PURSHASE AND REGISTRATION RIGHTS AGREEMENT
This Purchase and Registration Rights Agreement (this "Agreement")
dated as of April 28, 2003, by and between m-Wise, Inc., a Delaware corporation
(the "Company"), and ________________ (the "Purchaser") with respect to the
purchase of _________ shares of Common Stock of the Company (the "Shares") .
The Company and the Holder hereby agree as follows:
1. Definitions. As used in this Agreement, the following terms
shall have the following meanings:
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or under common control with
such Person. For the purposes of this definition only, the term "control," when
used with respect to any Person, means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms "affiliated," "controlling" and "controlled" have
meanings correlative to the foregoing.
"Business Day" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a
day on which banking institutions in the state of New York are authorized or
required by law or other
government actions to close between the hours of 9:30 a.m. and 5:00 p.m. New
York Time.
"Commission" means the United States Securities and Exchange Commission.
"Common Stock" means the Company's common stock, par value $.001 per share.
"Event" shall have the meaning set forth in Section 7 hereof.
"Event Date" shall have the meaning set forth in Section 7 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Holder" or "Holders" means the Purchaser and any other holder or
holders, as the case may be, from time to time of Registrable Securities.
"Indemnified Party" shall have the meaning set forth in Section 6(c)
hereof.
"Indemnifying Party" shall have the meaning set forth in Section 6(c)
hereof.
"Inspectors" shall have the meaning set forth in Section 5(a)(viii)
hereof.
"Losses" shall have the meaning set forth in Section 6(a) hereof.
"New York Courts" shall have the meaning set forth in Section 10(e)
hereof.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"Proceeding" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.
"Prospectus" means the prospectus included in a Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective
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registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by such Registration Statement, and all other amendments and
supplements to the prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such prospectus.
"Registrable Securities" means the Shares, and any other shares of
Common Stock issued as (or issuable upon the conversion or exercise of any
warrant, right, or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of, such
Shares, excluding in all cases, however, any Registrable Securities sold by a
Person in a transaction in which the seller's rights under this Agreement are
not assigned.
"Registration" shall have the meaning set forth in Section 3(a) hereof.
"Registration Expenses" means all expenses incurred in effecting any
registration pursuant to this Agreement, including, without limitation, all
registration, qualification, and filing fees, printing expenses, escrow fees,
fees and disbursements of counsel for the Company, blue sky fees and expenses,
and expenses of any regular or special audits incident to or required by any
such registration, but shall not include Selling Expenses, fees and
disbursements of counsel for the Holders and the compensation of regular
employees of the Company, which shall be paid in any event by the Company.
"Registration Statement" means each registration statement,
contemplated by Section 3(a) hereof, including the prospectus, amendments and
supplements to such registration statement or prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference in such registration
statement.
"Rule 144" means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such rule.
"Rule 144A" means Rule 144A promulgated by the Commission pursuant to
the Securities Act, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as rule 144A.
"Rule 145" shall mean Rule 145 as promulgated by the Commission under
the Securities Act, as such rule may be amended from time to time, or any
similar successor rule that may be promulgated by the Commission.
"Rule 158" means Rule 158 promulgated by the Commission pursuant to the
Securities Act, as such rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such rule.
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Holders" means each Holder any of whose Registrable Securities
are being registered pursuant to a Registration Statement.
"Special Power of Attorney" means that certain power of attorney, dated
the date hereof, given by the Company to the Escrow Agent.
"Underwritten Registration" or "Underwritten Offering" means a
registration in connection with which securities of the Company are sold to an
underwriter for sale to the public pursuant to an effective registration
statement.
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2. Restrictions on Transfer.
(a) Each Holder agrees not to offer, sell, transfer, pledge,
assign, hypothecate or otherwise dispose of all or any portion of its
Registrable Securities unless and until the transferee has agreed in writing for
the benefit of the Company to be bound by the terms of this Agreement and;
(i) There is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such registration statement; or
(ii) Such Holder shall have (A) notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (B)
furnished the Company with an opinion of counsel, reasonably satisfactory to the
Company, that such disposition will not require registration of such shares
under the Securities Act.
