ORDINARY SHARES AND WARRANTS PURCHASE AGREEMENT
This ORDINARY SHARES AND WARRANTS PURCHASE AGREEMENT (this "Agreement")
is dated as of the 27th day of February, 2002 (the "Agreement Date") by and
between Commtouch Software Ltd., a corporation organized under the laws of
Israel (the "Company"), and the investors listed on Exhibit A attached hereto
(each an "Investor" and together the "Investors").
The parties hereto agree as follows:
ARTICLE I Definitions
Section 1.1 Definitions.
(a) "Closing" shall have the meaning assigned to such term in
Section 2.2 hereof.
(b) "Commission" shall mean the Securities and Exchange
Commission.
(c) "Effective Date" shall mean the date the Registration
Statement of the Company covering the Shares being subscribed for hereby and the
Ordinary Shares issuable upon exercise of the Warrants is declared effective by
the Commission.
(d) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission promulgated
thereunder.
(e) "Registrable Securities" shall have the meaning assigned
to such term in Section 3.1(a).
(f) "Registration Statement" shall have the meaning assigned
to such term in Section 3.1(a).
(g) "Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations of the Commission promulgated thereunder.
(h) "Shares" shall mean the Ordinary Shares of the Company
that may be purchased hereunder.
(i) "Trading Day" shall mean (a) any day on which the Ordinary
Shares are traded on the Nasdaq National Market, or (b) if the Ordinary Shares
are not then listed or quoted for trading on the Nasdaq National Market, then a
day on which trading occurs on the New York Stock Exchange (or any successor
thereto).
(j) "Warrants" shall have the meaning assigned to such term in
Section 2.1.
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ARTICLE II Purchase and Sale of Shares and Warrants; Representations of Company
Section 2.1 Purchase and Sale of Shares. Subject to the terms
and conditions of this Agreement, each Investor agrees, severally and not
jointly, to purchase at the Closing, and the Company agrees to issue and sell to
each Investor, that number of Ordinary Shares of Company, 0.05 NIS par value per
share (the "Ordinary Shares"), indicated with respect to the investment amounts
corresponding to each such Investor on Exhibit A attached hereto at a purchase
price ("Purchase Price") equal to the average of the regular session closing
sale prices of an Ordinary Share as published by Bloomberg Financial LP for each
of the twenty (20) Trading Days prior to the Agreement Date hereof. Against the
payment of the investment proceeds by the Investors to the Company, the Company
shall issue a Stock Certificate to each Investor indicating the number of Shares
purchased by such Investor. In addition, each Investor will receive, and the
Company agrees to issue to each such Investor, a warrant substantially in the
form attached hereto as Exhibit B (the "Warrants") to purchase up to:
I) 20% (twenty percent) of the number of Ordinary Shares
purchased by Investor at Closing at a price per Ordinary Share
of 125% of the Purchase Price, plus
II) 20% (twenty percent) of the number of Ordinary Shares
purchased by Investor at Closing at a price per Ordinary Share
of $1.00 (One United States Dollar), plus
III) 20% (twenty percent) of the number of Ordinary Shares
purchased by Investor at Closing at a price per Ordinary Share
of $2.00 (Two United States Dollars).
The Ordinary Shares, the Warrants, and the Ordinary Shares issued upon exercise
of the Warrants shall be hereinafter referred to as the "Securities."
Section 2.2 Closing. The purchase and sale of the Securities
shall take place at the offices of McCutchen, Doyle, ▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP, ▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇") within three (3)
business days upon attainment of all of the following: (a) the receipt of
approvals from the Chief Scientist of Israel and the Israel Investment Center;
(b) the receipt of approval of the shareholders of the Company if required by
the Nasdaq; (c) deposit by the Investors in escrow with ▇▇▇▇▇▇▇▇▇ of the total
Purchase Price within fourteen (14) days of the Agreement Date and (d) any other
necessary approvals in connection with this Agreement and the transactions
contemplated thereunder (the "Closing"). Each party shall deliver all documents,
funds, instruments and writings required to be delivered by such party pursuant
to this Agreement at or prior to the Closing. If the Closing has not occurred by
the date 60 days from the Agreement Date, the Company's obligation to sell and
the Investors' obligation to purchase the Securities will terminate. The
Investors will not be obligated to purchase the Securities if, after the
Agreement Date and before the Closing, there shall have occurred a material
adverse effect upon the business, financial condition, results of operations,
assets, properties or business prospects of the Company.
Section 2.3 Representations and Warranties of the Company. The
Company hereby represents and warrants as follows:
(a) The Company is a company duly incorporated and validly
existing under the laws of Israel. This Agreement constitutes, or shall
constitute when executed and delivered, a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms. Without
limiting the generality of the foregoing, the Company knows of no
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reason why it will not be able to register the Registrable Securities as
provided in Article III below.
(b) The Company is authorized to issue the Shares, the
Warrants and the Ordinary Shares issuable upon exercise of the Warrants pursuant
to this Agreement, and the same shall be issued free and clear of any and all
liens, encumbrances, security interests and claims of any kind and nature, and
no third party holds any right or interest (beneficial, voting or otherwise) in
the Shares or Warrants. The Shares when issued and paid for as provided herein
and the Ordinary Shares issuable upon exercise of the Warrants when issued upon
exercise thereof will be fully-paid and non-assessable.
(c) The Company has full power and authority to enter into and
consummate the transactions contemplated by this Agreement, and the consent of
not other party or entity is necessary for the consummation of the transactions
contemplated herein other than as set forth herein.
(d) The Company meets the eligibility requirements for the use
of Form F-3 for the registration of securities in a transaction involving
secondary offerings.
ARTICLE III Registration and Accredited Investor Rights and Obligations
Section 3.1 Registration Statement.
(a) Filing and Effectiveness. The Company will file as soon as
commercially practicable a Form F-3 (or if not eligible at such time to file
Form F-3, a Form F-1) registration statement with the Commission (the
"Registration Statement"), for non-underwritten resale into the open market of
the Shares and the Ordinary Shares issuable upon exercise of the Warrants (the
"Registrable Securities"). Once filed, the Company shall take all reasonable
measures to cause such Registration Statement registering the Registrable
Securities to be declared effective. The Company will notify the Investors and
its transfer agent of the effectiveness of the Registration Statement within ten
(10) Trading Days of such event.
