Exhibit 4.7



 	
  

 




Exhibit I


Purchase and 

Assignment Agreement


relating to shares in 


eleven Gesellschaft zur Entwicklung und Vermarktung 


von Netzwerktechnologien mbH



	
  

 	
  

 
	
  



 
	
  

 	
  

 
	
  

 	
 b
 e t w e e n

 
	
  

 	
  

 
	
 1)

 	
 Robert
 Rothe,

 
	
  

 	
 whose address is Berlin 

 
	
  

 	
  

 
	
  

 	
 –
 hereinafter “Seller 1” or “Representative”– 

 
	
  

 	
  

 
	
 2)

 	
 Benjamin
 Pannier,

 
	
  

 	
 whose address is Berlin 

 
	
  

 	
  

 
	
 3)

 	
 Robert
 Strycharczuk,

 
	
  

 	
 whose address is Berlin 

 
	
  

 	
  

 
	
 4)

 	
 Ragna
 Rothe, 

 
	
  

 	
 whose address is Berlin 

 
	
  

 	
  

 
	
 5)

 	
 Jörg
 Jacobs, 

 
	
  

 	
 whose address is Berlin 

 
	
  

 	
  

 
	
  

 	
 –
 the parties referred to under 1) through 5) 

 hereinafter each a “Seller” and
 collectively the 

 “Sellers”– 

 
	
  

 	
  

 
	
  

 	
 a
 n d

 
	
  

 	
  

 
	
 6)

 	
 Commtouch Germany GmbH & Co. KG (currently still acting under the trade
 name: cor 29. GmbH & Co. KG), with registered seat in Berlin, registered
 with the commercial register at the local court of Berlin (Charlottenburg)
 under docket number HRA 47286 B, represented by its general partner Commtouch
 Management GmbH (currently still acting under the trade name: aptus 754.
 GmbH), with registered seat in Berlin, registered with the commercial
 register at the local court of Berlin (Charlottenburg) under docket number
 HRB 144201 B, represented on its part by managing director Shlomo Yanay on
 sole signature 

 
	
  

 	
  

 
	
  

 	
 –
 hereinafter “Purchaser”– 

 
	
  

 	
  

 
	
 7)

 	
 Commtouch Software Ltd., a company incorporated under the laws of
 the State of Israel, listed on the NASDAQ Stock Exchange under the symbol
 CTCH 

 


page 1 of 47









	
  

 	
  

 
	
  

 	
 –
 hereinafter “Commtouch”– 

 
	
  

 	
  

 
	
  

 	
 – the Sellers, Commtouch
 and the Purchaser collectively hereinafter “Parties”–

 


page 2 of 47





Table of Contents 


	
  

 	
  

 	
  

 
	
 1

 	
 Preamble

 	
 7

 
	
  

 	
  

 	
  

 
	
 2

 	
 Sale and Assignment

 	
 7

 
	
  

 	
  

 	
  

 
	
 3

 	
 Initial Purchase Price

 	
 8

 
	
  

 	
  

 	
  

 
	
 4

 	
 Earn-out

 	
 13

 
	
  

 	
  

 	
  

 
	
 5

 	
 Change of Control Payment

 	
 20

 
	
  

 	
  

 	
  

 
	
 6

 	
 Conditions Precedent

 	
 21

 
	
  

 	
  

 	
  

 
	
 7

 	
 Representations and
 Warranties

 	
 23

 
	
  

 	
  

 	
  

 
	
 8

 	
 Remedies

 	
 35

 
	
  

 	
  

 	
  

 
	
 9

 	
 Tax Indemnities;
 Cooperation in Tax Matters

 	
 40

 
	
  

 	
  

 	
  

 
	
 10

 	
 Conduct Prior To The
 Closing

 	
 43

 
	
  

 	
  

 	
  

 
	
 11

 	
 Confidentiality,
 Announcements and Press Releases

 	
 44

 
	
  

 	
  

 	
  

 
	
 12

 	
 Expenses

 	
 44

 
	
  

 	
  

 	
  

 
	
 13

 	
 Disputes

 	
 45

 
	
  

 	
  

 	
  

 
	
 14

 	
 Representative

 	
 45

 
	
  

 	
  

 	
  

 
	
 15

 	
 Final Provisions

 	
 46

 


page 3 of 47





Directory of Annexes 


	
  

 	
  

 
	
 Annex 1.2 – Shareholders’
 List

 	
 7

 
	
  

 	
  

 
	
 Annex 1.6 – Shareholders’
 Resolution and Consent of the Company

 	
 7

 
	
  

 	
  

 
	
 Annex 3.4a) – List of
 Sellers’ Bank Accounts

 	
 10

 
	
  

 	
  

 
	
 Annex 3.4b) – Calculation
 of the Closing Cash Payment

 	
 10

 
	
  

 	
  

 
	
 Annex 3.7 – Escrow
 Agreement

 	
 12

 
	
  

 	
  

 
	
 Annex 3.9(b)(1) – Waiver
 and Release Agreement regarding Company Options

 	
 12

 
	
  

 	
  

 
	
 Annex 4.4(a) – List of
 Eleven Customers

 	
 17

 
	
  

 	
  

 
	
 Annex 4.4(b) – Company
 Business

 	
 17

 
	
  

 	
  

 
	
 Annex 4.5.1 – Consulting
 Agreement

 	
 18

 
	
  

 	
  

 
	
 Annex 6.7.1 – Confirmation
 Letter Transfer Agent

 	
 22

 
	
  

 	
  

 
	
 Annex 6.7.2 – Closing
 Delivery Equity Consideration

 	
 22

 
	
  

 	
  

 
	
 Annex 7.5.1 – List of
 Material Agreements

 	
 24

 
	
  

 	
  

 
	
 Annex 7.5.2 – Material
 Agreements in Default (if any)

 	
 25

 
	
  

 	
  

 
	
 Annex 7.6.1 – List of
 Employees of the Company and each Subsidiary

 	
 26

 
	
  

 	
  

 
	
 Annex 7.7 – List of
 Business Insurances

 	
 26

 
	
  

 	
  

 
	
 Annex 7.8 – List of
 Litigation and Arbitration Matters

 	
 27

 
	
  

 	
  

 
	
 Annex 7.11.3 – List of
 Restricted IP

 	
 28

 
	
  

 	
  

 
	
 Annex 7.11.4 – Registered
 IP Rights, Third Party Rights, Required Actions

 	
 28

 
	
  

 	
  

 
	
 Annex 7.11.9 – List of
 Open Source Materials

 	
 29

 
	
  

 	
  

 
	
 Annex 7.11.12 – List of
 Governmental Funding, Facilities or Resources

 	
 30

 
	
  

 	
  

 
	
 Annex 7.12.2 – Tax Filings
 and Payments in Default

 	
 30

 
	
  

 	
  

 
	
 Annex 7.12.2iii) – Interim
 Accounts as per 15 November 2012

 	
 31

 
	
  

 	
  

 
	
 Annex 7.12.7 – Exceptions
 to Normal Depreciation or Amortization

 	
 32

 
	
  

 	
  

 
	
 Annex 7.15 – List of
 Leased Real Estate

 	
 32

 
	
  

 	
  

 
	
 Annex 7.16 – Conflicting
 Material Contracts

 	
 33

 
	
  

 	
  

 
	
 Annex 8.10 – List of
 Documents Provided in Data Room

 	
 40

 
	
  

 	
  

 


page 4 of 47





Table of Definitions


	
  

 	
  

 
	
 2012 Earn-out Payment

 	
 15

 
	
  

 	
  

 
	
 2012 Platform Revenue

 	
 15

 
	
  

 	
  

 
	
 2013-2015 Platform Revenue

 	
 16

 
	
  

 	
  

 
	
 Acceleration Event

 	
 20

 
	
  

 	
  

 
	
 Additional Escrow Amount

 	
 12

 
	
  

 	
  

 
	
 Additional Taxes

 	
 40

 
	
  

 	
  

 
	
 Agreed Losses

 	
 39

 
	
  

 	
  

 
	
 Allocation Principle

 	
 41

 
	
  

 	
  

 
	
 Annual Earn-out Amount

 	
 15

 
	
  

 	
  

 
	
 Annual Earn-out
 Calculation Statement

 	
 16

 
	
  

 	
  

 
	
 Applicable Expiration Date

 	
 36

 
	
  

 	
  

 
	
 AV Platform Revenue

 	
 16

 
	
  

 	
  

 
	
 Awarded Losses

 	
 39

 
	
  

 	
  

 
	
 Base Earn-out Amount

 	
 14

 
	
  

 	
  

 
	
 Best Knowledge of the
 Sellers

 	
 37

 
	
  

 	
  

 
	
 Breach of Guarantee

 	
 36

 
	
  

 	
  

 
	
 Business Day

 	
 10

 
	
  

 	
  

 
	
 Business Insurances

 	
 27

 
	
  

 	
  

 
	
 Cash

 	
 11

 
	
  

 	
  

 
	
 Cash Consideration

 	
 8

 
	
  

 	
  

 
	
 CEO

 	
 18

 
	
  

 	
  

 
	
 Claim

 	
 40

 
	
  

 	
  

 
	
 Claim Certificate

 	
 37

 
	
  

 	
  

 
	
 Closing

 	
 21

 
	
  

 	
  

 
	
 Closing Cash Payment

 	
 10

 
	
  

 	
  

 
	
 Closing Date

 	
 21

 
	
  

 	
  

 
	
 Closing Memorandum

 	
 23

 
	
  

 	
  

 
	
 Commtouch

 	
 2

 
	
  

 	
  

 
	
 Company

 	
 7

 
	
  

 	
  

 
	
 Company Closing Cash
 Certificate

 	
 11

 
	
  

 	
  

 
	
 Company Intellectual
 Property

 	
 28

 






	
  

 	
  

 
	
 Company Option

 	
 12

 
	
  

 	
  

 
	
 Condition Precedent

 	
 21

 
	
  

 	
  

 
	
 Conflict

 	
 33

 
	
  

 	
  

 
	
 CTO

 	
 18

 
	
  

 	
  

 
	
 Deemed Losses

 	
 38

 
	
  

 	
  

 
	
 Earn-out Arbitrator

 	
 17

 
	
  

 	
  

 
	
 Earn-out Dispute Notice

 	
 17

 
	
  

 	
  

 
	
 Eleven SDK

 	
 16

 
	
  

 	
  

 
	
 Eleven SDK Customer

 	
 17

 
	
  

 	
  

 
	
 Employed by the Company

 	
 20

 
	
  

 	
  

 
	
 Employment by the Company

 	
 20

 
	
  

 	
  

 
	
 Equity Consideration

 	
 8

 
	
  

 	
  

 
	
 Escrow Account

 	
 12

 
	
  

 	
  

 
	
 Escrow Agent

 	
 12

 
	
  

 	
  

 
	
 Escrow Agreement

 	
 12

 
	
  

 	
  

 
	
 Escrow Amount

 	
 10

 
	
  

 	
  

 
	
 Escrow Fund

 	
 12

 
	
  

 	
  

 
	
 Escrow Release Date

 	
 39

 
	
  

 	
  

 
	
 Expiration Dates

 	
 36

 
	
  

 	
  

 
	
 Extraordinary Claims

 	
 36

 
	
  

 	
  

 
	
 Financial Statements

 	
 27

 
	
  

 	
  

 
	
 General Indemnification
 Cap

 	
 37

 
	
  

 	
  

 
	
 Group Company

 	
 17

 
	
  

 	
  

 
	
 Holdback Amount

 	
 39

 
	
  

 	
  

 
	
 Initial Purchase Price

 	
 8

 
	
  

 	
  

 
	
 Intellectual Property

 	
 28

 
	
  

 	
  

 
	
 Leased Real Estate

 	
 32

 
	
  

 	
  

 
	
 Lien

 	
 24

 
	
  

 	
  

 
	
 Material Agreements

 	
 26

 
	
  

 	
  

 
	
 Measurement Period

 	
 17

 
	
  

 	
  

 
	
 New SaaS

 	
 17

 









page 5 of 47









	
  

 	
  

 
	
 Objection Notice

 	
 38

 
	
  

 	
  

 
	
 Open Source Materials

 	
 28

 
	
  

 	
  

 
	
 Parties

 	
 2

 
	
  

 	
  

 
	
 Plan

 	
 12

 
	
  

 	
  

 
	
 Plan Consideration

 	
 12

 
	
  

 	
  

 
	
 Purchaser

 	
 1

 
	
  

 	
  

 
	
 Registered Intellectual
 Property

 	
 28

 
	
  

 	
  

 
	
 Regulation S Investor

 	
 33

 
	
  

 	
  

 
	
 Representative

 	
 1,
 22

 
	
  

 	
  

 
	
 SaaS Technology or
 Platform

 	
 17

 
	
  

 	
  

 
	
 SDK

 	
 17

 
	
  

 	
  

 
	
 SEC

 	
 33

 
	
  

 	
  

 
	
 Securities Act

 	
 33

 
	
  

 	
  

 
	
 Seller

 	
 1

 
	
  

 	
  

 
	
 Seller 1

 	
 1

 






	
  

 	
  

 
	
 Sellers

 	
 1

 
	
  

 	
  

 
	
 Shares

 	
 7

 
	
  

 	
  

 
	
 Straddle Period

 	
 41

 
	
  

 	
  

 
	
 Subsidiaries

 	
 23

 
	
  

 	
  

 
	
 Subsidiary

 	
 23

 
	
  

 	
  

 
	
 Tax Authority

 	
 30

 
	
  

 	
  

 
	
 Tax Benefit

 	
 41

 
	
  

 	
  

 
	
 Tax Dispute

 	
 42

 
	
  

 	
  

 
	
 Tax Procedure

 	
 42

 
	
  

 	
  

 
	
 Tax Refund

 	
 41

 
	
  

 	
  

 
	
 Third Party Claim

 	
 38

 
	
  

 	
  

 
	
 Transaction

 	
 7

 
	
  

 	
  

 
	
 Transaction Fees

 	
 44

 
	
  

 	
  

 
	
 Upside Earn-out Amount

 	
 14

 







page 6 of 47









	
  

 	
  

 	
  

 	
  

 
	
 1

 	
  

 	
 Preamble

 
	
  

 	
  

 	
  

 
	
  

 	
 1.1

 	
  

 	
      eleven Gesellschaft zur Entwicklung und
 Vermarktung von Netzwerktechnologien mbH is a German limited liability
 company (Gesellschaft
 mit beschränkter Haftung - GmbH) and incorporated and existing
 under the laws of Germany, located in Berlin, Germany and registered with the
 commercial register of the local court of Berlin (Charlottenburg) under HRB
 83892 B (hereinafter referred to as “Company”).
 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 1.2

 	
  

 	
      The Company has a total share capital
 of EUR 60,000. The share capital consists of five shares with the serial
 numbers 1 through 5 having a nominal value of EUR 38,600 (serial number
 1), EUR 7,300 (serial number 2), EUR 7,300 (serial number 3),
 EUR 3,500 (serial number 4) and EUR 3,300 (serial number 5)
 (collectively: the “Shares”). The Sellers
 are all of the shareholders of the Company. holding the Shares as set out in
 the shareholders’ list attached to the Reference Deed as Annex 1.2.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 1.3

 	
  

 	
      The Company wholly owns two
 subsidiaries: (i) eleven – internationale Vertriebsgesellschaft mbH, a
 limited liability company under German law with business seat in Berlin,
 registered with the commercial register of the local court of Berlin
 (Charlottenburg) under HRB 100313 B and (ii) eleven USA Inc., a
 Delaware corporation.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 1.4

 	
  

 	
      The Purchaser is an indirectly wholly
 owned subsidiary of Commtouch.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 1.5

 	
  

 	
      The Purchaser intends to purchase the
 Shares from the Sellers (“Transaction”).

