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Exhibit 10.1
 
AIR METHODS CORPORATION

PERFORMANCE PAY PLAN

Adopted by the Board: September 30, 2011
Adopted by the Stockholders: [_____ __, 201_]

SECTION 1.
ESTABLISHMENT; PURPOSE

Air Methods Corporation (the “Company”) hereby establishes the Air Methods
Corporation Performance Pay Plan (the “Plan”) for the benefit of certain members
of the Company’s senior management team.  The purposes of the Plan are to (i)
place a significant portion of the compensation of Plan participants at risk by
tying such compensation to specific measurable goals designed to drive
shareholder value, and (ii) exempt bonuses paid hereunder from the deduction
limitations of Code Section 162(m).  The Plan is intended to encourage
initiative, resourcefulness, teamwork, motivation, and efficiency on the part of
the Participants that will result in financial success for both the stockholders
of the Company and the Participants.

SECTION 2.
CERTAIN DEFINITIONS.

“Board” means the Board of Directors of the Company.

“Cause” shall include (i) a material breach of the terms and conditions of a
Participant’s employment agreement with the Company, (ii) willful disobedience
of reasonable directions of the Board, (iii) gross malfeasance in performance of
the Participant’s duties under his or her employment agreement, or (iv) acts
resulting in an indictment charging a Participant 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 Participant’s conduct was
willful and has substantially adversely affected the Company or its reputation.
 
“Change in Control” means 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 fifty percent (50%)
of the ownership interest of the surviving corporation is held by persons other
than the stockholders 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.

“Code” means the Internal Revenue Code of 1986, as amended.

“Code Section 162(m)” means Section 162(m) of the Code and the applicable
Treasury Regulations and other guidance issued thereunder.

“Code Section 409A” means Section 409A of the Code and the applicable Treasury
Regulations and other guidance issued thereunder.

 
 

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“Committee” means a committee comprised of two or more directors, all of whom
are “outside directors,” as defined in Treasury Regulation Section
1.162-27(e)(3).  In the absence of an explicit Board delegation to the contrary,
the Committee shall be the Compensation Committee of the Board (or if one
exists, the 162(m) subcommittee of the Compensation Committee).

“Participant” means any member of senior management of the Company who is
selected to participate in the Plan for a Performance Period in accordance with
Section 4, below.

“Disability” means the complete and total inability of the Participant, due to
illness or physical or comprehensive mental impairment, to substantially perform
all of his or her duties as described herein for a consecutive period of thirty
(30) days or more.

“Performance Goals” means the specific, measurable goals set by the Committee
for any given Performance Period.  Performance Goals may include multiple goals
and may be based on one or more operational or financial criteria.  In setting
the Performance Goals for any Performance Period, the Committee may include one
or any combination of the following criteria in either absolute or relative
terms, for the Company or any business unit thereof:  (a) stock price, (b) total
shareholder return, (c) return on assets, return on equity, or return on capital
employed, (d) measures of growth, such as “economic value added,” (e) measures
of profitability such as earnings per share, corporate or business unit net
income, net income before extraordinary or one-time items, earnings before
interest and taxes or earnings before interest, taxes, depreciation and
amortization, (f) cash flow from operations, (g) levels of operating expense or
other expense items reported on the Company’s income statement, (h) non-core
product development and growth, (i) infrastructure development for business
units or administrative departments (such as IT and human resources), (j)
measures of pricing efficiency and/or growth, (k) satisfactory completion of a
major project or organizational initiative set in advance by the Committee, (l)
measures of safety, (m) revenue and/or sales, and (n) strategic sales or
acquisitions in compliance with specific criteria set forth in advance by the
Committee.

“Performance Period”  means one or more periods of time, which may be of varying
and overlapping durations, as the Committee may select, over which the
attainment of one or more Performance Goals will be measured for the purpose of
determining a Participant’s right to, and the payment of, a bonus award granted
under the terms of the Plan.