(b) Liquidated Damages for Failure to Register. In the event
that (a) the Registration Statement is not filed by the Company within 30 days
from the Closing Date, (b) the Registration Statement is not declared effective
by the Commission within 90 days from the Closing date, or (c) such Registration
Statement is not maintained as effective by the Company for the period set forth
in Section 3.1(c) below (each a "Registration Default"), then the Company will
pay each Investor (pro-rata on a monthly basis), except for those listed on
Schedule 3.1(b), for each Registration Default then in effect, as liquidated
damages and not as a penalty, during any period in which a Registration Default
is occurring, 5% (five percent) per calendar month or portion thereof of (i) the
aggregate Purchase Price paid by the Investor for the Securities, and (ii) the
value of any outstanding Warrants (valued at the difference between the average
volume weighted average price [based on a trading day from 9:30 a.m. to 4:00
p.m.] on the NASDAQ National Market as reported by Bloomberg Financial LP using
the AQR function [i.e. volume weighted average quote recap] for the Ordinary
Shares for each Trading Day (the "VWAP") during the applicable month and the
exercise price multiplied by the number of Warrant Shares the Warrants are
exercisable into, but in no case less than zero), held by such Investor until
such corresponding Registration Default no longer exists ("Liquidated Damages").
Such payment of the Liquidated Damages shall be made to the Investor upon 5
Trading Days' irrevocable notice to the Investor, in cash or registered Ordinary
Shares (based on the average of the closing sale prices of an Ordinary Share
during the 5 Trading Days immediately following
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such irrevocable notice by the Company of such issuance), on the last day of
each month during which a Registration Default occurred or was continuing,
without demand therefor by the Investor; provided, however, that the payment of
the Liquidated Damages shall not relieve the Company from its obligations to
register the Securities pursuant to this Section. Provided however that in no
event shall the amount of Liquidated Damages payable hereunder to any Investor
exceed 45% (forty-five percent) of the Purchase Price paid by that Investor.
(c) Effectiveness Period. The Company will maintain the
Registration Statement effective under the Securities Act until the earlier of
(i) the date that all of the Shares and Ordinary Shares issued upon exercise of
the Warrants have been sold pursuant to such Registration Statement, (ii) the
date the Investors receive an opinion from counsel to the Company, which counsel
shall be reasonably acceptable to the Investors, that the Shares may be sold
under the provisions of Rule 144 without limitation as to volume, (iii) the date
that all Shares have been otherwise transferred to persons who may trade such
shares without restriction under the Securities Act, and the Company has
delivered a new certificate or other evidence of ownership for such Shares not
bearing a restrictive legend, or (iv) eighteen (18) months from the Effective
Date.
Section 3.2 Investors Representations.
(a) Investor Status Declaration. Each Investor declares that
it has such knowledge and experience as to be capable of evaluating the merits
and risks of its investment. Each Investor is able to fend for itself and can
bear the economic risk of this investment, including a complete loss.
(b) Purchase Entirely for Own Account. Investor undertakes to
acquire the Shares and Ordinary Shares issuable upon exercise of the Warrants
for investment and for Investor's own account, not as a nominee or agent, and
not with a view to the resale or distribution of any part thereof, and Investor
has no present intention of selling, granting any participation in, or otherwise
distributing the same, provided that nothing in this section shall constitute an
agreement by Investor to hold or refrain from disposing of the Shares and
Ordinary Shares issuable upon exercise of the Warrants for any amount of time,
provided that any transfer, sale or other disposition of the Shares by Investor
shall comply in all respects with the requirements of the Securities Act and
similar provisions of state law. Investor will have sole voting control over the
Shares and Ordinary Shares issuable upon exercise of the Warrants for purposes
of Section 13(d) of the Exchange Act. Investor does not presently have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participation to such person or to any third person, with
respect to any of the Securities.
(c) Restricted Securities. Investor understands that the
Shares and the Ordinary Shares issuable upon exercise of the Warrants have not
been, and will not at the time of sale and issuance by the Company be,
registered under the Securities Act by reason of a specific exemption from the
registration provisions of the Securities Act which depends upon, among other
things, the bona fide nature of the investment intent and the accuracy of
Investor's representations as expressed herein. Investor understands that the
Shares and the Ordinary Shares issuable upon exercise of the Warrants are
"restricted securities" under applicable U.S. federal and state securities laws
and regulations, and that pursuant to these laws, Investor must hold the Shares
and the Ordinary Shares issuable upon exercise of the Warrants indefinitely
unless the Securities are registered with the Commission and qualified by
necessary state authorities or an exemption from such registration and
qualification requirements is available.
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Investor further acknowledges that if an exemption from registration or
qualification is available, it may be conditioned on various requirements
including, but not limited to, the time and manner of sale, the holding period
for the Shares and the Ordinary Shares issuable upon exercise of the Warrants,
and requirements relating to the Company which are outside of Investor control
and which the Company is under no obligation, except as set forth herein, to
satisfy.
(d) Information. Each Investor acknowledges that (i) it has
been furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the
Securities which have been requested by the Investor; (ii) it has been afforded
the opportunity to ask questions of the Company; (iii) it has sought such
accounting, legal and tax advice as it has considered necessary to make an
informed investment decision with respect to its acquisition of the Securities;
(iv) it understands that it (and not the Company) shall be responsible for
Investor's own tax liabilities that may arise as a result of this investment or
the transactions contemplated by this Agreement; (v) it has had access to the
Company's Annual Report on Form 20-F for the year ended December 31, 2000 as
amended by Amendment No. 1 thereto, and with Reports on Form 6-K for the months
of January, May (2 reports), June, August and November 2001, all as filed with
the SEC; and (vi) it understands that an investment in the Company may be
considered as a high-risk investment, and the Investor nevertheless has
voluntarily agreed to consummate the investment.
Section 3.3 Piggy-Back Registration.
(a) The Company shall notify the Investors in writing at least
fifteen (15) days prior to filing any registration statement under the 1933 Act
for purposes of effecting a public offering of securities of the Company
(including, but not limited to, registration statements relating to secondary
offerings of securities of the Company, but excluding registration statements
relating to any employee benefit plan or a corporate reorganization) and will
afford the Investors an opportunity to include in such registration statement
all or any part of the Shares or the Ordinary Shares reserved for issuance upon
exercise of the Warrant. If an Investor desires to include in any such
registration statement all or any part of such securities, the Investor shall,
within ten (10) days after receipt of the above-described notice from the
Company, so notify the Company in writing, and in such notice shall inform the
Company of the number of Shares and Ordinary Shares reserved for issuance upon
exercise of the Warrant that Investor wishes to include in such registration
statement. If Investor decides not to include all of the Shares or Ordinary
Shares issued or reserved for issuance upon the exercise of the Warrant in any
registration statement thereafter filed by the Company, the Investor shall
nevertheless continue to have the right to include any such securities in any
subsequent registration statement or registration statements as may be filed by
the Company with respect to offerings of its securities, all upon the terms and
conditions set forth herein. The Company will cooperate with the Investor to
facilitate its distribution of securities pursuant to any such registration
statement.