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 1.6

 	
  

 	
      The Parties are aware that according to
 Section 19 (4) of the articles of association of the Company the disposal
 over shares requires the authorization of the Company’s shareholder meeting.
 The Company’s shareholder meeting has approved the Transaction with
 shareholder resolution dated 12 November 2012 and the Company has on that basis granted its consent to the
 transfer of all Shares by written declaration dated ___ November 2012. Copies
 of such shareholder resolution and written declaration are for documentary
 purposes (zu Beweiszwecken) attached to the Reference Deed as Annex 1.6

 
	
  

 	
  

 	
  

 
	
 2

 	
  

 	
 Sale and Assignment

 
	
  

 	
  

 	
  

 
	
  

 	
 2.1

 	
  

 	
      Each Seller hereby sells (verkaufen)
 his or her respective Share to the Purchaser. The Purchaser accepts the sale
 of the Shares.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.2

 	
  

 	
      Each Seller hereby assigns (treten ab)
 his or her respective Share, subject to the conditions precedent (aufschiebende
 Bedingungen) within the meaning of § 158 (1) German Civil Code (BGB)
 of satisfaction or waiver of the Conditions Precedent as described in Section
 6. The Purchaser hereby accepts such conditional assignment of the Shares.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.3

 	
  

 	
      The assignment of the Shares is made
 with economic effect as of the Closing Date (as defined in Section 6.2 below)
 and shall include all ancillary rights 

 


page 7 of 47









	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 appearing thereto, in particular the rights to any undistributed
 profits from any periods prior to the Closing Date and the right to receive
 dividends, as of the beginning of the current financial year.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.4

 	
  

 	
      Each of the Sellers confirms that the
 Shares held by such Seller do not constitute his or her entire, or nearly
 (90% or more) his or her entire, property. Furthermore, the Purchaser, having
 been pointed by the notary to the provisions of Section 1365 of the German
 Civil Code declared that he has neither been made familiar nor is otherwise
 familiar with the financial situation of any of the Sellers. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.5

 	
  

 	
      Commtouch confirms to procure that, as
 of the Closing Date (as defined in Section 6.2 below) and at least until
 expiry of the last Measurement Period (as defined in Section 4.4 below),
 the Company will remain a German entity, irrespective of the particular legal
 form (e.g. a limited liability company (Gesellschaft mit beschränkter Haftung – GmbH), a company limited by shares (Aktiengesellschaft
 – AG) or a limited partnership (GmbH & Co. KG)), that
 is neither directly nor indirectly controlled by a United States entity. The
 Parties will use commercially reasonable efforts to safeguard that the
 Company will not become subject to any foreign (non-German, in particular
 United States or United Kingdom) data protection laws or to investigation
 rights of authorities of foreign (non-German, in particular United States or
 United Kingdom) authorities in a manner that is likely to materially
 adversely affect the business of the Company.

 
	
  

 	
  

 	
  

 	
  

 
	
 3

 	
  

 	
 Initial Purchase Price

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3.1

 	
  

 	
      The aggregate initial purchase price to
 be paid by the Purchaser for the Shares amounts to EUR 9,878,172 (in words:
 Nine Million Eight Hundred Seventy Eight Thousand One Hundred and Seventy Two
 Euros) (the “Initial Purchase
 Price”).

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3.2

 	
  

 	
      The Initial Purchase Price shall be
 comprised of: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 3.2.1

 	
 cash in the amount of EUR 8,231,810 (in words: Euro Eight Million Two
 Hundred Thirty One Thousand Eight Hundred and Ten) (the “Cash Consideration”); and 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 3.2.2

 	
 such number of restricted ordinary shares, with a nominal par value
 of NIS 0.15 per share, in Commtouch, having a value as determined in Section
 3.2.2.1 below of EUR 1,646,362 (in words: One Million Six Hundred Forty Six
 Thousand Three Hundred and Sixty Two Euros) (the “Equity Consideration”). The Cash
 Consideration and the Equity Consideration shall be paid to the Sellers on a
 pro rata basis, in proportion to their shareholdings in the Company as of the
 Closing Date and in accordance with the terms of this Agreement, unless
 otherwise expressly stipulated. In the event that the pro rata number of
 shares to be allocated to one or more Sellers is not an integral number,
 Seller 1 shall determine whether the number of shares of Equity 

 


page 8 of 47









	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 Consideration to be allocated to any specific Seller shall be rounded
 up or rounded down, provided
 that the aggregate number of shares of the Equity Consideration shall not
 exceed the number determined prior to such rounding.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 3.2.2.1

 	
 The actual number of the shares of the Equity Consideration shall be
 based on (i) the average share price of the shares in Commtouch during
 the twenty (20) trading days (New York) preceding the earlier of (a) the date
 of this agreement or (b) the date of the public announcement of the
 Transaction and (ii) the closing EURO-US dollar market exchange rate in
 effect on the currency trading day prior to Closing Date, as published on
 Bloomberg. If the number of shares so determined shall be a fractional share,
 then the number shall be rounded up if the fraction is 1⁄2 or greater, and
 otherwise shall be rounded down. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 3.2.2.2

 	
 The shares of the Equity Consideration shall vest (i.e. confer
 unrestricted shareholder rights as set out in the last sentence of this
 Section 3.2.2.2) in two equal annual installments as follows: (i) the
 first installment of 50% of the Equity Consideration shall vest immediately
 upon the 12-month anniversary of the Closing; and (ii) the second installment
 of the remaining 50% of the Equity Consideration shall vest immediately upon
 the 24-month anniversary of the Closing. Each vested share of the Equity
 Consideration shall enjoy standard shareholders’ rights, identical to those
 of the shares in Commtouch, subject to applicable corporate and securities
 laws and the terms hereof.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 3.2.2.3

 	
 Restrictions on Transfer.
 Any transfer of the Equity Consideration must comply with all
 applicable securities laws, and the Parties agree that the Sellers may be
 required to provide a satisfactory opinion of counsel to this effect, without
 incurring any further expenses for the Sellers. The Purchaser may issue appropriate “stop-transfer”
 instructions to its transfer agent, American Stock Transfer &
 Trust Company, to prevent
 the violation of applicable securities laws.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 3.2.2.4

 	
 The shares of the Equity Consideration shall be issued at the Closing
 in “book entry” format with the Purchaser’s transfer agent. The certificates evidencing the
 Equity Consideration issued pursuant to this Agreement will bear the
 following legend reflecting the foregoing restrictions on the transfer of
 such securities, in addition to any legend required by applicable U.S. state
 securities laws:

 


page 9 of 47









	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 “THESE SECURITIES HAVE NOT BEEN
 REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
 TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION
 STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN
 OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY TO THE COMPANY THAT SUCH
 REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH
 ACT.”

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 3.2.2.5

 	
 Removal of Legend.
 The Equity Consideration will no longer be subject to the legends
 referred to in Section 3.2.2.4 above upon the termination or lapse of all
 restrictions and conditions on transfer under applicable securities laws or
 pursuant to a disposition that is permitted thereunder. After such time, and upon the Seller’s
 request, a new certificate or certificates representing such Seller’s pro
 rata portion of the Equity Consideration held in such Seller’s name shall be
 issued without the legends referred to above and delivered to such Seller,
 provided that Commtouch is provided with all certificates, opinions and other
 information it may reasonably request in connection with such request.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3.3

 	
  

 	
      The
 Sellers represent and warrant that prior to the date of this Agreement they
 have (i) repaid all loans that they took from the Company without any
 remaining mutual claims arising therefrom and (ii) reimbursed the Company for
 any expenses that should be borne by the Sellers pursuant to
 Section 12 below and
 which have been incurred by the Company.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3.4

 	
  

 	
      At the Closing (as defined in Section
 6.2 below), the Purchaser shall transfer to each of the Sellers its pro rata
 portion of the Closing Cash Payment (as defined below) to the respective bank
 account as set forth opposite each Seller’s name in Annex 3.4a) to the
 Reference Deed. The “Closing Cash Payment”
 shall mean an amount of EUR_____________ (in
 words:__________________________) which equals the Cash Consideration (i) minus
 EUR 823,181 (in words: Eight Hundred Twenty Three Thousand One Hundred
 and Eighty One Euros) (the “Escrow Amount”)
 and (ii) minus or plus, as the case may be, any Cash and Deferred Revenue
 Adjustment (as defined in Section 3.6 below). The definite the calculation of
 the Closing Cash Payment and the Cash and Deferred Revenue Adjustment,
 including the Closing Cash Certificate (as defined in Section 3.6.3 below),
 is shown in Annex 3.4b). 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3.5

 	
  

 	
      “Business
 Day”
 shall mean each day that is not a Friday, Saturday or Sunday, or on which
 banking institutions located in Tel Aviv, Israel, Berlin, Germany, or in the
 State of California are authorized or obligated by law to close. The Sellers
 represent and warrant that there are no expenses that should be 

 


page 10 of 47









	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 borne by the Sellers pursuant to Section 12 below, which either were
 paid by the Company on or prior to the date of this Agreement or that are to
 be paid by the Company after the date of this Agreement.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3.6

 	
  

 	
      Cash and Deferred Revenue Adjustment.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 3.6.1

 	
 The Company is obligated to provide services to customers for whom
 deferred revenues were recognized and respective pre-payments were received
 by the Company prior to Closing. The Sellers shall ensure that the Company’s
 cash and cash equivalents (i.e.
 free cash in bank accounts, and corporate commercial paper and other money
 market instruments that can easily be converted into cash, including sums
 invested in money and financial markets (Geldmarkt), collectively referred to as
 “Cash”), excluding any
 cash needed to settle the payment obligations of the Company to former
 holders of Company Options as described in Section 3.9, at Closing shall
 at least equal the pre-payments for deferred revenues at Closing.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 3.6.2

 	
 The Sellers hereby guarantee to Purchaser that since December
 31, 2011, and continuing through the Closing, the overall average amount of
 liabilities and receivables of the Company has changed and will change only
 in the ordinary course of business and consistent
 with past practice, and the Company has not borrowed any funds.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 3.6.3

 	
 The Cash and Deferred Revenue Adjustment included in Annex 3.4b)
 reflects the Company’s good faith best estimate (based on reasonable
 assumptions) of (i) the amount of pre-payments for deferred revenues at
 Closing, and (ii) the amount of Cash in the Company at Closing, (the “Company
 Closing Cash Certificate”). For the
 avoidance of doubt, the Company Closing Cash Certificate has been prepared in
 view of all payment obligations to former holders of Company Options as
 described in Section 3.9 having to be paid as of Closing by the Company
 from the cash available in the Company at that time. The Company Closing Cash
 Certificate shall fairly and accurately present the Company’s good faith best
 estimate (based on reasonable assumptions). The Company Closing Cash Certificate
 shall be used by the Purchaser (i) to reduce the Closing Cash Payment
 payable pursuant to this Agreement to the extent, if any, that the Cash shall
 be less than the pre-payments for deferred revenues at Closing, or
 (ii) to increase the Closing Cash Payment payable pursuant to this Agreement
 to the extent, if any, that the Cash shall exceed the pre-payments for
 deferred revenues at Closing.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 3.6.4

 	
 The correctness of the Company Closing Cash Certificate shall be
 treated as a representation and warranty by the Sellers for all purposes, and
 any inaccuracy in such Company Closing Cash Certificate shall give rise to
 all of the remedies available for a 

 


page 11 of 47









	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 misrepresentation. Section 8 shall apply mutatis mutandis
 with the exception that deviating from Section 8.1 the representation and
 warranty of the correctness of the Company Closing Cash Certificate shall
 expire one month after the publication of the Purchaser’s audited financial
 statements for the year ending December 31, 2012, but not later than May 31,
 2013.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3.7

 	
  

 	
      At the Closing (as defined in Section
 6.2 below) Sellers, Purchaser and Attorney at Law Dr. Johannes Meinel (the “Escrow Agent”)
 shall enter into an escrow agreement substantially in the form attached to
 the Reference Deed as Annex 3.7. (the “Escrow Agreement”)
 and the Purchaser shall deposit the Escrow Amount with the Escrow Agent in
 accordance with the terms hereof and the Escrow Agreement in a respective
 account of the Escrow Agent (the “Escrow Account”).

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3.8

 	
  

 	
      In case the Purchaser has delivered a
 Claim Certificate pursuant to Section 8.7.1 and the
 Representative has delivered an Objection Notice pursuant to
 Section 8.7.2 before the Purchaser’s payment of the 2012 Earn-out
 Payment (as defined in Section 4.4 below), if any, pursuant to Section 4
 hereof, an additional amount of EUR 180,000 (in words: One Hundred and Eighty
 Thousand Euros) shall be deducted from the 2012 Earn-out Payment, if any, and
 added to the Escrow Amount (the “Additional Escrow Amount”). The Escrow
 Amount and the Additional Escrow Amount, if and to the extent such is
 deposited by the Purchaser with the Escrow Agent, shall be hereinafter
 collectively referred to as the “Escrow Fund”. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3.9

 	
  

 	
      Treatment
 of the Profit Participation Option Program (Genussrechtsoptions-programm) (the “Plan”).

