Greenawalt Kaplan Blair & Adler
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OFFICE BUILDING LEASE
This Lease between Airplaza Co., Inc., a Colorado corporation ("Landlord"), and
Proflight Medical Response, Inc., a Colorado corporation, ("Tenant"), is dated
February, 1997.
1. LEASE OF PREMISES.
In consideration of the Rent (as defined at Section 5.4) and the provisions of
this Lease, Landlord leases to Tenant and Tenant leases from Landlord the
Premises shown by diagonal lines on the floor plan attached hereto as Exhibit
"A", and further described at Section 21. The Premises are located within the
Building and Project described in Section 2m. Tenant shall have the
non-exclusive right (unless otherwise provided herein) in common with Landlord,
other tenants, subtenants and invitees, to use of the Common Areas (as defined
at Section 2e).
2. DEFINITIONS
As used in this Lease, the following terms shall have the following meanings:
<TABLE>
<S> <C>
a. Base Rent (initial): $140,460.00 per year.
b. Base Year: The calendar year of 1997.
c. Broker(s)
Landlord's: None.
Tenant's: None.
d. Commencement Date: The date that is ten (10) days following the date of issuance by Arapahoe County,
Colorado, of a Certificate of Occupancy for the Premises.
e. Common Areas: the building lobbies, common corridors and hallways, restrooms, garage and parking areas,
stairways, elevators and other generally understood public or common areas. Landlord shall have the right to
regulate or restrict the use of the Common Areas.
f. Expense Stop: (fill in if applicable): $4.00 per square foot of Rentable Area in the Premises, or a total of
$37,456.00.
g. Expiration Date: The day prior to the seventh (7th) anniversary of the Commencement Date, unless otherwise
sooner terminated in accordance with the provisions of this Lease.
h. Index (Section 5.2): United States Department of Labor, Bureau of Labor Statistics Consumer Price Index for
All Urban Consumers, U.S. City Average, Subgroup "All Items" (1967 = 100).
i. Landlord's Mailing Address: 5675 DTC Boulevard, Suite 100, Englewood, Colorado 80111.
Tenant's Mailing Address: Prior to the Commencement Date: 12420 East Control Tower Road, Englewood, Colorado
80112; after the Commencement Date: 7211 South Peoria Street, Suite 200, Englewood, Colorado 80112.
j. Monthly Installments of Base Rent (initial): $11,705.00 per month.
k. Parking: Tenant shall be permitted, at no additional charge, to park 31 cars on a non-exclusive basis in the
area(s) designated by Landlord for parking. Tenant shall abide by any and all parking regulations and rules
established from time to time by Landlord or Landlords's parking operator. Landlord reserves the right to
separately charge Tenant's quests and visitors for parking.
l. Premises: that portion of the Building containing approximately 9,364 square feet of Rentable Area, shown by
diagonal lines on Exhibit "A", located on the second (2nd) floor of the Building and known as Suite 200.
m. Project: the building of which the Premises are a part (the "Building") and any other buildings or
improvements on the real property (the "Property") located at 7211 South Peoria Street, Englewood, Colorado
80112 and further described at Exhibit "B". The Project is known as Airplaza 22.
n. Rentable Area: as to both the Premises and the Project, the respective measurements of floor area as may from
time to time be subject to lease by Tenant and all tenants of the Project, respectively, as determined by
Landlord and applied on a consistent basis throughout the Project.
</TABLE>
(1)
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o. Security Deposit (Section 7): $11,705.00.
p. State: the State of Colorado.
q. Tenant's First Adjustment Date (Section 5.2): the first anniversary of the Commencement Date.
r. Tenant's Proportionate Share: See Addendum One - Additional Provisions.
s. Tenant's Use Clause (Article 8): general office purposes.
t. Term: the period commencing on the Commencement Date and expiring at midnight on the Expiration Date.
</TABLE>
3. EXHIBITS AND ADDENDA.
The exhibits and addenda listed below (unless lined out) are incorporated by
reference in this Lease:
a. Exhibit "A" -- Floor Plan showing the Premises.
b. Exhibit "B" -- Site Plan of the Project.
c. Exhibit "C" -- Work Agreement.
d. Exhibit "D" -- Rules and Regulations.
e. Exhibit "E" -- Guarantee.
f. Addenda:
Addendum One - Additional Provisions.
4. DELIVERY OF POSSESSION.
If for any reason Landlord does not deliver possession of the Premises to
Tenant on the Commencement Date, Landlord shall not be subject to any liability
for such failure, the Expiration Date shall not change and the validity of this
Lease shall not be impaired, but Rent shall be abated until delivery of
possession. "Delivery of possession" shall be deemed to occur on the date
Landlord completes Landlord's Work as defined in Exhibit "C." If Landord permits
Tenant to enter into possession of the Premises before the Commencement Date,
such possession shall be subject to the provisions of this Lease, including,
without limitation, the payment of Rent.
5. RENT.
5.1. Payment of Base Rent. Tenant agrees to pay the Base Rent for the Premises.
Monthly Installments of Base Rent shall be payable in advance on the first day
of each calendar month of the Term. If the Term begins (or ends) on other than
the first (or last) day of a calendar month, the Base Rent for the partial month
shall be prorated on a per diem basis. Tenant shall pay Landlord the first
Monthly Installment of Base Rent when Tenant executes the Lease.
5.2 Adjusted Base Rent.
a. The Base Rent (and the corresponding Monthly Installments of Base Rent)
set forth at Section 2a shall be adjusted annually (the "Adjustment Date"),
commencing on Tenant's First Adjustment Date. Adjustments, if any, shall be
based upon increases (if any) in the Index. The Index in publication three
(3) months before the Commencement Date shall be the "Base Index." The Index
in publication three (3) months before each Adjustment Date shall be the
"Comparison Index." As of each Adjustment Date, the Base Rent payable during
the ensuing twelve-month period shall be determined by increasing the
Initial Base Rent by a percentage equal to the percentage increase, if any,
in the Comparison Index over the Base Index. If the Comparison Index for any
Adjustment Date is equal to or less than the Comparison Index for the
preceding Adjustment Date (or the Base Index, in the case of First
Adjustment Date), the Base Rent for the ensuing twelve-month period shall
remain the amount of Base Rent payable during the preceding twelve-month
period. When the Base Rent payable as of each Adjustment Date is determined,
Landlord shall promptly give Tenant written notice of such adjusted Base
Rent and the manner in which it was computed. The Base Rent as so adjusted
from time to time shall be the "Base Rent" for all purposes under this
Lease.
b. If at any Adjustment Date the Index no longer exists in the form
described in this Lease, Landlord may substitute any substantially
equivalent official index published by the Bureau of Labor Statistics or
its successor. Landlord shall use any appropriate conversion factors to
accomplish such substitution. The substitute index shall then become
the "Index" hereunder.
5.3 Project Operating Costs.
a. In order that the Rent payable during the Term reflect any increase in
Project Operating Costs, Tenant agrees to pay to Landlord as Rent, Tenant's
Proportionate Share of all increases in costs, expenses and obligations
attributable to the Project and its operation, all as provided below.
b. If, during any calendar year during the Term, Tenant's Proportionate
Share of Project Operating Costs exceeds the Expense Stop, Tenant shall pay
to Landlord, in addition to the Base Rent and all other payments due under
this Lease, an amount equal to the amount by which Tenant's Proportionate
Share of the Project Operating Costs exceeds the Expense Stop, in accordance
with the provisions of this Section 5.3b.
(2)
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(1) The term "Project Operating Costs" shall include all those items described
in the following subparagraphs (a) and (b).
(a) All taxes, assessments, water and sewer charges and other similar
governmental charges levied on or attributable to the Building or Project
or their operation, including without limitation, (i) real property taxes
or assessments levied or assessed against the Building or Project, (ii)
assessments or charges levied or assessed against the Building or Project
by any redevelopment agency, (iii) any tax measured by gross rentals
received from the leasing of the Premises, Building or Project, excluding
any net income, franchise, capital stock, estate or inheritance taxes
imposed by the State or federal government or their agencies, branches or
departments; provided that if at any time during the Term any governmental
entity levies, assesses or imposes on Landlord any (1) general or special,
ad valorem or specific, excise, capital levy or other tax, assessment, levy
or charge directly on the Rent received under this Lease or on the rent
received under any other leases of space in the Building or Project, or (2)
any license fee, excise or franchise tax, assessment, levy or charge
measured by or based, in whole or in part, upon such rent, or (3) any
transfer, transaction, or similar tax, assessment, levy or charge based
directly or indirectly upon the transaction represented by this Lease or
such other leases, or (4) any occupancy, use, per capita or other tax,
assessment, levy or charge based directly or indirectly upon the use or
occupancy of the Premises or other premises within the Building or Project,
then any such taxes, assessments, levies and charges shall be deemed to be
included in the term Project Operating Costs. If at any time during the
Term the assessed valuation of, or taxes on, the Project are not based on a
completed Project having at least eighty-five percent (85%) of the Rentable
Area occupied, then the "taxes" component of Project Operating Costs shall
be adjusted by Landlord to reasonably approximate the taxes which would
have been payable if the Project were completed and at least eighty-five
percent (85%) occupied.
(b) Operating costs incurred by Landlord in maintaining and operating the
Building and Project, including without limitation the following: costs of
(1) utilities; (2) supplies; (3) insurance (including public liability,
property damage, earthquake, and fire and extended coverage insurance for
the full replacement cost of the Building and Project as required by
Landlord or its lenders for the Project; (4) services of independent
contractors; (5) compensation (including employment taxes and fringe
benefits) of all persons who perform duties connected with the operation,
maintenance, repair or overhaul of the Building or Project, and equipment,
improvements and facilities located within the Project, including without
limitation engineers, janitors, painters, floor waxers, window washers,
security and parking personnel and gardeners (but excluding persons
performing services not uniformly available to or performed for
substantially all Building or Project tenants); (6) operation and
maintenance of a room for delivery and distribution of mail to tenants of
the Building or Project as required by the U.S. Postal Service (including,
without limitation, an amount equal to the fair market rental value of the
mail room premises); (7) management of the Building or Project, whether
managed by Landlord or an independent contractor (including, without
limitation, an amount equal to the fair market value of any on-site
manager's office); (8) rental expenses for (or a reasonable depreciation
allowance on) personal property used in the maintenance, operation or
repair of the Building or Project; (9) costs, expenditures or charges
(whether capitalized or not) required by any governmental or
quasi-governmental authority; (10) amortization of capital expenses
(including financing costs) (i) required by a governmental entity for
energy conservation or life safety purposes, or (ii) made by Landlord to
reduce Project Operating Costs; and (11) any other costs or expenses
incurred by Landlord under this Lease and not otherwise reimbursed by
tenants of the Project. If at any time during the Term, less than
eighty-five percent (85%) of the Rentable Area of the Project is occupied,
the "operating costs" component of Project Operating Costs shall be
adjusted by Landlord to reasonably approximate the operating costs which
would have been incurred if the Project had been at least eighty-five
percent (85%) occupied.
(2) Tenant's Proportionate Share of Project Operating Costs shall be payable by
Tenant to Landlord as follows:
(a) Beginning with the calendar year following the Base Year and for each
calendar year thereafter ("Comparison Year"), Tenant shall pay Landlord the
amount by which Tenant's Proportionate Share of the Project Operating Costs
incurred by Landlord in the Comparison Year exceeds the Expense Stop. This
excess is referred to as the "Excess Expenses."
(b) To provide for current payments of Excess Expenses, Tenant shall, at
Landlord's request, pay as additional rent during each Comparison Year, an
amount equal to the Excess Expenses payable during such Comparison Year, as
estimated by Landlord from time to time. Such payments shall be made in
monthly installments, commencing on the first day of the month following
the month in which Landlord notifies Tenant of the amount it is to pay
hereunder and continuing until the first day of the month following the
month in which Landlord gives Tenant a new notice of estimated Excess
Expenses. It is the intention hereunder to estimate from time to time the
amount of the Excess Expenses for each Comparison Year and then to make an
adjustment in the following year based on the actual Excess Expenses
incurred for that Comparison Year.
(c) On or before April 1 of each Comparison Year after the first Comparison
Year (or as soon thereafter as is practical), Landlord shall deliver to
Tenant a statement setting forth the Excess Expenses for the preceding
Comparison Year. If the actual Excess Expenses for the previous Comparison
Year exceeds the total of the estimated monthly payments made by Tenant for
such year, Tenant shall pay Landlord the amount of the deficiency within
ten (10) days of the receipt of the statement. If such total exceeds the
actual Excess Expenses for such Comparison Year, then Landlord shall credit
against Tenant's next ensuing monthly installment(s) of additional rent an
amount equal to the difference until the credit is exhausted. If a credit
is due from Landlord on the Expiration Date, Landlord shall pay Tenant the
amount of the credit. The obligations of Tenant and Landlord to make
payments required under this Section 5.3 shall survive the Expiration Date.
(d) Tenant's Excess Expenses in any Comparison Year having less than 365
days shall be appropriately prorated.
(e) If any dispute arises as to the amount of any additional rent due
hereunder, Tenant shall have the right after reasonable notice and at
reasonable times to inspect Landlord's accounting records at Landlord's
accounting office and, if after such inspection Tenant still disputes the
amount of additional rent owed, a certification as to the proper amount
shall be made by Landlord's certified public accountant, which
certification shall be final and conclusive. Tenant agrees to pay the cost
of such certification unless it is determined that Landlord's original
statement overstated Project Operating Costs by more than five percent
(5%).
(3)
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(f) If this Lease set forth an Expense Stop at Section 2f, then during the
Term Tenant shall be liable for Tenant's Proportionate Share of any actual
Project Operating Costs which exceed the amount of the Expense Stop. Tenant
shall make current payments of such excess costs during the Term in the same
manner as is provided for payment of Excess Expenses under the applicable
provisions of Section 5.3b(2)(b) and (c) above.
5.4 Definition of Rent. All costs and expenses which Tenant assumes or agrees to
pay to Landlord under this Lease shall be deemed additional rent (which,
together with the Base Rent is sometimes referred to as the "Rent"). The Rent
shall be paid to the Building manager (or other person) and a such place, as
Landlord may from time to time designate in writing, without any prior demand
therefor and without deduction or offset, in lawful money of the United States
of America.
5.5 Rent Control. If the amount or any other payment due under this Lease
violates the terms of any governmental restrictions on such Rent or payment,
then the Rent or payment due during the period of such restrictions shall be the
maximum amount allowable under those restrictions. Upon termination of the
restrictions, Landlord shall, to the extent it is legally permitted, recover
from Tenant the difference between the amount received during the period of the
restrictions and the amounts Landlord would have received had there been no
restrictions.
5.6 Taxes Payable by Tenant. In addition to the Rent and any other charges to be
paid by Tenant hereunder, Tenant shall reimburse Landlord upon demand for any
and all taxes payable by Landlord (other than net income taxes) which are not
otherwise reimbursable under this Lease, whether or not now customary or within
the contemplation of the parties, where such taxes are upon, measured by or
reasonably attributable to (a) the cost or value of Tenant's equipment,
furniture, fixtures and other personal property located in the Premises, or the
closest or value of any leasehold improvements made in or to the Premises by or
for Tenant, other than Building Standard Work made by Landlord, regardless of
whether title to such improvements is held by Tenant or Landlord; (b) the gross
or net Rent payable under this Lease, including, without limitation, any rental
or gross receipts tax levied by any taxing authority with respect to the receipt
of the Rent hereunder; (c) the possession, leasing, operation, management,
maintenance, alteration, repair, use or occupancy by Tenant of the Premises or
any portion thereof; or (d) this transaction or any document to which Tenant is
a party creating or transferring an interest or an estate in the Premises. If it
becomes unlawful for Tenant to reimburse Landlord for any costs as required
under this Lease, the Base Rent shall be revised to net Landlord the same net
Rent after imposition of any tax or other charge upon Landlord as would have
been payable to Landlord but for the reimbursement being unlawful.
6. INTEREST AND LATE CHARGES.
If Tenant falls to pay when due any Rent or other amounts or charges which
Tenant is obligated to pay under the terms of this Lease, the unpaid amounts
shall bear interest at the maximum rate then allowed by law. Tenant acknowledges
that the late payment of any Monthly Installment of Base Rent will cause
Landlord to lose the use of that money and incur costs and expenses not
contemplated under this Lease, including without limitation, administrative and
collection costs and processing and accounting expenses, the exact amount of
which is extremely difficult to ascertain. Therefore, in addition to interest,
if any such installment is not received by Landlord within ten (10) days from
the date it is due, Tenant shall pay Landlord a late charge equal to ten percent
(10%) of such installment. Landlord and Tenant agree that this late charge
represents a reasonable estimate of such costs and expenses and is fair
compensation to Landlord for the loss suffered from such nonpayment by Tenant.
Acceptance of any interest or late charge shall not constitute a waiver of
Tenant's default with respect to such nonpayment by Tenant nor prevent Landlord
form exercising any other rights or remedies available to Landlord under this
Lease.
7. SECURITY DEPOSIT.
Tenant agrees to deposit with Landlord the Security Deposit set forth at Section
2.0 upon execution of this Lease, as security for Tenant's faithful performance
of its lblifations under this Lease, Landlord and Tenant agree that the Security
Deposit may be commingled with funds of Landlord and Landlord shall have no
obligation or liability for payment of interest on such deposit. Tenant shall
not mortgage, assign, transfer or encumber the Security Deposit without the
prior written consent of Landlord and any attempt by Tenant to do so shall be
void, without force or effect and shall not be binding upon Landlord.
If Tenant fails to pay any Rent or other amount when due and payable under this
Lease, or fails to perform any of the terms hereof, Landlord may appropriate and
apply or use all or any portion of the Security Deposit for Rent payments or any
other amount then due and unpaid, for payment of any amount for which Landlord
has become obligated as a result of Tenant's default or breach, and for any loss
or damage sustained by Landlord as a result of Tenant's default or breach, and
Landlord may so apply or use this deposit without prejudice to any other remedy
Landlord may have by reason of Tenant's default or breach. If Landlord so uses
any of the Security Deposit, Tenant shall, within ten (10) days after written
demand therefor restore the Security Deposit to the full amount originally
deposited; Tenant's failure to do so shall constitute an act of default
hereunder and Landlord shall have the right to exercise any remedy proved for at
Article 27 hereof. Within fifteen (15) days after the Term (or any extension
thereof) has expired or Tenant has vacated the Premises, whichever shall last
occur and provided Tenant is not then in default on any of its obligations
hereunder, Landlord shall return the Security Deposit to Tenant, or, if Tenant
has assigned its interest under this Lease, to the last assignee of Tenant. If
Landlord sells its interest in the Premises, Landlord may deliver this deposit
to the purchaser of Landlord's interest and thereupon be relieved of any further
liability or obligation with respect to the Security Deposit.
8. TENANT'S USE OF THE PREMISES.
Tenant shall use the Premises solely for the purposes set forth in Tenant's Use
Clause. Tenant shall not use or occupy the epremises in violation of law or any
covent, condition or restriction affecting the Building or Project or the
certificate of occupy issued for the Building or Project, and shall, upon notice
and Landlord immediately discontinue any use of the Premises which is declared
by any governmental authority having jurisdiction to be a violation of law or
the certificate of occupancy. Tenant, at Tenant's own cost and expense, shall
comply with all laws, ordinances, regulations, rules and/or any directions of
any governmental agencies or authorities having jurisdicition which shall, by
reason of the nature of Tenant's use or occupancy of the Premises, impose any
duty upon Tenant or Landlord with respect tot the Premises or its use or
occupation. A judgment of any court of competent jurisdiction or the admission
by Tenant in any action or proceeding against Tenant that Tenant has violated
any such laws ordinances, regulations, rules and/or directions in the use of the
Premises shall be deemed to be a conclusive determination of that fact as
between Landlord and Tenant. Tenant shall not do or permit to be done anything
which will invalidate or increase the cost of any fire, extended coverage or
other insurance policy covering the Building or Project and/or property located
therein, and shall comply with all rules, orders, regulations, requirements and
recommendations of the Insurance Services Office or another organization
performing a similar function. Tenant shall
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promptly upon demand reimburse Landlord for any additional premium charged for
such policy by reason of Tenant's failure to comply with the provisions of this
Article. Tenant shall not do or permit anything to be done in or about the
Premises which will in any way obstruct or interfere with he rights of other
tenants or occupants of the Building or Project, or injure of annoy them, or use
or allow the Premises to be used for any improper, immoral, unlawful or
objectionable purpose, nor shall Tenant cause, maintain or permit any nuisance
in, on or about the Premises. Tenant shall not commit or suffer to be committed
any waste in or upon the Premises.
9. SERVICES AND UTILITIES.
Provided that Tenant is not in default hereunder, Landlord agrees to furnish to
the Premises during generally recognized business days, and during hours
determined by Landlord in its sole discretion, and subject to the Rules and
Regulations of the Building or Project, electricity for normal desk top office
equipment and normal copying equipment, and heating, ventilation and air
conditioning ("HVAC") as required in Landlord's judgment for the confortable use
and occupancy of the Premises. If Tenant desires HVAC at any other time,
Landlord shall use reasonable efforts to furnish such service upon reasonable
notice from Tenant and Tenant shall pay landlord's charges therefor on demand.
Landlord shall also maintain and keep lighted the common stairs, common entries
and restrooms in the Building. Landlord shall not be in default hereunder or be
liable for any damages directly or indirectly resulting from, nor shall the Rent
be abated by reason of (i) the installation, use or interruption of use of any
equipment in connection with the furnishing of any of the foregoing services,
(ii) failure to furnish or delay in furnishing any such services where such
failure or delay is caused by accident or any condition or event beyond the
reasonable control of Landlord or by the making of necessary repairs or
improvements to the Premises, Building or Project, or (iii) the limitation,
curtailment or rationing of, or restrictions on, use of water, electricity, gas
or any other form of energy serving the Premies, Building or Project. Landlord
shall not be liable under any circumstances for a loss of or injury to property
or business, however occurring, through or in connection with or incidental to
failure to furnish any such services. If Tenant uses heat generating machines or
equipment in the Premises which affect the temperature otherwise maintained by
the HVAC system, Landlord reserves the right to install supplementary air
conditioning units in the Premises and the cost thereof, including the cost of
installation, operation and maintenance thereof, shall be paid by Tenant to
Landlord upon demand by Landlord.
Tenant shall not, without the written consent of Landlord, use any apparatus or
device in the Premises, including without limitation, electronic data processing
machines, punch card machines or machines using in excess of 120 volts, which
consumes more electricity than is usually furnished or supplied for the use of
premises as general office space, as determined by Landlord. Tenant shall not
connect any apparatus with electric current except through existing electrical
outlets in the Premises. Tenant shall not consume water or electric current in
excess of that usually furnished or supplied for the use of premises as general
office space (as determined by Landlord), without first procuring the written
consent of Landlord, which Landlord may refuse, and in the event of consent,
Landlord may have installed a water meter or electrical current meter in the
Premises to measure the amount of water or electric current consumed. The cost
of any such meter and of its installation, maintenance and repair shall be paid
for by the Tenant and Tenant agrees to pay to Landlord promptly upon demand for
all such water and electric current consumed at shown by said meters, at the
rates charged for such services by the local public utility plus any additional
expense incurred in keeping account of the water and electric current so
consumed. If a separate meter is not installed, the excess cost for such water
and electric current shall be established by an estimate made by a utility
company or electrical engineer hired by Landlord at Tenant's expense.
Nothing contained in this Article shall restrict Landlord's right to require at
any time separate metering of utilities furnished to the Premises. In the event
utilities are separately metered, Tenant shall pay promptly upon demand for all
utilities consumed at utility rates charged by the local public utility plus any
additional expense incurred by Landlord in keeping account of the utilities so
consumed. Tenant shall be responsible for the maintenance and repair of any such
meters at its sole cost.
Landlord shall furnish elevator service, lighting replacement for building
standard lights, restroom supplies, window washing and janitor services in a
manner that such services are customarily furnished to comparable office
buildings in the area.
10. CONDITION OF THE PREMISES.
Tenant's taking possession of the Premises shall be deemed conclusive evidence
that as of the date of taking possession the Premises are in good order and
satisfactory condition, except for such matters as to which tenant gave Landlord
notice on or before the Commencement Date. No promise of Landlord to alter,
remodel, repair or improve the Premises, the Building or the Project and no
representation, express or implied, respecting any matter or thing relating to
the Premises, Building, Project or this Lease (including, without limitation,
the condition of the Premises, the Building or the Project) have been made to
Tenant by Landlord or its Broker or Sales Agent, other than as may be contained
herein or in a separate exhibit or addendum signed by Landlord and Tenant.
11. CONSTRUCTION, REPAIRS AND MAINTENANCE.
a. Landlord's Obligations. Landlord shall perform Landlord's Work to the
Premises as described in Exhibit "C." Landlord shall maintain in good order,
condition and repair the Building and all other portions of the Premises not the
obligation of Tenant or of any other tenant in the Building.
b. Tenant's Obligations.
(1) Tenant shall perform Tenant's work to the Premises as described in Exhibit
"C."
(2) Tenant at Tenant's sole expenses shall, except for services furnished by
Landlord pursuant to Article 9 hereof, maintain the Premises in good order,
condition and repair, including the interior surfaces of the ceilings, wall and
floors, all doors, all interior windows, all plumbing, pipes and fixtures,
electrical wiring, switches and fixtures, Building Standard furnishings and
special items and equipment installed by or at the expense of Tenant.
(3) Tenant shall be responsible for all repairs and alterations in and to the
Premises, Building and Project and the facilities and systems thereof, the need
for which arises out of (i) Tenant's use or occupancy of the Premises, (ii) the
installation, removal, use or operation of Tenant's Property (as defined in
Article 13) in the Premises, (iii) the moving of Tenant's Property into or out
of the Building, or (iv) the act, omission, misuse or negligence of Tenant, its
agents, contractors, employees or invitees.
(5)
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(4) If Tenant fails to maintain the Premises in good order, condition
and repair, Landlord shall give Tenant notice to do such acts as are
reasonably required to so maintain the Premises. If Tenant fails to
promptly commence such work and diligently prosecute it to completion, then
Landlord shall have the right to do such acts and expend such funds at the
expense of Tenant as are reasonably required to perform such work. Any
amount so expended by Landlord shall be paid by Tenant promptly after
demand with interest at the prime commercial rate then being charged by
Norwest Bank, Denver plus two percent (2%) per annum, from the date of such
work, but not to exceed the maximum rate then allowed by law. Landlord
shall have no liability to Tenant for any damage, inconvenience, or
interference with the use of the Premises by Tenant as a result of
performing any such work.
c. Compliance with Law. Landlord and Tenant shall each do all acts required to
comply with all applicable laws, ordinances, and rules of any public authority
relating to their respective maintenance obligations as set forth herein.
d. Waiver by Tenant. Tenant expressly waives the benefits of any statute now or
hereafter in effect which would otherwise afford the Tenant the right to make
repairs at Landlord's expense or to terminate this Lease because of Landlord's
failure to keep the Premises in good order, condition and repair.
e. Load and Equipment Limits. Tenant shall not place a load upon any floor of
the Premises which exceeds the load per square foot which such floor was
designed to carry, as determined by Landlord or Landlord's structural engineer.
The cost of any such determination made by Landlord's structural engineer shall
be paid for by Tenant upon demand. Tenant shall not install business machines or
mechanical equipment which cause noise or vibration to such a degree as to be
objectionable to Landlord or other Building tenants.
f. Except as otherwise expressly provided in this Lease, Landlord shall have no
liability to Tenant nor shall Tenant's obligations under this Lease be reduced
or abated in any manner whatsoever by reason of any inconvenience, annoyance,
interruption or injury to business arising from Landlord's making any repairs or
changes which Landlord is required or permitted by this Lease or by any other
tenant's lease or required by law to make in or to any portion of the Project,
Building or the Premises. Landlord shall nevertheless use reasonable efforts to
minimize any interference with Tenant's business in the Premises.
g. Tenant shall give Landlord prompt notice of any damage to or defective
condition in any part or appurtenance of the Building's mechanical, electrical,
plumbing, HVAC or other systems serving, located in, or passing through the
Premises.
h. Upon the expiration or earlier termination of this Lease, Tenant shall return
the Premises to Landlord clean and in the same condition as on the date Tenant
took possession, except for normal wear and tear. Any damage to the Premises,
including any structural damage, resulting from Tenant's use or from the removal
of Tenant's fixtures, furnishings and equipment pursuant to Section 13b shall be
repaired by Tenant at Tenant's expense.
12. ALTERATIONS AND ADDITIONS.
a. Tenant shall not make any additions, alterations or improvements to the
Premises without obtaining the prior written consent of Landlord. Landlord's
consent may be conditioned on Tenant's removing any such additions, alterations
or improvements upon the expiration of the Term and restoring the Premises to
the same condition as on the date Tenant took possession. All work with respect
to any addition, alteration or improvement shall be done in a good and
workmanlike manner by properly qualified and licensed personnel approved by
Landlord, and such work shall be diligently prosecuted to completion. Landlord
may, at Landlord's option, require that any such work be performed by Landlord's
contractor, in which case the cost of such work shall be paid for before
commencement of the work. Tenant shall pay to Landlord upon completion of any
such work by Landlord's contractor, an administrative fee of fifteen percent
(15%) of the cost of the work.
b. Tenant shall pay the costs of any work done on the Premises pursuant to
Section 12a, and shall keep the Premises, Building and Project free and clear of
liens of any kind. Tenant shall indemnify, defend against and keep Landlord free
and harmless from all liability, loss, damage, costs, attorneys' fees and any
other expense incurred on account of claims by any person performing work or
furnishing materials or supplies for Tenant or any person claiming under Tenant.
Tenant shall keep Tenant's leasehold interest, and any additions or improvements
which are or become the property of Landlord under this Lease, free and clear of
all attachment or judgment liens. Before the actual commencement of any work for
which a claim or lien may be filed, Tenant shall give Landlord notice of the
intended commencement date a sufficient time before that date to enable Landlord
to post notices of non-responsibility or any other notices which Landlord deems
necessary for the proper protection of Landlord's interest in the Premises,
Building or the Project, and Landlord shall have the right to enter the Premises
and post such notices at any reasonable time.
c. Landlord may require, at Landlord's sole option, that Tenant provide to
Landlord, at Tenant's expense, a lien and completion bond in an amount equal to
at least one and one-half (1 1/2) times the total estimated cost of any
additions, alterations or improvements to be made in or to the Premises, to
protect Landlord against any liability for mechanic's and materialmen's liens
and to insure timely completion of the work. Nothing contained in this Section
12c shall relieve Tenant of its obligation under Section 12b to keep the
Premises, Building and Project free of all liens.
d. Unless their removal is required by Landlord as provided in Section 12a, all
additions, alterations and improvements made to the Premises shall become the
property of Landlord and be surrendered with the Premises upon the expiration of
the Term; provided, however, Tenant's equipment, machinery and trade fixtures
which can be removed without damage to the Premises shall remain the property of
Tenant and may be removed, subject to the provisions of Section 13b.
13. LEASEHOLD IMPROVEMENTS; TENANT'S PROPERTY.
a. All fixtures, equipment, improvements and appurtenances attached to or built
into the Premises at the commencement of or during the Term, whether or not by
or at the expense of Tenant ("Leasehold Improvements"), shall be and remain a
part of the Premises, shall be the property of Landlord and shall not be removed
by Tenant, except as expressly provided in Section 13b.
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b. All movable partitions, business and trade fixtures, machinery and equipment,
communications equipment and office equipment located in the Premises and
acquired by or for the account of Tenant, without expense to Landlord, which can
be removed without structural damage to the Building, and all furniture,
furnishings and other articles of movable personal property owned by Tenant and
located in the Premises (collectively "Tenant's Property") shall be and shall
remain the property of Tenant and may be removed by Tenant at any time during
the Term; provided that if any of Tenant's Property is removed, Tenant shall
promptly repair any damage to the Premises or to the Building resulting from
such removal.
14. RULES AND REGULATIONS.
Tenant agrees to comply with (and cause its agents, contractors, employees and
invitees to comply with) the rules and regulations attached hereto as Exhibit
"D' and with such reasonable modifications thereof and additions thereto as
Landlord may from time to time make. Landlord shall not be responsible for any
violation of said rules and regulations by other tenants or occupants of the
Building or Project.
15. CERTAIN RIGHTS RESERVED BY LANDLORD.
Landlord reserves the following rights, exercisable without liability to Tenant
for (a) damage or injury to property, person or business, (b) causing an actual
or constructive eviction from the Premises, or (c) disturbing Tenant's use or
possession of the Premises:
a. To name the Building and Project and to change the name or street address
of the Building or Project;
b. To install and maintain all signs on the exterior and interior of the
Building and Project;
c. To have pass keys to the Premises and all doors within the Premises,
excluding Tenant's vaults and safes;
d. At any time during the Term, and on reasonable prior notice to Tenant, to
inspect the Premises, and to show the Premises to any prospective purchaser
or mortgagee of the Project, or to any assignee of any mortgage on the
Project, or to others having an interest in the Project or Landlord, and
during the last six months of the Term, to show the Premises to prospective
tenants thereof; and
e. To enter the Premises for the purpose of making inspections, repairs,
alterations, additions or improvements to the Premises or the Building
(including, without limitation, checking, calibrating, adjusting or
balancing controls and other parts of the HVAC system), and to take all
steps as may be necessary or desirable for the safety, protection,
maintenance or preservation of the Premises or the Building or Landlord's
interest therein, or as may be necessary or desirable for the operation or
improvement of the Building or in order to comply with laws, orders or
requirements of governmental or other authority. Landlord agrees to use its
best efforts (except in an emergency) to minimize interference with Tenant's
business in the Premises in the course of any such entry.
16. ASSIGNMENT AND SUBLETTING.
No assignment of this Lease or sublease of all or any part of the Premises shall
be permitted, except as provided in this Article 16.
a. Tenant shall not, without the prior written consent of Landlord, assign
or hypothecate this Lease or any interest herein or sublet the Premises or
any part thereof, or permit the use of the Premises by any party other than
Tenant. Any of the foregoing acts without such consent shall be void and
shall, at the option of Landlord, terminate this Lease. This Lease shall
not, nor shall any interest of Tenant herein, be assignable by operation of
law without the written consent of Landlord.
b. If at any time or from time to time during the Term Tenant desires to
assign this Lease or sublet all or any part of the Premises, Tenant shall
give notice to Landlord setting forth the terms and provisions of the
proposed assignment or sublease, and the identity of the proposed assignee
or subtenant. Tenant shall promptly supply Landlord with such information
concerning the business background and financial condition of such proposed
assignee or subtenant as Landlord may reasonably request. Landlord shall
have the option, exercisable by notice given to Tenant within twenty (20)
days after Tenant's notice is given, either to sublet such space from Tenant
at the rental and on the other terms set forth in this Lease for the term
set forth in Tenant's notice, or, in the case of an assignment, to terminate
this Lease. If Landlord does not exercise such option, Tenant may assign the
Lease or sublet such space to such proposed assignee or subtenant on the
following further conditions:
(1) Landlord shall have the right to approve such proposed assignee or
subtenant, which approval shall not be unreasonably withheld;
(2) The assignment or sublease shall be on the same terms set forth in
the notice given to Landlord;
(3) No assignment or sublease shall be valid and no assignee or
sublessee shall take possession of the Premises until an executed
counterpart of such assignment or sublease has been delivered to
Landlord;
(4) No assignee or sublessee shall have a further right to assign or
sublet except on the terms herein contained; and
(5) Any sums or other economic consideration received by Tenant as a
result of such assignment or subletting, however denominated under the
assignment or sublease, which exceed, in the aggregate, (i) the total
sums which Tenant is obligated to pay Landlord under this Lease
(prorated to reflect obligations allocable to any portion of the
Premises subleased), plus (ii) any real estate brokerage commissioners
or fees payable in connection with such assignment or subletting, shall
be paid to Landlord as additional rent under this Lease without
affecting or reducing any other obligations of Tenant hereunder.
c. Notwithstanding the provisions of paragraphs a and b above, Tenant may
assign this Lease or sublet the Premises or any portion thereof, without
Landlord's consent and without extending any recapture or termination option
to Landlord, to any corporation which controls, is controlled by or is under
common control with Tenant, or to any corporation resulting from a merger or
consolidation with Tenant, or to any person or entity which acquires all the
assets of Tenant's business as a going concern, provided that (i) the
assignee or sublessee assumes, in full, the obligations of Tenant under this
Lease, (ii) Tenant remains fully liable under this Lease, and (iii) the use
of the Premises under Article 8 remains unchanged.
(7)
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<PAGE>
d. No subletting or assignment shall release Tenant of Tenant's obligations
under this Lease or alter the primary liability of Tenant to pay the Rent and to
perform all other obligations to be performed by Tenant hereunder. The
acceptance of Tent by Landlord from any other person shall not be deemed to be a
waiver by Landlord of any provision hereof. Consent to one assignment or
subletting shall not be deemed consent to any subsequent assignment or
subletting. In the event of default by an assignee or subtenant of Tenant or any
successor of Tenant in the performance of any of the terms hereof, Landlord may
proceed directly against Tenant without the necessity of exhausting remedies
against such assignee, subtenant or successor. Landlord may consent to
subsequent assignments of the Lease or sublettings or amendments or
modifications to the Lease with assignees of Tenant, without notifying Tenant,
or any successor of Tenant, and without obtaining its or their consent thereto
and any such actions shall not relieve Tenant of liability under this Lease.
e. If Tenant assigns the Lease or sublets the Premises or requests the consent
of Landlord to any assignment or subletting or if Tenant requests the consent of
Landlord for any act that Tenant proposes to do, then Tenant shall, upon demand,
pay Landlord an administrative fee of One Hundred Fifty and No/100ths Dollars
($150.00) plus any attorneys' fees reasonably incurred by Landlord in connection
with such act or request.
17. HOLDING OVER.
If after expiration of the Term, Tenant remains in possession of the Premises
with Landlord's permission (express or implied), Tenant shall become a tenant
from month to month only, upon all the provisions of this Lease (except as to
term and Base Rent), but the "Monthly Installments of Base Rent' payable by
Tenant shall be increased to one hundred fifty percent (150%) of the Monthly
Installments of Base Rent payable by Tenant at the expiration of the Term. Such
monthly rent shall be payable in advance on or before the first day of each
month. If either party desires to terminate such month to month tenancy, it
shall give the other party not less than thirty (30) days advance written notice
of the date of termination.
18. SURRENDER OF PREMISES.
a. Tenant shall peaceably surrender the Premises to Landlord on the Expiration
Date, in broom-clean condition and in as good condition as when Tenant took
possession, except for (i) reasonable wear and tear, (ii) loss by fire or other
casualty, and (iii) loss by condemnation. Tenant shall, on Landlord's request,
remove Tenant's Property on or before the Expiration Date and promptly repair
all damage to the Premises or Building caused by such removal.
b. If Tenant abandons or surrenders the Premises, or is dispossessed by process
of law or otherwise, any of Tenant's Property left on the Premises shall be
deemed to be abandoned, and, at Landlord's option, title shall pass to Landlord
under this Lease as by a bill of sale. If Landlord elects to remove all or any
part of such Tenant's Property, the cost of removal, including repairing any
damage to the Premises or Building caused by such removal, shall be paid by
Tenant. On the Expiration Date Tenant shall surrender all keys to the Premises.
19. DESTRUCTION OR DAMAGE.
a. If the Premises or the portion of the Building necessary for Tenant's
occupancy is damaged by fire, earthquake, act of God, the elements of other
casualty, Landlord shall, subject to the provisions of this Article, promptly
repair the damage, if such repairs can, in Landlord's opinion, be completed
within (90) ninety days. If Landlord determines that repairs can be completed
within ninety (90) days, this Lease shall remain in full force and effect,
except that is such damage is not the result of the negligence or willful
misconduct of Tenant or Tenant's agents, employees, contractors, licensees or
invitees, the Base Rent shall be abated to the extent Tenant's use of the
Premises is impaired, commencing with the date of damage and continuing until
completion of the repairs required of Landlord under Section 19d.
b. If in Landlord's opinion, such repairs to the Premises or portion of the
Building necessary for Tenant's occupancy cannot be completed within ninety (90)
days, Landlord may elect, upon notice to Tenant given within thirty (30) days
after the date of such fire or other casualty, to repair such damage, in which
event this Lease shall continue in full force and effect, but the Base Rent
shall be partially abated as provided in Section 19a. If Landlord does not so
elect to make such repairs, this Lease shall terminate as of the date of such
fire or other casualty.
c. If any other portion of the Building or Projects is totally destroyed or
damaged to the extent that in Landlord's opinion repair thereof cannot be
completed within ninety (90) days, Landlord may elect upon notice to Tenant
given within thirty (30) days after the date of such fire or other casualty, to
repair such damage, in which event this Lease shall continue in full force and
effect, but the Base Rent shall be partially abated as provided in Section 19a.
If Landlord does not elect to make such repairs, this Lease shall terminate as
of the date of such fire or other casualty.
d. If the Premises are to be repaired under this Article, Landlord shall repair
at its cost any injury or damage to the Building and Building Standard Work in
the Premises. Tenant shall be responsible at its sole cost and expense for the
repair, restoration and replacement of any other Leasehold Improvements and
Tenant's Property. Landlord shall not be liable for any loss of business,
inconvenience or annoyance arising from any repair or restoration of any portion
of the Premises, Building or Project as a result of any damage from fire or
other casualty.
e. This Lease shall be considered an express agreement governing any case of
damage to or destruction of the Premises, Building or Project by fire or other
casualty, and any present or future law which purports to govern the rights of
Landlord and Tenant in such circumstances in the absence of express agreement,
shall have no application.
20. EMINENT DOMAIN.
a. If the whole of the Building or Premises is lawfully taken by condemnation or
in any other manner for any public or quasi-public purposes, this Lease shall
terminate as of the date of such taking, and Rent shall be prorated to such
date. If less than the whole of the Building or Premises is so taken, this Lease
shall be unaffected by such taking, provided that (i) Tenant shall have the
right to terminate this Lease by notice to Landlord given within ninety (90)
days after the date of such taking if twenty percent (20%) or more of the
Premises is taken and the remaining area of the Premises is not reasonably
sufficient for Tenant to continue operation of its business, and (ii) Landlord
shall have the right to terminate this Lease by notice to Tenant given within
ninety (90) days after the date of such taking. If either Landlord or Tenant so
elects to terminate this Lease, the Lease shall terminate on the thirtieth
(30th) day after either such notice. The Rent shall be prorated to the date of
termination. If this Lease continues in force upon such partial taking, the Base
Rent and Tenant's Proportionate Share shall be equitably adjusted according to
the remaining Rentable Area of the Premises and Project.
(8)
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b. In the event of any taking, partial or whole, all of the proceeds of any
award, judgment or settlement payable by the condemning authority shall be the
exclusive property of Landlord, and Tenant hereby assigns to Landlord all of its
right, title and interest in any award, judgment or settlement from the
condemning authority. Tenant, however, shall have the right, to the extent that
Landlord's award is not reduced or prejudiced, to claim from the condemning
authority (but not from Landlord) such compensation as may be recoverable by
Tenant in its own right for relocation expenses and damage to Tenant's personal
property.
c. In the event of a partial taking of the Premises which does not result in a
termination of this Lease, Landlord shall restore the remaining portion of the
Premises as nearly as practicable to its condition prior to the condemnation or
taking, but only to the extent of Building Standard Work. Tenant shall be
responsible at its sole cost and expense for the repair, restoration and
replacement of any other Leasehold Improvements and Tenant's Property.