(b) All expenses incurred by the Company in complying with
Section 3.3(a) (other than the underwriter's discounts and commissions),
including, without limitation, all registration and filing fees (including all
expenses incident to filing with the National Association of Securities Dealers,
Inc.), fees and expenses of complying with securities and blue sky laws (except
for blue sky expenses required by law to be borne by Investors), expense
allowances of the underwriters, printing expenses, fees and disbursements of
counsel or other advisor to the Company, and of the accountants to Company, are
herein called "Registration Expenses." All fees and expenses of counsel for any
selling Investor and all underwriting discounts and commissions applicable to
the eligible securities covered by any such registration, are herein called
"Selling Expenses." The Company shall pay all Registration Expenses in
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connection with each registration pursuant to Section 3.3(a). All Selling
Expenses and blue sky expenses required by law to be borne by Investors in
connection with each registration pursuant to Section 3.3(a) shall be borne by
the Investor or Investors therein in proportion to the number of eligible
securities included by each in such registration or in such other proportions as
they may agree upon. In the event of any dispute as to how Selling Expenses are
allocated, the Company shall be entitled to apportion the expenses in a
reasonable manner between the various Investors.
(c) The piggy-back registration rights granted in this Section
3.3 shall take effect solely if the Registration Statement described in Section
3.1(a) above is not declared effective within 90 days of the Closing date.
Section 3.4 Indemnification.
(a) Indemnification by Company. In the event of a registration
of any Shares pursuant to this Article III, the Company will hold harmless
Investors and each officer, director, employee and advisor of each of the
foregoing, against any expenses, losses, claims, damages or liabilities, joint
or several, to which Investors may become subject under the Securities Act, any
state securities law or otherwise, including any of the foregoing incurred in
settlement of any litigation, commenced or threatened, insofar as such expenses,
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained, on the Effective Date thereof, in any registration
statement under which such Shares are registered under the Securities Act, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein in light of the circumstances under
which they were made not misleading; provided, however, that the Company will
not be liable in any such case to the extent that any such expense, loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement, said preliminary prospectus or said prospectus or said
amendment or supplement in reliance upon and in conformity with written
information furnished in writing to the Company by or on behalf of Investors or
specifically for use in the preparation thereof.
(b) Indemnification by Investors. In the event of any
registration of any Shares under the Securities Act pursuant to this Article
III, each Investor, severally and not jointly, will indemnify and hold harmless
the Company, each officer of the Company who signs the registration statement,
and each director of the Company against any and all such expenses, losses,
claims, damages or liabilities referred to in the first paragraph of this
Section 3.4, if the statement, alleged statement, omission or alleged omission
in respect of which such expense, loss, claim, damage or liability is asserted
was made in reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of such Investor specifically for use in
connection with the preparation of such registration statement, preliminary
prospectus, prospectus, amendment or supplement.
(c) Indemnification Procedure. Each party entitled to
indemnification under this Section 3.4 (the "Indemnified Party") shall give
notice to the party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual knowledge of any claim
as to which indemnity may be sought, and shall permit the Indemnifying Party to
assume the defense of any such claim or any litigation resulting thereon,
provided that the Indemnified Party may participate in such defense at its own
expense, and provided further
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that the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this Section
3.4 except to the extent such failure resulted in actual detriment to the
Indemnifying Party. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. Each Indemnified Party shall furnish such information regarding
itself or the claim in question as an Indemnifying Party may reasonably request
in writing and as shall be reasonably required in connection with defense of
such claim and litigation resulting therefrom.
ARTICLE IV Additional Covenants
Section 4.1 Transfer Restrictions.
(a) The Investors agree to the imprinting, so long as is
required by this Section 4.1, of the following legend (the "Legend") on any
certificate evidencing Securities:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE
TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY.
(b) Certificates evidencing the Shares shall not contain any
legend (including the legend set forth in Section 4.1(a)) while a registration
statement covering the resale of such security is effective under the Securities
Act, or (ii) following any sale of such Shares pursuant to Rule 144, or (iii) if
such Shares are eligible for sale under Rule 144(k), or (iv) if such legend is
not required under applicable requirements of the Securities Act (including
judicial interpretations and pronouncements issued by the Staff of the
Commission).
Section 4.2 Rule 144 and 144A Reporting. With a view to making
available to holders of Registrable Securities the benefits of certain rules and
regulations of the SEC which may permit the sale of the Registrable Securities
to the public without registration, the Company agrees at all times to: (i) make
and keep public information available, as those terms are understood and defined
in Rule 144 and Rule 144A; and (ii) use its best efforts to file with the
Commission in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act.
(a) For purposes of facilitating sales pursuant to Rule 144A,
so long as the Company is not subject to the reporting requirements of Section
13 or 15(d) of the Exchange
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Act, each holder of Registrable Securities and any prospective purchaser of such
holder's securities shall have the right to obtain from the Company, upon
request of the holder prior to the time of sale, a brief statement of the nature
of the business of the Company and the products and services it offers; and the
Company's most recent balance sheet and profit and loss and retained earnings
statements, and similar financial statements for the two preceding fiscal years
(the year end financial statements should be audited to the extent reasonably
available).
(b) In the event that the Company does not comply with the
provisions of this Section 4.2, then the Investors shall be entitled to treat
any period of non-compliance as if it were a Registration Default, subject to
the penalties set out in Section 3.1(b) above.
Section 4.3 The Company will use best efforts to list the
Shares and Ordinary Shares obtained upon exercise of the Warrants for trading on
the Nasdaq system or any relevant market or system, if applicable. The Company
will continue to take all action necessary to continue the listing or trading of
its Ordinary Shares on the Nasdaq National Market or any relevant market or
system, if applicable, and will comply in all respects with the Company's
reporting, listing or other obligations under the rules of the Nasdaq National
Market or any relevant market or system.
ARTICLE V Miscellaneous
Section 5.1 Fees and Expenses.
(a) The Company agrees to reimburse the Investors for their
legal costs incurred in connection with this Agreement in an amount up to and
including $5,000 plus VAT as required by applicable law. Apart from such
reimbursement, each party will pay its own fees and expenses related to the
transactions contemplated by this Agreement.
Section 5.2 Consent to Jurisdiction and Governing Law.
