<SUBMISSION>
<ACCESSION-NUMBER>0000950134-01-505440
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>5
<PERIOD>20010630
<FILING-DATE>20010814
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>PETROLEUM HELICOPTERS INC
<CIK>0000350403
<ASSIGNED-SIC>4522
<IRS-NUMBER>720395707
<STATE-OF-INCORPORATION>LA
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>000-09827
<FILM-NUMBER>1712158
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>2121 AIRLINE DRIVE SUITE 400
<STREET2>P O BOX 578
<CITY>METAIRIE
<STATE>LA
<ZIP>70001-5979
<PHONE>5048283323
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>113 BORMAN DRIVE
<CITY>LAFAYETTE
<STATE>LA
<ZIP>70508
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>d89585e10-q.txt
<DESCRIPTION>FORM 10-Q FOR QUARTER ENDED JUNE 30, 2001
<TEXT>
<PAGE>   1


                       Securities and Exchange Commission
                             Washington, D.C. 20549

                                    FORM 10-Q

     [X]  Quarterly Report Pursuant To Section 13 or 15(d) of the Securities
          Exchange Act of 1934

                 For the quarterly period ended: June 30, 2001

                                       OR

     [ ]  Transition Report Pursuant To Section 13 or 15(d) of the Securities
          Exchange Act of 1934

           For the transition period from ___________ to ___________

                          Commission file number 0-9827

                           PETROLEUM HELICOPTERS, INC.
             (Exact name of registrant as specified in its charter)

                Louisiana                                 72-0395707
     (State or other jurisdiction of                   (I.R.S. Employer
      incorporation or organization)                  Identification No.)


         2121 Airline Drive Suite 400
       P.O. Box 578, Metairie, Louisiana                  70001-5979
    (Address of principal executive offices)              (Zip Code)

       Registrant's telephone number, including area code: (504) 828-3323


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 [ ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the Issuer's classes of
common stock, as of the latest practicable date.

<TABLE>
<CAPTION>
                     Class                    Outstanding at July 31, 2001
                     -----                    ----------------------------
<S>                                           <C>
            Voting Common Stock                      2,793,386 shares
            Non-Voting Common Stock                  2,404,897 shares
</TABLE>
<PAGE>   2
                           PETROLEUM HELICOPTERS, INC.

                                INDEX - FORM 10-Q

                         Part I - Financial Information

<TABLE>
<S>                                                                       <C>
Item 1.   Financial Statements - Unaudited
              Consolidated Balance Sheets -  June 30, 2001 and
                 December 31, 2000 ...................................     3
              Consolidated Statements of Operations - Three Months
                 and Six Months Ended June 30, 2001 and 2000..........     4
              Consolidated Statements of Cash Flows - Six Months
                 Ended June 30, 2001 and 2000 ........................     5
              Notes to Consolidated Financial Statements .............     6

Item 2.   Management's Discussion and Analysis of Financial
              Condition and Results of Operations ....................    10

Item 3.   Quantitative and Qualitative Disclosures about
              Market Risk ............................................    18

                           Part II - Other Information

Item 1.   Legal Proceedings ..........................................    18

Item 6.   Exhibits and Reports on Form 8-K ...........................    18

          Signature ..................................................    19
</TABLE>


                                        2
<PAGE>   3
                         PART I - FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

                  PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                    (THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                          JUNE 30,      DECEMBER 31,
                                                            2001           2000
                                                            ----           ----
<S>                                                       <C>            <C>
                    ASSETS
Current Assets:
   Cash and cash equivalents                              $   1,491      $     863
   Accounts receivable -- net of allowance:
      Trade                                                  46,024         39,399
      Other                                                   1,383          3,490
   Inventory                                                 34,676         35,175
   Prepaid expenses                                           5,315          5,112
   Refundable income taxes                                    1,773          3,852
                                                          ---------      ---------
           Total current assets                           $  90,662      $  87,891

Property and equipment, net                                 123,855        131,856
Other                                                         7,626          3,008
                                                          ---------      ---------
           Total Assets                                   $ 222,143      $ 222,755
                                                          =========      =========
     LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
   Accounts payable and accrued liabilities               $  26,886      $  30,047
   Accrued vacation payable                                   7,370          6,553
   Current maturities of long-term debt and capital
     lease obligations                                       14,823          9,744
                                                          ---------      ---------
           Total current liabilities                      $  49,079      $  46,344

Long-term debt and capital lease obligations, net of
  current maturities                                         57,447         65,075
Deferred income taxes                                        19,410         17,600
Other long-term liabilities                                  12,561         12,114
Commitments and Contingencies (Note 4)

Shareholders' Equity
   Voting common stock -- par value of $0.10;
     authorized shares of 12,500,000                            279            279
   Non-voting common stock -- par value of $0.10;
     authorized shares of 12,500,000                            238            237
   Additional paid-in capital                                12,141         12,045
   Accumulated other comprehensive income (loss)               (865)            --
   Retained earnings                                         71,853         69,061
                                                          ---------      ---------
           Total shareholders' equity                        83,646         81,622
                                                          ---------      ---------
           Total Liabilities and Shareholders' Equity     $ 222,143      $ 222,755
                                                          =========      =========
</TABLE>

The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.


                                        3
<PAGE>   4
                  PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                       QUARTER ENDED JUNE 30,     SIX MONTHS ENDED JUNE 30,
                                      -----------------------     -------------------------
                                        2001          2000           2001          2000
                                        ----          ----           ----          ----
<S>                                   <C>           <C>           <C>            <C>
REVENUES AND OTHER
  INCOME:
   Operating revenues                 $  68,534     $  55,105      $ 131,793     $ 107,764
   Other income, net                        703         2,400          2,734         2,547
                                      ---------     ---------      ---------     ---------
                                         69,237        57,505        134,527       110,311
                                      ---------     ---------      ---------     ---------
EXPENSES:
   Direct expenses                       58,790        52,505        117,606       102,019
   Selling, general, and
     administrative                       4,414         4,046          9,094         8,067
   Interest expense                       1,651         1,473          3,372         2,983
                                      ---------     ---------      ---------     ---------
                                         64,855        58,024        130,072       113,069
                                      ---------     ---------      ---------     ---------
Income (loss) before income taxes         4,382          (519)         4,455        (2,758)

Income taxes                              1,622          (193)         1,649        (1,004)
                                      ---------     ---------      ---------     ---------
Net income (loss)                     $   2,760     $    (326)     $   2,806     $  (1,754)
                                      =========     =========      =========     =========

Weighted average common shares
 outstanding:
   Basic                                  5,170         5,161          5,169         5,161
   Diluted                                5,305         5,161          5,226         5,161

Net Income (loss) per common
 share:
   Basic                              $    0.53     $   (0.06)     $    0.54     $   (0.34)
   Diluted                            $    0.52     $   (0.06)     $    0.54     $   (0.34)
</TABLE>


The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.


                                        4
<PAGE>   5
                  PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (THOUSANDS OF DOLLARS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                             SIX MONTHS ENDED JUNE 30,
                                                             -------------------------
                                                                2001          2000
                                                                ----          ----
<S>                                                          <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income (loss)                                          $  2,806      $ (1,754)
   Adjustments to reconcile net income (loss) to net cash
      provided by operating activities:
       Depreciation                                              7,861         6,673
       Deferred income taxes                                     1,810          (282)
       Gain on asset dispositions                               (2,272)       (2,592)
       Equity in net losses of investee companies, net of
           distributions                                            --            14
       Other                                                       400           323
   Changes in operating assets and liabilities                  (7,639)        5,674
                                                              --------      --------
Net cash provided by operating activities                        2,966         8,056
                                                              --------      --------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Investments in and advances to affiliates                        71        (1,266)
   Purchase of property and equipment                          (12,311)       (9,422)
   Proceeds from asset dispositions                             12,441        14,302
                                                              --------      --------
Net cash provided by investing activities                          201         3,614
                                                              --------      --------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from long-term debt                                  2,500         6,000
   Payments on long-term debt                                   (5,049)      (18,194)
   Other                                                            10            --
                                                              --------      --------
Net cash used in financing activities                           (2,539)      (12,194)
                                                              --------      --------
Increase (decrease) in cash and cash equivalents                   628          (524)

Cash and cash equivalents, beginning of period                     863         1,663
                                                              --------      --------
Cash and cash equivalents, end of period                      $  1,491      $  1,139
                                                              ========      ========
</TABLE>




The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.


                                        5
<PAGE>   6
                  PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.   GENERAL

The accompanying unaudited condensed consolidated financial statements include
the accounts of Petroleum Helicopters, Inc. and subsidiaries ("PHI" or the
"Company"). In the opinion of management, these financial statements reflect all
adjustments, consisting of only normal, recurring adjustments, necessary to
present fairly the financial results for the interim periods presented. These
condensed consolidated financial statements should be read in conjunction with
the financial statements contained in the Company's Annual Report on Form 10-K
for the year ended December 31, 2000 and the accompanying notes and Management's
Discussion and Analysis of Financial Condition and Results of Operations.

The Company's financial results, particularly as they relate to the Company's
domestic oil and gas operations, are influenced by seasonal fluctuations as
discussed in the Company's Annual Report on Form 10-K for the year ended
December 31, 2000. Therefore, the results of operations for interim periods are
not necessarily indicative of the operating results that may be expected for a
full fiscal year.

2.   SEGMENT INFORMATION

The Company has identified four principal segments: Domestic Oil and Gas and
Other, International, Aeromedical, and Technical Services. The Domestic Oil and
Gas and Other segment provides helicopter services to oil and gas customers
operating in the Gulf of Mexico. The Domestic Oil and Gas and Other segment also
provides helicopter services to certain domestic governmental agencies involved
with forest-fire fighting activities. The International segment provides
helicopters in various foreign countries to oil and gas customers, including
national oil companies, and certain U.S. and foreign governmental agencies. The
Aeromedical segment provides helicopter services to hospitals and medical
programs in several U.S. states. The Company's AirEvac subsidiary is included in
the Aeromedical segment. The Technical Services segment provides helicopter
repair and overhaul services for a variety of helicopter owners and operators.

Segment operating income is operating revenues less direct expenses, selling,
general, and administrative costs and interest expense allocated to the
operating segment. Unallocated overhead consists primarily of corporate selling,
general, and administrative costs that the Company does not allocate to the
operating segments.

Summarized financial information concerning the Company's reportable operating
segments for the quarter and six months ended June 30, 2001 and 2000 is as
follows (in thousands):


                                        6
<PAGE>   7
<TABLE>
<CAPTION>
                                                QUARTER ENDED                SIX MONTHS ENDED
                                                   JUNE 30,                      JUNE 30,
                                           ------------------------      ------------------------
                                              2001           2000           2001           2000
                                              ----           ----           ----           ----
<S>                                        <C>            <C>            <C>            <C>
Segment operating revenues, excluding
 other income:
   Domestic Oil and Gas and Other          $  46,302      $  35,206      $  86,268      $  68,705
     International                             5,230          4,356         11,069         10,077
     Aeromedical                              11,710         11,059         23,649         22,113
     Technical Services                        5,292          4,484         10,807          6,869
                                           ---------      ---------      ---------      ---------
       Total operating revenues,
         excluding other income            $  68,534      $  55,105      $ 131,793      $ 107,764
                                           =========      =========      =========      =========
Segment operating income (loss),
 excluding other income:
   Domestic Oil and Gas and Other          $   6,517      $    (452)     $   7,208      $      96
   International                                 (75)          (418)          (535)          (240)
   Aeromedical                                   (40)            91            880            126
   Technical Services                          1,109            901          1,741            870
                                           ---------      ---------      ---------      ---------
       Total segment operating income
         (loss) excluding other income         7,511            122          9,294            852
Other income, net                                703          2,400          2,734          2,547
Unallocated selling, general
 and administrative expense                   (3,832)        (3,041)        (7,573)        (6,157)
                                           ---------      ---------      ---------      ---------
           Income (loss) before
            income taxes                   $   4,382      $    (519)     $   4,455      $  (2,758)
                                           =========      =========      =========      =========
</TABLE>


3.   OTHER ASSETS

In June 2001 the Company executed an agreement for the sale of its 50% equity
interest and related assets in Clintondale Aviation, Inc. ("Clintondale") which
operated helicopters and fixed-wing aircraft primarily in Kazakhstan. The
Company had also previously leased four aircraft to Clintondale. The Company
executed a promissory note for $3.1 million due from Clintondale in exchange for
the previously leased four aircraft, certain amounts receivable from
Clintondale, and the Company's 50% equity interest in Clintondale. The book
value of the assets sold totaled $3.1 million, less a provision recorded at
December 31, 2000 of $1.3 million, or a net amount of $1.8 million.

Other Assets also includes $3.0 million that the Company funded toward the
construction cost of a new principal operating facility to be leased by the
Company. Any such amounts funded by PHI, up to $4.0 million, will amortize over
10 years at 7% per annum and the resulting monthly amortization amounts will
reduce PHI's monthly lease payments for the first 10 years of the lease.

4.   COMMITMENTS AND CONTINGENCIES

Environmental Matters -- The Company has conducted environmental reviews and
assessments at certain of its operating bases. In connection with the
assessments, the Company has recorded an aggregated estimated liability of $3.0
million for environmental remediation costs that were probable and estimable at
June 30, 2001. The Company recorded no additional provisions for the quarter
ended June 30, 2001.

                                        7
<PAGE>   8
The Company began conducting environmental site surveys in late 2000 at its
Lafayette, Louisiana facility, which will be vacated in 2001 when the Company
moves to its new facility. Initial phases of the surveys have identified certain
contamination. However, until the surveys and associated work are complete, the
Company cannot reasonably estimate the extent of that contamination and the
associated costs of remediation. The Company anticipates that it will also
conduct environmental site surveys at certain other Gulf Coast facilities during
2001. It is expected that the results of the surveys discussed above will
require additional provisions for environmental remediation costs, but the
Company is currently unable to estimate the amount of additional provisions that
may be necessary.

Legal Matters -- The Company is named as a defendant in various legal actions
that have arisen in the ordinary course of its business and have not been
finally adjudicated. The amount, if any, of ultimate liability with respect to
such matters cannot be determined. In the opinion of management, the amount of
the ultimate liability with respect to these actions will not have a material
adverse effect on results of operations, cash flow or financial position of the
Company.

Long-Term Debt -- On July 3, 2001, the Company executed a revised credit
agreement with its lending group. The revised credit agreement provides for a
$45.0 million revolving credit facility and a $25.5 million term credit
facility. The loan is secured by substantially all of the Company's assets. The
secured term and revolving loan permits prime rate based borrowings and
"Offshore Base Rate" (equivalent to LIBOR) based borrowings. The term credit
facility is payable in scheduled payments of $3.5 million on September 30, 2001,
$3.0 million on December 31, 2001, and $1.9 million per quarter beginning on
March 31, 2002 to September 30, 2004. At June 30, 2001 and December 31, 2000,
$25.5 million and $30.0 million was outstanding on the term credit facility. The
revolving credit facility converts to a term loan on January 31, 2002, with
scheduled quarterly installments equal to 5% of the principal amount outstanding
at the conversion date, with the final balance due January 31, 2003. At June 30,
2001 and December 31, 2000, $44.5 million and $37.5 million was outstanding on
the revolving credit facility.

The Company is subject to certain financial covenants under its loan agreement
with its principal lending group, and was in compliance with those covenants on
June 30, 2001 or had received the appropriate waiver. These covenants include
maintaining certain levels of cash flow, working capital and shareholders'
equity and contain other provisions, some of which restrict the purchases of the
Company's stock, capital expenditures, and payment of dividends. The declaration
or payment of dividends is restricted to 20% of net earnings for the previous
four fiscal quarters. The loan agreement also limits the creation, incurrence,
or assumption of Funded Debt (as defined, which includes long-term debt) and the
acquisition of investments in unconsolidated subsidiaries.

Operating Leases -- The Company will lease a new principal operating facility
for twenty years, including three five-year renewal options, effective September
2001. Under the terms of the new facility lease, there is a commitment by the
Company, under certain circumstances, to fund $4.0 million of construction
costs. Any such amounts funded by PHI will amortize over 10 years at 7% per
annum and the resulting monthly amortization amounts will reduce PHI's monthly
lease payments for the first 10 years of the lease. As of June 30, 2001, the
Company paid $3.0 million of the commitment. The Company expects that it will
pay the remaining $1.0 million in September 2001.

The Company leases certain aircraft, facilities, and equipment used in its
operations. The related lease agreements, which include both non-cancelable and
month-to-month terms, generally provide for fixed monthly rentals and, for
certain real estate leases, renewal options. The Company has approximately
$117.9 million in aggregate lease commitments under operating leases of which
approximately $19.0 million is payable during the next twelve months.

Purchase Commitments -- At June 30, 2001, the Company had no outstanding
purchase commitments.


                                        8
<PAGE>   9
5.   INTEREST RATE SWAPS

In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 133. SFAS No. 133 establishes new
accounting and reporting standards for derivative financial instruments and for
hedging activities. SFAS No. 133 requires the Company to measure all derivatives
at fair value and to recognize them in the balance sheet as an asset or
liability, depending on the Company's rights or obligations under the applicable
derivative contract.

The Company uses interest rate swaps to hedge its cash flow related to interest.
Effective January 1, 2001, the Company began accounting for its interest rate
swaps in accordance with SFAS No. 133, as amended, and has designated the
interest rate swaps as cash flow hedges. The cumulative effect of adopting SFAS
No. 133, as amended, on January 1, 2001 resulted in an increase of $38,000 to
other comprehensive income. As of June 30, 2001, the fair market value of these
interest rate swaps was a $0.9 million liability and is included in other
long-term liabilities on the balance sheet.

6.   ACCUMULATED OTHER COMPREHENSIVE INCOME

Following is a summary of the Company's comprehensive income (loss) for the
quarter and six months ended June 30, 2001 and 2000 (in thousands):

<TABLE>
<CAPTION>
                                           QUARTER ENDED           SIX MONTHS ENDED
                                              JUNE 30,                 JUNE 30,
                                        -------------------      --------------------
                                          2001        2000         2001         2000
                                          ----        ----         ----         ----
<S>                                     <C>         <C>          <C>          <C>
 Net income (loss)                      $ 2,760     $  (326)     $ 2,806      $(1,754)
 Other comprehensive income
   (loss):
      Cumulative effect of adopting
         SFAS No. 133                        --          --           38           --
      Unrecognized income (loss) on
         interest rate swaps                 32          --         (903)          --
                                        -------     -------      -------      -------
 Comprehensive income (loss)            $ 2,792     $  (326)     $ 1,941      $(1,754)
                                        =======     =======      =======      =======
</TABLE>

7.   VALUATION ACCOUNTS

The Company establishes an allowance for doubtful accounts based upon factors
surrounding the credit risk of specific customers, current market conditions,
and other information. The allowance for doubtful accounts was $1.3 million and
$2.2 million at June 30, 2001 and December 31, 2000, respectively.

The Company also establishes valuation reserves related to obsolescent and
excess inventory. The inventory valuation reserves were $4.2 million and $3.7
million at June 30, 2001 and December 31, 2000, respectively.

8.   SEVERANCE LIABILITY

At December 31, 2000, the Company recorded a severance liability of $1.1 million
for a plan of termination for approximately 120 employees. That termination plan
was executed in the first quarter 2001. There was no additional severance cost
incurred in the second quarter ended June 30, 2001. The related severance
liability at June 30, 2001 was $0.4 million covering three employees and certain
other cost related to the termination of all employees under the plan. The
Company expects to pay the remaining severance liability over the next 24
months.


                                        9
<PAGE>   10
9.   NEW ACCOUNTING PRONOUNCEMENTS

On June 29, 2001, SFAS No. 141, "Business Combinations" was approved by the
Financial Accounting Standards Board ("FASB"). SFAS No. 141 requires that the
purchase method of accounting be used for all business combinations initiated
after June 30, 2001. Goodwill and certain intangible assets will remain on the
balance sheet and not be amortized. On an annual basis, and when there is reason
to suspect that their values have been diminished or impaired, these assets must
be tested for impairment, and write-downs may be necessary. The Company is
required to implement SFAS No. 141 on July 1, 2001 and it has determined that
this statement will have no material impact on its consolidated financial
position or results of operations.

On June 29, 2001, SFAS No. 142, "Goodwill and Other Intangible Assets" was
approved by the FASB. SFAS No. 142 changes the accounting for goodwill from an
amortization method to an impairment-only approach. Amortization of goodwill,
including goodwill recorded in past business combinations, will cease upon
adoption of this statement. The Company is required to implement SFAS No. 142 on
January 1, 2002 and it has determined that this statement will have no material
impact on its consolidated financial position or results of operation.


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

This Management's Discussion and Analysis of Financial Condition and Results of
Operations ("MD&A") should be read in conjunction with the accompanying
unaudited condensed consolidated financial statements and the notes thereto as
well as the Company's Annual Report on Form 10-K for the year ended December 31,
2000.

FORWARD-LOOKING STATEMENTS

All statements other than statements of historical fact contained in this Form
10-Q, other periodic reports filed by the Company under the Securities Exchange
Act of 1934, and other written or oral statements made by it or on its behalf,
are forward-looking statements. When used herein, the words "anticipates",
"expects", "believes", "goals", "intends", "plans", or "projects" and similar
expressions are intended to identify forward-looking statements. It is important
to note that forward-looking statements are based on a number of assumptions
about future events and are subject to various risks, uncertainties, and other
factors that may cause the Company's actual results to differ materially from
the views, beliefs, and estimates expressed or implied in such forward-looking
statements. Although the Company believes that the assumptions reflected in
forward-looking statements are reasonable, no assurance can be given that such
assumptions will prove correct. Factors that could cause the Company's results
to differ materially from the results discussed in such forward-looking
statements include but are not limited to the following: flight variances from
expectations, volatility of oil and gas prices, the substantial capital
expenditures and commitments required to acquire aircraft, environmental risks,
competition, government regulation, unionization, operating hazards, risks
related to international operations, the ability to obtain insurance, and the
ability of the Company to implement its business strategy. All forward-looking
statements in this document are expressly qualified in their entirety by the
cautionary statements in this paragraph. PHI undertakes no obligation to update
publicly any forward-looking statements, whether as a result of new information,
future events, or otherwise.


                                       10
<PAGE>   11
OVERVIEW

Total revenues during the second quarter of 2001 reflected improvement over the
second quarter of 2000 primarily due to rate increases which were implemented
January 2001 and May 2001. Those rate increases become effective at customer
contract renewal dates unless implemented earlier by mutual agreement. The
improvement in earnings is also primarily a result of those rate increases.

RESULTS OF OPERATIONS

The following tables present certain non-financial operational statistics for
the quarter and six months ended June 30, 2001 and 2000:

<TABLE>
<CAPTION>
                                     QUARTER ENDED JUNE 30,     SIX MONTHS ENDED JUNE 30,
                                     ----------------------     -------------------------
                                       2001          2000         2001            2000
                                       ----          ----         ----            ----
<S>                                  <C>            <C>         <C>              <C>
FLIGHT HOURS:
    Domestic Oil and Gas and Other    40,063        39,619       76,271          74,901
    International                      5,286         4,842       10,979          11,029
    Aeromedical                        5,817         5,574       11,098          10,913
    Other                                 34           283          175             368
                                      ------        ------       ------          ------
               Total                  51,200        50,318       98,523          97,211
                                      ======        ======       ======          ======
</TABLE>


<TABLE>
<CAPTION>
                                                            JUNE 30,
                                                      --------------------
                                                      2001            2000
                                                      ----            ----
<S>                                                   <C>             <C>
AIRCRAFT OPERATED AT PERIOD END:
    Domestic Oil and Gas and Other                     192             201
    International                                       25              29
    Aeromedical                                         42              42
                                                       ---             ---
               Total                                   259             272
                                                       ===             ===
</TABLE>


QUARTER ENDED JUNE 30, 2001 COMPARED WITH QUARTER ENDED JUNE 30, 2000

Combined Operations

Operating revenues were $68.5 million for the quarter ended June 30, 2001 as
compared to $55.1 million for the quarter ended June 30, 2000. The increase of
$13.4 million was primarily due to rate increases implemented January 2001 and
May 2001. In addition, there was an increase in demand for medium aircraft
offset in part by a decrease in demand for light aircraft. While the number of
aircraft at the end of the period declined to 259 as compared to 272 at June 30,
2000, flight hours for the three months ended June 30, 2001 were up 882 hours as
compared to the three months ended June 30, 2000.

There was a net labor cost increase and an increase in aircraft parts usage cost
in the current quarter compared to the same period in the prior year. The labor
cost increase was related to compensation increases for pilots and mechanics.
That increase was offset to some extent by a reduction in personnel implemented
in February 2001.

The Company's net income for the quarter was $2.8 million compared to a loss in
the same period in the prior year of $0.3 million. Earnings before tax for the
quarter were $4.4 million compared to a loss of $0.5 million in the same period
of the prior year. Earnings per diluted share for the quarter were $0.52 as
compared to a loss per diluted share in the same quarter prior year of $0.06.
The improvement in earnings from operations is due primarily to the rate
increase implemented May 2001.


                                       11
<PAGE>   12
Domestic Oil and Gas and Other

Domestic Oil & Gas and Other segment revenues increased 31.5% to $46.3 million
for the quarter ended June 30, 2001 compared to $35.2 million during the same
period in the prior year. The increase of $11.1 million as compared to the
second quarter 2000 was due to rate increases implemented January 2001 and May
2001. In addition, there was an increase in demand for medium aircraft offset in
part by a decrease in demand for light aircraft.

The Domestic Oil & Gas and Other segment had operating income of $6.5 million
for the quarter compared to an operating loss of $0.5 million for the same
period in 2000. Operating margin of 14.1% for the second quarter compares
favorably to a negative margin of 1.3% in the prior period.

International

International segment revenues increased 20.1% to $5.2 million for the quarter
ended June 30, 2001 compared to $4.4 million during the same period in the prior
year. The increase was primarily due to a contract in Taiwan, but was also
affected by an increase in activity on two other contracts.

The International segment had a $0.1 million operating loss for the quarter
compared to $0.4 million operating loss for the same period in 2000. The
decrease in the operating loss was due to the contract in Taiwan that commenced
earlier this year.

The Company expects that it will exit the operation in Taiwan during the third
quarter of 2001 because its customer will require additional aircraft. The
Company has elected not to make the capital expenditures required to service the
customer's expanded operations.

Aeromedical

Aeromedical segment revenues increased 5.9% to $11.7 million for the quarter
ended June 30, 2001 compared to $11.0 million during the same period in the
prior year. The increase in operating revenues is the result of a new contract
in Grand Junction, Colorado, combined with rate increases on two other
aeromedical contracts.

The Aeromedical segment generated an operating loss of less than $0.1 million as
compared to an operating profit in the same quarter prior year of $0.1 million.
The loss in the current period is due to increased compensation cost.

Technical Services

The Technical Services segment revenues for the quarter ended June 30, 2001 were
$5.3 million compared to $4.5 million in the prior year, an increase of 18.0%.
This was due to increased activity related to certain long-term contracts.

Technical Services operating income improved to $1.1 million for the quarter
compared to $0.9 million in the same quarter in the prior year. The increase in
operating income is due to the increased activity related to certain long term
contracts.


                                       12
<PAGE>   13
OTHER INCOME, NET

Other income, net was $0.7 million for the three months ended June 30, 2001 as
compared to $2.4 million for the three months ended June 30, 2000. Included in
other income, net, are gains from aircraft sales which were $0.3 million for the
three months ended June 30, 2001 as compared to $2.4 million for the same period
in the prior year.

DIRECT EXPENSES

Direct expenses for the quarter ended June 30, 2001 increased by 12.0% to $58.8
million compared to $52.5 million in the same period in the prior year. Human
resource cost increased as a result of increases in compensation to pilots and
mechanics. Spare parts usage also increased for the quarter. Technical Services
costs increase is related to the increase in activity. Insurance and helicopter
lease cost also increased.

Depreciation expense included in direct expenses for the quarter ended June 30,
2001 was $3.5 million compared to $3.2 million in the same period prior year.
Total depreciation expense was $3.8 million and $3.5 million for the same two
periods, respectively. The increase was attributable to depreciation on new
aircraft and refurbishments to older aircraft, along with the acceleration of
deprecation on certain assets that the Company will abandon when it moves to its
new operating facility in Lafayette, Louisiana.

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES

Selling, general, and administrative expenses for the quarter ended June 30,
2001 were $4.4 million compared to $4.0 million in the same period in 2000. The
increase for the period was related to certain costs incurred related to
improvement and/or replacement of the Company's inventory and accounting
systems, corporate legal matters with outside counsel, and costs incurred in
reviewing and improving procedures and systems in the Company's aircraft
maintenance facility in Lafayette, Louisiana.

INTEREST EXPENSE

Interest expense for the quarter ended June 30, 2001 increased $0.2 million to
$1.7 million. The increase is due primarily to higher debt levels in the current
quarter compared to the same quarter in the prior year. Increases in interest
rates charged by the Company's lenders also contributed to the increase.

INCOME TAXES

Income tax expense for the quarter ended June 30, 2001 was $1.6 million compared
to an income tax benefit of $0.2 million for the quarter ended June 30, 2000.
The effective tax-rate was 37.0% and 37.2% for the quarters ended June 30, 2001
and 2000, respectively.

SIX MONTHS ENDED JUNE 30, 2001 COMPARED WITH SIX MONTHS ENDED JUNE 30, 2000

Combined Operations

Operating revenues for the six months ended June 30, 2001 were $131.8 million
compared to $107.8 million for the six months ended June 30, 2000. The increase
in revenue is primarily related to rate increases implemented in January 2001
and May 2001. Those rate increases become effective at customer contract renewal
dates unless implemented earlier by mutual agreement. There was also an increase
in revenue related to an increase in demand for medium aircraft offset in part
by a decrease in demand for light aircraft. The number of aircraft at the end of
the period were 259 as compared to 272 at


                                       13
<PAGE>   14
June 30, 2000. Flight hours for the six months ended June 30, 2001 were up 1,312
hours as compared to the six months ended June 30, 2000.

There was a labor cost increase and an increase in aircraft parts usage cost in
the current six months compared to the same period in the prior year. The labor
cost increase was related to compensation increases for pilots and mechanics.
That increase was offset to some extent by a reduction in personnel implemented
in February 2001. In addition, aircraft lease cost, insurance, and depreciation
also increased over the same period in the prior year.

The Company's net income for the six months ended June 30, 2001 was $2.8 million
compared to a loss for the six months ended June 30, 2000 of $1.8 million.
Earnings before tax for the six months ended June 30, 2001 was $4.5 million
compared to a loss of $2.8 million for the same period in the prior year.
Earnings per diluted share for the six months ended June 30, 2001 was $0.54 as
compared to a loss per diluted share for the six months ended June 30, 2000 of
($0.34). The improvement in earnings from operations is due primarily to the
rate increase implemented May 2001.

Domestic Oil and Gas and Other

Domestic Oil & Gas and Other revenues were $86.3 million for the six months
ended June 30, 2001 compared to $68.7 million for the six months June 30, 2000,
an increase of $17.6 million or 25.6%. The increase in revenue is primarily
related to rate increases implemented in January 2001 and May 2001. The May 2001
increase will take several months before it is fully implemented. Those rate
increases become effective at customer contract renewal dates unless implemented
earlier by mutual agreement. There was also an increase in revenue related to an
increase in demand for medium aircraft offset in part by a decrease in demand
for light aircraft.

Domestic Oil and Gas and Other had operating income of $7.2 million for the six
months ended June 30, 2001 compared to operating income of $0.1 million for the
same period in 2000. The operating margin for the six months ended June 2001 was
8.4% compared to essentially a breakeven margin in the prior period. The
improvement in earnings and operating margin occurred in the second quarter and
is the result primarily of the rate increase implemented May 1, 2001. There were
increases primarily in human resource cost and parts usage cost, which was
offset in part by cost reductions implemented earlier in the year.

International

International segment revenues were $11.1 million for the six months ended June
30, 2001 compared to $10.1 million during the same period in the prior year. The
increase was primarily due to a contract in Taiwan, but also an increase in
activity on two other contracts also contributed to the increase.

The International segment had a $0.5 million operating loss for the six months
ended June 30, 2001 compared to $0.2 million operating loss for the same period
in 2000. The increase in the operating loss was due to increased compensation
expense, offset in part by operating income from a contract in Taiwan which
commenced earlier this year.

The Company expects that it will exit the operation in Taiwan during the third
quarter of 2001 because its customer will require additional aircraft. The
Company has elected not to make the capital expenditures required to service the
customer's expanded operations.

Aeromedical

Aeromedical had revenue of $23.6 for the six months ended June 30, 2001 compared
to $22.1 million for

                                       14
<PAGE>   15
the same period in the prior year, an increase of 6.9%. This increase was
primarily due to a new contract in Grand Junction, Colorado, and an increase in
activity in the Company's AirEvac operations in Arizona.

Aeromedical had operating income of $0.9 million for the six months ended June
30, 2001 compared to $0.1 million for the same period in 2000. Although the year
- to-date earnings reflect an improvement in this segment as compared to the
same period in the prior year, the improvement occurred in the first quarter of
the current year. The second quarter in this period reflected a decrease in
operating income which was due to increases in compensation.

Technical Services

The Technical Services segment operating revenues for the six months ended June
30, 2001 were $10.8 million compared to $6.9 million in the prior year, an
increase of $3.9 million. This increase is due primarily to increased activity
on certain long term contracts.

The Technical Services segment had operating income of $1.7 million for the six
months compared to $0.9 million for the same six months in 2000.

The operating margin was 16.1% in the six months ended June 30, 2001 and 12.7%
for the six months ended June 30, 2000. The improvement in operating income and
in the operating margin is related to an increase in activity on certain
long-term contracts.

OTHER INCOME, NET

Other income, net was $2.7 million for the six months ended June 30, 2001 as
compared to $2.5 million for the six months ended June 30, 2000. Included in
other income, net, are gains from aircraft sales, which totaled $2.3 million for
the six months ended June 30, 2001 as compared to $2.6 million in the same
period prior year.

DIRECT EXPENSES

Direct expenses for the six months ended June 30, 2001 increased by 15.3% to
$117.6 million compared to $102.0 million in same period in the prior year. The
increase was due to a net increase in human resource costs, an increase in spare
parts usage and outside repairs, helicopter lease expense, insurance, and
depreciation, and an increase in cost of sales related to an increase in
Technical Services activity. The net increase in human resource cost is related
to increased compensation for pilots and mechanics offset in part by a reduction
in personnel implemented earlier in the year.

Depreciation expense included in direct expenses for the six months ended June
30, 2001 was $7.1 million compared to $6.1 million in the same period prior
year. Total depreciation expense was $7.9 million and $6.7 million for the same
two periods, respectively. The increase was attributable to depreciation on new
aircraft and refurbishments to older aircraft, along with the acceleration of
deprecation on certain assets that the Company will abandon when it moves to its
new operating facility in Lafayette, Louisiana.

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES

Selling, general, and administrative expenses for the six months ended June 30,
2001 increased by 12.7% to $9.1 million compared to $8.1 million in the same
period in the prior year. The increase for the period was related to certain
costs incurred related to improvement and/or replacement of the Company's


                                       15
<PAGE>   16
inventory and accounting systems, corporate legal matters with outside counsel,
and costs incurred in reviewing and improving procedures and systems in the
Company's aircraft maintenance facility in Lafayette, Louisiana. In addition
there were severance charges recorded in the current year related to a reduction
in force implemented in the first quarter of $0.3 million. Certain of the
severance charges related to the reduction in force.

INTEREST EXPENSE

Interest expense for the six months ended June 30, 2001 increased $0.4 million
to $3.4 million as compared to the six months ended June 30, 2000. The increase
is due primarily to higher debt levels in the current period compared to the
same period in the prior year. Increases in interest rates charged by the
Company's lenders also contributed to the increase.

INCOME TAXES

Income tax expense for the six months ended June 30, 2001 was $1.6 million, or
an effective tax rate of 37.0%. This compares to an income tax benefit recorded
in the same period prior year of $1.0 million, also an effective rate of 36.4%.

LIQUIDITY AND CAPITAL RESOURCES

The Company's cash position as of June 30, 2001 was $1.5 million compared to
$0.9 million at December 31, 2000. Working capital increased $0.1 million from
$41.5 million at December 31, 2000 to $41.6 million at June 30, 2001. Net cash
provided by operating activities for the six months ended June 30, 2001 was $3.0
million. Net cash provided by operating activities along with $12.4 million of
aircraft sales funded expenditures for property and equipment of $12.3 million
for the six months ended June 30, 2001.

Total long-term debt including capital lease obligations decreased $2.5 million
since December 31, 2000 to $72.3 million at June 30, 2001. The current portion
of the long-term debt was $14.8 million at June 30, 2001. On July 3, 2001, the
Company executed a revised credit agreement with its lending group. The revised
credit agreement provides for a $45.0 million revolving credit facility and a
$25.5 million term credit facility. The loan is secured by substantially all of
the Company's assets. The secured term and revolving loan permits prime rate
based borrowings and "Offshore Base Rate" based borrowings. The term credit
facility is payable in scheduled payments of $3.5 million on September 30, 2001,
$3.0 million on December 31, 2001, and $1.9 million per quarter beginning on
March 31, 2002 to September 30, 2004. At June 30,2001 and December 31, 2000,
$25.5 million and $30.0 million was outstanding on the term credit facility. The
revolving credit facility converts to a term loan on January 31, 2002, with
scheduled quarterly installments equal to 5% of the principal amount outstanding
at the conversion date, with the final balance due January 31, 2003. At June 30,
2001 and December 31, 2000, $44.5 million and $37.5 million was outstanding on
the revolving credit facility. During the second quarter the Company paid $4.8
million of term debt.

The amount expended for the purchase and completion of aircraft improvements and
engines and other property and equipment was $12.3 million for the six months
ended June 30, 2001, compared to $9.4 million for the six months ended June 30,
2000.

The Company executed a lease agreement for a new principal operating facility
for twenty years, effective September 2001. Certain portions of the new facility
have been occupied by the Company at June 30, 2001. Under the terms of the new
facility lease, the Company has committed to fund $4.0 million of construction
costs. As of June 30, 2001, the Company had funded $3.0 million of the


                                       16
<PAGE>   17
commitment, and expects to fund the remaining $1.0 million in September 2001.
Amounts funded by PHI will amortize over 10 years at 7% per annum and the
resulting monthly amortization amounts will reduce PHI's monthly lease payments
for the first 10 years of the lease.

The Company believes that the combination of improved cash flow from operations
and planned aircraft sales will fund required debt principal and interest
payments and necessary capital expenditures during 2001.

ENVIRONMENTAL MATTERS

The Company currently has an aggregate estimated liability of $3.0 million for
environmental remediation costs that were probable and estimable at December 31,
2000. The Company recorded no additional provisions for the quarter ended June
30, 2001. However, the Company began conducting environmental site surveys at
its Lafayette facility in late 2000, and anticipates that it will also conduct
environmental site surveys at certain other facilities during 2001. As a result
of information available to date, it is expected that the results of these
surveys will require additional provisions for environmental remediation costs,
but the Company is currently unable to estimate the amount of additional
provisions that may be necessary until such time as sufficient work has been
done and approvals received from appropriate regulatory agencies regarding any
remediation plans.

UNION CONTRACT

On April 27, 2001, the Company and the Office & Professional Employees
International Union ("OPEIU") reached a tentative agreement on all terms and
conditions of a three-year collective bargaining agreement covering its domestic
pilots. This agreement was ratified by the Company's domestic pilots on June 13,
2001, and was effective retroactively to June 1, 2001.

NEW ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 133. SFAS No. 133 establishes new
accounting and reporting standards for derivative financial instruments and for
hedging activities. SFAS No. 133 requires the Company to measure all derivatives
at fair value and to recognize them in the balance sheet as an asset or
liability, depending on the Company's rights or obligations under the applicable
derivative contract.

The Company uses interest rate swaps to hedge its cash flow related to interest.
Effective January 1, 2001, the Company began accounting for its interest rate
swaps in accordance with SFAS No. 133, as amended and has designated the
interest rate swaps as cash flow hedges. The cumulative effect of adopting SFAS
No. 133, as amended on January 1, 2001 resulted in an increase of $38,000 to
other comprehensive income. As of June 30, 2001, the fair market value of these
interest rate swaps was a $0.9 million liability and is included in other
long-term liabilities on the balance sheet.

On June 29, 2001, SFAS No. 141, "Business Combinations" was approved by the
Financial Accounting Standards Board ("FASB"). SFAS No. 141 requires that the
purchase method of accounting be used for all business combinations initiated
after June 30, 2001. Goodwill and certain intangible assets will remain on the
balance sheet and not be amortized. On an annual basis, and when there is reason
to suspect that their values have been diminished or impaired, these assets must
be tested for impairment, and write-downs may be necessary. The Company is
required to implement SFAS No. 141 on July 1, 2001 and it has determined that
this statement will have no material impact on its consolidated financial
position or results of operations.


                                       17
<PAGE>   18
On June 29, 2001, SFAS No. 142, "Goodwill and Other Intangible Assets" was
approved by the FASB. SFAS No. 142 changes the accounting for goodwill from an
amortization method to an impairment-only approach. Amortization of goodwill,
including goodwill recorded in past business combinations, will cease upon
adoption of this statement. The Company is required to implement SFAS No. 142 on
January 1, 2002 and it has determined that this statement will have no material
impact on its consolidated financial position or results of operation.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a result of a decline in market interest rates, the estimated fair value of
the Company's interest rate swaps declined to a liability of $0.9 million. There
were no other material changes to the Company's disclosures regarding
derivatives in its Form 10-K for the year ended December 31, 2000.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is involved in various legal proceedings primarily involving claims
for personal injury. The Company believes that the outcome of all such
proceedings, even if determined adversely, would not have a material adverse
effect on its consolidated financial statements.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

         3.1  (i) Articles of Incorporation of the Company (incorporated by
              reference to Exhibit No. 3.1 (i) to PHI's Report on Form 10-Q
              for the quarterly period ended October 31, 1994).

              (ii) By-laws of the Company as amended.

       10.23  Second Amended and Restated Loan Agreement to the Loan Agreement
              originally dated January 31, 1986 as amended and restated in its
              entirety as of March 31, 1997 and as amended among Petroleum
              Helicopters, Inc., and Bank of America, NA, Whitney National Bank,
              Bank One, NA, and Bank of America, N.A. as Agent, and Letter of
              Credit Issuing Bank dated July 3, 2001.

       10.24  Articles of Agreement Between Petroleum Helicopters, Inc. & Office
              & Professional Employees International Union and its Local 108
              dated June 13, 2001.

       10.25  Amendment to the Supplemental Executive Retirement Plan dated
              May 24, 2001.

(b)  Reports on Form 8-K

     No reports were filed on Form 8-K during the quarter ended June 30, 2001.


                                       18
<PAGE>   19
                                   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.



                                      Petroleum Helicopters, Inc.


August 14, 2001                       By: /s/ Carroll W. Suggs
                                          -------------------------------------
                                      Carroll W. Suggs
                                      Chairman of the Board and
                                      Chief Executive Officer

August 14, 2001                       By: /s/ Lance F. Bospflug
                                          -------------------------------------
                                      Lance F. Bospflug
                                      President

August 14, 2001                       By: /s/ Michael J. McCann
                                          -------------------------------------
                                      Michael J. McCann
                                      Chief Financial Officer and Treasurer


                                       19
<PAGE>   20
                                 EXHIBIT INDEX

       Exhibits

         3.1      (i) Articles of Incorporation of the Company (incorporated by
                  reference to Exhibit No. 3.1 (i) to PHI's Report on Form 10-Q
                  for the quarterly period ended October 31, 1994).

                  (ii) By-laws of the Company as amended.

         10.23    Second Amended and Restated Loan Agreement among Petroleum
                  Helicopters, Inc., and Bank of America, NA, Whitney National
                  Bank, Bank One, NA, and Bank of America, N.A. as Agent, and
                  Letter of Credit Issuing Bank dated July 3, 2001.

         10.24    Articles of Agreement Between Petroleum Helicopters, Inc. &
                  Office & Professional Employees International Union and its
                  Local 108 dated June 13, 2001.

         10.25    Amendment to the Supplemental Executive Retirement Plan dated
                  May 24, 2001.


                                       20

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.1
<SEQUENCE>3
<FILENAME>d89585ex3-1.txt
<DESCRIPTION>BY-LAWS OF THE COMAPNY AS AMENDED
<TEXT>
<PAGE>   1
                                                              EXHIBIT 3.1 (ii)



                              AMENDED AND RESTATED
                                     BY-LAWS
                                       OF
                           PETROLEUM HELICOPTERS, INC.

                               SECTION 1. OFFICES


     1.1 PRINCIPAL OFFICE. The principal office of the corporation shall be
located at 2121 Airline Drive, Suite 400, Metairie, Louisiana 70001-5979.

     1.2 ADDITIONAL OFFICES. The Corporation may have such offices at such other
places as the Corporation's Board of Directors (the "Board") may from time to
time determine or the business of the Corporation may require.

                        SECTION 2. SHAREHOLDERS MEETINGS

     2.1 PLACE OF MEETINGS. Unless otherwise required by law or these By-laws,
all meetings of the shareholders shall be held at the principal office of the
Corporation or at such other place, within or without the State of Louisiana, as
may be designated by the Board.

     2.2 ANNUAL MEETINGS. An annual meeting of the shareholders shall be held at
such date at such time as may be specified by the Board of Directors in the call
of the meeting, for the purpose of electing directors and for the transaction of
such other business as may be properly brought before the meeting. If no annual
shareholders' meeting is held for a period of eighteen months, any shareholder
may call such meeting to be held at the registered office of the Corporation as
shown on the records of the Secretary of State of Louisiana.

     2.3 SPECIAL MEETINGS. Special meetings of the shareholders, for any purpose
or purposes, may be called by the Chairman of the Board, the Chief Executive
Officer or the Board, or by the shareholders as provided in the Articles of
Incorporation.





<PAGE>   2

     2.4 NOTICE OF MEETINGS. Except as otherwise provided by law, the authorized
person or persons calling a shareholders' meeting shall cause written notice of
the time, place and purpose of the meeting to be given to all shareholders
entitled to vote at such meeting, at least ten days and not more than sixty days
prior to the day fixed for the meeting. Notice of the annual meeting need not
state the purpose or purposes thereof, unless action is to be taken at the
meeting as to which notice is required by law or the By-laws. Notice of a
special meeting shall state the purpose or purposes thereof, and the business
conducted at any special meeting shall be limited to the purpose or purposes
stated in the notice.

     2.5 LIST OF SHAREHOLDERS. At every meeting of shareholders, a list of
shareholders entitled to vote, arranged alphabetically and certified by the
Corporation's Secretary or by the agent of the Corporation having charge of
transfers of shares, showing the number and class of shares held by each such
shareholder on the record date for the meeting, shall be produced on the request
of any shareholder.

     2.6 QUORUM. At all meetings of shareholders, the holders of a majority of
the total voting power of the Corporation shall constitute a quorum; provided
that this subsection shall not have the effect of reducing the vote required to
approve or affirm any matter that may be established by law, the Articles of
Incorporation or these By-laws.

     2.7 VOTING. When a quorum is present at any meeting a majority of the total
voting power shall decide each question brought before such meeting, unless the
question is one upon which, by express resolution of the Board of Directors, or
express provision of law or the Articles of Incorporation, a different vote is
required, in which case such express provision shall govern and control the
decision of such question. Directors shall be elected by plurality vote.

     2.8 PROXIES-GENERAL. At any meeting of the shareholders, every shareholder
having the right to vote shall be entitled to vote in person or by proxy
appointed by an instrument in writing executed by such shareholder and bearing a
date not more than eleven months prior to the meeting, unless the instrument
provides for a longer period, but in no case will an outstanding proxy be valid
for longer than three years from the date of its execution. The person appointed
as proxy need not be a shareholder of the Corporation.

     2.9 EXECUTION OF PROXIES. Any proxy must be executed by a shareholder or
the shareholder's authorized officer, director, employee or agent. Any signature
on a proxy may be affixed by any reasonable means, including but not limited to
facsimile signature.

     2.10 ELECTRONICALLY TRANSMITTED PROXIES. A shareholder may authorize
another person or persons to act for him as proxy by transmitting or authorizing
the transmission of a telegram, cablegram or other means of




                                      -2-
<PAGE>   3

electronic transmission to the person who will be the holder of the proxy or to
a proxy solicitation firm, proxy support service organization or similar agent
duly authorized by the person who will be the holder of the proxy to receive
such transmission; provided, however, that any such telegram, cablegram or other
means of electronic transmission shall be submitted with information from which
the Corporation may determine that the telegram, cablegram or other electronic
transmission was authorized by the shareholder. If it is determined that such
electronic transmissions are valid, the inspectors or other persons making that
determination shall specify the information upon which they relied.

     2.11 VALIDITY OF COPIES AND OTHER REPRODUCTIONS OF PROXIES. Any copy,
facsimile, telecommunication or other reliable reproduction of the writing or
transmission created pursuant hereto may be substituted or used in lieu of the
original writing or transmission for all purposes for which the original writing
or transmission could be used; provided, however, that such copy, facsimile
telecommunication or other reliable reproduction shall be a complete
reproduction of the entire original writing or transmission.

     2.12 VOTING POWER PRESENT OR REPRESENTED. For purposes of determining the
amount of voting power present or represented at any annual or special meeting
of shareholders with respect to voting on a particular proposal, shares as to
which the proxy holders have been instructed to abstain from voting on the
proposal, and shares that have been precluded from voting (whether by law,
regulations of the Securities and Exchange Commission, rules or by-laws of any
self-regulatory organization or otherwise), will not be treated as present; but
such shares will be counted as present for purposes of determining the existence
of a quorum.

     2.13 ADJOURNMENTS. Adjournments of any annual or special meeting of
shareholders may be taken without new notice being given unless a new record
date is fixed for the adjourned meeting, but any meeting at which directors are
to be elected shall be adjourned only from day to day until such directors shall
have been elected.

     2.14 WITHDRAWAL. If a quorum is present or represented at a duly organized
meeting, such meeting may continue to do business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum as fixed in Section 2.6 of these By-laws, or the refusal of any
shareholders present to vote.

     2.15 LACK OF QUORUM. If a meeting cannot be organized because a quorum has
not attended, those present may adjourn the meeting to such time and place as
they may determine, subject, however, to the provisions of Section 73C of the
Business Corporation Law of Louisiana. In the case of any meeting called for the
election of directors, those who attend the second of such adjourned meetings,
although less than a quorum as fixed in Section 2.6 hereof, shall nevertheless
constitute a quorum for the purpose of electing directors.




                                      -3-
<PAGE>   4

     2.16 PRESIDING OFFICER. The Chairman, the CEO and the President, in that
order, or in their absence, a chairman designated by the Board, shall preside at
all shareholders' meetings.

     2.17 DEFINITIONS OF SHAREHOLDER, VOTING POWER AND VOTING POWER PRESENT. As
used in these By-laws, and unless the context otherwise requires, (a) the term
"shareholder" shall mean a person who is (i) the record holder of shares of the
Corporation's voting stock or (ii) a registered holder of any bonds, debentures
or similar obligations granted voting rights by the Corporation pursuant to La.
R.S. 12:75, (b) the term "voting power" shall mean the right vested by law,
these By-laws or the Articles of Incorporation in the shareholders to vote in
the determination of a particular question or matter and (c) the term "total
voting power" shall mean the total number of votes that the shareholders are
entitled to cast in the determination of a particular question or matter.

     2.18 NOTICE OF STOCKHOLDER BUSINESS.

               (a) Annual Meetings of Stockholders.

                    (1) The proposal of business to be considered by the
          stockholders may be made at an annual meeting of stockholders (a)
          pursuant to the Corporation's notice of meeting, (b) by or at the
          direction of the Board of Directors or (c) by any stockholder of the
          Corporation who was a stockholder of record at the time of giving of
          notice provided for in this By-Law, who is entitled to vote at the
          meeting and who complies with the notice procedures set forth in this
          By-Law.

                    (2) For other business to be properly brought before an
          annual meeting by a stockholder pursuant to paragraph (A) (1) (c), the
          stockholder must have given timely notice thereof in writing to the
          Secretary of the Corporation, and such other business must otherwise
          be a proper matter for stockholder action. To be timely, the notice
          must be delivered to the Secretary at the principal executive offices
          of the Corporation not later than the close of business on the 60th
          day nor earlier than the close of business on the 90th day before the
          first anniversary of the preceding year's annual meeting; but if the
          date of the annual meeting is more than 30 days before or more than 60
          days after such anniversary date, notice by the stockholder to be
          timely must be so delivered not earlier than the close of business on
          the 90th day before such annual meeting and not later than the close
          of business on the later of the 60th day before such annual meeting or
          the 10th day following the day on which public announcement of the
          date of such meeting is first made by the Corporation. In no event
          shall the public announcement of an adjournment of an annual meeting




                                       -4-
<PAGE>   5

          commence a new time period for the giving of a stockholder's notice as
          described above. Such stockholder's notice shall set forth (a) a brief
          description of the business desired to be brought before the meeting,
          the reasons for conducting such business at the meeting and any
          material interest in such business of such stockholder and the
          beneficial owner, if any, on whose behalf the proposal is made; and
          (b) as to the stockholder giving the notice and the beneficial owner,
          if any, on whose behalf the proposal is made (i) the name and address
          of such stockholder, as they appear on the Corporation's books, and of
          such beneficial owner and (ii) the class and number of shares of the
          Corporation which are owned beneficially and of record by such
          stockholder and such beneficial owner.

               (b) Special Meetings of Stockholders. Only such business shall be
conducted at a special meeting of stockholders as shall have been brought before
the meeting pursuant to the Corporation's notice of meeting.

               (c) General.

                    (1) Only such business shall be conducted at a meeting of
          stockholders as shall have been brought before the meeting in
          accordance with the procedures set forth in this By-Law. Except as
          otherwise provided by law, the Articles of Incorporation or these
          By-Laws, the Chairman of the meeting shall have the power and duty to
          determine whether any business proposed to be brought before the
          meeting was proposed, in accordance with the procedures set forth in
          this By-Law and, if any proposed business is not in compliance with
          this By-Law, to declare that such defective proposal shall be
          disregarded.

                    (2) For purposes of this By-Law, "public announcement" shall
          mean disclosure in a press release reported by the Dow Jones News
          Service, Associated Press or comparable national news service or in a
          document publicly filed by the Corporation with the Securities and
          Exchange Commission pursuant to Section 13, 14 or 15(d) of the
          Exchange Act.

                    (3) Notwithstanding the foregoing provisions of this By-Law,
          a stockholder shall also comply with all applicable requirements of
          the Securities Exchange Act of 1934 and the rules and regulations
          thereunder with respect to the matters set forth in this By-Law.
          Nothing in this By-Law shall be deemed to affect any rights (i) of
          stockholders to request inclusion of proposals in the Corporation's
          proxy statement pursuant to Rule l4a-8 under the




                                      -5-
<PAGE>   6


          Securities Exchange Act of 1934 or (ii) of the holders of any series
          of Preferred Stock to elect directors under specified circumstances.

                              SECTION 3. DIRECTORS

     3.1 POWERS; NUMBER. All of the corporate powers shall be vested in, and the
business and affairs of the Corporation shall be managed by, the Board, which
shall consist of seven natural persons; provided that, if after proxy material
for any meeting of shareholders at which directors are to be elected are mailed
to shareholders, any person or persons named therein to be nominated at the
direction of the Board becomes unable or unwilling to serve, the foregoing
number of authorized directors shall be automatically reduced by a number equal
to the number of such persons unless the Board, by a majority vote of the entire
Board, selects an additional nominee; provided that in no event shall the number
of directors so authorized, nominated and elected be less than the number
required by law. No amendment to this Section to decrease the number of
directors shall shorten the term of any incumbent director. No director need be
a shareholder.

     3.2 POWERS. The Board may exercise all such powers of the Corporation and
do all such lawful acts and things that are not by law, the Articles of
Incorporation or these By-laws directed or required to be done by the
shareholders.

     3.3 GENERAL ELECTION. At each annual meeting of shareholders, directors
shall be elected to succeed those directors whose terms then expire. Such newly
elected directors shall serve until the next succeeding annual meeting of
shareholders after their election and until their successors are elected and
qualified. A director elected to fill a vacancy shall hold office for a term
expiring at the next annual meeting and until his successor is elected and
qualified. No decrease in the number of directors constituting the Board shall
shorten the term of any incumbent director.

     3.4 VACANCIES. Except as otherwise provided in the Articles of
Incorporation or these By-laws (a) the office of a director shall become vacant
if he dies, resigns or is removed from office and (b) the Board may declare
vacant the office of a director if he (i) is interdicted or adjudicated an
incompetent, (ii) is adjudicated a bankrupt, (iii) in the sole opinion of the
Board becomes incapacitated by illness or other infirmity so that he is unable
to perform his duties for a period of six months or longer, or (iv) ceases at
any time to have the qualifications required by law, the Articles of
Incorporation or these By-laws.

     3.5 FILLING VACANCIES. In the event of a vacancy (including any vacancy
resulting from an increase in the authorized number of directors, or from
failure of the shareholders to elect the full number of authorized directors),
the remaining directors, even though not constituting a quorum, may fill any
vacancy on the Board for the unexpired term by a majority vote of the directors



                                      -6-
<PAGE>   7

remaining in office, provided that the shareholders shall have the right, at any
special meeting called for the purpose prior to such action by the Board, to
fill the vacancy.

     3.6 NOTICE OF SHAREHOLDER NOMINEES. Only persons who are nominated in
accordance with the procedures set forth in this Section 3.6 shall be eligible
for election as directors. Nominations of persons for election to the Board may
be made at a meeting of shareholders by or at the direction of the Board or by a
shareholder entitled to vote for the election of directors at the meeting who
complies with the notice procedures set forth in this Section 3.6. Such
nominations, other than those made by or at the direction of the Board, shall be
made pursuant to timely notice in writing to the Corporation's Secretary. To be
timely, a shareholder's notice must be delivered or mailed and received at the
principal executive offices of the Corporation not less than 45 days nor more
than 90 days prior to the meeting; provided, however, that if less than 55 days
notice or prior public disclosure of the date of the meeting is given or made to
shareholders, notice by the shareholder to be timely must be received no later
than the close of business on the 10th day following the day on which such
notice of the date of the meeting was mailed or such public disclosure was made.
Such shareholder's notice shall set forth the following:

                    (a) as to each person whom the shareholder proposes to
          nominate for election or e-election as a director (i) the name, age,
          business address and residence address of such person, (ii) the
          principal occupation or employment of such person, (iii) the class and
          number of shares of the capital stock of the Corporation of which such
          person is the beneficial owner and the number of votes such person is
          entitled to cast at the shareholders' meeting and (iv) any other
          information relating to such person that would be required to be
          disclosed in solicitations of proxies for election of directors, or
          would be otherwise required, in each case pursuant to Regulation 14A
          under the Securities Exchange Act of 1934, as amended (including
          without limitation such person's written consent to being named in the
          proxy statement as a nominee and to serving as a director if elected);
          and

                    (b) as to the shareholder giving the notice (i) the name and
          address of such shareholder and (b) the class and number of shares of
          the capital stock of the Corporation of which such shareholder is the
          beneficial owner and the number of votes such person is entitled to
          cast at the shareholders' meeting. If requested in writing by the
          Corporation's Secretary at least 15 days in advance of the meeting,
          such shareholder shall disclose to the Secretary, within 10 days of
          such request, whether such person is the sole beneficial owner of the
          shares held of record by him; and, if not, the name and address of
          each other person known by the shareholder of record to claim a
          beneficial interest in such shares.




                                       -7-
<PAGE>   8

At the request of the Board, any person nominated by or at the direction of the
Board for election as a director shall furnish to the Corporation's Secretary
that information required to be set forth in a shareholder's notice of
nomination that pertains to the nominee. If a shareholder seeks to nominate one
or more persons as directors, the Secretary shall appoint two inspectors (the
"Inspectors"), who shall not be affiliated with the Corporation, to determine
whether a shareholder has complied with this Section 3.6. If the Inspectors
shall determine that a shareholder has not complied with this Section 3.6, the
Inspectors shall direct the chairman of the meeting to declare to the meeting
that a nomination was not made in accordance with the procedures prescribed by
the Articles of Incorporation or these By-laws; and the chairman shall so
declare to the meeting and the defective nomination shall be disregarded.

     3.7 COMPENSATION OF DIRECTORS. Directors as such, shall receive such
compensation for their services as may be fixed by resolution of the Board and
shall receive their actual expenses of attendance, if any, for each regular or
special meeting of the Board; provided that nothing herein contained shall be
construed to preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor.

                        SECTION 4. MEETINGS OF THE BOARD


     4.1 PLACE OF MEETINGS. The meetings of the Board may be held at such place
within or without the State of Louisiana as a majority of the directors may from
time to time appoint.

     4.2 INITIAL MEETINGS. The first meeting of each newly elected Board shall
be held immediately following the shareholders' meeting at which the Board is
elected and at the same place as such meeting, and no notice of such first
meeting shall be necessary for the newly elected directors in order legally to
constitute the meeting.

     4.3 REGULAR MEETINGS; NOTICE. Regular meetings of the Board may be held at
such times as the Board may from time to time determine. No notice of regular
meetings of the Board shall be required provided that the date, time and place
of regular meetings are fixed by the Board.

     4.4 SPECIAL MEETINGS; NOTICE. Special meetings of the Board may be called
by the Chairman on reasonable notice given to each director, either personally
or by telephone, mail, e-mail or by telegram. Special meetings shall be called
by the Secretary in like manner and on like notice on the written request of a
majority of the directors, and if such officer fails or refuses, or is unable
within 24 hours to call a meeting when requested, then the directors making the
request may call the meeting on two days' written notice given to each director.
The notice of a special meeting of directors need not state its purpose or
purposes, but if the notice states a purpose or purposes and does not state a
further purpose to consider such other business as may properly come





                                      -8-
<PAGE>   9

before the meeting, the business to be conducted at the special meeting shall be
limited to the purposes stated in the notice.

     4.5 WAIVER OF NOTICE. Directors present at any regular or special meeting
shall be deemed to have received due, or to have waived, notice thereof,
provided that a director who participates in a meeting by telephone (as
permitted by Section 4.9) shall not be deemed to have received or waived due
notice if, at the beginning of the meeting, he objects to the transaction of any
business because the meeting is not lawfully called.

     4.6 QUORUM. A majority of the Board shall be necessary to constitute a
quorum for the transaction of business, and except as otherwise provided by law
or the Articles of Incorporation or these By-laws, the acts of a majority of the
Board at a meeting at which a quorum is present shall be the acts of the Board.
If a quorum is not present at any meeting of the Board, the directors present
may adjourn the meeting from time to time without notice other than announcement
at the meeting, until a quorum is present.

     4.7 WITHDRAWAL. If a quorum is present when the meeting convened, the
directors present may continue to do business, taking action by vote of a
majority of a quorum as fixed in Section 4.6, until adjournment, notwithstanding
the withdrawal of enough directors to leave less than a quorum as fixed in
Section 4.6 or the refusal of any director present to vote.

     4.8 ACTION BY CONSENT. Any action that may be taken at a meeting of the
Board or any committee thereof, may be taken by a consent in writing signed by
all of the directors or by all members of the committee, as the case may be, and
filed with the records of proceedings of the Board or such committee.

     4.9 MEETINGS BY TELEPHONE OR SIMILAR COMMUNICATION. Members of the Board
may participate at and be present at any meeting of the Board or any committee
thereof by means of conference telephone or similar communications equipment if
all persons participating in such meeting can hear and communicate with each
other. Participation in a meeting pursuant to this Section 4.9 shall constitute
presence in person at such meeting, except where a person participates in the
meeting for the express purpose of objecting to the transaction of any business
on the ground that the meeting is not lawfully called or convened.

                       SECTION 5. COMMITTEES OF THE BOARD

     5.1 GENERAL. The Board may designate one or more committees, each committee
to consist of two or more of the directors (and one or more directors may be
named as alternate members to replace any absent or disqualified regular
members), which, to the extent provided by resolution of the Board or the
By-laws, shall have and may exercise the powers of the Board in




                                      -9-
<PAGE>   10

the management of the business and affairs of the Corporation, and may have
power to authorize the seal of the Corporation to be affixed to documents, but
no such committee shall have power or authority in reference to amending the
Articles of Incorporation, adopting an agreement of merger, consolidation, or
share exchange, recommending to the shareholders the sale, lease or exchange of
all or substantially all of the corporation's property and assets, recommending
to the stockholders a dissolution of the Corporation or a revocation of
dissolution, removing or indemnifying directors or amending the By-laws; and
unless the resolution expressly so provides, no such committee shall have the
power or authority to declare a dividend or authorize the issuance of stock.
Such committee or committees shall have such name or names as may be stated in
the By-laws, or as may be determined, from time to time, by the Board. Any
vacancy occurring in any such committee shall be filled by the Board, but the
Chairman of the Board may designate another director to serve on the committee
pending action by the Board. Each such member of a committee shall hold office
during the term of the Board constituting it, unless otherwise ordered by the
Board.

     5.2 COMPENSATION COMMITTEE. The Board shall establish a Compensation
Committee consisting of at least two directors each of whom shall (i) be a
"non-employee director" as defined in Rule 16b-3 under the Securities Exchange
Act of 1934, and (ii) not serve, and shall not have served in the past, as an
officer or employee of the Corporation or any of its affiliates. The
Compensation Committee shall determine the compensation of officers and key
employees of the Corporation and administer the Corporation's stock incentive
plans.

     5.3 AUDIT COMMITTEE. The Board shall establish an Audit Committee
consisting of at least a majority of directors who are not officers or employees
of the Corporation or any of its affiliates, and who meet the qualifications of
the NASDAQ Stock Market. The Audit Committee shall have such responsibilities
and authority as is contained in a written Audit Committee Charter approved from
time to time by the Board.

     5.4 EXECUTIVE COMMITTEE. The Executive Committee shall consist of three or
more directors. It shall have and exercise all of the powers of the Board of
Directors when the Board is not in session except (i) declaration and payment of
dividends; (ii) sale of the Company; (iii) amendment of the Bylaws; (iv)
indemnification of directors; or (v) issuance of stock.

     5.5 PROCEDURES FOR COMMITTEES. Each committee shall keep written minutes of
its meetings and all actions taken by a committee shall be reported to the Board
at its next meeting, whether regular or special. Failure to keep written minutes
or to make such reports shall not affect the validity of action taken by a
committee. Each committee shall adopt such rules (not inconsistent with the
Articles of Incorporation, these By-laws or any regulations




                                      -10-
<PAGE>   11

specified for such committee by the Board) as it shall deem necessary for the
proper conduct of its functions and the performance of its responsibilities.

                       SECTION 6. REMOVAL OF BOARD MEMBER

     Any director or the entire Board may be removed at any time by the
affirmative vote of not less than a majority of the total voting power at a
meeting of shareholders duly called for that purpose. The shareholders at such
meeting may proceed to elect a successor or successors for the unexpired term of
the director or directors removed. Except as provided in this Section 6,
directors shall not be subject to removal.

                               SECTION 7. NOTICES

     7.1 FORM OF DELIVERY. Whenever under the provisions of law the Articles of
Incorporation or these By-laws notice is required to be given to any shareholder
or director, it shall not be construed to mean personal notice unless otherwise
specifically provided in the Articles of Incorporation or these By-laws, but
such notice may be given by mail, addressed to such shareholder or director at
his address as it appears on the records of the Corporation, with postage
thereon prepaid. Such notices shall be deemed to have been given at the time
they are deposited in the United States mail. Notice to a director pursuant to
Section 4.4 hereof may also be given personally or by telephone, e-mail or
telegram sent to his or her address as it appears on the Corporation's records.

     7.2 WAIVER. Whenever any notice is required to be given by law, the
Articles of Incorporation or these By-laws, a waiver thereof in writing signed
by the person or persons entitled to said notice, whether before or after the
time stated therein, shall be deemed equivalent thereto. In addition, notice
shall be deemed to have been given to, or waived by, any shareholder or director
who attends a meeting of shareholders or directors in person, or is represented
at such meeting by proxy, without protesting at the commencement of the meeting
the transaction of any business because the meeting is not lawfully called or
convened.

                              SECTION 8. OFFICERS

     8.1 DESIGNATIONS. The Corporation's officers shall be a Chairman, a Chief
Executive Officer, a President, a Secretary, a Chief Financial Officer, a
Controller and a Treasurer. The Corporation may also have one or more Assistant
Secretaries and Assistant Treasurers and other officers. Any two offices may be
held by one person, provided that no person holding more than one office may
sign, in more than one capacity, any certificate or other instrument required by
law to be signed by two officers.




                                      -11-
<PAGE>   12

     8.2 APPOINTMENT OF CERTAIN OFFICERS. At the first meeting of each newly
elected Board, or at such other time when there shall be a vacancy, the Board
shall elect the Corporation's officers.

     8.3 APPOINTMENT OF OTHER OFFICERS. As soon as practicable after his or her
election, the Chief Executive Officer may appoint one or more Assistant
Secretaries, Assistant Treasurers and other officers. The Chief Executive
Officer shall, following such appointment or appointments, cause to be filed
with the minutes of the meeting of the Board an instrument specifying the
officers selected. The Chief Executive Officer may also appoint such other
officers, employees and agents of the Corporation as he or she may deem
necessary, or may vest the authority to appoint such other officers, employees
and agents in such other of the Corporation's officers as he or she deems
appropriate subject in all cases to his or her discretion. Whenever by law or
the terms of the instrument, a vice-president is necessary to execute any
instrument in the absence of execution by the Chief Executive Officer or the
President, then the Chief Financial Officer and any officer designated as a
Director of a particular function or designated in a specific grant of
authority, shall be deemed a vice-president of the Corporation for such purpose.
Subject to these By-laws, all of the officers, employees and agents of the
Corporation shall hold their offices or positions for such terms and shall
exercise such powers and perform such duties as shall be specified from time to
time by the Board or the Chief Executive Officer.

     8.4 REMOVAL. The Board or the Chief Executive Officer may remove any
officer with or without cause at any time. Any such removal shall be without
prejudice to the contractual rights of such officers, if any, with the
Corporation, but the election of an officer shall not in and of itself create
contractual rights. Any vacancy occurring in any office of the Corporation by
death, resignation, removal or otherwise may be filled by the Chief Executive
Officer until the next regular or special meeting of the Board.

     8.5 THE CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall have
general and active responsibility for the management of the Corporation's
business, shall be responsible for implementing all orders and resolutions of
the Board, shall supervise the daily operations of the Corporation's business
and shall, in the absence of the Chairman, preside at meetings of the Board and
of the shareholders.

     8.6 AUTHORITY AND DUTIES OF OFFICERS. In the absence or disability of the
Chief Executive Officer, the President shall perform the duties and exercise the
powers of the Chief Executive Officer, and shall perform such other duties as
the Board shall prescribe.

     8.7 THE SECRETARY. The Secretary shall attend all meetings of the Board and
all meetings of the shareholders, record all votes and the minutes of all
proceedings in a book to be kept for that purpose, give, or cause to be given,




                                      -12-
<PAGE>   13

notice of all meetings of the shareholders and special meetings of the Board,
and perform such other duties as may be prescribed by the Board or Chairman, CEO
and President. The Secretary shall also keep in safe custody the Corporation's
seal, if any, and affix the seal to any instrument requiring it.

     8.8 THE PRESIDENT. The President shall report to the Chief Executive
Officer and the Board and shall perform such duties as may be requested from
time to time by the Board, the Chief Executive Officer, or the By-laws.

     8.9 THE CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall be the
Corporation's principal financial officer and shall manage the Corporation's
financial affairs and direct the activities of the Treasurer and other officers
responsible for the Corporation's financial affairs. The Chief Financial Officer
may sign, execute and deliver in the name of the Corporation contracts, bonds
and other obligations, shall be responsible for all of the Corporation's
internal and external financial reporting and shall perform such other duties as
may be prescribed from time to time by the Board, the Chief Executive Officer
and the President or by the By-laws.

     8.10 THE TREASURER. As directed by the Chief Financial Officer, the
Treasurer shall have general custody of all funds and securities of the
Corporation. The Treasurer may sign, with the Chief Executive Officer, the
President, the Chief Financial Officer or such other person or persons as may be
designated for the purpose by the Board, all bills of exchange or promissory
notes of the Corporation. The Treasurer shall perform such other duties as may
be prescribed from time to time by the Chief Financial Officer or the By-laws.

     8.11 THE CONTROLLER. The Controller shall assist the Chief Financial
Officer as directed in accounting, financial reporting, bookkeeping and
accounting procedures and perform such other duties as may be prescribed from
time to time by the Chief Financial Officer.

                                SECTION 9. STOCK

     9.1 CERTIFICATES. Every holder of stock in the Corporation shall be
entitled to have a certificate signed by the President and the Secretary or an
Assistant Secretary evidencing the number and class (and series, if any) of
shares owned by him, containing such information as required by law and bearing
the seal of the Corporation. If any stock certificate is manually signed by a
transfer agent or registrar other than the Corporation itself or an employee of
the Corporation, the signature of any such officer may be a facsimile. In case
any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may
be issued by the Corporation with the same effect as if he were such officer,
transfer agent or registrar at the date of issue.




                                      -13-
<PAGE>   14

     9.2 MISSING CERTIFICATES. The President may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the Corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. As a condition
precedent to the issuance of a new certificate or certificates, the officers of
the Corporation shall, unless dispensed with by the President, require the owner
of such lost, stolen or destroyed certificate or certificates, or his legal
representative, (i) to advertise or give the Corporation a bond or (ii) enter
into a written indemnity agreement, in each case in an amount appropriate to
indemnify the Corporation against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost, stolen or
destroyed.

     9.3 TRANSFERS. Upon surrender to the Corporation or the transfer agent of
the Corporation, of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, it shall be
the duty of the Corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.

                   SECTION 10. DETERMINATION OF SHAREHOLDERS

     10.1 RECORD DATE. For the purpose of determining shareholders entitled to
notice of and to vote at a meeting, or to receive a dividend, or to receive or
exercise subscription or other rights, or to participate in a reclassification
of stock, or in order to make a determination of shareholders for any other
proper purpose, the Board may fix in advance a record date for determination of
shareholders for such purpose, such date to be not more than sixty days and, if
fixed for the purpose of determining shareholders entitled to notice of and to
vote at a meeting, not less than ten days, prior to the date on which the action
requiring the determination of shareholder is to be taken.