21. INDEMNIFICATION.
a. Tenant shall indemnify and hold Landlord harmless against and from liability
and claims of any kind for loss or damage to property of Tenant or any other
person, or for any injury to or death of any person, arising out of: (1)
Tenant's use and occupancy of the Premises, or any work, activity or other
things allowed or suffered by Tenant to be done in, on or about the Premises;
(2) any breach or default by Tenant of any of Tenant's obligations under this
Lease; or (3) any negligent or otherwise tortious act or omission of Tenant, its
agents, employees, invitees or contractors. Tenant shall at Tenant's expense,
and by counsel satisfactory to Landlord, defend Landlord in any action or
proceeding arising from any such claim and shall indemnify Landlord against all
costs, attorneys' fees, expert witness fees and any other expenses incurred in
such action or proceeding. As a material part of the consideration for
Landlord's execution of this Lease, Tenant hereby assumes all risk of damage or
injury to any person or property in, on or about the Premises from any cause.
b. Landlord shall not be liable for injury or damage which may be sustained by
the person or property of Tenant, its employees, invitees or customers, or any
other person in or about the Premises, caused by or resulting from fire, steam,
electricity, gas, water or rain which may leak or flow from or into any part of
the Premises, or from the breakage, leakage, obstruction or other defects of
pipes, sprinklers, wires, appliances, plumbing, air conditioning or lighting
fixtures, whether such damage or injury results from conditions arising upon the
Premises or upon other portions of the Building or Project or from other
sources. Landlord shall not be liable for any damages arising from any act or
omission of any other tenant of the Building or Project.
22. TENANT'S INSURANCE.
a. All insurance required to be carried by Tenant hereunder shall be issued by
responsible insurance companies acceptable to Landlord and Landlord's lender and
qualified to do business in the State. Each policy shall name Landlord, and at
Landlord's request any mortgagee of Landlord, as an additional insured, as their
respective interests may appear. Each policy shall contain (i) a cross-liability
endorsement, (ii) a provision that such policy and the coverage evidenced
thereby shall be primary and non-contributing with respect to any policies
carried by Landlord and that any coverage carried by Landlord shall be excess
insurance, and (iii) a waiver by the insurer of any right of subrogation against
Landlord, its agents, employees and representatives, which arises or might arise
by reason of any payment under such policy or by reason of any act or omission
of Landlord, its agents, employees or representatives. A copy of each paid up
policy (authenticated by the insurer) or certificate of the insurer evidencing
the existence and amount of each insurance policy required hereunder shall be
delivered to Landlord before the date Tenant is first given the right of
possession of the Premises, and thereafter within thirty (30) days after any
demand by Landlord therefor. Landlord may, at any time and from time to time,
inspect and/or copy any insurance policies required to be maintained by Tenant
hereunder. No such policy shall be cancellable except after twenty (20) days
written notice to Landlord and Landlord's lender. Tenant shall furnish Landlord
with renewals or "binders' of any such policy at least ten (10) days prior to
the expiration thereof. Tenant agrees that if Tenant does not take out and
maintain such insurance, Landlord may (but shall not be required to) procure
said insurance on Tenant's behalf and charge the Tenant the premiums together
with a twenty-five percent (25%) handling charge, payable upon demand. Tenant
shall have the right to provide such insurance coverage pursuant to blanket
policies obtained by the Tenant, provided such blanket policies expressly afford
coverage to the Premises, Landlord, Landlord's mortgagee and Tenant as required
by this Lease.
b. Beginning on the date Tenant is given access to the Premises for any purpose,
and continuing until expiration of the Term, Tenant shall procure, pay for and
maintain in effect policies of casualty insurance covering (i) all Leasehold
Improvements (including any alterations, additions or improvements as may be
made by Tenant pursuant to the provisions of Article 12 hereof), and (ii) trade
fixtures, merchandise and other personal property from time to time in, on or
about the Premises, in an amount not less than one hundred percent (100%) of
their actual replacement cost from time to time, providing protection against
any peril included within the classification "Fire and Extended Coverage'
together with insurance against sprinkler damage, vandalism and malicious
mischief. The proceeds of such insurance shall be used for the repair or
replacement of the property so insured. Upon termination of this Lease following
a casualty as set forth herein, the proceeds under (i) shall be paid to
Landlord, and the proceeds under (ii) above shall be paid to Tenant.
c. Beginning on the date Tenant is given access to the Premises for any purpose
and continuing until expiration of the Term, Tenant shall procure, pay for and
maintain in effect workers' compensation insurance as required by law and
comprehensive public liability and property damage insurance with respect to the
construction of improvements on the Premises, the use, operation or condition of
the Premises and the operations of Tenant in, on or about the Premises,
providing personal injury and broad form property damage coverage for not less
than One Million Dollars ($1,000,000.00) combined single limit for bodily
injury, death, and property damage liability.
d. Not less than every three (3) years during the Term, Landlord and Tenant
shall mutually agree to increases in all of Tenant's insurance policy limits for
all insurance to be carried by Tenant as set forth in this Article. In the event
Landlord and Tenant cannot mutually agree upon the amounts of said increases,
then Tenant agrees that all insurance policy limits as set forth in this Article
shall be adjusted for increases in the cost of living in the same manner as is
set forth in Section 5.2 hereof for the adjustment of the Base Rent.
(9)
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23. WAIVER OF SUBROGATION.
Landlord and Tenant each hereby waive all rights of recovery against the other
and against the officers, employees, agents and representatives of the other, on
account of loss by or damage to the waiving party of its property or the
property of others under its control, to the extent that such loss or damage is
insured against under any fire and extended coverage insurance policy which
either may have in force at the time of the loss or damage. Tenant shall, upon
obtaining the policies of insurance required under this Lease, give notice to
its insurance carrier or carriers that the foregoing mutual waiver of
subrogation is contained in this Lease.
24. SUBORDINATION AND ATTORNMENT.
Upon written request of Landlord, or any first mortgagee or first deed of trust
beneficiary of Landlord, or ground lessor of Landlord, Tenant shall, in writing,
subordinate its rights under this Lease to the lien of any first mortgage or
first deed of trust, or to the interest of any lease in which Landlord is
lessee, and to all advances made or hereafter to be made thereunder. However,
before signing any subordination agreement, Tenant shall have the right to
obtain from any lender or lessor or Landlord requesting such subordination, an
agreement in writing providing that, as long as Tenant is not in default
hereunder, this Lease shall remain in effect for the full Term. The holder of
any security interest may, upon written notice to Tenant, elect to have this
Lease prior to its security interest regardless of the time of the granting or
recording of such security interest.
In the event of any foreclosure sale, transfer in lieu of foreclosure or
termination of the lease in which Landlord is lessee, Tenant shall attorn to the
purchaser, transferee or lessor as the case may be, and recognize that party as
Landlord under this Lease, provided such party acquires and accepts the Premises
subject to this Lease.
25. TENANT ESTOPPEL CERTIFICATES.
Within ten (10) days after written request from Landlord, Tenant shall execute
and deliver to Landlord or Landlords designee, a written statement certifying
(a) that this Lease is unmodified and in full force and effect, or is in full
force and effect as modified and stating the modifications; (b) the amount of
Base Rent and the date to which Base Rent and additional rent have been paid in
advance; (c) the amount of any security deposited with Landlord; and (d) that
Landlord is not in default hereunder or, if Landlord is claimed to be in
default, stating the nature of any claimed default. Any such statement may be
relied upon by a purchaser, assignee or lender. Tenant's failure to execute and
deliver such statement within the time required shall at Landlord's election be
a default under this Lease and shall also be conclusive upon Tenant that: (1)
this Lease is in full force and effect and has not been modified except as
represented by Landlord; (2) there are no uncured defaults in Landlord's
performance and that Tenant has no right of offset, counter-claim or deduction
against Rent; and (3) not more than one month's Rent has been paid in advance.
26. TRANSFER OF LANDLORD'S INTEREST.
In the event of any sale or transfer by Landlord of the Premises, Building or
Project, and assignment of this Lease by Landlord, Landlord shall be and is
hereby entirely freed and relieved of any and all liability and obligations
contained in or derived from this Lease arising out of any act, occurrence or
omission relating to the Premises, Building, Project or Lease occurring after
the consummation of such sale or transfer, providing the purchaser shall
expressly assume all of the covenants and obligations of Landlord under this
Lease. If any security deposit or prepaid Rent has been paid by Tenant, Landlord
may transfer the security deposit or prepaid Rent to Landlord's successor and
upon such transfer, Landlord shall be relieved of any and all further liability
with respect thereto.
27. DEFAULT.
27.1. Tenant's Default. The occurrence of any one or more of the following
events shall constitute a default and breach of this Lease by Tenant:
a. If Tenant abandons or vacates the Premises; or
b. If Tenant fails to pay any Rent or any other charges required to be paid
by Tenant under this Lease and such failure continues for five (5) days
after such payment is due and payable; or
c. If Tenant fails to promptly and fully perform any other covenant,
condition or agreement contained in this Lease and such failure continues
for thirty (30) days after written notice thereof from Landlord to Tenant;
or
d. If a writ of attachment or execution is levied on this Lease or on any of
Tenant's Property; or
e. If Tenant makes a general assignment for the benefit of creditors, or
provides for an arrangement, composition, extension or adjustment with its
creditors; or
f. If Tenant files a voluntary petition for relief or if a petition against
Tenant in a proceeding under the federal bankruptcy laws or other insolvency
laws is filed and not withdrawn or dismissed within forty-five (45) days
thereafter, or if under the provisions of any law providing for
reorganization or winding up of corporations, any court of competent
jurisdiction assumes jurisdiction, custody or control of Tenant or any
substantial part of its property and such jurisdiction, custody or control
remains in force unrelinquished, unstayed or unterminated for a period of
forty-five (45) days; or
g. If in any proceeding or action in which Tenant is a party, a trustee,
receiver, agent or custodian is appointed to take charge of the Premises or
Tenant's Property (or has the authority to do so) for the purpose of
enforcing a lien against the Premises or Tenant's Property; or
h. If Tenant is a partnership or consists of more than one (1) person or
entity, if any partner of the partnership or other person or entity is
involved in any of the acts or events described in subparagraphs d through
g above.
27.2. Remedies. In the event of Tenant's default hereunder, then in addition to
any other rights or remedies Landlord may have under any law, Landlord shall
have the right, at Landlord's option, without further notice or demand of any
kind to do the following:
a. Terminate this Lease and Tenant's right to possession of the Premises and
reenter the Premises and take possession thereof, and Tenant shall have no
further claim to the Premises or under this Lease; or
b. Continue this Lease in effect, reenter and occupy the Premises for the
account of Tenant, and collect any unpaid Rent or other charges which have
or thereafter become due and payable; or
c. Reenter the Premises under the provisions of subparagraph b, and
thereafter elect to terminate this Lease and Tenant's right to possession of
the Premises.
(10)
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If Landlord reenters the Premises under the provisions of subparagraphs b or c
above, Landlord shall not be deemed to have terminated this Lease or the
obligation of Tenant to pay any Rent or other charges thereafter accruing,
unless Landlord notifies Tenant in writing of Landlord's election to terminate
this Lease. In the event of any reentry or retaking of possession by Landlord,
Landlord shall have the right, but not the obligation, to remove all or any part
of Tenant's Property in the Premises and to place such property in storage at a
public warehouse at the expense and risk of Tenant. If Landlord elects to relet
the Premises for the account of Tenant, the rent received by Landlord from such
reletting shall be applied as follows: first, to the payment of any indebtedness
other than Rent due hereunder from Tenant to Landlord; second, to the payment of
any costs of such reletting; third, to the payment of the cost of any
alterations or repairs to the Premises; fourth to the payment of Rent due and
unpaid hereunder; and the balance, if any, shall be held by Landlord and applied
in payment of future Rent as it becomes due. If that portion of rent received
from the reletting which is applied against the Rent due hereunder is less than
the amount of the Rent due, Tenant shall pay the deficiency to Landlord promptly
upon demand by Landlord. Such deficiency shall be calculated and paid monthly.
Tenant shall also pay to Landlord, as soon as determined, any costs and expenses
incurred by Landlord in connection with such reletting or in making alterations
and repairs to the Premises, which are not covered by the rent received from the
reletting.
Should Landlord elect to terminate this Lease under the provisions of
subparagraphs a or c above, Landlord may recover as damages from Tenant the
following:
1. Past Rent. The worth at the time of the award of any unpaid Rent which had
been earned at the time of termination; plus
2. Rent Prior to Award. The worth at the time of the award of the amount by
which the unpaid Rent which would have been earned after termination until
the time of awards exceeds the amount of such rental loss that Tenant proves
could have been reasonably avoided; plus
3. Rent After Award. The worth at the time of the award of the amount by
which the unpaid Rent for the balance of the Term after the time of award
exceeds the amount of the rental loss that Tenant proves could be reasonably
avoided; plus
4. Proximately Caused Damages. Any other amount necessary to compensate
Landlord for all detriment proximately caused by Tenant's failure to perform
its obligations under this Lease or which in the ordinary course of things
would be likely to result therefrom, including, but not limited to, any costs
or expenses (including attorneys' fees), incurred by Landlord in (a) retaking
possession of the Premises, (b) maintaining the Premises after Tenant's
default, (c) prepaying the Premises for reletting to a new tenant, including
any repairs or alterations, and (d) reletting the Premises, including
broker's commissions.
"The worth at the time of the award' as used in subparagraphs 1 and 2 above, is
to be computed by allowing interest at the rate of ten percent (10%) per annum.
"The worth at the time of the award' as used in subparagraph 3 above, is to be
computed by discounting the amount at the discount rate of the Federal Reserve
Bank situated nearest to the Premises at the time of the award plus one percent
(1%).
The waiver by Landlord of any breach of any term, covenant or condition of this
Lease shall not be deemed a waiver of such term, covenant or condition or of any
subsequent breach of the same or any other term, covenant or condition.
Acceptance of Rent by Landlord subsequent to any breach hereof shall not be
deemed a waiver of any preceding breach other than the failure to pay the,
particular Rent so accepted, regardless of Landlord's knowledge of any breach at
the time of such acceptance of Rent. Landlord shall not be deemed to have waived
any term, covenant or condition unless Landlord gives Tenant written notice of
such waiver.
27.3 Landlord's Default. If Landlord fails to perform any covenant, condition or
agreement contained in this Lease within thirty (30) days after receipt of
written notice from Tenant specifying such default, or if such default cannot
reasonably be cured within thirty (30) days, if Landlord fails to commence to
cure within that thirty (30) day period, then Landlord shall be liable to Tenant
for any damages sustained by Tenant as a result of Landlord's breach; provided,
however, it is expressly understood and agreed that if Tenant obtains a money
judgment against Landlord resulting from any default or other claim arising
under this Lease, that judgment shall be satisfied only out of the rents,
issued, profits, and other income actually received on account of Landlord's
right, title and interest in the Premises, Building or Project, and no other
real, personal or mixed property of Landlord (or of any of the partners which
comprise Landlord, if any) wherever situated, shall be subject to levy to
satisfy such judgment. If, after notice to Landlord of default, Landlord (or any
first mortgagee or first deed of trust beneficiary of Landlord) fails to cure
the default as provided herein, then Tenant shall have the right to cure that
default at Landlord's expense. Tenant shall not have the right to terminate this
Lease or to withhold, reduce or offset any amount against any payments of Rent
or any other charges due and payable under this Lease except as otherwise
specifically provided herein.
28. BROKERAGE FEES.
Tenant warrants and represents that it has not dealt with any real estate broker
or agent in connection with this Lease or its negotiation except those noted in
Section 2.c. Tenant shall indemnify and hold Landlord harmless from any cost,
expenses or liability (including costs of suit and reasonable attorneys' fees)
for any compensation, commission or fees claimed by any other real estate broker
or agent in connection with this Lease or its negotiation by reason of any act
of Tenant.
29. NOTICES.
All notices, approvals and demands permitted or required to be given under this
Lease shall be in writing and deemed duly served or given if personally
delivered or sent by certified or registered U.S. mail, postage prepaid, and
addressed as follows: (a) if to Landlord, to Landlord's Mailing Address and to
the Building Manager, and (b) if to Tenant, to Tenant's Mailing Address;
provided, however, notices to Tenant shall be deemed duly served or given if
delivered or mailed to Tenant at the Premises. Landlord and Tenant may from time
to time by notice to the other designate another place for receipt of future
notices.
30. GOVERNMENT ENERGY OR UTILITY CONTROLS.
In the event of imposition of federal, state or local government controls,
rules, regulations, or restrictions on the use or consumption of energy or other
utilities during the Term, both Landlord and Tenant shall be bound thereby. In
the event of a difference in interpretation by Landlord and Tenant of any such
controls, the interpretation of Landlord shall prevail, and Landlord shall have
the right to enforce compliance therewith, including the right of entry into the
Premises to effect compliance.
31. RELOCATION OF PREMISES.
Landlord shall have the right to relocated the Premises to another part of the
Building in accordance with the following:
(11)
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a. The new premises shall be substantially the same in size, dimensions,
configuration, decor and nature as the Premises described in this Lease, and if
the relocation occurs after the Commencement Date, shall be placed in that
condition by Landlord at its cost.
b. Landlord shall give Tenant at least thirty (30) days written notice of
Landlord's intention to relocate the Premises.
c. As nearly as practicable, the physical relocation of the Premises shall take
place on a weekend and shall be completed before the following Monday. If the
physical relocation has not been completed in that time, Base Rent shall abate
in full from the time the physical relocation commences to the time it is
completed. Upon completion of such relocation, the new premises shall become the
"Premises' under this Lease.
d. All reasonable costs incurred by Tenant as a result of the relocation shall
be paid by Landlord.
e. If the new premises are smaller than the Premises as it existed before the
relocation, Base Rent shall be reduced proportionately.
f. The parties hereto shall immediately execute an amendment to this Lease
setting forth the relocation of the Premises and the reduction of Base Rent, if
any.
32. QUIET ENJOYMENT.
Tenant, upon paying the Rent and performing all of its obligations under this
Lease, shall peaceably and quietly enjoy the Premises, subject to the terms of
this Lease and to any mortgage, lease, or other agreement to which this Lease
may be subordinate.
33. OBSERVANCE OF LAW.
Tenant shall not use the Premises or permit anything to be done in or about the
Premises which will in any way conflict with any law, statute, ordinance or
governmental rule or regulation now in force or which may hereafter be enacted
or promulgated. Tenant shall, at its sole cost and expense, promptly comply with
all laws, statutes, ordinances and governmental rules, regulations or
requirements now in force or which may hereafter be in force, and with the
requirements of any board of fire insurance underwriters or other similar bodies
now or hereafter constituted, relating to, or affecting the condition, use or
occupancy of the Premises, excluding structural changes not related to or
affected by Tenant's improvements or acts. The judgment of any court of
competent jurisdiction or the admission of Tenant in any action against Tenant,
whether Landlord is a party thereto or not, that Tenant has violated any law,
ordinance or governmental rule, regulation or requirement, shall be conclusive
of that fact as between Landlord and Tenant.
34. FORCE MAJEURE.
Any prevention, delay or stoppage of work to be performed by Landlord or Tenant
which is due to strikes, labor disputes, inability to obtain labor, materials,
equipment or reasonable substitutes therefor, act of God, governmental
restriction or regulations or controls, judicial orders, enemy or hostile
government actions, civil commotion, fire or other casualty, or other causes
beyond the reasonable control of the party obligated to perform hereunder, shall
excuse performance of the work by that party for a period equal to the duration
of that prevention, delay or stoppage. Nothing in this Article 34 shall excuse
or delay Tenant's obligation to pay Rent or other charges under this Lease.
35. CURING TENANT'S DEFAULTS.
If Tenant defaults in the performance of any of its obligations under this
Lease, Landlord may (but shall not be obligated to) without waiving such
default, perform the same for the account at the expense of Tenant. Tenant shall
pay Landlord all costs of such performance promptly upon receipt of a bill
therefor.
36. SIGN CONTROL.
Tenant shall not affix, paint, erect or inscribe any sign, projection, awning,
signal or advertisement of any kind to any part of the Premises, Building or
Project, including without limitation, the inside or outside of windows or
doors, without the written consent of Landlord. Landlord shall have the right to
remove any signs or other matter, installed without Landlord's permission,
without being liable to Tenant by reason of such removal, and to charge the cost
of removal to Tenant as additional rent hereunder, payable within ten (10) days
of written demand by Landlord.
37. MISCELLANEOUS.
a. Accord and Satisfaction; Allocation of Payments. No payment by Tenant or
receipt by Landlord of a lesser amount than the Rent provided for in this Lease
shall be deemed to be other than on account of the earliest due Rent, nor shall
any endorsement or statement on any check or letter accompanying any check or
payment as Rent be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord's right to recover the
balance of the Rent or pursue any other remedy provided for in this Lease. In
connection with the foregoing, Landlord shall have the absolute right in its
sole discretion to apply any payment received from Tenant to any account or
other payment of Tenant then not current and due or delinquent.
b. Addenda. If any provision contained in an addendum to this Lease is
inconsistent with any other provision herein, the provision contained in the
addendum shall control, unless otherwise provided in the addendum.
c. Attorney's Fees. If any action or proceeding is brought by either party
against the other pertaining to or arising out of this Lease, the finally
prevailing party shall be entitled to recover all costs and expenses, including
reasonable attorneys' fees, incurred on account of such action or proceeding.
d. Captions, Articles and Section Numbers. The captions appearing within the
body of this Lease have been inserted as a matter of convenience and for
reference only and in no way define, limit or enlarge the scope or meaning of
this Lease. All references to Article and Section numbers refer to Articles and
Sections in this Lease.
e. Changes Requested by Lender. Neither Landlord or Tenant shall unreasonably
withhold its consent to changes or amendments to this Lease requested by the
lender on Landlord's interest, so long as these changes do not alter the basic
business terms of this Lease or otherwise materially diminish any rights or
materially increase any obligations of the party form whom consent to such
charge or amendment is requested.
f. Choice of Law. This Lease shall be construed and enforce in accordance with
the laws of the State.
g. Consent. Notwithstanding anything contained in this Lease to the contrary,
Tenant shall have co claim, and hereby waives the right to any claim against
Landlord for money damages by reason of any refusal, withholding or delaying by
Landlord of any consent, approval or statement of satisfaction, and in such
event, Tenant's only remedies therefor shall be an action for specific
performance, injunction or declaration judgment to enforce any right to such
consent, etc.
(12)
<PAGE>
<PAGE>
h. Corporate Authority. If Tenant is a corporation, each individual signing this
Lease on behalf of Tenant represents and warrants that he is duly authorized to
execute and deliver this Lease on behalf of the corporation, and that this Lease
is binding on Tenant in accordance with its terms. Tenant shall, at Landlord's
request, deliver a certified copy of a resolution of its board of directors
authorizing such execution.
i. Counterparts. This Lease may be executed in multiple counterparts, all of
which shall constitute one and the same Lease.
j. Execution of Lease, No Option. The submission of this Lease to Tenant shall
be for examination purposes only, and does not and shall not constitute a
reservation of or option for Tenant to lease, or otherwise create any interest
of Tenant in the Premises or any other premises within the Building or Project.
Execution of this Lease by Tenant and its return to Landlord shall not be
binding on Landlord notwithstanding any time interval, until Landlord has in
fact signed and delivered this Lease to Tenant.
k. Furnishing of Financial Statements; Tenant's Representations. In order to
induce Landlord to enter into this Lease Tenant agrees that it shall promptly
furnish Landlord, from time to time, upon Landlord's written request, with
financial statements reflecting Tenant's current financial condition. Tenant
represents and warrants that all financial statements, records and information
furnished by Tenant to Landlord in connection with this Lease are true, correct
and complete in all respects.
l. Further Assurances. The parties agree to promptly sign all documents
reasonably requested to give effect to the provisions of this Lease.
m. Mortgagee Protection. Tenant agrees to send by certified or registered mail
to any first mortgage or first deed of trust beneficiary of Landlord whose
address has been furnished to Tenant, a copy of any notice of default served by
Tenant on Landlord. If Landlord fails to cure such default within the time
provided for in this Lease, such mortgagee or beneficiary shall have an
additional thirty (30) days to cure such default; provided that if such default
cannot reasonably be cured within that thirty (30) day period, then such
mortgagee or beneficiary shall have such additional time to cure the default as
is reasonably necessary under the circumstances.
n. Prior Agreements; Amendments. This Lease contains all of the agreements of
the parties with respect to any matter covered or mentioned in this Lease, and
no prior agreement or understanding pertaining to any such matter shall be
effective for any purpose. No provisions of this Lease may be amended or added
to except by an agreement in writing signed by the parties or their respective
successors in interest.
o. Recording. Tenant shall not record this Lease without the prior written
consent of Landlord. Tenant, upon the request of Landlord, shall execute and
acknowledge a "short form' memorandum of this Lease for recording purposes.
p. Severability. A final determination by a court of competent jurisdiction that
any provision of this Lease is invalid shall not affect the validity of any
other provision, and any provision so determined to be invalid shall, to the
extent possible, be construed to accomplish its intended effect.
q. Successors and Assigns. This Lease shall apply to and bind the heirs,
personal representatives, and permitted successors and assigns of the parties.
r. Time of the Essence. Time is of the essence of this Lease.
s. Waiver. No delay or omission in the exercise of any right or remedy of
Landlord upon any default by Tenant shall impair such right or remedy or be
construed as a waiver of such default.
t. Compliance. The parties hereto agree to comply with all applicable federal,
state and local laws, regulations, codes, ordinances and administrative orders
having jurisdiction over the parties, property or the subject matter of this
Agreement, including, but not limited to, the 1964 Civil Rights Act and all
amendments thereto, the Foreign Investment In Real Property Tax Act, the
Comprehensive Environmental Response Compensation and Liability Act, and The
Americans With Disabilities Act.
The receipt and acceptance by Landlord of delinquent Rent shall not constitute a
waiver of any other default; it shall constitute only a waiver of timely payment
for the particular Rent payment involved.
No act or conduct of Landlord, including, without limitation, the acceptance of
keys to the Premises, shall constitute an acceptance of the surrender of the
Premises by Tenant before the expiration of the Term. Only a written notice from
Landlord to Tenant shall constitute acceptance of the surrender of the Premises
and accomplish a termination of the Lease.
Landlord's consent to or approval of any act by Tenant requiring Landlord's
consent or approval shall not be deemed to waive or render unnecessary
Landlord's consent to or approval of any subsequent act by Tenant.
Any waiver by Landlord of any default must be in writing and shall not be a
waiver of any other default concerning the same or any other provision of the
Lease.
The parties hereto have executed this Lease as of the dates set forth below.
<TABLE>
<S> <C>
Date: 2/27/97 Date: 2/27/97
--------------------------------------------------- ---------------------------------------------
Landlord: Airplaza Co., Inc. Tenant: Proflight Medical Response, Inc.
------------------------------------- -----------------------------------------
By: /s/ William Vaniman By: /s/ Kevin L. Burkhardt
------------------------------------------------- -------------------------------------------------
Title: Vice President Title: President
-------------------------------------------- --------------------------------------------
By: By:
-------------------------------------------------- -------------------------------------------------
Title: Title:
--------------------------------------------- ---------------------------------------------
</TABLE>
(13)
<PAGE>
<PAGE>
ADDENDUM ONE
(This ADDENDUM ONE is attached to and constitutes part of that certain Office
Building Lease dated as of February 27, 1997, between AIRPLAZA CO., INC., a
Colorado corporation, as Landlord, and PROFLIGHT MEDICAL RESPONSE, INC., a
Colorado corporation, as Tenant (the "Lease").)
ADDITIONAL PROVISIONS:
A. TENANT'S PROPORTIONATE SHARE. For purposes of this Lease, the term "Tenant's
Proportionate Share" shall have the following meaning:
(1) With respect to Project Operating Costs that are allocated by Landlord,
in Landlord's reasonable judgment, to the entire Project, Tenant's Proportionate
Share shall mean 8.35%, which percentage is a fraction, the numerator of which
is the Rentable Area of the Premises (9,364 square feet), and the denominator of
which is the Rentable Area of the Project as determined by Landlord from time to
time, and which, as of the date of this Lease, is 112,190 square feet. One
example of a Project Operating Cost allocated by Landlord, in Landlord's
reasonable judgment, to the entire Project is the cost of maintenance of the
landscaping for the entire Project.
(2) With respect to Project Operating Costs that are allocated by Landlord,
in Landlord's reasonable judgment, in their entirety to the Building, Tenant's
Proportionate Share shall means 24.57%, which percentage is a fraction, the
numerator of which is the Rentable Area of the Premises (9,364 square feet), and
the denominator of which is the Rentable Area of the Building (38,114 square
feet). One example of a Project Operating Cost allocated by landlord, in
Landlord's reasonable judgment, in its entirety to the Building is the cost of
janitorial services for the Building.
B. TENANT'S RIGHT TO TERMINATE. If, through no fault of Tenant's, the
Commencement Date has not occurred on or prior to the 140th day after the Tenant
T/I Approval Date (as defined in paragraph 2 of Exhibit C to this Lease), then
Tenant, by written notice to Landlord delivered during the ten (10) day period
following the 140th day after the date of this Lease, shall have the right to
terminate this Lease and all of Tenant's rights, obligations and duties
hereunder. Upon receipt of any such written notice of termination in a timely
manner, Landlord promptly thereafter shall refund to Tenant any security deposit
made by Tenant pursuant hereto and after said refund, neither Landlord nor
Tenant shall have any further obligations or liabilities to the other pursuant
hereto, except as expressly stated herein.
C. TENANT'S RIGHT TO EXTEND THE TERM. Tenant shall have the right to extend the
Term of this Lease once for a period of three (3) years. In the event of such an
extension, the Expiration Date shall become the day prior to the tenth (10th)
anniversary of the Commencement Date, and the Base Rent for the first year of
the extension period (the period from the 7th anniversary of the Commencement
Date to the day prior to the 8th anniversary of the Commencement Date) shall be
equal to the market rent for similar space in comparable locations in the
Centennial Airport area, with said Base Rent to be adjusted for the second and
third years of the extension period in the manner set forth in Section 5.2 of
this Lease. To exercise this right to extend the Term of this Lease, Tenant
shall give Landlord written notice (the "Notice") of its election to extend on
or prior to the date (the "Notice Date") that is 180 days prior to the original
Expiration Date (the day prior to the 7th anniversary of the Commencement Date).
Tenant's right to extend shall apply only if Tenant is not in default under this
Lease at the time Tenant delivers the Notice. If Landlord has not received the
Notice on or prior to the Notice Date, then as of 11:59 p.m. on that date
Tenant's right to extend the Term of this Lease pursuant to this paragraph shall
terminate and be of no further force or effect.
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<PAGE>
D. TENANT'S RIGHT OF FIRST REFUSAL TO LEASE CONTIGUOUS SPACE. As long as Tenant
is not in default under this Lease, Tenant shall have a right of first refusal
to lease any office space in the Building adjacent and contiguous to (and on the
same floor as) the Premises (the "Contiguous Space"), as follows: in the event
that Landlord receives an offer to lease any Contiguous Space on terms and
provisions that Landlord is willing to accept ("Offer"), then Landlord shall
notify Tenant in writing of the Offer and the terms and provisions thereof.
Tenant shall have five (5) days after its receipt of any such written
notification from Landlord to elect to lease said Contiguous Space on the exact
terms of the Offer. To elect to lease said Contiguous Space on the exact terms
of the Offer, Tenant must deliver written notice of its election to landlord
within said five (5) day period. If Landlord does not receive that written
notice within said five (5) day period, then Tenant's right to lease that
Contiguous Space shall terminate, and Landlord thereafter shall have the right
to enter into a lease of that Contiguous Space on terms and conditions no more
favorable to Landlord than the terms and conditions set forth in the Offer.
Tenant's failure to elect to lease any Contiguous Space on the terms of any
Offer presented to Tenant during the Term of this Lease, if that Offer
ultimately becomes the basis of a lease actually entered into by Landlord, shall
terminate permanently Tenant's right of first refusal as set forth herein with
respect to that Contiguous Space, and Tenant shall not have any right of first
refusal with respect to any subsequent Offer pertaining to that Contiguous Space
during the Term of this Lease.
IN WITNESS THEREOF, Landlord and Tenant have executed this Addendum One as
of the date first written above.
LANDLORD:
AIRPLAZA CO., INC.
By: /s/ William Vaniman
- ---------------------------------------
Title: Vice President
- ---------------------------------------
TENANT:
PROFLIGHT MEDICAL RESPONSE, INC.
By: /s/ KEVIN L. BURKHARDT
- ---------------------------------------
Title: President
- ---------------------------------------
- 2 -
<PAGE>
<PAGE>
AIR AMBULANCE TRANSPORT SERVICES AGREEMENT
This Air Ambulance Transport Services Agreement ("Agreement") is made and
entered into this 1st day of January, 1996, by and between ProFlight, Inc., a
corporation organized and existing under the laws of the State of Colorado
(hereinafter referred to as "ProFlight") and Aetna Health Management, Inc., a
corporation organized and existing under the laws of the State of Delaware
(hereinafter referred to as "AHM").
WHEREAS, AHM desires to engage ProFlight to provide certain air transport
services for individuals entitled to receive health care services through health
benefit plans administered or serviced by AHM; and
WHEREAS, ProFlight desires to provide such services on the following terms and
conditions.
NOW, THEREFORE, it is mutually agreed, as follows:
ARTICLE I -- DEFINITIONS
As used in this Agreement, each of the following terms (and the plural thereof,
when appropriate) shall have the meaning set forth herein.
A. "Air Transport Services" mean those Covered Services identified in
Attachment A related to the transportation of an individual requiring
transplant services or other health care services that are to be
provided at a distant facility.
B. "Affiliate" means a corporation or other legal entity related by common
ownership, management or control.
C. "Covered Services" means those health care services for which a Member
is entitled to benefits under the terms of a Health Benefit Program.
Services that are not Medically Necessary will not be deemed Covered
Services for purposes of this Agreement.
D. "Health Benefit Program" means a benefit program (i) specifying health
care services to be reimbursed, paid for or provided to individuals
lawfully participating in that benefits program; (ii) employing
financial incentives to utilize Participating Providers; and (iii)
issued, administered or serviced by AHM or an Affiliate.
E. "Member" means an individual covered by or enrolled in a Health Benefit
Program.
<PAGE>
<PAGE>
F. "Participating" means credentialed by AHM or its designee consistent
with AHM's credentialing policies, as applicable, and designated as
Participating by AHM. When used in conjunction with, for example,
"Physician," "Ancillary Provider," "Facility," "Provider" or "Facility,"
Participating means the named party or parties credentialed by AHM and
under contract with AHM, directly or indirectly, to provide Covered
Services to Members.
G. "Payor" means an employer, labor union, insurer, health maintenance
organization ("HMO") or other person or entity which has agreed to be
responsible for funding benefit payments, or otherwise paying, for
Covered Services provided to Members under the terms of a Health Benefit
Program.
ARTICLE II -- OBLIGATIONS AND RESPONSIBILITIES OF PROFLIGHT
ProFlight, being fully accredited and licensed in all phases of air medical
transport services with the credentials listed in Attachment A, is an
independent contractor of AHM. As such, its obligations and responsibilities
include, but are not limited to, the following:
A. ProFlight will provide Air Transport Services requested and approved in
accordance with Section N of this Article II on a twenty-four (24) hour
per day, seven (7) days per week basis as required for Members who need
to be transported in connection with the provision of transplant
services and/or other health care services.
B. ProFlight certifies that it is, and it shall remain, in full compliance
with the applicable provisions of Part 91 and Part 135 of the Federal
Aviation Regulations, and will comply with any subsequent changes and
amendments to such regulations. Any and all pilots and aircraft
personnel shall be properly licensed and certified in accordance with
applicable law and industry standards.
C. ProFlight will provide properly directed and staffed air medical
personnel according to the nature and extent of health care needs
anticipated and the scope of services offered. Such personnel may
include, but shall not be limited to, board certified emergency room
physicians, critical care registered professional nurses, medical
technicians, paramedics, respiratory therapists, and perfusion
therapists.
<PAGE>
<PAGE>
ProFlight shall require that each physician have and maintain valid,
unrestricted, unencumbered licenses to practice in the state in which
such physician provides services to Members hereunder. ProFlight shall
also require that each physician satisfy the following criteria: (a)
current, unrestricted DEA certificate (or other state narcotics
registration or certificate); (b) absence of a history of any adverse
action, including but not limited to restriction, suspensions, fines,
exclusion or debarment, related to the physician's participation in the
Medicaid or Medicare programs; (c) absence of a history of professional
liability claims or evidence that such history does not demonstrate
probable future substandard professional performance; (d) absence of
professional disciplinary action or evidence that such history does not
demonstrate probable future substandard professional performance or
business practices; (e) absence of current mental or physical impairment
or condition (including substance abuse) that would adversely affect the
physician's ability to competently and safely perform the essential
functions of a physician in the same area of practice; (f) absence of a
history of criminal investigation, indictment or conviction or evidence
that such history does not demonstrate probable future substandard
professional performance; (g) absence of any information that
demonstrates that the physician has engaged in conduct unbecoming to a
professional; and (h) absence of a history of denial or cancellation of
professional liability insurance or evidence that such history does not
demonstrate probable future substandard performance or business
practices. ProFlight shall report to AHM within five (5) days any
information which it learns about a physician with regard to the
foregoing criteria.
ProFlight shall require that all non-physician providers under contract
with ProFlight and all ancillary personnel employed by ProFlight are and
shall remain licensed, registered or certified and supervised (when and
as required by state law), and qualified by training and experience to
perform their professional duties. ProFlight shall further require that
all licensed or certified non-physician providers and ancillary
personnel are and will be acting within the scope of their licensure,
registration or certification, as the case may be.
D. ProFlight will ensure that all training and experience requirements will
be commensurate to the critical care, advanced life support, specialty
care, and basic life support airborne environment.
E. ProFlight agrees to coordinate the transfer of Members from the point of
origin to their final destination. Further, ProFlight will provide
continuity and stable transition of care between the site from which
such Member is transferred and the receiving facility designated by AHM.
F. ProFlight will ensure that the quality and appropriateness of medical
care provided by ProFlight medical personnel (including any and all such
personnel providing services to Members on behalf of ProFlight, pursuant
to a contract between such personnel and ProFlight) will be continuously
reviewed and evaluated through the establishment of written quality
assurance policy procedures, a copy of which will be provided to AHM.
<PAGE>
<PAGE>
G. ProFlight will provide management information reports to AHM on a
regularly scheduled basis. Format and frequency of said management
reports will be determined by mutual agreement between ProFlight and
AHM, provided that, at a minimum, such reports shall list the number of
flights during the period, and for each flight, shall provide specific
information regarding dates of service. destination, number of air
miles, and flight time, patient name, patient diagnosis, staffing, and
all costs incurred by ProFlight and included in the compensation to
ProFlight pursuant to Article IV. These reports shall be provided at no
additional cost to AHM or the applicable Payor.
H. Medical and administrative personnel from ProFlight will be reasonably
available for consultation during normal business hours. Such hours
shall be between 9:00 a.m. and 5:00 p.m., Monday through Friday of each
week except holidays.
I. ProFlight will provide itemized invoices to AHM in such format and with
such frequency mutually determined by ProFlight and AHM.
J. ProFlight will provide emergency service twenty-four (24) hours a day,
seven (7) days a week, 365 days a year.
K. ProFlight shall maintain at all times during the term of this Agreement
the following insurance:
(i) Worker's Compensation in minimum amounts required by statute and
Employer's Liability limits of $500,000;
(ii) comprehensive and general liability insurance in the minimum
amounts of $1 million dollars per occurrence and $2 million dollars in
the annual aggregate, with AHM listed as an additional insured with
respect to the provision of Air Transport Services pursuant to this
Agreement;
(iii) medical professional liability insurance in the minimum amounts of
$1 million per occurrence and $3 million in the annual aggregate,
including medical professional liability insurance for ProFlight
employed and/or contracted health care providers in the minimum amounts
of $1 million per occurrence and $3 million in the annual aggregate,
with AHM listed as an additional insured with respect to the provision
of Air Transport Services pursuant to this Agreement; and
(iv) aircraft insurance insuring against any claim, loss, liability or
damage in minimum amounts of $20 million, with AHM listed as an
additional insured with respect to the services provided pursuant to
this Agreement.
ProFlight shall require each and every land transport company or
supplier with which it contracts to provide land transportation services
to Members hereunder to maintain automobile insurance applicable to any
land transportation services provided pursuant to this Agreement in
minimum amounts of $1 million per accident and $2 million in the annual
aggregate.
<PAGE>
<PAGE>
ProFlight shall deliver to AHM evidence of such coverages in force.
Notice shall be provided to AHM within one business day of ProFlight's
notice of (i) cancellation, nonrenewal or suspension of any of the
aforementioned insurance coverages, or (ii) reduction in the coverage
limits below the minimum levels set forth in this Section.
L. ProFlight agrees to abide by the utilization management and quality
management programs applicable to each Member's Health Benefit Program.
M. ProFlight agrees that it shall provide Air Transport Services to Members
pursuant to this Agreement only after obtaining authorization from the
appropriate UM case manager in accordance with the particular Member's
Health Benefit Program. Notwithstanding the previous sentence, in the
event of an emergency, if ProFlight is unable to obtain such
preauthorization due to the unavailability of the appropriate case
manager (despite ProFlight's best efforts to contact such individual),
ProFlight may provide Air Transport Services to a Member upon the
request of a Participating Physician, and AHM shall instruct the
applicable Payor to pay ProFlight for such services in accordance with
Article IV, provided that such services are determined to be medically
necessary pursuant to such Member's Health Benefit Program.
ARTICLE III - GENERAL PROVISIONS
A. Nothing contained in this Agreement shall be construed to require
ProFlight's medical director or appointed staff to perform any
procedure, course treatment, or transport which staff deems
professionally unacceptable.
B. Neither party shall subcontract nor otherwise delegate its rights,
obligations, or duties under this Agreement except as otherwise provided
herein, without the express written consent of the other.
C. ProFlight shall maintain or cause to be maintained adequate medical
records relating to the provision of services to Members. ProFlight and
AHM agree that all Member medical records shall be treated as
confidential so as to comply with all state and federal laws regarding
the confidentiality of patient records. AHM shall have the right to
inspect, at all reasonable times, any accounting and administrative
records maintained by ProFlight pertaining to AHM or Members. However,
ProFlight shall not be required to disclose the medical records of any
Member without his or her written consent, to other than Participating
Providers, AHM or to the applicable Payor.
D. ProFlight warrants that it is in compliance with all applicable federal,
state, and local laws relating to the provision of Air Transport
Services and that ProFlight shall cause all its employees and other
contracted personnel or entities to perform their duties in accordance
with all applicable federal, state, and local standards of professional
ethics and practice as may be applicable.
<PAGE>
<PAGE>
E. Agreement, together with any supplements, addenda, amendments,
modifications, or attachments, comprises the complete modifications, or
attachments, comprises the complete agreement. Neither of the parties
has made any representations nor warranties other than those set forth
in this Agreement and such attachments, supplements, addenda, amendments
or modifications, if any.
F. In the event that any portion of this Agreement is found to be void or
illegal, the validity or enforceability of any other portion shall not
be affected.
G. The waiver by either party of a breach or violation of any provision of
this Agreement shall not operate as or be construed to be a waiver of
any subsequent breach thereof. To be effective, waivers must be in
writing and signed.
H. The headings of the various Articles of this Agreement are inserted
merely for the purpose of convenience and do not, expressly or by
implication, limit or define or extend the specific terms of the
Articles so designated.
I. All the rights and remedies hereunder will be cumulative and not
alternative, and this Agreement shall be construed and governed by the
laws of the State of Connecticut.
J. This Agreement may be executed in any number of counterparts which, when
read together, shall constitute one instrument.
K. ProFlight acknowledges that the terms of this Agreement (including
without limitation reimbursement rates), membership lists, lists of
sponsors of Health Benefit Programs, and the utilization management
programs and other policies and procedures of AHM and its Affiliates
constitute confidential and proprietary information, the unauthorized
use or disclosure of which would cause irreparable harm to AHM and/or
its Affiliates. ProFlight shall maintain such information in confidence
and shall not disclose such information to any person, except as may be
required by law, without the written consent of AHM. The obligations of
this Section L shall survive the termination of this Agreement
regardless of the cause of termination.
