EXECUTION COPY
TERMINATION AND RELEASE AGREEMENT
This Termination and Release Agreement (this "Agreement") is made on
February 2, 2006 (the "Effective Date") by and between m-Wise, Inc. ("m-Wise"),
on the one hand; and DEP Technology Holdings Ltd. ("DEP") on the other hand.
m-Wise and DEP shall be referred to herein individually as a "Party" and
collectively, the "Parties".
RECITALS
A. m-Wise and DEP are parties to that certain Promissory Note dated July 22nd,
2002 (the "Note").
B. m-Wise desires to settle its outstanding obligations, and the parties desire
to release each other from any claims arising on or prior to the Effective Date
from or relating to the Note, all according to the terms set forth below.
In consideration of the mutual promises made below, the Parties agree as
follows:
1. Representation and Warranties of m-Wise and DEP.
1.1 m-Wise hereby represents and warrants to DEP with specific
reference to the securities to be issued under this Agreement, that the m-Wise
Common Stock to be issued to DEP hereunder and/or upon exercise of the Warrants
(upon receipt of full payment therefore from DEP) granted hereunder, is and,
shall have been when issued, validly issued, fully paid and nonassessable, and
DEP will receive on the date of issuance, good, marketable and valid title, free
of any mortgage, charge, pledge, lien or any other encumbrance, security
interest or other third party rights of any nature whatsoever, free and clear of
all rights of first refusal, co-sale right, options to purchase, anti-dilution,
proxies, voting trusts and any other voting agreements, calls or commitments of
every kind, provided, however, that the m-Wise Common Stock may be subject to
restrictions on transfer under applicable securities laws.
1.2 m-Wise represents and warrants that it is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, United States of America. m-Wise is in good standing under the laws of
each other jurisdiction where the failure to be so qualified or authorized would
have a material adverse effect on the properties, assets, financial condition,
business or operations of m-Wise.
1.3 m-Wise represents and warrants that it has all requisite corporate
power to enter into this Agreement and to carry out and perform its obligations
and the transactions contemplated under the terms of this Agreement, and has or
will have taken, prior to the Closing, all actions necessary for the
authorization, execution and delivery thereof.
1.4 DEP represents and warrant that it has all requisite corporate
power to enter into this Agreement and to carry out and perform its obligations
and the transactions contemplated under the terms of this Agreement, and has or
will have taken, prior to the Closing, all actions necessary for the
authorization, execution and delivery thereof.
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1.5 m-Wise represents and warrants that, subject to the execution of
this Agreement by all parties hereto, this Agreement is a valid and binding
obligations of m-Wise, enforceable in accordance with its terms, except as the
same may be limited by bankruptcy, insolvency, moratorium, and other laws of
general application affecting the enforcement of creditors' rights and by the
availability of equitable remedies.
1.6 DEP represents and warrants that, subject to the execution of this
Agreement by all parties hereto, this Agreement is a valid and binding
obligation of DEP, enforceable in accordance with its terms, except as the same
may be limited by bankruptcy, insolvency, moratorium, and other laws of general
application affecting the enforcement of creditors' rights and by the
availability of equitable remedies.
1.7 m-Wise represents and warrants that the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby will
not result in the breach of any term of, or constitute a default under, any
contract, agreement, commitment, indenture, mortgage, note or other instrument
or obligation to which m-Wise is bound.
1.8 DEP represents and warrants that the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby will not
result in the breach of any term of, or constitute a default under, any
contract, agreement, commitment, indenture, mortgage, note or other instrument
or obligation to which DEP may be bound.
1.9 m-Wise represents and warrants that its execution and delivery of
this Agreement does not or will not (a) require m-Wise to obtain any consent,
approval or action of, or make any filing with or give any notice to, any
corporation, person or firm or any public, governmental or judicial authority
that has not already been obtained prior to the Effective Date, other than
filings with the SEC with respect to the entering into of this Agreement, which
will be filed within seven (7) days from the date hereof, with a copy thereof to
be provided to DEP, (b) result in any violation of, or conflict with, or
constitute a default under its certificate of incorporation or bylaws, each as
amended to date, or (c) result in any violation of, or conflict with any of the
agreements or any judgment, decree, arbitral award or order binding on m-Wise
and/or its properties.
1.10 m-Wise represents and warrants that there are no actions, suits,
proceedings or investigations by or before any governmental authority, currently
pending or, to its best knowledge, threatened that question the validity of this
Agreement.