Each of the Company and Investors (i) hereby irrevocably
submit to the exclusive jurisdiction of the United States District Court and
other courts of the United States sitting in the State of California for the
purposes of any suit, action or proceeding arising out of or relating to this
Agreement and (ii) hereby waives, and agrees not to assert in any such suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of such court, that the suit, action or proceeding is brought in an
inconvenient forum or that the venue of the suit, action or proceeding is
improper. Each of the Company, Investors consent to process being served in any
such suit, action or proceeding by mailing a copy thereof to such party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing in this Section shall affect or limit any right to serve
process in any other manner permitted by law. This Agreement shall be governed
by and construed in accordance with the internal laws of the State of
California, without giving effect to the choice of law provisions thereof.
Section 5.3 Entire Agreement; Amendment. This Agreement
contains the entire understanding of the parties with respect to the matters
covered hereby and, except as specifically set forth herein, neither the Company
nor Investors makes any representations, warranty, covenant or undertaking with
respect to such matters. The parties hereto may not amend this Agreement or any
rights or obligations hereunder without the prior written consent of the Company
and Investors.
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Section 5.4 Notices. Any notice, demand, request, waiver or
other communication required or permitted to be given hereunder shall be in
writing and shall be effective (a) upon hand delivery, by telecopy or facsimile
at the address or number designated below (if delivered on a business day during
normal business hours where such notice is to be received), or the first
business day following such delivery (if delivered other than on a business day
during normal business hours where such notice is to be received) or (b) on the
second business day following the date of dispatch by express courier service,
fully prepaid, addressed to such address, or upon actual receipt of such
dispatch, whichever shall first occur. The addresses for such communications
shall be:
If to the Company: Commtouch Software Ltd.
c/o Commtouch Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Tel. No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Chief Executive Officer
If to the Investors: To the address and fax number indicated on the
signature page hereof.
With a copy (which shall not ▇▇▇▇▇ ▇▇▇▇▇ & Co.
constitute notice) to: ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Fax No.: (▇▇▇-▇) ▇▇▇-▇▇▇▇
Any party hereto may from time to time change its address for notices
by giving at least ten (10) days written notice of such changed address to the
other party hereto.
Section 5.5 Waivers. No provision of this Agreement may be
waived other than by a written instrument signed by the party against whom
enforcement of any such waiver is sought. No waiver by either party of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any other provisions, condition or requirement hereof, nor shall any delay or
omission of any party to exercise any right hereunder in any manner impair the
exercise of any such right accruing to it thereafter.
Section 5.6 Headings. The article, section and subsection
headings in this Agreement are for convenience only and shall not constitute a
part of this Agreement for any other purpose and shall not be deemed to limit or
affect any of the provisions hereof.
Section 5.7 Successors and Assigns. Investors may not assign
this Agreement to any person without the prior consent of the Company, which
consent will not be unreasonably withheld. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and permitted
assigns.
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Section 5.8 Counterparts. This Agreement may be executed in
any number of counterparts, all of which taken together shall constitute one and
the same instrument.
Section 5.9 Severability. The provisions of this Agreement are
severable and, in the event that any court of competent jurisdiction shall
determine that any one or more of the provisions or part of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision or part of a provision of
this Agreement, and this Agreement shall be reformed and construed as if such
invalid or illegal or unenforceable provision, or part of such provision, had
never been contained herein, so that such provisions would be valid, legal and
enforceable to the maximum extent possible.
Section 5.10 Further Assurances. From and after the date of
this Agreement, upon the request of the Investors or the Company, each of the
Company and the Investors shall execute and deliver such instruments, documents
and other writings as may be reasonably necessary or desirable to confirm and
carry out and to effectuate fully the intent and purposes of this Agreement.
Section 5.11 Corporate Securities Laws. THE SALE OF THE
SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH
THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF
THE SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION
THEREFOR PRIOR TO THE QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES
IS EXEMPT FROM THE QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE
CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE
EXPRESSLY CONDITIONED UPON THE QUALIFICATION BEING OBTAINED UNLESS THE SALE IS
SO EXEMPT.
[remainder of page intentionally left blank]
10
[ORDINARY SHARES AND WARRANTS PURCHASE AGREEMENT SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officer as of the date first above
written.
COMMTOUCH SOFTWARE LTD.
By: ______________________________________
Name:
Title:
INVESTORS INVESTORS
By: ______________________________________ By: ______________________________________
Name: ▇▇▇▇ ▇▇▇ Name: OZF Ltd.
Title: Title:
By: ______________________________________ By: ______________________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Title:
By: ______________________________________ By: ______________________________________
Name: ▇▇▇ ▇▇▇▇▇ Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Title:
By: ______________________________________ By: ______________________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Title:
By: ______________________________________ By: _______________________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇▇▇▇
Title: Title:
By: ______________________________________ By: _______________________________________
Name: Danitan ▇▇▇▇▇ Ltd. Name: Origami Ltd.
