Exhibit 4.6



 	
  

 



EXECUTION VERSION 


24
JULY 2012


SHARE PURCHASE AGREEMENT


BETWEEN


THE
PERSONS LISTED IN SCHEDULE 1 AS SELLERS

(AS SELLERS)


AND


COMMTOUCH
SOFTWARE LTD.

(AS BUYER)


	
  

 	
  

 	
  

 
	
  

 	
 


 	
  

 
	
  

 	
  

 	
  

 
	
 RELATING TO SHARES IN

 
	
  

 
	
 AN INCORPORATED ICELANDIC PRIVATE LIMITED COMPANY

 
	
  

 	
 


 	
  

 











EXECUTION VERSION 


	
  

 	
  

 	
  

 
	
 Table of Contents

 
	
  

 	
  

 	
  

 
	
 Clause



 	
  



 	
 Page



 
	
  

 	
  

 	
  

 
	
 1.

 	
 Interpretation

 	
 4

 
	
  

 	
  

 	
  

 
	
 2.

 	
 Conditions

 	
 8

 
	
  

 	
  

 	
  

 
	
 3.

 	
 Sale and
 purchase

 	
 9

 
	
  

 	
  

 	
  

 
	
 4.

 	
 Purchase
 Price

 	
 9

 
	
  

 	
  

 	
  

 
	
 5.

 	
 Completion
 and Termination

 	
 10

 
	
  

 	
  

 	
  

 
	
 6.

 	
 Warranties

 	
 11

 
	
  

 	
  

 	
  

 
	
 7.

 	
 Limitations
 on claims

 	
 12

 
	
  

 	
  

 	
  

 
	
 8.

 	
 Indemnities of the Sellers

 	
 13

 
	
  

 	
  

 	
  

 
	
 9.

 	
 CONTRACTS

 	
 14

 
	
  

 	
  

 	
  

 
	
 10.

 	
 Restrictions
 on the Sellers

 	
 15

 
	
  

 	
  

 	
  

 
	
 11.

 	
 Confidentiality
 and announcements

 	
 16

 
	
  

 	
  

 	
  

 
	
 12.

 	
 Whole agreement

 	
 16

 
	
  

 	
  

 	
  

 
	
 13.

 	
 Variation and waiver

 	
 17

 
	
  

 	
  

 	
  

 
	
 14.

 	
 Costs

 	
 17

 
	
  

 	
  

 	
  

 
	
 15.

 	
 Notice

 	
 17

 
	
  

 	
  

 	
  

 
	
 16.

 	
 Further
 assurance

 	
 18

 
	
  

 	
  

 	
  

 
	
 17.

 	
 Counterparts

 	
 18

 
	
  

 	
  

 	
  

 
	
 18.

 	
 Severance

 	
 18

 
	
  

 	
  

 	
  

 
	
 19.

 	
 Assignment

 	
 19

 
	
  

 	
  

 	
  

 
	
 20.

 	
 Governing
 law and jurisdiction

 	
 19

 
	
  

 	
  

 	
  

 
	
 SCHEDULE 1
 Particulars of the Sellers

 	
 20

 
	
  

 	
  

 	
  

 
	
 SCHEDULE 2 Assets and Liabilities

 	
 21

 
	
  

 	
  

 	
  

 
	
 SCHEDULE 3 Conditions

 	
 23

 
	
  

 	
  

 	
  

 
	
 SCHEDULE 4 Completion

 	
 25

 
	
  

 	
  

 	
  

 
	
 SCHEDULE 5 Warranties

 	
 28

 










EXECUTION VERSION 


	
  

 	
  

 	
  

 
	
 1.

 	
 Power to Sell the Company

 	
 28

 
	
  

 	
  

 	
  

 
	
 2.

 	
 Shares in
 the company and the assets and liabilities

 	
 28

 
	
  

 	
  

 	
  

 
	
 3.

 	
 Information

 	
 28

 
	
  

 	
  

 	
  

 
	
 4.

 	
 Compliance
 with laws

 	
 29

 
	
  

 	
  

 	
  

 
	
 5.

 	
 Licenses and
 consents

 	
 29

 
	
  

 	
  

 	
  

 
	
 6.

 	
 Insurance

 	
 29

 
	
  

 	
  

 	
  

 
	
 7.

 	
 Power of
 attorney

 	
 29

 
	
  

 	
  

 	
  

 
	
 8.

 	
 Disputes and
 investigations

 	
 30

 
	
  

 	
  

 	
  

 
	
 9.

 	
 The
 Company’s and FRISK’s Products

 	
 30

 
	
  

 	
  

 	
  

 
	
 10.

 	
 Materially
 Adverse Changes

 	
 30

 
	
  

 	
  

 	
  

 
	
 11.

 	
 Contracts

 	
 30

 
	
  

 	
  

 	
  

 
	
 12.

 	
 Transactions
 with the sellers

 	
 31

 
	
  

 	
  

 	
  

 
	
 13.

 	
 Finance and
 guarantees

 	
 32

 
	
  

 	
  

 	
  

 
	
 14.

 	
 Insolvency

 	
 32

 
	
  

 	
  

 	
  

 
	
 15.

 	
 Assets

 	
 32

 
	
  

 	
  

 	
  

 
	
 16.

 	
 Intellectual
 property

 	
 33

 
	
  

 	
  

 	
  

 
	
 17.

 	
 Information
 technology

 	
 33

 
	
  

 	
  

 	
  

 
	
 18.

 	
 Data protection

 	
 34

 
	
  

 	
  

 	
  

 
	
 19.

 	
 Employment

 	
 34

 
	
  

 	
  

 	
  

 
	
 20.

 	
 commtouch
 shares

 	
 35

 
	
  

 	
  

 	
  

 
	
 21.

 	
 Accounts

 	
 35

 
	
  

 	
  

 	
  

 
	
 22.

 	
 Financial
 and other records

 	
 36

 
	
  

 	
  

 	
  

 
	
 23.

