EMPLOYMENT AGREEMENT
Exhibit
10.1
This is
an Agreement made and entered into as of February 22, 2008, between AIR METHODS
CORPORATION, a Delaware corporation (the “Company”), and Xxxx Xxxx (the
“Executive”).
RECITALS
The
Company wishes to employ the Executive in the executive positions described
below, and the Executive wishes to accept such employment. The
Company and the Executive desire to set forth in this Agreement the terms and
conditions of the Executive’s employment by the Company, effective as the date
hereof.
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
Operating Officer. Subject to Section 4, the term of the
Executive’s employment under this Agreement shall be for one (1) year, beginning
March 31, 2008 (the “Start Date”). The term of this Agreement shall
be extended for successive one-year periods on March 1 of each year beginning
March 1, 2009, unless on or before three months prior to any such renewal date
the Company or the Executive provides written notice to the other of its or his
intention not to renew.
2. Duties, Responsibilities and
Authority. In his capacity as Chief Operating Officer, the
Executive shall have primary responsibility for the overall operation and the
day-to-day management of the business of the Company. In the absence
or of the Chief Executive Officer, the Chief Operating Officer shall assume and
discharge the responsibilities of that office. In this capacity, he shall also
perform such other duties as are prescribed by applicable law and the Company’s
bylaws for the office which the Executive shall hold pursuant to this Agreement,
all of which responsibilities shall be discharged in accordance with policies
established by the Company’s Board of Directors (the “Board”). In his
capacity as Chief Operating Officer, the Executive shall report to the Chief
Executive Officer and be subject to the additional 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 Operating
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 of $295,000 per annum (as adjusted pursuant to Section 3(b), the
"Salary").
(b) Annual Review and Salary
Adjustment. The Executive’s salary will not be reviewed during
the calendar year 2008. The Executive’s first salary review shall be
for the period ending December 31, 2009, and, as appropriate, his salary shall
be adjusted effective January 1, 2009 and shall be reviewed annually
thereafter during the term of this Agreement.
(c) Bonus. In
addition to the Salary, the Executive shall be eligible to receive an annual
bonus for each year of his employment ending on and after December 31, 2008, as
determined by the Board or by the Chief Executive Officer if and to the extent
the authority to make such determination is delegated by the Board to the Chief
Executive Officer.
(d) Equity
Awards.
(i) 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.
(ii) Options. As
additional consideration for the Executive’s performance of services hereunder,
effective upon the Start Date, the Company hereby issues to the Executive, under
and subject to the Company’s 2006 Equity Compensation Plan (the “Plan”), options
(the “Options”) to purchase 25,000 shares of the Company’s common stock, par
value $0.06 per share (the “Common Stock”). It is intended that the
maximum amount of these Options as permitted under law shall qualify as an
“incentive stock option” under Section 422 of the Internal Revenue Code of 1986,
as amended (the “Code”), and to the extent that all or any portion of the
Options do not so qualify, the Options shall be treated as non-qualified
options. The Options shall have an exercise price equal to the Fair
Market Value of the Common Stock (as such term is defined in the Plan) on the
Start Date (subject to customary adjustments for stock splits and stock
dividends) and shall expire on the tenth (10th) anniversary of the Start Date.
The Options shall vest and become exercisable one-third (1/3) on each
anniversary of the Start Date.
(iii) Restricted Shares. As
additional consideration for the Executive’s performance of services hereunder,
effective upon the Start Date, the Company hereby issues to the Executive, under
and subject to the Plan, 3,500 restricted shares of
Common Stock (the “Restricted Shares”). The Executive’s rights with respect to
the Restricted Shares shall remain forfeitable at all times prior to the dates
set forth below (each a “Lapse Date”):
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Number of
Shares
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Lapse
Date
|
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1,166
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1st
anniversary of Start Date
|
|
1,166
|
2nd
anniversary of Start Date
|
|
1,167
|
3rd
anniversary of Start Date
|
provided however, that,
notwithstanding anything to the contrary in the Plan, the Executive shall not be
entitled to sell the Restricted Shares until the first (1st)
anniversary following the Lapse Date applicable thereto.
