FIRST MIRAGE, INC.
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
(000) 000-0000 FAX (000) 000-0000
Via Email
xxx@xxxx.xxx
August 21, 2003
Xx. Xxxxxxx Xxxxxxxx
President/CEO
New Mexico Software, Inc.
0000 Xxxxxx Xxxxxx XX
Xxxxxxxxxxx, XX 00000
Dear Xx. Xxxxxxxx:
This letter agreement (Agreement) confirms the understanding
and agreement between First Mirage, Inc. (Consultant or
First Mirage) and NMXS, Inc. (Company or NMXS) as follows:
1. The Company wishes to engage First Mirage to provide
consulting services and First Mirage is willing to provide
such services. First Mirage will provide the consulting
services for a period of one year commencing on the date
that both parties have signed this Agreement.
2. First Mirage shall provide the following consulting
services to the company:
a) Advice concerning the company's capital structure; this
will be on an "as needed" basis. Corporate finance issues
including: valuation analysis, timing of capital events,
capital structure, public offering strategy, merger and
acquisition strategy, and investment bank evaluation and
selection.
b) Advice concerning the effect on the securities markets
of proposed capital transactions.
c) To advise in the evaluation, selection and recruitment
of the Company's Board of Directors and its Advisory Board,
and the establishment of procedures and processes for Board
review and action. The term will be for one year.
d) To advise in the evaluation, selection and recruitment
of its management team. Executive coaching and mentoring to
management.
e) To advise in the evaluation, selection and recruitment
of professional advisors, including accounting advisors.
f) We are going to communicate by phone, email and face to
face meetings on a variety of financial subjects at the
request of the company. The consulting term for the above
will be for one year.
3. As compensation for the consulting services to be
rendered by First Mirage as set forth herein, the Company
will issue to First Mirage 1,000,000 warrants exercisable
for a period of five years from the date hereof at $.08 per
warrant (the "Warrants"). The Warrants shall be cashless
exercise if, but only if, at any time after one year from
the date hereof that the underlying common stock is not
freely tradable pursuant to an effective registration
statement with a current prospectus available. The form of
the Warrants is attached hereto as Exhibit A. In connection
with the issuance of the Warrants, First Mirage hereby
represents and warrants to the Company as follows:
a) It is an "accredited investor" as that term is defined
in Rule 501(a) of Regulation D promulgated by the Securities
and Exchange Commission under the Securities Act of 1933, as
amended.
b) It understands that the Warrants have not been
registered pursuant to the Securities Act, or any state
securities act, and thus are "restricted securities" as
defined in Rule 144 promulgated by the SEC.
c) It acknowledges that the Warrants are being purchased
for its own account, for investment, and not with the
present view towards the distribution, assignment, or resale
to others or fractionalization in whole or in part. First
Mirage further acknowledges that no other person has or will
have a direct or indirect beneficial or pecuniary interest
in the Warrants.
d) It acknowledges that it will not sell, assign,
hypothecate, or otherwise transfer any rights to, or any
interest in, the Warrants except (i) pursuant to an
effective registration statement under the Securities Act,
or (ii) in any other transaction which, in the opinion of
counsel acceptable to the Company, is exempt from
registration under the Securities Act, or the rules and
regulations of the SEC thereunder. First Mirage also
acknowledges that an appropriate legend will be placed upon
each of the certificates representing the Warrants stating
that the Warrants have not been registered under the
Securities Act and setting forth or referring to the
restrictions on transferability and sale of the Warrants.
e) It has been furnished (i) with all requested materials
relating to the business, finances, and operations of the
Company; (ii) with information deemed material to making an
informed investment decision; and (iii) with additional
requested information necessary to verify the accuracy of
any documents furnished to it by the Company. The
undersigned representative of First Mirage has been afforded
the opportunity to ask questions of the Company and its
management and to receive answers concerning the terms and
conditions of the issuance of the Warrants.
f) The undersigned representative of First Mirage has
received or had access to: (i) the Company's annual report
on Form 10-KSB for the year ended December 31, 2002; (ii)
the Company's quarterly reports on Form 10-QSB for the
quarters ended March 31, 2003, and June 30, 2003; and (iii)
each other filing made by the Company with the SEC. Such
person has relied upon the information contained therein and
has not been furnished any other documents, literature,
memorandum, or prospectus.