L. ProFlight agrees to indemnify, defend and hold AHM, Payors and Members,
and their respective officers, directors, employees, Affiliates and
successors and assigns harmless from any loss, claim, damage, cost or
expense, including but not limited to reasonable attorneys' fees and
costs, that AHM, Payors, Members, or their respective officers,
directors, employees, Affiliates and successors and assigns may incur
arising out of or related to ProFlight's performance under this
Memorandum.
<PAGE>
<PAGE>
ARTICLE IV - COMPENSATION
ProFlight's compensation shall be subject to the following conditions:
A. AHM shall instruct Payors to remit payment for Air Transport Services,
provided such services are requested and are authorized in accordance
with Article II, Section N of this Agreement, within thirty (30) days of
receipt of an undisputed claim. Billing by ProFlight for Air Transport
Services shall be in accordance with the fee schedule listed in
Attachment A.
ProFlight agrees to bill the applicable Payor within thirty (30) days of
its provision of Air Transport Services on behalf of a Member. Any Air
Transport Services not billed to Payors within ninety (90) days from the
date of service shall require approval by AHM to be eligible for
reimbursement.
B. Payment by Payors to ProFlight for Air Transport Services shall be
deemed full compensation for all of the services that are provided or
arranged by ProFlight relating to such services, including all
equipment, supplies, personnel, aircraft and non-aircraft transport
vehicles and services, and all other costs incurred by ProFlight
relating to the provision of such services, except that ProFlight shall
bill and collect from Members any applicable copayments, coinsurance or
deductibles.
C. ProFlight agrees to look solely to Payors for compensation of Air
Transport Services rendered to Members and, with the exception of any
copayments, coinsurance or deductibles required under the Member's
Health Benefit Program, ProFlight shall not assert any claim for
compensation against Members in the event of non-payment by Payors or as
a result of any breach of this Agreement.
The above provision shall not prohibit ProFlight from providing to
Members services that are not Covered Services provided that, prior to
the provision of Air Transport Services: (1) ProFlight informs such
Member, in writing, that the services are not covered under the terms of
such member's Health Benefit Program; and (2) such Member agrees in
writing to assume the full responsibility for payment for such services.
D. ProFlight agrees that it will provide AHM with the necessary billing
information required to pursue coordination of benefits with other
health care plans or any other permitted method of third party recovery.
ProFlight further agrees that, where duplicate coverage exists and the
Health Benefit Program appears to be the secondary coverage, ProFlight
shall so notify AHM.
If ProFlight has collected a copayment, deductibles or coinsurance from
a Member, where duplicate coverage exists and ProFlight is subsequently
reimbursed for the service by another health care plan, ProFlight shall
refund or credit to the Member the portion, if any, of the copayment,
deductible or coinsurance which represents an overpayment to ProFlight.
<PAGE>
<PAGE>
ARTICLE V - TERM AND TERMINATIONS
Subject to the conditions set forth in this Article V, the term of this
Agreement shall be for a period of twelve (12) months, commencing on
[1/9/96]; provided, however, this Agreement may be unilaterally terminated
sooner, without cause, by either party, by giving ninety (90) days written
notice to the other party. In addition, this Agreement may be terminated
immediately by AHM, upon delivery of notice to ProFlight, if (i) AHM determines,
in its sole discretion, that the health, safety or welfare of Members is
jeopardized by the continuation of this Agreement, or (ii) AHM determines that
ProFlight has failed to satisfy any of its obligations hereunder.
The parties agree that, in the event of a termination of this Agreement, the
obligations of ProFlight and AHM shall continue in full force and effect with
respect to services already identified and agreed to for the transportation of
Members hereunder.
ARTICLE VI - CHANGES IN THIS AGREEMENT
This Agreement, including any attachments, supplements, addenda, amendments or
modifications, may only be changed by a written document executed by both
parties.
ARTICLE VII - NOTICES
Any notices required to be given pursuant to the terms and provisions of this
Agreement shall be in writing and shall be sent by certified mail, return
receipt requested, prepaid to:
ProFlight: 12420 East Control Tower Road
Englewood,CO 80112
Attn: Brad Myers
AHM: 151 Farmington Avenue
Hartford, CT 06156
Either party may, at any time, designate any other address in place of those
given above by written notice to the other party.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
PROFLIGHT, INC. AETNA HEALTH MANAGEMENT, INC.
By: Kevin L. Burkhardt By: A. Bruce Campbell
Printed Name: Kevin L Burkhardt Printed Name: A.B. Campbell
Title: President Title: SVP
Date: 1/9/96 Date: 12/23/95
<PAGE>
<PAGE>
ATTACHMENT A
COMPENSATION
1. The applicable Payor shall reimburse ProFlight for all Air Transport Services
provided to Members pursuant to this Attachment A. For purposes of the Agreement
and this Attachment A, "Air Transport Services" shall mean any and all necessary
services and supplies relating to the transfer of a member from point of origin
to final destination, including, without limitation, all equipment, supplies,
medical and other personnel, aircraft and ground transport vehicles and
services.
2. Reimbursement Rate
Subject to the terms of this Agreement and the applicable Health Benefit
Program, ProFlight shall accept reimbursement for Air Transport Services
provided to Members ("Reimbursement Rate") in accordance with the following:
Aircraft Pass Seats Cruise Speed Rate/Hour
- ---------------------------------------------------------------------------
Lear Jet 24(Normal Config.) 5 500 MPH $1175.00**
Lear Jet 24(Ambulance Config.) 2 500 MPH $1250.00*
Catering ....................................................... At Cost
Nurse and Supplies (Per 24 Hour Period) ........................ $800.00
Respiratory Therapist or 2nd Nurse (Per 24 Hour Period,......... $250.00
not including airline transportation)
Medical Doctor (Per 24 Hour Period, not including............... $850.00
airline transportation)
Ground Ambulance ............................................... At Cost
International Handling ......................................... At Cost
All other services not listed separately above shall be provided at no
additional cost.
- --------
* Where applicable, an additional amount in respect of federal excise taxes
shall be added based on the then existing federal rate.
<PAGE>
<PAGE>
In calculating the Reimbursement Rate, AHM and ProFlight agree as follows:
(a) The Reimbursement Rate that is derived for services provided
hereunder on behalf of a particular Member (based on the above-listed schedule
of rates) shall constitute the Reimbursement Rate for all services provided or
arranged by ProFlight in connection with the transportation of such Member to
the specified destination.
(b) The hourly rate indicated above for the use of an aircraft shall be
based on the following principles:
(i) the length of time to be used to measure the number of "hours" of
use of the aircraft (the "Aircraft Use Time") shall be equal to
the sum of (A) the actual flight time for the flight from the
Member's departure airport (the "designated departure airport")
to the destination airport and (B) the length of time, if any,
applicable to transporting the aircraft to the designated
departure airport, as determined in accordance with clause (ii)
below.
(ii) In the event that the aircraft is located at an airport other
than the designated departure airport at the time the use of such
aircraft is required hereunder, the Aircraft Use Time shall
include the lesser of (A) the actual flight time to the
designated departure airport, or (B) twice the actual flight time
from the designated departure airport to the designated
destination airport. Notwithstanding the foregoing, the Aircraft
Use Time shall not include any flight time relating to the
transportation of the aircraft to the designated departure
airport if ProFlight is charging any other person or payor for
such flight time to the designated departure airport, whether
because such aircraft is being used to provide Air Transport
Services hereunder or otherwise.
(iii) Aircraft Use Time shall be rounded to the nearest tenth of an
hour and the portion of the Reimbursement Rate relating to the
use of the aircraft shall be equal to the specified hourly rate
multiplied by the Aircraft Use Time, as rounded to the nearest
tenth of an hour.
(iv) The Aircraft Use Time shall end at the time the aircraft lands at
the designated destination airport; Aircraft Use Time shall not
include any flight time associated with a return of the aircraft
to the airport from which it departed.
<PAGE>
<PAGE>
(c) The rate indicated above relating to the personnel provided hereunder
by ProFlight shall be based on the following principles:
(i) The applicable rates indicated for nurses, respiratory therapists
and physicians are fixed rates per twenty-four (24) hour period;
in the event that any single transport of a Member exceeds
twenty-four (24) hours or consecutive transports of Members
involving the same personnel exceed twenty-four (24) hours, the
aggregate time period shall be measured (to the nearest hour) and
the fee shall be prorated for the number of hours in excess of
twenty-four (24) hours.
(ii) In measuring the number of hours of service of such personnel,
the flight time involved in flying such personnel to the
designated departure airport shall be included, along with the
flight time with the Member to the destination airport.
(iii) As part of the Reimbursement Rate, an amount shall be added for
the cost of transporting Additional Medical Personnel (as defined
herein) back to their point of origin on a commercial flight,
provided that ProFlight's aircraft is not to return to such point
of origin within a reasonable amount of time. The parties agree
that the cost of any such commercial flight shall not exceed the
cost of the lowest reasonably available airfare to such point of
origin. For purposes hereof, "Additional Medical Personnel" shall
mean any second nurse, and/or any respiratory therapist or
physician who is/are required to accompany the Member and the
standard flight crew (which standard flight crew shall include a
nurse) due to the medical needs of the Member.
(d) The Reimbursement Rate shall be deemed to include the cost of all drugs,
pharmaceutical services and other supplies, and no additional amounts shall be
added to the Reimbursement Rate in respect thereof.
(e) With respect to the Ground Ambulance or other ground transportation (for
which the payor shall reimburse ProFlight at its cost), ProFlight's "cost" shall
be the lesser of (i) ProFlight's actual cost or (ii) the reasonable and
customary fee for such services in the geographic region. In addition, ProFlight
agrees to use AHM's preferred provider of such services, if AHM has contracted
with such a provider and that provider is available; in such event, such AHM
preferred provider shall be compensated pursuant to the arrangement between AHM
and such provider, and the Reimbursement Rate hereunder shall not include any
amounts relating to such services.
<PAGE>
<PAGE>
3. Reimbursement from Members
ProFlight shall bill and collect from Members any copayments,
coinsurance or deductibles applicable under such Members' Health Benefit
Program.
4. Compensation to ProFlight
The compensation per claim payable by the applicable Payor to
ProFlight, subject to the terms of this Agreement and the applicable
Health Benefit Program, shall be equal to the Reimbursement Rate minus
any applicable copayments, coinsurance or deductibles.
<PAGE>
<PAGE>
AMENDMENT TO THE AIR AMBULANCE
TRANSPORT SERVICES AGREEMENT
This amendment ("Amendment") to the Air Ambulance Transport Services Agreement
by and between ProFlight, Inc. ("ProFlight") and Aetna Health Management, Inc.
("AHM") dated January 1, 1996 (hereinafter referred to as the "Agreement") is
made and entered into to be effective on January 1, 1996.
WHEREAS, AHM and ProFlight have entered into the Agreement so that ProFlight may
provide Air Transport Services to Members;
WHEREAS, the parties desire to amend the Agreement so that ProFlight may
participate in the indemnity product administered by Aetna Life Insurance
Company, of which AHM is a subsidiary ("Traditional Choice Product");
WHEREAS, ProFlight desires to provide such services on the following terms and
conditions;
NOW, THEREFORE, in consideration of the mutual covenants in this Amendment, the
parties agree as follows:
1. For purposes of this Amendment, Article II shall be amended to include the
following term which shall apply in addition to the terms contained in the
Agreement as to ProFlight's participation in the Traditional Choice Product and
its provision of services to Members.
"N. ProFlight shall obtain from all Members to whom Air Transport
Services are provided by ProFlight signed assignment of benefits
authorizing payment for Air Transport Services to be made directly to
ProFlight."
2. For purposes of ProFlight's participation in the Traditional Choice Product
only, the following terms shall apply:
A. Article I, section D of the Agreement is hereby revised and amended
to read as follows:
"D. Health Benefit Indemnity Program means a benefit program (i)
specifying health care services to be reimbursed, paid for or provided
to individuals lawfully participating in such benefit program; and (ii)
issued, administered or serviced by Aetna Life Insurance Company."
B. The first paragraph of Article IV, section C of the Agreement is
hereby revised and amended to read as follows:
<PAGE>
<PAGE>
"C. In the event that ProFlight fails to obtain assignment of
benefits from Member, or if Payor fails to pay ProFlight for Air
Transport Services rendered to Member, ProFlight may bill such Member
for such Air Transport Services rendered to Member, in addition to any
copayments, coinsurance or deductibles required under the Member's
Health Benefit Indemnity Program."
C. Article IV of the Agreement is hereby amended to include the
following provision:
"E. ProFlight shall accept compensation in accordance with the
Agreement, the Health Benefit Indemnity Program and Attachment A of the
Agreement as payment in full for Air Transport Services."
3. All other terms of the Agreement not amended herein remain in full force and
effect. If the terms of this Amendment conflicts with any term of the Agreement,
the terms of thi~ Amendment shall prevail.
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed below.
PROFLIGHT, INC. AETNA HEALTH MANAGEMENT, INC.
By: /s/ Kevin L. Burkhardt By: /s/ A. Bruce Campbell
_____________________________ ________________________________
Printed Name: Kevin L. Burkhardt Printed Name: A.B. Campbell
___________________ ______________________
Title: President Title: SVP
__________________________ _____________________________
Date: 2/6/96 Date: 2/9/96
___________________________ ______________________________
AETNA LIFE INSURANCE COMPANY
By: /s/ A. Bruce Campbell
_____________________________
Printed Name: A.B. Campbell
___________________
Title: SVP
__________________________
Date: 2/9/96
___________________________
<PAGE>
<PAGE>
PROMISSORY NOTE
$220,000.00 Englewood, Colorado
March 17, 1995
FOR VALUE RECEIVED, PROFLIGHT INC., a Colorado corporation ("Maker")
hereby promises to pay to the order of LEAR THREE, L.L.C. (which is hereinafter
referred to, together with each subsequent holder of this note, as "Holder"), at
7427 S. Richfield St., Foxfield, CO 80016, or at such other address as may be
designated from time to time hereafter by written notice to Maker, the principal
sum of Two Hundred Twenty Thousand and No/100 Dollars ($220,000.00), together
with simple interest from the date hereof at the interest rate of eleven percent
(11 %) per annum. Upon the occurrence of an Event of Default, this note shall
bear interest from the date of the Event of Default at the default rate of
eighteen percent (18%) per annum.
This Note is secured by:
1. One Form 8050-98 Aircraft Security Agreement (the "Aircraft
Security Agreement") granting Holder a second lien interest in a
1973 Learjet 25BXR, Serial Number 141, with current Registration
No. N25HA.
2. A Security Agreement (the "Security Agreement") and Financing
Statement executed by Maker granting Holder a first security
interest in all accounts receivable of Maker and in certain
Medical Equipment (as more specifically defined in the Security
Agreement) owned by Maker.
Principal and interest shall be due and payable hereunder by Maker to
Holder as follows:
Annual payments of principal shall be made as follows:
$22,000.00 of principal due and payable on March 17, 1996;
$44,000.00 of principal due and payable on March 17, 1997;
$154,000.00 of principal due and payable on March 17,
1998.
In addition, monthly payments of all accrued and outstanding
interest shall be due on the 17th day of each month, commencing
on April 17, 1995, and continuing thereafter through March 17,
1998, at which time all accrued and outstanding interest is due
and payable.
All payments made on this note shall be applied first to interest and then to
principal. Maker shall be entitled to prepay this note in full or in part at any
time, without penalty.
Maker shall be deemed to be in default hereunder upon the occurrence of any of
the following events (an "Event of Default"):
a. Maker fails to make any payment of principal, interest or any
other sum required to be paid by Maker under this note when such
amounts are due and payable.
b. Maker fails to timely and properly perform any covenant,
agreement or condition
<PAGE>
<PAGE>
herein contained.
c. Maker becomes the subject of commencement of an involuntary case
under the federal bankruptcy law as now or hereafter constituted,
or there is filed a petition against Maker seeking
reorganization, arrangement, adjustment or composition of or in
respect of Maker under the federal bankruptcy law as now or
hereafter constituted, or under any other applicable federal or
state bankruptcy, insolvency, reorganization or other similar
law, or seeking the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official)
of Maker or any substantial part of its property, or seeking the
winding-up or liquidation of its affairs and such involuntary
case or petition is not dismissed within 60 days after the filing
thereof.
d. Maker commences a voluntary case or institutes proceedings to be
adjudicated a bankrupt or insolvent, or consents to the
institution of bankruptcy or insolvency proceedings against it,
under the federal bankruptcy laws as now or hereafter
constituted, or any other applicable federal or state bankruptcy
or insolvency or other similar law, or consents to the
appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or other similar
official) of Maker or of any substantial part of its property, or
makes any assignment for the benefit of creditors or admits in
writing its inability to pay its debts generally as they become
due or fails to generally pay its debts as they become due or if
Maker or its stockholders or board of directors or any committee
thereof takes any corporate action in contemplation, preparation
or furtherance of or for any of the occurrences, steps,
procedures, proceedings or other items mentioned in subparagraphs
(c) or (d) hereof.
Any Event of Default under this Note shall also be considered an Event of
Default under the Aircraft Security Agreement and the Security Agreement; and
any Event of Default as defined in the Aircraft Security Agreement or the
Security Agreement shall also constitute an Event of Default hereunder and under
any and every other document securing or executed in connection with this note.
Notwithstanding any term or provision of this note to the contrary, upon the
occurrence of any such Event of Default hereunder, including but not limited to
any Event of Default as defined in the Aircraft Security Agreement or the
Security Agreement, the entire balance of unpaid principal hereunder, all unpaid
interest accrued or accruing hereunder, and all other unpaid sums to be paid
hereunder shall, at the option of Holder, become at once due and payable in full
without notice or demand.
Maker and all other persons and entities who may be or become liable for
the payment hereof, primarily or secondarily, directly or indirectly, hereby
severally (a) waive presentment, demand for payment, protest of nonpayment,
notice of dishonor, diligence in collection, and all other indulgences with
respect to this note, (b) consent to impairment or release of collateral,
extensions of time for payment, and acceptance of partial payments before, at,
or after maturity, and agree that no such actions shall cause them, or any of
them, to, be released from any liability for the payment hereof, and (c) agree
to pay any and all reasonable costs and expenses, including but not limited to
reasonable attorneys' fees, which may be incurred or paid by Holder in the
collection of the indebtedness evidenced by this note or any part thereof, or in
preserving, securing possession of, or in realizing upon any security or
collateral for this note, including but not limited to the commencement and
carrying out of any remedies available to Holder as a secured party under the
Aircraft Security Agreement or the Security Agreement.
No delay or omission on the part of the Holder in exercising any of
Holder's rights under this note or under the Aircraft Security Agreement or the
Security Agreement shall operate as a waiver of
<PAGE>
<PAGE>
such right or of any other right of the Holder under this note or under the
Aircraft Security Agreement or the Security Agreement. Nor shall any single or
partial exercise by the Holder of any right or remedy hereunder or under the
Aircraft Security Agreement or the Security Agreement preclude the exercise of
any other right or remedy which Holder may have; the remedies provided for
hereunder and under the Aircraft Security Agreement and the Security Agreement
are cumulative and not exclusive of any statutory, legal or equitable remedies
otherwise available.
If any provision hereof or of any other document securing or related to
the indebtedness evidence hereby is, for any reason and to any extent, invalid
or unenforceable, then neither the remainder of the document in which such
provision is contained, nor the application of tile provision to other persons,
entities, or circumstances, nor any other document referred to herein, shall be
affected thereby, but instead shall be enforceable to the maximum extent
permitted by law.
Regardless of the place of its execution, this note shall he construed
and enforced in accordance with the laws of the State of Colorado.
MAKER:
PROFLIGHT INC., a Colorado corporation,
By: /s/ Kevin L. Burkhardt President
------------------------------------
(Title)
ACCOMMODATION AGREEMENT
THIS ACCOMMODATION AGREEMENT is made and entered into this 27 day of March,
1995, by and between Proflight, Inc., a Colorado corporation hereinafter called
the "Debtor", and Lear Three, LLC, a Colorado limited liability company,
hereinafter called the "Accommodator."
RECITALS:
<PAGE>
<PAGE>
1. Debtor purchased a 1973 Learjet 25BXR, Serial Number 141, with
current Registration Number N25HA (the "Aircraft") on or about March 17, 1995.
2. In order to purchase the Aircraft, it was necessary for the
Accommodator to guarantee repayment of a loan payable to Norwest Equipment
Company in the amount of $480,000.00 which loan is secured by a first lien on
the Aircraft (the "First Lien").
WHEREAS, IN CONSIDERATION for the Accommodator's willingness to enter
into the guarantee necessary to secure for the benefit of the Debtor the
financing from Norwest, the parties hereto agree as follows:
1. ACCOMMODATION FEE. Debtor shall pay Accommodator a fee of $100.00 on
the 17th of each month commencing on April 17, 1995 and continuing until the
Accommodator guarantee to Norwest is extinguished either by release, payment in
full or by operation of law.
2. ESCROW. Debtor shall deposit $8,022.91 into an escrow account at
First Bank of Littleton or any other institution acceptable to Accommodator
whose assent shall be evidenced in writing. The escrow account shall be used
only for the purpose of either preventing or curing a default which might occur
or which might have already occurred by reason of the failure to timely pay
Norwest an installment due on the First Lien. Debtor shall re-deposit money into
the escrow account to restore its balance to $8,022.91 within twenty-one days
following withdrawal of all or any portion of the escrow account for the purpose
here described.
3. DEFAULT. Each of the following events shall constitute an "Event of
Default" hereunder: (1) the use of monies held in the escrow account for any
unauthorized purpose; (2) the failure to restore the escrow account balance to
$8,022.91 within twenty-one days following authorized withdrawal and use; (3)
Debtor's failure to observe or perform any agreement to be observed or performed
by Debtor under the First Lien Security Agreement between Norwest and Debtor and
the continuance thereof for ten calendar days following written notice thereof
by Norwest to Debtor; (4) Debtor ceasing to do business as a going concern or
making an assignment for the benefit of creditors; (5) Debtor voluntarily
filing, or having filed against it involuntarily, a petition for liquidation,
reorganization, adjustment of debt, or similar relief under the Federal
Bankruptcy Code or any other present or future federal or state bankruptcy or
insolvency law, or a trustee, receiver, or liquidator appointment of it or of
all or a substantial part of its assets; and (6) the loss or substantial
destruction of the Aircraft.
4. ACCOMMODATOR'S REMEDIES IN THE EVENT OF DEFAULT. Upon default, the
Accommodator shall immediately have the right to pay to Norwest an amount equal
to the unpaid balance due under the First Lien. Upon proof of such payment,
Debtor shall execute an assignment of title to the Aircraft together with any
documents required by Accommodator's counsel to effect the transfer of ownership
of the Aircraft from Debtor to Accommodator. Debtor shall furthermore transfer
to Accommodator all monies held for the replacement and/or repair of the engines
for the subject Aircraft. Such monies are described on debtor's financial
statement as the "engine reserve" for the Aircraft.
5. WAIVER. The failure by Accommodator to exercise any right available
shall not constitute a waiver of any right.
6. GOVERNING LAW. This Agreement shall be governed by the laws of
Colorado.
7. EXPENSES. Debtor will pay all reasonable expenses, including
reasonable
<PAGE>
<PAGE>
attorney's fees, incurred in connection with the enforcement of Accommodator
rights under this Agreement. Furthermore, Debtor agrees to indemnify
Accommodator for expenses and attorney's fees incurred by Accommodator as a
consequence of Norwest's enforcement of rights against the Accommodator.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and the year first above written.
LEAR THREE, LLC PROFLIGHT, INC.
by:/s/ Thomas G. Cox by: /s/ Kevin L. Burkhardt
------------------------- -------------------------
Thomas G. Cox Kevin L. Burkhardt
5. Promptly to notify Secured Party of any change in the location of the
Collateral.
6. To pay all taxes and assessments of every nature which may be levied
or assessed against the Collateral.
7. Not to permit or allow any adverse lien, security interest or
encumbrance whatsoever upon the Collateral and not to permit the same to be
attached or replevined.
8. That the Collateral is in good condition, and that he will, at his
own expense, keep the same in good condition and from time to time, forthwith,
replace and repair all such parts of the Collateral as may be broken, worn out,
or damaged without allowing any lien to be created upon the Collateral on
account of such replacement or repairs, and that the Secured Party may examine
and inspect the Collateral at any time, wherever located.
9. That he will not use the Collateral in violation of any applicable
statutes, regulations or ordinances.
10. The Debtor will keep the Collateral at all times insured against
risks of loss or damage by fire (including so-called extended coverage), theft
and such other casualties as the
<PAGE>
<PAGE>
Secured Party may reasonably require, including collision in the case of any
motor vehicle all in such amounts, under such forms of policies, upon such
terms, for such periods, and written by such companies or underwriters as the
Secured Party may approve, losses in all cases to be payable to the Secured
Party and the Debtor as their interest may appear. All policies of insurance
shall provide for at least ten days prior written notice of cancellation to the
Secured Party; and the Debtor shall furnish the Secured Party with certificates
of such insurance or other evidence satisfactory to the Secured Party as to
compliance with the provisions of this paragraph. The Secured Party may act as
attorney for the Debtor in making, adjusting and settling claims under or
canceling such insurance and endorsing the Debtor's name on any drafts drawn by
insurers of the Collateral.
UNTIL DEFAULT Debtor may have possession of the Collateral and use it in
any lawful manner, and upon default Secured Party shall have the immediate right
to the possession of the Collateral.
DEBTOR SHALL BE IN DEFAULT under this agreement upon the happening of
any of the following events or conditions:
(a) default in the payment or performance of any obligation, covenant or
liability contained or referred to herein or in any note evidencing the same;
(b) the making or furnishing of any warranty, representation or
statement to Secured Party by or on behalf of Debtor which proves to have been
false in any material respect when made or furnished;
(c) loss, theft, damage, destruction, sale or encumbrance to or of any
of the Collateral or the making of any levy seizure or attachment thereof or
thereon;
(d) death, dissolution, termination or existence, insolvency. business
failure, appointment of a receiver of any part of the property of, assignment
for the benefit of creditors by, or the commencement of any proceeding under any
bankruptcy or insolvency laws of, by or against Debtor or any guarantor or
surety for Debtor.
UPON SUCH DEFAULT and at any time thereafter, or if it deems itself
insecure, Secured Party may declare all Obligations secured hereby immediately
due and payable and shall have the remedies of a secured party under Article 9
of the Colorado Uniform Commercial Code. Secured Party require Debtor to
assemble the Collateral and deliver or make it available to Secured Party at a
place to be designated by Secured Party which is reasonably convenient to both
parties. Expenses of retaking, holding, preparing for sale, selling or the like
shall include Secured Party's reasonable attorney's fees and legal expenses.
No waiver by Secured Party of any default shall operate as a waiver of
any other default or of the same default on a future occasion. The taking of
this security agreement shall not waive or impair any other security said
Secured Party may have or hereafter acquire for the payment of the above
indebtedness. nor shall the taking of any such additional security waive or
impair this security agreement; but said Secured Party may resort to any
security it may have in the order it may deem proper, and notwithstanding any
collateral security, Secured Party shall retain its rights of set-off against
Debtor.
All rights of Secured Party hereunder shall inure to the benefit of its
successors and
<PAGE>
<PAGE>
assigns; and all promises and duties of Debtor shall bind his heirs, executors
or administrators or his or its successors or assigns. If there be more than one
Debtor, their liabilities hereunder shall be joint and several.
Date this 17th day of March, 1995
------ ----- ----
Debtor: PROFLIGHT, INC. Secured Party: LEAR THREE, L.L.C.,
/s/ Kevin L. Burkhardt
- ----------------------------------- ----------------------------------
- ----------------------------------- ----------------------------------
<PAGE>
<PAGE>
PROMISSORY NOTE
$100,000.00 Englewood, Colorado
May 20,1996
FOR VALUE RECEIVED, PROFLIGHT, INC., a Colorado corporation ("Maker")
hereby promises to pay to the order of Lear Three, L.L.C. (which is hereinafter
referred to, together with each subsequent holder of this note, as "Holder"), at
7427 South Richfield Street, Foxfield, Colorado 80016, or at such other address
as may be designated from time to time hereafter by written notice to Maker, the
Principal sum of One Hundred Thousand and no/100 Dollars ($100,000.00), together
with accrued interest, on or before May 20, 1997.
Upon occurrence of an Event of Default, this note shall bear interest
from the date of the Event of Default at the default rate of eighteen percent
(18%) per annum.
This Note is secured by:
1. One Form 8050-98 Aircraft Security Agreement (the "Aircraft Security
Agreement") granting Holder a third lien interest in a 1973 Learjet 25
BXR, Serial Number 141, with current Registration No. N25HA.
2. A Security Agreement (the "Security Agreement") and Financing Statement
executed by Maker granting Holder a second security interest in all
accounts receivable of Maker and in certain Medical Equipment (as more
specifically defined in the Security Agreement) owned by Maker.
Principal and interest shall be due and payable hereunder by Maker to
Holder as follows:
One payment of $100,000.00 principal due and payable on May 20, 1997.
Monthly interest payments shall be due on the twentieth (20th) day of
each month and shall be calculated at three percent (3%) greater than the prime
lending rate at Norwest Banks on the first business day of each month,
commencing on June 20, 1996 and continuing monthly thereafter on the 20th day of
each month until May 20, 1997 at which time all accrued and outstanding interest
is due and payable, together with all filing and related fees for recording and
releasing collateral.
All payments made on this note shall be applied first to interest and
then to principal. Maker shall be entitled to prepay this note in full or in
part at any time, without penalty.
Maker shall be deemed to be in default hereunder upon the occurrence of
any of the following events (an "Event of Default"):
a. Maker fails to make any payment of principal, interest or any
other sum required to be paid by Maker under this note when such
amounts are due and
<PAGE>
<PAGE>
payable.
b. Maker fails to timely and properly perform any covenant,
agreement or condition herein contained.
c. Maker becomes the subject of commencement of an involuntary case
under the federal bankruptcy law as now or hereafter constituted,
or there is filed a petition against Maker seeking
reorganization, arrangement, adjustment or composition of or in
respect of Maker under the federal bankruptcy law as now or
hereafter constituted or under any other applicable federal or
state bankruptcy, insolvency, reorganization or other similar
law, or seeking the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official)
of Maker or any substantial part of its property, or seeking the
winding-up or liquidation of its affairs and such involuntary
case or petition is not dismissed within 60 days after the filing
thereof.
d. Maker commences a voluntary case or institutes proceedings to be
adjudicated a bankrupt or insolvent, or consents to the
institution of bankruptcy or insolvency proceedings against it,
under the federal bankruptcy laws as now or hereafter
constituted, or any other applicable federal or state bankruptcy
or insolvency or other similar law, or consents to the
appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator ( or similar official)
of the property of Maker or of any substantial part of its
property, or makes any assignment for the benefit of creditors or
admits in writing its inability to pay its debts generally as
they become due or fails to generally pay its debts as they
become due or if Maker or its stockholders or board of directors
or any committee thereof takes any corporate action in
contemplation, preparation or furtherance of or for any of the
occurrences, steps, procedures, proceedings or other items
mentioned in subparagraphs (c) or (d) hereof.
Any Event of Default under this Note shall also be considered an Event
of Default under the Aircraft Security Agreement and the Security Agreement; and
any Event of Default as defined in the Aircraft Security Agreement or the
Security Agreement shall also constitute an Event of Default hereunder and under
any and every other document securing or executed in connection with this note.
Notwithstanding any term or provision of this note to the contrary, upon the
occurrence of any such Event of Default hereunder, including but not limited to
any Event of Default as defined in the Aircraft Security Agreement or the
Security Agreement, the entire balance of unpaid principal hereunder, all unpaid
interest accrued or accruing hereunder, and all other unpaid sums to be paid
hereunder shall, at the option of Holder, become at once due and payable in full
without notice or demand.
Maker and all other persons and entities who may be or become liable for
the payment hereof, primarily or secondarily, directly or indirectly, hereby
severally (a) waive presentment, demand for payment, protest of nonpayment,
notice of dishonor, diligence in collection and all other indulgences with
respect to this note, (b) consent to impairment or release of collateral,
2
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<PAGE>
extensions of time for payment, and acceptance of partial payments before, at or
after maturity, and agree that no such actions shall cause them, or any of them,
to be released from any liability for the payment hereof, and agree to pay any
and all reasonable costs and expenses, including but not limited to reasonable
attorneys' fees, which may be incurred or paid by Holder in the collection of
the indebtedness evidenced by this note or any part hereof, or in preserving,
securing possession of, or in realizing upon any security or collateral for this
note, including but not limited to the commencement and carrying out of any
remedies available to Holder as a secured party under the Aircraft Security
Agreement or the Security Agreement.
No delay or omission on the part of the Holder in exercising any of
Holder's rights under this note or under the Aircraft Security Agreement or the
Security Agreement shall operate as a waiver of such right or of any other right
of the Holder under this note or under the Aircraft Security Agreement or the
Security Agreement. Nor shall any single or partial exercise by the Holder of
any right or remedy hereunder or under the Aircraft Security Agreement or
Security Agreement preclude the exercise of any other right or remedy which
Holder may have; the remedies provided for hereunder and under the Aircraft
Security Agreement and the security Agreement are cumulative and not exclusive
of any statutory, legal or equitable remedies otherwise available.
If any provision hereof or of any other document securing or related to
the indebtedness evidenced hereby is, for any reason and to any extent, invalid
or unenforceable, then neither the remainder of the document in which such
provision is contained, nor the application of the provision to other persons,
entities or circumstances nor any other document referred to herein shall be
affected thereby, but instead shall be enforceable to the maximum extent
permitted by law.
Regardless of the place of its execution, this note shall be construed
and enforced in accordance with the laws of the State of Colorado.
Maker:
PROFLIGHT, INC. a Colorado corporation
By: /s/ Kevin L. Burkhardt, President
---------------------------------------
Title
3
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<PAGE>
$1,313,000.00 May 31, 1996
PROMISSORY NOTE
For value received, the undersigned (jointly and severally if more than
one) promises to pay to the order of Textron Financial Corporation ("TFC"), a
Delaware corporation having its principal place of business in Providence, Rhode
Island (together with any other holder of this Note, hereinafter referred to as
the "Holder"), the principal sum of One Million Three Hundred Thirteen Thousand
United States Dollars ($1,313,000.00), together with interest thereon as
provided herein. The obligations of the undersigned hereunder are "Obligations"
secured by the "Collateral" as defined and described in a Security Agreement
between the undersigned and the Holder dated as of May 31, 1996 (the "Security
Agreement"), and the Holder shall be entitled to all of the rights and
privileges provided therein, including rights of acceleration of this Note.
Each installment shall be due and payable monthly commencing on June 30,
1996 and continuing on the same date of each month thereafter ("Payment Dates"),
through and including May 31, 2001 (the "Maturity Date"). Installments 1 through
59 shall consist of principal and interest of $17,716.97 each. The final
installment due and payable on the Maturity Date shall be in an amount equal to
the entire outstanding principal balance of this Note, together with all accrued
interest, charges and other amounts then due and owing hereunder and under the
Security Agreement. Interest is calculated on the unpaid principal balance of
this Note at the rate of ten and one-half percent (10.50%) per annum on the
basis of a 360-day year comprised of twelve 30-day months.
In the event any amount due hereunder is past due by more than ten (10)
days, the undersigned agrees to pay a late charge equal to the lesser of (a)
five percent (5%) on and in addition to the amount of the past due payment or
(b) the maximum charges allowable under then applicable law. Upon the maturity
of this Note (by reason of default and acceleration or otherwise), the
undersigned agrees to pay interest on the unpaid balance and all accrued and
unpaid amounts due hereunder and under the Security Agreement from the maturity
hereof through the day of payment at a rate of interest equal to the lesser of
(a) the Holder's then current default rate of interest, or (b) the maximum rate
of interest allowable under then applicable law.
Each payment hereunder shall be made in lawful money of the United
States and shall be payable to such account or address as the Holder hereof
shall from time to time direct the undersigned. All amounts received shall be
applied first, to accrued late charges and any other costs or expenses due and
owing hereunder or under the terms of the Security Agreement; second, to accrued
interest; and third, to unpaid principal. If at any time during the term of this
Note the interest rate applicable hereunder exceeds the maximum rate of interest
permitted under then applicable law, then the interest rate shall thereafter be
deemed to be the maximum rate permitted under then applicable law, and amounts
of interest received from the undersigned in excess of such maximum rate shall
be considered reductions to principal to the extent of any such excess.
<PAGE>
<PAGE>
Failure to pay this Note, or any installment hereunder promptly when
due, or default or failure in the performance or due observance of any of the
terms, conditions or obligations hereunder or under the Security Agreement or in
any other agreement or instrument between the undersigned (or any endorser,
guarantor, surety or other party liable for the undersigned's obligations
hereunder, or any other entity controlling, controlled by, or under common
control with the undersigned) and the Holder (or any other entity controlling,
controlled by or under common control with the Holder), shall entitle the Holder
to accelerate the maturity of this Note and to declare the entire unpaid
principal balance and all accrued interest and other charges owing hereunder
(including prepayment fees) and under the Security Agreement to be immediately
due and payable, and to proceed at once to exercise each and every one of the
remedies set forth in the Security Agreement or otherwise available at law or in
equity.
The undersigned and all other parties who may be liable (whether as
endorsers, guarantors, sureties or otherwise) for payment of any sum or sums due
or to become due under the terms of this Note waive diligence, presentment,
demand, protest, notice of dishonor, notice of intent to accelerate, notice that
the debt has been accelerated and notice of any other kind whatsoever and agree
to pay all costs incurred by the Holder in enforcing its rights under this Note
or the Security Agreement, including' reasonable attorney's fees, and they do
hereby consent to any number of renewals or extensions at any time in the
payment of this Note. No extension of time for payment of this Note made by any
agreement with any person now or hereafter liable for payment of this Note shall
operate to release, discharge, modify, change or affect the original liability
of the undersigned under this Note, either in whole or in part. No delay or
failure by the Holder hereof in exercising any right, power, privilege or remedy
shall be deemed to be a waiver of the same or any part thereof; nor shall any
single or partial exercise thereof or any failure to exercise the same in any
instance preclude any future exercise thereof, or exercise of any other right,
power, privilege or remedy, and the rights and remedies provided for hereunder
are cumulative and not exclusive of any other right or remedy available at law
or in equity. The Holder of this Note may proceed against all or any of the
Collateral securing this Note or against any guarantor hereof, or may proceed
contemporaneously or in the first instance against the undersigned, in such
order and at such times following default hereunder as the Holder may determine
in its sole discretion. All of the undersigned's obligations under this Note are
absolute and unconditional, and shall not be subject to any offset or deduction
whatsoever. The undersigned waives any right to assert, by way of counterclaim
or affirmative defense in any action to enforce the undersigned's obligations
hereunder, any claim whatsoever against the Holder of this Note.
The provisions of this Note shall be governed by and construed in
accordance with the laws of the State of Rhode Island.
ATTEST/WITNESS: Maker: PROFLIGHT, INC.
____________________________ By: ________________________________
Name: ______________________ Name: ______________________________
Title: _____________________________
<PAGE>
<PAGE>
PROFLIGHT INC.
Compound Period.............: Monthly
Nominal Annual Rate ........: 10.50 %
Effective Annual Rate ......: 11.02 %
Periodic Rate ..............: 0.870 %
Daily Rate..................: 0.02917%
CASH FLOW DATA
Event Start Date Amount Number Period End Date
1 Loan 05/31/1996 1,313,000.00 1
2 Payment 06/30/1996 17,716.97 59 Monthly 04/30/2001
3 Payment 05/31/2001 841,995.32 1
AMORTIZATION SCHEDULE - Normal Amortization, 360 Day Year
<TABLE>
<CAPTION>
Date Payment Interest Principal Balance
<S> <C> <C> <C> <C> <C>
Loan 05/31/1996 1,313,000.00
1 06/30/1919 17,716.97 11,488.75 6,228.22 1,306,771.78
2 07/31/1996 17,716.97 11,434.25 6,282.72 1,300,489.06
3 08/31/1996 17,716.97 11,379.28 6,337.69 1,294,151.37
4 09/30/1996 17,716.97 11,323.82 6,393.15 1,287,758.22
5 10/31/1996 17,716.97 11,267.88 6,449.09 1,281,309.13
6 11/30/1996 17,716.97 11,211.45 6,505.52 1,274,803.61
7 12/31/1996 17,716.97 11,154.53 6,562.44 1,268,241.17
1996 Totals 124,018.79 79,259.96 44,758.83
8 01/31/1997 17,716.97 11,097.11 6,619.86 1,261,621.31
9 02/28/1997 17,716.97 11,039.19 6,677.78 1,254,943.53
10 03/31/1997 17,716.97 10,980.76 6,736.21 1,248,207.32
11 04/30/1997 17,716.97 10,921.81 6,795.16 1,241,412.16
12 05/31/1997 17,716.97 10,862.36 6,854.61 1,234,557.55
13 06/30/1997 17,716.97 10,802.38 6,914.59 1,227,642.96
14 07/31/1997 17,716.97 10,741.88 6,975.09 1,220,667.87
15 08/31/1997 17,716.97 10,680.84 7,036.13 1,213,631.74
16 09/30/1997 17,716.97 10,619.28 7,097.69 1,206,534.05
17 10/31/1997 17,716.97 10,557.17 7,159.80 1,199,374.25
18 11/31/1997 17,716.97 10,494.52 7,222.45 1,192,151.80
19 12/31/1997 17,716.97 10,431.33 7,285.64 1,184,866.16
1997 Totals 212,603.64 129,228.63 83,375.01
<PAGE>
<PAGE>
20 01/31/1998 17,716.97 10,367.58 7,349.39 1,177,516.77
21 02/28/1998 17,716.97 10,303.27 7,413.70 1,170,103.07
22 03/31/1998 17,716.97 10,238.40 7,478.57 1,162,624.50
23 04/30/1998 17,716.97 10,172.96 7,544.01 1,155,080.49
24 05/31/1998 17,716.97 10,106.95 7,610.02 1,147,470.47
25 06/30/1998 17,716.97 10,040.37 7,676.60 1,139,793.87
26 07/31/1998 17,716.97 9,973.20 7,9743.77 1,132,050.10
27 08/31/1998 17,716.97 9,905.44 7,811.53 1,124,238,57
28 09/30/1998 17,716.97 9,837.09 7,879.88 1,116,358.69
29 10/31/1998 17,716.97 9,768.14 7,948.83 1,108,409.86
30 11/30/1998 17,716.97 9,698.59 8,018.38 1,100,391.48
31 12/31/1998 17,716.97 9,628.43 8,088.54 1,092,302.94
1998 Totals 212,603.64 120,040.42 92,563.22
32 01/31/1999 17,716.97 9,557.65 8,159.32 1,084,143.62
33 02/28/1999 17,716.97 9,486.26 8,230.71 1,075,912.91
34 03/31/1999 17,716.97 9,414.24 8,302.73 1,067,810.18
35 04/30/1999 17,716.97 9,341.59 8,375.38 1,059,234.80
38 06/31/1999 17,716.97 9,268.30 8,448.67 1,050,786.13
37 06/30/1999 17,716.97 9,194.38 8,522.59 1,042,263.54
38 07/31/1999 17,716.97 9,119.81 8,597.16 1,033,668.38
39 08/31/1999 17,716.97 9,044.58 8,672.39 1,024,993.99
40 09/30/1999 17,716.97 8,968.70 8,748.27 1,016,245.72
41 10/11/1999 17,716.97 8,892.15 8,824.82 1,007,420.90
42 11/30/1999 17,716.97 8,814.93 8,902.04 998,518.86
43 12/31/1999 17,716.97 8,737.04 8,979.93 989,538.93
1999 Totals 212,603.64 109,839.63 102,764.01
44 01/31/2000 17,716.97 8,658.47 9,058.50 980,480.43
45 02/29/2000 17,716.97 8,579.20 9,137.77 971,342.66
46 03/31/2000 17,716.97 8,499.25 9,217.72 962,124.94
47 04/30/2000 17,716.97 8,418.59 9,298.38 952,826.56
48 05/31/2000 17,716.97 8,337.23 9,379.74 943,446.82
49 06/30/2000 17,716.97 8,255.16 9,461.81 933,985.01
50 07/31/2000 17,716.97 8,172.37 9,544.60 924,440.41
51 06/31/2000 17,716.97 8,088.85 9,628.12 914,812.29
52 09/20/2000 17,716.97 8,004.61 9,712.36 905,099.93
53 10/31/2000 17,716.97 7,919.62 9,797.35 895,302.58
54 11/30/2000 17,716.97 7,833.90 9,883.07 885,419.51
55 12/31/2000 17,716.97 7,747.42 9,969.55 875,449.96
2000 Total 212,603.64 98,514.67 114,088.97
<PAGE>
<PAGE>
56 01/31/2001 17,716.97 7,660.19 10,056.78 865,393.18
57 02/28/2001 17,716.97 7,572.19 10,144.78 855.248.40
58 03/31/2001 17,716.97 7,483.42 10,233.55 845,014.85
59 04/30/2001 17,716.97 7,393.88 10,323.09 834,691.76
60 05/31/2001 841,995.32 7,303.56 834,691.76 0.00
2001 Totals 912,863.20 37,413.24 875,449.96
Grand Totals 1,887,296.55 574,296.55 1,313,000.00
</TABLE>
<PAGE>
<PAGE>
SECURITY AGREEMENT
(Aircraft)
DATE: MAY 31, 1996
PROFLIGHT INC., a Colorado Corporation with its principal place of business at
12420 East Control Tower Road, Englewood, CO 80112 ("Debtor"), hereby grants to
Textron Financial Corporation, a Delaware corporation and its subsidiaries and
affiliates ("Secured Party") with a principal place of business at 40
Westminster Street, P.O. Box 6687, Providence, Rhode Island 02940, a security
interest in all of its rights, title and interest, whether now owned or
hereafter acquired, in the aircraft described on Schedule I hereto, and all
parts, engines, equipment, logbooks, manuals, records and accessories thereto;
all instruments, accounts and chattel paper arising therefrom (including leases
and conditional sales contracts); and the proceeds of all the foregoing,
including proceeds in the form of goods, accounts, chattel paper, documents,
instruments and general intangibles (the "Collateral"), to secure payment and
performance of all of Debtor's, and of Debtor's subsidiaries' and affiliates',
liabilities and obligations, actual or contingent, now or hereafter owing,
arising, due or payable from Debtor and any of Debtor's subsidiaries and
affiliates to Secured Party, including but not limited to, that certain
Promissory Note between Debtor and Secured Party dated May 31, 1996
(the "Note"), (hereinafter collectively referred to as the "Obligations"). The
extent to which Secured Party's security interest in the Collateral shall be
entitled to purchase money priority shall be determined by reference to
the unpaid principal, interest or other charges associated with such Collateral.