     10.2 REGISTERED SHAREHOLDERS. Except as otherwise provided by law, the
Corporation, and its directors, officers and agents may recognize and treat a
person registered on its records as the owner of shares, as the owner in fact
thereof for all purposes, and as the person exclusively entitled to have and to
exercise all rights and privileges incident to the ownership of such shares, and
rights under this Section 10.2 shall not be affected by any actual constructive
notice that the Corporation, or any of its directors, officers or agents, may
have to the contrary


                           SECTION 11. MISCELLANEOUS

     11.1 DIVIDENDS. Except as otherwise provided by law or the Articles of
Incorporation, dividends upon the stock of the Corporation may be declared by



                                      -14-
<PAGE>   15

the Board at any regular or special meeting. Dividends may be paid in cash,
property, or in shares of stock.

     11.2 CHECKS. All checks or demands for money and notes of the Corporation
shall be signed by such officer or officers or such other person or persons as
the Chief Executive Officer or the Board may from time to time designate.
Signatures of the authorized signatories may be by facsimile.

     11.3 FISCAL YEAR. The Board may adopt for and on behalf of the Corporation
a fiscal or a calendar year.

     11.4 SEAL. The Board may adopt a corporate seal, which seal shall have
inscribed thereon the name of the Corporation. The seal may be used by causing
it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.
Failure to affix the seal shall not, however, affect the validity of any
instrument.

     11.5 GENDER. All pronouns and variations thereof used in these By-laws
shall be deemed to refer to the masculine, feminine or neuter gender, singular
or plural, as the identity of the person, persons, entity or entities referred
to require.

     11.6 CONTROL SHARE ACQUISITIONS. Effective as of October 18, 1994, the
provisions of Sections 135 through 140.2 of the Business Corporation Law of
Louisiana (as amended) shall not apply to acquisitions of shares of the
Corporation.

                          SECTION 12. INDEMNIFICATION

     The Corporation shall indemnify to the full extent permitted by law any
director, officer or employee against any expenses or costs, including
attorneys' fees, actually or reasonably incurred by him or her in connection
with any threatened, pending or completed claim, action, suit or proceeding,
whether criminal, civil, administrative or investigative, against such person or
as to which he or she is involved solely as a witness or person required to give
evidence because he or she is a director, officer or employee of the Corporation
or serves or served at the request of the Corporation with any other enterprise
as a director, officer or employee. For purposes of this Section 12, the term
"Corporation" shall include any predecessor of this Corporation and any
constituent corporation (including any constituent of a constituent) absorbed by
the Corporation in a consolidation or merger; the term "other enterprises" shall
include any corporation, partnership, joint venture, trust or employee benefit
plan; service "at the request of the Corporation" shall include service as a
director, officer or employee of the Corporation that imposes duties on, or
involves services by, such director, officer or employee with respect to an
employee benefit plan, its participants or beneficiaries; any excise taxes
assessed on a person with respect to an employee benefit plan shall be deemed to
be



                                      -15-
<PAGE>   16

indemnifiable expenses; and action by a person with respect to an employee
benefit plan that such person reasonably believes to be in the interest of the
participants and beneficiaries of such plan shall be deemed to be action not
opposed to the best interests of the Corporation.


                             SECTION 13. AMENDMENTS

     The Corporation's By-laws may be amended or repealed only by a majority of
the Board or the affirmative vote of the holders of at least a majority of the
total voting power at any regular or special meeting of shareholders, the notice
of which states that the proposed amendment or repeal is to be considered at the
meeting.



                                      -16-

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.23
<SEQUENCE>4
<FILENAME>d89585ex10-23.txt
<DESCRIPTION>2ND AMENDED AND RESTATED LOAN AGREEMENT
<TEXT>
<PAGE>   1
                                                                 EXHIBIT 10.23

================================================================================

                           SECOND AMENDED AND RESTATED


                                 LOAN AGREEMENT

                                      among

                          PETROLEUM HELICOPTERS, INC.,

                                       and

                             BANK OF AMERICA, N.A.,

                             WHITNEY NATIONAL BANK,

                                  BANK ONE, NA,

                                       and

                              BANK OF AMERICA, N.A.
                                    as Agent,
                                       and
                          Letter of Credit Issuing Bank



                            Dated as of July 3, 2001




<PAGE>   2



                                TABLE OF CONTENTS


<Table>
<Caption>
Section                                                                                                        Page
-------                                                                                                        ----


<S>                                                                                                            <C>
SECTION 1. DEFINITIONS AND ACCOUNTING TERMS.......................................................................2
         1.01     Defined Terms...................................................................................2
         1.02     Use of Certain Terms...........................................................................29
         1.03     Accounting Terms...............................................................................29
         1.04     Rounding.......................................................................................29
         1.05     Exhibits and Schedules.........................................................................29
         1.06     References to Agreements and Laws..............................................................30

SECTION 2. THE LOANS, THE COMMITMENTS AND EXTENSIONS OF CREDIT...................................................30
         2.01     Term Loans.....................................................................................30
         2.02     Revolving Credit Loans.........................................................................31
         2.03     Revolving Credit Borrowings and Continuations of Loans.........................................32
         2.04     Letters of Credit..............................................................................33
         2.05     Prepayments....................................................................................38
         2.06     Reduction or Termination of Commitments........................................................41
         2.07     Interest.......................................................................................41
         2.08     Fees...........................................................................................42
         2.09     Computation of Interest and Fees...............................................................42
         2.10     Making Payments................................................................................42
         2.11     Funding Sources................................................................................44

SECTION 3. TAXES, YIELD PROTECTION AND ILLEGALITY................................................................44
         3.01     Taxes..........................................................................................44
         3.02     Illegality.....................................................................................45
         3.03     Inability to Determine Rates...................................................................45
         3.04     Increased Cost and Reduced Return; Capital Adequacy............................................45
         3.05     Breakfunding Costs.............................................................................46
         3.06     Matters Applicable to all Requests for Compensation............................................46
         3.07     Recapture......................................................................................47
         3.08     Survival.......................................................................................47

SECTION 4. CONDITIONS PRECEDENT TO EXTENSIONS OF CREDIT..........................................................47
         4.01     Conditions of Initial Extension of Credit......................................................47
         4.02     Conditions to all Extensions of Credit.........................................................49

SECTION 5. REPRESENTATIONS AND WARRANTIES........................................................................49
         5.01     Existence and Qualification; Power; Compliance with Laws.......................................49
         5.02     Power; Authorization; Enforceable Obligations..................................................50
         5.03     No Legal Bar...................................................................................50
         5.04     Financial Statements; No Material Adverse Effect...............................................50
         5.05     Litigation.....................................................................................50
         5.06     No Default.....................................................................................51
         5.07     Ownership of Property; Liens; Warranty of Title; Leases........................................51
         5.08     Taxes..........................................................................................51
</Table>



                                      -i-

<PAGE>   3



<Table>
<S>                                                                                                             <C>
         5.09     Margin Regulations; Investment Company Act; Public Utility Holding Company Act.................52
         5.10     ERISA Compliance...............................................................................52
         5.11     Intangible Assets..............................................................................53
         5.12     Compliance With Laws...........................................................................53
         5.13     Environmental Compliance.......................................................................53
         5.14     Insurance......................................................................................53
         5.15     Disclosure.....................................................................................54
         5.16     Franchises, Permits, Etc.......................................................................54
         5.17     Description of and Title to Aviation Units and Engines.........................................54
         5.18     Registered Office/Chief Executive Office.......................................................54
         5.19     Title to Parts and Receivables.................................................................55
         5.20     Section 1110 of Bankruptcy Reform Act of 1978..................................................55
         5.21     Status as Air Carrier..........................................................................55
         5.22     Capitalization; Subsidiaries...................................................................55
         5.23     EMTALA.........................................................................................56
         5.24     Medicare and Medicaid Programs; Licensure......................................................56
         5.25     Fraud and Abuse and Stark Law..................................................................57

SECTION 6. AFFIRMATIVE COVENANTS.................................................................................57
         6.01     Financial Statements...........................................................................57
         6.02     Certificates, Notices and Other Information....................................................58
         6.03     Payment of Taxes...............................................................................60
         6.04     Preservation of Existence......................................................................60
         6.05     Maintenance of Properties......................................................................60
         6.06     Maintenance of Insurance.......................................................................61
         6.07     Compliance With Laws...........................................................................61
         6.08     Inspection Rights..............................................................................61
         6.09     Keeping of Records and Books of Account........................................................61
         6.10     Compliance with ERISA..........................................................................61
         6.11     Compliance With Agreements.....................................................................62
         6.12     Use of Proceeds................................................................................62
         6.13     Citizen; Air Carrier...........................................................................62
         6.14     Registration, Maintenance, Operation, Foreign Operations and Marking of Collateral.............62
         6.15     Insurance with Respect to the Aircraft.........................................................64
         6.16     Recording, Etc.................................................................................67
         6.17     Further Assurances.............................................................................68
         6.18     Location of Collateral.........................................................................68

SECTION 7. NEGATIVE COVENANTS....................................................................................69
         7.01     Indebtedness...................................................................................69
         7.02     Liens and Negative Pledges.....................................................................69
         7.03     Fundamental Changes............................................................................70
         7.04     Dispositions...................................................................................70
         7.05     Investments....................................................................................70
         7.06     Lease Obligations..............................................................................71
         7.07     Restricted Payments............................................................................71
         7.08     ERISA..........................................................................................71
         7.09     Change in Nature of Business...................................................................71
</Table>



                                      -ii-

<PAGE>   4



<Table>
<S>                                                                                                             <C>
         7.10     Transactions with Affiliates...................................................................71
         7.11     Capital Expenditures...........................................................................72
         7.12     Limitations on Upstreaming.....................................................................72
         7.13     Margin Regulations.............................................................................72
         7.14     Financial Covenants............................................................................72
         7.15     Change in Auditors.............................................................................72
         7.16     Change in Accounting Method....................................................................72
         7.17     Tax Consolidation..............................................................................72
         7.18     Chief Executive Office; Registered Office; Jurisdiction of Incorporation.......................73
         7.19     Leasing........................................................................................73
         7.20     Hazardous Materials............................................................................73
         7.21     Impairment or Disposition of Collateral........................................................73
         7.22     Valuation of Aircraft, Etc.....................................................................73

SECTION 8. EVENTS OF DEFAULT AND REMEDIES........................................................................74
         8.01     Events of Default..............................................................................74
         8.02     Remedies Upon Event of Default.................................................................76
         8.03     Application of Proceeds of Collateral..........................................................77

SECTION 9. AGENT.................................................................................................79
         9.01     Appointment and Authorization of Agent.........................................................79
         9.02     Delegation of Duties...........................................................................80
         9.03     Liability of Agent.............................................................................80
         9.04     Reliance by Agent..............................................................................80
         9.05     Notice of Default..............................................................................81
         9.06     Credit Decision; Disclosure of Information by Agent............................................81
         9.07     Indemnification of Agent.......................................................................82
         9.08     Agent in Individual Capacity...................................................................83
         9.09     Successor Agent................................................................................83
         9.10     Releases of Collateral.........................................................................83

SECTION 10. MISCELLANEOUS........................................................................................84
         10.01    Amendments; Consents...........................................................................84
         10.02    Requisite Notice; Effectiveness of Signatures and Electronic Mail..............................85
         10.03    Attorney Costs, Expenses and Taxes.............................................................86
         10.04    Binding Effect; Assignment.....................................................................86
         10.05    Set-off........................................................................................88
         10.06    Sharing of Payments............................................................................88
         10.07    No Waiver; Cumulative Remedies.................................................................88
         10.08    Usury..........................................................................................89
         10.09    Counterparts...................................................................................89
         10.10    Integration....................................................................................89
         10.11    Nature of Banks' Obligations...................................................................89
         10.12    Survival of Representations and Warranties.....................................................90
         10.13    Indemnity by Borrower..........................................................................90
         10.14    Nonliability of Banks..........................................................................91
         10.15    No Third Parties Benefited.....................................................................92
         10.16    Severability...................................................................................92
         10.17    Confidentiality................................................................................92
         10.18    Further Assurances.............................................................................92
</Table>




                                     -iii-
<PAGE>   5

<Table>
<S>                                                                                                             <C>
         10.19    Headings.......................................................................................93
         10.20    Time of the Essence............................................................................93
         10.21    Foreign Banks..................................................................................93
         10.22    Governing Law..................................................................................93
         10.23    Waiver of Right to Trial by Jury...............................................................94
         10.24    ENTIRE AGREEMENT...............................................................................94
</Table>



                                      -iv-

<PAGE>   6


EXHIBITS

A-1      -        Term Note

A-2      -        Revolving Credit Note

B        -        Request for Extension of Credit

C        -        Borrower Security Agreement

D        -        Air Evac Security Agreement

E        -        Guaranty Agreement

F-1      -        Opinion of Counsel (Borrower Parties)

F-2      -        Opinion of Counsel (FAA)

G        -        Borrowing Base Certificate

H        -        Compliance Certificate

I        -        Officer's Certificate (Release of Collateral)

J        -        Assignment and Acceptance

SCHEDULES

2.01     -        Commitments and Pro-Rata Shares

5.17     -        Aviation Units and Engines

5.19     -        Location of Parts

5.22     -        Subsidiaries

7.02     -        Existing Liens

7.05     -        Investments

10.02    -        Offshore and Domestic Lending Offices, Addresses for Notices



                                      -v-



<PAGE>   7


                   SECOND AMENDED AND RESTATED LOAN AGREEMENT


         This SECOND AMENDED AND RESTATED LOAN AGREEMENT ("Agreement") is
entered into as of July 3, 2001, by and among PETROLEUM HELICOPTERS, INC., a
Louisiana corporation ("Borrower"), BANK OF AMERICA, N.A., a national banking
association ("Bank of America"), WHITNEY NATIONAL BANK, a national banking
association ("Whitney"), and BANK ONE, NA, a national banking association having
its main office in Chicago, Illinois ("Bank One" and together with Bank of
America, Whitney and each lender from time to time party hereto, collectively
the "Banks" and each, individually, a "Bank"), and BANK OF AMERICA, N.A., as
Agent and Issuing Bank.


                                    RECITALS

         A. Borrower, NationsBank of Texas, N.A. ("NationsBank"), Whitney, First
National Bank of Commerce ("FNBC"), and NationsBank, as Agent, entered into that
certain Loan Agreement, originally dated as of January 31, 1986, as amended and
restated in its entirety as of March 31, 1997, and as further amended by that
certain First Amendment to Amended and Restated Loan Agreement, dated as of
December 31, 1997, that certain Second Amendment to Amended and Restated Loan
Agreement, dated as of November 30, 1998, that certain Limited Waiver and Third
Amendment to Amended and Restated Loan Agreement, dated as of June 30, 1999,
that certain Fourth Amendment to Amended and Restated Loan Agreement, dated as
of June 30, 2000, that certain Fifth Amendment to Amended and Restated Loan
Agreement, dated as of October 30, 2000, that certain Sixth Amendment to Amended
and Restated Loan Agreement, dated as of November 30, 2000, that certain Seventh
Amendment to Amended and Restated Loan Agreement, dated as of December 29, 2000,
that certain Eighth Amendment to Amended and Restated Loan Agreement and Limited
Waiver dated as of March 29, 2001, and that certain Ninth Amendment to Amended
and Restated Loan Agreement dated as of April 30, 2001 (as so amended, the
"Existing Loan Agreement").

         B. Bank of America (f/k/a Bank of America National Trust and Savings
Association, successor by merger to Bank of America, N.A., f/k/a NationsBank,
N.A.) is the successor to NationsBank.

         C. Bank One (successor by merger to Bank One, Louisiana, N.A.) is the
successor to FNBC.

         D. Borrower has requested that the Banks amend and restate the Existing
Loan Agreement, among other things, to (i) extend and renew the term and
revolving loans thereunder, and (ii) increase the aggregate commitments
available to the Borrower thereunder.

         E. Banks are willing to so amend and restate the Existing Loan
Agreement and extend and renew the term and revolving loans thereunder as
hereinafter set forth.

         In consideration of the mutual covenants and agreements herein
contained, Borrower, Banks and Agent hereby agree that, effective as of the
Effective Date (as hereinafter defined), the






<PAGE>   8

Existing Loan Agreement is hereby amended and restated in its entirety on the
terms and conditions set forth herein. It is the intention of Borrower, Banks
and Agent that this Agreement supersede and replace the Existing Loan Agreement
in its entirety; provided, that, (i) such amendment and restatement shall
operate to renew, amend and modify the rights and obligations of the parties
under the Existing Loan Agreement, as applicable and as provided herein, but
shall not effect a novation thereof, (ii) unless otherwise provided for herein
or evidenced by a separate written amendment, the Security Documents (as defined
in the Existing Loan Agreement) shall remain in full force and effect except
that Borrower, the Banks and Agent agree that by executing this Agreement the
definition of "Loan Agreement" contained in such Security Documents shall be
amended to include this Agreement and all future amendments hereto, and (iii)
the Liens securing the loans and other extensions of credit under the Existing
Loan Agreement and granted pursuant to the Security Documents (as defined
therein) shall not be extinguished, but shall be carried forward and shall
secure such loans and extensions of credit as renewed, amended, restated and
modified hereby. Borrower, Banks and Agent hereby further agree as follows:

                                   SECTION 1.
                        DEFINITIONS AND ACCOUNTING TERMS

         1.01 DEFINED TERMS. As used in this Agreement, the following terms
shall have the meanings set forth below:

         "Agent" means Bank of America, N.A., in its capacity as agent under any
of the Loan Documents, or any successor agent.

         "Agent's Office" means Agent's address and, as appropriate, account as
set forth on Schedule 10.02, or such other address or account as Agent hereafter
may designate by written notice to Borrower and Banks.

         "Agent-Related Persons" means Agent (including any successor agent),
together with its Affiliates (including, in the case of Bank of America in its
capacity as Agent), and the officers, directors, employees, agents and
attorneys-in-fact of such Persons and Affiliates.

         "Affiliate" means any Person directly or indirectly controlling,
controlled by, or under direct or indirect common control with, another Person.
A Person shall be deemed to be "controlled by" any other Person if such other
Person possesses, directly or indirectly, power (a) to vote 5% or more of the
securities (on a fully diluted basis) having ordinary voting power for the
election of directors or managing general partners; or (b) to direct or cause
the direction of the management and policies of such Person whether by contract
or otherwise.

         "Agreement" means this Loan Agreement, as amended, restated, extended,
supplemented or otherwise modified in writing from time to time.

         "Aggregate Revolving Credit Commitment" means the sum of all of the
Banks' Revolving Credit Commitments.

         "Air Evac" means Air Evac Services, Inc., a Louisiana corporation.




                                       2
<PAGE>   9

         "Air Evac Borrowing Base" means at any time an amount, equal to the
lesser of (a) $5,000,000 or (b) the sum of (i) 50% of the amount of Eligible
Receivables of Air Evac in which each of the Creditors have a valid equal and
ratable perfected first priority Security Interest, pursuant to the Security
Documents executed by Air Evac, plus (ii) 50% of the Appraised Value of the
Aircraft of Air Evac in which each of the Creditors have a valid equal and
ratable perfected first priority Security Interest, pursuant to the Security
Documents executed by Air Evac, plus (iii) 50% of the value of Eligible Parts
(valued at the lower of average cost or market) of Air Evac in which each of the
Creditors have a valid equal and ratable perfected first priority Security
Interest, pursuant to the Security Documents executed by Air Evac.

         "Aircraft" means the helicopters and fixed-wing aircraft described in
Schedule 5.17 of this Agreement, together with all aircraft engines, airframes,
propellers, rotors, appliances, instruments, mechanisms, equipment (including
communications equipment), parts, apparatus, appurtenances and accessories
(including without limitation property which consists of, or which may from time
to time hereafter consist of, one or more aircraft engines of 750 or more rated
takeoff horsepower or the equivalent of that horsepower, and one or more
propellers capable of absorbing 750 or more rated takeoff shaft horsepower) now
or from time to time hereafter incorporated or installed in or attached or
appertaining to one or more of said helicopters or aircraft, in each case so
long as the same shall be subject or required or intended to be subject to the
Security Interest, including without limitation those aircraft engines described
in Schedule 5.17 of this Agreement, and shall include any helicopters,
fixed-wing aircraft or other Aviation Units from time to time hereafter subject
or required or intended to be subject to the Security Interest, together with
all aircraft engines, airframes, propellers, rotors, appliances, instruments,
mechanisms, equipment (including communications equipment), parts, apparatus,
appurtenances and accessories (including property which consists of, or which
may from time to time hereafter consist of, one or more aircraft engines of 750
or more rated takeoff horsepower or the equivalent of that horsepower, and one
or more propellers capable of absorbing 750 or more rated takeoff shaft
horsepower) from time to time incorporated or installed in or attached or
appertaining to any thereof and subject or required or intended to be subject to
the Security Interest.

         "Aircraft Registry" means the Federal Aviation Administration Aircraft
Registry located in Oklahoma City, Oklahoma, or such different office or
location of said Registry, or the office of any successor to said Registry, as
may be duly designated by the Secretary of Transportation (or his successor or
designee) for receipt and recording of "conveyances" (as defined in the Federal
Aviation Act) to preserve and protect their validity as against, and to publish
notice to, third parties.

         "Applicable Amount" means the following amounts per annum, based upon
the Leverage Ratio as set forth in the most recent Compliance Certificate
received by Agent pursuant to Section 6.02(b); provided, however, that, until
Agent receives the first Compliance Certificate after the Effective Date, such
amounts shall be those indicated for pricing level 1 set forth below:




                                       3
<PAGE>   10


<Table>
<Caption>
                                   APPLICABLE AMOUNT (IN BASIS POINTS PER ANNUM)

                                                                           OFFSHORE RATE +
                                                                           ----------------
                                                                             LETTERS OF
          PRICING LEVEL        LEVERAGE RATIO           COMMITMENT FEE         CREDIT        BASE RATE +
          -------------- --------------------------- --------------------- ---------------- ---------------

<S>                      <C>                         <C>                   <C>              <C>
                1                  > 5.00                   62.50              300.00           200.00
                2            >4.00 < or = to 5.00           50.00              250.00           100.00
                3               < or = to 4.00              50.00              200.00             0.00
</Table>

         The Applicable Amount shall be in effect from the date the most recent
Compliance Certificate is received by Agent to but excluding the date the next
Compliance Certificate is received; provided, however, that if Borrower fails to
timely deliver the next Compliance Certificate, the Applicable Amount from the
date such Compliance Certificate was due to but excluding the date such
Compliance Certificate is received by Agent shall be that indicated for the
highest pricing level set forth above, and, thereafter, the pricing level
indicated by such Compliance Certificate when received.

         "Applicable Payment Date" means, (a) as to any Offshore Rate Loan, the
last day of the relevant Interest Period, any date that such Loan is prepaid or
converted in whole or in part and the Maturity Date; provided, however, that if
any Interest Period for an Offshore Rate Loan exceeds three months, interest
shall also be paid on the Business Day which falls every three months after the
beginning of such Interest Period; (b) as to the commitment fee, the last
Business Day of each calendar quarter and the Revolving Loan Maturity Date; and
(c) as to any other Obligations, the last Business Day of each calendar quarter
and the later to occur of the Term Loan Maturity Date or the Revolving Loan
Maturity Date; provided, further, that interest accruing at the Default Rate
shall be payable from time to time upon demand of Agent.

         "Applicable Time" means Houston, Texas time.

         "Appraised Value" means (a) with respect to any of the Aircraft that
shall at the time be new or not more than one year old, the purchase price
thereof, as certified by the Borrower in Officers' Certificates delivered to
Agent and Banks at the times and under the circumstances contemplated by this
Agreement and (b) with respect to any of the Aircraft that shall at the time be
more than one year old, the purchase price thereof that would be agreed to in an
arm's-length transaction between an informed and willing buyer-user (other than
a user currently in possession or a used equipment or scrap dealer) and an
informed and willing seller under no compulsion to sell or lease (the costs of
removal from the location of current use being deductions from such value), as
specified by the Independent Appraiser (after consultation with the Borrower and
after such physical inspection, if any, of such Aircraft as the Independent
Appraiser shall deem to be necessary or appropriate) in written opinions
addressed and delivered to Agent and Banks at the times and under the
circumstances contemplated by this Agreement. For the purpose of determining
whether clause (a) or (b) of the first sentence of this definition of "Appraised
Value" shall apply to any particular Aircraft, the Aircraft in question shall be
deemed to be one year old upon the expiration of one year from the delivery by
the original manufacturer to, and acceptance






                                       4
<PAGE>   11

by, the first user thereof (or the Person anticipated to be the first user
thereof), whether or not the Borrower shall have been such first user or other
Person. For the purpose of determining the "Appraised Value" of any Aircraft
that shall be new or not more than one year old, the term "purchase price" with
respect thereto means the actual purchase price thereof that shall appear on the
invoice issued by the manufacturer of said Aircraft and by the manufacturer or
distributor of any instruments or other equipment added thereto after the date
of the invoice issued by the manufacturer of said Aircraft (excluding, however,
any freight or transportation charges, erection costs or other charges or costs
that do not reflect the price of materials and components used in the
manufacture of said Aircraft or instruments or equipment, whether or not such
charges or costs shall be separately stated on the invoice).

         "Appropriate Actions" means, with respect to the inclusion of an
Aviation Unit in the Security Interest, (a) filing or causing to be filed a
proper bill or bills of sale covering said Aviation Unit (on FAA Form 8050-2,
"Aircraft Bill of Sale", or on any other appropriate form) in the Aircraft
Registry and in any other public office necessary for full compliance by the
Borrower or Air Evac, as applicable, with the terms hereof; (b) causing said
Aviation Unit to be free and clear of all Liens (other than Permitted Liens),
making the appropriate filings, registrations and recordings (including the
filing of FAA Form 8050-41 and any appropriate termination statements or
releases) necessary to release any existing Liens of record and otherwise
causing said Aviation Unit to be in full compliance with all the terms and
provisions of this Agreement with the same effect as if the same were a portion
of the original Aircraft described in this Agreement; (c) executing and
delivering any registration, recordation or filing documents and any other
appropriate security documentation as Agent or any Creditor through Agent may
request for the purpose of describing said Aviation Unit (including all aircraft
engines, airframes, propellers, rotors, appliances, instruments, mechanisms,
equipment (including communications equipment), parts, apparatus, appurtenances
and accessories) in reasonable detail, and expressly and specifically subjecting
the same to the Security Interest; (d) delivering or causing to be delivered to
Agent and each Creditor an opinion of counsel (dated the date of the filing for
recordation in the Aircraft Registry of the security documentation referred to
in clause (c) above) to the effect that the Borrower has good and marketable
title to said Aviation Unit free of all Liens (other than Permitted Liens) and
that said Aviation Unit has been duly subjected to the Security Interest and
constitutes a portion of the Collateral; and (e) delivering to Agent and each
Creditor an Officers' Certificate certifying that the Borrower is in full
compliance with all provisions of this Agreement with respect to the same.

         "Aviation Unit" means any engine-powered device that is used or
intended to be used for flight in the air and shall include within each such
device all aircraft engines, airframes, propellers, rotors, appliances,
instruments, mechanisms, equipment (including without limitation communications
equipment), parts, apparatus, appurtenances and accessories from time to time
incorporated or installed therein or attached or appertaining thereto.

         "Assignment and Acceptance" means an Assignment and Acceptance
substantially in the form of Exhibit J.

         "Attorney Costs" means and includes all fees and disbursements of any
law firm or other external counsel.





                                       5
<PAGE>   12

         "Audited Financial Statements" means the audited consolidated balance
sheet of Borrower and its Subsidiaries for the fiscal year ended December 31,
2000, and the related consolidated statements of income and cash flows for such
fiscal year of Borrower.

         "Bank" and "Banks" have the meanings set forth in the introductory
paragraph of this Agreement.

         "Bank of America" has the meaning set forth in the introductory
paragraph.

         "Bank One" has the meaning set forth in the introductory paragraph.

         "Base Rate" means for any day a fluctuating rate per annum equal to the
higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest
in effect for such day as publicly announced from time to time by Bank of
America as its "prime rate." Such rate is a rate set by Bank of America based
upon various factors including Bank of America's costs and desired return,
general economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such announced
rate. Any change in such rate announced by Bank of America shall take effect at
the opening of business on the day specified in the public announcement of such
change.

         "Base Rate Loan" means a Loan made hereunder and specified to be a Base
Rate Loan in accordance with Section 2.

         "Borrower" has the meaning set forth in the introductory paragraph
hereto.

         "Borrower Party" means Borrower or any Person (except Agent, the
Creditors and any of their respective Affiliates) from time to time party to a
Loan Document.

         "Borrowing" and "Borrow" each mean a borrowing of Loans hereunder.

         "Borrowing Base" means at any time an amount equal to (a) the PHI
Borrowing Base, plus (b) the Air Evac Borrowing Base, plus (c) the Value of
Pledged Investment Securities, minus (c) the aggregate principal amount of Term
Loans outstanding at the time of such determination. Notwithstanding any other
provision of this Agreement to the contrary, no Aircraft subject to an Event of
Loss or the provisions of Section 6.15(e) shall be included for the purpose of
determining the Borrowing Base.

         "Borrowing Base Certificate" means an Officers' Certificate in the form
of Exhibit G attached hereto and made a part hereof, with the blanks
appropriately completed.

         "Borrowing Date" means, with respect to a Borrowing, the date
designated in the Request for Extension of Credit with respect thereto upon
which the proceeds of such Borrowing are to be paid or delivered to the
Borrower.

         "Business Day" means any day other than a Saturday, Sunday, or other
day on which commercial banks are authorized to close under the Laws of, or are
in fact closed in, the state where Agent's Office is located or New Orleans,
Louisiana and, if such day relates to any







                                       6
<PAGE>   13

Offshore Rate Loan, means any such day on which dealings in Dollar deposits are
conducted by and between banks in the offshore Dollar interbank market.

         "Capital Lease" means with respect to any Person any lease which
should, in accordance with GAAP, be required to be capitalized on a balance
sheet of the lessee or, if not so capitalized, for which the amounts of the
asset and liability (had such lease been capitalized) be required to be
disclosed in a note to such a balance sheet.

         "Code" means the Internal Revenue Code of 1986, as amended from time to
time.

         "Collateral" means all of the following, whether now owned or hereafter
acquired by the Borrower or Air Evac: (a) the Aircraft, including all
substitutions, renewals and replacements of any portion thereof and all
additions, improvements, accessions and accumulations to any portion thereof,
whether now owned or held or hereafter acquired or now or from time to time
hereinafter incorporated or installed in or attached or appertaining to any
portion of the Aircraft (whether or not the same shall be or remain incorporated
or installed in or attached to any portion of such property), whether now owned
or held or hereafter acquired, (b) the Receivables, (c) the Parts, (d) all
Pledged Investment Securities, (e) all estates, rights, power and privileges in
respect of any of the foregoing and (f) any and all proceeds of the conversion,
voluntary or involuntary, of any portion of the property now or from time to
time hereafter subject or required or intended to be subject to the Security
Interest, into cash, negotiable instruments or other instruments for the payment
of money, chattel paper, security agreements, documents, liquidated claims or
any other form of proceeds, including proceeds of insurance and of any
governmental takings, subject, however, to the further provisions of this
Agreement and the Security Documents (it being understood and agreed that the
inclusion of proceeds in the Collateral does not authorize the Borrower or Air
Evac to sell, dispose of or otherwise use the Collateral in a manner that is not
expressly permitted by this Agreement or the Security Documents).

         "Commitment" means a Revolving Credit Commitment or a Term Loan
Commitment.

         "Compliance Certificate" means a certificate substantially in the form
of Exhibit H, properly completed and signed by a Responsible Officer of
Borrower.

         "Consolidated Current Assets" means, as of the date of determination
thereof, the following assets of the Borrower and Consolidated Subsidiaries,
after eliminating all offsetting debits and credits among the Borrower and
Consolidated Subsidiaries and all other items to be eliminated in the process of
consolidation effected in accordance with GAAP and after deducting from the
value thereof appropriate reserves against any thereof required to be created or
maintained in accordance with GAAP: (a) cash and cash items in any bank or trust
company, on hand and in transit, (b) spare parts and supplies (whether or not
held for sale to customers in the ordinary course of business), stated at the
lower of average cost or fair market value, (c) direct obligations of the United
States Government having a final maturity of not more than one year from the
date of original issuance thereof, stated at the lower of cost or current market
value, (d) commercial paper rated "Prime-1" by Moody's Investors Service, Inc.
or "A-1" by Standard & Poor's Ratings Group (or comparably rated by either such
organization or any successor thereto if the rating system of such organization
is changed or there is such a successor) and having a final








                                       7
<PAGE>   14

maturity of not more than nine months from the date of original issuance
thereof, stated at the lower of cost or current market value, (e) time deposits
in any bank or trust company organized under the laws of the United States of
America, any state thereof or the District of Columbia (provided, however, that
such bank or trust company is a member of the Federal Reserve System and has a
combined capital, surplus and undivided profits in excess of $80,000,000),
stated at the lower of cost or current market value, (f) customers' accounts,
bills and notes receivable, not more than 90 days overdue, (g) such other
Tangible Assets (but excluding investments other than those included in
Consolidated Current Assets by clauses (c), (d) and (e) above and excluding real
property in the process of development or sale), and such insurance proceeds
receivable within one year after the date of determination of "Consolidated
Current Assets", as, in accordance with GAAP, would be included in current
assets and (h) prepaid interest, rents, insurance premiums and taxes which, in
accordance with GAAP, would be included in current assets.

         "Consolidated Current Liabilities" means, as of the date of
determination thereof, the following obligations of the Borrower and
Consolidated Subsidiaries, after eliminating all offsetting debits and credits
among the Borrower and Consolidated Subsidiaries and all other items to be
eliminated in the process of consolidation effected in accordance with GAAP: (a)
all Indebtedness thereof payable on demand or maturing within one year from the
date of determination and not renewable or extendible at the option of the
obligor, under a revolving credit agreement or otherwise, to a date more than
one year from the date of creation thereof, (b) final maturities, prepayments,
sinking fund payments and other payments required to be made within one year
from the date of determination in respect of any Indebtedness thereof (including
the Notes), (c) accounts, bills and notes payable and (d) all other items
(including taxes accrued as estimated) which, in accordance with GAAP, would be
included in current liabilities.

         "Consolidated Current Ratio" means, for any accounting period, (a)
through and including the fiscal quarter ended September 30, 2001, the ratio
obtained by dividing (i) the total assets of the Company and Consolidated
Subsidiaries which would be shown as current assets on the balance sheet of the
Company and Consolidated Subsidiaries prepared in accordance with GAAP at such
time, by (ii) the total liabilities of the Company and Consolidated Subsidiaries
which would be shown as current liabilities on the balance sheet of the Company
and Consolidated Subsidiaries prepared at such time in accordance with GAAP, and
(b) thereafter, the ratio obtained by dividing Consolidated Current Assets by
Consolidated Current Liabilities.

         "Consolidated Indebtedness" means, as of the date of determination
thereof, Indebtedness of the Borrower and Consolidated Subsidiaries, after
eliminating all offsetting debits and credits among the Borrower and
Consolidated Subsidiaries and all other items to be eliminated in the process of
consolidation effected in accordance with GAAP.

         "Consolidated Interest Charges" means, for any accounting period, the
total of interest and amortization of debt discount expense and premium of all
Consolidated Indebtedness, excluding, however, obligations of the Borrower and
the Consolidated Subsidiaries under all Operating Leases.

         "Consolidated Net Income" and "Consolidated Net Loss" means, for any
accounting period, the consolidated net income or loss, as the case may be, of
the Borrower and






                                       8
<PAGE>   15

Consolidated Subsidiaries determined in accordance with GAAP, but in any event
excluding (a) in calculating "Consolidated Net Income", the following items:

                  (i) the earnings of any Person (other than a Consolidated
         Subsidiary) predecessor to the Borrower or any Consolidated Subsidiary
         through merger, consolidation, sale of assets or otherwise during the
         period prior to the date of determination, or the earnings of any
         Consolidated Subsidiary prior to the date it shall have become a
         Consolidated Subsidiary;

                  (ii) all items properly classified as extraordinary in
         accordance with generally accepted accounting principles (provided,
         however, that, irrespective of the classification of earnings or losses
         derived from resales of helicopters by the Borrower or any Consolidated
         Subsidiaries, such earnings or losses shall not be considered as
         extraordinary for the purposes of this definition);

                  (iii) any equity in the earnings of any Person other than a
         Consolidated Subsidiary, except to the extent of any dividend actually
         received by the Borrower from such Person in cash or in other tangible
         property (valued at the fair market value thereof at the time of
         receipt thereof by the Borrower); and

                  (iv) any fees payable by the Borrower under Section 2.08(a);
         and

(b) in calculating "Consolidated Net Loss", losses of any Person other than the
Borrower or a Consolidated Subsidiary.

         "Consolidated Subsidiary" or "Consolidated Subsidiaries" means a
Subsidiary or Subsidiaries, respectively, whose financial statements are
prepared on a consolidated basis with those of the Borrower in accordance with
generally accepted accounting principles.

         "Consolidated Tangible Net Worth" means, as of the date of
determination thereof, the sum of (a) the par value (or value stated on the
books of the Borrower) of all classes of the capital stock of the Borrower and
(b) the amount of the consolidated surplus, whether capital or earned, of the
Borrower and Consolidated Subsidiaries less all deferred charges, patents, trade
names, copyrights, licenses, franchises, goodwill, acquisition expenses,
unamortized debt discount and expense and other intangible items, all determined
in accordance with GAAP.

         "Continuation" and "Continue" mean, with respect to any Offshore Rate
Loan, the continuation of such Offshore Rate Loan as an Offshore Rate Loan on
the last day of the Interest Period for such Loan.

         "Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or undertaking to
which such Person is a party or by which it or any of its property is bound.

         "Conversion" and "Convert" mean, with respect to any Loan, the
conversion of such Loan from or into another type of Loan.





                                       9
<PAGE>   16

         "Conversion Date" means January 31, 2002.

         "Creditors" means the Banks and any and all Swap Providers.

         "Debtor Relief Laws" means the Bankruptcy Code of the United States of
America, and all other liquidation, conservatorship, bankruptcy, assignment for
the benefit of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief Laws of the United States of America or
other applicable jurisdictions from time to time in effect affecting the rights
of creditors generally.

         "Default" means any event that, with the giving of any notice, the
passage of time, or both, would be an Event of Default.

         "Default Rate" means an interest rate equal to the Base Rate plus the
Applicable Amount, if any, applicable to Base Rate Loans plus 3.00% per annum;
provided, however, that with respect to an Offshore Rate Loan, the Default Rate
shall be an interest rate equal to the interest rate (including any Applicable
Amount) otherwise applicable to such Loan plus 3.00% per annum, in each case to
the fullest extent permitted by applicable Laws.

         "Direct Expenses" means all expenses incurred by the Borrower and the
Consolidated Subsidiaries in the operation of their respective Aviation Units
determined in accordance with GAAP excluding (a) depreciation and amortization,
(b) lease rental expense arising under Operating Leases, (c) general and
administrative expenses, (d) interest expense and (e) profit sharing plan
contributions.

         "Disposition" or "Dispose" means the sale, transfer, license or other
disposition (including any sale and leaseback transaction) of any property by
any Person, including any sale, assignment, transfer or other disposal with or
without recourse of any notes or accounts receivable or any rights and claims
associated therewith.

         "Dollar" and "$" means lawful money of the United States of America.

         "Effective Date" means the date all the conditions precedent in Section
4.01 are satisfied or waived in accordance with Section 4.01.

         "Eligible Assignee" means (a) a financial institution organized under
the laws of the United States, or any state thereof, and having a combined
capital and surplus of at least $100,000,000; (b) a commercial bank organized
under the laws of any other country which is a member of the Organization for
Economic Cooperation and Development, or a political subdivision of any such
country, and having a combined capital and surplus of at least $100,000,000,
provided that such bank is acting through a branch or agency located in the
United States; (c) a Person that is primarily engaged in the business of
commercial banking and that is (i) a Subsidiary of a Bank, (ii) a Subsidiary of
a Person of which a Bank is a Subsidiary, or (iii) a Person of which a Bank is a
Subsidiary; (d) another Bank; (e) any other entity which is an "accredited
investor" (as defined in Regulation D under the Securities Act of 1933, as
amended) which extends credit or buys loans as one of its businesses, including
but not limited to, insurance companies, mutual funds and lease financing
companies; or (f) other lenders or institutional investors consented to in
writing in








                                       10
<PAGE>   17

advance by Agent and Borrower. No Borrower Party or any Affiliate of a Borrower
Party shall be an Eligible Assignee.

         "Eligible Parts" means all Parts on the books of account of the such
Person on the date any determination is made in which Agent shall have a
perfected first priority security interest for the benefit of the Creditors and
which are located, (a) in the case of Borrower within the State of Texas or the
State of Louisiana, or (b) in the case of Air Evac in the State of Arizona.

         "Eligible Receivables" means Receivables carried on its books of
account of such Person which, on the date as of which the determination is being
made (a) arose in the ordinary course of business, (b) arose from the sale or
lease of goods or performance of services by such Person, (c) are evidenced by
an "Invoice" (i.e., an invoice, shipping order or similar writing) dated no
later than the last day of the calendar month in which the sale or lease of
goods or performance of services occurred, and which Invoice provides for
payment within 30 days or less from the date of such Invoice, (d) are not
subject to set-off, counterclaim or defense, (e) are not more than 90 days old
if payable to the Borrower or 210 days old in the case of Air Evac, (f) are not
payable by officers or directors of such Person or officers or directors of an
Affiliate of such Person, (g) are not payable by the United States of America or
any agency or department thereof, provided, however, that Receivables owing by
the United States of America or any agency or department thereof to Air Evac
shall not be so excluded if (i) such Receivables are assignable under the
Assignment of Claims Act of 1940 as amended, and in effect from time to time,
and all regulations issued pursuant thereto (the "Act"), or if a valid security
interest therein may be created under all other applicable laws and regulations,
including, without limitation, those applicable to Government Receivables, (ii)
Agent receives appropriate documentation, in form and substance satisfactory to
the Agent for the ratable benefit of the Banks and under the other loan
documents in compliance with the notification and other provisions for
assignment set forth in such Act and other laws and regulations, and (iii)
agreement, acknowledgment and consent to such assignment by the appropriate
contracting agent(s), disbursing agent(s), if any, and surety(ies) upon the
bond(s), if any; and (h) does not by its terms prohibit the assignment thereof
or require the consent of the obligor thereon to any assignment thereof;
provided, however, Receivables due from Affiliates of any Person or from Persons
located outside the United States shall not constitute in the aggregate more
than 10% of the Eligible Receivables of such Person; and further, provided, that
if any Receivable is more than 90 days old, upon receipt by Borrower of a notice
from Agent, acting at the request of the Requisite Banks, specifying that no
Receivables due from the obligor of such Receivable is to be included as an
Eligible Receivable, no such Receivable shall be included as an Eligible
Receivable unless the prior written consent of the Requisite Banks is obtained.
For purposes of this Agreement, a Receivable is 90 days old on the 90th day
after the date of the Invoice evidencing such Receivable, and the age of any
other Receivable is likewise the number of days since the date of its Invoice.

         "Environmental Protection Statute" means (a) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (as amended by
the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C.A. Section
9601 et seq.), as amended from time to time, and any and all rules and
regulations issued or promulgated thereunder ("CERCLA"); (b) the Resource
Conservation and Recovery Act, (as amended by the Hazardous and Solid Waste
Amendment of 1984, 42 U.S.C.A. Section 6901 et seq.), as amended from time to
time, and any and all







                                       11
<PAGE>   18
rules and regulations promulgated thereunder ("RCRA"); (c) the Clean Air Act,
42 U.S.C.A. Section 7401 et seq., as amended from time to time, and any and all
rules and regulations promulgated thereunder; (d) the Clean Water Act of 1977,
33 U.S.C.A. Section 1251 et seq., as amended from time to time, and any and all
rules and regulations promulgated thereunder; (e) the Toxic Substances Control
Act, 15 U.S.C.A. Section 2601 et seq., as amended from time to time, and any and
all rules and regulations promulgated thereunder; or (f) any other federal or
state law, statute, rule, or regulation enacted in connection with or relating
to the protection or regulation of the environment (including, without
limitation, those laws, statutes, rules, and regulations regulating the
disposal, removal, production, storing, refining, handling, transferring,
processing, or transporting of Hazardous Materials) and any rules and
regulations issued or promulgated in connection with any of the foregoing by any
Governmental Authority, and "Environmental Protection Statutes" means each of
the foregoing.

         "ERISA" means the Employee Retirement Income Security Act of 1974 and
any regulations issued pursuant thereto, as amended from time to time.

         "ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with Borrower within the meaning of Sections
414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes
of provisions relating to Section 412 of the Code).

         "ERISA Event" means (a) a Reportable Event with respect to a Pension
Plan; (b) a withdrawal by Borrower or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations that is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by Borrower or any ERISA Affiliate
from a Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization; (d) the filing of a notice of intent to terminate, the treatment
of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or
the commencement of proceedings by the PBGC to terminate a Pension Plan or
Multiemployer Plan; (e) an event or condition which might reasonably be expected
to constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan or Multiemployer Plan;
or (f) the imposition of any liability under Title IV of ERISA, other than PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon Borrower or
any ERISA Affiliate.

         "Event of Default" means any of the events specified in Section 8.01.

         "Event of Loss" means any of the following events: (a) the total
destruction of any Aviation Unit constituting a portion of the Aircraft, or
damage thereto to an extent which, in the opinion of the Borrower (as evidenced
by an Officers' Certificate to such effect delivered to Agent with a copy to
each Bank, together with, if requested by any Bank, a certificate of the
Independent Appraiser addressed and delivered to Agent with a copy to each
Bank), shall render repair impracticable or uneconomical; or (b) the
condemnation, confiscation, theft or seizure of, or the requisition of title to
or use of, any Aviation Unit constituting a portion of the Aircraft, or any
portion thereof, as shall result in the loss of use or possession of such
helicopter or other Aviation Unit by the Borrower or Air Evac, as applicable,
for a period of 90 days or longer.




                                       12
<PAGE>   19

         "Existing Loan Agreement" has the meaning specified in Recital A.

         "Extension of Credit" means (a) a Borrowing, Conversion or Continuation
of Loans and (b) a Letter of Credit Action wherein a new Letter of Credit is
issued or which has the effect of increasing the amount of, extending the
maturity of, or making a material modification to an outstanding Letter of
Credit or the reimbursement of drawings thereunder (collectively, the
"Extensions of Credit").

         "Federal Aviation Act" means the Federal Aviation Act of 1958, as
amended and in effect at the particular time, or comparable provisions of any
successor statute.

         "Funded Indebtedness" means, with respect to any Person, all
Indebtedness for Money Borrowed of such Person which has a final maturity (or,
pursuant to the terms of the agreement under which it has been issued, an
anticipated maturity) more than one year after the date of creation thereof (or
which is renewable or extendible at the option of the obligor for more than one
year from the date of creation thereof), and shall include the obligation of
such Person to make payments in respect thereof required to be made less than
one year after the date of creation thereof, notwithstanding the fact that the
obligation of such Person to make such payments may at the time also be included
in current liabilities under generally accepted accounting principles.

         "Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards to the nearest 1/100 of 1%) equal to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers on such day, as published by the
Federal Reserve Bank on the Business Day next succeeding such day; provided that
(a) if such day is not a Business Day, the Federal Funds Rate for such day shall
be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (b) if no such rate is so
published on such next succeeding Business Day, the Federal Funds Rate for such
day shall be the average rate charged to Bank of America on such day on such
transactions as determined by Agent.

         "FNCB" has the meaning set forth in Recital A.

         "GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or such other principles as may be
approved by a significant segment of the accounting profession, that are
applicable to the circumstances as of the date of determination, consistently
applied. If at any time any change in GAAP would affect the computation of any
financial ratio or requirement set forth in any Loan Document, and either
Borrower or Requisite Banks shall so request, Agent, Banks and Borrower shall
negotiate in good faith to amend such ratio or requirement to preserve the
original intent thereof in light of such change in GAAP (subject to the approval
of Requisite Banks), provided that, until so amended, (a) such ratio or
requirement shall continue to be computed in accordance with GAAP prior to such
change therein and (b) Borrower shall provide to Agent and Banks financial
statements and other documents required under this Agreement or as reasonably
requested hereunder setting forth a reconciliation between





                                       13
<PAGE>   20

calculations of such ratio or requirement made before and after giving effect to
such change in GAAP.

         "Governmental Authority" means (a) any international, foreign, federal,
state, county or municipal government, or political subdivision thereof, (b) any
governmental or quasi-governmental agency, authority, board, bureau, commission,
department, instrumentality, central bank or public body, or (c) any court,
administrative tribunal or public utility.

         "Guaranty Agreement" means that certain Guaranty Agreement, of even
date herewith, executed by Air Evac in favor of Agent for the benefit of the
Creditors, guaranteeing the unpaid principal amount of the Loans and all other
obligations and liabilities of the Borrower to the Agent and the Creditors
substantially in the form of Exhibit E.

         "Guaranty Obligation" means, as to any Person, any (a) guaranty by such
Person of Indebtedness of, or other obligation payable or performable by, any
other Person or (b) assurance, agreement, letter of responsibility, letter of
awareness, undertaking or arrangement given by such Person to an obligee of any
other Person with respect to the payment or performance of an obligation by, or
the financial condition of, such other Person, whether direct, indirect or
contingent, including any purchase or repurchase agreement covering such
obligation or any collateral security therefor, any agreement to provide funds
(by means of loans, capital contributions or otherwise) to such other Person,
any agreement to support the solvency or level of any balance sheet item of such
other Person or any "keep-well" or other arrangement of whatever nature given
for the purpose of assuring or holding harmless such obligee against loss with
respect to any obligation of such other Person; provided, however, that the term
Guaranty Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any Guaranty
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the related primary obligation, or portion thereof, covered by such
Guaranty Obligation or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by the Person in good
faith.

         "Hazardous Materials" means (a) any "hazardous waste" as defined by
RCRA, (b) any "hazardous substance" as defined by CERCLA, (c) asbestos, (d)
polychlorinated biphenyls, (e) any substance the presence of which on any of
Borrower's or any of the Subsidiaries' properties is prohibited by any
Governmental Authority, and (f) any other substance which requires special
handling pursuant to any Environmental Protection Statute.

         "Indebtedness" means, as to any Person at a particular time, all items
(other than capital stock and surplus) which, in accordance with GAAP, would be
shown on the liability side of a balance sheet of such Person as of the date on
which Indebtedness is to be determined. Except as otherwise agreed in writing by
the Requisite Banks, "Indebtedness" shall also mean, whether or not so
reflected, (a) all debt, obligations and liabilities secured by any Lien
existing on property owned by such Person if such property shall be subject to
such Lien, whether or not the debt, obligations or liabilities secured thereby
shall have been assumed; (b) all obligations of such Person under any lease
which is a Capital Lease or any lease which, whether or not such lease is a
Capital Lease, contains terms that require the payment of lease rentals whether
or not the property leased thereunder shall exist or can be used for the purpose
for which it shall have been





                                       14
<PAGE>   21

leased, or provide for a termination payment calculated to be sufficient to
retire any debt, obligations or liabilities secured by a Lien on such lease or
on the property leased thereunder; (c) all Guaranty Obligations of such Person;
(d) all obligations of such Person to purchase any materials, supplies or other
property, or to obtain the services of any other Person, if the relevant
contract or other related document requires that payment for such materials,
supplies or other property, or for such services, shall be made regardless of
whether or not delivery of such materials, supplies or other property is ever
made or tendered or such services are ever performed or tendered; and (e) all
obligations of such Person (contingent or direct) in respect of letters of
credit issued for the account of such Person or other extensions of credit to
such Person.

         "Indebtedness for Money Borrowed" means, with respect to any Person,
all Indebtedness of such Person (a) in respect of money borrowed or evidenced by
a promissory note, debenture or other like written obligation to pay money, (b)
in respect of letters of credit issued for the account of such Person or other
extensions of credit to such Person, (c) in respect of obligations under any
lease of Aviation Units which is a Capital Lease or any lease of Aviation Units
which, whether or not such lease is a Capital Lease, contains terms that require
the payment of lease rentals whether or not the property leased thereunder shall
exist or can be used for the purpose for which it shall have been leased, or
provide for a termination payment calculated to be sufficient to retire any
debt, obligations or liabilities secured by a Lien on such lease or on the
property leased thereunder, (d) representing all or part of the purchase price
of any assets acquired by such Person, other than any such purchase price
payable to a trade creditor in the ordinary course of business the full payment
of which may be deferred for a period customary in the particular trade (but in
any event not exceeding 60 days) and which is not rendered delinquent by
nonpayment before the expiration of such period and (e) in respect of
obligations of such Person to purchase any Aviation Units if the relevant
contract or other related document requires that payment for such Aviation Units
shall be made regardless of whether or not delivery of such Aviation Units is
ever made or tendered.

         "Indemnified Liabilities" has the meaning set forth in Section 10.13.

         "Indemnitees" has the meaning set forth in Section 10.13.

         "Independent Appraiser" means (a) Air Associates, Inc., so long as the
same shall not be an Affiliate or have as an officer or director any Affiliate,
an officer or director of the Borrower or an officer, director or partner of any
Affiliate, or (b) such other Person who or which is neither an Affiliate, an
officer or director of the Borrower nor an officer, director or partner of any
Affiliate and which, if other than an individual, does not have as an officer,
director or partner any Affiliate, an officer or director of the Borrower or an
officer, director or partner of any Affiliate, if the same shall have been
selected by the Borrower and shall be acceptable to the Requisite Banks;
provided, however, that the Requisite Banks may for cause shown at any time and
from time to time remove any Person serving as the Independent Appraiser
hereunder by an instrument in writing delivered to the Borrower, such removal to
become effective at the time (which shall be after the date of delivery of such
instrument to the Borrower) designated in such instrument.

         "Interest Period" means for each Offshore Rate Loan, (a) initially, the
period commencing on the date such Offshore Rate Loan is disbursed or Continued,
or Converted into, such Offshore





                                       15
<PAGE>   22

Rate Loan and (b) thereafter, the period commencing on the last day of the
preceding Interest Period, and ending, in each case, on the earlier of (x) the
scheduled Maturity Date, or (y) one, two, three or six months thereafter;
provided that:

                  (i) any Interest Period that would otherwise end on a day that
         is not a Business Day shall be extended to the next succeeding Business
         Day unless such Business Day falls in another calendar month, in which
         case such Interest Period shall end on the next preceding Business Day;

                  (ii) any Interest Period which begins on the last Business Day
         of a calendar month (or on a day for which there is no numerically
         corresponding day in the calendar month at the end of such Interest
         Period) shall end on the last Business Day of the calendar month at the
         end of such Interest Period; and

                  (iii) unless Agent otherwise consents, there may not be more
         than 5 Interest Periods for Offshore Rate Loans in effect at any time.

         "Investment" means, as to any Person, any acquisition or any investment
by such Person, whether by means of the purchase or other acquisition of stock
or other securities of any other Person or by means of a loan, creating a debt,
capital contribution, guaranty or other debt or equity participation or interest
in any other Person, including any partnership and joint venture interests in
such other Person. For purposes of covenant compliance, the amount of any
Investment shall be the amount actually invested, without adjustment for
subsequent increases or decreases in the value of such Investment.

         "Investment Securities" means direct certificated obligations of the
United States Government maturing within three months of issue, or such other
certificated obligations of, or guaranteed by, the United States Government
which are acceptable to the Banks.

         "IRS" means the United States Internal Revenue Service.

         "Issuing Bank" means Bank of America, or any successor issuing lender
hereunder.

         "Laws" or "Law" means all international, foreign, federal, state and
local statutes, treaties, rules, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, licenses, authorizations and
permits of, and agreements with, any Governmental Authority.

         "Lending Office" means, as to any Bank, the office or offices of such
Bank described as such on Schedule 10.02, or such other office or offices as a
Bank may from time to time notify Agent.

         "Letter of Credit" means any letter of credit issued or outstanding
hereunder.




                                       16
<PAGE>   23

         "Letter of Credit Action" means the issuance, supplement, amendment,
renewal, extension, modification or other action relating to a Letter of Credit
hereunder.

         "Letter of Credit Application" means an application for a Letter of
Credit Action from time to time in use by Issuing Bank.

         "Letter of Credit Cash Collateral Account" means a blocked deposit
account at Bank of America in which Borrower hereby grants a first priority
security interest to Agent as security for Letter of Credit Usage and with
respect to which Borrower agrees to execute and deliver from time to time such
documentation as Agent or the Creditors may reasonably request to further assure
and confirm such security interest.

         "Letter of Credit Expiration Date" means the Business Day immediately
prior to the Conversion Date.

         "Letter of Credit Sublimit" means an amount equal to the lesser of the
Aggregate Revolving Credit Commitments and $5,000,000. The Letter of Credit
Sublimit is part of, and not in addition to, the Revolving Credit Commitments.

         "Letter of Credit Usage" means, as at any date of determination, the
aggregate undrawn face amount of outstanding Letters of Credit plus the
aggregate amount of all drawings under the Letters of Credit not reimbursed by
Borrower or converted into Loans.

         "Leverage Ratio" means, for any period of four consecutive fiscal
quarters of the Borrower, a quotient equal to (a) the sum of (i) Funded
Indebtedness of the Borrower and the Consolidated Subsidiaries as of the last
day of such period, and (ii) the product of (A) eight and (B) Rent Expense for
such period, divided by (b) the greater of $1 or the sum of (i) Consolidated Net
Income (or Consolidated Net Loss, as the case may be) for such period, and, (ii)
to the extent actually deducted in computing such Consolidated Net Income (or
Consolidated Net Loss), (A) Consolidated Interest Charges for such period, (B)
depreciation and amortization expense of the Borrower and the Consolidated
Subsidiaries for such period, (C) tax expense of the Borrower and the
Consolidated Subsidiaries for such period, and (D) Rent Expense for such period.

         "Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement (in the nature of compensating balances, cash collateral accounts or
security interests), encumbrance, lien (statutory or other), charge, or
preference, priority or other security interest or preferential arrangement of
any kind or nature whatsoever (including any conditional sale or other title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, and the filing of any financing statement under
the Uniform Commercial Code or comparable Laws of any jurisdiction), including
the interest of a purchaser of accounts receivable.

         "Loan" means any advance made by any Bank to Borrower as provided in
Section 2 (collectively, the "Loans").

         "Loan Documents" means this Agreement and each Note, each Security
Document, each Letter of Credit Application, each Request for Extension of
Credit, each Compliance Certificate,








                                       17
<PAGE>   24

each certificate, each fee letter, and each other instrument, document and
agreement from time to time delivered in connection with this Agreement.

         "Material Adverse Effect" means any set of circumstances or events
which (a) has or could reasonably be expected to have any material adverse
effect whatsoever upon the validity or enforceability of any Loan Document, (b)
is or could reasonably be expected to be material and adverse to the condition
(financial or otherwise), business, assets, operations or prospects of any
Borrower Party, or (c) materially impairs or could reasonably be expected to
materially impair the ability of any Borrower Party to perform its Obligations.

         "Maturity Date" means (a) as to any Term Loan, the Term Loan Maturity
Date, and (b) as to any Revolving Credit Loan, the Revolving Loan Maturity Date.

         "Maximum Rate" has the meaning set forth in Section 10.08.

         "Minimum Amount" means, with respect to each of the following actions,
the minimum amount and any multiples in excess thereof set forth opposite such
action:

<Table>
<Caption>
                                                                           MULTIPLES IN EXCESS
                        TYPE OF ACTION                  MINIMUM AMOUNT           THEREOF
         --------------------------------------------- ------------------ ----------------------

<S>                                                    <C>                <C>
         Borrowing or prepayment of, or Conversion       $   500,000             $250,000
         into, Base Rate Loans

         Borrowing, prepayment or Continuation of,       $   500,000             $250,000
         or Conversion into, Offshore Rate Loans

         Letter of Credit Action                         $   100,000             None

         Reduction in Revolving Credit Commitment        $   500,000             $250,000

         Assignments                                     $ 1,000,000             None
</Table>


         "Modified Cash Flow Coverage" means, for any accounting period, (a)
Consolidated Net Income, plus Federal and state taxes measured on income of the
Borrower and Consolidated Subsidiaries, plus Consolidated Interest Charges, plus
Rent Expense, plus depreciation and amortization of the Borrower and
Consolidated Subsidiaries, for such period, determined in accordance with GAAP
plus any non-recurring significant charge the addition of which has been
approved in writing by each of the Banks for such period, which approval may be
withheld in each Bank's sole discretion, divided by (b) an amount equal to the
sum of all payments of principal on Consolidated Indebtedness, plus Consolidated
Interest Charges, plus Rent Expense, required to be made during such period
under the terms governing such Consolidated Indebtedness, Consolidated Interest
Charges and Rent Expense, regardless of whether such payments or expenses were
actually paid by the Borrower or its Consolidated Subsidiaries during such
period or instead were prepaid during an earlier period or postponed until a
later period; provided, however, from and including the four consecutive fiscal
quarters ending December 31, 2000, through and including the four consecutive
fiscal quarters of Borrower ending September 30,






                                       18
<PAGE>   25

2001, the Company may, to the extent the Non-Recurring Charges are included in
determining Consolidated Net Income in accordance with GAAP and without
duplication, add such Non-Recurring Charges to Consolidated Net Income in
calculating the Modified Cash Flow Coverage for such accounting period.

         "Multiemployer Plan" means any employee benefit plan of the type
described in Section 4001(a)(3) of ERISA.

         "Negative Pledge" means a Contractual Obligation that restricts Liens
on property.

         "Net Cash Proceeds" means, in connection with any Disposition
(including any sale and leaseback transaction), the cash proceeds (including any
cash payments received by way of deferred payment pursuant to a promissory note,
receivable or otherwise, but only as and when received in cash) of such
Disposition net of (a) reasonable transaction costs (including any underwriting,
brokerage or other selling commissions and reasonable legal, advisory and other
fees and expenses, including title and recording expenses, associated therewith
actually incurred and satisfactorily documented), (b) taxes estimated to be paid
as a result of such Disposition, and (c) any portion of such cash proceeds which
the Borrower determines in good faith should be reserved for post-closing
adjustments or liabilities (to the extent that the Borrower delivers to the
Agent a certificate signed by a Responsible Officer as to such determination),
it being understood and agreed that on the day all such post-closing adjustments
and liabilities have been determined, (x) the amount (if any) by which the
reserved amount of the cash proceeds of such Disposition exceeds the actual
post-closing adjustments or liabilities payable by the Borrower or any
Subsidiary shall constitute Net Cash Proceeds on such date and (y) the amount
(if any) by which the actual post-closing adjustments or other liabilities
payable by the Borrower or any Subsidiary exceeds the reserved amount of the
cash proceeds of such Disposition on such date shall be credited against any
subsequent Net Cash Proceeds that the Borrower or any Subsidiary is required to
apply to prepay the Loans pursuant to Section 2.05(b).

         "Non-Recurring Charges" means charges incurred by the Company in the
fiscal year ended December 31, 2000, or to be incurred in the fiscal year ending
December 31, 2001 for the following items: (a) up to $1,682,000 arising from the
write-down of aircraft leased to, the investment in, and accounts receivable
from Clintondale Aviation, Inc., (b) up to $7,642,000 arising from adjustments
to and the write-down of inventory and inventory related items, (c) up to
$1,240,000 arising from the accrual of a retroactive pay increase for pilots,
(d) up to $1,106,000 arising from the accrual of severance costs, and (e) up to
$782,000 arising from losses on the sale of aircraft

         "Notes" means all Term Notes and Revolving Credit Notes made by
Borrower in favor of the Banks.

         "Obligations" means all advances to, and debts, liabilities,
obligations, covenants and duties of, any Borrower Party arising under any Loan
Document, whether direct or indirect (including those acquired by assumption),
absolute or contingent, due or to become due, now








                                       19
<PAGE>   26

existing or hereafter arising and including interest that accrues after the
commencement of any proceeding under any Debtor Relief Laws by or against any
Borrower Party or any Subsidiary or Affiliate of any Borrower Party.

         "Offshore Base Rate" has the meaning set forth in the definition of
Offshore Rate.

         "Offshore Rate" means for any Interest Period with respect to any
Offshore Rate Loan, a rate per annum determined by Agent pursuant to the
following formula:

                  Offshore Rate =                 Offshore Base Rate
                                         ------------------------------------
                                         1.00 - Eurodollar Reserve Percentage
                  Where,

                  "Offshore Base Rate" means, for such Interest Period:

                  (a) the rate per annum equal to the rate determined by Agent
         to be the offered rate that appears on the page of the Telerate screen
         that displays an average British Bankers Association Interest
         Settlement Rate for deposits in Dollars (for delivery on the first day
         of such Interest Period) with a term equivalent to such Interest
         Period, determined as of approximately 11:00 a.m. (London time) two
         Business Days prior to the first day of such Interest Period, or

                  (b) in the event the rate referenced in the preceding
         subsection (a) does not appear on such page or service or such page or
         service shall cease to be available, the rate per annum equal to the
         rate determined by Agent to be the offered rate on such other page or
         other service that displays an average British Bankers Association
         Interest Settlement Rate for deposits in Dollars (for delivery on the
         first day of such Interest Period) with a term equivalent to such
         Interest Period, determined as of approximately 11:00 a.m. (London
         time) two Business Days prior to the first day of such Interest Period,
         or

                  (c) in the event the rates referenced in the preceding
         subsections (a) and (b) are not available, the rate per annum
         determined by Agent as the rate of interest (rounded upward to the next
         1/100th of 1%) at which deposits in Dollars for delivery on the first
         day of such Interest Period in same day funds in the approximate amount
         of the Offshore Rate Loan being made, Continued or Converted by Agent
         (or its Affiliate) in its capacity as a Bank and with a term equivalent
         to such Interest Period would be offered by Bank of America's London
         Branch to major banks in the offshore Dollar market at their request at
         approximately 11:00 a.m. (London time) two Business Days prior to the
         first day of such Interest Period.

                  "Eurodollar Reserve Percentage" means, for any day during any
         Interest Period, the reserve percentage (expressed as a decimal,
         rounded upward to the next 1/100th of 1%) in effect on such day,
         whether or not applicable to any Bank, under regulations issued from
         time to time by the Board of Governors of the Federal Reserve System
         for determining the maximum reserve requirement (including any
         emergency, supplemental or other marginal reserve requirement) with
         respect to Eurocurrency funding (currently







                                       20
<PAGE>   27

         referred to as "Eurocurrency liabilities"). The Offshore Rate for each
         outstanding Offshore Rate Loan shall be adjusted automatically as of
         the effective date of any change in the Eurodollar Reserve Percentage.

                  The determination of the Eurodollar Reserve Percentage and the
         Offshore Base Rate by Agent shall be conclusive in the absence of
         manifest error.

         "Officers' Certificate" means a certificate signed in the name of the
Borrower by the Chairman of the Board, the Vice Chairman of the Board, the
President or any Vice President and by any other Vice President, the Treasurer,
the Secretary or any Assistant Secretary or Assistant Treasurer of the Borrower.

         "Offshore Rate Loan" means a Loan bearing interest based on the
Offshore Rate.

         "Operating Lease" means any lease other than a Capital Lease.

         "Ordinary Course Dispositions" means:

                  (a) Dispositions of obsolete or worn out property, whether now
         owned or hereafter acquired, in the ordinary course of business;

                  (b) Dispositions of cash, cash equivalents, inventory and
         other property in the ordinary course of business;

                  (c) Dispositions of property to the extent that such property
         is exchanged for credit against the purchase price of similar
         replacement property, or the proceeds of such sale are reasonably
         promptly applied to the purchase price of such replacement property or
         where Borrower or any Subsidiary determine in good faith that the
         failure to replace such equipment will not be detrimental to the
         business of Borrower or such Subsidiary; and

                  (d) Dispositions of assets or property by any Subsidiary to
         Borrower or another Wholly-Owned Subsidiary;

provided, however, that no such Disposition shall be for less than the fair
market value of the property being disposed of and no Disposition of Aircraft,
Parts or Receivables shall be considered an Ordinary Course Disposition.

         "Ordinary Course Indebtedness" means:

                  (a) intercompany Guaranty Obligations of Borrower or any
         Subsidiaries guarantying Indebtedness otherwise permitted hereunder of
         Borrower or any Wholly-Owned Subsidiary;

                  (b) Indebtedness arising from the honoring of a check, draft
         or similar instrument against insufficient funds;

                  (c) Indebtedness arising from the Swap Agreements;



                                       21
<PAGE>   28

                  (d) trade and other accounts payable in the ordinary course of
         business in accordance with customary trade terms and which are not
         overdue for a period of more than 60 days; and

                  (e) deferred taxes.

         "Ordinary Course Investments" means Investments consisting of:

                  (a) cash and cash equivalents;

                  (b) advances to officers, directors and employees of Borrower
         and Subsidiaries for travel, entertainment, relocation and analogous
         ordinary business purposes not at any time exceeding $200,000 in the
         aggregate;

                  (c) Investments of any Subsidiary in Borrower or another
         Subsidiary;

                  (d) extensions of credit to customers or suppliers of Borrower
         and Subsidiaries in the ordinary course of business and any Investments
         received in satisfaction or partial satisfaction thereof; and

                  (e) Guaranty Obligations permitted by Section 7.01.

         "Ordinary Course Liens" means:

                  (a) Liens for taxes not yet due or which are being contested
         in good faith and by appropriate proceedings, if adequate reserves with
         respect thereto are maintained on the books of the applicable Person in
         accordance with GAAP;

                  (b) carriers', warehousemen's, mechanics', materialmen's,
         repairmen's or other like Liens arising in the ordinary course of
         business which are not overdue for a period of more than 30 days or
         which are being contested in good faith and by appropriate proceedings,
         if adequate reserves with respect thereto are maintained on the books
         of the applicable Person;

                  (c) pledges or deposits in connection with worker's
         compensation, unemployment insurance and other social security
         legislation;

                  (d) deposits to secure the performance of bids, trade
         contracts (other than for borrowed money), leases, statutory
         obligations, surety and appeal bonds, performance bonds and other
         obligations of a like nature incurred in the ordinary course of
         business;

                  (e) easements, rights-of-way, restrictions and other similar
         encumbrances affecting real property which, in the aggregate, are not
         substantial in amount, and which do not in any case materially detract
         from the value of the property subject thereto or materially interfere
         with the ordinary conduct of the business of the applicable Person; and




                                       22
<PAGE>   29

                  (f) attachment, judgment or other similar Liens arising in
         connection with litigation or other legal proceedings (and not
         otherwise a Default hereunder) in the ordinary course of business that
         is currently being contested in good faith by appropriate proceedings,
         adequate reserves have been set aside and no material property is
         subject to a material risk of loss or forfeiture and the claims in
         respect of such Liens are fully covered by insurance (subject to
         ordinary and customary deductibles).

         "Organization Documents" means, (a) with respect to any corporation,
the certificate or articles of incorporation and the bylaws; (b) with respect to
any limited liability company, the articles of formation and operating
agreement; and (c) with respect to any partnership, joint venture, trust or
other form of business entity, the partnership or joint venture agreement and
any agreement, instrument, filing or notice with respect thereto filed in
connection with its formation with the secretary of state or other department in
the state of its formation, in each case as amended from time to time.

         "Outstanding Obligations" means, as of any date, and giving effect to
making any Extensions of Credit requested on such date and all payments,
repayments and prepayments made on such date, (a) when reference is made to all
Banks, the sum of (i) the aggregate outstanding principal amount of all Loans
and (ii) all Letter of Credit Usage, and (b) when reference is made to one Bank,
the sum of (i) the aggregate outstanding principal amount of all Loans made by
such Bank, and (ii) such Bank's ratable risk participation in all Letter of
Credit Usage.

         "Parts" means, until installed in any Aviation Unit, all aircraft
engines, propellers, rotors, appliances, tires, airframes, spare parts, radios
and other communication equipment together with all other aircraft appliances,
instruments, mechanisms, apparatus, appurtenances, accessories and parts or
components thereof, of such Person wherever maintained, now or hereafter
existing, whether acquired by purchase or otherwise and whether held by such
Person for use in its business or held by such Person for sale or lease or to be
furnished by such Person under contracts of service, and all proceeds and
products thereof and accessories thereto.

         "PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto established under ERISA.

         "Pension Plan" means any "employee pension benefit plan" (as such term
is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by Borrower or any
ERISA Affiliate or to which Borrower or any ERISA Affiliate contributes or has
an obligation to contribute, or in the case of a multiple employer plan (as
described in Section 4064(a) of ERISA) has made contributions at any time during
the immediately preceding five plan years.

         "Permitted Liens" has the definition set forth in Section 7.02.

         "Person" means any individual, trustee, corporation, general
partnership, limited partnership, limited liability company, joint stock
company, trust, unincorporated organization, bank, business association, firm,
joint venture, Governmental Authority, or otherwise.




                                       23
<PAGE>   30

         "Plan" means any employee benefit plan maintained or contributed to by
a Borrower Party or by any trade or business (whether or not incorporated) under
common control with a Borrower Party as defined in Section 4001(b) of ERISA and
insured by the Pension Benefit Guaranty Corporation under Title IV of ERISA.

         "Pledged Investment Securities" means all Investment Securities of the
Borrower now or from time to time hereafter delivered to pursuant to a
Securities Pledge Agreement.

         "PHI Borrowing Base" means an amount equal to the sum of (a) 80% of the
amount of Eligible Receivables of Borrower in which each of the Creditors shall
have a valid equal and ratable perfected first priority Security Interest
pursuant to the Security Documents executed by Borrower, plus (ii) 50% of the
Appraised Value of the Aircraft of Borrower in which each of the Creditors shall
have a valid equal and ratable perfected first priority Security Interest
pursuant to the Security Documents executed by Borrower, plus (c) 50% of the
value of Eligible Parts (valued at the lower of average cost or market), in
which each of the Creditors shall have a valid equal and ratable perfected first
priority Security Interest, pursuant to the Security Documents executed by the
Borrower.

         "Pro Rata Share" means, with respect to each Bank, the percentage
(rounded, if necessary to the ninth decimal place) of the Total Commitments set
forth opposite the name of such Bank on Schedule 2.01, as such share may be
adjusted as contemplated herein.