g) The undersigned representative of First Mirage, has
such knowledge and experience in business and financial
matters that he is capable of evaluating the risks of the
prospective transaction involving the Warrants, and that the
financial capacity of First Mirage is of such proportion
that the total cost of its commitment in the Warrants would
not be material when compared with its total financial
capacity.
h) It did not enter into this Agreement as a result of or
subsequent to any advertisement, article, notice, or other
communication published in any newspaper, magazine, or
similar media or broadcast on television or radio, or
presented at any seminar or meeting.
i) All communications concerning the transaction set forth
in this Agreement and the issuance of the Warrants made to
the undersigned by the Company, or on its behalf by its duly
authorized representative(s), have been made only in the
State of Georgia.
j) The undersigned representative of First Mirage has a
preexisting personal or business relationship with the
Company or one of its officers, directors, or controlling
persons, or, by reason of his business or financial
experience, First Mirage has the capacity to protect its own
interests in connection with the acquisition of the
Warrants.
4. The Company hereby grants to First Mirage the following
piggy-back registration rights in connection with the shares
of common stock underlying the Warrants:
a)Whenever the Company shall propose to file a
registration statement under the Securities Act on a
form which permits the inclusion of the shares of
common stock underlying the Warrants (the "Shares")
for resale (the "Registration Statement"), it will
give written notice to First Mirage at least fifteen
(15) business days prior to the anticipated filing
thereof, specifying the approximate date on which
the Company proposes to file the Registration
Statement and the intended method of distribution in
connection therewith, and advising First Mirage of
its right to have any or all of the Shares then held
by it included among the securities to be covered by
the Registration Statement (the "Piggy-Back
Rights"). The Company shall use its best efforts to
maintain the effectiveness of the Registration
Statement for such time during which the Warrants
are exercisable, or until all of the Shares are
resold or qualify for resell under Rule 144,
whichever shall first occur.
b) Subject to Section (d) and Section (e) hereof,
in the event that First Mirage has and shall elect
to utilize the Piggy-Back Rights, the Company shall
include in the Registration Statement the number of
the Shares identified by First Mirage in a written
request (the "Piggy-Back Request") given to the
Company not later than ten (10) business days prior
to the proposed filing date of the Registration
Statement. The Shares identified in the Piggy-Back
Request shall be included in the Registration
Statement on the same terms and conditions as the
other shares of common stock included in the
Registration Statement.
c) First Mirage shall not have Piggy-Back Rights
with respect to (i) a registration statement on Form
S-4 or Form S-8 or Form S-3 (with respect to
dividend reinvestment plans and similar plans) or
any successor forms thereto, (ii) a registration
statement filed in connection with an exchange offer
or an offering of securities solely to existing
stockholders or employees of the Company, (iii) a
registration statement filed in connection with an
offering by the Company of securities convertible
into or exchangeable for Common Stock, and (iv) a
registration statement filed in connection with
private placement of securities of the Company
(whether for cash or in connection with an
acquisition by the Company or one of its
subsidiaries).
d) If the lead managing underwriter selected by
the Company for an underwritten offering for which
Piggy-Back Rights are requested determines that
marketing or other factors require a limitation on
the number of shares of common stock to be offered
and sold in such offering, then (i) such underwriter
shall provide written notice thereof to each of the
Company and First Mirage, and (ii) there shall be
included in the offering, first, all shares of
common stock proposed by the Company to be sold for
its account (or such lesser amount as shall equal
the maximum number determined by the lead managing
underwriter as aforesaid) and, second, only that
number of Shares requested to be included in the
Registration Statement by First Mirage that such
lead managing underwriter reasonably and in good
faith believes will not substantially interfere with
(including, without limitation, adversely affect the
pricing of) the offering of all the shares of common
stock that the Company desires to sell for its own
account.
e) The granting of the Piggy-Back Rights shall not
create any liability on the part of the Company to
First Mirage if the Company for any reason should
decide not to file a Registration Statement for
which Piggy-Back Rights are available or to withdraw
such Registration Statement subsequent to its
filing, regardless of any action whatsoever that
First Mirage may have taken, whether as a result of
the issuance by the Company of any notice hereunder
or otherwise.
f) As a condition to providing Piggy-Back Rights,
the Company may require First Mirage to furnish to
the Company in writing such information regarding
the proposed distribution by First Mirage as the
Company may from time to time reasonably request.
g) Except as set forth below, the Company shall
bear all expenses of the Registration Statement.