When payments are received with respect to more than one obligation, they shall
be applied in accordance with the written instructions of Debtor, if any. Absent
instructions, any payment received with respect to one or more obligations
shall be applied as follows: first, to expenses of collection and preservation
of the Collateral, including reasonable attorney's fees; second, to late charges
outstanding with respect to the oldest obligation first until late charges on
all obligations are paid in full; third, to accrued and unpaid interest
outstanding with respect to the oldest obligation first until interest charges
on all obligations are paid in full; and fourth, to principal outstanding under
the oldest obligation first and continuing until the payments so received
are exhausted.
A. Debtor's Representations, Warranties, Covenants and Agreements
1. Authority. The execution, delivery and performance of this Agreement and
any instrument or other agreement or writing relating to this Agreement
have been duly and validly authorized by Debtor and do not and will not
conflict with any provision of Debtor's corporate charter or bylaws or
any agreement, instrument or writing to which Debtor is a party or by
which Debtor is bound, and Debtor has full power and authority to enter
into this Agreement and all other instruments or other writings
contemplated hereby and to consummate the transactions contemplated
hereby.
2. Financial Information. Debtor, its guarantors and affiliates shall
timely provide Secured Party with financial statements at least
quarterly. All financial statements and other written information
heretofore or hereafter delivered or furnished directly or indirectly by
Debtor and any guarantor or affiliate to Secured Party are and will be
true and correct as of the date furnished and as to any such financial
statements, do and will fairly present the financial condition and
results of Debtor's (or its guarantors or affiliates, as appropriate)
operations at the times and for the periods stated in such financial
statements.
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3. Absence of liens. There are no liens, security interests, chattel
mortgages, tax liens or other encumbrances of any kind on the Collateral
other than the security interest created hereby, and Debtor shall not
create or permit any to exist hereafter.
4. Place of Business, Use of Collateral. Debtor's principal place of
business is located at the address set forth at the beginning of this
Agreement and Debtor shall not change such principal place of business
without providing Secured Party at least 45 days' prior written notice.
Debtor hereby represents that the primary use of the Collateral is for
business purposes and agrees that it shall not allow the Collateral to
be removed from or flown outside the continental United States of
America, Mexico, Central America, and South America without the prior
written consent of Secured Party, and then only on the terms and
conditions contained in said consent.
5. Sale or Lease, Registration. Debtor shall not sell, lease, pledge, give
away or otherwise dispose of, alienate or encumber its title to the
Collateral without Secured Party's prior written consent. Debtor shall
at all times maintain registration of the Collateral with the Federal
Aviation Administration ("FAA"), which registration shall appropriately
reflect Secured Party's interest in the Collateral.
6. Books and Records. Debtor will at all times keep accurate and complete
records and books of account with respect to all of Debtor's business
activities, in accordance with sound accounting practices and generally
accepted accounting principles, such records and accounts to be
maintained at Debtor's address set forth at the beginning of this
Agreement, and Debtor agrees that Secured Party may from time to time,
during normal business hours, inspect and make copies thereof, and
Secured Party shall have the right to make such verification concerning
the Collateral as Secured Party may consider reasonable under the
circumstances, all at Debtor's expense.
7. Continuing Information. Debtor will furnish and cause Guarantor to
furnish to Secured Party such information relevant to the Collateral,
(Debtor's and Guarantor's, as appropriate) financial condition, and
business as Secured Party may from time to time reasonably request. In
addition, Debtor hereby authorizes Secured Party to update its credit
information from time to time including, but not limited to, the
obtaining of updated references from credit reporting agencies, Debtor's
banks and other companies with whom Debtor does business.
8. Maintenance of Collateral. The Debtor shall, at its own expense,
maintain and keep the Collateral in an air-worthy and good flying
condition and all components thereof and equipment installed thereon in
good order and repair particularly in accordance with the maintenance
requirements of (i) the Federal Aviation Agency (the "FAA"), (ii) the
manufacturer of the Collateral and (iii) the manufacturer of any
component or equipment installed on said Collateral, and shall allow
Secured Party reasonable access to the Collateral during normal business
hours in order to verify compliance with the foregoing. The Debtor
shall, within a reasonable time, at its own cost and expense, replace in
or on the Collateral and its components and equipment any and all such
parts, equipment, appliances, instruments and accessories which may
be worn, used, lost, destroyed, confiscated, damaged or otherwise
rendered unfit for use so that each of such items shall always
be in good operating condition and shall have at least the original
value and utility of the property replaced. All inspections,
repairs, modifications, installments and overhaul work to be performed
on the Collateral shall be performed at the Debtor's expense by
personnel duly licensed to perform such work and shall be in accordance
with the standards required by the FAA. Debtor shall
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<PAGE>
promptly notify Secured Party of any scheduled or unscheduled overhaul
or servicing of engines or other major components of the Collateral,
which notice shall specify the nature of the work to be done, the name
and address of the shop providing such services, and a reasonable
estimate of the completion date of such work. The Debtor shall also
comply with all FAA air-worthiness directives and the manufacturer's
maintenance and repair manuals and alert service bulletins.
9. Engine Reserves. During the term of this Security Agreement, Debtor
shall pay to Secured Party the sum of $65.00 for each hour of operation
(take off to landing) of each serial numbered engine (hereinafter
individually and collectively an "Engine") constituting a part of each
Aircraft (the "Reserves"). The Reserves will be submitted to, and held
by, the Secured Party. Any interest earned will be applied to costs
associated with account maintenance and associated expenses incurred by
Secured Party in administering the account and any interest earned and
not so expended shall accrue in the account and used for disbursements
described herein. At the Secured Party's option, the amount of the
Reserves payable for each hour of operation shall be adjusted annually
during the term of this Security Agreement to an amount equal to the
Engine manufacturer's then published price for a major engine overhaul
plus hot section divided by the number of flight hours permitted between
major engine overhauls as provided for in the FAA approved maintenance
program of the Debtor. The Reserves may be insufficient to cover all
costs eligible for disbursement in whole. The Reserves are payable in
arrears commencing on the fifteenth day of the month immediately
subsequent to the note date with respect to the related Aircraft, and
thereafter on the same day of each succeeding month during the term of
this Security Agreement, and shall be accompanied with copies of log
books and other records substantiating Debtor's certification of the
actual number of hours of operation for the previous month. Secured
Party shall reflect all Reserves so paid by Debtor on Secured Party's
books and shall render an account thereof, annually, to Debtor upon
written request. Provided Debtor is not in default, Debtor shall have
the right to have available Reserves applied to reasonable expenses for
labor and materials (as Debtor certifies, in writing, in the
disbursement request forms supplied and required by Secured Party which
requires the inclusion of copies of all applicable invoices and return
to service documentation), to the Secured Party as are necessary solely
in order to accomplish hot sections and scheduled overhauls. Such
expenses may be disbursed up to the maximum amount held on account for
an Engine at date of repair. Upon receipt and approval of such
disbursement request, Secured Party shall, within 10 days, remit the
available amounts directly to the laborers and/or vendors. If evidence
satisfactory to Secured Party has been submitted by Debtor to Secured
Party supporting Debtor's contention that Debtor has paid the expenses
in full, Secured Party may remit payment directly to Debtor. In the
event that collected Reserves are insufficient, Debtor shall be
responsible for any shortfall. Shortfall payments made by Debtor shall
not be credited towards or offset future Reserves due. Reserves
collected on an Engine may not be applied to an expense claim on a
different Engine. In the event an Engine is substituted in accordance
with this Security Agreement, any accumulated Reserves on the Engine
being substituted for shall be retained as Reserves with respect to the
new engine which shall thereafter be considered an Engine hereunder. So
long as any event of default exists, irrespective of whether the
Aircraft has been returned to Secured Party, Secured Party shall not be
required to disburse any amounts and will retain the entire balance of
the Reserves until the default is cured to Secured Party's satisfaction.
3
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<PAGE>
10. Base Location. The home airport and base location at which the
Collateral will be located is Centennial Airport, Englewood, CO, which
home airport location will not be changed without the prior written
consent of the Secured Party and in particular the Collateral shall not
be used in or over the territorial limits of any country other than the
United States of America, Mexico, Central America, and South America
without the prior written consent of the Secured Party.
11. Legal Purpose. Debtor shall not use or permit the Collateral to be used
(i) contrary to any laws or regulations, including but not limited to
those relating to intoxicating liquors, narcotics, drugs or similar
products, or (ii) in any manner which invalidate or restrict the
insurance coverage required to be carried or maintained by this
Agreement.
12. Insurance. Debtor shall have and maintain at all times with respect to
the Collateral Aircraft Liability Insurance and All Risk Ground and
Flight Insurance covering all forms of loss or damage to the Collateral
in such amounts, containing such terms and in such form as is
satisfactory in the sole discretion of Secured Party. All such policies
of insurance shall provide that any proceeds thereof shall be payable to
Secured Party and Debtor as their interests may appear. All such
policies of insurance shall provide for not less than thirty days' prior
notice of cancellation or change in form to Secured Party, such policies
to include a Breach of Warranty clause in favor of Secured Party without
obligation to pay the premium therefore in the event of Debtor's failure
to pay. In the event of Debtor's failure to secure and maintain
insurance as herein provided, Secured Party may, at its option, secure
such insurance on behalf of Debtor and Debtor hereby promises to pay to
Secured Party on demand any amounts expended by Secured Party in
securing such insurance as part of the obligations payment of which is
secured by the Collateral pursuant to this Agreement. Debtor hereby
agrees that Secured Party may act as Debtor's attorney-in-fact in
making, adjusting and settling claims under any such insurance policies
covering the Collateral.
13. Liens and Encumbrances. In its discretion, Secured Party may at any time
discharge taxes and other encumbrances levied or placed on the
Collateral, make repairs thereto and pay any necessary filing fees with
respect to the Collateral or its interest therein. Debtor agrees to
reimburse Secured Party on demand for any and all expenditures so made,
and until paid the amount thereof shall be deemed to be part of the
Obligations payment of which is secured by the Collateral pursuant to
this Agreement. Secured Party shall have no obligation to Debtor to make
any such expenditures nor shall the making thereof cure any default by
Debtor hereunder or under any agreement or instrument performance of the
terms of which is secured hereby.
14. Execution and Filing. Debtor shall perform, make, execute and deliver
all such additional and further acts, things, deeds, assurances and
instruments as Secured Party may request to more completely vest in and
assure to Secured Party its rights hereunder or in the Collateral,
including, without limitation, execution and delivery of any documents
or instruments which Secured Party deems appropriate to perfect and
continue the security interest hereby granted, in the United States of
America or any other country in which Secured Party determines such
action to be advisable; and Debtor hereby irrevocably authorizes Secured
Party, or its designee, at Debtor's expense, to file such documents or
instruments with respect thereto, with or without the Debtor's
signature, as Secured Party may deem appropriate, and appoints Secured
Party as Debtor's attorney-in-fact to execute such documents and
instruments and to do each and every other act or thing which Secured
Party is authorized to do or perform on behalf of Debtor by this
Agreement.
4
<PAGE>
<PAGE>
15. Collateral Value. Debtor shall have a continuing obligation to notify
Secured Party of any factors or circumstances which affect the value of
the Collateral, including but not limited to, current market conditions.
16. Authority and Citizenship. Debtor hereby affirms to Secured Party that
it has full power and authority to enter into, and perform the
obligations under, this Agreement. Debtor, if an individual, hereby
affirms that Debtor is a citizen of the United States as defined in the
Federal Aviation Act of 1958, as amended (the "Act"), or a lawfully
admitted permanent resident of the United States or is otherwise
qualified to register aircraft for operation and navigation within the
United States. Debtor, if a partnership, hereby affirms that all
partners are of the United States as defined in the Act. All corporate
Debtors hereby affirm that: (i) they are organized under the laws of the
United States; (ii) the president of the corporation is a United States
citizen; (iii) 2/3 of the managing officers/directors are United States
citizens; and (iv) at least 75% of the voting interest of the
corporation's stock is owned or controlled by citizens of the United
States.
B. Default
The occurrence of any of the following shall constitute an Event of Default
hereunder:
1. Debtor's, or any of Debtor's subsidiaries' and affiliates', failure to
perform, breach of, or default with respect to any Obligation or any of
Debtor's covenants and agreements contained herein or in any other
agreement, instrument or obligation between Debtor or its subsidiaries
and affiliates, and Secured Party.
2. Any statement, representation or warranty of Debtor contained in this
Agreement or made by Debtor or any other party in any other writing
furnished to Secured Party by or on behalf of Debtor proves to have been
untrue, incomplete, or misleading in any material respect when made.
3. There occurs a loss, theft, substantial damage, destruction, sale or
encumbrance of or upon the Collateral, or the Collateral is levied upon
or seized or attached by legal process.
4. The dissolution, liquidation, termination of existence, insolvency,
appointment of a receiver for any part of the property of, assignment
for the benefit of creditors by, or the voluntary or involuntary
commencement of any proceeding under any bankruptcy, insolvency or
similar laws by or against Debtor or by or against any guarantor or
other party liable for the Debtor's Obligations under the Note.
5. Any guaranty or other document or instrument securing payment of the
Obligations given in favor of Secured Party shall not be in full force
and effect in accordance with its terms or shall cease to be a lawful,
valid and binding obligation or if the obligor thereof shall so assert;
or
6. There shall occur such change in the management, ownership or financial
or other condition or affairs of Debtor or any other party liable for
payment of the Obligations as, in the reasonable opinion of Secured
Party, significantly impairs Secured Party's security hereunder or
substantially increases Secured Party's risk of nonpayment of the
Obligations.
5
<PAGE>
<PAGE>
C. Rights Upon Default
If an Event of Default shall occur:
1. Upon the occurrence of any such Event of Default, and so long as such
Default continues, Secured Party may without notice, demand or legal
process of any kind declare any part of or all the Obligations to be
immediately due and payable, and Secured Party shall then have, in any
jurisdiction where enforcement of this Agreement is sought, in addition
to any and all other rights and remedies it may have at law, in equity,
by statute or otherwise, all the rights and remedies of a Secured
Creditor under the Uniform Commercial Code, including, without
limitation, the right to take immediate possession of the Collateral
wherever it may be found, and for that purpose Secured Party may, so far
as Debtor can give authority therefor and without breach of the peace,
enter upon any premises on which the Collateral or any part thereof may
be situated or Secured Party believes it to be situated and take
possession of, remove, keep, and store any of the Collateral until the
same shall be sold or disposed of.
2. Debtor will upon demand from Secured Party and at Debtor's expense,
assemble the Collateral at a place and time designated by Secured Party
which is reasonably convenient to both parties and where, at Secured
Party's option, the Collateral may remain, at Debtor's expense, pending
a sale or other disposition thereof.
3. From the proceeds of any public or private sale of the Collateral,
Secured Party shall be entitled to retain the following amounts, and any
excess shall be due and payable to Debtor:
(i) all sums secured hereby;
(ii) secured Party's reasonable expenses of retaking, holding,
preparing for sale and selling the Collateral; and
(iii) Secured Party's reasonable attorneys' fees and other reasonable
fees and expenses incurred in connection with enforcing its rights
hereunder.
Debtor shall be and remain liable for any deficiency, plus interest,
costs and attorneys fees provided under the Note, remaining from the net
proceeds of any sale of the Collateral.
4. In the event Secured Party seeks to take possession of any or all of the
Collateral by court process, Debtor hereby waives any bonds and any
security and surety relating thereto required by any statute, court rule
or otherwise as an incident to such possession, and waives any demand
for possession prior to the commencement of any suit or action to
recover with respect thereto and waives the right to demand a jury in
any action in which Secured Party is a party.
5. Demand, presentment, protest, notice of nonpayment, notice of intent to
accelerate and notice that the debt has been accelerated are hereby
waived by Debtor. Debtor also waives the benefit of all evaluation,
appraisement and exemption laws.
D. Miscellaneous
1. No waiver by Secured Party of any Event of Default shall be effective
unless in writing and signed by an authorized officer or employee of
Secured Party, nor operate as a waiver of any other Event of Default or
of the same Event of Default on a future occasion or past occasion. No
single or partial exercise by Secured Party of any right
6
<PAGE>
<PAGE>
or remedy shall preclude other or further exercise thereof or the
exercise of any other right or remedy, all rights and remedies of
Secured Party hereunder being cumulative. All rights of Secured Party
shall inure to the benefit of the successors and assigns of Secured
Party and all Obligations of Debtor shall be binding upon the heirs,
executors, administrators, successors and assigns of Debtor.
2. Whenever possible each provision of this Agreement shall be interpreted
in such a manner as to be effective and valid under applicable law, but
if any provision of this Agreement shall be prohibited by or invalid
under any applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity but the remainder of such
provision or the remaining provisions of this Agreement shall remain in
full force and effect.
3. THIS AGREEMENT IS DELIVERED IN AND SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF RHODE ISLAND.
IN WITNESSS WHEREOF, the parties hereunto have caused this Agreement to
be executed by their duly authorized officers as of the day and year first above
written.
Secured Party:
TEXTRON FINANCIAL CORPORATION
By: [signature]
----------------------------------
Title: GVP
------------------------------
Debtor:
PROFLIGHT INC.
By: /s/ David Cohen
----------------------------------
Title: Trea.
------------------------------
STATE OF Colorado
COUNTY OF Arapahoe
On this 24th day of May, 1996 before me personally appeared David Cohen
to me known and known by me to be the person executing the foregoing instrument,
and he/she acknowledged said instrument by him/her executed to be his/her free
act and deed.
[signature]
-------------------------------------
NOTARY PUBLIC
My Commission Expires 3-3-98
8600 E. Arapahoe Rd.
Englewood, CO 80111
7
<PAGE>
<PAGE>
Schedule 1 to the
Security Agreement (Aircraft)
<TABLE>
<CAPTION>
DESCRIPTION OF AIRCRAFT
-----------------------
<S> <C> <C> <C>
AIRCRAFT:
MANUFACTURER: Lear
MODEL: 35A
SERIAL NUMBER: 105
FAA NUMBER: N18FN
ENGINES:
Engine #1 Engine #2
MANUFACTURER: GARRETT GARRETT
MODEL: TFE 731-2-2B TFE 731-2-2B
SERIAL NUMBER: P74592 P74184
RATED TAKE-OFF*: 3500 LBS. OF THRUST 35OO LBS. OF THRUST
* 750 HP OR MORE (1875 LBS THRUST IS EQUIVALENT TO 750 HORSEPOWER)
EQUIPPED AS FOLLOWS:
COLLINS FD-1086 JET VG-206D
JET DN-101D COLLINS VHF-20
COLLINS VIR-30 COLLINS TDR 90
COLLINS 51Y-719 COLLINS DME-40
BENDIX 1200 COLLINS ALT 50A
KING KHF-950 GLOBAL GNS-500A
CARGO DOOR AIR CONDITION
</TABLE>
8
<PAGE>
<PAGE>
PROMISSORY NOTE
$481,669.00 October 8, 1996
For value received, the undersigned (jointly and severally if more than
one) promises to pay to the order of Textron Financial Corporation ("TFC"), a
Delaware corporation having its principal place of business in Providence, Rhode
Island (together with any other holder of this Note, hereinafter referred to as
the "Holder"), the principal sum of four hundred eighty-one thousand six hundred
sixty-nine Dollars ($481,669.00), together with interest thereon as provided
herein. The obligation of the undersigned hereunder are "Obligations" secured by
the "Collateral" as defined and described in a Security Agreement between the
undersigned and the Holder dated as of May 31, 1996, (the "Security Agreement"),
and the Holder shall be entitled to all of the rights and privileges provided
therein, including rights of acceleration of this Note.
Each installment shall be due and payable monthly commencing on November 15,
1996 and continuing on the same date of each month thereafter ("Payment Dates"),
through and including June 15, 2001 (the "Maturity Date"). Installments 1
through 55 shall consist of principal and interest of $6,512.67 each. The final
Installment due and payable on the Maturity Date shall be in an amount equal to
the entire outstanding principal balance of this Note, together with all accrued
interest, charges and other amounts then due and owing hereunder and under the
Security Agreement. Interest is calculated on the unpaid principal balance of
this Note at the rate of ten and fifty one-hundredths percent (10.50%)per annum
on the basis of a 360-day year comprised of twelve 30-day months.
In the event any amount due hereunder is past due by more than ten (10)
days, the undersigned agrees to pay a late charge equal to the lesser of (a)
five percent (5%) on and in addition to the amount of the past due payment or
(b) the maximum charges allowable under then applicable law. Upon the maturity
of this Note (by reason of default and acceleration or otherwise), the
undersigned agrees to pay interest on the unpaid balance and all accrued and
unpaid amounts due hereunder and under the Security Agreement from the maturity
hereof through the day of payment at a rate of interest equal to the lesser of
(a) the Holder's then current default rate of interest, or (b) the maximum rate
of interest allowable under then applicable law.
Each payment hereunder shall be made in lawful money of the United
States and shall be payable to such account or address as the Holder hereof
shall from time to time direct the undersigned. All amounts received shall be
applied first, to accrued late charges and any other costs or expenses due and
owing hereunder or under the terms of the Security Agreement; second, to accrued
interest; and third, to unpaid principal. If at any time during the term of this
Note the interest rate applicable hereunder exceeds the maximum rate of interest
permitted under then applicable law, then the interest rate shall thereafter be
deemed to be the maximum rate permitted under then applicable law, and amounts
of interest received from the undersigned in excess of such maximum rate shall
be considered reductions to principal to the extent of any such excess.
<PAGE>
<PAGE>
Failure to pay this Note, or any installment hereunder promptly when
due, or default or failure in the performance or due observance of any of the
terms, conditions or obligations hereunder or under the Security Agreement or in
any other agreement or instrument between the undersigned (or any endorser,
guarantor, surety or other party liable for the undersigned's obligations
hereunder, or any other entity controlling, controlled by, or under common
control with the undersigned, and the Holder (or any other entity controlling,
controlled by or under common contra with the Holder), shall entitle the Holder
to accelerate the maturity of this Note and to declare the entire unpaid
principal balance and all accrued interest and other charges owing hereunder
(including prepayment fees) and under the Security Agreement to be immediately
due and payable, and to proceed at once to exercise such and every one of the
remedies set forth in the Security Agreement or otherwise available at law or in
equity
The undersigned and all other parties who may be liable (whether as
endorsers, guarantors, sureties or otherwise) for payment of any sum or sums due
or to become due under the terms of this Note waive diligence, presentment,
demand, protest, notice of, dishonor, notice of intent to accelerate, notice
that the debt has been accelerated and notice of any other kind whatsoever and
agree to pay all costs incurred by the Holder in enforcing its rights under this
Note or the Security Agreement, including reasonable attorney's fees, and they
do hereby consent to any number of renewals or extensions at any time in the
payment of this Note. No extension of time for payment of this Note made by any
agreement with any person now or hereafter liable for payment of this Note shall
operate to release, discharge, modify, charge or affect the original liability
of the undersigned under this Note, either in whole or in part. No delay or
failure by the Holder hereof in exercising any right, power, privilege or remedy
shall be deemed to be a waiver of the same or any part thereof; nor shall any
single or partial exercise thereof or any failure to exercise, the same in any
instance preclude any future exercise thereof, or exercise of any other right,
power, privilege or remedy, and the rights and remedies provided for hereunder
are cumulative and not exclusive of any other right or remedy available at law
or in equity. The Holder of this Note may proceed against all or any of the
Collateral securing this Note or against any guarantor hereof, or may proceed
contemporaneously or in the first instance against the undersigned, in such
order and at such times following default hereunder as the Holder may determine
in its sole discretion. All of the undersigned's obligations under this Note are
absolute end unconditional, and shall not be subject to any offset or deduction
whatsoever. The undersigned waives an, right to assert, by way of counterclaim
or affirmative defense any action to enforce the undersigned's obligations
hereunder, any claim whatsoever against the Holder of this Note.
The provisions of this Note be governed by and construed In accordance
with the laws of the State of Rhode Island.
ATTEST/WITNESS: MAKER: Proflight, Inc.
/s/ David Cohen By: /s/ Kevin L. Burkhardt
_________________________ ______________________________
Name: David Cohen Name: Kevin L. Burkhardt
___________________ ____________________________
Title: President
AFD 2001 (9/92)
(Fixed rate/level/payment)
<PAGE>
<PAGE>
PROFLGHT, INC.
Compound Period..............: Monthly
Nominal Annual Rate..........: 10.500 %
Effective Annual Rate .......: 11.020 %
Periodic Rate................: 0.8750 %
Daily Rate...................: 0.02917%
CASH FLOW DATA
Event Start Date Amount Number Period End Date
1 Loan 10/08/1996 481,669.00 1
2 Payment 11/15/1996 6,512.67 55 Monthly 05/15/2001
3 Payment 06/15/2001 324,627.13 1
AMORTIZATION SCHEDULE - Normal Amortization, 360 Day Year
<TABLE>
<CAPTION>
Date Payment Interest Principal Balance
<S> <C> <C> <C> <C> <C>
Loan 10/08/1996 481,669.00
1 11/15/1996 6,512.67 5,206.62 1,306.05 480,362.95
2 12/15/1996 6,512.67 4,203.18 2,309.49 478,053.46
1996 Totals 13,025.34 9,409.80 3,615.54
3 01/15/1997 6,512.67 4,182.97 2,329.70 475,723.76
4 02/15/1997 6,512.67 4,162.58 2,350.09 473,373.67
5 03/15/1997 6,512.67 4,142.02 2,370.65 471,003.02
6 04/15/1997 6,512.67 4,121.28 2,391.39 468,611.02
7 05/15/1997 6,512.67 4,100.35 2,412.32 466,199.31
8 06/15/1997 6,512.67 4,079.24 2,433.43 463,765.88
9 07/15/1997 6,512.67 4,057.95 2,454.72 461,311.16
10 08/15/1997 6,512.67 4,036.47 2,476.20 458,834.96
11 09/15/1997 6,512.67 4,014.81 2,497.86 456,337.10
12 10/15/1997 6,512.67 3,992.95 2,519.72 453,817.38
13 11/15/1997 6,512.67 3,970.90 2,541.77 451,275.61
14 12/15/1997 6,512.67 3,948.66 2,564.01 448,711.60
1997 Totals 78,152.04 48,810.18 29,341.86
<PAGE>
<PAGE>
15 01/15/1998 6,512.67 3,926.23 2,586.44 446,125.16
16 02/15/1998 6,512.67 3,903.60 2,609.07 443,516.09
17 03/15/1998 6,512.67 3,880.77 2,631.90 440,884.19
18 04/15/1998 6,512.67 3,857.74 2,654.93 438,229.26
19 05/15/1998 6,512.67 3,834.51 2,678.16 435,551.10
20 06/15/1998 6,512.67 3,811.07 2,701.60 432,849.50
21 07/15/1998 6,512.67 3,787.43 2,725.24 430,124.26
22 08/15/1998 6,512.67 3,763.59 2,749.08 427,375.18
23 09/15/1998 6,512.67 3,739.53 2,773.14 424,602.04
24 10/15/1998 6,512.67 3,715.27 2,797.40 421,804.64
25 11/15/1998 6,512.67 3,690.79 2,821.88 418,982.76
26 12/15/1998 6,512.67 3,666.10 2,846.57 416,136.19
1998 Totals 78,152.04 45,576.63 32,575.41
27 01/15/1999 6,512.67 3,641.19 2,871.48 413,264.71
28 02/15/1999 6,512.67 3,616.07 2,896.60 410,368.11
29 03/15/1999 6,512.67 3,590.72 2,921.95 407,446.16
30 04/15/1999 6,512.67 3,565.15 2,947.52 404,498.64
31 05/15/1999 6,512.67 3,539.36 2,973.31 401,525.33
32 06/15/1999 6,512.67 3,513.35 2,999.32 398,526.01
33 07/15/1999 6,512.67 3,487.10 3,025.57 395,500.44
34 08/15/1999 6,512.67 3,460.63 3,052.04 392,448.40
35 09/15/1999 6,512.67 3,433.92 3,078.75 389,369.65
36 10/15/1999 6,512.67 3,406.98 3,105.69 386,263.96
37 11/15/1999 6,512.67 3,379.81 3,132.86 383,131.10
38 12/15/1999 6,512.67 3,352.40 3,160.27 379,970.83
1999 Totals 78,152.04 41,986.68 36,165.36
39 01/15/2000 6,512.67 3,324.74 3,187.93 376,782.90
40 02/15/2000 6,512.67 3,296.85 3,215.82 373,567.08
41 03/15/2000 6,512.67 3,268.71 3,243.96 370,323.12
42 04/15/2000 6,512.67 3,240.33 3,272.34 367,050.78
43 05/15/2000 6,512.67 3,211.69 3,300.98 363,749.80
44 06/15/2000 6,512.67 3,182.81 3,329.86 360,419.94
45 07/15/2000 6,512.67 3,153.67 3,359.00 357,060.94
46 08/15/2000 6,512.67 3,124.28 3,388.39 353,672.55
47 09/15/2000 6,512.67 3,094.63 3,418.04 350,254.51
48 10/15/2000 6,512.67 3,064.73 3,447.94 346,806.57
49 11/15/2000 6,512.67 3,034.56 3,478.11 343,328.46
50 12/15/2000 6,512.67 3,004.12 3,508.55 339,819.91
2000 Totals 78,152.04 38,001.12 40,150.92
<PAGE>
<PAGE>
51 01/15/2001 6,512.67 2,973.42 3,539.25 336,280.66
52 02/15/2001 6,512.67 2,942.46 3,570.21 332,710.45
53 03/15/2001 6,512.67 2,911.22 3,601.45 329,109.00
54 04/15/2001 6,512.67 2,879.70 3,632.97 325,476.03
55 05/15/2001 6,512.67 2,847.92 3,664.75 321,811.28
56 06/15/2001 6,512.67 2,815.85 321,811.28 321,811.28
2001 Totals 357,190.48 17,370.57 339,819.91
Grand Totals 682,823.98 201,154.98 481,669.00
</TABLE>
Last interest amount increased by 0.01 due to rounding.
<PAGE>
<PAGE>
AIRCRAFT LEASE AGREEMENT
This AIRCRAFT LEASE AGREEMENT (the "Agreement") entered into as of the 15th day
of November 1996 by and between Superior Transport Service, Inc. ("Lessor") and
Proflight, Inc. ("Lessee").
RECITALS
WHEREAS, Lessor is the registered owner of a 1980 LearJet 25D FAA registration
#: N161RB, S/N 0294 ("Aircraft") and Lessor so desires to lease the Aircraft to
Lessee in accordance with the terms and conditions herein contained; and Whereas
the parties understand that Lessee intends to utilize the Aircraft in conducting
its business; Therefore in consideration of the premises and the mutual
covenants contained herein, and for other good and valuable consideration, the
parties hereby agree as follows:
ARTICLE ONE
LEASE AND TERM:
Lessor agrees to lease to Lessee the Aircraft together with the accessories and
equipment specified in appendix A hereto. Commencing on the 15th day of November
1996 and shall continue in effect until November 15, 1998. Thereafter, this
agreement shall continue in effect from month to month, being automatically
renewed after each month, unless terminated under the provisions of this
agreement.
Lessee has the option to purchase this Aircraft for $975,000 at the termination
of this lease
The lease payment, payable by lessee to lessor $13,000 per month. First payment
plus a one month security deposit shall be payable November 15, 1996. Payments
are due the 15th of each month, there is a ten (10) day grace period. A late
charge of five percent (5%) will be added for payments not received within this
grace period.
This lease is non-cancelable and may not be terminated by lessee before the end
of the initial term, except as provided in Article Nine of this Lease. Your
obligation to pay all amounts specified in this Lease is absolute and
unconditional until the Lease is fully satisfied and shall not be subject to any
abatement, reduction, set-off, defense, counterclaim, interruption, deferment or
recoupment. Your obligation to the lessor will continue despite any dispute you
may have with respect to the Aircraft or any Parts or its equipment.
FAILURE TO PURCHASE OR SURRENDER
If Lessee fails to purchase or surrender the Aircraft at the end of the initial
term, Lessee will continue to pay rent on a month to month basis at a sum equal
to 115% of the monthly rent. During the three (3) months prior to the scheduled
expiration of the Initial Term, Lessor may advertise the Aircraft for sale in
suitable Aircraft magazines or other print or electronic media. In
<PAGE>
<PAGE>
connection with such advertising, lessee at his convenience will cooperate in
making the Aircraft available for inspection by prospective purchasers and
Lessor or any broker or dealer acting on Lessors behalf.
ARTICLE TWO
ENGINE RESERVES:
The engine reserves for the engines of the Aircraft will be based on the hours
of use of the engines shown on the "Hourage Report" to be sent to the lessor by
lessee. The Hourage Report will cover the 30-day period ending on the 15th day
coinciding with the lease payment for which payment is due. Lessee shall for the
duration of the lease make payments to lessor of $150/engine hour ($75 per
engine) within ten (10) days of the end of reporting period. Reserve fund items
are: any mid-life, lease expiration or termination inspection; overhaul or
replacement of Engines; overhaul, cycle replacement or hot section inspection of
the Aircraft Power Unit ("APU") which includes the Accessory Gear Box and Fuel
Controller. When and if work on any Reserve Fund item is necessary, it shall be
performed by the lessee or other persons under contract to the lessee and the
expenses thereof shall be paid by lessor out of the Reserve Fund established
pursuant to this agreement. If such Reserve Fund is insufficient, the remainder
shall be paid by lessee directly. Lessor shall reimburse lessee out of the
Reserve Fund as funds are accrued within ten (10) days when an invoice is
presented accompanied by documentation substantiating the performance of the
necessary repairs pursuant to FAA requirements. Any Reserve Fund balance
remaining when this Lease expires, will be paid to lessee, should you exercise
your option to purchase Aircraft, but lessor shall retain the balance if you
fail to execute your purchase option, or the lease terminates before such option
can be exercised.
ARTICLE THREE
MAINTENANCE AND REPAIRS:
Lessee shall perform or cause to be performed all maintenance, repair,
inspection and overhaul work necessary to obtain and maintain certification for
the Aircraft pursuant to Part 135 of the FAA regulations. All such work
performed on the Aircraft shall be performed in accordance with the standards
set by the regulations of the FAA. Lessee Shall provide or cause to be provided
at all times qualified personnel to perform all maintenance repair, inspection
and overhaul work on the Aircraft. All such personnel will be contracted for, or
employed, by lessee, and lessor shall have no authority to direct, employ,
discharge, or pay compensation to such personnel. Lessor shall rely wholly on
the expertise of lessee as to the necessity of the labor and materials required
under this article. If the proper maintenance is not performed on said aircraft
by the lessee he shall be responsible for all damages incurred.
<PAGE>
<PAGE>
ARTICLE FOUR
OPERATING COSTS:
Lessee shall be responsible for all costs and expense incurred by lessee in
operation Aircraft during the term of this Agreement including but not limited
to the following:
A. MAINTENANCE: All costs and expenses incurred by lessee in performing or
causing to be performed all maintenance, repair, inspection and overhaul work on
the Aircraft, including but not limited to all costs and expense associated with
new parts and accessories utilized for such work.
B. FUEL AND OIL: All costs and expenses incurred by lessee in purchasing
fuel and oil for the Aircraft.
C. INSURANCE: All costs and expenses incurred by lessee in maintaining in
force such passenger, liability insurance of not less than $20,000,000, public
liability, property damage, malpractice (air ambulance). Aircraft hull insurance
of no less than $975,000 and baggage insurance in such form, for such amounts,
and with such insurers as shall be satisfactory to lessor, protecting lessee and
lessor as co-insureds against claim for death of, or injury to persons, and loss
of, or damage to property, in connection with the possession, maintenance, use
and operation of the Aircraft.
D. TAXES: All taxes, fees, assessments, fines and penalties dues, assessed
or levied by any taxing authority or governmental agency which relate in any way
to the use or operation of the Aircraft, including, but without limitation, all
sales taxes and personal property taxes, licenses, and registration fees, and
all use, excise, gross receipts, franchise, stamp, stamp or other taxes, duties
or charges, together with any penalties, fines or interest thereon, imposed, or
relating to activities conducted, during income taxes attributable to its income
earned under this Agreement.
E. STORAGE OF THE AIRCRAFT: All costs and expense incurred by Lessee in
storing the Aircraft.
F. RISK OF LOSS: Lessee will bear the sole risk of loss of theft or damage
to the Aircraft or any Parts or equipment ("Casualty Loss"). Lessee acknowledges
that the lessor has no obligation to provide a replacement aircraft for any
reason. The lessee will notify the lessor within 24 hours of any loss. If the
lessee determines that the Aircraft or the affected Part or equipment can be
economically repaired, lessee will have it repaired at lessees expense.
ARTICLE FIVE
LOG BOOK AND RECORDS:
Lessee shall maintain all log books and records pertaining to the Aircraft in
accordance with FAA regulations. All log books and records shall be stored in a
fire-resistant file or safe. Such log books and records shall be made available
for examination by lessor, and lessee shall at the termination of this Agreement
deliver them to lessor.
<PAGE>
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ARTICLE SIX
OPERATION OF AIRCRAFT:
A. Lessee shall operate the Aircraft in accordance with this Agreement.
During those times when the Aircraft has been chartered, Lessee shall have and
maintain operational control of the Aircraft in accordance with Section 135.77
of the FAA regulations.
B. Lessee may operate the Aircraft only for the purposes, and within the
geographical limits, set forth in the insurance policy or policies obtained by
Lessee in accordance with Paragraph C of Article Six of this Agreement. Lessee
shall not use the Aircraft in violation of any foreign, federal, state,
territorial or municipal law or regulation and shall be solely responsible for
any fines, penalties or forfeitures occasioned by any violation. If any such
fine or penalty is imposed on and paid by Lessor, Lessee shall reimburse Lessor
for the amount thereof within ten (10) days after receipt by Lessee of written
notice requesting such reimbursement. Lessee will not base the Aircraft, or
permit it to be based, outside the limits of the United States of America,
without the prior written consent of Lessor.
C. The Aircraft shall be operated only by licensed and qualified pilots.
For charter and air ambulance flights, all pilots shall be employees of Lessee
and shall be under the exclusive control of Lessee.
D. Lessee shall have sole control over dispatching and scheduling the
Aircraft.
ARTICLE SEVEN
ALTERATIONS:
Lessee shall not have the right to alter, modify or make additions or
improvements to the Aircraft, other than those necessary to obtain and maintain
FAA certification, without prior written permission from Lessor. All such
alterations, modifications, additions and improvements are so made shall become
the property of Lessor and shall be subject to all of the terms of this
Agreement.
ARTICLE EIGHT
TITLE:
The registration of, and title to, the Aircraft shall be in the name of Lessor,
and the Aircraft shall at all times bear United States registration markings.
ARTICLE NINE
DEFAULT:
A. Lessor shall be in breach of this Agreement if: ( 1) Lessor defaults in
the performance of any of its obligations under this Agreement and such default
shall continue for five (5) days after receipt by Lessor of notice thereof from
Lessee: or (2) Lessor takes any actions to prevent or
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hinder the performance by Lessee of any of its obligations under this Agreement.
In the event of any breach, Lessee shall have the right to terminate the
Agreement immediately and to pursue any other remedy available to Lessee in law
or equity.
B. Lessee shall be in breach of this Agreement if Lessee defaults in the
performance of any of its obligations under this Agreement and such default
shall continue for five (5) days after receipt by Lessee of written notice
thereof from Lessor. In the event of any breach by Lessee, Lessor shall have the
right to repossess the Aircraft without further demand, notice or court order,
or other process of law and to terminate the Agreement immediately. Exercise by
Lessor of either or both of the rights specified above shall not prejudice
Lessor's right to pursue any other remedy available to Lessor in law or equity.
C. The failure of either party to enforce strictly any provision of this
Agreement shall not be construed as a waiver thereof and shall not preclude such
party from demanding performance in accordance with the terms hereof.
ARTICLE TEN
ASSIGNMENT:
Lessee shall not assign this Agreement or any interest in the Aircraft without
the prior written consent of Lessor. Subject to the foregoing, this Agreement
inures to the benefit of, and is binding on, the heirs, legal representatives,
successors, and assigns of the parties hereto.
ARTICLE ELEVEN
ACCIDENT AND CLAIM:
Lessee shall immediately notify Lessor of any accident involving the Aircraft,
which notification shall specify to the extent known by the Lessee, the time and
place of the accident, the extent of the damage, the names and addresses of
parties involved, persons injured, known witnesses, and owners of properties
damaged. Lessee shall advise Lessor of all correspondence, papers, notices, and
documents received by Lessee in connection with any claim or demand involving or
relating to the Aircraft or its operations, and shall aid in any investigation
instituted by Lessor and in the recovery of damages from third persons liable
therefor.