 	
 Changes
 since 31 december 2011 until immediately prior to the division

 	
 37

 
	
  

 	
  

 	
  

 
	
 24.

 	
 Effect of
 sale of shares

 	
 37

 
	
  

 	
  

 	
  

 
	
 25.

 	
 Taxes

 	
 38

 
	
  

 	
  

 	
  

 
	
 SCHEDULE 6 Particulars of the Earnout

 	
 39

 
	
  

 	
  

 	
  

 
	
 SCHEDULE 7 – Post-Completion Adjustments

 	
 41

 










EXECUTION VERSION


THIS AGREEMENT
(hereinafter referred to as the “Agreement”) is dated 24 July 2012


Between


	
  

 	
  

 
	
  (1)

 	
 THE PERSONS LISTED IN SCHEDULE 1 (hereinafter
 referred to as the “Sellers”); and

 
	
  

 	
  

 
	
  (2)

 	
 COMMTOUCH SOFTWARE
 LTD., a company incorporated and registered in the
 State of Israel having its registered address at 4A Hatzoran St. Netanya
 Israel 42504 (hereinafter referred to as the “Buyer”). 

 
	
  

 	
  

 
	
  

 	
 Together the Sellers and the Buyer are hereinafter referred to as the
 “Parties”
 and each of them being a “Party”.

 



Background


	
  

 	
  

 
	
 (A)

 	
 The Sellers, who are also the shareholders of the total share capital
 of FRISK (as defined below), shall cause FRISK to be divided pursuant to
 Article 107 (a) of the Act on Private Limited Companies No. 138/1994. The
 Division shall have entered into force prior to 11 September 2012 and certain
 assets and liabilities shall have been transferred to the Company, as the
 receiving company as a result of the Division, such assets and liabilities
 being detailed in Schedule 2. 

 
	
  

 	
  

 
	
 (B)

 	
 The Company shall have an issued share capital of ISK 52,000,000 divided
 into equal number of 1 ISK in nominal value. 

 
	
  

 	
  

 
	
 (C)

 	
 The Sellers have agreed to sell and the Buyer has agreed to buy the
 Shares (as defined below) subject to the terms and conditions of this
 Agreement.

 



Agreed terms


	
  

 	
  

 
	
 1.

 	
 Interpretation

 
	
  

 	
  

 
	
 1.1

 	
 The definitions and rules of interpretation in this clause 1 apply in
 this Agreement.

 
	
  

 	
  

 
	
  

 	
 Assets: means the assets detailed in Schedule 2.

 
	
  

 	
  

 
	
  

 	
 Business: means
 the business of FRISK, comprising the intellectual property, software,
 development, marketing, sales and support of anti-virus security products and
 associated services carried on by FRISK as at the date of this Agreement. The
 term Business shall not include the business of (i) intellectual property,
 software, development, marketing, sales and support of the Puki spell checker
 software and associated services, (ii) the genealogy database
 “‘Íslendingabók”, and (iii) real estate business.

 
	
  

 	
  

 
	
  

 	
 Business Day: means
 a day (other than a Saturday, Sunday or public holiday) when banks in
 Iceland, Israel and the USA, are open for business.

 
	
  

 	
  

 
	
  

 	
 Buyer’s Group: means the Buyer and each of its subsidiaries, direct and
 indirect holding companies (including Commtouch Inc.) and any subsidiary of
 such holding companies.

 
	
  

 	
  

 
	
  

 	
 Buyer’s Lawyers: means LOGOS legal services,
 registration number 460100-2320, with its registered address at Efstaleiti 5,
 103 Reykjavik, Iceland.

 


4/44






EXECUTION VERSION


	
  

 	
  

 
	
  

 	
 Claim:
 means a claim brought pursuant to the terms of this Agreement including any
 claims arising under the Warranties.

 
	
  

 	
  

 
	
  

 	
 Commtouch Shares:
 means 750,000 restricted ordinary shares in the capital of the Buyer with a
 par value of Israeli New Shekel
 (NIS) 0.15 per share vesting in equal annual installments over a 4 year
 vesting cycle, commencing on the first anniversary of Completion.

 
	
  

 	
  

 
	
  

 	
 Commtouch Inc.:
 means Commtouch Inc., a company incorporated and registered in California,
 USA having its registered address at 292 Gibraltar Drive, Suite 107,
 Sunnyvale, CA 94089, USA.

 
	
  

 	
  

 
	
  

 	
 Company: means a private limited liability company to be
 incorporated as a result of the Division, to be named as FRISK Iceland ehf.
 and have its registered address at Þverholt 18, 105
 Reykjavík, Iceland.

 
	
  

 	
  

 
	
  

 	
 Completion:
 means the completion of the sale and purchase of the Shares in accordance
 with this Agreement.

 
	
  

 	
  

 
	
  

 	
 Completion Date:
 has the meaning given in clause 5.2.

 
	
  

 	
  

 
	
  

 	
 Completion Payment:
  means USD 1,200,000, or as set forth
 in the Side Letter.

 
	
  

 	
  

 
	
  

 	
 Conditions: the
 conditions set out in Schedule 3.

 
	
  

 	
  

 
	
  

 	
 Contracts: the contracts detailed in
 Schedule 2.

 
	
  

 	
  

 
	
  

 	
 Control: means in relation to a body
 corporate, the power of a person or a consortium of persons to secure that
 the affairs of the body corporate are conducted in accordance with the wishes
 of that person or a consortium of persons:

 
	
  

 	
  

 
	
  

 	
 (a)          by
 means of the holding of shares, or the possession of voting power, in or in
 relation to that or any other body corporate; or

 
	
  

 	
  

 
	
  

 	
 (b)          by
 virtue of any powers conferred by the constitutional or corporate documents,
 or any other document, regulating that or any other body corporate; 

 
	
  

 	
  

 
	
  

 	
 and a Change of Control occurs if a person or a consortium of
 persons who control anybody corporate cease to do so or if another person or
 a consortium of persons acquires control of it.