         "Receivables" means, with respect to any Person, all Indebtedness
presently existing or hereafter owing to such Person in connection with such
Person's business, profession, occupation, or any other undertaking, including,
but not limited to the sale of goods or the performance of services or the
leasing of property, together with all proceeds thereof; excluding, however any
indebtedness due to or arising out of claims in tort and indebtedness evidenced
by a promissory note or a negotiable instrument.

         "Rent Expense" means, for any period, all rental expenses of the
Borrower and the Consolidated Subsidiaries for such period (other than rental
expenses under Capital Leases), including without limitation, rental expense for
leases of real, personal or intangible property of the Borrower and each
Consolidated Subsidiary.

         "Reportable Event" means any of the events set forth in Section 4043(b)
of ERISA or the regulations thereunder, a withdrawal from a Plan described in
Section 4063 of ERISA, or a cessation of operations described in Section 4062(e)
of ERISA.

         "Request for Extension of Credit" means, unless otherwise specified
herein, (a) with respect to a Borrowing, Conversion or Continuation of Loans, a
written request substantially in the form of Exhibit B, and (b) with respect to
a Letter of Credit Action, a Letter of Credit Application.

         "Requisite Banks" means, as of any date of determination: (a) if the
Revolving Credit Commitments are then in effect, Banks (excluding any Banks not
funding when required to so hereunder) having in the aggregate 100% of the Total
Commitments then in effect and (b) if the








                                       24
<PAGE>   31

Revolving Credit Commitments have then been terminated and there are Outstanding
Obligations, Banks holding Outstanding Obligations aggregating 100% of such
Outstanding Obligations.

         "Requisite Notice" means a notice delivered in accordance with Section
10.02.

         "Requisite Time" means, with respect to any of the actions listed
below, the time and date set forth below opposite such action:

<Table>
<Caption>
                           TYPE OF ACTION                     APPLICABLE TIME                DATE OF ACTION
         ---------------------------------------------------- ---------------- --------------------------------------------
<S>                                                           <C>              <C>

         Delivery of Request for Extension of
         Credit for, or notice for:
         o        Borrowing or prepayment of Base Rate Loans     9:00 a.m.     1 Business Days prior to such Borrowing or
                                                                               prepayment

         o        Conversion into Base Rate Loans                9:00 a.m.     2 Business Days prior to such Conversion

         o        Borrowing, prepayment or, Continuation        10:00 a.m.     3 Business Days prior to such Borrowing,
                  of, or Conversion into, Offshore Rate Loans                  prepayment, Continuation or Conversion

                                                                               3 Business Days prior to such action (or
         o        Letter of Credit Action                       10:00 a.m.     such lesser time which is acceptable to
                                                                               Issuing Bank)
         o        Voluntary reduction in or termination of
                  Revolving Credit Commitments                  10:00 a.m.     5 Business Days prior to such reduction or
                                                                               termination

         Payments by Banks or Borrower to Agent                 10:00 a.m.     On date payment is due
</Table>

         "Responsible Officer" means the president, chief financial officer,
treasurer or assistant treasurer of a Borrower Party. Any document or
certificate hereunder that is signed by a Responsible Officer of a Borrower
Party shall be conclusively presumed to have been authorized by all necessary
corporate, partnership and/or other action on the part of such Borrower Party
and such Responsible Officer shall be conclusively presumed to have acted on
behalf of such Borrower Party.

         "Restricted Payment" means:

                  (a) the declaration or payment of any dividend or distribution
         by Borrower or any Subsidiary, either in cash or property, on any
         shares of the capital stock of any class of Borrower or any Subsidiary
         (except dividends or other distributions payable solely in shares of
         capital stock of Borrower or any Subsidiary or payable by any
         Subsidiary to Borrower or to a Wholly-Owned Subsidiary);




                                       25
<PAGE>   32

                  (b) the purchase, redemption or retirement by Borrower or any
         Subsidiary of any shares of its capital stock of any class or any
         warrants, rights or options to purchase or acquire any shares of its
         capital stock, whether directly or indirectly;

                  (c) any other payment or distribution by Borrower or any
         Subsidiary in respect of its capital stock, either directly or
         indirectly;

                  (d) any Investment other than an Investment otherwise
         permitted under Section 7.05; and

                  (e) the prepayment, repayment, redemption, defeasance or other
         acquisition or retirement for value prior to any scheduled maturity,
         scheduled repayment or scheduled sinking fund payment, of any
         Indebtedness.

         "Revolving Credit Borrowing" means a borrowing consisting of a
simultaneous Revolving Credit Loan from each Bank.

         "Revolving Credit Commitment" has the meaning set forth in Section
2.02(a).

         "Revolving Credit Loan" has the meaning set forth in Section 2.02(a).

         "Revolving Credit Note" means a note, substantially in the form
attached hereto as Exhibit A-2, evidencing the Revolving Credit Loans made by a
Bank, including all renewals, extensions, modifications, amendments,
rearrangements and replacements thereof.

         "Revolving Loan Maturity Date" means (a) January 31, 2003 or (b) such
earlier date upon which the Revolving Credit Loans otherwise become due and
payable in accordance with the terms of this Agreement.

         "Samaritan" means Samaritan Health System, an Arizona non-profit
corporation.

         "Securities Pledge Agreement" means a pledge and security agreement and
such other documents as requested by Agent or any Creditor, each in form and
substance satisfactory to the Agent and each Creditor, executed by the Borrower
in order to grant a valid and perfected first priority security interest in the
Investment Securities delivered to Agent pursuant to this Agreement for the
equal and ratable benefit of the Creditors as security for the Notes and the
Obligations under the Loan Documents.

         "Security Agreements" means collectively (a) the Amended and Restated
Security Agreement, dated as of even date herewith executed by Borrower in favor
of Agent in substantially the form attached as Exhibit C, (b) the Security
Agreement, dated as of even date herewith executed by Air Evac in favor of Agent
in substantially the form attached as Exhibit D, (c) all other security
agreements executed on or after the Effective Date by any of the Borrower
Parties and (d) any and all supplements, modifications or amendments or
restatements of the foregoing.




                                       26
<PAGE>   33

         "Security Documents" means the Security Agreements, the Guaranty
Agreement, and all other documents, agreements, instruments, financing
statements, financing statement changes and continuation statements heretofore,
now or hereafter executed or delivered by any Person in connection with, or as
security for the payment of the Loans.

         "Security Interest" means, with reference to the Collateral (or any
portion thereof), mortgages, liens, security interests, charges or other
encumbrances created by the Borrower or Air Evac in favor of the Banks or other
Creditors, as the case may be, and held by Agent for their respective equal and
ratable benefit pursuant to the Security Documents.

         "Subsidiary" of a Person means a corporation, partnership, joint
venture, limited liability company or other business entity of which a majority
of the shares of securities or other interests having ordinary voting power for
the election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise specified, all references to a "Subsidiary" or
to "Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries
of Borrower.

         "Swap Agreement" means any interest rate protection agreement, interest
rate futures contract, interest rate option, interest rate cap or other interest
rate hedge arrangement, on terms and conditions satisfactory to the Requisite
Banks at the inception of such interest rate protection agreement, interest rate
futures contract, interest rate option, interest rate cap or other interest rate
hedge arrangement, to or which Borrower is a party or a beneficiary, together
with all schedules thereto and the confirmations thereunder, as may be further
amended, modified, restated or supplemented (including, without limitation,
amendments, modifications, restatements or supplements which have the effect of
increasing the notional amount, liabilities or obligations thereunder).

         "Swap Provider" means any Bank, or any Affiliate of such Bank,
satisfactory to the Requisite Banks at the time such Bank or affiliate initially
enters into its Swap Agreement with Borrower, which is a party to a Swap
Agreement and has agreed in writing to be bound by the terms of this Agreement.

         "Swap Termination Value" means, in respect of any one or more Swap
Agreements, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Agreements, (a) for any date on or after
the date such Swap Agreements have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a) the amount(s) determined as the
mark-to-market value(s) for such Swap Agreements, as determined based upon one
or more mid-market or other readily available quotations provided by any
recognized dealer in such Swap Agreements (which may include any Bank).

         "Tangible Assets" means, with respect to any Person, all assets of such
Person (after deducting applicable reserves for depreciation and all other
reserves properly deductible from the value of such assets in accordance with
GAAP) except (a) deferred assets, (b) patents, copyrights,







                                       27
<PAGE>   34

trademarks, trade names, franchises and goodwill, (c) unamortized debt discount
and expense and (d) all other items generally regarded as intangibles in
accordance with GAAP.

         "Term Loan Borrowing" means a borrowing consisting of a simultaneous
Term Loan from each Bank.

         "Term Loan Commitment" has the meaning set forth in Section 2.01(a).

         "Term Loan Maturity Date" means (a) September 30, 2004 , or (b) such
earlier date upon which the Term Loans otherwise become due and payable in
accordance with the terms of this Agreement.

         "Term Loans" has the meaning set forth in Section 2.01(a).

         "Term Note" means a note, substantially in the form attached hereto as
Exhibit A-1, evidencing the Term Loan made by a Bank, including all renewals,
extensions, modifications, amendments, rearrangements and replacements thereof.

         "to the best knowledge of" means, when modifying a representation,
warranty or other statement of any Person, that the fact or situation described
therein is known by such Person (or, in the case of a Person other than a
natural Person, known by any officer of such Person) making the representation,
warranty or other statement, or with the exercise of reasonable due diligence
under the circumstances (in accordance with the standard of what a reasonable
Person in similar circumstances would have done) would have been known by such
Person (or, in the case of a Person other than a natural Person, would have been
known by an officer of such Person).

         "Total Commitments" means the Aggregate Revolving Commitments and the
aggregate amount of each Bank's Term Loan Commitment hereunder, as such amounts
may be reduced or adjusted from time to time in accordance with the terms of
this Agreement.

         "Trade Payables" means, with respect to any Person, the accounts
payable or trade indebtedness payable by such Person in respect of goods or
services acquired by such Person on a recurring basis and classified as accounts
or trade indebtedness payable on the balance sheet of such Person in accordance
with GAAP.

         "type" of Loan means (a) a Base Rate Loan, and (b) an Offshore Rate
Loan.

         "Unfunded Pension Liability" means the excess of a Pension Plan's
benefit liabilities under Section 4001(a)(16) of ERISA, over the current value
of that Pension Plan's assets, determined in accordance with the assumptions
used for funding the Pension Plan pursuant to Section 412 of the Code for the
applicable plan year.

         "Value of Pledged Investment Securities" means the value of all Pledged
Investment Securities valued at the lower of cost or market value as of the date
of the applicable Borrowing Base Certificate.





                                       28
<PAGE>   35

         "Voting Stock" means the stock of a corporation the holders of which
are ordinarily, in the absence of contingencies, entitled to elect a majority of
the corporate directors (or persons performing similar functions).

         "Whitney" has the meaning set forth in the introductory paragraph.

         "Wholly-owned Subsidiary" means, with respect to any Person, any
Subsidiary 100% of the stock of every class of which (except for directors'
qualifying shares) at the time as of which any determination is being made, is
owned, directly or indirectly, by such Person.

         1.02 USE OF CERTAIN TERMS.

         (a) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
or thereto, unless otherwise defined therein.

         (b) As used herein, unless the context requires otherwise, the
masculine, feminine and neuter genders and the singular and plural include one
another.

         (c) The words "herein" and "hereunder" and words of similar import when
used in any Loan Document shall refer to the Loan Documents as a whole and not
to any particular provision thereof. The term "including" is by way of example
and not limitation. References herein to a Section, subsection or clause shall,
unless the context otherwise requires, refer to the appropriate Section,
subsection or clause in this Agreement.

         (d) The term "or" is disjunctive; the term "and" is conjunctive. The
term "shall" is mandatory; the term "may" is permissive.

         1.03 ACCOUNTING TERMS. All accounting terms not specifically or
completely defined in this Agreement shall be construed in conformity with, and
all financial data required to be submitted by this Agreement shall be prepared
in conformity with, GAAP applied on a consistent basis, as in effect from time
to time, applied in a manner consistent with that used in preparing the Audited
Financial Statements, except as otherwise specifically prescribed herein.

         1.04 ROUNDING. Any financial ratios required to be maintained by
Borrower pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio is expressed in this
Agreement and rounding the result up or down to the nearest number (with a
round-up if there is no nearest number) to the number of places by which such
ratio is expressed in this Agreement.

         1.05 EXHIBITS AND SCHEDULES. All exhibits and schedules to this
Agreement, either as originally existing or as the same may from time to time be
supplemented, modified or amended, are incorporated herein by this reference. A
matter disclosed on any Schedule shall be deemed disclosed on all Schedules.




                                       29
<PAGE>   36

         1.06 REFERENCES TO AGREEMENTS AND LAWS. Unless otherwise expressly
provided herein, (a) references to agreements (including the Loan Documents) and
other contractual instruments shall include all amendments, restatements,
extensions, supplements and other modifications thereto (unless prohibited by
any Loan Document), and (b) references to any Law shall include all statutory
and regulatory provisions consolidating, amending, replacing, supplementing or
interpreting such Law.

                                   SECTION 2.
               THE LOANS, THE COMMITMENTS AND EXTENSIONS OF CREDIT

         2.01 TERM LOANS.

         (a) Subject to the terms and conditions set forth in this Agreement,
each Bank severally agrees on the Effective Date to renew, modify and extend the
loans made by it to the Borrower pursuant to the Existing Loan Agreement and to
convert such loans to principal outstanding under a term loan hereunder (each a
"Term Loan"). The Term Loans converted and extended pursuant hereto by each Bank
shall not exceed in aggregate principal amount outstanding the amount set forth
opposite such Bank's name on Schedule 2.01 under the caption "Term Loan
Commitment" (its "Term Loan Commitment" and collectively for all Banks, the
"Term Loan Commitments"). Any portion of each such Bank's Term Loan Commitment
not utilized on the Effective Date shall be permanently canceled. Any Term Loans
that are repaid or prepaid may not be reborrowed. The conversion of the
indebtedness due to each Bank with respect to loans made to the Borrower
pursuant to the Existing Loan Agreement into the Term Loans under the terms of
this Agreement, shall not effect a novation of, but shall be, to the fullest
extent applicable, in modification, renewal, extension, rearrangement and
replacement of, the loans made by the Banks to the Borrower pursuant to the
Existing Loan Agreement.

         (b) Borrower shall repay the Term Loans of each Bank in fourteen
consecutive quarterly installments, payable on the last Business Day of each
June, September, December, and March (each a "Principal Payment Date"),
commencing on September 30, 2001, in amounts equal to such Bank's Pro Rata Share
of the respective amounts set forth opposite the relevant Principal Payment Date
set forth below.

<Table>
<Caption>
                  PRINCIPAL PAYMENT DATE                                              AMOUNT
                  ----------------------                                              ------
<S>                                                                                 <C>
                    September 30, 2001                                              $3,500,000
                     December 31, 2001                                              $3,000,000
                      March 31, 2002                                                $1,875,000
                       June 30, 2002                                                $1,875,000
                    September 30, 2002                                              $1,875,000
                     December 31, 2002                                              $1,875,000
                      March 31, 2003                                                $1,875,000
                       June 30, 2003                                                $1,875,000
                    September 30, 2003                                              $1,875,000
                     December 31, 2003                                              $1,875,000
                      March 31, 2004                                                $1,875,000
                       June 30, 2004                                                $1,875,000
                    September 30, 2004                                                $250,000
</Table>





                                       30
<PAGE>   37

If not sooner paid, Borrower agrees to pay the outstanding principal amount of
each Term Loan, together with accrued interest, on the Term Loan Maturity Date.

         (c) Each Bank's Term Loans shall be evidenced by a Term Note payable to
the order of such Bank in installments and bearing interest as set forth herein.
Each Bank shall post on a schedule attached to its Term Note or in records
relating to its Term Note (i) the rate of interest such Term Loan will bear and
(ii) each payment of principal and interest thereon; provided, however, that
neither the failure to make any such postings nor any inaccuracy therein shall
affect the Borrower's obligations under any Term Note or this Agreement. The
information set forth on such schedule shall be conclusive evidence of the
matters described therein absent clearly demonstrable error.

         2.02 REVOLVING CREDIT LOANS.

         (a) Subject to the terms and conditions set forth in this Agreement,
each Bank severally agrees (i) on the Effective Date to renew, modify and extend
the revolving credit loans made by it to the Borrower pursuant to the Existing
Loan Agreement and to convert such loans to principal outstanding under a
revolving loan hereunder, and (ii) on any Business Day from and after the
Effective Date, but prior to January 31, 2002 (the "Conversion Date"), to make
revolving credit loans pursuant to its Revolving Credit Commitment to the
Borrower (each such loan renewed, modified and extended and each such loan made
on or after the Effective Date, a "Revolving Credit Loan"); provided, however,
that each Bank's Revolving Credit Loans and Pro Rata Share of Letter of Credit
Usage shall not exceed at any one time the amount set forth opposite such Bank's
name on Schedule 2.01 under the caption "Revolving Credit Commitment" (as the
same may be reduced pursuant to Section 2.06 or otherwise from time to time
modified pursuant to Section 10.01, its "Revolving Credit Commitment," and
collectively for all Banks, the "Revolving Credit Commitments"); and provided,
further, that at no time shall additional Revolving Credit Loans be made or
Letter of Credit Actions be taken if, after giving effect to such proposed
Extensions of Credit, the outstanding principal amount of the Revolving Credit
Loans and Letter of Credit Usage would exceed the Borrowing Base. On the
Conversion Date, the Revolving Credit Commitments of the Banks will no longer be
revolving in nature, the




                                       31
<PAGE>   38

Revolving Credit Loans will convert into a term facility and all Revolving
Credit Loans repaid or prepaid may not be reborrowed. Within the foregoing
limits and subject to the conditions set out in Section 4, the Borrower may
obtain Borrowings of Revolving Credit Loans, repay or prepay such Revolving
Credit Loans, and reborrow such Revolving Credit Loans. The conversion of the
indebtedness due to each Bank with respect to loans made to the Borrower
pursuant to the Existing Loan Agreement into Revolving Credit Loans under the
terms of this Agreement, shall not effect a novation of, but shall be, to the
fullest extent applicable, in modification, renewal, extension, rearrangement
and replacement of, the loans made by the Banks to the Borrower pursuant to the
Existing Loan Agreement.

         (b) The principal of the Revolving Credit Loans shall be payable in
quarterly installments each in an amount equal to 5% of the principal amount of
Revolving Credit Loans outstanding as of the Conversion Date, which quarterly
installments shall be payable on the last Business Day of each March, June,
September, December, commencing on March 31, 2002, and ending on the first such
date (after the Conversion Date) on which the aggregate unpaid principal amount
of the Revolving Credit Loans shall be paid in full by reason of quarterly
installments paid as aforesaid and any prepayments made pursuant to Section 2.05
or otherwise (but in any event no later than the Revolving Loan Maturity Date).
If not sooner paid, Borrower agrees to pay the outstanding principal amount of
each Revolving Credit Loan, together with accrued interest, on the Revolving
Loan Maturity Date.

         (c) Each Bank's Revolving Credit Loans shall be evidenced by a
Revolving Credit Note payable to the order of such Bank in installments and
bearing interest as set forth herein. Each Bank shall post on a schedule
attached to its Revolving Credit Note or in records relating to its Revolving
Credit Note (i) the date and principal amount of each Revolving Credit Loan,
(ii) the rate of interest each such Revolving Credit Loan will bear, and (iii)
each payment of principal and interest thereon; provided, however, that neither
the failure to make any such postings nor any inaccuracy therein shall affect
the Borrower's obligations under any Revolving Credit Note or this Agreement.
The information set forth on such schedule shall be conclusive evidence of the
matters described therein absent clearly demonstrable error.

         2.03 REVOLVING CREDIT BORROWINGS AND CONTINUATIONS OF LOANS.

         (a) Borrower may irrevocably request a Revolving Credit Borrowing, or
Conversion or Continuation of any Loans on any Business Day in a Minimum Amount
therefor by delivering a Request for Extension of Credit therefor by Requisite
Notice to Agent not later than the Requisite Time therefor. All Borrowings,
Conversions and Continuations shall constitute Base Rate Loans unless properly
and timely otherwise designated as set forth in the prior sentence.

         (b) In connection with each Revolving Credit Borrowing to be used to
fund the purchase of additional Aviation Units by either the Borrower or Air
Evac, the Borrower shall also (i) deliver, prior to the Borrowing Date set forth
in the Request for Extension of Credit related to such Revolving Credit
Borrowing, to the Agent, with a copy to each Bank, invoices, receipts, or other
evidence of purchase (such evidence to be within seven (7) days prior to such
Borrowing Date) showing an aggregate value thereof that is greater than or equal
to the amount of the Revolving Credit Borrowing referred to in such Request for
Extension of Credit and (ii) within 30









                                       32
<PAGE>   39

days of such purchase, (A) execute and deliver to Agent Security Documents,
satisfactory to Agent, to subject such Aviation Units to a valid and perfected
first priority security interest, (B) complete the Appropriate Actions, and (C)
complete any other actions or filings required by Section 6.16.

         (c) Following receipt of a Request for Extension of Credit, Agent shall
promptly notify each Bank of its Pro Rata Share thereof by Requisite Notice. In
the case of a Borrowing of Loans, each Bank shall make the funds for its Loan
available to Agent at Agent's Office not later than the Requisite Time therefor
on the Business Day specified in such Request for Extension of Credit. Upon
satisfaction of the applicable conditions set forth in Section 4.02 (and, if the
initial Extension of Credit hereunder, Section 4.01), all funds so received
shall be made available to Borrower in like funds received. Agent shall promptly
notify Borrower and Banks of the interest rate applicable to any Offshore Rate
Loan upon determination of same, which determination shall be conclusive in the
absence of clearly demonstrable error. Agent shall from time to time notify
Borrower and Banks of any change in Bank of America's prime rate used in
determining the Base Rate promptly following the public announcement of such
change.

         (d) Except as otherwise provided herein, an Offshore Rate Loan may be
Continued or Converted only on the last day of the Interest Period for such
Offshore Rate Loan. During the existence of a Default or Event of Default, no
Loans may be requested as, Converted into or Continued as Offshore Rate Loans
without the consent of Requisite Banks and Requisite Banks may demand that any
or all of the then outstanding Offshore Rate Loans be Converted immediately into
Base Rate Loans.

         (e) If a Loan is to be made on the same date that another Loan is due
and payable, Borrower or Banks, as the case may be, shall, unless Agent
otherwise requests, make available to Agent the net amount of funds giving
effect to both such Loans and the effect for purposes of this Agreement shall be
the same as if separate transfers of funds had been made with respect to each
such Loan.

         (f) The failure of any Bank to make any Loan on any date shall not
relieve any other Bank of any obligation to make a Loan on such date, but no
Bank shall be responsible for the failure of any other Bank to so make its Loan.

         2.04 LETTERS OF CREDIT.

         (a) THE LETTER OF CREDIT COMMITMENT. Subject to the terms and
conditions set forth in this Agreement, until the Letter of Credit Expiration
Date, Issuing Bank shall take such Letter of Credit Actions as Borrower may from
time to time request; provided, however, that each Bank's Revolving Credit Loans
and Pro Rata Share of Letter of Credit Usage shall not exceed such Bank's
Revolving Credit Commitment at any time; and provided, further, that at no time
shall any Letter of Credit Action be taken if after giving effect to such Letter
of Credit Action (x) the outstanding principal amount of the Revolving Credit
Loans and Letter of Credit Usage would exceed the Borrowing Base or (y) the
Letter of Credit Usage would exceed the Letter of Credit Sublimit. Subject to
subsection (f) below and unless consented to by Issuing Bank and Requisite
Banks, no Letter of Credit may expire more than 12 months after the date of its
issuance or last





                                       33
<PAGE>   40

renewal; provided, however, that no Letter of Credit shall expire after the
Letter of Credit Expiration Date. If any Letter of Credit Usage remains
outstanding after such date, Borrower shall, not later than such date, deposit
cash in an amount equal to such Letter of Credit Usage in a Letter of Credit
Cash Collateral Account.

         (b) REQUESTING LETTER OF CREDIT ACTIONS. Borrower may irrevocably
request a Letter of Credit Action in a Minimum Amount therefor in United Stated
Dollars by delivering a Letter of Credit Application therefor to Issuing Bank,
with a copy to Agent (who shall notify Banks), by written (not telephonic)
Requisite Notice not later than the Requisite Time therefor. Each Letter of
Credit Action shall be in a form acceptable to Issuing Bank in its sole
discretion. Unless Agent notifies Issuing Bank that such Letter of Credit Action
is not permitted hereunder, or Issuing Bank notifies Agent that it has
determined that such Letter of Credit Action is contrary to any Laws or policies
of Issuing Bank, Issuing Bank shall, upon satisfaction of the applicable
conditions set forth in Section 4.02 with respect to any Letter of Credit Action
constituting an Extension of Credit, effect such Letter of Credit Action. This
Agreement shall control in the event of any conflict with any Letter of Credit
Application. Upon the issuance of a Letter of Credit, each Bank shall be deemed
to have purchased from Issuing Bank a risk participation therein in an amount
equal to such Bank's Pro Rata Share times the amount of such Letter of Credit.

         (c) REIMBURSEMENT OF PAYMENTS UNDER LETTERS OF CREDIT. Borrower shall
reimburse Issuing Bank through Agent for any payment that Issuing Bank makes
under a Letter of Credit on or before the date of such payment; provided,
however, that if the conditions precedent set forth in Section 4.02 can be
satisfied, Borrower may request a Borrowing of Revolving Credit Loans to
reimburse Issuing Bank for such payment pursuant to Section 2.03, or, failing to
make such request, Borrower shall be deemed to have requested a Borrowing of
Base Rate Revolving Credit Loans on such payment date pursuant to subsection (e)
below.

         (d) FUNDING BY BANKS WHEN ISSUING BANK NOT REIMBURSED. Upon any drawing
under a Letter of Credit, Issuing Bank shall notify Agent and Borrower. If
Borrower fails to timely make the payment required pursuant to subsection (c)
above, Issuing Bank shall notify Agent of such fact and the amount of such
unreimbursed payment. Agent shall promptly notify each Bank of its Pro Rata
Share of such amount by Requisite Notice. Each Bank shall make funds in an
amount equal its Pro Rata Share of such amount available to Agent at Agent's
Office not later than the Requisite Time therefor on the Business Day specified
by Agent, Agent shall remit the funds so received to Issuing Bank. The
obligation of each Bank to so reimburse Issuing Bank shall be absolute and
unconditional and shall not be affected by the occurrence of a Default or Event
of Default or any other occurrence or event. Any such reimbursement shall not
relieve or otherwise impair the obligation of Borrower to reimburse Issuing Bank
for the amount of any payment made by Issuing Bank under any Letter of Credit,
together with interest as provided herein.

         (e) NATURE OF BANKS' FUNDING. If the conditions precedent set forth in
Section 4.02 can be satisfied (except for the giving of a Request for Extension
of Credit) on any date Borrower is obligated to, but fails to, reimburse Issuing
Bank for a drawing under a Letter of Credit, the funding by Banks pursuant to
the previous subsection shall be deemed to be a Borrowing of Base








                                       34
<PAGE>   41

Rate Loans (without regard to the Minimum Amount therefor) deemed requested by
Borrower. If the conditions precedent set forth in Section 4.02 cannot be
satisfied on the date Borrower is obligated to, but fails to, reimburse Issuing
Bank for a drawing under a Letter of Credit, the funding by Banks pursuant to
the previous subsection shall be deemed to be a funding by each Bank of its risk
participation in such Letter of Credit, and each Bank making such funding shall
thereupon acquire a pro rata participation, to the extent of its reimbursement,
in the claim of Issuing Bank against Borrower in respect of such payment and
shall share, in accordance with that pro rata participation, in any payment made
by Borrower with respect to such claim. Any amounts made available by a Bank
under its risk participation shall be payable by Borrower upon demand of Agent,
and shall bear interest at a rate per annum equal to the Default Rate.

         (f) SPECIAL PROVISIONS RELATING TO EVERGREEN LETTERS OF CREDIT.
Borrower may request Letters of Credit that have automatic extension or renewal
provisions ("evergreen" Letters of Credit) so long as Issuing Bank consents in
its sole and absolute discretion thereto and has the right to not permit any
such extension or renewal at least annually within a notice period to be agreed
upon at the time each such Letter of Credit is issued. Once an evergreen Letter
of Credit is issued, unless Agent has notified Issuing Bank that Requisite Banks
have elected not to permit such extension or renewal, the Borrower Parties,
Agent and Banks shall be deemed to have authorized (but may not require) Issuing
Bank to, in its sole and absolute discretion, permit the renewal of such
evergreen Letter of Credit at any time to a date not later than the LETTER OF
CREDIT EXPIRATION DATE, and, unless directed by Issuing Bank, Borrower shall not
be required to request such extension or renewal. Issuing Bank may, in its sole
and absolute discretion elect not to permit an evergreen Letter of Credit to be
extended or renewed at any time.

         (g) OBLIGATIONS ABSOLUTE. The obligation of Borrower to pay to Issuing
Bank the amount of any payment made by Issuing Bank under any Letter of Credit
shall be absolute, unconditional, and irrevocable. Without limiting the
foregoing, Borrower's obligation shall not be affected by any of the following
circumstances:

                  (i) any lack of validity or enforceability of such Letter of
         Credit, this Agreement, or any other agreement or instrument relating
         thereto;

                  (ii) any amendment or waiver of or any consent to departure
         from such Letter of Credit, this Agreement, or any other agreement or
         instrument relating hereto or thereto;

                  (iii) the existence of any claim, setoff, defense, or other
         rights which Borrower may have at any time against Issuing Bank, Agent
         or any Bank, any beneficiary of such Letter of Credit (or any Persons
         for whom any such beneficiary may be acting) or any other Person,
         whether in connection with such Letter of Credit, this Agreement, or
         any other agreement or instrument relating thereto, or any unrelated
         transactions;

                  (iv) any demand, statement, or any other document presented
         under such Letter of Credit proving to be forged, fraudulent, invalid,
         or insufficient in any respect or any statement therein being untrue or
         inaccurate in any respect whatsoever so long as any such document
         appeared to comply with the terms of the Letter of Credit;






                                       35
<PAGE>   42

                  (v) payment by Issuing Bank in good faith under such Letter of
         Credit against presentation of a draft or any accompanying document
         which does not strictly comply with the terms of such Letter of Credit;
         or any payment made by Issuing Bank under such Letter of Credit to any
         Person purporting to be a trustee in bankruptcy, debtor-in-possession,
         assignee for the benefit of creditors, liquidator, receiver or other
         representative of or successor to any beneficiary or any transferee of
         such Letter of Credit, including any arising in connection with any
         proceeding under any Debtor Relief Laws;

                  (vi) the existence, character, quality, quantity, condition,
         packing, value or delivery of any property purported to be represented
         by documents presented in connection with such Letter of Credit or for
         any difference between any such property and the character, quality,
         quantity, condition, or value of such property as described in such
         documents;

                  (vii) the time, place, manner, order or contents of shipments
         or deliveries of property as described in documents presented in
         connection with such Letter of Credit or the existence, nature and
         extent of any insurance relative thereto;

                  (viii) the solvency or financial responsibility of any party
         issuing any documents in connection with such Letter of Credit;

                  (ix) any failure or delay in notice of shipments or arrival of
         any property;

                  (x) any error in the transmission of any message relating to
         such Letter of Credit not caused by Issuing Bank, or any delay or
         interruption in any such message;

                  (xi) any error, neglect or default of any correspondent of
         Issuing Bank in connection with such Letter of Credit;

                  (xii) any consequence arising from acts of God, wars,
         insurrections, civil unrest, disturbances, labor disputes, emergency
         conditions or other causes beyond the control of Issuing Bank;

                  (xiii) so long as Issuing Bank in good faith determines that
         the document appears to comply with the terms of the Letter of Credit,
         the form, accuracy, genuineness or legal effect of any contract or
         document referred to in any document submitted to Issuing Bank in
         connection with such Letter of Credit; and

                  (xiv) any other circumstances whatsoever where Issuing Bank
         has acted in good faith.

         In addition, Borrower will promptly examine a copy of each Letter of
Credit and amendments thereto delivered to it and, in the event of any claim of
noncompliance with Borrower's instructions or other irregularity, Borrower will
immediately notify Issuing Bank in writing. Borrower shall be conclusively
deemed to have waived any such claim against Issuing Bank and its correspondents
unless such notice is given as aforesaid.





                                       36
<PAGE>   43

         (h) ROLE OF ISSUING BANK. Each Bank and Borrower Party agree that, in
paying any drawing under a Letter of Credit, Issuing Bank shall not have any
responsibility to obtain any document (other than any sight draft, certificates
and documents expressly required by the Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or the authority of
the Person executing or delivering any such document. No Agent-Related Person
nor any of the respective correspondents, participants or assignees of Issuing
Bank shall be liable to any Bank for any action taken or omitted in connection
herewith at the request or with the approval of Banks or Requisite Banks, as
applicable; any action taken or omitted in the absence of gross negligence or
willful misconduct; or the due execution, effectiveness, validity or
enforceability of any document or instrument related to any Letter of Credit.
Borrower hereby assumes all risks of the acts or omissions of any beneficiary or
transferee with respect to its use of any Letter of Credit; provided, however,
that this assumption is not intended to, and shall not, preclude Borrower's
pursuing such rights and remedies as it may have against the beneficiary or
transferee at law or under any other agreement. No Agent-Related Person, nor any
of the respective correspondents, participants or assignees of Issuing Bank,
shall be liable or responsible for any of the matters described in subsection
(g) above. In furtherance and not in limitation of the foregoing, Issuing Bank
may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary, and Issuing Bank shall not be responsible for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason.

         (i) APPLICABILITY OF ISP98 AND UCP. Unless otherwise expressly agreed
by Issuing Bank and Borrower when a Letter of Credit is issued and subject to
applicable laws, performance under Letters of Credit by Issuing Bank, its
correspondents, and beneficiaries will be governed by (i) with respect to
standby Letters of Credit, the rules of the "International Standby Practices
1998" ("ISP98") or such later revision as may be published by the Institute of
International Banking Law & Practice, subject to applicable laws, and (ii) with
respect to commercial Letters of Credit, the rules of the Uniform Customs and
Practice for Documentary Credits, as published in its most recent version by the
International Chamber of Commerce (the "ICC") on the date any commercial Letter
of Credit is issued, and including the ICC decision published by the Commission
on Banking Technique and Practice on April 6, 1998 regarding the European single
currency (euro).

         (j) LETTER OF CREDIT FEES. With respect to commercial Letters of
Credit, Borrower shall pay to Agent on each Applicable Payment Date in arrears,
for the account of each Bank in accordance with its Pro Rata Share, a Letter of
Credit fee equal to the greater of (i) Applicable Amount times the average
maximum amount available to be drawn under each Letter of Credit since the later
of the Effective Date and the previous Applicable Payment Date divided by 360
and (ii) the actual number of days since the later of the Effective Date and the
previous Applicable Payment Date times $300, divided by 360.

         (k) FRONTING FEE AND DOCUMENTARY AND PROCESSING CHARGES PAYABLE TO
ISSUING BANK. Borrower shall pay directly to Issuing Bank for its sole account a
fronting fee in such amounts and at such times as set forth in a separate letter
agreement between Borrower and








                                       37
<PAGE>   44

Agent. In addition, Borrower shall pay directly to Issuing Bank, upon demand,
for its sole account its customary documentary and processing charges in
accordance with its standard schedule, as from time to time in effect, for any
Letter of Credit Action or other occurrence relating to a Letter of Credit for
which such charges are customarily made. Such fees and charges are
nonrefundable.

         2.05 PREPAYMENTS.

         (a) VOLUNTARY PREPAYMENTS

         Upon Requisite Notice to Agent not later than the Requisite Time
therefor, Borrower may at any time and from time to time voluntarily prepay
Loans in part in the Minimum Amount therefor or in full without premium or
penalty. Each such notice of prepayment shall specify (i) the type (i.e., Term
Loan Borrowing or Revolving Credit Borrowings) of Borrowings to be prepaid, (ii)
the aggregate principal amount of Borrowings to be prepaid , and (iii) the date
on which such prepayment is to take place (which date must be a Business Day).
Borrower's notice of such prepayment having been given as aforesaid, the
principal amount of the Loans comprising such Borrowings specified in the
notice, together with interest thereon to the date of prepayment, shall become
due and payable on such prepayment date. Notwithstanding the foregoing, the
Borrower may not prepay any Offshore Rate Loan before the last day of the
Interest Period relating thereto.

         (b) AGGREGATE COMMITMENTS EXCEEDED

                  If for any reason the aggregate outstanding Revolving Credit
Loans plus Letter of Credit Usage exceeds the Aggregate Revolving Credit
Commitments as in effect or as reduced or because of any limitation set forth in
this Agreement or otherwise, Borrower shall immediately prepay Revolving Credit
Loans and/or deposit cash in a Letter of Credit Cash Collateral Account in an
aggregate amount equal to such excess.

         (c) DISPOSITION

                  If on any date the Borrower or any Subsidiary makes any
Disposition, an amount equal to 100% of the Net Cash Proceeds from such
Disposition shall be shall be paid ratably, to the Banks for application to the
principal of the Term Loans, provided, that, if, at the time of such prepayment,
there is no aggregate principal amount outstanding under the Term Loans,
Borrower may prepay the Revolving Credit Loans and the respective Commitment of
each Bank shall be permanently and ratably reduced by the amount of such
prepayment, provided, further, that, if no Default or Event of Default exists at
the time of such Disposition, the Borrower or the Subsidiary making such
Disposition may retain Net Cash Proceeds therefrom in an amount which, when
added to all other amounts retained by any Person pursuant to this proviso, does
not exceed $5,000,000 in the aggregate. Nothing in this subsection shall be
deemed to permit any Disposition not otherwise permitted under this Agreement.

         (d) BORROWING BASE EXCEEDED (NO EVENT OF LOSS)




                                       38
<PAGE>   45

                  If at any time Borrower or any Bank determines the outstanding
principal amount of the Revolving Credit Loans and Letter of Credit Usage
exceeds the Borrowing Base, the Borrower shall, within three (3) Business Days
of such determination, (i) make a prepayment in the amount sufficient to cause
the outstanding principal amount of the Revolving Credit Loans and Letter of
Credit Usage not to exceed the Borrowing Base, which prepayment shall be applied
to the Term Loans to the extent outstanding and, if no Term Loans remain
outstanding to the Revolving Credit Loans (in which case the respective
Commitment of each Bank shall be permanently and ratably reduced by the amount
of Revolving Credit Loans so prepaid), (ii) deposit Investment Securities with
the Agent at its principal office in Houston, Texas pursuant to a Securities
Pledge Agreement in an amount sufficient to cause the outstanding principal
amount of the Revolving Credit Loans and Letter of Credit Usage not to exceed
the Borrowing Base, or (iii) take all the actions described in Section 6.16 for
the purpose and with the effect of subjecting to a valid and perfected first
priority security interest in favor of the Agent one or more Aviation Units
acceptable to the Agent and the Creditors that having an aggregate Appraised
Value sufficient to cause the outstanding principal amount of the Revolving
Credit Loans and Letter of Credit Usage not to exceed the Borrowing Base
(notwithstanding any time periods set forth in Section 6.16, all such actions
must be taken must be taken within 3 Business Days as aforesaid) provided,
however, if the sole reason that the outstanding principal amount of the
Revolving Credit Loans and Letter of Credit Usage exceeds the Borrowing Base is
the occurrence of an Event of Loss and so long as no other Default or any Event
of Default has occurred and is continuing, the Borrower may comply with the
provisions of Section 2.05(e), within the time periods provided therein, further
provided, however, that at no time while the outstanding principal amount of the
Revolving Credit Loans and Letter of Credit Usage exceeds the Borrowing Base may
the Borrower request any Borrowings hereunder.




                                       39
<PAGE>   46




         (e) BORROWING BASE EXCEEDED (EVENT OF LOSS)

                  If, solely as a result of an Event of Loss, the outstanding
principal amount of the Revolving Credit Loans and Letter of Credit Usage
exceeds the Borrowing Base, Borrower may defer the payment required under
Section 2.05(d) so long as no Event or Default has occurred and is continuing;
provided, that (i) within 40 days after the occurrence of such Event of Loss the
Borrower elects to take one or more of the following actions in respect of such
Event of Loss and gives the Agent and each Bank written notice of which action
it has elected to take (said written notice being a "Notice of Election") and
(ii) takes the actions specified in such Notice of Election within the time
periods for such actions specified below:

                           (A) within 30 days after the delivery of the Notice
of Election, deposit Investment Securities with the Agent at its principal
office in Houston, Texas pursuant to a Securities Pledge Agreement in an
aggregate amount equal to the Appraised Value (determined prior to such Event of
Loss) of the Aircraft affected by such Event of Loss;

                           (B) within 45 days after the delivery of the Notice
of Election, subject to a valid and perfected first priority security interest
in favor of the Agent for the ratable benefit of the Creditors one or more
Aviation Units acceptable to the Agent and each Creditor that have an aggregate
Appraised Value (in the case of Aviation Units more than one year old, as
specified by the Independent Appraiser in a written opinion addressed and
delivered to the Agent and each Creditor) at least equal to the Appraised Value
(determined prior to such Event of Loss) of the Aircraft affected by such Event
of Loss (without limitation of the foregoing, the Borrower must take Appropriate
Actions with respect to all such Aviation Units within such 45 day period);


                           (C) within 45 days after the date of the occurrence
of such Event of Loss, prepay principal on the Term Notes in an amount equal to
the Appraised Value (determined prior to such Event of Loss) of the Aircraft
affected by such Event of Loss; provided, however, if, at the time of such
prepayment, there is no aggregate principal amount outstanding under the Term
Loans, the Borrower may prepay the Revolving Credit Loans and the Revolving
Credit Commitment of each Bank shall be permanently and ratably reduced by the
amount of such prepayment; or

                           (D) take any combination of the actions described in
clauses (A)-(C) above within the time periods specified therein.


         (f) PROCEEDS FROM EVENT OF LOSS


                  If on any date the Borrower or any Subsidiary shall receive
any amounts representing payment of insurance proceeds or payment from any
Governmental Authority or other Person with respect to any Event of Loss, an
amount equal to 100% of the Net Cash Proceeds from such Event of Loss shall be
paid ratably, to the Banks for application to the









                                       40
<PAGE>   47

principal installments due under the Term Loans, provided, that, if, at the time
of such prepayment, there is no aggregate principal amount outstanding under the
Term Loans, Borrower shall prepay the Revolving Credit Loans and the respective
Revolving Credit Commitment of each Bank shall be permanently and ratably
reduced by the amount of such prepayment.


         (g) PROVISIONS GENERALLY APPLICABLE TO PREPAYMENTS.

                  (i) Agent will promptly notify each Bank of each prepayment
received by it and of such Bank's Pro Rata Share thereof.

                  (ii) Any prepayment of an Offshore Rate Loan shall be
accompanied by all accrued interest thereon, together with the costs set forth
in Section 3.05.

                  (iii) Any partial prepayments of Term Loans, and on or after
the Conversion Date, any partial prepayments of Revolving Credit Loans, shall be
applied to the principal of such Loans in the inverse order of maturity (the
"Back End Installments") according to each Bank's Pro Rata Share; provided that,
if no Default or Event of Default has occurred and is continuing and the
Borrower so requests in writing at least 5 Business Days prior to such
prepayment, prepayments pursuant to Section 2.05(a) or Section 2.05(c) shall be
applied, according to each Bank's Pro Rata Share, to such installments of
principal as designated by the Borrower in such written request in an aggregate
amount not to exceed, when added to the sum of all other prepayments not applied
to Back End Installments hereunder and for which (as of the date of
determination thereof) the respective due dates of such prepaid principal
installments have not yet passed, the sum of the scheduled principal
installments payable in the four consecutive fiscal quarters of the Company
commencing with the fiscal quarter in which such prepayment is made, and,
provided further that the Borrower may only designate prepayments as not to be
applied to Back End Installments up to twice in any given fiscal quarter.

         2.06 REDUCTION OR TERMINATION OF COMMITMENTS. Upon Requisite Notice to
Agent not later than the Requisite Time therefor, Borrower may at any time and
from time to time, without premium or penalty, permanently and irrevocably
reduce the Revolving Credit Commitments in a Minimum Amount therefor to an
amount not less than the aggregate outstanding Revolving Credit Loans and Letter
of Credit Usage at such time or terminate the Revolving Credit Commitments. Any
such reduction or termination shall be accompanied by payment of all accrued and
unpaid commitment fees with respect to the portion of the Revolving Credit
Commitments being reduced or terminated. Agent shall promptly notify Banks of
any such request for reduction or termination of the Revolving Credit
Commitments. Each Bank's Revolving Credit Commitment shall be reduced by an
amount equal to such Bank's Pro Rata Share times the amount of such reduction.

         2.07 INTEREST.

         (a) Subject to subsection (b) below, and unless otherwise specified
herein, Borrower shall pay interest on the unpaid principal amount of each Loan
(before and after default, before and after maturity, before and after judgment,
and before and after the commencement of any










                                       41
<PAGE>   48

proceeding under any Debtor Relief Laws) from the date borrowed until paid in
full (whether by acceleration or otherwise) on each Applicable Payment Date at a
rate per annum equal to the interest rate determined in accordance with the
definition of such type of Loan, plus, to the extent applicable in each case,
the Applicable Amount for such type of Loan.

         (b) If any amount payable by any Borrower Party under any Loan Document
is not paid when due (without regard to any applicable grace periods), it shall
thereafter bear interest (after as well as before entry of judgment thereon to
the extent permitted by law) at a fluctuating interest rate per annum at all
times equal to the Default Rate to the fullest extent permitted by applicable
Law (in no event to exceed the maximum rate allowed by La. R.S. Section 9:3509.1
if and to the extent applicable). Accrued and unpaid interest on past due
amounts (including interest on past due interest) shall be payable upon demand.

         2.08 FEES.

         (a) COMMITMENT FEE. Borrower shall pay to Agent for the account of each
Bank pro rata according to its Pro Rata Share, a commitment fee equal to the
Applicable Amount times the actual daily amount by which the Aggregate Revolving
Credit Commitments exceed the Revolving Credit Loans plus Letter of Credit
Usage. The commitment fee shall accrue at all times from the Effective Date
until the Conversion Date and shall be payable quarterly in arrears on each
Applicable Payment Date. The commitment fee shall be calculated quarterly in
arrears, and if there is any change in the Applicable Amount during any quarter,
the actual daily amount shall be computed and multiplied by the Applicable
Amount separately for each period during such quarter that such Applicable
Amount was in effect. The commitment fee shall accrue at all times, including at
any time during which one or more conditions in Section 4 are not met.

         (b) AGENCY FEES. Borrower shall pay to Agent an agency fee in such
amounts and at such times as set forth in a separate letter agreement between
Borrower and Agent. The agency fee is for the services to be performed by Agent
in acting as Agent and is fully earned on the date paid. The agency fee paid to
Agent is solely for its own account and is nonrefundable.

         2.09 COMPUTATION OF INTEREST AND FEES. Computation of interest on Base
Rate Loans when the Base Rate is determined by Bank of America's "prime rate"
shall be calculated on the basis of a year of 365 or 366 days, as the case may
be, and the actual number of days elapsed. Computation of all other types of
interest and all fees shall be calculated on the basis of a year of 360 days and
the actual number of days elapsed, which results in a higher yield to Banks than
a method based on a year of 365 or 366 days. Interest shall accrue on each Loan
for the day on which the Loan is made, and shall not accrue on a Loan, or any
portion thereof, for the day on which the Loan or such portion is paid, provided
that any Loan that is repaid on the same day on which it is made shall bear
interest for one day.

         2.10 MAKING PAYMENTS.

         (a) Except as otherwise provided herein, all payments by Borrower or
any Bank hereunder shall be made to Agent at Agent's Office not later than the
Requisite Time for such type of payment. All payments received after such
Requisite Time shall be deemed received on the






                                       42
<PAGE>   49

next succeeding Business Day. All payments shall be made in immediately
available funds in lawful money of the United States of America. All payments by
Borrower shall be made without condition or deduction for any counterclaim,
defense, recoupment or setoff.

         (b) Upon satisfaction of any applicable terms and conditions set forth
herein, Agent shall promptly make any amounts received in accordance with the
prior subsection available in like funds received as follows: (i) if payable to
Borrower, by crediting a deposit account designated from time to time by
Borrower to Agent by Requisite Notice, and (ii) if payable to any Bank, by wire
transfer to such Bank at its Lending Office. If such conditions are not so
satisfied, Agent shall return any funds it is holding to the Banks making such
funds available, without interest.

         (c) Subject to the definition of "Interest Period," if any payment to
be made by any Borrower Party shall come due on a day other than a Business Day,
payment shall instead be considered due on the next succeeding Business Day, and
such extension of time shall be reflected in computing interest and fees.

         (d) Unless Borrower or any Bank has notified Agent prior to the date
any payment to be made by it is due, that it does not intend to remit such
payment, Agent may, in its sole and absolute discretion, assume that Borrower or
Bank, as the case may be, has timely remitted such payment and may, in its sole
and absolute discretion and in reliance thereon, make available such payment to
the Person entitled thereto. If such payment was not in fact remitted to Agent
in immediately available funds, then:

                  (i) if Borrower failed to make such payment, each Bank shall
         forthwith on demand repay to Agent the amount of such assumed payment
         made available to such Bank, together with interest thereon in respect
         of each day from and including the date such amount was made available
         by Agent to such Bank to the date such amount is repaid to Agent at the
         Federal Funds Rate; and

                  (ii) if any Bank failed to make such payment, Agent shall be
         entitled to recover such corresponding amount on demand from such Bank.
         If such Bank does not pay such corresponding amount forthwith upon
         Agent's demand therefor, Agent promptly shall notify Borrower, and
         Borrower shall pay such corresponding amount to Agent. Agent also shall
         be entitled to recover from such Bank interest on such corresponding
         amount in respect of each day from the date such corresponding amount
         was made available by Agent to Borrower to the date such corresponding
         amount is recovered by Agent, (A) from such Bank at a rate per annum
         equal to the daily Federal Funds Rate. and (B) from Borrower, at a rate
         per annum equal to the interest rate applicable to such Borrowing.
         Nothing herein shall be deemed to relieve any Bank from its obligation
         to fulfill its Commitment or to prejudice any rights which Agent or
         Borrower may have against any Bank as a result of any default by such
         Bank hereunder.

         (e) If Agent or any Bank is required at any time to return to Borrower,
or to a trustee, receiver, liquidator, custodian, or any official under any
proceeding under Debtor Relief Laws, any portion of a payment made by Borrower,
each Bank shall, on demand of Agent, return its







                                       43
<PAGE>   50

share of the amount to be returned, plus interest thereon from the date of such
demand to the date such payment is made at a rate per annum equal to the daily
Federal Funds Rate.

         2.11 FUNDING SOURCES. Nothing in this Agreement shall be deemed to
obligate any Bank to obtain the funds for any Loan in any particular place or
manner or to constitute a representation by any Bank that it has obtained or
will obtain the funds for any Loan in any particular place or manner.

                                   SECTION 3.
                     TAXES, YIELD PROTECTION AND ILLEGALITY

         3.01 TAXES.

         (a) Any and all payments by Borrower to or for the account of Agent or
any Bank under any Loan Document shall be made free and clear of and without
deduction for any and all present or future taxes, duties, levies, imposts,
deductions, assessments, fees, withholdings or similar charges, and all
liabilities with respect thereto, excluding, in the case of Agent and each Bank,
taxes imposed on or measured by its net income, and franchise taxes imposed on
it (in lieu of net income taxes), by the jurisdiction (or any political
subdivision thereof) under the Laws of which Agent or such Bank, as the case may
be, is organized or maintains a lending office (all such non-excluded taxes,
duties, levies, imposts, deductions, assessments, fees, withholdings or similar
charges, and liabilities being hereinafter referred to as "Taxes"). If Borrower
shall be required by any Laws to deduct any Taxes from or in respect of any sum
payable under any Loan Document to Agent or any Bank, (i) the sum payable shall
be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section),
Agent and such Bank receives an amount equal to the sum it would have received
had no such deductions been made, (ii) Borrower shall make such deductions,
(iii) Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable Laws, and (iv) within
30 days after the date of such payment, Borrower shall furnish to Agent (who
shall forward the same to such Bank) the original or a certified copy of a
receipt evidencing payment thereof.

         (b) In addition, Borrower agrees to pay any and all present or future
stamp, court or documentary taxes and any other excise or property taxes or
charges or similar levies which arise from any payment made under any Loan
Document or from the execution, delivery, performance, enforcement or
registration of, or otherwise with respect to, any Loan Document (hereinafter
referred to as "Other Taxes").

         (c) If Borrower shall be required to deduct or pay any Taxes or Other
Taxes from or in respect of any sum payable under any Loan Document to Agent or
any Bank, Borrower shall also pay to such Bank or Agent (for the account of such
Bank), at the time interest is paid, such additional amount that the respective
Bank specifies as necessary to preserve the after-tax yield (after factoring in
all taxes, including taxes imposed on or measured by net income) such Bank would
have received if such Taxes or Other Taxes had not been imposed.

         (d) BORROWER AGREES TO INDEMNIFY AGENT AND EACH BANK FOR THE FULL
AMOUNT OF TAXES AND OTHER TAXES (INCLUDING ANY







                                       44
<PAGE>   51

TAXES OR OTHER TAXES IMPOSED OR ASSERTED BY ANY JURISDICTION ON AMOUNTS PAYABLE
UNDER THIS SECTION) PAID BY AGENT AND SUCH BANK, AMOUNTS PAYABLE UNDER SECTION
3.01(c) AND ANY LIABILITY (INCLUDING PENALTIES, INTEREST AND EXPENSES) ARISING
THEREFROM OR WITH RESPECT THERETO.

         3.02 ILLEGALITY. If any Bank determines that any Laws have made it
unlawful, or that any Governmental Authority has asserted that it is unlawful,
for any Bank or its applicable Lending Office to make, maintain or fund Offshore
Rate Loans, or materially restricts the authority of such Bank to purchase or
sell, or to take deposits of, Dollars in the applicable offshore Dollar market,
or to determine or charge interest rates based upon the Offshore Rate, then, on
notice thereof by such Bank to Borrower through Agent, any obligation of such
Bank to make Offshore Rate Loans shall be suspended until such Bank notifies
Agent and Borrower that the circumstances giving rise to such determination no
longer exist. Upon receipt of such notice, Borrower shall, upon demand from such
Bank (with a copy to Agent), prepay or Convert all Offshore Rate Loans of such
Bank, either on the last day of the Interest Period thereof, if such Bank may
lawfully continue to maintain such Offshore Rate Loans to such day, or
immediately, if such Bank may not lawfully continue to maintain such Offshore
Rate Loans. Each Bank agrees to designate a different Lending Office if such
designation will avoid the need for such notice and will not, in the good faith
judgment of such Bank, otherwise be materially disadvantageous to such Bank.

         3.03 INABILITY TO DETERMINE RATES. If, in connection with any Request
for Extension of Credit involving any Offshore Rate Loan, Agent determines that
(a) Dollar deposits are not being offered to banks in the applicable offshore
dollar market for the applicable amount and Interest Period of the requested
Offshore Rate Loan, (b) adequate and reasonable means do not exist for
determining the underlying interest rate for such Offshore Rate Loan, or (c)
such underlying interest rate does not adequately and fairly reflect the cost to
Banks of funding such Offshore Rate Loan, Agent will promptly notify Borrower
and all Banks. Thereafter, the obligation of Banks to make or maintain such
Offshore Rate Loan shall be suspended until Agent revokes such notice. Upon
receipt of such notice, Borrower may revoke any pending request for a Borrowing
of Offshore Rate Loans or, failing that, be deemed to have converted such
request into a request for a Borrowing of Base Rate Loans in the amount
specified therein.

         3.04 INCREASED COST AND REDUCED RETURN; CAPITAL ADEQUACY.

         (a) If any Bank determines that any Laws:

                  (i) subject such Bank to any tax, duty, or other charge with
         respect to any Offshore Rate Loans or its obligation to make Offshore
         Rate Loans, or change the basis on which taxes are imposed on any
         amounts payable to such Bank under this Agreement in respect of any
         Offshore Rate Loans;

                  (ii) shall impose or modify any reserve, special deposit, or
         similar requirement (other than the reserve requirement utilized in the
         determination of the Offshore Rate)





                                       45
<PAGE>   52

         relating to any extensions of credit or other assets of, or any
         deposits with or other liabilities or commitments of, such Bank
         (including its Commitment); or

                  (iii) shall impose on such Bank or on the offshore interbank
         market any other condition affecting this Agreement or any of such
         extensions of credit or liabilities or commitments;

and the result of any of the foregoing is to increase the cost to such Bank of
making, Converting into, Continuing, or maintaining any Offshore Rate Loans or
to reduce any sum received or receivable by such Bank under this Agreement with
respect to any Offshore Rate Loans, then from time to time upon demand of Bank
(with a copy of such demand to Agent), Borrower shall pay to such Bank such
additional amounts as will compensate such Bank for such increased cost or
reduction.

         (b) If any Bank determines that any change in or the interpretation of
any Laws have the effect of reducing the rate of return on the capital of such
Bank or compliance by such Bank (or its Lending Office) or any corporation
controlling such Bank as a consequence of such Bank's obligations hereunder
(taking into consideration its policies with respect to capital adequacy and
such Bank's desired return on capital), then from time to time upon demand of
such Bank (with a copy to Agent), Borrower shall pay to such Bank such
additional amounts as will compensate such Bank for such reduction.

         3.05 BREAKFUNDING COSTS. Upon demand of any Bank (with a copy to Agent)
from time to time, Borrower shall promptly compensate such Bank for and hold
such Bank harmless from any loss, cost or expense incurred by it as a result of:

         (a) any Continuation, Conversion, payment or prepayment of any Loan
other than a Base Rate Loan on a day other than the last day of the Interest
Period for such Loan (whether voluntary, mandatory, automatic, by reason of
acceleration, or otherwise); or

         (b) any failure by Borrower (for a reason other than the failure of
such Bank to make a Loan) to prepay, borrow, Continue or Convert any Loan other
than a Base Rate Loan on the date or in the amount notified by Borrower;

including any loss of anticipated profits and any loss or expense arising from
the liquidation or reemployment of funds obtained by it to maintain such Loan or
from fees payable to terminate the deposits from which such funds were obtained.
Borrower shall also pay any customary administrative fees charged by such Bank
in connection with the foregoing.

         3.06 MATTERS APPLICABLE TO ALL REQUESTS FOR COMPENSATION.

         A certificate of Agent or any Bank claiming compensation under this
Section 3 and setting forth the additional amount or amounts to be paid to it
hereunder shall be conclusive in the absence of clearly demonstrable error. In
determining such amount, Agent or any Bank may use any reasonable averaging and
attribution methods. For purposes of this Section 3, a Bank shall be deemed to
have funded each Offshore Rate Loan at the Offshore Base Rate used in
determining








                                       46
<PAGE>   53

the Offshore Rate for such Loan by a matching deposit or other borrowing in the
applicable offshore interbank market, whether or not such Offshore Rate Loan was
in fact so funded.

         3.07 RECAPTURE.

                  Notwithstanding anything to the contrary in any Loan Document,
if the rate of interest applicable to any Borrowing or portion thereof (the
"Applicable Rate") would, but for the limitation of the rate herein to the
Maximum Rate, for any period of time exceed the Maximum Rate, the rate of
interest to accrue on such Borrowing or portion thereof during such period shall
be limited to the Maximum Rate, but such Borrowing shall bear interest
thereafter at the Maximum Rate until the total amount of interest accrued
thereon equals the amount of interest which would have accrued thereon if the
Applicable Rate would have at all times been in effect during such period.

         3.08 SURVIVAL. All of Borrower's obligations under this Section 3 shall
survive termination of the Commitments and payment in full of all Obligations.

                                   SECTION 4.
                  CONDITIONS PRECEDENT TO EXTENSIONS OF CREDIT

         4.01 CONDITIONS OF INITIAL EXTENSION OF CREDIT. The obligation of each
Bank to make its initial Extension of Credit hereunder is subject to
satisfaction of the following conditions precedent:

         (a) Unless waived by all Banks (or by Agent with respect to immaterial
matters or items specified in subsection (iv) or (v) below with respect to which
Borrower has given assurances satisfactory to Agent that they will be delivered
promptly following the Effective Date), Agent's receipt of the following, each
of which shall be originals or facsimiles (followed promptly by originals)
unless otherwise specified, each properly executed by a Responsible Officer of
the signing Borrower Party, each dated on, or in the case of third-party
certificates, recently before the Effective Date and each in form and substance
satisfactory to Agent and its legal counsel:

                  (i) executed counterparts of this Agreement, sufficient in
         number for distribution to Agent, Banks and Borrower;

                  (ii) Term Notes executed by Borrower in favor of each Bank,
         each in a principal amount equal to such Bank's Term Loan Commitment
         and Revolving Credit Notes executed by Borrower in favor of each Bank,
         each in a principal amount equal to such Bank's Revolving Credit
         Commitment;

                  (iii) executed counterparts of the Guaranty Agreement and all
         other Security Documents, sufficient in number for distribution to
         Agent, Banks and the Borrower Parties that are parties thereto;




                                       47
<PAGE>   54

                  (iv) such certificates of resolutions or other action,
         incumbency certificates and/or other certificates of Responsible
         Officers of each Borrower Party as Agent may require to establish the
         identities of and verify the authority and capacity of each Responsible
         Officer thereof authorized to act as a Responsible Officer thereof;

                  (v) such evidence as Agent may reasonably require to verify
         that each Borrower Party is duly organized or formed, validly existing,
         in good standing and qualified to engage in business in each
         jurisdiction in which it is required to be qualified to engage in
         business, including certified copies of each Borrower Party's
         Organization Documents, certificates of good standing and/or
         qualification to engage in business, tax clearance certificates, and
         the like;

                  (vi) a certificate signed by a Responsible Officer of Borrower
         certifying (A) that the conditions specified in Sections 4.01(c) and
         (d) have been satisfied, and (B) that there has been no event or
         circumstance since the date of the Audited Financial Statements which
         has a Material Adverse Effect;

                  (vii) opinions of counsel of Correro Fishman Haygood Phelps
         Walmsley & Castex, L.L.P., counsel for the Borrower Parties, and Lytle,
         Soule & Curlee, a professional corporation, special Federal Aviation
         Act counsel for the Borrower Parties, as to the matters set forth in
         Exhibits F-1 and F-2, respectively, with such changes as approved by
         the Banks in their sole discretion, and as to such other matters as any
         Bank may reasonably require;

                  (viii) evidence satisfactory to Agent and each Bank that (A)
         Borrower has subjected to a valid and perfected first priority security
         interest in favor of the Agent for the ratable benefit of the Creditors
         one or more Aviation Units acceptable to the Agent and each Bank,
         having an aggregate Appraised Value (in the case of any Aviation Units
         more than one year old, as specified by the Independent Appraiser in a
         written opinion addressed and delivered to the Agent and each Creditor)
         at least equal to the $72,000,000, and (B) all Appropriate Actions have
         been taken with respect thereto; and

                  (ix) such other assurances, certificates, documents, consents
         or opinions as Agent, Issuing Bank or Requisite Banks reasonably may
         require.

         (b) Any fees required to be paid on or before the Effective Date shall
have been paid.

         (c) The representations and warranties made by Borrower herein, or
which are contained in any certificate, document or financial or other statement
furnished at any time under or in connection herewith or therewith, shall be
correct on and as of the Effective Date.

         (d) Each Borrower Party shall be in compliance with all the terms and
provisions of the Loan Documents to which it is a party, and no Default or Event
of Default shall have occurred and be continuing.

         (e) Unless waived by Agent, Borrower shall have paid all Attorney Costs
of Agent to the extent invoiced prior to or on the Effective Date, plus such
additional amounts of Attorney








                                       48
<PAGE>   55

Costs as shall constitute its reasonable estimate of Attorney Costs incurred or
to be incurred by it through the closing proceedings (provided that such
estimate shall not thereafter preclude final settling of accounts between
Borrower and Agent).

         4.02 CONDITIONS TO ALL EXTENSIONS OF CREDIT. In addition to any
applicable conditions precedent set forth elsewhere in this Section 4 or in
Section 2, the obligation of each Bank to honor any Request for Extension of
Credit other than a Conversion or Continuation is subject to the following
conditions precedent:

         (a) the representations and warranties of Borrower contained in Section
5, or which are contained in any certificate, document or financial or other
statement furnished at any time under or in connection herewith or therewith,
shall be correct on and as of the date of such Extension of Credit, except to
the extent that such representations and warranties specifically refer to an
earlier date;

         (b) no Default or Event of Default exists, or would result from such
proposed Extension of Credit;

         (c) Agent shall have timely received a Request for Extension of Credit
by Requisite Notice by the Requisite Time therefor;

         (d) Agent and each Bank shall have received a Borrowing Base
Certificate dated as of the date of such Extension of Credit demonstrating that,
after giving effect to such Extension of Credit, the outstanding principal
amount of Revolving Credit Loans and Letter of Credit Usage will not exceed the
Borrowing Base; and

         (e) Agent shall have received, in form and substance satisfactory to
it, such other assurances, certificates, documents or consents related to the
foregoing as Agent or Requisite Banks reasonably may require.

         Each Request for Extension of Credit by Borrower shall be deemed to be
a representation and warranty that the conditions specified in Sections 4.02(a)
and (b) have been satisfied on and as of the date of such Extension of Credit.

                                   SECTION 5.
                         REPRESENTATIONS AND WARRANTIES

         Borrower represents and warrants to Agent and Banks that:

         5.01 EXISTENCE AND QUALIFICATION; POWER; COMPLIANCE WITH LAWS. Each
Borrower Party is a corporation duly organized or formed, validly existing and
in good standing under the Laws of the state of its incorporation or
organization, has the power and authority and the legal right to own and operate
its properties, to lease the properties it operates and to conduct its business,
is duly qualified and in good standing under the Laws of each jurisdiction where
its ownership, lease or operation of properties or the conduct of its business
requires such







                                       49
<PAGE>   56

qualification, and is in compliance with all Laws except to the extent that
noncompliance does not have a Material Adverse Effect.

         5.02 POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. Each Borrower Party
has the power and authority and the legal right to make, deliver and perform
each Loan Document to which it is a party and Borrower has power and authority
to borrow hereunder and has taken all necessary action to authorize the
borrowings on the terms and conditions of this Agreement and to authorize the
execution, delivery and performance of this Agreement and the other Loan
Documents to which it is a party. No consent or authorization of, filing with,
or other act by or in respect of any Governmental Authority or any other Person
(including, without limitation any other creditor or supplier), is required in
connection with the Borrowings hereunder or with the execution, delivery,
performance, validity or enforceability of this Agreement or any of the other
Loan Documents. All Loan Documents have been duly executed and delivered by each
Borrower Party, and constitute a legal, valid and binding obligation of each
Borrower Party, enforceable against each Borrower Party in accordance with their
respective terms.

         5.03 NO LEGAL BAR. The execution, delivery, and performance by each
Borrower Party of the Loan Documents to which it is a party and compliance with
the provisions thereof have been duly authorized by all requisite action on the
part of such Borrower Party and do not and will not (a) violate or conflict
with, or result in a breach of, or require any consent under (i) any
Organization Documents of such Borrower Party or any of its Subsidiaries, (ii)
any applicable Laws, rules, or regulations or any order, writ, injunction, or
decree of any Governmental Authority or arbitrator, or (iii) any Contractual
Obligation of such Borrower Party or any of its Subsidiaries or by which any of
them or any of their property is bound or subject, (b) constitute a default
under any such agreement or instrument, or (c) result in, or require, the
creation or imposition of any Lien on any of the properties of such Borrower
Party or any of its Subsidiaries.

         5.04 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE EFFECT.

         (a) The Audited Financial Statements (i) were prepared in accordance
with GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein; (ii) fairly present the financial condition
of Borrower and its Subsidiaries as of the date thereof and their results of
operations for the period covered thereby in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly
noted therein; and (iii) show all material indebtedness and other liabilities,
direct or contingent, of Borrower and its Subsidiaries as of the date thereof,
including liabilities for taxes, material commitments and Indebtedness in
accordance with GAAP consistently applied throughout the period covered thereby.

         (b) Since the date of the Audited Financial Statements, there has been
no event or circumstance which has a Material Adverse Effect.

         5.05 LITIGATION. No litigation, investigation or proceeding of or
before an arbitrator or Governmental Authority is pending or, to the knowledge
of Borrower after due and diligent investigation, threatened by or against any
Borrower Party or any of its Subsidiaries or against







                                       50
<PAGE>   57

any of their properties or revenues which, if determined adversely, has a
Material Adverse Effect. There are no outstanding judgments or awards against
Borrower or any Subsidiary.

         5.06 NO DEFAULT. Neither any Borrower Party nor any of its Subsidiaries
are in default under or with respect to any Contractual Obligation or any order,
writ, injunction, or decree of any Governmental Authority or arbitrator, which
default might have consequences that could result in a Material Adverse Effect,
and no Default or Event of Default has occurred and is continuing or will result
from the consummation of this Agreement or any of the other Loan Documents, or
the making of the Extensions of Credit hereunder.

         5.07 OWNERSHIP OF PROPERTY; LIENS; WARRANTY OF TITLE; LEASES. Each
Borrower Party and its Subsidiaries have valid fee or leasehold interests in all
real property which they use in their respective businesses, and each Borrower
Party and its Subsidiaries have good and marketable title to all their other
property, and none of such property is subject to any Lien other than Permitted
Liens. Borrower has good and marketable title to all the Collateral and has good
right and full power and authority to subject the Collateral to the Security
Interest. The Collateral is free and clear of all Liens other than Permitted
Liens. The Security Documents do, as of the Effective Date, constitute a first
mortgage on and first priority perfected security interest in the Collateral
subject only to Permitted Liens. There is no financing statement, chattel
mortgage or notice thereof (including FAA Form 905, "Aircraft Chattel Mortgage")
or other security agreement or instrument or notice thereof in which Borrower
(or any predecessor Person) or any Subsidiary is named as debtor or mortgagor,
or which Borrower (or any predecessor Person) or any Subsidiary has signed as
debtor or mortgagor, now on file in any public office (including the Aircraft
Registry) and not canceled covering any of the Collateral other than those
previously filed, the effect of which has been terminated by termination
statements or releases (including FAA Form 8050-41) duly filed prior to the time
of the filing of any of the Security Documents for recordation in the Aircraft
Registry. Borrower and each Subsidiary have the right to, and do, enjoy peaceful
and undisturbed possession under all leases to which any of them is a party or
under which any of them is operating. All such leases are valid and subsisting,
and no default exists under any such lease.

         5.08 TAXES. Each Borrower Party and its Subsidiaries have filed all tax
returns which are required to be filed, and have paid, or made provision for the
payment of, all taxes with respect to the periods, property or transactions
covered by said returns, or pursuant to any assessment received by such Borrower
Party or its respective Subsidiaries, except (a) such taxes, if any, as are
being contested in good faith by appropriate proceedings and as to which
adequate reserves have been established and maintained, and (b) immaterial
taxes; provided, however, that in each case no material item or portion of
property of any Borrower Party or any of its Subsidiaries is in jeopardy of
being seized, levied upon or forfeited. The respective federal income tax
returns of Borrower and each of its Consolidated Subsidiaries have been examined
and reported on by the Internal Revenue Service for all fiscal years to and
including the fiscal year ended April 30, 1995. Borrower and its officers know
of no claims by any Governmental Authority for any unpaid taxes. There are no
tax sharing agreements between Borrower and any of the Subsidiaries.




                                       51
<PAGE>   58

         5.09 MARGIN REGULATIONS; INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING
COMPANY ACT.

         (a) No Borrower Party is engaged or will engage, principally or as one
of its important activities, in the business of extending credit for the purpose
of "purchasing" or "carrying" "margin stock" within the respective meanings of
each of the quoted terms under Regulation U of the Board of Governors of the
Federal Reserve System as now and from time to time hereafter in effect. No part
of the proceeds of any Extensions of Credit hereunder will be used for
"purchasing" or "carrying" "margin stock" as so defined or for any purpose which
violates, or which would be inconsistent with, the provisions of Regulations U
or X of such Board of Governors or the Securities Exchange Act of 1934, as
amended, in each case as in effect on the Effective Date or as the same may
hereinafter be in effect on the date of any Borrowing.

         (b) No Borrower Party or any of its Subsidiaries (i) is a "holding
company," or a "subsidiary company" of a "holding company," or an "affiliate" of
a "holding company" or of a "subsidiary company" of a "holding company," within
the meaning of the Public Utility Holding Company Act of 1935, or (ii) is or is
required to be registered as an "investment company" under the Investment
Company Act of 1940.

         5.10 ERISA COMPLIANCE.

         (a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state Laws. Each
Plan that is intended to qualify under Section 401(a) of the Code has received a
favorable determination letter from the IRS or an application for such a letter
is currently being processed by the IRS with respect thereto and, to the best
knowledge of Borrower, nothing has occurred which would prevent, or cause the
loss of, such qualification. Borrower and each ERISA Affiliate have made all
required contributions to each Plan subject to Section 412 of the Code, and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.

         (b) There are no pending or, to the best knowledge of Borrower,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan that has a Material Adverse Effect. There has been no
prohibited transaction or violation of the fiduciary responsibility rules with
respect to any Plan that has a Material Adverse Effect.

         (c) (i) No ERISA Event has occurred or is reasonably expected to occur;
(ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither Borrower
nor any ERISA Affiliate has incurred, or reasonably expects to incur, any
liability under Title IV of ERISA with respect to any Pension Plan (other than
premiums due and not delinquent under Section 4007 of ERISA); (iv) neither
Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur,
any liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Sections 4201 or
4243 of ERISA with respect to a Multiemployer Plan; and (v) neither Borrower nor
any ERISA Affiliate has engaged in a transaction that could be subject to
Sections 4069 or 4212(c) of ERISA.





                                       52
<PAGE>   59

         5.11 INTANGIBLE ASSETS. Each Borrower Party and its Subsidiaries own,
or possess the right to use, all trademarks, trade names, copyrights, patents,
patent rights, franchises, licenses and other intangible assets that are used in
the conduct of their respective businesses as now operated, and none of such
items, to the best knowledge of Borrower, conflicts with the valid trademark,
trade name, copyright, patent, patent right or intangible asset of any other
Person to the extent that such conflict has a Material Adverse Effect.