ARTICLE TWELVE
RETURN OF PLANE TO LESSOR:
On the termination of this Agreement by expiration or otherwise, Lessee shall
return the Aircraft to Lessor at Palm Springs Airport, in the same condition as
when received, ordinary wear, tear and deterioration excepted.
In case of the lessees election to surrender the aircraft, the value of the
aircraft and the cost of excess wear and tear and repairs needed to return the
aircraft to the required condition will be
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established by a professional inspector and appraiser. Lessee will be
responsible for all costs and repairs.
ARTICLE THIRTEEN
A. Aircraft is to be operated on Part 135 Charter Certificate, to be
supplied by Lessee, and is exempt from California use/sales tax.
ARTICLE FOURTEEN
DISCLAIMER AND TRANSFER OF WARRANTIES; QUIET ENJOYMENT:
We are not the manufacturer of the aircraft or any Parts or equipment.
we hereby assign to you to the extent assignable all applicable manufacturer's
warranties, service agreements and patent and copyright protection, if any,
available under manufacturer or importer warranties or the Purchase or Sales
Agreement with the Supplier, for the purpose of making appropriate claims
against the manufacturer. However, we shall retain at all times the right to be
protected by these same warranties, agreements, and indemnities as the owner of
the Aircraft.
So long as you are not in default under this Lease, we warrant that
neither we nor anyone acting for or claiming through us will interfere with your
quiet enjoyment of the Aircraft. EXCEPT FOR OUR WARRANTY OF QUIET ENJOYMENT, WE
MAKE NO WARRANTY, EXPRESS OR IMPLIED, ABOUT ANY MATTER, INCLUDING, BUT NOT
LIMITED TO, THE IMPLIED WARRANTIES OF AIRWORTHINESS, MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE. AS TO US, YOU LEASE THE AIRCRAFT IN AN `AS IS'
CONDITION. IN NO EVENT WILL WE HAVE ANY LIABILITY FOR, NOR WILL YOU HAVE ANY
REMEDY AGAINST US FOR CONSEQUENTIAL DAMAGES, ANY LOSS OF PROFITS OR SAVINGS,
LOSS OF USE, OR ANY OTHER LOSS.
ARTICLE FIFTEEN
REMEDIES
If you are in default, we may do one or more of the following:
A. declare this Lease to be in default;
B. terminate this lease;
C. revoke any authorization we have given to you under this Lease
to act on our behalf;
D. recover from you all amounts that are or will be due;
E. attempt to satisfy any amounts due with any collateral used as
security;
F. repossess or render the Aircraft unusable without demand,
notice, court order or other process and retain all payments
made as partial compensation for the use of the Aircraft and
depreciation; require you at your expense to assemble on the
Aircraft all equipment that is supposed to be there and deliver
the Aircraft to us at
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the return base designated in paragraph 4G of Addendum No. 2;
H. require you to pay an amount equal to 115% of the current Rent
prorated on a 30-day month for each day the Aircraft is not
returned plus any associated late charges; and
I. recover from you all reasonable attorney's fees and associated
expenses and consequential damages incurred in exercising any of
our rights under this Lease.
To repossess the Aircraft, we may peaceable enter your premises or any
airport or storage facility where the Aircraft is stored. If we accept
late payments or partial payments, that does not mean we will accept
other late or partial payments.
ARTICLE SIXTEEN
MISCELLANEOUS PROVISIONS
A. The relationship between Lessor and Lessee shall always and only be that
of lessor and lessee. Lessee shall never at any time during the term of this
Agreement become the agent of Lessor, and Lessor shall not be responsible for
acts or omission of Lessee or its agents.
B. This Agreement constitutes the entire understanding between the parties,
and as of its effective date supersedes all prior or independent agreements
between the parties covering the Aircraft. Any change or modification hereof
must be in writing, signed by both parties.
C. This Agreement is to be construed in accordance with the laws of the
State of California.
D. Any notice given by one party to the other in connection with this
Agreement shall be in writing and shall be sent by certified or registered mail,
return receipt requested:
(1) If to Lessor, addressed to:
Paul Emerson
Superior Transport Service, Inc.
1291 Valdivia Way
Palm Springs, CA 92262
(2) If to Lessee, addressed to:
Kevin Burkhardt
Proflight, Inc.
12420 E. Control Tower Rd.
Englewood, CO 80112
Notices shall be deemed to have been received on the date of receipts as shown
on the return receipt.
E. Lessee shall have no right to consent, allow or permit any liens or
encumbrances on the Aircraft. Lessee shall immediately remove from the Aircraft
any lien on encumbrance arising or created by any act or omission on the part of
the Lessee.
F. The rights and remedies with respect to any of the terms and conditions
of the Agreement
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shall be cumulative and not exclusive, and shall be in addition to all other
rights and remedies.
G. Lessor, at their expense will deliver aircraft to Denver (Centennial
Airport) at commencement of lease.
INDEMNITY:
Lessee shall indemnify us for any action, claim, damage, obligations,
liabilities and costs and expenses ("Claims") regarding any matter arising
during the Lease Term or holdover term, including reasonable attorneys' and
collection fees.
NON COMPETE:
Principals of Superior Transport agree not to establish any form of
Aeromedical/Charter transport services for a period of five years, commencing
from date of signature.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first written above.
LESSOR:
-----------------------------
Title: /s/ CEO
---------------
Date: 11/15/96
----------------
LESSEE: /s/ Kevin L. Burkhardt
----------------------
Title: President
----------------
Date: 11/15/96
-----------------
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<PAGE>
[Norwest Equipment Finance LOGO]
- --------------------------------------------------------------------------------
Norwest Equipment Finance, Inc. Promissory Note
Suite 300
733 Marquette Avenue
Minneapolis, Minnesota 55479-2048
- --------------------------------------------------------------------------------
For value received, the undersigned, PROFLIGHT, INC. hereby promises to pay to
the order of Norwest Equipment Finance, Inc. (the "Lender") at its office in
Minneapolis, Minnesota, or at such other place as may be designated from time to
time by the holder hereof, the sum of $1,205,560.88 in installments according to
the schedule set forth below; provided, however, that the undersigned and the
Lender may agree to any other payment schedule, in which case any variations
shall be set forth in the space provided for additional provisions. The first
payment period shall begin on the 15th day of the month in which Lender
disburses the loan proceeds if disbursement is made on or before the 15th day of
such month, and the first payment period shall begin on the last day of such
month if disbursement is made during the balance of such month. The first
installment shall be payable on the first payment due date set forth below
(which may be the same as the date the first payment period begins). Subsequent
installments shall be payable on the first day of each payment period beginning
after the first payment period. The undersigned agrees that the date the first
payment period begins may be left blank when this Note is executed and hereby
authorized Lender to insert such date based upon the date the loan proceeds are
disbursed.
PAYMENT SCHEDULE: Date first payment period begins: ________________, 19__
First payment due: ______________________________ , 19__
Number of installments: SIXTY-ONE (6l)
Amount of each installment: $ SEE ADDITIONAL PROVISIONS
Payment period (check one):
[X] Monthly [ ] Annually
[ ] Quarterly [ ] Other--See Additional Provisions
[ ] Semi-annually
Annual interest rate used in computing payment
schedule: 9.75%
Principal amount of loan proceeds disbursed: $893,598.21
In addition to installment payments as set forth above, the undersigned agrees
to pay Lender interim interest on the loan proceeds disbursed hereunder from the
date of disbursement to the date the first payment period begins at the annual
interest rate set forth above used in computing the payment schedule. Interim
interest shall be due and payable on the date the first payment period begins.
ADDITIONAL PROVISIONS:
PAYMENT SCHEDULE:
SIXTY (60) PAYMENTS @ $14,719.61; THEN ONE (1) PAYMENT @ $322,384.28
If any installment is not paid when due, then in addition to any other remedy
Lender may have hereunder, Lender may impose and, if imposed, the undersigned
shall pay a late charge of 5% of the amount of the delinquent installment but in
any event not more than permitted by applicable law. Payments thereafter
received shall be applied first to delinquent installments and then to current
installments.
This Note may be prepaid in whole or in part at anytime and from time to time
but only if accompanied by a prepayment premium of 2% of the principal amount
prepaid. Any partial prepayment shall be applied to the last maturing
installment or installments. Upon any prepayment in full, the unearned portion
of the interest will be refunded using the simple interest method.
The following shall constitute an Event of Default hereunder: (a) failure to pay
any installment hereunder when due; (b) the occurrence of an event of default as
defined in any security agreement or mortgage securing this Note; (c) the
commencement of any bankruptcy or insolvency proceedings by or against the
undersigned or any guarantor of this Note; and (d) any indebtedness the
undersigned may now or hereafter owe to Norwest Bank Minnesota, National
Association or any affiliate thereof shall be accelerated following a default
thereunder or, if any such indebtedness is payable on demand, payment thereof
shall be demanded. Upon the occurrence of an Event of Default, Lender may do any
one or more of the following as it may elect: (i) upon written notice to the
undersigned, declare the entire unpaid balance of the Note to be immediately due
and payable, and the same (less unearned interest computed using the simple
interest method as if this Note had been paid in full on the date it became due
and payable) shall thereupon be and become immediately due and payable: (ii)
exercise any one or more of the rights and remedies available to it under any
security agreement or mortgage securing this Note or under any other agreement
or by law.
The undersigned hereby waives presentment, notice of dishonor, and protest. The
undersigned agrees to pay all costs of collection of this Note, including
reasonable attorney's fees. The holder hereof may change the terms of payment of
the Note by extension, renewal or otherwise, and release any security for, or
party to, this Note and such action shall not release any accommodation maker,
endorser, or guarantor from liability on this Note.
Dated NOVEMBER 13, 1996 PROFLIGHT, INC.
- ------------------------ -----------------------------------
Borrower
By /s/ Kevin L. Burkhardt
-------------------------------
Its President
-------------------------------
<PAGE>
<PAGE>
[Norwest Equipment Finance Logo] Norwest Equipment Finance, Inc.
Suite 230
9350 East Arapahoe Road
Englewood, Colorado 80112
303/792-5670
Fax: 303/792-5653
November 13, 1996
Charles W. Bartholomew
2150 Oak Hills Drive
Colorado Springs, CO 80919
RE: Guaranty dated March 14, 1995 ("Guaranty")
Dear Charles:
Norwest Equipment Finance, Inc. ("NEFI") has agreed to extend additional credit
to PROFLIGHT, INC. ("Debtor"). This letter is to notify you that the Obligations
(as defined in the Guaranty) resulting from such extension of credit will be
covered by your Guaranty.
Sincerely,
Norwest Equipment Finance, Inc.
/s/ Nancy A. Sheridan
Nancy A. Sheridan
Marketing Assistant
<PAGE>
<PAGE>
[Norwest Equipment Finance Logo] Norwest Equipment Finance, Inc.
Suite 230
9350 East Arapahoe Road
Englewood, Colorado 80112
303/792-5670
Fax: 303/792-5653
November 13, 1996
Mr. Kevin L. Burkhardt
20417 Sagewood Lane
Parker, CO 80134
RE: Guaranty dated March 14, 1995 ("Guaranty")
Dear Kevin:
Norwest Equipment Finance, Inc. ("NEFI") has agreed to extend additional credit
to PROFLIGHT, INC. ("Debtor"). This letter is to notify you that the Obligations
(as defined in the Guaranty) resulting from such extension of credit will be
covered by your Guaranty.
Sincerely,
Norwest Equipment Finance, Inc.
/s/ Nancy A. Sheridan
Nancy A. Sheridan
Marketing Assistant
<PAGE>
<PAGE>
[Norwest Equipment Finance Logo] Norwest Equipment Finance, Inc.
Suite 230
9350 East Arapahoe Road
Englewood, Colorado 80112
303/792-5670
Fax: 303/792-5653
November 13, 1996
Mr. Andrew A. Hiestand
16056 E. Rice Place, #B
Aurora, CO 80015
RE: Guaranty dated March 14, 1995 ("Guaranty")
Dear Andrew:
Norwest Equipment Finance, Inc. ("NEFI") has agreed to extend additional
credit to PROFLIGHT, INC. ("Debtor"). This letter is to notify you that the
Obligations (as defined in the Guaranty) resulting from such extension of credit
will be covered by your Guaranty.
Sincerely,
Norwest Equipment Finance, Inc.
/s/ Nancy A. Sheridan
Nancy A. Sheridan
Marketing Assistant
<PAGE>
<PAGE>
Dated: November 13, 1996
Norwest Equipment Finance, Inc.
Investors Building-Suite 300
733 Marquette Avenue
Minneapolis, Minnesota 55479-2048
Gentlemen:
In reference to Contract Number dated as of
November 13, 1996, you are irrevocably instructed to disburse payment
as follows:
- ------------------------------------------------------------------------
Payee Invoice Number Amount
- ------------------------------------------------------------------------
Payoff NEFI Contract #220631-700 $393,598.21
GE Engine Services 526-1016688 $250,000.00
GE Engine Services 526-1016687 $250,000.00
TOTAL FINANCED $893,598.21
Sincerely,
PROFLIGHT, INC.
By: /s/ Kevin L. Burkhardt
______________________________
Its: President
______________________________
<PAGE>
<PAGE>
AGREEMENT UNDER STANDARDS
THIS AGREEMENT, between the Arapahoe County Public Airport Authority
("Authority") and PROFLIGHT, INC. ("Licensee"), is dated as of the 13th day of
October, 1994.
WHEREAS, Authority is responsible for the operation and maintenance of
the Centennial Airport, hereinafter referred to as "Airport"; and
WHEREAS, the Authority has adopted Minimum Standards for Commercial
Aeronautical Activities ("Standards") at the Airport; and
WHEREAS, Licensee has met all requirements stipulated within said
Standards for the conduct of the activities proposed and has made application
for the licensing of its operation; and
WHEREAS, Licensee submitted its application under Standards to the
Authority on the 8th day of September, 1994; and
WHEREAS, Licensee's proposes to commence its based commercial
aeronautical activities at Centennial Airport on the 14th day of October, 1994
("Commencement Date"); and
WHEREAS, Licensee is subleasing its premises from Arapahoe Airport Joint
Venture #1 pursuant to a sublease agreement dated the 15th day of October, 1993
("Sublease Agreement"); and
WHEREAS, the Authority has held public hearing upon Licensee's
application and has approved said application on 13th day of October, 1994.
NOW, THEREFORE, the parties hereto agree as follows:
1. Authorized Activities: Authority grants Licensee the right to conduct
the following named commercial aeronautical activities under the Standards at
the Airport:
Aircraft Maintenance
2. Term: The authorization granted Licensee to conduct the above-named
commercial aeronautical activities shall terminate ten (10) years from the date
of this Agreement or upon the expiration of the term of the Sublease Agreement
as may be amended by the parties thereto whichever occurs first. Licensee may
renew the agreement by submitting an application and demonstration compliance
with all requirements of the Standards in place at the time of renewal.
3. Fees:
a. Licensee shall pay to Authority the fees prescribed in Exhibit A
attached hereto and made a part hereof adopted by the Authority September 8,
1994. It is understood that the fees may be increased or decreased from time to
time by the Authority and Licensee agrees to be bound by any changes to the fees
in Exhibit A hereafter made by the Authority and to make payment to the
Authority in accordance therewith.
b. The Fees specified in Exhibit A shall be paid annually; the
initial payment of $125.00 to be made by Licensee upon execution of this
Agreement and subsequent payments made prior to February 1 of each succeeding
year.
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c. In the event of termination of service by Licensee subsequent to
the date of this Agreement, the Annual Fees for this activity shall be adjusted
in accordance with the following formula:
Prior to 1 April Full Fee
Between 1 April and 30 June 3/4 Fee
Between 1 July and 30 September 1/2 Fee
Between 1 Oct. and 31 Dec. 1/4 Fee
4. Delinquency: The payments set forth in paragraph 3b above must be
kept current. Interest from the due date shall be charged on any payment overdue
at the rate of one and one-half percent (1 1/2%) for month prorated for the
number of days late and based on the date of receipt of payment by Authority.
5. Place and Manner of Payments: All payments required to be made
hereunder by Licensee to Authority shall be made at the Airport Manager's Office
at the Airport. All payments shall be made in legal tender of the United States.
All checks shall be received by Authority subject to collection of any such
checks.
6. Books and Records: Licensee shall keep and maintain at Airport or at
such other place as may be approved in writing by Authority, true and accurate
books and records regarding the aircraft used in its operations under the terms
of this Agreement in a form satisfactory to Authority.
7. Inspection: Authorized representatives of the Authority shall have
the right to inspect the premises of Licensee at reasonable intervals during
regular business hours to determine whether Licensee has complied and is
complying with the terms and conditions of this Agreement.
8. Notifications: a. Licensee agrees to comply with the requirements
stipulated for conduct of Aircraft Maintenance as set forth in said Standards
and with the Airport Rules and Regulations, both of which may be amended from
time to time by the Authority; and to notify the Authority with respect to any
change in the elements of its operations, to include:
1) change in any required insurance coverage
2) change in hours of operation
3) change in qualification/certification required of its employees
4) change in location of required facilities
5) change in aircraft fleet
6) change in principals or key officials of Licensee
7) change in company name
8) change in the scope of business services along with amendments
to FAA certifications concerning such operations
b. All notices required hereunder shall be made to the Authority as
follows: Executive Director, 7800 South Peoria Street, Englewood, Colorado
80112, and to Licensee at 12420 East Control Tower Road. Englewood. Colorado
80112. All notices shall be hand delivered or sent certified mail, return
receipt requested.
9. Insurance:
a. Licensee agrees that it will at all times during the terms of this
agreement, at its cost and expense, provide and keep in force a policy or
policies of insurance as described on Exhibit A
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<PAGE>
attached hereto and made a part hereof; include the Authority, its officers, and
agents as additional insured. All policies of insurance required herein shall be
in a form and in a company or companies approved by the Authority and qualified
to do business in the state of Colorado. Licensee shall furnish proper
certification and evidence of compliance to the Authority. Such certification
shall provide that such policy may not be materially changed, altered, or
canceled by the insurer during its term without first giving twenty (20) days
written notice by registered mail, return receipt requested, to Authority.
b. Licensee shall not violate the terms or prohibitions of any insurance
policy herein required.
c. Authority shall not be under any obligation to prosecute, settle or
adjust any claim which may accrue under any such policy of insurance.
10. Personnel:
a. The Licensee shall have in his employ and on duty during operating
hours trained personnel in such numbers as are required to meet the Standards in
an efficient manner for each aeronautical service being performed.
b. All personnel of Licensee are required to hold current Federal
Aviation Administration certificates and ratings as they are required.
11. Standard Clauses:
a. This Agreement grants Licensee the non-exclusive right to use the
airfield and associated operational areas in common with others as authorized,
which right shall be exercised in accordance with the laws of the United States
of America and the State of Colorado, the rules and regulations promulgated by
their authority with reference to aviation and air navigation, and all pertinent
directives, Rules and Regulations of the Authority.
b. Licensee shall make its accommodations and/or services available to
the public on fair and reasonable terms without unjust discrimination on the
basis of race, color, religion, sex, age, handicap, or national origin.
c. Licensee shall furnish its accommodations and/or services on a fair,
equal and not unjustly discriminatory basis to all users thereof and it shall
charge fair, reasonable and not unjustly discriminatory prices for each unit of
service; provided, that Licensee may be allowed to make reasonable and
nondiscriminatory prices for each unit of service; provided, that Licensee may
be allowed to make reasonable and nondiscriminatory discounts, rebates or other
similar type of price reductions to volume purchasers.
d. Licensee shall maintain at its own expense all necessary permits and
licenses required in the conduct of its business at the Airport.
e. Licensee shall at all times retain qualified and competent personnel
to conduct its authorized activities and said personnel shall be authorized to
represent and act for Licensee.
f. Licensee shall observe and obey all laws, ordinances, rules and
regulations of the United States of America and of the State of Colorado,
Arapahoe County, and the Authority which may be applicable to its operations at
the Airport.
g. Licensee shall pay, in addition to the application and annual
activity fees, as required herein, all other costs connected with the operation
of said business including, but not limited to,
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<PAGE>
insurance and taxes.
h. Licensee shall provide the Authority a schedule of the hours of
operation that Licensee will be open to the public and the names and telephone
numbers of Licensee's officials who shall be available at all hours of
Licensee's operations at the Airport to perform required management functions.
i. Licensee shall conform to all applicable safety, health,
environmental, and sanitary codes and agrees to cooperate with the Authority in
its fire prevention efforts and comply with Airport Rules and Regulations.
j. Licensee is and shall be deemed to be an independent contractor in
the conduct of its business and activities hereunder and shall be responsible to
all persons for its acts of omission or commission and Authority shall in no way
be responsible therefore. In the use of the Airport, Licensee shall indemnify
Authority, Arapahoe County and the State of Colorado, their agents and
employees, from any and all liability that may proximately result because of any
negligence on the part of Licensee's officers, agents, or employees.
k. Licensee shall comply with the requirements of any Executive Order
barring discrimination; further, in accordance with these requirements, Licensee
shall not discriminate in any manner against any employee or applicant for
employment because of political or religious opinion or affiliation, sex, race,
creed, color, handicap, or national origin; and further, licensee shall include
a similar clause in all subcontracts, except subcontracts for standard
commercial supplies or raw materials. Licensee understands and acknowledges that
the Authority has given to the United States of America, acting by and through
the Federal Aviation Administration, certain assurances with respect to
non-discrimination which have been required by Title Vl of the Civil Rights Act
of 1964, and by or pursuant to Title 49, Code of Federal Regulations, Department
of Transportation, Subtitle A, Office of the Secretary, Part 21,
Non-discrimination in Federally Assisted Programs of the Department of
Transportation, as a condition precedent to the Government making grants in aid
to the Authority for certain Airport programs and activities, and that the
Authority is required under said regulations to include in every agreement or
concession pursuant to which any person or persons other than the Authority
operates or has the right to operate any facility on the Airport providing
services to the public, the following covenant, to which Licensee agrees:
"Licensee, in its operation at and use of the Airport, covenants
that it will not, on the grounds of sex, race, color, or national origin,
discriminate or permit discrimination against any person or group of persons in
any manner prohibited by Title 49, Code of Federal Regulations Department of
Transportation Subtitle A, Office of the Secretary, Part 21; and in the event of
such discrimination; Licensee agrees that the Authority has the right to take
such action against Licensee as the Government may direct to enforce this
covenant."
l. Airport Development: The Authority reserves the right to further
develop or improve the landing area of the Airport as it sees fit and without
unreasonable interference or hindrance.
m. Performance of Services: It is clearly understood by the Licensee
that no rights or privileges have been granted which would operate to prevent
any person, firm or corporation operating aircraft on the Airport from
performing any services on its own aircraft with its own regular employees
(including but not limited to, maintenance and repair) that it may choose to
perform provided, however, that such services shall be subject to the Rules and
Regulations established by the Authority and shall be consistent with terms of
any lease or sublease of hangar space.
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n. Authority's Rights: The Authority reserves the right (but shall not
be obligated to the Licensee) to maintain and keep in repair the landing area of
the Airport and all publicly-owned facilities of the Airport together with the
right to direct and control all activities of the Licensee in this regard.
o. Airport Obstruction: The Authority reserves the right to take any
action it considers appropriate to protect the aerial approaches of the Airport
against obstruction, together with the right to prevent the Licensee from
erecting or permitting to be erected, any building or other structure on the
Airport which, in the opinion of the Authority, would limit the usefulness of
the Airport or constitute a hazard to aircraft.
p. Subordination: This shall be subordinate to the provisions of any
existing or future agreement between the Authority and the United States,
relative to the operation or maintenance of the Airport, the execution of which
has been or may be required as a condition precedent to the expenditure of
Federal funds for the development of the Airport. This subordination includes,
but is not limited to, the right of the Authority, during time of war or
national emergency, to lease the landing area, or any part thereof, to the
United States for military or naval use, and if any such lease is made, the
provisions of this Agreement shall be suspended.
q. Indemnity: The Licensee shall hold the Authority, the Airport Manager
and all other Airport personnel and their agents harmless from and against all
suits, claims, demands, actions, and/or causes of action of any kind or nature
in any way arising out of or resulting from Licensee's activities, and shall pay
all expenses in defending any claims against the Authority by reason of
Licensee's activities.
r. No Sham Affidavit: All terms and conditions with respect to this
Agreement are expressly contained herein, and the Licensee agrees that no
representative or agent of the Authority has made any representation or promise
with respect to this Agreement not expressly contained herein.
s. Assignment: All covenants, stipulations and provisions in this
Agreement shall extend to and bind the legal representatives, successors and
assigns; however, Licensee shall not assign or transfer this Agreement without
the written approval of Authority which approval may be denied for any reason.
t. Exclusive Right: It is understood and agreed that nothing herein
shall be construed to grant or authorize the granting of an exclusive right
within the meaning of Section 308 (a) of the Federal Aviation Act of 1958, as
amended.
u. Affirmative Action Program: The Licensee assures that it will
undertake an affirmative action program as required by 14 CFR Part 152, Subpart
E, to ensure that no person shall on the grounds of race, creed, color, national
origin, or sex be excluded from participating in any employment activities
covered in 14 CFR Part 152, Subpart E. The Licensee assures that no person shall
be excluded on these grounds from participating in or receiving the services or
benefits of any program or activity covered by this subpart. The Licensee
assures that it will require that its covered suborganizations provide
assurances to the Licensee that they will require assurances from their
suborganizations, as required by 14 CFR Part 152, Subpart E, to the same effect.
v. Aircraft Leaseback. Sublease. or other Aircraft Operating Agreements:
(1) All aircraft leases, leasebacks, subleases or other aircraft
operating agreements involving commercial activity between an aircraft
owner/operator and Licensee shall be in writing and shall conform to the
Standards for the respective aeronautical activities being performed
<PAGE>
<PAGE>
under the subject agreement.
(2) Where such agreements involve or contemplate the right or
responsibility or obligation to perform maintenance on aircraft (other than
Preventive Maintenance), such agreements must involve reasonable use of and
payment for the aircraft commensurate with the value and usage of said aircraft.
(3) A copy of all such agreements must be submitted to the Authority
along with proof of compliance with all applicable Airport insurance
requirements.
12. Cancellation and Termination: Authority may cancel and terminate
this Agreement, with or without process of law, without liability, in the event
any payment required hereunder is in arrears and remains unpaid for a period of
thirty (30) days after the same is due, upon giving ten (10) days written notice
to Licensee of the Authority's intention to terminate, at the end of which time
all the rights Licensee hereunder shall terminate unless such payment, which
shall have been stated in such notice, shall have been paid within such ten (10)
days; provided, however, Licensee will be allowed only two (2) such notice
within any twenty-four (24) month period to cure within the time specified in
this paragraph. The third such notice in any twenty-four (24) month period shall
be final and shall cancel and terminate all of the rights hereunder of Licensee
without any right on the part of Licensee to cure such default after receiving
such notice. In like manner, upon thirty (30) days written notice, Authority may
cancel and terminate this Agreement in the event of any other non-monetary
default of Licensee.
13. Obligations Following Termination: Except as otherwise provided
herein, in the event of cancellation and termination of this agreement by
Authority as herein provided, parties shall have no further obligations
hereunder, except that Licensee shall remain liable to the Authority for all
damages, charges and fees accrued to the date of termination.
14. No Personal Liability: No commissioner, officer, or employee of
Authority shall be held personally liable under this Agreement or because of its
enforcement or attempted enforcement.
15. Entire Agreement: This Agreement covers and includes the entire
agreement between the parties and there are no promises, representations,
warranties, conditions, terms or obligations other than those contained herein.
Licensee has read and understands the whole of this Agreement and now states
that no representations, promises or agreements not expressed herein have been
made to induce the Licensee to enter into it. Licensee understands that no
Commissioner, Officer, or Agent of Authority has the authority to change,
rescind, alter or modify the agreement in whole or in part.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed this 13th day of October, 1994.
(Seal) ARAPAHOE COUNTY PUBLIC AIRPORT AUTHORITY
/s/ Jeannie Jally
-----------------------------
Chairman
ATTEST:
/s/ Thomas Eggert
- --------------------------
Clerk
/s/ Kevin L. Burkhardt
-----------------------------
Licensee
/s/ David Cohen
- --------------------------
Witness
<PAGE>
<PAGE>
EMPLOYMENT AGREEMENT, NON-COMPETITION
AND CONFIDENTIALITY AGREEMENT
THIS AGREEMENT made as of the 31 day of March 1997, by and between
Proflight Medical Response, Inc., a Colorado corporation, with its principal
office at 12420 E. Control Tower Road, Englewood, Colorado 80122 (the "Company")
and Kevin L. Burkhardt, residing at 20417 Sagewood Lane, Parker, Colorado 80134
(the "Employee").
W I T N E S S E T H
WHEREAS, the Company is engaged in air ambulance transport services (the
"Business"); and
WHEREAS, the Company is desirous of employing the Employee on a
full-time basis as its President and Chief Executive Officer on the terms and
conditions hereinafter set forth; and
WHEREAS, the Employee is desirous and willing to accept such employment
on the terms and conditions hereinafter set forth.
NON, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties, the Company and the
Employee agree as follows:
<PAGE>
<PAGE>
1. Incorporation of Recitals.
The recitals set forth above are incorporated herein by reference and
made part of this Agreement.
2. Employment and Term.
(a) The Company hires and employs the Employee and the Employee agrees
to perform for the Company, the services set forth in Paragraph 3 hereof, on a
full-time basis under the terms and conditions hereinafter set forth.
(b) The term of this Agreement (the "Initial Term") shall commence on
the closing date of the Company's initial public offering (the "Commencement
Date") and shall continue until the fifth (5th) anniversary of the Commencement
Date. This Agreement will automatically renew for successive one (1) year
periods upon the terms and conditions contained herein ("Renewal Option"),
unless the Employee has advised the Company and/or the Company has advised the
Employee, at least sixty (60) days prior to the end of the Initial Term or the
end of any other year extended by the Renewal Option, of either party's
intention not to extend the Agreement beyond any such term. Hereinafter, the
Initial Term and any successive one-year periods shall collectively be referred
to as the "Term."
-2-
<PAGE>
<PAGE>
3. Extent of Service.
(a) During the Term, the Employee shall serve on a full-time
basis as President and Chief Executive Officer and have the responsibility for
the day to day management of the business of the Company.
(b) The Employee shall devote all of his business time, skill, labor and
attention to the affairs of the Company, and shall promptly and faithfully,
perform all services pertaining thereto that are or may hereafter be required of
him by the Company, provided that such services shall be consistent with his
position as President and Chief Executive Officer of the Company. Nothing in
this Agreement shall preclude the Employee from devoting time to managing his
personal investments, provided that such investments are not in competition with
the business of the Company and that such activities do not unreasonably
interfere with the performance of his duties hereunder.
4. Compensation.
(a) Base Compensation. As base compensation for the services rendered
hereunder, the Employee shall be paid a salary of $90,000.00 per annum. The
Employee shall receive a 10% increase in his base salary after each year of the
Term. The aforesaid salary shall initially be payable in 26 equal payments
commencing two (2) weeks from the Commencement Date or on such other basis,
-3-
<PAGE>
<PAGE>
such as weekly and/or monthly as determined by the Board of Directors of the
Company.
(b) Bonuses and Additional Benefits. The Employee shall receive a one
time $25,000 bonus if the Company consummates an acquisition other than the
acquisition of Air Response, Inc.and Air Response South Inc. The Employee may be
awarded bonuses as agreed and set by the Board of Directors of the Company.
Employee shall also be entitled to, and shall be accorded, all rights and
benefits under any executive incentive plan (including the Company's Stock
Option Plan), monetary bonus plan, participation or extra compensation plan,
pension plan, profit sharing plan, disability insurance, health and major
medical insurance policy or policies, and any other plans or benefits that the
Company may from time to time provide for any officers generally during the
Term. The Company shall accord the Employee such rights and benefits on a basis
no less favorable than any other officers of comparable status of the Company or
its subsidiaries or affiliates.
(c) Vacation and Sick Leave. For each year during which this Agreement
is in effect, Employee shall be entitled to vacation and sick leave benefits,
without a deduction of salary or other compensation in accordance with the
Company's standard policies. The Employee shall have no less than four(4) weeks
vacation per year, provided the Employee works full time each year for the
Company and under the terms of this Agreement. Such
-4-
<PAGE>
<PAGE>
vacation shall be taken at such time or times during such year as may be
mutually agreed upon by the Company and the Employee.
(d) Business Expenses. The Employee shall be authorized to incur
reasonable business expenses for promoting the business of the Company,
including expenditures for entertainment, gift and travel, within the guidelines
as are set by the Board of Directors of the Company and which are consistent
with the Internal Revenue Service guidelines, provided that the Employee submits
vouchers therefore in the form reasonably satisfactory to the Company.
(e) Other Benefits. The Company will provide the Employee with fringe
benefits in the aggregate not less favorable than those received generally by
other officers of comparable status of the Company.
5. Life Insurance.
The Company, in its discretion may apply for and procure as owner and
for its own benefit insurance on the life of the Employee, in such amounts and
in such form or forms as the Company may choose.
6. Disability and Death of Employee.
(a) Disability. For purpose hereof, the term "disability" shall mean
the inability of the Employee to work for a period of six (6) consecutive months
or any 140 days in any 185 day period. In the event the Employee shall become
disabled, the Employee
-5-
<PAGE>
<PAGE>
shall be entitled to all base compensation due and payable pursuant Paragraph
4(a) for a period of six (6) months following the date that he is determined to
have become disabled pursuant to the previous sentence. Such amounts payable
shall be offset by any amounts paid to the Employee under disability insurance
policies maintained by the Company.
(b) Death. In the event of death during the Term, the normal monthly
compensation of the Employee shall be paid and all benefits the Employee was
then receiving will continue to be paid to the Employee's spouse or his
survivors for a period of one (1) year. In all other respects, this Agreement
shall be deemed to terminate upon death of the Employee.
7. Covenant Not To Compete
(a) The Employee hereby acknowledges and recognizes the highly
competitive and confidential nature of the Company's Business, and for the
consideration stated above, accordingly agrees that, unless the employee is
terminated without cause, during the entire period, commencing with the
Commencement Date, the Employee's employment by the Company, to include twelve
(12) months after the termination of the Employee's employment with the Company,
Employee will not directly or indirectly, in any capacity:
(i) Engage in any capacity in any business endeavor which has among its
purposes and/or endeavors air ambulance services or related businesses within
100 miles of any geographic area, city
-6-
<PAGE>
<PAGE>
and/or state in which the Company's services have been provided within the last
year.
(ii) Induce employees of the Company, or any of its respective
subsidiaries, to terminate their employment or to engage in any activities
hereby prohibited to the Employee;
(iii) Contact, communicate or solicit any customer and/or any contact of
the Company derived from any customer list, customer lead, mail, printed
material or other information of the Company with any other party.
(iv) Discuss any activities, methods of operation, finances,
confidential practices and private business information of the Company with any
other party.
(b) It is expressly understood and agreed that although the Employee and
the Company consider the restrictions contained in clause (a) above to be
reasonable, for the purpose of reserving for the Company or any of its
subsidiaries, their good will and other proprietary rights, if a final judicial
determination is made by a Court having jurisdiction as to the restrictions
agreed to by the parties hereto the provisions of such restriction clauses by
this Agreement shall not be rendered void, but shall be deemed amended to apply
as to such maximum time and territory and to such other extent as such Court may
judicially determine or indicate to be reasonable.
(c) As to the reasonableness of the non-competition and restrictive
covenants contained herein, Employee further acknowledges and confesses that he
is capable of making a living
-7-
<PAGE>
<PAGE>
in employment areas other than the business engaged in by the Company, and, that
the non-competition and restrictive covenants contained herein will not in the
least manner impair or interfere with Employee from earning a living after
Employee terminates his relations with the Company.
8. Disclosure of Information.
The Employee acknowledges that the Company's trade secrets, private or
secret processes as they may exist from time to time, and confidential
information concerning their services, development, all technical information,
procurement and sales activities and procedures, promotion and pricing
techniques and credit and financial data concerning customers and other trade
secrets are valuable, special and unique assets of the Company and its
subsidiaries, access to and knowledge of which are essential to the performance
of the Employee's duties hereunder. In light of the highly competitive nature of
the industry in which the Company and its subsidiaries' business is conducted,
the Employee further agrees that all knowledge and information described in the
preceding sentence not in the public domain and heretofore or in the future
obtained by him as a result of his employment by the Company or its subsidiaries
shall be considered confidential information. In recognition of this fact, the
Employee agrees that he will not, during or after the Term, disclose any such
secrets, processes or information to any person or their entity for any reason
or purpose whatsoever, except as
-8-
<PAGE>
<PAGE>
is necessary in the performance of his duties as an employee of the Company or
its subsidiaries and then only upon a written confidentiality agreement in such
form and content as requested by the Company from time to time; nor shall the
Employee make use of any such secrets, processes or information (other than
information in the public domain) for his own purposes or for the benefits of
any person or other entity (except the Company and its subsidiaries) under any
circumstances during or after the Term.
9. Termination.
(a) The Employee's employment may be terminated at any time during the
Term for Cause (as hereinafter defined) by action of the Board of Directors of
the Company upon giving the Employee notice of such termination at least thirty
(30) days prior to the date upon which termination shall take effect. As used
herein, the term "Cause" shall mean any of the following events:
(i) The Employee's conviction of or plea of guilty or nolo
contendere to a crime involving moral turpitude.
(ii) The Employee's willful misconduct, or neglect of duties or
failure to act with respect to duties or actions previously communicated to the
Employee in writing by the Board of Directors of the Company.
If the Employee's employment is terminated under the provisions of this
Section 9(a) all rights of the Executive
-9-
<PAGE>
<PAGE>
pursuant to Section 4 hereof shall cease as of the effective date of such
termination.
(b) Upon the termination of this Agreement, other than for cause, the
Company shall be responsible to pay the Executive the salary he was presently
earning and continue all benefits available to the Executive hereunder for an
additional one (1) year period from the date of termination.
(c) Upon the termination of this Agreement, for any reason, the
Executive (or his estate) shall be entitled to receive payment for base
compensation earned and accrued prior to the date of such termination.
(d) If this Agreement shall be terminated as a result of a violation of
the terms hereof by the Company, the Executive shall be entitled to all remedies
and damages available under applicable law. The Executive shall not be required
to mitigate damages.
10. Arbitration
Any and all disputes between the Employee and the Company arising with
respect to the employment by the Company or any of its subsidiaries, including
any dispute arising under this Agreement, shall be submitted to binding,
expedited arbitration
-10-
<PAGE>
<PAGE>
in Denver, Colorado under the then prevailing rules of the American Arbitration
Association.
11. Assignment.
This Agreement shall not be assignable by the Employee. This Agreement
is assignable by the Company and/or any of its subsidiaries to any successor in
interest of the Company or any of its subsidiaries.
12. Notices.
All notices, requests, demands and communications under or in respect
hereof shall be deemed to have been duly given and made if in writing (including
fax) if delivered by hand or by pre-paid registered or certified mail to the
party concerned at its address appearing below or sent by fax to the number and
with a copy as indicated below. Service shall be deemed to be effective: so far
as delivery by hand is concerned when handed to the recipient or left at the
recipient's address; by post two days after posting; by fax on the same day as
dispatch and receipt is confirmed. The said addresses and fax numbers are as
follows:
If to the Employee:
Kevin L. Burhkardt
20417 Sagewood Lane
Parker, Colorado 80134
Tel: (303) 841-5570
Fax:
-11-
<PAGE>
<PAGE>
If to the Company:
Proflight Medical Response, Inc.
12420 E Control Tower Road
Englewood, Colorado 80112
Attn: David Cohen
Tel: 800-949-5387
Fax: 303-799-1367
13. Complete Agreement; Amendments
This Agreement contains the full and complete understanding of the
parties pertaining to the subject matter hereof and supersedes all prior and
contemporaneous agreements and understandings of the parties in connection
therewith. No amendment or modification of this Agreement shall be valid unless
made pursuant to an instrument signed by the Company and the Employee.
14. Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Colorado.
15. Severability.
If any one or more of the terms, provisions, covenants or restrictions
of this Agreement shall be determined by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated. If any one or
more of the provisions contained in this Agreement shall for any
-12-
<PAGE>
<PAGE>
reason be determined by a court of competent jurisdiction to be excessively
broad or vague as to duration, geographical scope, activity or subject or
otherwise, this Agreement shall be construed by limiting, reducing or defining
it, so as to be enforceable to the fullest extent compatible with then
applicable law.
16. Headings.
The descriptive headings of the several Paragraphs of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
17. Prior Employment Agreements.
This Agreement supercedes all prior employment agreements between the
parties.
18. Waiver of Breach.
The waiver by the Company or Employee of a breach of any provision of
this Agreement by the Company or the Employee shall not operate or be construed
as a waiver of any subsequent breach by the Company or the Employee.
19. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be an original, and all of which shall constitute one and the same
agreement.
-13-
<PAGE>
<PAGE>
IN WITNESS WHEREOF the parties hereto have duly executed this Agreement
as of the day and year first above written.
PROFLIGHT MEDICAL RESPONSE, INC.
By: /s/ David Cohen
______________________________________
David Cohen, Chief Financial Officer
and Treasurer
/s/ Kevin L. Burkhardt
______________________________________
Kevin L. Burkhardt
-14-
<PAGE>
<PAGE>
EMPLOYMENT AGREEMENT, NON-COMPETITION
AND CONFIDENTIALITY AGREEMENT
THIS AGREEMENT made as of the 31 day of March 1997, by and between
Proflight Medical Response, Inc., a Colorado corporation, with its principal
office at 12420 E. Control Tower Road, Englewood, Colorado 80122 (the "Company")
and David Cohen, residing at 7136 South Hudson Court, Littleton, Colorado 80122
(the "Employee").
W I T N E S S E T H
WHEREAS, the Company is engaged in air ambulance transport services (the
"Business"); and
WHEREAS, the Company is desirous of employing the Employee on a
full-time basis as its Treasurer and Chief Financial Officer on the terms and
conditions hereinafter set forth; and
WHEREAS, the Employee is desirous and willing to accept such employment
on the terms and conditions hereinafter set forth.
NON, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties, the Company and the
Employee agree as follows:
<PAGE>
<PAGE>
1. Incorporation of Recitals.
The recitals set forth above are incorporated herein by reference and
made part of this Agreement.
2. Employment and Term.
(a) The Company hires and employs the Employee and the Employee agrees
to perform for the Company, the services set forth in Paragraph 3 hereof, on a
full-time basis under the terms and conditions hereinafter set forth.
(b) The term of this Agreement (the "Initial Term") shall commence on
the closing date of the Company's initial public offering (the "Commencement
Date") and shall continue until the third (3rd) anniversary of the Commencement
Date. This Agreement will automatically renew for successive one (1) year
periods upon the terms and conditions contained herein ("Renewal Option"),
unless the Employee has advised the Company and/or the Company has advised the
Employee, at least sixty (60) days prior to the end of the Initial Term or the
end of any other year extended by the Renewal Option, of either party's
intention not to extend the Agreement beyond any such term. Hereinafter, the
Initial Term and any successive one-year periods shall collectively be referred
to as the "Term."
-2-
<PAGE>
<PAGE>
3. Extent of Service.
(a) During the Term, the Employee shall serve on a full-time basis as
Treasurer and Chief Financial Officer and have the responsibility for the
financial management of the business of the Company.
(b) The Employee shall devote all of his business time, skill, labor and
attention to the affairs of the Company, and shall promptly and faithfully,
perform all services pertaining thereto that are or may hereafter be required of
him by the Company, provided that such services shall be consistent with his
position as Treasurer and Chief Financial Officer of the Company. Nothing in
this Agreement shall preclude the Employee from devoting time to managing his
personal investments, provided that such investments are not in competition with
the business of the Company and that such activities do not unreasonably
interfere with the performance of his duties hereunder.