Title: Title:
By: ______________________________________ By: _______________________________________
Name: McCutchen, Doyle, ▇▇▇▇▇ & Enersen Name: ▇▇▇▇▇ ▇▇▇▇
Title: Title:
By: _______________________________________
Name: ▇▇. ▇. ▇. ▇▇▇▇▇▇▇
Title:
11
Exhibit A
Schedule of Investors and Investment Amount
----------------------------------------- ----------------- ------------- -------------- -------------- --------------
Name and Address of Investor Amount of No. of No. of No. of No. of
Investment Ordinary 125% $1.00 $2.00
Shares Warrants Warrants Warrants
----------------------------------------- ----------------- ------------- -------------- -------------- --------------
▇▇▇▇ ▇▇▇▇▇▇▇ $25,000 85,616 17,123 17,123 17,123
I.D. ▇▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇, ▇▇▇-▇▇▇▇, ▇▇▇▇▇▇ - ▇▇▇▇▇
Tel (W): ▇▇▇-▇-▇▇▇▇▇▇▇
Fax: ▇▇▇-▇-▇▇▇▇▇▇▇
Tel (H): ▇▇▇-▇-▇▇▇▇▇▇▇
Mobile: ▇▇▇-▇▇-▇▇▇▇▇▇
Mail: ▇▇▇▇@▇▇▇▇▇▇.▇▇.▇▇
----------------------------------------- ----------------- ------------- -------------- -------------- --------------
▇▇▇ ▇▇▇▇▇ $25,000 85,616 17,123 17,123 17,123
Barazani ▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇
ID No: ▇▇▇▇▇▇▇▇▇
Tel (w): ▇▇▇-▇-▇▇▇▇▇▇▇
Fax: ▇▇▇-▇-▇▇▇▇▇▇▇
Tel (H): ▇▇▇-▇-▇▇▇▇▇▇▇
Mobil: ▇▇▇-▇▇-▇▇▇▇▇▇
e-mail:
▇.▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇.▇▇
----------------------------------------- ----------------- ------------- -------------- -------------- --------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ $25,000 85,616 17,123 17,123 17,123
I.D. No. 16538100
▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
Tel (W): ▇▇▇-▇-▇▇▇▇▇▇▇
Fax: ▇▇▇-▇-▇▇▇▇▇▇▇
Tel (H): ▇▇▇-▇-▇▇▇▇▇▇▇
Mobile: ▇▇▇-▇▇-▇▇▇▇▇▇
Mail:
▇.▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇.▇▇
----------------------------------------- ----------------- ------------- -------------- -------------- --------------
▇▇▇▇ ▇▇▇▇▇▇ $25,000 85,616 17,123 17,123 17,123
I.D. No. 065178444
▇▇▇▇▇ ▇▇▇-▇▇▇ ▇/▇▇ ▇▇▇▇▇▇-▇▇▇▇▇, ▇▇▇▇▇▇
Tel (W): ▇▇▇-▇-▇▇▇▇▇▇▇
Fax: ▇▇▇-▇-▇▇▇▇▇▇▇
Mobile: ▇▇▇-▇▇▇▇▇▇▇▇
Mail:
▇▇▇▇.▇▇▇▇▇▇@▇▇.▇▇▇▇▇▇▇▇.▇▇▇
----------------------------------------- ----------------- ------------- -------------- -------------- --------------
Danitan ▇▇▇▇▇ Ltd. $25,000 85,616 17,123 17,123 17,123
Reg. No. 511718470
Lamerhav 53b', Ramat Hasharon,
Israel - 47226
Tel (W): ▇▇▇-▇-▇▇▇▇▇▇▇
Fax: ▇▇▇-▇-▇▇▇▇▇▇▇
Mobile: ▇▇▇-▇▇-▇▇▇▇▇▇
----------------------------------------- ----------------- ------------- -------------- -------------- --------------
12
----------------------------------------- ----------------- ------------- -------------- -------------- --------------
Mail: ▇▇▇▇▇▇▇▇@▇▇▇.▇▇▇.▇▇
----------------------------------------- ----------------- ------------- -------------- -------------- --------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇. $205,000 702,055 140,411 140,411 140,411
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Cell: ▇▇▇-▇▇▇-▇▇▇▇
Mail: ▇▇▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
----------------------------------------- ----------------- ------------- -------------- -------------- --------------
▇▇▇▇ ▇▇▇
Be'▇▇ ▇▇▇ St. 17 $50,000 171,233 34,247 34,247 34,247
Ein Vered, ▇▇▇▇▇ ▇▇▇▇▇▇
Tel: ▇▇▇-▇-▇▇▇▇▇▇▇
Cell: ▇▇▇-▇▇-▇▇▇▇▇▇
Mail: ▇▇▇▇.▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
----------------------------------------- ----------------- ------------- -------------- -------------- --------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
22 Hameyasdim St. $170,000 582,192 116,438 116,438 116,438
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Cell: ▇▇▇-▇▇-▇▇▇▇▇▇
Mail: ▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
----------------------------------------- ----------------- ------------- -------------- -------------- --------------
Origami Ltd. $100,000 342,466 68,493 68,493 68,493
▇▇ ▇▇▇▇▇ ▇▇'▇▇ ▇▇.
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: ▇▇▇-▇-▇▇▇▇▇▇▇
Fax: ▇▇▇-▇-▇▇▇▇▇▇▇
Mail: ▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇.▇▇
----------------------------------------- ----------------- ------------- -------------- -------------- --------------
▇▇. ▇.▇. ▇▇▇▇▇▇▇ $50,000 171,233 34,247 34,247 34,247
c/o Gemini Israel Venture Funds Ltd.
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
Fax: ▇▇-▇▇▇-▇▇▇▇
E-mail: ▇▇@▇▇▇▇▇▇.▇▇.▇▇
----------------------------------------- ----------------- ------------- -------------- -------------- --------------
▇▇▇▇▇ ▇▇▇▇ $50,000 171,233 34,247 34,247 34,247
c/o Gemini Israel Venture Funds Ltd.
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
Fax: ▇▇-▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇@▇▇▇▇▇▇.▇▇.▇▇
----------------------------------------- ----------------- ------------- -------------- -------------- --------------
OZF Ltd. $300,000 1,027,397 205,479 205,479 205,479
Tropic Isle Building
Wickhams Cay, P.O. Box 964
Road Town, Tortola, British Virgin
Islands
c/o Tis Prager, Prager Dreifuss,
▇▇▇▇▇▇▇▇▇▇▇▇▇. ▇, ▇▇-▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇
Fax: ▇▇▇ ▇ ▇▇▇ ▇▇ ▇▇
Email: ▇▇▇▇@▇▇▇▇▇▇-▇▇▇▇▇▇▇▇.▇▇▇
----------------------------------------- ----------------- ------------- -------------- -------------- --------------
▇▇▇▇▇▇ ▇▇▇▇▇
Marcus St. 8 $100,000 342,466 68,493 68,493 68,493
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇
Fax/Tel: ▇▇▇-▇-▇▇▇▇▇▇▇
----------------------------------------- ----------------- ------------- -------------- -------------- --------------
13
----------------------------------------- ----------------- ------------- -------------- -------------- --------------
▇▇▇▇▇▇ ▇▇▇▇
▇▇ ▇▇▇ ▇▇▇ $100,000 342,466 68,493 68,493 68,493
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇
Tel: ▇▇▇-▇▇-▇▇▇▇▇▇
Fax: ▇▇▇-▇-▇▇▇▇▇▇▇
----------------------------------------- ----------------- ------------- -------------- -------------- --------------
McCutchen, Doyle, ▇▇▇▇▇ & Enersen $45,000 154,110 30,822 30,822 30,822
Three ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Mail: ▇▇▇▇▇▇@▇▇▇▇.▇▇▇
----------------------------------------- ----------------- ------------- -------------- -------------- --------------
14
Exhibit B
Form of Warrant
Issued _______, 2002
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY SET FORTH HEREIN. THIS WARRANT AND THE
SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. NO SALE
OR DISPOSITION MAY BE EFFECTED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL FOR THE HOLDER, SATISFACTORY
TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR SUCH
STATE LAWS.
THIS WARRANT MAY NOT BE EXERCISED EXCEPT IN COMPLIANCE WITH ALL APPLICABLE
FEDERAL AND STATE SECURITIES LAWS TO THE REASONABLE SATISFACTION OF THE COMPANY
AND LEGAL COUNSEL FOR THE COMPANY.
