Exhibit 4.1
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ENGAGEMENT AGREEMENT
June 29, 2000
Xx. Xxxxx X. Xxxx
Chief Financial Officer
Air Methods Corporation
0000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
1. This letter agreement will confirm the understanding between Air Methods
Corporation and/or its affiliates and successors (the "Company," "Air
Methods" or "AIRM") and RCG Capital Markets Group, Inc. and/or its
affiliates and successors ("RCG") with respect to the matters set forth
herein. RCG will provide consulting and other services, as more
particularly described herein and in the attachment hereto entitled
Financial Relations Services Attachment (the "Financial Relations
Services"), to the Company and will represent the Company during the
engagement as exclusive Financial Relations Consultants with respect to the
Financial Relations Services, on the terms and conditions set forth herein
and in the attachments hereto, all of which are incorporated herein by
reference and form a part hereof. The period during which RCG will perform
the Financial Relations Services for the Company will commence on July 1,
2000 (the "Commencement Date") and, unless otherwise terminated as provided
in this paragraph or in paragraph nine of this letter agreement, will
terminate on the date which is Twenty-four months following the
commencement date (the "Termination Date"). The period beginning on the
Commencement Date and ending on the Termination Date is hereafter referred
to as the "Engagement Term".
2. During the Engagement Term, the Company agrees to furnish or cause to be
furnished to RCG all information concerning the Company as RCG reasonably
requests and deems appropriate for purposes of providing the Financial
Relations Services. The Company represents that all information, with
respect to the Company, provided to RCG will be complete and correct in all
material respects and will not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein not misleading in light of the circumstances under which
such statements are made. Air Methods understands, that in rendering the
Financial Relations Services required hereunder, RCG will be using and
relying on publicly available information and the information furnished to
RCG by Air Methods without independent verification thereof. RCG will treat
as confidential any non-public information provided to it hereunder and
will not disclose the same to third parties at any time unless required by
applicable law. In the event disclosure has been or will be made by RCG,
RCG will use its reasonable best efforts to cooperate as requested by the
Company in minimizing any potential loss or injury to the Company as a
consequence of any such necessary disclosure. In addition, RCG will use its
reasonable best efforts to comply with all applicable state and Federal
securities laws in the performance of this agreement.
3. During the Engagement Term, RCG and its employees, consultants and
contractors will be generally available to Air Methods Corporation, in
connection with its rendering of the Financial Relations Services.
Specifically, RCG (a) will outline, develop and implement a financial
relations program to assist the Company in creating and/or enhancing a
positive and more visible public image, (b) may contact existing and future
shareholders, broker/dealers, potential investors, registered
representatives, institutions, mutual fund managers, investment banking
sources,
June 29, 2000
Page 2
securities analysts, independent portfolio managers, and other professional
investment community contacts including certain financial media sources for
the purpose of enhancing the Company's public image and perceived value,
(c) will assist the Company in the creation, production and distribution of
certain financial markets and investor/shareholder corporate image
materials, including corporate profiles, due diligence materials and
investor packages, as well as all financial press releases; (d) assist the
Company in its endeavor to secure research analyst coverage through a
targeted securities professionals campaign and (e) otherwise perform the
services described in the Financial Relations Services Attachment.
4. During the Engagement Term, the Company will afford RCG the opportunity and
reasonable time period to review and/or comment on any disclosure, prior to
its release, which the Company plans to make to any of the sources
described in paragraph (3) and which relates to the Financial Relations
Services to be provided hereunder. In addition, RCG will be responsible for
assisting the Company in writing and/or editing, producing, coordinating
and disseminating all financial industry press releases. RCG agrees that it
will not release or distribute any press release without the Company's
prior consent.
5. In consideration of RCG's services hereunder, the Company agrees to pay
RCG, promptly when due, the Compensation as described by and in strict
Accordance with the attachment hereto entitled Financial Relations
Compensation Attachment. Should RCG and the Company determine to extend the
Engagement Term or change the scope of the engagement, then a mutually
acceptable amendment or supplement to that attachment shall be promptly
executed by RCG and Company. Absent any such amendment, all terms and
conditions of this letter agreement shall be binding to the parties.