 
	
  

 	
  

 
	
  

 	
 Disclosed: means fairly, fully, clearly and
 accurately disclosed (with sufficient details to identify the nature and
 scope of the matter disclosed) in the Disclosure Letter.

 
	
  

 	
  

 
	
  

 	
 Disclosure Letter: means the letter from the Sellers to the Buyer with the same
 date as this Agreement.

 
	
  

 	
  

 
	
  

 	
 Division:  means the division of FRISK pursuant to Article 107 (a)
 of the Act on Private Limited Companies No. 138/1994 which shall have entered
 into force prior to 11 September 2012, whereby the Company is the receiving
 company of the Assets and the Liabilities.

 
	
  

 	
  

 
	
  

 	
 Due Diligence
 Documents: the documents that were provided
 by the Sellers to the Buyer pursuant to a list provided by the Sellers to the
 Buyer on the date hereof, copies of which have been made on
 the two identical cd-roms initialed by the

 


5/44






EXECUTION VERSION


	
  

 	
  

 
	
  

 	
 Parties at the date hereof of which one remains in the possession of
 the Sellers and the other remains in the possession of the Buyer.

 
	
  

 	
  

 
	
  

 	
 Earn-out: means
 the earn-out mechanism, the terms of which are as set out in clause 4.5 and
 Schedule 6 hereto.

 
	
  

 	
  

 
	
  

 	
  Earn-out Payments:
 has the meaning set out in paragraph 3.1 of Schedule 6.

 
	
  

 	
  

 
	
  

 	
  Employees: the persons wholly employed by
 FRISK in the Business at the Completion Date (which, at the date of this
 Agreement, consists of those persons whose details are set out in the
 Employee List.

 
	
  

 	
  

 
	
  

 	
  Employee List:
 means the list of employees from the Sellers to the Buyer with the same date
 as this Agreement and contained in the Disclosure Letter.

 
	
  

 	
  

 
	
  

 	
  Encumbrance: means any interest or equity
 of any person (including any right to acquire, option or right of pre-emption
 or conversion) or any mortgage, charge, pledge, lien, assignment,
 hypothecation, security, interest, title, retention or any other security
 agreement or arrangement to create any of the above.

 
	
  

 	
  

 
	
  

 	
 Escrow Agent: means Union Bank. 

 
	
  

 	
  

 
	
  

 	
 Escrow Agreement: means
 the escrow agreement, dated on or about the date hereof, between FRISK,
 Commtouch Inc., the Sellers, the Buyer and the Escrow Agent.

 
	
  

 	
  

 
	
  

 	
 Escrow Account:
 means the bank account with the Escrow Agent with the details as set forth in
 the Escrow Agreement. 

Escrow Amount: means
 the sum of USD 1,000,000, held by the Escrow Agent pursuant to the Escrow
 Agreement.

 
	
  

 	
  

 
	
  

 	
 Escrow Expiry Date: means
 the date falling on the first anniversary of the IP Asset Transfer Agreement.

 
	
  

 	
  

 
	
  

 	
 FRISK: means
 Friðrik Skúlason ehf. (also known as FRISK Software International), a private
 limited liability company organized and existing under the laws of Iceland,
 registered with the Icelandic Enterprise Register under the number
 510693-2489, having its registered address at Þverholt 18, 105 Reykjavík,
 Iceland.

 
	
  

 	
  

 
	
  

 	
 IP Assets: means
 all the intellectual property assets that are owned by FRISK or used or held
 for use by FRISK in the Business as currently conducted, including but not
 limited to the Rights which are transferred subject to the provisions of the
 IP Asset Transfer Agreement.

 
	
  

 	
  

 
	
  

 	
 IP Asset Transfer Agreement: means
 the IP asset transfer agreement in the agreed form, to be entered into
 immediately prior to Completion between FRISK and Commtouch Inc., in respect
 to the sale and purchase of the IP Assets.

 
	
  

 	
  

 
	
  

 	
 Lease Agreement: means
 the lease agreement in the agreed form, to be entered into on, or immediately
 prior to Completion, between the Company (as the lessee) and FRISK (as the
 lessor), in respect to the real estate at Þverholt 18, 105 Reykjavík,
 Iceland.

 
	
  

 	
  

 
	
  

 	
 Liabilities: means
 the liabilities detailed in Schedule 2.

 


6/44







	
  

 	
  

 	
  

 
	
  

 	
 EXECUTION VERSION 

 
	
  

 	
  

 
	
  

 	
 Purchase Price: means the purchase price for the Shares to be paid by the Buyer to
 the Sellers in accordance with clause 4.

 
	
  

 	
  

 
	
  

 	
 Sellers Account: means the bank account with the Sellers’ Lawyers, with the following
 details:

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 IBAN:
 IS81 0303 3810 6309 2704 6352 59 

 
	
  

 	
  

 	
 SWIFT:
 ESJAISRE 

 
	
  

 	
  

 	
 Bank:
 Arion bank hf.

 
	
  

 	
  

 	
 Address:
 Laugavegur 120, 105 Reykjavík, Iceland 

 
	
  

 	
  

 	
 Name
 of account: Björg M. Ólafsdóttir, ID no. 270463-5259 

 
	
  

 	
  

 
	
  

 	
 Sellers’ Lawyers: means Jonsson & Hall Law Firm, registration number 671291-3289,
 with its registered address at Sudurlandsbraut 4, 108 Reykjavik, Iceland.

 
	
  

 	
  

 
	
  

 	
 Shares: means 52,000,000 shares of a nominal value of 1 ISK each in the
 Company, representing 100% of the Company’s issued share capital immediately
 following the Division, all of which shall have been fully paid for.

 
	
  

 	
  

 
	
  

 	
 Share Subscription Letter: a letter from the Sellers to the Buyer, in
 the agreed form, to be entered into immediately prior to Completion, setting
 out the terms and conditions for the issue of the Commtouch Shares. 

 
	
  

 	
  

 
	
  

 	
 Side Letter: means the side letter entered into by the Buyer and the Sellers on the
 date hereof.