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(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 senior officers and
executive employees of the Company, including such long-term disability benefits
as may be available to other executive officers of the Company. The
Executive shall be entitled to four (4) weeks of paid vacation per
year. The Executive may accumulate up to one and one-half times his
annual vacation accrual rate at any one time. The value of any
unforfeited, accrued but unused vacation time shall be paid in cash to the
Executive upon termination of his employment for any reason.
(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.
4. Termination. Either
party may terminate the Executive’s employment under this Agreement, without
cause, upon ninety (90) days’ written advance notice to the other party, but
subject to the provisions of Section 7 hereof. The Company may
terminate the Executive’s employment for “Cause” (as hereinafter defined)
immediately upon written notice stating the basis for such
termination. “Cause” for termination of the Executive’s employment
shall only be deemed to exist if the Executive has breached this Agreement and
if such breach continues or recurs more than 30 days after notice from the
Company specifying the action which constitutes the breach and demanding its
discontinuance, exhibited willful disobedience of reasonable directions of the
Board, or committed gross malfeasance in performance of his duties hereunder or
acts resulting in an indictment charging the Executive with the commission of a
felony; provided that the commission of acts resulting in such an indictment
shall constitute Cause only if a majority of the directors who are not also
subject to any such indictment determine that the Executive’s conduct was
willful and has substantially adversely affected the Company or its
reputation. A material failure to perform his duties hereunder that
results from the disability of the Executive shall not be considered Cause for
his termination.
5. Disability. If
the Executive shall be prevented by illness, accident, or other incapacity from
properly performing his duties hereunder (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 or six (6) months, whichever is greater, pay
the Executive his compensation payable under the provisions of Section 3
(above) and continue to provide the Executive all other benefits provided
hereunder, provided that any amount received during such time by the Executive
under a disability insurance policy carried by the Company shall be credited
against the compensation due to the Executive. 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.
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7. Severance Pay.
Subject to the conditions set forth below, in the event that the Executive’s
employment is terminated by the Company other than for Cause, whether during or
after the term of this Agreement, the Executive shall be entitled, for a period
of twelve (12) months following the termination, to receive compensation at an
annual rate equal to the Executive’s highest cash compensation received during
any 12-month period of his employment, payable at the Company’s regular payment
intervals; provided, that if any of such payments would (i) constitute a
“parachute payment” within the meaning of Section 280G of 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. In addition, the Executive shall be entitled to continue to
receive at the Company’s expense, coverage under the Company’s health insurance
policies, or comparable coverage, during the term of such severance payments,
but only until the Executive begins other employment in connection with which he
is entitled to health insurance coverage. As a condition of the
Executive’s right to receive severance compensation as provided above, the
Executive shall sign and deliver to the Company a release of all claims that the
Executive might otherwise assert against the Company, in a form approved by the
Company. 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. Change of
Control/Constructive Termination. In the event that a Change
of Control of the Company, as hereinafter defined, occurs, and the Executive’s
employment by the Company, or a successor to the business of the Company, is
terminated by the Company or the successor in connection with, or within one
year after, the occurrence of such Change of Control, or if, after a Change of
Control, the Executive terminates his employment as a result of a “constructive
termination” of his employment by the Company or such successor, the Executive
shall be entitled for a period of two (2) years following such termination or
constructive termination, to receive compensation at an annual rate equal to the
Executive’s highest cash compensation received during any 12-month period of his
employment, payable at the Company’s regular payment intervals; provided, that
if any of such payments would (i) constitute a “parachute payment” within
the meaning of Section 280G of the Code and (ii) but for this proviso
be subject to 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. For purposes
of this Section, a “constructive termination” by the Company or its successor
shall be deemed to occur if the Executive is assigned to another position, not
comparable in terms of salary, duties, status or authority, or substantially
reducing the Executive’s job responsibilities and authority from the position,
responsibilities and/or authority held by the Executive prior to the Change of
Control, or if the Executive’s place of work shall be moved more than 75 miles
from the Executive’s place of work with the Company prior to the Change of
Control. For purposes of this Section 8, a Change of Control
shall be deemed to have occurred in the event that a merger, sale of assets,
sale or exchange of stock, or other corporate reorganization occurs with another
corporation or other entity, following which and as a result of which, at least
50% of the ownership interest of the surviving corporation is held by persons
other than the shareholders of the Company prior to such transaction, or a
majority of the directors of the surviving corporation are persons other than
the directors of the Company prior to such transaction. Any notice by
the Executive to the Company or its successor claiming a constructive
termination of the Executive shall specify the claimed default by the Company or
the successor and the Company or its successor shall have ninety (90) days to
make such modifications in the Executive’s working relationship as to overcome
the constructive termination.