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1.11 m-Wise represents and warrants that: (i) the authorized share
capital of m-Wise consists of 210,000,000 Shares of Common Stock, each having a
par value of $0.0017, and 170,000,000 shares of Preferred Stock, each having a
par value of $0.0017; (ii) as of the Effective Date of this Agreement,
113,514,157 shares of Common Stock are issued and outstanding, no shares of
Preferred Stock are issued and outstanding, and no class of capital stock of
m-Wise currently issued and outstanding is entitled to preemptive rights; (iii)
except for options to purchase 11,887,347 shares of Common Stock of m-Wise; and
(iv) except for Shares of Common Stock to be issued to Syntek upon conversion of
the Note pursuant to a certain Termination and Release Agreement entered into
between m-Wise and Syntek on December 22nd, 2005 (the "m-Wise-Syntek Agreement")
and a Warrant to be issued to Syntek pursuant to the m-Wise-Syntek Agreement,
and except as detailed in Section 3 below, as of the Effective Date of this
Agreement, there are no other outstanding options, warrants or other rights to
acquire capital stock from m-Wise.
1.12 m-Wise has furnished or made available to DEP, prior to the date
hereof, copies of its Annual Report on Form 10-K for the fiscal year ended
December 31, 2004 ("Form 10-K"), its Quarterly Reports on Form 10-Q for the
fiscal quarters ended March 31, 2005, June 30 , 2005 and September 30, 2005
respectively (the "Form 10-Qs"), the Current Reports on Form 8-K filed since
December 31, 2004 (the "Form 8-Ks") filed by m-Wise with the Securities and
Exchange Commission ("SEC") (the Form 10-K, the Form 10-Qs and the Form 8-Ks are
collectively referred to herein as the "SEC Documents").
2. Conversion of the Note into m-Wise stock. Effective immediately after the
closing of that certain Share Purchase Agreement between, inter alia, m-Wise and
Xcitel Ltd. (the "M&A Transaction"), m-Wise shall issue to DEP such number of
shares of m-Wise common stock calculated by dividing the sum of $900,000 (Nine
Hundred Thousand US Dollars) plus interest at per annum LIBOR rate offered by
Citibank North America from July 10, 2002 until the Effective Date by the
weighted average closing price of m-Wise stock on the OTC bulleting board (MWIS)
during the 30 trading days prior to December 22nd, 2005 being $ 0.174. In the
event that no M&A Transaction Agreement is executed by February 28th, 2006, then
the number of m-Wise Common Stock to be issued to DEP upon the conversion of the
Note, shall be the number of stock resulting from the above calculation PLUS
638,230 shares of Common Stock.
For the sake of clarity m-Wise represents and warrants to DEP that
according to the Quarterly Report on Form 10-Q for the fiscal quarter ended on
September 30, 2005 the amount under the Note plus accrued interests due to DEP
sums up to $959,346.50. Following the issuance of shares by m-Wise hereunder,
the Note shall be deemed converted and, effective immediately prior to the
closing of the M&A Transaction, DEP waives any claim or right with respect to
the repayment of any outstanding loan previously borrowed by m-Wise from DEP or
accrued and unpaid interest thereon.
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m-Wise hereby undertakes to file a registration statement with respect
to the shares of Common Stock issued to DEP under this Section 2 (the "DEP
Registration Statement") as well as at least 20% of the Common Stock to be
transferred to DEP from the Founders under a certain Termination and Release
Agreement entered into on even date within one year from the anticipated closing
of a certain credit line and loan agreement of m-Wise with certain third parties
and the registration of m-Wise shares issued thereunder, but in any event not
later than December 31st, 2006. All costs and expenses incurred by m-Wise
directly in connection with the registration of DEP's shares shall be borne
solely by DEP against detailed invoices and subject to prior approval by DEP.
M-Wise hereby undertakes that: (i) it shall comply with the securities laws such
that the ability to file the DEP Registration Statement and the effectiveness
thereof is not negatively affected by the non-compliance with such laws and that
(ii) the DEP Registration Statement shall include only securities offered by DEP
and (iii) that the DEP Registration Statement shall be effective for at least
120 days, or until all of the DEP shares shall have been sold. Notwithstanding
the foregoing, m-Wise has been informed that each of DEP and Syntek may grant
"piggy back" rights to each other on their respective registrations, as may be
agreed between them separately, in which case, m-Wise agrees to act according to
their instructions.
3. Warrant to DEP. Concurrently with the execution hereof, m-Wise shall furnish
a warrant to DEP in the form attached hereto as Exhibit A, pursuant to which DEP
will be entitled to purchase shares of m-Wise common stock calculated by
dividing the sum of $1,000,000 (One Million US Dollars) by the weighted average
closing price of m-Wise stock on the OTC bulleting board (MWIS) during the 30
trading days prior to December 22nd, 2005, plus a 10% premium, i.e. 5,263,158
shares of m-Wise common stock, at an exercise price of $ 0.19, and with an
exercise term of three years from the date hereof.
4. m-Wise is aware that DEP may wish to offer any Common Stock issued upon the
conversion of the Note and/or the exercise of the Warrants (whether under Rule
144 or similar rules, or in a private transaction), and undertakes to provide
DEP with such information and/or access to legal opinions as may be required
under the Securities laws of the US for the sale of such securities, provided
that DEP will cover the direct cost of any legal opinions requested solely by
DEP hereunder.