 
	
  

 	
  

 
	
  

 	
 Substantiated Claim: means a Claim which has been validly made
 in accordance with this Agreement and in respect of which liability is (1)
 agreed in writing between the Sellers and the Buyer; or (2) adjudicated on by
 a court of competent jurisdiction and no right of appeal lies in respect of
 such adjudication, or the Parties are debarred by passage of time or
 otherwise from making an appeal.

 
	
  

 	
  

 
	
  

 	
 Tax or Taxation: means all forms of tax or taxation including, in particular, any
 charge, tax, duty, levy, impost, withholding or liability wherever chargeable imposed for support of national,
 state, federal, municipal or local government or any other person in any
 jurisdiction and any penalty, fine, surcharge, interest, charges or costs
 payable in connection with any such tax or taxation. 

 
	
  

 	
  

 
	
  

 	
 Third Party Consent: a consent, licence, approval, authorisation
 or waiver required from a third party for the conveyance, transfer,
 assignment or novation in favour of the Buyer of any of the Contracts on
 terms acceptable to the Buyer. 

 
	
  

 	
  

 
	
  

 	
 Transaction: means the transaction contemplated by this Agreement and the IP Asset
 Transfer Agreement or any part of that transaction.

 
	
  

 	
  

 
	
  

 	
 Warranties: means the warranties in Schedule 5 hereto.

 
	
  

 	
  

 
	
  

 	
 Working Capital: means trade debtors, cash, stock, and other debtors, prepayments and
 accrued income less its trade and other creditors and its unpaid and accrued
 liabilities and expenses (including but not limited to unpaid taxation). 

 
	
  

 	
  

 
	
 1.2

 	
 Clause
 and schedule headings do not affect the interpretation of this Agreement.

 
	
  

 	
  

 
	
 1.3

 	
 A
 person includes a corporate or unincorporated body. 

 


7/44









	
  

 	
  

 	
  

 	
  

 
	
  

 	
 EXECUTION VERSION

 
	
  

 	
  

 
	
 1.4

 	
 Words
 in the singular include the plural and in the plural include the singular.

 
	
  

 	
  

 
	
 1.5

 	
 A
 reference to a law is a reference to it as it is in force for the time being
 taking account of any amendment, extension, application or re-enactment and
 includes any subordinate legislation for the time being in force made under
 it.

 
	
  

 	
  

 
	
 1.6

 	
 Warranties
 given “so far as the Sellers are aware” or any similar provision, are deemed
 to be given to the best of the knowledge, information and belief of the Sellers
 after they have made all reasonable and careful enquiries and shall be deemed
 to include that which can reasonably be expected that they would be aware of,
 in their current or former capacity as employees, shareholders and/or
 directors of the Company and/or FRISK.

 
	
  

 	
  

 
	
 1.7

 	
 In
 the event any action or event described herein is set to occur on a day that
 is not a Business Day, such action or event shall instead occur on the
 immediately following Business Day.

 
	
  

 	
  

 
	
 1.8

 	
 Documents
 in agreed form are documents in the form agreed by the Parties to this
 Agreement and initialed by them for identification.

 
	
  

 	
  

 
	
 1.9

 	
 Unless
 otherwise expressly provided, the obligations and liabilities of the Sellers
 under this Agreement are joint and several. 

 
	
  

 	
  

 
	
 2.

 	
 Conditions

 
	
  

 	
  

 
	
 2.1

 	
 Completion
 of this Agreement is subject to the Conditions in Schedule 3 being satisfied
 or waived by the date and time provided in clause 2.4. 

 
	
  

 	
  

 
	
 2.2

 	
 If
 any of the Conditions are not satisfied or waived by the date and time
 referred to in clause 2.4, this Agreement shall cease to have effect
 immediately after that date and time except for any rights or liabilities
 that have accrued under this Agreement. 

 
	
  

 	
  

 
	
 2.3

 	
 The
 following provisions shall continue to have effect, notwithstanding failure
 to waive or satisfy the Conditions: 

 
	
  

 	
  

 
	
  

 	
  

 	
 (a)

 	
 clause
 1; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (b)

 	
 clause
 2.2 and this clause 2.3; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (c)

 	
 clause
 11; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (d)

 	
 clause
 12; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (e)

 	
 clause
 14; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (f)

 	
 clause
 15; and 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (g)

 	
 clause
 20. 

 
	
  

 	
  

 
	
 2.4

 	
 The
 Sellers and the Buyer shall use all reasonable endeavours (so far as lies
 within their respective powers) to procure that the Conditions are satisfied
 as soon as practicable and in any event no later than 14 September 2012 or at
 such later time and date as may be agreed in writing by the Sellers and the
 Buyer. 

 
						


8/44









	
  

 	
  

 	
  

 	
  

 
	
  

 	
 EXECUTION VERSION

 
	
  

 	
  

 
	
 2.5

 	
 The
 Buyer and the Sellers shall co-operate fully in all actions necessary to
 procure the satisfaction of the Conditions including, but not limited to, the
 provision by all parties of all information reasonably necessary to make any
 notification or filing that the Buyer deems to be necessary or as requested
 by any relevant authority, keeping all parties informed of the progress of
 any notification or filing and providing such assistance as may reasonably be
 required. 

 
	
  

 	
  

 
	
 2.6

 	
 The
 Buyer may, to such extent as it thinks fit and is legally entitled to do so,
 waive the conditions set out in the Conditions by written notice to the
 Sellers. 

 
	
  

 	
  

 
	
 3.

 	
 Sale and Purchase

 
	
  

 	
  

 
	
 3.1

 	
 On
 the terms of this Agreement the Sellers shall sell, and the Buyer shall buy
 (with effect from Completion), the Shares. 

 
	
  

 	
  

 
	
 3.2

 	
 Each
 Seller: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (a)

 	
 has, or shall on Completion
 have, full authority to sell its part of the Shares under the terms set out
 in this Agreement; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (b)

 	
 shall at its own cost give
 the Buyer the full legal and beneficial title to the Shares; and 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (c)

 	
 sells the Shares free from
 all Encumbrances.