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 No option or other right
 granted under the Plan (whether vested or unvested) that is outstanding
 immediately prior to the Closing (each, a “Company
 Option”) shall be assumed by Purchaser. The Sellers have provided to the
 Purchaser with all of the existing waiver and release agreements (Vereinbarungen über die Abfindung von
 Genussrechtsoptionen), signed by all of the holders of Company Options, whereby each such
 holder validly agrees to the termination of the Company Options held by him,
 subject only to, and effective upon, the Closing, against consideration by
 the Company (“Plan Considerations”); copies of those waiver and release
 agreements (Vereinbarungen über die
 Abfindung von Genussrechtsoptionen)  are for documentary purposes (zu
 Beweiszwecken) attached to the Reference Deed as Annex
 3.9.(b)(1). The Parties acknowledge that Commtouch
 and the Sellers have reached an agreement that the Plan Considerations
 consist of a cash payment in the aggregate amount of up to EUR 733,800
 to be paid by the Company to the former holders of the Company Options and
 the provision of option rights in shares in Commtouch according to the
 current employee option scheme applicable to employees of Commtouch as
 amended from time to time. Commtouch hereby undertakes to grant the required
 options to the respective former holders of the Company Options. The Parties
 are aware of the fact that as a consequence of the cash payment to the former
 

 


page 12 of 47









	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 holders of Company Options
 the Company will not generate any profit in the fiscal year 2012.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3.10

 	
  

 	
 Any payment under this Agreement shall be deemed to have been
 effectuated on that date it has been credited to the account of the
 respective recipient. All payments shall be made free and clear of any costs
 and bank charges.

 
	
  

 	
  

 	
  

 	
  

 
	
 4

 	
  

 	
 Earn-out 

 
	
  

 	
  

 	
  

 
	
  

 	
 4.1

 	
  

 	
      Payment
 of Earn-out Payments. Subject to
 the terms and conditions of this Agreement, including this Section 4, in
 addition to the Initial Purchase Price, the Purchaser shall pay or cause to
 be paid to each of the Sellers its pro rata portion of an
 amount in cash equal to each of the Annual Earn-out Amounts, if any,
 determined as specified below and payable without undue delay after the
 calculation pursuant to Section 4.3 has been completed with respect to the
 respective Annual Earn-out Amount. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 4.2

 	
  

 	
      Annual
 Earn-out Amounts. Subject to adjustment as provided below,
 the Annual Earn-out Amount, if any, for any Measurement Period shall be
 calculated as follows:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 2012 Earn-out

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 4.2.1

 	
 On the basis of the 2012
 Platform Revenue for the twelve months ending 31 December 2012, the 2012
 Earn-out Payment shall be the difference between (A) twice the 2012
 Platform Revenue, and (B) the Initial Purchase Price.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 2013 – 2015 Earn-out

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 4.2.2

 	
 In the event the sum of the
 2013-2015 Platform Revenue and AV Platform Revenue for any Measurement Period
 is less than EUR 3,122,000, then the Annual Earn-out Amount for such
 Measurement Period shall be equal to zero.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 4.2.3

 	
 In the event the sum of the
 2013-2015 Platform Revenue and AV Platform Revenue for any Measurement Period
 is at least EUR 3,122,000 but not more than EUR 5,307,000, then the
 Annual Earn-out Amount for such Measurement Period shall be equal to 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 i)

 	
 12% of the 2013-2015 Platform
 Revenue for such Measurement Period squared, divided by EUR 6,244,000,
 plus

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 ii)

 	
 3% of the AV Platform Revenue
 for such Measurement Period.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 4.2.4

 	
 In the event the sum of the
 2013-2015 Platform Revenue and AV Platform Revenue for any Measurement Period
 is more than EUR 5,307,000 but not more than EUR 6,244,000, then
 the Annual Earn-out Amount for such Measurement Period shall be equal to 

 


page 13 of 47









	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 i)

 	
 12% of the 2013-2015 Platform
 Revenue for such Measurement Period, plus

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 ii)

 	
 3% of the AV Platform Revenue
 for such Measurement Period.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 4.2.5

 	
 In the event the sum of the
 2013-2015 Platform Revenue and AV Platform Revenue for any Measurement Period
 is more than EUR 6,244,000, then the Annual Earn-out Amount for such
 Measurement Period shall be equal to the sum of:

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 i)

 	
 EUR 749,280 (referred to
 as “Base
 Earn-out Amount”), plus

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 ii)

 	
 10% of the difference between
 the 2013-2015 Platform Revenue for such Measurement Period and
 EUR 6,244,000, plus

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 iii)

 	
 3% of the AV Platform Revenue
 for such Measurement Period ((ii) and (iii) collectively “Upside
 Earn-out Amount”).

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 4.3

 	
  

 	
      Calculation
 of Annual Earn-out Amounts; Dispute Resolution. As soon as reasonably practicable, but not later than one month
 following the completion of the audited financial statements for each
 Measurement Period, the Purchaser shall prepare and deliver to the
 Representative a statement showing the AV Platform Revenue and the 2013-2015
 Platform Revenue or, as the case may be, the 2012 Platform Revenue and the
 calculation of the Annual Earn-out Amount for such Measurement Period. The
 Purchaser shall afford to the Representative and its advisors reasonable
 access during normal business hours and upon reasonable notice after delivery
 of each Annual Earn-out Calculation Statement to the books of account and records used or that should have
 been used to prepare the Annual Earn-out Calculation Statement, and to management of the
 Purchaser, for purposes of verifying the calculation of the Annual Earn-out
 Amount. The Representative shall notify the Purchaser in writing within
 twenty (20) Business Days of receipt of an Annual Earn-out Calculation
 Statement as to whether the
 Representative disputes the determination of the Annual Earn-out Amount; if
 the Representative disputes the determination of the Annual Earn-out Amount,
 the Representative shall deliver an Earn-out Dispute Notice setting forth in
 reasonable detail the specific items in dispute and the basis for the
 dispute. If the Representative does not deliver an Earn-out Dispute Notice
 within twenty (20) Business Days of receipt of an Annual Earn-out Calculation
 Statement, or if the Representative
 accepts the amounts set forth in the Annual Earn-out Calculation Statement for the Measurement Period in
 writing, the Annual Earn-out Amount calculations as contained in the Annual
 Earn-out Calculation Statement
 shall be deemed final and binding. In the event an Earn-out Dispute Notice is
 delivered, the Purchaser and the Representative shall meet within ten (10) Business
 Days of the delivery of such Earn-out Dispute Notice to attempt to resolve
 such dispute in good faith. If a
 final resolution of such dispute is reached as reflected in an agreement in
 writing, the agreed upon Annual Earn-out Amount agreed with respect to such
 Measurement Period shall be deemed final and binding. If no final 

 


page 14 of 47









	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 resolution
 is reached within fifteen (15) Business Days of the delivery of such Earn-out
 Dispute Notice after good faith negotiation, either party may require that
 the dispute (other than a dispute as to the calculation of any aspect of the
 Annual Earn-out Calculation Statement) be
 resolved in accordance with the dispute resolution mechanism set forth in
 Section 13. If the dispute
 relates to the method of calculation of any aspect of the Annual Earn-out Calculation
 Statement, the dispute shall be
 submitted to the Earn-out Arbitrator. The Earn-out Arbitrator shall
 be authorized only to arbitrate the calculation of the 2012 Platform Revenue,
 the 2013-2015 Platform revenue and the AV Platform Revenue but shall not have
 any authority to arbitrate any other dispute relating to the matters
 addressed in this Section 4.3. The Earn-out Arbitrator shall be instructed to
 review the Annual Earn-out Calculation Statement, the Earn-out Dispute Notice and all work papers related
 thereto to determine the Annual Earn-out Amount, and shall use every
 reasonable effort to determine such amounts within sixty (60) days after the
 submission of such dispute to it, and in any event as soon as practicable.
 The Earn-out Arbitrator shall not undertake any review of any matters not
 specifically identified by the Representative as being in dispute in the
 Earn-out Dispute Notice and shall only decide the specific items under
 dispute by the parties and solely in accordance with the terms of this
 Agreement. In resolving any disputed
 item, the Earn-out Arbitrator may not assign a value to any item greater than
 the greatest value for such item claimed by either party or less than the
 smallest value for such item claimed by either party. The Earn-out
 Arbitrator’s determination shall be based solely on presentations by the
 Purchaser and the Representative, and an independent review by the Earn-out
 Arbitrator of the books and records of the Purchaser and on the definitions
 and other terms included herein. The Earn-out Arbitrator shall set out the
 resolution of the dispute in writing, which shall be conclusive and binding
 upon the parties. The costs and expenses of the Earn-out Arbitrator shall be
 borne (i) by the Purchaser, if the Annual Earn-out Amount as determined
 by the Earn-out Arbitrator is higher than the Annual Earn-out Amount
 determined by the Purchaser, (ii) by the Sellers (to be allocated among
 them on a pro rata basis) if the Annual Earn-out Amount as determined by the
 Earn-out Arbitrator is lower than the Annual Earn-out Amount as determined by
 the Representative, or (iii) 50% by the Purchaser and 50% by the Sellers (to
 be allocated among them on a pro rata basis), in any other case.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 4.4

 	
  

 	
      Earn-out
 Definitions. The following
 capitalized terms shall have the meanings set forth below:

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 “2012 Earn-out Payment” means the amount, if any, payable pursuant to
 Section 4.2.1 above.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 “2012 Platform Revenue” means all revenues (Umsätze) of the Company on
 a consolidated basis (excluding VAT, discounts and credits), determined in
 accordance with generally accepted accounting principles under German GAAP
 (HGB) for the twelve months ending 31 December 2012.

 


page 15 of 47









	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 “Annual Earn-out Amount” means the amount,
 if any, calculated pursuant to Section 4.2 with respect to each of the
 Measurement Periods.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 “Annual Earn-out Calculation Statement” means the statement prepared by Commtouch
 pursuant to Section 4.3 with respect to each of the Measurement Periods.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 “AV Platform Revenue” means all revenues (Umsätze) of Commtouch on a
 consolidated basis (excluding VAT, discounts and credits), determined in
 accordance with generally accepted accounting principles in the United
 States, in the respective Measurement Period (other than 2012) for any SaaS
 Technology or Platform relating to

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 (i)

 	
 anti
 virus products and services or 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 (ii)

 	
 New
 SaaS products and services either licensed,
 acquired or self developed

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 in each
 case except for products and services which any Group Company has acquired or
 licensed as a SaaS Technology or Platform after the conclusion of this
 Transaction and which is provided to customers in the form acquired without
 any substantial modifications (other than porting and the like).

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 “2013-2015 Platform Revenue” means all revenues (Umsätze) of Commtouch on a
 consolidated basis (excluding VAT, discounts and credits), determined in
 accordance with generally accepted accounting principles in the United
 States, in the respective Measurement Period (other than 2012) for any of the
 following:

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 (i)

 	
 any service or product
 worldwide, without any qualifications, relating to or deriving from the use
 of eXpurgate, ensurance, eXached, exelerate, EVA (BSI service) and archiving
 services, including any future development of such products or services;

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 (ii)

 	
 with respect to services or
 products which derive from the SDK (excluding any SaaS Technology or
 Platform) currently licensed or sold by the Company, including any future
 development deriving from any of such SDK (“Eleven SDK”)

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 (a)

 	
 all amounts invoiced by a
 Group Company to Eleven SDK Customers worldwide

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 (b)

 	
 all amounts invoiced by a
 Group Company to any customer in Germany, Austria or Switzerland

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 (iii)

 	
 all amounts invoiced by a
 Group Company to Eleven SDK Customers worldwide with respect to services or
 products which derive from any SDK (excluding any SaaS Technology or
 Platform) which is not the Eleven SDK, with the following qualification:

 


page 16 of 47









	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 if the relevant Eleven SDK
 Customer has for a consecutive period of at least twelve months made any
 revenue with Eleven SDK prior to changing to a different SDK offered by any Group
 Company, such former revenue made with Eleven SDK (invoiced amounts excluding
 VAT) shall be deemed to be the revenue made in the relevant Measurement
 Period rather than the actual revenue made with the new SDK product or
 service; and

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 (iv)

 	
 any e-mail or web service or
 product worldwide, without any qualifications, relating to or deriving from a
 SaaS Technology or Platform.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 “Earn-out Arbitrator” means Deloitte, PricewaterhouseCoopers or
 another independent accounting firm with offices in Israel and Berlin of
 recognized international standing, mutually agreed upon by Commtouch and the
 Representative to resolve disputes relates to the method of calculation of
 any aspect of the Annual Earn-out Calculation Statement.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 “Earn-out Dispute Notice” means a notice delivered by the
 Representative pursuant to Section 4.3, if the Representative disputes the
 determination of an Annual Earn-out Amount.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 “Eleven SDK Customer” means all customers of the Company as listed
 in Annex 4.4(a) to the
 Reference Deed pertaining to the Company’s business as
 referred to in Annex 4.4(b) to the Reference
 Deed.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 “Group Company” means the Company, Commtouch, or any of
 Commtouch’s direct or indirect subsidiaries worldwide

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 “Measurement Period” means each of (i) the
 year ending on December 31, 2012, (ii) the year ending December 31,
 2013; (iii) the year ending December 31, 2014; and (iv) the year
 ending December 31, 2015.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 “New SaaS” means any SaaS Technology or Platform not
 currently marketed or developed by any Group Company.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 “SaaS Technology or Platform” means software as a service which is a software delivery model in which
 software and associated data are centrally hosted on the cloud, cloud
 computing being the use of computing resources (hardware and software) that
 are delivered as a service in parts or entirely over the internet.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 “SDK” means a
 software development kit which is a set of software development tools that allows
 for the creation of applications for a certain software package, software
 framework, hardware platform, computer system, operating system, or similar
 platform.