(b) Each certificate representing Registrable Securities
shall bear the following legend:
THE SHARES OF COMMON STOCK REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR
APPLICABLE STATE "BLUE SKY" OR SECURITIES LAWS ("STATE LAWS"), AND MAY NOT BE
OFFERED, SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF UNLESS AND UNTIL (i) REGISTERED UNDER THE ACT AND APPLICABLE STATE
LAWS OR (ii) THE COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL OR OTHER
EVIDENCE, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS
NOT REQUIRED.
(c) The Company shall be obligated to reissue promptly
unlegended certificates at the request of any Holder thereof if the Holder shall
have obtained an opinion of counsel at such Holder's expense (which counsel may
be counsel to the Company) reasonably acceptable to the Company to the effect
that the securities proposed to be disposed of may lawfully be so disposed of
without registration, qualification or legend;
(d) Any legend endorsed on an instrument pursuant to
applicable state securities laws and the stop-transfer instructions with respect
to such securities shall be removed upon receipt by the Company of an order of
the appropriate blue sky authority authorizing such removal.
3. "Piggy-back" and Demand Registrations.
(a) If the Company decides to register any of its Common Stock
or securities convertible into or exchangeable for Common Stock under the
Securities Act (a "Registration") on a form that is suitable for an offering of
shares of Common Stock by the Company or by third parties and that is not a
registration solely to implement an employee benefit plan, a registration
statement on Form S-4 (or successor form) or a transaction to which Rule 145 or
any other similar rule of the Commission is applicable (such form, a
"Registration Statement"), the Company shall give written notice to the Holders
and the Escrow Agent of its intention to effect such a Registration. Subject to
Section 3(b) below, the Company shall use all reasonable efforts to effect
Registration under the Securities Act of all Registrable Securities that the
Holders request be included in such Registration by a written notice delivered
to the Company within fifteen (15) days after the notice given by the Company.
Each of the Holders agrees that any Registrable Securities which such Holder
requests to be included in a Registration pursuant to this Section 3 shall be
included by the Company on the same form of Registration Statement as selected
for the Registration;
(b) If a Registration involves an underwritten offering, the
Company shall not be required to register securities in excess of the amount
that the principal underwriter reasonably and in good faith recommends in
writing for inclusion in such offering (a "Cutback"), a copy of which
recommendation, and supporting reasoning, shall be delivered to each Holder. If
such a Cutback occurs, the number of shares that are
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entitled to be included in the Registration and underwriting shall be allocated
in the following manner: (i) first, to the Company for any securities it
proposes to sell for its own account, (ii) second, to any Person with demand
registration rights requiring such registration, and (iii) third, to the Holders
and other holders of Company securities with piggy-back registration rights
requesting inclusion in the Registration, pro rata among the respective holders
thereof on the basis of the number of shares for which each such requesting
holder has requested registration;
(c) If the Registration of which the Company gives notice is
for an underwritten public offering, the Company shall so advise the Holders as
a part of the written notice given pursuant to Section 3(a). In such event, the
right of any Holder to have its Registrable Securities included in the
Registration pursuant to this Section 3 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting shall
(together with the Company and its other security holders with registration
rights to participate therein distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
representative of the underwriters or the managing underwriter selected by the
Company;
(d) If the Company elects to terminate any Registration after
a Registration Statement under (a), (b) or (c) for such Registration shall have
been filed, the Company will have no obligation to register the Registrable
Securities that the Holders sought to have included in such Registration. The
Company shall bear all Registration Expenses of the Holders in connection with
any Registration.
(e) Nothwithstanding the foregoing, the Company agrees to file
and cause to be effective within 120 days of the date of this Agreement a
Registration with respect to the Registrable Securities, and to maintain the
effectiveness of such Registration for a period ending no less than 120 days
after the effectiveness of the Registration and the listing of the Common Stock
on NASDAQ, the OTC Bulletin Board, or another electronic trading market
registered under Section 12(b) of the Exchange Act. If for any reason the
Company does not maintain the effectiveness of such Registration for 120 days,
it shall within 60 days of such interruption file one or more additional
Registrations and maintain their effectiveness until such time as the aggregate
number of days equals or exceeds 120.