Void after ________, 2007
COMMTOUCH SOFTWARE LTD.
WARRANT TO PURCHASE UP TO ________ ORDINARY SHARES
----------
THIS CERTIFIES THAT, for value received, _____________, a ________ company
("_______" or "Holder"), is entitled at any time prior to expiration of this
Warrant to subscribe for and purchase up to __________ shares of the fully paid
and nonassessable ordinary shares, nominal value NIS 0.05, of Commtouch Software
Ltd., an Israeli company (the "Company"), at the price per share equal to
___________ (such price and such other price as may result, from time to time,
from the adjustments/restrictions specified in paragraph 4 hereof are
collectively referred to herein as the "Warrant Price"), subject to the
provisions and upon the terms and conditions hereinafter set forth. As used
herein, "Shares" shall mean the ordinary shares of the Company; "Warrant Shares"
shall mean the Shares issued or issuable upon exercise of the Warrants; and
"Date of Grant" shall mean ___________, 2002.
1. TERM.
This Warrant is exercisable, in whole or in part, at any time and from time to
time on and after the Date of Grant through ______, 2007.
2. METHOD OF EXERCISE; PAYMENT; ISSUANCE OF NEW WARRANT.
(a) The purchase right represented by this Warrant may be exercised by
the holder hereof, in whole or in part, by the surrender of this Warrant (with
the notice of exercise form attached hereto as Exhibit A duly executed) at the
principal office of the Company and (i) by the payment to the Company, by check,
of an amount equal to the Warrant Price per Share multiplied by the number of
Shares then being purchased.
(b) In the event of any exercise of the purchase right represented by
this Warrant, certificates for the Shares so purchased shall be delivered to the
holder hereof within ten business days of the effective date of such purchase
and, unless this Warrant has been fully exercised or expired, a new Warrant
representing the portion of the securities, if any, with respect to which this
Warrant shall not then have been exercised shall also be issued to the holder
hereof within such ten-day period. Upon the effective date of such purchase, the
holder shall be deemed to be the holder of record of the securities,
notwithstanding that certificates representing the securities shall not then be
actually delivered to such holder or that such securities are not then set forth
on the stock transfer books of the Company.
(c) In lieu of exercising this Warrant by payment of cash or check, and
provided that the Company's Ordinary Shares are publicly traded, the Holder may
elect to receive shares equal to the value of this Warrant (or the portion
thereof being exercised) at any time after the date hereof during the term
hereof, by surrender of this Warrant at the principal executive office of the
Company, together with the Notice of Conversion in the form of Exhibit B annexed
hereto, in which event the Company shall issue to Holder a number of Shares in
accordance with the following formula:
Y(A-B)
X = ------
A
Where, X = the number of Shares to be issued to Holder;
Y = the number of Shares for which the Warrant
is being exercised;
A = the fair market value of one Share; and
B = the Exercise Price.
For purposes of this Section 2(c), the fair market value of the Shares
shall mean the price determined by the Company's Board of Directors, acting in
good faith upon a review of all relevant factors or, in the event of an exercise
concurrently with (i) a public offering of the Company's stock, the price to the
public for such stock in such offering or (ii) an acquisition, the per share
price to be received by the holders of Shares.
3. SHARES FULLY PAID; RESERVATION OF SHARES.
(a) All securities which may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be fully paid and
nonassessable, and free from all taxes, liens and charges with respect to the
issue thereof. During the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized, and
reserved for the purpose of the issue upon exercise of the purchase rights
evidenced by this Warrant, a sufficient number of Shares to provide for the
exercise of the rights represented by this Warrant.
(b) The Company will not, by amendment of its memorandum or association
or articles of association, or through reorganization, consolidation, merger,
dissolution, issue or sale of securities, sale of assets or any other voluntary
action, willfully avoid or seek to avoid the observance or performance of any of
the terms hereof, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such actions as may be necessary or
appropriate in order to protect the rights of Warrant Holder under the Warrants
against such willful actions. Without limiting the generality of the foregoing,
the Company: (i) will not set nor increase the par or nominal value of any
Warrant Shares above the amount payable therefor upon such exercise, and (ii)
will take all actions that are necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable Warrant
Shares upon the exercise of the Warrants.
4. ADJUSTMENTS.
The maximum number of Warrant Shares issuable upon exercise of this Warrant and
the Warrant Price shall be adjusted if any of the following events occur before
the holder's exercise of this Warrant:
(a) Distributions, Share Dividends and Splits.
(i) In case the Company declares a dividend or other
distribution payable in Shares or subdivides its Shares into a greater number of
Shares, the Warrant Price in effect immediately prior to such declaration or
subdivision shall be proportionately decreased and the number and kind of Shares
purchasable upon exercise of this Warrant shall be adjusted so that the holder
thereof shall be entitled to receive the kind and number of shares or the other
securities of the Company that the holder would have owned or have been entitled
to receive after the happening of any of the events described in this paragraph
(a)(i) had the Warrant Shares been issued immediately prior to the happening of
such event or any record date with respect thereto.
(ii) In the case of any reclassification or change of the
outstanding securities of the Company or of any reorganization of the Company
after the date hereof, or in case, after such date, the Company shall
consolidate with or merge with or into another corporation or convey all or
substantially all of its assets to another corporation or other entity, then, in
each such case, Warrant Holder, upon any exercise of this Warrant, at any time
after the consummation of such reclassification, change, reorganization,
consolidation, merger, or conveyance, shall be entitled to receive, in lieu of
the stock or other securities and property
receivable upon the exercise of this Warrant prior to such consummation, the
stock or other securities or property to which such Warrant Holder would have
been entitled upon the consummation of such reclassification, change,
reorganization, consolidation, merger or conveyance if Warrant Holder had
exercised the Warrants immediately prior thereto, all subject to further
adjustment as provided in this Section, and the successor or purchasing
corporation or other entity in such reclassification, change, reorganization,
consolidation, merger or conveyance (if not the Company) shall duly execute and
deliver to Warrant Holder a supplement hereto acknowledging such corporation's
or entity's obligations under the Warrants; and in each such case, the terms of
the Warrants (including the exercisability, transfer and adjustment provisions
of the Warrants) shall be applicable to the shares of stock or other securities
or property receivable upon the exercise of the Warrants after the consummation
of such reclassification, change, reorganization, consolidation, merger or
conveyance.