 
	
  

 	
  

 	
  

 	
  

 
	
 3.3

 	
 The
 Sellers confirm to the Buyer that the Company has no outstanding debt of any kind.

 
	
  

 	
  

 
	
 3.4

 	
 The
 Sellers hereby irrevocably and unconditionally waive all rights of
 pre-emption or other restriction on transfer of the Shares conferred on them
 by either the articles of association of the Company or in any other way.

 
	
  

 	
  

 
	
 3.5

 	
 The
 Shares are sold with full title guarantee and all rights that attach, or may
 in the future attach, to them (including, in particular, the right to receive
 all dividends and distributions declared, made or paid on or after the date
 of this Agreement).

 
	
  

 	
  

 
	
 3.6

 	
 The
 Buyer is not obliged to complete the purchase of any of the Shares unless the
 purchase of all the Shares and the IP Assets is completed simultaneously, or
 the purchase of the IP Assets is completed immediately before Completion. 

 
	
  

 	
  

 
	
 4.

 	
 Purchase Price

 
	
  

 	
  

 
	
 4.1

 	
 The
 Purchase Price shall consist of (1) the Completion Payment; (2) the Commtouch
 Shares; (3) the Earn-out Payments, and (4) less the amount paid in respect of
 any Substantiated Claims. 

 
	
  

 	
  

 
	
 4.2

 	
 The
 Completion Payment shall be paid by the Buyer in USD in cash to the Sellers
 on Completion into the Sellers Account, or as set forth in the Side Letter.

 
	
  

 	
  

 
	
 4.3

 	
 The
 Commtouch Shares shall be delivered to the Sellers by transferring the
 Commtouch Shares in accordance with the provisions of the Share Subscription
 Letter. 

 


9/44









	
  

 	
  

 	
  

 	
  

 
	
  

 	
 EXECUTION VERSION

 
	
  

 	
  

 
	
 4.4

 	
 Subject
 to and in accordance with the provisions set forth in Schedule 6, the Buyer
 shall pay to the Sellers the Earn-out Payments.

 
	
  

 	
  

 
	
 4.5

 	
 The
 Purchase Price shall be adjusted as set out in Schedule 7. 

 
	
  

 	
  

 
	
 5.

 	
 Completion and Termination

 
	
  

 	
  

 
	
 5.1

 	
 Completion
 shall take place on the Completion Date: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (a)

 	
 at
 the offices of the Buyer’s Lawyers at Efstaleiti 5, 103 Reykjavík, Iceland;
 or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (b)

 	
 at
 any other place or time as agreed in writing by the Sellers and the Buyer. 

 
	
  

 	
  

 
	
 5.2

 	
 Completion Date means 14 September 2011, but subject to clause 5.9 and clause 2.4, if
 the Conditions have not been satisfied or waived in accordance with clause 2
 on or before that date, means: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (a)

 	
 the
 fifth Business Day after the Conditions are satisfied or waived; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (b)

 	
 any
 other date agreed in writing by the Sellers and the Buyer; or 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (c)

 	
 the
 date to which Completion is deferred in accordance with clause 5.6. 

 
	
  

 	
  

 
	
 5.3

 	
 The Sellers undertake to
 the Buyer that the Business shall be conducted in the manner provided in Part
 1 of Schedule 4 from the date of this Agreement until Completion and give the
 Buyer the undertakings set out in that Schedule. 

 
	
  

 	
  

 
	
 5.4

 	
 At, or immediately prior
 to, Completion the Sellers shall: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (a)

 	
 deliver
 or cause to be delivered the documents and evidence set out in Part 2 of
 Schedule 4; and

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (b)

 	
 deliver
 any other documents referred to in this Agreement as being required to be
 delivered by them; and 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (c)

 	
 cause
 completion under the IP Asset Transfer Agreement. 

 
	
  

 	
  

 
	
 5.5

 	
 At Completion the Buyer
 shall pay the Completion Payment to the Sellers (or as set forth in the Side
 Letter) and procure the delivery of the countersigned Share Subscription
 Letter to the Sellers. 

 
	
  

 	
  

 
	
 5.6

 	
 If the Sellers do not
 comply with clause 5.4 in any material respect, the Buyer may, without
 prejudice to any other rights it has: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (a)

 	
 proceed to Completion; or 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (b)

 	
 defer Completion to a date
 no more than 28 days after the date on which Completion would otherwise have
 taken place; or 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (c)

 	
 rescind this Agreement. 

 


10/44









	
  

 	
  

 	
  

 	
  

 
	
  

 	
 EXECUTION VERSION

 
	
  

 	
  

 
	
 5.7

 	
 If
 Completion does not take place because of the Sellers non-fulfilment or
 failure to perform any of its obligations under clause 5.4, which is within
 their control, or to fulfil any of the Conditions (including in respect of
 the Division), to the extent that it is within their control, the Sellers
 shall pay the Buyer the sum of USD 200,000 by way of compensation for all costs
 and expenses incurred by the Buyer’s Group in the negotiation, preparation
 and performance of this Agreement and the Asset Sale Agreement, including but
 not limited to the cost of legal and financial advisers. For the avoidance of
 doubt, this clause does not limit the amount that the Buyer may claim under
 this Agreement in the event of the above occurring. 

 
	
  

 	
  

 
	
  

 	
 The
 same compensation duty, of the same amount, applicability and limitations,
 applies to the Buyer, should Completion not take place because of the Buyer’s
 non-fulfilment or failure to perform any of its obligations under clause 5.5,
 which is within its control, or to fulfil any of the Conditions, to the
 extent that it is within its control.

 
	
  

 	
  

 
	
 5.8

 	
 As
 soon as possible after Completion the Sellers shall send to the Buyer all
 records, correspondence, documents, files, memoranda and other papers
 relating to the Company and the Business not required to be delivered at
 Completion to the extent such records, correspondence, documents, files,
 memoranda and other papers relating to the Company and the Business are in
 the possession of and/or known by the Sellers to exist. 