4. Compensation.
(a) Base Compensation. As base compensation for the services rendered
hereunder, the Employee shall be paid a salary of $70,000.00 per annum. The
aforesaid salary shall initially be payable in 26 equal payments commencing two
(2) weeks from the Commencement Date or on such other basis, such as weekly
and/or monthly as determined by the Board of Directors of the Company.
-3-
<PAGE>
<PAGE>
(b) Bonuses and Additional Benefits. The Employee may be awarded bonuses
as agreed and set by the Board of Directors of the Company. Employee shall also
be entitled to, and shall be accorded, all rights and benefits under any
executive incentive plan (including the Company's Stock Option Plan), monetary
bonus plan, participation or extra compensation plan, pension plan, profit
sharing plan, disability insurance, health and major medical insurance policy or
policies, and any other plans or benefits that the Company may from time to time
provide for any officers generally during the Term. The Company shall accord the
Employee such rights and benefits on a basis no less favorable than any other
officers of comparable status of the Company or its subsidiaries or affiliates.
(c) Vacation and Sick Leave. For each year during which this Agreement
is in effect, Employee shall be entitled to vacation and sick leave benefits,
without a deduction of salary or other compensation in accordance with the
Company's standard policies. The Employee shall have no less than three (3)
weeks vacation per year, provided the Employee works full time each year for the
Company and under the terms of this Agreement. Such vacation shall be taken at
such time or times during such year as may be mutually agreed upon by the
Company and the Employee.
(d) Business Expenses. The Employee shall be authorized to incur
reasonable business expenses for promoting the business of the Company,
including expenditures for entertainment, and travel, within the guidelines as
are set by the Board of
-4-
<PAGE>
<PAGE>
Directors of the Company and which are consistent with the Internal Revenue
Service guidelines, provided that the Employee submits vouchers therefore in the
form reasonably satisfactory to the Company.
(e) Other Benefits. The Company will provide the Employee with fringe
benefits in the aggregate not less favorable than those received generally by
other officers of comparable status of the Company.
5. Life Insurance.
The Company, in its discretion may apply for and procure as owner and
for its own benefit insurance on the life of the Employee, in such amounts and
in such form or forms as the Company may choose.
6. Disability and Death of Employee.
(a) Disability. For purpose hereof, the term "disability" shall mean
the inability of the Employee to work for a period of six (6) consecutive months
or any 140 days in any 185 day period. In the event the Employee shall become
disabled, the Employee shall be entitled to all base compensation due and
payable pursuant Paragraph 4(a) for a period of three (3) months following the
date that he is determined to have become disabled pursuant to the previous
sentence. Such amounts payable shall be offset by any amounts paid to the
Employee under disability insurance policies maintained by the Company.
-5-
<PAGE>
<PAGE>
(b) Death. In the event of death during the Term, the normal monthly
compensation of the Employee shall be paid and all benefits the Employee was
then receiving will continue to be paid to the Employee's spouse or his
survivors for a period of six (6) months. In all other respects, this Agreement
shall be deemed to terminate upon death of the Employee.
7. Covenant Not To Compete
(a) The Employee hereby acknowledges and recognizes the highly
competitive and confidential nature of the Company's Business, and for the
consideration stated above, accordingly agrees that, unless the employee is
terminated without cause, during the entire period, commencing with the
Commencement Date, the Employee's employment by the Company, to include twelve
(12) months after the termination of the Employee's employment with the Company,
Employee will not directly or indirectly, in any capacity:
(i) Engage in any capacity in any business endeavor which has among its
purposes and/or endeavors air ambulance services or related businesses within
100 miles of any geographic area, city and/or state in which the Company's
services have been provided within the last year.
(ii) Induce employees of the Company, or any of its respective
subsidiaries, to terminate their employment or to engage in any activities
hereby prohibited to the Employee;
-6-
<PAGE>
<PAGE>
(iii) Contact, communicate or solicit any customer and/or any contact of
the Company derived from any customer list, customer lead, mail, printed
material or other information of the Company with any other party.
(iv) Discuss any activities, methods of operation, finances,
confidential practices and private business information of the Company with any
other party.
(b) It is expressly understood and agreed that although the Employee and
the Company consider the restrictions contained in clause (a) above to be
reasonable, for the purpose of reserving for the Company or any of its
subsidiaries, their good will and other proprietary rights, if a final judicial
determination is made by a Court having jurisdiction as to the restrictions
agreed to by the parties hereto the provisions of such restriction clauses by
this Agreement shall not be rendered void, but shall be deemed amended to apply
as to such maximum time and territory and to such other extent as such Court may
judicially determine or indicate to be reasonable.
(c) As to the reasonableness of the non-competition and restrictive
covenants contained herein, Employee further acknowledges and confesses that he
is capable of making a living in employment areas other than the business
engaged in by the Company, and, that the non-competition and restrictive
covenants contained herein will not in the least manner impair or interfere with
Employee from earning a living after Employee terminates his relations with the
Company.
-7-
<PAGE>
<PAGE>
8. Disclosure of Information.
The Employee acknowledges that the Company's trade secrets, private or
secret processes as they may exist from time to time, and confidential
information concerning their services, development, all technical information,
procurement and sales activities and procedures, promotion and pricing
techniques and credit and financial data concerning customers and other trade
secrets are valuable, special and unique assets of the Company and its
subsidiaries, access to and knowledge of which are essential to the performance
of the Employee's duties hereunder. In light of the highly competitive nature of
the industry in which the Company and its subsidiaries' business is conducted,
the Employee further agrees that all knowledge and information described in the
preceding sentence not in the public domain and heretofore or in the future
obtained by him as a result of his employment by the Company or its subsidiaries
shall be considered confidential information. In recognition of this fact, the
Employee agrees that he will not, during or after the Term, disclose any such
secrets, processes or information to any person or their entity for any reason
or purpose whatsoever, except as is necessary in the performance of his duties
as an employee of the Company or its subsidiaries and then only upon a written
confidentiality agreement in such form and content as requested by the Company
from time to time; nor shall the Employee make use of any such secrets,
processes or information (other than information in the public domain) for his
own purposes or for the
-8-
<PAGE>
<PAGE>
benefits of any person or other entity (except the Company and its subsidiaries)
under any circumstances during or after the Term.
9. Termination.
(a) The Employee's employment may be terminated at any time during the
Term for Cause (as hereinafter defined) by action of the Board of Directors of
the Company upon giving the Employee notice of such termination at least thirty
(30) days prior to the date upon which termination shall take effect. As used
herein, the term "Cause" shall mean any of the following events:
(i) The Employee's conviction of or plea of guilty or nolo
contendere to a crime involving moral turpitude.
(ii) The Employee's willful misconduct, or neglect of duties or
failure to act with respect to duties or actions previously communicated to the
Employee in writing by the Board of Directors of the Company.
If the Employee's employment is terminated under the provisions of this
Section 9(a) all rights of the Executive pursuant to Section 4 hereof shall
cease as of the effective date of such termination.
(b) Upon the termination of this Agreement, other than for cause, the
Company shall be responsible to pay the Executive the salary he was presently
earning and continue all benefits available to the Executive hereunder for an
additional one (1) year from the date of termination.
-9-
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<PAGE>
(c) Upon the termination of this Agreement, for any reason, the
Executive (or his estate) shall be entitled to receive payment for base
compensation earned and accrued prior to the date of such termination.
(d) If this Agreement shall be terminated as a result of a violation of
the terms hereof by the Company, the Executive shall be entitled to all remedies
and damages available under applicable law. The Executive shall not be required
to mitigate damages.
10. Arbitration
Any and all disputes between the Employee and the Company arising with
respect to the employment by the Company or any of its subsidiaries, including
any dispute arising under this Agreement, shall be submitted to binding,
expedited arbitration in Denver, Colorado under the then prevailing rules of the
American Arbitration Association.
11. Assignment.
This Agreement shall not be assignable by the Employee. This Agreement
is assignable by the Company and/or any of its subsidiaries to any successor in
interest of the Company or any of its subsidiaries.
-10-
<PAGE>
<PAGE>
12. Notices.
All notices, requests, demands and communications under or in respect
hereof shall be deemed to have been duly given and made if in writing (including
fax) if delivered by hand or by pre-paid registered or certified mail to the
party concerned at its address appearing below or sent by fax to the number and
with a copy as indicated below. Service shall be deemed to be effective: so far
as delivery by hand is concerned when handed to the recipient or left at the
recipient's address; by post two days after posting; by fax on the same day as
dispatch and receipt is confirmed. The said addresses and fax numbers are as
follows:
If to the Employee:
David Cohen
7136 South Hudson Court
Littleton, Colorado 80112
Tel: (303) 721-7765
Fax:
If to the Company:
Proflight Medical Response, Inc.
12420 E Control Tower Road
Englewood, Colorado 80112
Attn: Kevin L. Burkhardt
Tel: 800-949-5387
Fax: 303-799-1367
13. Complete Agreement; Amendments
This Agreement contains the full and complete understanding of the
parties pertaining to the subject matter hereof and supersedes all prior and
contemporaneous agreements and
-11-
<PAGE>
<PAGE>
understandings of the parties in connection therewith. No amendment or
modification of this Agreement shall be valid unless made pursuant to an
instrument signed by the Company and the Employee.
14. Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Colorado.
15. Severability.
If any one or more of the terms, provisions, covenants or restrictions
of this Agreement shall be determined by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated. If any one or
more of the provisions contained in this Agreement shall for any reason be
determined by a court of competent jurisdiction to be excessively broad or vague
as to duration, geographical scope, activity or subject or otherwise, this
Agreement shall be construed by limiting, reducing or defining it, so as to be
enforceable to the fullest extent compatible with then applicable law.
-12-
<PAGE>
<PAGE>
16. Headings.
The descriptive headings of the several Paragraphs of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
17. Prior Employment Agreements.
This Agreement supercedes all prior employment agreements between the
parties.
18. Waiver of Breach.
The waiver by the Company or Employee of a breach of any provision of
this Agreement by the Company or the Employee shall not operate or be construed
as a waiver of any subsequent breach by the Company or the Employee.
19. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be an original, and all of which shall constitute one and the same
agreement.
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<PAGE>
<PAGE>
IN WITNESS WHEREOF the parties hereto have duly executed this Agreement
as of the day and year first above written.
PROFLIGHT MEDICAL RESPONSE, INC.
By: /s/ Kevin L. Burkhardt
______________________________________
Kevin L. Burkhardt, Chief Executive
Officer and President
/s/ David Cohen
______________________________________
David Cohen
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<PAGE>
<PAGE>
EMPLOYMENT AGREEMENT, NON-COMPETITION
AND CONFIDENTIALITY AGREEMENT
THIS AGREEMENT made as of the 31 day of March 1997, by and between
Proflight Medical Response, Inc., a Colorado corporation, with its principal
office at 12420 E. Control Tower Road, Englewood, Colorado 80122 (the "Company")
and Jane S. Burkhardt, residing at 20417 Sagewood Lane, Parker, Colorado 80134
(the "Employee").
W I T N E S S E T H
WHEREAS, the Company is engaged in air ambulance transport services (the
"Business"); and
WHEREAS, the Company is desirous of employing the Employee on a
part-time basis as its Secretary and Medical and Legal Coordinator on the terms
and conditions hereinafter set forth; and
WHEREAS, the Employee is desirous and willing to accept such employment
on the terms and conditions hereinafter set forth.
NON, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby
<PAGE>
<PAGE>
acknowledged by the parties, the Company and the Employee agree as follows:
1. Incorporation of Recitals.
The recitals set forth above are incorporated herein by reference and
made part of this Agreement.
2. Employment and Term.
(a) The Company hires and employs the Employee and the Employee agrees
to perform for the Company, the services set forth in Paragraph 3 hereof, on a
part-time basis under the terms and conditions hereinafter set forth.
(b) The term of this Agreement (the "Initial Term") shall commence on
the closing date of the Company's initial public offering (the "Commencement
Date") and shall continue until the third (3rd) anniversary of the Commencement
Date. This Agreement will automatically renew for successive one (1) year
periods upon the terms and conditions contained herein ("Renewal Option"),
unless the Employee has advised the Company and/or the Company has advised the
Employee, at least sixty (60) days prior to the end of the Initial Term or the
end of any other year extended by the Renewal Option, of either party's
intention not to extend the Agreement beyond any such term. Hereinafter, the
Initial Term and any successive one-year periods shall collectively be referred
to as the "Term."
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<PAGE>
3. Extent of Service.
(a) During the Term, the Employee shall serve on a part-time
basis as Secretary and Medical and Legal Coordinator and have the responsibility
for __________________________ of the business of the Company.
(b) The Employee shall devote a minimum of 20 hours per week to the
affairs of the Company, and shall promptly and faithfully, perform all services
pertaining thereto that are or may hereafter be required of her by the Company,
provided that such services shall be consistent with her position as Secretary
and Medical and Legal Coordinator of the Company. Nothing in this Agreement
shall preclude the Employee from devoting time to managing her personal
investments, provided that such investments are not in competition with the
business of the Company and that such activities do not unreasonably interfere
with the performance of her duties hereunder.
4. Compensation.
(a) Base Compensation. As base compensation for the services rendered
hereunder, the Employee shall be paid a salary of $36,000.00 per annum. The
aforesaid salary shall initially be payable in 26 equal payments commencing two
(2) weeks from the Commencement Date or on such other basis, such as weekly
and/or monthly as determined by the Board of Directors of the Company.
-3-
<PAGE>
<PAGE>
(b) Bonuses and Additional Benefits. The Employee may be awarded bonuses
as agreed and set by the Board of Directors of the Company. Employee shall also
be entitled to, and shall be accorded, all rights and benefits under any
executive incentive plan (including the Company's Stock Option Plan), monetary
bonus plan, participation or extra compensation plan, pension plan, profit
sharing plan, disability insurance, health and major medical insurance policy or
policies, and any other plans or benefits that the Company may from time to time
provide for any officers generally during the Term. The Company shall accord the
Employee such rights and benefits on a basis no less favorable than any other
officers of comparable status of the Company or its subsidiaries or affiliates.
(c) Vacation and Sick Leave. For each year during which this Agreement
is in effect, Employee shall be entitled to vacation and sick leave benefits,
without a deduction of salary or other compensation in accordance with the
Company's standard policies. The Employee shall have no less than two(2) weeks
vacation per year, provided the Employee works a minimum of 20 hours per week
for each year for the Company and under the terms of this Agreement. Such
vacation shall be taken at such time or times during such year as may be
mutually agreed upon by the Company and the Employee.
(d) Other Benefits. The Company will provide the Employee with fringe
benefits in the aggregate not less favorable than
-4-
<PAGE>
<PAGE>
those received generally by other officers of comparable status of the Company.
5. Covenant Not To Compete
(a) The Employee hereby acknowledges and recognizes the highly
competitive and confidential nature of the Company's Business, and for the
consideration stated above, accordingly agrees that, unless the employee is
terminated without cause, during the entire period, commencing with the
Commencement Date, the Employee's employment by the Company, to include twelve
(12) months after the termination of the Employee's employment with the Company,
Employee will not directly or indirectly, in any capacity:
(i) Engage in any capacity in any business endeavor which has among its
purposes and/or endeavors air ambulance services or related businesses within
100 miles of any geographic area, city and/or state in which the Company's
services have been provided within the last year.
(ii) Induce employees of the Company, or any of its respective
subsidiaries, to terminate their employment or to engage in any activities
hereby prohibited to the Employee;
(iii) Contact, communicate or solicit any customer and/or any contact of
the Company derived from any customer list, customer lead, mail, printed
material or other information of the Company with any other party.
-5-
<PAGE>
<PAGE>
(iv) Discuss any activities, methods of operation, finances,
confidential practices and private business information of the Company with any
other party.
(b) It is expressly understood and agreed that although the Employee and
the Company consider the restrictions contained in clause (a) above to be
reasonable, for the purpose of reserving for the Company or any of its
subsidiaries, their good will and other proprietary rights, if a final judicial
determination is made by a Court having jurisdiction as to the restrictions
agreed to by the parties hereto the provisions of such restriction clauses by
this Agreement shall not be rendered void, but shall be deemed amended to apply
as to such maximum time and territory and to such other extent as such Court may
judicially determine or indicate to be reasonable.
(c) As to the reasonableness of the non-competition and restrictive
covenants contained herein, Employee further acknowledges and confesses that she
is capable of making a living in employment areas other than the business
engaged in by the Company, and, that the non-competition and restrictive
covenants contained herein will not in the least manner impair or interfere with
Employee from earning a living after Employee terminates her relations with the
Company.
6. Disclosure of Information.
The Employee acknowledges that the Company's trade secrets, private or
secret processes as they may exist from time to time,
-6-
<PAGE>
<PAGE>
and confidential information concerning their services, development, all
technical information, procurement and sales activities and procedures,
promotion and pricing techniques and credit and financial data concerning
customers and other trade secrets are valuable, special and unique assets of the
Company and its subsidiaries, access to and knowledge of which are essential to
the performance of the Employee's duties hereunder. In light of the highly
competitive nature of the industry in which the Company and its subsidiaries'
business is conducted, the Employee further agrees that all knowledge and
information described in the preceding sentence not in the public domain and
heretofore or in the future obtained by him as a result of her employment by the
Company or its subsidiaries shall be considered confidential information. In
recognition of this fact, the Employee agrees that she will not, during or after
the Term, disclose any such secrets, processes or information to any person or
their entity for any reason or purpose whatsoever, except as is necessary in the
performance of her duties as an employee of the Company or its subsidiaries and
then only upon a written confidentiality agreement in such form and content as
requested by the Company from time to time; nor shall the Employee make use of
any such secrets, processes or information (other than information in the public
domain) for her own purposes or for the benefits of any person or other entity
(except the Company and its subsidiaries) under any circumstances during or
after the Term.
-7-
<PAGE>
<PAGE>
7. Termination.
(a) The Employee's employment may be terminated at any time during the
Term for Cause (as hereinafter defined) by action of the Board of Directors of
the Company upon giving the Employee notice of such termination at least thirty
(30) days prior to the date upon which termination shall take effect. As used
herein, the term "Cause" shall mean any of the following events:
(i) The Employee's conviction of or plea of guilty or nolo
contendere to a crime involving moral turpitude.
(ii) The Employee's willful misconduct, or neglect of duties or
failure to act with respect to duties or actions previously communicated to the
Employee in writing by the Board of Directors of the Company.
If the Employee's employment is terminated under the provisions of this
Section 9(a) all rights of the Executive pursuant to Section 4 hereof shall
cease as of the effective date of such termination.
(b) Upon the termination of this Agreement, other than for cause, the
Company shall be responsible to pay the Executive the salary she was presently
earning and continue all benefits available to the Executive hereunder for an
additional one (1) year period from the date of termination.
-8-
<PAGE>
<PAGE>
(c) Upon the termination of this Agreement, for any reason, the
Executive (or her estate) shall be entitled to receive payment for base
compensation earned and accrued prior to the date of such termination.
(d) If this Agreement shall be terminated as a result of a violation of
the terms hereof by the Company, the Executive shall be entitled to all remedies
and damages available under applicable law. The Executive shall not be required
to mitigate damages.
8. Arbitration
Any and all disputes between the Employee and the Company arising with
respect to the employment by the Company or any of its subsidiaries, including
any dispute arising under this Agreement, shall be submitted to binding,
expedited arbitration in Denver, Colorado under the then prevailing rules of the
American Arbitration Association.
9. Assignment.
This Agreement shall not be assignable by the Employee. This Agreement
is assignable by the Company and/or any of its subsidiaries to any successor in
interest of the Company or any of its subsidiaries.
-9-
<PAGE>
<PAGE>
10. Notices.
All notices, requests, demands and communications under or in respect
hereof shall be deemed to have been duly given and made if in writing (including
fax) if delivered by hand or by pre-paid registered or certified mail to the
party concerned at its address appearing below or sent by fax to the number and
with a copy as indicated below. Service shall be deemed to be effective: so far
as delivery by hand is concerned when handed to the recipient or left at the
recipient's address; by post two days after posting; by fax on the same day as
dispatch and receipt is confirmed. The said addresses and fax numbers are as
follows:
If to the Employee:
Jane S. Burhkardt
20417 Sagewood Lane
Parker, Colorado 80134
Tel: (303) 841-5570
Fax:
If to the Company:
Proflight Medical Response, Inc.
12420 E Control Tower Road
Englewood, Colorado 80112
Attn: Kevin L. Burkhardt
Tel: 800-949-5387
Fax: 303-799-1367
11. Complete Agreement; Amendments
This Agreement contains the full and complete understanding of the
parties pertaining to the subject matter hereof and supersedes all prior and
contemporaneous agreements and
-10-
<PAGE>
<PAGE>
understandings of the parties in connection therewith. No amendment or
modification of this Agreement shall be valid unless made pursuant to an
instrument signed by the Company and the Employee.
12. Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Colorado.
13. Severability.
If any one or more of the terms, provisions, covenants or restrictions
of this Agreement shall be determined by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated. If any one or
more of the provisions contained in this Agreement shall for any reason be
determined by a court of competent jurisdiction to be excessively broad or vague
as to duration, geographical scope, activity or subject or otherwise, this
Agreement shall be construed by limiting, reducing or defining it, so as to be
enforceable to the fullest extent compatible with then applicable law.
-11-
<PAGE>
<PAGE>
14. Headings.
The descriptive headings of the several Paragraphs of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
15. Prior Employment Agreements.
This Agreement supercedes all prior employment agreements between the
parties.
16. Waiver of Breach.
The waiver by the Company or Employee of a breach of any provision of
this Agreement by the Company or the Employee shall not operate or be construed
as a waiver of any subsequent breach by the Company or the Employee.
17. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be an original, and all of which shall constitute one and the same
agreement.
-12-
<PAGE>
<PAGE>
IN WITNESS WHEREOF the parties hereto have duly executed this Agreement
as of the day and year first above written.
PROFLIGHT MEDICAL RESPONSE, INC.
By: /s/ Kevin L. Burkhardt
______________________________________
Kevin L. Burkhardt, Chief Executive
Officer and President
/s/ Jane S. Burkhardt
______________________________________
Jane S. Burkhardt
-13-
<PAGE>
<PAGE>
CONSULTING AND NON-COMPETITION AGREEMENT
CONSULTING AND NON-COMPETITION AGREEMENT made and entered into as of
this day of April 8, 1997 (the "Consulting Agreement"), by and between
PROFLIGHT MEDICAL RESPONSE, INC., a corporation organized under the laws of
the state of Colorado, with its principal offices at 12420 E. Control Tower
Road, Englewood, Colorado 80122 (the "Company") and LOUIS R. CAPECE,
JR., residing at 10845 Bayshore Drive, Windermere, Florida 34786 (the
"Consultant").
WHEREAS, the Company is engaged in air ambulance transport services
("the Business"); and
WHEREAS, the Company is desirous of engaging the Consultant on the terms
and conditions hereinafter set forth; and
WHEREAS, the Consultant is desirous and willing to provide such services
as hereinafter set forth.
NOW, THEREFORE, the Company and Consultant, each intending to be legally
bound hereby agree as follows:
1
<PAGE>
<PAGE>
1. ENGAGEMENT.
The Company agrees to engage Consultant and Consultant agrees to provide
consulting services to the Company as set forth in Section 3 hereof.
2. TERM.
The term of this Consulting Agreement shall commence on the closing date
of the Company's initial public offering (the "Commencement Date") and shall
continue until the third anniversary of the Commencement Date unless this
Consulting Agreement is terminated sooner as hereinafter provided. This
Consulting Agreement may be canceled by either party after the first year upon
sixty (60) days prior notice.
3. EXTENT OF SERVICES.
During the term, the Consultant shall be required to devote a minimum of
100 hours per month to the performance of Consulting services hereunder
concerning Company management. Nothing in this Consulting Agreement shall
preclude the consultant from devoting time to managing his personal investments,
provided that such investments are not in competition with the business of the
Company and that such activities do not unreasonably interfere with the
performance of his duties hereunder.
2
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<PAGE>
4. COMPENSATION.
The Consultant shall be paid an annual consulting fee of Fifty Two
Thousand Dollars ($52,000) payable in 26 equal payments commencing two (2) weeks
from the Commencement Date.
5. REIMBURSEMENT OF EXPENSES.
The Corporation shall reimburse the Consultant for all reasonable
expenses that Consultant shall incur on behalf of the Company in performing
services under this Consulting Agreement provided that said expenses are
approved by the Company beforehand and the Consultant submits receipts in form
reasonably satisfactory to the Company.
6. LIFE INSURANCE.
The Corporation, in its discretion, may apply for and procure as owner
and for its own benefit insurance on the life of the Consultant, in such amounts
and in such form or forms as the Corporation may choose.
7. COVENANT NOT TO COMPETE.
Consultant hereby acknowledges and recognizes the highly competitive and
confidential nature of the Company's business, and for the consideration stated
above, accordingly agrees that he will not for a period of five years following
the Commencement date, directly or indirectly:
3
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<PAGE>
(a) engage in any capacity in any business endeavor which has
among its purposes and/or endeavors air ambulance services within
100 miles of any geographical area, city and/or state in which
the Company's services have been provided within the last year;
(b) induce employees of the Company, or any of its respective
subsidiaries, to terminate their employment or to engage in any
activities hereby prohibited to the Consultant;
(c) contact, communicate or solicit any customer list, customer
lead, mail, printed material or other information of the Company
with any other party;
(d) discuss any activities, methods of operation, finances,
confidential practices and private business information of the
Company with any other party, except as necessary and reasonable
to the performance of the Consultant's duties in the ordinary
course of his business.
It is expressly understood and agreed that although Consultant and the
Company consider the covenant not to
4
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<PAGE>
compete to be reasonable, if a final judicial determination is made by a Court
having jurisdiction as to the restrictions agreed to by the parties hereto, the
provisions of such restriction clauses by this Consulting Agreement shall not be
rendered void, but shall be deemed amended to apply as to such maximum time and
territory and to such other extent as such Court may judicially determine or
indicate to be reasonable.
Consultant further represents that he is capable of making a living in
areas other than the air ambulance business engaged in by the Company, and that
the non-competition and restrictive covenants contained herein will not in the
least manner impair or interfere with Consultant's ability to earn a living.
Notwithstanding the foregoing, in the event the Company is in material
default of this Consulting Agreement, the provisions of this Section 7 shall be
deemed null and void.
8. CONFIDENTIALITY.
The Consultant acknowledges that the Company's trade secrets, private or
secret processes as they may exist from time to time, and confidential
information concerning their services, development, all technical information,
procurement and sales activities and procedures, promotion and pricing
techniques and credit and financial data concerning customers and other trade
secrets are valuable, special and unique
5
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<PAGE>
assets of the Company and its subsidiaries, access to and knowledge of which are
essential to the performance of the Consultant's duties hereunder. In light of
the highly competitive nature of the industry in which the Company and its
subsidiaries' business is conducted, the Consultant further agrees that all
knowledge and information described in the preceding sentence not in the public
domain and heretofore or in the future obtained by him as a result his
consulting duties with the Company or its subsidiaries shall be considered
confidential information. In recognition of this fact, the Consultant agrees
that he will not, during or for five (5) years after the Term, disclose any such
secrets, processes or information to any person or entity for any reason or
purpose whatsoever, except as is necessary in the performance of his duties as a
consultant of the Company or its subsidiaries and then only upon a written
confidentiality agreement in such form and content as requested by the Company
from time to time; nor shall the Consultant make use of any such secrets,
processes or information (other than information in the public domain) for his
own purposes or for the benefits of any person or other entity (except the
Company and its subsidiaries) under any circumstances during or for five (5)
years after the Term.
6
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<PAGE>
9. COMPANY'S RIGHT TO APPROVE TRANSACTIONS.
The Company expressly retains the right to approve, in its sole
discretion, each and every transaction introduced by Consultant that involves
the Company as a party to any agreement. The Consultant and the Company mutually
agree that Consultant is not authorized to enter into any agreements on behalf
of the Company.
10. CONSULTANT NOT AN AGENT OR EMPLOYEE.
The Consultant's obligations under this Consulting Agreement consist
solely of the services described herein. In no event shall the Consultant be
considered to be acting as an employee or agent of the Company or otherwise
representing or binding the Company. For the purposes of this Consulting
Agreement, Consultant is an independent contractor. All final decisions with
respect to acts of the Company or its affiliates, whether or not made pursuant
to or in reliance on information or advice furnished by the Consultant
hereunder, shall be those of the Company or such affiliates and Consultant
shall, under no circumstances, be liable for any expenses incurred or losses
suffered by the Company as a consequence of such actions. Consultant agrees that
all of his work product relating to the services to be rendered pursuant to this
Consulting Agreement, shall become the exclusive property of the Company.
7
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<PAGE>
11. TERMINATION.
Notwithstanding anything herein to the contrary, this Consulting
Agreement shall automatically terminate upon the death of the Consultant.
12. ARBITRATION.
Any and all disputes between the Consultant and the Company arising
under this Consulting Agreement, shall be submitted to binding, expedited
arbitration in Denver, Colorado under the then prevailing rules of the American
Arbitration Association.
13. ASSIGNMENT.
This Consulting Agreement shall not be assignable by the Consultant.
This Consulting Agreement is assignable by the Company and/or any of its
subsidiaries to any successor in interest of the Company or any of its
subsidiaries, provided any such assignment shall not result in a material change
in the ability of the assignee to perform the assignor's obligations hereunder.
14. NOTICES.
All notices, requests, demands and communications under or in respect
hereof shall be deemed to have been duly given and made if in writing (including
fax) if delivered by hand or by pre-paid registered or certified mail to the
party
8
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<PAGE>
concerned at its address appearing below or sent by fax to the number and with a
copy as indicated below. Service shall be deemed to be effective: so far as
delivery by hand is concerned when handed to the recipient or left at the
recipient's address; by post two days after posting; by fax on the same day as
dispatch and receipt is confirmed. The said addresses and fax numbers are as
follows:
If to the Consultant:
Louis R. Capece, Jr.
10845 Bayshore Drive
Windermere, FL 34786
Tel: (407) 876-9307
Fax: (407) 876-9307
If to the Company:
Proflight, Inc.
12420 E Control Tower Road
Englewood, Colorado 80112
Attention: Kevin L. Burkhardt
Tel: 800-949-5387
Fax: 303-799-1367
15. COMPLETE AGREEMENT; AMENDMENTS.
This Consulting Agreement contains the full and complete understanding
of the parties pertaining to the subject matter hereof and supersedes all prior
and contemporaneous agreements and understandings of the parties in connection
therewith. No amendment or modification of this Consulting Agreement shall be
valid unless made pursuant to an instrument signed by the Company and the
Consultant.
9
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<PAGE>
16. GOVERNING LAW.
This Consulting Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado.
17. SEVERABILITY.
If any one or more of the terms, provisions, covenants or restrictions
of this Consulting Agreement shall be determined by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Consulting Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated. If any one or more of the provisions contained in this Consulting
Agreement shall for any reason be determined by a court of competent
jurisdiction to be excessively broad or vague as to duration, geographical
scope, activity or subject or otherwise, this Consulting Agreement shall be
construed by limiting, reducing or defining it, so as to be enforceable to the
fullest extent compatible with then applicable law.
18. HEADINGS.
The descriptive headings of the several Paragraphs of this Consulting
Agreement are inserted for convenience only and do not constitute a part of this
Consulting Agreement.
10
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<PAGE>
19. WAIVER OF BREACH.
The waiver by the Company or the Consultant of a breach of any provision
of this Consulting Agreement by the Company or the Consultant shall not operate
or be construed as a waiver of any subsequent breach by the Company or the
Consultant.
20. COUNTERPARTS.
This Consultant Agreement may be executed in any number of counterparts,
each of which shall be an original, and all of which shall constitute one and
the same agreement.
IN WITNESS WHEREOF the parties hereto have duly executed this Consulting
Agreement as of the day and year first above written.
Proflight Medical Response, Inc.
By /s/ Kevin L. Burkhardt
______________________________
Kevin L. Burkhardt, President
By /s/ Louis R. Capece, Jr.
_______________________________
Louis R. Capece, Jr., Consultant
11
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<PAGE>
THE BUSINESS MANAGER
AGREEMENT WITH BUSINESSES AND PROFESSIONALS
TO: Central National Bank FROM: Air Response, Inc.
Canajoharie P.O. Box 109
24 Church Street Fort Plain, NY 13339
Canajoharie, New York 13317
(The "Bank") (The "Business")
The Business named above confirms its understanding of the following terms
by which, when accepted by the Bank, the Business will receive payment for sales
or services to Customers pursuant to the Bank's Business Manager financing plan.
SECTION 1: DEFINITIONS
1.1 "Account" means an account of the customer with the Business, any part of
which is assigned to the Bank by the Agreement.
1.2 "Credit Memo" means the form evidencing a credit, other than a credit
arising from a payment to a customer's account.
1.3 "Customer" means a debtor obligated on receivables which arose from goods
the Business sold or services it rendered to the customer.
1.4 "Discount" means a fixed charge equal to two point eight five
percent (2.85%) of the face amount of each acceptable sales slip the Business
delivers to the Bank. The discount may be periodically reviewed and adjusted at
the Bank's sole discretion leased upon volume, delinquency and current economic
conditions.
1.5 "Face Amount" means the cash price of the goods the Business sold and/or
services it rendered, plus any taxes imposed upon such transaction.
1.6 "Finance Service Charge" means a monthly charge equal to one and one-half
percent (1.5%) of the receivables which a customer does not remit to the Bank
within thirty (30) days of invoicing therefor, which charge shall be billed to,
and payable by, the customer. Payment of the finance service charge shall inure
to, and be an asset of, the Bank.
1.7 "Installment Credit Agreement" means an Installment Credit Agreement
executed by a customer.
"Net Amount" of a receivable means the gross amount of receivable, less the
discount, reserves, returns, credits or allowances of any nature at any time
issued, owing, granted or outstanding.
1.9 "Obligations" means all of the Business' obligations to the Bank, whether
or not pursuant to this agreement, under any note, contract, guaranty,
accommodations or otherwise, however and whenever created, arising or evidenced,
whether direct or indirect, absolute or contingent, now or hereafter existing or
due.
<PAGE>
<PAGE>
1.10 "Receivable" means all accounts, inventory, instruments, contract rights,
chattel paper, documents, and general intangibles arising from the Business'
sale of goods or rendering of services, and the proceeds thereof, and all
security and guarantees therefor, whether now existing or hereafter created,
which are acceptable to the Bank, in its sole discretion.
1.11 "Sales Slip" means the form of sales slip, dated the day of, and
evidencing, to the satisfaction of the Bank, a sale of goods or rendering of
services to a customer.
SECTION 2: SALE; PURCHASE PRICE BILLING; AND COLLECTION; RESERVE
2.1 Assignment and Sale - The Business hereby absolutely and without condition
assigns, transfers and sells to the Bank as absolute owner, with full recourse,
the Business' entire interest in such of its currently outstanding receivables
as are described on attached Exhibit 2.1, as well as its future receivables
represented by sales slips it delivers to the Bank, and which the Bank elects to
purchase in its sole discretion, in accordance with the terms and conditions
hereof.
2.2 Purchase Price -The purchase price of the receivables is to be the net
amount thereof, which shall be payable by credit to the Business primary account
with the Bank on or before the next banking day after delivery to the Bank of
acceptable sales slips; provided, however, that the Business shall be liable to
the Bank for any purchased receivables which are not collected by the Bank in
accordance with the terms and conditions hereof; as further consideration for
the Bank's purchase of receivables, the Business shall cause Louis R. Capece,
Jr. to execute a guaranty of the Business' liabilities under this agreement,
which guaranty shall be in such form and on such terms as the Bank reasonably
requires.
2.3 Documentation - The Business will provide the Bank with an installment
credit agreement, sales slips and credit memos (if applicable) related to all
future sales creating receivables of customers, and of such other documents and
proof of delivery of goods or rendering of services as the Bank may reasonably
require. As to the receivables described in Exhibit 2.1, the invoicing of
customers shall be conclusive evidence of assignment and sales thereof, and any
invoice the Business sends will clearly indicate that the related receivables
have been assigned, sold and are payable to the Bank only.
2.4 Billing Process - The Business shall deliver the documentation referred to
in Section 2.3 to the Bank no later than five (5) business days prior to the
Business scheduled billing date. The Bank will send a monthly statement to all
customers itemizing their account activity during the preceding billing period.
The Business will (and the Bank shall have the right to) instruct customers to
make payments directly to the Bank, and, regardless by whom received, all
payments will be applied on a first-in, first-out basis. Payment will be deemed
made when received by the Bank. All variations, modifications or extensions of
indebtedness on receivables assigned to the Bank will be made only by the Bank.
Nothing in this Agreement authorizes the Business to collect receivables once
assigned, but in the event the Business does so collect assigned receivables, it
will receive such receivables in trust for the Bank and will remit the same to
the Bank, properly endorsed, no later than the next Banking day. The Business
will pay to the Bank any finance service charges incurred by a customer because
of delay on the Business' part in delivering payments or credit memos to the
Bank.
2.5 Reserve - The Bank shall retain a portion of the sums payable to the
Business in consideration or the purchase of receivables, including receivables
previously purchased, as a reserve to provide for delinquency of the receivables
or for application by the Bank in the event of a default. The amount of the
reserve shall initially equal ten percent (10.0%) of each receivable purchased
(unless the receivable purchased is delinquent, as hereinafter defined, in which
case the initial reserve for the delinquent receivable will be set in accordance
with the schedule set forth below; provided, however, that the Bank may adjust
the initial reserve percentage from time to time, in its reasonable discretion.
A
<PAGE>
<PAGE>
receivable shall be deemed "delinquent" for purposes of determining reserves it
is not paid within thirty (30) days of the Bank's billing of a customer
therefor. Reserves shall be increased at the end of each thirty-day billing
cycle for the Business in accordance with the following schedule
Aggregate Business Receivables Reserve Percentage
with Delinquencv Period of Increased to
1 - 90 Days Ten Percent (10%)
Over 91 Days One Hundred Percent (100%)
The Business recognizes understands and agrees that the net amount of
future receivables purchased by the Bank may be reduced as a result of an
increase in the reserves attributable to a previously purchased and aging
receivable.
SECTION 3: REASSIGNMENT OF RECEIVABLES; SECURITY INTEREST
3.1 Current Receivables - The Bank may reassign and charge back to the Business
all or any portion of the Business purchased and currently outstanding
receivables from any one or more customers ninety (90) days or more from the
first billing by the Bank therefor, (unless by the terms of the Business
agreement with the customer obligate to pay these receivables or the installment
credit agreement between the Business and that customer, payment is deferred and
the Bank agreed or agrees to the terms of such deferral) or if any dispute
arises with a customer regarding his or her receivables (including, without
limitation, any alleged deduction, defense, offset or counterclaim), as the case
may be; provided, however, that no such reassignment shall be undertaken or
executive unless and until the Bank has been paid for the unpaid balance of the
receivable, as provided in Section 3.3.
3.2 Receivables Arising From Sales Slips - In addition to a reassignment under
Section 3.1, the Bank may reassign to the Business all outstanding receivables
that arise from the Business' sale of sales slips of the Bank pursuant to this
agreement:
(a) upon a default, as defined in Section 8, or
(b) upon the termination of this agreement; provided, however, that no
such reassignment shall be undertaken or effective unless and until the
Bank has been paid for the unpaid balance of the receivable in question,
as further set forth in Section 3.3.
Effect of Reassignment - Prior to reassigning any receivable, the Bank may
charge against the Business reserve (which reserve includes funds from other
receivables not the subject of the reassignment) or other account with the Bank,
an amount equal to the unpaid balance of the receivables proposed to be
reassigned, including accrued and unpaid financial service charges to the date
of such reassignment. If the reserves are inadequate to fully pay the Bank all
amounts owed with respect to the receivables proposed to be reassigned, the
Business shall be deemed to be in default under Section 3.1
3.4 Security Interest - The Business hereby grants the Bank a security interest
in its present and future receivables, all reserves created hereunder and all
return, repossessed, and reclaimed goods and related books and records, to
secure all of the Business obligations. The Business agrees to execute
appropriate UCC-1 financing and other related statements that the Bank may
consider necessary or
<PAGE>
<PAGE>
desirable to create, preserve, continue, perfect or validate any security
interest granted hereunder or which the Bank may consider necessary or desirable
to exercise or enforce its rights hereunder with respect to such security
interest. Without limiting the generality of the foregoing, the Bank is
authorized: to file with respect to the collateral identified in this Section
3.4 one or more financing statements, continuation statements or other documents
without the signature of the Business and to name therein the Business as debtor
and Bank as secured party; and correct and complete or cause to be corrected or
completed, any financing statements, continuation statements or other such
documents as have been filed naming the Business as debtor and the Bank as
secured party. The Business further sells and assigns to the Bank all of the
Business rights as an unpaid vendor or lienor, all of its related rights of
stoppage in transit, replevin and reclamation and rights against third parties,
and the Business agrees to cooperate with the Bank in exercising these rights.
SECTION 4: REPRESENTATTONS, WARRANTIES AND COVENANTS
4.1 Representations and Warranties - The Business represents and warrants that
it is fully authorized to enter into this agreement and to perform hereunder,
and that this agreement constitutes a legal, valid and binding obligation; that
the Business is solvent and in good standing in the State of New York; that its
receivables are, and covenants that they will be, at the time of their creation,
bona file and existing obligations of customers of the Business arising out of
its sales or services free and clear of all security interests, liens, and
claims whatsoever of third parties; that the Business inventory is not subject
to any security interest, lien or encumbrance whatsoever, and that the Business
will not permit it to become so encumbered without the Bank's prior written
consent. Neither the execution and delivery of this Agreement by the Business,
nor the consummation of the transactions contemplated by this agreement, nor the
performance by the Business of its obligations under this agreement will do any
of the following:
(i) To the knowledge of the Business, violate or otherwise conflict with
any provision or law or any regulation, judgment or order of any federal or
state court or governmental agency or authority; or
(ii) violate or otherwise conflict with any agreement or other
instrument to which the Business is a party or by which the Business or any of
the assets of the business are bound.
There are no actions, suits, proceedings, or governmental investigations
pending or, to the knowledge of the Business, threatened against the Business or
affecting any of the assets of the Business in any court or before any
arbitrator, governmental agency, or administrative body which, if adversely
determined, might, individually or in the aggregate, adversely affect the
ability of the Business to perform its obligations under this Agreement.
4.2 Covenants - The Business covenants that it will allow the Banks to review,
or will supply, financial information and necessary documentation on the
Business or on any customer any customer upon the bank's request, and with
respect to each receivable as it arises:
a) The Business will have made delivery of the goods or will have
rendered the services ordered along with a copy of the sales slip, and
the goods or services will have been accepted;
b) The Business will have preserved and will continue to preserve any
liens and any rights to liens available by virtue of the sales or
services;
c) The customer will not be the Business affiliate;
<PAGE>
<PAGE>
d) The bank's copy of the sales slip will be genuine and will comply
with this agreement;
e) The Business will have no knowledge of any dispute or potential
dispute that may impair the validity of the transaction of the
customer's obligation to pay the related receivable in accordance with
its terms;
f) The Business will have the right to render the services or to sell
the goods creating the receivable, and will do so in accordance with all
applicable laws; and
g) The Business will have paid or provided for the payment of all taxes
arising from the transaction creating the receivable. So long as the
obligations shall remain outstanding and unpaid, the Business shall not,
without the written consent of the Bank:
a) Sell, convey, assign or otherwise dispose of all or
substantially all of its property or assets, or interests
therein, or merge or enter into any partnership, corporation or
other entity; or
b) Cause or permit the sale, assignment, transfer or other
disposition of any of the collateral identified in Section 3.4 or
the granting of any security interest in any of such collateral.
