<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
---------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-16079
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AIR METHODS CORPORATION
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(Exact name of Registrant as Specified in Its Charter)
Delaware 84-0915893
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(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
7301 South Peoria, Englewood, Colorado 80112
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (303) 792-7400
-------------------
N/A
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Former Name, Former Address and Former Fiscal Year, if Changed Since
Last Report.
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes X No
------------- ---------------
The number of shares of Common Stock, par value $.06, outstanding
as of October 31, 1995 was 8,077,399.
<PAGE>
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - September 30, 1995
and December 31, 1994 1
Statements of Operations for the three and nine
months ended September 30, 1995 and 1994 3
Statements of Cash Flows for the nine months
ended September 30, 1995 and 1994 4
Notes to Financial Statements 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 2. Changes in Securities 9
Item 3. Defaults upon Senior Securities 9
Item 4. Submission of Matters to a Vote of
Security Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 9
SIGNATURES 10
<PAGE>
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AIR METHODS CORPORATION
BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1994
------------- ------------
Assets (unaudited)
- ------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 2,864 696
Current installment of notes receivable 348 324
Receivables:
Trade 1,075 900
Insurance proceeds 216 49
Employees and other 270 65
-------- --------
1,561 1,014
-------- --------
Inventories 1,413 1,522
Work-in-progress on medical interiors 10 240
Assets held for sale 14 4,529
Prepaid expenses and other 646 1,511
-------- --------
Total current assets 6,856 9,836
-------- --------
Equipment and leasehold improvements:
Flight and ground support equipment 36,558 36,221
Furniture and office equipment 1,242 1,161
-------- --------
37,800 37,382
Less accumulated depreciation and amortization (6,499) (4,667)
-------- --------
Net property and equipment 31,301 32,715
-------- --------
Excess of cost over the fair value of net assets acquired,
net of accumulated amortization of $ 381 and $ 308 at September
30, 1995 and December 31, 1994, respectively 2,046 2,119
Notes receivable, less current installments 1,934 2,197
Patent application costs and other assets, net of
accumulated amortization of $ 489 and $ 424 at September
30, 1995 and December 31, 1994, respectively 950 1,267
-------- --------
$ 43,087 48,134
======== ========
</TABLE>
(Continued)
See accompanying notes to financial statements.
-1-<PAGE>
AIR METHODS CORPORATION
BALANCE SHEETS, CONTINUED
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1994
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Liabilities and Stockholders' Equity (unaudited)
- ------------------------------------
<S> <C> <C>
Current Liabilities:
Notes payable $ 781 2,278
Current installments of long-term debt 1,137 4,870
Current installments of obligations under capital leases 734 722
Accounts payable 981 746
Accrued overhaul and parts replacement costs 1,300 804
Deferred revenue 720 10
Accrued restructuring expenses and
other accrued liabilities 1,868 2,298
-------- --------
Total current liabilities 7,521 11,728
-------- --------
Long-term debt, less current installments 6,705 7,569
Obligations under capital leases, less current installments 4,734 5,302
Accrued overhaul and parts replacement costs 4,282 4,559
Other liabilities 892 945
-------- --------
Total liabilities 24,134 30,103
-------- --------
Stockholders' equity:
Common stock, $.06 par value. Authorized 16,000,000 shares;
issued 8,102,644 and 8,051,765 shares at September
30, 1995 and December 31, 1994, respectively 485 481
Additional paid-in capital 49,637 49,572
Accumulated deficit (note 3) (31,169) (32,022)
-------- --------
Total stockholders' equity 18,953 18,031
-------- --------
$ 43,087 48,134
======== ========
</TABLE>
See accompanying notes to financial statements.
-2-<PAGE>
AIR METHODS CORPORATION
STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
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SEPTEMBER 30, SEPTEMBER 30,
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1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue:
Flight revenue $ 6,658 6,831 19,782 19,857
Sales of medical interiors and products 1,056 488 2,761 962
International franchise revenue 100 -- 100 --
Gain on disposition of assets, net -- 65 -- --
-------- -------- -------- --------
7,814 7,384 22,643 20,819
-------- -------- -------- --------
Operating expenses:
Flight centers 1,800 2,232 6,070 6,808
Aircraft operations 2,580 2,226 6,412 6,389
Aircraft rental 321 496 1,124 2,038
Medical interiors and parts 869 1,045 2,407 2,098
Depreciation and amortization 670 629 1,973 1,843
Loss on disposition of assets, net 5 -- 16 1,647
General and administrative 1,032 1,098 2,970 4,013
Restructuring and other non-recurring expenses -- -- -- 3,010
-------- -------- -------- --------
7,277 7,726 20,972 27,846
-------- -------- -------- --------
Operating income (loss) 537 (342) 1,671 (7,027)
Other income (expense):
Interest expense (326) (348) (1,078) (986)
Interest and dividend income 69 87 206 229
Other, net -- -- 54 6
-------- -------- -------- --------
Net income (loss) $ 280 (603) 853 (7,778)
========= ========= ========= =========
Income (loss) per common share $ .03 (.08) .11 (.98)
========= ========= ========= =========
Weighted average number of
common shares outstanding 8,075,695 8,022,730 8,068,769 7,899,990
========== ========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
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AIR METHODS CORPORATION
STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
-----------------
SEPTEMBER 30,
-------------
1995 1994
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<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 853 (7,778)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization expense 1,973 1,843
Vesting of common stock and options issued for services and in connection
with employee stock compensation agreements, net of forfeitures 69 (227)
Loss on retirement and sale of equipment 16 1,647
Provision for restructuring and non-recurring expenses -- 2,218
Changes in assets and liabilities:
Decrease (increase) in prepaid and other current assets 1,257 (616)
Decrease (increase) in receivables (502) 617
Decrease in inventories 109 487
Decrease in work-in-progress on medical interiors 193 418
Increase (decrease) in accounts payable, accrued restructuring expenses,
and other accrued liabilities (194) 393
Increase in deferred revenue and other liabilities 656 975
Increase in accrued overhaul and parts replacement costs 219 836
-------- --------
Net cash provided by operating activities 4,649 813
-------- --------
Cash flows from investing activities:
Acquisition of equipment and leasehold improvements (430) (3,699)
Proceeds from retirement and sale of equipment and assets held for sale 4,109 675
Proceeds from maturity of short-term investments -- 504
Decrease in notes receivable, patent application costs and other assets 490 267
-------- --------
Net cash provided (used) by investing activities 4,169 (2,253)
-------- --------
Cash flows from financing activities:
Issuance of common stock and warrants for cash -- 6,059
Net payments under short-term notes payable (1,497) (2,069)
Payments for syndication and solicitation costs -- (152)
Proceeds from issuance of debt -- 985
Payments of long-term debt (4,597) (1,443)
Payments of capital lease obligations (556) (1,629)
-------- --------
Net cash provided (used) by financing activities (6,650) 1,751
-------- --------
Increase in cash and cash equivalents 2,168 311
Cash and cash equivalents at beginning of period 696 2,154
-------- --------
Cash and cash equivalents at end of period $ 2,864 2,465
========= ========
</TABLE>
See accompanying notes to financial statements.