5. Waiver and Release. Effective immediately after the closing of the M&A
Transaction, and subject to the fulfillment of the obligations of m-Wise
hereunder to DEP, DEP, for and on behalf of itself, its predecessors,
successors, assigns, directors, shareholders, principals, agents,
representatives, parent companies and subsidiaries (each, a "Releasing Party"),
covenants that it will not make and does hereby irrevocably relieve, release and
forever discharge m-Wise (including for the purpose hereof, any subsidiary,
shareholder, director, officer or agent thereof) from any and all claims,
rights, debts, liabilities, demands, obligations, conditions, promises, acts,
agreements, costs, expenses, damages, lost profits and actions, of whatever kind
or nature, whether now know or unknown which such Releasing Party has, may now
have or may hereafter have against m-Wise prior to the execution hereof,
including without limitation, which arise out of, in connection with or relating
to this Agreement, any breach of the rights thereunder that occurred prior to
the execution hereof and any other related agreement or understanding entered
into prior to the date hereof, excluding in all cases, any such claims relating
to or arising from the M&A Transaction and/or from the execution of this
Agreement. DEP expressly agrees that if it shall make any claim against m-Wise
the same shall then be entitled on the grounds of this Section alone to apply to
the competent court for dismissal of the action against it, with costs.
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6. Waiver and Release. Effective immediately after the closing of the M&A
Transaction, m-Wise, for and on behalf of itself, its predecessors, successors,
assigns, directors, shareholders, principals, agents, representatives, parent
companies and subsidiaries (each, a "Releasing Party"), covenants that it will
not make and does hereby irrevocably relieve, release and forever discharge DEP
(including for the purpose hereof, any subsidiary, shareholder, director,
officer or agent thereof) from any and all claims, rights, debts, liabilities,
demands, obligations, conditions, promises, acts, agreements, costs, expenses,
damages, lost profits and actions, of whatever kind or nature, whether now know
or unknown which such Releasing Party has, may now have or may hereafter have
against DEP prior to the execution hereof, including without limitation, which
arise out of, in connection with or relating to this Agreement and any other
related agreement or understanding entered into prior to the date hereof,
excluding in all cases, any such claims relating to or arising from the M&A
Transaction and/or from the execution of this Agreement. m-Wise expressly agrees
that if it shall make any claim against DEP, the same shall then be entitled on
the grounds of this Section alone to apply to the competent court for dismissal
of the action against it, with costs.
7. No Assignment. DEP represents and warrants that none of its claims against
m-Wise have been assigned, granted or transferred in any way to any person or
entity before the execution hereof.
8. Miscellaneous.
8.1 Severability. Any provision of this Agreement held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Agreement, and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
8.2 Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Israel, without regard to conflicts
of laws principles. Any dispute relating to or arising from this Agreement shall
be exclusively submitted to competent courts in the district of Tel Aviv-Jaffa.
8.3 Successors and Assigns. This Agreement is binding upon and shall
inure to the benefit of the Parties and their respective successors and assigns,
provided that no Party may assign or transfer any of its rights or obligations
hereunder without the prior written consent of all Parties hereto. The
aforementioned shall not limit DEP from transferring the m-Wise Securities. In
addition, the warrant issued to DEP shall be assignable in accordance with its
terms.
8.4 Counterparts. This Agreement may be executed in multiple
counterparts and on telecopy counterparts, each of which when so executed shall
be deemed to be an original, but all of which when taken together shall
constitute one and the same agreement.
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8.5 Headings. The headings, captions, and arrangements used in this
Agreement are for convenience only and shall not affect the interpretation of
this Agreement.
8.6 Entire Agreement. This Agreement embodies the final, entire
agreement among the Parties and supersedes any and all prior commitments,
agreements, representations, and understandings, whether written or oral,
relating to the subject matter of this Agreement, and may not be contradicted or
varied by evidence of prior, contemporaneous, or subsequent oral agreements or
discussions of any of the Parties. There are no oral agreements among the
Parties with respect to the subject matter hereof.
8.7 Further Assurances. Each Party will promptly execute, acknowledge
and deliver any assurances or documents reasonably requested by any other Party
and necessary for the other Party to satisfy its obligations hereunder or to
obtain the benefits contemplated hereby.
8.8 Tax and Expenses. Each Party shall bear all costs and expenses
related to this Agreement and the performance of its obligations hereunder. DEP
is responsible for payment of any and all taxes chargeable to it under any
applicable law and to make any tax report or filing required under such law when
due with respect to any transfer or issuance of shares herein.
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IN WITNESS WHEREOF, the parties hereto have caused this Termination and
Release Agreement to be duly executed as of the day and year first above
written.
m-WISE, INC.
By:
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Printed Name:
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Title:
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IN WITNESS WHEREOF, the parties hereto have caused this Termination and
Release Agreement to be duly executed as of the day and year first above
written.
DEP Technology Holdings Ltd.
By:
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Printed Name:
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By:
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Title:
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