EMPLOYMENT AGREEMENT
This is an Agreement made and entered into as of July 1, 2003,
between AIR METHODS CORPORATION, a Delaware corporation (the "Company"), and
Xxxxx X. Xxxx (the "Executive").
RECITALS
Executive is presently employed by the Company and has been
since the year 1995. The Executive has been elected to the position of Chief
Executive Officer, effective as of the date of this Agreement. The Company and
the Executive desire to set forth in this Agreement the terms and conditions of
the Executive's continued employment by the Company, effective as the date first
set forth above.
AGREEMENT
In consideration of the mutual promises contained herein, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. Employment; Position; Term. The Company hereby
employs the Executive, and the Executive hereby accepts employment with the
Company, in the capacity of Chief Executive Officer. Subject to Section 4, the
term of the Executive's employment under this Agreement shall be for two (2)
years, beginning July 1, 2003. The term of this Agreement shall be extended for
successive one-year periods on July 1 of each year beginning July 1, 2005,
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 Executive Officer, the Executive shall have primary
responsibility for the overall management 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 of $300,000 per annum
beginning July 1, 2003.
(b) Annual Review and Salary Adjustment. The
Executive's salary will not be reviewed during the calendar year 2003. The
Executive's first salary review shall be for the period ending December 31,
2003, and, as appropriate, his salary shall be adjusted effective January 1,
2004 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 four (4) weeks of paid vacation per year. The Executive may
accumulate up to one and one-half times his annual vacation accrual rate at any
one time. The value of any unforfeited, accrued but unused vacation time shall
be paid in cash to the Executive upon termination of his employment for any
reason.
(e) Reimbursement of Expenses. The Company shall
reimburse the Executive for all reasonable out-of-pocket expenses incurred by
the Executive in connection with the business of the Company and in the
performance of his duties under this Agreement upon the Executive's presentation
to the Company of an itemized accounting of such expenses with reasonable
supporting data.
4. Termination. Either party may terminate the
Executive's employment under this Agreement, without cause, upon ninety (90)
days' written advance notice to the other party, but subject to the provisions
of Section 7 hereof. The Company may terminate the Executive's employment for
"Cause" (as hereinafter defined) immediately upon written notice stating the
basis for such termination. "Cause" for termination of the Executive's
employment shall only be deemed to exist if the Executive has breached this
Agreement and if such breach continues or recurs more than 30 days after notice
from the Company specifying the action which constitutes the breach and
demanding its discontinuance, exhibited willful disobedience of reasonable
directions of the 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.
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6. Death. In the event of the death of the Executive,
except with respect to any benefits which have accrued and have not been paid to
the Executive hereunder, the provisions of this Employment Agreement shall
terminate immediately. However, the Executive's estate shall have the right to
receive compensation due to the Executive as of and to the date of his death
and, furthermore, to receive an additional amount equal to one-twelfth (1/12) of
the Executive's annual compensation then in effect as specified in Section 3,
above.
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 eighteen (18) 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 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. 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 three (3) 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 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. 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
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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.
9. Indemnification. The Company shall, to the full
extent permitted by applicable law, indemnify the Executive and hold him
harmless if he is a party, or is threatened to be made a party, to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative, or investigative, by reason of the fact that the
Executive is or was an officer and employee of the Company or is or was serving
at the request of the Company as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by the Executive in connection
with such action, suit or proceeding so long as the Executive acted in good
faith and in a manner that he reasonably believed to be in or not opposed to the
best interests of the Company and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. To the
fullest extent permitted by law, the Company shall pay such expenses of the
Executive in advance of the final disposition of such action upon satisfying
such conditions as may be imposed by law with respect to such advances.
10. Covenant Not to Compete. During the continuance of
his employment by the Company and for a period of eighteen (18) 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 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
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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.
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 July 1, 2003, the date first above written.
AIR METHODS CORPORATION
By: /s/ Xxxxx X. Xxxxxx
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Xxxxx Xxxxxx, Chief Financial Officer
THE EXECUTIVE:
/s/ Xxxxx X. Xxxx
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