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NOTES TO FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
---------------------
In the opinion of management, the accompanying unaudited
financial statements contain all adjustments (consisting of only
normal recurring accruals) necessary to present fairly the
financial statements for the respective periods. Interim results
are not necessarily indicative of results for a full year. The
financial statements should be read in conjunction with the
Company's audited consolidated financial statements and notes
thereto for the transitional fiscal year ended December 31, 1994.
(2) INCOME (LOSS) PER SHARE
-----------------------
Per-share information is based on the weighted-average number of
shares of common stock outstanding during each of the periods.
Shares issuable upon the exercise of warrants and stock options
are not included in the calculations, since their inclusion would
be anti-dilutive.
(3) STOCKHOLDERS' EQUITY
--------------------
Changes in the stockholders' equity for the nine months ended
September 30, 1995 consisted of the following (amounts in
thousands except share amounts):
<TABLE>
<CAPTION>
Nine Months Ended
September 30, 1995
--------------------
Shares Amount
------ ------
<S> <C> <C>
Balance at January 1, 1995 8,051,765 $ 18,031
Issuance of common shares for
options exercised and services rendered 50,879 72
Amortization of deferred compensation expense -- (3)
Net income -- 853
--------- ---------
Balance at September 30, 1995 8,102,644 18,953
========= ========
</TABLE>
-5-<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company reported net income of $280,000 and $853,000 for
the three and nine months ended September 30, 1995,
respectively, compared to net losses of $603,000 and
$7,778,000 for the comparable periods in 1994. The loss for
the nine months ended September 30, 1994, included a
restructuring charge of $3,010,000 and net losses on the
disposition of assets and other non-recurring items of
$2,365,000. Without the restructuring charge and other non-
recurring items, the loss for the nine-month period would
have been $2,403,000. The improvement in operating results
is primarily attributable to the improved performance of the
Company's Products Division and to a reduction in general
and administrative expenses.
Sales of medical interiors and products increased $568,000
(or 116.4%) and $1,799,000 (or 187.0%) for the three and
nine months ended September 30, 1995, respectively, in
comparison to the comparable periods in 1994. In the third
quarter of 1995 the Company recognized revenue of $458,000
from the design of a medical interior for a Lockheed L-1011
aircraft and $350,000 from the sale of a medical interior
for a Bell 206 helicopter and other equipment to a Brazilian
customer. The nine months ended September 30, 1995 also
included revenue from the sale of a medical interior for a
Bell 412 helicopter, the sale of passenger oxygen systems,
the installation of an advanced navigational and weather
detection system, and the refurbishment of an interior for
an existing customer. The revenue recorded in the
comparable nine-month period in 1994 related to the
completion of five emergency medical interiors for Bell
Helicopters, Inc. for use outside the United States and to
the sale of a medical interior to one of the Company's
hospital customers. The cost of medical interiors decreased
16.8% for the three months ended September 30, 1995 as
compared to the previous year but increased 14.7% for the
nine months ended September 30, 1995. The increase for the
nine-month period reflects the increase in the volume of
products sold. The increase in cost of sales is less than
the increase in sales primarily because of higher margins
earned on the work performed in 1995 compared to 1994. Cost
of sales also includes Product Division overhead costs,
including facilities rent and management salaries, which do
not vary with the volume of products completed. In
addition, the cost of medical interiors for the nine months
ended September 30, 1994, included $653,000 of payments for
work on a medical interior that the Company had
subcontracted to an outside vendor. The work done by the
subcontractor was subsequently determined to be
unsatisfactory and was reperformed by the Company. The
decrease in cost of medical interiors for the three months
ended September 30, 1995, is due primarily to significant
costs incurred in the three-month period ended September 30,
1994, for the development of the interior sold to one of the
Company's hospital customers.
Flight revenue remained basically unchanged in the three and
nine months ended September 30, 1995 in comparison to the
same periods in the previous year. In general, the
Company's contracts with hospital clients are subject to
annual increases based on changes in the Consumer Price
Index (CPI). The volume of revenue hours flown by the
Company's fleet is dependent upon hospital demand and to a
lesser extent weather conditions; total revenue hours for
the three and nine months ended September 30, 1995 decreased
5% compared to the hours for the same periods in the
previous year primarily because of the termination of air
charter operations and 3 airplane medical contracts during
the quarter ended September 30, 1994. The effect of
terminating these operations was offset by revenue of
$460,000 from the short-term lease of one of the Company's
aircraft during the nine months ended September 30, 1995.
Flight center costs decreased 19.4% and 10.8% for the three
and nine months ended September 30, 1995, due to the
decrease in the number of airplane medical contracts. The
Company also experienced a decrease in workers compensation
insurance premiums for the period because claims filed for
the policy year were less than projected by the insurance
carrier. In addition, flight center costs for the three
months ended September 30, 1994, included approximately
$97,000 in termination fees associated with the discontinued
airplane contracts.
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The Company recognized $100,000 of international franchise
revenue during the quarter ended September 30, 1995,
representing the first installment of a ten-year franchise
agreement signed in February 1995 with a Brazilian company.
Under the exclusive franchise agreement, the Brazilian
company purchased the right to use the trademarks and
expertise of the Company in providing air medical services
in Brazil, in exchange for an initial acquisition price of
$2,250,000 plus annual royalties based on gross revenues.
Aircraft operating expenses increased by 15.9% and 0.4% for
the three and nine months ended September 30, 1995,
respectively, in comparison to the three and nine months
ended September 30, 1994. The increase is primarily due to
higher repair and maintenance costs for the fleet in 1995.
Included in repair and maintenance costs for the quarter
ended September 30, 1995, was the cost of refurbishing and
upgrading the interior for one of the Company's aircraft as
well as the cost of repainting two aircraft. Aircraft
operating expenses consist of fuel, insurance, and
maintenance costs and generally are a function of the size
of the fleet, the type of aircraft flown, and the number of
hours flown.
Aircraft rental expense decreased by 35.3% and 44.8% for the
three and nine months ended September 30, 1995,
respectively, as compared to 1994. The Company has
eliminated seven leased aircraft from its fleet which had
been in operation during all or part of the nine months
ended September 30, 1994. An eighth previously leased
aircraft was purchased by one of the Company's hospital
customers during the nine months ended September 30, 1995,
and is still operated by the Company. Lease expense
recognized on these aircraft in the nine months ended
September 30, 1994, totaled $998,000.