4. Representations and Warranties.
(a) The Company hereby makes the following
representations and warranties to the
Purchaser:
(i) The Company has the requisite corporate
power and authority to enter into,
execute and deliver this Agreement and to consummate the transactions
contemplated hereby and thereby and to carry out its obligations hereunder and
thereunder. The execution and delivery of this Agreement and the consummation by
it of the transactions contemplated hereby and thereby have been duly authorized
by all necessary action on the part of the Company. This Agreement has been duly
executed and delivered by the Company and constitute the valid and binding
obligations of the Company enforceable against the Company in accordance with
its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors' rights or by other equitable principles of general application;
(ii) Shares have been validly issued and are
fully paid and non-assessable;
(iii) The execution, delivery and performance of
this Agreement by the Company
and the consummation by the Company of the transactions contemplated hereby and
thereby do not and will not (I) conflict with or violate any provision of its or
any Subsidiary's articles of incorporation, resolutions or bylaws or (ii)
require the consent of any third party, conflict with, or constitute a default
(or an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment,
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acceleration or cancellation of, any agreement, indenture or instrument to which
the Company is a party, or (iii) result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any
court or governmental authority to which the Company is subject (including
federal and state securities laws and regulations), or by which any property or
asset of the Company or any of its Subsidiaries is bound or affected, except in
the case of each of clauses (ii) and (iii), such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse Effect;
(iv) Neither the Company nor any Subsidiary is
required to obtain any consent,
permit, waiver, authorization or order of, or make any filing or registration
with, any court or other federal, state, local or other governmental authority
or other Person in connection with the execution, delivery and performance by
the Company of this Agreement;
(v) Neither the Company nor any Subsidiary (I)
is in default under or in violation
of any indenture, loan or credit agreement or any other agreement or instrument
to which it is a party or by which it or any of its properties is bound, except
such conflicts or defaults as do not have a Material Adverse Effect, (ii) is in
violation of any order of any court, arbitrator or governmental body, except for
such violations as do not have a Material Adverse Effect, or (iii) is in
violation of any statute, rule or regulation of any governmental authority which
could (individually or in the aggregate) (x) adversely affect the legality,
validity or enforceability of this Agreement, (y) have a Material Adverse Effect
or (z) adversely impair the Company's ability or obligation to perform fully on
a timely basis its obligations under this Agreement;
(b) The Purchaser hereby represents and warrants to the
Company as follows:
(i) Such Purchaser, if a corporation, or other
non-individual, is duly organized
and validly existing and in good standing under the laws of the jurisdiction of
its incorporation.
(ii) Such Purchaser has the requisite corporate
power and authority to enter into
and to consummate the transactions contemplated hereby to carry out its
obligations hereunder. The execution and delivery of this Agreement has been
duly authorized by all necessary corporate action on the part of such Purchaser.
This Agreement has been duly executed and delivered by such Purchaser or on its
behalf and constitutes the valid and legally binding obligation of such
Purchaser, enforceable against it in accordance with its terms; except as such
enforceability may be limited by applicable bankruptcy, insolvency, liquidation,
fraudulent transfer, reorganization, moratorium laws and remedies or by other
equitable principles of general application or similar laws relating to or
affecting generally the enforcement of creditors' rights.
(iii) Such Purchaser is acquiring the Shares for
its own account for investment
purposes only and without a view toward the resale or distribution thereof,
without prejudice, however, to the Purchaser's right, subject to the provisions
of this Agreement, at all times to sell or otherwise dispose of all or any part
of such Shares in compliance with applicable federal and state securities laws.
(iv) At the time such Purchaser was offered the
Shares, it was, and at the date
hereof, it is, and at the Closing Date, it will be, an "accredited investor" as
defined in Rule 501(a) under the Securities Act.
(v) Such Purchaser, either alone or together
with its representatives, has such
knowledge, sophistication and experience in business and financial matters so as
to be capable of evaluating the merits and risks of the prospective investment
in the Shares, and has so evaluated the merits and risks of such investment.
(vi) Such Purchaser is able to bear the economic
risk of an investment in the
Shares and, at the present time, is able to afford a complete loss of such
investment.
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(vii) Such Purchaser acknowledges receipt of the
Company's draft Form SB-2 with
the audited financial statements and further acknowledges that it has been
afforded (A) the opportunity to ask such questions as it has deemed necessary
of, and to receive answers from, representatives of the Company concerning the
terms and conditions of the offering of the Shares and the merits and risks of
investing in therein; (B) access to information about the Company and the
Company's financial condition, results of operations, business, properties,
management and prospects sufficient to enable it to evaluate its investment in
the Shares; and (C) the opportunity to obtain such additional information which
the Company possesses or can acquire which is necessary to make an informed
investment decision with respect to the Shares.
