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SALE AND PURCHASE AGREEMENT
BY AND AMONG
COMMTOUCH SOFTWARE LTD.,
COMMTOUCH INC.,
WINGRA, INCORPORATED,
WINGRA TECHNOLOGIES, LLC,
▇▇▇ ▇▇▇▇
AND
▇▇▇▇▇ ▇▇▇▇▇▇
February 25, 2002
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SALE AND PURCHASE AGREEMENT
THIS SALE AND PURCHASE AGREEMENT (the "Agreement") is made and
entered into as of February 25, 2002, by and between Commtouch Software Ltd.
("Commtouch"), an Israeli corporation, Commtouch Inc., a wholly-owned subsidiary
of Commtouch and a California corporation ("CI"), Wingra, Incorporated
("WingraInc"), a wholly-owned subsidiary of Commtouch and a Wisconsin
corporation, Wingra Technologies, LLC ("WingraLLC"), a Wisconsin limited
liability company, ▇▇▇ ▇▇▇▇ ("▇▇▇▇") and ▇▇▇▇▇▇ ▇▇▇▇▇▇ ("Entine").
RECITALS
A. In or about December 2000, Commtouch, by way of an Amended
and Restated Merger and Exchange Agreement, dated as of November 24, 2000
("Merger Agreement") and in furtherance of its business as an outsourced hosted
email service provider, acquired and became the sole owner (directly or
indirectly) of the ownership interests in WingraInc and WingraLLC.
B. On or about December 31, 2001 and February 5, 2002
Commtouch sold its outsourced hosted consumer email service and its outsourced
Exchange enterprise email service, respectively, to two independent third
parties and, in so doing, has effectively ceased its activities as an outsourced
hosted email services provider in general.
C. The respective parties or some of them have certain claims
against each other that they are interested in resolving in an amicable manner.
D. Each of the Boards of Directors of Commtouch, CI, WingraInc
and WingraLLC, as well as Eddy and Entine, has determined that, given the
above-stated claims and the change in Commtouch's business model, it is in the
best interests of the respective companies and their security holders that Eddy
and Entine (sometimes referred to herein as "Purchasers") shall acquire by way
of purchase all of the outstanding membership interests of WingraLLC and share
interests of WingraInc from Commtouch and CI (the "Acquisition") and, in
furtherance thereof, has approved the Acquisition.
E. The parties desire to make certain representations and
enter into releases and other agreements in connection with the Acquisition.
NOW, THEREFORE, in consideration of the covenants and
representations set forth herein, and for other good and valuable consideration,
the parties agree as follows:
ARTICLE I
THE ACQUISITION
1.1 The Sale of Wingra Interests. At the Closing (as defined in Section
1.2) and subject to and upon the terms and conditions of this Agreement,
Commtouch and CI agree to sell to Purchasers, and Purchasers agree to purchase
all of the outstanding membership interests of
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WingraLLC and shares of WingraInc held by each of Commtouch and CI (hereinafter
"Wingra Interests").
1.2 Closing. The closing of the transactions contemplated hereby (the
"Closing") shall take place on February 28, 2002 or at such other time as the
parties hereto agree (the "Closing Date"). The Closing shall take place at the
offices of McCutchen, Doyle, ▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, or at such other location as the parties hereto agree.
1.3 Resignation of Directors. At the Closing, Commtouch shall cause the
directors, ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇, who were appointed to the Boards of
WingraInc and WingraLLC, to resign except to the extent either or both has/have
already done so.
1.4 Surrender of Certificates and ▇▇▇▇ of Sale. At the Closing,
Commtouch shall deliver to Purchasers the membership certificates (if any) and
original stock certificates representing the Wingra Interests, duly endorsed for
transfer to Purchasers or with duly endorsed stock transfer powers transferring
such certificates to Purchasers, and a related ▇▇▇▇ of Sale (in a form
reasonably acceptable to the parties), with such delivery constituting full and
complete transfer of good and marketable title in the Wingra Interests to
Purchasers, with such Wingra Interests being free and clean of all liens,
encumbrances and other third party interests.