“Treasury Regulations” means the Treasury Regulations promulgated under the
Code.

SECTION 3.
ADMINISTRATION.

The Plan shall be administered by the Committee, and the Committee shall have
full authority to administer the Plan, including authority to interpret and
construe any provision of the Plan and to adopt such rules for administering the
Plan as it may deem necessary to comply with the requirements of the Code, or to
conform to any regulation or any change in any law or regulation applicable
thereto.  The Committee may delegate any of its responsibilities under the Plan
other than such responsibilities that are explicitly reserved for Committee
action pursuant to Code Section 162(m).   The Committee’s decisions shall be
final and binding upon all parties, including the Company, stockholders, and
Participants.

 
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SECTION 4.
PERFORMANCE PERIODS; ELIGIBILITY

The Committee may, but need not, establish up to two (2) different Performance
Periods beginning in any calendar year, with each such Performance Period to
extend for such duration of three (3) years or less as may be determined by the
Committee in its sole and absolute discretion.  Within ninety (90) days after
the beginning of any such Performance Period, but in no event after twenty-five
(25) percent of the Performance Period has elapsed, the Committee shall
designate in writing those members of senior management of the Company who shall
be Participants in the Plan for such Performance Period.  Only those individuals
selected to be Participants shall be eligible to earn bonus awards under the
Plan.

SECTION 5.
ESTABLISHMENT OF PERFORMANCE GOALS; DETERMINATION OF AWARDS

5.1           Establishment of Performance Goals; Bonus Formulas.  Within ninety
(90) days after the beginning of a Performance Period, but in no event after
twenty-five (25) percent of the Performance Period has lapsed, the Committee
shall establish in writing (i) the Performance Goals and the underlying
performance criteria applicable to the Performance Period, and (ii) the formula
or methodology for determining the bonus award payable (if any) to each
Participant for such Performance Period upon attainment of the specified
Performance Goals.  Performance Goals must be objective and must satisfy the
third-party objectivity standards under Code Section 162(m).  Notwithstanding
the foregoing, at the time such Performance Goals are established, the Committee
may determine that the Performance Goals may be adjusted to account for any
unusual items or specified events or occurrences during the Performance
Period.  In addition, unless otherwise provided by the Committee at the time the
Performance Goals are established, the Performance Goals may be adjusted to
exclude the effect of any of the following events that occur during the
Performance Period:  (i) asset write-downs, (ii) extraordinary litigation,
claims, judgments, or settlements, (iii) the effect of changes in tax law,
accounting principles or other such laws or provisions affecting reported
results, (iv) accruals for reorganization and restructuring programs, (v)
material changes to invested capital from pension and post-retirement
benefits-related items and similar non-operational items, and (vi) any other
extraordinary, unusual, non-recurring or non-comparable items (A) as described
in management’s discussion and analysis of financial condition and results of
operations appearing in the Company’s Annual Report to stockholders, (B) as
described in Accounting Principles Board Opinion No. 30 (or successor guidance
thereto) or (C) as publicly announced by the Company in a  press release or
conference call relating to the Company’s results of operations or financial
condition for a completed quarterly or annual fiscal period.

5.2           Certification of Results; Calculation of Bonuses.  As soon as
reasonably practicable after the close of the Performance Period, the Committee
shall determine bonus awards to be paid under the terms of the Plan.  Any
payments made under this Plan shall be contingent upon achieving the Performance
Goals set in advance for the Performance Period in question.  The Committee
shall certify in writing prior to approval of any awards that such Performance
Goals have been satisfied (approved minutes of the Committee may be used for
this purpose).

 
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5.3           Committee Discretion to Reduce Awards.  The Committee may, in its
sole and absolute discretion, reduce the bonus awards to which any Participant
is otherwise due for any Performance Period if it believes that such reduction
is in the best interest of the Company and its shareholders, but any reduction
cannot result in any increase in the bonus award of one or more other
Participants for such Performance Period.  The Committee has no discretion to
increase the bonus award otherwise payable to any Participant for any
Performance Period.