         5.12 COMPLIANCE WITH LAWS. Each Borrower Party and its Subsidiaries are
in compliance in all material respects with all Laws that are applicable to it.

         5.13 ENVIRONMENTAL COMPLIANCE. (a) Neither Borrower nor any of the
Subsidiaries has: (i) received any summons, citation, directive, letter, notice,
or other form of communication, or otherwise learned of any claim, demand,
action, event, condition, report, or investigation indicating or concerning any
potential or actual liability which could individually, or in the aggregate,
have a Material Adverse Effect arising in connection with (A) any non-compliance
with, or violation of, the requirements of any Environmental Protection Statute;
(B) the release, or threatened release, of any Hazardous Materials which
Borrower or any Subsidiary would have a duty to report to any governmental
authority under any Environmental Protection Statute; (C) the existence of any
environmental lien on any property of Borrower or any of the Subsidiaries
resulting from the presence of such Hazardous Materials; (ii) obtained knowledge
of any threatened or actual liability in connection with the release or
threatened release of any Hazardous Materials which would individually, or in
the aggregate, have a Material Adverse Effect; (iii) received any notice of, or
otherwise learned of, any federal or state investigation evaluating whether any
remedial action is needed to respond to a release or threatened release of any
Hazardous Materials for which Borrower or any of the Subsidiaries may be liable;
or (iv) received any notice that Borrower or any the Subsidiaries is or may be
liable to any person under any Environmental Protection Statute.

         (b) Borrower and each Subsidiary have obtained all permits, licenses
and authorizations which are required under all Environmental Protection
Statutes, (including, without limitation, laws relating to emissions,
discharges, releases, or threatened releases of Hazardous Materials (including,
without limitation, ambient air, surface water, ground water, or land) or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of Hazardous Materials), except to the
extent that failure to have or obtain any such permit, license or authorization
could not have a Material Adverse Effect. Borrower and each of the Subsidiaries
is in compliance with all terms and conditions of the permits, licenses and
authorizations required to be obtained by it, and is also in compliance with all
other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules, and timetables contained in all
Environmental Protection Statutes or contained in any plan, order, injunction,
notice, or demand letter issued, entered, promulgated, or approved thereunder,
except to the extent that failure to comply could not have a Material Adverse
Effect.

         5.14 INSURANCE. The properties of each Borrower Party and its
Subsidiaries are insured with financially sound and reputable insurance
companies not Affiliates of Borrower, in such amounts, with such deductibles and
covering such risks as are customarily carried by companies





                                       53
<PAGE>   60

engaged in similar businesses and owning similar properties in localities where
such Borrower Party or such Subsidiary operates.

         5.15 DISCLOSURE. No statement, information, report, representation, or
warranty made by any Borrower Party in any Loan Document or furnished to Agent
or any Bank in connection with any Loan Document contains any untrue statement
of a material fact or omits to state any material fact necessary to make the
statements herein or therein not misleading.

         5.16 FRANCHISES, PERMITS, ETC.

         Borrower and each Subsidiary hold free from materially burdensome
restrictions all municipal consents, franchises, permits, licenses,
rights-of-way, easements, consents and other rights which, together with their
respective corporate and charter powers, are sufficient for the proper and
efficient operation as a whole of their respective businesses as presently
conducted and as presently proposed to be conducted.

         5.17 DESCRIPTION OF AND TITLE TO AVIATION UNITS AND ENGINES.

         Schedule 5.17 to this Agreement contains a correct and complete
description of all of the Aviation Units subject to the Security Interest as of
the Effective Date, and a correct and complete description of each aircraft
engine of 750 or more rated takeoff horsepower, or the equivalent of that
horsepower, installed in or attached or appertaining to any such Aviation Units.
Without limiting the generality of the representations and warranties contained
in Sections 5.02 and 5.07, all filings, registrations and recordings (including,
without limitation, the filing for recordation in the Aircraft Registry of FAA
Form 8050-2, "Aircraft Bill of Sale", or other comparable forms, covering each
such Aviation Unit and engine), necessary or advisable in order to establish,
protect and preserve title to and interest in such Aviation Units and engines as
against the respective sellers thereof and all third parties, and each such
Aviation Unit and engine has been duly registered in the name of Borrower or Air
Evac, as applicable, pursuant to the Federal Aviation Act. There are not now any
Liens on such Aviation Units or engines other than Permitted Liens and those
security interests created by the Security Documents in favor of the Agent.
Except for the filing of UCC Continuation Statements in accordance with the
recording provisions of Louisiana, Texas and Arizona law, no further action,
including, without limitation, any filing or recording of any documents (whether
under Article 9 of the Uniform Commercial Code of any applicable jurisdiction,
or otherwise), is necessary or advisable in order to establish, protect, perfect
or preserve Borrower's or Air Evac's title to and interest in such Aviation
Units or engines, and the first priority, perfected, security interest of the
Creditors in such Aviation Units and engines created by the Security Documents
in such Aviation Units and engines (subject only to Permitted Liens), and in the
proceeds thereof as against the respective sellers thereof and all third
parties.

         5.18 REGISTERED OFFICE/CHIEF EXECUTIVE OFFICE.

         The registered office (as shown on the records of the Secretary of
State of the State of Louisiana) and chief executive office of Borrower and Air
Evac is 2121 Airline Highway, Suite 400, Metairie, Louisiana 70001-5979. The
principal place of business of Borrower is 2121







                                       54
<PAGE>   61

Airline Highway, Suite 400, Metairie, Louisiana 70001-5979, and the principal
place of business of Air Evac is 2630 Sky Harbor Boulevard, Phoenix, Arizona
85034.

         5.19 TITLE TO PARTS AND RECEIVABLES.

         There are no Liens on the Parts (except for Permitted Liens) or on
Receivables (except for Permitted Liens of the type described in clause (a) of
the definition of Ordinary Course Liens). Schedule 5.19 contains a complete
listing of all of the locations at which Parts are located in the United States.
Except for the filing of UCC Continuation Statements, in accordance with the
recording provisions of the laws of the States of Louisiana, Texas and Arizona,
no further action, including, without limitation, the filing or recording of any
additional documents (whether under Article 9 of the Uniform Commercial Code of
any applicable jurisdiction, or otherwise), is necessary or advisable in order
to establish, protect or preserve the first priority perfected Security Interest
of the Creditors in the Parts and Receivables created by the Security Documents
as against third parties.

         5.20 SECTION 1110 OF BANKRUPTCY REFORM ACT OF 1978.

         Each of Borrower and Air Evac is "a citizen of the United States of
America holding an air carrier operating certificate issued by the Secretary of
Transportation," within the meaning of the United States Bankruptcy Code, as
amended, and it is the intention of Borrower, Air Evac and the Creditors that
Agent, for the equal and ratable benefit of the Creditors, upon the execution
and delivery of this Agreement, will be a "secured party with a purchase-money
equipment security interest", within the meaning of Section 1110, in the
Aircraft and each portion thereof now or from time to time hereafter subjected
to the Security Interest to the extent that the Security Interest constitutes a
"purchase-money equipment security interest" therein, with the result that the
Agent, for the equal and ratable benefit of the Creditors, may take the full
benefit of the provisions of said Section 1110 with respect to such Aircraft and
each such portion thereof.

         5.21 STATUS AS AIR CARRIER.

         Each of Borrower and Air Evac is a "citizen of the United States"
within the meaning of Section 101(13) of the Federal Aviation Act and is an "air
carrier" duly qualified as an "air taxi commercial operator" within the meaning
of said Act and the regulations issued thereunder.

         5.22 CAPITALIZATION; SUBSIDIARIES.

         (a) The authorized capital stock of Borrower consists of (i) 12,500,000
shares of voting common stock, par value $.10 per share, 2,793,386 shares of
which are outstanding; (ii) 12,500,000 shares of nonvoting common stock, par
value $.10 per share, 2,385,465 shares of which are outstanding and (iii)
10,000,000 shares of preferred stock, no par value, no shares of which are
outstanding.

         (b) The authorized capital stock of Air Evac consists of (i) 7,000
shares of common stock, without par value, 1,000 shares of which are outstanding
and are owned, both beneficially and of record, by PHI Aeromedical Services,
Inc., a Louisiana corporation (all of the issued and







                                       55
<PAGE>   62

outstanding shares of capital stock of which are owned, beneficially and of
record, by Borrower), and (b) 3,000 shares of preferred stock, par value $100
per share, 1,000 shares of which are outstanding and are owned of record and, to
the best knowledge of the Borrower, beneficially by Samaritan.

         (c) The corporations named in Schedule 5.22 are the only Subsidiaries
of Borrower and Air Evac on the Effective Date, and such schedule accurately
reflects the percentage of (x) the issued and outstanding capital stock, and (y)
the Voting Stock of each class of each Subsidiary on the Effective Date and
accurately identifies the Consolidated Subsidiaries and the percentage of
Borrower's, Air Evac's and each other Subsidiary's ownership of the outstanding
Voting Stock of each Subsidiary.

         (d) The shares of capital stock of each Subsidiary owned by Borrower or
Air Evac have been validly issued, are outstanding, fully-paid and
non-assessable shares of such Subsidiary and are owned by such Person free and
clear of all Liens (except statutory liens for taxes not yet due and for
salaries of clerical employees, none of which liens has been filed or
perfected).

         (e) Except as set forth in Schedule 5.22, there are no outstanding
shareholders agreements, voting agreements or other agreements of any nature
which in any way restrict or effect the transfer, pledge or voting of any of the
capital stock of Borrower or Air Evac or subject any of such securities to any
put, call, redemption obligation or similar right or obligation of any nature.

         5.23 EMTALA.

         Air Evac is not subject to Emergency Medical Treatment and Labor Act
requirements.

         5.24 MEDICARE AND MEDICAID PROGRAMS; LICENSURE.

         (a) Air Evac has made all necessary filings and similar applications
that are necessary in order that each of Air Evac and each medical director,
nurse, licensed employee and other individuals providing air ambulance and
patient care services on behalf of Air Evac will become qualified, credentialed
and licensed for participation in the Medicare and Medicaid programs and as
otherwise required under applicable state law, so that each will be so
qualified, credentialed and licensed prior to providing air ambulance and
patient care services on behalf of Air Evac. Air Evac is a party to supplier
agreements under the Medicare and Medicaid programs which are in full force and
effect with no defaults having occurred thereunder. Air Evac has timely filed
all claims or other reports required to be filed with respect to the services
provided to Medicare, Medicaid and third party payors, and all such claims or
reports are complete and accurate, and the Company has no liability to any payor
with respect thereto. There are no pending appeals, overpayment determinations,
adjustments, challenges, audit litigation or notices of intent to open Medicare
or Medicaid, or third party claim determinations or other reports required to be
filed by Air Evac.

         (b) Neither Air Evac, nor any medical director, nurses, licensed
employees or other individuals providing patient care services on behalf of Air
Evac has been convicted of, or pled





                                       56
<PAGE>   63

guilty to nolo contendere to, patient abuse or negligence, or any other Medicare
or Medicaid program related offense and none has committed any offense which may
serve as the basis for suspension or exclusion from the Medicare and Medicaid
programs.

         5.25 FRAUD AND ABUSE AND STARK LAW.

         Neither Air Evac, nor its officers, directors, employees or agents have
engaged in any activities which are prohibited under Section 1320a-7b or Section
1395nn of Title 42 of the United States Code or the regulations promulgated
thereunder, or related state or local statutes or regulations, or which are
prohibited by rules of professional conduct including, but not limited to, the
following: (a) knowingly and willfully making or causing to be made a false
statement or representation of a material fact in any application for any
benefit or payment, (b) knowingly and willfully making or causing to be made any
false statement or representation of a material fact for use in determining
rights to any benefit or payment, (c) any failure by a claimant to disclose
knowledge of the occurrence of any event affecting the initial or continued
right to any benefit or payment on its own behalf or on behalf of another, with
the intent to fraudulently secure such benefit or payment, and (d) knowingly and
willfully soliciting or receiving any remuneration (including any kickback,
bribe or rebate) directly or indirectly, overtly or covertly, in cash or in
kind, or offering to pay or receive such remuneration (i) in return for
referring an individual to a person for the furnishing or arranging for the
furnishing of any item or service for which payment may be made in whole or in
part by Medicare or Medicaid, or (ii) in return for purchasing, leasing or
ordering or arranging for, or recommending, purchasing, leasing or ordering any
good, facility, service or item for which payment may be made in whole or in
part by Medicare or Medicaid, or (e) referring a patient for designated health
services to or providing designated health services to a patient upon referral
from an entity or person with which the physician or an immediate family member
has a financial relationship, and to which no exception under Section 1395nn of
Title 42 of the United States Code applies.

                                   SECTION 6.
                              AFFIRMATIVE COVENANTS

         So long as any Obligation remains unpaid or unperformed, or any portion
of the Revolving Credit Commitments remains outstanding, Borrower shall, and
shall (except in the case of Borrower's reporting covenants), cause each
Subsidiary to:

         6.01 FINANCIAL STATEMENTS. Deliver to Agent and each Bank:

         (a) as soon as available, but in any event within 120 days after the
end of each fiscal year of Borrower, a copy of (i) a consolidated balance sheet
of Borrower and the Consolidated Subsidiaries as at the end of such fiscal year,
and the related consolidated statements of earnings, stockholder's equity and
cash flows of Borrower and the Consolidated Subsidiaries for such fiscal year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all in detail reasonably satisfactory to the Agent, audited and
accompanied by a report and opinion of Deloitte & Touche LLP, Arthur Anderson,
LLP, KPMG Peat Marwick, LLP, PriceWaterhouseCoopers, LLP, Ernst & Young, LLP or
another independent certified public




                                       57
<PAGE>   64

accountant of nationally recognized standing reasonably acceptable to Requisite
Banks, which report and opinion shall be prepared in accordance with GAAP and
shall not be subject to any qualifications or exceptions as to the scope of the
audit nor to any qualifications and exceptions not reasonably acceptable to
Requisite Banks; and (ii) a consolidating balance sheet of Borrower and the
Consolidated Subsidiaries as of the end of such fiscal year and consolidating
statements of earnings, stockholders' equity and changes in the financial
position of Borrower and the Consolidated Subsidiaries for such fiscal year,
setting forth, in each case in comparative form, the figures for the previous
fiscal year, all in reasonable detail and certified as complete and correct by
the principal financial officer of Borrower; and

         (b) as soon as available, but in any event within 60 days after the end
of each of the first three fiscal quarters of each fiscal year of Borrower, a
copy of (i) a consolidated balance sheet of Borrower and its Consolidated
Subsidiaries as at the end of such fiscal quarter, and (ii) the related
consolidated statements of income and cash flows for such fiscal quarter and for
the portion of Borrower's fiscal year then ended, setting forth in each case in
comparative form the figures for the corresponding fiscal quarter of the
previous fiscal year and the corresponding portion of the previous fiscal year,
in each case in detail reasonably satisfactory to the Agent, and certified by
the principal financial officer of Borrower as fairly presenting the financial
condition, results of operations and cash flows of Borrower and its Consolidated
Subsidiaries in accordance with GAAP, subject only to normal year-end audit
adjustments and the absence of footnotes; and

         (c) within 45 days after the end of each of the first, second, fourth,
fifth, seventh, eighth, tenth and eleventh months of each fiscal year of
Borrower, a copy of (i) a consolidated balance sheet of Borrower and the
Consolidated Subsidiaries as of the end of such month, and (ii) a consolidated
statement of earnings of Borrower and the Consolidated Subsidiaries for such
month and for the portion of the fiscal year ending with such month, setting
forth, in each case in comparative form, the figures for the corresponding
periods in the previous fiscal year, all in detail reasonably satisfactory to
the Agent.

         6.02 CERTIFICATES, NOTICES AND OTHER INFORMATION.

         Deliver to Agent and each Bank, in form and detail satisfactory to
Agent and the Requisite Banks, with sufficient copies for each Bank:

         (a) concurrently with the delivery of the financial statements referred
to in Section 6.01(a), a certificate of its independent certified public
accountants certifying such financial statement and stating that in making the
examination necessary therefor no knowledge was obtained of any Default or Event
of Default under the financial covenants set forth herein or, if any such
Default or Event of Default shall exist, stating the nature and status of such
event;

         (b) concurrently with the delivery of the financial statements referred
to in Sections 6.01, a duly completed Compliance Certificate signed by the
principal financial officer of Borrower;

         (c) promptly after request by Agent or any Bank, copies of any detailed
audit reports, management letters or recommendations submitted to the board of
directors (or the audit






                                       58
<PAGE>   65

committee of the board of directors) of Borrower by independent accountants in
connection with the accounts or books of Borrower or any Subsidiary, or any
audit of any of them;

         (d) promptly after the same are available, copies of each annual
report, proxy or financial statement or other report or communication sent to
the stockholders of Borrower, and copies of all annual, regular, periodic and
special reports and registration statements which Borrower may file or be
required to file with the Securities and Exchange Commission under Sections 13
or 15(d) of the Securities Exchange Act of 1934, and not otherwise required to
be delivered to Agent pursuant hereto;

         (e) promptly after the occurrence thereof, notice of any Default or
Event of Default;

         (f) notice of any material change in accounting policies or financial
reporting practices by Borrower or any Subsidiary;

         (g) promptly after the commencement thereof, notice of any litigation,
investigation or proceeding affecting any Borrower Party where the amount
involved exceeds $100,000, or in which injunctive relief or similar relief is
sought, which relief, if granted, has a Material Adverse Effect;

         (h) promptly after the occurrence thereof, notice of any Reportable
Event with respect to any Plan or the intent to terminate any Plan, or the
institution of proceedings or the taking or expected taking of any other action
to terminate any Plan or withdraw from any Plan;

         (i) promptly after the occurrence thereof, notice of any Material
Adverse Effect (including, without limitation, any downward valuation by
Borrower or any Subsidiary of the Aviation Units or any determination by
Borrower or any Subsidiary that a significant portion of its Receivables is
uncollectible);

         (j) with each set of financial statements delivered pursuant to Section
6.01(a), an Officers' Certificate specifying (i) the insured value of the
Aircraft, (ii) the existence and nature of any changes in the insurance coverage
required to be maintained by Borrower under Section 6.15 and (iii) if any
Aviation Unit constituting a portion of the Aircraft is then being leased by
Borrower to another Person, or operated by Borrower under contract with another
Person, the name of such Person and the term of the relevant lease or contract;

         (k) as soon as available after the end of each fiscal quarter of
Borrower, and in any event within 60 days after the end of each of the first
three fiscal quarters of Borrower and within 120 days after the end of the
fourth fiscal quarter of Borrower (i) a schedule of the Direct Expenses incurred
by Borrower and the Consolidated Subsidiaries during such quarter in such form
and containing such information and detail as the Agent, or any Bank through the
Agent, may request, (ii) a summary description of the Parts, by type of Aviation
Unit to which such Parts are applicable, (iii) a list of the Receivables of
Borrower and Air Evac as at the end of such quarter, (iv) a list of the Trade
Payables of Borrower and the Consolidated Subsidiaries as at the end of such
quarter, each such schedule, description and list to be in such form and contain
such information and detail as the Agent, or any Bank through the Agent, may
reasonably request,




                                       59
<PAGE>   66

including, without limitation, as to such Receivables, agings thereof in the
customary manner, identifying each obligor thereon and designating each such
Receivable that is 90 days old, and as to such summary description of the Parts,
the opening balance, withdrawals, additions and closing balance, and as to such
Trade Payables, agings thereof in the customary manner, the supplier and the
designation of each Trade Payable not paid pursuant to its payment terms and
(iv) a written confirmation of the make and model, manufacturer's serial number
and United States registration number of each Aviation Unit constituting a
portion of the Aircraft, the month and year of purchase of each such Aviation
Unit and the parish (or county) and state (or, if such Aviation Unit shall at
the time be situated outside the United States, the country and province) of the
current location of each thereof;

         (l) with each set of financial statements delivered pursuant to Section
6.01(b) with respect to each third fiscal quarter of Borrower, a copy of a pro
forma consolidated balance sheet of Borrower and the Consolidated Subsidiaries
for the next succeeding fiscal year of Borrower and pro forma consolidated
statements of earnings, stockholder's equity and cash flows of Borrower and the
Consolidated Subsidiaries for the next succeeding fiscal year of Borrower;

         (m) within 45 days after the end of each month and within 45 days after
each Event of Loss, a Borrowing Base Certificate;

         (n) promptly after the annual meeting of Borrower's stockholders, an
Officers' Certificate of the election and incumbency of Borrower's officers and
directors;

         (o) promptly (and in any event within 20 days after the occurrence
thereof), notice of any Event of Loss; and

         (p) promptly, such other data and information as from time to time may
be reasonably requested by Agent, or, through Agent, any Bank.

         Each notice pursuant to this Section 6.02 shall be accompanied by a
statement of a Responsible Officer of Borrower setting forth details of the
occurrence referred to therein and stating what action Borrower has taken and
proposes to take with respect thereto.

         6.03 PAYMENT OF TAXES. Pay and discharge when due all taxes,
assessments, and governmental charges, Ordinary Course Liens or levies imposed
on any Borrower Party or its Subsidiaries or on its income or profits or any of
its property, except for any such tax, assessment, charge, or levy which is an
Ordinary Course Lien under subsection (b) of the definition of such term.

         6.04 PRESERVATION OF EXISTENCE. Preserve and maintain its existence,
licenses, permits, rights, franchises and privileges necessary or desirable in
the normal conduct of its business, except where failure to do so does not have
a Material Adverse Effect.

         6.05 MAINTENANCE OF PROPERTIES. Maintain, preserve and protect all of
its material properties and equipment necessary in the operation of its business
in good order and condition, subject to wear and tear in the ordinary course of
business, and not permit any waste of its properties.





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<PAGE>   67

         6.06 MAINTENANCE OF INSURANCE.

         Maintain liability and casualty insurance with financially sound and
reputable insurance companies in such amounts with such deductibles and against
such risks as is customary for similarly situated businesses, and furnish to any
Bank, upon request, an Officers' Certificate containing full information as to
the insurance carried; and promptly after notice in writing from the Agent, or
any Bank through the Agent, obtain such additional insurance as the Agent, or
any Bank through the Agent, may reasonably request and which is customarily
carried on comparable businesses or properties. All policies of insurance
maintained by Borrower or Air Evac on the Parts shall name the Agent as an
additional insured and any payment of claims thereunder shall be made payable to
the Agent (without the necessity for any other Person's joining in endorsing any
check or otherwise accepting any payment) under a standard mortgagee loss
payable clause satisfactory to the Agent and the Banks; provided, however, that
such policies may provide that, with respect to proceeds of any particular
claim, such proceeds not in excess of $500,000 may be paid by the insurers
directly to Borrower or Air Evac rather than to the Agent unless an Event of
Default or Default shall have occurred and is continuing and the Agent shall
have notified the insurer thereof

         6.07 COMPLIANCE WITH LAWS.

         (a) Comply with the requirements of all applicable Laws and orders of
any Governmental Authority, noncompliance with which has a Material Adverse
Effect.

         (b) Conduct its operations and keep and maintain its property in
compliance with all Environmental Protection Statutes, noncompliance with which
has a Material Adverse Effect.

         6.08 INSPECTION RIGHTS. At any time during regular business hours and
as often as reasonably requested, permit Agent or any Bank, or any employee,
agent or representative thereof, to examine, audit and make copies and abstracts
from the Borrower Parties' records and books of account and to visit and inspect
their properties and to discuss their affairs, finances and accounts with any of
their officers and key employees, and, upon request, furnish promptly to Agent
or any Bank true copies of all financial information and internal management
reports made available to their senior management.

         6.09 KEEPING OF RECORDS AND BOOKS OF ACCOUNT. Keep adequate records and
books of account reflecting all financial transactions in conformity with GAAP,
consistently applied, and in material conformity with all applicable
requirements of any Governmental Authority having regulatory jurisdiction over
Borrower or the applicable Subsidiary.

         6.10 COMPLIANCE WITH ERISA. Cause, and cause each of its ERISA
Affiliates to: (a) maintain each Plan in compliance in all material respects
with the applicable provisions of ERISA, the Code and other federal or state
law; (b) cause each Plan which is qualified under Section 401(a) of the Code to
maintain such qualification; and (c) make all required contributions to any Plan
subject to Section 412 of the Code.




                                       61
<PAGE>   68

         6.11 COMPLIANCE WITH AGREEMENTS.

         Promptly and fully comply with all Contractual Obligations to which any
one or more of them is a party, except for any such Contractual Obligations (a)
the performance of which would cause a Default or Event of Default, (b) then
being contested by any of them in good faith by appropriate proceedings, or (c)
if the failure to comply therewith does not have a Material Adverse Effect.

         6.12 USE OF PROCEEDS. Use the proceeds of Extensions of Credit for
lawful general corporate purposes not otherwise in contravention of this
Agreement.

         6.13 CITIZEN; AIR CARRIER.

         Remain a citizen of the United States within the meaning of Section
101(16) of the Federal Aviation Act and an "air carrier" duly qualified as an
"air taxi commercial operator" (or equivalent status permitting such Person to
continue to conduct its business as presently conducted) under said Act.

         6.14 REGISTRATION, MAINTENANCE, OPERATION, FOREIGN OPERATIONS AND
MARKING OF COLLATERAL.

         (a) At its own cost and expense: (i) defend title to the Collateral
against the claims and demands of all Persons other than the Agent and the
Creditors; (ii) forthwith upon the delivery thereof, cause each portion of the
Aircraft to be duly registered, and at all times thereafter to remain duly
registered, in the name of Borrower or such Subsidiary, as applicable, under the
Federal Aviation Act (it being understood and agreed that neither the Borrower
nor any Subsidiary will register any portion of the Aircraft under the laws of
any country other than the United States of America as aforesaid) and cause the
Security Documents to be duly recorded and maintained of record in the Aircraft
Registry and any other appropriate public offices as a first mortgage on, and as
creating a prior perfected security interest in, the Aircraft and each portion
thereof (including each portion which consists of an aircraft engine of 750 or
more rated takeoff horsepower, or the equivalent of that horsepower, or a
propeller capable of absorbing 750 or more rated takeoff shaft horsepower);
(iii) maintain, service, repair, overhaul and test the Aircraft so as to
maintain the Aircraft in such condition as may be necessary to enable the
airworthiness certification of the Aircraft to be maintained in good standing at
all times under the Federal Aviation Act, and, in any event, in good repair,
working order and operating condition, ordinary wear and tear excepted, and in
compliance with any applicable requirements of law and of any Governmental
Authority having jurisdiction (regardless of upon which Person such requirements
shall, by their terms, be nominally imposed), and from time to time make or
cause to be made all necessary or appropriate repairs, restorations,
replacements and renewals thereof and additions or improvements thereto, and in
furtherance thereof (subject to the provisions of this Agreement specifying the
obligations of Borrower upon the occurrence of Events of Loss) promptly replace
aircraft engines and all Parts of whatever nature which, originally or from time
to time, have been incorporated in or installed as part of the Aircraft, or any
portion thereof, and which may from time to time become worn out, lost, stolen,
destroyed, seized, confiscated, damaged beyond repair or permanently rendered
unfit for use for any reason whatsoever, and maintain each replacement





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<PAGE>   69

portion free and clear of all Liens (other than Permitted Liens) and rights of
others and in as good operating condition as, and having a value and utility at
least equal to that of, the replaced portion (assuming that such replaced
portion shall have been in the condition and state of repair required to be
maintained under the terms hereof); (iv) maintain all records, logs and other
materials required by the Federal Aviation Administration, and any other
Governmental Authority having jurisdiction, to be maintained in respect of the
Aircraft, regardless of upon which Person any such requirements shall, by their
terms, be nominally imposed, and comply with all applicable maintenance,
service, repair and overhaul manuals and service bulletins published by or on
behalf of the manufacturers of the Aircraft; (v) at such times as any Bank may
reasonably request, through the Agent, furnish to the Agent, with a copy to each
Bank, statements regarding the condition and state of repair of the Aircraft, in
such detail as such Bank, through the Agent, may reasonably request; and (vi)
procure and pay for all permits, franchises, inspections and licenses necessary
or appropriate in connection with the Aircraft or any repair, restoration,
replacement, renewal, addition or improvement with respect to the Aircraft, the
failure to procure which might have an adverse effect on any Aviation Unit or
Units constituting a portion of the Aircraft, or any interest of the Creditors
therein or in respect thereof. Without limitation of the foregoing, no Aircraft
will be (x) maintained, used or operated in violation of any law or any rule,
regulation or order of any Governmental Authority having jurisdiction, or in
violation of any airworthiness certification, license or registration relating
to the Aircraft issued by any such Governmental Authority or (y) used or
operated at any time that the full amount of insurance required by Section 6.15
to be carried with respect thereto shall not be in effect.

         (b) Cause all Aircraft, the Appraised Value of which is used to
determine the Borrowing Base, to be used, operated and situated solely within
the continental United States, and, with respect to the Aircraft used, operated
or situated outside the continental United States, either (i) maintain hull war
risk insurance (including insurance against war, strikes, riots, civil
commotion, acts of persons for political or terrorist purposes, malicious acts,
acts of sabotage, hijacking, confiscation and nationalization, except
confiscation and nationalization by the United States), extending throughout the
world, which insurance shall be made payable to the Agent, for the benefit of
the Creditors under a standard mortgagee loss payable clause satisfactory to the
Agent and each Creditor, or (ii) have entered into such other protective
arrangements with respect to such Aircraft as the Agent and each Creditor shall
have approved in advance in writing, which approval may be withheld in such
parties' sole discretion.

         (c) At all times affix to and maintain in each portion of the Aircraft
consisting of an Aviation Unit, adjacent to the airworthiness certification
therein, a metal nameplate bearing the following inscription in plain, distinct
and conspicuous lettering:

         "THIS EQUIPMENT IS OWNED BY PETROLEUM HELICOPTERS, INC/AIR EVAC, INC.
SUBJECT TO A MORTGAGE IN FAVOR OF BANK OF AMERICA, N.A., WHITNEY NATIONAL BANK
AND BANK ONE, NA (THE "BANKS"). ANY BUYER OR OTHER ENCUMBRANCER OF THIS
EQUIPMENT IS HEREBY PUT ON NOTICE THAT THE SALE OR CREATION OF AN ENCUMBRANCE BY
PETROLEUM HELICOPTERS, INC/AIR EVAC, INC. TO OR IN FAVOR OF SUCH BUYER OR
ENCUMBRANCER IS IN VIOLATION OF THE AFORESAID MORTGAGE UNLESS AND UNTIL SUCH
BUYER OR ENCUMBRANCER SHALL HAVE RECEIVED FROM SAID BANK OF AMERICA, N.A.,




                                       63
<PAGE>   70

AS AGENT FOR THE BANKS, A WRITTEN STATEMENT TO THE EFFECT THAT SUCH EQUIPMENT
HAS BEEN DULY RELEASED FROM THE SECURITY INTEREST OF SAID MORTGAGE."

         (d) Promptly replace any part of such nameplate which may be removed,
defaced or destroyed, and in the event that any Person shall, in accordance with
the terms of this Agreement, succeed to the position of Borrower, Air Evac or
the Creditors named on any such nameplate, promptly replace such nameplate with
a nameplate inscribed with the name of such successor. Except as above provided,
the Borrower will not permit or suffer, and will cause each Subsidiary not to
permit or suffer the name of any Person other than the Borrower or such
Subsidiary, as applicable, to be placed on any portion of the Aircraft as a
designation that might be interpreted as a claim of ownership or a right to the
possession or use thereof.

         (e) With respect to Borrower, hangar the Aircraft principally in
Lafayette Parish, Louisiana, and although any Aviation Unit of Borrower may from
time to time, and for various periods of time, operate in the normal course of
business outside said parish and state, it is intended and agreed that such
Aviation Unit shall remain principally hangared, and in that sense located, in
Lafayette Parish, Louisiana.

         (f) With respect to Air Evac, hangar the Aircraft principally in
Phoenix Arizona, and although any Aviation Unit of Borrower may from time to
time, and for various periods of time, operate in the normal course of business
outside said county and state, it is intended and agreed that such Aviation Unit
shall remain principally hangared, and in that sense located, in Phoenix
Arizona.

         6.15 INSURANCE WITH RESPECT TO THE AIRCRAFT.

         (a) Without limiting the generality of Section 6.06, at its own cost
and expense, maintain, with insurers of recognized national stature and
responsibility satisfactory to the Agent and the Creditors, insurance policies
insuring against loss or damage to the Aircraft from such risks and in such
amounts as a prudent person would maintain on similar properties; provided,
however, that, without the prior written consent of the Agent and the Creditors,
neither the Borrower nor any Subsidiary will permit or suffer the Aircraft owned
by it to be insured on any basis or to any extent other than that upon which the
other Aviation Units in such Person's fleet shall be insured, and, in any event,
neither the Borrower nor any Subsidiary will permit or suffer the amount of such
insurance for each occurrence, less the deductible, if any, with respect
thereto, at any time to be less than the Appraised Value of such Aircraft. The
policies required by this Section 6.15(a) to be maintained shall name the Agent
as an additional insured with respect to the Aircraft and any payment of claims
thereunder shall be made payable to the Agent (without the necessity for any
other Person's joining in endorsing any check or otherwise accepting any
payment) under a standard mortgagee loss payable clause satisfactory to the
Agent and the Creditors; provided, however, that such policies may provide that,
with respect to proceeds of any particular claim, such proceeds not in excess of
$500,000 may be paid by the insurers directly to Borrower or the Subsidiary that
owns such Aircraft rather than to the Agent unless an Event of Default or
Default shall have occurred and be continuing and the Agent shall have notified
the insurer thereof. To the extent that such insurance coverage shall be
available, such policies shall





                                       64
<PAGE>   71

further provide that (i) in respect of the interest of the Agent and the
Creditors in such policies, the insurance shall not be invalidated by any action
or inaction of the Borrower or such Subsidiary, as applicable, or any other
Person, (ii) the Agent's and Creditors' interest shall be insured regardless of
any breach or violation by Borrower or such Subsidiary, as applicable, of any
warranties, declarations or conditions contained in such policies, (iii) the
insurers waive all rights of subrogation against the Borrower or such
Subsidiary, as applicable, the Agent and each Creditor, (iv) the insurers waive
any right to any set-off, counterclaim or deduction, whether by attachment or
otherwise, in respect of any liability of Borrower or such Subsidiary, as
applicable, and (v) such insurance will not be invalidated by any foreclosure or
other remedial proceedings or notices thereof relating to the Aircraft or any
portion thereof or interest therein, or by any change in the title to or
ownership of the Aircraft or any portion thereof or interest therein, or by the
use or operation of the Aircraft or any portion thereof for purposes more
hazardous, or in a manner more hazardous, than shall have been permitted by such
policies. No such policy shall contain a provision reducing or eliminating the
liability of the insurer thereunder for any loss by reason of the existence of
other insurance policies covering the Aircraft or any portion thereof against
the peril involved, whether collectible or not. As between the Agent, the
Creditors, the Borrower or any Subsidiary, all insurance proceeds received as
the result of the occurrence of an Event of Loss shall be applied in accordance
with Section 2.05(f), and all insurance proceeds received as the result of loss
or damage not constituting an Event of Loss shall be applied in accordance with
Section 6.15(e).

         (b) At its own cost and expense, maintain, with insurers of recognized
national stature and responsibility satisfactory to the Agent and the Creditors,
insurance policies with respect to the Aircraft insuring against loss or damage
to the person and property of others from such risks and in such amounts as a
prudent person would maintain in similar circumstances (including passenger
legal liability insurance); provided, however, that Borrower and Air Evac will
maintain public liability (including passenger legal liability) and property
damage insurance applicable to the Aircraft owned by them in an amount which
shall not be less than $20,000,000 per accident, subject to a deductible not in
excess of $50,000. The policies required by this Section 6.15(b) to be
maintained shall name the Agent for the equal and ratable benefit of the
Creditors as an additional insured with respect to the Aircraft, and, to the
extent available, shall insure the Agent's and Creditors' interest regardless of
any breach of or violation by Borrower or Air Evac of any warranties,
declarations or conditions contained in such policies and shall provide that the
insurers waive all rights of subrogation against Borrower, Air Evac, the Agent
and each Creditor and that the insurers waive any right to any set-off,
counterclaim or deduction, whether by attachment or otherwise, in respect of any
liability of Borrower or Air Evac. No such policy shall contain a provision
reducing or eliminating the liability of the insurer thereunder for any loss by
reason of the existence of other insurance policies covering the Aircraft or any
portion thereof against the peril involved, whether collectible or not. Each
insurance policy required by this subsection (b) to be maintained by Borrower or
Air Evac shall expressly provide that all the provisions thereof, except the
limits of liability (which shall be applicable to all insureds as a group) and
liability for premiums (which shall be solely a liability of Borrower or Air
Evac, as applicable), shall operate in the same manner as if there were a
separate policy covering each insured.

         (c) Upon request, furnish to the Agent, with a copy to each Creditor,
and in any event within 120 days after the end of each fiscal year of Borrower,
a certificate signed by Borrower or







                                       65
<PAGE>   72

Air Evac's (as requested) independent insurance broker or consultant summarizing
the insurance then maintained by Borrower pursuant to this Section 6.15 and
stating that, in the opinion of said broker or consultant, such insurance
complies with the terms hereof.

         (d) Each insurance policy required to be maintained pursuant to this
Section 6.15 shall provide that the insurer will, (i) advise the Agent and each
Creditor in writing promptly of any default in the payment of any premiums or of
any other act or omission on the part of any named insured of which it shall
have knowledge and which might invalidate or render unenforceable, in whole or
in part, any such insurance and (ii) advise the Agent and each Creditor in
writing, at least 30 days prior thereto, of the expiration or cancellation or
any reduction or any material change in the coverage of any such insurance (each
such policy to provide that no such cancellation, reduction or change will be
effective until thirty days after such notice is given). Borrower will advise,
and will cause its Subsidiaries to advise, the Agent and each Creditor in
writing promptly of any notice or other communication received from any insurer
by which such insurer indicates that it may seek to suspend, terminate or change
any insurance required by this Section 6.15.

         (e) If any Aircraft or any portion thereof shall be condemned,
requisitioned, confiscated, stolen, seized, lost or damaged or its title or use
requisitioned, and such action shall not result in an Event of Loss, the
Borrower will promptly take, or cause Air Evac to promptly take, the action
required by Section 6.14 with respect to the repair and replacement thereof,
and, in the event of any such condemnation, requisition, confiscation,
requisition of title or use, the Borrower will promptly (and, in any event, upon
the earlier of the Business Day next preceding the date upon which a Borrowing
Base Certificate is to be delivered hereunder or 10 days after such occurrence)
notify the Banks in writing and, promptly upon receipt by the Borrower or Air
Evac, will deposit or cause to be deposited with the Agent any award or purchase
price received by the Borrower or Air Evac in connection therewith (the Borrower
hereby assigning to the Agent for the equal and ratable benefit of the Creditors
all its rights and interest in and to any and all such awards or purchase price
to which it is entitled and hereby agreeing to execute and deliver, and to cause
Air Evac to execute and deliver, upon the request of the Agent or any Creditor,
any and all assignments and other instruments deemed by the Agent or such
Creditor to be necessary or desirable for the purpose of causing, confirming or
further evidencing the assignment by the Borrower and/or Air Evac of the
aforesaid awards or purchase price to the Agent for the benefit of the Creditors
free and clear of any and all Liens of any kind or nature whatsoever created by
the Borrower or Air Evac). Any amounts received by the Agent representing
payment of insurance proceeds or payment from any Governmental Authority or
other Person with respect to any condemnation, requisition, confiscation, theft
or seizure of, or requisition of title to or use of, or loss or damage to, the
Aircraft or any portion thereof that shall not result in an Event of Loss will
be applied by the Agent to reimburse the Borrower or Air Evac, as applicable,
for (but only after its completion of) the repair or replacement of the affected
portion of the Aircraft, but such reimbursement shall be made only (i) if, at
the time of such reimbursement, the Agent shall not have any knowledge that any
Default or Event of Default shall have occurred and then be continuing, or will
exist immediately after such reimbursement, and (ii) upon receipt by each Bank,
in form and substance satisfactory to such Bank, of an Officers' Certificate
requesting such reimbursement, describing the costs incurred for which
reimbursement is requested and certifying that (A) there is not any outstanding
Indebtedness for the purchase









                                       66
<PAGE>   73

price or construction of said repairs or replacements, or for labor, wages,
materials or supplies in connection with the making thereof, which, if unpaid,
might become the basis for a vendor's, mechanic's, laborer's, materialman's,
statutory or other similar lien upon said repairs or replacements or any portion
thereof, or which might materially impair the security afforded by said repairs
or replacements; (B) no Default or Event of Default has occurred and is then
continuing, or will exist immediately after such reimbursement; (C) no part of
the amount requested for reimbursement has been or is being made the basis, in
any previous or then pending application, for the withdrawal of any other
proceeds under this Section 6.15(e); and (D) the affected portion of the
Aircraft, as so repaired or replaced, is of a value not less than the value
thereof immediately preceding such condemnation, requisition, confiscation,
theft, seizure, requisition of title or use, loss or damage and, in any event,
is in the condition required by Section 6.14 to be maintained. If, with respect
to any particular loss, the Agent shall not have notified the insurers that any
Default or Event of Default has occurred and is continuing, the proceeds
attributable to such loss not in excess of $500,000 may be paid by the insurers
directly to the Borrower or Air Evac, as applicable, provided, such proceeds
shall be applied by the Borrower or Air Evac, as applicable (and the Borrower,
by acceptance of such proceeds, covenants to so apply or cause such proceeds to
be so applied) to the cost of repairing, restoring or replacing the property
destroyed or damaged; and any portion of such proceeds remaining after such
application may be retained by the Borrower or Air Evac, as applicable. All
other proceeds shall be directly paid by the insurers to the Agent for the
ratable benefit of the Creditors and if, notwithstanding such requirement,
Borrower or Air Evac receives such proceeds, Borrower shall promptly surrender
or cause Air Evac to surrender such proceeds, to the Agent for the ratable
benefit of the Creditors.

         6.16 RECORDING, ETC.

         (a) Forthwith upon the execution and delivery of this Agreement with
respect to the Collateral on the Effective Date, and from time to time
thereafter, cause the Security Documents and all other documents and notices
with respect thereto (including financing statements and continuation
statements, if any), to be promptly filed, registered or recorded (and continued
in effect) to such extent, in such manner and in such places (including the
Aircraft Registry) as may be necessary or appropriate under any present or
future law in order to publish notice of and fully to preserve and protect the
validity and priority of the Security Interest, and the interest of the Agent
and the Creditors, in the property comprising or intended to comprise the
Collateral (including any portion of the Aircraft or any Part which consists of
an aircraft engine of 750 or more rated takeoff horsepower, or the equivalent of
that horsepower, or a propeller capable of absorbing 750 or more rated takeoff
shaft horsepower), and from time to time will perform or cause to be performed
any and all other actions, and will execute and deliver or cause to be executed
and delivered and filed, registered or recorded any and all other documents,
that may be required by applicable law or requested by any Creditor for such
publication, preservation and protection. Borrower will pay or cause to be paid
all filing, registration and recording taxes and fees incident to such filing,
registration and recording, and all expenses incident to the preparation,
execution, delivery and acknowledgment of this Agreement, the Security
Documents, financing statements, continuation statements, if any, and other such
documents, and all stamp taxes and other taxes, duties, imposts, assessments and
charges arising out of or in connection





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<PAGE>   74

with the execution and delivery of this Agreement, the Security Documents,
financing statements, continuation statements and other such documents.

         (b) Deliver to the Agent (i) promptly after the execution and delivery
of any Security Document which subjects additional Aviation Units to the
Security Interest, an opinion of legal counsel satisfactory to the Creditors
stating either (A) that such Security Document and all other documents have been
properly filed, registered and recorded to the extent required by this Section
6.16, and reciting the details of such action or referring to prior opinions of
counsel in which such details are given, or (B) that no such action is necessary
to maintain the Security Interest, as so required, and (ii) within 45 days after
a written request from the Agent or any Creditor, but in no event more than once
during each calendar year, an opinion of legal counsel satisfactory to the
Creditors (A) stating that all action has been taken with respect to the filing,
registration, recording, refiling, re-registration and re-recording of the
Security Documents and all other documents as is necessary to maintain the
Security Interest, as required under this Agreement and the Security Documents
(including the Security Interest on any property acquired after the date of
execution and delivery of the Security Documents and owned on the date of such
request which is intended to be subject to the Security Interest), and reciting
the details of such action or referring to prior opinions of counsel in which
such details are given, and (B) describing what if any action of the foregoing
character may reasonably be expected to become necessary in the future to
maintain the Security Interest, as so required, in the Collateral.

         6.17 FURTHER ASSURANCES.

         At any time and from time to time, promptly, at Borrower's cost and
expense, execute, acknowledge and deliver, or cause to be done, executed,
acknowledged and delivered, any and all such further acts, instruments,
mortgages, security agreements, financing statements, continuation statements
and assurances as the Agent or any Creditor through the Agent shall reasonably
require to obtain the full benefits of the estates, interests, rights, powers,
privileges, and immunities granted herein and in the Security Documents and for
the better mortgaging, hypothecating, pledging, assuring and confirming to or
with the Creditors, or for the protection or continuance of protection of the
validity and priority of the Security Interest in, all or any portion of the
Collateral by the Security Documents mortgaged, hypothecated or pledged, or
intended hereby or thereby to be mortgaged, hypothecated or pledged, to or with
the Creditors or which Borrower or any other Person may be or may hereafter
become bound to mortgage, hypothecate or pledge to or with the Creditors.

         6.18 LOCATION OF COLLATERAL.

         Notify each Creditor and the Agent promptly in the event that
$5,000,000 of Parts (valued at the lower of average cost or market) are located
at any location other than those enumerated in Schedule 5.19, and take such
actions as the Creditors and the Agent may reasonably request to subject such
Parts to the Security Interest.




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<PAGE>   75

                                   SECTION 7.
                               NEGATIVE COVENANTS

         So long as any Obligations remain unpaid or unperformed, or any portion
of the Revolving Loan Commitments remains outstanding, Borrower shall not, nor
shall it permit any Subsidiary to, directly or indirectly:

         7.01 INDEBTEDNESS. Create, incur, assume or suffer to exist any
Indebtedness, except:

         (a) Indebtedness under the Loan Documents;

         (b) Ordinary Course Indebtedness;

         (c)      (i) Indebtedness arising from the lease of Aviation Units not
                  exceeding $124,000,000 in the aggregate at any time; provided,
                  that, no such Indebtedness arising from the lease of Aviation
                  Units entered into at any time after March 15, 2001, shall
                  have an actual or implicit interest rate in excess of 10% per
                  annum without the prior written approval of the Requisite
                  Banks, which approval may be withheld in the Requisite Banks'
                  sole discretion;

                  (ii) Indebtedness arising from facilities leases not exceeding
                  $19,000,000 in the aggregate at any time; and

                  (iii) Indebtedness for Borrowed Money representing the
                  purchase price of goods or services acquired from trade
                  creditors in the ordinary course of business (the full payment
                  of the purchase price of which has been deferred for a period
                  exceeding 60 days) not exceeding $4,000,000 in the aggregate
                  at any time;

                  ; provided, however, the Indebtedness permitted to be
                  outstanding at any given time under clauses (c)(i), (c)(ii)
                  and (c)(iii) above shall not exceed (A) from the Effective
                  Date to and including February 1, 2002, $145,000,000 in the
                  aggregate, and (B) after February 1, 2002, $127,000,000 in the
                  aggregate.

         7.02 LIENS AND NEGATIVE PLEDGES. Incur, assume or suffer to exist, any
Lien or Negative Pledge upon any of its property, assets or revenues, whether
now owned or hereafter acquired, except the following (collectively, the
"Permitted Liens"):

         (a) Liens pursuant to any Loan Document;

         (b) Liens and Negative Pledges not affecting the Collateral that exist
on the date hereof and are listed on Schedule 7.02 and any renewals or
extensions thereof, provided that the property covered thereby is not increased
and any renewal or extension of the obligations secured or benefited thereby is
permitted by Section 7.01(c);

         (c) Ordinary Course Liens;




                                       69
<PAGE>   76

         (d) leases of Aviation Units that do not constitute part of the
Aircraft and which are permitted by Section 7.01(c)(i) and leases of Aviation
Units that constitute part of the Aircraft and which are permitted by Section
7.19.

         7.03 FUNDAMENTAL CHANGES. Merge or consolidate with or into any Person
or liquidate, wind-up or dissolve itself, or permit or suffer any liquidation or
dissolution or sell or otherwise transfer all or substantially all of its
assets, except, that so long as no Default or Event of Default exists or would
result therefrom:

         (a) any Subsidiary other than Air Evac may merge with (i) Borrower if
Borrower is the continuing or surviving corporation, (ii) any one or more
Wholly-Owned Subsidiaries of the Borrower, so long as the continuing or
surviving corporation is a Wholly-Owned Subsidiary, and (iii) any joint venture,
partnership or other Person, so long as such joint venture, partnership and
other Person will, as a result of making such merger and all other
contemporaneous related transactions, become a Wholly-Owned Subsidiary of the
Borrower; and

         (b) any Subsidiary other than Air Evac may sell or transfer all or
substantially all of its assets (upon voluntary liquidation or otherwise), to
Borrower or to a Wholly-Owned Subsidiary of the Borrower.

         7.04 DISPOSITIONS. Make any Dispositions, except:

         (a) Ordinary Course Dispositions;

         (b) Dispositions permitted by Section 7.03; and

         (c) Dispositions by Borrower of Aviation Units; provided that (i) no
Default or Event of Default has occurred and is continuing or would result from
such Disposition, (ii) the sum of (A) any cash to be received by Borrower as
consideration for the Aviation Unit subject to such Disposition, plus (B) the
Appraised Value of any Aviation Unit(s) received in any such Disposition (as
reflected on a certificate of an Independent Appraiser, in form and substance
acceptable to the Agent) shall be greater than or equal to the Appraised Value
Disposition (as reflected on a certificate of an Independent Appraiser, in form
and substance acceptable to the Agent) of the Aviation Unit to be released,
(iii) if such Disposition is in part or in whole for cash, concurrently with
such Disposition, 100% of the Net Cash Proceeds therefrom is applied to prepay
the Term Loans to the extent required by Section 2.05(c); (iv) if such
Disposition is whole or in part in exchange for other Aviation Units, within 30
days of such purchase, Borrower shall (A) execute and deliver to Agent Security
Documents, satisfactory to Agent, to subject such Aviation Units to a valid and
perfected first priority security interest in favor of the Agent for the ratable
benefit of the Creditors, (B) complete the Appropriate Actions, and (C) complete
any other actions or filings required by Section 6.16; (v) Borrower shall have
delivered to the Agent an Officers' Certificate in the form of Exhibit I to this
Agreement.

         7.05 INVESTMENTS. Make any Investments, except:

         (a) Investments existing on the date hereof and described on Schedule
7.05;




                                       70
<PAGE>   77

         (b) Ordinary Course Investments;

         (c) Investments permitted by Section 7.03; and

         (d) Investments by Borrower in any joint venture in which (i) 50% or
more of the capital stock (or comparable equity or partnership interests) is
owned by Borrower and (ii) the aggregate book value of all such Investments,
shall not at any time exceed 3% of the Consolidated Tangible Net Worth of
Borrower at such time.

         7.06 LEASE OBLIGATIONS. Create or suffer to exist any obligations for
the payment of rent for any property under lease or agreement to lease, except:

         (a) obligations permitted by clauses (i) and (ii) of Section 7.01(c);

         (b) obligations not included in the definition of Indebtedness with
respect to leases in existence on the date hereof and any renewal, extension or
refinancing thereof; and

         (c) obligations not included in the definition of Indebtedness with
respect to Operating Leases entered into or assumed by Borrower or any
Subsidiary after the date hereof in the ordinary course of business.

         7.07 RESTRICTED PAYMENTS. Make any Restricted Payments provided,
however, Borrower may, so long as no Default or Event of Default has occurred
and is continuing or would result from the making of such Restricted Payment
(unless any such Default or Event of Default has been waived in the manner
required by Section 10.01) (a) pay or declare cash dividends in an aggregate
amount not in excess of 20% of the average of the quarterly Consolidated Net
Income after taxes (excluding from the computation of Consolidated Net Income
extraordinary gains) for the immediately preceding four consecutive fiscal
quarters of Borrower, and (b) acquire its stock from its employees who are
leaving the employ of Borrower, provided that the aggregate purchase price of
all such stock acquired by Borrower during any fiscal year of Borrower shall not
exceed $50,000.

         7.08 ERISA. At any time engage in a transaction which could be subject
to Sections 4069 or 4212(c) of ERISA, or permit any Pension Plan to (a) engage
in any non-exempt "prohibited transaction" (as defined in Section 4975 of the
Code); (b) fail to comply with ERISA or any other applicable Laws; or (c) incur
any material "accumulated funding deficiency" (as defined in Section 302 of
ERISA), which, with respect to each event listed above, has a Material Adverse
Effect.

         7.09 CHANGE IN NATURE OF BUSINESS. Make any change in the nature of the
business of any Borrower Party as conducted and as proposed to be conducted as
of the date hereof or engage in any line of business materially different from
any line of business carried on as of the date hereof.

         7.10 TRANSACTIONS WITH AFFILIATES. Enter into any transaction of any
kind with any Affiliate of Borrower other than arm's-length transactions with
Affiliates that are otherwise permitted hereunder.





                                       71
<PAGE>   78

         7.11 CAPITAL EXPENDITURES. Make, or become legally obligated to make,
any capital expenditures, except capital expenditures in any fiscal year of
Borrower in the aggregate not exceeding the sum of (i) $25,000,000 and (ii) the
amount of cash proceeds, net of direct selling expenses, received by from the
sale of any plant, property, equipment or other capital asset during such fiscal
year. Notwithstanding any of the foregoing, neither Borrower, nor any Subsidiary
may approve, incur or commit to incur, any capital expenditures during the
continuance of an Event of Default.

         7.12 LIMITATIONS ON UPSTREAMING. Agree to any restriction or limitation
on the making of Restricted Payments or transferring of assets from any
Subsidiary to Borrower.

         7.13 MARGIN REGULATIONS. No Borrower Party shall use the proceeds of
any Extensions of Credit hereunder for "purchasing" or "carrying" "margin stock"
as so defined or for any purpose which violates, or which would be inconsistent
with, the provisions of Regulations U or X of such Board of Governors.

         7.14 FINANCIAL COVENANTS.

         (a) CURRENT RATIO.

         At the end of any fiscal quarter of Borrower, permit the Consolidated
Current Ratio to be less than 1.75 to 1.00

         (b) CONSOLIDATED TANGIBLE NET WORTH.

         At the end of any fiscal quarter of Borrower, permit the Consolidated
Tangible Net Worth to be less than an amount equal to the greater of (i)
$85,000,000, or (ii) the sum of $85,000,000 plus 50% of Consolidated Net Income
for the period commencing on December 31, 2000 and terminating at the end of the
fiscal quarter most recently ended.

         (c) MODIFIED CASH FLOW COVERAGE.

         Permit Modified Cash Flow Coverage for any four consecutive fiscal
quarters of Borrower to be less than (a) for any such period of four consecutive
fiscal quarters ending during the period from the Effective Date to and
including June 30, 2001, 1.10 and (b) for any such period of four consecutive
fiscal quarters ending after June 30, 2001, 1.25.

         7.15 CHANGE IN AUDITORS. Intentionally deleted.

         7.16 CHANGE IN ACCOUNTING METHOD.

         Intentionally deleted.

         7.17 TAX CONSOLIDATION.




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<PAGE>   79

         File or permit or suffer to be filed any consolidated income tax return
with any Person other than a Subsidiary.

         7.18 CHIEF EXECUTIVE OFFICE; REGISTERED OFFICE; JURISDICTION OF
INCORPORATION.

         Move its chief executive office, registered office or jurisdiction of
incorporation from the location set forth in Section 5.18.

         7.19 LEASING.

         Lease, or permit or suffer to be leased, any portion of the Aircraft
except pursuant to a written lease which shall contain terms expressly
subjecting and subordinating the leasehold interest to the Security Interest and
to the rights of the Agent and the Banks hereunder (a copy of which lease
agreement shall have been furnished to each Bank), or assign or otherwise
transfer to any Person any of its rights under any such lease. Flight service
agreements between Borrower (alone or together with one or more Subsidiaries)
and its customers, pursuant to which a crew, as well as a helicopter, is
furnished, shall not be considered "leases" for purposes of this Section 7.19.

         7.20 HAZARDOUS MATERIALS.

         Cause, permit or allow to exist (a) any Hazardous Materials to be
placed, held, used, located or disposed of on, under or at any of such Person's
property or any part thereof by any Person in a manner which could have a
Material Adverse Effect, (b) any part of any of such Person's property to be
used as a manufacturing, storage or dump site for Hazardous Materials, where
such action could have a Material Adverse Effect, (c) any Lien to be recorded
against any of such Person's property as a consequence of, or in any way related
to, the presence, remediation, or disposal of Hazardous Materials in or about
any of such Person's property, including any so-called state, federal or local
"superfund" Lien relating to such matters, which, together with all other such
Liens, secures obligations which in the aggregate exceed $500,000.

         7.21 IMPAIRMENT OR DISPOSITION OF COLLATERAL.

         Except as expressly permitted by this Agreement, take, suffer or omit
to take any action, or permit Air Evac to take, suffer or omit to take any
action, the taking, suffering or omission of which might result in an impairment
of the Collateral or any portion thereof, or the Security Interest therein.
Without limiting the generality of the foregoing, Borrower agrees that it will
not, and will not permit Air Evac, to Dispose of or create or suffer to exist
any Lien on, all or any portion of the Collateral except as and to the extent
permitted by the express terms of this Agreement.

         7.22 VALUATION OF AIRCRAFT, ETC.

         On or before June 15 in each calendar year, commencing on June 15,
2001, to deliver or cause the following to be delivered to the Agent and each
Bank:





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<PAGE>   80

         (a) with respect to any Aircraft that are less than one year old at
such time, an Officers' Certificate certifying the purchase price thereof, and
having attached thereto a schedule of all the Aircraft showing the Appraised
Value of each Aviation Unit constituting a portion thereof for that year and the
immediately prior year; and

         (b) with respect to any Aircraft that are more than one year old at
such time, a written opinion of the Independent Appraiser, dated as of a date
after April 30 of that year and addressed to the Agent and each Bank, specifying
the "purchase price" (as referred to in and determined in accordance with clause
(ii) of the definition of "Appraised Value" set forth below) of such Aircraft as
of such date. Each such written opinion shall (i) state that the Independent
Appraiser has, on or after April 30 of that year, made such a physical
inspection, if any, of each Aviation Unit covered by said written opinion as he
deems necessary or appropriate for the purposes of such opinion, (ii) and
indicate the following information for each such Aviation Unit: (A) the make and
model, manufacturer's serial number and the United States registration number
thereof, (B) the month and year of purchase thereof by Borrower, (B) the
original purchase price thereof and (C) the "purchase price" thereof referred to
in and determined in accordance with clause (ii) of the definition of "Appraised
Value" set forth herein; and (iii) be otherwise in form and substance
satisfactory to the Agent and each Bank.

In the event that, after receiving any written opinion pursuant to clause (b)
above, any Bank delivers to Borrower and the Agent a written request for a new
written opinion and a written statement of the reasons for its objection to the
annual opinion, Borrower shall cause the Independent Appraiser to deliver to the
Agent, with a copy to each Bank, within 30 days after the receipt by Borrower of
such written request, a new written opinion, dated as of a date within such
30-day period, with respect to the matters referred to in clause (b). If
Borrower has not, within 45 days after the delivery to the Agent and the Banks
of any annual written opinion required pursuant clause (b), received a written
request for a new written opinion pursuant to this paragraph, the Agent and the
Banks shall be deemed to have permitted Borrower to use such written opinion as
the basis for determining the "Appraised Value" of the Aircraft described
therein as of the date thereof for purposes of this Agreement, including,
without limitation, as the basis for complying with its obligations under
Section 2.05(d). If any Bank requests a new written opinion pursuant to this
paragraph, the Agent and the Banks shall be deemed to have permitted Borrower to
use the most recent written opinion delivered by the Independent Appraiser as
the basis for determining the "Appraised Value" of Aircraft for purposes of this
Agreement until the earlier of (i) 30 days after receipt by the Borrower of such
written request and (ii) the date such new written opinion is delivered.

                                   SECTION 8.
                         EVENTS OF DEFAULT AND REMEDIES

         8.01 EVENTS OF DEFAULT. Any one or more of the following events shall
constitute an Event of Default:

         (a) Borrower fails to pay any principal on any Outstanding Obligation
(other than fees) as and on the date when due; or




                                       74
<PAGE>   81

         (b) Borrower fails to pay any interest on any Outstanding Obligation,
or any commitment fees due hereunder within three days after the date when due;
or fails to pay any other fees or amount payable to Agent or any Bank under any
Loan Document within five days after the date due; or

         (c) Any default occurs in the observance or performance of any
agreement contained in Section 6.01, 6.02, 6.04, 6.08 or 7; or

         (d) The occurrence of an Event of Default (as such term is or may
hereafter be specifically defined in any other Loan Document) under any other
Loan Document; or any Borrower Party fails to perform or observe any other
covenant or agreement (not specified in subsections (a), (b) or (c) above)
contained in any Loan Document on its part to be performed or observed and such
failure continues for 30 days; or

         (e) Any representation or warranty in any Loan Document or in any
certificate, agreement, instrument or other document made or delivered by any
Borrower Party pursuant to or in connection with any Loan Document proves to
have been incorrect when made or deemed made; or

         (f) (i) Any Borrower Party (x) defaults in any payment when due of
principal of or interest on any Indebtedness (other than Indebtedness hereunder)
having an aggregate principal amount in excess of $100,000 or (y) defaults in
the observance or performance of any other agreement or condition relating to
any Indebtedness (other than Indebtedness hereunder) or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event shall occur, the effect of which default or other event is to cause, or to
permit the holder or holders of such Indebtedness (or a trustee or agent on
behalf of such holder or holders or beneficiary or beneficiaries) to cause, with
the giving of notice if required, Indebtedness having an aggregate principal
amount in excess of $100,000 to be demanded or become due (automatically or
otherwise) prior to its stated maturity, or any Guaranty Obligation in such
amount to become payable or cash collateral in respect thereof to be demanded,
or any Borrower Party is unable or admits in writing its inability to pay its
debts as they mature; or (ii) the occurrence under any Swap Agreement of an
Early Termination Date (as defined in such Swap Agreement) resulting from (x)
any event of default under such Swap Agreement as to which Borrower or any
Subsidiary is the Defaulting Party (as defined in such Swap Agreement) or (y)
the occurrence of any Termination Event under such Swap Agreement (as defined
therein) as to which Borrower or any Subsidiary is an Affected Party (as so
defined) as a result of which, in either event, the Swap Termination Value owed
by Borrower or such Subsidiary is greater than $100,000; or

         (g) Any Loan Document, at any time after its execution and delivery and
for any reason other than the agreement of all Banks or satisfaction in full of
all the Obligations, ceases to be in full force and effect or is declared by a
court of competent jurisdiction to be null and void, invalid or unenforceable in
any respect; or any Borrower Party denies that it has any or further liability
or obligation under any Loan Document, or purports to revoke, terminate or
rescind any Loan Document; or




                                       75
<PAGE>   82

         (h) (i) A final judgment against any Borrower Party is entered for the
payment of money in excess of $1,000,000, or any non-monetary final judgment is
entered against any Borrower Party which has a Material Adverse Effect and, in
each case, if such judgment remains unsatisfied without procurement of a stay of
execution within (A) 30 calendar days after the date of entry of judgment or,
(B) if earlier, five days prior to the date of any proposed sale, or (ii) any
writ or warrant of attachment or execution or similar process is issued or
levied against all or any material part of the property of any such Person and
is not released, vacated or fully bonded within 30 calendar days after its issue
or levy; or

         (i) Any Borrower Party or any of its Subsidiaries institutes or
consents to the institution of any proceeding under Debtor Relief Laws, or makes
an assignment for the benefit of creditors; or applies for or consents to the
appointment of any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer for it or for all or any material part of its
property; or any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer is appointed without the application or consent
of that Person and the appointment continues undischarged or unstayed for 60
calendar days; or any proceeding under Debtor Relief Laws relating to any such
Person or to all or any part of its property is instituted without the consent
of that Person and continues undismissed or unstayed for 60 calendar days, or an
order for relief is entered in any such proceeding; or

         (j) (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in liability of Borrower under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of $500,000;
(ii) the aggregate amount of Unfunded Pension Liability among all Pension Plans
at any time exceeds the Threshold Amount; or (iii) Borrower or any ERISA
Affiliate fails to pay when due, after the expiration of any applicable grace
period, any installment payment with respect to its withdrawal liability under
Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in
excess of the Threshold Amount.

         8.02 REMEDIES UPON EVENT OF DEFAULT. Without limiting any other rights
or remedies of Agent or Banks provided for elsewhere in this Agreement, or the
other Loan Documents, or by applicable Law, or in equity, or otherwise:

         (a) Upon the occurrence, and during the continuance, of any Event of
Default other than an Event of Default described in Section 8.01(i):

                  (i) Requisite Banks may request Agent to, and Agent thereupon
         shall, terminate the Revolving Credit Commitments and/or declare all or
         any part of the unpaid principal of all Loans, all interest accrued and
         unpaid thereon and all other amounts payable under the Loan Documents
         to be immediately due and payable, whereupon the same shall become and
         be immediately due and payable, without protest, presentment, notice of
         dishonor, demand or further notice of any kind, all of which are
         expressly waived by Borrower; and

                  (ii) Issuing Bank may, with the approval of Agent on behalf of
         Requisite Banks, demand immediate payment by Borrower of an amount
         equal to the aggregate





                                       76
<PAGE>   83

         amount of all outstanding Letter of Credit Usage to be held in a Letter
         of Credit Cash Collateral Account.

         (b) Upon the occurrence of any Event of Default described in Section
8.01(i):

                  (i) the Revolving Credit Commitments and all other obligations
         of Agent or Banks shall automatically terminate without notice to or
         demand upon Borrower, which are expressly waived by Borrower;

                  (ii) the unpaid principal of all Loans, all interest accrued
         and unpaid thereon and all other amounts payable under the Loan
         Documents shall be immediately due and payable, without protest,
         presentment, notice of dishonor, demand or further notice of any kind,
         all of which are expressly waived by Borrower; and

                  (iii) an amount equal to the aggregate amount of all
         outstanding Letter of Credit Usage shall be immediately due and payable
         to Issuing Bank without notice to or demand upon Borrower, which are
         expressly waived by Borrower, to be held in a Letter of Credit Cash
         Collateral Account.

         (c) Upon the occurrence of any Event of Default, Banks and Agent, or
any of them, without notice to (except as expressly provided for in any Loan
Document) or demand upon Borrower, which are expressly waived by Borrower
(except as to notices expressly provided for in any Loan Document), may proceed
to (but only with the consent of Requisite Banks) protect, exercise and enforce
their rights and remedies under the Loan Documents against any Borrower Party
and such other rights and remedies as are provided by Law or equity.

         (d) Except as permitted by Section 10.05, no Bank may exercise any
rights or remedies with respect to the Obligations without the consent of
Requisite Banks in their sole and absolute discretion. The order and manner in
which Agent's and Banks' rights and remedies are to be exercised shall be
determined by Requisite Banks in their sole and absolute discretion. No
application of payments will cure any Event of Default, or prevent acceleration,
or continued acceleration, of amounts payable under the Loan Documents, or
prevent the exercise, or continued exercise, of rights or remedies of Agent and
Banks hereunder or thereunder or at Law or in equity.

         8.03 APPLICATION OF PROCEEDS OF COLLATERAL.

         (a) All moneys received by the Agent as a result of the enforcement of
the rights and remedies of the Agent or the Creditors pursuant to the Security
Documents and otherwise in respect of the Collateral shall be distributed by the
Agent on the dates fixed by the Agent (individually a "Distribution Date" and
collectively, the "Distribution Dates") as follows:

         FIRST:   to the Agent in payment of the amount of any and all
                  unreimbursed expenses of the Agent, including, without
                  limitation, the fees and disbursements of its counsel and of
                  any agents and experts employed by the Agent, incurred by the
                  Agent prior to the relevant Distribution Date in connection
                  with (w) the administration of this Agreement and the Security




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<PAGE>   84

                  Documents, (x) the custody, preservation, use or operation of,
                  or the sale of, collection from, or other realization upon any
                  assets of Borrower pursuant to the Security Documents (y) the
                  exercise or enforcement of any of the rights of the Agent
                  hereunder or under the Security Documents or (z) the failure
                  by Borrower to perform or observe any of the provisions of
                  this Agreement or any Security Document;

         SECOND:  to the Banks in an amount equal to the sum of the unpaid
                  principal of and interest on the Notes plus the Letter of
                  Credit Usage, and accrued interest thereon, if any, and to the
                  Swap Providers in an amount equal to the obligations of
                  Borrower (calculated, if the Swap Agreement is an ISDA Master
                  Agreement (Multicurrency-Cross Border) ("ISDA Agreement"),
                  pursuant to Section 6(e) thereof, or, if the Swap Agreement is
                  not an ISDA Agreement, pursuant to the provisions of such Swap
                  Agreement substantially similar to Section 6(e) of the ISDA
                  Agreement) under the Swap Agreements and any accrued interest
                  thereon, if any, and, in the event such moneys shall be
                  insufficient to pay in full such amounts, then to the payment
                  thereof ratably to each Creditor in the same proportion which
                  (x) the sum of aggregate unpaid principal of and interest on
                  the Notes held by such Bank plus Letter of Credit Usage and
                  accrued interest thereon (excluding therefrom an amount equal
                  to that portion of such interest calculated at a rate per
                  annum in excess of the rate per annum provided for under
                  Section 2.07(b), such excluded amount being the "Excess
                  Interest"), if any, in respect of Permitted Letters of Credit
                  issued by such Bank or the sum of the obligations of Borrower
                  (calculated as described above) to such Swap Provider under
                  the applicable Swap Agreement and any accrued interest
                  thereon, as the case may be, bears to (y) the sum of the
                  aggregate unpaid principal of and interest on the Notes plus
                  Letter of Credit Usage and accrued interest thereon (excluding
                  therefrom an amount equal to the aggregate Excess Interest),
                  if any, plus an amount equal to the obligations of Borrower
                  (calculated as described above) under the Swap Agreements and
                  any accrued interest thereon, if any, on the relevant
                  Distribution Date (all such prepayments to be applied by each
                  Creditor first to the payment of accrued and unpaid interest,
                  if any, owing by Borrower to such Creditor, then to the
                  payment of principal on the Notes or the obligations of
                  Borrower (calculated as described above) under the Swap
                  Agreements, as the case may be, and finally pursuant to the
                  Letter of Credit Applications); provided, however, in the
                  event any Bank that has issued a Letter of Credit does not for
                  any reason apply its portion of the proceeds of the Collateral
                  as provided herein within 30 days after the expiration date of
                  such Letter of Credit, such Bank shall return all such
                  unapplied proceeds to the Agent for distribution to the Banks
                  for the ratable application to any unpaid obligations held by
                  the Banks in respect of the Notes and any other Letters of
                  Credit;




                                       78
<PAGE>   85

         THIRD:   to the Creditors in an amount equal to the sum of unpaid
                  commitment and agent's fees payable under this Agreement plus
                  the fees, if any, due in respect of any Permitted Letters of
                  Credit plus the fees, if any, due in respect of any Swap
                  Agreements (collectively the "Fees"), whether matured or
                  unmatured, and, in the event such moneys shall be insufficient
                  to pay in full such amount, then to the payment thereof
                  ratably to each Creditor in the same proportion which the
                  aggregate amount of Fees due to such Creditor bears to the
                  aggregate unpaid Fees due to all the Creditors on the relevant
                  Distribution Date;

         FOURTH:  to the Banks in an amount equal to the aggregate Excess
                  Interest plus all other amounts due under this Agreement and
                  the Security Documents and to the Swap Providers, in an amount
                  equal to all other amounts, due under the Swap Agreements,
                  this Agreement and the Security Documents (collectively the
                  "Other Amounts"), and in the event such moneys shall be
                  insufficient to pay in full such amount, then to the payment
                  thereof ratably to each Creditor in the same proportion which
                  the aggregate amount of Other Amounts due such Creditor to the
                  aggregate unpaid Other Amounts due to all the Creditors on the
                  relevant Distribution Date; and

         FIFTH:   any surplus then remaining shall be paid to Borrower, or to
                  its successors and assigns, or to whomsoever may be lawfully
                  entitled to receive the same, or as a court of competent
                  jurisdiction may direct.

         (b) The term "unpaid" as used in this Section 8.03 shall mean all
obligations outstanding as of a Distribution Date as to which prior
distributions have not been made, after giving effect to any adjustments which
are made pursuant to Section 10.06 and of which the Agent shall have been
notified.

                                   SECTION 9.
                                      AGENT

         9.01 APPOINTMENT AND AUTHORIZATION OF AGENT.

         (a) Each Bank hereby irrevocably (subject to Section 9.09) appoints,
designates and authorizes Agent to take such action on its behalf under the
provisions of this Agreement and each other Loan Document and to exercise such
powers and perform such duties as are expressly delegated to it by the terms of
this Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document, Agent shall
not have any duties or responsibilities, except those expressly set forth
herein, nor shall Agent have or be deemed to have any fiduciary relationship
with any Bank or participant, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against Agent. Without
limiting the generality of the foregoing sentence, the use of the term "agent"
in this Agreement with reference to Agent is not





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<PAGE>   86

intended to connote any fiduciary or other implied (or express) obligations
arising under agency doctrine of any applicable law. Instead, such term is used
merely as a matter of market custom, and is intended to create or reflect only
an administrative relationship between independent contracting parties.