1.5 Consideration. In consideration for the sale of the Wingra
Interests to Purchasers:
a. WingraLLC, WingraInc, Eddy and Entine agree to provide the
releases set forth in Article VI below;
b. WingraLLC, WingraInc, Eddy and Entine release and forever
discharge Commtouch and its subsidiaries, affiliates,
representatives, officers, directors and employees from
Commtouch's guarantees of Eddy's and Entine's employment
agreements dated November 2, 2000 and any other agreements,
oral or written, concerning their employment by WingraInc
and/or WingraLLC; and
c. WingraInc and WingraLLC, jointly and severally, agree to
assume or retain as the case may be, all liabilities and
obligations of WingraLLC and/or WingraInc for which Commtouch
is obligated (either directly or indirectly, including as
guarantor and an indemnifying party). In particular, and
without derogating from the generality of the foregoing, the
personal guaranties of Eddy that Commtouch assumed or was to
assume in the manner as set forth in Section 7.15 of the
Merger Agreement are hereby made null and void, and Eddy,
WingraInc and WingraLLC shall use their best efforts to ensure
that any and all of the parties ("noteholders") that
previously agreed to Commtouch's assumption of the personal
guarantees are informed of and agree to waive and release any
and all rights against Commtouch in relation thereof. Should
such noteholders fail to agree to waive and release any such
claims against Commtouch, then Eddy, WingraInc and WingraLLC,
jointly and severally,
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agree to fully indemnify Commtouch for all damages, costs and
expenses incurred by Commtouch as a result thereof.
d. Notwithstanding c. above, immediately prior to the Closing,
any intercompany debt owed to Commtouch or its subsidiaries by
WingraLLC will be distributed by Commtouch (or through
Commtouch if owed by any other subsidiary, other than
WingraInc) to WingraInc and converted by WingraInc to equity
in WingraLLC, such that such equity is included in the Wingra
Interests.
ARTICLE II
REFERRAL FEES
2.1 Fees. Should WingraLLC or WingraInc provide, directly or
indirectly, software or services to or receive purchase/work orders during 2002
from any Referred Customers (as defined below), WingraLLC and/or WingraInc shall
pay to Commtouch ten percent (10%) of any license fees and five percent (5%) of
any other services fees received in 2002 or to be due for purchase/work orders
received in 2002 by WingraInc or WingraLLC from the Referred Customers. For
purposes of this Section 2.1, "Referred Customers" shall mean Jamcracker Inc.,
TeleComputing Inc., Mi8 Inc., and their affiliated companies only.
2.2 Payments. Payments for the amounts due and owing to Commtouch from
WingraLLC and/or WingraInc under Section 2.1 above shall be made on a quarterly
basis by WingraLLC and/or WingraInc by no later than the tenth day of each
quarter based on the applicable revenues collected during the prior quarter. Any
payments made more than 30 days past the due date shall bear interest at the
rate of 1% for each month that such amount remains unpaid, or the maximum legal
rate, whichever is less.
2.3 Reports. WingraLLC and/or WingraInc shall provide Commtouch with
detailed quarterly reports of all revenue collected for which Commtouch is
entitled to payments as described herein, including the source thereof and the
period to which it is applicable.
2.4 Audit Rights. Commtouch may appoint any nationally-recognized
independent accounting firm that agrees to accept reasonable and customary
confidentiality obligations to audit, upon not less than seven (7) days advance
written notice and during normal business hours, WingraLLC's and/or WingraInc's
records applicable to the Referred Customers. Commtouch shall pay the costs of
any such audit unless the audit reveals an underpayment of five percent (5%) or
more, in which case, in addition to any other rights of Commtouch hereunder or
at law, the audit costs shall be paid by WingraLLC and/or WingraInc. Audits are
limited to no more than one per calendar quarter.