Depreciation and amortization expense increased 6.5% and
7.1% for the three and nine months ended September 30, 1995,
respectively. The increases are primarily the result of
the addition of approximately $650,000 of equipment to the
Company's rotable equipment inventory during the nine months
ended September 30, 1995.
The 6.0% and 26.0% decreases in general and administrative
expenses for the three- and nine-month periods ended
September 30, 1995, respectively, reflect the effects of the
Company's restructuring plan which was implemented in the
quarters ended March 31 and June 30, 1994. The
restructuring plan included a reduction in the
administrative work force and a decreased reliance on
outside contractors and other professional services,
resulting in declines in administrative expense of
approximately $366,000 and $120,000, respectively, for the
nine months ended September 30, 1995. The Company's Board
of Directors has met quarterly in the current year as
compared to monthly during the restructuring, causing a
decrease of $176,000 in costs for the nine months ended
September 30, 1995. In addition, in the nine months ended
September 30, 1994, the Company incurred expenses of almost
$280,000 associated with the development of a proposed joint
venture to provide air medical services in Mexico and the
pursuit of other manufacturing and service contracts. While
the Company continued to seek additional manufacturing and
service contracts in 1995, costs associated with these
efforts were only $42,000 for the nine months ended
September 30, 1995.
Interest expense decreased 6.3% in the third quarter of 1995
as compared to the same quarter in the previous year but
increased 9.3% for the nine months ended September 30, 1995.
In previous years the Company has generally procured
financing for its aircraft hull and liability insurance
premium through a note payable; however, the Company chose
not to finance the new premium beginning in July 1995.
Interest expense for the quarter, therefore, was lower than
in the quarter ended September 30, 1994. The increase for
the nine months is due to interest incurred on notes to
finance the acquisition of two aircraft; one aircraft was
placed in service in May 1994 and the other in January 1995.
The aircraft placed in service in January 1995 was
subsequently sold in March 1995.
Operating expenses for the nine months ended September 30,
1994, included $1,647,000 of valuation allowances and losses
on the disposition of aircraft and $3,010,000 of
restructuring expenses. The Company did not incur any
similar costs in the nine months ended September 30, 1995.
-7-<PAGE>
FINANCIAL CONDITION
Cash and cash equivalents increased $2,168,000 from $696,000
at December 31, 1994, to $2,864,000 as of September 30,
1995; the working capital deficit also decreased from
$1,892,000 to $665,000 over the same period. The increase
in cash and cash equivalents and the improvement in the
working capital position in the nine months ended September
30, 1995, is primarily due to the sale of one of the
Company's aircraft which generated approximately $700,000 in
cash after the retirement of the related debt and to the
positive cash flow generated by the Company's two operating
divisions. The positive cash flow from operations is a
result of both increased business in the Product Division
and cost containment measures taken since the restructuring
in 1994.
The Company expects to continue profitable operations in the
last quarter of 1995 and into 1996. Revenue will continue
to be recognized on the design and manufacture of the
medical interior for the Lockheed L-1011 aircraft through
the completion of the project in the second quarter of 1996.
The Company believes that cash flow generated from
operations will remain sufficient to meet its obligations
throughout fiscal 1995 without additional external
financing. In addition, the Company has four unencumbered
aircraft valued at approximately $7.4 million which could be
used to obtain additional financing, if necessary.
-8-<PAGE>
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In November 1992, a former employee brought a lawsuit
against the Company in the U. S. District Court for the
District of Minnesota alleging that the Company had
wrongfully discharged him. In September 1995 the District
Court issued a directed verdict in favor of the Company.
The employee appealed the case to the Eighth Circuit of the
U. S. Court of Appeals in November 1995. Management of the
Company believes the ultimate outcome of this action will
not have a material adverse impact on the Company's
financial position or results of operations.
ITEM 2. CHANGES IN SECURITIES
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable
ITEM 5. OTHER INFORMATION
Not Applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 Employment Agreement dated July 10, 1995, between the
Company and Aaron Todd
10.2 July 1, 1995 Amendment to Employment Agreement between
the Company and George W. Belsey
10.3 July 1, 1995 Amendment to Employment Agreement between
the Company and Michael G. Prieto
11.1 Calculation of Earnings Per Share
27.1 Financial Data Schedule
(b) Reports on Form 8-K
None.
____________________
-9-<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
AIR METHODS CORPORATION
Date: November 13, 1995 By Aaron D. Todd
--------------------------------------
On behalf of the Company, and as
Principal Financial and Accounting
Officer
-10-
FORM OF EMPLOYMENT AGREEMENT
This Agreement is made and entered into as of July 10,
1995, between AIR METHODS CORPORATION, a Delaware corporation
(the "Company"), and Aaron Todd (the "Executive").
RECITALS
The Company desires to employ the Executive as Chief
Financial Officer, Secretary and Treasurer, and the Executive
desires to be employed by the Company, upon the terms and
conditions set forth in this Agreement.
In consideration of the mutual promises contained
herein, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
AGREEMENT
1. Employment; Position; Term. The Company hereby
--------------------------
employs the Executive, and the Executive hereby accepts
employment with the Company, in the capacity of Chief Financial
Officer, Secretary and Treasurer. Subject to Section 4, the term
of the Executive's employment under this Agreement shall be for
one (1) year, beginning July 10, 1995. The term of this
Agreement shall be extended for successive one-year periods on
July 10 of each year beginning July 10, 1996, unless on or before
May 10, prior to any such renewal date the Company or the
Executive provides written notice to the other of its intention
not to renew.
2. Duties, Responsibilities and Authority. In his
--------------------------------------
capacity as Chief Financial Officer, Secretary and Treasurer, the
Executive shall have primary responsibility for maintenance of
the Company's books and records including, without limitation,
its financial and general corporate records, and shall perform
such other duties as are prescribed by applicable law and the
Company's bylaws for the offices which the Executive shall hold
pursuant to this Agreement, all of which duties shall be
conducted in accordance with policies established by the
Company's board of directors (the "Board"). In his capacity as
Chief Financial Officer, Secretary and Treasurer, the Executive
shall report to the Chief Operating Officer and be subject to the
additional direction and control of the Board and the Company's
Chairman and Chief Executive Officer. The Executive shall devote
his full professional and managerial time and effort to the
performance of his duties as Chief Financial Officer, Secretary
and Treasurer of the Company and he shall not engage in any other
business activity or activities which, in the mutual judgment of
<PAGE>
the Executive and the Board, do, in fact, conflict with the
performance of his duties under this Agreement.