         (b) Issuing Bank shall act on behalf of Banks with respect to any
Letters of Credit issued by it and the documents associated therewith until such
time and except for so long as Agent may agree at the request of Requisite Banks
to act for such Issuing Bank with respect thereto; provided, however, that
Issuing Bank shall have all of the benefits and immunities (i) provided to Agent
in this Section 9 with respect to any acts taken or omissions suffered by
Issuing Bank in connection with Letters of Credit issued by it or proposed to be
issued by it and the application and agreements for letters of credit pertaining
to the Letters of Credit as fully as if the term "Agent" as used in this Section
9 included Issuing Bank with respect to such acts or omissions, and (ii) as
additionally provided in this Agreement with respect to Issuing Bank.

         9.02 DELEGATION OF DUTIES. Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects in the
absence of gross negligence or willful misconduct.

         9.03 LIABILITY OF AGENT. No Agent-Related Person shall (i) be liable
for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct
in connection with its duties expressly set forth herein), or (ii) be
responsible in any manner to any Bank or participant for any recital, statement,
representation or warranty made by any Borrower Party or any officer thereof,
contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by Agent under or in connection with, this Agreement or any other
Loan Document, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document, or for any failure of
any Borrower Party or any other party to any Loan Document to perform its
obligations hereunder or thereunder. No Agent-Related Person shall be under any
obligation to any Bank or participant to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of any Borrower Party or any Subsidiary or Affiliate thereof.

         9.04 RELIANCE BY AGENT.

         (a) Agent shall be entitled to rely, and shall be fully protected in
relying, upon any writing, communication, signature, resolution, representation,
notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or
telephone message, statement or other document or conversation believed by it to
be genuine and correct and to have been signed, sent or made by the proper
Person or Persons, and upon advice and statements of legal counsel (including
counsel to any Borrower Party), independent accountants and other experts
selected by Agent. Agent shall be fully justified in failing or refusing to take
any action under any Loan Document unless it shall







                                       80
<PAGE>   87

first receive such advice or concurrence of Requisite Banks as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by Banks against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such action. Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement or any other Loan Document in accordance with a request or
consent of Requisite Banks or all Banks, if required hereunder, and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all of Banks and participants. Where this Agreement expressly permits or
prohibits an action unless Requisite Banks otherwise determine, Agent shall, and
in all other instances, Agent may, but shall not be required to, initiate any
solicitation for the consent or a vote of Banks.

         (b) For purposes of determining compliance with the conditions
specified in Section 4.01, each Bank and participant shall be deemed to have
consented to, approved or accepted or to be satisfied with, each document or
other matter either sent by Agent to each Bank for consent, approval, acceptance
or satisfaction, or required thereunder to be consented to or approved by or
acceptable or satisfactory to a Bank.

         (c) The Agent shall be absolutely entitled to rely on the Officers'
Certificates and certificates of Independent Appraisers and opinions of counsel
referred to in the definition of "Appropriate Actions" and for the veracity of
each of the statements made therein absent actual knowledge to the contrary on
the part of the Agent . The Agent shall not be required to investigate or verify
any statement made in such Officers' Certificates and certificates of
Independent Appraisers and opinions of counsel and any investigation that the
Agent shall elect to undertake shall not affect its ability to rely on such
Officers' Certificates and Certificates of Independent Appraisers and opinions
of counsel.

         9.05 NOTICE OF DEFAULT. Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default, except with respect
to defaults in the payment of principal, interest and fees required to be paid
to Agent for the account of Banks, unless Agent shall have received written
notice from a Bank or Borrower referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a "notice of
default". Agent will notify Banks of its receipt of any such notice. Agent shall
take such action with respect to such Default or Event of Default as may be
directed by Requisite Banks in accordance with Section 8; provided, however,
that unless and until Agent has received any such direction, Agent may (but
shall not be obligated to) take such action, or refrain from taking such action,
with respect to such Default or Event of Default as it shall deem advisable or
in the best interest of Banks.

         9.06 CREDIT DECISION; DISCLOSURE OF INFORMATION BY AGENT. Each Bank and
participant acknowledges that no Agent-Related Person has made any
representation or warranty to it, and that no act by Agent hereinafter taken,
including any consent to and acceptance of any assignment or review of the
affairs of any Borrower Party or any of its Subsidiaries or Affiliates, shall be
deemed to constitute any representation or warranty by any Agent-Related Person
to any Bank or participant as to any matter, including whether Agent-Related
Persons have disclosed material information in their possession. Each Bank,
including any Bank by assignment, and each participant represents to Agent that
it has, independently and without reliance upon any





                                       81
<PAGE>   88

Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of any Borrower Party and its Subsidiaries and Affiliates, and
all applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend
credit to any Borrower Party hereunder. Each Bank and participant also
represents that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of any Borrower Party and its
Subsidiaries and Affiliates. Except for notices, reports and other documents
expressly required to be furnished to Banks by Agent herein, Agent shall not
have any duty or responsibility to provide any Bank or participant with any
credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of any Borrower
Party or any of its Subsidiaries or Affiliates which may come into the
possession of any Agent-Related Person.

         9.07 INDEMNIFICATION OF AGENT. WHETHER OR NOT THE TRANSACTIONS
CONTEMPLATED HEREBY ARE CONSUMMATED, BANKS SHALL INDEMNIFY UPON DEMAND EACH
AGENT-RELATED PERSON (TO THE EXTENT NOT REIMBURSED BY OR ON BEHALF OF ANY
BORROWER PARTY AND WITHOUT LIMITING THE OBLIGATION OF ANY BORROWER PARTY TO DO
SO), PRO RATA, AND HOLD HARMLESS EACH AGENT-RELATED PERSON FROM AND AGAINST ANY
AND ALL INDEMNIFIED LIABILITIES INCURRED BY IT, EVEN IF SUCH INDEMNIFIED
LIABILITIES ARISE IN WHOLE OR IN PART FROM THE NEGLIGENCE OF ANY AGENT-RELATED
PERSON; PROVIDED, HOWEVER, THAT NO BANK SHALL BE LIABLE FOR THE PAYMENT TO ANY
AGENT-RELATED PERSON OF ANY PORTION OF SUCH INDEMNIFIED LIABILITIES RESULTING
FROM SUCH PERSON'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT; PROVIDED, HOWEVER,
THAT NO ACTION TAKEN IN ACCORDANCE WITH THE DIRECTIONS OF REQUISITE BANKS SHALL
BE DEEMED TO CONSTITUTE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT FOR PURPOSES OF
THIS SECTION. WITHOUT LIMITATION OF THE FOREGOING, EACH BANK SHALL REIMBURSE
AGENT UPON DEMAND FOR ITS RATABLE SHARE OF ANY COSTS OR OUT-OF-POCKET EXPENSES
(INCLUDING ATTORNEY COSTS) INCURRED BY AGENT IN CONNECTION WITH THE PREPARATION,
EXECUTION, DELIVERY, ADMINISTRATION, MODIFICATION, AMENDMENT OR ENFORCEMENT
(WHETHER THROUGH NEGOTIATIONS, LEGAL PROCEEDINGS OR OTHERWISE) OF, OR LEGAL
ADVICE IN RESPECT OF RIGHTS OR RESPONSIBILITIES UNDER, THIS AGREEMENT, ANY OTHER
LOAN DOCUMENT, OR ANY DOCUMENT CONTEMPLATED BY OR REFERRED TO HEREIN, TO THE
EXTENT THAT AGENT IS NOT REIMBURSED FOR SUCH EXPENSES BY OR ON BEHALF OF ANY





                                       82
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BORROWER PARTY. THE UNDERTAKING IN THIS SECTION SHALL SURVIVE THE PAYMENT OF ALL
OBLIGATIONS HEREUNDER AND THE RESIGNATION OR REPLACEMENT OF AGENT.

         9.08 AGENT IN INDIVIDUAL CAPACITY. Bank of America and its Affiliates
may make loans to, issue letters of credit for the account of, accept deposits
from, acquire equity interests in and generally engage in any kind of banking,
trust, financial advisory, underwriting or other business with any Borrower
Party and its Subsidiaries and Affiliates as though Bank of America were not
Agent or Issuing Bank hereunder and without notice to or consent of Banks. Banks
and participants acknowledge that, pursuant to such activities, Bank of America
or its Affiliates may receive information regarding any Borrower Party or its
Affiliates (including information that may be subject to confidentiality
obligations in favor of any Borrower Party or such Affiliate) and acknowledge
that Agent shall be under no obligation to provide such information to them.
With respect to its Loans, Bank of America shall have the same rights and powers
under this Agreement as any other Bank and may exercise the same as though it
were not Agent or Issuing Bank.

         9.09 SUCCESSOR AGENT. Agent may resign as Agent upon 30 days' notice to
Banks. If Agent resigns under this Agreement, Requisite Banks shall appoint from
among Banks a successor Agent for Banks which successor Agent shall be consented
to by Borrower at all times other than during the existence of an Event of
Default (which approval of Borrower shall not be unreasonably withheld or
delayed). If no successor Agent is appointed prior to the effective date of the
resignation of Agent, Agent may appoint, after consulting with Banks and
Borrower, a successor Agent from among Banks. Upon the acceptance of its
appointment as successor Agent hereunder, such successor Agent shall succeed to
all the rights, powers and duties of the retiring Agent and the term "Agent"
shall mean such successor Agent and the retiring Agent's appointment, powers and
duties as Agent shall be terminated. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Section 9 and Sections 10.03 and
10.13 shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Agent under this Agreement. If no successor Agent has
accepted appointment as Agent by the date which is 30 days following a retiring
Agent's notice of resignation, the retiring Agent's resignation shall
nevertheless thereupon become effective and Banks shall perform all of the
duties of Agent hereunder until such time, if any, as Requisite Banks appoint a
successor agent as provided for above.

         9.10 RELEASES OF COLLATERAL.

         Each of the Creditors hereby authorizes the Agent to execute and
deliver (and, where appropriate, as determined by the Agent in its sole and
independent discretion, to authorize others to execute and deliver on its
behalf) on behalf of the Creditors, all documents required to effect the release
of any Aviation Unit from the Security Interest in connection with any
Disposition permitted hereby.




                                       83
<PAGE>   90

                                   SECTION 10.
                                  MISCELLANEOUS

         10.01 AMENDMENTS; CONSENTS. No amendment, modification, supplement,
extension, termination or waiver of any provision of this Agreement or any other
Loan Document, no approval or consent thereunder, and no consent to any
departure by any Borrower Party therefrom shall be effective unless in writing
signed by Requisite Banks and acknowledged by Agent, and each such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given. Except as otherwise expressly provided herein, without
the approval in writing of Agent and all Banks, no amendment, modification,
supplement, termination, waiver or consent may be effective to:

         (a) Reduce the amount of principal or required principal payments or
prepayments of any Outstanding Obligations; provided, however, that only the
consent of Requisite Banks shall be required in any instance where Banks have
the right to consent to the release price of any property or Persons being
Disposed of;

         (b) Reduce the rate of interest payable on any Outstanding Obligations
or the amount of any fee or other amount payable to any Bank under the Loan
Documents (unless consented to by each Bank entitled to receive such fee or
other amount), including in each case, any change in the way any financial
covenant used to determine the Applicable Amount is calculated;

         (c) Waive an Event of Default consisting of the failure of Borrower to
pay when due principal, interest or any commitment fee;

         (d) Postpone any date fixed for any payment of principal of, prepayment
of principal of, or any installment of interest on, any Loan or any installment
of any commitment fee, to extend the term of, or increase the amount of, any
Bank's Revolving Credit Commitment or Term Loan Commitment (it being understood
that a waiver of any Event of Default not referred to in subsection (c) above
shall require only the consent of Requisite Banks) or modify the Pro Rata Share
of any Bank;

         (e) Amend the definition of "Requisite Banks" or the provisions of
Section 4, Section 9, this Section 10.01 or Section 10.06; or

         (f) Amend any provision of this Agreement that expressly requires the
consent or approval of all Banks;

provided, however, that (i) no amendment, waiver or consent shall, unless in
writing and signed by Issuing Bank in addition to Requisite Banks or all Banks,
as the case may be, affect the rights or duties of Issuing Bank, (ii) no
amendment, waiver or consent shall, unless in writing and signed by Agent in
addition to Requisite Banks or all Banks, as the case may be, affect the rights
or duties of Agent, and (iii) any fee letters may be amended, or rights or
privileges thereunder waived, in a writing executed by the parties thereto. Any
amendment, modification, supplement, termination, waiver or consent pursuant to
this Section shall apply equally to, and shall be binding upon, all Banks and
Agent.





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         10.02 REQUISITE NOTICE; EFFECTIVENESS OF SIGNATURES AND ELECTRONIC
MAIL.

         (a) REQUISITE NOTICE. Notices given in connection with any Loan
Document shall be delivered to the intended recipient at the number and/or
address set forth on Schedule 10.02 (or as otherwise specified from time to time
by such recipient in writing to Agent) and shall be given by (i) irrevocable
written notice or (ii) except as otherwise provided, irrevocable telephonic (not
voicemail) notice. Such notices may be delivered, must be confirmed and shall be
effective as follows:

<Table>
<Caption>
             MODE OF DELIVERY                  EFFECTIVE ON EARLIER OF ACTUAL RECEIPT, AND:
         -------------------------- -------------------------------------------------------------------

<S>                                 <C>
         Mail                       Fourth Business Day after deposit in U.S. mail, first class
                                    postage pre-paid

         Courier or hand delivery   When signed for by recipient

         Telephone (not voicemail)  When conversation completed (must be confirmed in writing)

         Facsimile                  When confirmed by telephone (not voicemail)

         Electronic Mail            When delivered (usage subject to subsection (c) below)
</Table>


provided, however, that notices delivered to Agent pursuant to Section 2 shall
not be effective until actually received by Agent; provided, further, that Agent
may require that any notice be confirmed or followed by a manually-signed
hardcopy thereof. Notices shall be in any form prescribed herein and, if sent by
a Borrower Party, shall be made by a Responsible Officer of such Borrower Party.
Notices delivered and, if required, confirmed in accordance with this subsection
shall be deemed to have been delivered by Requisite Notice.

         (b) EFFECTIVENESS OF FACSIMILE DOCUMENTS AND SIGNATURES. Loan Documents
may be transmitted and/or signed by facsimile. The effectiveness of any such
documents and signatures shall, subject to applicable Law, have the same force
and effect as manually-signed hardcopies and shall be binding on all Borrower
Parties, Agent and Banks. Agent may also require that any such documents and
signatures be confirmed by a manually-signed hardcopy thereof; provided,
however, that the failure to request or deliver the same shall not limit the
effectiveness of any facsimile document or signature.

         (c) LIMITED USAGE OF ELECTRONIC MAIL. Electronic mail and internet and
intranet websites may be used to distribute routine communications, such as
financial statements and other information, and to distribute agreements and
other documents to be signed by Agent, Banks and Borrower Parties. No other
legally-binding and/or time-sensitive communication or Request for Extension of
Credit may be sent by electronic mail without the consent of, or confirmation
to, the intended recipient in each instance.

         (d) RELIANCE BY AGENT AND BANKS. Agent and Banks shall be entitled to
rely and act upon any notices purportedly given by or on behalf of any Borrower
Party even if (i) such notices were not made in a manner specified herein, were
incomplete or were not preceded or followed








                                       85
<PAGE>   92

by any other notice specified herein, or (ii) the terms thereof, as understood
by the recipient, varied from any confirmation thereof. BORROWER SHALL INDEMNIFY
AGENT-RELATED PERSONS AND BANKS FROM ANY LOSS, COST, EXPENSE OR LIABILITY AS A
RESULT OF RELYING ON ANY NOTICES PURPORTEDLY GIVEN BY OR ON BEHALF OF ANY
BORROWER PARTY EVEN IF SUCH LOSS, COST, EXPENSE OR LIABILITY ARISES IN WHOLE OR
IN PART FROM THE NEGLIGENCE OF SUCH AGENT-RELATED PERSONS OR BANKS.

         10.03 ATTORNEY COSTS, EXPENSES AND TAXES. Borrower agrees (a) to pay or
reimburse Agent for all costs and expenses incurred in connection with the
development, preparation, negotiation and execution of the Loan Documents, and
the development, preparation, negotiation and execution of any amendment,
waiver, consent, supplement or modification to, any Loan Documents, and any
other documents prepared in connection herewith or therewith, and the
consummation and administration of the transactions contemplated hereby and
thereby, including all Attorney Costs, and (b) to pay or reimburse Agent and
each Bank for all costs and expenses incurred in connection with any
refinancing, restructuring, reorganization (including a bankruptcy
reorganization) and enforcement or attempted enforcement, or preservation of any
rights under any Loan Documents, and any other documents prepared in connection
herewith or therewith, or in connection with any refinancing, or restructuring
of any such documents in the nature of a "workout" or of any insolvency or
bankruptcy proceeding, including Attorney Costs. The foregoing costs and
expenses shall include all search, filing, recording, title insurance and
appraisal charges and fees and taxes related thereto, and other out-of-pocket
expenses incurred by Agent and the cost of independent public accountants and
other outside experts retained by Agent or any Bank. The agreements in this
Section shall survive repayment of all Obligations.

         10.04 BINDING EFFECT; ASSIGNMENT.

         (a) This Agreement and the other Loan Documents to which Borrower is a
party will be binding upon and inure to the benefit of Borrower, Agent, Banks
and their respective successors and assigns, except that, Borrower may not
assign its rights hereunder or thereunder or any interest herein or therein
without the prior written consent of all Banks and any such attempted assignment
shall be void. Any Bank may at any time pledge its Note or any other instrument
evidencing its rights as a Bank under this Agreement to a Federal Reserve Bank,
but no such pledge shall release such Bank from its obligations hereunder or
grant to such Federal Reserve Bank the rights of a Bank hereunder absent
foreclosure of such pledge.

         (b) From time to time following the Effective Date, each Bank may
assign to one or more Eligible Assignees all or any portion of its Commitment
and/or Extensions of Credit; provided that (i) such assignment, if not to a Bank
or an Affiliate of the assigning Bank, shall be consented to by Borrower at all
times other than during the existence of a Default or Event of Default and by
Agent and Issuing Bank (which approvals of Borrower, Agent and Issuing Bank
shall not be unreasonably withheld or delayed), (ii) a copy of a duly signed and
completed Assignment and Acceptance shall be delivered to Agent, (iii) except in
the case of an assignment (A) to an Affiliate of the assigning Bank or to
another Bank or (B) of the entire remaining Commitment of the assigning Bank,
the portion of the Commitment assigned shall not be less than








                                       86
<PAGE>   93

the Minimum Amount therefor, and (iv) the effective date of any such assignment
shall be as specified in the Assignment and Acceptance, but not earlier than the
date which is five Business Days after the date Agent has received the
Assignment and Acceptance. Upon obtaining any consent required as set forth in
the prior sentence, any forms required by Section 10.21 and payment of the
requisite fee described below, the assignee named therein shall be a Bank for
all purposes of this Agreement to the extent of the Assigned Interest (as
defined in such Assignment and Acceptance), and the assigning Bank shall be
released from any further obligations under this Agreement to the extent of such
Assigned Interest. Upon request, Borrower shall execute and deliver new or
replacement Notes to the assigning Bank and the assignee Bank to evidence Loans
made by them. Agent's consent to any assignment shall not be deemed to
constitute any representation or warranty by any Agent-Related Person as to any
matter. For purposes hereof, each mutual fund that is an Affiliate of a Bank
shall be deemed to be a single Eligible Assignee, whether or not such fund is
managed by the same fund manager as other mutual funds that are Affiliates of
the same Bank.

         (c) After receipt of a completed Assignment and Acceptance, and receipt
of an assignment fee of $3,500 from such Eligible Assignee and/or such assigning
Bank (including in the case of assignments to Affiliates of assigning Banks),
Agent shall, promptly following the effective date thereof, provide to Borrower
and Banks a revised Schedule 10.02 giving effect thereto.

         (d) Each Bank may from time to time, without the consent of any other
Person, grant participations to one or more other Person (including another
Bank) all or any portion of its Pro Rata Share of its Commitment and/or
Extensions of Credit; provided, however, that (i) such Bank's obligations under
this Agreement shall remain unchanged, (ii) such Bank shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) the participating banks or other financial institutions shall not be a
Bank hereunder for any purpose except, if the participation agreement so
provides, for the purposes of Section 3 (but only to the extent that the cost of
such benefits to Borrower does not exceed the cost which Borrower would have
incurred in respect of such Bank absent the participation) and subject to
Sections 10.05 and 10.06, (iv) Borrower, Agent and the other Banks shall
continue to deal solely and directly with such Bank in connection with such
Bank's rights and obligations under this Agreement, (v) the participation
agreement shall not restrict an increase in the Total Commitments or in the
granting Bank's Commitment or Pro Rata Share, so long as the amount of the
participation interest is not increased, and (vi) the consent of the holder of
such participation interest shall not be required for amendments or waivers of
provisions of the Loan Documents; provided, however, that the assigning Bank
may, in any agreement with a participant, give such participant the right to
consent to any matter which (A) extends the Maturity Date as to such participant
or any other date upon which any payment of money is due to such participant,
(B) reduces the rate of interest owing to such participant, any fee or any other
monetary amount owing to such participant, or (C) reduces the amount of any
installment of principal owing to such participant. Any Bank that sells a
participation to any Person that is a "foreign corporation, partnership or
trust" within the meaning of the Code shall include in its participation
agreement with such Person a covenant by such Person that such Person will
comply with the provisions of Section 10.21 as if such Person were a Bank and
provide that Agent and Borrower shall be third party beneficiaries of such
covenant.




                                       87
<PAGE>   94

         10.05 SET-OFF. In addition to any rights and remedies of Agent and
Banks or any assignee or participant of any Bank or any Affiliate thereof (each,
a "Proceeding Party") provided by law, upon the occurrence and during the
continuance of any Event of Default, each Proceeding Party is authorized at any
time and from time to time, without prior notice to Borrower, any such notice
being waived by Borrower to the fullest extent permitted by law, to proceed
directly, by right of set-off, banker's lien, or otherwise, against any assets
of the Borrower Parties which may be in the hands of such Proceeding Party
(including all general or special, time or demand, provisional or other deposits
and other indebtedness owing by such Proceeding Party to or for the credit or
the account of Borrower) and apply such assets against the Obligations,
irrespective of whether such Proceeding Party shall have made any demand
therefor and although such Obligations may be unmatured. Each Bank agrees
promptly to notify Borrower and Agent after any such set-off and application
made by such Bank; provided, however, that the failure to give such notice shall
not affect the validity of such set-off and application.

         10.06 SHARING OF PAYMENTS. Each Bank severally agrees that if it,
through the exercise of any right of setoff, banker's lien or counterclaim
against Borrower or otherwise, receives payment of the Obligations held by it of
a type owed ratably to the various Banks that is ratably more than any other
Bank receives in payment of those Obligations held by such other Bank, then,
subject to applicable Laws: (a) such Bank exercising the right of setoff,
banker's lien or counterclaim or otherwise receiving such payment shall
purchase, and shall be deemed to have simultaneously purchased, from the other
Bank a participation in the Obligations held by the other Bank and shall pay to
the other Bank a purchase price in an amount so that the share of the
Obligations held by each Bank after the exercise of the right of setoff,
banker's lien or counterclaim or receipt of payment shall be in the same
proportion that existed prior to the exercise of the right of setoff, banker's
lien or counterclaim or receipt of payment; and (b) such other adjustments and
purchases of participations shall be made from time to time as shall be
equitable to ensure that all Banks share any payment obtained in respect of the
Obligations ratably in accordance with each Bank's share of the Obligations
immediately prior to, and without taking into account, the payment; provided
that, if all or any portion of a disproportionate payment obtained as a result
of the exercise of the right of setoff, banker's lien, counterclaim or otherwise
is thereafter recovered from the purchasing Bank by Borrower or any Person
claiming through or succeeding to the rights of Borrower, the purchase of a
participation shall be rescinded and the purchase price thereof shall be
restored to the extent of the recovery, but without interest. Each Bank that
purchases a participation in the Obligations pursuant to this Section shall from
and after the purchase have the right to give all notices, requests, demands,
directions and other communications under this Agreement with respect to the
portion of the Obligations purchased to the same extent as though the purchasing
Bank were the original owner of the Obligations purchased. Borrower expressly
consents to the foregoing arrangements and agrees that any Bank holding a
participation in an Obligation so purchased may exercise any and all rights of
setoff, banker's lien or counterclaim with respect to the participation as fully
as if Bank were the original owner of the Obligation purchased.

         10.07 NO WAIVER; CUMULATIVE REMEDIES.

         (a) No failure by any Bank or Agent to exercise, and no delay by any
Bank or Agent in exercising, any right, remedy, power or privilege hereunder,
shall operate as a waiver thereof;







                                       88
<PAGE>   95

nor shall any single or partial exercise of any right, remedy, power or
privilege under any Loan Document preclude any other or further exercise thereof
or the exercise of any other right, remedy, power or privilege.

         (b) The rights, remedies, powers and privileges herein or therein
provided are cumulative and not exclusive of any rights, remedies, powers and
privileges provided by Law. Any decision by Agent or any Bank not to require
payment of any interest (including Default Interest), fee, cost or other amount
payable under any Loan Document or to calculate any amount payable by a
particular method on any occasion shall in no way limit or be deemed a waiver of
Agent's or such Bank's right to require full payment thereof, or to calculate an
amount payable by another method that is not inconsistent with this Agreement,
on any other or subsequent occasion.

         (c) Except with respect to Section 9.09, the terms and conditions of
Section 9 are for the sole benefit of Agent and Banks.

         10.08 USURY. Notwithstanding anything to the contrary contained in any
Loan Document, the interest paid or agreed to be paid under the Loan Documents
shall not exceed the maximum rate of non-usurious interest permitted by
applicable Law (the "Maximum Rate"). If Agent or any Bank shall receive interest
in an amount that exceeds the Maximum Rate, the excessive interest shall be
applied to the principal of the Outstanding Obligations or, if it exceeds the
unpaid principal, refunded to Borrower. In determining whether the interest
contracted for, charged, or received by Agent or a Bank exceeds the Maximum
Rate, such Person may, to the extent permitted by applicable Law, (a)
characterize any payment that is not principal as an expense, fee, or premium
rather than interest, (b) exclude voluntary prepayments and the effects thereof,
and (c) amortize, prorate, allocate, and spread in equal or unequal parts the
total amount of interest throughout the contemplated term of the Obligations.

         10.09 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

         10.10 INTEGRATION. This Agreement, together with the other Loan
Documents and any letter agreements referred to herein, comprises the complete
and integrated agreement of the parties on the subject matter hereof and
supersedes all prior agreements, written or oral, on the subject matter hereof.
In the event of any conflict between the provisions of this Agreement and those
of any other Loan Document, the provisions of this Agreement shall control and
govern; provided that the inclusion of supplemental rights or remedies in favor
of Agent or Banks in any other Loan Document shall not be deemed a conflict with
this Agreement. Each Loan Document was drafted with the joint participation of
the respective parties thereto and shall be construed neither against nor in
favor of any party, but rather in accordance with the fair meaning thereof.

         10.11 NATURE OF BANKS' OBLIGATIONS. Nothing contained in this Agreement
or any other Loan Document and no action taken by Agent or Banks or any of them
pursuant hereto or thereto may, or may be deemed to, make Banks a partnership,
an association, a joint venture or other entity, either among themselves or with
Borrower or any Affiliate of Borrower. Each Bank's obligation to make any
Extension of Credit pursuant hereto is several and not joint or joint and




                                       89
<PAGE>   96

several. A default by any Bank will not increase the Pro Rata Share attributable
to any other Bank.

         10.12 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made hereunder and in any other Loan Document, certificate or
statement delivered pursuant hereto or thereto or in connection herewith or
therewith shall survive the execution and delivery thereof, and will bind and
inure to the benefit of the respective successors and assigns of the Agent and
each Bank, whether so expressed or not. Such representations and warranties have
been or will be relied upon by Agent, each Bank and their respective successors
and assigns, notwithstanding any investigation made by Agent or any Bank or on
their behalf.

         10.13 INDEMNITY BY BORROWER. WHETHER OR NOT THE TRANSACTIONS
CONTEMPLATED HEREBY ARE CONSUMMATED, BORROWER AGREES TO INDEMNIFY, SAVE AND HOLD
HARMLESS EACH AGENT-RELATED PERSON AND EACH BANK AND THEIR RESPECTIVE
AFFILIATES, DIRECTORS, OFFICERS, AGENTS, ATTORNEYS AND EMPLOYEES (COLLECTIVELY
THE "INDEMNITEES") FROM AND AGAINST: (a) ANY AND ALL CLAIMS, DEMANDS, ACTIONS OR
CAUSES OF ACTION THAT ARE ASSERTED AGAINST ANY INDEMNITEE BY ANY PERSON (OTHER
THAN AGENT OR ANY BANK) RELATING DIRECTLY OR INDIRECTLY TO A CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION THAT SUCH PERSON ASSERTS OR MAY ASSERT AGAINST ANY
BORROWER PARTY, ANY OF THEIR AFFILIATES OR ANY OF THEIR OFFICERS OR DIRECTORS;
(b) ANY AND ALL CLAIMS, DEMANDS, ACTIONS OR CAUSES OF ACTION ARISING OUT OF OR
RELATING TO, THE LOAN DOCUMENTS, ANY PREDECESSOR LOAN DOCUMENTS, THE
COMMITMENTS, THE USE OR CONTEMPLATED USE OF THE PROCEEDS OF ANY LOAN, OR THE
RELATIONSHIP OF ANY BORROWER PARTY, AGENT AND BANKS UNDER THIS AGREEMENT; (c)
ANY ADMINISTRATIVE OR INVESTIGATIVE PROCEEDING BY ANY GOVERNMENTAL AUTHORITY
ARISING OUT OF OR RELATED TO A CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
DESCRIBED IN SUBSECTION (a) OR (b) ABOVE; AND (d) ANY AND ALL LIABILITIES
(INCLUDING LIABILITIES UNDER INDEMNITIES), LOSSES, COSTS OR EXPENSES (INCLUDING
ATTORNEY COSTS) THAT ANY INDEMNITEE SUFFERS OR INCURS AS A RESULT OF THE
ASSERTION OF ANY FOREGOING CLAIM, DEMAND, ACTION, CAUSE OF ACTION OR PROCEEDING,
OR AS A RESULT OF THE PREPARATION OF ANY DEFENSE IN CONNECTION WITH ANY
FOREGOING CLAIM, DEMAND, ACTION, CAUSE OF ACTION OR PROCEEDING, IN ALL CASES,
WHETHER OR NOT ARISING OUT OF THE NEGLIGENCE OF AN INDEMNITEE, WHETHER OR NOT AN
INDEMNITEE IS A PARTY TO SUCH CLAIM, DEMAND, ACTION, CAUSE OF ACTION OR
PROCEEDING (ALL THE FOREGOING, COLLECTIVELY, THE "INDEMNIFIED LIABILITIES");
PROVIDED THAT NO INDEMNITEE SHALL BE ENTITLED TO INDEMNIFICATION FOR ANY LOSS
CAUSED BY ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OR FOR ANY LOSS
ASSERTED AGAINST IT BY ANOTHER INDEMNITEE.





                                       90
<PAGE>   97

THE AGREEMENTS IN THIS SECTION SHALL SURVIVE REPAYMENT OF ALL OBLIGATIONS.

         10.14 NONLIABILITY OF BANKS. Borrower acknowledges and agrees that:

         (a) Any inspections of any property of Borrower made by or through
Agent or Banks are for purposes of administration of the Loan Documents only,
and Borrower is not entitled to rely upon the same (whether or not such
inspections are at the expense of Borrower);

         (b) By accepting or approving anything required to be observed,
performed, fulfilled or given to Agent or Banks pursuant to the Loan Documents,
neither Agent nor Banks shall be deemed to have warranted or represented the
sufficiency, legality, effectiveness or legal effect of the same, or of any
term, provision or condition thereof, and such acceptance or approval thereof
shall not constitute a warranty or representation to anyone with respect thereto
by Agent or Banks;

         (c) The relationship between Borrower and Agent and Banks is, and shall
at all times remain, solely that of borrower and lenders; neither Agent nor any
Bank shall under any circumstance be deemed to be in a relationship of
confidence or trust or a fiduciary relationship with Borrower or its Affiliates,
or to owe any fiduciary duty to Borrower or its Affiliates; neither Agent nor
any Bank undertakes or assumes any responsibility or duty to Borrower or its
Affiliates to select, review, inspect, supervise, pass judgment upon or inform
Borrower or its Affiliates of any matter in connection with their property or
the operations of Borrower or its Affiliates; Borrower and its Affiliates shall
rely entirely upon their own judgment with respect to such matters; and any
review, inspection, supervision, exercise of judgment or supply of information
undertaken or assumed by Agent or any Bank in connection with such matters is
solely for the protection of Agent and Banks and neither Borrower nor any other
Person is entitled to rely thereon; and

         (d) NEITHER AGENT NOR ANY BANK SHALL BE RESPONSIBLE OR LIABLE TO ANY
PERSON FOR ANY LOSS, DAMAGE, LIABILITY OR CLAIM OF ANY KIND RELATING TO INJURY
OR DEATH TO PERSONS OR DAMAGE TO PROPERTY CAUSED BY THE ACTIONS, INACTION OR
NEGLIGENCE OF BORROWER AND/OR ITS AFFILIATES AND BORROWER HEREBY AGREES TO
INDEMNIFY AND HOLD AGENT AND BANKS HARMLESS FROM ANY SUCH LOSS, DAMAGE,
LIABILITY OR CLAIM EVEN IF SUCH LOSS, DAMAGE, LIABILITY OR CLAIM ARISES IN WHOLE
OR IN PART FROM THE NEGLIGENCE OF SUCH AGENT-RELATED PERSONS OR BANKS.




                                       91
<PAGE>   98

         10.15 NO THIRD PARTIES BENEFITED. This Agreement is made for the
purpose of defining and setting forth certain obligations, rights and duties of
Borrower, Agent and Banks in connection with the Extensions of Credit, and is
made for the sole benefit of Borrower, Agent and Banks, and Agent's and Banks'
successors and assigns. Except as provided in Sections 10.04 and 10.13, no other
Person shall have any rights of any nature hereunder or by reason hereof.

         10.16 SEVERABILITY. Any provision of the Loan Documents that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions thereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

         10.17 CONFIDENTIALITY. Agent, each Bank and each participant shall use
any confidential non-public information concerning the Borrower Parties and
their Subsidiaries that is furnished to Agent or such Bank by or on behalf of
the Borrower Parties and their Subsidiaries in connection with the Loan
Documents (collectively, "Confidential Information") solely for the purpose of
evaluating and providing products and services to them and administering and
enforcing the Loan Documents, and it will hold the Confidential Information in
confidence. Notwithstanding the foregoing, Agent and each Bank may disclose
Confidential Information (a) to their affiliates or any of their or their
affiliates' directors, officers, employees, auditors, counsel, advisors, or
representatives (collectively, the "Representatives") whom it determines need to
know such information for the purposes set forth in this Section; (b) to any
bank or financial institution or other entity to which such Bank has assigned or
desires to assign an interest or participation in the Loan Documents or the
Obligations, provided that any such foregoing recipient of such Confidential
Information agrees to keep such Confidential Information confidential as
specified herein; (c) to any governmental agency or regulatory body having or
claiming to have authority to regulate or oversee any aspect of Agent's or such
Bank's business or that of their Representatives in connection with the exercise
of such authority or claimed authority; (d) to the extent necessary or
appropriate to effect or preserve Agent's or such Bank's or any of their
Affiliates' security (if any) for any Obligation or to enforce any right or
remedy or in connection with any claims asserted by or against Agent or such
Bank or any of their Representatives; and (e) pursuant to any subpoena or any
similar legal process. For purposes hereof, the term "Confidential Information"
shall not include information that (x) is in Agent's or a Bank's possession
prior to its being provided by or on behalf of the Borrower Parties, provided
that such information is not known by Agent or such Bank to be subject to
another confidentiality agreement with, or other legal or contractual obligation
of confidentiality to, a Borrower Party, (y) is or becomes publicly available
(other than through a breach hereof by Agent or such Bank), or (z) becomes
available to Agent or such Bank on a nonconfidential basis, provided that the
source of such information was not known by Agent or such Bank to be bound by a
confidentiality agreement or other legal or contractual obligation of
confidentiality with respect to such information.

         10.18 FURTHER ASSURANCES. Each Borrower Party shall, and shall cause
its Subsidiaries to, at their expense and without expense to Banks or Agent, do,
execute and deliver such further acts and documents as any Bank or Agent from
time to time reasonably requires for the assuring and confirming unto Banks or
Agent of the rights hereby created or intended now or hereafter so





                                       92
<PAGE>   99

to be, or for carrying out the intention or facilitating the performance of the
terms of any Loan Document.

         10.19 HEADINGS. Section headings in this Agreement and the other Loan
Documents are included for convenience of reference only and are not part of
this Agreement or the other Loan Documents for any other purpose.

         10.20 TIME OF THE ESSENCE. Time is of the essence of the Loan
Documents.

         10.21 FOREIGN BANKS. Each Bank that is a "foreign corporation,
partnership or trust" within the meaning of the Code shall deliver to Agent,
prior to receipt of any payment subject to withholding under the Code (or after
accepting an assignment of an interest herein), two duly signed completed copies
of either IRS Form W-8BEN or any successor thereto (relating to such Person and
entitling it to an exemption from, or reduction of, withholding tax on all
payments to be made to such Person by Borrower pursuant to this Agreement) or
IRS Form W-8ECI or any successor thereto (relating to all payments to be made to
such Person by Borrower pursuant to this Agreement) or such other evidence
satisfactory to Borrower and Agent that such Person is entitled to an exemption
from, or reduction of, U.S. withholding tax. Thereafter and from time to time,
each such Person shall (a) promptly submit to Agent such additional duly
completed and signed copies of one of such forms (or such successor forms as
shall be adopted from time to time by the relevant United States taxing
authorities) as may then be available under then current United States laws and
regulations to avoid, or such evidence as is satisfactory to Borrower and Agent
of any available exemption from or reduction of, United States withholding taxes
in respect of all payments to be made to such Person by Borrower pursuant to
this Agreement, (b) promptly notify Agent of any change in circumstances which
would modify or render invalid any claimed exemption or reduction, and (c) take
such steps as shall not be materially disadvantageous to it, in the reasonable
judgment of such Bank, and as may be reasonably necessary (including the
re-designation of its Lending Office) to avoid any requirement of applicable
Laws that Borrower make any deduction or withholding for taxes from amounts
payable to such Person. If such Person fails to deliver the above forms or other
documentation, then Agent may withhold from any interest payment to such Person
an amount equivalent to the applicable withholding tax imposed by Sections 1441
and 1442 of the Code, without reduction. IF ANY GOVERNMENTAL AUTHORITY ASSERTS
THAT AGENT DID NOT PROPERLY WITHHOLD ANY TAX OR OTHER AMOUNT FROM PAYMENTS MADE
IN RESPECT OF SUCH PERSON, SUCH PERSON SHALL INDEMNIFY AGENT THEREFOR, INCLUDING
ALL PENALTIES AND INTEREST, ANY TAXES IMPOSED BY ANY JURISDICTION ON THE AMOUNTS
PAYABLE TO THE AGENT UNDER THIS SECTION, AND COSTS AND EXPENSES (INCLUDING
ATTORNEY COSTS) OF AGENT. THE OBLIGATION OF BANKS UNDER THIS SECTION SHALL
SURVIVE THE PAYMENT OF ALL OBLIGATIONS AND THE RESIGNATION OR REPLACEMENT OF
AGENT.

         10.22 GOVERNING LAW.

         (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF TEXAS APPLICABLE TO







                                       93
<PAGE>   100

AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT
AGENT AND EACH BANK SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW. Without
limitation of the foregoing, nothing in this Agreement or in the Notes shall be
deemed to constitute a waiver of any rights which any Bank may have under
applicable federal legislation relating to the rate of interest which such Bank
may contract for, take, reserve, receive or charge in respect of any borrowing.
Chapter 346 of the Texas Finance Code, as amended (relating to revolving loan
and revolving triparty accounts), shall not apply to this Agreement or the Notes
hereunder or the transactions contemplated hereby.

         (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS
SITTING IN DALLAS OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF SUCH
STATE, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH BORROWER PARTY,
AGENT AND EACH BANK CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH BORROWER PARTY, AGENT AND EACH
BANK IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION
IN RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO. EACH BORROWER
PARTY, AGENT AND EACH BANK WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR
OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH
STATE.

         10.23 WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS AGREEMENT
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM
WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT
OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

         10.24 ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE





                                       94
<PAGE>   101

PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

      [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]






                                       95
<PAGE>   102

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.


                      PETROLEUM HELICOPTERS, INC.


                      By:
                           ---------------------------------------------------
                      Name:
                             -------------------------------------------------
                      Title:
                            --------------------------------------------------



                      BANK OF AMERICA, N.A., as Agent


                      By:
                           ---------------------------------------------------
                      Name:
                             -------------------------------------------------
                      Title:
                            --------------------------------------------------



                      BANK OF AMERICA, N.A., as a Bank, and Issuing Bank


                      By:
                           ---------------------------------------------------
                      Name:
                             -------------------------------------------------
                      Title:
                            --------------------------------------------------



                      WHITNEY NATIONAL BANK, as a Bank


                      By:
                           ---------------------------------------------------
                      Name:
                             -------------------------------------------------
                      Title:
                            --------------------------------------------------



                      BANK ONE, NA, as a Bank


                      By:
                           ---------------------------------------------------
                      Name:
                             -------------------------------------------------
                      Title:
                            --------------------------------------------------









                                      S-1
<PAGE>   103


                                   EXHIBIT A-1

                                    TERM NOTE

                                [To be attached]



<PAGE>   104


                                   EXHIBIT A-2

                              REVOLVING CREDIT NOTE

                                [To be attached]



<PAGE>   105


                                    EXHIBIT B

                         REQUEST FOR EXTENSION OF CREDIT

                                [To be attached]



<PAGE>   106


                                    EXHIBIT C

                           BORROWER SECURITY AGREEMENT

                                [To be attached]



<PAGE>   107


                                    EXHIBIT D

                           AIR EVAC SECURITY AGREEMENT

                                [To be attached]



<PAGE>   108


                                    EXHIBIT E

                               GUARANTY AGREEMENT

                                [To be attached]



<PAGE>   109


                                   EXHIBIT F-1

                      OPINION OF COUNSEL (BORROWER PARTIES)

                                [To be attached]



<PAGE>   110


                                   EXHIBIT F-2

                            OPINION OF COUNSEL (FAA)

                                [To be attached]



<PAGE>   111


                                    EXHIBIT G

                           BORROWING BASE CERTIFICATE

                                [To be attached]



<PAGE>   112


                                    EXHIBIT H

                             COMPLIANCE CERTIFICATE

                                [To be attached]



<PAGE>   113


                                  SCHEDULE 2.01

                         COMMITMENTS AND PRO-RATA SHARES

<Table>
<Caption>
              BANK                             TERM                   REVOLVING CREDIT LOAN             PRO RATA SHARE
                                            COMMITMENT                     COMMITMENT
---------------------------------- ------------------------------ ------------------------------ -----------------------------

<S>                                <C>                            <C>                            <C>
Bank of America, N.A.                      $9,562,500.00                 $16,875,000.00                 37.500000000%

Whitney National Bank                      $9,562,500.00                 $16,875,000.00                 37.500000000%

Bank One, NA                               $6,375,000.00                 $11,250,000.00                 25.000000000%

Total                                      25,500,000.00                 $45,000,000.00                100.000000000%
</Table>





<PAGE>   114


                                  SCHEDULE 5.17

                           AVIATION UNITS AND ENGINES

                                [To be attached]



<PAGE>   115


                                  SCHEDULE 5.19

                                LOCATION OF PARTS

                                [To be attached]



<PAGE>   116


                                  SCHEDULE 5.22

                                  SUBSIDIARIES

                                [To be attached]



<PAGE>   117


                                  SCHEDULE 7.02

                                 EXISTING LIENS

                                [To be attached]





<PAGE>   118


                                  SCHEDULE 7.05

                                   INVESTMENTS

                                [To be attached]



<PAGE>   119


                                 SCHEDULE 10.02

          OFFSHORE AND DOMESTIC LENDING OFFICES, ADDRESSES FOR NOTICES



PETROLEUM HELICOPTERS, INC.

113 Borman Drive
Municipal Airport
Lafayette, LA 70508
Attn:    Michael McCann
         Telephone:  (337) 272-4427
         Facsimile:  (337) 235-1357
         Electronic mail:  mmccann@phihelico.com



BANK OF AMERICA, N.A.

Agent's Office and Bank of America's Lending Office (for payments and Requests
for Extensions of Credit):

Bank of America, N.A.
901 Main Street
Dallas, TX 75202-3714
Attention:        Renita Cummings
                  Telephone:        (214) 209-1233
                  Facsimile:        (214) 290-8371
                  Electronic Mail:  renita.cummings@bankofamerica.com
                  Account No.:      1292000882
                  Ref:              Petroleum Helicopters
                  ABA#              111000012
                  Attention:        Corporate Loan Funds

with copy to:

Bank of America, N.A.
333 Clay Street, Suite 4550
Houston, TX 77002

Attention:        Pamela K. Rodgers
                  Telephone:        (713) 651-4880
                  Facsimile:        (713) 651-4904
                  Electronic Mail:  pamela.rodgers@bankofamerica.com





<PAGE>   120

Issuing Bank:

Bank of America, N.A.
Trade Operations-Los Angeles #22621
333 S. Beaudry Avenue, 19th Floor
Mail Code:  CA9-703-19-23
Los Angeles, CA 90017-1466
Attention:        Bolivar Carrillo
                  Vice President
                  Telephone:  213.345.0084
                  Facsimile:  213.345.6694
                  Electronic Mail:  bolivar.carrillo@bankofamerica.com

with copy to:

Bank of America, N.A.
333 Clay Street, Suite 4550
Houston, TX 77002

Attention:        Pamela K. Rodgers
                  Telephone:        (713) 651-4880
                  Facsimile:        (713) 651-4904
                  Electronic Mail:  pamela.rodgers@bankofamerica.com

Other Notices as Agent:

Bank of America, N.A.
333 Clay Street, Suite 4550
Houston, TX 77002

Attention:        Paul Squires
                  Managing Director
                  Telephone:        (713) 651-4812
                  Facsimile:        (713) 651-4880

with copy to:

Bank of America, N.A.
333 Clay Street, Suite 4550
Houston, TX 77002

Attention:        Pamela K. Rodgers
Telephone:        (713) 651-4880
Facsimile:        (713) 651-4904
Electronic Mail:  pamela.rodgers@bankofamerica.com




<PAGE>   121


WHITNEY NATIONAL BANK

Requests for Extensions of Credit:

228 St. Charles Avenue
New Orleans, LA  70130
Attn:    Mr. Harry Stahel
         Senior Vice President
         Telephone:        (504) 586-7206
         Facsimile:        (504) 586-3409
         Electronic Mail:  hstahel@whitneybank.com
         Ref:              Petroleum Helicopters
         ABA#              065000171
         Attention:        Commercial Loan Department


BANK ONE, NA

DOMESTIC LENDING OFFICE:
Institution Name: Bank One, NA
Street Address:   1717 Main - 4th Floor, TX1-2454
City/State/Zip:            Dallas, TX 75201

EURODOLLAR LENDING OFFICE:
Institution Name: Bank One, NA
Street Address:   1717 Main Street - 4th Floor, TX1-2454
City/State/Zip:            Dallas, TX 75201

ADMINISTRATIVE CONTACTS - BORROWINGS, PAYMENTS, INTERESTS, ETC.
Name:                      Dorothy Moravek
Street Address:   1717 Main
                           4th Floor, TX1-2454
City/State/Zip:            Dallas, TX 75201
Phone No.:                 (214) 290-3442
Fax No.:          (214) 290-2930

REMITTANCE INSTRUCTIONS:
Name of Bank where funds are to be transferred:
                           Bank One, NA
ABA Transit Number:        111000614
Name of Account:           LSII (Large Corporate Loan Services) Incoming
                           Clearing A/C
Account Number:            2453265212
                           Attn:  Dorothy Morovek
                           Re:  Petroleum Helicopters, Inc.





<PAGE>   122

CREDIT CONTACTS (FINANCIALS, COVENANT COMPLIANCE, ETC.):
Name:             Dianne Russell
Street Address:   Bank One Center
                  910 Travis, 6th Floor
City/State/Zip:   Houston, TX 77002
Fax No.:          (713) 751-3982
Telephone:        (713) 751-3679








<PAGE>   123

                                   EXHIBIT A-1

                                FORM OF TERM NOTE


                           PETROLEUM HELICOPTERS, INC.

                                    Term Note


$                                                                 July ___, 2001
 --------------


                  FOR VALUE RECEIVED, the undersigned, Petroleum Helicopters,
Inc., a Louisiana corporation ("Borrower")(successor by merger to Petroleum
Helicopters, Inc., a Delaware corporation), hereby promises to pay to the order
of __________________________________________________________________ ("Bank"),
on the Term Loan Maturity Date (as defined in, and from time to time extended in
accordance with, the Agreement referred to below) the principal amount of
_______________________________________________________Dollars ($____________),
or such lesser principal amount thereof as remains unpaid on such date under
that certain Second Amended and Restated Loan Agreement dated as of July ___,
2001, among Borrower, the Banks from time to time party thereto, and Bank of
America, N.A., as Agent and Issuing Bank (as amended, restated, extended,
supplemented or otherwise modified in writing from time to time, the
"Agreement;" the terms defined therein being used herein as therein defined).

                  Borrower promises to pay interest on the unpaid principal
amount of the Term Loan from the date hereof until such principal amount is paid
in full, at such interest rates, and payable at such times as are specified in
the Agreement. All payments of principal and interest shall be made to Agent for
the account of Bank in United States dollars in immediately available funds at
Agent's Office. If any amount is not paid in full when due hereunder, such
unpaid amount shall bear interest, to be paid upon demand, from the due date
thereof until the date of actual payment (and before as well as after judgment)
computed at the per annum rate set forth in the Agreement.

                  This Term Note is one of the "Notes" referred to in the
Agreement and is secured by and entitled to the benefits of the Security
Documents. Reference is hereby made to the Agreement for rights and obligations
of payment and prepayment, events of default and the right of Bank to accelerate
the maturity hereof upon the occurrence of such events. The Term Loan made by
Bank shall be evidenced by one or more loan accounts or records maintained by
Bank in the ordinary course of business. Bank may also attach schedules to this
Term Note and endorse thereon the date, amount and maturity of its Term Loan and
payments with respect thereto.

                  This Term Note does not effect a novation but is given, to the
fullest extent applicable, in modification, renewal, extension, rearrangement
and replacement of the aggregate principal amount outstanding under that certain
Term Note dated March 31, 1997, in the




                                     A-1-1
<PAGE>   124

principal face amount of $_____________, executed by the Borrower, payable to
the order of the Bank (the "1997 Note") pursuant to that certain Amended and
Restated Loan Agreement among the Borrower, Whitney National Bank, First
National Bank of Commerce, NationsBank of Texas, N.A., and NationsBank of Texas,
N.A., as Agent (the "1997 Loan Agreement"), which 1997 Note and 1997 Loan
Agreement modified, renewed, extended, rearranged and replaced certain
indebtedness outstanding pursuant to that certain Loan Agreement originally
dated as of January 31, 1986 among the Borrower, Texas Commerce Bank National
Association, Hibernia National Bank of New Orleans and RepublicBank Houston,
N.A. (as amended and restated in its entirety as of August 1, 1988, as further
amended and restated in its entirety as of December 28, 1990, as further amended
and restated in its entirety as of July 9, 1993, as further amended and restated
in its entirety as of August 13, 1996, and as most recently amended and restated
by the 1997 Loan Agreement, the "Original Loan Agreement") and of which Original
Loan Agreement the Agreement is an amendment and restatement in its entirety.
All liens and security interests securing the Original Loan Agreement
(including, without limitation, all liens and security interests securing the
1997 Loan Agreement) are hereby collectively renewed, extended, rearranged,
ratified and brought forward as security for the payment and performance of this
note. The Borrower hereby agrees that this modification, renewal, extension,
rearrangement, and replacement shall in no manner affect, release, cancel,
terminate, extinguish or otherwise impair the liens and security interests
securing the Original Loan Agreement (including, without limitation, all liens
and security interests securing the 1997 Loan Agreement) and that said liens and
security interests shall not in any manner be waived.

                  Borrower agrees to pay all collection expenses, court costs
and Attorney Costs (whether or not litigation is commenced) which may be
incurred by Bank in connection with the collection or enforcement of this Term
Note.

                  THE BORROWER, FOR ITSELF AND ITS SUCCESSORS AND ASSIGNS, AND
ANY AND ALL ENDORSERS, GUARANTORS AND SURETIES SEVERALLY WAIVE GRACE, DEMAND,
PRESENTMENT FOR PAYMENT, NOTICE OF NONPAYMENT, DISHONOR OR DEFAULT, PROTEST,
NOTICE OF INTENT TO ACCELERATE, NOTICE OF ACCELERATION, NOTICE OF PROTEST AND
DILIGENCE IN COLLECTING AND BRINGING OF SUIT AGAINST ANY PARTY HERETO AND ANY
OTHER NOTICES OR OTHER ACTION, AND AGREE TO ALL MODIFICATIONS, RENEWALS,
EXTENSIONS OR PARTIAL PAYMENTS HEREON, IN WHOLE OR IN PART, WITH OR WITHOUT
NOTICE, BEFORE OR AFTER MATURITY.

                  THIS NOTE SHALL BE INTERPRETED AND GOVERNED BY, AND THE
RIGHTS, OBLIGATIONS AND LIABILITIES OF THE PARTIES HERETO SHALL BE DETERMINED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS AND APPLICABLE FEDERAL LAW.



                                     A-1-2
<PAGE>   125




                  IN WITNESS WHEREOF, the undersigned has duly executed this
Term Note as of the date first written above.

                                        PETROLEUM HELICOPTERS, INC.


                                        By:
                                           ------------------------------------
                                        Name:
                                        Title:


                                     A-1-3
<PAGE>   126
                                   EXHIBIT A-2

                          FORM OF REVOLVING CREDIT NOTE


                           PETROLEUM HELICOPTERS, INC.

                              Revolving Credit Note


$                                                                 July ___, 2001
 -----------------------

                  FOR VALUE RECEIVED, the undersigned, Petroleum Helicopters,
Inc., a Louisiana corporation ("Borrower")(successor by merger to Petroleum
Helicopters, Inc., a Delaware corporation), hereby promises to pay to the order
of _____________________________ ("Bank"), on the Revolving Loan Maturity Date
(as defined in, and from time to time extended in accordance with, the Loan
Agreement referred to below) the principal amount of
_____________________Dollars ($____________), or such lesser principal amount of
Loans (as defined in the Loan Agreement referred to below) payable by Borrower
to Bank on such Revolving Loan Maturity Date under that certain Second Amended
and Restated Loan Agreement dated as of July ___, 2001, among Borrower, the
Banks from time to time party thereto Bank of America, N.A., as Agent and
Issuing Bank (as amended, restated, extended, supplemented or otherwise modified
in writing from time to time, the "Agreement;" the terms defined therein being
used herein as therein defined).

                  Borrower promises to pay interest on the unpaid principal
amount of each Revolving Credit Loan from the date of such Revolving Credit Loan
until such principal amount is paid in full, at such interest rates, and payable
at such times as are specified in the Agreement. All payments of principal and
interest shall be made to Agent for the account of Bank in United States dollars
in immediately available funds at Agent's Office. If any amount is not paid in
full when due hereunder, such unpaid amount shall bear interest, to be paid upon
demand, from the due date thereof until the date of actual payment (and before
as well as after judgment) computed at the per annum rate set forth in the
Agreement.

                  This Revolving Credit Note is one of the "Notes" referred to
in the Agreement and is secured by and entitled to the benefits of the Security
Documents. Reference is hereby made to the Agreement for rights and obligations
of payment and prepayment, events of default and the right of Bank to accelerate
the maturity hereof upon the occurrence of such events. Revolving Credit Loans
made by Bank shall be evidenced by one or more loan accounts or records
maintained by Bank in the ordinary course of business. Bank may also attach
schedules to this Revolving Credit Note and endorse thereon the date, amount and
maturity of its Revolving Credit Loans and payments with respect thereto.

                  This Revolving Credit Note does not effect a novation but is
given, to the fullest extent applicable, in modification, renewal, extension,
rearrangement and replacement of the aggregate principal amount outstanding
under that certain Revolving Credit Note dated March



                                     A-2-1
<PAGE>   127

31, 1997, in the principal face amount of $_____________, executed by the
Borrower, payable to the order of the Bank (the "1997 Note") pursuant to that
certain Amended and Restated Loan Agreement among the Borrower, Whitney National
Bank, First National Bank of Commerce, NationsBank of Texas, N.A., and
NationsBank of Texas, N.A., as Agent (the "1997 Loan Agreement"), which 1997
Note and 1997 Loan Agreement modified, renewed, extended, rearranged and
replaced certain indebtedness outstanding pursuant to that certain Loan
Agreement originally dated as of January 31, 1986 among the Borrower, Texas
Commerce Bank National Association, Hibernia National Bank of New Orleans and
RepublicBank Houston, N.A. (as amended and restated in its entirety as of August
1, 1988, as further amended and restated in its entirety as of December 28,
1990, as further amended and restated in its entirety as of July 9, 1993, as
further amended and restated in its entirety as of August 13, 1996, and as most
recently amended and restated by the 1997 Loan Agreement, the "Original Loan
Agreement") and of which Original Loan Agreement the Agreement is an amendment
and restatement in its entirety. All liens and security interests securing the
Original Loan Agreement (including, without limitation, all liens and security
interests securing the 1997 Loan Agreement) are hereby collectively renewed,
extended, rearranged, ratified and brought forward as security for the payment
and performance of this note. The Borrower hereby agrees that this modification,
renewal, extension, rearrangement, and replacement shall in no manner affect,
release, cancel, terminate, extinguish or otherwise impair the liens and
security interests securing the Original Loan Agreement (including, without
limitation, all liens and security interests securing the 1997 Loan Agreement)
and that said liens and security interests shall not in any manner be waived.

                  Borrower agrees to pay all collection expenses, court costs
and Attorney Costs (whether or not litigation is commenced) which may be
incurred by Bank in connection with the collection or enforcement of this
Revolving Credit Note.

                  THE BORROWER, FOR ITSELF AND ITS SUCCESSORS AND ASSIGNS, AND
ANY AND ALL ENDORSERS, GUARANTORS AND SURETIES SEVERALLY WAIVE GRACE, DEMAND,
PRESENTMENT FOR PAYMENT, NOTICE OF NONPAYMENT, DISHONOR OR DEFAULT, PROTEST,
NOTICE OF INTENT TO ACCELERATE, NOTICE OF ACCELERATION, NOTICE OF PROTEST AND
DILIGENCE IN COLLECTING AND BRINGING OF SUIT AGAINST ANY PARTY HERETO AND ANY
OTHER NOTICES OR OTHER ACTION, AND AGREE TO ALL MODIFICATIONS, RENEWALS,
EXTENSIONS OR PARTIAL PAYMENTS HEREON, IN WHOLE OR IN PART, WITH OR WITHOUT
NOTICE, BEFORE OR AFTER MATURITY.

                  THIS NOTE SHALL BE INTERPRETED AND GOVERNED BY, AND THE
RIGHTS, OBLIGATIONS AND LIABILITIES OF THE PARTIES HERETO SHALL BE DETERMINED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS AND APPLICABLE FEDERAL LAW.



                                     A-2-2
<PAGE>   128




                  IN WITNESS WHEREOF, the undersigned has duly executed this
Revolving Credit Note as of the date first written above.


                                                   PETROLEUM HELICOPTERS, INC.


                                                   By:
                                                      --------------------------
                                                   Name:
                                                   Title:


                                     A-2-3
<PAGE>   129


                                    EXHIBIT B

                     FORM OF REQUEST FOR EXTENSION OF CREDIT

                           PETROLEUM HELICOPTERS, INC.

                         Request for Extension of Credit

                                                         Date:
                                                              -----------------

To: Bank of America, N.A., as Agent

Ladies and Gentlemen:

Reference is made to that certain Second Amended and Restated Loan Agreement
dated as of July ___, 2001, among Petroleum Helicopters, Inc., a Louisiana
corporation ("Borrower"), the Banks from time to time party thereto, Bank of
America, N.A., as Agent and Issuing Bank (as amended, restated, extended,
supplemented or otherwise modified in writing from time to time, the
"Agreement;" the terms defined therein being used herein as therein defined).

The undersigned hereby requests (select one):

[ ]  A Borrowing of Loans              [ ] A Conversion or Continuation of Loans

1.       On                                                    (a Business Day).
           --------------------------------------------------

2.       In the amount of $                                  .
                           ----------------------------------

3.       Comprised of                                        .
                     ---------------------------------------
                           [type of Loans requested]

4.       For Offshore Rate Loans:  with an Interest Period of           months.
                                                              ---------

The foregoing request complies with the requirements of Section 2.03 of the
Agreement. The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the above date, before and after
giving effect and to the application of the proceeds therefrom:

         (a) The representations and warranties made by Borrower in the
Agreement, or which are contained in any certificate, document or financial or
other statement furnished at any time under or in connection therewith, are and
will be correct on and as of the date of this Extension of Credit, except to the
extent that such representations and warranties specifically refer to any
earlier date; and


                                      B-1
<PAGE>   130



         (b) no Default or Event of Default has occurred and is continuing on
the date hereof or after giving effect to this Extension of Credit.

                                                     PETROLEUM HELICOPTERS, INC.


                                                     By:
                                                        ------------------------
                                                     Name:
                                                     Title:


                                      B-2
<PAGE>   131

                                    EXHIBIT C

                         FORM OF PHI SECURITY AGREEMENT

                 SECOND AMENDED AND RESTATED SECURITY AGREEMENT

                  This SECOND AMENDED AND RESTATED SECURITY AGREEMENT (the
"Agreement"), dated as of July 3, 2001, made by PETROLEUM HELICOPTERS, INC., a
Louisiana corporation ("Grantor") to BANK OF AMERICA, N.A. ("Bank of America"),
as Agent (together with its successors and assigns in such capacity, the
"Secured Party").

                                    RECITALS

                  A. Grantor, NationsBank of Texas, N.A. ("NationsBank"),
Whitney National Bank ("Whitney"), First National Bank of Commerce ("FNBC"), and
NationsBank, as Agent, entered into that certain Loan Agreement, originally
dated as of January 31, 1986, as amended and restated in its entirety as of
March 31, 1997, and as further amended by that certain First Amendment to
Amended and Restated Loan Agreement, dated as of December 31, 1997, that certain
Second Amendment to Amended and Restated Loan Agreement, dated as of November
30, 1998, that certain Limited Waiver and Third Amendment to Amended and
Restated Loan Agreement, dated as of June 30, 1999, that certain Fourth
Amendment to Amended and Restated Loan Agreement, dated as of June 30, 2000,
that certain Fifth Amendment to Amended and Restated Loan Agreement, dated as of
October 30, 2000, that certain Sixth Amendment to Amended and Restated Loan
Agreement, dated as of November 30, 2000, that certain Seventh Amendment to
Amended and Restated Loan Agreement, dated as of December 29, 2000, that certain
Eighth Amendment to Amended and Restated Loan Agreement and Limited Waiver dated
as of March 29, 2001, and that certain Ninth Amendment to Amended and Restated
Loan Agreement dated as of April 30, 2001 (as so amended, the "Existing Loan
Agreement").

                  B. The obligations of Grantor under the Existing Loan
Agreement are secured, in part, by that certain Amended and Restated Security
Agreement dated March 31, 1997 by Grantor in favor of the NationsBank, as Agent
(as amended from time to time, the "Existing Security Agreement"), which
Security Agreement was recorded at 1:53 p.m. on May 12, 1997 as conveyance
number YY018504 with the Federal Aviation Administration and amended and
supplemented as reflected on Schedule III attached hereto.

                  C. Grantor, Bank of America (successor by merger to
NationsBank), Whitney and Bank One, NA (successor by merger to FNBC) are
entering into that certain Second Amended and Restated Loan Agreement dated as
of even date herewith (as the same may be amended, supplemented or otherwise
modified from time to time, including, without limitation, all extensions,
renewals, restatements, rearrangements and refundings thereof, the "Loan
Agreement"), pursuant to which, among other things, the term and revolving loans
under the Existing Loan Agreement are being extended, renewed and increased.

                  D. It is a condition precedent to the effectiveness of the
Loan Agreement and the transactions contemplated thereby that Grantor shall have
amended and restated the Existing Security Agreement.


                                      C-1
<PAGE>   132

                  NOW, THEREFORE, in consideration of the mutual premises herein
contained and for other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Grantor and the Secured Party hereby agree as
follows:

                  SECTION 1. Defined Terms and Related Matters.

         (a) Unless otherwise defined herein, the terms defined in Article 9 of
the Uniform Commercial Code as enacted in the State of Louisiana (as the same
may from to time be amended, modified or in effect, the "Code") are used herein
as defined therein.

         (b) As used herein the terms set forth below have the meanings set
forth below.

                  "Banks" means, collectively, Bank of America, Whitney, Bank
One, NA and each other lender from time to time party to the Loan Agreement.

                  "Base Rate" means for any day a fluctuating rate per annum
equal to the higher of (i) the Federal Funds Rate plus 1/2 of 1% and (ii) the
rate of interest in effect for such day as publicly announced from time to time
by Bank of America as its "prime rate." Such rate is a rate set by Bank of
America based upon various factors including such bank's costs and desired
return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or below
such announced rate. Any change in such rate announced by Bank of America shall
take effect at the opening of business on the day specified in the public
announcement of such change.

                  "Borrower Parties" means the Grantor, Air Evac Services, Inc.
and any other Persons (except Agent, the Creditors and any of their respective
affiliates) from time to time party to a Loan Document.

                  "Business Day" means any day other than a Saturday, Sunday, or
other day on which commercial banks are authorized to close under the laws of,
or are in fact closed in, the state where Agent's Office is located or New
Orleans, Louisiana.

                  "Capital Lease" means with respect to any Person any lease
which should, in accordance with GAAP, be required to be capitalized on a
balance sheet of the lessee or, if not so capitalized, for which the amounts of
the asset and liability (had such lease been capitalized) be required to be
disclosed in a note to such a balance sheet.

                  "Creditors" means the Banks and any and all Swap Providers.

                  "Event of Default" means any of the events specified in
Section 8.01 of the Loan Agreement.

                  "Federal Funds Rate" means, for any day, the rate per annum
(rounded upwards to the nearest 1/100 of 1%) equal to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank on the Business Day next succeeding such day; provided
that (i) if such day is not a Business Day, the Federal Funds Rate for such day



                                      C-2
<PAGE>   133

shall be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (ii) if no such rate is so
published on such next succeeding Business Day, the Federal Funds Rate for such
day shall be the average rate charged to Bank of America on such day on such
transactions as determined by Agent.

                  "Governmental Authority" means (i) any international, foreign,
federal, state, county or municipal government, or political subdivision
thereof, (ii) any governmental or quasi-governmental agency, authority, board,
bureau, commission, department, instrumentality, central bank or public body, or
(iii) any court, administrative tribunal or public utility.

                  "Guaranty Agreement" means that certain Guaranty Agreement, of
even date herewith, executed by Air Evac Services, Inc. in favor of Agent.

                  "Guaranty Obligation" means, as to any Person, any (i)
guaranty by such Person of Indebtedness of, or other obligation payable or
performable by, any other Person or (ii) assurance, agreement, letter of
responsibility, letter of awareness, undertaking or arrangement given by such
Person to an obligee of any other Person with respect to the payment or
performance of an obligation by, or the financial condition of, such other
Person, whether direct, indirect or contingent, including any purchase or
repurchase agreement covering such obligation or any collateral security
therefor, any agreement to provide funds (by means of loans, capital
contributions or otherwise) to such other Person, any agreement to support the
solvency or level of any balance sheet item of such other Person or any
"keep-well" or other arrangement of whatever nature given for the purpose of
assuring or holding harmless such obligee against loss with respect to any
obligation of such other Person; provided, however, that the term Guaranty
Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business.

                  "Indebtedness" means, as to any Person at a particular time,
all items (other than capital stock and surplus) which, in accordance with GAAP,
would be shown on the liability side of a balance sheet of such Person as of the
date on which Indebtedness is to be determined. Except as otherwise agreed in
writing by the Requisite Banks, "Indebtedness" shall also mean, whether or not
so reflected, (i) all debt, obligations and liabilities secured by any Lien
existing on property owned by such Person if such property shall be subject to
such Lien, whether or not the debt, obligations or liabilities secured thereby
shall have been assumed; (ii) all obligations of such Person under any lease
which is a Capital Lease or any lease which, whether or not such lease is a
Capital Lease, contains terms that require the payment of lease rentals whether
or not the property leased thereunder shall exist or can be used for the purpose
for which it shall have been leased, or provide for a termination payment
calculated to be sufficient to retire any debt, obligations or liabilities
secured by a Lien on such lease or on the property leased thereunder; (iii) all
Guaranty Obligations of such Person; (iv) all obligations of such Person to
purchase any materials, supplies or other property, or to obtain the services of
any other Person, if the relevant contract or other related document requires
that payment for such materials, supplies or other property, or for such
services, shall be made regardless of whether or not delivery of such materials,
supplies or other property is ever made or tendered or such services are ever
performed or tendered; and (v) all obligations of such Person (contingent or
direct) in respect of letters of credit issued for the account of such Person or
other extensions of credit to such Person.



                                      C-3
<PAGE>   134

                  "Letter of Credit Application" means an application with
regard to a letter of credit issued under the Loan Agreement.

                  "Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement (in the nature of compensating balances, cash collateral
accounts or security interests), encumbrance, lien (statutory or other), charge,
or preference, priority or other security interest or preferential arrangement
of any kind or nature whatsoever (including any conditional sale or other title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, and the filing of any financing statement under
the Uniform Commercial Code or comparable laws of any jurisdiction), including
the interest of a purchaser of accounts receivable.

                  "Loan Documents" means the Loan Agreement and each Note, each
Security Document, each Letter of Credit Application, each request for extension
of credit, each compliance certificate, each certificate, each fee letter, and
each other instrument, document and agreement from time to time delivered in
connection with the Loan Agreement.

                  "Maximum Rate" means the maximum rate of non-usurious interest
permitted by applicable law.

                  "Notes" means all Term Notes and Revolving Credit Notes made
by Grantor in favor of the Banks.

                  "Permitted Liens" means Liens expressly permitted under
Section 7.02 of the Loan Agreement.

                  "Person" means any individual, trustee, corporation, general
partnership, limited partnership, limited liability company, joint stock
company, trust, unincorporated organization, bank, business association, firm,
joint venture, Governmental Authority, or otherwise.

                  "Requisite Banks" has the meaning set forth in the Loan
Agreement.

                  "Revolving Credit Note" means a note evidencing revolving
credit loans made by a Bank, pursuant to the Loan Agreement, including all
renewals, extensions, modifications, amendments, rearrangements and replacements
thereof.

                  "Security Agreements" means collectively (i) this Amended and
Restated Security Agreement, (ii) the Security Agreement, dated as of even date
herewith executed by Air Evac Services, Inc. in favor of Agent, and (iii) all
other security agreements executed on or after the date hereof by any of the
Borrower Parties and (iv) any and all supplements, modifications or amendments
or restatements of the foregoing.

                  "Security Documents" means the Security Agreements, the
Guaranty Agreement, and all other documents, agreements, instruments, financing
statements, financing statement changes and continuation statements heretofore,
now or hereafter executed or delivered by any Person in connection with, or as
security for the payment of the credit extended under the Loan Documents.



                                      C-4
<PAGE>   135

                  "Swap Agreement" means any interest rate protection agreement,
interest rate futures contract, interest rate option, interest rate cap or other
interest rate hedge arrangement, interest rate futures contract, interest rate
option, interest rate cap or other interest rate hedge arrangement, to or which
Grantor is a party or a beneficiary, together with all schedules thereto and the
confirmations thereunder, as may be further amended, modified, restated or
supplemented (including, without limitation, amendments, modifications,
restatements or supplements which have the effect of increasing the notional
amount, liabilities or obligations thereunder).

                  "Swap Provider" means any Bank, or any affiliate of such Bank
which is a party to a Swap Agreement, as permitted by the Loan Agreement, and
has agreed in writing to be bound by the terms of the Loan Agreement.

                  "Term Note" a note evidencing term loans made by a Bank,
pursuant to the Loan Agreement, including all renewals, extensions,
modifications, amendments, rearrangements and replacements thereof.

         SECTION 2. Grant of Security Interest. Grantor hereby collaterally
assigns and pledges to the Secured Party for the equal and ratable benefit of
the Creditors, and hereby reconfirms its collateral assignment and pledge to the
Secured Party for the equal and ratable benefit of the Creditors under the
Existing Security Agreement of, and hereby grants to the Secured Party for the
equal and ratable benefit of the Creditors, and hereby reconfirms its grant to
the Secured Party for the equal and ratable benefit of the Creditors under the
Existing Security Agreement of, a security interest in all of Grantor's right,
title and interest in and to the following (the "Collateral"):

I.       All aircraft engines, propellers, rotors, appliances, tires, airframes,
         spare parts, radios and other communication equipment, together with
         all other aircraft appliances, instruments, mechanisms, apparatus,
         appurtenances, accessories and parts or components thereof of Grantor
         maintained at the locations described in Schedule I attached hereto and
         made a part hereof, now or hereafter existing, whether acquired by
         purchase or otherwise and whether held by Grantor for use in its
         business or held by Grantor for sale or lease or to be furnished by
         Grantor under contracts of services and all proceeds and products
         thereof and accessories thereto together with the right to receive
         proceeds attributable to the sale, lease, insurance loss, or
         condemnation of such property; rights under service, maintenance, or
         warranty contracts with regard to such property; and rights under trade
         names, patents, or copyrights that are subject to use in connection
         with the property (excluding, however, all such parts or products
         installed in any engine-powered device that is used or intended to be
         used for flight in the air which are not otherwise covered by paragraph
         II hereof).