ARTICLE III
SUBSEQUENT DISPOSITION
In the event that, during 2002 and following the Closing one
or more of the following transactions with a third party ("Transaction(s)")
occurs:
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(i) the assets or a portion thereof of WingraLLC and/or WingraInc are
sold or an agreement in relation thereto is entered into,
(ii) an equity investment is made into WingraLLC and/or WingraInc
either by way of a majority of the Wingra Interests or additional
equity interests of WingraLLC and/or WingraInc, or debentures, warrants
or other such instruments under which a majority of the ownership
interests in WingraLLC and/or WingraInc may be issued, or
(iii) WingraLLC and/or WingraInc is/are acquired by way of merger,
consolidation, sale of a controlling interest or any other similar
manner of acquisition or an agreement in relation thereto is entered
into,
and the Value (as defined below) received from the above Transaction(s) is in
excess of (a) $900,000 plus (b) any equity investment made into WingraLLC and/or
WingraInc subsequent to the Closing ("Excess Value"), Purchasers, WingraInc and
WingraLLC, jointly and severally, agree to pay Commtouch upon the closing of
such Transaction(s) an amount equal to:
o thirty-three percent (33%) of any proceeds representing the
Excess Value from the Transaction(s) that occur within the
first six (6) months of 2002, multiplied by the percentage of
WingraLLC and/or WingraInc that is sold in the Transaction(s),
or
o twenty-five percent (25%) of any proceeds representing the
Excess Value from the Transaction(s) that occur within the
second six (6) months of 2002 multiplied by the percentage of
WingraLLC and/or WingraInc that is sold in the Transaction(s).
For purposes of the above, "Value" shall mean the total of all proceeds received
from the Transaction(s), including cash, non-cash, debt assumption and other
consideration, divided by the percentage of WingraLLC and/or WingraInc that is
sold in the Transaction(s).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COMMTOUCH AND CI
Commtouch and CI, jointly and severally, represent and warrant
to Purchasers, WingraInc and WingraLLC that, as of the date hereof and as of the
Closing:
4.1 Authority. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary action on the part of each of Commtouch and CI. This
Agreement has been duly and validly executed and delivered by each of Commtouch
and CI and constitutes the valid and binding agreement of each of Commtouch and
CI enforceable in accordance with its terms.
4.2 Corporate Plans. As of the Closing, Commtouch is unaware of any
plans involving a leveraged buyout of Commtouch or to voluntarily delist
Commtouch's Ordinary Shares from the NASDAQ market or otherwise sell Commtouch
Ordinary Shares or other equity or assets of Commtouch, except as disclosed in
Exhibit A herein.
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4.3 Absence of Continuing Interest; Ownership of Wingra Interests. As
from the Closing, neither Commtouch nor CI shall retain any interest in the
Wingra Interests or any assets of WingraLLC or WingraInc. The Wingra Interests
constitute all of the outstanding ownership interests in WingraLLC and
WingraInc, no other rights to purchase or acquire ownership interests in
WingraLLC or WingraInc exist or are outstanding, and CI and WingraInc hold of
record and beneficially all of the Wingra Interests, free and clear of any liens
or other encumbrances.
4.4 Fairness of Transaction. The Board of Directors of Commtouch, in
unanimously approving this Agreement, has determined that in its opinion, the
transactions described herein are in the best interests of the shareholders of
Commtouch and the creditors of WingraLLC and WingraInc, and are on terms that
are fair to such shareholders and creditors.
4.5 Advisors. Except as set forth in this Agreement, Commtouch and CI
are not relying on any statements or representations of any other party to this
Agreement or any of the other party's agents with respect to any legal, tax or
other consequences of the transactions contemplated by this Agreement and
understands that it (and not any other party to this Agreement) shall be
responsible for its own legal, tax or other liabilities that may arise as a
result of the transactions contemplated by this Agreement.