 


page 17 of 47









	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 4.5

 	
  

 	
      Continuation
 Requirement.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 4.5.1

 	
 The Parties agree that
 Seller 1 shall, as from the Closing Date, remain Employed by the
 Company. He is intended to remain the Company’s managing director (Geschäftsführer).
 Further, he is intended to serve as Commtouch’s German site manager and
 general manager. On the level of Commtouch, Seller 1 shall become Chief
 Technical Officer (“CTO”) reporting directly to
 Commtouch’s Chief Executive Officer (“CEO”). The consultancy agreement to
 be entered into, by way of notarial deed (in notariell beurkundeter Form), between
 Purchaser and RoRo Beteiligungsgesellschaft mbH (registered with the
 commercial register at the local court of Berlin (Charlottenburg) under HRB
 117585) at the Closing is attached as Annex
 4.5.1 to the Reference Deed.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 4.5.2

 	
 Notwithstanding any other
 provision of this Agreement, if Seller 1 voluntarily resigns from his
 Employment by the Company on or after January 1, 2013 but within 24 months as
 from the Closing Date, or is dismissed for “Cause” (as defined in Section
 4.5.4 below) at any time, then he shall not be entitled to receive his pro
 rata share of any Upside Earn-out Amount (if any) calculated pursuant to
 Section 4.2.5 above with respect to any Measurement Period subsequent to such
 Measurement Period in which the resignation or dismissal occurs. With respect
 to the Measurement Period in which such resignation or dismissal occurs,
 Seller 1 shall (only) be entitled to such proportion of his pro rata share of
 the respective Upside Earn-out Amount (if any) which equals, pro rata (i) the
 number of months from the beginning of the Measurement Period up and
 including the month in which the resignation or dismissal occurs (ii) to 12
 months (e.g. in the event the resignation is validly announced in March of
 the respective Measurement Period, Seller 1 shall only be entitled to
 3/12 of the respective Upside Earn-out Amount). For the avoidance of doubt,
 any Upside Earn-out Amount for past and current Measurement Periods as well
 as any other portion of a future Base Earn-out Amount which is not an Upside
 Earn-out Amount shall be unaffected. Any remaining Upside Earn-out Amount of
 the Measurement Period in which the resignation or dismissal occurs as well
 as any future Upside Earn-out Amount Seller 1 would be entitled to if he
 had not resigned shall be deemed to be forfeited to the Purchaser and shall
 be retained by the Purchaser, and no other Seller shall be entitled to
 participate in such amount. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 4.5.3

 	
 Section 4.5.2 shall not apply
 if Seller 1’s Employment by the Company is terminated in any other way
 (including due to death and/or incapacity for work) as set forth in Section
 4.5.2 above, in particular in the event Seller 1 resigns from his
 Employment by the Company “for cause” – aus wichtigem Grund (as defined in
 Section 626 para. (1) German Civil 

 


page 18 of 47









	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 Code (BGB)) or is dismissed due
 to an Acceleration Event (as defined in Section 5 below) following the
 Transaction.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 4.5.4

 	
 For purposes of
 Section 4.5.2 above, “Cause” means (for purposes of this definition of
 Cause, “Commtouch” shall mean any Group Company):

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
      i)

 	
           an
 intentional act of fraud, embezzlement, theft or any other material violation
 of law;

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
      ii)

 	
           intentional
 damage to Commtouch’s assets;

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
      iii)

 	
           intentional
 disclosure of Commtouch’s confidential information contrary to company
 policy;

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
      iv)

 	
           intentional
 engagement in any competitive activity which would constitute a breach of a
 duty of loyalty or of other obligations under an employment agreement;

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
      v)

 	
           intentional
 and material breach of any of Commtouch’s policies, in effect and as amended
 from time to time, provided however that such breach would constitute
 circumstances which under German civil law or employment law would justify a
 termination “for cause” – aus wichtigem Grund (as defined in
 Section 626 para. (1) German Civil Code (BGB);

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
      vi)

 	
           the
 wilful and continued failure to substantially perform duties for Commtouch or
 the Company, including, but not limited to, repeated unexcused absences from
 work (other than as a result of incapacity due to physical or mental
 illness); or

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
      vii)

 	
           wilful
 conduct that is demonstrably and materially injurious to Commtouch,
 monetarily or otherwise.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 For purposes of this
 paragraph, an act, or a failure to act, shall not be deemed wilful or
 intentional, as those terms are defined herein, unless it is done, or omitted
 to be done, in bad faith or without a reasonable belief that the action or
 omission was in the best interest of Commtouch or the Company. Failure to meet performance standards or
 objectives, by itself, does not constitute “Cause”. “Cause” also includes any of the above grounds for dismissal
 regardless of whether Commtouch learns of it before or after terminating
 employment or the consultancy agreement (as the case may be).

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 4.5.5

 	
      Nothing
 contained in this Section 4.5 shall be deemed to detract from the right
 of Seller 1 to participate in any other Annual Earn-out Amount (in
 particular the Base Earn-out Amount), including his pro 

 


page 19 of 47









	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 rata share of any Annual
 Earn-out Amount calculated pursuant to Sections 4.3 and 4.2.1 to 4.2.5
 above. This Section 4.5 contains regulations with regard to the Upside
 Earn-out Amount only. For the avoidance of doubt, nothing contained in this
 Section 4.5 shall affect the payment obligations of Purchaser vis-à-vis
 the other Sellers (not being Seller 1).

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 4.5.6

 	
      For
 purposes of this Section 4.5, Seller 1 will be deemed to be “Employed
 by the Company” or have an “Employment by the Company” so long as he is providing services
 to any Group Company, either directly or through RoRo
 Beteiligungsgesellschaft mbH or any other company wholly-owned by Seller 1,
 pursuant to a consultancy agreement with any Group Company, provided that
 such arrangement is and continues to be reasonably acceptable to Commtouch.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 5

 	
  

 	
 Change of Control Payment

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 In case any of the events
 described in Sections 5.1 to 5.4 below occurs within any of the Measurement
 Periods (each such event referred to as “Acceleration Event”) Purchaser shall pay on the date
 of the occurrence of such Acceleration Event to each of the Sellers its pro
 rata portion of an amount in cash equal to (i) the 2012 Platform Revenue less (ii) all previously paid Upside
 Earn-out Amounts: and any Upside Earn-out Amount still payable (fällig und
 weiterhin zahlbar) at that time.

 
	
  

 	
  

 	
  

 
	
  

 	
 5.1

 	
  

 	
      sale,
 exchange or takeover in an economically comparable way, within 12 months
 following the Closing, of at least 50% of all Shares in one single
 transaction and/or multiple transactions in close time proximity by one
 purchaser and/or consortium of purchasers (with the exception of a respective sale or transfer to a
 shareholder or a company affiliated to a shareholder within the meaning of
 sec. 15 et seq. German Stock Corporation Act, Aktiengesetz – AktG,
 or a pure internal group restructuring of the Company and its affiliates
 provided that at least 50% of the shareholders prior to the restructuring will
 remain shareholders in any target structure); 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 5.2

 	
  

 	
      sale,
 exchange or takeover in an economically comparable way of at least 50% of all
 of the share capital of Commtouch Software Ltd., in one single transaction
 and/or multiple transactions in close time proximity by one purchaser and/or consortium
 of purchasers (with the exception of a respective sale or transfer to a shareholder or a company
 affiliated to a shareholder within the meaning of sec. 15 et seq. German
 Stock Corporation Act, Aktiengesetz – AktG, or a pure internal
 group restructuring of the Company and its affiliates provided that at least
 50% of the shareholders prior to the restructuring will remain
 shareholders in any target structure), at a price representing a company
 value for Commtouch Software Ltd. at least equal to the market value of Commtouch
 Software Ltd. on the date of the Closing (determined using the guidelines
 specified in Section 3.2.2.1 above), followed by the announcement of the 

 


page 20 of 47









	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 termination or end-of-life (or
 the effective end of active sales activity) of significant SaaS Technology or Platform offerings;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 5.3

 	
  

 	
      sale
 of all or substantially all (at least 75% with respect to fair market value)
 of the assets of the Company) within 12 months following the Closing; or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 5.4

 	
  

 	
      the
 Company ceases to be a German entity and/or becomes either
 directly or indirectly controlled by a United States entity. 

 
	
  

 	
  

 	
  

 	
  

 
	
 6

 	
  

 	
  

 	
 Conditions Precedent

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.1

 	
  

 	
      The assignment of the Shares is subject
 to the cumulative fulfillment (i) of all Conditions to Closing set forth
 below and (ii) of all Conditions for Transfer set forth below (the
 Conditions to Closing and the Conditions for Transfer collectively referred
 to as the “Conditions Precedent”):

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 6.1.1

 	
 Conditions
 to Closing

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
      i)

 	
           The
 Escrow Agreement shall have been signed by the parties thereto.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 6.1.2

 	
 Conditions for Transfer

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
      i)

 	
           The
 Purchaser has paid the Closing Cash Payment according to Section 3.4, as
 adjusted (if applicable) pursuant to Section 3.6.3;

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
      ii)

 	
           The
 Escrow Amount has been paid to the Escrow Account as referred to in Section
 3.6; and

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
      iii)

 	
           The
 Equity Consideration has been issued by “book entry” according to Section
 3.2.2.4.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.2

 	
  

 	
      The consummation in rem of the transactions
 contemplated in this Agreement (“Closing”) shall occur
 when all Conditions Precedent have been fulfilled or have been waived in
 accordance with Section 6.3.
 Closing shall occur on 15 November 2012, or on any other day the
 Parties mutually agree (the “Closing Date”).

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.3

 	
  

 	
      The Purchaser shall have the right to
 waive the Condition to Closing referred to in Section 6.1.1 (ii).
 The waiver is to be declared by the Purchaser in writing to the
 Representative.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 The Sellers, acting through the Representative, shall have the right
 to waive the Conditions for Transfer in Section 6.1.2 (iii). The
 waiver is to be declared by the Representative in writing to the Purchaser.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.4

 	
  

 	
     The Purchaser and the Sellers are entitled to rescind this Agreement
 by written notice to the respective other Party if the Closing has not
 occurred by December 31, 2012 at the latest.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.5

 	
  

 	
      The Parties undertake to use all
 reasonable endeavors to ensure that the Conditions Precedent are fulfilled as
 soon as practically possible and when due.

 


page 21 of 47









	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.6

 	
  

 	
      The Sellers shall deliver to the
 Purchaser documents evidencing the satisfaction of the Conditions to Closing
 set out in Section 6.1.1. If all such Conditions Precedent are
 satisfied, the Purchaser shall send to Mr. Robert Rothe, as the
 Representative of the Sellers for purposes of this Agreement (the “Representative”),
 a written statement of satisfaction or waiver of the Conditions to Closing
 set out in Section 6.1.1. Such written statement shall contain a signed
 copy of the Company Closing Cash Certificate. It also shall contain the
 intended Closing Date.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.7

 	
  

 	
 In anticipation of a timely Closing, Purchaser has provided Sellers
 with the following:

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 6.7.1

 	
 Purchaser delivered to Sellers a scan of a written confirmation by
 the American Stock Transfer & Trust Company, LLC signed by its Vice
 President and addressed to Seller 1 confirming that it will issue restricted
 ordinary shares in Commtouch upon receipt of a corresponding instruction by
 Commtouch. A copy of the written confirmation is attached to the Reference
 Deed as Annex
 6.7.1.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 6.7.2

 	
 Purchaser delivered to Sellers a written confirmation by Commtouch’s
 General Counsel and Corporate Secretary addressed to Seller 1 confirming that
 he will on behalf of Commtouch instruct the American Stock Transfer &
 Trust Company, LLC to issue restricted ordinary shares in Commtouch to
 Sellers in an amount to be calculated as set forth in Section 3.2.2.1. A copy
 of the written confirmation is attached to the Reference Deed as Annex
 6.7.2.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.8

 	
  

 	
      In
 order to effectuate the Closing, the Parties shall meet on the Closing Date
 in the offices of notary public Dr. Peter Wessels, Friedrichstraße 88/Unter
 den Linden, 10117 Berlin or such other place as agreed by the Parties, and
 undertake to perform the following actions:

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 6.8.1

 	
 Sellers shall deliver to Purchaser appropriate written proof of the
 satisfaction of the Conditions to Closing set out in Section 6.1.1;

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 6.8.2

 	
 In case Closing Date should not take place on the same date as the
 date of this agreement, Sellers shall deliver to Purchaser a revised version
 of Annex 3.4b amended as of the Closing Date;

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 6.8.3

 	
 Purchaser shall deliver to Sellers appropriate written proof that
 Purchaser has instructed its bank to immediately wire the Initial Purchase
 Price into the Sellers’ accounts as listed in Annex 3.4 (a) by express
 wire transfer (Blitzüberweisung) and Sellers shall deliver to Purchaser
 appropriate written proof that the respective amounts of the Initial Purchase
 Price have been credited to the Sellers’ accounts;

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 6.8.4

 	
 Purchaser shall deliver to Sellers appropriate written proof that
 Purchaser has instructed its bank to immediately wire the Escrow Amount into
 the escrow account as specified in the Escrow Agreement by express wire
 transfer (Blitzüberweisung)
 and the Escrow Agent shall 

 


page 22 of 47









	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 deliver to Purchaser appropriate written
 proof that the Escrow Amount has been credited to the Escrow Account;

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.9

 	
  

 	
      The
 Parties shall confirm the fulfilment of the Conditions Precedent by executing
 a closing memorandum (the “Closing Memorandum”) at the Closing Date.
 The attachment of a certified copy (beglaubigte Abschrift) of the Closing
 Memorandum to the original of this Agreement by the acting notary shall
 constitute the unrebuttable assumption (unwiderlegbare Vermutung) that the Closing
 Conditions have been fulfilled.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.10

 	
  

 	
      The Parties
 instruct the acting notary to submit an up-to-date list of the shareholders (Gesellschafterliste)
 of the Company to the relevant commercial register as soon as he has been
 provided with an original of the signed Closing Memorandum.

 
	
  

 	
  

 	
  

 	
  

 
	
 7

 	
 Representations and
 Warranties

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.1

 	
  

 	
      Each Seller
 hereby represents and warrants to the Purchaser by way of an independent
 guarantee (selbständiges Garantieversprechen) within the meaning of § 311
 I BGB that the statements set forth below are true and complete at the date
 of this Agreement and at the Closing Date, unless otherwise specified. The
 Sellers make the representations and warranties below jointly and severally,
 except that (i) any representation and warranty made by a Seller as to
 himself or as to his Shares shall be several and not joint, and (ii) a
 Seller shall not bear liability greater than the gross amount received by him
 under this Agreement with respect to his Shares (it being understood that
 amounts not yet received but receivable in the future may further be offset
 by the Purchaser against warranty claims provided they do not lead to a
 payment obligation of the respective Seller beyond the gross amount received
 by him), except that there shall be no limitation on the liability of any
 Seller who commits fraud.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.2

 	
  

 	
      Status of the Company. The Company holds the subsidiaries which
 are referred to in Section 1.3 (Preamble) (each a “Subsidiary” and collectively, the “Subsidiaries”). The Company and eleven –
 internationale Vertriebsgesellschaft mbH are limited liability companies
 under German law (GmbH). eleven USA Inc. is a Delaware corporation. Each of
 the foregoing companies is duly founded and validly existing, is in good
 standing under the laws of its foundation (Gründung) and has full
 power to conduct its business as conducted prior to the Closing. The Company
 has the requisite power and authority to enter into and fully perform its
 obligations under any agreements entered into pursuant to this Agreement in
 accordance with their terms. The share capital of the Subsidiaries has been
 fully paid in.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.3

 	
  

 	
      Status of Sellers and Shares. The Sellers hold unrestricted legal and
 beneficial title (uneingeschränkte rechtliche und wirtschaftliche
 Inhaberschaft) to the Shares. The Company holds unrestricted legal
 and beneficial title (uneingeschränkte rechtliche und wirtschaftliche
 Inhaberschaft) to the shares of the Subsidiaries. The Shares and
 the shares of the Subsidiaries are not pledged 