II.      All aircraft engines, propellers, rotors, appliances, tires, airframes,
         spare parts, radios and other communication equipment, together with
         all other aircraft appliances, instruments, mechanisms, apparatus,
         appurtenances, accessories and parts or components thereof of Grantor
         wherever maintained, other than at the locations described in Schedule
         I attached hereto and made a part hereof, now or hereafter existing,
         whether acquired by purchase or


                                      C-5
<PAGE>   136

         otherwise and whether held by Grantor for use in its business or held
         by Grantor for sale or lease or to be furnished by Grantor under
         contracts of services and all proceeds and products thereof and
         accessories thereto together with the right to receive proceeds
         attributable to the sale, lease, insurance loss, or condemnation of
         such property; rights under service, maintenance, or warranty contracts
         with regard to such property; and rights under trade names, patents, or
         copyrights that are subject to use in connection with the property
         (excluding, however, all such parts or products installed in any
         engine-powered device that is used or intended to be used for flight in
         the air which are not otherwise covered by paragraph III hereof).

III.     The helicopters, fixed-wing or other aircraft described in Schedule II
         attached hereto and made a part hereof, together with all aircraft
         engines, airframes, propellers, rotors, appliances, instruments,
         mechanisms, equipment (including communication equipment), parts,
         apparatus, appurtenances and accessories, now or from time to time
         hereafter incorporated or installed in or attached to or appertaining
         to one or more of said helicopters or aircraft, including without
         limitation those aircraft engines described in Schedule II attached
         hereto and made a part hereof, together with the right to receive
         proceeds attributable to the sale, lease, insurance loss, or
         condemnation of such property; rights under service, maintenance, or
         warranty contracts with regard to such property; and rights under trade
         names, patents, or copyrights that are subject to use in connection
         with the property, together with all proceeds and products thereof.

IV.      All of Grantor's "accounts" and "general intangibles" giving rise to
         such "accounts," as each such term is defined in the Code, now owned or
         hereafter acquired by Grantor, including, without limitation, all
         accounts receivable, book debts and other forms of obligations now
         owned or hereafter received or acquired by or belonging or owing to
         Grantor (including, without limitation, under any trade names, styles
         or divisions thereof), whether arising out of goods sold or services
         rendered by Grantor or from any other transaction, whether or not the
         same involves the sale of goods or services by Grantor, and all of
         Grantor's rights in, to and under all purchase orders or receipts now
         owned or hereafter acquired by it for goods or services, and all of
         Grantor's rights to any goods represented by any of the foregoing
         (including, without limitation, unpaid seller's rights of rescission,
         replevin, reclamation and stoppage in transit and rights to returned,
         reclaimed or repossessed goods), and all moneys due or to become due to
         Grantor under all contracts for the sale of goods or the performance of
         services or both by Grantor (whether or not yet earned by performance
         on the part of Grantor or in connection with any other transaction),
         now in existence or hereafter occurring, including, without limitation,
         the right to receive the proceeds of said purchase orders and
         contracts, as well as to enforce all collateral security and guaranties
         of any kind given by any Person with respect to any of the foregoing,
         and all present and future general intangibles of Grantor in any way
         related or pertaining to the foregoing, including, without limitation,
         Grantor's books, records, files, computer discs and software relating
         to the foregoing.

The inclusion of proceeds in this Agreement does not authorize Grantor to sell,
dispose of or otherwise use the Collateral in any manner not specifically
authorized hereby or by the Loan Agreement.



                                      C-6
<PAGE>   137

Grantor will maintain the Collateral described in paragraph I above at the
locations specified in Schedule I attached hereto and made a part hereof.

                  SECTION 3. Security for Obligations. This Agreement secures
the prompt and complete (a) payment of all debts, liabilities and obligations of
Grantor to the Secured Party or any of the Creditors, now existing or hereafter
incurred, due or to become due, under the Existing Loan Agreement, the Loan
Agreement, any and all Swap Agreements, the Notes, the Existing Security
Agreement, the Security Documents, each Letter of Credit Application and any
other Loan Document, and (b) performance of all covenants and conditions by
Grantor contained in the Loan Documents (including, without limitation, the
covenants and conditions contained herein) and any Swap Agreement (all such
obligations, covenants and conditions described in the foregoing clauses (a) and
(b) being hereinafter collectively referred to as the "Secured Obligations"),
regardless of whether such obligations be direct or indirect, primary or
secondary, joint or several, absolute or contingent, together with any and all
renewals, modifications or extensions of such debts, obligations and
liabilities, or any part thereof, whether for principal, interest, attorneys'
fees, costs or otherwise (including obligations which, but for the automatic
stay under Section 362(a) of the Bankruptcy Code, would become due).

                  SECTION 4. Grantor Remains Liable. Anything herein to the
contrary notwithstanding, (a) Grantor shall remain liable under any contracts
and agreements included in the Collateral to the extent set forth therein to
perform all of its respective duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the exercise by the
Secured Party or any Creditor of any of the rights hereunder shall not release
Grantor from any of its duties or obligations under the contracts and agreements
included in the Collateral and (c) neither the Secured Party nor any Creditor
shall have any obligation or liability under any contracts and agreements
included in the Collateral by reason of this Agreement, nor shall the Secured
Party or any Creditor be obligated to perform any of the obligations or duties
of Grantor thereunder or to take any action to collect or enforce any claim for
payment in respect of which a security interest is granted hereunder.

                  SECTION 5. Representations and Warranties. Grantor hereby
represents and warrants as follows:

                  (a) Upon the making of all filings and the taking of all other
         actions necessary to perfect the security interests created hereby,
         including, without limitation, those actions specified in Section 6(a)
         below, this Agreement will create valid first priority security
         interests in the Collateral (subject only to Permitted Liens) securing
         the payment of the Secured Obligations.

                  (b) Other than the filings and other actions described in
         Section 5.17 of the Loan Agreement and in Section 6 below, to perfect
         the security interests created by this Agreement, no authorization,
         approval or other action by, and no notice to or filing with, any
         Governmental Authority, is required for the perfection of or the
         exercise by the Secured Party of the rights and remedies of the
         Creditors and the Secured Party hereunder.



                                      C-7
<PAGE>   138

                  (c) Grantor's only taxpayer identification number is
         72-0395707. Grantor will not change its taxpayer identification number
         unless it has given the Secured Party prior written notice and has
         taken such action as is necessary to cause the security interest of the
         Secured Party in the Collateral to continue to be perfected. If
         Grantor's taxpayer identification number is changed by an entity other
         than Grantor, then Grantor will give the Secured Party written notice
         within one month thereafter and will take such action as is necessary
         to cause the security interest of the Creditors and the Secured Party
         in the Collateral to continue to be perfected.

                  (d) Grantor is an "air carrier" holding a certificate under 49
         U.S.C.A. Section 44705 and the regulations promulgated thereunder.

                  SECTION 6. Further Assurances.

                  (a) Grantor authorizes the Secured Party to file financing
         statements (Form UCC-1), and any necessary amendments thereto or
         continuations thereof, and other security documents executed by Grantor
         in those offices and locations necessary in the opinion of the Secured
         Party to perfect the security interests granted herein. Grantor further
         agrees that from time to time, at the expense of Grantor, Grantor will
         promptly execute and deliver all further instruments and documents, and
         take all further action that may be necessary or desirable, or that the
         Secured Party may reasonably request, in order to perfect and protect
         any security interests granted or purported to be granted hereby or to
         enable the Secured Party to exercise and enforce the Creditors' rights
         and remedies hereunder with respect to any of the Collateral. Without
         limiting the generality of the foregoing, Grantor will execute and file
         such financing or continuation statements, or amendments thereto, and
         such other instruments or notices, as may be necessary or desirable, or
         as the Secured Party may reasonably request, in order to perfect and
         preserve the security interests granted or purported to be granted
         hereby.

                  (b) Grantor authorizes the Secured Party to file a carbon,
         photographic or other reproduction of this Agreement as a financing
         statement or to file one or more financing or continuation statements,
         and amendments thereto, relative to all or any part of the Collateral
         without the signature of Grantor where permitted by law.

                  SECTION 7. Insurance. Grantor shall at its own expense
maintain insurance with respect to the Collateral required by the terms of the
Loan Agreement.

                  SECTION 8. Transfers and Other Liens. Except as permitted by
the Loan Agreement, Grantor shall not:

                  (a) sell, assign (by operation of law or otherwise) or
         otherwise dispose of any of the Collateral, and

                  (b) create or suffer to exist any Lien upon or with respect to
         any of the Collateral to secure the Indebtedness of any Person.



                                      C-8
<PAGE>   139

                  SECTION 9. Secured Party Appointed Attorney-in-Fact. Grantor
hereby irrevocably appoints the Secured Party, effective upon the occurrence of
an Event of Default and the acceleration of the Secured Obligations, Grantor's
attorney-in-fact, with full authority in the place and stead of Grantor and in
the name of Grantor, the Secured Party or otherwise, from time to time in the
Secured Party's discretion, to take any action and to execute any instrument
which the Secured Party may deem necessary or advisable to accomplish the
purposes of this Agreement, including, without limitation:

                  (a) to ask, demand, collect, sue for, recover, compound,
         receive and give acquittance and receipts for moneys due and to become
         due under or in respect of any of the Collateral,

                  (b) to receive, endorse and collect any drafts or other
         instruments, documents and chattel paper in connection with clause (a)
         above, and

                  (c) to file any claims or take any action or institute any
         proceedings which the Secured Party may deem necessary or desirable for
         the collection of any of the Collateral or otherwise to enforce the
         rights of the Creditors and the Secured Party.

                  SECTION 10. Secured Party May Perform. If Grantor fails to
perform any agreement contained herein and such violation shall not have been
remedied within 30 days, the Secured Party may itself perform, or cause
performance of, such agreement, and the reasonable expenses of the Secured Party
(including reasonable attorneys' fees) incurred in connection therewith shall be
payable by Grantor under Section 13.

                  SECTION 11. The Secured Party's Duties. The powers conferred
on the Secured Party and the Creditors hereunder are solely to protect their
interest in the Collateral and shall not impose any duty upon the Secured Party
or any Creditor to exercise any such powers. Except for the safe custody of any
Collateral in its possession and the accounting for moneys actually received by
it hereunder, neither the Secured Party nor any Creditor shall have any duty as
to any Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral.

                  SECTION 12. Remedies. Upon the occurrence of any Event of
Default and the acceleration of any of the Secured Obligations:

                  (a) The Secured Party may exercise in respect of the
         Collateral, in addition to other rights and remedies provided for
         herein or otherwise available to it, all the rights and remedies of a
         secured party on default under Chapter 9 of the Code (whether or not
         the Code applies to the affected Collateral) and in addition thereto
         and cumulative thereof, the following rights (to the extent allowed by
         the Code): the right to sell, lease or otherwise dispose of the
         Collateral and the right to take possession of the Collateral, and for
         that purpose, the Secured Party may enter upon any premises on which
         the Collateral may be situated and remove the same therefrom and/or may
         render the Collateral inoperable; the Secured Party may require Grantor
         to, and Grantor hereby agrees that it will, at its expense and upon the
         request of the Secured Party, forthwith assemble all or part of the
         Collateral and all documents relating to the Collateral as directed by
         the


                                      C-9
<PAGE>   140

         Secured Party and make the Collateral available to the Secured Party at
         a place to be designated by the Secured Party; without notice except as
         specified below, sell the Collateral in one or more parcels at public
         or private sale, at any of the Secured Party's offices or elsewhere,
         for cash, on credit or for future delivery, and, to the extent
         permitted by law, upon such other terms as the Secured Party may deem
         commercially reasonable. Grantor agrees that, to the extent notice of
         sale shall be required by law, at least ten days' notice to Grantor of
         the time and place of any public sale or the time after which any
         private sale is to be made shall constitute reasonable notification.
         The Secured Party shall not be obligated to make any sale of Collateral
         regardless of notice of sale having been given. The Secured Party may
         adjourn any public or private sale from time to time by announcement at
         the time and place fixed therefor, and such sale may, without further
         notice, be made at the time and place to which it was so adjourned.

                  (b) All cash proceeds received by the Secured Party in respect
         of any sale of, collection from, or other realization upon all or any
         part of the Collateral may, in the discretion of the Secured Party, be
         held by the Secured Party as collateral for, and/or then or at any time
         thereafter applied in whole or in part by the Secured Party against,
         the Secured Obligations in the order provided in Section 8.03 of the
         Loan Agreement.

                  (c) Additionally, and not by way of limitation: Grantor hereby
         acknowledges the Secured Obligations secured hereby whether now
         existing or hereafter arising, and confesses judgment in favor of the
         Creditors and does by these presents agree and stipulate that, upon the
         occurrence of an Event of Default, the entire Secured Obligations
         whatever the form thereof, shall at the option of the Creditors
         pursuant to the terms of the Loan Agreement, become due and payable
         immediately, without presentment, demand for payment, protest or notice
         of nonpayment, dishonor or protest or any other notice or demand of any
         kind and the Secured Party may, without making demand and without
         notice of or putting in default, all the same being hereby expressly
         waived, enforce payment in full of all the Secured Obligations, and
         cause all and singular the Collateral to be seized and sold by
         executory process under the laws of the State of Louisiana issued by
         any competent court, and to proceed with the enforcement of this
         Agreement in any manner prescribed by law. Grantor hereby waives the
         benefit of any laws or parts of laws relating to the appraisement of
         the property seized and sold under executory process or other legal
         process and consents that the Collateral be sold without appraisement
         at public or private sale. Grantor further consents to any of the
         Creditors purchasing the Collateral at such sale.

         Grantor hereby expressly waives:

         (1)      The benefit of appraisement, as provided in Articles 2332,
                  2336, 2723 and 2724, Louisiana Code of Civil Procedure, and
                  all other laws conferring the same;

         (2)      The demand and three (3) days delay accorded by Articles 2639
                  and 2721, Louisiana Code of Civil Procedure;


                                      C-10
<PAGE>   141

         (3)      The notice of seizure required by Articles 2293 and 2721,
                  Louisiana Code of Civil Procedure;

         (4)      The three (3) days delay provided by Articles 2331 and 2722,
                  Louisiana Code of Civil Procedure; and

         (5)      The benefit of the other provisions of Articles 2331, 2722 and
                  2733, Louisiana Code of Civil Procedure and the benefit of any
                  other articles or laws relating to rights or appraisement,
                  notice, or delay not specifically mentioned above and Grantor
                  hereby expressly agrees to the immediate seizure of the
                  Collateral in the event of suit thereon.

                  (d) All rights and remedies of the Secured Party and the
         Creditors expressed herein are in addition to all other rights and
         remedies possessed by the Secured Party and the Creditors in the Loan
         Documents and the Swap Agreements.

                  SECTION 13. Indemnity, Expenses and Interest.

                  (a) Grantor agrees upon demand to pay to the Secured Party the
         amount of any and all reasonable costs and expenses, including the
         reasonable fees and disbursements of its counsel and of any experts and
         agents, which the Secured Party may incur in connection with (i) the
         administration of this Agreement, (ii) the custody, preservation, use
         or operation of, or the sale of, collection from, or other realization
         upon, any of the Collateral, (iii) the exercise or enforcement of any
         of the rights of the Secured Party hereunder or (iv) the failure by
         Grantor to perform or observe any of the provisions hereof provided
         such failure shall not have been remedied within 30 days.

                  (b) Grantor agrees to pay interest on any expenses or other
         sums due to the Secured Party hereunder that are not paid when due at a
         rate per annum equal to the lesser of (i) the Maximum Rate or (ii) 3%
         above the Base Rate.

                  SECTION 14. Amendments, Etc. Subject to any provision in the
Loan Agreement to the contrary, no amendment or waiver of any portion of this
Agreement nor consent to any departure by Grantor herefrom shall in any event be
effective unless the same shall be in writing and signed by the Creditors, and
then such waiver or consent shall be effective only in the specific instance for
the specific purpose for which given.

                  SECTION 15. Addresses for Notices. Except as otherwise
expressly provided herein, all notices and other communications provided for
hereunder shall be given in accordance with the terms of the Loan Agreement.

                  SECTION 16. Security Interests Absolute. All rights of the
Secured Party and the Creditors, all obligations of Grantor hereunder and the
security interests hereunder, shall, to the extent permitted by applicable law,
be absolute and unconditional, irrespective of:

                  (a) any lack of validity or enforceability of the Loan
         Agreement, any Swap Agreement or any of the other Loan Documents or any
         other agreement or security


                                      C-11
<PAGE>   142

         document relating thereto or executed in connection with or pursuant to
         the Existing Loan Agreement, the Loan Agreement, any Swap Agreement,
         the Existing Security Agreement or any other Loan Document;

                  (b) any change in the time, manner or place of payment of, or
         in any other term of, all or any of the Secured Obligations or any
         other amendment or waiver of or any consent to any departure from the
         Loan Agreement, any Swap Agreement or any other Loan Document;

                  (c) any exchange, release or non-perfection of any other
         collateral, or any release or amendment or waiver of or consent to
         departure from any guaranty, for all or any of the Secured Obligations;
         or

                  (d) any other circumstance which might otherwise constitute a
         defense available to, or a discharge of, Grantor in respect of the
         Secured Obligations or in respect of this Agreement.

                  SECTION 17. Continuing Security Interests. This Agreement
creates a continuing security interest in the Collateral and shall (a) remain in
full force and effect until (i) termination of the obligations of the Banks to
make Loans and termination of any and all Swap Agreements, and (ii) payment in
full thereafter of the Secured Obligations, (b) be binding upon Grantor, its
successors and assigns and (c) inure to the benefit of the Secured Party, the
Creditors and their respective successors, transferees and assigns. Without
limiting the generality of the foregoing clause (c), the Secured Party and the
Creditors may assign or otherwise transfer any of their respective rights under
this Agreement to any other Person, and such Person shall thereupon become
vested with all the benefits in respect thereof granted herein or otherwise to
the Secured Party or the Creditors, as the case may be. Upon the payment in full
of the Secured Obligations and the termination of any commitments to make any
extensions of credit with respect to the Loan Documents, Grantor shall be
entitled to the return, upon its request and at its expense, of such of the
Collateral as shall not have been sold or otherwise applied pursuant to the
terms hereof.

                  SECTION 18. Waiver of Marshaling. All rights of marshaling of
assets of Grantor, including any such right with respect to the Collateral, are
hereby waived by Grantor.

                  SECTION 19. Limitation by Law. All rights, remedies and powers
provided in this Agreement may be exercised only to the extent that the exercise
thereof does not violate any applicable provision of law, and all the provisions
of this Agreement are intended to be subject to all applicable mandatory
provisions of law which may be controlling and to be limited to the extent
necessary so that they will not render this Agreement invalid, unenforceable, in
whole or in part, or not entitled to be recorded, registered or filed under the
provisions of any applicable law.

                  SECTION 20. Termination of Agreement; Release of Security
Interests. Upon the payment in full of the Secured Obligations and the
termination of any commitments to make any extensions of credit with respect to
the Loan Documents, this Agreement shall terminate and be of no further force
and effect and the Secured Party shall, at the expense of Grantor, execute



                                      C-12
<PAGE>   143

and deliver to Grantor such documents and instruments reasonably requested by
Grantor to evidence the release of the security interests created by this
Agreement; provided, however, notwithstanding the termination of, and the
release of the security interests created by, this Agreement, the obligations of
Grantor and the rights of the Secured Party and the Creditors under Sections 4
and 13 shall survive such termination and release.

                  SECTION 21. Survival of Representations and Warranties. All
representations and warranties contained in this Agreement or made in writing by
or on behalf of Grantor in connection herewith shall survive the execution and
delivery of this Agreement and repayment of the Secured Obligations. Any
investigation by the Creditors shall not diminish in any respect whatsoever
their rights to rely on such representations and warranties.

                  SECTION 22. Separability. Should any clause, sentence,
paragraph, subsection or Section of this Agreement be judicially declared to be
invalid, unenforceable or void, such decision will not have the effect of
invalidating or voiding the remainder of this Agreement, and Grantor agrees that
the part or parts of this Agreement so held to be invalid, unenforceable or void
will be deemed to have been stricken herefrom by the parties hereto, and the
remainder will have the same force and effectiveness as if such stricken part or
parts had never been included herein.

                  SECTION 23. Captions. The captions in this Agreement have been
inserted for convenience only and shall be given no substantive meaning or
significance whatsoever in construing the terms and provisions of this
Agreement.

                  SECTION 24. Amendment and Restatement; Confirmation of Liens.
This Agreement amends and restates the Existing Security Agreement in its
entirety and shall not affect a novation of, but shall be, to the fullest extent
applicable, in modification, renewal, confirmation and extension of the Liens
created by the Existing Security Agreement. Grantor agrees that the execution of
this Agreement, the Loan Agreement and the other documents relating thereto
shall not in any way release, diminish, impair, reduce or otherwise affect the
Liens created by the Existing Security Agreement.

                  SECTION 25. No Waiver; Remedies. No failure on the part of the
Secured Party or any Creditor to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.

                  SECTION 26. Governing Law; Terms. This Agreement shall be
governed by and construed in accordance with the laws of the State of Louisiana,
except as required by mandatory provisions of law and except to the extent that
remedies hereunder in respect of any particular Collateral are governed by the
laws of a jurisdiction other than the State of Louisiana.

                  SECTION 27. INTEGRATION. THIS AGREEMENT, TOGETHER WITH THE
OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,


                                      C-13
<PAGE>   144

CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

                  SECTION 28. Counterparts. This Agreement may be executed in
any number of counterparts and by the parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which taken together shall constitute but one and the same
instrument.



                            [REMAINDER OF PAGE BLANK.
                            SIGNATURE PAGE FOLLOWS.]



                                      C-14
<PAGE>   145








                  IN WITNESS WHEREOF, the undersigned have caused this Second
Amended and Restated Agreement to be duly executed and delivered by its officer
thereunto duly authorized as of the date first above written.

                                              GRANTOR:

                                              PETROLEUM HELICOPTERS, INC.


                                              By:
                                                 -------------------------------
                                              Name:
                                              Title:


                                              SECURED PARTY:

                                              BANK OF AMERICA, N.A., AS AGENT


                                              By:
                                                 -------------------------------
                                              Name:
                                              Title:


<PAGE>   146



                                   SCHEDULE I

                              COLLATERAL LOCATIONS

                                [To be attached]


<PAGE>   147



                                   SCHEDULE II



                            HELICOPTERS AND AIRCRAFT





                                     ENGINES



                                [To be attached]


<PAGE>   148



                                  Schedule III

                           AMENDMENTS AND SUPPLEMENTS

                                [To be attached]
<PAGE>   149


                                    EXHIBIT D


                       FORM OF AIR EVAC SECURITY AGREEMENT

                               SECURITY AGREEMENT

                  This SECURITY AGREEMENT (the "Agreement"), dated as of July 3,
2001, made by AIR EVAC SERVICES, INC., a Louisiana corporation ("Grantor") to
BANK OF AMERICA, N.A. ("Bank of America"), as Agent (together with its
successors and assigns in such capacity, the "Secured Party").

                                    RECITALS

                  A. Petroleum Helicopters, Inc. (the "Borrower"), Bank of
America, Whitney National Bank and Bank One, NA have entered into that certain
Second Amended and Restated Loan Agreement, dated as of even date herewith (as
the same may be amended, supplemented or otherwise modified from time to time,
including, without limitation, all extensions, renewals, restatements,
rearrangements and refundings thereof, the "Loan Agreement").

                  B. The Grantor is a wholly-owned subsidiary of the Borrower
has guaranteed certain obligations and liabilities of the Borrower pursuant to
that certain Guaranty Agreement dated as of even date herewith (the "Guaranty
Agreement"), made by Grantor to and in favor of the Guaranteed Parties (as
defined therein).

                  C. It is a condition precedent to the extensions of credit
pursuant to the Loan Agreement and the transactions contemplated thereby that
Grantor shall have executed and delivered this Agreement to the Secured Party
for its benefit and the benefit of the Creditors (as defined in the Loan
Agreement).

                  D. Accordingly, Grantor desires to execute this Agreement in
order to satisfy such condition.

                  NOW, THEREFORE, in consideration of the mutual premises herein
contained and for other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Grantor and the Secured Party hereby agree as
follows:

                  SECTION 1. Defined Terms and Related Matters.

         (a) Unless otherwise defined herein, the terms defined in Article 9 of
the Uniform Commercial Code as enacted in the State of Louisiana (as the same
may from to time be amended, modified or in effect, the "Code") are used herein
as defined therein.

         (b) As used herein the terms set forth below have the meanings set
forth below.

                  "Banks" means, collectively, Bank of America, Whitney National
Bank, Bank One, NA and each other lender from time to time party to the Loan
Agreement.


                                      D-1
<PAGE>   150


                  "Base Rate" means for any day a fluctuating rate per annum
equal to the higher of (i) the Federal Funds Rate plus 1/2 of 1% and (ii) the
rate of interest in effect for such day as publicly announced from time to time
by Bank of America as its "prime rate." Such rate is a rate set by Bank of
America based upon various factors including such bank's costs and desired
return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or below
such announced rate. Any change in such rate announced by Bank of America shall
take effect at the opening of business on the day specified in the public
announcement of such change.

                  "Borrower Parties" means the Borrower, the Grantor and any
other Persons (except Agent, the Creditors and any of their respective
affiliates) from time to time party to a Loan Document.

                  "Business Day" means any day other than a Saturday, Sunday, or
other day on which commercial banks are authorized to close under the laws of,
or are in fact closed in, the state where Agent's Office is located or New
Orleans, Louisiana.

                  "Capital Lease" means with respect to any Person any lease
which should, in accordance with GAAP, be required to be capitalized on a
balance sheet of the lessee or, if not so capitalized, for which the amounts of
the asset and liability (had such lease been capitalized) be required to be
disclosed in a note to such a balance sheet.

                  "Creditors" means the Banks and any and all Swap Providers.

                  "Event of Default" means any of the events specified in
Section 8.01 of the Loan Agreement.

                  "Federal Funds Rate" means, for any day, the rate per annum
(rounded upwards to the nearest 1/100 of 1%) equal to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank on the Business Day next succeeding such day; provided
that (i) if such day is not a Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (ii) if no such rate is so
published on such next succeeding Business Day, the Federal Funds Rate for such
day shall be the average rate charged to Bank of America on such day on such
transactions as determined by Agent.

                  "Government Receivables" shall mean Receivables now or
hereafter owing from the United States or from State Medicaid programs.

                  "Governmental Authority" means (i) any international, foreign,
federal, state, county or municipal government, or political subdivision
thereof, (ii) any governmental or quasi-governmental agency, authority, board,
bureau, commission, department, instrumentality, central bank or public body, or
(iii) any court, administrative tribunal or public utility.

                  "Guaranty Obligation" means, as to any Person, any (i)
guaranty by such Person of Indebtedness of, or other obligation payable or
performable by, any other Person or (ii) assurance, agreement, letter of
responsibility, letter of awareness, undertaking or arrangement given by such
Person to an obligee of any other Person with respect to the payment or
performance of an obligation by, or the financial condition of, such other
Person, whether direct, indirect or contingent, including any purchase or
repurchase agreement covering such obligation or any collateral security
therefor, any agreement to provide funds (by means of loans, capital
contributions or otherwise) to such other Person, any agreement to support the
solvency or level


                                      D-2
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of any balance sheet item of such other Person or any "keep-well" or other
arrangement of whatever nature given for the purpose of assuring or holding
harmless such obligee against loss with respect to any obligation of such other
Person; provided, however, that the term Guaranty Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business.

                  "Indebtedness" means, as to any Person at a particular time,
all items (other than capital stock and surplus) which, in accordance with GAAP,
would be shown on the liability side of a balance sheet of such Person as of the
date on which Indebtedness is to be determined. Except as otherwise agreed in
writing by the Requisite Banks, "Indebtedness" shall also mean, whether or not
so reflected, (i) all debt, obligations and liabilities secured by any Lien
existing on property owned by such Person if such property shall be subject to
such Lien, whether or not the debt, obligations or liabilities secured thereby
shall have been assumed; (ii) all obligations of such Person under any lease
which is a Capital Lease or any lease which, whether or not such lease is a
Capital Lease, contains terms that require the payment of lease rentals whether
or not the property leased thereunder shall exist or can be used for the purpose
for which it shall have been leased, or provide for a termination payment
calculated to be sufficient to retire any debt, obligations or liabilities
secured by a Lien on such lease or on the property leased thereunder; (iii) all
Guaranty Obligations of such Person; (iv) all obligations of such Person to
purchase any materials, supplies or other property, or to obtain the services of
any other Person, if the relevant contract or other related document requires
that payment for such materials, supplies or other property, or for such
services, shall be made regardless of whether or not delivery of such materials,
supplies or other property is ever made or tendered or such services are ever
performed or tendered; and (v) all obligations of such Person (contingent or
direct) in respect of letters of credit issued for the account of such Person or
other extensions of credit to such Person.

                  "Letter of Credit Application" means an application with
regard to a letter of credit issued under the Loan Agreement.

                  "Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement (in the nature of compensating balances, cash collateral
accounts or security interests), encumbrance, lien (statutory or other), charge,
or preference, priority or other security interest or preferential arrangement
of any kind or nature whatsoever (including any conditional sale or other title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, and the filing of any financing statement under
the Uniform Commercial Code or comparable laws of any jurisdiction), including
the interest of a purchaser of accounts receivable.

                  "Loan Documents" means the Loan Agreement and each Note, each
Security Document, each Letter of Credit Application, each request for extension
of credit, each compliance certificate, each certificate, each fee letter, and
each other instrument, document and agreement from time to time delivered in
connection with the Loan Agreement.

                  "Maximum Rate" means the maximum rate of non-usurious interest
permitted by applicable law.


                                      D-3
<PAGE>   152


                  "Notes" means all Term Notes and Revolving Credit Notes made
by the Borrower in favor of the Banks.

                  "Permitted Liens" means Liens expressly permitted under
Section 7.02 of the Loan Agreement.

                  "Person" means any individual, trustee, corporation, general
partnership, limited partnership, limited liability company, joint stock
company, trust, unincorporated organization, bank, business association, firm,
joint venture, Governmental Authority, or otherwise.

                  "Receivables" means, with respect to any Person, all
Indebtedness presently existing or hereafter owing to such Person in connection
with such Person's business, profession, occupation, or undertaking, including,
but not limited to the sale of goods or the performance of services or the
leasing of property, together with all proceeds thereof; excluding, however any
indebtedness due to or arising out of claims in tort and indebtedness evidenced
by a promissory note or a negotiable instrument.

                  "Requisite Banks" has the meaning set forth in the Loan
Agreement.

                  "Revolving Credit Note" means a note evidencing revolving
credit loans made by a Bank, pursuant to the Loan Agreement, including all
renewals, extensions, modifications, amendments, rearrangements and replacements
thereof.

                  "Security Agreements" means collectively (i) this Amended and
Restated Security Agreement, (ii) the Security Agreement, dated as of even date
herewith executed by Air Evac Services, Inc. in favor of Agent, and (iii) all
other security agreements executed on or after the date hereof by any of the
Borrower Parties and (iv) any and all supplements, modifications or amendments
or restatements of the foregoing.

                  "Security Documents" means the Security Agreements, the
Guaranty Agreement, and all other documents, agreements, instruments, financing
statements, financing statement changes and continuation statements heretofore,
now or hereafter executed or delivered by any Person in connection with, or as
security for the payment of the credit extended under the Loan Documents.

                  "Swap Agreement" means any interest rate protection agreement,
interest rate futures contract, interest rate option, interest rate cap or other
interest rate hedge arrangement, interest rate futures contract, interest rate
option, interest rate cap or other interest rate hedge arrangement, to or which
the Borrower is a party or a beneficiary, together with all schedules thereto
and the confirmations thereunder, as may be further amended, modified, restated
or supplemented (including, without limitation, amendments, modifications,
restatements or supplements which have the effect of increasing the notional
amount, liabilities or obligations thereunder).

                  "Swap Provider" means any Bank, or any affiliate of such Bank
which is a party to a Swap Agreement, as permitted by the Loan Agreement, and
has agreed in writing to be bound by the terms of the Loan Agreement.


                                      D-4
<PAGE>   153


                  "Term Note" a note evidencing term loans made by a Bank,
pursuant to the Loan Agreement, including all renewals, extensions,
modifications, amendments, rearrangements and replacements thereof.

                  SECTION 2. Grant of Security Interest. Grantor hereby
collaterally assigns and pledges to the Secured Party for the equal and ratable
benefit of the Creditors, and hereby grants to the Secured Party for the equal
and ratable benefit of the Creditors, a security interest in all of Grantor's
right, title and interest in and to the following (the "Collateral"):

I.       All aircraft engines, propellers, rotors, appliances, tires, airframes,
         spare parts, radios and other communication equipment, together with
         all other aircraft appliances, instruments, mechanisms, apparatus,
         appurtenances, accessories and parts or components thereof of Grantor
         maintained at the locations described in Schedule I attached hereto and
         made a part hereof, now or hereafter existing, whether acquired by
         purchase or otherwise and whether held by Grantor for use in its
         business or held by Grantor for sale or lease or to be furnished by
         Grantor under contracts of services and all proceeds and products
         thereof and accessories thereto together with the right to receive
         proceeds attributable to the sale, lease, insurance loss, or
         condemnation of such property; rights under service, maintenance, or
         warranty contracts with regard to such property; and rights under trade
         names, patents, or copyrights that are subject to use in connection
         with the property (excluding, however, all such parts or products
         installed in any engine-powered device that is used or intended to be
         used for flight in the air which are not otherwise covered by paragraph
         II hereof).

II.      All aircraft engines, propellers, rotors, appliances, tires, airframes,
         spare parts, radios and other communication equipment, together with
         all other aircraft appliances, instruments, mechanisms, apparatus,
         appurtenances, accessories and parts or components thereof of Grantor
         wherever maintained, other than at the locations described in Schedule
         I attached hereto and made a part hereof, now or hereafter existing,
         whether acquired by purchase or otherwise and whether held by Grantor
         for use in its business or held by Grantor for sale or lease or to be
         furnished by Grantor under contracts of services and all proceeds and
         products thereof and accessories thereto together with the right to
         receive proceeds attributable to the sale, lease, insurance loss, or
         condemnation of such property; rights under service, maintenance, or
         warranty contracts with regard to such property; and rights under trade
         names, patents, or copyrights that are subject to use in connection
         with the property (excluding, however, all such parts or products
         installed in any engine-powered device that is used or intended to be
         used for flight in the air which are not otherwise covered by paragraph
         III hereof).

III.     The helicopters, fixed-wing or other aircraft described in Schedule II
         attached hereto and made a part hereof, together with all aircraft
         engines, airframes, propellers, rotors, appliances, instruments,
         mechanisms, equipment (including communication equipment), parts,
         apparatus, appurtenances and accessories, now or from time to time
         hereafter incorporated or installed in or attached to or appertaining
         to one or more of said helicopters or aircraft, including without
         limitation those aircraft engines described in Schedule II attached
         hereto and made a part hereof, together with the right to receive
         proceeds attributable to the sale, lease, insurance loss, or
         condemnation of such property;


                                      D-5
<PAGE>   154


         rights under service, maintenance, or warranty contracts with regard to
         such property; and rights under trade names, patents, or copyrights
         that are subject to use in connection with the property, together with
         all proceeds and products thereof.

IV.      All of Grantor's "accounts" and "general intangibles" giving rise to
         such "accounts," as each such term is defined in the Code, now owned or
         hereafter acquired by Grantor, and, in any event, all accounts
         receivable (including, without limitation, all health-care-insurance
         receivables and all Government Receivables, including without
         limitation, those arising pursuant to supplier agreements under the
         Medicare and Medicaid programs or otherwise arising out of services for
         which payment or reimbursement is made under the Medicare and Medicaid
         programs or by third party payors), book debts and other forms of
         obligations now owned or hereafter received or acquired by or belonging
         or owing to Grantor (including, without limitation, under any trade
         names, styles or divisions thereof), whether arising out of goods sold
         or services rendered by Grantor or from any other transaction, whether
         or not the same involves the sale of goods or services by Grantor, and
         all of Grantor's rights in, to and under all purchase orders or
         receipts now owned or hereafter acquired by it for goods or services,
         and all of Grantor's rights to any goods represented by any of the
         foregoing (including, without limitation, unpaid seller's rights of
         rescission, replevin, reclamation and stoppage in transit and rights to
         returned, reclaimed or repossessed goods), and all moneys due or to
         become due to Grantor under all contracts for the sale of goods or the
         performance of services or both by Grantor (whether or not yet earned
         by performance on the part of Grantor or in connection with any other
         transaction), now in existence or hereafter occurring, including,
         without limitation, the right to receive the proceeds of said purchase
         orders and contracts, as well as to enforce all collateral security and
         guaranties of any kind given by any Person with respect to any of the
         foregoing, and all present and future general intangibles of Grantor in
         any way related or pertaining to the foregoing (excluding, however,
         licenses, permits and Medicare and Medicaid supplier agreements that by
         the terms thereof or applicable law may not be encumbered, assigned or
         otherwise transferred), including, without limitation, Grantor's books,
         records (except medical records), files, computer discs and software
         relating to the foregoing but subject to any applicable state or
         federal record retention requirements.

V.       All of Grantor's rights under the Asset Purchase Agreement, the
         Services Agreement, effective as of January 1, 1998, between Samaritan
         Health System, an Arizona non-profit corporation, and Grantor, and all
         documents and instruments executed in connection with either of the
         foregoing agreements, together with all proceeds of any of the
         foregoing.

VI.      All "deposit accounts" as such term is defined in the Code, including,
         without limitation, Account number 710786204 maintained by Grantor at
         Whitney National Bank, any other bank account (wherever located) into
         which proceeds of Receivables may at any time or from time to time be
         deposited, any lockbox, post office box or similar collection or cash
         management device or arrangement relating thereto, all checks and other
         items deposited from time to time therein, and the balance of all
         amounts from time to time on deposit therein, together with all
         proceeds of any of the foregoing.


                                      D-6
<PAGE>   155


The inclusion of proceeds in this Agreement does not authorize Grantor to sell,
dispose of or otherwise use the Collateral in any manner not specifically
authorized hereby or by the Loan Agreement.

Grantor will maintain the Collateral described in paragraph I above at the
locations specified in Schedule I attached hereto and made a part hereof.

                  SECTION 3. Security for Obligations. This Agreement secures
the prompt and complete (a) payment of all Guaranteed Obligations (as defined in
the Guaranty Agreement) and (b) performance of all other obligations, covenants
and conditions by Grantor contained in any other Loan Documents to which the
Grantor is or becomes a party (including, without limitation, the covenants and
conditions contained herein) (all such obligations, covenants and conditions
described in the foregoing clauses (a) and (b) being hereinafter collectively
referred to as the "Secured Obligations"), regardless of whether such
obligations be direct or indirect, primary or secondary, joint or several,
absolute or contingent, together with any and all renewals, modifications or
extensions of such debts, obligations and liabilities, or any part thereof,
whether for principal, interest, attorneys' fees, costs or otherwise (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due).

                  SECTION 4. Grantor Remains Liable. Anything herein to the
contrary notwithstanding, (a) Grantor shall remain liable under any contracts
and agreements included in the Collateral to the extent set forth therein to
perform all of its respective duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the exercise by the
Secured Party or any Creditor of any of the rights hereunder shall not release
Grantor from any of its duties or obligations under the contracts and agreements
included in the Collateral and (c) neither the Secured Party nor any Creditor
shall have any obligation or liability under any contracts and agreements
included in the Collateral by reason of this Agreement, nor shall the Secured
Party or any Creditor be obligated to perform any of the obligations or duties
of Grantor thereunder or to take any action to collect or enforce any claim for
payment in respect of which a security interest is granted hereunder.

                  SECTION 5. Representations and Warranties. Grantor hereby
represents and warrants as follows:

                  (a) Upon the making of all filings and the taking of all other
         actions necessary to perfect the security interests created hereby,
         including, without limitation, those actions specified in Section 6(a)
         below, this Agreement will create valid first priority security
         interests in the Collateral (subject only to Permitted Liens and other
         than Collateral consisting of Receivables under private insurance
         policies) securing the payment of the Secured Obligations. In the case
         of Collateral consisting of Receivables under private insurance
         policies, upon compliance by the parties with the provisions of such
         policies and any applicable state common law requirements, this
         Agreement will create valid security interests in such Collateral,
         securing the payment of the Secured Obligations.

                  (b) Other than the filings and other actions described in
         Section 5.17 of the Loan Agreement and in Section 6 below, to perfect
         the security interests created by this Agreement, no authorization,
         approval or other action by, and no notice to or filing with,


                                      D-7
<PAGE>   156


         any Governmental Authority, is required for the perfection of or the
         exercise by the Secured Party of the rights and remedies of the
         Creditors and the Secured Party hereunder, except that in the case of
         Government Receivables the Secured Party must obtain a court order in
         compliance with federal and state anti-assignment laws in order to
         enforce the obligations of the account debtors in respect of such
         Government Receivables. Grantor has not assigned to others its rights
         with respect to Receivables under policies or contracts of insurance..

                  (c) Grantor's only taxpayer identification number is
         72-1404705. Grantor will not change its taxpayer identification number
         unless it has given the Secured Party prior written notice and has
         taken such action as is necessary to cause the security interest of the
         Secured Party in the Collateral to continue to be perfected. If
         Grantor's taxpayer identification number is changed by an entity other
         than Grantor, then Grantor will give the Secured Party written notice
         within one month thereafter and will take such action as is necessary
         to cause the security interest of the Creditors and the Secured Party
         in the Collateral to continue to be perfected.

                  (d) Grantor is an "air carrier" holding a certificate under 49
         U.S.C.A. Section 44705 and the regulations promulgated thereunder.

                  SECTION 6. Further Assurances.

                  (a) Grantor authorizes the Secured Party to file financing
         statements (Form UCC-1), and any necessary amendments thereto or
         continuations thereof, and other security documents executed by Grantor
         in those offices and locations necessary in the opinion of the Secured
         Party to perfect the security interests granted herein, including all
         such documents and agreements as may be required from time to time to
         comply with the Assignment of Claims Act of 1940, as in effect from
         time to time and the rules and regulations issued or promulgated
         thereunder (the "Assignment of Claims Act"), to the extent the
         Assignment of Claims Act is applicable to any of the Collateral, and to
         comply with state and federal statutes and regulations relating to the
         creation and perfection of security interests in Government Receivables
         and the proceeds thereof. Grantor further agrees that from time to
         time, at the expense of Grantor, Grantor will promptly execute and
         deliver all further instruments and documents, and take all further
         action that may be necessary or desirable, or that the Secured Party
         may reasonably request, in order to perfect and protect any security
         interests granted or purported to be granted hereby or to enable the
         Secured Party to exercise and enforce the Creditors' rights and
         remedies hereunder with respect to any of the Collateral. Without
         limiting the generality of the foregoing, Grantor will execute and file
         such financing or continuation statements, or amendments thereto, and
         such other instruments or notices, as may be necessary or desirable, or
         as the Secured Party may reasonably request, in order to perfect and
         preserve the security interests granted or purported to be granted
         hereby.

                  (b) Grantor authorizes the Secured Party to file a carbon,
         photographic or other reproduction of this Agreement as a financing
         statement or to file one or more financing or continuation statements,
         and amendments thereto, relative to all or any part of the Collateral
         without the signature of Grantor where permitted by law.


                                      D-8
<PAGE>   157


                  SECTION 7. Insurance. Grantor shall at its own expense
maintain insurance with respect to the Collateral required by the terms of the
Loan Agreement.

                  SECTION 8. Transfers and Other Liens. Except as permitted by
the Loan Agreement, Grantor shall not:

                  (a) sell, assign (by operation of law or otherwise) or
         otherwise dispose of any of the Collateral, and

                  (b) create or suffer to exist any Lien (other than federal and
         state government rights of offset with respect to Government
         Receivables, to the extent that such rights may be characterized as
         constituting a Lien) upon or with respect to any of the Collateral to
         secure the Indebtedness of any Person.

                  SECTION 9. Secured Party Appointed Attorney-in-Fact. Grantor
hereby irrevocably appoints the Secured Party (other than with respect to
Government Receivables, in which case such appointment shall be revocable),
effective upon the occurrence of an Event of Default and the acceleration of the
Secured Obligations, Grantor's attorney-in-fact, with full authority in the
place and stead of Grantor and in the name of Grantor, the Secured Party or
otherwise, from time to time in the Secured Party's discretion, to take any
action and to execute any instrument which the Secured Party may deem necessary
or advisable to accomplish the purposes of this Agreement, including, without
limitation:

                  (a) to ask, demand, collect, sue for, recover, compound,
         receive and give acquittance and receipts for moneys due and to become
         due under or in respect of any of the Collateral,

                  (b) to receive, endorse and collect any drafts or other
         instruments, documents and chattel paper in connection with clause (a)
         above,

                  (c) to apply funds deposited to any lockbox or deposit account
         to the payment of the Secured Obligations, and

                  (d) to file any claims or take any action or institute any
         proceedings which the Secured Party may deem necessary or desirable for
         the collection of any of the Collateral or otherwise to enforce the
         rights of the Creditors and the Secured Party.

                  SECTION 10. Secured Party May Perform. If Grantor fails to
perform any agreement contained herein and such violation shall not have been
remedied within 30 days, the Secured Party may itself perform, or cause
performance of, such agreement, and the reasonable expenses of the Secured Party
(including reasonable attorneys' fees) incurred in connection therewith shall be
payable by Grantor under Section 13.

                  SECTION 11. The Secured Party's Duties. The powers conferred
on the Secured Party and the Creditors hereunder are solely to protect their
interest in the Collateral and shall not impose any duty upon the Secured Party
or any Creditor to exercise any such powers. Except for the safe custody of any
Collateral in its possession and the accounting for moneys actually received by
it hereunder, neither the Secured Party nor any Creditor shall have any duty as
to any


                                      D-9
<PAGE>   158


Collateral or as to the taking of any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Collateral.

                  SECTION 12. Remedies. Upon the occurrence of any Event of
Default and the acceleration of any of the Secured Obligations:

                  (a) Except with respect to Government Receivables as to which
         notice must be provided by the Secured Party to the applicable
         governmental or public authority or agency and a court order must be
         obtained by the Secured Party in order for it to enforce the
         obligations of the account debtor thereunder, the Secured Party may
         exercise in respect of the Collateral, in addition to other rights and
         remedies provided for herein or otherwise available to it, all the
         rights and remedies of a secured party on default under Chapter 9 of
         the Code (whether or not the Code applies to the affected Collateral,
         except that the Secured Party shall not have the right, absent a valid
         court order to such effect, to notify account debtors in respect of
         Government Receivables to make payments other than to Grantor) and in
         addition thereto and cumulative thereof, the following rights (to the
         extent allowed by the Code): the right to sell, lease or otherwise
         dispose of the Collateral and the right to take possession of the
         Collateral, and for that purpose, the Secured Party may enter upon any
         premises on which the Collateral may be situated and remove the same
         therefrom and/or may render the Collateral inoperable; the Secured
         Party may require Grantor to, and Grantor hereby agrees that it will,
         at its expense and upon the request of the Secured Party, forthwith
         assemble all or part of the Collateral and all documents relating to
         the Collateral as directed by the Secured Party and make the Collateral
         available to the Secured Party at a place to be designated by the
         Secured Party; without notice except as specified below and, except as
         may be required by the terms of the applicable policies or contracts in
         the case of private insurance Receivables, sell the Collateral in one
         or more parcels at public or private sale, at any of the Secured
         Party's offices or elsewhere, for cash, on credit or for future
         delivery, and, to the extent permitted by law, upon such other terms as
         the Secured Party may deem commercially reasonable. Grantor agrees
         that, to the extent notice of sale shall be required by law, at least
         ten days' notice to Grantor of the time and place of any public sale or
         the time after which any private sale is to be made shall constitute
         reasonable notification. The Secured Party shall not be obligated to
         make any sale of Collateral regardless of notice of sale having been
         given. The Secured Party may adjourn any public or private sale from
         time to time by announcement at the time and place fixed therefor, and
         such sale may, without further notice, be made at the time and place to
         which it was so adjourned.

                  (b) All cash proceeds received by the Secured Party in respect
         of any sale of, collection from, or other realization upon all or any
         part of the Collateral may, in the discretion of the Secured Party, be
         held by the Secured Party as collateral for, and/or then or at any time
         thereafter applied in whole or in part by the Secured Party against,
         the Secured Obligations in the order provided in Section 8.03 of the
         Loan Agreement.

                  (c) Additionally, and not by way of limitation: Grantor hereby
         acknowledges the Secured Obligations secured hereby whether now
         existing or hereafter arising, and confesses judgment in favor of the
         Creditors (but only to the extent permitted by law in the case of
         Government Receivables) and does by these presents agree and stipulate
         that,


                                      D-10
<PAGE>   159


         upon the occurrence of an Event of Default, the entire Secured
         Obligations whatever the form thereof, shall at the option of the
         Creditors pursuant to the terms of the Loan Agreement, become due and
         payable immediately, without presentment, demand for payment, protest
         or notice of nonpayment, dishonor or protest or any other notice or
         demand of any kind and the Secured Party may, without making demand and
         without notice of or putting in default, all the same being hereby
         expressly waived, enforce payment in full of all the Secured
         Obligations, and cause all and singular the Collateral to be seized and
         sold by executory process under the laws of the State of Louisiana
         issued by any competent court, and to proceed with the enforcement of
         this Agreement in any manner prescribed by law. Grantor hereby waives
         the benefit of any laws or parts of laws relating to the appraisement
         of the property seized and sold under executory process or other legal
         process and consents that the Collateral be sold without appraisement
         at public or private sale. Grantor further consents to any of the
         Creditors purchasing the Collateral at such sale.

         Grantor hereby expressly waives:

         (1)      The benefit of appraisement, as provided in Articles 2332,
                  2336, 2723 and 2724, Louisiana Code of Civil Procedure, and
                  all other laws conferring the same;

         (2)      The demand and three (3) days delay accorded by Articles 2639
                  and 2721, Louisiana Code of Civil Procedure;

         (3)      The notice of seizure required by Articles 2293 and 2721,
                  Louisiana Code of Civil Procedure;

         (4)      The three (3) days delay provided by Articles 2331 and 2722,
                  Louisiana Code of Civil Procedure; and

         (5)      The benefit of the other provisions of Articles 2331, 2722 and
                  2733, Louisiana Code of Civil Procedure and the benefit of any
                  other articles or laws relating to rights or appraisement,
                  notice, or delay not specifically mentioned above and Grantor
                  hereby expressly agrees to the immediate seizure of the
                  Collateral in the event of suit thereon.

                  (d) All rights and remedies of the Secured Party and the
         Creditors expressed herein are in addition to all other rights and
         remedies possessed by the Secured Party and the Creditors in the Loan
         Documents and the Swap Agreements.

                  SECTION 13. Indemnity, Expenses and Interest.

                  (a) Grantor agrees upon demand to pay to the Secured Party the
         amount of any and all reasonable costs and expenses, including the
         reasonable fees and disbursements of its counsel and of any experts and
         agents, which the Secured Party may incur in connection with (i) the
         administration of this Agreement, (ii) the custody, preservation, use
         or operation of, or the sale of, collection from, or other realization
         upon, any of the Collateral, (iii) the exercise or enforcement of any
         of the rights of the Secured Party


                                      D-11
<PAGE>   160


         hereunder or (iv) the failure by Grantor to perform or observe any of
         the provisions hereof provided such failure shall not have been
         remedied within 30 days.

                  (b) Grantor agrees to pay interest on any expenses or other
         sums due to the Secured Party hereunder that are not paid when due at a
         rate per annum equal to the lesser of (i) the Maximum Rate or (ii) 3%
         above the Base Rate.

                  SECTION 14. Amendments, Etc. Subject to any provision in the
Loan Agreement to the contrary, no amendment or waiver of any portion of this
Agreement nor consent to any departure by Grantor herefrom shall in any event be
effective unless the same shall be in writing and signed by the Creditors, and
then such waiver or consent shall be effective only in the specific instance for
the specific purpose for which given.

                  SECTION 15. Addresses for Notices. Except as otherwise
expressly provided herein, all notices and other communications provided for
hereunder shall be given in accordance with the terms of the Guaranty Agreement.

                  SECTION 16. Security Interests Absolute. All rights of the
Secured Party and the Creditors, all obligations of Grantor hereunder and the
security interests hereunder, shall, to the extent permitted by applicable law,
be absolute and unconditional, irrespective of:

                  (a) any lack of validity or enforceability of the Loan
         Agreement, any Swap Agreement or any of the other Loan Documents;

                  (b) any change in the time, manner or place of payment of, or
         in any other term of, all or any of the Secured Obligations or any
         other amendment or waiver of or any consent to any departure from the
         Loan Agreement, any Swap Agreement or any other Loan Document;

                  (c) any exchange, release or non-perfection of any other
         collateral, or any release or amendment or waiver of or consent to
         departure from any guaranty, for all or any of the Secured Obligations;
         or

                  (d) any other circumstance which might otherwise constitute a
         defense available to, or a discharge of, Grantor in respect of the
         Secured Obligations or in respect of this Agreement.

                  SECTION 17. Continuing Security Interests. This Agreement
creates a continuing security interest in the Collateral and shall (a) remain in
full force and effect until (i) termination of the obligations of the Banks to
make Loans and termination of any and all Swap Agreements, and (ii) payment in
full thereafter of the Secured Obligations, (b) be binding upon Grantor, its
successors and assigns and (c) inure to the benefit of the Secured Party, the
Creditors and their respective successors, transferees and assigns. Without
limiting the generality of the foregoing clause (c), the Secured Party and the
Creditors may assign or otherwise transfer any of their respective rights under
this Agreement to any other Person, and such Person shall thereupon become
vested with all the benefits in respect thereof granted herein


                                      D-12
<PAGE>   161


or otherwise to the Secured Party or the Creditors, as the case may be. Upon the
payment in full of the Secured Obligations and the termination of any
commitments to make any extensions of credit with respect to the Loan Documents,
Grantor shall be entitled to the return, upon its request and at its expense, of
such of the Collateral as shall not have been sold or otherwise applied pursuant
to the terms hereof.

                  SECTION 18. Waiver of Marshaling. All rights of marshaling of
assets of Grantor, including any such right with respect to the Collateral, are
hereby waived by Grantor.

                  SECTION 19. Limitation by Law. All rights, remedies and powers
provided in this Agreement may be exercised only to the extent that the exercise
thereof does not violate any applicable provision of law, and all the provisions
of this Agreement are intended to be subject to all applicable mandatory
provisions of law which may be controlling and to be limited to the extent
necessary so that they will not render this Agreement invalid, unenforceable, in
whole or in part, or not entitled to be recorded, registered or filed under the
provisions of any applicable law.

                  SECTION 20. Termination of Agreement; Release of Security
Interests. Upon the payment in full of the Secured Obligations and the
termination of any commitments to make any extensions of credit with respect to
the Loan Documents, this Agreement shall terminate and be of no further force
and effect and the Secured Party shall, at the expense of Grantor, execute and
deliver to Grantor such documents and instruments reasonably requested by
Grantor to evidence the release of the security interests created by this
Agreement; provided, however, notwithstanding the termination of, and the
release of the security interests created by, this Agreement, the obligations of
Grantor and the rights of the Secured Party and the Creditors under Sections 4
and 13 shall survive such termination and release.

                  SECTION 21. Survival of Representations and Warranties. All
representations and warranties contained in this Agreement or made in writing by
or on behalf of Grantor in connection herewith shall survive the execution and
delivery of this Agreement and repayment of the Secured Obligations. Any
investigation by the Creditors shall not diminish in any respect whatsoever
their rights to rely on such representations and warranties.

                  SECTION 22. Separability. Should any clause, sentence,
paragraph, subsection or Section of this Agreement be judicially declared to be
invalid, unenforceable or void, such decision will not have the effect of
invalidating or voiding the remainder of this Agreement, and Grantor agrees that
the part or parts of this Agreement so held to be invalid, unenforceable or void
will be deemed to have been stricken herefrom by the parties hereto, and the
remainder will have the same force and effectiveness as if such stricken part or
parts had never been included herein.

                  SECTION 23. Captions. The captions in this Agreement have been
inserted for convenience only and shall be given no substantive meaning or
significance whatsoever in construing the terms and provisions of this
Agreement.

                  SECTION 24. No Waiver; Remedies. No failure on the part of the
Secured Party or any Creditor to exercise, and no delay in exercising, any right
hereunder shall operate as a


                                      D-13
<PAGE>   162


waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.

                  SECTION 25. No Absolute Assignment of Government Receivables.
In order to prevent possible violations of, among other statutes and regulations
relating to Government Receivables, the Assignment of Claims Act and 42 U.S.C.
Section 1395u(b)(6), 42 U.S.C. Section 1396a(a)(32), 32 C.F.R. Section 199.7(j),
38 U.S.C. Section 1713, LSA-R.S. 46:111, Arizona Administrative Code Section R
9-22-704 and Texas Human Resources Code Ann. Section 32.036, this Agreement is
not intended to be an absolute assignment of any Government Receivable.

                  SECTION 26. Governing Law; Terms. This Agreement shall be
governed by and construed in accordance with the laws of the State of Louisiana,
except as required by mandatory provisions of law and except to the extent that
remedies hereunder in respect of any particular Collateral are governed by the
laws of a jurisdiction other than the State of Louisiana.

                  SECTION 27. INTEGRATION. THIS AGREEMENT, TOGETHER WITH THE
OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.

                  SECTION 28. Counterparts. This Agreement may be executed in
any number of counterparts and by the parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which taken together shall constitute but one and the same
instrument.



                            [REMAINDER OF PAGE BLANK.
                            SIGNATURE PAGE FOLLOWS.]



                                      D-14
<PAGE>   163



                  IN WITNESS WHEREOF, Grantor has caused this Agreement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.

                                              GRANTOR:

                                              AIR EVAC SERVICES, INC.


                                              By:
                                                 -------------------------------
                                                  Name:
                                                  Title:


                                              SECURED PARTY:

                                              BANK OF AMERICA, N.A., AS AGENT


                                              By:
                                                 -------------------------------
                                                  Name:
                                                  Title:


<PAGE>   164



                                   SCHEDULE I

                              COLLATERAL LOCATIONS

                                [To be attached]



<PAGE>   165



                                   SCHEDULE II



                            HELICOPTERS AND AIRCRAFT





                                     ENGINES



                                [To be attached]

<PAGE>   166



                                    EXHIBIT E


                           FORM OF GUARANTY AGREEMENT

                               GUARANTY AGREEMENT



                  This GUARANTY AGREEMENT, dated as of July 3, 2001, is made by
Air Evac Services, Inc., a Louisiana corporation (the "Guarantor"), in favor of
the Guaranteed Parties (as hereinafter defined).

                                    RECITALS:

         A. Petroleum Helicopters, Inc. (the "Borrower"), Bank of America, N.A.
("Bank of America"), Whitney National Bank ("Whitney"), Bank One, NA ("Bank One"
and, together, with Bank of America, Whitney and the other lenders from time to
time parties to the Loan Agreement, collectively, the "Banks"), Bank of America,
as Issuing Bank, and Bank of America, as Agent, have entered into that certain
Second Amended and Restated Loan Agreement, dated as of even date herewith (as
the same may be amended, supplemented or otherwise modified from time to time,
including, without limitation, all extensions, renewals, restatements,
rearrangements and refundings thereof, the "Loan Agreement"). Capitalized terms
used but not defined herein have the meanings assigned to such terms in such
Loan Agreement.

         B. As a condition precedent to the extensions of credit under the Loan
Agreement and under certain Swap Agreements that the Borrower may enter from
time to time with the Swap Providers (together with the Banks, collectively, the
"Creditors"), the Creditors have required that the Guarantor execute and deliver
this Guaranty Agreement in favor of the Creditors, the Issuing Bank and the
Agent (collectively, the "Guaranteed Parties").

         C. The Guarantor is a wholly owned subsidiary of the Borrower and will
derive substantial direct and indirect benefit from the extensions of credit
under the Loan Agreement and the financial accommodations under the Swap
Agreements.

         D. Accordingly, the Guarantor desires to execute this Guaranty in order
to satisfy the condition described above in Recital B.

                  NOW, THEREFORE, for and in consideration of the premises and
to induce the Banks to make Loans and the Issuing Bank to issue Letters of
Credit to the Borrower pursuant to the Loan Agreement, and in order to induce
the Swap Providers to execute, deliver and perform the Swap Agreements, the
Guarantor hereby agrees with the Agent and the Guaranteed Parties as follows:

                  1. Defined Terms.

                  (a) As used herein, "Borrower Obligations" means the
collective reference to the unpaid principal of and accrued and unpaid interest
on the Loans and all other obligations



                                      E-1
<PAGE>   167

and liabilities of the Borrower (including, without limitation, interest
accruing at the then applicable rate provided in the Loan Agreement after the
maturity of the Loans and interest accruing at the then applicable rate provided
in the Loan Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) to any Guaranteed Party, whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, the
Loan Agreement, any other Loan Document or any Swap Agreement entered into by
the Borrower for the benefit of any Guaranteed Party, or any other document
made, delivered or given in connection with any of the foregoing, in each case
whether on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all
fees, charges and disbursements of counsel to Agent and/or to any Bank that are
required to be paid by the Borrower pursuant to the terms of any Loan Document).

                  (b) As used herein, "Guaranteed Obligations" means the
collective reference to (i) the Borrower Obligations, (ii) all obligations and
liabilities of the Guarantor which may arise under or in connection with this
Guaranty Agreement, any other Loan Document or any Swap Agreement to which the
Guarantor is a party, in each case, whether on account of direct obligations,
Guaranty Obligations, reimbursement obligations, principal, interest (including,
without limitation, interest accruing at the then applicable rate provided in
the Loan Agreement after the maturity of the Loans and interest accruing at the
then applicable rate provided in the Loan Agreement after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding relating to the Guarantor or the Borrower, whether or not a
claim for post-filing or post-petition interest is allowed in any such
proceeding), fees, indemnities, costs, expenses or otherwise (including, without
limitation, all fees, charges and disbursements of counsel to the Agent and/or
to any Bank that are required to be paid by the Guarantor pursuant to the terms
of this Guaranty Agreement or any other Loan Document to which it is a party)
and (iii) all renewals, refundings, restructures and other refinancings of any
thereof, including increases in the amount thereof.

                  (c) As used herein, "Guaranty Agreement" means this Guaranty
Agreement, as amended, supplemented and otherwise modified from time to time.

                  (d) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Guaranty Agreement shall refer to this Guaranty
Agreement as a whole and not to any particular provision of this Guaranty
Agreement, and paragraph references are to this Guaranty Agreement unless
otherwise specified.

                  (e) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.



                  2. Guarantee.




                                      E-2
<PAGE>   168

                  (a) This Guaranty Agreement constitutes a guaranty of payment
and not of collection and is intended to be an absolute, irrevocable and
unconditional guaranty of payment and performance, and the Guarantor shall be
liable for the payment and performance of the Guaranteed Obligations as a
primary obligor. In furtherance thereof, but subject to the provisions of the
last sentence of this paragraph 2(a) and the provisions of paragraph 2(b), the
Guarantor hereby absolutely, unconditionally and irrevocably guarantees to the
Agent for the benefit of itself and the Guaranteed Parties and their respective
successors, endorsees, transferees and assigns, the prompt and complete payment
and performance by the Borrower when due (whether at the stated maturity, by
acceleration or otherwise) of the Guaranteed Obligations.

                  (b) Anything herein, in the Loan Agreement, any Swap Agreement
or in any other Loan Document to the contrary notwithstanding, the maximum
liability of the Guarantor hereunder shall in no event exceed the amount which
can be guaranteed by the Guarantor under applicable laws relating to the
insolvency of debtors.

                  (c) The Guarantor further agrees to pay any and all reasonable
expenses (including, without limitation, all reasonable fees and disbursements
of counsel) which may be paid or incurred by any Guaranteed Party in enforcing,
or obtaining advice of counsel in respect of, any rights with respect to, or
collecting, any or all of the Guaranteed Obligations and/or enforcing any rights
with respect to, or collecting against, the Guarantor under this Guaranty
Agreement. This Guaranty Agreement shall remain in full force and effect until
the Guaranteed Obligations are indefeasibly paid in full and the Loan Agreement
and the other Loan Documents are terminated, notwithstanding that from time to
time prior thereto the Borrower may be free from any Borrower Obligations.

                  (d) The Guarantor agrees that the Borrower Obligations may at
any time and from time to time exceed the amount of the liability of such
Guarantor hereunder without impairing this Guaranty Agreement or affecting the
rights and remedies of the Agent hereunder.

                  (e) No payment or payments made by the Borrower, the
Guarantor, any other guarantor or any other person or entity or received or
collected by the Agent or any Guaranteed Party from the Borrower, the Guarantor,
any other guarantor or any other person or entity by virtue of any action or
proceeding or any set-off or appropriation or application at any time or from
time to time in reduction of or in payment of the Guaranteed Obligations shall
be deemed to modify, reduce, release or otherwise affect the liability of the
Guarantor hereunder, which shall, notwithstanding any such payment or payments,
remain liable for the Guaranteed Obligations up to the maximum liability of the
Guarantor until the Guaranteed Obligations are indefeasibly paid in full and the
Loan Agreement and the other Loan Documents are terminated.

                  3. Right of Contribution. The Guarantor shall be entitled to
seek and receive contribution from and against any other guarantor of the
Borrower Obligations. The Guarantor reserves its right of contribution which
shall be subject to the terms and conditions of paragraph 5. The provisions of
this paragraph 3 shall in no respect limit the obligations and liabilities of
the Guarantor to the Agent and the Guaranteed Parties, and the Guarantor shall
remain liable to the Agent and the Guaranteed Parties for the full amount
guaranteed by the Guarantor hereunder.



                                      E-3
<PAGE>   169


                  4. Right of Set-off. On the occurrence and during the
continuance of any default by the Guarantor under this Guaranty Agreement, any
Loan Document or any Swap Agreement to which the Guarantor is a party or by the
Borrower or any other person or entity obligated to the Agent or any Guaranteed
Party under the Loan Agreement, any other Loan Document or any Swap Agreement,
to the maximum extent permitted by applicable law, the Guarantor hereby
irrevocably authorizes the Agent and each Guaranteed Party at any time and from
time to time without notice to the Guarantor or any other guarantor of the
Borrower Obligations, any such notice being expressly waived by the Guarantor,
to set-off and appropriate and apply any and all deposits (general or special,
time or demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured at any time held or owing
by the Agent or any Guaranteed Party to or for the credit or the account of the
Guarantor, or any part thereof in such amounts as the Agent or such Bank may
elect, against and on account of the Guaranteed Obligations, whether or not the
Agent or any such Guaranteed Party has made any demand for payment and although
all or any part of the Guaranteed Obligations may be contingent or unmatured.
The Agent will notify the Guarantor promptly of any such set-off (or if any
Guaranteed Party has set-off, such Guaranteed Party will notify the Agent and
the Guarantor thereof) and the application of the funds obtained thereby;
provided, that, to the extent permitted by applicable law, the failure to give
such notice shall not affect the validity of such set-off or such application.
The rights of the Agent and the Guaranteed Parties under this paragraph 4 are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) which the Agent and the Guaranteed Parties may have.

                  5. Subrogation. The Guarantor will not exercise any rights
which it may acquire by way of subrogation under this Guaranty Agreement, by any
payment made hereunder or otherwise, nor shall the Guarantor seek or be entitled
to seek any contribution or reimbursement from the Borrower or any other
guarantor in respect of payments made by the Guarantor hereunder, until all
amounts owing by the Borrower on account of the Borrower Obligations are
indefeasibly paid in full and the Loan Agreement, the other Loan Documents and
the Swap Agreements are terminated. If any amount shall be paid to the Guarantor
on account of such subrogation, contribution or reimbursement rights at any time
when all of the Borrower Obligations have not been indefeasibly paid in full and
the Loan Agreement, the other Loan Documents and the Swap Agreements have not
been terminated, that amount shall be held by the Guarantor in trust for the
Agent and the Guaranteed Parties, segregated from other funds of the Guarantor,
and shall, forthwith upon receipt by the Guarantor, be turned over to the Agent
in the exact form received by the Guarantor (duly endorsed by the Guarantor to
the Agent, if required), to be applied against the Guaranteed Obligations,
whether matured or unmatured, in such order and manner as the Agent may
determine in its sole discretion.

                  6. Amendments, etc. with Respect to the Guaranteed
Obligations; Waiver of Rights. The Guarantor shall remain obligated hereunder
notwithstanding that, without any reservation of rights against the Guarantor
and without notice to or further assent by the Guarantor, any demand for payment
of any of the Guaranteed Obligations made by the Agent or any Guaranteed Party
may be rescinded by the Agent or such Guaranteed Party and any of the Guaranteed
Obligations continued, and the Guaranteed Obligations, or the liability of any
other party upon or for any part thereof, or any collateral security or other
guarantee therefor or right of offset with respect thereto, may, from time to
time, in whole or in part, be renewed, extended,




                                      E-4
<PAGE>   170

amended, modified, accelerated, compromised, waived, surrendered or released,
and the Loan Agreement, any other Loan Document and any Swap Agreement may be
amended modified, supplemented or terminated, in whole or in part, from time to
time, and any collateral security, guarantee or right of offset at any time
existing for the payment of the Guaranteed Obligations may be sold, exchanged,
waived, surrendered or released. Neither the Agent nor any Guaranteed Party
shall have any obligation to protect, secure, perfect or insure any lien or
security interest at any time held by it as security for the Guaranteed
Obligations or for this Guaranty Agreement or any property subject thereto, and
the Guarantor hereby expressly waives any defense it may have to its obligations
and liabilities hereunder, under any other Loan Document or under any Swap
Agreement as a result of any failure by the Agent or any Guaranteed Party to so
protect, secure, perfect or insure any such lien or secured interest. When
making any demand hereunder against the Guarantor, the Agent may, but shall be
under no obligation to, make a similar demand on the Borrower or any other
guarantor, and any failure by the Agent to make any such demand or to collect
any payments from the Borrower or any such other guarantor or any release of the
Borrower or such other guarantor shall not relieve the Guarantor of any of its
obligations or liabilities hereunder, and shall not impair or affect the rights
and remedies, express or implied, or as a matter of law, of the Agent or any
Guaranteed Party against the Guarantor. For the purposes hereof, "demand" shall
include the commencement and continuance of any legal proceedings.

                  7. Guaranty Agreement Absolute and Unconditional. The
Guarantor hereby expressly waives any and all notice of the creation, renewal,
extension or accrual of any of the Guaranteed Obligations and notice of or proof
of reliance by the Agent or any Guaranteed Party on this Guaranty Agreement or
acceptance of this Guaranty Agreement, and the Guaranteed Obligations, and any
of them, shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended or waived, in reliance upon this
Guaranty Agreement, and all dealings between the Borrower and the Guarantor, on
the one hand, and the Agent and the Guaranteed Parties, on the other hand,
likewise shall be conclusively presumed to have been had or consummated in
reliance upon this Guaranty Agreement. The Guarantor hereby expressly waives
diligence, presentment, protest, demand for payment and notice of default or
nonpayment to or on the Borrower or any other guarantor with respect to the
Guaranteed Obligations. The Guarantor understands and agrees that this Guaranty
Agreement shall be construed as a continuing, absolute and unconditional
guaranty of payment and performance without regard to, and hereby knowingly,
intentionally and irrevocably waives any defenses it may now or hereafter have
in any way relating to, any of the following: (a) the validity, regularity or
enforceability of the Loan Agreement, any other Loan Document or any Swap
Agreement, any of the Guaranteed Obligations or any collateral security therefor
or guarantee or right of offset with respect thereto at any time or from time to
time held by the Agent or any Guaranteed Party; (b) any defense, set-off or
counterclaim (other than a defense of indefeasible payment) which may at any
time be available to or be asserted by the Borrower or any other guarantor
against the Agent or any Guaranteed Party; or (c) any other circumstance
whatsoever (with or without notice to or knowledge of the Borrower or the
Guarantor) which constitutes, or might be construed to constitute, an equitable
or legal discharge of the Borrower for the Borrower Obligations, or of the
Guarantor under this Guaranty Agreement, in bankruptcy or in any other instance.
When pursuing its rights and remedies hereunder against the Guarantor, the Agent
may, but shall be under no obligation to, pursue such rights and remedies as it
may have against the Borrower or any other person or entity, against any
collateral security or guaranty for the Borrower Obligations or any right of
offset with respect thereto, and any failure by the Agent to pursue





                                      E-5
<PAGE>   171

such other rights or remedies or to collect any payments from the Borrower, any
other guarantor or any such other person or entity or to realize upon any such
collateral security or guaranty or to exercise any such right of offset, or any
release of the Borrower, any other guarantor or any such other person or entity
or any such collateral security, guaranty or right of offset, shall not relieve
the Guarantor of any liability hereunder, and shall not impair or affect the
rights and remedies, whether express, implied or available as a matter of law,
of the Agent against the Guarantor. This Guaranty Agreement shall be effective
as a waiver of, and the Guarantor hereby expressly waives, any and all rights to
which the Guarantor may otherwise have been entitled under any suretyship laws
of the State of Texas in effect from time to time, including, without
limitation, any rights pursuant to Rule 31 of the Texas Rules of Civil
Procedure, Section 17.001 of the Texas Civil Practice and Remedies Code and
Chapter 34 of the Texas Business and Commerce Code. This Guaranty Agreement
shall remain in full force and effect and be binding in accordance with and to
the extent of its terms upon the Guarantor and the successors and assigns
thereof and shall inure to the benefit of the Agent and the Guaranteed Parties
and their respective successors, endorsees, transferees and assigns, until all
the Guaranteed Obligations are satisfied by indefeasible payment in full and the
Loan Agreement, the other Loan Documents and the Swap Agreements are terminated,
notwithstanding that from time to time during the term of the Loan Agreement the
Borrower may be free from any Borrower Obligations.

                  8. Reinstatement. This Guaranty Agreement shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any of the Guaranteed Obligations is rescinded or must
otherwise be restored or returned by the Agent or any Guaranteed Party on the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Borrower or the Guarantor, or on or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, the
Borrower or the Guarantor or any substantial part of its property, or otherwise,
all as though such payments had not been made.

                  9. Payments. The Guarantor hereby guarantees that payments
hereunder will be paid to the Agent without set-off or counterclaim in United
States dollars and in immediately available funds at the Agent's Office.