4.6 Taxation of WingraLLC. Neither Commtouch nor CI has taken any
action that would be reasonably expected to cause WingraLLC to be taxed other
than as a partnership for federal tax purposes.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASERS, WINGRAINC AND
WINGRALLC
Purchasers, WingraInc and WingraLLC, jointly and severally,
hereby represent and warrant to Commtouch that, as of the date hereof and as of
the Closing:
5.1 Authority. The execution and delivery of this Agreement and the
consummation of the transactions contemplated thereby have been duly authorized
by all necessary action on the part of WingraInc and WingraLLC. This Agreement
has been duly and validly executed and delivered by each Purchaser, WingraInc
and WingraLLC and constitutes the valid and binding agreement of each
Purchaser,WingraInc and WingraLLC, enforceable in accordance with its terms.
5.2 Corporate Plans. As of the Closing, there are no plans or
discussions with a third party involving the sale of WingraLLC and/or WingraInc,
including pursuant to the methods set forth in Article III above, except as set
forth in Exhibit B hereto.
5.3 Fairness of Transaction. The Board of Directors of WingraInc and
WingraLLC, in unanimously approving this Agreement, have determined that in
their opinion, the transactions described herein are in the best interests of
the creditors of WingraInc and WingraLLC, and are on terms that are fair to such
creditors.
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5.4 Purchase for Own Account. The Wingra Interests purchased by
Purchasers hereunder will be acquired for investment for their own account, not
as a nominee or agent, and not with a view to the public resale or distribution
thereof within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"), and each Purchaser has no present intention of selling,
granting any participation in or otherwise distributing the same, except in
compliance with the Securities Act.
5.5 Investment Experience. Purchasers understand that the purchase of
the Wingra Interests involves substantial risk. They have experience as
investors in securities of companies in the development stage and acknowledge
that they are able to fend for themselves, can bear the economic risk of the
investment and have such knowledge and experience in financial or business
matters that they are capable of evaluating the merits and risks of this
investment and protecting their own interests in connection with this
investment.
5.6 Accredited Investor Status. Each Purchaser is an "accredited
investor" within the meaning of Rule 501 of Regulation D promulgated under the
Securities Act, as presently in effect.
5.7 Advisors. Except as set forth in this Agreement, WingraLLC,
WingraInc and Purchasers are not relying on any statements or representations of
any other party to this Agreement or any of the other party's agents with
respect to any legal, tax or other consequences of the transactions contemplated
by this Agreement and understand that they (and not any other party to this
Agreement) shall be responsible for its own legal, tax or other liabilities that
may arise as a result of the transactions contemplated by this Agreement.
ARTICLE VI
RELEASES AND NEGATIVE COVENANTS
6.1 Eddy Release. In consideration of the mutual promises and
representations herein and effective as of the Closing, Eddy hereby releases and
forever discharges Commtouch, CI and their agents, employees, successors,
assigns, officers, directors, shareholders, any affiliates (past, present and
future) of and from any and all actions, causes of action, claims and demands of
whatever nature, at law or in equity, known or unknown, which Eddy now has, ever
had, or hereafter may have generally arising out of or relating to the Merger
Agreement, any aspect of the merger and acquisition by Commtouch and CI of
WingraInc and WingraLLC and/or any aspect of the relationship of Commtouch
and/or CI and/or their related entities with WingraInc, Eddy and/or WingraLLC up
to the Closing, except for the rights and obligations created under this
Agreement. In making the release hereinabove and below, Eddy is acting solely on
her own behalf and not on behalf of any of the other former shareholders of
WingraInc or membership interests holders of WingraLLC.
6.2 Entine Release. In consideration of the mutual promises and
representations herein and effective as of the Closing, Entine hereby releases
and forever discharges Commtouch, CI, and their agents, employees, successors,
assigns, officers, directors, shareholders, any affiliates (past, present and
future) of and from any and all actions, causes of action, claims and demands of
whatever nature, at law or in equity, known or unknown, which
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Entine now has, ever had, or hereafter may have generally arising out of or
relating to the Merger Agreement, any aspect of the merger and acquisition by
Commtouch and CI of WingraInc and WingraLLC and/or any aspect of the
relationship of Commtouch and/or CI and/or their related entities with
WingraInc, Entine and/or WingraLLC up to the Closing, except for the rights and
obligations created under this Agreement.