SECTION 5: FORMS AND PROCEDURES; RESPONSIBILITY FOR USE
5.1 Forms and Procedures - The Bank will furnish any and all forms to be used in
connection with this agreement, including without limitation, sales slips,
credit memos, advertising materials and form of installment credit agreements.
The Business will only use forms supplier or approved by the Bank and will
follow all procedures in connection with the use of such Forms which are
satisfactory to the Bank.
5.2 Responsibility - The Business will be solely responsible for the adequacy,
completeness and accuracy of the raw data and its preparation in the form
required and transported to the Bank, and will indemnify and hold the Bank (or
anyone else providing the processing services) harmless from any claim or
liability sustained by virtue of acting in reliance upon data furnished by the
Business. The Business understands that the form of installment credit agreement
the Bank supplies to the Business should be reviewed by the Business local
counsel, as the Bank makes no representations or warranty as to its
enforceability.
SECTION 6: POWER OF ATTORNEY
The Business appoints the Bank as its attorney-in-fact to receive, open
and dispose of all mail addressed to the Business pertaining to receivables; to
endorse the Business name upon any notes, acceptances, checks, drafts, money
orders, and other evidences of payment of receivables that may come into the
Bank's possession, and to deposit or otherwise collect the same; and to do all
other acts and things necessary to carry out the terms of this agreement. This
power, being coupled with an interest, is irrevocable while any receivable shall
remain unpaid.
SECTION 7: APPLICABLE LAW
This agreement shall be governed by, construed and enforced according to the
laws of the State of New York.
<PAGE>
<PAGE>
SECTION 8: DEFAULT
8.1 Event of Default - The following events will constitute a default (a
"Default") in the terms of this agreement:
a) The Business fails to pay or to perform any obligation, covenant or
liability in connection with this agreement and ten (10) days pass after
it receives written notice thereof, or if it fails to pay any of its
other indebtedness to the Bank pursuant to its terms;
b) Any warranty, representation or statement whenever made by the
Business in connection with this Agreement proves to be false in any
material respect when made, or if the Business fails to disclose to the
Bank that any such warranty, representation or statement has become
untrue in any material respect;
c) Dissolution or termination of the Business corporate existence or, if
an individual, the Business death;
d) The Business insolvency;
e) The assignment for the general benefit of the Business creditors, the
appointment of a receiver or trustee for its asset, the commencement of
any proceeding under any Bankruptcy or insolvency laws by or against the
Business or any proceeding for the dissolution or liquidation,
settlement of claims against or winding up of its affairs;
f) The termination or withdrawal of any guaranty for its obligations;
g) The Business fails to pay when due any tax imposed on it in
connection with the on creating a receivable;
h) If any judgment against the Business remains unpaid, unstayed on
appeal, undischarged, unbonded or undismissed for a period of thirty
(30) days;
i) The Business discontinues its Business as a going concern;
j) The Bank in good faith deems the prospect of the Business payment or
performance of its obligations to have been impaired; or
k) There is a default as set forth in Section 3.3 hereof'.
8.2 Effect of Default - Upon the occurrence of any Default, the Bank may
immediately terminate this agreement, at winch time all obligations of the
Business to the Bank will immediately become due and payable without notice to,
or demand on, the Business, and the Banks obligations to the Business hereunder
will cease. After the occurrence of a default, the Bank:
a) Will have the right to withhold any further payments to the Business;
b) May, in its discretion, exercise all rights and remedies available to
it under this agreement and as a secured party under the Uniform
Commercial Code in effect in the State of New York;
<PAGE>
<PAGE>
c) May demand, collect receipt for, settle, compromise, adjust, sue for,
foreclose or realize upon the collateral referred to in Section 3.4 (or
any part of the collateral) as the Bank may determine in its sole
discretion; or
d) May at any time and from time to time, with or without notice to the
Business, appropriate and apply to the payment or reduction in whole or in part
of the obligations, whether or not then due, any and all moneys, securities,
commercial paper, certificates of deposit, stocks, bonds, notes or other assets
or security in any form whatsoever, now or hereafter on deposit with or
otherwise held by the Bank to the credit of or belonging to the Business without
being obligated to assert or enforce any rights or the security interest or to
take any action in reference thereto. Any cash held by the Bank as collateral
and all cash proceeds received by the Bank in respect of interest or other
distributions from, payment of collection from, sale or exchange of, or other
realization upon, all or any part of the collateral may, in the sole discretion
of the Bank, continue to be held by the Bank as part of the collateral or may
then, or at any time thereafter be applied in whole or in part by the Bank in
payment of the obligations in order as the Bank shall desire.
SECTION 9: NON-LIABILITY OF BANK
In addition to the provisions of Section 5.2, the Bank shall not be
liable for any indirect, special or consequential damages, such as loss of
anticipated revenues or other economic loss in connection with or arising out of
any default in performance hereunder or other matter arising herefrom. Nor shall
the Bank be liable for any errors of judgment or mistake of fact when acting as
the Business attorney-in-fact pursuant to Section 6, or liable for delay in the
performance of the Banks duties caused by strike, lawsuit, riot, civil
disturbance, fire, shortage of supplies or materials, or any otter cause
reasonably beyond the Bank's control.
SECTION 10: EFFECTIVE DATE; TERMINATION; BINDING EFFECT
This agreement will be effective when accepted by the Bank, and will
continue in full force and effect until terminated by sixty days prior written
notice from one party to the other (unless terminated immediately pursuant to a
default). Upon termination, the Business will pay all of its obligations to the
Bank, and, in any event, the Business will remain liable to the Bank for any
deficiency remaining after liquidation of any collateral. Also, upon
termination, the Bank may withhold any payment to the Business unless supplied
with an indemnity satisfactory to the Bank.
SECTION 11: ATTORNEYS' FEES; NO WAIVER; SEVERABILITY; HEADINGS;
ENTIRE AGREEMENT; NOTICES
The Business will pay all reasonable expenses incurred by the Bank in
connection with the execution of this agreement and the custody, care,
administration, collection of or realization on the collateral identified in
Section 3.4 hereof, including expenses incurred in connection with the filing of
financing statement, continuation statements and record searches. Upon
liquidation of any collateral, settlement or prosecution of a dispute with any
customer, or enforcement of any obligations of the Business hereunder, the Bank
may charge to the Business account all cost and expenses incurred, including
reasonable attorney's fees and such costs, expense and fees shall constitute
part of the Business obligations. No delay or failure on the Bank's part in
exercising any right, privilege, or option hereunder shall operate as a waiver
of such or of any other right, privilege or option, and no waiver, amendment or
modification of any provision of this Agreement shall be valid unless in writing
signed by the Bank, and then only to the extent therein stated; the Bank does,
however, have the right to amend this agreement upon thirty (30) days written
notice to the Business. Should any provision of this agreement be prohibited by
or invalid under applicable law, the validity of the remaining provisions shall
not be affected. The headings herein are for convenience only, and shall not
define or limit the
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<PAGE>
scope, extent, meaning or intent of this agreement. This agreement embodies the
Business entire agreement as to its affiliation with the Bank's Business Manager
financing program, although the Business anticipates that the Bank will
subsequently outline certain depository procedures. Any notice, request or
demand to be given hereunder will be deemed to be given when delivered by
registered or certified mail at the address of the recipient listed at the
beginning of the agreement. This agreement shall be binding upon and shall inure
to the benefit of the parties and their respective heirs, successors and
permitted assigns, provided however, that the Business agrees that the Bank may
delegate its duties hereunder, in its sole discretion, but that the Business may
only do so (subject to those restrictions on assignment set forth herein) with
the Bank's prior written consent. This agreement is intended to serve as a
continuing statement of the relationship of the parties and of the obligations
of the Business until such time as it terminates in accordance with its terms.
BUSINESS:
AIR RESPONSE, INC.
/s/ Louis R. Capece
_____________________________
By: Louis R. Capece, Jr.
Title: President
ACCEPTANCE:
This agreement is accepted this
30th day of April, 1995
BANK:
CENTRAL NATIONAL BANK, CANAJOHARIE
/s/ Sandra Prokop
__________________
By: Sandra Prokop
Title: Manager
<PAGE>
<PAGE>
NOTE AND SECURITY AGREEMENT No. 731027
<TABLE>
<CAPTION>
LENDER: BORROWER(S):
<S> <C>
Air Response, Inc.
Cessna Finance Corporation _______________________________________________________________________
P.O. Box 308 Name (if partnership or co-ownership, name all partners or co-owners.)
5800 E. Pawnee Road
Wichita, Kansas 67201-0308 7 Main Street, P.O. Box 109
_______________________________________________________________________
Address
Fort Plain, NY 13339
_______________________________________________________________________
City State Zip Code
</TABLE>
1. Parties. In this Agreement, the words "I", "me", "my" and "mine" mean all
who sign this Agreement as Borrower. The words "you" and "your(s)" mean the
Lender and anyone to whom the Lender assigns this Agreement. The words "we",
"us" and "our(s)" mean both the Borrower and Lender.
2. Security Interest. To secure the prompt payment of all amounts that I may owe
under this Agreement, under any renewals or extensions of this Agreement and
under any other agreements between us (both present and future) including,
without limitation, any future advances from you that are evidenced by new
promissory note(s) ("New Note(s)"), and to secure the full and prompt
performance of all of my obligations under this Agreement and under any other
agreements between us (both present and future), I grant you a security interest
in the following "Aircraft" (including, without limitation, a security interest
in all of its installed engines, equipment and accessories, in all engines,
equipment and accessories added thereto from time to time [accessions], and in
all engine, airframe and other logbooks and documents for or relating to the
Aircraft) and in all replacements and substitutions therefor and proceeds
therefrom:
<TABLE>
<CAPTION>
YEAR MANUFACTURER MODEL FAA REG. NO. SERIAL NO.
<S> <C> <C> <C> <C>
1975 Cessna 421B N918WK 421B0956
- --------------------------------------------------------------------------------
</TABLE>
In addition to the manufacturer's standard equipment, the following
equipment is now installed on the Aircraft:
King KNR 630, KTR 950A NavComs, KDM 705 DME, Dual KXR 755 transponders, KDF 805
ADF, RDR 150 radar, RNS-3500 RNAV, M1 Loran, Sperry Stars Flight Director, JB
Air Conditioning, Engine Fire Detection System
The security interest in all "proceeds" of the Aircraft includes, without
limitation, a security interest in all cash, trade-in aircraft, and trade-in
engines, equipment and accessories generated by any disposition of the Aircraft,
and in all payments under any insurance covering the Aircraft and any of its
engines, equipment, accessories and accessions. It is my intent and I understand
and agree that the security interest that I am hereby granting you shall be
deemed a "purchase money security interest," as that phrase is used in the
Uniform Commercial Code, for as long as the Aircraft continues to secure any
payment owing in connection with the loan described in Paragraph 4. I understand
and agree that you will have a non-purchase money security interest until I have
paid you all amounts that I owe you and performed all of my other obligations
under all New Note(s) and other contracts and agreements between us (both
present and future) or until you expressly release your security interest in the
Aircraft in writing, even if I have paid you all that I owe you under this
Agreement.
3. Use and Location of Aircraft. I will use the Aircraft primarily for the
following purpose (check one):
X
_____ Business, ____ Agricultural, or _____ Personal, family or household.
The aircraft will be permanently based at:
Fulton County Airport Johnstown NY
- --------------------------------------------------------------------------------
(Airport) (City) (State)
and I will not remove the Aircraft to another base airport without first
obtaining your written consent.
4. Loan Breakdown. The following is a breakdown of my credit terms under this
Agreement:
<TABLE>
<S> <C>
a. AMOUNT FINANCED (the amount of credit provided to me or on my behalf): $ 150,300.00
_____________
*b. FINANCE CHARGE (the dollar amount the credit will cost me): $ 46,112.40
_____________
*c. ANNUAL PERCENTAGE RATE (the cost of my credit expressed as a yearly rate):
(1) a variable rate of 9.25% through and until paid in full, followed by
-------------------
(fixed or variable)
(2) a n/a rate of n/a% through and until n/a, and
-------------------
(fixed or variable)
(3) a n/a rate of n/a% thereafter until paid in full.
-------------------
(fixed or variable)
*d. TOTAL OF PAYMENTS (the amount I will have paid after I have made all payments as scheduled): $ 196,412.40
_____________
*Estimate: See "25. Late Payments and Prepayments" and "26. Changes in Rates and Payments".
</TABLE>
<PAGE>
5. Promise to Pay. I promise to pay to you or to your order the AMOUNT FINANCED,
together with the FINANCE CHARGE computed on the principal balance of the AMOUNT
FINANCED remaining unpaid from time to time at the applicable ANNUAL PERCENTAGE
RATE until the AMOUNT FINANCED is fully paid. I will make my payments according
to the Payment Schedule described below and any revised Payment Schedules
provided for in this Agreement. I understand and agree that you will apply any
payments that you receive from me: first, to the repayment of all sums that I
may owe you in connection with any future advances that you make pursuant to
Paragraph 13 of this Agreement; second, (at your sole discretion and in such
order as you may select) to the payment of any New Note(s) and other
indebtedness (both present and future) secured by this Agreement; third, to any
unpaid FINANCE CHARGE that I may owe as of the date you receive any payment; and
fourth, to the unpaid principal balance of the AMOUNT FINANCED pursuant to this
Agreement.
6. Payment Schedule. I agree to pay you the AMOUNT FINANCED, together with the
FINANCE CHARGE owing on the AMOUNT FINANCED, as follows:
<TABLE>
<CAPTION>
NO. OF
PAYMENTS AMOUNT OF PAYMENT DUE DATE
<C> <C> <C> <C> <C> <S>
72 payments of $ 2,727.95 (beginning 1/22, 1995, with a payment in the same amount on the same day of
each month thereafter), succeeded by
n/a payments of $ n/a (beginning n/a, 19__, with a payment in the same amount on the same day of
each month thereafter), succeeded by
n/a payments of $ n/a (beginning n/a, 19__, with a payment in the same amount on the same day of
each month thereafter); and n/a.
</TABLE>
7. Use and Care of Aircraft. I will use and maintain the Aircraft in accordance
with all applicable laws, regulations, and ordinances and all insurance policies
(or applications for insurance) covering the Aircraft. I will keep the Aircraft,
at my expense, in good repair and in an airworthy condition at all times, and I
will make the Aircraft available for inspection at your request. I will not fly
or permit the Aircraft to be flown outside the continental United States, or
register the Aircraft in any foreign country, without first obtaining your
written consent. I agree to keep the Aircraft enrolled and participating in the
following maintenance related system(s) during the term of this Agreement at my
expense: n/a.
8. Disclaimer of Warranties and Waiver of Certain Claims and Defenses. I HEREBY
ACKNOWLEDGE THAT I HAVE SELECTED THE AIRCRAFT FOR PURCHASE WITHOUT ANY
ASSISTANCE OR INDUCEMENT FROM YOU OR YOUR AGENTS OR EMPLOYEES AND THAT EXCEPT
FOR THE ADVANCEMENT OF FUNDS PURSUANT TO THIS AGREEMENT, YOU HAVE NOT BEEN
INVOLVED IN THE PURCHASE DECISION OR PURCHASE TRANSACTION. I AGREE THAT YOU HAVE
MADE NO WARRANTIES WHATSOEVER CONCERNING THE AIRCRAFT, EXPRESS OR IMPLIED,
WHETHER OF AIRWORTHINESS, MERCHANTABILITY, CONDITION, DESCRIPTION, DURABILITY,
FITNESS OR SUITABILITY FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, AND THAT
YOU (EXCEPT WHERE PROHIBITED BY APPLICABLE LAW) HEREBY DISCLAIM ALL SUCH
WARRANTIES. I ACKNOWLEDGE AND AGREE THAT YOU HAVE NOT AUTHORIZED ANY THIRD
PARTY, INCLUDING, WITHOUT LIMITATION, THE CESSNA AIRCRAFT COMPANY, ITS OFFICERS,
AGENTS OR EMPLOYEES, TO MAKE ANY REPRESENTATIONS, WARRANTIES, PROMISES,
GUARANTEES, COVENANTS OR AGREEMENTS, ORAL OR WRITTEN, CONCERNING THE AIRCRAFT OR
THIS AGREEMENT ON YOUR BEHALF, AND FURTHER ACKNOWLEDGE AND AGREE THAT NO SUCH
THIRD PARTY IS YOUR AGENT AND THAT YOU SHALL NOT BE BOUND BY ANY SUCH PURPORTED
REPRESENTATIONS, WARRANTIES, PROMISES, GUARANTEES, COVENANTS OR AGREEMENTS. IN
CONSIDERATION OF THIS AGREEMENT, EXCEPT WHERE PROHIBITED BY APPLICABLE LAW, I
COMPLETELY WAIVE AND SURRENDER THE RIGHT TO PURSUE, ASSERT OR INTERPOSE ANY
CLAIM OR DEFENSE AGAINST YOU, IN LAW OR IN EQUITY (INCLUDING, WITHOUT
LIMITATION, ANY RIGHT TO RECOUPMENT, SETOFF OR COUNTERCLAIM), BASED UPON THE
AIRCRAFT'S AIRWORTHINESS, MERCHANTABILITY, CONDITION, DESCRIPTION, DURABILITY,
FITNESS OR SUITABILITY FOR ANY PARTICULAR USE OR PURPOSE, OR UPON ALLEGATIONS
THAT YOU ARE SO CLOSELY OR INTIMATELY CONNECTED WITH THE MANUFACTURERS OR PRIOR
OWNER(S) OF THE AIRCRAFT OR WITH ANY OTHER THIRD PARTY WHATSOEVER, THAT YOU KNEW
OR HAD REASON TO KNOW OF FACTS ABOUT THE AIRCRAFT (OR ABOUT MY DEALINGS WITH
SUCH MANUFACTURERS, PRIOR OWNER(S) OR THIRD PARTIES OR ABOUT THEIR GENERAL
BUSINESS PRACTICES) THAT WOULD SUPPORT A CLAIM, COUNTERCLAIM OR DEFENSE BY ME
AGAINST SUCH MANUFACTURERS, PRIOR OWNER(S) OR THIRD PARTIES.
Page 1 of 1
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<TABLE>
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ANNUAL FINANCE Amount Financed Total of Payments Itemization of Amount Financed
PERCENTAGE CHARGE The amount of credit provided The amount I will have Amount Financed
RATE The dollar amount the to me or on my behalf. paid after I have made all $ 19,000.00
The cost of credit will cost me. scheduled payments. --------------------------------
my ???????? Amount given to me directly
as a yearly $
rate. --------------------------------
8.0% $4,115.00 $19,000.00 $23,115.00 Amount credited to my account
- ------------------------------------------------------------------------------------------------- $ 19,000.00
My payment schedule will be: e means an estimate --------------------------------
Amount paid to others on my behalf
- ------------------------------------------------------------------------------------------------- ---------------------------------
Number of payments Amount of Payments When Payments Are Due to public officials
- ------------------------------------------------------------------------------------------------- $
60 $385.25 Monthly, beginning March 27, 1993 ---------------------------------
- ------------------------------------------------------------------------------------------------- to insurance company
$ $
- ------------------------------------------------------------------------------------------------- ---------------------------------
$ to_________________________
- ------------------------------------------------------------------------------------------------- $
VARIABLE RATE: If this box [X] is checked, this is a variable rate transaction. The Annual ---------------------------------
Percentage Rate may increase during the term of this transaction if: to_________________________
[X] NY Prime Rate increases. [ ]the New York Federal Reserve Bank Discount Rate increases. $
Any increase will take the form of [X] higher payment amounts. [ ] a larger amount due at maturity.---------------------------------
If the interest rate increases by 1% today: [X]my regular payments will increase to $394.41; to_________________________
[ ] my range of payments will increase to $_______ and vary to $______; [ ] my final payment will $
increase to $___________________. ---------------------------------
[X] the interest rate will not increase above 25%. to_________________________
SECURITY: I am giving a security interest in: $
[ ] real estate located at ______________________________________________________________________ ---------------------------------
(Street) (City/Town) State to_________________________
[ ] the goods or property being purchased. $
[ ] certain securities, stocks, bonds or certificates of deposit. ---------------------------------
[ ] certain of my deposit accounts with you. to_________________________
[ ] _____________________________________________________________________________________________ $
---------------------------------
FILING FEES $___________ NON-FILING INSURANCE $___________________ Prepaid Finance Charge
$
PREPAYMENT: If I pay off early, I will not have to pay a penalty. ---------------------------------
The Note, Security Agreement and any other documents which I sign for this Loan will have additional
information about nonpayment, default, any required repayment in full before the scheduled date,
security interests, and prepayment refunds and penalties.
- ----------------------------------------------------------------------------------------------------
</TABLE>
$19,000.00 PROMISSORY NOTE/SECURITY AGREEMENT FEBRUARY 24, 1993
(TIME, TERM OR INSTALMENT)
MEANING OF SOME WORDS: In this Note, the words "I", "me" and "my" mean anyone
signing this Note as a Borrower or in any other way. The words "you" and "your"
mean the Lender.
PROMISE TO PAY: I promise to pay to the order of:
CENTRAL NATIONAL BANK, CANAJOHARIE, CANAJOHARIE, NEW YORK 13317
(the "Lender")
at any of your offices, on FEBRUARY 27, 1998 ("Maturity Date"), the Principal
amount of, NINETEEN THOUSAND AND NO/100THS -------($19,000.00)------ Dollars,
together with all accrued interest then due. Interest shall accrue daily
beginning the date the Note was signed on the unpaid Principal balance at the
rate of: [ ]____% per annum; [X] 2% per annum above your Base Rate (the
"Variable Rate"); [ ]____% per annum above the New York Federal Reserve Bank
Discount Rate (the "Discount Rate"). In no event will the interest rate be more
than _______% or less than ______%.
CALCULATION OF INTEREST/DEFINITION OF THE BASE RATE: Interest is calculated on
the basis of a [ ] 360 [X] 365 day year for the actual number of days the loan
is outstanding. If interest is calculated using either the Base Rate or the
Discount Rate, the interest payable under this Note, will change in accordance
with and at the same time as each change in the applicable rate. "The Base Rate"
means that the rate of interest designated or announced by you from time to time
as your "Base Rate" and used internally by you to calculate the interest payable
to you under notes or other agreements providing for interest based on your Base
Rate. The Base Rate is not necessarily the lowest rate granted by you; credit
may be extended at interest rates both above and below the Base Rate.
Principal shall be payable MONTHLY, BEGINNING MARCH 27, 1993_______________
________________________________________________________________________________
Interest shall be payable MONTHLY, BEGINNING MARCH 27, 1993________________
________________________________________________________________________________
COLLATERAL: 1976 CESSNA 172M, REGISTRATION NO. N80583, SERIAL NO. 17266659______
________________________________________________________________________________
INSURANCE: If you require property insurance, I may obtain such insurance
through the person of my choice.
SECURITY: To secure payment of all amounts owing under this Note or any other
obligation to you:
[ ] I grant to you a security interest in each item described in the section
entitled "Collateral", in?????ng all accessions to the Collateral, as well as
all products and proceeds of the Collateral. If any of the Collateral consists
of real property, I will sign a separate security instrument (mortgage). If my
dwelling is located on such real property, the security interest given by me
does not apply to any debts other than this debt.
[ ] I hereby pledge to you certain stocks, bonds or other securities or certain
certificate(s) of deposit listed in the Collateral section to you. Also, you are
given a security interest in all money or other property payable or issued
directly or indirectly on account of the stocks, bonds or other securities or
the certificate(s) of deposit and in all proceeds of it or them, or of the other
property. I will immediately deliver to you any stock dividend or split of the
stock or securities pledged. All securities will be accompanied by proper
instruments of transfer (stock or bond power). Any securities may be transferred
to your nominee (agent) whether or not I am in default.
Air Response Inc.
Signature of Borrower /s/ Louis R. Capece, Jr.
-----------------------------------------------------------
By: Louis R. Capece, Jr.
Address P.O. Box 109, Fort Plain, NY 13339
-------------------------------------------------------------------------
[ ] You are hereby given an assignment of my rights in any deposit account
(other than one represented by a certificate of deposit) described in the
Collateral section, including any additions.
In addition to the rights I give you in the Collateral, the law gives you a
right of offset. This right permits you to use non-exempt funds on deposit with
you or held by you of any person signing or guaranteeing this Note to pay any
amount then due to you from that person under this Note or the guaranty. I
understand that IRA and HR-10 (Keogh) accounts are not subject to this right.
Except for funds covered by this right of offset, if this Note is for consumer
purposes, no property in which you have been previously given an interest will
secure payment of any amount to be owing under the Note unless it is described
in the Collateral section.
PREPAYMENT: I may prepay the principal due on this Note in whole or in part at
any time, without penalty.
ACKNOWLEDGMENT OF COPY: I acknowledge receipt of a completely filled-in copy of
this Note at the time it was signed.
Signature of Borrower __________________________________________________________
Address ________________________________________________________________________
NOTICE: SEE REVERSE SIDE FOR ADDITIONAL CONTRACTUAL TERMS.
GUARANTY: In consideration of this loan being made to the Borrower, I
unconditionally promise that if the Borrower fails to make payment when
demanded, I will pay the unpaid amount of the loan, together with any unpaid
interest and attorney's fees. If more than one person signs below, we agree that
either any one or all of us can be made to pay the full amount due. I agree that
the Lender may do any of the following without affecting my or our
responsibility on this guaranty: extend the time of payment, release, substitute
or fail to file against or take possession of any Collateral, release any party
from his, her or its liability on the Note or this guaranty, fail to present
this Note for payment, fail to protest it, waive or delay enforcing any of
Lender's rights against the Borrower or on the Collateral or fail to give any
notices to one or all of us of defaults of Borrower or any signer of this
guaranty.
<TABLE>
<S> <C>
Response Medical Transport, Inc.
Signature of Guarantor /s/ Louis R. Capece, Jr. Signature of Guarantor /s/ Louis R. Capece, Jr.
---------------------------- ----------------------------
By: Louis R. Capece, Jr., President Louis R. Capece, Jr.
Address P.O. Box 109, Fort Plain, NY 13339 Address P.O. Box 109, Fort Plain, NY 13339
------------------------------------------- -------------------------------------------
</TABLE>
BORROWERS' COPY
<PAGE>
<PAGE>
SCHEDULE FOR AIRCRAFT LEASE AGREEMENT
Schedule Number 11116.001
THIS SCHEDULE made as of June 27, 1996, by and between U.S. BANCORP
LEASING FINANCIAL ("Lessor"), having its principal place of business at 825 N.E.
Multnomah, Suite 800, Portland, Oregon 97232, and Air Response, Inc. ("Lessee"),
having its principal place of business located at P.O. Box 109, Fort Plain, New
York 13339, to the Aircraft Lease Agreement dated as of June 27, 1996 between
the Lessee and the Lessor (the Lease). Capitalized terms used but not defined
herein are used with the respective meanings specified in the Lease.
LESSOR AND LESSEE HEREBY COVENANT AND AGREE AS FOLLOWS:
(a) The following specified equipment (the "Property") is hereby made and
constituted Property for all purposes pursuant to the Lease:
One (1) 1972 Learjet 25B, N700FC, s/n #082 with two General Electric CJ 610-6
Engines, s/n's #251-238A and #251-244A, each in excess of 750shp.
The above aircraft is complete as equipped including, but not limited to, all
avionics, accessories, improvements, components, instruments, furnishings,
substitutions, additions, replacements, parts tools and equipment now or
hereafter affixed to or used in connection with such airframe, engines and/or
propellers, together with all products and proceeds thereof, including, but not
limited to all leased and/or chartered income.
(b) The cost of the Property is $637,500.00;
PLEASE INITIAL HERE: /s/ LRC
--------
(c) This Schedule shall commence on July 1, 1996 and shall continue for 84
months thereafter.
(d) Lessee shall owe 84 basic monthly rental payments in arrears each in the
amount of $8,797.82 (plus applicable sales/use taxes). The first such
payment shall be due on August 1, 1996 and shall continue on the same
day of each month thereafter until the end of the term of this Schedule.
(e) The Property will be installed or stored at the following address:
Fulton County Airport, Johnstown, New York 12095, COUNTY: Fulton;
(f) The record owner of the premises at which the Property will be installed
or stored is: Response Aviation, Johnstown, NY
1. TITLE PASSAGE. a. As long as no event of default has occurred under the
Lease, Lessee shall have the options, to purchase all, but not part, of the
Property at the end of 24 months (on August 1, 1998) hereinafter called the
"Mid-Term Option D" and "Mid-Term Option" or at the end of the Term or any
renewal thereof (hereinafter called the "End of Term Option Date" and "End of
Term Option").
<PAGE>
<PAGE>
b. The above Options may only be exercised by Lessee by written notice
of such exercise to Lessor, which notice must be received by Lessor not later
than one hundred eighty (180) days prior to: 1) the Mid-Term Option Date to
exercise the .Mid-Term Option; or 2) the End of Term Option Date to exercise the
End of Term Option. Payment of the purchase price must be received by Lessor on
or before the Mid-Term Option Date or the End of Term Option Date as
appropriate.
c. The Mid-Term Option purchase price for the Property shall be
$538,298.90. The End of Term purchase price for the Property shall be the fair
market value of the Property at the time of such exercise as mutually agreed
upon by Lessor and Lessee. If such parties cannot agree thereon after good faith
negotiation, the purchase price of the Property shall be the value determined by
an appraisal of the Property made by a reputable independent equipment appraiser
certified for the type of Property being appraised. The appraiser shall be
selected by Lessor and reasonably acceptable to Lessee, and the cost of the
appraisal shall be paid by Lessee.
d. The Mid-Term Option purchase price shall only be applicable in the
event that the Mid-Term Option is exercised in accordance with its Terms. Such
purchase price shall not be deemed to be equal to the "anticipated residual
value" as such phrase is used in the Lease.
e. Upon receipt of payment of the purchase price together with any and
all applicable sales or other taxes due in connection therewith, and any and all
remaining sums or other amounts payable under this Schedule, Lessor shall
transfer all its right, title and interest in and to the Property to Lessee. The
Property shall be transferred "As Is" and "Where Is" without any express or
implied representations or warranties.
f. Should Lessee fail to either return the Property in accordance with
the Lease or exercise the End of Term Option in accordance with its terms, then
Lessor, at its sole option, shall have the right to: a) declare the End of Term
Option terminated and demand immediate return of the Property; or, b) extend the
term for an additional six (6) months (the "Extended Term"). Should Lessor elect
to extend the Term, Lessee shall be irrevocably obligated to remit basic monthly
rent for the period beginning on the day immediately succeeding the last day of
the original Term (the "Holdover Date") and ending at the end of the sixth (6)
month thereafter. A payment of such rent being due on the Holdover Date and on
the same day of each consecutive month thereafter. Each payment of such rent
shall be in the amount of the basic monthly rent for the last month of the Term
in accordance with the provisions of this Schedule. All Lessee's other
obligations under the Lease shall remain in full force and effect for so long as
Lessee shall continue to possess the Property. Upon the expiration of each
Extended Term, Lessor, at its sole option, shall have the right to: a) permit
Lessee to exercise the End of Term Option in accordance with its Terms; b)
declare the End of Term Option terminated and demand immediate return of the
Property; or, c) extend the term for an additional six (6) month Extended Term.
Any and all rental payments pursuant to this Paragraph shall be deemed for all
intents and purposes to be payments for possession and use of the Property after
the expiration of the Term, and shall not be credited to any other obligation of
Lessee to Lessor. Lessor's invoicing and/or accepting any such payment shall not
give rise to any right, title or interest of Lessee other than to possession and
use of the Property during the period to which such rent applies in accordance
with this Paragraph. The aforesaid right to charge Lessee rent for possession
and use of the Property is not in limitation or derogation of any of Lessor's
rights pursuant to the Lease.
2. MAINTENANCE, USE, AND RETURN PROVISIONS. Lessee shall give Lessor prior
written notice of the location (at an airport in the continental United States)
and date for the Final
<PAGE>
<PAGE>
Inspection, which shall occur within sixty (60) days prior to the expiration of
the Lease Term, and which at Lessor's option shall also include a two-hour
operational test flight of the Aircraft Such test flight shall be conducted by
the manufacturer or designee acceptable to Lessor at Lessee's cost using the
manufacturers recommended test flight procedures. If such test(s) shall indicate
that the Aircraft is not in good working condition and in compliance with the
provisions herein, then Lessee shall remit the cost of such repairs to Lessor,
due upon presentation to Lessee of an invoice outlining the costs. Lessor or its
authorized representative may, with five (5) days prior written notice to
Lessee, inspect the Aircraft and the books and records of Lessee. As
supplemental rent herein, Lessee shall pay to Lessor, upon presentation of an
invoice, the pro-rated original rent per hour for each hour flown in excess of
the industry standard of 300 hours per year.
The Final Inspection shall verify that the condition of the Aircraft is
in compliance with the terms of the Lease, which shall include but not be
limited to the following: the Aircraft shall have a full complement of engines,
avionics, equipment, parts & accessories. Each engine shall have at least fifty
percent (50%) of the operating hours or cycles, whichever is more limiting,
remaining before the next anticipated hot section inspection or major overhaul;
the Aircraft with all material component parts shall have one half or less of
the available operating hours and/or, as applicable, one half or more of the
stated calendar time remaining as stated in the Code of Federal Regulations.
Aircraft shall comply with manufacturer's current specifications; shall have in
existence a valid and existing Certificate of Airworthiness issued by the
Federal Aviation Administration; and shall have cleared all pilot discrepancies
from the logbook.
3. DEPRECIATION. Lessor will be entitled to modified accelerated cost
recovery depreciation based on 100% of Property Cost using the 200% declining
balance method, switching to straight line, for 5 year Property, and zero
salvage value.
IN WITNESS WHEREOF, the Lessor and the Lessee have each caused this
Schedule to be duly executed as of the day and year first above written.
Air Response, Inc.
By: /s/Louis R. Capece
-------------------------
Louis R. Capece
President and Secretary
U.S. BANCORP LEASING & FINANCIAL
By:
-------------------------
An Authorized Officer Thereof
Address for All Notices:
U. S. BANCORP LEASING & FINANIAL
825 N.E. Multnomah, Suite 800
Portland, Oregon 97232
<PAGE>
<PAGE>
Machine Tool Finance Group General Equipment Group
(800) 225-8029 (503) 797-0222 (800) 253-3468 (503) 797-0200
<PAGE>
<PAGE>
AIRCRAFT LEASE AGREEMENT
THIS LEASE, dated June 27, 1996, by and between U.S. Bancorp Leasing &
Financial, hereafter referred to as "Lessor," and Air Response, Inc., hereafter
referred to as "Lessee,"
LESSOR AND LESSEE(S) COVENANT AND AGREE AS FOLLOWS:
1. ALIRCRAFT LEASED. Lessor agrees to lease to Lessee and Lessee agrees
to lease from Lessor the aircraft ("Aircraft") described in the Lease Agreement
Schedule(s) ("Schedule") now or hereafter executed by the parties.
2. TERM. This Lease shall become effective on the execution hereof by
Lessor and the term of this Lease shall be deemed to commence on the day of the
month indicated in the Schedule.
3. RENT AND PAYMENT. Rental payments are specified in each Schedule. All
rents shall be payable in advance each month on the payment date shown in each
Schedule by Lessee at Lessor's address herein. or as otherwise directed by
Lessor, without notice or demand and without abatement, set-off or deduction of
any amount whatsoever. Lessee shall pay when due all taxes, fees assessments, or
other charges, however designated, now or hereafter levied or based upon the
rentals, ownership, use, possession, leasing, operation, control, or maintenance
of the Aircraft, whether or not paid or payable by Lessor, excluding Lessor's
income, franchise and business and occupation taxes, and shall supply Lessor
with proof of payment satisfactory to Lessor at least seven (7) days before
delinquency. Lessee shall not create, cause, or permit any kind of claim, levy,
lien or legal process on the Aircraft, and shall satisfy, remove or procure the
release thereof within thirty (30) days following written notice of its
imposition.
For any payment due hereunder which is not paid when due, Lessee agrees to pay a
delinquency charge calculated thereon at the rate of five (5) percent of such
payment due hereunder. Payments thereafter received shall be applied first to
delinquent amounts due, including delinquency charges, then to current
installments.
4. LOSS OR DAMAGE. No loss or damage to the Aircraft, or any part of it,
shall impair any obligation of Lessee hereunder. Lessee assumes all risk of
damage to or loss of the Aircraft, however caused, while in transit and during
the team hereof. if the aircraft is totally destroyed, Lessee's liability to pay
rent for it may be discharged by paying Lessor all past due and the present
value of all remaining rent discounted at the rate of eight (8%) percent, and
other charges owing, less the amount of any recovery for the loss received by
Lessor from any insurance or other source.
5. DEPOSIT. Prior to delivery of the Aircraft, Lessee shall deposit with
Lessor and shall maintain during the term hereof the sum specified in the
Schedule, as security, to be applied at Lessor's option, toward payment of any
obligation of Lessee hereunder. Such deposit shall not prevent default or excuse
performance of any obligation of Lessee at the time and in the manner prescribed
herein.
6. USE, LOCATION AND MAINTENANCE. Lessee may use and operate the
Aircraft within and without the continental limits of the United States of
America. Lessee agrees that, without the prior written consent of Lessor, Lessee
will not base, or permit the Aircraft to be based, outside the continental
limits of the United States of America. Lessee agrees that the Aircraft will not
be maintained, used or operated in violation of any law or any rule, regulation
or order of any domestic or foreign governmental authority having jurisdiction
over the Aircraft or registration relating to the Aircraft issued by any such
authority. Lessee also agrees not to fly the
<PAGE>
<PAGE>
Aircraft, or suffer the Aircraft to be flown, in any area not fully covered by
each insurance policy in effect with respect to the Aircraft and required by the
terms of Section 7 hereof. Lessee agrees to keep the Aircraft at all times
registered in accordance with the laws of the United States of America.
At its own risk, Lessee shall use or permit the use of the Aircraft from the
location specified in the schedule and shall not loan, sublet, part with
possession or otherwise dispose of the Aircraft, without Lessor's prior written
consent. Lessee shall not use or permit the use of the Aircraft in any
unintended, injurious or unlawful manner, shall not permit use or operation of
the Aircraft by any one other than qualified pilots satisfactory to Lessee's
insurance carrier and shall not change or alter the Aircraft without Lessor's
written consent. Such consent shall not be unreasonably withheld by Lessor.
Lessee, at its own cost and expense, shall comply with all applicable service,
maintenance, repair and overhaul regulations, directives and instructions of
applicable governmental authority, and all applicable maintenance, service,
repair and overhaul manuals and service bulletins published by the manufacturers
of the airframe, engines, accessions, equipment and parts installed on the
Aircraft. Lessee shall maintain all records, logs and other materials required
by the aeronautics authority to be maintained in respect to the Aircraft after
delivery, regardless of upon whom such requirements are, by their terms,
normally imposed. Lessee shall comply with all laws of the jurisdiction in which
the Aircraft may be operated and within all rules of the FAA and other
legislative, executive, administrative or judicial body exercising any power or
jurisdiction over the Aircraft, to the extent that such laws and rules affect
the operation, maintenance or use of the Aircraft. In the event that such laws
or rules require the alteration of the Aircraft, Lessee shall conform or obtain
conformance therewith at no expense of Lessor, and shall maintain the Aircraft
in proper condition for operation under such laws and rules; provided, however,
that Lessee make good faith contest the validity and application of any such law
or rule in any reasonable manner which does not adversely affect the Aircraft or
rights Lessor hereunder, or to the Aircraft. No technical or non-substantial
non-compliance with the provisions of this paragraph shall be deemed a material
breach if Lessee shall have obtained from the appropriate authorities
permissions, extensions or continuances.
7. LEASE; OWNERSHIP NOTICES; INSIGNIA. This is a non-cancelable contract
of lease only and except as set forth in the Schedule(s) attached hereto,
nothing herein or in any other document executed in conjunction herewith shall
be construed as conveying or granting to Lessee any option to acquire any right.
title or interest, legal or equitable, in or to the Aircraft, other than use and
possession, subject to and upon full compliance with the provisions hereof.
Lessor shall affix and maintain, at its expense, in a prominent and visible
location, all ownership notices supplied by Lessor. Lessee shall permit Lessor
to reasonably mark the Aircraft in a manner sufficient to identify the Aircraft
as Lessor's property. Lessee shall secure from each person not a party hereto
who might acquire an interest, lien, or other claim in the Aircraft, a waiver
thereof. The Lessee shall have the right to print or paint its name or any other
symbols, insignia or its customary colors on the Aircraft. Lessee shall affix
and maintain, or cause to be affixed and maintained, in the cockpit of the
Aircraft adjacent to and not less prominent than the airworthiness certificate
therein, a certificate furnished by Lessor bearing the inscription, "This
aircraft leased from U.S. Bancorp Leasing & Financial, pursuant to a Lease
Agreement between U.S. Bancorp Leasing & Financial and Air Response, Inc.,
Lessee.
8. GENERAL INDEMNIFICATION. Lessee assumes liability for, and agrees to
defend, indemnify and hold Lessor harmless from any claims, liability, loss,
cost, expense, or damage of every nature (including without limitation, fines,
forfeitures, penalties, settlements, and reasonable
<PAGE>
<PAGE>
attorneys' fees) by or to any person whomsoever, regardless of the basis, which
directly or indirectly results from or pertains to the leasing, manufacture,
delivery, ownership, use, possession, selection, performance, operation,
inspection, condition (including without limitation, latent or other defects),
improvements, removal, return or storage of the Aircraft.
Upon request of Lessor, Lessee shall assume the defense of all demands, claims,
actions, suits and all proceedings against Lessor for which indemnity is
provided and shall allow Lessor to participate in the defense thereof. Lessor
shall be subrogated to all rights of Lessee for any matter which Lessor has
assumed obligation hereunder, and may settle any such demand, claim, or action
with Lessee's prior consent (which consent shall not be unreasonably withheld),
and without prejudice to Lessor's right to indemnification hereunder.
9. INSURANCE AGAINST LOSS OR DAMAGE. At its expense, Lessee shall
maintain in force, at all times from shipment of the Aircraft to Lessee until
surrender thereof, insurance of the types and amounts indicated in each Schedule
with insurance approved by Lessor, protecting Lessor, as an additional insured,
or loss payee, or both at the option of the Lessor, and providing for thirty
(30) days advance written notice to Lessor of modification or cancellation.
Lessee shall forthwith and annually deliver to Lessor satisfactory evidence of
the insurance coverage. In the event Lessee fails to provide satisfactory
evidence of coverage within ten (10) days of request thereof by Lessor, then
Lessor may, at Lessor's option, in addition to any other rights available to
Lessor, obtain coverage, and any sum paid therefor by Lessor shall be
immediately due and payable to Lessor by Lessee.
In addition to and without limitation of the insurance provisions set out in the
preceding paragraph, it is agreed that Lessee will carry or cause to be carried
at its own expense:
(a) Aircraft public liability (including, without limitation, passenger
legal liability) insurance and property damage insurance (exclusive of
manufacturers product liability insurance) with respect to the Aircraft and any
engine installed on the Aircraft in an amount not less than 520,000,000 per
occurrence; and,
(b) Insurance against Loss or damage, consisting of all-risk hull
insurance covering the aircraft, including the engines, and all-risk coverage of
engines and parts while removed from the Aircraft and not replaced by similar
components. Such insurance shall at times while the Aircraft is subject to this
lease be for not less than or a lesser amount as agreed to by Lessor.
Any policies carried in accordance with this section shall name the Lessor, as
owner of the Aircraft, as an additional insured, without imposing upon Lessor
any liability to pay premiums with respect to such insurance. If any material
change shall be made in the insurance that adversely affects the interest of
Lessor, any cancellation or change shall not be effective as to the Lessor for
thirty (30) days after receipt by Lessor of written notice by such insurer;
provided, however, that if any notice period specified above is not commercially
available, such policies shall provide for as long a period of prior notice as
is then commercially available. Such insurance shall be primary without any
right of contribution from any other insurance that is carried by the Lessor.