(viii) Such Purchaser understands and acknowledges
that (A) the Shares are being
offered and sold, and that the Shares are being offered, to it without
registration under the Securities Act in a transaction that is exempt from the
registration provisions of the Securities Act and (B) the availability of such
exemption, depends in part upon, and the Company will rely upon, the accuracy
and truthfulness of, the foregoing representations, and such Purchaser hereby
consents to such reliance.
5. Procedures for Registration.
(a) Whenever the Company is required to register Registrable
Securities under this Agreement, it agrees to do the following at its sole cost
and expense:
(i) advise the underwriter(s), if any, and the
Selling Holders promptly and, if
requested by such Persons, to confirm such advice in writing: (A) when the
prospectus, or any prospectus supplement or post-effective amendment has been
filed, and, with respect to the Registration Statement or any post-effective
amendment thereto, when the same has become effective; (B) of any request by the
Commission for amendments to the Registration Statement or amendments or
supplements to the prospectus or for additional information relating thereto;
(C) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement under the Securities Act or of the
suspension by any state securities commission of the qualification of the
Registrable Securities for qualification, offering or sale in any jurisdiction,
or the initiation of any Proceeding for any of the preceding purposes; and (D)
of the existence of any fact or the happening of any event that makes any
statement of a material fact made in the Registration Statement, the prospectus,
any amendment or supplement thereto, or any document incorporated by reference
therein untrue, or that requires the making of any additions to or changes in
the Registration Statement or the prospectus in order to make the statements
therein not misleading. If, at any time, the Commission issues any stop order
suspending the effectiveness of the Registration Statement or any state
securities commission or other regulatory authority issues an order suspending
the qualification or exemption from qualification of any Registrable Securities
under state securities or Blue Sky laws, the Company shall use its best efforts
to obtain the withdrawal or lifting of such order at the earliest possible time;
(ii) if requested by any Selling Holder or the
underwriter(s), if any, incorporate in
the Registration Statement or prospectus, pursuant to a supplement or
post-effective amendment if necessary, such information as such Selling Holder
and the underwriter(s), if any, may reasonably request to have included therein,
with respect to the number of Registrable Securities, if any, being sold to such
underwriter(s), the purchase price being paid therefor and any other terms of
the offering of the Registrable Securities to be sold in such offering, and the
Company shall make all required filings of such prospectus supplement or
post-effective amendment as soon as practicable after the Company is notified of
the matters to be incorporated in such prospectus supplement or post-effective
amendment;
(iii) furnish to the Selling Holders and each of
the underwriter(s), if any, without
charge, before filing with the Commission, at least one copy of the Registration
Statement, as first filed with the Commission, and of each amendment thereto,
including the prospectus and all documents incorporated by reference therein and
all exhibits (including exhibits incorporated therein by reference);
(iv) consult with the Selling Holders and the
underwriter(s), if any, prior to the
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filing of such Registration Statement or prospectus;
(v) deliver to each of the Selling Holders and
underwriter(s), if any, without
charge, as many copies of the prospectus (including each preliminary prospectus)
and any amendment or supplement thereto as such Persons may reasonably request,
the Company hereby consenting to the use of the prospectus and any amendment or
supplement thereto by each of the Selling Holders and each of the
underwriter(s), if any, in connection with the offering and the sale of any
Registrable Securities covered by the prospectus or any amendment or supplement
thereto;
(vi) use its best efforts, prior to any public
offering of Registrable Securities, to
register or qualify the Registrable Securities under the securities or blue sky
laws of such jurisdictions as the Holder or underwriter(s), if any, may
reasonably request and do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of the Registrable
Securities covered by the Registration Statement; provided, however, that the
Company shall not be required to register or qualify as a foreign corporation
where it is not now so qualified or to take any action that would subject it to
the service of process in suits or to taxation, other than as to matters and
transactions relating to the Registration Statement, in any jurisdiction where
it is not now so subject;
(vii) cooperate with the Selling Holders and the
underwriter(s), if any, to facilitate
the timely preparation and delivery of certificates representing Registrable
Securities covered by a Registration Statement and not bearing any restrictive
legends, except as required by law, and enable such Registrable Securities to be
in such denominations and registered in such names as the Holders may request
prior to any sale of Registrable Securities made by the underwriter(s), if any;
(viii) in connection with the preparation and
filing of each Registration Statement
under the Securities Act pursuant to this Agreement, the Company shall give
Selling Holders, their underwriters, if any, and one counsel or firm of counsel
and one accountant or firm of accountants representing all Selling Holders the
opportunity to participate in the preparation of such Registration Statement,
each prospectus included therein or filed with the Commission, and each
amendment thereof or supplement thereto.