6.3 Wingra Release. In consideration of the mutual promises and
representations herein and effective as of the Closing, WingraInc and WingraLLC,
on behalf of themselves jointly and severally, their agents, employees,
successors, assigns, officers, directors, and any affiliates (past, present and
future) hereby release and forever discharge Commtouch, CI and their agents,
employees, successors, assigns, officers, directors, shareholders, partners and
any affiliates (past, present and future) of and from any and all actions,
causes of action, claims and demands of whatever nature, at law or in equity,
known or unknown, which WingraInc and/or WingraLLC now has, ever had, or
hereafter may have generally arising out of or relating to the Merger Agreement,
any aspect of the merger and acquisition by Commtouch of WingraInc and WingraLLC
and/or the relationship of Commtouch and/or CI and/or their related entities
with WingraLLC and/or WingraInc up to the Closing, except for the rights and
obligations created under this Agreement.
6.4 Commtouch Release. In consideration of the mutual promises and
representations herein and effective as of the Closing, Commtouch and CI,
jointly and severally, on behalf of themselves, their respective agents,
employees, successors, assigns, officers, directors, shareholders, and any
affiliates (past, present and future) hereby indemnify, release and forever
discharge Purchasers, WingraLLC and WingraInc, their respective agents,
employees, successors, assigns, officers, directors, shareholders, partners and
any affiliates (past, present and future) of and from any and all actions,
causes of action, claims and demands of whatever nature, at law or in equity,
known or unknown, which Commtouch and/or CI now have, ever had, or hereafter may
have generally arising out of or relating to the Merger Agreement, any aspect of
the merger and acquisition by Commtouch and CI of WingraInc and WingraLLC and/or
the relationship of Commtouch and/or CI with Purchasers, WingraLLC and/or
WingraInc up to the Closing, except for the rights and obligations created under
this Agreement.
6.5 Release of Unknown Claims. In making the above releases, the
parties expressly waive the provisions and benefits of Section 1542 of the
California Civil Code, which provides:
"A general release does not extend to claims which the creditor does not know or
suspect to exist in its favor at the time of executing the release, which if
known by him must have materially affected its settlement with the debtor."
and agree as a further consideration and inducement for this Agreement that this
Agreement shall apply to all unknown and unanticipated losses or damages arising
out of the matters the subject of this Agreement, which losses or damages
hereafter may be claimed by the parties, as well as to those such losses or
damages known by the parties.
6.6 Covenant not to Participate in Proceedings. Purchasers, WingraInc
and WingraLLC agree, jointly and severally, that, unless compelled by an order
of a court of proper
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jurisdiction, or as otherwise required by law, none shall lead, support or
otherwise participate in any law suits or other actions of any kind against
Commtouch and/or any of its related companies, or their respective officers,
directors, employees, agents or representatives, other than a lawsuit or other
action that arises out of the transactions contemplated hereunder or
transactions hereafter, and will provide reasonable assistance to these
Commtouch entities in dissuading potential plaintiffs and defending any such
action (at Commtouch's expense).
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Public Disclosure. Unless otherwise permitted by this Agreement,
none of the parties shall, without the prior written consent of the others, make
any press release or other public statement or disclosure (whether or not in
response to an inquiry) regarding the terms of this Agreement and the
transactions contemplated hereby. This Section 7.1 shall not prohibit Commtouch,
CI, Purchasers, WingraInc or WingraLLC from making statements as may be
reasonably necessary regarding this Agreement and the transactions contemplated
hereby to its shareholders, current or potential investors, noteholders,
creditors, customers, attorneys, accountants or employees, or as provided by
law, including SEC rules and regulations, provided that Commtouch, CI,
Purchasers, WingraInc or WingraLLC, as the case may be, shall have used
reasonable efforts to ensure that such information is held in confidence by such
recipients and does not become generally available to the public.