3. Compensation.
------------
(a) Salary. For services rendered under this
------
Agreement, the Company shall pay the Executive a salary of
$90,000 per annum beginning July 10, 1995.
(b) Annual Review. The Executive's salary will
-------------
not be reviewed during the initial one-year term of the
Agreement. The Executive's first salary review shall be for the
period ending July 9, 1996, and, as appropriate, his salary shall
be adjusted effective July 10, 1996 and shall be reviewed
annually thereafter during the term of this Agreement.
(c) Stock Options. The Executive may participate
-------------
in stock option programs of the Company in accordance with the
policies applicable to other officers of the Company, upon such
terms as the administrators of such programs in their discretion
determine.
(d) Benefits and Vacation. The Executive shall
---------------------
be eligible to participate in such insurance programs (health,
disability, or life) or such other health, dental, retirement, or
similar employee benefits programs as the Board may approve, on a
basis comparable to that available to other officers and
executive employees of the Company. The Executive shall be
entitled to three (3) weeks of paid vacation during the first
full year of employment, and the Executive shall be entitled to
four (4) weeks of paid vacation per year in the second and
subsequent years of employment. Vacation time may be accumulated
for one (1) year beyond the year for which it is accrued and used
any time during such year, but any vacation time not used during
such additional year shall be forfeited. The value of any
accrued but unused vacation time shall be paid in cash to the
Executive upon termination of his employment for any reason.
(e) Reimbursement of Expenses. The Company shall
-------------------------
reimburse the Executive for all reasonable out-of-pocket expenses
incurred by the Executive in connection with the business of the
Company and in the performance of his duties under this Agreement
upon the Executive's presentation to the Company of an itemized
accounting of such expenses with reasonable supporting data.
4. Termination. Either party may terminate the
-----------
Executive's employment under this Agreement, without cause, upon
ninety (90) days' written advance notice to the other party, but
subject to the provisions of Section 7 hereof. The Company may
terminate the Executive's employment for "Cause" (as hereinafter
defined) immediately upon written notice stating the basis for
such termination. "Cause" for termination of the Executive's
employment shall only be deemed to exist if the Executive has
breached this Agreement and if such breach continues or recurs
-2-<PAGE>
more than 30 days after notice from the Company specifying the
action which constitutes the breach and demanding its
discontinuance, exhibited willful disobedience of reasonable
directions of the Board, or committed gross malfeasance in
performance of his duties hereunder or acts resulting in an
indictment charging the Executive with the commission of a
felony; provided that the commission of acts resulting in such an
indictment shall constitute Cause only if a majority of the
directors who are not also subject to any such indictment
determine that the Executive's conduct has substantially
adversely affected the Company or its reputation. A material
failure to perform his duties hereunder that results from the
disability of the Executive shall not be considered Cause for his
termination.
5. Disability. If the Executive shall be prevented
----------
by illness, accident, or other incapacity from properly
performing his duties hereunder (and, if required by the Company
upon the furnishing of evidence satisfactory to the Company of
such disability), the Company shall, during the continuance of
his disability but only for the remaining term of this Agreement,
pay the Executive his compensation payable under the provisions
of Section 3 (above) and continue to provide the Executive all
other benefits provided hereunder. As used herein, the term
"disability" shall mean the complete and total inability of the
Executive, due to illness, physical or comprehensive mental
impairment to substantially perform all of his duties as
described herein for a consecutive period of thirty (30) days or
more.
6. Death. In the event of the death of the
-----
Executive, except with respect to any benefits which have accrued
and have not been paid to the Executive hereunder, the provisions
of this Employment Agreement shall terminate immediately.
However, the Executive's estate shall have the right to receive
compensation due to the Executive as of and to the date of his
death and, furthermore, to receive an additional amount equal to
one-twelfth (1/12) of the Executive's annual compensation then in
effect as specified in Section 3, above.
7. Severance Pay. In the event that the Executive's
-------------
employment is terminated by the Company other than for Cause,
whether during or after the term of this Agreement, the Executive
shall be entitled to receive his then current compensation,
payable at the Company's regular payment intervals, for a period
of one year following the date of termination; provided, that if
any of such payments would (i) constitute a "parachute payment"
within the meaning of Section 280G of the Internal Revenue Code
of 1986 (the "Code") and (ii) but for this proviso be subject to
the excise tax imposed by Section 4999 of the Code (the "Excise
Tax"), the amount payable hereunder shall be reduced to the
largest amount which the Executive determines would result in no
portion of the payments hereunder being subject to the Excise
Tax. If the Executive voluntarily resigns his employment
-3-<PAGE>
hereunder, or if his employment is terminated for Cause, the
Executive shall not be entitled to any severance pay or other
compensation beyond the date of termination of his employment.
8. Covenant Not to Compete. During the continuance
-----------------------
of his employment by the Company and for a period of twenty-four
(24) months after termination of his employment, the Executive
shall not, anywhere in the United States, engage in any business
which competes directly or indirectly with the Company.
9. Trade Secrets and Confidential Information.
------------------------------------------
During his employment by the Company, and for a period of five
years thereafter, the Executive shall not, directly or
indirectly, use, disseminate, or disclose for any purpose other
than for the purposes of the Company's business, any of the
Company's confidential information or trade secrets, unless such
disclosure is compelled in a judicial proceeding. Upon
termination of his employment, all documents, records, notebooks,
and similar repositories of records containing information
relating to any trade secrets or confidential information then in
the Executive's possession or control, whether prepared by him or
by others, shall be left with the Company or returned to the
Company upon its request.
10. Severability. It is the desire and intent of the
------------
parties that the provisions of Sections 8 and 9 shall be enforced
to the fullest extent permissible under the laws and public
policies applied in each jurisdiction in which enforcement is
sought. Accordingly, if any particular sentence or portion of
either Section 8 or 9 shall be adjudicated to be invalid or
unenforceable, the remaining portions of such section
nevertheless shall continue to be valid and enforceable as though
the invalid portions were not a part thereof. In the event that
any of the provisions of Section 8 relating to the geographic
areas of restriction or the period of restriction shall be deemed
to exceed the maximum area or period of time which a court of
competent jurisdiction would deem enforceable, the geographic
areas and times shall, for the purposes of this Agreement, be
deemed to be the maximum areas or time periods which a court of
competent jurisdiction would deem valid and enforceable in any
state in which such court of competent jurisdiction shall be
convened.
11. Injunctive Relief. The Executive agrees that any
-----------------
violation by him of the agreements contained in sections 8 and 9
are likely to cause irreparable damage to the Company, and
therefore agrees that if there is a breach or threatened breach
by the Executive of the provisions of said sections, the Company
shall be entitled to an injunction restraining the Executive from
such breach. Nothing herein shall be construed as prohibiting
the Company from pursuing any other remedies for such breach or
threatened breach.