6. RCG shall be entitled to such additional fees as may be mutually agreed
upon by separate agreement between the parties hereto, for additional
consulting services not anticipated in this agreement rendered during the
engagement term.
7. As more particularly set forth in the Financial Relations Compensation
Attachment, the Company agrees to pay all of RCG's direct and certain
indirect out-of-pocket expenses reasonably incurred, in connection with
this engagement. As set forth in the Financial Relations Compensation
Attachment, an expense retainer shall be utilized for this purpose.
8. The Company and RCG agree to indemnify each other (the indemnifying party
hereafter being referred to as the "Indemnitor", and the party entitled to
indemnification hereafter being referred to as the "Indemnitee") as
follows: Indemnitor agrees to defend, indemnify and hold harmless
Indemnitee, and its officers, directors, and employees against any and all
losses, claims, demands, suits, actions, judgments, awards, damages,
liabilities, costs, reasonable attorneys' fees, and expenses incurred in
investigating, preparing or defending any such action or claim, directly or
indirectly caused by, related to, or asserted by a third party, based upon
or arising out of (a) the Indemnitor's breach of or the incorrectness of
any of its representations, warranties, or covenants contained in this
agreement; and/or (b) any Services rendered by RCG as defined in or
contemplated by this agreement, as it may be amended from time to time (the
"Agreement"). Notwithstanding the foregoing, the Indemnitor shall have no
obligation to indemnify or hold the Indemnitee harmless with regard to
Indemnitee's gross negligence, willful misconduct, or the material breach
of or the incorrectness of any representation, warranty or covenant of
Indemnitee contained in this Agreement.
9. Either party hereto may terminate this engagement as follows:
Either party hereto may terminate this agreement at the conclusion of
Initial Twelve months from the execution date of the agreement by providing
the other party a 30-day notification of "Intent to
June 29, 2000
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Terminate Agreement". Not withstanding the above, the Company and/or RCG
may also terminate this Agreement at any time prior to the initial twelve
months "without cause", upon providing the other party Thirty (30) days
written notice. In the event of either such termination by the Company,
"without cause", RCG shall be entitled to immediately vest, retain and
receive One hundred (100%) percent of the remaining warrants or stock
options granted hereunder, any unpaid cash compensation then outstanding,
along with reimbursement of any non paid, out-of-pocket expenses up to the
effective date of termination. Such payment is due and payable on the
effective date of termination. In the event of such termination by RCG, RCG
shall forfeit the remaining, unvested warrants/options.
(b) WITH CAUSE: In addition, the Company may terminate this Agreement at
any time upon written notice to RCG:
(i) If RCG fails to cure any material breach of any provision of this
Agreement within Sixty (60) days from written notice from the
Company (unless such breach cannot be reasonably cured within the
Sixty (60) days and RCG is actively pursuing to cure said
breach).
(ii) For RCG's substantial negligence, willful misconduct, fraud,
misappropriation, embezzlement, or other dishonesty;
(iii) Upon a judicial ruling of RCG's failure to have materially
complied with applicable law or regulation relating to the
Services it will perform;
(iv) Upon the filing by or against RCG of a petition to have RCG
adjudged as bankrupt or a petition for reorganization or
arrangement under any law relating to bankruptcy, and where any
such involuntary petition is not dismissed within 90 days.
Upon termination under subparagraph (b) of this paragraph 9, the
Company shall have no liability to RCG for Compensation accruing after
such termination, and RCG shall have no further entitlement thereto.
Upon such termination, RCG shall be entitled to receive and retain
only accrued Compensation and vested Options to the date of such
termination, to the extent it is unpaid, together with expenses not
yet reimbursed.
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(c) RCG may terminate this agreement at any time upon written notice to
the Company.