7.2 Reasonable Efforts and Further Assurances. Each of the parties to
this Agreement shall use its commercially reasonable efforts to effectuate the
transactions contemplated hereby and to fulfill and cause to be fulfilled the
conditions to closing under this Agreement. Each party hereto, at the reasonable
request of another party hereto, shall execute and deliver such other
instruments and do and perform such other acts and things as may be necessary or
desirable for effecting completely the consummation of this Agreement and the
transactions contemplated hereby.
7.3 WingraLLC 401(K) Plan. As soon as administratively practical,
Commtouch shall cause the trustees of Commtouch's 401(k) plan to transfer the
401(k) account balances of WingraInc's and/or WingraLLC's current and former
employees directly, in a plan-to-plan transfer, from Commtouch's 401(k) plan to
the trustees of a qualified retirement plan established by WingraInc and/or
WingraLLC and to provide the successor trustee with such participant, plan
account and related information as the trustee may reasonably request.
7.4 Commtouch Option Plan. As of the Closing, all employees or
consultants of WingraLLC and WingraInc holding option grants under the Commtouch
Software Ltd. Amended and Restated 1996 CSI Stock Option Plan shall cease
vesting immediately and shall no longer be considered employees or consultants
for purposes of participation under such plan. Any Commtouch non-qualified
options that have vested prior to the Closing for then current WingraLLC and/or
WingraInc employees and/or consultants may be exercised at any time during a 180
(one hundred and eighty) day period as from the Closing. Any shares not
exercised prior to or during this 180 day period shall be cancelled. Any
Commtouch incentive stock options that have vested prior to the Closing for then
current WingraLLC and/or WingraInc
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employees and/or consultants may be exercised at any time during the maximum
period allowed for incentive stock options under the terms of the Amended and
Restated 1996 CSI Stock Option Plan as from the Closing.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. At any time prior to the Closing, this Agreement may
be terminated by consent of all parties.
8.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 8.1, this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of Commtouch,
WingraInc, CI, WingraLLC, or Purchasers or their respective officers, directors,
shareholders or affiliates.
8.3 Expenses and Termination Fees. Whether or not the Sale and Purchase
is consummated, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby (including, without
limitation, the fees and expenses of its advisers, accountants and legal
counsel) shall be paid by the party incurring such expense.
8.4 Extension; Waiver. At any time prior to the Closing any party
hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
ARTICLE IX
INDEMNIFICATION
9.1 Commtouch Indemnification. Purchasers, WingraInc and WingraLLC,
jointly and severally, shall indemnify and hold harmless Commtouch and CI and
their affiliates, officers, directors, employees, agents and representatives,
from and against any and all expenses, including attorneys' fees, witness fees,
damages, judgments, fines and amounts paid in settlement and any other amounts
that such entity becomes legally obligated to pay because of any claim or claims
made against it, relating to or arising from (i) any WingraLLC and/or WingraInc
related matter or the business thereto, including claims by any creditors
thereof, (ii) misrepresentations or breaches of representations or warranties
made herein by WingraLLC, WingraInc, and/or Purchasers or (iii) noncompliance
with or breach by WingraInc, WingraLLC and/or Purchasers of any of the covenants
or agreements contained in this Agreement or (iv) by reason of Commtouch's
and/or CI's and/or their related parties' relationships with customers,
suppliers, employees (other than claims by employees relating to Commtouch
options) of WingraInc and/or WingraLLC prior to the Closing. The above
indemnification replaces and supersedes any prior indemnifications given by
Eddy, WingraInc and/or WingraLLC to
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Commtouch within the framework of any other agreement or understanding, with the
exception of indemnities granted within the framework of the Merger Agreement.