First Mirage will be individually responsible for
payment of its own legal fees (if First Mirage
retains legal counsel separate from that of the
Company), underwriting fees and brokerage discounts,
commissions and other sales expenses incident to any
registration of the Shares to be sold by First
Mirage.
h)The Piggy-Back Rights granted pursuant to this
Agreement are not assignable or transferable by
First Mirage without the prior written consent of
the Company.
5. The Company will reimburse First Mirage, upon request,
for its reasonable expenses (including, without limitation,
travel expenses and professional and legal fees) incurred in
connection with its engagement hereunder. First Mirage
agrees not to incur reimbursable expenses on behalf of the
Company without prior written approval by the Company.
6. Except as required by applicable law or pursuant to
an order entered or subpoena issued by a court of
competent jurisdiction, First Mirage will keep
confidential all material non-public information
provided to it by the Company, and will not disclose
such information to any third party, other than its
employees and advisors that are involved in providing
services to the Company hereunder who likewise agree to
maintain the confidentiality of such material non-
public information. This provision shall survive the
termination of the Agreement. First Mirage
acknowledges that the remedy of damages may be
inadequate to protect the interests of the Company in
the event of breach or threatened breach of this
Agreement. Accordingly, First Mirage acknowledges the
availability and propriety of injunctive or other
equitable relief to the Company in addition to any
other remedy at law that may be available to the
Company.
7. It is the policy and practice of First Mirage to
receive indemnification when it is acting as an advisor
on behalf of its clients. Accordingly, the Company and
First Mirage agree to the indemnification and other
provisions set forth in Schedule I.
8.This Agreement supersedes all prior agreements between
the parties concerning the subject matter hereof. This
Agreement may be modified only with a written
instrument duly executed by each of the parties. No
waiver by any party of any breach of this Agreement
will be deemed to be a waiver of any proceeding or
succeeding breach. This Agreement may be executed in
more than one counterpart, each of which will be deemed
to be an original, or by facsimile or electronic
signature, and all such counterparts together will
constitute but one and the same instrument. The
invalidity or unenforceability of any provision of this
Agreement will not affect the validity or
enforceability of any other provisions of this
Agreement, which will remain in full force and effect.
This contract shall inure to the benefit of the parties
hereto, their heirs, administrators and successors in
interest. This Agreement shall not be assignable by
either party hereto without the prior written consent
of the other.
9. This Agreement will be governed by the internal laws
of the state of Georgia. Any proceeding related to or
arising out of the engagement of First Mirage pursuant
to this Agreement may, at the sole option of First
Mirage, be commenced, prosecuted or continued in any
court of the State of Georgia located in Xxxxxx County
or in the United States District Court for the Northern
District of Georgia. The Company and First Mirage waive
all rights to trial by jury in any such proceeding.
10. Both the Company and the Consultant agree that the
Consultant will act as an independent contractor in the
performance of his duties under this Agreement.
Nothing contained in this Agreement shall be construed
to imply that Consultant, or any employee, agent or
other authorized representative of Consultant, is a
partner, joint venturer, agent, officer or employee of
the Company. Neither party hereto shall have any
authority to bind the other in any respect vis a vis
any third party, it being intended that each shall
remain an independent contractor and responsible only
for its own actions.
11. All notices, requests, demands, and other
communications under this Agreement shall be in
writing, sent either by hand delivery, facsimile, or
overnight mail, and notice is given for the purposes of
this Agreement upon receipt by the receiving party.
If to the Company: New Mexico Software, Inc.
0000 Xxxxxx Xxxxxx XX
Xxxxxxxxxxx, XX 00000
Telephone: (000) 000 0000
Facsimile: (000) 000 0000
Attn: CEO
With a copy to: Xxxxxx X. Xxxxx
Attorney at Law
00 Xxxx 000 Xxxxx
Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Consultant: First Mirage, Inc.