                  10. Representations and Warranties. The Guarantor hereby
represents and warrants that:

                  (a) it is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization and has the
power and authority and the legal right to own and operate its properties, to
lease and operate the properties it leases, to conduct the business in which it
is currently engaged, is duly qualified and in good standing under the Laws of
each jurisdiction where its business requires such qualification, and is in
compliance with all Laws except to the extent that noncompliance does not have a
Material Adverse Effect;

                  (b) it has the power and authority and the legal right to
execute and deliver, and to perform its obligations under, this Guaranty
Agreement and the other Loan Documents to which it is a party, and has taken all
necessary action to authorize the execution, delivery and performance of this
Guaranty Agreement and each of the other Loan Documents to which it is a party;




                                       E-6
<PAGE>   172

                  (c) this Guaranty Agreement and each of the other Loan
Documents to which it is a party constitutes a legal, valid and binding
obligation of the Guarantor enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and general equitable principles (whether
enforcement is sought by proceedings in equity or at law);

                  (d) the execution, delivery and performance of this Guaranty
Agreement and the other Loan Documents to which it is a party will not violate
any provision of any applicable law, rule or regulation or any contractual
obligation of the Guarantor and will not result in or require the creation or
imposition of any lien, security interest or other encumbrance of any kind on
any of the properties or revenues of the Guarantor pursuant to any requirement
of any applicable law, rule or regulation or any court order or decree
applicable to the Guarantor or any of its properties or any contractual
obligation of the Guarantor;

                  (e) no consent or authorization of, filing with, or other act
by or in respect of, any arbitrator or Governmental Authority and no consent of
any other person or entity (including, without limitation, any stockholder or
creditor of the Guarantor) is required in connection with the execution,
delivery, performance, validity or enforceability of this Guaranty Agreement or
(except in the case of the collection under the Security Agreement from the
account debtor in respect of Government Receivables, which requires a court
order in compliance with applicable federal or state anti-assignment laws) any
other Loan Document to which it is a party;

                  (f) there are no actions, suits or proceedings, claims or
disputes pending, or to the best knowledge of the Guarantor, threatened at law,
in equity, or in arbitration before any Governmental Authority, against the
Guarantor or any of its properties or assets which (i) purport to affect or
pertain to this Guaranty Agreement or any other Loan Document to which the
Guarantor is a party, or any of the transactions contemplated hereby, or (ii)
would reasonably be expected to have a Material Adverse Effect; and

                  (g) no injunction, writ, temporary restraining order of any
nature has been issued by any court or other Governmental Authority purporting
to enjoin or restrain the execution, delivery or performance of this Guaranty,
or directing that any other transaction provided for herein not be consummated
as herein provided.

The Guarantor hereby agrees that the foregoing representations and warranties
shall be deemed to have been made by the Guarantor on the date each Loan is made
and the date of each Letter of Credit Action under the Loan Agreement on and as
of such date of that Loan or Letter of Credit Action, as applicable, as though
made hereunder on and as of that date.

                  11. Notices. All notices, requests and demands to or upon the
Agent or any Guaranteed Party or the Guarantor to be effective shall be in
writing (including by facsimile) and shall be deemed to have been duly given or
made (i) when delivered by hand and signed for by recipient or (ii) four
business days after being deposited in the mail, first class postage prepaid or
(iii) one business day after being sent by priority overnight mail with a
nationally recognized overnight delivery carrier or (iv) if by facsimile, when
confirmed by telephone (not voicemail):




                                      E-7
<PAGE>   173

                  (a) if to the Agent or any Guaranteed Party, at its address or
facsimile number for notices set forth in the Loan Agreement; and

                  (b) if to the Guarantor, at its address or facsimile number
for notices set forth under its signature below.

The Agent, the Guaranteed Parties and the Guarantor may change their respective
addresses and facsimile numbers for notices by notice in the manner provided in
this paragraph 11.

                  12. Severability. Any provision of this Guaranty Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

                  13. INTEGRATION. THIS GUARANTY AGREEMENT, TOGETHER WITH THE
OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.

                  14. Amendments in Writing; No Waiver; Cumulative Remedies.

                  (a) None of the terms or provisions of this Guaranty Agreement
may be waived, amended, supplemented or otherwise modified except by a written
instrument executed by the Guarantor and the Agent.

                  (b) Neither the Agent nor any Guaranteed Party shall by any
act (except by a written instrument pursuant to paragraph 14(a)), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any default or in any breach of any of the
terms and conditions hereof. No failure to exercise, nor any delay in
exercising, on the part of the Agent or any Guaranteed Party, any right, power
or privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
A waiver by the Agent of any right or remedy hereunder on any one occasion shall
not be construed as a bar to any right or remedy which the Agent would otherwise
have on any future occasion.

                  (c) The rights and remedies herein provided are cumulative,
may be exercised singly or concurrently and are not exclusive of any other
rights or remedies provided by law.

                  15. Section Headings. The Section headings used in this
Guaranty Agreement are for convenience of reference only and are not to affect
the construction hereof or be taken into consideration in the interpretation
hereof.

                  16. Successors and Assigns. This Guaranty Agreement shall be
binding upon the successors and assigns of the Guarantor and shall inure to the
benefit of the Agent and the




                                      E-8
<PAGE>   174

Guaranteed Parties and their respective successors and assigns; provided, that
the Guarantor may not assign any of its rights or obligations under this
Guaranty Agreement without the prior written consent of the Agent and each
Guaranteed Party and any such purported assignment shall be null and void.

                  17. SUBMISSION TO JURISDICTION; WAIVERS.

                  (a) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
GUARANTY AGREEMENT OR ANY OTHER LOAN DOCUMENT TO WHICH THE GUARANTOR IS A PARTY
MAY BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS SITTING IN DALLAS OR OF THE
UNITED STATES FOR THE NORTHERN DISTRICT OF SUCH STATE, AND BY EXECUTION AND
DELIVERY OF THIS GUARANTY AGREEMENT THE GUARANTOR CONSENTS, FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE
GUARANTOR IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS GUARANTY AGREEMENT, ANY OTHER LOAN DOCUMENT TO
WHICH THE GUARANTOR IS A PARTY OR OTHER DOCUMENT RELATED THERETO. THE GUARANTOR
WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE
MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.

                  (b) THE GUARANTOR HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL
BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER OR IN ANY
WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THIS GUARANTY AGREEMENT, ANY OF
THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT
OR TORT OR OTHERWISE; AND THE GUARANTOR HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT ANY PARTY TO THE LOAN DOCUMENTS MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF THE GUARANTOR TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

                  (c) THE GUARANTOR IRREVOCABLY AND UNCONDITIONALLY AGREES THAT
SERVICE OF PROCESS IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR
ANY OTHER LOAN DOCUMENT MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED
OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID,
TO THE GUARANTOR AT ITS ADDRESS SET FORTH UNDER ITS SIGNATURE BELOW OR AT SUCH
OTHER ADDRESS OF WHICH THE AGENT SHALL HAVE BEEN NOTIFIED PURSUANT TO PARAGRAPH
11.



                                      E-9
<PAGE>   175


                  (d) THE GUARANTOR IRREVOCABLY AND UNCONDITIONALLY AGREES THAT
NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OR PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER
JURISDICTION.

                  (e) THE GUARANTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO
THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR
RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO IN THIS PARAGRAPH 17 ANY
SPECIAL, EXEMPLARY OR PUNITIVE DAMAGES.

                  18. [INTENTIONALLY DELETED.]

                  19. GOVERNING LAW. THIS GUARANTY AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF TEXAS.

                  20. COUNTERPARTS. THIS GUARANTY AGREEMENT MAY BE EXECUTED IN
ANY NUMBER OF COUNTERPARTS AND BY THE DIFFERENT PARTIES HERETO ON SEPARATE
COUNTERPARTS, EACH OF WHICH WHEN SO EXECUTED AND DELIVERED SHALL BE DEEMED TO BE
AN ORIGINAL AND ALL OF WHICH TAKEN TOGETHER SHALL CONSTITUTE BUT ONE AND THE
SAME INSTRUMENT.

                  21. Security Documents. The obligations of the Guarantor are
secured by certain of the Security Documents. The Guarantor shall comply with
all terms and conditions of the Security Documents to which such Guarantor is a
party, as the same may be amended, restated, supplemented or otherwise modified
from time to time.

                  22. Stay of Acceleration. In the event that acceleration of
the time for payment of any of the Guaranteed Obligations is stayed, upon the
insolvency, bankruptcy or reorganization of the Borrower or any other Person, or
otherwise, all such amounts shall nonetheless be payable by the Guarantor
immediately upon demand by the Guaranteed Parties.

                  23. Credit Agreement Covenants. The Guarantor covenants and
agrees that on and after the date hereof and until the Commitment and all Swap
Agreements have been terminated and no Loan or Letter of Credit remains
outstanding (other than Letters of Credit, together with all fees that have
accrued and will accrue thereon through the stated termination date of such
Letters of Credit, which have been supported in a manner satisfactory to the
Issuing Bank in its sole and absolute discretion) and all Guaranteed Obligations
have been paid in full (other than indemnities described in Section 10.13 of the
Loan Agreement and analogous provisions in the Security Documents which are not
then due and payable), the Guarantor shall take, or will refrain from taking, as
the case may be, all actions that are necessary to be taken or not taken so that
no violation of any provision, covenant or agreement contained in Section 6 or
Section 7 of the Loan Agreement, and so that no Default or Event of Default is
caused by the actions of the Guarantor or any of its Subsidiaries.



                                      E-10
<PAGE>   176


      [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]





                                      E-11
<PAGE>   177





                  IN WITNESS WHEREOF, each of the undersigned has caused this
Guaranty Agreement to be duly executed and delivered by its duly authorized
officer as of the day and year first above written.

                                  AIR EVAC SERVICES, INC.


                                  By:
                                     -----------------------------------------
                                  Name:
                                  Title:


                                  Address for Notices:
                                  113 Borman Drive
                                  Municipal Airport
                                  Lafayette, LA 70508
                                  Attention:  Michael J. McCann
                                  Telephone:  (337) 272-4427
                                  Facsimile:  (337) 235-1357

<PAGE>   178


                                   EXHIBIT H

                         FORM OF COMPLIANCE CERTIFICATE

                                       Financial Statement Date:
                                                                --------------

To:      Bank of America, N.A., as Agent

Ladies and Gentlemen:

         Reference is made to that certain Second Amended and Restated Loan
Agreement dated as of July ___, 2001 among Petroleum Helicopters, Inc., a
Louisiana corporation ("Borrower"), Banks from time to time party thereto, Bank
of America, N.A., as Agent and Issuing Bank (as amended, restated, extended,
supplemented or otherwise modified in writing from time to time, the
"Agreement;" the terms defined therein being used herein as therein defined).

         The undersigned Responsible Officer hereby certifies as of the date
hereof that he is the [________________] of Borrower, and that, as such, he is
authorized to execute and deliver this Certificate to Agent on the behalf of
Borrower, and that:

            [Use following for fiscal YEAR-END financial statements]

         1. Attached hereto as Schedule 1 are the year-end audited financial
statements required by Section 6.01(a) of the Agreement for the fiscal year of
Borrower ended as of the above date, together with the report and opinion of an
independent certified public accountant required by such section.

           [Use following for fiscal QUARTER-END financial statements]

         1. Attached hereto as Schedule 1 are the unaudited financial statements
required by Section 6.01(b) of the Agreement for the fiscal quarter of Borrower
ended as of the above date. Such financial statements fairly present the
financial condition, results of operations and changes in financial position of
Borrower and its Subsidiaries in accordance with GAAP as at such date and for
such periods, subject only to normal year-end audit adjustments and the absence
of footnotes.

         2. The undersigned has reviewed and is familiar with the terms of the
Agreement and has made, or has caused to be made under his supervision, a
detailed review of the transactions and conditions (financial or otherwise) of
Borrower during the accounting period covered by the attached financial
statements.

         3. A review of the activities of the Borrower Parties during such
fiscal period has been made under my supervision with a view to determining
whether during such fiscal period the Borrower Parties performed and observed
all their respective Obligations under the Loan Documents, and

                                  [SELECT ONE:]



                                      H-1
<PAGE>   179


[TO THE BEST KNOWLEDGE OF THE UNDERSIGNED DURING SUCH FISCAL PERIOD, BORROWER
PERFORMED AND OBSERVED EACH COVENANT AND CONDITION OF THE LOAN DOCUMENTS
APPLICABLE TO IT.]

                                     --OR--

         [THE FOLLOWING COVENANTS OR CONDITIONS HAVE NOT BEEN PERFORMED OR
OBSERVED AND THE FOLLOWING IS A LIST OF EACH SUCH DEFAULT OR EVENT OF DEFAULT
AND ITS NATURE AND STATUS:]

         4. The financial covenant analyses and information set forth on
Schedule 2 attached hereto are true and accurate on and as of the date of this
Certificate.

         IN WITNESS WHEREOF, the undersigned has executed this Certificate as
of                    ,             .
   -------------------  ------------

                                          PETROLEUM HELICOPTERS, INC.

                                          By:
                                             ----------------------------------

                                          Name:
                                               --------------------------------

                                          Title:
                                                -------------------------------



                                      H-2
<PAGE>   180



        For the Quarter/Year ended ___________________("Statement Date")



                                   SCHEDULE 2
                          to the Compliance Certificate
                                  ($ in 000's)





I.   SECTION 7.12 -- CAPITAL EXPENDITURES.

     A.   Capital expenditures made during fiscal year to date:   $
                                                                   -------

     B.   Cash proceeds, net of direct selling expenses,
          received from the sale of any plant, property,
          equipment or other capital asset during such
          fiscal year                                             $
                                                                   -------

     C.   Maximum permitted capital expenditures
          ($25,000,000 + Line I.B.):                              $
                                                                   -------

     D.   Excess (deficient) for covenant compliance
          (Lines I.C - I.A):                                      $
                                                                   -------


II.  SECTION 7.14(A) - CONSOLIDATED CURRENT RATIO.


     A.   [TOTAL ASSETS OF THE BORROWER AND CONSOLIDATED
          SUBSIDIARIES WHICH WOULD BE SHOWN AS CURRENT
          ASSETS ON THE BALANCE SHEET OF THE BORROWER
          AND CONSOLIDATED SUBSIDIARIES PREPARED IN
          ACCORDANCE WITH GAAP](1) [CONSOLIDATED CURRENT
          ASSETS](2) for applicable measurement period:           $
                                                                   -------

     B.   [TOTAL LIABILITIES OF THE BORROWER AND
          CONSOLIDATED SUBSIDIARIES WHICH WOULD BE
          SHOWN AS CURRENT LIABILITIES ON THE
          BALANCE SHEET OF THE BORROWER AND CONSOLIDATED
          SUBSIDIARIES PREPARED AT SUCH TIME IN ACCORDANCE
          WITH GAAP](3)[CONSOLIDATED CURRENT LIABILITIES](4)
          for applicable measurement period:                      $
                                                                   -------

     C.   Consolidated Current Ratio (Line II.A /
          Line II.B):                                                to 1.00
                                                              ------

     Maximum permitted (1.75 to 1.00)



----------

(1)  Through and including the fiscal quarter ended September 30, 2001.

(2)  After fiscal quarter ended September 30, 2001.

(3)  Through and including the fiscal quarter ended September 30, 2001

(4)  After fiscal quarter ended September 30, 2001.


                                       H-3
<PAGE>   181





III. SECTION 7.14(B) - CONSOLIDATED TANGIBLE NET WORTH.

     A.   Consolidated Tangible Net Worth at Statement Date:

          1.   Par value (or value stated on the books
               of the Borrower) of all classes of the
               capital stock of the Borrower determined in
               accordance with GAAP:                              $
                                                                   -------

          2.   The amount of the consolidated surplus,
               whether capital or earned, of the Borrower
               and Consolidated Subsidiaries determined
               in accordance with GAAP:                           $
                                                                   -------

          3.   All deferred charges, patents, trade names,
               copyrights, licenses, franchises, goodwill,
               acquisition expenses, unamortized debt discount
               and expense and other intangible items
               determined in accordance with GAAP:                $
                                                                   -------

          4.   Consolidated Tangible Net Worth (Line III.A.1
               plus Line III.A.2 less Line III.A.3 ):             $
                                                                   -------

     B.   50% of Consolidated Net Income for each fiscal
          quarter ending after December 31, 2001
          (no reduction for losses):                              $
                                                                   -------

     C.   Minimum required Consolidated Tangible Net
          Worth (Line III.B plus $85,000,000):                    $
                                                                   -------

     D.   Excess (deficient) for covenant compliance
          (Line III.A.4. less Line III.C):                        $
                                                                   -------


                                      H-4
<PAGE>   182




IV.  SECTION 7.14(C) - MODIFIED CASH FLOW COVERAGE.

     A.   Consolidated Net Income for applicable
          measurement period:                                     $
                                                                   -------

     B.   Federal and state taxes measured on income
          of the Borrower and Consolidated Subsidiaries
          for applicable measurement period:                      $
                                                                   -------

     C.   Consolidated Interest Charges for applicable
          measurement period:                                     $
                                                                   -------

     D.   Rent Expense for applicable measurement period:         $
                                                                   -------

     E.   Depreciation and amortization of the
          Borrower and Consolidated Subsidiaries,
          for applicable measurement period                       $
                                                                   -------

     F.   Non-recurring significant charge the addition
          of which has been approved in writing by each
          of the Banks for applicable measurement
          period(5)                                               $
                                                                   -------

     G.   Line IV.A plus Line IV.B plus Line IV.C plus
          Line IV.D plus Line IV.E plus Line IV.F                 $
                                                                   -------

     H.   All payments of principal on Consolidated
          Indebtedness required to be paid during
          applicable measurement period under the
          terms governing such Consolidated Indebtedness          $
                                                                   -------

     I.   Consolidated Interest Charges required to
          be paid during applicable measurement period            $
                                                                   -------

     J.   Rent Expense required to be paid during
          applicable measurement period                           $
                                                                   -------

     K.   Line IV.H plus Line IV.I plus Line IV.J                 $
                                                                   -------

     L    Modified Cash Flow Coverage (Line IV.G /
          Line IV.K):                                            to 1.00
                                                         --------

         Minimum Required:

<Table>
<Caption>
                                                       MINIMUM MODIFIED CASH
           FOUR CONSECUTIVE FISCAL QUARTERS ENDING          FLOW COVERAGE
          ----------------------------------------     ---------------------
<S>                                                    <C>
          Through and including June 30, 2001              1.10 to 1.00
          Thereafter                                       1.25 to 1.00
</Table>



----------

(5) From and including the four consecutive fiscal quarters ending December 31,
2000, through and including the four consecutive fiscal quarters of Borrower
ending September 30, 2001, the Borrower may, to the extent the Non-Recurring
Charges are included in determining Consolidated Net Income in accordance with
GAAP and without duplication, add such Non-Recurring Charges to Consolidated Net
Income in calculating the Modified Cash Flow Coverage for such accounting period



                                      H-5
<PAGE>   183
                                    EXHIBIT I

            FORM OF OFFICER'S CERTIFICATE AS TO RELEASE OF COLLATERAL


         The undersigned [CARROLL W. SUGGS/LANCE BOSPFLUG/MICHAEL MCCANN] the
[CHAIRMAN OF THE BOARD/PRESIDENT/CHIEF FINANCIAL OFFICER] of Petroleum
Helicopters, Inc., a Louisiana corporation (the "Company"), on my behalf and on
behalf of the Company, hereby certifies as to the matters set forth in the
numbered paragraphs below. The capitalized terms used and not defined herein are
used with the same meaning assigned thereto in that certain Second Amended and
Restated Loan Agreement, dated as of July ___, 2001 among the Company, Banks
from time to time party thereto, and Bank of America, N.A., as Agent and issuing
bank (as amended, restated, extended, supplemented or otherwise modified in
writing from time to time, the "Agreement").

1.       The Company is currently and will be, immediately after giving effect
         to Amendment No. ____ dated ________, ____, to the Security Agreement
         relating to the Aviation Unit to be released (the "Amendment"), in full
         compliance with all of the provisions of the Agreement.

2.       The helicopters or fixed-wing aircraft to be released consist of one or
         more complete Aviation Units.

3.       The portion of the Aircraft remaining subject to the Security Interest
         consists of complete Aviation Units in the operating condition required
         by Section 6.14 of the Agreement to be maintained by the Company.

4.       The Company has satisfied, or promptly hereafter will satisfy, the
         requirements of the proviso of Section 7.04(c) of the Agreement.

5.       There is currently no Default or Event of Default under the Agreement,
         no such Default or Event of Default is imminent and no such Default or
         Event of Default will be precipitated or continued by the transactions
         contemplated herein. The Company is currently, and immediately after
         giving effect to the Amendment will be, in full compliance with each of
         the Security Documents.

                  IN TESTIMONY WHEREOF, I hereunto set over my hand and affix
the corporate seal of the Company on this ___ day of _____________, ____.



                       ---------------------------------------------------------
                       [CARROLL W. SUGGS/LANCE BOSPFLUG/MICHAEL MCCANN]
                       [CHAIRMAN OF THE BOARD/PRESIDENT/CHIEF FINANCIAL OFFICER]



                                      I-1
<PAGE>   184
                                    EXHIBIT J

                        FORM OF ASSIGNMENT AND ACCEPTANCE
                                                                        ,
                                                               --------- -------

         Reference is made to that certain Second Amended and Restated Loan
Agreement dated as of July ___, 2001, among Petroleum Helicopters, Inc., a
Louisiana corporation ("Borrower"), Banks from time to time party thereto, and
Bank of America, N.A., as Agent and Issuing Bank (as amended, restated,
extended, supplemented or otherwise modified in writing from time to time, the
"Agreement;" the terms defined therein being used herein as therein defined).

         The assignor identified on the signature page hereto ("Assignor") and
the assignee identified on the signature page hereto ("Assignee") agree as
follows:

         1. (a) Subject to paragraph 11 below, effective as of the date written
on Schedule 1 hereto (the "Effective Date"), Assignor irrevocably sells and
assigns to Assignee without recourse to Assignor, and Assignee hereby
irrevocably purchases and assumes from Assignor without recourse to Assignor,
the interest described on Schedule 1 hereto (the "Assigned Interest") in and to
Assignor's rights and obligations under the Agreement.

                  (b) From and after the Effective Date, (i) Assignee shall be a
party under the Agreement and will have all the rights and obligations of a Bank
for all purposes under the Loan Documents to the extent of the Assigned Interest
and be bound by the provisions thereof, and (ii) Assignor shall relinquish its
rights and be released from its obligations under the Agreement to the extent of
the Assigned Interest. Assignor and/or Assignee, as agreed by Assignor and
Assignee, shall deliver, in immediately available funds, any applicable
assignment fee required under Section 10.04(c) of the Agreement.

         2. On the Effective Date, Assignee shall pay to Assignor, in
immediately available funds, an amount equal to the purchase price of the
Assigned Interest as agreed upon by Assignor and Assignee.

         3. Assignor and Assignee agree that all payments of principal,
interest, fees and other amounts in respect of the Assigned Interest accruing
from and after the Effective Date shall be for the account of Assignee, and all
payments of such amounts in respect of the Assigned Interest accruing prior to
the Effective Date shall remain for the account of Assignor. Assignor and
Assignee hereby agree that if either receives any payment of such amounts which
is for the account of the other, it shall hold the same in trust for such party
and shall promptly pay the same to such party.

         4. Assignor represents and warrants to Assignee that:

                  (a) Assignor is the legal and beneficial owner of the Assigned
         Interest, and the Assigned Interest is free and clear of any adverse
         claim;

                  (b) the Assigned Interest listed on Schedule 1 accurately and
         completely sets forth the amount of all Outstanding Obligations
         relating to the Assigned Interest as of the Effective Date;


                                      J-1
<PAGE>   185

                  (c) it has the power and authority and the legal right to
         make, deliver and perform, and has taken all necessary action, to
         authorize the execution, delivery and performance of this Assignment
         and Acceptance, and any and all other documents delivered by it in
         connection herewith and to fulfill its obligations under, and to
         consummate the transactions contemplated by, this Assignment and
         Acceptance and the Loan Documents, and no consent or authorization of,
         filing with, or other act by or in respect of any Governmental
         Authority, is required in connection in connection herewith or
         therewith; and

                  (d) this Assignment and Acceptance constitutes the legal,
         valid and binding obligation of Assignor.

Assignor makes no representation or warranty and assumes no responsibility with
respect to the financial condition of Borrower Parties or the performance by any
Borrower Party of its obligations under the Loan Documents, and assumes no
responsibility with respect to any statements, warranties or representations
made under or in connection with any Loan Document or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of any Loan Document
other than as expressly set forth above.

         5. Assignee represents and warrants to Assignor and Agent that:

                  (a) it is an Eligible Assignee;

                  (b) it has the power and authority and the legal right to
         make, deliver and perform, and has taken all necessary action, to
         authorize the execution, delivery and performance of this Assignment
         and Acceptance, and any and all other documents delivered by it in
         connection herewith and to fulfill its obligations under, and to
         consummate the transactions contemplated by, this Assignment and
         Acceptance and the Loan Documents, and no consent or authorization of,
         filing with, or other act by or in respect of any Governmental
         Authority, is required in connection in connection herewith or
         therewith;

                  (c) this Assignment and Acceptance constitutes the legal,
         valid and binding obligation of Assignee;

                  (d) under applicable Laws no tax will be required to be
         withheld by Agent or Borrower with respect to any payments to be made
         to Assignee hereunder or under any Loan Document, and prior to or
         concurrently with Agent's receipt of this Assignment and Acceptance,
         Assignee has delivered to Agent any tax forms required by Section 10.21
         of the Agreement; and

                  (e) Assignee has received a copy of the Agreement, together
         with copies of the most recent financial statements delivered pursuant
         thereto, and such other documents and information as it has deemed
         appropriate to make its own credit analysis and decision to enter into
         this Assignment and Acceptance. Assignee has independently and without



                                      J-2
<PAGE>   186

         reliance upon Assignor or Agent and based on such information as
         Assignee has deemed appropriate, made its own credit analysis and
         decision to enter into this Agreement. Assignee will, independently and
         without reliance upon Agent or any Bank, and based upon such documents
         and information as it shall deem appropriate at the time, continue to
         make its own credit decisions in taking or not taking action under the
         Agreement.

         6. Assignee appoints and authorizes Agent to take such action as agent
on its behalf and to exercise such powers and discretion under the Agreement,
the other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto as are delegated to Agent by the terms thereof, together with
such powers as are incidental thereto.

         7. Assignee and assignor hereby request that the Agent request from the
Borrower such replacement note(s) as are appropriate to reflect the transfer
effected hereby.

         8. Assignor and Assignee agree to execute and deliver such other
instruments, and take such other action, as either party may reasonably request
in connection with the transactions contemplated by this Assignment and
Acceptance.

         9. This Assignment and Acceptance shall be binding upon and inure to
the benefit of the parties and their respective successors and assigns;
provided, however, that Assignee shall not assign its rights or obligations
hereunder without the prior written consent of Assignor and any purported
assignment, absent such consent, shall be void.

         10. This Assignment and Acceptance may be executed by facsimile
signatures with the same force and effect as if manually signed and may be
executed in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument. This
Assignment and Acceptance shall be governed by and construed in accordance with
the laws of the state specified in the Agreement.

         11. The effectiveness of the assignment described herein is subject to:

                  (a) if such consent is required by the Agreement, Assignor and
Assignee obtaining the consent of Agent, Issuing Bank and/or Borrower to the
assignment described herein. By delivering a duly executed and delivered copy of
this Assignment and Acceptance to Agent, Assignor and Assignee hereby request
any such required consent and request that Agent register Assignee as a Bank
under the Agreement effective as of the Effective Date.

                  (b) receipt by Agent of (or other arrangements acceptable to
Agent with respect to) any applicable assignment fee referred to in Section
10.04(c) of the Agreement and any tax forms required by Section 10.21 of the
Agreement.

         By signing below, Agent agrees to register Assignee as a Bank under the
Agreement, effective as of the Effective Date with respect to the Assigned
Interest and will adjust the registered Pro Rata Share of Assignor under the
Agreement to reflect the assignment of the Assigned Interest.

         12. Attached hereto as Schedule 2 is all contact, address, account and
other administrative information relating to Assignee.



                                      J-3
<PAGE>   187

                  IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Acceptance to be executed as of the date first above written by
their respective duly authorized officers.


                                         ASSIGNOR:

                                         ---------------------------------------



                                         By:
                                            ------------------------------------

                                         Name:
                                              ----------------------------------

                                         Title:
                                               ---------------------------------




                                         ASSIGNEE:



[ ]   Tax forms required by
      Section 10.21 of the Agreement
      included
                                         By:
                                            ------------------------------------
                                         Name:
                                              ----------------------------------
                                         Title:
                                               ---------------------------------


(Signatures continue)




                                      J-4
<PAGE>   188



In accordance with and subject to Section 10.04 of
the Loan Agreement, the undersigned consent to
the foregoing assignment as of the Effective Date:


[BORROWER]


By:
   ----------------------------------
Name:
     --------------------------------
Title:
      -------------------------------

BANK OF AMERICA, N.A.,
as Agent

By:
   ----------------------------------
   Name:
        -----------------------------
   Title:
         ----------------------------



                                      J-5
<PAGE>   189



                     SCHEDULE 1 TO ASSIGNMENT AND ASSIGNMENT


                              THE ASSIGNED INTEREST


EFFECTIVE DATE:
               ------------------


<Table>
<Caption>

                               TYPE AND AMOUNT OF OUTSTANDING          ASSIGNED PRO RATA
  ASSIGNED COMMITMENT                OBLIGATIONS ASSIGNED                    SHARE
  -------------------          ------------------------------          -----------------
<S>                            <C>                                     <C>

 $                             [type] $                                                   %
  ------------------                   ----------------------          ------------------
</Table>



                                      J-1
<PAGE>   190


                     SCHEDULE 2 TO ASSIGNMENT AND ASSIGNMENT


                             ADMINISTRATIVE DETAILS

        (Assignee to list names of credit contacts, addresses, phone and
            facsimile numbers, electronic mail addresses and account
                            and payment information)



                                      J-2

<PAGE>   191

                                  SCHEDULE 5.19

                                LOCATION OF PARTS

I.       PHI

<Table>
<Caption>
             BASE                             P.O. BOX ADDRESS                            PHYSICAL ADDRESS
-------------------------------- -------------------------------------------- ------------------------------------------
<S>                              <C>                                          <C>
Alexandria, LA                                                                Petroleum Helicopters, Inc.
                                                                              c/o Rapides Regional Hospital
                                                                              211 4th street
                                                                              Alexandria, LA 71301

Baton Rouge, LA                                                               Petroleum Helicopters, Inc.
                                                                              4343 Chuck Yeager Ave.
                                                                              Baton Rouge, LA 70807

Cameron, LA                      Petroleum Helicopters, Inc.                  Petroleum Helicopters, Inc.
                                 Post Office Box 386                          295 Beach Road
                                 Cameron, LA 70631                            Cameron, LA 70631

Fixed Wing Hangar, LA                                                         Petroleum Helicopters, Inc.
                                                                              119 Shepard Drive
                                                                              Lafayette, LA 70508-1073

Fourchon, LA                                                                  Petroleum Helicopters, Inc.
                                                                              318 A.J. Estay Road
                                                                              Port Fourchon, LA 70357

Galveston, TX                                                                 Mailing:
                                                                              Petroleum Helicopters, Inc.
                                                                              Galveston Airport
                                                                              2115 Terminal Drive #19
                                                                              Galveston Airport 77554

                                                                              Physical:
                                                                              2215 Terminal Drive
                                                                              Galveston, TX 77554

Houma, LA                                                                     Petroleum Helicopters, Inc.
                                                                              3650 Taxi Road
                                                                              Houma Air Base
                                                                              Houma, LA 70383

IHTI Grand Isle, LA              IHTI                                         INTI
                                 Post Office Box 760                          Hwy. 1
                                 Grand Isle, LA 70358                         Grand Isle, LA 70358

IHTI Intracoastal, LA                                                         IHTI
                                                                              Hwy. 333
                                                                              9701 Exxon (pvt) Rd.
                                                                              Abbeville, LA 70510

Intracoastal City, LA                                                         Petroleum Helicopters, Inc.
                                                                              24836 La. Hwy. 333
                                                                              Abbeville, LA 70510
</Table>


<PAGE>   192


<Table>
<S>                              <C>                                          <C>
Lafayette, LA                                                                 Petroleum Helicopters, Inc.
(Heliport)                                                                    203 Tower Drive (Heliport)
                                                                              Lafayette LA 70508-2149

Lafayette, LA (Plant 1)                                                       Mailing:
                                                                              Petroleum Helicopters, Inc.
                                                                              113 Borman Drive
                                                                              Lafayette, LA 70508-1073

                                                                              Physical:
                                                                              2001 SE Evangeline Thruway
                                                                              Lafayette, LA 70508

Lafayette, LA (Plant 2)                                                       Petroleum Helicopters, Inc.
                                                                              118 Shepard Drive
                                                                              Lafayette, LA 70508-1073

Lafayette, LA                                                                 Petroleum Helicopters, Inc.
(Warehouse)                                                                   114 Chaplin
                                                                              Lafayette, LA 70508-1073

Lake Charles, LA                 Petroleum Helicopters, Inc.                  Petroleum Helicopters
                                 Post Office Box 5908                         500 Airport Boulevard
                                 Lake Charles, LA 70606-5908                  Lake Charles, LA 70605

Morgan City, LA                  Petroleum Helicopters, Inc.                  Petroleum Helicopters, Inc.
                                 Post Office Box 599                          4008 Lake Palourde Rd.
                                 Amelia, LA 70430                             Morgan City, LA 70380

New Orleans (Heliport)           Petroleum Helicopters, Inc.                  Petroleum Helicopters, Inc.
                                 Post Office Box 23502                        5802 River Road
                                 Harahan, LA 70183                            Harahan, LA 70123

Port O'Connor, TX                Petroleum Helicopters, Inc.                  Petroleum Helicopters, Inc.
                                 Post Office Box 369                          Monroe Street
                                 Port O'Connor, TX 77982                      Port O'Connor, TX 77982

Rockport, TX                     Petroleum Helicopters, Inc.                  Petroleum Helicopters, Inc.
                                 Post Office Box 430                          225 John P. Wendell Road
                                 Fulton, TX 78358                             Aransas County Airport
                                                                              Fulton, TX 78358

Sabine, TX                       Petroleum Helicopters, Inc.                  Petroleum Helicopters, Inc.
                                 Post Office Box 1085                         10600 Gulfway Drive
                                 Sabine, TX 77655                             Sabine, TX 77655

Tennessee Gas                                                                 Petroleum Helicopters, Inc.
Pipeline, LA                                                                  El Paso Gas
                                                                              225 Aviation Road
                                                                              Houma, LA

Boothville, LA                                                                Mailing:
                                                                              38963 Highway 23
                                                                              Burns, LA 70041

                                                                              Physical:
                                                                              38963 Highway 23
                                                                              Boothville, LA 70038
</Table>


<PAGE>   193



II.      AIR EVAC

2630 Sky Harbor Blvd.
Phoenix, AZ 85034

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.24
<SEQUENCE>5
<FILENAME>d89585ex10-24.txt
<DESCRIPTION>ARTICLES OF AGREEMENT
<TEXT>
<PAGE>   1

                                                                   EXHIBIT 10.24

                              ARTICLES OF AGREEMENT

                                     BETWEEN

                           PETROLEUM HELICOPTERS, INC.

                                        &

      OFFICE & PROFESSIONAL EMPLOYEES INTERNATIONAL UNION AND ITS LOCAL 108


                   EFFECTIVE JUNE 1, 2001 THROUGH MAY 31, 2004
                                REVISION 7.12.01


<PAGE>   2

<Table>
<Caption>
                               TABLE OF CONTENTS                                     PAGE
                               -----------------                                     ----
<S>         <C>                                                                      <C>
Preamble                                                                               1
Article 1.  Purpose of Agreement                                                       2
Article 2.  Recognition                                                                3
Article 3.  Pilot Status                                                               4
Article 4.  Nondiscrimination                                                          5
Article 5.  Seniority                                                                  6
Article 6.  Seniority List                                                             7
Article 7.  Reductions in Work Force                                                   8
Article 8.  Categories of Aircraft                                                     9
Article 9.  Job Posting & Bidding                                                     10
Article 10. Schedules of Service                                                      13
Article 11. Leaves of Absence                                                         14
Article 12. Paid Days Off and Banked Days                                             16
Article 13. On the Job Injury/Workers' Compensation                                   19
Article 14. Bereavement Leave                                                         21
Article 15. Jury Duty                                                                 22
Article 16. Fees and Physical Examinations                                            23
Article 17. Training                                                                  24
Article 18. Facilities, Equipment and Uniforms                                        28
Article 19. Severance Pay                                                             31
Article 20. Moving Expense                                                            32
Article 21. Base Pay                                                                  34
Article 22. Pilot Bonuses                                                             37
Article 23. Other Bonuses                                                             38
Article 24. Workover                                                                  39
Article 25. Travel Pay                                                                42
Article 26. Per Diem                                                                  43
Article 27. Insurance Benefits                                                        44
Article 28. 401(k) Plan                                                               45
Article 29. General & Miscellaneous                                                   46
Article 30. Safety/Accident Prevention                                                48
Article 31. Sexual and Workplace Harassment Policy                                    49
Article 32. Environmental Compliance                                                  50
Article 33. No Strike, No Lockout                                                     51
Article 34. Management Rights                                                         52
Article 35. Discipline and Discharge                                                  53
Article 36. Grievance Procedure                                                       54
Article 37. System Board of Adjustment                                                56
Article 38. Union Representation                                                      58
Article 39. Union Bulletin Boards & Communications                                    60
Article 40. Union Membership, Dues, Agency Fees & Checkoff                            61
Article 41. Savings Clause                                                            63
Article 42. Duration                                                                  64
</Table>


<PAGE>   3

                           PETROLEUM HELICOPTERS, INC.
                               EMPLOYER PROPOSALS

                                    AGREEMENT

         This Agreement is entered into between Petroleum Helicopters, Inc.,
hereinafter called "the Employer," and Office and Professional Employees
International Union, and its Local 108, hereinafter jointly called "the Union"
or "the OPEIU."






                                       1
<PAGE>   4

                         ARTICLE 1. PURPOSE OF AGREEMENT

         1. The purpose of this Agreement is to define the wages, hours and
other terms and conditions of employment of the Flight Deck Crew members
(hereinafter called "pilots") covered by this Agreement.

         2. No pilot covered by this Agreement will be interfered with,
restrained, coerced or discriminated against by the Employer or the Union, their
officers or their agents, because of membership or non-membership in the union,
or any lawful activity under the Railway Labor Act not in violation of this
Agreement.

         3. Whenever the male gender is used in this Agreement, it is understood
that it is referring to both male and female pilots.

         4. This Agreement sets forth the entire understanding and agreement of
the parties and may not be modified in any respect except by writing subscribed
to by the parties. This Agreement supercedes all previous agreements,
commitments or practices, oral or written, between the Employer and the Union
and/or the pilots, and expresses all of the obligations of and restrictions
imposed upon each of the respected parties during its term. The waiver of any
provision of this Agreement or any breach of this Agreement by either party
during the term of the Agreement shall not constitute a precedent for the future
waiver of any breach or provision. Nothing in this Agreement shall prohibit the
parties from bargaining on any issue they desire if both parties mutually agree
to do so during the term of this Agreement.





                                       2
<PAGE>   5

                             ARTICLE 2. RECOGNITION

         1. The Employer recognizes the Union as the exclusive bargaining
representative of, and this Agreement applies only to, all flight deck
crewmembers employed by Petroleum Helicopters, Inc. in the United States, its
territories and possessions.

         2. The Employer may subcontract pilots and/or aircraft with pilots
(collectively know as "Subcontracting") for a period not to exceed one hundred
and eighty (180) days per occurrence during the term of the Agreement when (i)
Subcontracting is necessary for the Employer to continue its operations, (ii)
the Employer determines that it does not have sufficient aircraft, or
appropriate aircraft type(s), or it lacks sufficient pilots, or its pilots are
not appropriately trained for such Subcontracting work, (iii) the temporary and
occasional use of Subcontracting is required for Fixed Wing operations and (iv)
the Employer does not furlough any pilot as a direct result of such
Subcontracting. It is understood and agreed that nothing in this paragraph shall
prevent the Employer from furloughing or terminating pilots in accordance with
the provisions of this Agreement due to business or economic reasons independent
of, and unrelated to Subcontracting.

         3. Notwithstanding Section 2 above, in the event the Employer is
required to Subcontract due to circumstances beyond its control, the Employer
may Subcontract for a time not to exceed the duration of the such circumstance
or twelve (12) months, whichever is less. Circumstances beyond the Employer's
control shall include (i) an act of nature, (ii) a strike affecting the
Employer's business, (iii) grounding of a significant number of the Employer's
aircraft by a governmental agency or court, (iv) loss or destruction of the
Employer's aircraft, (v) an act or declaration of war affecting directly or
indirectly the Employer's operations, or (vi) an owner's or manufacturer's delay
in the delivery of aircraft scheduled for delivery.

         4. In the event the employer sells all or part of its helicopter
operations to another carrier during the term of this Agreement, in advance of
such sale, the employer shall give notice of the existence of this Agreement to
such successor carrier and shall make reasonable effort to persuade such
successor carrier to agree to the continuation of the economic terms set forth
in this Agreement.

         5. All revenue and all known and recurring miscellaneous flying
performed by the Employer will be performed by pilots on its payroll, except as
provided in Sections 2 and 3 above.





                                       3
<PAGE>   6

                             ARTICLE 3. PILOT STATUS


         1. All pilots covered by this Agreement are on probation for the first
six months of their employment by the Employer.

         2. Probationary pilots shall be entitled to all rights and benefits
under this agreement except that such pilots may not utilize the provisions of
this Agreement concerning any corrective actions taken by the Employer in
connection with the pilot's performance or conduct or any disciplinary actions,
up to and including discharge.

         3. After a new pilot completes the Employer's new employee orientation,
he will be introduced to a union representative for the purpose of discussing
union membership.






                                       4
<PAGE>   7

                          ARTICLE 4. NONDISCRIMINATION

         1. The Employer and the Union agree to comply with all applicable laws
prohibiting discrimination on the basis of race, color, religion, national
origin, sex, age, disability or Vietnam-era veteran status.






                                       5
<PAGE>   8

                              ARTICLE 5. SENIORITY

         1. There shall be two types of seniority:

            A.    Company seniority- Company seniority shall be defined as the
                  pilot's length of employment from date of hire with the
                  Employer, adjusted for any breaks in service as defined in
                  Section 2 of this Article. Company seniority shall be used for
                  determining eligibility for, and the level of, all benefits.

            B.    Bidding seniority- Bidding seniority shall be defined as the
                  pilot's length of employment as a pilot with the Employer.

         2. Company seniority shall be adjusted for any breaks in employment
with PHI of one (1) year or less, except as provided in Article 7. Reduction in
Force, Section 6.

         3. If a pilot is assigned to a position not covered by this agreement,
he shall have no rights under this agreement, except that pilots on foreign
assignment, pilots on assignment as managers and supervisors on the date this
Agreement is executed, and no more than one pilot elected or appointed to a
position with the Local Union shall continue to accrue company and bidding
seniority. Pilots who are assigned to management or supervision following the
date this Agreement is executed shall continue to accrue bidding seniority for
one (1) year after being placed in the position, and shall thereafter retain all
such seniority.

         4. A pilot shall lose all seniority rights and have his name removed
from the seniority list under the following conditions:

            A.    resignation or retirement;

            B.    discharge;

            C.    absent from work for forty-eight (48) consecutive hours
                  without proper notification of the reason to the Director of
                  Operations or his designee, unless the Employer determines the
                  pilot is physically incapable of providing the Employer with
                  the proper notification of his absence;

            D.    failure to return to work from an authorized leave of absence
                  in the time provided by the Employer, giving a false reason
                  for obtaining a leave of absence or accepting gainful
                  employment while on a leave of absence (when the employment
                  was not specifically authorized by the Employer);

            E.    failure to inform Human Resources in person or by certified
                  mail of his intention to return to work or failure to return
                  to work on or before a date specified in the notice of recall
                  as provided for in Article 7, Section 8(A); or

            F.    a pilot who is furloughed and who is not recalled to service
                  with the Employer within thirty-six (36) months from the date
                  of furlough.





                                       6
<PAGE>   9

                            ARTICLE 6. SENIORITY LIST

         1. The pilot seniority list shall consist of the seniority number, name
and seniority dates of all pilots covered by this agreement. The Employer will
post the seniority list at all work locations where pilots covered by this
agreement are assigned. A copy of the seniority list will be furnished to the
Union in computer floppy disk form with leave of absence and new hire
designations.

         2. When two or more pilots are employed on the same date, they shall be
placed on the seniority list according to their date of birth with the eldest
pilot having the most seniority. If two or more pilots are employed on the same
date and have the same date of birth, the pilot who has the lowest last four
digits in his social security number shall have the most seniority.

         3. The Employer agrees to update and distribute as described above the
seniority list once each month with the effective date of this agreement. A
pilot shall have a period of thirty (30) days after the posting of the seniority
list to protest to the Employer any omission or incorrect posting affecting his
bidding seniority. Once the thirty (30) day period has expired without a
protest, a pilot's posting shall be considered correct and shall not be subject
to further protest unless the omission or incorrect posting was the result of a
clerical error on the part of the Employer.







                                       7
<PAGE>   10

                       ARTICLE 7. REDUCTIONS IN WORK FORCE


         1. If there is a loss or reduction of an Aeromedical contract, the
affected pilot(s) assigned to that contract will be placed in the Oil & Gas
pilot pool, except as described in section 2 below. If there is a loss or
reduction of an Oil & Gas contract, the affected pilot(s) assigned to that
contract will be placed in the Oil & Gas pilot pool. If a reduction in force is
necessary in any other business unit, the affected helicopter pilot(s) will be
placed in the Oil & Gas pilot pool. If a reduction in force is necessary in Oil
& Gas, a pilot's bidding seniority shall determine the order of layoff, with the
least senior pilot laid off first.

         2. Pilots hired for a specific contract (i.e., Aeromedical) may be
exempted from general layoffs; however, they may be subject to layoff upon
termination of that specific contract.

         3. If the customer owns or dry leases the aircraft and retains the
right to select pilots for these aircraft, the customer retains the right to
exempt pilots from layoff.

         4. The Employer shall provide the Union with reasonable notice of an
impending reduction in force affecting pilots under this Agreement, in order to
permit the parties to discuss alternative options. Such notice and discussions
shall be waived when circumstances beyond the control of the employer require
immediate action.

         5. Pilots with seniority rights will be recalled from furlough into the
pilot pool in bidding seniority order, with the most senior laid off pilot being
recalled first. In the event vacant jobs in Aeromedical cannot be filled from
within, furloughed pilots will be offered such jobs in bidding seniority order.
However, furloughed pilots, who would be required to relocate, will not be
removed from the seniority list if they choose not to accept the vacant
Aeromedical job offered.

         6. Pilots who are furloughed shall continue to accrue bidding seniority
for as long as they have seniority rights. They will accrue company seniority up
to a maximum of thirty (30) days while on furlough.

         7. Pilots on furlough are required to file their proper mailing address
and telephone number(s) with Human Resources at the time of the layoff and will
notify Human Resources of any changes to this information within ten (10)
calendar days.

         8. Furloughed pilots shall be notified of their recall by telephone or
certified mail to the most recent contact information provided as per Section 7
above. The date of recall notification shall be the date the Employer contacts
the furloughed pilot by telephone or the pilot acknowledges receipt of the
certified letter. Written notice to the pilot's last address of record shall be
conclusive evidence of notice to that furloughed pilot.

            A.    Each pilot accepting recall shall answer his recall notice no
                  later than five (5) calendar days after the Employer contacts
                  the pilot or the date the pilot signs for the certified
                  letter, whichever is earlier. Pilots who fail to respond to a
                  recall notice within the time limits set forth above, pilots
                  who refuse recall, or pilots who reject a recall notice shall
                  forfeit all recall rights and have their name stricken from
                  the seniority list.

            B.    A furloughed pilot who is recalled must report to work no
                  later than fourteen (14) calendar days after the date of
                  recall notification to report to duty. Nothing shall prevent
                  the Employer from beginning recurrent or requalification
                  training for recalled pilots prior to the fourteen (14) day
                  period if a sufficient number of pilots agree to return from
                  recall early.

         9. Seniority and recall rights shall terminate if a laid off pilot is
not recalled within thirty-six (36) months from the commencement of his lay off.




                                       8
<PAGE>   11

                       ARTICLE 8. CATEGORIES OF AIRCRAFT


         1. Company aircraft shall be divided into three (3) categories
consistent with FAA definitions:

            A.    Small Aircraft: A single engine or multi-engine aircraft,
                  type-certificated to carry nine (9) passengers or less, and
                  with a maximum certified gross weight of 7000 pounds or less.

            B.    Medium Aircraft: An aircraft type-certificated to carry more
                  than nine (9), but less than twenty (20) passengers, and with
                  a maximum certified gross weight of more than 7000 pounds, but
                  less than 12,500 pounds.

            C.    Large Aircraft: An aircraft type-certificated to carry more
                  than nine (9) passengers, and with a maximum certified gross
                  weight of 12,500 pounds or greater.






                                       9
<PAGE>   12

                        ARTICLE 9. JOB POSTING & BIDDING

         1. In the event there is a non-temporary job opening, a Job Posting
will be issued, normally within seven (7) days. The Job Posting will normally be
posted for a minimum of fourteen (14) days and will include any terms of the job
opening such as pay, work schedule, experience and qualification requirements,
location(s), application and other pertinent job requirements information. The
selection will be made within seven (7) days after the closing of the job
posting, subject to customer acceptance of the pilot(s) and contract award.

         2. A Job Opening will exist when the employer determines that a need
exists for an aircraft transition, upgrade or specialized training, or that a
vacancy exists on a non-temporary customer contract. Transitions and specialized
training required for replacement aircraft or ad hoc specials will be posted in
accordance with this article, and will include any conditions such as base,
regional or area requirements, pool assignment, workover expectations, and
reassignment obligations and limits thereto (normally not to exceed twelve (12)
months).

         3. A pilot applicant shall be considered qualified if he has been
previously trained in aircraft type and has the specialized training; and is
current in duty position and meets customer and employer minimum experience
requirements. For transition and upgrade, qualified means that the pilot holds
appropriate FAA certification and duty position.

         4. A job which is contracted for one hundred eighty (180) days or less
is considered temporary. Temporary jobs expected to last more than sixty (60)
days will be posted except as provided for in Section 11 (temporary
reassignments) of this Article. A temporary job filled by posting will not be
re-posted in the event it becomes non-temporary, and the pilot awarded the job
through the temporary posting will remain on that job unless he opts to be
reassigned to the pilot pool, or he successfully bids on another job.

         5. A non-temporary job vacancy is created when:

            A.    A new customer contract is obtained, unless contract
                  requirements dictate that specific pilots fill the job, or

            B.    A pilot on a non-temporary job accepts another position, or

            C.    A pilot is removed from a job.

         6. A vacancy does not exist if:

            A.    A customer changes aircraft type, and requests that the
                  assigned pilot(s) remain on the job, or

            B.    The pilot on a non-temporary job is either on an extended
                  leave (i.e- sick leave, occupational injury leave or personal
                  leave) for ninety (90) days or less; or the pilot is on a
                  special assignment or temporary assignment for one hundred
                  eighty (180) days or less, or

            C.    The customer owns or dry leases the aircraft and retains the
                  right to select pilots for these aircraft. If the customer
                  requests that the employer select the pilot(s), then the job
                  will be posted in accordance with this section.

         7. Nothing in this Article prevents the Employer from hiring pilots
into the pilot pool.



                                       10
<PAGE>   13

         8. Downgrades from a medium or heavy ship assignment require the
approval of the Chief Pilot or Director of Operations.

         9. All job openings will be posted and awarded by the following method:

            A.    A job posting is issued and posted at all domestic company
                  locations.

            B.    The Employer will use the following criteria to determine if a
                  pilot meets the requirements to be considered for a job
                  opening:

                  1)    The customer must accept the pilot applicant, and

                  2)    The Employer reserves the right to require a minimum of
                        six (6) months in a previously awarded job; or twelve
                        (12) months in a previously awarded job involving an
                        upgrade or transition with a pay increase; or
                        twenty-four (24) months in a previously awarded job
                        involving a company paid relocation. Except for the six
                        month requirement and a company paid relocation, nothing
                        in this language prevents a pilot from an upgrade or
                        promotion opportunity.

            C.    The job opening is awarded to the qualified pilot with the
                  greatest bidding seniority.

            D.    If no qualified applicant submits a bid, the employer shall
                  award the job using the following criteria:

                  1)    In EMS:

                        a)    Select and qualify the senior applicant who meets
                              customer requirements.

                        b)    Select and qualify the senior furloughed pilot who
                              meets customer requirements.

                        c)    Hire from outside the company as necessary to fill
                              job opening.

                  2)    In all other business units:

                        a)    Transition the senior applicant who is otherwise
                              qualified except as to aircraft type if the
                              transition or specialized training does not
                              involve a pay increase.

                        b)    Select the least senior qualified pilot from the
                              pilot pool.

                        c)    Select and qualify the senior applicant who meets
                              customer requirements (such as aircraft transition
                              with a pay increase or upgrade).

                        d)    Select and qualify the least senior pilot from the
                              pilot pool who meets customer requirements.

                        e)    Select the least senior qualified pilot.

                        f)    Select and qualify the least senior pilot who
                              meets customer requirements.

                        g)    Select and qualify the senior furloughed pilot who
                              meets customer requirements.

                        h)    Hire from outside the company as necessary to fill
                              job opening.

         10. Before removing a pilot from a previous bid and assigned job, the
Employer will first attempt to get the customer to modify job requirements to
allow a pool pilot to fill the job until such time as an applicant can be
trained or otherwise qualified to fill the job.



                                       11
<PAGE>   14

         11. The Director of Operations may temporarily assign a qualified pool
pilot to fill an immediate or new contract job opening until a job posting and
qualifications can be accomplished. In the event a qualified pool pilot is not
available, the Director of Operations may assign another qualified pilot. This
assignment will normally not exceed ninety (90) days, but may be extended an
additional ninety (90) days for extreme and unusual operational necessity. Upon
completion of the assignment, the pilot may return to his regularly assigned job
if that job still exists. His regularly assigned job while he is on reassignment
will be filled on a temporary basis. While on such assignment, the pilot will be
paid per diem at the rate specified for pool pilots, so long as he is assigned
to a job at a base other than his regularly assigned base.

         12. Except as otherwise provided in this Article, pilots shall not be
removed from their regularly assigned jobs to cover vacant jobs for more than
three (3) consecutive workdays, not to exceed three (3) workdays per hitch and a
total of nine (9) workdays per calendar quarter.

         13. A pool pilot may submit a request for a base assignment, and
Scheduling will make a good faith effort to honor such request on a seniority
basis.

         14. In any case in which a pilot is interviewed by a customer for a
position, the Employer will provide the customer with the training records,
medical certificate and any commendations and/or disciplinary actions in the
pilot's personnel or operations file. No other records will be provided unless
requested in writing by the customer.




                                       12
<PAGE>   15

                        ARTICLE 10. SCHEDULES OF SERVICE

         1. Pilots will work a schedule that complies with applicable Federal
Air Regulations (FARs) and will essentially be one of the following types of
work schedules:

            A.    An earned day off for each day worked (e.g.- 6/6, 7/7, 14/14,
                  4/3/3/4, 5/2/5/9);

            B.    An earned day off for each two days worked (e.g.- 8/4, 10/5,
                  14/7);

            C.    Two days off for each 5 days worked (8 1/2 hour duty day where
                  the pilot is required to remain at the base);

            D.    Two days off for each 5 days worked (14 hour duty day where
                  the pilot is not required to remain at the base when there is
                  no flight requirement); and

            E.    Continuous duty (e.g.- fire fighting, and other temporary
                  assignments usually not exceeding ninety (90) days). The
                  Employer will attempt to provide the pilot on continuous duty
                  two (2) days rest for each fourteen (14) duty days.

            The provisions of this Article are intended to define a pilot's pay
in a biweekly payperiod and should not be construed as a guarantee of hours of
work or hours paid in a payperiod or as a limitation of the Employer's right to
schedule work or change the workday, the workweek, or the work schedules as
required by operations. However, the Employer agrees to confer with the Union
for any work schedule which deviates from those listed above, including the
appropriateness of any schedule bonus.

         2. The standard work schedule for Oil & Gas operations is the 7/7
schedule (i.e.- 7 days on and 7 days off). Any job assignment deviating from the
7/7 schedule, including those other work schedules listed above, shall be filled
according to Article 9. Job Posting & Bidding Article.

         3. The Employer will make assignments of pilots in compliance with FAR
required flight duty time limitations and rest periods.

         4. A pilot's work days shall not be changed without at least five (5)
calendar days notice unless caused by extreme or unusual operational changes or
upon mutual agreement between the pilot and the Employer.

         5. A pilot may leave his duty location, with his manager's approval, if
it is determined that no flying or other job requirements are foreseeable for
the remainder of the duty day.






                                       13
<PAGE>   16

                          ARTICLE 11. LEAVES OF ABSENCE


         1. A Leave of Absence (LOA) is intended to account for a reasonable
period of time that a pilot may be required to be absent from the job for
reasons other than VSTO, STO, or paid bereavement leave. A LOA may fall into one
of the following categories:

            A.    Informal LOA (a reasonable time not to exceed 30 days) without
                  pay may be granted to a pilot for urgent personal matters.
                  Some examples include attending special schools for personal
                  benefit, a need to handle family affairs associated with the
                  death or serious illness of a close family member, or other
                  special reasons. Except as approved by the Director of Human
                  Resources, a pilot may be granted no more than one (1)
                  Informal LOA in a 2-year period.

            B.    Formal LOA (a reasonable time up to one (1) year, or in cases
                  of non-occupational injury or illness which may be extended an
                  additional year if the Employer and the physician agree that
                  the pilot is likely to return to active duty during the
                  extension) without pay may be granted to a pilot to extend the
                  time they are gone from work for recuperation from an injury
                  or illness, or to allow a pilot with insufficient paid time
                  off to fulfill the 90 day waiting period for the Long Term
                  Disability Plan. A pilot on a Formal LOA may be required by
                  the Employer to provide periodic proof that he remains
                  disabled from work. Except as approved by the Director of
                  Human Resources, a pilot may be granted no more than one
                  Formal LOA in a 2-year period.

            C.    Military LOA- Military leaves of absence and reemployment
                  rights upon return from such leave shall be granted in
                  accordance with applicable laws. All orders for military duty,
                  including National Guard and Reserve duty, shall be provided
                  in writing to the Director of Operations, within four (4)
                  calendar days of receiving the orders. A pilot on a military
                  leave shall retain and accrue company and bidding seniority.

            D.    Family & Medical LOA (leave granted under the Family and
                  Medical Leave Act) will be granted to eligible pilots as
                  required by law. The Employer's separate policy on leaves
                  associated with the Family and Medical Leave Act will apply in
                  these type leaves of absence. A pilot on FMLA will continue to
                  accrue all seniority rights. In a case of a serious
                  non-occupational health condition of a pilot who does not
                  return to work within the twelve (12) week period provided for
                  under the FMLA, he will be placed on a Formal Leave of
                  Absence.

         2. A pilot who wishes to apply for a leave of absence must submit his
request in writing to his supervisor. This written request must include the
expected duration of the leave, the purpose of the leave and where the pilot may
be contacted during the leave. It is the pilot's responsibility to keep Human
Resources informed of any changes in his contact information for the duration of
the approved leave.

         3. All requests for leaves of absence must be submitted in writing and
must be approved by the Department Manager and the Director of Human Resources.
Except as approved by the Director of Human Resources, a pilot will not be
granted a leave of absence (except a Military LOA or Workers Compensation LOA)
without first using all VSTO or in the case of a Formal leave of absence for
illness or injury without first using all STO.



                                       14
<PAGE>   17

         4. Prior to returning to duty from medical leave, a pilot may be
required to present a physician's statement to the Employer verifying that he is
medically fit to perform all pilot duties.

         5. A pilot on any non-medical leave of absence may continue certain
benefits, if any, such as Medical, Dental, Life Insurance, and Long Term
Disability/Loss of License for a maximum of one (1) month at premium rates
comparable to what other represented pilots are paying. A pilot on any
non-occupational leave of absence may continue certain benefits, if any, for a
maximum of six (6) months at premium rates comparable to what other represented
pilots are paying.

         6. Continued pilot contributions and Employer matching in the 401(k)
plan, if any, are based exclusively on receipt of wages in any payperiod.

         7. A pilot will continue to accrue VSTO and all seniority rights for a
maximum of 90 days for any leave of absence. However, a pilot on a Military
Leave of Absence, Worker's Compensation Leave of Absence and non-occupational
serious illness or injury will continue to accrue company and bidding seniority
for the duration of the leave.

         8. Approval of any leave of absence for a probationary employee rests
exclusively with the Employer. If a pilot is granted a leave of absence during
his probationary period, his probationary period shall be extended accordingly.

         9. In the event of a reduction-in-force, a pilot on a leave of absence
who would otherwise be laid off will have his leave of absence cancelled. The
pilot will be notified that his rights under this agreement have been changed to
those of a furloughed pilot.

         10. A pilot returning from a leave of absence will be returned to his
duty position if it still exists or any other vacant position where his
seniority and qualifications permit. Any pilot returning from a leave of absence
who requires training prior to returning to flying will be scheduled for
required training within seven (7) duty days or the next scheduled class from
the time the pilot notifies the Employer he is returning from such leave and has
met all requirements to return to flight duty. Pay shall resume when the pilot
commences training.

         11. All leaves of absence shall specify the date on which the pilot
will return to duty unless mutually agreed otherwise or by operation of law.

         12. All leaves of absence shall be without pay unless otherwise
specified in this agreement.

         13. Failure of any pilot to return to active status at the end of any
leave of absence shall be deemed a voluntary resignation and his name will be
removed from the seniority list.

         14. Any pilot on a leave of absence who enters the services of another
employer or who enters into a business of his own without first obtaining
written permission from the Employer, will be terminated and will forfeit his
seniority rights.



                                       15
<PAGE>   18

                    ARTICLE 12. PAID DAYS OFF AND BANKED DAYS

                         PAID TIME OFF AND LEAVE ACCRUAL

         1. There will be two types of leave accrual banks: a Vacation and
Scheduled Time Off Bank (VSTO) and a Sick Time Off (STO) Bank. These two banks
are used to give a pilot more flexibility and control for his paid time off.

                         VACATION AND SCHEDULED TIME OFF

                                  VSTO Accrual

         1. The number of VSTO days earned each year is dependent on a pilot's
years of active service with the Employer.

<Table>
<Caption>
                Completed Years of Active
                   Service As A Pilot                   Accrual Units
                -------------------------               -------------

<S>                                                     <C>
                        1-5 Years                            10
                         6 Years                             11
                         7 Years                             12
                         8 Years                             13
                         9 Years                             14
                       10-11 Years                           15
                       12-13 Years                           16
                       14-15 Years                           17
                       16-17 Years                           18
                       18-19 Years                           19
                    20 Years and More                        20
</Table>

         To compute work days vacation due:

         -   5&2, 8&4, 10&5 schedules: Multiply accrued units by 1.0

         -   All one for one schedules: Multiply accrued units by 0.7 & round to
             nearest day

         2. In order to accrue VSTO days, a pilot must be an active pilot on the
payroll for at least fifteen (15) days in a month.

         3. A new hire pilot will accrue VSTO in a month only if he is on the
payroll prior to the fifteenth (15th) of the month.

         4. A pilot does not earn and is not eligible to take VSTO days until he
completes one (1) year of active duty with the Employer.

                           Scheduling and Bidding VSTO

         1. VSTO is to be used for scheduled time off. A pilot may request up to
seven (7) day-at-a-time (DAT) VSTOs per year. Approval of the individual DAT
VSTO days is based on operational needs. The request must be submitted to the
Scheduling Department prior to the end of a hitch for use in the next hitch. DAT
will be granted on a first-come, first-serve basis.

         2. A pilot may bid all or part of his VSTO accrual as full weeks of
vacation. In cases where more than one pilot desires full week VSTO days on the
same work hitch and the Employer must limit such request due to



                                       16
<PAGE>   19

operational needs, the full week VSTO days will be awarded to the pilot(s) with
the greatest company seniority. The Employer may limit the number of pilots
permitted time off at any one time due to operational needs.

         3. Full week requests must be made at least sixty (60) days in advance.
Approvals will be given to pilots no less than thirty (30) days prior to the
start date of the pilot's requested vacation.

         4. A pilot may request the Employer purchase up to eighty (80) hours
accrued VSTO once each twelve months. In this case the pilot must submit his
request in writing to the Director of Human Resources. A pilot may accrue a
maximum of three hundred forty-four (344) hours VSTO at his anniversary date.

         5. A pilot may elect to use his VSTO bank to supplement any Workers
Compensation payments due an injury/illness incurred on the job with the
Employer as described in Article 13, On-the-job Injuries/Worker's Compensation.

         6. All VSTO days are paid at a pilot's applicable daily rate, except as
provided for by Employer policy.

                 VSTO Cancellation due to Operational Necessity

         1. In the event VSTO days are canceled due to operational necessity,
the Employer shall notify the affected pilot. Cancellations shall first be
offered to volunteers in reverse seniority order. If an insufficient number of
pilots voluntarily accept cancellation, remaining cancellations shall be
involuntarily cancelled and assigned in inverse seniority order. If a vacation
is involuntarily cancelled by the Employer or the pilot voluntarily cancels his
vacation at Employer request, the pilot shall be paid one hundred and fifty
(150) percent of his base pay for that period of scheduled vacation that he
actually works.

         2. When a full week's VSTO is canceled, the pilot and the Employer
shall attempt to find a mutually agreeable substitute block during the current
year. In the event a mutual agreement is not reached, the pilot may elect to
receive compensation in lieu of vacation. In this case, the pilot will not be
limited to the maximum of eighty (80) hours Employer purchased VSTO as described
in Section 4 above.

         3. In the event the Employer cancels a pilot's full week VSTO for
operational needs and it was involuntary on the pilot's part, all non-refundable
vacation deposits which the pilot, with the assistance of the Employer, is
unable to recover shall be reimbursed to the pilot. In order to receive
reimbursement, the pilot shall provide the Employer with proof of the deposit.

                       Treatment of VSTO Upon Termination

         1. In the event a pilot voluntarily leaves the Employer (including
retirement or permanent disability), he will be paid for his accrued VSTO days
provided he has given the Employer two weeks notice of his departure.

                               SICK TIME OFF (STO)

         1. Sick Time Off (STO) Days are granted to a pilot to provide an
opportunity for him to recover from an illness or injury. A pilot may elect to
use his STO bank to supplement any Workers Compensation payments due to an
injury/illness incurred on the job with the Employer as described in Article 13,
On-the-job Injuries/Worker's Compensation.

         2. The number of STO days accrued each year is dependent on a pilot's
years of active service with the Employer according to the following schedule:

<Table>
<Caption>
                Completed Years of Active
                   Service As A Pilot                Accrual Units/year
                -------------------------            ------------------

<S>                                                  <C>
              6 months but less than 1 Year                   1
              1 Year but less than 2 Years                    1
              2 Years but less than 3 Years                   2
              3 Years but less than 4 Years                   3
                    4 Years and over                          4
</Table>


                                       17
<PAGE>   20

        To compute work days STO accrued:

         -   5&2, 8&4, 10& 5 schedules: Multiply accrued units by 5

         -   All one for one schedules: Multiply accrued units by 3.5

         3. A pilot may accrue a maximum of 560 hours STO, except that any pilot
who has greater than this maximum at the time this agreement is executed shall
be grandfathered with his accrued STO and will not accrue any additional STO
until such time as his total STO hours drops below the 560 hour maximum. STO
days will be accrued to a pilot only after he has completed six (6) months of
active duty with the Employer.

         4. All STO days are paid at a pilot's applicable daily rate, except as
provided for by Employer policy.

         5. Unscheduled absences are taken in the following order:

            A.    Unscheduled absences due to personal illness or injury off the
                  job will be taken from the STO Bank.

            B.    Once the STO Bank is exhausted, a pilot may use his remaining
                  unused VSTO days.

            C.    Unbid accrued VSTO days must be used for any additional
                  unscheduled absences.

         6. Use of VSTO and STO on Family Medical Leave shall be required
pursuant to Family Medical Leave Act policy of the Employer. Use of VSTO days
for other leaves of absence will be pursuant to the Employer's leave policies.

         7. A pilot who is out on STO days for seven (7) consecutive work days
will be required to provide a physician's statement at that time and on a
monthly basis until he is released by the physician to return to active duty.
The pilot is responsible to ensure the FAA has cleared the pilot to return to
active duty if such illness or injury requires this FAA clearance.

         8. Maternity leave and disabilities caused or contributed by pregnancy,
miscarriage, abortion, childbirth and recovery therefrom shall be treated as
time covered by STO.

         9. Pilots and the Union share in the responsibility for preventing
unnecessary absences and shall assist the Employer in its efforts to minimize
any abuse of excessive absenteeism.

            A.    A pilot who cannot perform his duties due to a
                  non-occupational injury or illness shall immediately report
                  such absence and the reason for it to his immediate
                  supervisor. A pilot shall personally contact his supervisor on
                  a daily basis during his scheduled work hitch unless
                  physically unable to do so and shall advise the supervisor of
                  his expected date of return and a telephone number where he
                  can be reached during his absence.

            B.    Upon reasonable suspicion of misuse of such leave, the
                  Employer reserves the right to require a physician's
                  certificate or an examination by a Employer-designated
                  physician. To the extent any Employer-requested examination is
                  not covered by insurance, it shall be paid for by the Employer
                  provided the pilot submits receipts for reimbursement in a
                  timely manner.




                                       18
<PAGE>   21

               ARTICLE 13. ON THE JOB INJURY/WORKERS' COMPENSATION


         1. A pilot is eligible for worker's compensation benefits with respect
to injuries or illnesses arising out of and in the course of employment with the
Employer, provided that the pilot injured on the job reports the injury
immediately to his supervisor. If the injury is not immediately apparent, the
pilot must notify his supervisor as soon as the injury becomes apparent.

         2. A pilot injured on the job will receive his worker's compensation
benefits in accordance with applicable law. The Employer will make whole any
lost wages for the pilot during the statutory waiting period to the extent that
such wages are not paid by the Worker's Compensation carrier or the state.

         3. The pilot shall inform his supervisor of the injury and immediately
complete the First Report of Injury and give to the supervisor (unless urgent
medical care is required for the pilot in which case this report shall be
completed as soon as practical). If the pilot refuses medical attention, he must
complete and sign the refusal of care form and give it to his supervisor.

         4. A post-accident drug and alcohol screen will be performed if the
injury is a direct result of the actions of the pilot or if required by Company
policy, DOT or FAA regulations.

         5. Pilots unable to report to work on their next scheduled workday due
to an On the Job Injury (OJI) will be placed on Worker's Compensation (WC) leave
of absence. VSTO and STO days will not be charged to a pilot who is injured on
the job. The pilot is eligible to use Long-Term Disability insurance, if any, at
the end of the waiting period. A Worker's Compensation leave and leave under the
FMLA shall run concurrently in cases of on-the-job injuries or illness, except
such leaves shall not prevent the pilot from obtaining an additional leave for
other reasons covered by the FMLA within the twelve (12) month period prescribed
by law.

         6. A Workers Compensation leave of absence of up to one (1) year will
be granted to a pilot who experiences an on-the-job injury/illness (OJI) and is
medically required to be absent from work. If the pilot is unable to return to
work following the one year leave, the Employer will consult with the pilot's
physician and Aeromedical Medical Examiner in a review of the pilot's medical
prognosis to determine if an extension of the leave is necessary, in which case
the leave may be extended not to exceed thirty-six (36) months from the date of
the injury.

         7. WC leave will have no effect on the pilot's seniority with the
Employer and the pilot will accrue VSTO while on WC leave for up to one year.
All insurance benefits, if any, shall continue to be available to the pilot on
the same basis as other active represented pilots for a maximum of twelve (12)
months of WC leave. If the pilot continues on Workers Compensation leave beyond
twelve (12) months, he may continue his insurance benefits at the same premium
rate as under COBRA.



                                       19
<PAGE>   22

         8. A pilot on WC leave will contact his Supervisor or Human Resources
weekly to update his progress and discuss returning to work.

         9. If the pilot is unable to return to active duty, either in a
restricted or unrestricted capacity, at the end of his Worker's Compensation
leave of absence, his employment will be terminated.

         10. The Employer may require an injured pilot to submit to a physical
examination at the Employer's expense.

                            TRANSITIONAL WORK POLICY

         1. At the Employer's discretion, a pilot on WC leave may be offered,
and he may accept, a transitional work assignment within the restrictions placed
on the pilot by the treating physician. Human Resources and the supervisor will
work with the physician to determine if the pilot's restrictions allow him to
perform the transitional work.

         2. If the pilot is unable to return to work in his regular job, but can
perform other duties beneficial to the organization, the supervisor working with
Human Resources may temporarily assign the pilot to a transitional work
assignment which falls into one of the following categories:

            A.    he temporarily fills a vacant position;

            B.    he performs work which will offset overtime or vacation.;

            C.    he performs work which reduces the need for contractors or
                  temporary pilots; or

            D.    he performs project work beneficial to the Employer.

         3. This arrangement will be reviewed by the Supervisor and Human
Resources with the treating physician at least twice a month to determine if the
pilot is able to return to full duty.

         4. If the pilots regular rate of base pay is within the pay range for
the temporary assignment, then the pilots base pay shall not be reduced,
otherwise the Supervisor working with Human Resources will determine an
appropriate pay rate.

         5. It is the sole discretion of the Employer to return an
injured/disabled pilot to work prior to their full medical release and to
determine duration of the accommodation.




                                       20
<PAGE>   23

                          ARTICLE 14. BEREAVEMENT LEAVE

         1. The provisions of this section are intended to provide pilots with
paid leave, if needed, in cases of death of a member of the pilot's immediate
family while the pilot is scheduled to work.

         2. Paid time may be granted to a pilot for a death to a member of the
pilot's immediate family while the pilot is scheduled to work. Immediate family
is defined as: Parent (or legal guardian), Sister, Brother, Spouse, Children,
Grandparents, Mother-in-Law, or Father-in-Law.

         3. The Employer will grant bereavement leave for the death of a pilot's
immediate family. This leave shall be granted for up to three (3) consecutive
days for each occurrence, provided however, that such three day period must
include the day of the funeral, or absent a funeral, a memorial service. Pilots
will be paid for each duty day missed during this three day period. A pilot must
receive Employer approval for any additional time off work for bereavement leave
and the pilot may use accrued VSTO to cover his pay for such additional time
off.