5.4           Maximum Awards.  The maximum bonus award that may be paid to any
Participant for any Performance Period shall be (x) two million five hundred
thousand dollars ($2,500,000), multiplied by (y) the number of years (or portion
thereof) in the Performance Period.
 
SECTION 6.
PAYMENT OF AWARDS

Coincident with the Committee’s establishment of Performance Goals for any
Performance Period, the Committee shall also establish in writing when bonus
awards for such Performance Period (if any) shall be paid, including (but not
limited to) the effect that a Participant’s death, Disability, or termination
without Cause, or a Change of Control of the Company, shall have on the payment
of such awards.  All payment terms shall be intended to comply with Code Section
409A.  Payment may be made in the form of cash or Company common stock
(including Company common stock that is subject to forfeiture), or any
combination thereof, as determined by the Committee in its sole and absolute
discretion.

SECTION 7.
GENERAL PROVISIONS.

7.1           Nonassignability.  A Participant shall have no right to assign or
transfer any interest under this Plan.

7.2           No Contract of Employment.  Nothing in this Plan shall confer upon
the Participant the right to maintain his relationship with the Company or any
affiliate as an employee, nor shall it interfere in any way with any right of
the Company, or any such affiliate, to terminate its relationship with the
Participant at any time for any reason whatsoever, with or without Cause.

7.3           Amendment and Termination.  The Board may from time to time alter,
amend, suspend or discontinue the Plan, including, where applicable, any
modifications or amendments as it shall deem advisable in order that the Plan
not be subject to the limitations on deductibility contained in Code Section
162(m), or to conform to any regulation or to any change in law or regulation
applicable thereto; provided, however, that no such action shall adversely
affect the rights and obligations of the Participants with respect to the bonus
amount payable under the Plan at the time of such alteration, amendment,
suspension or discontinuance, except as may be required in order to comply with
the requirements of Code Section 162(m) or Code Section 409A.

 
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7.4           Section 409A of the Code.  This Plan, including any payment terms
established in accordance with Section 6, above, shall be established,
administered and operated in the good faith determination of the Board or the
Committee to comply with or be exempt from Code Section 409A.  Although the
Company intends to administer the Plan so that it complies with or is exempt
from the requirements of Code Section 409A, the Company does not warrant that
any bonus amount payable under the Plan will not be subject to the tax imposed
by Code Section 409A or will otherwise qualify for favorable tax treatment under
any other provision of federal, state, local or foreign law.  The Company shall
not be liable to any Participant for any tax, interest or penalties the
Participant might owe as a result of his or her participation in the Plan.

7.5           Tax Withholding. The Company shall withhold all applicable taxes
from any bonus awards payable hereunder, including any foreign, federal, state,
and local taxes.

7.6           Applicable Law. This Plan shall be construed in accordance with
provisions of the laws of the State of Colorado, without regards to the
conflicts of laws provisions of such state.

SECTION 8.
EFFECTIVE DATE; PRIOR PLAN NOT SUSPENDED.

8.1           Effective Date of Plan. This Air Methods Corporation Performance
Pay Plan was adopted by the Board of Directors effective as of September 30,
2011, and it shall remain in effect, subject to amendment from time to time.

8.2           Stockholder Approval.  The Plan will be submitted to the
stockholders of the Company for approval as soon as practicable following the
adoption of the Plan by the Board.  In the event stockholder approval of the
Plan is not obtained prior to the end of any Performance Period established
hereunder, no bonus award shall be payable pursuant to this Plan for such
Performance Period.

8.3           1995 and 2006 Plans Not Superseded. This Plan does not supersede
or otherwise affect the 1995 Stock Option Plan adopted on August 15, 1995 or the
2006 Equity Compensation Plan adopted on May 3, 2006.  All options and awards
granted under either of the foregoing plans remain valid and shall continue to
be governed by the provisions of such plans.
 
 
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