-4-<PAGE>
12. Miscellaneous.
-------------
(a) Notices. Any notice required or permitted to
-------
be given under this Agreement shall be directed to the
appropriate party in writing and mailed or delivered, if to the
Company, to P.O. Box 4114, 7301 South Peoria, Englewood, Colorado
80155 or to the Company's then principal office, if different,
and if to the Executive, to P.O. Box 4114, 7301 South Peoria,
Englewood, Colorado 80155 or to the Company's then principal
office, if different.
(b) Binding Effect. This Agreement is a personal
--------------
service agreement and may not be assigned by the Company or the
Executive, except that the Company may assign this Agreement to a
successor by merger, consolidation, sale of assets or other
reorganization. Subject to the foregoing, this Agreement shall
be binding upon and inure to the benefit of the parties hereto
and their respective successors, assigns, and legal
representatives.
(c) Amendment. This Agreement may not be amended
---------
except by an instrument in writing executed by each of the
parties hereto.
(d) Applicable Law. This Agreement is entered
--------------
into in the State of Colorado and for all purposes shall be
governed by the laws of the State of Colorado.
(e) Counterparts. This instrument may be
------------
executed in one or more counterparts, each of which shall be
deemed an original.
(f) Entire Agreement. This Agreement supersedes
----------------
and replaces all prior agreements between the parties related to
the employment of the Executive by the Company.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
AIR METHODS CORPORATION
By: [FORM]
--------------------------------
George Belsey, Chairman and
Chief Executive Officer
THE EXECUTIVE:
[FORM]
-----------------------------------
Aaron Todd
-5-
FORM OF AMENDED EMPLOYMENT AGREEMENT
This Amended Employment Agreement was made and entered into
as of June 1, 1994 and amended as of July 1, 1995, between Air Methods
Corporation, a Delaware corporation, with its principal place of
business at 7301 South Peoria, Englewood, Colorado 80112 (the
"Company") and George W. Belsey, who presently resides in Chicago,
Illinois (the "Executive").
RECITAL
A. The Company desires to employ the Executive as Chief
Executive Officer, and the Executive desires to be employed by the
Company in such position, upon the terms and conditions set forth in
this Agreement.
AGREEMENT
In consideration of the mutual promises contained herein,
the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
1. Employment; Position; Term. The Company hereby employs
--------------------------
the Executive, and the Executive hereby accepts employment with the
Company, in the capacity of Chief Executive Officer. Subject to
Section 4, the term of Executive's employment under this Agreement
(the "Term") shall be for five (5) years, beginning June 1, 1994. The
Term shall be extended for successive one-year periods on June 1 of
each year beginning June 1, 1999, unless on or before April 1 prior to
any such renewal date the Company or the Executive provides written
notice to the other of its or his intention not to renew.
2. Duties, Responsibilities and Authority. In his
--------------------------------------
capacity as Chief Executive Officer, the Executive shall have primary
responsibility for the overall management and operation of the
Company, which shall be conducted in accordance with policies
established by the Company's board of directors (the "Board"). In his
capacity as Chief Executive Officer, the Executive shall report to and
be subject to the direction and control of the Board. The Executive
shall devote his full professional and managerial time and effort to
the performance of his duties as Chief Executive Officer, and he shall
not engage in any other business activity or activities which, in the
mutual judgment of the Executive and the Board, do, in fact, conflict
with the performance of his duties under this Agreement.
3. Compensation.
------------
a. Salary. For services rendered under this
------
Agreement, the Company shall pay the Executive a salary at the rate of
$165,000 per annum. The salary earned for the period from June 1,
1994 through December 31, 1994, shall be paid on January 2, 1995, and
thereafter he shall be paid at the same intervals as other executives
of the Company.
<PAGE>
b. Annual Review. The Executive's salary shall be
-------------
reviewed annually beginning June 1, 1995, and it may be adjusted as
the Board deems appropriate.
c. Stock Options. Subject to approval of the Stock
-------------
Option Committee of the Board in its sole discretion the Executive
will be granted an option under the Company's Stock Option Plan to
purchase up to 250,000 shares of the Company's Common Stock at the
fair market value on the date of grant. One-fifth of the options
shall be exercisable immediately upon the date of grant; one-fifth
shall become exercisable on the anniversary date of the grant in each
of the years 1995, 1996, 1997 and 1998, and the options shall be
exercisable until 5 years after the date of grant. Such stock options
shall be evidenced by a Stock Option Agreement which sets forth all
applicable terms of the options. In addition, the Executive may
participate in stock option programs of the Company upon such terms as
the administrators of such programs in their discretion determine.
d. Benefits and Vacation. The Executive shall be
---------------------
eligible to participate in such insurance programs (health,
disability, or life) or such other health, dental, retirement, or
similar employee benefits programs as the Board may approve, on a
basis comparable to that available to other officers and executive
employees of the Company. The Executive shall be entitled to four (4)
weeks of paid vacation. Vacation time may be accumulated for one
(1) year beyond the year for which it is accrued and used any time
during such year, but any vacation time not used during such
additional year shall be forfeited. The value of any accrued but
unused and unforfeited vacation time shall be paid in cash to the
Executive upon termination of his employment for any reason.
e. Reimbursement of Expenses. The Company shall
-------------------------
reimburse the Executive for all reasonable out-of-pocket expenses
incurred by the Executive in connection with the business of the
Company and in the performance of his duties under this Agreement upon
the Executive's presentation to the Company of an itemized accounting
of such expenses with reasonable supporting data.
f. Relocation Expenses. The Company shall reimburse
-------------------
the Executive for expenses reasonably and necessarily incurred by the
Executive in connection with relocating from Illinois to Colorado.
The Executive shall provide the Company with an itemized accounting of
such expenses with reasonable supporting data prior to reimbursement.
Such expenses shall include the following:
(i) Direct expenses of moving household
furnishings from Chicago, Illinois to Colorado and other direct
expenses of moving to Colorado;
(ii) Real estate sales commissions incurred by the
Executive upon the sale of his home in Illinois, and an origination
fee of up to 1% of the principal amount of a mortgage loan obtained by
the Executive for the purpose of purchasing a home in Colorado;
(iii) Temporary living expenses for a reasonable
period of time pending the sale of the Executive's home in Illinois;
and
-2-<PAGE>
(iv) The cost of an appropriate home security
system, including the cost of installation in his hew home in
Colorado, subject to the Company's prior approval of such expenses.