(ix) make available for inspection by the Selling
Holders, any underwriter
participating in any disposition pursuant to a Registration Statement, and any
attorney, accountant or other agent retained by any Holder or underwriter
(collectively, the "Inspectors"), all financial and other records, pertinent
corporate documents and properties of the Company necessary to enable them to
exercise their due diligence responsibility, and cause the Company's officers,
directors and employees to supply all information reasonably requested by any
such Inspector in connection with such Registration Statement;
(x) notify each seller of Registrable Securities
covered by a Registration
Statement at any time when a prospectus relating thereto is required to be
delivered under the Securities Act of the happening of any event as a result of
which the prospectus included in the Registration Statement, as then in effect,
includes and untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or incomplete in the light of the circumstances then existing,
and, at the request of any such seller, prepare and furnish to such seller a
reasonable number of copies of a supplement to be an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of any Registrable Securities, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading or
incomplete in the light of the circumstances then existing;
(xi) keep such registration effective for a
period of one hundred eighty (180) days
or until the Selling Holders have completed the distribution described in any
Registration Statement relating thereto, whichever first occurs; provided,
however, that (A) such 180-day period shall be extended for a period of time
equal to the longer of (1) the period the Holder refrains from selling any
securities included in such registration at the request of an underwriter of
securities of the Company and (2) the period ending on the date
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on which Rule 144(k) first becomes available for transfers of Registrable
Securities and (B) in the case of any Registration of Registrable Securities on
Form S-3 which are intended to be offered on a continuous or delayed basis, such
180-day period shall be extended, if necessary, to keep the Registration
Statement effective until all such Registrable Securities are sold, however in
no event longer than one year from the Effective Date of the Registration
Statement and provided that Rule 145 permits an offering on a continuous or
delayed basis;
(xii) cause all such Registrable Securities
registered hereunder to be listed on each
securities exchange on which similar securities issued by the Company are then
listed;
(xiii) provide a transfer agent and registrar for
all Registrable Securities registered
pursuant to a Registration Statement and a CUSIP number for all such Registrable
Securities, in each case not later than the effective date of such Registration
Statement;
(xiv) otherwise use its best efforts to comply
with all applicable rules and
regulations of the Commission, and make available to its security holders, as
soon as reasonably practicable, an earnings statement covering the period of at
least twelve months, but not more than eighteen months, beginning with the first
month after the effective date of the Registration Statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act;
and
(xv) at such time as a Registration Statement
covering a resale of any Registrable
Securities has been declared effective by the Commission, cause its counsel to
deliver to the transfer agent for the Common Stock an opinion, subject to the
making by Selling Holders of such representations and warranties to Company
counsel as it may reasonably require, certifying that such Registrable
Securities may be sold by the Selling Holders pursuant to such Registration
Statement with the purchasers thereof receiving share certificates without
restrictive legend, which opinion shall remain effective so long as such
Registration Statement remains in full force and effect;
(b) Each Selling Holder shall, upon receipt of notice from the
Company of the occurrence of any event of the kind described in Section 4(a)(i),
forthwith discontinue disposition of Registrable Securities following the
effective date of a Registration Statement covering Registrable Securities until
such Holder's receipt of copies of the prospectus supplement and/or
post-effective amendment or until it is advised in writing by the Company that
the use of the applicable prospectus may be resumed and, in either case, has
received copies of any additional or supplemental filings that are incorporated
or deemed to be incorporated by reference in such prospectus or Registration
Statement.
(c) Each Holder covenants and agrees that (i) it will not
offer or sell any Registrable Securities being registered pursuant to any
Registration Statement until such Holder shall have received copies of the
related prospectus and notice from the Company that such Registration Statement
has become effective and (ii) such Holder and its officers, directors and
Affiliates, if any, will comply with the prospectus delivery requirements of the
Securities Act as applicable to them in connection with sales of Registrable
Securities pursuant to any Registration Statement.