 


page 23 of 47









	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (verpfändet), attached (gepfändet)
 or otherwise encumbered (belastet) with any Lien (as defined
 below) or other third party rights. The Shares and the shares of the
 Subsidiaries are fully paid up. All contributions have been made in
 compliance with applicable law and have not been partially or totally repaid
 or returned. There are no obligations to make further contributions in
 relation to the Shares (keine Nachschusspflichten) or the shares
 of the Subsidiaries. The Shares constitute the entire issued share capital of
 the Company. No third party has any pre-emptive right (Vorkaufsrecht), right
 of first refusal (Vorerwerbsrecht), subscription right (Bezugsrecht), option
 right (Optionsrecht), conversion right (Wandlungsrecht) or similar right in
 respect of the Shares, and no person has any present, future or contingent
 right to be entered into the shareholders’ register or in the commercial
 register as the holder of the Shares, any other securities of the Company or
 the shares of the Subsidiaries and there are no encumbrances on the Shares or
 the shares of the Subsidiaries or any arrangements or obligations to create
 any such encumbrances or to issue new shares in the Company or the
 Subsidiaries. No claim has been made by any person that they are entitled to
 any such right or have the benefit of any such encumbrances. For purposes of
 this Agreement, “Lien“ shall mean any lien, pledge, charge, claim,
 mortgage, security interest, or other encumbrance of any sort, other than
 those imposed or applied by applicable Laws. The Purchaser shall not have any liability to any holder of a
 Company Option under the Plan.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.4

 	
 Business Operations, Business Assets and Loans. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 7.4.1

 	
 The business of the Company and each
 Subsidiary is conducted in accordance with all material applicable laws.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 7.4.2

 	
 Since the respective dates of
 incorporation, the Company’s business operations have been conducted within
 the ordinary course of business, in accordance with prudent business practice
 and carried on substantially in the same manner as prior thereto. Since
 December 31, 2011 the business operations of the Company have not materially
 adversely changed.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 7.4.3

 	
 No dividends have been declared, resolved on
 or distributed by the Company or the Subsidiaries during the current fiscal
 year.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 7.4.4

 	
 Neither the Company nor any Subsidiary is
 responsible for the indebtedness of any other person, nor party to any option
 or pre-emption right or any guarantee, surety or any other obligation
 (whatever called) to pay, purchase or provide funds (whether by the advance
 of money, the purchase of or subscription for shares or other securities or
 the purchase of assets or services or otherwise) for the payment of, or as an
 indemnity against the consequence of default in the payment of, any
 indebtedness of any other person.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.5

 	
 Material Agreements 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 7.5.1

 	
 Annex 7.5.1 to the Reference Deed contains a true and correct list, as of the
 date hereof, of all of the following contracts and agreements to 

 


page 24 of 47









	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 which the Company and each Subsidiary is a
 party and which have not yet been completely fulfilled (hereinafter referred
 to as “Material
 Agreements”):

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 i)

 	
           agreements
 relating to the acquisition or sale of interests in other companies or
 businesses which have been entered into within the last three years prior to
 the date hereof providing, in each case, for a consideration of
 EUR 100,000 or more;

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 ii)

 	
           joint
 venture agreements, cooperation agreements, partnership agreements or similar
 agreements (other than the Constitutional Documents of the Company and the
 Subsidiaries);

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 iii)

 	
           rental
 and lease agreements relating to assets or real estate which, individually,
 provide for annual payments of EUR 100,000 or more;

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 iv)

 	
           loan
 agreements, bonds, notes or any other instruments of debt with an aggregate
 nominal amount of more than EUR 100,000 (excluding for the avoidance of doubt
 customary deferred payment arrangements with customers or suppliers);

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 v)

 	
           guarantees,
 sureties (Bürgschaften),
 indemnities, letters of comfort (Patronatserklärungen) issued by any of
 the Company or either Subsidiary;

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 vi)

 	
           agreements between the Company or either
 Subsidiary and any of the Sellers, relatives of any Seller or entities
 affiliated with any Seller or any of his relatives;

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 vii)

 	
 any long-term agreement (Dauerschuldverhältnis)
 which cannot be terminated at will by the Company or the Subsidiary, as
 applicable, upon not more than 30 days prior notice, and which provides for
 annual obligations of the Company or the Subsidiary, as applicable, in excess
 of EUR 100,000 per year;

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 viii)

 	
 any long-term agreement (Dauerschuldverhältnis)
 with customers, suppliers or agents (Handelsvertreter) which provides for
 annual obligations of the Company or any Subsidiary in excess of EUR 100,000 per year; or

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 ix)

 	
           any
 agreement or arrangement to which the Company or either Subsidiary is a party
 which prevents the Company from competing in any part of the world.

 


page 25 of 47









	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.5.2

 	
 To the Best Knowledge of the Sellers,
 unless otherwise disclosed in Annex 7.5.2 to the Reference Deed,
 each Material Agreement is in full force and effect, neither the Company nor
 either Subsidiary is in default or breach under any such agreement and no
 party to a Material Agreement has given notice of termination or has threatened
 to terminate a Material Agreement.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.5.3

 	
 No party to a Material Agreement has given
 notice of termination or has to the Best Knowledge of the Sellers threatened
 to terminate or vary a Material Agreement as a result of the transactions
 contemplated by this Agreement.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.6

 	
 Employees; Pensions

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.6.1

 	
 Annex 7.6.1 to the Reference Deed sets forth a true, correct and complete list of
 all persons employed by the Company and each Subsidiary.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.6.2

 	
 There are no agreements with labor unions (Gewerkschaften),
 work councils agents (Betriebsräte) or other labor group
 arrangements by which any entity of the Company or either Subsidiary is
 bound. Except for the Company’s obligations under the Plan, there are no
 material written commitments, and to the Sellers’ Best Knowledge there are no
 material commitments of any kind, towards the workforce by which the Company
 is bound. The Company is in full compliance with its obligations under the
 Plan, except for instances of minor non-compliance which, in the aggregate,
 are not material to the Company.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.6.3

 	
 The Sellers are not aware that any employee
 of the Company or either Subsidiary has plans to terminate his or her
 employment relationship with the Company or such Subsidiary, as applicable.
 None of the employees of the Company or either Subsidiary is represented by
 any labor union, and there is no labor strike or other labor trouble pending
 or, to the Sellers’ Best Knowledge, threatened. No employee of the Company or
 either Subsidiary is, to the Sellers’ Best Knowledge, obligated under any
 contract or subject to any judgment, decree or administrative order that
 would conflict or interfere with the performance of the employee’s duties as
 an employee.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.6.4

 	
 There are no (i) independent contractors
 who are hired directly and not through an agency or subcontracting company
 and who, to the Sellers’ Best Knowledge, spend the majority of their working
 time on the business of the Company or either Subsidiary and (ii) persons to whom
 an offer of employment is made and accepted or outstanding.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.6.5

 	
 All labor agreements of the Company’s and
 both Subsidiaries’ former employees were legally terminated and the Sellers
 are not aware of any circumstances that could give raise to adverse claims
 regarding labor issues.

 


page 26 of 47









	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.7

 	
  

 	
      Insurance. Annex 7.7 to the Reference Deed contains
 a true and complete list of all material liability insurance contracts that
 insure the business, operations or affairs of the Company and both
 Subsidiaries, or affect or relate to the ownership, use or operations of any
 of their respective assets (the “Business Insurances”), all of which are in full force
 and effect. There are no claims currently pending or, to the Sellers’ Best
 Knowledge, any basis therefore or threat thereof against the Company or
 either Subsidiary under any of the Business Insurances. The Company and each
 Subsidiary has materially satisfied its obligations under the Business
 Insurances.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.8

 	
  

 	
      Litigation Matters and Proceedings
 before Governmental Authorities. Annex 7.8 to the Reference Deed contains
 a correct and complete list of all litigation matters and proceedings before
 courts and governmental authorities as well as arbitration panels in respect
 of which the Company or either Subsidiary is a party. The Sellers warrant
 that, to the Best Knowledge of the Sellers, there is no adverse claim from
 any third party, either formally served or otherwise, that is likely or
 possibly to result in litigations involving the Company or either Subsidiary.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.9

 	
  

 	
      Solvency. No insolvency proceedings (or similar proceedings under applicable
 laws) have been applied for regarding the assets of the Sellers, the Company
 or the Subsidiaries and there are no circumstances which would require or
 justify the opening of or application for such proceedings. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.10

 	
  

 	
 Financial Statements 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.10.1

 	
 The existing consolidated financial
 statements of the Company and the Subsidiaries for the business years
 2009-2011, copies of which have been provided to the Purchaser prior to the
 notarization, (the “Financial Statements”) have been prepared in accordance
 with the German generally accepted accounting principles set forth in the
 provisions of the HGB and provide a true and fair view of the assets,
 liabilities, financial position and profit or loss of the Company and the
 Subsidiaries at the respective date of statement. Sufficient provisions have
 been included and value adjustments have been carried out in the Financial Statements
 for all risks and uncertainties so far under applicable law required. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.10.2

 	
 The Financial Statements are not adversely
 affected by any extraordinary or non-recurring items unless otherwise
 expressly stated therein.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.10.3

 	
 As of December 31, 2011, neither the
 Company nor any Subsidiary was subject to any liabilities or obligations
 other than those listed in the Financial Statements, except for liabilities
 not required to be recorded under HGB that, in the aggregate, do not exceed
 EUR 100,000.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.10.4

 	
 The books and records of the Company and
 the Subsidiaries are up-to-date and have been maintained materially in
 accordance with all applicable legal requirements and contain complete and
 accurate 

 


page 27 of 47









	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 records of all matters to be dealt with in
 such books under applicable law.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.10.5

 	
 Since the last balance sheet day, except for liabilities and
 obligations incurred in the ordinary course of business and consistent with past practice, neither the Company nor any
 Subsidiary has incurred or agreed to assume or incur any material liabilities
 or obligations (whether direct, indirect, accrued or contingent).

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.11

 	
  

 	
 Intellectual Property Rights

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.11.1

 	
 “Intellectual Property” shall mean all registered and
 unregistered intangible assets, including without limitation, utility models,
 trademarks, trade names, service marks, copyrights, design rights, any
 application thereof and know-how. “Company
 Intellectual Property” shall mean any and all
 Intellectual Property that is owned by or licensed to the Company or either Subsidiary. “Registered Intellectual Property” means
 Intellectual Property that
 is the subject of an application, certificate, filing, registration or other
 document issued by, filed with, or recorded by, any government or other
 public legal authority at any time in any jurisdiction. “Open Source
 Materials” shall mean any “open source”,
 “public source” or “freeware” software, materials, or other technology,
 including any software licensed pursuant to any GNU general public license,
 lesser general public license, Mozilla public license, or a similar license.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.11.2

 	
 The Company Intellectual Property owned by
 the Company is valid and enforceable. The Company Intellectual Property
 licensed to the Company is to the Best Knowledge of the Sellers valid and
 enforceable. The Company owns or is the licensee of the Company Intellectual Property. To the Best Knowledge of the Sellers there are no third parties that claim to own
 or to have an exclusive license to any Company Intellectual Property. The Company does not own, and has not
 applied for, any patents.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.11.3

 	
 Except for the Company
 Intellectual Property listed in Annex 7.11.3 to the Reference Deed the
 Company may
 transfer, or license the Company Intellectual Property without restriction or
 payment to a third party. The Company is not obligated to transfer or license
 any Company Intellectual Property, or any Intellectual Property Rights later
 developed or obtained by the Company, to a third party.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.11.4

 	
 Annex 7.11.4 to the Reference Deed lists (i)
 all Registered Intellectual Property owned by, filed in the name of, applied
 for by, or subject to a valid obligation of assignment to the Company; (ii) all third parties that
 share rights to such Registered Intellectual Property with the Company,
 including without limitation joint owners and co-applicants; and (iii) all
 actions that must be taken by the Company within 120 days of the 

 


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 Closing Date to maintain the
 validity or enforceability of its Registered Intellectual Property.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.11.5

 	
 The Company has sufficient
 rights to all Intellectual Property used in or necessary for the conduct of
 the Company’s business as it currently is conducted by the Company with the
 qualification that, to the Best Knowledge of the Sellers, the conduct of the Company’s business does
 not misappropriate, or otherwise violate the Intellectual Property of a third
 party in
 any way.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.11.6

 	
 To the Best Knowledge of the Sellers there is no infringement,
 misappropriation, unauthorized use or violation of the Company Intellectual Property by any third party.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.11.7

 	
 Apart from what has been disclosed in Annex
 7.8 there
 is no pending (rechtshängig) litigation disputes regarding any license of
 Intellectual Property to or from the Company and to the Best Knowledge of the
 Seller no such litigation has been threatened against the Company.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.11.8

 	
 The Company has not disclosed,
 delivered or licensed to any person or agreed or obligated itself to
 disclose, deliver or license to any person, or expressly permitted the
 disclosure or delivery to any escrow agent or other person of, any Company
 source code, other than disclosures to employees and consultants involved in
 the development of Company products.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.11.9

 	
 Annex 7.11.9 to the Reference Deed identifies
 all Open Source Materials used in any Company products, and
 indicates whether such Open Source Materials were modified and/or distributed
 by the Company and identifies the licenses under which such Open Source Materials were used. To the Best Knowledge
 of the Sellers the Company is materially in compliance with the material
 terms and conditions of all licenses for the Open Source Materials. To the
 Best Knowledge of the Sellers the Company has not (i) incorporated Open
 Source Materials into, or combined Open Source Materials with, the Company products; (ii) distributed Open Source Materials in
 conjunction with any Company products; or (iii) used Open Source
 Materials in such a way that, with respect to (i), (ii), or (iii), creates,
 or purports to create obligations for the Company that the Company products incorporated into, derived from or
 distributed with such Open Source Materials be (A) disclosed or distributed
 in source code form, (B) licensed for the purpose of making derivative works
 at no charge, or (C) redistributable at no charge.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.11.10

 	
 All employees of the Company
 at any time involved in the creation of Intellectual Property for the Company have
 executed a proprietary information, confidentiality and invention assignment
 Contract substantially in the form made available to the Purchaser. Neither the Sellers nor any employee of, or
 freelancer who has worked for, the 

 



page 29 of 47









	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 Company or either Subsidiary is entitled to
 or has claimed any payment or compensation in respect of Intellectual
 Property Rights and/or its use in the business of the Company or either
 Subsidiary (including without limitation compensation according to the German
 Employee Inventions Act). Service inventions (Diensterfindungen) which
 are part of Intellectual Property and achieved by German employees, have been
 claimed in compliance with Section 5 of the German Employee Invention Act (Arbeitnehmererfindungsgesetz).