Insurance payments for any property damage loss to the airframe or any engine
will be applied in payment for repairs or for replacement property. All such
insurance proceeds remaining after compliance with this section will be paid to
the Lessee.
During any period that the Aircraft is in storage and reasonable precautions
have been taken to
<PAGE>
<PAGE>
insure that the Aircraft will not be flown without the insurance required under
this lease, the Lessee may carry or cause to be carried, in lieu of the
insurance otherwise required above, insurance otherwise conforming to that
carried by major air carriers for aircraft similar to the Aircraft in similar
storage.
10. INCOME TAX INDEMNITY. Lessee hereby represents, warrants, and
covenants to Lessor as follows:
(a) This Lease will be a lease for federal and Oregon state income tax
purposes; Lessor will be treated as the purchaser, owner, lessor, and original
user of the Aircraft and Lessee will be treated as the lessee of the Aircraft
for such purposes.
(b) Lessor shall be entitled to depreciation deductions with respect to
the Aircraft as provided by Section 167(a) of the Internal Revenue Code of 1986,
as amended (the "Code"), determined under Section 168 of the Code by using the
applicable depreciation method, the applicable recovery period, and the
applicable convention, all as specified on the applicable Schedule for the
Aircraft, and Lessor shall be entitled to corresponding above depreciation
deductions.
(c) For purposes of determining depreciation deductions, the Aircraft
shall have an income tax basis equal to Lessor's cost for the Aircraft specified
applicable Schedule, plus such expenses of the transaction incurred by Lessor as
are includible in basis under Section 1012 of the Code.
(d) The maximum federal and Oregon income tax rates applicable to Lessor
in effect on the date of execution and delivery of a Schedule with respect to
the Aircraft will not change during the lease term applicable to such Aircraft.
If by any reason whatsoever any of the representations, warranties, or covenants
of Lessee contained in this Lease or in any other agreement relating to the
Aircraft shall prove to be incorrect and (i) Lessor shall determine that it is
not entitled to claim all or any portion of the depreciation deductions in the
amounts and in the taxable years determined as specified in (B) and (C), above,
or (ii) such depreciation deductions are disallowed, adjusted, recomputed,
reduced, or recaptured, in whole or in part, by the Internal Revenue Service or
Oregon Department of Revenue (such determination, disallowance, adjustment,
recomputation, reduction, or recapture being herein called a "Loss.), then
Lessee shall pay to Lessor as an indemnity and as additional rent such amount as
shall, in the reasonable opinion of Lessor, cause Lessor's after-tax economic
yield (the "Net Economic Return") to equal the Net Economic Return that would
have been realized by Lessor if such Loss had not occurred. The amount payable
to Lessor pursuant to this section shall be payable on the next succeeding
rental payment date after written demand therefor from Lessor, accompanied by a
written statement describing in reasonable detail such Loss and the computation
of the amount so payable.
Further, in the event (i) there shall be any change, amendment, addition, or
modification of any provision of Oregon law or of the Code or regulations
thereunder or interpretation thereof with respect to the matters set forth in
this section 9 effective prior to the commencement date of the term of this
Lease with respect to any Aircraft or (ii) if at any time there shall be any
change, amendment, addition, or modification of any provision of Oregon law or
of the Code or regulations thereunder or interpretation thereof with respect to
the maximum applicable federal and state income tax rates as set forth in (D),
above, which results in a decrease in Lessor's Net
<PAGE>
<PAGE>
Economic Return, then Lessor shall recalculate and submit to Lessee the modified
rental rate required to provide Lessor with the same Net Economic Return as it
would have realized absent such change and the lease shall thereupon
automatically be deemed to be amended to adopt such rental rate and values,
11. INSPECTION AND REPORTS. Lessor shall have the right, at any
reasonable time, to enter on Lessee's premises or elsewhere and inspect the
Aircraft or observe its use. Within thirty (30) days of any written request by
Lessor, Lessee shall furnish all information requested by Lessor which is
reasonably necessary to determine Lessee's current financial condition or
faithful performance of the terms hereof. Lessee shall give Lessor immediate
notice and copy of all tax notices, reports, or inquires and of all seizure,
attachment, or judicial process affecting or relating to the use, maintenance,
operation, possession, or ownership of the Aircraft.
12. SUBORDINATION; QUIET ENJOYMENT. This Lease, and Lessee's rights and
interest hereunder, and to the Aircraft, shall be subject, subordinate and
junior to the lien of any security agreement created by Lessor, and to the
rights of the holder thereof, whether executed heretofore or hereafter. After
notice of default in payment or performance under any such security agreement,
Lessee may perform or pay rent for the Aircraft subject thereto to the holder of
such security and the same to the extent of such payment shall constitute
payment of rent as if it had been made to Lessor.
Lessor represents and warrants that as of the date of this Lease the aircraft is
free of liens. Lessor covenants that it will not, through its own actions,
interfere in the lessee's (or any Sublessee's) quiet enjoyment of the Aircraft
during the lease term except in accordance with the provisions of this Lease.
13. ASSIGNMENT. LESSEE SHALL NOT ASSIGN OR IN ANY WAY DISPOSE OF ALL OR
ANY OF ITS RIGHTS OR OBLIGATIONS UNDER THIS LEASE OR ENTER INTO ANY SUBLEASE OF
ALL OR ANY PART OF THE LEASED PROPERTY WITHOUT THE PRIOR WRITTEN CONSENT OF
LESSOR LESSEE AGREES THAT LESSOR MAY ASSIGN OR TRANSFER THIS LEASE OR LESSOR'S
INTEREST IN THE LEASED PROPERTY WITHOUT NOTICE TO LESSEE. Any assignee of Lessor
shall have all of the rights, but none of the obligations, of Lessor under this
Lease and Lessee agrees that it will not assert against any assignee of Lessor
any defense, counter claim or offset that Lessee may have against Lessor. Lessee
acknowledges that any assignment or transfer by Lessor will not materially
change Lessee's duties or obligations under this Lease nor materially increase
the burdens or risks imposed on Lessee. Lessee shall cooperate with Lessor in
executing any documentation reasonably required by Lessor or any assignee of
Lessor to effectuate any such assignment.
14. RETURN OF THE AIRCRAFT; TRANSFER OF RECORDS. On the expiration or
termination of this lease, Lessee shall, at its risk and expense, assemble,
prepare for delivery, and deliver the Aircraft to Lessor at Portland, Oregon.
The Aircraft shall be delivered unencumbered and free of any liens, charges, or
other obligations (including delivery expense and sales or use taxes, if any,
arising from such delivery).
Upon return of the Aircraft at the termination of this lease at the end of the
basic term or any renewal term or pursuant to sections 15 or 16,
(a) At the Lessee's expense: (i) the Aircraft shall be in passenger
configuration, (ii) the interior of the aircraft shall be clean in accordance
with industry standards with respects to
<PAGE>
<PAGE>
"between flights" cleaning, (iii) the exterior of the Aircraft shall be cleaned
in accordance with industry standards, (iv) the Aircraft shall have no deferred
maintenance items or placards and all systems and components shall be
operational, and, (v) the Aircraft shall have all of Lessee's exterior markings
removed or painted over and the areas where such markings were located shall be
refurbished as necessary to blend with adjacent areas;
(b) The Aircraft shall at Lessee's expense be in compliance with all FAA
airworthiness directives and standards then applicable thereto for an aircraft
registered, and certified as airworthy, under the laws of the United States of
America, without regard to any variances or extensions granted specifically to
the Lessee waiving or delaying compliance with such directives or standards;
(c) All fuel and oil aboard the Aircraft shall be the property of the
Lessor without charge;
(d) During the last three (3) months of the lease term (unless the
Lessee shall have elected to purchase or renew in accordance with the terms of
this Lease), with reasonable prior written notice, the Lessee will cooperate in
all reasonable respects with the efforts of the Lessor to sell or lease the
Aircraft including, without limitation. permitting prospective purchasers or
lessees to inspect the Aircraft and the records relating thereto. Any request to
inspect the Aircraft or related records shall be made to Lessee at least 48
hours before such inspection unless otherwise agreed by Lessee. Such inspections
shall not obstruct Lessee's use of the Aircraft but Lessee shall permit
inspections that are reasonably requested and which can be completed while the
Aircraft is not in use at Lessee's premises.
Upon return of the Aircraft at the end of the basic term or any renewal term or
pursuant to Sections 14 or 15, the Lessee, except to the extent prohibited by
applicable law, shall deliver or cause to be delivered to the Lessor, ail logs,
manuals and data and inspection, modification and overhaul records required to
be transferred (or customarily transferred) with the ownership or possession of
such an aircraft.
15. DEFAULT. Time is of the essence under this Lease, and Lessee shall
be in default in event of any of the following ("Event of Default") herein: (a)
any failure to pay when due the full amount of any payment required hereunder,
including, without limitation, rent, taxes, liens, insurance, indemnification,
repair or other charge; or (b) any material misstatement or false statement in
connection with, or non-performance of any of Lessee's obligations, agreements,
or affirmations under this Lease; or (c) upon Lessee's dissolution, termination
of existence, insolvency, becoming the subject of a petition in bankruptcy,
either voluntary or involuntary, or in any other proceeding under federal
bankruptcy laws; making an assignment for benefit of creditors; or being named
in, or the Aircraft being subjected to a suit for the appointment of a receiver;
or (d) if the Aircraft should be seized or levied upon under any legal or
governmental process against Lessee or the Aircraft; or (e) bankruptcy,
insolvency, termination, or default of any guarantor for Lessee. Upon any Event
of Default, Lessor shall give Lessee ten (10) days written notice and an
opportunity to cure in the case of a monetary default and thirty (30) days
written notice and an opportunity to cure in the case of a non-monetary default.
16. REMEDIES. Upon the occurrence of any event of default and at any
time thereafter, Lessor shall have all remedies provided by law; and, without
limiting the generality of the foregoing and without terminating this Lease,
Lessor, at its sole option, shall have the right at any time to exercise
concurrently, or separately, any one or all of the following remedies:
(a) request Lessee to make the Aircraft available to Lessor at a
reasonable place
<PAGE>
<PAGE>
designated by Lessor and put Lessor in possession thereof on demand;
(b) immediately and without legal proceedings or notice to Lessee, take
possession of, remove and retain the Aircraft or render it unusable (any such
taking shall not terminate this Lease);
(c) without notice to Lessee declare due the entire amount of rent
contracted to be paid over the balance of the unexpired term of the Lease,
discounted at a rate equal to the discount rate of the Federal Reserve Bank of
San Francisco, calculated as of the date of termination, plus one (1%) percent;
(d) without notice to Lessee terminate the leasing of the Aircraft and
be immediately entitled to the entire amount of rent and other sums payable
hereunder;
(e) if this Lease provides for a Stipulated Loss Value of the Aircraft,
recover the Stipulated Loss Value of the Aircraft as of the rent payment date
immediately preceding Lessee's date of default, plus all commercially reasonable
costs and expenses incurred by Lessor in any repossession, recovery, storage,
repair, sale, release or other disposition of the Aircraft, including reasonable
attorneys' fees and costs incurred in connection therewith or otherwise
resulting from Lessee's default;
(f) if this Lease does not provide for a Stipulated Loss Value of the
Aircraft, recover damages from Lessee, not as a penalty, but herein liquidated
for all purposes and in an amount equal to the sum of: (i) any accrued and
unpaid rent as of the date of entry of judgment in favor of Lessor plus interest
at the rate of eighteen percent (18.0%) per annum; plus (ii) the present value
of all future rentals reserved in the Lease and contracted to be paid over the
unexpired term of the Lease, discounted at a rate equal to the discount rate of
the Federal Reserve Bank of San Francisco as of the date of entry of judgment in
favor of Lessor plus one percent (1%); plus, (iii) all commercially reasonable
costs and expenses incurred by Lessor in any repossession, recovery, storage, or
repair, sale, re-lease or other disposition of the Aircraft, including
reasonable attorneys' fees and costs incurred in connection therewith or
otherwise resulting from Lessee's default plus, (iv) the estimated residual
value of the leased Aircraft as of the expiration of this Lease or any renewal
thereof; and, (v) any indemnity, if then determinable, plus interest at eighteen
percent (18.0% per annum);
(g) release or sell the Aircraft at a public or private sale on such
terms and notice as Lessor shall deem reasonable, and recover damages from
Lessee, not as a penalty, but herein liquidated for all purposes and in an
amount equal to the sum of: (i) any accrued and unpaid rent as of the latter of
(a) the date of default, or (b) the date Lessor has obtained possession of the
Aircraft, or such other date as Lessee has made an effective tender of
possession of the Aircraft back to lessor ("Default Date"); plus rent (at the
rate provided for in this Lease and any Lease Schedule) for a period (the
"Additional Period".) commencing on the Default Date and ending on the earlier
of (A) the date the Aircraft is resold or re-let by Lessor, or (B) the date of
entry of judgment in favor of Lessor; plus, (ii) the present value of all future
rentals reserved in the Lease and the present value of the estimated residual
value of the Aircraft as of the expiration of this Lease, or any renewal
thereof, discounted at a rate equal to the discount rate as provided in
sub-paragraph (f) (ii) above; plus,(iii) any indemnity, if then determinable,
plus interest at eighteen percent (18.0%) per annum; less the amount received by
Lessor upon any such public or private sale or re-lease of the Aircraft if any;
provided that Lessee shall be given no less than five (5) business days written
notice of any such public or private sale.
<PAGE>
<PAGE>
If: (i) Lessor elects to sell, re-lease or otherwise dispose of the
Aircraft, or (ii) does so by a re-lease which is not made in a manner
substantially similar to the applicable Lease Schedule, or (iii) the measure of
damages under sub-paragraphs e, f, or g above are not allowable under any
applicable law, Lessor may recover the market value, if any, as of the default
date, of the rent reasonably estimated by Lessor to be obtainable for the
Aircraft during the remaining lease term or any renewal thereof then in effect,
plus any accrued and unpaid rent as of the default date.
If this Lease is deemed at any time by a court of competent jurisdiction to be
one intended as security, Lessee agrees that the Aircraft shall secure, in
addition to the indebtedness set forth herein, indebtedness at any time owing by
Lessee to Lessor.
No remedy referred to in this paragraph is intended to be exclusive, but shall
be cumulative and in addition to any other remedy referred to above or otherwise
available to Lessor at law or in equity. No express or implied waiver by Lessor
of any default shall constitute a waiver of any other default by Lessee or a
waiver of Lessor's rights, provided, however, that Lessor shall not be entitled
to recover a multiple recovery or be made more than whole in availing itself of
such cumulative remedies.
17. LESSEE'S WAIVERS. To the extent permitted by applicable law and
except as provided in the attached lease schedule(s), Lessee hereby waives its
rights to: (i) cancel this lease; (ii) repudiate this Lease; (iii) reject the
Aircraft; (iv) revoke acceptance of the Aircraft; (v) claim a security interest
in the Aircraft in Lessee's possession or control for any reason; (vi) accept
any partial delivery of the Aircraft.
18. CHARGES. Upon failure by Lessee, at its option, Lessor may pay any
tax, assessment, insurance premium, expense, repair, release, confiscation
expense, lien, encumbrance, or other charge or fee payable hereunder by Lessee,
and any amount so paid shall be repayable by Lessee on demand. The rights
secured hereby are not a waiver of any other rights of Lessor arising from
breach by Lessee of any of the covenants hereof. If enforcement, collection, or
realization procedures of this Lease or any agreement of Lessee contained herein
are undertaken by lessor, lessee shall pay a reasonable attorney's fee,
including fees incurred in both trial and appellate courts or without suits, all
costs of court and public officials, and all other expense incurred in the
pursuit thereof' including, but not limited to, reasonable compensation for
efforts conducted by Lessor's employees or agents.
19. MULTIPLE LESSEES. Where more than one Lessee has signed this
agreement whether as co-lessee, guarantor, or otherwise, liability hereunder
shall be joint and several, and Lessor or its assigns may, with the consent of
any one of the lessees hereunder, modify, extend or change any of the terms
hereof without the consent or knowledge of the others, without in any way
releasing, waiving or impairing any rights granted to Lessor against such
others.
20. NOTICES, PAYMENTS AND GOVERNING LAW. All notices and payments shall
be mailed or delivered to the respective parties at the below address, or such
other address as a parry may provide in writing from time to time. This Lease
shall be considered to have been made in Oregon and shall be interpreted, and
the rights and liabilities of the parties determined, in accordance with the
laws of the State of Oregon. In the event of suit enforcing this Lease, Lessee
agrees that venue may, at Lessor's option, be in the county of Lessor's address
below. Paragraph headings shall not be considered a part of this Lease. Any
action by Lessee against Lessor for any alleged default by Lessor under this
Lease, and any action for indemnity, shall be commenced
<PAGE>
<PAGE>
within the time required under the law of jurisdiction in which the Lessee
resides after any such cause of action accrues, not withstanding the provision
that Oregon law prevails under the terms of this agreement.
21. WARRANTIES AND ACCEPTANCE. The Lessor has obtained the Aircraft
herein leased based on specifications furnished by the Lessee. The Lessor does
not deal in Aircraft of this kind or otherwise by his occupation hold himself or
his agents out as having knowledge or skill peculiar to the Aircraft involved in
the transaction. The Lessee acknowledges that he has relied on his own skill and
experience in selecting an aircraft suitable to the Lessee's particular needs or
purposes and has neither relied upon the skill or judgment of the Lessor nor
believes the Lessor or his agents to possess any special skill or judgment in
the selection of aircraft for the Lessee's particular purposes. Further, the
Lessee has not notified the Lessor of the Lessee's particular needs in using the
Aircraft. THE LESSOR HAS MADE NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR
IMPLIED, TO THE LESSEE CONCERNING THE FITNESS OF THE AIRCRAFT FOR THE PARTICULAR
PURPOSES OF THE LESSEE.
THE LESSOR ASSUMES NO RESPONSIBILITY FOR THE CONDITIONS, SAFENESS, USEABILITY,
REPAIR OR FITNESS OF THE AIRCRAFT. THE LESSOR MAKES NO REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE WARRANTY OF MERCHANTABILITY,
CONCERNING THE AIRCRAFT OR ANY INDIVIDUAL CHARACTERISTICS OR QUALITIES OF THE
AIRCRAFT.
Providing Lessee is not in Default under this Lease, the Lessor hereby assigns
to the Lessee without recourse, all rights arising under any warranties
applicable to the Aircraft provided by the manufacturer or any other person. All
proceeds of any warranty claim from the manufacturer or any other person shall
first be used to repair the affected Aircraft.
By signing the Schedule, Lessee states that it has fully accepted and taken
possession of the Aircraft and acknowledges the Aircraft to be satisfactory and
suitable for the purposes specified by Lessee in full compliance with the term
of this Lease, and in good condition and repair lessee agrees that Lessor shall
not be liable to Lessee for any representation, claim, breach of warranty,
expense or loss directly or indirectly caused by any person, including Lessor,
or in any way related to the Aircraft.
22. SEVERABILITY. If any of the provisions of this Lease are contrary
to, prohibited by, or held invalid under applicable laws or regulations of any
Jurisdiction in which it is sought to be enforced, then that provision shall be
considered inapplicable and omitted but shall not invalidate the remaining
provisions.
23. SURVIVAL. All of Lessor's rights, privileges and indemnities
contained herein (including rights, privileges, and indemnities under paragraphs
8, 9 & 10) shall survive the expiration or other termination of the Lease and
its Schedules, and the rights, privileges and indemnities contained herein are
expressly made for the benefit of, and shall be enforceable by Lessor, its
successors and assigns.
24. ENTIRE AGREEMENT: WAIVERS, SUCCESSORS. This Lease and all Schedules
expressly referring hereto contain the entire agreement of the panics in
connection with the Aircraft and shall not be qualified or supplemented by
course of dealing. No waiver or modification by lessor of any of the terms or
conditions hereof shall be effective unless in writing signed by an officer of
lessor. No waiver or indulgence by Lessor of any deviation by lessee of any
required performance shall be a waiver of Lessor's right to subsequent or other
full and timely
<PAGE>
<PAGE>
performance. This Lease shall be binding on Lessor and Lessor's successors and
assigns and shall inure to the benefit of Lessor's successors and assigns.
25. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be considered an original and all of which
taken together shall constitute a single instrument.
BY INITIALING AND DATING THIS SECTION, LESSEE ACKNOWLEDGES THAT LESSEE HAS READ
THE ABOVE PARAGRAPHS UNDER SECTION 21, WARRANTIES AND ACCEPTANCE, AND SECTION
24, ENTIRE AGREEMENT, AND FULLY UNDERSTANDS THEIR CONTENT.
INITIALED: /s/ LRC DATED: 6/28/96
----------- --------------
TRUTH IN LEASING REQUIREMENT IN COMPLIANCE WITH FAR 91.54:
FOR THE TWELVE (12) MONTHS PRECEDING THE DATE OF THIS LEASE AGREEMENT, THE
AIRCRAFT LEASED HEREUNDER HAS BEEN MAINTAINED AND INSPECTED IN ACCORDANCE WITH
FEDERAL AVIATION REGULATIONS PART 91.169 (E)(F)(5). THE AIRCRAFT CURRENTLY
COMPLIES WITH SUCH REGULATIONS.
THE LESSEE CERTIFIES THAT IT IS RESPONSIBLE FOR THE AIRCRAFT'S STATUS OF
COMPLIANCE WITH APPLICABLE MAINTENANCE AND INSPECTION REQUIREMENTS AS SET FORTH
UNDER THE FAA REGULATIONS APPLICABLE TO LESSEE'S USE AND OPERATION OF THE
AIRCRAFT. THE LESSEE UNDERSTANDS IT'S RESPONSIBILITIES PURSUANT SUCH
REGULATIONS. IN ADDITION, THE LESSEE AGREES TO ADVISE THE LESSOR OF WHICH OF THE
REQUIRED FAA MAINTENANCE PROGRAMS THEY HAVE SELECTED AND AGREES TO PROVIDE
LESSOR UPON REQUEST WITH WRITTEN INSPECTION REPORTS FOR INSPECTIONS ACCOMPLISHED
UNDER SAID PROGRAM.
THE LESSEE IS SOLELY RESPONSIBLE FOR OPERATIONAL CONTROL OF THE AIRCRAFT AND
CERTIFIES AND AGREES TO COMPLY WITH ALL APPLICABLE FAA REGULATIONS NOW IN EFFECT
OR SUBSEQUENT FAA REGULATIONS ISSUED DURING THE TERM OF THE LEASE AGREEMENT. THE
LESSEE IS HERERY ADVISED THAT AN EXPLANATION OF FACTORS BEARING ON OPERATIONAL
CONTROL AND PERTINENT FAA REGULATIONS CAN BE OBTAINED FROM THE NEAREST FAA
FLIGHT STANDARDS DISTRICT OFFICE. LESSEE AGREES TO KEEP A COPY OF THIS LEASE
AGREEMENT IN THE AIRCRAFT AT ALL TIMES DURING THE TERM OF THIS LEASE AGREEMENT.
IN WITNESS WHEREOF, the Lessor and Lessee have each caused this Lease to be duly
executed.
Air Response, Inc. (LESSEE)
P.O. Box 109
Fort Plain, New York 13339
<PAGE>
<PAGE>
By:/s/ Louis R. Capece
-----------------------------
Louis R. Capece
President and Secretary
U.S. BANCORP LEASING & FINANCIAL (LESSOR)
By:
-----------------------------
Address for All Notices:
U. S. Bancorp Leasing & Financial
825 N. E. Multnomah, Suite 800
Portland, Oregon 97232
Machine Tool Finance Group General Equipment Group
(800) 225-8029 (503) 797-0222 (800) 253-3468 (503) 797-0200
<PAGE>
<PAGE>
PROMISSORY NOTE
<TABLE>
<S> <C>
Loan No. 01-901-27383-01-00005
Note No. 0001
Borrower(s):
AIR RESPONSE, INC.
---------------------------------------------
NAME(S) (If partnership or co-ownership, name
all partners or co-owners.)
55 E. MAIN STREET
---------------------------------------------
Address
September 20, 1996 Wichita, Kansas NELLISTON NY 13410
- ---------------------- ---------------------------------------------
City State Zip Code
</TABLE>
1. Definitions. In this Promissory Note, the words "I," "me," and "mine" mean
all who sign this Promissory Note as Borrower(s). The words "you" and "your(s)"
mean Cessna Finance Corporation, 5800 E. Pawnee Road, P.O. Box 308, Wichita,
Kansas 67201-0308, and any party to whom Cessna Finance Corporation assigns this
Promissory Note. The words "we," "us" and "our(s)" mean both the Borrower(s) and
Lender. Borrower(s) is/are a Corporation.
2. Security for Payment of Promissory Note. This Promissory Note evidences an
advance of credit made to me as of the date appearing above. By signing this
Promissory Note, I acknowledge my receipt and acceptance of the advance of
credit in the AMOUNT FINANCED set out below. I agree that my obligations under
this Promissory Note will be secured by the Security Agreement between us dated
September 20, 1996, as the same may be amended, extended, supplemented, modified
or replaced from time to time (the "Security Agreement"), which grants you a
security interest in the Aircraft described below and further defined in the
Security Agreement, including, without limitation, the following aircraft:
Year Manufacturer Model FAA Reg No. Serial No.
1972 MITSUBISHI MU-2B-35 N3330K 551
3. Loan Breakdown. The following is a breakdown of my credit terms under this
Promissory Note:
<TABLE>
<S> <C>
a. AMOUNT FINANCED (the amount of credit provided to me or on
my behalf-includes an origination fee in the amount of $400.00): $253,850.00
-----------
*b. FINANCE CHARGE (the dollar amount the credit will cost me): $ 94,659.28
-----------
*c. ANNUAL PERCENTAGE RATE (the cost of my credit expressed as a yearly rate):
(1) a Variable rate of Prime Rate plus** 1.25%
(fixed or variable)
(initial ANNUAL PERCENTAGE RATE= 9.50%),
through and until paid in full, followed by
(2) a N/A rate of N/A plus** N/A % thereafter until paid in full.
(fixed or variable)
*d. TOTAL OF PAYMENTS (the amount I will have paid after I have made all
payments as scheduled): $348,509.28
___________
</TABLE>
*Estimate: see Paragraph 6, "Late Payments and Prepayments," and Paragraph
7, "Changes in Rate and Payments."
**The additional interest factor added after the word "plus" for variable
rate applications is hereafter referred to as the "Additional Rate."
<PAGE>
4. Promise to Pay. I promise to pay to you or to your order the AMOUNT FINANCED,
together with the FINANCE CHARGE computed on the principal balance of the AMOUNT
FINANCED remaining unpaid from time to time at the applicable ANNUAL PERCENTAGE
RATE, as defined above, until the AMOUNT FINANCED and any applicable FINANCE
CHARGE are paid in full. I will make my payments according to the Payment
Schedule described below, subject to any revisions that may be adopted pursuant
to this Promissory Note. I understand and agree that you will apply any payments
that you receive from me: first, to the repayment of all sums that I may owe you
in connection with any future advances that you make pursuant to Paragraph 11 of
the Security Agreement; second, (at your sole discretion and in such order as
you may select) to any other indebtedness (both present and future) secured by
the Security Agreement; third, to any prepayment premium, if applicable, in an
amount determined by reference to the schedule set out in Paragraph 6; fourth,
to any unpaid FINANCE CHARGE that I may owe as of the date you receive any
payment; and fifth, to the unpaid principal balance of the AMOUNT FINANCED
pursuant to this Promissory Note.
5. Payment Schedule. Subject to any applicable adjustments described in
Paragraphs 6 and 7, I agree to pay you the AMOUNT FINANCED, together with
applicable FINANCE CHARGE pursuant to the following Payment Schedule:
<TABLE>
<S> <C> <C>
84 payments of $4148.92 (beginning October 20, 1996, with a payment in the same amount on the same
day of each month thereafter), succeeded by
N/A payments of $ N/A (beginning N/A, with a payment in the same amount on the same
day of each month thereafter), and
N/A.
</TABLE>
6. Late Payments and Prepayments. I understand and agree that the FINANCE CHARGE
will be calculated on a daily basis using actual days elapsed. If I make any
payment after its due date, the FINANCE CHARGE and TOTAL OF PAYMENTS will
increase. If I make any payment before its due date, the FINANCE CHARGE and the
TOTAL OF PAYMENTS will decrease. I agree that the aggregate change in the
FINANCE CHARGE and the aggregate change in the TOTAL OF PAYMENTS resulting from
payments made before or after their due dates will be reflected and paid by me
in the final payment, if I have not paid such sums before that date. You agree
that so long as I am not in default on any of my obligations under this
Promissory Note, the Security Agreement or any other contract or agreement
between us (both present and future), in consideration of my payment of the
prepayment premiums as set forth below in this paragraph, you hereby grant me
the privilege at any time to pay in advance all or any part of the unpaid
principal balance of the AMOUNT FINANCED, but I agree that any such advance
payment must be made and applied as specified in Paragraph 4. The prepayment
premium shall be an amount equal to a percentage of the then unpaid principal
balance of the AMOUNT FINANCED, as follows: 0.00% during the first year of this
Promissory Note; 0.00% during the second year of this Promissory Note; 0.00%
during the third year of this Promissory Note; 0.00% during the fourth year of
this Promissory Note; 0.00% thereafter.
NOTICE TO BORROWER(S):
1. SEE THE BACK OF THIS PAGE FOR ADDITIONAL TERMS AND CONDITIONS.
2. DO NOT SIGN THIS PROMISSORY NOTE BEFORE READING IT OR IF IT CONTAINS ANY
BLANK SPACE.
3. BORROWER IS ENTITLED TO A COMPLETELY FILLED IN COPY OF THIS PROMISSORY NOTE.
I HAVE READ THIS ENTIRE PROMISSORY NOTE AND HAVE RECEIVED A COPY OF IT.
<TABLE>
<S> <C>
AIR RESPONSE, INC.
- --------------------------------------------
BORROWER(S) (If partnership or co-ownership,
name all partners or co-owners.)
By: /s/ Louis R. Capece--President By:
--------------------------------------------------- ------------------------------------------
(If Corporation, show title of officer (Title) (Signature) (Title)
signing. If partnership or co-ownership,
all partners or co-owners must sign.)
By: By:
--------------------------------------------------- ------------------------------------------
(Signature) (Title) (Signature) (Title)
</TABLE>
Page 1 of 2
<PAGE>
<PAGE>
Learjet 25, s/n 25-012
PROMISSORY NOTE
$500,000.00 October 23, 1996
For value received, the undersigned (jointly and severally if more than
one) promises to pay to the order of Textron Financial Corporation ("TFC"), a
Delaware corporation having its principal place of business in Providence, Rhode
Island (together with any other holder of this Note, hereinafter referred to as
the "Holder"), the principal sum of Five Hundred Thousand Dollars ($500,000.00),
together with interest thereon as provided herein. The obligations of the
undersigned hereunder are "Obligations" secured by the "Collateral" as defined
and described in a Security Agreement between the undersigned and the Holder
dated as of October 23, 1996 (the "Security Agreement"), and the Holder shall be
entitled to all of the rights and privileges provided therein, including rights
of acceleration of this Note.
Interest shall accrue on the unpaid balance of this Note from time to
time outstanding at the floating rate of one and one-half percent (1.50%) per
annum above the prime commercial rate of interest announced by the Chase
Manhattan Bank, N.A., New York, New York and in effect on the first day of the
month preceding the month in which a scheduled payment is due hereunder (the
"Interest Rate"). All calculations of interest hereunder shall be made on the
basis of a 360-day year comprised of twelve 30-day months.
Each installment shall be due and payable monthly commencing November
15, 1996 and continuing on the same date of each month thereafter ("Payment
Dates"), through and including October 15, 2001 (the "Maturity Date") and shall
be in an amount necessary to fully amortize the principal balance of this Note
with level payments of principal and interest calculated (upon each change in
the Interest Rate) over the then remaining period of an assumed original term of
this Note of ten years by application of each such payment first to the accrued
interest on the outstanding principal balance of this Note, and the remainder to
reduction of the outstanding principal balance of this Note. The final
installment due and payable on the Maturity Date shall be in an amount equal to
the entire outstanding principal balance of this Note, together with all accrued
interest, charges and other amounts then due and owing hereunder and under the
Security Agreement.
In the event any amount due hereunder is past due by more than ten (10)
days, the undersigned agrees to pay a late charge equal to the lesser of (a)
five percent (5%) on and in addition to the amount of the past due payment or
(b) the maximum charges allowable under then applicable law. Upon the maturity
of this Note (by reason of default and acceleration or otherwise), the
undersigned agrees to pay interest on the unpaid balance and all accrued and
unpaid amounts due hereunder and under the Security Agreement from the maturity
hereof through the day of payment at a rate of interest equal to the lesser of
(a) the Holder's then current default rate of interest, or (b) the maximum rate
of interest allowable under then applicable law.
Each payment hereunder shall be made in lawful money of the United
States and shall be
<PAGE>
<PAGE>
payable to such account or address as the Holder hereof shall from time to time
direct the undersigned. All amounts received shall be applied first, to accrued
late charges and any other costs or expenses due and owing hereunder or under
the terms of the Security Agreement; second, to accrued interest; and third, to
unpaid principal. If at any time during the term of this Note the interest rate
applicable hereunder exceeds the maximum rate of interest permitted under then
applicable law, then the interest rate shall thereafter be deemed to be the
maximum rate permitted under then applicable law, and amounts of interest
received from the undersigned in excess of such maximum rate shall be considered
reductions to principal to the extent of any such excess.
Failure to pay this Note, or any installment hereunder promptly when
due, or default or failure in the performance or due observance of any of the
terms, conditions or obligations hereunder or under the Security Agreement or in
any other agreement or instrument between the undersigned (or any endorser,
guarantor, surety or other party liable for the undersigned's obligations
hereunder, or any other entity controlling, controlled by, or under common
control with the undersigned) and the Holder (or any other entity controlling,
controlled by or under common control with the Holder), shall entitle the Holder
to accelerate the maturity of this Note and to declare the entire unpaid
principal balance and all accrued interest and other charges owing hereunder
(including prepayment fees) and under the Security Agreement to be immediately
due and payable, and to proceed at once to exercise each and every one of the
remedies set forth in the Security Agreement or otherwise available at law or in
equity.
The undersigned and all other parties who may be liable (whether as
endorsers, guarantors, sureties or otherwise) for payment of any sum or sums due
or to become due under the terms of this Note waive diligence, presentment,
demand, protest, notice of dishonor, notice of intent to accelerate, notice that
the debt has been accelerated and notice of any other kind whatsoever and agree
to pay all costs incurred by the Holder in enforcing its rights under this Note
or the Security Agreement, including reasonable attorney's fees, and they do
hereby consent to any number of renewals or extensions at any time in the
payment of this Note. No extension of time for payment of this Note made by any
agreement with any person now or hereafter liable for payment of this Note shall
operate to release, discharge, modify, change or affect the original liability
of the undersigned under this Note, either in whole or in part. No delay or
failure by the Holder hereof in exercising any right, power, privilege or remedy
shall be deemed to be a waiver of the same or any part thereof, nor shall any
single or partial exercise thereof or any failure to exercise the same in any
instance preclude any future exercise thereof, or exercise of any other right,
power, privilege or remedy, and the rights and remedies provided for hereunder
are cumulative and not exclusive of any other right or remedy available at law,
or in equity. The Holder of this Note may proceed against all or any of the
Collateral securing this Note or against any guarantor hereof, or may proceed
contemporaneously or in the first instance against the undersigned, in such
order and at such times following default hereunder as the Holder may determine
in its sole discretion. All of the undersigned's obligations under this Note are
absolute and unconditional, and shall not be subject to any offset or deduction
whatsoever. The undersigned waives any right to assert, by way of counterclaim
or affirmative defense in any action to enforce the undersigned's obligations
hereunder, any claim whatsoever against the Holder of this Note.
<PAGE>
<PAGE>
The provisions of this Note shall be governed by and construed in
accordance with the laws of the State of Rhode Island.
ATTEST/WITNESS: MAKER: Air Response, Inc.
/s/ Robert L. Hudson, Jr. (L.S.) By: /s/ Louis R. Capece
________________________________ _____________________________
Name: Robert L. Hudson Name: Louis R. Capece, Jr.
__________________________ ___________________________
Title: President
__________________________
<PAGE>
<PAGE>
Cessna 340A, s/n 340A-0054
PROMISSORY NOTE
$145,000.00 October 23, 1996
For value received, the undersigned (jointly and severally if more than
one) promises to pay to the order of Textron Financial Corporation ("TFC"), a
Delaware corporation having its principal place of business in Providence, Rhode
Island (together with any other holder of this Note, hereinafter referred to as
the "Holder"), the principal sum of One Hundred Forty-five Thousand dollars
($145,000.00), together with interest thereon as provided herein. The
obligations of the undersigned hereunder are "Obligations" secured by the
"Collateral" as defined and described in a Security Agreement between the
undersigned and the Holder dated as of October 23, 1996 (the "Security
Agreement"), and the Holder shall be entitled to all of the rights and
privileges provided therein, including rights of acceleration of this Note.
Interest shall accrue on the unpaid principal balance of this Note from
time to time outstanding at the floating rate of one and one-half percent
(1.50%) per annum above the prime commercial rate of interest announced by the
Chase Manhattan Bank N.A., New York, New York and in effect on the first day of
the month preceding the month in which a scheduled payment is due hereunder (the
"Interest Rate"). All calculations of interest hereunder shall be made on the
basis of a 360-day year comprised of twelve 30-day months.
Each installment shall be due and payable monthly commencing November 15,
1996 and continuing on the same date of each month thereafter ("Payment Dates"),
through and including October 15, 2001 (the "Maturity Date") and shall be in an
amount necessary to fully amortize the principal balance of this Note with level
payments of principal and interest calculated (upon each change in the Interest
Rate) over the then remaining term of this Note through and including the
Maturity Date by application of each such payment first to the accrued interest
on the outstanding principal balance of this Note, and the remainder to
reduction of the outstanding principal balance of this Note. The final
installment due and payable on the Maturity Date shall be in an amount equal to
the entire outstanding principal balance of this Note, together with all accrued
interest, charges and other amounts then due and owing hereunder and under the
Security Agreement.
In the event any amount due hereunder is past due by more than ten (10)
days, the undersigned agrees to pay a late charge equal to the lesser of (a)
five percent (5%) on and in addition to the amount of the past due payment or
(b) the maximum charges allowable under then applicable law. Upon the maturity
of this Note (by reason of default and acceleration or otherwise), the
undersigned agrees to pay interest on the unpaid balance and all accrued and
unpaid amounts due hereunder and under the Security Agreement from the maturity
hereof through the day of payment at a rate of interest equal to the lesser of
(a) the Holder's then current default rate of interest, or (b) the maximum rate
of interest allowable under then applicable law.
<PAGE>
<PAGE>
Each payment hereunder shall be made in lawful money of the United States
and shall be payable to such account or address as the Holder hereof shall from
time to time direct the undersigned. All amounts received shall be applied
first, to accrued late charges and any other costs or expenses due and owing
hereunder or under the terms of the Security Agreement; second, to accrued
interest; and third, to unpaid principal. If at any time during the term of this
Note the interest rate applicable hereunder exceeds the maximum rate of interest
permitted under then applicable law, then the interest rate shall thereafter be
deemed to be the maximum rate permitted under then applicable law, and amounts
of interest received from the undersigned in excess of such maximum rate shall
be considered reductions to principal to the extent of any such excess.
Failure to pay this Note, or any installment hereunder promptly when due,
or default or failure in the performance or due observance of any of the terms,
conditions or obligations hereunder or under the Security Agreement or in any
other agreement or instrument between the undersigned (or any endorser,
guarantor, surety or other party liable for the undersigned's obligations
hereunder, or any other entity controlling, controlled by, or under common
control with the undersigned) and the Holder (or any other entity controlling,
controlled by or under common control with the Holder), shall entitle the Holder
to accelerate the maturity of this Note and to declare the entire unpaid
principal balance and all accrued interest and other charges owing hereunder
(including prepayment fees) and under the Security Agreement to be immediately
due and payable, and to proceed at once to exercise each and every one of the
remedies set forth in the Security Agreement or otherwise available at law or in
equity.
The undersigned and all other parties who may be liable (whether as
endorsers, guarantors, sureties or otherwise) for payment of any sum or sums due
or to become due under the terms of this Note waive diligence, presentment,
demand, protest, notice of dishonor, notice of intent to accelerate, notice that
the debt has been accelerated and notice of any other kind whatsoever and agree
to pay all costs incurred by the Holder in enforcing its rights under this Note
or the Security Agreement, including reasonable attorney's fees, and they do
hereby consent to any number of renewals or extensions at any time in the
payment of this Note. No extension of time for payment of this Note made by any
agreement with any person now or hereafter liable for payment of this Note shall
operate to release, discharge, modify, change or affect the original liability
of the undersigned under this Note, either in whole or in part. No delay or
failure by the Holder hereof in exercising any right, power, privilege or remedy
shall be deemed to be a waiver of the same or any part thereof; nor shall any
single or partial exercise thereof or any failure to exercise the same in any
instance preclude any future exercise thereof, or exercise of any other right,
power, privilege or remedy, and the rights and remedies provided for hereunder
are cumulative and not exclusive of any other right or remedy available at law
or in equity. The Holder of this Note may proceed against all or any of the
Collateral securing this Note or against any guarantor hereof, or may proceed
contemporaneously or in the first instance against the undersigned, in such
order and at such times following default hereunder as the Holder may determine
in its sole discretion. All of the undersigned's obligations under this Note are
absolute and unconditional, and shall not be subject to any offset or deduction
whatsoever. The undersigned waives any right to assert, by way of counterclaim
or affirmative defense in any action to enforce the undersigned's obligations
hereunder, any claim whatsoever against the Holder of this Note.
<PAGE>
<PAGE>
The provisions of this Note shall be governed by and construed in
accordance with the laws of the State of Rhode Island.
ATTEST/WITNESS: MAKER: Air Response, Inc.
/s/ Robert L. Hudson By: /s/ Louis R. Capece,
________________________________ _____________________________
Name: Robert L. Hudson Name: Louis R. Capece, Jr.
__________________________ ___________________________
Title: President
__________________________
<PAGE>
<PAGE>
We have issued our reports dated January 16, 1997 (except for note J, Subsequent
Events, as to which the date is February 17, 1997, and note E, Commitments and
Contingencies - Litigation, as to which the date is April 24, 1997) accompanying
the financial statements of Proflight Medical Response, Inc. contained in the
Registration Statement and Prospectus. We consent to the use of the
aforementioned reports in the Registration Statement and Prospectus, and to the
use of our name as it appears under the caption 'Experts', 'Summary Historical
and Pro Forma Financial Data' and 'Selected Financial Data.'
GRANT THORNTON LLP
Denver, Colorado
May 15, 1997
<PAGE>
<PAGE>
[LETTERHEAD OF STAFF MAIKELS & CIAMPINO, P.C.]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form SB-2 of our
report dated December 18, 1996, on our audit of the combined financial
statements of Air Response, Inc. and Air Response South, Inc. We also consent
to the reference to our firm under the caption "Experts."
May 14, 1997 /s/ Staff Maikels & Ciampino, P.C.
<PAGE>
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the inclusion in this Registration Statement of Proflight Medical
Response, Inc. on Form SB-2 of our report dated November 26, 1996 relating to
our audit of the combined statements of operations and retained earnings and
cash flows of Air Response, Inc. and Air Response South, Inc. for the year ended
May 31, 1995.
We also consent to the reference to us under the headings 'Summary Historical
and Pro Forma Financial Data', 'Selected Financial Data' and 'Experts' in
such Registration Statement.
/s/ KAUFMAN, ROSSIN & CO.
Miami, Florida
May 14, 1997
<PAGE>