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxxx X. Xxxxxxxx, General
Counsel
If the foregoing correctly sets forth the understanding and
agreement between First Mirage and the Company, please so
indicate in the space provided for that purpose below,
whereupon this letter will constitute a binding agreement as
of the date hereof.
First Mirage, Inc.
By: /s/ Xxxx Xxxxxxxxxxx
---------------------
Xxxx Xxxxxxxxxxx, Vice President
Date:08/21/2003
AGREED:
New Mexico Software, Inc.
By: /s/ Xxxxxxx Xxxxxxxx
--------------------------------
Xxxxxxx Xxxxxxxx, President/CEO
Date: 08/21/2003
Schedule I
Indemnification
1.The Company will:
(a) indemnify First Mirage and hold it harmless
against any and all losses, claims, damages or
liabilities to which First Mirage may become subject
arising in any manner out of or in connection with
the rendering of services by First Mirage hereunder
(including any services rendered prior to the date
hereof) or the rendering of additional services by
First Mirage as requested by the Company that are
related to the services rendered hereunder, unless
it is finally judicially determined that such
losses, claims, damages or liabilities resulted
directly from the gross negligence or willful
misconduct of First Mirage; and
(b) reimburse First Mirage promptly for any
reasonable legal or other expenses reasonably
incurred by it in connection with investigating,
preparing to defend or defending, or providing
evidence in or preparing to serve or serving as a
witness with respect to, any lawsuits,
investigations, claims or other proceedings arising
in any manner out of or in connection with the
rendering of services by First Mirage hereunder or
the rendering of additional services by First Mirage
as requested by the Company that are related to the
services rendered hereunder (including, without
limitation, in connection with the enforcement of
this Agreement and the indemnification obligations
set forth herein); provided, however, if it is
finally judicially determined that such losses,
claims, damages or liabilities resulted directly
from the gross negligence or willful misconduct of
First Mirage; then First Mirage will remit to the
Company any amounts reimbursed under this
subparagraph 1(b).
The Company agrees that the indemnification and
reimbursement commitments set forth in this paragraph 1
will apply whether or not First Mirage is a formal
party to any such lawsuits, investigations, claims or
other proceedings and that such commitments will extend
upon the terms set forth in this paragraph to any
controlling person, affiliate, shareholder, member,
director, officer, employee or consultant of First
Mirage (each, with First Mirage, an "Indemnified
Person"). The Company further agrees that, without
First Mirage's prior written consent (which consent
will not be unreasonably withheld), it will not enter
into any settlement of a lawsuit, claim or other
proceeding arising out of the transactions contemplated
by this Agreement (whether or not First Mirage or any
other Indemnified Person is an actual or potential
party to such lawsuit, claim or proceeding) unless such
settlement includes an explicit and unconditional
release from the party bringing such lawsuit, claim or
other proceeding of all Indemnified Persons.
The Company further agrees that the Indemnified Persons
are entitled to retain separate counsel of their choice
in connection with any of the matters in respect of
which indemnification, reimbursement or contribution
may be sought under this Agreement.
2. The Company and First Mirage agree that if any
indemnification or reimbursement sought pursuant to the
preceding paragraph 1 is judicially determined to be
unavailable, then the Company will contribute to the losses,
claims, damages, liabilities and expenses for which such
indemnification or reimbursement is held unavailable (i) in
such proportion as is appropriate to reflect the relative
economic interests of the Company on the one hand, and First
Mirage on the other hand, in connection with the transaction
or event to which such indemnification or reimbursement
relates, or (ii) if the allocation provided by clause (i)
above is judicially determined not to be permitted, in such
proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) but also the
relative faults of the Company on the one hand, and First
Mirage on the other hand, as well as any other equitable
considerations; provided, however, that in no event will the
amount to be contributed by First Mirage pursuant to this
paragraph exceed the value of the compensation actually
received by First Mirage hereunder.