6. Indemnification.
(a) Indemnification by the Company. The Company shall,
notwithstanding termination of this Agreement and without limitation as to time,
indemnify and hold harmless each Holder, the officers, directors, agents
(including any underwriters retained by the Holders in connection with the offer
or sale of Registrable Securities), brokers, investment advisors and employees
of each of them, each Person who controls any such Holder (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) and the
officers, directors, agents and employees of each such controlling Person, from
and against any and all losses, claims, damages, liabilities, costs (including,
without limitation, costs of preparation and attorneys' fees) and expenses
(collectively, "Losses"), as incurred, arising out of or relating to any untrue
or alleged untrue statement of a material fact contained in such Registration
Statement, any prospectus or any form of prospectus or in any
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amendment or supplement thereto or in any preliminary prospectus, or arising out
of or relating to any omission or alleged omission of a material fact required
to be stated therein or necessary to make the statements therein (in the case of
any prospectus or form of prospectus or amendment or supplement thereto, in
light of the circumstances under which they were made) not misleading, except
solely to the extent that (I) such untrue statements or omissions are based
solely upon information regarding such Holder furnished in writing to the
Company by or on behalf of such Holder expressly for use therein, which
information was relied on by the Company for use therein or (ii) such
information relates to such Holder or such Holder's proposed method of
distribution of Registrable Securities and was furnished in writing to the
Company by or on behalf of such Holder expressly for use therein. The Company
shall notify the Holders promptly of the institution, threat or assertion of any
Proceeding of which the Company is aware in connection with the transactions
contemplated by this Agreement.
(b) Indemnification by Holders. In connection with each
Registration Statement, each Selling Holder shall furnish to the Company in
writing such information as the Company reasonably requests for use in
connection with such Registration Statement or the related prospectus and
agrees, severally and not jointly, to indemnify and hold harmless the Company,
their directors, officers, agents and employees, each Person who controls the
Company (within the meaning of Section 15 of the Securities Act and Section 20
of the Exchange Act), and the directors, officers, agents or employees of such
controlling Persons, to the fullest extent permitted by applicable law, from and
against all Losses (as determined by a court of competent jurisdiction in a
final judgment not subject to appeal or review) arising solely out of or based
solely upon any untrue statement of a material fact contained in such
Registration Statement, such prospectus, or any form of prospectus, or arising
solely out of or based solely upon any omission of a material fact required to
be stated therein or necessary to make the statements therein not misleading
solely to the extent that (I) such untrue statement or omission is contained in
any information furnished in writing by such Holder to the Company specifically
for inclusion in such Registration Statement or such prospectus and such
information was relied upon by the Company for use in such Registration
Statement, such prospectus or such form of prospectus, or (ii) such information
relates to such Holder or such Holder's proposed method of distribution of
Registrable Securities and was furnished in writing by or on behalf of such
Holder to the Company specifically for inclusion in such Registration Statement
or such prospectus and such information was relied upon by the Company for use
in such Registration Statement, such prospectus or such form of prospectus;
provided, however, that anything contained herein to the contrary
notwithstanding, no Holder shall be liable for any claims hereunder in an amount
in excess of the net proceeds received by such Holder from the sale of its
Registrable Securities pursuant to a Registration Statement. In addition, the
foregoing shall not inure to the benefit of any Holder if a copy of such
prospectus (as then amended or supplemented) was furnished by the Company to
such Holder and was not sent or given by or on behalf of such Holder to such
Holder's purchaser of Registrable Securities if required by law to have been so
delivered.
(c) Conduct of Indemnification Proceedings. If any Proceeding
is brought or asserted against any Person entitled to indemnity hereunder (an
"Indemnified Party"), such Indemnified Party promptly shall notify the Person
from whom indemnity is sought (the "Indemnifying Party") in writing, and the
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to the Indemnified Party and the payment of all
fees and expenses incurred in connection with defense thereof; provided that the
failure of any Indemnified Party to give such notice shall not relieve the
Indemnifying Party of its obligations or liabilities pursuant to this Agreement,
except (and only) to the extent that it is finally determined by a court of
competent jurisdiction (which determination is not subject to appeal or further
review) that such failure shall have proximately and materially adversely
prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel in
any such Proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party or
Parties unless: (I) the Indemnifying Party has agreed to pay such fees and
expenses; or (ii) the Indemnifying Party shall have failed to assume promptly
the defense of such Proceeding and to employ counsel reasonably satisfactory to
such Indemnified Party in such Proceeding; or (iii) the named parties to any
such Proceeding (including any impleaded parties) include both such Indemnified
Party and the Indemnifying
{00061071.2 / 0000-003} J-9
Party, and such Indemnified Party shall have been advised by counsel that a
conflict of interest is likely to exist if the same counsel were to represent
such Indemnified Party and the Indemnifying Party (in which case, if such
Indemnified Party notifies the Indemnifying Party in writing that it elects to
employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense of the claim
against the Indemnified Party but shall retain the right to control the overall
Proceedings out of which the claim arose, and counsel employed by the
Indemnified Party shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld. No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending Proceeding in respect of
which any Indemnified Party is a party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding.