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.11.11

 	
 The Company is in compliance
 with all material German applicable laws and its internal privacy policy
 relating to the privacy of users of its products and services.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.11.12

 	
 Except as set forth in Annex
 7.11.12, to the Reference Deed no government funding, facilities
 or resources of a university, college, other educational institution or
 research center or funding from third parties was used in the development of
 the Company’s Intellectual Property, and no respective governmental entity,
 university, college, other educational institution or research center
 referred to in Annex 7.11.12 has any claim or right in or to such Company
 Intellectual Property.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.12

 	
  

 	
 Tax/Taxes

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.12.1

 	
 “Tax” or “Taxes” shall mean

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 i)

 	
 a payment which is levied by
 or on behalf of a German or non-German public body to raise income (“Tax
 Authority”), including taxes within the
 meaning of section 3 par. 1 of the German General Fiscal Code (Abgabenordnung)
 or any corresponding foreign legal regulations including administrative fines
 as well as interest, costs and surcharges or any other additional costs
 within the meaning of section 3 par. 4 of the German General Fiscal Code (Steuerliche
 Nebenleistungen) in respect of the Company and each Subsidiary,
 social security contributions and customs and excise duties (Zölle),
 taxes deducted at source and withholding taxes which the Company or any
 Subsidiary has to withhold and pay from payments to third parties without
 itself being a person liable to pay tax as well as payments from tax
 allotment agreements or comparable agreements, and any similar charges, duties or fees imposed by any public
 authority or governmental body (such as subsidies), each in respect of the Company and each
 Subsidiary.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 ii)

 	
 any of the payments listed under
 sub-paragraph (i) above, imposed on the Company as a secondary liability (Haftungsschuld);

 


page 30 of 47









	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 regardless of how and by whom such payment
 is collected and whether it is owed jointly and/or severally.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.12.2

 	
 Filings and Payments. Except as set forth
 in Annex
 7.12.2 to the Reference Deed:

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 i)

 	
 All returns, documents, declarations,
 filings, notifications and information which the Company or either Subsidiary
 has made or provided for Tax purposes have been filed in good time, have been
 properly prepared in accordance with all applicable laws or common practice,
 with all regulations and any agreement or arrangement made with any competent
 Tax Authority and have been validly and timely made or provided to the
 appropriate Tax Authority. All such information that the Company or either
 Subsidiary has at any time supplied to any Tax Authority has been complete
 and true in all material respects;

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 ii)

 	
 The Company and each Subsidiary has at all
 times punctually paid all Tax that has become due on or before the Closing
 Date;

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 iii)

 	
 To the extent that any Tax has not yet been
 due at the statement day of the Financial Statement for the business year
 2011, they have been accrued in the balance sheets being part of the
 Financial Statement for the business year 2011 except for the amount
 which has been discussed and disclosed between the Parties within the tax due
 diligence and which has been accrued in 2012 prior to the Closing Date, as
 reflected in the interim accounts as per 15 November 2012 which is
 attached hereto as Annex 7.12.2iii), it being
 understood that the Tax not yet due (but accrued for in the Financial Statement
 2011 and in the interim accounts as per 15 November 2012) shall not
 exceed an aggregate sum of EUR 123,300;

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 iv)

 	
 All records and documentation, especially
 with respect to transfer pricing which the Company and each Subsidiary is
 required to keep for Tax purposes or which would be needed to substantiate
 any claim made or position taken in relation to Tax by the Company and each
 such Subsidiary, have been duly kept and are available for inspection at the
 premises of the Company and the Subsidiary if and to the extent the Company
 was obliged to keep such records by statutory law;

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 v)

 	
 No binding ruling or other decision of a
 Tax Authority has been issued towards the Company or any Subsidiary which
 would in future impair, limit or otherwise influence the conduct of business
 or a reorganization of the Company or either Subsidiary.

 


page 31 of 47









	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.12.3

 	
 There is no ongoing audit, review material,
 disagreement or dispute between the Company and any Tax Authority with regard
 to any returns or otherwise in connection with Tax and neither the Company
 nor either Subsidiary is, or has been the subject of an investigation (other
 than regular routine inquiries or tax audits) by any Tax Authority.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.12.4

 	
 The Company is and has always been
 exclusively resident in Germany for tax purposes. eleven-internationale Vertriebsgesellschaft mbH is and has
 always been exclusively resident in Germany for tax purposes. eleven USA Inc. has always been
 exclusively resident in Delaware and/or California, U.S.A, for tax purposes;

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.12.5

 	
 To Sellers’ Best Knowledge no transaction
 in the Company or any Subsidiary with its shareholder or any other related
 party qualifies taxwise as hidden distribution of profits/constructive
 dividends (verdeckte Gewinnausschüttung) and those transactions have
 been set-up in accordance to arm’s length standards. Transactions directly
 related to this Agreement are not part of this Section.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.12.6

 	
 Neither the Company nor either Subsidiary
 has transferred assets to a company or partnership in a tax exempt
 reorganization, including without limitation, any transaction referred to in
 sec. 6 para. 5 sent. 3 of the Income Tax Act or sec. 20 Reorganisation Tax
 Act (Umwandlungssteuergesetz).

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.12.7

 	
 Neither the Company nor either Subsidiary
 has claimed a deduction for a write down of any of its assets with tax effect
 without the course of scheduled depreciation or amortization unless fully
 recaptured prior to Closing or set forth in Annex 7.12.7 to the
 Reference Deed.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.12.8

 	
 Any wage taxes and social contribution
 payments in relation to the settlement of the Plan have been or will be paid
 in time when due on or before Closing. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 With respect to any claims related to tax
 guarantees pursuant to this Sec. 7.12, Sec. 9 shall apply accordingly. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.13

 	
  

 	
 Public Grants. There are no public investment grants (Investitionszulagen) or
 investment subsidies (Investitionszuschüsse) and any other
 public or private subsidy or grant which has not been disclosed to the
 Purchaser and which will have to be repaid as a result of the consummation of
 the transactions reflected in this Agreement nor due to other circumstances.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.14

 	
  

 	
 Permits.
 The Company and each Subsidiary holds all permits and required licenses
 necessary for their present operations and no revocation of any such permit
 is impending. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.15

 	
  

 	
 Leased Real Estate. Annex
 7.15 to the Reference Deed includes a correct and complete list of
 all real estate leased by the Company or either Subsidiary from any third
 party and correctly states for each such piece of real estate the location,

 


page 32 of 47









	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 size and use, the landlord and the date of
 the lease agreement (the “Leased Real Estate”). No real estate other than the Leased Real Estate is
 currently used by or necessary for the Company and each Subsidiary to conduct
 its business as conducted on the Closing Date.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.16

 	
  

 	
 No conflict. Except for the Material Contracts listed in
 Annex
 7.16 to the Reference Deed to the Best Knowledge of the Sellers,
 the execution and delivery by the Company and the Sellers of this Agreement,
 and the consummation of the Transaction, will not conflict with or result in
 any violation of or default under (with or without notice or lapse of time,
 or both) or give rise to a right of termination or cancellation, modification
 or acceleration of any obligation or loss of any benefit under (any such
 event, a “Conflict”) any
 material contract to which the Company is a party or by which any of its
 properties or assets are bound. Annex 7.16
 of this Agreement sets forth all necessary consents, approvals,
 notices, waivers or declarations of parties to any material contracts to
 which the Company is a party, as are required thereunder in connection with
 the Transaction, or for any such contract to remain in full force and effect
 immediately after the Closing.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.17

 	
  

 	
 No right out of the Transaction. Neither the Company nor either Subsidiary
 has any obligation or liability to pay any fees or commissions to any broker,
 finder, agent or any third person in relation to the consummation of the
 transaction contemplated by this Agreement. No third party including without
 limitation employees, managers and other parties of agreements can claim any
 payments or exercise rights against / towards the Company or either
 Subsidiary in relation to the consummation of the transaction contemplated by
 this Agreement.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.18

 	
  

 	
 Securities Law 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.18.1

 	
 Each
 Seller is not a U.S. Person as defined in Regulation S (a “Regulation S Investor”)
 promulgated under the Securities Act of 1933, as amended (the “Securities Act”) by the United States Securities and Exchange Commission (the “SEC”).
 If such Seller is a Regulation S Investor, such Seller also represents that:
 (1) it is not a U.S. Person, (2) it was not organized under the
 laws of any United States jurisdiction, and was not formed for the purpose of
 investing in securities not registered under the Securities Act, (3) on
 the date of this Agreement, the Regulation S Investor is outside the United
 States, (4) the Seller is not acquiring the Equity Consideration for the
 account or benefit of any U.S. Person, (5) it will not, during the
 one-year period starting on the date of such Seller’s purchase and receipt of
 the Equity Consideration, offer or sell any of the Equity Consideration (or
 create or maintain any derivative position equivalent thereto) in the United
 States, to or for the account or benefit of a U.S. Person other than in
 accordance with Regulation S or pursuant to an effective registration
 statement under the Securities Act or any available exemption therefrom and,
 in any case, in accordance with applicable state securities laws, (6) it
 will, after the expiration of such one-year period, 

 


page 33 of 47









	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 offer, sell, pledge or
 otherwise transfer the Equity Consideration (or create or maintain any
 derivative position equivalent thereto) only pursuant to an effective
 registration statement under the Securities Act or any available exemption therefrom
 and, in any case, in accordance with applicable state securities laws and
 (7) that the offer and issuance of the Equity Consideration to such
 Seller was made in an offshore transaction (as defined in Rule 902(h) of
 Regulation S), no directed selling efforts (as defined in Rule 902(c) of
 Regulation S) were made in the United States, and such Seller is not
 acquiring the Equity Consideration for the account or benefit of any U.S.
 Person.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.18.2

 	
 Each Seller has confirmed on
 the signature page hereto whether such Seller is a Regulation S Investor.
 Each Seller represents and warrants that the information set forth on its
 respective signature page is true and correct.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.18.3

 	
 Such Seller understands that,
 in connection with the acquisition of the Equity Consideration as
 contemplated herein, the shares of the Equity Consideration have not been and
 will not be registered under the Securities Act or registered or qualified
 under the securities laws of any U.S. state or other jurisdiction, in each
 case by reason of specific exemptions from the registration provisions of the
 Securities Act and the securities laws of such states or other jurisdictions,
 the availability of which depend upon, among other things, the bona fide
 nature of the investment intent and the accuracy of such Seller’s
 representations as expressed herein and in response to Purchaser’s inquiries,
 if any. Moreover, such Seller understands that Purchaser is under no
 obligation to register the Equity Consideration with the SEC.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.18.4

 	
 Such Seller understands that
 the Equity Consideration that such Seller is acquiring pursuant to this
 Agreement are and will be “restricted securities” under the Securities Act in
 that such securities will be acquired from Purchaser in a transaction not
 involving a public offering under the Securities Act, and that under U.S.
 federal and state laws and applicable regulations, such Equity Consideration
 may be resold without registration under the Securities Act only in certain
 limited circumstances and that otherwise such securities must be held
 indefinitely. In this connection, the Seller represents that it understands
 the resale limitations imposed by the Securities Act and is familiar with SEC
 Rule 144, as presently in effect, and the conditions which must be met in
 order for that rule to be available for resale of “restricted securities.”
 Such Seller also acknowledges that such Seller may deemed to be an Affiliate
 of Purchaser and that, if so, certain resale limitations thereunder shall
 apply to such Seller for so long as such Seller remains an Affiliate and for
 three months thereafter.

 


page 34 of 47









	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.18.5

 	
 Such Seller has received and
 reviewed information about Purchaser, including the reports filed by
 Purchaser with the SEC, and has had an opportunity to discuss Purchaser’s
 business, management and financial affairs with its management. Such Seller
 is aware of Purchaser’s business affairs and financial condition and has
 acquired sufficient information about Purchaser to reach an informed and
 knowledgeable decision to acquire the Equity Consideration. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.18.6

 	
 Such Seller acknowledges that
 Purchaser has informed such Seller that the market value of the Equity
 Consideration shall be as specified in Section 3.2.2.1 above. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.18.7

 	
 Such Seller acknowledges that
 at no time was such Seller presented with or solicited by any publicly issued
 or circulated newspaper, mail, radio, television or other form of general
 advertising or solicitation in connection with the offer, sale and purchase
 of the Equity Consideration.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.18.8

 	
 Such Seller acknowledges that
 such Seller is fully aware of: (a) the speculative nature of the Equity
 Consideration; and (b) the qualifications and backgrounds of the
 management of Purchaser.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.18.9

 	
 Such Seller has had an
 opportunity to review with his own Tax advisors the Tax consequences to him
 of the transactions contemplated by this Agreement, including the receipt of
 Equity Consideration. Such Seller understands that such Seller must rely
 solely on his advisors and not on any statements or representations by
 Purchaser, the Company or any of their attorneys, investment advisors,
 accountants or other agents with respect to Tax matters.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 Such Seller acknowledges that
 such Seller either alone or with his purchaser representative(s), has such
 knowledge and experience in financial and business matters that such Seller
 is capable of evaluating the merits and risks of the share purchase, has the
 capacity to protect such Seller’s own interests in connection with this
 transaction and is financially capable of bearing a total loss of the Equity
 Consideration.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.19

 	
  

 	
           No Untrue
 Statement. The
 information provided in connection with this Transaction to the Purchaser is
 accurate in all material respects, is not misleading and, to the Best
 Knowledge of the Sellers, does not omit anything material relating to the
 Company or the Subsidiaries which the Purchaser should be aware of in order
 to be able to evaluate such information. To the Best Knowledge of the Sellers
 there are no material facts or circumstances which in the future could have a
 materially adverse effect on the Company or its Subsidiaries except for
 general developments of the economy or the market.

 


page 35 of 47







	
 

	
 

	
 

	
 

	
 


	
8

	
 

	
Remedies


	
 

	
 

	
 

	
 

	
 


	
 

	
8.1

	
 

	
     The representations and warranties of
the Sellers set forth in Section 7 of this Agreement shall survive the
Closing for a period of 12 months thereafter; provided, however,
(i) that in the event of fraud, willful breach or intentional
misrepresentation of a representation or warranty, such representation or
warranty shall survive until the expiration of the applicable statute of
limitations; (ii) the representations and warranties of the Sellers set
forth in Section 7.2 (Status of the Company) and Section 7.11.2 through Section 7.11.5 (Intellectual Property Rights)
shall survive the Closing for a period of 3 years thereafter; and
(iii) the representations and warranties set forth in Section
7.3 (Status of Sellers and Shares) shall survive the Closing
for a period of 5 years thereafter. Sections 8.1(i), 8.1(ii) and
8.1(iii) above are referred to herein as “Extraordinary Claims”. The agreements, covenants and
other obligations of the parties hereto shall survive the Closing in
accordance with their respective terms. The dates on which the applicable
survival periods referenced in this Section 8.1 expire shall be referred to, collectively, as the “Expiration Dates” and the date on which each
applicable survival period expires shall be referred to as the “Applicable Expiration
Date”.