4. Termination. Either party may terminate the
-----------
Executive's employment under this Agreement, without cause, upon
thirty (30) days' written advance notice to the other party, but
subject to the provisions of Section 7 hereof. The Company may
terminate the Executive's employment for "Cause" (as hereinafter
defined) immediately upon written notice stating the basis for such
termination. "Cause" for termination of the Executive's employment
shall only be deemed to exist if the Executive has breached this
Agreement, and if such breach continues or recurs more than thirty
(30) days after notice from the Company specifying the action which
constitutes the breach and demanding its discontinuance, exhibited
willful disobedience of directions of the Board, or committed gross
malfeasance in performance of his duties hereunder or acts resulting
in an indictment charging the Executive with the commission of a
felony; provided that the commission of acts resulting in such an
indictment shall constitute Cause only if a majority of the directors
who are not also subject to any such indictment determine that the
Executive's conduct has substantially adversely affected the Company
or its reputation. A material failure to perform his duties hereunder
that results from the disability of the Executive shall not be
considered Cause for his termination.
5. Disability. If the Executive shall be prevented by
----------
illness, accident, or other incapacity from properly performing his
duties hereunder (and, if required by the Company upon the furnishing
of evidence satisfactory to the Company of such disability), the
Company shall, during the continuance of his disability but only for a
maximum of ninety (90) days, pay the Executive his salary payable
under the provisions of Sections 3(a) and 3(b) and continue to provide
the Executive all other benefits provided hereunder. As used herein,
the term "disability" shall mean the complete and total inability of
the Executive, due to illness, physical or comprehensive mental
impairment to substantially perform all of his duties as described
herein for a consecutive period of thirty (30) days or more.
6. Death. In the event of the death of the Executive,
-----
except with respect to any benefits which have accrued and have not
been paid to the Executive hereunder, the provisions of this
Employment Agreement shall terminate immediately. However, the
Executive's estate shall have the right to receive compensation due to
the Executive as of and to the date of his death and, furthermore, to
receive an additional amount equal to one-twelfth (1/12) of the
Executive's annual compensation then in effect as specified in
Section 3, above.
7. Severance. In the event that the Executive's
---------
employment is terminated by the Company other than for cause, whether
during or after the term of this Agreement, the Executive shall be
entitled to receive his then current salary, as provided for in
Section 3(a), and adjusted pursuant to Section 3(b), payable at the
Company's regular payment intervals, for twelve (12) months following
the date of the Executive's termination by the Company; provided, that
if any of such payments would (i) constitute a "parachute payment"
within the meaning of Section 280G of the Internal Revenue Code of
1986 (the "Code") and (ii) but for this proviso be subject to the
excise tax imposed by Section 4999 of the Code (the "Excise Tax"), the
amount payable hereunder shall be reduced to the largest amount which
the Executive determines would
-3-<PAGE>
result in no portion of the payments hereunder being subject to the
Excise Tax. If the Executive voluntarily resigns his employment
hereunder, or if his employment is terminated for Cause, the Executive
shall not be entitled to any severance pay or other compensation
beyond the date of termination of his employment.
8. Covenant Not to Compete. During the continuance of his
-----------------------
employment hereunder and for a period of twelve (12) months after
termination of his employment hereunder, the Executive shall not,
anywhere in the United States, engage in any business which competes
directly or indirectly with the Company.
9. Trade Secrets and Confidential Information. During his
------------------------------------------
employment by the Company and for a period of five (5) years
thereafter, the Executive shall not, directly or indirectly, use,
disseminate, or disclose for any purpose other than for the purposes
of the Company's business, any of the Company's confidential
information or trade secrets, unless such disclosure is compelled in a
judicial proceeding. Upon termination of his employment, all
documents, records, notebooks, and similar repositories of records
containing information relating to any trade secrets or confidential
information then in the Executive's possession or control, whether
prepared by him or by others, shall be left with the Company or
returned to the Company upon its request.
10. Severability. It is the desire and intent of the
------------
parties that the provisions of Sections 8 and 9 shall be enforced to
the fullest extent permissible under the laws and public policies
applied in each jurisdiction in which enforcement is sought.
Accordingly, if any particular sentence or portion of either Section 8
or 9 shall be adjudicated to be invalid or unenforceable, the
remaining portions of such section nevertheless shall continue to be
valid and enforceable as tough the invalid portions were not a part
thereof. In the event that any of the provisions of Section 8
relating to the geographic areas of restriction or the period of
restriction shall be deemed to exceed the maximum area or period of
time which a court of competent jurisdiction would deem enforceable,
the geographic areas and times shall, for the purposes of this
Agreement, be deemed to be the maximum areas or time periods which a
court of competent jurisdiction would deem valid and enforceable in
any state in which such court of competent jurisdiction shall be
convened.
11. Injunctive Relief. The Executive agrees that any
-----------------
violation by him of the agreements contained in Sections 8 and 9 are
likely to cause irreparable damage to the Company, and therefore
agrees that if there is a breach or threatened breach by the Executive
of the provisions of said sections, the Company shall be entitled to
an injunction restraining the Executive from such breach. Nothing
herein shall be construed as prohibiting the Company from pursuing any
other remedies for such breach or threatened breach.
12. Miscellaneous.
-------------
a. Notices. Any notice required or permitted to be
-------
given under this Agreement shall be directed to the appropriate party
in writing and mailed or delivered, if to the Company, to 7301 South
Peoria, Englewood, Colorado 80155 or to the Company's then-
-4-<PAGE>
principal office, if different, and if to the Executive, to 7301 South
Peoria, Englewood, Colorado 80155 or to the Company's then-principal
office, if different.
b. Binding Effect. This Agreement is a personal
--------------
service agreement and may not be assigned by the Company or the
Executive, except that the Company may assign this Agreement to a
successor by merger, consolidation, sale of assets or other
reorganization. Subject to the foregoing, this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors, assigns, and legal representatives.
c. Amendment. This Agreement may not be amended
---------
except by an instrument in writing executed by each of the parties
hereto.
d. Applicable Law. This Agreement is entered into in
--------------
the State of Colorado and for all purposes shall be governed by the
laws of the State of Colorado.
e. Counterparts. This instrument may be executed in
------------
one or more counterparts, each of which shall be deemed an original.
f. Entire Agreement. This Agreement supersedes and
----------------
replaces all prior agreements between the parties related to the
employment of the Executive by the Company.
IN WITNESS WHEREOF, the parties have executed this Amended
Employment Agreement as of July 1, 1995.
THE EXECUTIVE: AIR METHODS CORPORATION
[FORM] By: [FORM]
- -------------------------------- --------------------------------
George W. Belsey Donald R. Segner, Vice
Chairman of the Board
-5-
FORM OF AMENDED EMPLOYMENT AGREEMENT
This Amended Employment Agreement was made and entered into
as of November __, 1993 and amended as of July 1, 1995, between AIR
METHODS CORPORATION, a Delaware corporation (the "Company"), and
MICHAEL G. PRIETO (the "Executive").