(iii) An adjustment made pursuant to this paragraph (a) shall
become effective immediately after the record date in the case of a dividend or
distribution and shall become immediately effective after the effective date in
the case of a subdivision. If, as a result of an adjustment made pursuant to
this paragraph (a), the holder after exercise shall become entitled to receive
shares of two or more classes of capital stock or Shares and any other class of
capital stock of the Company, the Board of Directors of the Company (whose
determination shall be conclusive and shall be described in a written notice to
the holder promptly after such adjustment) shall determine the allocation of the
adjusted Warrant Price between or among shares of such classes of capital stock
or Shares and such other classes of capital stock.
(iv) In the case of any adjustment in the number of Warrant
Shares receivable upon the exercise of the Warrants pursuant to the terms
hereof, the chief financial officer of the Company shall promptly thereafter
compute such adjustment in accordance with the terms hereof and prepare a
certificate setting forth such adjustment and showing in detail the facts upon
which such adjustment is based. The Company will provide copies of such
certificate to Warrant Holder in the manner provided for notices hereunder.
(b) Record Date. In case the Company shall take a record of the holders
of its Shares for the purpose of determining holders entitled to receive a
dividend or other distribution payable in Shares, then such record date shall be
considered to be the date of the issue or sale of the Shares related to such
dividend or distribution.
(c) Stock Combinations. In case the Company shall combine all of the
outstanding Shares into a smaller number of Shares, the Warrant Price in effect
immediately prior to such combination shall be proportionately increased and the
number of Warrant Shares shall be proportionately decreased.
(d) Fractional Shares. No fractional Warrant Shares shall be issued
upon the exercise hereof. Upon exercise by any holder, such holder shall be
entitled to receive the aggregate full number of Shares which the holder may
receive upon exercise.
(e) The adjustment to the number of Shares issuable upon the exercise
hereof and the adjustments to the Warrant Price described in this Section 4
shall be made each time any event listed in this Section 4 occurs.
(f) If any event occurs of the type contemplated by the provisions of
this Section 4, but not expressly provided for by such provisions or definition,
then the Company's Board of Directors in its reasonable judgment shall make an
appropriate adjustment in the number of Warrant Shares obtainable upon exercise
of this Warrant so as to protect the rights of the Warrant Holder.
5. COMPLIANCE WITH SECURITIES ACT; RESTRICTIONS ON TRANSFER; REPRESENTATIONS.
Holder hereby represents and warrants that:
(a) Purchase Entirely for Own Account. This Warrant and the Warrant
Shares issuable upon exercise hereof (collectively, the "Securities") will be
acquired for investment for Holder's own account, not as a nominee or agent, and
not with a view to the resale or distribution of any part thereof, and Holder
has no present intention of selling, granting any participation in or otherwise
distributing the same. Holder does not have any contract, undertaking, agreement
or arrangement with any person to sell, transfer or grant participation to any
person with respect to any of the Securities.
(b) Investment Experience. Holder acknowledges that it is able to fend
for itself, can bear the economic risk of its investment and has such knowledge
and experience in financial or business matters that it is capable of evaluating
the merits and risks of the investment in this Warrant. Holder also represents
it has not been organized for the purpose of acquiring this Warrant.
(c) Accredited Investor. Holder is (a) an "accredited investor" within
the meaning of Rule 501 of Regulation D of the Securities and Exchange
Commission (the "SEC"), as presently in effect or (b) not a "U.S. Person" as
defined by Rule 902 of Regulation S promulgated under the Securities Act.
(d) Restricted Securities. Holder understands that the Securities are
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering, and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act of
1933, as amended ("the Securities Act") only in certain limited circumstances.
In this connection, Holder represents that it is familiar with SEC Rule 144
promulgated under the Securities Act, as presently in effect, and understands
the resale limitations imposed thereby and by the Act.
(e) Further Limitations on Disposition. Without in any way limiting the
representations set forth above, Holder further agrees not to make any
disposition of all or any portion of the Securities unless and until 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 (i) Holder shall have 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 (ii)
Holder shall have 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.
(f) Authorization. If the holder is not a natural person, the holder
hereby represents that its acceptance of this Warrant has been authorized on its
behalf by all appropriate limited liability company, corporate or partnership
action.
(g) Enforceability. The holder hereby represents that it has full legal
power to accept this Warrant and that its acceptance of this Warrant will result
in legally binding obligations of the holder enforceable against it in
accordance with the terms and provisions hereof except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of
general application affecting enforcement of creditors' rights generally,
and(ii) as limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies.
(h) Legend. This Warrant and all Shares issued upon exercise of this
Warrant(unless registered under the Securities Act) shall be stamped or
imprinted with a legend in substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT
THE PRIOR WRITTEN CONSENT OF THE COMPANY AND WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL FOR THE
HOLDER, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER SUCH ACT."
The Company need not register a transfer of this Warrant or the Warrant
Shares unless the conditions specified in such legend are satisfied. Subject to
the foregoing transfer restrictions set forth in this Section, this Warrant is
transferable, in whole or in part, on the books of the Company, upon surrender
of this Warrant to the Company, together with a written assignment duly executed
by the Holder.
(i) Notwithstanding the foregoing, the restrictions imposed upon the
transferability of this Warrant and the Warrant Shares shall cease and terminate
as to this Warrant or any particular shares of capital stock when, (i) such
Warrant or Warrant Shares shall have been effectively registered under the 1933
Act and sold by the holder thereof in accordance with such registration or (ii)
counsel for Holder provides an opinion, in form and substance reasonably
satisfactory to the Company (or in lieu of an opinion of counsel, Holder
provides the Company with other evidence satisfactory to the Company), that such
restrictions are no longer required in order to ensure compliance with the 1933
Act. If and whenever the restrictions imposed hereunder shall terminate as to
this Warrant (or to any Warrant Shares) as hereinabove provided, Holder may and
the Company shall, as promptly as practicable upon the request of Holder and at
the Company's expense, cause to be stamped or otherwise imprinted upon this
Warrant or such shares of capital stock a legend in substantially the following
form:
"The restrictions on the transferability of [this] [these] [Warrant]
[securities] terminated on _______________, _____, and are of no
further force or effect"
or take such other action as to effectively remove the restrictions on
the transferability of the Warrant and the Warrant Shares.
Any Warrant issued upon the split-up, combination, exchange,
substitution, transfer or loan of the Warrants entitled to bear such legend
shall have a similar legend endorsed thereon. Whenever the restrictions imposed
hereunder shall terminate as to any Warrant or as to any shares of capital
stock, as hereinabove provided, the Holder thereof shall be entitled to receive
from the Company without expense, a new Warrant or new shares of capital stock
not bearing the restrictive legend set forth hereon or above, respectively.
(j) The Company shall cause all Warrant Shares covered by a valid
registration statement to be listed on any securities exchange upon which the
Shares are then listed.