 
	
  

 	
  

 
	
 5.9

 	
 This
 Agreement may be terminated, and the Transaction abandoned, at any time prior
 to Completion: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (a)

 	
 by
 the mutual written consent of the Sellers and the Buyer;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (b)

 	
 by
 the Buyer if Completion has not occurred by 14 September 2012; or 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (c)

 	
 by
 the Buyer, upon a breach of any representation, warranty, covenant or
 agreement on the part of any of the Sellers set forth in this Agreement, or
 if any representation or warranty of the Sellers shall have become untrue.

 
	
  

 	
  

 
	
 5.10

 	
 The
 right to terminate this Agreement pursuant to clause 5.9 above shall not be
 available to any party whose action or failure to act has been a principal
 cause of or resulted in the failure of Completion to occur on or before such
 date. 

 
	
  

 	
  

 
	
 6.

 	
 Warranties

 
	
  

 	
  

 
	
 6.1

 	
 The
 Buyer enters into this Agreement on the basis of, and in reliance on, the
 Warranties given by the Sellers and set out in Schedule 5.

 
	
  

 	
  

 
	
 6.2

 	
 The
 Sellers warrant and represent to the Buyer that, except as Disclosed, each
 Warranty is true, correct and not misleading on the date of this Agreement
 and on the Completion Date. 

 


11/44









	
  

 	
  

 	
  

 	
  

 
	
  

 	
 EXECUTION VERSION

 
	
  

 	
  

 
	
 6.3

 	
 Without
 prejudice to the right of the Buyer to claim on any other basis or take
 advantage of any other remedies available to it, the Sellers agree and shall
 procure that the Buyer is entitled to deduct the amount of any Substantiated
 Claim from (i) the Escrow Amount (provided such claim arises no later than on
 the Escrow Expiry Date), (ii) the Earn-out Payments and/or (iii) any unvested
 Commtouch Shares. 

 
	
  

 	
  

 
	
 6.4

 	
 The
 Buyer may postpone payments of the Earn-Out Payments and unvested Commtouch
 Shares, provided that it notifies the Sellers in writing that it has a Claim
 (containing a summary of the subject matter and amount of such claim and of
 the circumstances relating to such claim). Such payments shall be made to the
 Sellers if legal proceedings have not been issued and validly served in
 respect of the Claim concerned within 6 months of receipt by the Sellers of
 written notice of such claim. To the extent that such a claim does not become
 a Substantiated Claim, the Buyer shall make a payment to the Sellers of the
 payment that was postponed. 

 
	
  

 	
  

 
	
 6.5

 	
 The
 basis of damages for any Claim shall be the amount necessary to put the
 Company and the Buyer in the position it would have been if the covenant or
 Warranty had not been breached and had been true, correct and not misleading.
 

 
	
  

 	
  

 
	
 6.6

 	
 The
 Sellers undertake to pay to the Buyer any amounts in respect to Substantiated
 Claims, although never succeeding the Purchase Price (less any amounts that
 the Buyer receives from the Escrow Amount). 

 
	
  

 	
  

 
	
 6.7

 	
 The
 Buyer is not entitled to recover damages or otherwise obtain restitution more
 than once in respect of the same loss. 

 
	
  

 	
  

 
	
 6.8

 	
 If
 at any time within the period of 1 year beginning with the Completion Date,
 any Seller becomes aware that a Warranty has been breached, is untrue or is
 misleading, or has a reasonable expectation that any of those things might
 occur, it must immediately: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (a)

 	
 notify
 the Buyer in sufficient detail to enable the Buyer to make an accurate
 assessment of the situation; and 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (b)

 	
 if
 requested by the Buyer, use its reasonable endeavours to prevent or remedy
 the notified occurrence. 

 
	
  

 	
  

 
	
 6.9

 	
 Each of the Warranties is
 separate and, unless specifically provided, is not limited by reference to
 any other Warranty or anything in this Agreement. 

 
	
  

 	
  

 
	
 6.10

 	
 No information of which the
 Buyer and/or its agents and/or advisers has knowledge (actual, constructive
 or imputed), or which could have been discovered (whether by investigation
 made by the Buyer or made on its behalf), shall prejudice or prevent any
 Claim or reduce any amount recoverable thereunder.

 
	
  

 	
  

 
	
 7.

 	
 Limitations on claims

 
	
  

 	
  

 
	
 7.1

 	
 This clause limits the
 liability of the Sellers in relation to any Claim pursuant to clause 6 and
 Schedule 5 (a “Warranty Claim”).
 

 


12/44









	
  

 	
  

 	
  

 	
  

 
	
  

 	
 EXECUTION VERSION

 
	
  

 	
  

 
	
 7.2

 	
 The
 liability of the Sellers for all Warranty Claims that become Substantiated
 Claims when taken together shall be limited to the Purchase Price plus an
 amount in respect of reasonable legal costs incurred by the Buyer in Iceland
 in bringing any such Substantiated Claims, such legal costs not to exceed ISK
 2,500,000. 

 
	
  

 	
  

 
	
 7.3

 	
 The
 Sellers are not liable for a Warranty Claim unless the Buyer has given the
 Sellers notice in writing of the Warranty Claim, summarising the nature of
 the Warranty Claim as far as it is known to the Buyer and the amount claimed,
 within the period of 2 years beginning with the Completion Date, provided
 however that such notice period will instead be a 6 year notice period with
 respect to any Warranty Claim relating to the tax warranties in paragraph 25
 of Schedule 5. 

 
	
  

 	
  

 
	
 7.4

 	
 The
 Sellers are not liable for any Warranty Claim to the extent that the Warranty
 Claim relates to matters Disclosed. 

 
	
  

 	
  

 
	
 7.5

 	
 Nothing
 in this clause 7 applies to a claim that arises or is delayed as a result of
 dishonesty, fraud, wilful misconduct or wilful concealment by the Sellers,
 their agents or advisers. 

 
	
  

 	
  

 
	
 7.6

 	
 Nothing
 in this clause 7 applies to a claim that relates to the Warranties in
 paragraphs 1 and 2 of Schedule
 5. 