All fees and expenses of the Indemnified Party to which the Indemnified
Party is entitled hereunder (including reasonable fees and expenses to the
extent incurred in connection with investigating or preparing to defend such
Proceeding in a manner not inconsistent with this Section) shall be paid to the
Indemnified Party, as incurred, within ten (10) Business Days after the
Indemnified Party gives written notice thereof to the Indemnifying Party.
(d) Contribution. If a claim for indemnification under Section
6(a) or 6(b) of this Agreement is unavailable to an Indemnified Party or is
insufficient to hold such Indemnified Party harmless for any Losses in respect
of which this Section would apply by its terms (other than by reason of
exceptions provided in this Section), then each Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Indemnifying Party on the one hand and the Indemnified Party on the other from
the distribution of the Registrable Securities or (ii) if the allocation
provided by clause (i) above in this paragraph is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in such clause (i) but also the relative fault of the
Indemnifying Party and Indemnified Party in connection with the actions,
statements or omissions that resulted in such Losses as well as any other
relevant equitable considerations. The relative fault of such Indemnifying Party
and Indemnified Party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission of a material fact, has been
taken or made by, or relates to information supplied by, such Indemnifying Party
or Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any Losses shall
be deemed to include, subject to the limitations set forth in Section 6(c)
hereof, any attorneys' or other fees or expenses incurred by such party in
connection with any Proceeding to the extent such party would have been
indemnified for such fees or expenses if the indemnification provided for in
this Section was available to such party.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 6(d), no Holder shall be required
to contribute, in the aggregate, any amount in excess of the amount by which the
proceeds actually received by such Holder from the sale of its Registrable
Securities subject to the Proceeding exceeds the amount of any damages that such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
(e) The indemnity and contribution agreements contained in
this Section 6 and the representations and warranties of the Company set forth
in this Agreement shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of any Holder or any Person
controlling Holder, the Company, its directors or officers or any Person
controlling the Company.
{00061071.2 / 0000-003} J-10
(f) No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending or
threatened action, suit or proceeding in respect of which any Indemnified Party
is or could have been a party and indemnity could have been sought hereunder by
such Indemnified Party, unless such settlement includes an unconditional release
of such Indemnified Party from all liability on claims that are the subject
matter of such action, suit or proceeding.
(g) The indemnity and contribution agreements contained in
this Section are in addition to any liability that the Indemnifying Parties may
have to the Indemnified Parties.
7. Rule 144. The Company shall file the reports required to be filed by
it under the Securities Act and the Exchange Act in a timely manner and, if at
any time the Company is not required to file such reports, it will, upon the
request of any Holder, make publicly available other information for as long as
necessary to permit sales of its securities pursuant to Rule 144. The Company
further covenants that it will take such further action as any Holder may
reasonably request, all to the extent required from time to time to enable such
Holder to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by Rule 144. Upon the
request of any Holder, the Company shall deliver to such Holder a written
certification of a duly authorized officer as to whether it has complied with
such requirements.
8. Rule 144A. The Company agrees that, upon the request of a Holder or
any prospective purchaser of Registrable Securities designated by a Holder, the
Company shall promptly provide (but in any case within fifteen (15) days of a
request) to such Holder or potential purchaser, the following information:
(a) a brief statement of the nature of the business of
the Company and any subsidiaries
and the products and services each of them offers;
(b) the most recent consolidated balance sheets and profit and
losses and retained earnings statements, and similar financial statements of the
Company for the two (2) most recent fiscal years (such financial information
shall be audited, to the extent reasonably available); and
(c) such other information about the Company, any
subsidiaries, and their business, financial condition and results of operations
as such Holder or purchaser of such Registrable Securities shall request in
order to comply with Rule 144A, as amended, and in connection therewith the
anti-fraud provisions of the federal and state securities laws.