RECITALS
The Company desires to employ the Executive as Vice
President and Director of Manufacturing and Engineering, and the
Executive desires to be employed by the Company, upon the terms and
conditions set forth in this Agreement.
In consideration of the mutual promises contained herein,
the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
AGREEMENT
1. Employment; Position; Term. The Company hereby employs
--------------------------
the Executive, and the Executive hereby accepts employment with the
Company, in the capacity of Vice President and Director of
Manufacturing and Engineering. Subject to Section 4, the term of the
Executive's employment under this Agreement (the "Term") shall be for
one (1) year, beginning December 1, 1993. The Term has been extended
for one successive one-year period on November __, 1994, and shall be
extended for successive one-year periods on November ___ of each year
beginning November __, 1995, unless on or before September __, prior
to any such renewal date, the Company or the Executive provides
written notice to the other of its or his intention not to renew.
2. Duties, Responsibilities and Authority. In his
--------------------------------------
capacity as Vice President and Director of Manufacturing and
Engineering, the Executive shall have primary responsibility for the
Company's manufacturing operations and engineering activities, which
shall be conducted in accordance with policies established by the
Company's board of directors (the "Board"). In his capacity as Vice
President and Director of Manufacturing and Engineering, the Executive
shall report to the Chief Operating Officer and be subject to the
additional direction and control of the Board and the Company's
Chairman and Chief Executive Officer. The Executive shall devote his
full professional and managerial time and effort to the performance of
his duties as Vice President and Director of Manufacturing and
Engineering of the Company and he shall not engage in any other
business activity or activities which, in the mutual judgment of the
Executive and the Board, do, in fact, conflict with the performance of
his duties under this Agreement.
<PAGE>
3. Compensation.
------------
(a) Salary and Incentive Compensation. For services
---------------------------------
rendered under this Agreement, the Company shall pay the Executive a
salary of $88,000 per annum beginning December 1, 1993. In addition,
the Company will pay you, as additional compensation, an amount equal
to 2.2% of your base salary in lieu of Company contributions to the
Company's 401-K Plan until you are eligible to participate in the 401-
K Plan, plus an amount sufficient to pay the federal and state income
taxes on such additional compensation.
(b) Annual Review. The Executive's salary will not be
-------------
reviewed during the initial one-year term of the Agreement. The
Executive's first salary review shall be for the period ending
December 31, 1994 and, as appropriate, his salary shall be adjusted
effective January 1, 1995 and shall be reviewed annually thereafter
during the term of this Agreement.
(c) Automobile Expense Allowance. The Company shall
----------------------------
pay the Executive the amount of $1,000.00 per month as an automobile
expense allowance.
(d) Stock Options. Subject to approval of the Stock
-------------
Option Committee of the Board in its sole discretion the Executive
will be granted an option under the Company's Stock Option Plan to
purchase up to 25,000 shares of the Company's Common Stock at the fair
market value on the date of grant. One third of the options shall
become exercisable on December 1 in each of the years 1994, 1995 and
1996, and the options shall be exercisable through November 30, 1998.
In addition, the Executive may participate in stock option programs of
the Company upon such terms as the administrators of such programs in
their discretion determine.
(e) Benefits and Vacation. The Executive shall be
---------------------
eligible to participate in such insurance programs (health,
disability, or life) or such other health, dental, retirement, or
similar employee benefits programs as the Board may approve, on a
basis comparable to that available to other officers and executive
employees of the Company. The Executive shall be entitled to three
(3) weeks of paid vacation during the first full year of employment,
and the Executive shall be entitled to four (4) weeks of paid vacation
per year in the second and subsequent years of employment. Vacation
time may be accumulated for one (1) year beyond the year for which it
is accrued and used any time during such year, but any vacation time
not used during such additional year shall be forfeited. The value of
any accrued but unused vacation time shall be paid in cash to the
Executive upon termination of his employment for any reason.
(f) Reimbursement of Expenses. The Company shall
-------------------------
reimburse the Executive for all reasonable out-of-pocket expenses
incurred by the Executive in connection with the business of the
Company and in the performance of his duties under this Agreement upon
the Executive's presentation to the Company of an itemized accounting
of such expenses with reasonable supporting data.
-2-<PAGE>
4. Termination. Either party may terminate the
-----------
Executive's employment under this Agreement, without cause, upon
ninety (90) days' written advance notice to the other party, but
subject to the provisions of Section 7 hereof. The Company may
terminate the Executive's employment for "Cause" (as hereinafter
defined) immediately upon written notice stating the basis for such
termination. "Cause" for termination of the Executive's employment
shall only be deemed to exist if the Executive has breached this
Agreement, and if such breach continues or recurs more than thirty
(30) days after notice from the Company specifying the action which
constitutes the breach and demanding its discontinuance, exhibited
willful disobedience of directions of the Board, or committed gross
malfeasance in performance of his duties hereunder or acts resulting
in an indictment charging the Executive with the commission of a
felony; provided that the commission of acts resulting in such an
indictment shall constitute Cause only if a majority of the directors
who are not also subject to any such indictment determine that the
Executive's conduct has substantially adversely affected the Company
or its reputation. A material failure to perform his duties hereunder
that results from the disability of the Executive shall not be
considered Cause for his termination.
5. Disability. If the Executive shall be prevented by
----------
illness, accident, or other incapacity from properly performing his
duties hereunder (and, if required by the Company upon the furnishing
of evidence satisfactory to the Company of such disability), the
Company shall, during the continuance of his disability but only for
the remaining term of this Agreement, pay the Executive his
compensation payable under the provisions of Section 3 (above) and
continue to provide the Executive all other benefits provided
hereunder. As used herein, the term "disability" shall mean the
complete and total inability of the Executive, due to illness,
physical or comprehensive mental impairment to substantially perform
all of his duties as described herein for a consecutive period of
thirty (30) days or more.
6. Death. In the event of the death of the Executive,
-----
except with respect to any benefits which have accrued and have not
been paid to the Executive hereunder, the provisions of this
Employment Agreement shall terminate immediately. However, the
Executive's estate shall have the right to receive compensation due to
the Executive as of and to the date of his death and, furthermore, to
receive an additional amount equal to one-twelfth (1/12) of the
Executive's annual compensation then in effect as specified in
Section 3, above.