 
	
  

 	
  

 
	
 8.

 	
 Indemnities of the Sellers

 
	
  

 	
  

 
	
 8.1

 	
 The
 Sellers undertake to indemnify, and to keep indemnified, the Buyer and the
 Company against all losses or liabilities which may be actually suffered or
 incurred by any of them and which arise directly or indirectly in connection
 with: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (a)

 	
 the
 Sellers’ breach of a Warranty (including, without limitation, any Warranty
 proving to be untrue, misleading or false) or their non-fulfillment of or
 failure to perform any covenant or agreement required of them pursuant to
 this Agreement; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (b)

 	
 the
 Division, including if a claim is brought against the Company pursuant to
 Article 107 (a) (3) of the Act on Private Limited Companies No. 138/1994 or
 if any Asset, Liability or Contract has not been effectively transferred to
 the Company by Completion; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (c)

 	
 FRISK’s
 breach of any Warranty (including, without limitation, any Warranty proving
 to be untrue, misleading or false) or its non-fulfillment of or failure to
 perform any covenant or agreement required of it pursuant to the IP Asset
 Transfer Agreement;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (d)

 	
 the
 employment of the Employees or the termination of their employment by the
 Company or FRISK prior to the Completion Date or as a result of the Division;
 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (e)

 	
 any
 failure by the Company or FRISK before the Completion Date to comply with its
 legal obligations in respect of any of the Employees; 

 


13/44









	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 EXECUTION VERSION

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (f)

 	
 the
 transfer to the Company or Commtouch Inc. of the employment of any employee
 of FRISK other than the Employees;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (g)

 	
 any
 claims under any guarantees or warranties given by the Sellers to any
 customer in relation to goods sold or services rendered by the Sellers before
 the Completion Date, the liability for which shall remain absolutely with the
 Sellers; or 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (h)

 	
 any
 claims relating to and payable in respect of the Business which are
 attributable to the period up to and including the Completion Date, including
 any act or omission on the part of the Sellers in relation to the Contracts
 or any defects in, or alleged defects in, goods supplied or services provided
 prior to the Completion Date. 

 
	
  

 	
  

 
	
 8.2

 	
 The
 Parties acknowledge that the Act on the legal status of employees due to a
 change of control of companies’ No. 72/2002 is applicable to the Transaction.
 Sellers undertake to indemnify, and to keep indemnified, the Buyer and the
 Company against all losses or liabilities which may be actually suffered or
 incurred by any of them and which arise directly or indirectly in connection
 with any claims of previous and current employees of FRISK relating to a
 period prior than the Completion Date. Notwithstanding the above, the Sellers
 are not liable for accrued but unpaid holidays of employees. The Sellers
 represent and warrant that the amount of accrued but unpaid holidays of
 employees is correctly stipulated in a document which they delivered to the
 Buyer. 

 
	
  

 	
  

 
	
 8.3

 	
 The
 Sellers are jointly and severally liable for the obligations of FRISK under
 the IP Asset Transfer Agreement. Commtouch Inc. may rely on the indemnity
 provided by the Sellers under this paragraph. For the avoidance of doubt,
 should the Buyer or Commtouch Inc. have a claim against the Sellers, such a
 claim shall be brought before Icelandic courts, or such other courts whereby
 the Sellers are domiciled at each time. 

 
	
  

 	
  

 
	
 8.4

 	
 Any
 payment made in respect of a claim under this clause 8 shall include:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (a)

 	
 an
 amount in respect of all costs and expenses incurred by the Buyer or the
 Company or any of the Buyer’s Group in relation to the bringing of the claim
 (including a reasonable amount in respect of management time); and

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (b)

 	
 any
 amount necessary to ensure that, after any Taxation of the payment, the Buyer
 is left with the same amount it would have had if the payment was not subject
 to Taxation. 

 
	
  

 	
  

 
	
 9.

 	
 contracts 

 
	
  

 	
  

 
	
  

 	
 Between
 the date of this Agreement and the Completion Date, the Sellers shall procure
 from the counterparties to the Contracts their consent to the assignment of
 the Contracts and/or waiver of any change of control or other termination
 rights 

 


14/44









	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 EXECUTION VERSION 

 
	
  

 	
  

 
	
  

 	
 which
 arise or are likely to arise as a result of the Division or the Transaction
 (“the Contract Consents”). 

 
	
  

 	
  

 
	
 10.

 	
 Restrictions on the Sellers 

 
	
  

 	
  

 
	
 10.1

 	
 Each of the Sellers
 severally covenants with the Buyer that he shall not: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (a)

 	
 at
 any time during the period of 2 years beginning with the Completion Date, in
 any geographic areas in which the Business was carried on at the Completion
 Date, carry on or be employed, engaged or interested in any business which
 would be in competition with any part of the Business as the Business was
 carried on at the Completion Date; or 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (b)

 	
 at
 any time during the period of 2 years beginning with the Completion Date,
 deal with any person who is, at the Completion Date, or who has been at any
 time during the period of 12 months immediately preceding that date, a client
 or customer of either FRISK in respect of the Business or the Company; or 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (c)

 	
 at
 any time during the period of 2 years beginning with the Completion Date, canvass,
 solicit or otherwise seek the custom of any person who is, at the Completion
 Date, or who has been at any time during the period of 12 months immediately
 preceding that date, a client or customer of either FRISK in respect of the
 Business or the Company; or 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (d)

 	
 at
 any time during the period of 2 years beginning with the Completion Date:

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 (i)
 offer employment to, enter into a contract for the services of, or attempt to
 entice away from the Company, any individual who is at the time of the offer
 or attempt, and was at the Completion Date, employed or directly or
 indirectly engaged in an executive or managerial position in the Business; or

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 (ii)
 procure or facilitate the making of any such offer or attempt by any other
 person; or

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (e)

 	
 at any time after
 Completion, use in the course of any business:

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 (ii)
 any trade or service mark, business or domain name, design or logo which, at
 Completion, was or had been used in respect of the Business; or

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 (iii)
 anything which is, in the reasonable opinion of the Buyer, capable of
 confusion with such words, mark, name, design or logo; or

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (f)

 	
 at
 any time during a period of 2 years beginning with the Completion Date,
 solicit or entice away from the Business any supplier who had supplied goods
 or services to the Company or FRISK in respect of the Business at any time
 during the period of 12 months immediately preceding the Completion Date, if
 that solicitation or enticement causes or would cause 

 


15/44







EXECUTION VERSION


	
  

 	
  

 	
  

 
	
  

 	
  

 	
 such supplier to cease supplying, or materially reduce its supply of,
 those goods or services to the Company or any member of the Buyer’s Group.