	
 

	
 

	
 

	
 

	
 


	
 

	
8.2

	
 

	
     If
one or more of the representations
or warranties of the Sellers set forth in Section 7 are
incorrect, incomplete or not
complied with (the “Breach of Guarantee”), the Purchaser may demand from the Sellers, jointly
and severally (except that in the case of a Breach of Guarantee relating to a
representation and warranty made by a Seller as to himself or as to his
specific Shares, the liability shall be (i) several and not joint and
(ii) a Seller shall not bear liability greater than the gross amount
received by him under this Agreement with respect to his Shares (it being
understood that amounts not yet received but receivable in the future may
further be offset by the Purchaser against warranty claims provided they do
not lead to a payment obligation of the respective Seller beyond the gross
amount received by him), except that there shall be no limitation on the
liability of any Seller who commits fraud, to put it in the position in which it would
have been if the respective guarantee had been correct (restitution in kind - Naturalrestitution),
within a period of three months following receipt of a corresponding demand
in writing from the Purchaser. If the respective Seller does not put
the Purchaser in the guaranteed position within the time limit set,
the Purchaser shall be entitled to demand monetary compensation from the
respective Seller for the resulting losses from the Breach of Guarantee. The
same is the case if and to the extent that restitution in kind is impossible
or cannot be effected by Sellers with reasonable efforts.


	
 

	
 

	
 

	
 

	
 


	
 

	
8.3

	
 

	
     Only
if Seller fails to comply with his obligations under Section 8.2, Purchaser
may, at its discretion, claim (i) specific performance of such
obligations or (ii) payment of monetary damages (Schadensersatz in Geld). The obligation to pay monetary compensation
is limited to the actual and direct damages incurred by the Purchaser but
shall include costs for reasonable recovery including for experts and in any
event include the amount which Purchaser would dedicate in 




page 36 of 47









	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
order
to put himself and/or the Company in the position as if the guarantee would
have been correct. Particularly, further indirect or consequential damages (Mangelfolgeschäden), loss of profits,
internal management costs or frustrated expenses shall not be compensated.
The legal principles as to the calculation of damages, mitigation of damages
and offsetting of losses by advantages due to the damaging event pursuant to
Sec. 249 et seq. of the German Civil Code (BGB) shall apply to all claims
of Purchaser under or in connection with this Agreement. Compensation
must be paid to the Purchaser or, at the request of same, to the Company.


	
 

	
 

	
 

	
 


	
 

	
8.4

	
 

	
     Notwithstanding anything to the contrary contained in this Agreement,
the maximum liability of any Seller for such monetary damages shall be the
Escrow Fund (the “General Indemnification Cap”) except that indemnification for
monetary damages as a result of, arising out of or in connection with
Extraordinary Claims shall not be subject to the General Indemnification Cap
but shall be limited, in the aggregate to the Initial Purchase Price actually
received by an Indemnifying Party hereunder on a pro rata basis (it being
understood that amounts not yet received but receivable in the future may
further be offset by the Purchaser against warranty claims provided they do
not lead to a payment obligation of the respective Seller beyond the gross
amount received by him), except that there shall be no limitation on the
liability of any Seller who commits fraud.


	
 

	
 

	
 

	
 


	
 

	
8.5

	
 

	
     Sellers
shall only be liable for Breach of Guarantee if (i) the amount recoverable
with respect to the individual Claim made exceeds EUR 40,000 (in words:
Euro forty thousand); and (ii) the aggregate amount recoverable with regard
to all claims made exceeds an amount of EUR 80,000 (in words: Euro
eighty thousand); if either of the Euro thresholds in the foregoing sentence
is exceeded, the Purchaser shall be entitled to receive the entire such
amount from the first Euro of loss as if such threshold did not exist.


	
 

	
 

	
 

	
 


	
 

	
8.6

	
 

	
     Any
monetary damages recoverable by the Purchaser from the Sellers pursuant to this
Section 8 shall first
be recovered by reduction of the recovered amount from the respective pro
rata portion of such Seller in the Escrow Fund, and only after such amount is
depleted, may the Purchaser recover any remaining amount (if and to the
extent the Purchaser is entitled to recover from the Seller(s) for monetary
damages in excess of the Escrow Fund pursuant to this Section 8 directly from such Seller(s)). Any
representation and warranty of Sellers in Section 7 above which refers to the “Best Knowledge of the Sellers” is only breached if Seller 1
had either actual knowledge of the relevant fact or grossly negligently (grob
fahrlässig) could have information of the relevant fact if he had
used the diligence of a prudent businessman pursuant to § 43 Limited
Liability Companies Act (GmbHG).


	
 

	
 

	
 

	
 


	
 

	
8.7

	
 

	
     Procedure in respect of Purchaser’s
claims in general:


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
8.7.1

	
In the event that the Purchaser becomes aware of a Breach of
Guarantee prior to the Applicable Expiration Date, it shall promptly




page 37 of 47









	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
deliver a certificate (a “Claim
Certificate”) to
the Representative, specifying all relevant facts resulting in
the Purchaser’s claim under this Agreement.


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
8.7.2

	
In the event that any such
matter is related to any claim or proceeding asserted or commenced by any
third party including any governmental authority (a “Third Party Claim”), Seller 1 shall
have the right, at any time, at its cost to assume the control of the
defense of the Third
Party Claim. In particular, Seller 1 may select counsel and instruct the
Purchaser to litigate or settle, or cause to be litigated or settled, the
Third Party Claim in accordance with Seller 1’s instructions.
The Purchaser shall assist, at Seller 1’s cost and expense, the Seller
in the defense of any
Third Party Claim (internal costs not being chargeable). Such assistance
shall include, without limitation, the providing and making available to
Seller 1 of all books, records and other information, and of all managing
directors and employees of the Purchaser, its affiliates or the
Company, to the extent necessary or useful in connection with the
defense of Third Party Claim
unless this is against the economic or financial interest of the Purchaser
and/or the Company. Costs and expenses incurred by Sellers in defending any
Third Party Claims in accordance with the foregoing provisions shall be borne
by the Sellers. Any failure of the Purchaser to comply with any of its
obligations regarding Third Party Claim under this Section shall release
the Sellers from their respective obligation under this Agreement,
except if (and to the extent that) the Sellers are not prejudiced by
such failure. Purchaser may chose to waive the respective against Sellers
under this Section 8
if compliance with this Section 8.7.2 would according to its free judgment
infringe its economic interests.


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
8.7.3

	
In case of a Third Party Claim arising which could lead to a breach
of warranties pursuant to Section 7.11 (Intellectual Property Rights), the
Parties are obliged to jointly defend the Third Party Claim at Commtouch’s
expense. Purchaser’s and Commtouch’s obligations regarding access to
information provided for in Section 8.7.3 shall apply mutatis mutandis.


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
8.7.4

	
In the event that any such
matter does not relate to a Third Party Claim, the
Representative shall have 20 Business Days following his receipt of a Claim
Certificate to object to any item(s) or amount(s) set forth therein by
delivering written notice thereof (an “Objection Notice”)
to Purchaser, with a copy to the Escrow Agent (if and to the extent that the
Purchaser is seeking recourse against the Escrow Fund in accordance with
Section 8.1). In the
event that the Representative shall fail to object, to any item or amount set
forth in a Claim Certificate as set forth herein, the Representative shall be
deemed to have 




page 38 of 47









	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
agreed and consented (for and on behalf of the Sellers) to each such
item and amount set forth in the Claim Certificate (“Deemed Losses”). Upon the expiration of such 20
Business Day period, if the claim set forth in the Claim Certificate is in
whole or in part against the Escrow Fund and if the Representative failed to
object as stipulated above, Purchaser shall be entitled to deliver to the
Escrow Agent (with a copy to the Representative) instructions requiring the
Escrow Agent to promptly release from the Escrow Fund and deliver to
Purchaser an amount of cash equal to any Deemed Losses.


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
8.7.5

	
In the event that the Representative delivers an Objection
Certificate as set forth herein, the Representative and Purchaser shall
attempt in good faith to agree upon the rights of the respective parties with
respect to each of such claims objected to in such Objection Certificate (the
“Agreed Losses”). If the
Purchaser and the Representative should so agree, a memorandum setting forth
such agreement with respect to the Agreed Losses shall be prepared and signed
by both parties and furnished to the Escrow Agent who shall deliver to
Purchaser an amount of cash equal to any Agreed Losses.


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
8.7.6

	
Should Purchaser and the Representative be unable to agree as to any
particular item or items or amount or amounts specified in an Objection
Certificate within the time periods specified above, then the matter shall be settled by an arbitrator agreed upon by the
Parties and such decision shall be final, binding and conclusive upon
the Sellers (the “Awarded Losses”).
Any ruling or decision of the arbitrator may be enforced in any court of
competent jurisdiction. Purchaser shall provide the Escrow Agent with the
written resolution of the arbitrator to distribute to Purchaser, out of the
Escrow Fund, an amount equal to the Awarded Losses. 


	
 

	
 

	
 

	
 

	
 


	
 

	
8.8

	
 

	
     The Escrow Fund shall be held as a
trust fund and shall not be subject to any Lien, attachment, trustee process
or any other judicial process of any creditor of any party, and shall be held
and disbursed solely for the purposes and in accordance with the terms of
this Agreement and the Escrow Agreement.


	
 

	
 

	
 

	
 

	
 


	
 

	
8.9

	
 

	
     Any amounts remaining in the Escrow Fund shall be released from the
Escrow Fund on the date which is the 12 month anniversary of the Closing Date
(the “Escrow
Release Date”)
(less any portion of the Escrow Fund which is necessary to satisfy any
unresolved claims specified in any Claim Certificate that has been properly
delivered by the Purchaser prior to the Applicable Expiration Date and the
Escrow Release Date (such amount, the “Holdback Amount”)).
On the Escrow Release Date, the Escrow Agent shall deliver to the Sellers on
a pro rata basis the remaining portion of the Escrow Fund (less the Holdback
Amount, if any) and shall retain the Holdback Amount, if any, in accordance
with this Section 8.9. Upon resolution of any such unsatisfied or
unresolved claim for Losses in accordance with any of the provisions of this
Section 8, the Escrow




page 39 of 47









	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
Agent shall release such portion of the Holdback Amount required to
satisfy such claims, as soon as reasonably practicable.


	
 

	
 

	
 

	
 

	
 


	
 

	
8.10

	
 

	
The Purchaser shall forfeit its right to exercise its rights under or
in connection with this Agreement in case the Purchaser, its accountants,
legal advisors or any of its directors or employees was aware of the fact
that a representation or warranty is untrue, incomplete or not complied with.
The provisions of § 442 BGB, § 443 BGB and § 377 HGB shall not apply.
Purchaser has in the course of its due diligence been provided with the
documents in the data room listed in Annex 8.10 to the Reference Deed. The
parties have recorded the documents listed in Annex 8.10 to the Reference
Deed on a DVD as data carrier. For documentary purposes, the parties have
handed over to the acting notary such a data carrier with those recorded data
and do thereby instruct him, to keep the data carrier together with the
original (Urschrift)
of this deed in his custody and to make, at the written request of any of the
parties, a complete or partial copy available to, and at the expense of, the
requesting party. The parties are aware of the fact that the notary has not
reviewed the contents of the data carrier and does not assume any liability
for the permanent accessibility of the data recorded on the data carrier. The
acting notary is entitled to destroy the data carrier after expiry of two
years of the notarization of this deed. Each Party will further be provided
with a copy of this data room DVD at Closing.


	
 

	
 

	
 

	
 


	
 

	
8.11

	
 

	
To the extent permitted by
law, rights and remedies of the Purchaser based on a Breach of Guarantee, in
particular based on statutory warranty rights and warranties such as
withdrawal from the agreement (Rücktritt), reduction of purchase price
(Minderung),
repair or compensation (Nachbesserung), culpa in contrahendo,
adjustment or reversal of the Agreement due to frustration of the contract (Wegfall
der Geschäftsgrundlage) as well as the contesting of the Agreement
due to the absence of an essential characteristic (Anfechtung wegen des Fehlens einer
verkehrswesentlichen Eigenschaft) are expressly excluded, except
for rights and remedies of the Purchaser according to sections 123 BGB,
444 BGB, 823 BGB and 826 BGB as well as any rights based on wilful
misconduct.


	
 

	
 

	
 

	
 


	
9

	
 

	
Tax Indemnities; Cooperation in Tax Matters


	
 

	
 

	
 

	
 

	
 


	
 

	
9.1

	
 

	
The Sellers agree to indemnify and hold harmless the Purchaser and/or
the Company, completely and without delay, from and against all Taxes due and
payable by the Company (and any other financial disadvantages directly
related to such Taxes) for assessment periods ending on or before the Closing
Date to the extent such Taxes (i) have not been reflected in the Financial
Statements for the business year 2011, clearly specified as tax liabilities
or as tax provisions, and (ii) have not been reflected as accruals in the
interim accounts as per 15 November 2012 (Annex 7.12.2 iii),
collectively: “Additional Taxes”,
except to the extent that such Additional Taxes




page 40 of 47









	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
9.1.1

	
are caused by transactions carried out by the Purchaser, its
affiliates or the Company after the Closing Date;


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
9.1.2

	
can be reclaimed by the Purchaser, its affiliates or the Company on
the basis of an enforceable and valuable claim against any other third party
(“Claim”); any additional costs of the
Purchaser, its affiliates or the Company for demonstrating that the Claim is
not valuable shall be reimbursed by the Sellers;


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
9.1.3

	
do result in a tax reduction or other tax benefits in assessment
periods starting after the Closing Date (“Tax Benefit”) provided that such tax benefit
has been realized within five years after the Closing Date. If Additional
Taxes have already been paid to Purchaser, Sellers can reclaim the amount of
the Tax Benefit. In any case, the Tax Benefit needs to be discounted with a
discount rate of 3% and a tax rate of 30%.


	
 

	
 

	
 

	
 

	
 


	
 

	
9.2

	
 

	
Claims under Section 9.1 also exist for Taxes which will be assessed for assessment
periods starting before and ending after the Closing Date (“Straddle
Period”) and which
shall be allocated to the Straddle Period (“Allocation Principle”):


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
9.2.1

	
Insofar the Taxes are triggered by extra-ordinary measures (e.g.
constructive dividend, transfer of assets, restructuring) of the Sellers
(except the settlement of the Plan) those Taxes qualify as Additional Taxes
as if the assessment period would end on the Closing Date,


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
9.2.2

	
Insofar the Taxes are triggered by the settlement of the Plan 50% of
those Taxes shall qualify as Additional Taxes and shall be indemnified by the
Sellers;


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
9.2.3

	
In all other cases the Taxes for the whole Straddle Period multiplied
by a fraction of the numerator of which is the number of days in the
assessment period ending on the Closing Date and the denominator of which is
the number of days of the whole Straddle Period. 


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
Section 9.1 applies accordingly for all Additional Taxes under this
Section 9.2.