(i) If the Company fails to cure any material breach of any provision
of this Agreement with Sixty (60) days from written notice from
the Company (unless such breach cannot be reasonably cured within
the Sixty (60) days and the Company is actively pursuing to cure
said breach);
(ii) For the Company's substantial negligence, willful misconduct,
fraud or misrepresentation;
Such termination under 9(c)(i or ii) shall be deemed to be a
termination by the Company "without cause" as provided in paragraph 9
(a) above.
(iii) Upon a judicial ruling of Company's failure to have materially
complied with any applicable law or regulation relating to the
Services being provided;
(iv) Upon the filing by or against the Company of a petition to have
the Company adjudged as bankrupt or a petition for reorganization
or arrangement under any law relating to bankruptcy, and where
any such involuntary petition is not dismissed within 90 days.
June 29, 2000
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(d) RENEWAL. The Company agrees to notify RCG Thirty (30) days prior to
the end of the Twenty-four month period of its intent to not renew.
Should the Company fail to notify RCG, the contract will revert to a
month-to-month agreement until specifically renewed in writing or
terminated with the Thirty (30) day notice. Such renewal or
month-to-month engagement shall be on the same terms and conditions
contained herein, unless modified and agreed in writing by both
parties.
10. RCG hereby fully discloses that certain associates, affiliates, officers
and employees of RCG are:
(a) Licensed as Registered Securities Principals issued by the National
Association of Securities Dealers ("NASD"); and/or
(b) Licensed as Registered Representatives issued by the NASD.
All NASD registrations are carried by SWS Financial Services, Inc., which
is a non-RCG affiliated NASD-registered broker/dealer.
RCG FURTHER DISCLOSES AND THE COMPANY SPECIFICALLY ACKNOWLEDGES THAT RCG IS
NOT A BROKER/DEALER REGISTERED WITH THE NASD OR ANY OTHER REGULATORY
AGENCY. FURTHERMORE, IN THE PERFORMANCE OF SERVICES UNDER THE TERMS AND
CONDITIONS OF THIS AGREEMENT, SUCH SERVICES SHALL NOT BE CONSIDERED TO BE
ACTING IN ANY BROKER/DEALER OR UNDERWRITING CAPACITY AND THEREFORE RCG IS
NOT RECEIVING ANY COMPENSATION FROM THE COMPANY AS SUCH.
11 The Company understands and acknowledges that RCG provides other and
similar consulting services to companies, which may or may not conduct
business and activities similar to those of the Company. RCG is not
required to devote its full time and attention to the performance of its
duties detailed in this agreement, and may devote only so much of its time
and attention as it deems reasonable or necessary.
12. As the services are being provided by an Arizona domiciled corporation, the
validity and interpretation of this letter agreement shall be governed by
the laws of the State of Arizona applicable to agreements made and to be
fully performed therein.
13. In the event of any controversy or dispute arising out of, or relating to
this Agreement or breach thereof, RCG and AIRM agree to settle such
controversy by arbitration pursuant to Arizona Revised Statutes, 12-1501 et
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seq. and in accordance with the rules, of the American Arbitration
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Association governing commercial transactions then existing, to the extent
that such Rules are not inconsistent with said Statutes and this Agreement.
Judgment upon the award rendered under arbitration may be entered in any
court having jurisdiction. The cost of the arbitration procedure shall be
borne by the losing party, or, if the decision is not clearly in favor of
one party or the other, the costs shall be borne as determined by the
arbitrator. The parties agree that the arbitration procedure provided
herein shall be the sole and exclusive remedy to resolve any controversy or
dispute arising hereunder, and that the proper venue for such arbitration
proceeding shall be Maricopa County, Arizona.
14. For the convenience of the parties, any number of counterparts of this
letter agreement may be executed by the parties hereto. Each such
counterpart shall be deemed to be an original instrument, but all such
counterparts taken together shall constitute one and the same letter
agreement.
15. Miscellaneous:
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(a) Modification: This Agreement sets forth the entire understanding of
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the parties with respect to the subject matter hereof. This Agreement
may be amended only in writing signed by both parties.