The Company hereby represents and warrants to the Holders and any
prospective purchaser of Registrable Securities from a Holder that the
information provided by the Company pursuant to this Section 8 will, as of the
dates of such information, not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements made,
in light of the circumstances under which they were made, not misleading.
9. Consent to be Bound; Assignability of Registration Rights. Each
subsequent holder of Registrable Securities must consent in writing to be bound
by the terms and conditions of this Agreement in order to acquire the rights
granted pursuant to this Agreement. Subject to the foregoing sentence, the
registration rights set forth in this Agreement are assignable to each assignee
of Registrable Securities conveyed in accordance herewith who agrees in writing
to be bound by the terms and conditions of this Agreement.
10. Miscellaneous.
(a) No amendment, modification, termination or cancellation of
this Agreement shall be effective unless made in a writing signed by the Company
and all of the Persons who are then Holders of Registrable Securities;
(b) The Company and the Holders agree that the rights
created by this Agreement are
{00061071.2 / 0000-003} J-11
unique, and that the loss of any such right is not susceptible to monetary
quantification. Consequently, the parties agree that an action for specific
performance (including for temporary and/or permanent injunctive relief) of the
obligations created by this Agreement is a proper remedy for the breach of the
provisions of this Agreement, without the necessity of proving actual damages.
If the parties hereto are forced to institute legal proceedings to enforce their
rights in accordance with the provisions of this Agreement, the prevailing party
shall be entitled to recover its reasonable expenses, including attorneys' fees,
in connection with any such action;
(c) Except as otherwise specifically provided herein, all
notices, requests, demands and other communications provided for hereunder shall
be in writing and shall be deemed duly given to the Person for whom intended (i)
upon receipt when personally delivered, (ii) one (1) day after being sent by a
nationally recognized overnight courier for next day delivery or telecopy
providing confirmation or receipt of delivery, or (iii) three (3) days after
being sent by certified or registered mail, postage and certified or registered
mail fees prepaid, return receipt requested, if sent to such Person at the
address for such Person indicated below or to such other address as may be
designated by such Person in writing sent by such Person in the manner required
by this Section:
If to the Company: m-Wise, Inc.
10 Hasadnaot Street
Herzeliya Pitauch
Israel 46120
Tel: +972 9 958 1711
If to the Holders: To the address of each such Holder as it
appears in the stock transfer
records of the Company
(d) This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and, all of which taken together shall constitute one and the same Agreement. In
the event that any signature is delivered by facsimile transmission, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) the same with the same force and
effect as if such facsimile signature were the original thereof;
(e) This Agreement shall be governed by and construed in
accordance with the laws of the state of New York without regard to principles
thereof relating to the conflict of laws. Each of the Company and each Holder
hereby irrevocably submits to the jurisdiction of any New York state court or
any federal court sitting in the city and county of New York (collectively, the
"New York Courts") in respect of any Proceeding arising out of or relating to
this Agreement and irrevocably accepts for itself and in respect of its
property, generally and unconditionally, jurisdiction of the New York Courts.
Each of the Company and each Holder irrevocably waives, to the fullest extent it
may effectively do so under applicable law, any objection that it may now or
hereafter have to the laying of the venue of any such Proceeding brought in any
New York Court and any claim that any such Proceeding brought in any New York
Court has been brought in an inconvenient forum;
(f) The remedies provided herein are cumulative and not
exclusive of one another or of
any remedies provided by law;
(g) If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their reasonable efforts to find and employ an alternative means to achieve the
same or substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
(h) The headings in this Agreement are for convenience o
f reference only and shall not
{00061071.2 / 0000-003} J-12
limit or otherwise affect the meaning hereof.
[Signatures on following page]
{00061071.2 / 0000-003} J-13
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
Company:
M-WISE, INC.
By: _____________________________
Name: ___________________
Title: ___________________
Holder:
--------------------------------
By: _______________________________
Name: _____________________
Title: _____________________
{00061071.2 / 0000-003} J-14
Schedule of details
Name Shares
Ecco Petroleum Family Limited Partnership 400,000
Brighton Capital, Inc. 674,454
24351 Pasto Road, Dana Point California 92629
Oxford Financial Group, Inc. 1,074,454
11 Brookridge Drive
Henderson, NV 89052
{00061071.2 / 0000-003} J-15