	
 

	
 

	
 

	
 

	
 


	
 

	
9.3

	
 

	
If and to the extent the Company receives a refund of Taxes after the
Closing Date for an assessment period ending on or before the Closing Date or
for the Straddle Period (“Tax Refund”) the Purchaser shall pay such amount to the Sellers pursuant
to their shareholdings in the Company at Closing or off-set against any
claims he has under this Section 9. In case of a Tax Refund for the Straddle
Period the Allocation Principle of Section 9.2 shall apply accordingly for
the Tax Refund.


	
 

	
 

	
 

	
 

	
 


	
 

	
9.4

	
 

	
Irrespective of the period of limitation for other claims under this
Agreement, all claims under this Section shall prescribe six (6) months after
the final and binding Tax Assessment (bestandskräftig und unanfechtbar) or any
corresponding or similar event of the respective Tax. Furthermore, any other
limitation for other claims under this Agreement (in particular but not
limited to Section 8) shall not




page 41 of 47









	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
apply to tax claims, including (but not limited to) tax claims under
this Section and tax claims related to Section 7.12 .


	
 

	
 

	
 

	
 


	
 

	
9.5

	
 

	
Sellers shall make any payments under this Section 9 to the Purchaser
or, upon the Purchaser’s discretion to the Company or its Subsidiaries,
within twenty [20]
business days after notice and presentation of a copy of the respective Tax
assessment. Purchaser shall make any payments under this Section 9 to the
Sellers within twenty [20] business days after notice of a Tax Refund.


	
 

	
 

	
 

	
 

	
 


	
 

	
9.6

	
 

	
Any payment made by the Sellers under this Section 9 is considered to
be a reduction of the Initial Purchase Price, unless prohibited by mandatory
statutory law. Any payment made by the Purchaser under this Section 9 is
considered to be an increase of the Initial Purchase Price, unless prohibited
by mandatory statutory law.


	
 

	
 

	
 

	
 

	
 


	
 

	
9.7

	
 

	
Cooperation in Case of a Tax Procedure/Tax Dispute 


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
9.7.1

	
If a claim arises as a result of or in connection with a liability or
alleged liability to any Tax Authority, especially a tax field audit,
litigation or other procedure, for the period ending on or before the Closing
Date (“Tax Procedure”), then, in
addition to the obligations provided for in this clause,


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
i)

	
     the Purchaser shall, after it
is informed by an official notice of a Tax Authority of a Tax Procedure
concerning the Company, immediately and without undue delay give notice in
writing to the Representative, including copies of the Tax Authority’s
notice, if in writing, or other documents received together with the notice;


	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
ii)

	
     the Sellers may request the Purchaser to dispute, resist, appeal,
compromise or defend the Claim and any adjudication in respect thereof and that any
comments of the Sellers are duly incorporated into any statements to the Tax
Authorities, unless such comments are in violation of applicable statutory
laws or unreasonable (“Tax Dispute”);


	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
iii)

	
     the Purchaser shall, and shall procure that the Company shall, permit
the Representative or its duly authorized advisors, if they are subject to a
professional duty of confidentiality, to be involved in the Tax Procedure/Tax
Dispute
and to participate in meetings, discussions and correspondence with the Tax
Authorities, including any final meetings with a Tax auditor, if
reasonable;


	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
iv)

	
     the Purchaser shall, and shall procure that the Company shall, give
full information and full access to the books and records of the Company to
the extent that they relate to the fiscal periods ending on or before the
Closing Date and are relevant for the claim.




page 42 of 47









	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
9.7.2

	
All expenses and costs at the level of Purchaser and/or the Company
that arise and are directly born in connection with any Tax Dispute and that
are not unreasonably caused, shall be borne by the Sellers pro rata.


	
 

	
 

	
 

	
 

	
 


	
 

	
9.8

	
 

	
Procedures in Relation to the Preparation of Tax Returns etc.


	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
If Tax Returns in the name of
the Company have to be prepared after the Closing Date relating to any period
ending on or before the Closing Date, such Tax Returns shall be prepared by
the Representative but reviewed and filed by the Company in accordance with
the following:


	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
9.8.1

	
The Purchaser shall procure that the Representative is given full information and full access to the
books and records of the Company to the extent that they relate to periods
ending on or before the Closing Date and are relevant for the Tax Return;


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
9.8.2

	
The Representative
shall prepare the respective Tax Return on a basis consistent with those for
prior assessment periods;


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
9.8.3

	
The Purchaser and the Company shall receive a copy of the prepared
Tax Return at least twenty-five (25) Business Days prior to the due date of
the respective Tax Return.


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
9.8.4

	
The Purchaser undertakes to consult with the Representative and to attempt in good faith to resolve any
dispute between the Representative
and the Purchaser in relation to the Tax Return.


	
 

	
 

	
 

	
 

	
 


	
10

	
 

	
Conduct Prior
To The Closing


	
 

	
 

	
 


	
 

	
 

	
During the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement or the Closing, the Sellers agree that they shall cause the
Company to operate its business in the ordinary course consistent with past
practices of the Company, except (a) with the prior written consent of
Purchaser (the decision with respect to which will not be unreasonably
delayed) or (b) as specifically contemplated by this Agreement. The
Sellers shall cause the Company to pay indebtedness for borrowed money and
Taxes of the Company in the ordinary course of business when due (subject to
the right of Purchaser to review and approve any Tax Returns filed on or
prior to the Closing), to use reasonable efforts to (i) pay or perform
other obligations when due, (ii) to the extent consistent therewith, to
preserve intact the present business organizations of the Company,
(iii) keep available the services of the present officers and employees
of the Company, and (iv) preserve the Company’s assets and technology
and preserve the relationships of the Company with material customers,
suppliers, distributors, licensors, licensees, and others having business
dealings with them, all with the goal of preserving unimpaired the goodwill
and ongoing business of the Company at the Closing. Without limiting the
foregoing, during the period from the date of this Agreement and continuing
until the earlier of the termination of this Agreement or the Closing, except
as set forth in clauses (a) through (b) of the first sentence of this Section
10, the Sellers shall take all measures necessary to ensure that the Company
shall not (i) amend its 




page 43 of 47









	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
Constitutional Documents,
(ii) issue, sell or grant any share capital or other equity interest,
(iii) issue, sell or grant, or authorize or propose the issuance, sale
or grant of any options, warrants, call rights, convertible securities,
commitments or agreements of any character, written or oral, to issue,
deliver, sell, or cause to be issued, delivered or sold, any Share Capital or
other equity interest, (iv) declare, set aside or pay any dividend or
any other distribution payable in cash, stock or property or redeem, purchase
or otherwise acquire directly or indirectly any of the Shares,
(v) split, combine or reclassify any of the Shares, (vi) enter into
any new, or amend, terminate or renew any contract or agreement that is or
would be a Material Agreement, (vii) enter into any new, amend,
terminate or renew any existing, employment, severance, consulting or salary
continuation agreements, the Plan or any similar plan if in effect as of the
date hereof, with or for the benefit of any employee, or engage any employee
or consultant or service provider, (viii) grant any increases in the
compensation, perquisites or benefits (whether through the payment of, or
agreement to pay, bonus amounts or otherwise) to any Employee,
(ix) create any new liabilities of any kind, (x) take any action
that would result in any of the Conditions Precedent in Section 6 not being satisfied or that would
delay their satisfaction, (xi) authorize the entrance into, or enter
into any contract to do any of the foregoing. The Sellers shall promptly
notify Purchaser of any material event involving the Company that arises
during the period from the date of this Agreement and continuing until the
earlier of the termination date of this Agreement or the Closing.


	
 

	
 

	
 

	
 

	
 

	
 


	
11

	
Confidentiality, Announcements and Press
Releases


	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
11.1

	
 

	
Each of the Sellers and the Purchaser hereby agree that they will
not, at any time hereafter, divulge to any third party (other than in
accordance with the provisions of this Section 11) any information relating
to the Sellers (in the case of the obligation owed by the Purchaser) or the
Purchaser (in the case of the obligation owed by the Sellers) that the
relevant Party has obtained from the other by virtue of its consideration and
negotiation of the Transaction, between 19 April 2012 and the Closing Date,
other than as specifically permitted by the confidentiality agreement between
the Sellers’ advisor and the Purchaser dated 19 April 2012.


	
 

	
 

	
 

	
 


	
 

	
11.2

	
 

	
No announcement or statement about this Agreement or the subject
matter of, or any matter referred to in, this Agreement (including, if
applicable, the termination of this Agreement and the reasons therefore)
shall be made or issued before, on or after the date of the Closing by or on behalf of either Party without the
prior written approval of the other Party, provided that (i) nothing
shall restrict the making by the Purchaser of any statement or disclosure
which may be required by any applicable law or the rules of a recognized
stock exchange upon which securities of the Purchaser (or a member of the
group of which it is part) are traded or listed so long as the Company shall
have received notice (and a copy) of the disclosure at least 24 hours prior
to it being made, if feasible; and (ii) the parties shall issue a joint
press release to announce the Transaction at such time as shall be mutually
agreed upon by the Parties.




page 44 of 47









	
 

	
 

	
 

	
 

	
 


	
12

	
Expenses


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
Whether or not the Transaction is consummated, all Transaction Fees
shall be the obligation of the respective Party incurring such fees and
expenses, and all Transaction Fees of the Company shall be the obligation of
the Sellers. “Transaction Fees”
shall mean all fees and expenses incurred by a Party in connection with this
Agreement or the transactions contemplated hereby, whether or not paid or
payable prior or subsequent to the Closing, including: (a) all legal, accounting,
tax, financial advisory, consulting and all other fees and expenses of third
parties incurred by a Party in connection with the negotiation of the terms
and conditions of this Agreement and the consummation of the transactions
contemplated hereby; and (b) any brokerage or finders’ fee, agents’
commission or any similar charge in connection with the Transactions
contemplated by this Agreement. Notary and registration costs shall be paid
by the Purchaser.


	
 

	
 

	
 

	
 

	
 


	
13

	
Disputes


	
 

	
 

	
 

	
 

	
 


	
 

	
13.1

	
 

	
All disputes arising out of
or in connection with this Agreement (including without limitation, claims
for set-off or counter-claim) or its validity shall firstly be referred to the [Chief
Executive Officers/Managing Director] of the Purchaser and the Representative,
who shall enter into discussions in an attempt to reach a mutually
satisfactory agreement in relation to them.


	
 

	
 

	
 

	
 

	
 


	
 

	
13.2

	
 

	
If the Chief Executive
Officers/Managing Directors have not reached agreement by the end of the 20th
Business Day on which such referral has been made to them, then the shall
be finally settled by three arbitrators in accordance with the Arbitration
Rules of the German Institution of Arbitration e.V. (DIS) without recourse to
the ordinary courts of law. The venue of the arbitration shall be Frankfurt
am Main. The language of the arbitration proceedings shall be English. This
arbitration clause shall be governed by the substantive laws of the Federal
Republic of Germany.


	
 

	
 

	
 

	
 

	
 


	
 

	
13.3

	
 

	
Nothing
contained in this Agreement shall preclude any Party from seeking injunctive
or other equitable relief from a court of law having appropriate
jurisdiction.


	
 

	
 

	
 

	
 

	
 


	
14

	
Representative


	
 

	
 

	
 

	
 

	
 


	
 

	
14.1

	
 

	
The Sellers, by approving this Agreement and the transactions
contemplated hereby, irrevocably appoint and constitute Mr. Robert Rothe as
the Representative for and on behalf of the Sellers to execute and deliver
this Agreement and the Escrow Agreement and for all other purposes hereunder
and thereunder, to give and receive notices and communications, to take all
actions and to authorize all actions on behalf of the Sellers under this
Agreement and the Escrow Agreement as fully as though such actions were taken
by the Sellers 




page 45 of 47









	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
themselves. Sellers entitled to a majority of the Initial Purchase
Price may replace the Representative from time to time upon not less than ten
(10) days’ prior written notice to the Purchaser and the escrow agent under
the Escrow Agreement. The Representative shall receive no compensation for
his services. Notices or communications to or from the Representative shall
constitute notice to or from each of the Sellers.


	
 

	
 

	
 

	
 


	
 

	
14.2

	
 

	
The Representative shall not be liable for any act done or omitted
hereunder as Representative while acting in good faith and any act done or
omitted pursuant to the advice of counsel shall be conclusive evidence of
such good faith. The Sellers shall severally and pro rata indemnify the
Representative and hold him harmless against any loss, liability, expense or
fee incurred without gross negligence or bad faith on the part of the
Representative and arising out of or in connection with the acceptance or
administration of his duties hereunder.


	
 

	
 

	
 

	
 

	
 


	
 

	
14.3

	
 

	
A decision, act, consent or instruction of the Representative shall
constitute a decision of all of the Sellers and shall be final, binding and
conclusive upon each and every Seller, the Purchaser and the escrow agent
under the Escrow Agreement, and the Purchaser and the escrow agent under the
Escrow Agreement may rely upon any decision, act, consent or instruction of
the Representative as being the decision, act, consent or instruction of each
and every Seller. The Purchaser and the escrow agent under the Escrow
Agreement are hereby relieved from any liability to any person for any acts
done by them in accordance with such decision, act, consent or instruction of
the Representative.


	
 

	
 

	
 

	
 

	
 


	
15

	
 

	
Final Provisions


	
 

	
 

	
 

	
 

	
 


	
 

	
15.1

	
 

	
The Parties agree that Commtouch shall be jointly liable for all
obligations of the Purchaser under this agreement.


	
 

	
 

	
 

	
 

	
 


	
 

	
15.2

	
 

	
Where a German term has been inserted in this Agreement it alone (and
not the English term to which it relates) shall be authoritative for the
purpose of the interpretation of the relevant English term in this Agreement.


	
 

	
 

	
 

	
 

	
 


	
 

	
15.3

	
 

	
All changes of and amendments to this Agreement shall require the
written form in order to be effective, unless being subject to notarization.
This shall likewise apply to a waiver of the requirement-of-writing clause
itself.


	
 

	
 

	
 

	
 

	
 


	
 

	
15.4

	
 

	
This Agreement shall be governed by the substantive laws of the
Federal Republic of Germany. 


	
 

	
 

	
 

	
 

	
 


	
 

	
15.5

	
 

	
Any notice or communication relating to this Agreement or its
performance shall be sent in writing to the addresses of the contracting
Parties shown above. These addresses shall remain applicable until changed by
a contractual notice to all other Parties. 


	
 

	
 

	
 

	
 

	
 


	
 

	
15.6

	
 

	
Should individual provisions of this Agreement be or become
ineffective or should this Agreement prove to be incomplete, the
effectiveness of the remaining provisions of this Agreement shall not be
affected thereby. Rather, the Parties 




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shall in this case be under the obligation to replace the ineffective
or missing provision by such effective provision as reflects best the
economic purpose pursued by the ineffective or missing one.


	
 

	
 

	
 

	
 

	
 


	
The above Deed including all Annexes has been read aloud to the
persons appearing in the presence of the notary, approved by them and signed
by them and by the notary as follows:




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