(b) Notices: Any notices hereunder shall be sent to the Company and RCG at
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their respective addresses set forth. Any notice shall be given by
registered or certified mail, postage prepaid, and shall be deemed to
have been given when received by the non-sending party. Either party
may designate any other address to which notice shall be given, by
giving written notice to the other of such change in address in the
manner herein provided.
(c) Waiver: Any waiver by either party of a breach of any provision of
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this Agreement shall not operate as or be construed to be a waiver of
any other breach of that provision or of any breach of any other
provision of this Agreement. The failure of a party to insist upon
strict adherence to any term of this Agreement on one or more
occasions will not be considered a waiver or deprive that party of the
right thereafter to insist upon adherence to that term of any other
term of this Agreement.
(d) Relationship of the Parties: Nothing in this Agreement shall create
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any partnership or joint venture between the parties hereto, it being
understood and agreed that the parties are independent contractors and
neither has the authority to bind the other in any way.
(e) Entire agreement: This Agreement contains the entire agreement between
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the parties and may not be altered or modified, except in writing and
signed by the party to be charged thereby, and supersedes any and all
previous agreements between the parties.
If the foregoing correctly sets forth our agreement, please sign the enclosed
copy of the letter in the space provided and return it to us, whereupon all
parties will be bound to the terms of this engagement.
Confirmed and agreed to on June 30, 2000
RCG CAPITAL MARKETS GROUP, INC. AIR METHODS CORPORATION
By: /s/ A. Xxx Xxxxxx By: /s/ Xxxxxx X. Xxxxxx
Title: President and CEO Title: Chairman and CEO
June 29, 2000
Page 6
FINANCIAL RELATIONS
SERVICES ATTACHMENT
As of July 1, 2000 and by the of execution of this agreement, RCG Capital
Markets Group, Inc. and/or affiliates, (collectively "RCG") will serve as the
exclusive Financial Relations Counsel for Air Methods Corporation ("AIRM" or
"Company"). Consistent with the Air Methods Financial Relations Campaign
Overview, RCG anticipates the following services will be attempted and/or
implemented within the scope of this engagement:
- Outline, define, establish and implement a well-coordinated "Financial
Relations" campaign.
- Create, produce, enhance existing and distribute high-quality, due
diligence and marketing materials, which specifically include, but are not
limited to a "Corporate Profile" document and the Company's "Investor
Package".
- Specifically develop, proactively execute and maintain a targeted
securities professionals telecommunications and information campaign
specifically directed toward retail brokers, institutional investors,
third-party portfolio managers and small/mid-cap mutual funds, buy and sell
side analysts and the financial media as circumstances dictate, including,
but not limited to, preparation, clearing with the Company and
dissemination of quarterly press releases and other news releases deemed
appropriate by the Company. RCG will allocate and utilize its proprietary
securities industry, small/mid cap company oriented, databases and fax-line
communications programs. (This will include responding to all incoming
investment community inquiries and fulfillment of information and data
requests.)
- RCG will use its best efforts to secure investment recommendations and
on-going corporate research coverage from national or regional investment
banking or research firms and/or an endorsement by an investment newsletter
publication.
- When appropriate, plan, arrange and coordinate specific follow-on road-show
presentations to strategically targeted primary metropolitan financial
markets.
- RCG will be responsible for the origination and release of financial
industry data and financial media information on behalf of Air Methods. RCG
will also be responsible for editing (or writing) all press releases and
coordinating information disseminated to all media sources relating to the
securities industry and capital markets.
- RCG will organize, monitor and follow-up all conference calls between the
Company and RCG's targeted segment of the investment community, in
conjunction with material press releases, through a teleconferencing
service. (RCG will be responsible for faxing and/or emailing the
invitations and will follow up with calls to the recipients in an effort to
expand the conference call participation.)
- Plan, arrange and coordinate periodic registered representative,
institutional and/or other securities professionals meetings, luncheons,
dinners or special gatherings.
- Implement periodic direct mailings which may include the most recent
statistical information reports, and any appropriate articles or press
releases that have been released during the last reported quarter.