6. RIGHTS OF SHAREHOLDERS.
No holder of the Warrant or Warrants shall be entitled to vote or
receive dividends or be deemed the holder of Shares, nor shall anything
contained herein be construed to confer upon the holder of this Warrant, as
such, any of the rights of a shareholder of the Company or any right to vote for
the election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action (whether
upon any recapitalization, issuance of stock, reclassification of stock, change
of par value or change of stock to no par value, consolidation, merger,
conveyance, or otherwise) or to receive notice of meetings, or to receive
dividends until the Warrant or Warrants shall have been exercised and the Shares
shall have become deliverable, as provided herein.
7. PIGGY-BACK REGISTRATION RIGHTS
(a) The Company shall notify Warrant Holder in writing at least fifteen
(15) days prior to filing any registration statement under the 1933 Act for
purposes of effecting a public offering of securities of the Company (including,
but not limited to, registration statements relating to secondary offerings of
securities of the Company, but excluding registration statements relating to any
employee benefit plan or a corporate reorganization) and will afford Warrant
Holder an opportunity to include in such registration statement all or any part
of the Warrant Shares issued or reserved for issuance to Warrant Holder upon
exercise of this Warrant. If Warrant Holder desires to include in any such
registration statement all or any part of such Warrant Shares, Warrant Holder
shall, within ten (10) days after receipt of the above-described notice from the
Company, so notify the Company in writing, and in such notice shall inform the
Company of the number of Warrant Shares Warrant Holder wishes to include in such
registration statement. If Warrant Holder decides not to include all of the
shares of Ordinary Shares issued or reserved for issuance to Warrant Holder upon
the exercise of this Warrant in any registration statement thereafter filed by
the Company, Warrant Holder shall nevertheless continue to have the right to
include any such Warrant Shares any subsequent registration statement or
registration statements as may be filed by the Company with respect to offerings
of its securities, all upon the terms and conditions set forth herein. The
Company will cooperate with Warrant Holder to facilitate its distribution of
Warrant Shares pursuant to any such registration statement.
(b) The Company agrees to indemnify and hold harmless Warrant Holder
and its directors, officers, employees, agents, partners, members, controlling
persons and affiliates from and against any expenses, losses, claims, damages or
liabilities they may incur arising out of any untrue or alleged untrue statement
of material fact contained in such registration statement, or any amendment or
supplement thereto, or arising out of or based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or arising out of any
violation of the 1933 Act or the Securities Exchange Act of 1934, as amended, in
connection therewith, provided, however, that the Company will not be liable in
any such case to the extent that any such expense, loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
or amendment thereto in reliance upon and in conformity with written information
furnished in writing to the Company by or on behalf of the Holder specifically
for use in the preparation thereof., and, provided that Warrant Holder is
entitled to indemnification hereunder, will reimburse Warrant Holder and its
directors, officers, employees, agents, controlling persons and affiliates for
any legal or other expenses reasonably incurred in connection with investigating
or defending any such action or claim as such expenses are incurred.
(c) All expenses incurred by the Company in complying with Section 7(a)
(other than the underwriter's discounts and commissions), including, without
limitation, all registration and filing fees (including all expenses incident to
filing with the National Association of Securities Dealers, Inc.), fees and
expenses of complying with securities and blue sky laws (except for blue sky
expenses required by law to be borne by sellers), expense allowances of the
underwriters, printing expenses, fees and disbursements of counsel or other
advisor to the Company, and of the accountants to Company, are herein called
"Registration Expenses." All fees and expenses of counsel for any selling
Warrant Holder and all underwriting discounts and commissions applicable to the
eligible securities covered by any such registration, are herein called "Selling
Expenses."
(d) The Company shall pay all Registration Expenses in connection with
each registration pursuant to Section 7(a). All Selling Expenses and blue sky
expenses required by law to be borne by sellers in connection with each
registration pursuant to Section 7(a) shall be borne by the seller or sellers
therein in proportion to the number of eligible securities included by each in
such registration or in such other proportions as they may agree upon. In the
event of any dispute as to how Selling Expenses are allocated, the Company shall
be entitled to apportion the expenses in a reasonable manner between the various
sellers.
(e) The piggy-back registration rights granted in this Section 6 are in
addition to, and not in lieu of, any other registration rights the Holder may
have by virtue of other contractual arrangements with the Company.
8. GOVERNING LAW.
The terms and conditions of this Warrant shall be governed by and construed in
accordance with the laws of the State of California.
9. MISCELLANEOUS.
The headings in this Warrant are for purposes of convenience and reference only,
and shall not be deemed to constitute a part hereof. Neither this Warrant nor
any term hereof may be changed, waived, discharged or terminated orally but only
by an instrument in writing signed by the Company and the registered holder
hereof. All notices and other communications from the Company to the holder of
this Warrant shall be mailed by first-class registered or certified mail or
recognized commercial courier service, postage prepaid, to the address furnished
to the Company in writing by the last holder of this Warrant who shall have
furnished an address to the Company in writing.
_______, 2002 COMMTOUCH SOFTWARE LTD.
____________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇, Chief Executive Officer
EXHIBIT A
NOTICE OF EXERCISE
TO: COMMTOUCH SOFTWARE LTD.
1. The undersigned hereby elects to purchase ___________ Shares of
Commtouch Software Ltd. pursuant to the terms of the attached Warrant, and
tenders herewith payment of the purchase price of such Shares in full, together
with all applicable transfer taxes, if any.
2. The undersigned represents that the Shares are being acquired for
the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has
no present intention of distributing or reselling such shares.
3. Please issue a certificate or certificates representing said Shares
in the name of the undersigned or in such other name as is specified below:
_________________________________
(Name)
_________________________________
_________________________________
(Address)
___________________________________
Name of Warrant holder
___________________________________
Signature of Authorized Signatory
___________________________________
Print Name and Title
___________________________________
Date
EXHIBIT B
NOTICE OF CONVERSION
TO: COMMTOUCH SOFTWARE LTD.
1. The undersigned hereby elects to convert the attached Warrant into
such number of Ordinary Shares (the "Shares") of Commtouch Software Ltd. as is
determined pursuant to Section 2(c) of such Warrant, which conversion shall be
effected pursuant to the terms of the attached Warrant.
2. Please issue a certificate or certificates representing the Shares
in the name of the undersigned or in such other name as is specified below:
___________________________________
(Print Name)
___________________________________
(Address)
___________________________________
(Address)
3. The undersigned represents that the Shares are being acquired for
the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has
no present intention of distributing or reselling such shares.
(Date) (Signature)
(Print Name)
Schedule 3.1(b)
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