         4. The pilot shall provide, and the Employer will accept, any
reasonable proof of death and verification of the date of the funeral or
memorial service.






                                       21
<PAGE>   24

                              ARTICLE 15. JURY DUTY

         1. Jury Duty is considered an authorized absence with regular pay. Any
monies received by a pilot from the court for Jury Duty shall be signed over to
the Employer.

         2. A copy of the jury summons should be forwarded to the Human
Resources Department

         3. Jury Duty pay is not applicable when a pilot is on leave of absence,
VSTO/STO or layoff.

         4. In the event a pilot is released from Jury Duty on a duty day, he
shall be required to return to his base provided the court is located within
reasonable proximity to the base and he has at least six (6) hours remaining in
his duty day.

         5. If a pilot is called for Jury Duty twice within a twelve (12) month
period in jurisdiction where citizens are exempt on the second call within the
twelve (12) period, the Employer is not obliged to pay for Jury Duty.

         6. Pilots under subpoena for reasons other than those benefiting the
Employer or jury duty, will be charged VSTO. When VSTO is not available, the
time off will be without pay.






                                       22
<PAGE>   25

                   ARTICLE 16. FEES AND PHYSICAL EXAMINATIONS

         1. It shall be the responsibility of each pilot to maintain an
appropriate and current FAA medical certificate, and to provide a copy of this
certificate to the Employer by the 20th of the month in which it is due.

         2. It shall be the responsibility of each pilot to maintain the
appropriate FAA pilot certificate(s) required for his duty position. The pilot
shall provide the most current certificate(s) to the Employer, and immediately
report any changes that affect the validity of those certificates.

         3. It shall be the responsibility of each pilot to arrange his required
medical examination as required by the FAA by a qualified aeromedical examiner
of the pilot's choice. Such medical examinations are to be scheduled and
conducted on the pilot's off duty time. The pilot is responsible for all costs
associated with these medical examinations to the extent that these costs are
not covered by the wellness benefit under the Employer medical insurance, if
any.

         4. When the Employer believes that there are grounds to question a
pilot's physical or mental condition to remain on flight status, the Employer
may require that such pilot be examined by a FAA designated aeromedical examiner
(AME) selected by the Employer. The Employer shall pay for this medical
examination or tests required by the Employer pursuant to this Article. The
pilot agrees to sign a medical release to allow a copy of the results to be
given to the Employer and the pilot shall also be provided a copy of this
report. This report will state specifically if the pilot is unable to perform
his duties.

         5. A pilot who fails to pass an Employer's medical examination may have
a review of the case. Such review will be conducted by the Medical Certification
Branch of the FAA. The pilot may, at his expense, have a second medical
examination conducted and submitted along with the Employer's medical
examination to this branch of the FAA.






                                       23
<PAGE>   26

                              ARTICLE 17. TRAINING

         1. For the purposes of this agreement, the following terms apply to
pilot training and duty position assignment:

            A.    Initial New Hire Training. This training category is for newly
                  hired pilots who have not had previous experience with the
                  Employer or rehires who are not eligible for recurrent
                  training. It also applies to pilots employed by the Employer
                  who have not previously held a crewmember position.

            B.    Initial Equipment Training. This category of training is for
                  pilots who have been previously trained and qualified for a
                  duty position by the Employer (not new hires) and who are
                  being reassigned for any of the following reasons:

                        (1) For Part 135 operations, the crewmember is being
                        reassigned in one of the following circumstances:

                              a) Reassignment to a different duty position or a
                              different aircraft type and the crewmember has not
                              been previously trained and qualified by the
                              Employer for that duty position and aircraft type.

                              b) Reassignment to an aircraft of a category or
                              class for which the crewmember has not previously
                              qualified with the Employer.

            C.    Transition Training. This category of training is for a pilot
                  who has been previously trained and qualified for a specific
                  duty position by the Employer and who is being assigned to the
                  same duty position on a different aircraft type.

            D.    Upgrade or Promotion Training. This category of training is
                  for a pilot who has been previously trained and qualified as
                  First Officer, IFR (SIC or second in command) by the Employer
                  and is being assigned as a Captain, IFR (PIC or pilot in
                  command) to the same aircraft type for which the pilot was
                  previously trained and qualified.

            E.    Recurrent Training. This category of training is for a pilot
                  who has been trained and qualified by the Employer, who will
                  continue to serve in the same duty position and aircraft type,
                  and who must receive recurring training and/or checking within
                  an appropriate eligibility period to maintain currency.

            F.    Requalification Training. This category of training is for a
                  pilot who has been trained and qualified by the Employer, but
                  is not current to serve in a particular duty position and/or
                  aircraft due to not having received recurrent training and/or
                  a required flight or competency check within the appropriate
                  eligibility period. Requalification training is also
                  applicable if a crewmember fails a required test or check.

            G.    Specialized Training. This is training conducted for pilots
                  who are assigned to a job they have not previously flown for
                  the Employer or is supplemental training. Some examples, but
                  not a complete list, of specialized training are; fire
                  fighting, long line, mountain, EMS, Offshore, and rescue
                  hoisting; and some examples of supplemental training are water
                  survival and customer required training.

            H.    Duty Position: The functional or operating position of a
                  crewmember. For purposes of this agreement, duty positions are
                  Captain, IFR; First Officer, IFR; and Captain, VFR.

         2. When it becomes necessary to transition or upgrade (promote) pilots,
bidding seniority shall be given priority to the extent possible subject to job
and customer requirements.



                                       24
<PAGE>   27

         3. Recurrent Training

            A.    Recurrent training will be conducted in accordance with the
                  Employer's FAA approved training program. Pay for recurrent
                  training will be in accordance with Article 21, Section 9.

            B.    Each month the Employer will publish a list of those who are
                  scheduled for recurrent training; however, it is the pilot's
                  responsibility to know when his recurrent training and/or
                  checkrides are due, and to notify the director of training if
                  he has not been scheduled at the appropriate time. In the
                  event a pilot is unable to attend training on the day(s)
                  scheduled, he will notify the director of training or his
                  representatives as far in advance as possible. If a mutually
                  acceptable date cannot be agreed upon by the pilot and the
                  Director of Training, the pilot shall be obligated to attend
                  on the originally scheduled date(s).

         4. Transition, Upgrade, and Initial Equipment Training, and Specialized
Training

            A.    Transition, Upgrade, and Initial Equipment training will be
                  conducted in accordance with PHI's FAA approved training
                  program. Pay for Transition, Upgrade, and Initial Equipment
                  training will be in accordance with Article 21, Section 9.

            B.    A pilot who fails training during an upgrade, transition,
                  initial equipment or specialized course will not be eligible
                  to reapply (in writing) for that training for six (6) months
                  unless approved by the Chief Pilot, the Director of Operations
                  or their representative. A second failure of an upgrade,
                  transition, initial equipment training or specialized course
                  will make the pilot ineligible for that course for at least
                  twelve (12) months, and only then with the approval of the
                  Chief Pilot, the Director of Operations or their
                  representative.

         5. Initial New Hire Training

            A.    Initial New Hire training will be conducted in accordance with
                  PHI's FAA approved training program. Pay for Initial New Hire
                  will be in accordance with Article 21, Section 9.

         6. Training, Checking, or Testing Failures

            A.    Training (Initial New Hire, Recurrent, Initial Equipment,
                  Transition, Upgrade, or specialized training). A pilot who is
                  unable to successfully complete a required portion of training
                  will have that training discontinued. The Director of Training
                  will consult with the pilot in an effort to determine the
                  cause of the of the pilot's inability to complete the
                  training. The pilot may request a change of instructor, and
                  the Employer will grant this request if another instructor is
                  available. If the pilot is still unable to successfully
                  complete the training, the Director of Training will



                                       25
<PAGE>   28

                  determine if training is to be continued or stopped. If the
                  Director of Training stops the training, the pilot will be
                  returned to his previous job. If that job no longer exists,
                  the pilot will be assigned to the pilot pool. In the case of
                  Initial New Hire training, the Chief Pilot or the Director of
                  Operations will review the pilot's training records and make a
                  determination as to the appropriate course of action.

            B.    Checking or Testing Failures. A pilot who fails a required
                  test or check will immediately be removed from flight duty.
                  The pilot will be offered additional training if necessary,
                  and a recheck, if he successfully completes the additional
                  training, providing that the pilot has had no previous
                  failures within the past three (3) years. The pilot may
                  request a change of instructor or check airman, and the
                  Employer will grant this request if another check airman is
                  available. If the pilot has had a previous failure within the
                  past three (3) years, the Chief Pilot or the Director of
                  Operations, will consult with the pilot and determine an
                  appropriate course of action. If further training, testing or
                  checking is approved by the Chief Pilot or the Director of
                  Operations, the pilot may request a check airman change. The
                  Employer will grant this request if another check airman is
                  available. The pilot may request a recheck by an FAA
                  inspector, and the Employer will make an effort to accommodate
                  this recheck request, but does not control the availability of
                  an FAA inspector. If the pilot fails the recheck, the Chief
                  Pilot or Director of Operations will determine an appropriate
                  course of action.

            C.    Pay Procedures for Checking or Testing Failures. The Employer
                  will make a reasonable effort to retest or recheck within
                  seven (7) days of the date of the initial test or check
                  failure. If the pilot fails a retest or recheck, he will be
                  returned to his previous job, if qualified. If that job is not
                  available, the pilot will be reassigned to the pilot pool, if
                  qualified. The Employer will provide housing and per diem for
                  time spent in training, testing or retesting, and;

                  (1)   A pilot who fails any required test or check and has not
                        failed a test or check within the past thirty-six (36)
                        months will be ineligible for any additional pay during
                        his earned time off and will be removed from flight
                        duty. The pilot will be eligible for up to seven (7)
                        scheduled workdays pay following the failure provided he
                        has not declined to retest or recheck during his earned
                        time off. If the additional time beyond the seven (7)
                        scheduled missed workdays is due to the pilot's
                        unavailability or the pilot declines the opportunity to
                        retest or recheck during his earned time off, then all
                        time for missed scheduled workdays will be either leave
                        without pay or VSTO, until the pilot completes the
                        retest or recheck.

                  (2)   A pilot who fails any required test or check and has
                        failed a test or check within the preceeding thirty-six
                        (36) months will be ineligible for any additional pay
                        during his earned time off and will be removed from
                        flight duty and will be placed on leave without pay or
                        VSTO, until he successfully passes the retest or
                        recheck.



                                       26
<PAGE>   29

         7. Training Committee

            A.    The parties agree to create to a joint training committee,
                  which shall consist of two (2) representatives designated by
                  the Employer, and two pilots designated by the Union. The role
                  of the Training Committee shall be to jointly review pilot
                  recommendations for changes and improvements in the pilot
                  training programs. Pilot representatives shall function in an
                  advisory capacity. The training committee will meet
                  periodically as necessary, but no less than once per year.








                                       27
<PAGE>   30

                 ARTICLE 18. FACILITIES, EQUIPMENT AND UNIFORMS

                                   FACILITIES

         1. Except for regular assignments in Fixed Wing, EMS, firefighting and
other unique operations in remote areas, the Employer shall provide pilots with
clean and comfortable rooms near its operating bases. These may be either
apartment units, motels, or mobile homes. The rooms will be provided under the
following circumstances:

            A.    When a pilot does not work within thirty (30) miles of his
                  home regardless of whether he is on regular work schedule or
                  workover; or

            B.    When travel back to his home would prevent the pilot from
                  receiving minimum rest in accordance with FARs.

         2. All mobile homes provided by the Employer will be limited to a
maximum of five (5) bedrooms. If any pilot(s) in a mobile home objects to such
sleeping accommodations for valid reasons, the Employer will endeavor to place
the pilot(s) in alternate accommodations. Quality furnishings will be provided
in each mobile home, including air conditioning, furniture, two refrigerators
(in units with five (5) bedrooms), television with selectable cable or
equivalent, stove and microwave oven, and cooking and eating utensils. If not
provided in the mobile homes, washers and dryers will be provided near the
operating bases.

         3. For Employer-provided accommodations, the Employer will provide maid
service weekly to clean the facility and replace towels and bed linens. Adequate
numbers of clean towels and linens will be provided to pilots at least once per
week. When a pilot vacates a room, it is his responsibility to remove his bed
linens and place his towels and linens in the designated location inside the
residence.

         4. The Employer will arrange transportation to and from
Employer-provided off-base accommodations for pilots who are assigned to a
different work location than the location the pilot initially reported to,
unless the pilot used his personal vehicle to move to that new work location.
The Employer will endeavor to arrange transportation to such pilots at meal
times as necessary.

         5. Pilots on temporary assignment or workover (other than at their
regularly assigned base) in EMS shall be provided with clean and comfortable
housing near the assigned work location and the Employer will arrange
transportation to and from the accommodations when required. The Employer will
provide or reimburse Fixed Wing pilots for accommodations when the pilot is
required by the Employer to remain overnight (RON). If a pilot is assigned to a
fire fighting assignment or other unique remote area assignments, the Employer
will provide clean and comfortable housing where available.

         6. All Employer-provided accommodations shall be single occupancy, if
available.



                                       28
<PAGE>   31

         7. The Union may appoint a Crew Accommodations Committee to work
jointly with the Employer concerning pilot complaints about pilot
accommodations. The Committee may make recommendations to the Employer to
improve crew accommodations and base living conditions.

         8. The Employer will make a reasonable effort to insure that
customer-provided accommodations are suitable, clean and comfortable. If a pilot
finds the customer-provided accommodations substandard, he shall immediately
report his specific complaint to the Employer, and the Employer will promptly
investigate and seek to resolve the complaint. In any case where the
customer-provided accommodations are substandard, with Employer approval, the
pilot may be permitted to move to another location with acceptable
accommodations.

         9. It will be the responsibility of each pilot housed in
Employer-provided accommodations to maintain the cleanliness of his area, treat
all furnishings and appliances with care, and report any items in need of repair
to the appropriate supervisor or Area Manager. Smoking is not permitted in
Employer-provided accommodations.

         10. Employer-provided accommodations are to be used by PHI employees
only.

                                    EQUIPMENT

         1. The Employer shall make available to its pilots all equipment
required to perform their duties.

         2. Pilots are responsible for all equipment assigned to them, and if
they lose equipment, or damage equipment through negligence, the pilot will be
required to reimburse the Employer for the cost of the replacement.
Employer-provided equipment that becomes inoperative as a result of normal wear
and tear will be repaired or replaced by the Employer.

         3. The Employer will provide each pilot with an individually assigned
headset. If the pilot loses or damages the headset, the pilot will be required
to purchase a replacement. Headsets that become inoperative as a result of
normal wear and tear will be repaired or replaced by the Employer.

                                 PILOT UNIFORMS

         1. Pilot uniforms are provided by the Employer and are required to be
worn while on duty in the work environment. The Oil & Gas pilot uniform consists
of tan shirt with shoulder boards and brown trousers. The IHTI pilot uniform
consists of blue shirt with shoulder boards and blue trousers. The Aeromedical
pilot uniform is appropriate to the customer assignment. Uniform colors are at
the sole discretion of the Employer.

         2. Pilots will be issued fourteen (14) garments for seven (7) complete
uniforms when hired. Short or long sleeve shirts may be ordered in any
combination totaling seven (7), but may not be substituted for ordering extra
pants. In addition, a pilot may be issued up to four (4) caps per year.



                                       29
<PAGE>   32

         3. Pilots' names will be displayed on the uniform shirts. Space
limitations dictate a maximum of twenty-seven (27) total letters. The maximum
number of letters for the first name is eleven (11). If the pilot's first name
exceeds eleven (11) letters, the initial letter of the first name will precede
the last name. A pilot may choose not to display his last name. Nicknames which
are derivatives of given first, middle, or last names can be used on the uniform
shirt.

         4. The replacement of pilot uniforms for reasonable wear and tear will
be based on Employer approval.

         5. Substitution or modification other than tailoring for proper fit of
uniform parts is not permitted. Shirts will be worn tucked in. Belts will be
worn. The headgear issued by the Employer or that of an appropriate customer or
manufacturer may be worn.

         6. Pilots shall maintain their uniforms in a clean and professional
condition.

         7. Pilots shall wear brown or black professional footwear.






                                       30
<PAGE>   33

                            ARTICLE 19. SEVERANCE PAY

         1. A pilot who is laid off and goes on furlough with the Employer shall
receive severance pay according to the schedule in Section 2 below except if one
or more of the following conditions exist he shall receive no severance pay:

            A.    He refuses to accept a job or assignment within his category
                  as "pilot" with the Employer;

            B.    The lay off is caused by circumstances beyond the control of
                  the Employer; or

            C.    He is dismissed for cause, resigns or retires.

         2. Severance pay will be paid within seven (7) days of the pilot's
furlough according to the following schedule:

<Table>
<Caption>
       Years Company Service              Calendar Weeks Severance Pay
       ---------------------              ----------------------------
<S>                                      <C>
       1 year but less than 4 years                    2
       4 years but less than 8 years                   4
       8 years but less than 12 years                  6
       12 years but less than 16 years                 8
       16 years or more                               10
</Table>

         3. The Employer may offer voluntary leaves of absence or voluntary
furloughs to offset scheduled furloughs. Any volunteer selected by the Employer
for furlough shall be covered by the provisions of this Article.

         4. Medical, dental and life insurance, if any, shall continue until the
end of the month the pilot terminates provided such pilot pays appropriate
premiums. The pilot will be eligible for COBRA coverage at that time.




                                       31
<PAGE>   34

                           ARTICLE 20. MOVING EXPENSE

         1. It is the policy of PHI to assist and ease the financial and other
burdens associated with the reasonable expenses of relocation. This policy will
provide uniform and equitable treatment regardless of work location within the
United States.

         2. Pilots who relocate at the request of the Employer who are required
to live within one (1) hour of the job location shall be reimbursed under this
policy, however, a move will only be paid if it results in the Employer not
having to provide the pilot with Employer-provided accommodations at his new
work location. In the event the Employer reimburses a pilot for relocation to a
new job assignment and that job contract later ends, the Employer will reimburse
the pilot's relocation to his previous domicile or his next assignment.

         3. The Human Resources Department will assist relocating pilots to
facilitate their move.

         4. Eligible pilots will be reimbursed for reasonable expenses of moving
as follows:

            A.    Packing, insuring, shipping, unpacking and placement of
                  household personal effects and reasonable items of furniture,
                  furnishings, clothing, appliances, tools and equipment from
                  the principal place of residence to the new home up to a
                  maximum of 12,000 pounds. Special handling items as defined by
                  the moving company will not be eligible for reimbursement
                  (e.g.- transportation of pets/animals, boats, automobiles,
                  motorcycles and heavy shop equipment).

            B.    Automobile(s) will not be transported as part of the household
                  goods move. PHI will pay the cost of driving one vehicle per
                  family by the most direct AAA highway mileage route at the
                  current mileage rate established by the IRS. No expenses will
                  be paid for a second vehicle.

            C.    Transportation of pilot and family at the time of the move:

                  o     Mileage at current IRS rate by the most direct AAA
                        highway mileage route from home to home

                  o     Pilots will be allowed the following enroute expenses
                        when properly substantiated by receipts during the
                        period of enroute travel:

                        I.    For pilot only - $30.00/day

                        II.   For pilot and Spouse - $60.00/day

                        III.  For each dependent child - $15.00/day

                  o     The period of enroute travel shall continue after
                        arrival until the day the household effects arrive or
                        until the end of the fifth (5th) day, whichever comes
                        first.



                                       32
<PAGE>   35

            D.    For the purpose of determining necessary travel time, the
                  Employer will allow one (1) travel day for each five hundred
                  (500) miles or fraction thereof, to a maximum of five (5)
                  travel days when driving a vehicle. The pilot is expected to
                  move during his days off and be prepared to work on his
                  assigned schedule. The most direct AAA mileage between the two
                  (2) cities will determine travel time.

         5. Pilots eligible for Employer paid moving expenses who elect to move
themselves shall be reimbursed for actual moving expenses such as truck or
trailer rental, gas, oil, drop-off and other Employer-approved expenses. Pilots
must notify the Employer in advance of a move, receive prior Employer approval,
and follow the specified procedures per Company policy in order to be
reimbursed. Actual expenses reimbursed cannot exceed the total estimated cost of
a Company-coordinated move.

         6. Federal Tax Regulations require an Employer to include moving
reimbursements as gross income. The Internal Revenue Code allows reasonable
moving expense deductions provided pilots use the itemized deduction procedure
when filing their income tax returns.

         7. Pilots who voluntarily leave the Employer within twenty-four months
of a paid move will be required to reimburse the Employer for all moving
expenses provided herein.






                                       33
<PAGE>   36

                              ARTICLE 21. BASE PAY

         1. A pilot will be placed in his appropriate pay scale based on the
type of aircraft flown and his years with the Employer as a pilot, except where
a pilot has been hired and given credit for appropriate previous experience.

  CAPTAIN, VFR (PIC)/FIRST OFFICER, IFR (SIC)/FIRST OFFICER, FIXED WING (SIC)

<Table>
<Caption>
                                1/1/2001         JUNE 2001         JUNE 2002         JUNE 2003
                   STEP        ANNUAL PAY       ANNUAL PAY        ANNUAL PAY        ANNUAL PAY
                   ----        ----------       ----------        ----------        ----------
<S>                <C>         <C>              <C>               <C>               <C>
                    1           $37,000           $40,700           $42,735           $44,872
                    2           $38,000           $41,800           $43,890           $46,085
                    3           $39,000           $42,900           $45,045           $47,297
                    4           $40,000           $44,000           $46,200           $48,510
                    5           $41,250           $45,375           $47,644           $50,026
                    6           $43,250           $47,575           $49,954           $52,451
                    7           $45,250           $49,775           $52,264           $54,877
                    8           $46,750           $51,425           $53,996           $56,696
                    9           $47,300           $52,030           $54,632           $57,363
                    10          $47,550           $52,305           $54,920           $57,666
                    11          $47,800           $52,580           $55,209           $57,969
                    12          $48,100           $52,910           $55,556           $58,333
                    13          $48,750           $53,625           $56,307           $59,122
                    14          $49,401           $54,341           $57,058           $59,911
                    15          $50,051           $55,056           $57,809           $60,700
                    16          $50,702           $55,772           $58,560           $61,488
                    17          $51,352           $56,487           $59,311           $62,277
                    18          $52,002           $57,202           $60,063           $63,066
                    19          $52,653           $57,918           $60,814           $63,854
                    20          $53,303           $58,633           $61,565           $64,643
</Table>



                                       34
<PAGE>   37

                  CAPTAIN, IFR (PIC)/CAPTAIN, FIXED WING (PIC)

<Table>
<Caption>
                                1/1/2001         JUNE 2001         JUNE 2002         JUNE 2003
                  STEP         ANNUAL PAY       ANNUAL PAY        ANNUAL PAY        ANNUAL PAY
                  ----         ----------       ----------        ----------        ----------
<S>              <C>         <C>               <C>               <C>               <C>
                    1           $43,420           $47,762           $50,150           $52,658
                    2           $43,420           $47,762           $50,150           $52,658
                    3           $43,420           $47,762           $50,150           $52,658
                    4           $44,554           $49,009           $51,460           $54,033
                    5           $45,550           $50,105           $52,610           $55,241
                    6           $46,500           $51,150           $53,708           $56,393
                    7           $48,000           $52,800           $55,440           $58,212
                    8           $50,250           $55,275           $58,039           $60,941
                    9           $51,500           $56,650           $59,483           $62,457
                    10          $52,750           $58,025           $60,926           $63,973
                    11          $54,750           $60,225           $63,236           $66,398
                    12          $56,250           $61,875           $64,969           $68,217
                    13          $58,500           $64,350           $67,568           $70,946
                    14          $60,000           $66,000           $69,300           $72,765
                    15          $61,000           $67,100           $70,455           $73,978
                    16          $61,246           $67,641           $71,023           $74,574
                    17          $61,492           $68,182           $71,592           $75,171
                    18          $61,738           $68,724           $72,160           $75,768
                    19          $61,984           $69,265           $72,728           $76,364
                    20          $62,230           $69,806           $73,296           $76,961
                    21          $62,476           $70,347           $73,865           $77,558
                    22          $62,722           $70,888           $74,433           $78,154
                    23          $62,968           $71,430           $75,001           $78,751
                    24          $63,214           $71,971           $75,569           $79,348
                    25          $63,460           $72,512           $76,138           $79,944
                    26          $63,706
                    27          $63,952
                    28          $64,198
                    29          $64,444
                    30          $64,690
                    31          $64,936
                    32          $65,182
                    33          $65,428
                    34          $65,674
                    35          $65,920
</Table>

         2. On the first day of the first pay period in April 2001, each pilot
who was on the pilot payroll as of December 31, 2000 and who is not topped out
in his respective pay scale will move



                                       35
<PAGE>   38

up one step on the appropriate pay scale. This represents approximately a 2.5%
increase for pilots.

         3. On the first day of the first payperiod in June 2001, the Employer
will compress the number of step levels in the Captain, IFR (PIC) pay scale from
thirty-five (35) to twenty-five (25) steps as shown in Section 1 above (Captain,
IFR (PIC) June 2001), and affected Captain, IFR (PIC) pilots' pay will be
increased accordingly.

         4. On the first day of the first payperiod in June 2001, each pilot
will be moved to the pay scales listed in Section 1 above (June, 2001 Annual
Pay). This scale represents a 10% increase over pay scales effective 1/1/2001.

         5. One year following the execution of this Agreement, each pilot will
be moved to the pay scales listed in Section 1 above (2002 Annual Pay). This
scale represents a 5% increase over the pay scales effective June 2001.

         6. On the first day of the first pay period in both April 2002, April
2003 and April 2004, each pilot who was on the pilot payroll as of December 31,
2001, December 31, 2002, and December 31, 2003 respectively, and who is not
topped out in his respective pay scale will move up one (1) step on the
appropriate pay scale. This represents approximately a 2.5% increase for each
year of step increase for pilots.

         7. On the first day of the first pay period in June 2003, each pilot
will be moved to the pay scale listed in Section 1 above (June 2003 Annual Pay).
This scale represents a 5% increase over the pay scales effective 2002.

         8. The Employer has paid to each pilot on the payroll as of December
31, 1999, a one-time retroactive lump sum calculated on the basis of placing the
pilot in his proper step level (generally based on years of service with the
Employer) and the resulting increased regular base rate of pay for the period
between April 2000 (or the pilot's date of employment if after April 2000) and
January 1, 2001.

         9. Workover rate shall be computed by dividing the pilot's yearly base
salary by one hundred eighty-two (182) anticipated yearly workdays on his
assigned work schedule plus 50%. This rate is referred to as the "regular
workover rate."

         10. A pilot who is required to participate in any training required by
the Employer or a customer (other than initial new hire training) outside his
normal work schedule will be paid a regular day's pay for that day (calculated
by dividing his yearly base salary by the number of anticipated work days on his
assigned schedule); provided, however, that he is in training for more than five
(5) hours for that day. If the pilot spends five (5) hours or less in training
as described above he shall be paid one-half (1/2) of a regular days pay for
that day. Pilots participating in initial new hire training will be paid a
regular monthly salary regardless of work schedule for the duration of this
training.



                                       36
<PAGE>   39

                            ARTICLE 22. PILOT BONUSES

         1. Pilots will be eligible for the following bonuses for the period of
time they are working the schedule:

Schedule Bonuses

  Helicopter Pilots

5&2 Schedule (14 hour duty day only)- 25% of base pay up (maximum of
$1,150/month)

2 for 1 Schedule - $1,150 per Month

  Fixed Wing Pilots

New Orleans 5&2 Schedule - $350 per Month

2 for 1 Schedule - $1,150 per Month

                                  Duty Bonuses

Lead Pilot - $25 per day ($30/day if Lead Pilot flies a contract job)
Instructor - $200 per month
Check Airman - $500 per month
Pilot/Mechanic - $500 per month
RMT Pilot - $1,000 per month
Fire/Extended Standby - Extended standby time is determined by the Forestry
     Service and is passed through to the pilot.
First Officer, IFR (SIC) - $125 per month
Captain, VFR (PIC) single pilot medium aircraft (reconfigured to 9 or less
     passengers) - $75 per month (see Note 1 below)
Captain, VFR (PIC) dual pilot VFR medium aircraft (10 passenger of more) - $75
     per month (see Note 1 below)
Heavy Ship First Officer (SIC) (214ST) - $150 per month
Heavy Ship Captain (PIC) (214ST) - $300 per month

                              Certification Bonuses

Airline Transport Pilot Rating- $100 per month

Note 1: To qualify for this bonus, pilot(s) must be permanently assigned as
either single pilot Captain, VFR medium aircraft reconfigured to 9 passenger or
less; or dual pilot Captain, VFR medium aircraft 10 passenger or more. These VFR
medium aircraft configurations will only be at customer request and will usually
be flown with VFR medium aircraft added to Employer's fleet (and are not
anticipated to constitute a significant portion of the Employer's fleet).



                                       37
<PAGE>   40

                           ARTICLE 23. OTHER BONUSES

         1. Offshore Bonus- In addition to his base salary, a pilot who is
required by the Employer or the customer to remain at an offshore location
overnight shall receive twenty-five (25) dollars per night.

         2. Fire Contract Bonus- In addition to his base pay and any other
bonuses, a pilot will receive a fire contract bonus of $100/day when the
aircraft is activated on a fire contract. This bonus shall begin when he reports
to the duty assignment (including reasonable travel time) and shall end when he
is released from the duty assignment (including reasonable travel time).

         3. Safety Award Program- The Employer's safety award program will
continue in its present form (attached as addendum herein). However, the
Employer reserves the right to modify or discontinue the program at its
discretion but agrees to confer with the union prior to doing so.

         4. Holiday Pay- The Employer recognizes six holidays per calendar year:
New Year's Day, Memorial Day, 4th of July, Labor Day, Thanksgiving Day and
Christmas Day. Any pilot who works on an Employer designated holiday shall
receive an additional eight hours pay at his Workover rate.





                                       38
<PAGE>   41

                              ARTICLE 24. WORKOVER

         1. All pilots who work extra duty days over and above their assigned
work schedule will be paid for the extra days worked at a workover rate, except
that all types of training outside the pilot's normal work schedule shall be
paid according to Article 21. Base Pay, Section 9.

         2. Separate workover volunteer lists will be maintained at each base
and at Lafayette Scheduling. These lists will indicate the days the pilot is
willing to "workover" at particular bases on his normal time off. Each list will
include a telephone number (or beeper number) where the pilot may be reached.
Workover will be limited to a maximum of four days for any seven-day off-time
period unless otherwise approved by the business unit manager or Director of
Operations. A pilot who desires to have his name added to the workover list at a
specific base(s) shall notify by Sunday 12 noon in writing (email, fax or
otherwise) the appropriate Area Manager(s) (or their representatives) of his
desire to workover. Each pilot is limited to requesting workover at two (2)
specific bases, however, he may also send his workover request to Lafayette
Scheduling. This request shall include the pilot's name and contact number, the
date(s) the pilot is available for workover, the aircraft the pilot is qualified
to fly, his current job assignment and the date of his last workover. If the
pilot is assigned offshore and has no means of notifying the base(s) except by
telephone, the base will accept and note on the workover list such verbal
notification for this pilot. If the pilot is willing to workover at any base, he
will send his workover request to Lafayette Scheduling and will include the
information listed above. Each workover list will be purged at the end of each
calendar quarter and pilots who desire workover will be required to resubmit
their workover requests as described above.

         3. The Employer will first attempt to award workover to pilots with off
days between training and their normal work hitch. For other available workover
the Employer will allow the pilot in the order described below to choose which
workover he desires to work. Available workover will be awarded in the following
order: a) to pilots on that job at the base, b) on a rotating basis to all other
pilots on the workover list starting with the pilot who reported the greatest
length of time since his last workover at that base. In the event two or more
pilots report the same length of time since their last workover, the pilot with
the most bidding seniority will receive the workover. When a base workover list
is exhausted, Lafayette Scheduling will provide a pilot for the workover on the
same basis as described above. When the workover lists are exhausted, the
Employer may fill the position with any qualified pilot who is employed by the
Employer. If the Employer is still unable to fill the job requirement under the
procedures outlined in this Article, workovers shall be assigned based on
bidding seniority, starting with the least senior qualified pilot, except that
once a pilot has worked three (3) such workover days per calendar year, the next
least senior qualified pilot shall be required to accept the next mandated
workover until he reaches three such workover days and so on until the seniority
list is depleted. Further assigned workovers would then revert to the least
senior pilot until he reaches six (6) mandated workover days in a calendar year
and then continue as described above.

Once the pilot has accepted a workover assignment, it may not be changed without
prior mutual agreement between the pilot and the Employer.



                                       39
<PAGE>   42

         4. The pilot will designate on the workover request form with the Area
Manager (or his representative) if he is available for "emergency workover"
(workover opportunity which requires the pilot to report within two hours).
Qualified pilots will be selected for emergency workovers on the same basis as
described in Section 3 above.

         5. A pilot may request and be approved by the Employer to take
compensatory time in lieu of receiving workover pay. A pilot will be compensated
at his regular base pay for any approved compensatory time taken.

         6. A pilot will be passed over for workovers when:

            A.    A pilot is not qualified.

            B.    A customer requests a certain pilot or requests that a certain
                  pilot not fly his job.

            C.    There is a conflict with a pilot's regular job (i.e., FAR
                  limitations).

            D.    The dates of a pilot's availability conflict with the length
                  of the workover requirement.

            E.    An off-duty pilot does not answer a phone call from the
                  Employer or does not return a message left on his answering
                  machine within fifteen (15) minutes. The time and date of the
                  attempted call to contact the pilot will be documented by the
                  Employer.

            F.    A pilot is unable to give a definitive answer at the time of
                  the call.

            G.    An off-duty pilot will be allowed to use a beeper as his
                  contact number only for normal workovers and will have fifteen
                  (15) minutes to respond to his page or he will be passed over
                  for a workover assignment. The pilot is responsible to make
                  certain that his beeper is in working order.

            H.    An on-duty pilot cannot be contacted within two (2) hours.

         7. A pilot who has expressed interest in workover and subsequently
twice refuses a workover without having previously removed his name from the
workover request list will be removed from the workover list for the next four
(4) calendar weeks, and he may not put his name back on that specific workover
list during this period.

         8. The Director of Training or his designee shall determine workover in
the Training Department. The Director of Operations and the Director of Training
(or their designees) shall determine placement of Instructor/Check Airmen in the
performance of their duties, including line checks.

         9. For jobs that are assigned to pilot/mechanics, any qualified
pilot/mechanic will be called first for those workover assignments.

         10. If a pilot on a Gulf of Mexico assignment is required to remain
overnight due to head-to-head crew change requirements, he will receive workover
pay based on duty time rounded to the next hour with a minimum of two (2) hours
and a maximum of one full day workover once he has been on duty at least eight
(8) hours for that day.



                                       40
<PAGE>   43

         11. The Employer reserves the option to pay a premium rate (e.g.
workover) for all time it deems appropriate due to operational necessity. The
Employer will meet and confer with the Union prior to implementing a premium
rate.

         12. A pilot attending any training required by the Employer or a
customer outside his normal work schedule will not be eligible for workover for
those days spent in training.

         13. For three (3) months after the execution of this agreement, the
remedy for inadvertent Employer errors in awarding workover shall be that the
affected pilot or pilots shall receive priority consideration without regard to
the length of time since his last workover or his bidding seniority for the
number of workovers which corresponds to the workover error only where the pilot
is qualified and acceptable to the customer, however, Section 6 above shall
apply to any offer of workover under this Section.

         14. Three (3) months after the execution of this Agreement, the parties
will meet to determine if any changes should be made in the terms of this
Article. If the parties mutually agree to changes, this Article shall be amended
accordingly. In any event after the three month trial period, the additional
remedy for Employer errors will be one (1) hour workover paid for each workover
day missed due to the error, up to a maximum of four (4) hours workover pay.





                                       41
<PAGE>   44

                             ARTICLE 25. TRAVEL PAY

         1. If a pilot is required to move between two or more field bases or
another PHI designated location during his normal work schedule and that pilot
uses personal transportation, a mileage allowance equal to the IRS standard
mileage rate per mile will be paid. A mileage allowance will also be paid if a
pilot is required to go directly from one base to another for workover in
conjunction with that person's regular work hitch. Such mileage allowance will
be paid on the basis of an Employer approved mileage chart calculated using the
most direct route between bases.

         2. The Employer shall make reasonable efforts to enter into Additional
Crew Member Agreements (ACM) with other air transportation carriers. The
Employer shall provide a photo identification card that clearly identifies the
employee as a pilot on his next occasion of recurrent training.





                                       42
<PAGE>   45

                              ARTICLE 26. PER DIEM

         1. A pilot shall receive per diem when company housing is provided as
described in Article 18. Facilities & Equipment, Section 1.

         2. A pilot cannot receive both an offshore bonus and per diem for the
same workday.

         3. Per diem shall be paid as follows:

            A.    Three (3) dollars per meal to a maximum of nine (9) dollars
                  per day when the pilot is working at his regularly assigned
                  base.

            B.    Five (5) dollars per meal to a maximum of fifteen (15) dollars
                  per day for:

                  (1)   Pilots assigned to the pilot pool;

                  (2)   Replacement pilots for EMS;

                  (3)   A pilot on a regular work schedule who is required to
                        relocate via vehicle or aircraft after arriving at his
                        assigned base;

                  (4)   A pilot attending training at locations other than PHI
                        facilities (e.g., Flight Safety Training); and

                  (5)   A pilot assigned to an offshore contract and normally
                        required to remain offshore who is required to RON
                        onshore during his work schedule




                                       43
<PAGE>   46

                         ARTICLE 27. INSURANCE BENEFITS

         1. The Employer shall offer welfare benefits for Pilots equal in
benefits and employee premiums to that of the company's non-represented
employees. This includes, but is not limited to, Medical Insurance, Dental
Insurance, Term Life Insurance, Employee and Dependent Supplemental Life
Insurance, LTD coverage, Medical Loss of License Coverage, Medical and Dependent
Care Spending Accounts, Employee Assistance Program, and Vision Discount
Program.

         2. Effective January 1, 2002, the Employer will modify its Term Life
Insurance Plan to provide at no cost to each employee, including pilots covered
under this Agreement, one and one-half (1 1/2) times his annual base salary in
life insurance coverage and an equal amount of coverage under Accidental Death
and Dismemberment (AD&D). The Employer will make reasonable efforts with the
Insurance provider to avoid having the additional Employer-provided Life
Insurance affect the amount of Supplemental Life Insurance and AD&D "buy-up"
coverage which is now available to the employee.





                                       44
<PAGE>   47

                             ARTICLE 28. 401(k) PLAN

         1. The Employer shall match a participating Pilot's 401(k) plan salary
deferral contribution two dollars for each dollar the pilot contributes up to a
maximum of the pilot's first three (3) percent of gross earnings bi-weekly,
exclusive of bonuses.

         2. The Employer will separate the 401(k) plan for pilots covered by
this agreement from other 401(k) plan participants.





                                       45
<PAGE>   48

                       ARTICLE 29. GENERAL & MISCELLANEOUS

         1. Any pilot leaving the service of the Employer shall, upon written
request to the Human Resources Department, be provided with a letter setting
forth the Employer's record of his job classification, length of service and
rate of pay at the date of his termination.

         2. The pay period is currently every fourteen (14) days (bi-weekly). If
the Employer wishes to change the pay period timing, it shall meet and discuss
the change with the Union prior to implementation. The Employer shall continue
to offer, on a voluntary basis, Electronic Funds Transfer (EFT) to the pilot's
bank of choice.

         3. When there is an error in the pay of a pilot, this error will be
corrected as soon as possible, not to exceed five (5) business days following
notification.

         4. If the Employer decides to place into service aircraft other than
those already in service at the time of execution of this Agreement, the
Employer will confer with the Union as soon as possible and prior to
establishing rates of pay, rules and working conditions applicable to the new
aircraft. If the Employer decides to place into service any aircraft of
substantially different design, configuration (e.g., tiltrotor aircraft, CH54)
or cargo/passenger capacity of twenty-two (22) or more passengers, either party
may request a mediator from the National Mediation Board to participate in
interest based bargaining discussions for a period of up to sixty (60) days
prior to the Employer implementing rates of pay, rules and working conditions
applicable to the new aircraft.

         5. A pilot's personal items lost or damaged due to an aircraft accident
or incident will be reimbursed by the Employer at the replacement costs of such
items, provided, however, that the Employer reserves the right to require
reasonable proof of loss and value of such personal items.

         6. In the event the Employer requires an off-hitch pilot to report in
person for a meeting with management for any reason, except in cases where
discipline is imposed following the meeting or as otherwise provided in the
Training Article, the pilot will receive workover pay for all hours spent in
such meeting, with a minimum of two hours workover and a maximum of a full day
of workover for each day spent in such meetings. Except in cases where
discipline is imposed following the meeting or as described in Article 17.
Training, the Employer will also reimburse the pilot for mileage, lodging and
per diem at rates described in this Agreement.

         7. Pilots shall not engage in business activities which are in
competition with the Employer or interfere with the pilot's performance of his
Employer duties, without first obtaining the written approval of the Employer.
This section shall not be construed to prohibit pilots from affiliating with or
performing duties for the Armed Forces of the United States of America.

         8. Pilots will be required to ensure the aircraft is secure (e.g.- tie
down kit installed), engine(s) rinsed and dried, and a reasonably clean and
orderly cockpit. To the extent that such duties would interfere with the pilot's
availability for duty on the following day, the pilot will be excused from these
duties.



                                       46
<PAGE>   49

         9. Pilot duty positions are as follows: Captain, IFR; First Officer,
IFR; and Captain, VFR.



                                       47
<PAGE>   50

                     ARTICLE 30. SAFETY/ACCIDENT PREVENTION

         1. The Employer and the Union recognize their duty and responsibility
to ensure the safety of our customers and employees. It is agreed that:

            A.    Safety is the primary consideration in all aspects of the job;

            B.    Safe working conditions, proper training, proper equipment and
                  appropriate protective devices are essential elements in this
                  safety and accident prevention effort;

            C.    The Employer will train pilots in any new aircraft, its
                  components or on any new procedures which pilots may be
                  required to utilize;

            D.    All pilots must follow PHI safety policies and procedures,
                  including safety practices as published and taught. Following
                  safe work practices is a condition of employment.

            E.    Both PHI and the pilots shall adhere to all applicable Federal
                  Aviation, or other controlling Regulations.

            F.    The Employer will ensure the continuation of the Notice to
                  Airmen (NOTAM) system and weather reporting system.

         2. The parties agree to create a joint Safety Committee, which shall
consist of two representatives designated by the Employer and two pilots
designated by the Union. The role of the Safety Committee shall be to jointly
review pilot recommendations on safety and accident prevention measures. Pilot
representatives shall function in an advisory capacity. The Safety Committee
will meet periodically as necessary, but no less than once each quarter.

         3. The Union agrees to encourage pilots to engage in safe work
practices and to communicate safety issues to the designated management
representative identified in Section 4 below.

         4. The Employer designates the Director of Safety as the management
representative to be responsible for receiving safety complaints.

         5. The Employer and the Union shall cooperate in seeking feasible
solutions to help reduce accident frequency and severity rates.

         6. The Employer will endeavor to equip its fleet of domestic aircraft
with Traffic Alert Systems by seeking customer participation in the funding of
such equipment.

         7. The Employer will endeavor to equip all aircraft operated under
instrument flight rules (IFR) with approved flight directors by seeking customer
participation in the funding of such equipment.




                                       48
<PAGE>   51

               ARTICLE 31. SEXUAL AND WORKPLACE HARASSMENT POLICY

         1. It is agreed that the Employer, as a responsible corporate citizen,
is committed to maintaining a hospitable, cooperative work environment that
promotes professionalism, common courtesy and mutual respect among all levels of
employees, supervisors, managers, and executives. To advance that commitment,
the Employer has adopted and will communicate to employees the Sexual and
Workplace Harassment Policy (attached as Appendix A) that strictly prohibits
sexual and workplace harassment on the basis of race, color, creed, gender,
religion, national origin, age, sexual orientation or disability. This policy
shall not be amended during the term of this agreement unless required by law.

         2. The Union agrees to support the provisions of the PHI Corporate
Sexual and Workplace Harassment Policy. Each pilot will be required to read,
understand and sign an acknowledgement of this policy, which will be placed in
his personnel file.





                                       49
<PAGE>   52

                      ARTICLE 32. ENVIRONMENTAL COMPLIANCE

         1. It is agreed that the Employer, as a responsible corporate citizen,
is committed to protecting human health, natural resources and the environment.
This commitment is an important aspect of daily corporate operation and
administration, and reaches further than mere compliance with the law - it
encompasses the incorporation of sound environmental practices into all of our
business decisions. To advance this commitment, the Employer has adopted and
will communicate to employees the Corporate Environmental Policy (attached as
Appendix B) that defines the responsibilities of the Employer and the employees.
This policy shall not be amended during the term of this agreement unless
required by law.

         2. The Union agrees to support the provisions of the PHI Corporate
Environmental Policy. Each pilot will be required to read, understand and sign
an acknowledgement of this policy, which will be placed in his personnel file.





                                       50
<PAGE>   53

                        ARTICLE 33. NO STRIKE, NO LOCKOUT

         1. The Union agrees it will not, under any circumstances or for any
reason, call, encourage, authorize or engage in any strike, slow down or other
concerted activity or hindrance to work during the term of this Agreement.

         2. Any Pilot who engages in any activity described in section one of
this Article will be subject to discharge, and such discharge will not be
subject to the grievance procedure and System Board of Adjustment provisions of
this Agreement, except as to the question of whether the Pilot engaged in such a
violation.

         3. The Employer agrees not to lock out Pilots during the term of this
Agreement.

         4. If the Employer knows that one of its customers is being picketed,
the employer will notify the Pilot about the picket line before dispatching the
Pilot to the location of the picket line.

         5. A Pilot may refuse to take an assignment to cross a picket line if
he has reasonable safety concerns. In any such case, the Company will be
permitted to service the customer the best way possible.







                                       51
<PAGE>   54

                          ARTICLE 34. MANAGEMENT RIGHTS

         1. The Employer reserves and retains, solely and exclusively, all of
the rights, privileges and prerogatives which it had or possessed prior the
execution of this Agreement, regardless of the frequency or infrequency with
which such rights have been exercised in the past, except to the extent that
such rights, privileges and prerogatives are specifically abridged by the
expressed provisions of this Agreement.

         2. Without limiting the generality of the foregoing, the sole and
exclusive rights of management which are not abridged by this Agreement include,
but are not confined to, the full and exclusive control, direction and
supervision of the workforce; the hire, promotion, demotion, transfer, layoff or
reassignment of pilots; the discipline and discharge for cause of pilots; the
selection of pilots and the determination of the qualifications for pilot
selection; the determination of the size and composition of the workforce; the
determination of schedules; the determination of pilot job content and the
amount and types of flight duties required; the scheduling of the hours and days
to be worked on each job and each shift; the selection and determination of the
number of pilots required, and the assignment of work to pilots; the contracting
out or subcontracting of work; the equipment to be utilized; the establishment
and enforcement of standards for the quality and quantity of work required to be
performed by pilots; the right to require physical exams and testing of pilots;
the right to introduce new or improved methods or facilities and/or the
discontinuance of existing methods or facilities; the discretion to suspend or
cease its operations or any phase or part of its business or operations; the
right to make, amend and enforce work and safety rules and regulations; and the
right to discontinue, transfer or assign all or any part of its operations, and
to establish new jobs and abolish or change existing jobs.





                                       52
<PAGE>   55

                       ARTICLE 35. DISCIPLINE & DISCHARGE

         1. Pilots may be subject to disciplinary actions, up to and including
discharge for just cause including violation or infraction of company rules or
policies, or for violating this Agreement. The severity of the infraction will
determine the nature of the disciplinary action, which can range from a verbal
warning to a written warning, suspension or discharge.

         2. In case a pilot is called into a meeting to discuss possible
disciplinary action against him, the pilot may request to be accompanied by his
Steward, and such a request will be granted by the Employer, if the Steward or
his alternate is available within a reasonable time, not to exceed twenty four
(24) hours.

         3. Upon his request, a pilot's personnel file shall be open for his
inspection during normal office hours in the presence of an employer
representative, upon reasonable notice. Nothing of a derogatory nature will be
placed in the pilot's personnel file unless a copy is provided to the pilot.
Upon receipt of such a document, the pilot shall have the option of responding
by submitting a written rebuttal that will be placed in his personnel file. It
the Employer determines that the pilot's comments invalidate the document in
question, the document will be removed from the pilot's personnel file.

         4. Customer complaints or correspondence of a derogatory nature shall
not serve as the basis for discipline after twelve (12) months from the date of
issuance unless within the 12 month period there has been a recurrence of the
same or similar nature.

         5. Disciplinary records involving the performance of his duties as a
pilot shall not serve as the basis for any discipline after five (5) years from
the date of issuance unless within the five (5) year period there has been a
recurrence of the same or similar nature.

         6. In any case in which a pilot receives a formal reprimand or is
discharged, a Human Resources Representative will ask the pilot if he desires
that a copy of the disciplinary document be sent to a representative designated
by the Union. If the pilot does so desire, the Human Resources Representative
will promptly forward a copy of the document to the designated Union
representative.




                                       53
<PAGE>   56

                         ARTICLE 36. GRIEVANCE PROCEDURE

         1. Disputes relating to the interpretation or application of this
Agreement may be the subject of a grievance. A grievance shall mean a dispute
between an employee(s) or the Union and the Employer with respect to the
interpretation or application of this Agreement.

         2. Any such grievance shall be processed in the following matter:

            Step 1. The pilot shall first attempt to resolve the grievance with
                    his immediate supervisor within seven (7) calendar days from
                    the date of the occurrence of the event giving rise to the
                    grievance, or within seven (7) calendar days of the date the
                    pilot knew or should have known of such event not to exceed
                    twenty eight (28) calendar days from the date of the event.
                    The supervisor shall give his answer within seven (7)
                    calendar days from that date.

            Step 2. If the grievance is not resolved at Step 1 to the
                    satisfaction of the grievant, the grievance shall be reduced
                    to writing and presented to the designated representative of
                    the Employer within ten (10) calendar days after the receipt
                    of the immediate supervisor's answer. The written grievance
                    must state the nature of the grievance, the circumstances
                    out of which it arose, the remedy or correction requested
                    and the specific provisions of the Agreement alleged to have
                    been violated. The Employer representative will give his
                    answer to the grievant in writing with a copy to the Union
                    within ten (10) calendar days after the receipt of the
                    grievance.

            Step 3. In the event the decision by the Employer representative
                    is unacceptable to the aggrieved party, it may be appealed
                    in writing to the designated representative of the Employer
                    with seven (7) days of the receipt of the decision. The
                    appeal must include a statement of the reasons the grievant
                    believes the decision was erroneous. The Employer's
                    representative shall render a decision on the appeal in
                    writing within fourteen (14) calendar days of receipt of the
                    appeal. In the event the decision at Step 3 is unacceptable
                    to the grievant, the Union may appeal to the System Board of
                    Adjustment in accordance with Article 37 of this agreement.

         3. In the event a non-probationary pilot who has been discharged wishes
to grieve such discharge, the grievance must be presented at Step 2 within seven
(7) calendar days after the termination.

         4. All provisions of this Article shall apply to Employer and Union
grievances except that such grievances shall be presented to the designated
representative of the other party at Step 2.

         5. Any grievance not presented and processed in the manner, and within
the time limits set forth above, shall be waived provided, however, at any time
in advance of the expiration of such time limit the parties may agree, by mutual
written consent, to extend any time limit for a specified period of time.
Compliance with all time limits specified in this Article shall be determined by
the date of mailing as established by postmark, or by the date of hand delivery.

         6. No grievance, the basis for which occurred prior to the execution of
this Agreement, shall be considered.



                                       54
<PAGE>   57

         7. The Employer and the Union agree to furnish to the other party the
names of their designated representatives charged with administration of the
grievance procedure within thirty (30) calendar days after the execution of this
Agreement. Any changes in these representatives shall be furnished to the other
party in writing.

         8. In the event a pilot is suspended pending an investigation of
alleged misconduct, the pilot shall be informed of the nature of the alleged
misconduct at the time of suspension.

         9. The Union and the Employer may, by mutual agreement in writing,
elect to bypass any or all steps in this Article and proceed to the System Board
of Adjustment in accordance with Article 37 of this Agreement.





                                       55
<PAGE>   58

                     ARTICLE 37. SYSTEM BOARD OF ADJUSTMENT

         1. In compliance with Section 204, Title II of the Railway Labor Act,
as amended, this Agreement establishes a System Board of Adjustment, which shall
be called the Petroleum Helicopters Pilots' System Board of Adjustment,
hereinafter called "the Board."

         2. The Board has jurisdiction over timely filed and appropriately
processed grievances arising out of the interpretation and application of this
Agreement relating to rates of pay, rules, working conditions, discipline and
discharge. The procedures set forth in this Article are the exclusive and
mandatory forum for all such disputes.

         3. The Board does not have jurisdiction over any dispute unless all of
the procedures required by the Grievance Procedure provided for in this
Agreement have been timely and completely exhausted in the dispute, and the
dispute has been properly submitted to the Board pursuant to the provisions of
this Article.

         4. The Board has no jurisdiction to modify, add to or otherwise alter
or amend any of the terms of this Agreement.

         5. The Board shall consist of four members, two of whom shall be
selected and appointed by the Employer and two of whom shall be selected and
appointed by the President of the Local Union. A Board member appointed by the
Union shall serve as chairman and a Board member appointed by the Employer shall
serve as vice-chairman in even years, and a Board member appointed by the
Employer shall serve as chairman and a Board member appointed by the Union shall
serve as vice-chairman in odd years. The vice-chairman shall act as chairman in
his absence. Each Board member has a vote in connection with all actions taken
by the Board. In the event the four Board members cannot reach a decision with
respect to a particular dispute, the Board will select a neutral member who will
decide the dispute. In the event the Board cannot agree on a neutral member,
within ten (10) calendar days thereafter either party may request that the
American Arbitration Association (AAA) submit a list of seven potential
neutrals, and the neutral shall be selected in accordance with the rules of AAA.

         6. The Board will meet quarterly in Lafayette (unless a different
location is agreed upon by the members of the Board), provided that at such time
there are cases on file with the Board for its consideration.

         7. Any expenses incurred by Board memberS appointed by one of the
parties to this Agreement will be paid by that party. Any pilot called as a
witness by the neutral will suffer no loss of pay as a result of testifying at
any hearing before the neutral. The fees and expenses of any neutral member of
the Board shall be borne equally by the Employer and the Union

         8. Disputes may only be submitted to the Board by the President of the
Local Union or a duly designated officer of the Union or the Employer.



                                       56
<PAGE>   59

         9. Decisions by the Board are final and binding on the Employer, the
Union and the affected pilots.

         10. The party appealing a final decision under the Grievance Procedure
in this Agreement shall submit the dispute for consideration by the Board,
including all papers and exhibits, within fourteen (14) calendar days of that
decision. If the appeal is not made with this fourteen day period, the Board
does not have jurisdiction over the dispute.

         11. All disputes referred to the Board shall be sent to the Director of
Human Resources of the Employer and his office shall assign a docket number
according to the order in which the dispute is received.

         12. The appealing party will ensure that a copy of the petition is
served on the members of the Board.

         13. Each case submitted to the Board must state:

                  A.    The question or questions at issue;

                  B.    a statement of the facts with supporting documents;

                  C.    a reference to the applicable provisions of the
                        Agreement alleged to have been breached;

                  D.    the position of the aggrieved party;

                  E.    the remedy requested; and

                  F.    the position of the opposing party.

         14. Decisions by the Board shall be rendered no later than thirty (30)
days after the close of the hearing.

         15. The Employer and the Union shall, in good faith, attempt to make a
joint submission of their dispute to the Board. If the parties are unable to
agree on a joint submission, the appealing party shall file a submission with
the Board containing all of the information described in Section 13 of this
Article, and the responding party may do the same. Any party filing a submission
with the Board pursuant to this Article shall serve a copy of its submission
with the other party.

         16. The parties agree that each Board member is free to discharge his
duties in an independent manner without fear of retaliation from the Employer or
the Union because of any action taken by him in good faith in his capacity as a
Board member.




                                       57
<PAGE>   60

                        ARTICLE 38. UNION REPRESENTATION

         1. In the event it is necessary for a Union representative to enter the
Employer's premises to discuss the application of this Agreement, the Union
representative shall notify the manager for the particular location, and they
shall arrange a mutually satisfactory time, date and place for the visit within
a ten (10) day period thereafter. The Union representative shall not take any
action that would interrupt or in any way interfere with the Employer's
operations or the job duties of any employee. A representative of the Employer
may accompany the Union representative, if the Employer desires.

         2. The Employer will not be obligated to deal with any Union
representative who has not been designated in writing to be an authorized
representative of the Union.

         3. The Union may elect or appoint Pilots to be primary job steward(s)
and alternate(s) to conduct Union business and shall notify the employer, in
writing, of their election, appointment or removal. Pilots who have been
designated as primary stewards (and the alternate steward in the absence of the
primary steward) shall be granted reasonable time to investigate, present and
process grievances during their own duty hours without loss of pay to the extent
such activity does not interfere with the performance of their duties or the
duties of other employees. Stewards who serve their fellow pilots shall be
considered Union representatives.

         4. The Employer and the Union desire that complaints and grievances
shall be settled whenever possible with supervisors at the location where the
complaint or grievance originates. It is understood and agreed that a steward's
activities shall fall within the scope of the following functions:

            A.    To consult with a pilot(s) regarding a presentation of a
                  complaint or grievance which the pilot(s) desires to present.
                  Stewards shall be permitted to present grievances to
                  management and attempt to resolve any grievance.

            B.    To present a grievance or complaint to a pilot's immediate
                  supervisor in an attempt to settle the matter. To the extent
                  that it doesn't interfere with the Employer's operations,
                  Stewards shall be granted the right to consult with pilots at
                  their base for the purpose of enforcing the provisions of this
                  agreement.

            C.    To investigate a complaint or grievance of record in
                  accordance with the Grievance Procedure.

         5. Stewards and alternate stewards shall be considered union
representatives. The Employer and the Union agree that a minimum amount of time
shall be spent in the performance of steward duties.

         6. Effective on the date of the execution of this Agreement, the Union
may designate one pilot who will be permitted to act as a full-time Union
Officer during his normal shift without loss of pay; provided, however, that
this Section of this Article shall expire on the 31st day of May, 2004. The
normal shift for this pilot will be Monday through Friday each week and he will
be required to submit a monthly time sheet approved by the Union. Any sick days
or vacation days shall be charged against the pilot's appropriate VSTO or STO
bank. This pilot will be permitted



                                       58
<PAGE>   61

to perform workovers to the extent necessary to maintain his pilot currency and
proficiency and may also bid on other workover on his days off in accordance
with Article 24 of this Agreement. Any workover requested by the Employer during
his regular shift will be compensated at a rate of 50% above his base rate of
pay, and all workovers outside his shift shall be compensated at 150% of his
base rate of pay. Such pilot shall be eligible for the 5&2 Pilot Bonus but will
not be eligible for other bonuses except when he actually works as a pilot. This
pilot will continue to accrue seniority and will be entitled to all wage
adjustments and benefits provided for in this Agreement.





                                       59
<PAGE>   62

               ARTICLE 39. UNION BULLETIN BOARDS & COMMUNICATIONS


         1. The Employer shall permit the Union to display an unlocked bulletin
board at each base that is company owned. The Union shall purchase the bulletin
boards and shall be responsible for their installation. The bulletin board shall
be a maximum of four (4) feet by five (5) feet. The bulletin boards shall only
be placed in areas that have been agreed to by the Employer in advance.

         2. The bulletin boards used by the Union and Pilots covered by this
agreement shall be for posting notices of Union social and recreational affairs,
meetings and elections.

         3. General distributions, posted notices and official business will
bear the seal or signature of an officer of the Union or a Pilot representative
and will not contain anything defamatory, derogative, inflammatory, negative, or
of a personal nature attacking the Employer or its representatives.

         4. The Employer may refuse to permit any posting that would violate any
of the provisions of this Agreement. Any notices posted that are not in
accordance with this Article shall be removed by the Union or by the Employer
upon notice to the Union.






                                       60
<PAGE>   63

           ARTICLE 40. UNION MEMBERSHIP, DUES, AGENCY FEES & CHECKOFF

         1. Membership in the Union is not compulsory for any pilot employed as
of the date of this agreement or any pilot subsequently hired through May 30,
2004. These pilots have the right to join, not join, maintain, or drop their
membership in the Union as they see fit. Neither party shall exert any pressure
on, or discriminate against a pilot as regards such matters.

         2. Each pilot covered by this agreement who is hired on or after May
31, 2004, shall become a member of the union or an agency fee payer within sixty
(60) days after his/her date of hire, and shall be required as a condition of
continued employment by the Employer to maintain his/her membership in the Union
or pay an equivalent agency fee, so long as this Agreement remains in effect.
The agency fee referred to in this Section shall be equal to the Union's regular
and usual initiation fee and its regular, uniform and usual monthly dues.
Notwithstanding the foregoing, nothing herein shall be construed to be in
violation of or in conflict with the provisions of the Railway Labor Act.

         3. During the life of this Agreement, the Employer agrees that upon
receipt of a properly executed Authorization of Payroll Deduction, voluntarily
executed by a pilot, it will make bi-weekly deductions from the pilot's earnings
after other deductions authorized by the pilot or are required by law have been
made, to cover his current standard bi-weekly union dues, assessments and/or
initiation fees or agency fees uniformly levied in accordance with the
Constitution and bylaws of the Union as set forth in the Railway Labor Act.

         4. Any authorizations for payroll deductions under this Article shall
be effective the first day of the month following its receipt by the Payroll
Department and shall apply to the next paycheck for which dues deduction or
agency fees is made.

         5. The Employer remittance to the union will be accompanied by a list
of the names of the pilots for whom the deductions have been made in that
particular month and the individual amounts deducted.

         6. Collection of dues or agency fees not deducted because of
insufficient current earnings, dues or agency fees missed because of clerical
error or inadvertent error in the accounting procedure, or dues or agency fees
missed due to delay in receipt of the Authorization for Payroll Deductions,
shall be the responsibility of the Union and shall not be the subject of payroll
deductions from subsequent paychecks, and the Employer shall not be responsible
in any way for such missed collections. It shall be the Union's responsibility
to verify apparent errors with the individual Pilot prior to contacting the
Payroll Department. The total or balance of unpaid dues, assessments and/or
initiation fees or agency fees due and owing the Union at the time a Pilot
terminates his employment shall be deducted from the final paycheck in
accordance with applicable law.

         7. An Authorization for Payroll Deduction under this Article shall be
irrevocable for the term of this Agreement, or for a period of one (1) year from
the date the Authorization is first executed, whichever occurs sooner.
Revocation shall become effective when the pilot serves written notice on the
Payroll Department to revoke such Authorization for payroll deduction. An
Authorization for Payroll Deduction shall automatically be revoked if:

            A.    the Pilot transfers to a position with the Employer not
                  covered by the agreement;

            B.    the Pilot's service with the Employer is terminated;

            C.    the Pilot is furloughed; or

            D.    the Pilot is on an authorized leave of absence.



                                       61
<PAGE>   64

         8. The Union agrees to hold the Employer harmless and to indemnify the
Employer against any suits, claims, liabilities, and reasonable and customary
attorneys' fees which arise out of or by reason of any action taken by the
Employer under the terms of this Article.




                                       62
<PAGE>   65

                           ARTICLE 41. SAVINGS CLAUSE

         1. Should any part of this Agreement be rendered or declared invalid by
reason of any existing or subsequently enacted legislation, act of government
agency, or by any decree of a court of competent jurisdiction, such invalidation
of such part or portion of this Agreement shall not invalidate the remaining
portions hereof, and they shall remain in full force and effect.

         2. In the event that any provisions of this Agreement are in conflict
with or are rendered inoperative or unlawful by virtue of any duly enacted law
or regulation or any governmental agency or commission having jurisdiction over
the Employer, the Union and Employer will meet and attempt to negotiate changes
necessary, pertaining only to those provisions so affected or directly related
thereto.




                                       63
<PAGE>   66

                              ARTICLE 42. DURATION

         1. This Agreement shall be effective from the 1ST day of June, 2001
through the 31ST day of May, 2004 and shall automatically renew itself from year
to year thereafter, unless written notice of intended change is served in
accordance with Section 6, Title I of the Railway Labor Act, by either party at
least sixty days prior to the termination date or any anniversary thereof.

                       Dated this 12th day of July, 2001.


<Table>
<Caption>
OFFICE AND PROFESSIONAL                 PETROLEUM HELICOPTERS, INC.
EMPLOYEES INTERNATIONAL
UNION

<S>                                     <C>
By: /s/ Jack Bowers                     By: /s/ Richard Rovinelli
    ------------------------------          ----------------------------------

OFFICE AND PROFESSIONAL                 PETROLEUM HELICOPTERS, INC.
EMPLOYEES INTERNATIONAL
UNION, LOCAL 108

By: /s/ Stephen D. Ragin                By: /s/ Michael Hurst
    ------------------------------          ----------------------------------

OFFICE AND PROFESSIONAL                 PETROLEUM HELICOPTERS, INC.
EMPLOYEES INTERNATIONAL
UNION

By: /s/ Mike Dorsett                    By: /s/ Carlin Craig
    ------------------------------          ----------------------------------

OFFICE AND PROFESSIONAL                 PETROLEUM HELICOPTERS, INC.
EMPLOYEES INTERNATIONAL
UNION

By: /s/ Herbert J. Jenssen              By: /s/ Edward Gatza
    ------------------------------          ----------------------------------

OFFICE AND PROFESSIONAL
EMPLOYEES INTERNATIONAL
UNION

By: Paul Bohelski
    ------------------------------
</Table>




                                       64
<PAGE>   67

                             LETTER OF AGREEMENT #1



                                 APRIL 27, 2001


Dear Captain Ragin:

Both parties recognize the importance of disability benefits to employees;
therefore, it is agreed that the Employer and the Union will form a joint labor
management committee that will initially meet no later than September 1, 2001.
The Committee will explore alternatives for short-term disability benefits and
consider the possibility of rapid reaccrual as part of sick time off (STO).


Very truly yours,                           Agreed:

/s/ Richard Rovinelli                       /s/ Stephen D. Ragin
------------------------------              --------------------------------
Richard Rovinelli                           Stephen D. Ragin





                                       65
<PAGE>   68

                             LETTER OF AGREEMENT #2



                                 APRIL 27, 2001


Dear Captain Ragin:

Within thirty (30) days after the execution of this Agreement, the parties will
meet for the purpose of establishing a "Joint Implementation/Resolution
Committee."




Very truly yours,                           Agreed:

/s/ Richard Rovinelli                       /s/ Stephen D. Ragin
------------------------------              --------------------------------
Richard Rovinelli                           Stephen D. Ragin






                                       66
<PAGE>   69

                             LETTER OF AGREEMENT #3



                                  JULY 12, 2001


Dear Captain Ragin:

The parties agree under Article 6, that the floppy disk version of the seniority
list would be sent to the Secretary/Treasurer of the OPEIU Local 108, and that
such seniority lists shall contain all represented pilots with the following
information for each: 1) seniority number (based on bidding seniority), 2) pilot
name, 3) bidding seniority date, 4) company seniority date, and 5) status of the
pilot (including highlighting new hire pilots for the first seniority report
subsequent to their employment).

The parties also agree under Article 6, Seniority List, Section 3, that the
pilots' right to protest to the Employer any omission or incorrect posting of
the seniority list shall mean that a pilot shall have a single protest for any
unique seniority date, and will have no further protests rights as long as the
Employer does not change that date in future seniority postings.




Very truly yours,                           Agreed:

/s/ Richard Rovinelli                       /s/ Stephen D. Ragin
------------------------------              --------------------------------
Richard Rovinelli                           Stephen D. Ragin






                                       67
<PAGE>   70

                             LETTER OF AGREEMENT #4



                                  JULY 12, 2001


Dear Captain Ragin:

The parties agree under Article 12, Paid Days Off and Banked Days, that both
VSTO and STO accrual banks will be calculated and accrued to a pilot by the
Employer on a bi-weekly (pay period) basis instead of a monthly basis.




Very truly yours,                           Agreed:

/s/ Richard Rovinelli                       /s/ Stephen D. Ragin
------------------------------              --------------------------------
Richard Rovinelli                           Stephen D. Ragin





                                       68
<PAGE>   71

                             LETTER OF AGREEMENT #5



                                  JULY 12, 2001


Dear Captain Ragin:

The parties agree under Article 22, Pilot Bonuses, that all pilot bonuses shall
be effective June 4, 2001 and will be paid to pilots as soon as practical.

The parties also agree under Article 22, that Air Evac operations shall have no
Lead Pilots. However, each base may have a Pilot Base Coordinator, who will be
responsible for some, but not all, duties of a Lead Pilot, and the Employer
shall pay such designated Pilot Base Coordinator a bonus of $200 per month.



Very truly yours,                           Agreed:

/s/ Richard Rovinelli                       /s/ Stephen D. Ragin
------------------------------              --------------------------------
Richard Rovinelli                           Stephen D. Ragin






                                       69
<PAGE>   72

                             LETTER OF AGREEMENT #6



                                  JULY 12, 2001


Dear Captain Ragin:

The parties agree under Article 24, Workover, that reference to "the greatest
length of time since his last workover at that base" in Section 3 will be
modified to "the greatest length of time since his last workover date." In order
to maintain an accurate last workover date for each pilot, the parties agree
that a pilot will be required to resubmit a workover request each time he
performs a workover (continuous workover without a day off shall be considered a
single workover) if he desires additional workover.

The parties also agree for Air Evac, Cleveland EMS, Lexington EMS and Acadian
Ambulance EMS operations, under Article 24, that these operations shall be
considered one base for the determination and award of workover(s).




Very truly yours,                           Agreed:

/s/ Richard Rovinelli                       /s/ Stephen D. Ragin
------------------------------              --------------------------------
Richard Rovinelli                           Stephen D. Ragin






                                       70
<PAGE>   73

                             LETTER OF AGREEMENT #7



                                  JUL 12, 2001


Dear Captain Ragin:

Both parties recognize the likelihood of increased grievance activity during the
initial implementation of this Agreement and desire to avoid unnecessary added
costs and time commitments of the normal grievance procedure and System Board of
Adjustment during this time. Therefore, the parties agree under Article 36,
Grievance Procedure, that until the end of September 2001 (or at the end of
December 2001 if the parties agree as described below), grievances (except those
grievances as defined in Sections 3, 4, and 9) shall first be processed through
Section 2, Step 1. If the grievance is unresolved at that step (and for
grievances defined in Sections 3 and 4), the grievance will then be presented to
the Joint Implementation/ Resolution Committee ("Committee") in an attempt to
resolve the complaint as quickly and as fairly as possible. The Committee shall
review grievances only with a full and equal complement of standing members or
their designees from both the Employer and the Union, and shall respond in
writing to the grievance within thirty (30) days. If the Committee is unable to
resolve the grievance, the grievance may then proceed through the remaining
steps of the grievance procedure. Until the end of September 2001 (or at the end
of December 2001 if the parties agree as described below), the ten (10) calendar
day time requirement to proceed to Section 2, Step 3 shall begin after the
Committee has determined in writing that it is unable to resolve the grievance.

The parties agree that upon mutual written agreement, this Letter of Agreement
may be extended from the end of September 2001 until the end of December 2001.




Very truly yours,                           Agreed:

/s/ Richard Rovinelli                       /s/ Stephen D. Ragin
------------------------------              --------------------------------
Richard Rovinelli                           Stephen D. Ragin






                                       71
<PAGE>   74

                             LETTER OF AGREEMENT #8



                                  JULY 12, 2001


Dear Captain Ragin:

The parties agree under Article 40, Union Membership, Dues, Agency Fees &
Checkoff, that reference to "Authorization for Payroll Deduction" in Section 3
shall mean the Union's "Dues/Agency Fees Payroll Deduction Authorization" form.






Very truly yours,                           Agreed:

/s/ Richard Rovinelli                       /s/ Stephen D. Ragin
------------------------------              --------------------------------
Richard Rovinelli                           Stephen D. Ragin






                                       72
<PAGE>   75

                             LETTER OF AGREEMENT #9



                                  JULY 12, 2001


Dear Captain Ragin:

The parties agree to modify Article 28, Section 2, to provide that the
Employer's 401(k) Plan shall include pilots covered by this Agreement consistent
with the terms of that Plan. Should business conditions warrant, or if required
by law, the Employer reserves the right to separate the 401(k) Plan for pilots
covered by this Agreement from other Plan participants as originally provided
for under the Agreement, however the Employer agrees to discuss with the Union
any such change prior to implementation.






Very truly yours,                           Agreed:

/s/ Richard Rovinelli                       /s/ Stephen D. Ragin
------------------------------              --------------------------------
Richard Rovinelli                           Stephen D. Ragin






                                       73
<PAGE>   76

                             LETTER OF AGREEMENT #10



                                  JULY 12, 2001


Dear Captain Ragin:

Both parties recognize that in the Employer's IHTI operations, pilots have
cooperated in rotating their 14&14 work schedule each year such that the pilots
have every second year off-duty with their families for the Thanksgiving and
Christmas holidays. The parties agree that this practice may continue under
Article 10, Schedules of Service.





Very truly yours,                           Agreed:

/s/ Richard Rovinelli                       /s/ Stephen D. Ragin
------------------------------              --------------------------------
Richard Rovinelli                           Stephen D. Ragin






                                       74


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.25
<SEQUENCE>6
<FILENAME>d89585ex10-25.txt
<DESCRIPTION>SERP AGREEMENT AS AMENDED
<TEXT>
<PAGE>   1
                                                                   EXHIBIT 10.25


            AMENDMENT TO THE SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN


In a Board of Directors meeting on May 24, 2001, the Board voted to delete from
the Supplemental Executive Retirement Plan (SERP) the Change of Control
provisions and the related establishment of a trust agreement. As a result, all
references to the Change of Control and trust, including Section 12 "Change of
Control" in its entirety are removed from the Plan document.

</TEXT>
</DOCUMENT>
</SUBMISSION>