3.First Mirage will:
(a) indemnify the Company and hold it harmless
against any and all losses, claims, damages or
liabilities to which the Company may become subject
arising in any manner out of or in connection with
the rendering of services by First Mirage hereunder
(including any services rendered prior to the date
hereof) or the rendering of additional services by
First Mirage as requested by the Company that are
related to the services rendered hereunder, unless
it is finally judicially determined that such
losses, claims, damages or liabilities resulted
directly from the gross negligence or willful
misconduct of the Company; and
(b) reimburse the Company promptly for any
reasonable legal or other expenses reasonably
incurred by it in connection with investigating,
preparing to defend or defending, or providing
evidence in or preparing to serve or serving as a
witness with respect to, any lawsuits,
investigations, claims or other proceedings arising
in any manner out of or in connection with the
rendering of services by First Mirage hereunder or
the rendering of additional services by First Mirage
as requested by the Company that are related to the
services rendered hereunder (including, without
limitation, in connection with the enforcement of
this Agreement and the indemnification obligations
set forth herein); provided, however, if it is
finally judicially determined that such losses,
claims, damages or liabilities resulted directly
from the gross negligence or willful misconduct of
the Company; then the Company will remit to First
Mirage any amounts reimbursed under this
subparagraph 3(b).
First Mirage agrees that the indemnification and
reimbursement commitments set forth in this paragraph 3
will apply whether or not the Company is a formal party
to any such lawsuits, investigations, claims or other
proceedings and that such commitments will extend upon
the terms set forth in this paragraph to any controlling
person, affiliate, shareholder, member, director,
officer, employee or consultant of the Company (each,
with the Company, an "Indemnified Person"). First
Mirage further agrees that, without the Company's prior
written consent (which consent will not be unreasonably
withheld), it will not enter into any settlement of a
lawsuit, claim or other proceeding arising out of the
transactions contemplated by this Agreement (whether or
not the Company or any other Indemnified Person is an
actual or potential party to such lawsuit, claim or
proceeding) unless such settlement includes an explicit
and unconditional release from the party bringing such
lawsuit, claim or other proceeding of all Indemnified
Persons.
First Mirage agrees that the Indemnified Persons are
entitled to retain separate counsel of their choice in
connection with any of the matters in respect of which
indemnification, reimbursement or contribution may be
sought under this Agreement.
4.First Mirage and the Company agree that if any
indemnification or reimbursement sought pursuant to the
preceding paragraph 3 is judicially determined to be
unavailable, then First Mirage will contribute to the
losses, claims, damages, liabilities and expenses for
which such indemnification or reimbursement is held
unavailable (i) in such proportion as is appropriate to
reflect the relative economic interests of First Mirage
on the one hand, and the Company on the other hand, in
connection with the transaction or event to which such
indemnification or reimbursement relates, or (ii) if
the allocation provided by clause (i) above is
judicially determined not to be permitted, in such
proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) but also
the relative faults of the First Mirage on the one
hand, and the Company on the other hand, as well as any
other equitable considerations; provided, however, that
in no event will the amount to be contributed by First
Mirage pursuant to this paragraph exceed the value of
the compensation actually received by First Mirage
hereunder.
5.Nothing in this Agreement, expressed or implied, is
intended to confer or does confer on any person or
entity other than the parties hereto or their
respective successors and assigns, any rights or
remedies under or by reason of this Agreement or as a
result of the services to be rendered by First Mirage
hereunder. The parties acknowledge that First Mirage
is not acting as an agent of the Company or in a
fiduciary capacity with respect to the Company and that
First Mirage is not assuming any duties or obligations
other than those expressly set forth in this Agreement.
The Company further agrees that neither First Mirage
nor any of its controlling persons, affiliates,
directors, officers, employees or consultants will have
any liability to the Company or any person asserting
claims on behalf of or in right of the Company for any
losses, claims, damages, liabilities or expenses
arising out of or relating to this Agreement or the
services to be rendered by First Mirage hereunder,
unless it is finally judicially determined that such
losses, claims, damages, liabilities or expenses
resulted directly from the gross negligence or willful
misconduct of First Mirage.
6. The provisions of this Schedule I shall survive any
expiration or termination of this Agreement or First
Mirage's engagement hereunder; provided however, that no
claims under this indemnification provision shall be first
made more than one hundred twenty (120) days following the
termination or expiration of this Agreement.