9.2 Purchasers, WingraInc and WingraLLC Indemnification. Commtouch and
CI, jointly and severally, shall indemnify and hold harmless Purchasers,
WingraInc and WingraLLC and their affiliates, officers, directors, employees,
agents and representatives from and against any and all expenses, including
attorneys' fees, witness fees, damages, judgments, fines and amounts paid in
settlement and any other amounts that such party becomes legally obligated to
pay because of any claim or claims made against it, relating to or arising from
(i) a Commtouch shareholder or Commtouch creditor action taken against such
party in relation to the subject matter of this Agreement, (ii)
misrepresentations or breaches of representations or warranties made herein by
Commtouch or CI or (iii) noncompliance with or breach by Commtouch or CI of any
of the covenants or agreements contained in this Agreement. In addition,
Commtouch and CI, jointly and severally, shall indemnify and hold harmless
Purchasers, WingraInc and/or WingraLLC and any other party, from and against all
expenses, including attorneys' fees, witness fees, damages, judgments, fines and
amounts paid in settlement and any other amounts that such party becomes legally
obligated to pay because of any claim or claims made against it, including,
without limitation, any taxes, interest and penalties finally determined to be
due, relating to or arising from any forgiveness of indebtedness income
resulting from the transactions set forth in Section 1.5(d) of this Agreement.
The above indemnification replaces and supersedes any prior indemnifications
given by Commtouch to Purchasers, WingraInc and/or WingraLLC within the
framework of any other agreement or understanding. However, to the extent that
Eddy or Entine are sued due to their capacity as an officer and/or director of
WingraLLC and/or WingraInc as set forth in WingraInc's articles of incorporation
or by-laws or WingraLLC's operating agreement for an action covered under
Commtouch's Directors' and Officers' liability insurance policy relating to
activities during the period as from the closing of the Merger Agreement until
the Closing Date hereunder, Eddy and Entine shall be entitled to such coverage,
with any applicable deductibles being paid by Commtouch.
9.3 Notification and Defense of Claim. As soon as practicable and not
later than ten (10) days after receipt by any party named above in Sections 9.1
and 9.2 as a party to be indemnified thereunder ("Indemnified Party") of notice
of the commencement of any action, suit or proceeding, such party will notify
the indemnifying party ("Indemnifying Party") of the commencement thereof; but
the omission so to notify the Indemnifying Party will not relieve it from any
liability which it may have to such Indemnified Party hereunder, unless the
Indemnifying Party is materially prejudiced by the delay. With respect to any
such action, suit or proceeding as to which such Indemnified Party so notifies
the Indemnifying Party of the commencement thereof, the Indemnifying Party shall
assume the defense thereof at its own expense, with the Indemnified Party being
entitled to participate therein at its own expense and own counsel reasonably
satisfactory to such Indemnifying Party. The Indemnified Party shall be
permitted to settle any such action brought against it, with the acquiescence
thereto of Indemnifying Party, not to be unreasonably withheld.
9.4 Successors. Each of the parties shall require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business or assets of any such party, expressly
to assume and agree to perform the
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indemnification obligations set forth in this Article IX in the same manner and
to the same extent that it would be required to perform if no such succession
had taken place.
ARTICLE X
GENERAL PROVISIONS
10.1 Survival at Closing. It is understood and agreed by the parties
that the representations and agreements contained herein shall survive the
Closing in perpetuity.
10.2 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given (i) upon actual receipt if delivered
personally or by commercial same-day delivery service, (ii) as of the date of
delivery indicated on the receipt issued by the relevant postal service, or, if
the addressee fails or refuses to accept delivery, as of the date of such
failure or refusal, if mailed by registered or certified mail (return receipt
requested), (iii) upon receipt, if sent by overnight delivery, or (iv) the next
business day after transmission (and sender shall bear the burden of proof of
delivery), if sent via facsimile or other electronic means of transmitting
written documents, to the parties at the following address and facsimile numbers
(or at such other address or facsimile number for a party as shall be specified
by like notice):
(a) if to Commtouch or CI, to:
Commtouch Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
(b) if to Eddy, Entine, WingraInc or WingraLLC, to:
Wingra Technologies, LLC
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
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10.3 Interpretation. When a reference is made in this Agreement to
Exhibits, such reference shall be to an Exhibit to this Agreement unless
otherwise indicated. The words "include," "includes" and "including" when used
herein shall be deemed in each case to be followed by the words "without
limitation." The phrase "made available" in this Agreement shall mean that the
information referred to has been made available if requested by the party to
whom such information is to be made available. The phrases "the date of this
Agreement", "the date hereof", and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to February 25, 2002. The headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. The parties hereto
agree that they have been represented by counsel during the negotiation,
preparation and execution of this Agreement and, therefore, waive the
application of any law, regulation, holding or rule of construction providing
that ambiguities in an agreement or other document will be construed against the
party drafting such agreement or document.