7. Severance Pay. In the event that the Executive's
-------------
employment is terminated by the Company other than for Cause, whether
during or after the term of this Agreement, the Executive shall be
entitled to receive his then current compensation, payable at the
Company's regular payment intervals, for a period of one year
following the date of termination; provided, that if any of such
payments would (i) constitute a "parachute payment" within the meaning
of Section 280G of the Internal Revenue Code of 1986 (the "Code") and
(ii) but for this proviso be subject to the excise tax imposed by
Section 4999 of the Code (the "Excise Tax"), the amount payable
hereunder shall be reduced to the largest amount which the Executive
determines would result in no portion of the payments hereunder being
subject to the Excise Tax. If the Executive voluntarily resigns his
employment hereunder, or if his employment is terminated for Cause,
the Executive shall not be entitled to any severance pay or other
compensation beyond the date of termination of his employment.
-3-<PAGE>
8. Covenant Not to Compete. During the continuance of his
-----------------------
employment by the Company and for a period of twenty-four (24) months
after termination of his employment, the Executive shall not, anywhere
in the United States, engage in any business which competes directly
or indirectly with the Company.
9. Trade Secrets and Confidential Information. During his
------------------------------------------
employment by the Company, and for a period of five years thereafter,
the Executive shall not, directly or indirectly, use, disseminate, or
disclose for any purpose other than for the purposes of the Company's
business, any of the Company's confidential information or trade
secrets, unless such disclosure is compelled in a judicial proceeding.
Upon termination of his employment, all documents, records, notebooks,
and similar repositories of records containing information relating to
any trade secrets or confidential information then in the Executive's
possession or control, whether prepared by him or by others, shall be
left with the Company or returned to the Company upon its request.
10. Severability. It is the desire and intent of the
------------
parties that the provisions of Sections 8 and 9 shall be enforced to
the fullest extent permissible under the laws and public policies
applied in each jurisdiction in which enforcement is sought.
Accordingly, if any particular sentence or portion of either Section 8
or 9 shall be adjudicated to be invalid or unenforceable, the
remaining portions of such section nevertheless shall continue to be
valid and enforceable as though the invalid portions were not a part
thereof. In the event that any of the provisions of Section 8
relating to the geographic areas of restriction or the period of
restriction shall be deemed to exceed the maximum area or period of
time which a court of competent jurisdiction would deem enforceable,
the geographic areas and times shall, for the purposes of this
Agreement, be deemed to be the maximum areas or time periods which a
court of competent jurisdiction would deem valid and enforceable in
any state in which such court of competent jurisdiction shall be
convened.
11. Injunctive Relief. The Executive agrees that any
-----------------
violation by him of the agreements contained in sections 8 and 9 are
likely to cause irreparable damage to the Company, and therefore
agrees that if there is a breach or threatened breach by the Executive
of the provisions of said sections, the Company shall be entitled to
an injunction restraining the Executive from such breach. Nothing
herein shall be construed as prohibiting the Company from pursuing any
other remedies for such breach or threatened breach.
12. Miscellaneous.
-------------
(a) Notices. Any notice required or permitted to be
-------
given under this Agreement shall be directed to the appropriate party
in writing and mailed or delivered, if to the Company, to 7301 South
Peoria, Englewood, Colorado 80155 or to the Company's then principal
office, if different, and if to the Executive, to 7301 South Peoria,
Englewood, Colorado 80155 or to the Company's then principal office,
if different.
(b) Binding Effect. This Agreement is a personal
--------------
service agreement and may not be assigned by the Company or the
Executive, except that the Company may assign this Agreement to a
successor by merger, consolidation, sale of assets or other
reorganization.
-4-<PAGE>
Subject to the foregoing, this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors, assigns, and legal representatives.
(c) Amendment. This Agreement may not be amended
---------
except by an instrument in writing executed by each of the parties
hereto.
(d) Applicable Law. This Agreement is entered into in
--------------
the State of Colorado and for all purposes shall be governed by the
laws of the State of Colorado.
(e) Counterparts. This instrument may be executed in
------------
one or more counterparts, each of which shall be deemed an original.
(f) Entire Agreement. This Agreement supersedes and
----------------
replaces all prior agreements between the parties related to the
employment of the Executive by the Company.
IN WITNESS WHEREOF, the parties have executed this Amended
Employment Agreement as of July 1, 1995.
AIR METHODS CORPORATION
By: [FORM]
-------------------------------------
George W. Belsey, Chairman and Chief
Executive Officer
THE EXECUTIVE:
[FORM]
----------------------------------------
Michael G. Prieto
-5-
AIR METHODS CORPORATION
CALCUATION OF EARNINGS PER SHARE
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
SEPTEMBER 30, SEPTEMBER 30,
------------- ------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Earnings per common share:
Weighted average number of common
shares outstanding 8,075,695 8,022,730 8,068,769 7,899,990
=========== =========== =========== ===========
Net income (loss) $ 280 (603) 853 (7,778)
=========== =========== =========== ===========
Income (loss) per common share $ 0.03 (0.08) 0.11 (0.98)
=========== =========== =========== ===========
Fully diluted earnings per share:
Weighted average number of common
shares outstanding 8,075,695 8,022,730 8,068,769 7,899,990
Assumed exercise of options & warrants,
net of purchases of treasury stock 372,678 360,127 352,678 293,461
----------- ----------- ----------- -----------
8,448,373 8,382,857 8,421,447 8,193,451
=========== =========== =========== ===========
Net income (loss) $ 280 (603) 853 (7,778)
Interest expense reduction on debt
assumed retired 61 560 54 232
----------- ----------- ----------- -----------
Net income (loss) $ 341 (43) 907 (7,546)
=========== =========== =========== ===========
Income (loss) per common share -
fully diluted $ 0.04 (0.01) 0.11 (0.92)
=========== =========== =========== ===========
/TABLE
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE COMPANY'S INTERIM UNAUDITED FINANCIAL STATEMENTS FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1995, AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 2864
<SECURITIES> 0
<RECEIVABLES> 1920
<ALLOWANCES> (11)
<INVENTORY> 1423
<CURRENT-ASSETS> 6856
<PP&E> 37800
<DEPRECIATION> 6499
<TOTAL-ASSETS> 43087
<CURRENT-LIABILITIES> 7521
<BONDS> 0
<COMMON> 485
0
0
<OTHER-SE> 49637
<TOTAL-LIABILITY-AND-EQUITY> 43087
<SALES> 2761
<TOTAL-REVENUES> 22643
<CGS> 2407
<TOTAL-COSTS> 20972
<OTHER-EXPENSES> 54<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 872<F2>
<INCOME-PRETAX> 853
<INCOME-TAX> 0
<INCOME-CONTINUING> 853
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 853
<EPS-PRIMARY> .11
<EPS-DILUTED> .0
<FN>
<F1> Net non-operating income
<F2> Net of interest income of $206
</FN>
</TABLE>