June 29, 2000
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- Update all due diligence and marketing materials. RCG anticipates updating
Company information on a regular basis as required when there are material
changes or events that should be disseminated to the investment community.
- Implement an AIRM Internet Site on RCG's Internet Home Page, RCG Online.
RCG Online will also create an Internet link to the Company's home page.
The purpose of these inclusions will be to provide the investment community
24-hour access site to obtain up-to-date information about the Company.
There will be an additional cost of $350 per month for this service
RCG intends to perform the services and accomplish the specified goals within
the scope of this engagement. However, due to the nature and type of services
being performed, RCG cannot guarantee, nor can it be assumed that certain
specific results will be realized with reference to increased market valuation
of AIRM securities.
June 29, 2000
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FINANCIAL RELATIONS
COMPENSATION ATTACHMENT
In consideration of the Financial Relations Services to be rendered pursuant
hereto Air Methods Corporation agrees to promptly pay RCG the following
compensation (the "Compensation"):
(a) Cash Compensation. During the term of this Agreement, the Company shall pay
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RCG a monthly fee of $5,500 payable monthly in advance of services rendered
and beginning upon the commencement date of this Agreement (the "Retainer
Fees").
(b) Expense reimbursement. In addition, RCG requires to be reimbursed on a
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direct cost basis, for other miscellaneous expenses. AIRM will remit $5,000
to RCG, which RCG will utilize as an escrow deposit for the express purpose
of indemnifying RCG in the event of late payment of monthly expenses by the
Company. RCG will provide the Company with a detailed breakdown of all
reimbursable expenses incurred in the previous month by the twentieth
(20th) day of the following month of service. AIRM agrees to reimburse RCG
within 15 days of receipt of detailed invoice each month. If AIRM is
delinquent in timely reimbursement of expenses as defined above, RCG will
have the right to withdraw from the escrow account the applicable dollar
amount to fully reimburse RCG. If reimbursement is not received by RCG by
the 25th day after the date of the invoice, AIRM, will then remit to RCG an
amount equal to the expenses in question plus a penalty of 15% for
delinquency. RCG will then replenish the escrow account for the amount
withdrawn to cover the delinquency. RCG can at its discretion discontinue
all representation activities on behalf of Company if RCG deems AIRM to be
routinely delinquent in the timely payment of expenses and/or the monthly
fees as stated above.
RCG will obtain prior approval from the Company for all specific expense
items and any single miscellaneous expense item in excess of $750. RCG
acknowledges and understands that the Company will have specific amounts
budgeted for these expenditures and will use it's best efforts to ensure
those budget amounts are not exceeded.
(c) Equity Compensation. RCG requests a non-forfeitable, non-cancelable
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warrant/option (the "Warrants/Options") to acquire 25,000 shares of Air
Methods common stock of which 33.33% will vest immediately, 33.33% will
vest at the one year anniversary of the commencement date and the remaining
33.33% will vest at the two year anniversary of the commencement date. The
Options issued will possess a Five-year expiration term and will provide
RCG the right, until July 1, 2005 to purchase common shares of the Company
at the closing stock price of as June 30, 2000. The Company agrees to issue
an options/warrants document which conforms to and delineates the terms and
conditions contained herein, within sixty (60) days of this Agreement's
execution date.
The shares underlying the non-forfeitable, non-cancelable warrant/option issued
will be eligible for registration by demand registration rights via a form S-3
registration statement or by non-proratable piggy-back registration rights
should the Company file an applicable registration. RCG agrees to pay 50% up to
$5,000 in direct costs associated with S-3 registration. Such payment by RCG is
due upon the effective date of the registration statement. In the event that
RCG provides a written request to exercise any portion or all of its option
position the Company hereby agrees to immediately effectuate such exercise and
to file such registration statement within 30 days of the request.
In the event that AIRM is merged into or a controlling interest is acquired by
any entity, or there is a material change in AIRM management, RCG will be
immediately vested in all remaining options, including those, which to that
point have not yet been vested.
