EXHIBIT 10.22
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.
2
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
3
(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),
4
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 and
shall remain in full force and effect for three years from the date
hereof. 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.
5
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
6
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: 8/29/03
AGREED:
New Mexico Software, Inc.
By: /s/ Xxxxxxx X. Xxxxxxxx
Xxxxxxx Xxxxxxxx, President/CEO
Date: 8/29/03
6
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 l(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,
7
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)
9
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.