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9. Indemnification. The
Company shall, to the fullest extent permitted by applicable law, indemnify the
Executive and hold him harmless if he is a party, or is threatened to be made a
party, to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative, or investigative, by reason of the fact
that the Executive is or was an officer and employee of the Company or is or was
serving at the request of the Company as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys’ fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by the Executive in connection
with such action, suit or proceeding so long as the Executive acted in good
faith and in a manner that he reasonably believed to be in or not opposed to the
best interests of the Company and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was
unlawful. To the fullest extent permitted by law, the Company shall
pay such expenses of the Executive in advance of the final disposition of such
action upon satisfying such conditions as may be imposed by law with respect to
such advances.
10. Covenant Not to
Compete. During the continuance of his employment by the
Company and for a period of twelve (12) 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. Any company or business which is engaged in the air medical
transport business or the business of furnishing or retrofitting aircraft to
provide medical transports shall be deemed to be engaged in business in
competition with the Company.
11. Trade Secrets and
Confidential Information. During his employment by the
Company, and for a period of five (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.
12. Severability. It
is the desire and intent of the parties that the provisions of Sections 10
and 11 shall be enforced to the fullest extent permissible under the laws and
public policies applied in each jurisdiction in which enforcement is
sought. Accordingly, if any particular sentence or portion of either
Section 10 or 11 shall be adjudicated to be invalid or unenforceable, the
remaining portions of such section nevertheless shall continue to be valid and
enforceable as though the invalid portions were not a part
thereof. In the event that any of the provisions of Section 10
relating to the geographic areas of restriction or the period of restriction
shall be deemed to exceed the maximum area or period of time which a court of
competent jurisdiction would deem enforceable, the geographic areas and times
shall, for the purposes of this Agreement, be deemed to be the maximum areas or
time periods which a court of competent jurisdiction would deem valid and
enforceable in any state in which such court of competent jurisdiction shall be
convened.
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13. Injunctive
Relief. The Executive agrees that any violation by him of the
agreements contained in Sections 10 and 11 are likely to cause irreparable
damage to the Company, and therefore agrees that if there is a breach or
threatened breach by the Executive of the provisions of said sections, the
Company shall be entitled to an injunction restraining the Executive from such
breach. Nothing herein shall be construed as prohibiting the Company
from pursuing any other remedies for such breach or threatened
breach.
14. 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 0000 Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000 or to the Company’s then
principal office, if different, and if to the Executive, to such address as the
Executive may have furnished to the Company for this purpose or, if the
Executive has furnished no such address, to the Executive’s last known address
as shown on the Company’s records.
(b) Binding
Effect. This Agreement is a personal service agreement and may
not be assigned by the Company or the Executive, except that the Company may
assign this Agreement to a successor by merger, consolidation, sale of assets or
other reorganization. Subject to the foregoing, this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors, assigns, and legal representatives.
(c) Amendment. This
Agreement may not be amended except by an instrument in writing executed by each
of the parties hereto.
(d) Applicable
Law. This Agreement is entered into in the State of Colorado
and for all purposes shall be governed by the laws of the State of
Colorado.
(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.
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IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
above written.
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AIR
METHODS CORPORATION
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By:
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/s/ Xxxxx X. Xxxx
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Name:
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Xxxxx X. Xxxx
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Title:
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Chief Executive Officer
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THE
EXECUTIVE:
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/s/ Xxxx Xxxx
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Xxxx
Xxxx
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