10.4 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
10.5 Entire Agreement; Nonassignability. This Agreement and the
documents and instruments and other agreements specifically referred to therein
or delivered pursuant to the terms hereof, including the Exhibits thereto (a)
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
and (b) shall not be assigned by operation of law or otherwise except as
otherwise specifically provided.
10.6 Severability. In the event that any provision of this Agreement,
or the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
10.7 Remedies Cumulative. Except as otherwise provided herein, any and
all remedies herein expressly conferred upon a party will be deemed cumulative
with and not exclusive of any other remedy conferred hereby, or by law or equity
upon such party, and the exercise by a party of any one remedy will not preclude
the exercise of any other remedy.
10.8 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without reference to its
principles of conflicts of law. Each of the parties hereto irrevocably consents
to the exclusive jurisdiction of any court located in Delaware, in connection
with any matter based upon or arising out of this Agreement or the matters
contemplated herein. Further, the parties agree that process may be served upon
them in any manner authorized by the laws of the State of Delaware for such
persons and waives
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and covenants not to assert or plead any objection which they might otherwise
have to such jurisdiction and such process.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed and delivered by itself or its respective officers
thereunto duly authorized, all as of the date first written above.
COMMTOUCH SOFTWARE LTD.:
By ___________________________________
Name__________________________________
Title_________________________________
COMMTOUCH INC.:
By ___________________________________
Name__________________________________
Title_________________________________
WINGRA, INCORPORATED:
By ___________________________________
Name__________________________________
Title_________________________________
WINGRA TECHNOLOGIES, LLC:
By ___________________________________
Name__________________________________
Title_________________________________
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▇▇▇ ▇▇▇▇
By ___________________________________
▇▇▇▇▇ ▇▇▇▇▇▇
By ___________________________________
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Exhibit A
Corporate Plans Disclosures
Commtouch
1. Commtouch sold its hosted consumer email business to MailCentro (a CPSG
company) in late 2001
2. Commtouch is in the process of transferring its hosted enterprise email
service ("SPS") to MailCentro as well
3. Commtouch sold its hosted Exchange email business to TeleComputing in
February, 2002
4. Commtouch has sold and will continue to sell equipment and other assets
that it no longer requires for its continuing operations
5. Commtouch is currently working to obtain additional funding for its
continuing business operations
a. Commtouch is in contracting stage with a consortium of
individuals (including Commtouch founders) for a direct
investment into the Company
b. Commtouch has negotiated deal terms and certain contract
language with a third party investment group - this deal has
been put on hold in order to focus on the deal listed as 5a
above (Note the terms of the deal described in 5a are better
for Commtouch than those in the deal described here in 5b,
i.e., more net cash to Commtouch and no discount on share
price)
c. Commtouch is in early discussions with a number of other
potential investors and investor groups
d. As a standard course of business, Commtouch will continue to
look for additional funding if and when needed to support
continued operations
6. Commtouch has no plans to voluntarily delist from Nasdaq and is working
to avoid involuntary delistment, but the Company can not guarantee that
it will not be delisted or moved to another exchange sometime in the
future
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Exhibit B
Corporate Plans Disclosures
Wingra
After obtaining written approval from ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
contacted both AOL and Sun/iPlanet in the latter part of 2001 concerning either
party's interest in making an equity investment in Wingra or acquiring Wingra
from Commtouch. After preliminary discussions, both parties indicated that they
were not interested in further pursuing an equity transaction with Wingra.
B-1