TERMINATION AND RELEASE AGREEMENT
This Termination and Release Agreement (this "Agreement") is made on
December 22, 2005 (the "Effective Date") by and between m-Wise, Inc. ("m-Wise"),
on the one hand; and Syntek Capital AG ("Syntek") on the other hand. m-Wise and
Syntek shall be referred to herein individually as a "Party" and collectively,
the "Parties".
RECITALS
A. m-Wise and Syntek 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 Syntek.
1.1 m-Wise hereby represents and warrants to Syntek with specific
reference to the securities to be issued under this Agreement, that the m-Wise
Common Stock to be issued to Syntek hereunder and/or upon exercise of the
Warrants (upon receipt of full payment therefor from Syntek) granted hereunder,
is and, shall have been when issued, validly issued, fully paid and
nonassessable, and Syntek 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 Syntek 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.
-1-
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 Syntek represents and warrants that, subject to the execution of
this Agreement by all parties hereto, this Agreement is a valid and binding
obligation of Syntek, 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 Syntek 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 Syntek 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 Syntek, (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.
-2-
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
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 Syntek, 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 Syntek 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 the Effective Date being
December 22, 2005. 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
Syntek 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 Syntek 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
Syntek 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, Syntek waives any claim or right with
respect to the repayment of any outstanding loan previously borrowed by m-Wise
from Syntek or accrued and unpaid interest thereon.
-3-
m-Wise hereby undertakes to file a registration statement with respect
to the shares of Common Stock issued to Syntek under this Section 2 (the "Syntek
Registration Statement") 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 Syntek's shares shall be borne solely by
Syntek against detailed invoices and subject to prior approval by Syntek. M-Wise
hereby undertakes that: (i) it shall comply with the securities laws such that
the ability to file the Syntek Registration Statement and the effectiveness
thereof is not negatively affected by the non-compliance with such laws and that
(ii) the Syntek Registration Statement shall include only securities offered by
Syntek and (iii) that the Syntek Registration Statement shall be effective for
at least 120 days, or until all of the Syntek shares shall have been sold.
Notwithstanding the foregoing, m-Wise has been informed that each of Syntek and
DEP 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 Syntek. Concurrently with the execution hereof, m-Wise shall
furnish a warrant to Syntek in the form attached hereto as Exhibit A, pursuant
to which Syntek 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 the Effective Date, plus a 10% premium, i.e.
5,263,158 shares of m-Wise common stock, at an exercise price of $.19 per share,
and with an exercise term of three years from the date hereof.
4. m-Wise is aware that Syntek 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 Syntek 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 Syntek will cover the direct cost of any legal opinions requested
solely by Syntek 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 Syntek, Syntek, 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. Syntek 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.
-4-
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
Syntek (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 Syntek 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 Syntek, 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. Syntek 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 Syntek from transferring the m-Wise Securities.
In addition, the warrant issued to Syntek shall be assignable in accordance with
its terms.
-5-
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.
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.
Syntek 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.
-6-
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:
---------------------------------------
Printed Name:
------------------------------
Title:
------------------------------------
-7-
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.
SYNTEK CAPITAL AG
By:
---------------------------------------
Printed Name:
------------------------------
Title:
------------------------------------
By:
---------------------------------------
Printed Name:
------------------------------
Title:
------------------------------------
-8-