 
	
  

 	
  

 	
  

 
	
 10.2

 	
 Nothing in this clause 10 prevents the Sellers or any of them from
 holding for investment purposes only: 

 
	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 any units of UCITS or investment funds within the meaning of the Act
 on UCITS, investment funds and professional investment funds No. 128/2011; or

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 not more than 5% of any class of shares or securities of any company
 traded on any stock exchange in any geographic areas in which any business of
 the Company or any of the Subsidiaries was carried on at the Completion Date;
 or

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 any of the Sellers ́ existing investments in Iceland at the date
 hereof. 

 
	
  

 	
  

 	
  

 
	
 10.3

 	
 Each of the covenants in this clause
 10 is a separate undertaking by each Seller in relation to himself and
 herself and his or her interests shall be enforceable by the Buyer separately
 and independently of its right to enforce any one or more of the other
 covenants contained in this clause 10. Each of the covenants in this clause 10 is considered fair and
 reasonable by the parties. If any restriction is found to be unenforceable,
 but would be valid if any part of it were deleted or the period or area of
 application reduced, the restriction shall apply with such modifications as
 may be necessary to make it valid and enforceable.

 
	
  

 	
  

 
	
 10.4

 	
 In the event of any breach of any of the covenants in this clause 10
 the Sellers shall on demand pay to the Buyer the sum of USD 200,000. For the
 avoidance of doubt, this clause does not limit the amount that the Buyer may
 claim under this Agreement in the event of a breach of any of the covenants
 in this clause 10.

 





	
  

 	
  

 
	
 11.

 	
 Confidentiality and announcements

 
	
  

 	
  

 
	
 11.1

 	
 Each of the
 Parties agree that the content of this Agreement as well as any and all
 information being delivered or disclosed (whether orally or in writing) to
 the other party in connection herewith shall be deemed to be confidential.

 
	
  

 	
  

 
	
 11.2

 	
 The Parties
 have on the date of this Agreement agreed a text of a joint press release to
 announce the Transaction which shall be announced on said date or, if not
 reasonably possible, the next business day thereafter.

 
	
  

 	
  

 
	
 11.3

 	
 This clause
 11 shall survive the termination of this Agreement and is subject to any
 requirements of the Buyer under applicable law and/or the rules of the Nasdaq
 Stock Market and the US Securities Exchange Commission.

 
	
  

 	
  

 
	
 12.

 	
 Whole agreement

 
	
  

 	
  

 
	
 12.1

 	
 This
 Agreement, and any documents referred to in it, constitute the whole
 agreement between the Parties and supersede any arrangements, understandings
 or previous agreements between them relating to the subject matter they
 cover.

 


16/44






EXECUTION VERSION


	
  

 	
  

 
	
 13.

 	
 Variation and waiver

 
	
  

 	
  

 
	
 13.1

 	
 Any variation of this Agreement shall be in writing and signed by or
 on behalf of all Parties.

 
	
  

 	
  

 
	
 13.2

 	
 Any waiver of any right under this Agreement is only effective if it
 is in writing, and it applies only in the circumstances for which it is given
 and shall not prevent the Party who has given the waiver from subsequently
 relying on the provision it has waived.

 
	
  

 	
  

 
	
 13.3

 	
 No failure to exercise or delay in exercising any right or remedy
 provided under this Agreement or by law constitutes a waiver of such right or
 remedy or will prevent any future exercise in whole or in part thereof.

 
	
  

 	
  

 
	
 13.4

 	
 No single or partial exercise of any right or remedy under this
 Agreement shall preclude or restrict the further exercise of any such right
 or remedy.

 
	
  

 	
  

 
	
 13.5

 	
 Unless specifically provided otherwise, rights arising under this
 Agreement are cumulative and do not exclude rights provided by law.

 
	
  

 	
  

 
	
 14.

 	
 Costs

 
	
  

 	
  

 
	
 14.1

 	
 Unless otherwise provided, all costs in connection with the
 negotiation, preparation, execution and performance of this Agreement, and
 any documents referred to in it, shall be borne by the Party that incurred
 the costs.

 





	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 15.

 	
 Notice

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 15.1

 	
 A notice
 given under this Agreement:

 
	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 shall be in
 writing in the English language;

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 shall be
 sent for the attention of the person, and to the address, or fax number,
 given in this clause 15 (or such other address, fax number or person as the
 party may notify to the others in accordance with the provisions of this
 clause 15); and

 
	
  

 	
  

 
	
  

 	
 (c)

 	
 shall be:

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (i)

 	
  

 	
 delivered
 personally; or

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (ii)

 	
  

 	
 sent by fax;
 or

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (iii)

 	
  

 	
 sent by
 pre-paid first class post, recorded delivery or registered post; or

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (iv)

 	
  

 	
 by email. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 15.2

 	
 The
 addresses for service of notice are:

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 On behalf of
 the Sellers:

 
	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 (i)

 	
 name:
 Friðrik Skúlason.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 (ii)

 	
 address:
 Stigahlíð 65, 105 Reykjavík, Iceland

 


17/44






EXECUTION VERSION


	
  

 	
  

 	
  

 
	
  

 	
 (iii)

 	
 for the attention of: Friðrik Skúlason / Björg M. Ólafsdóttir

 
	
  

 	
  

 	
  

 
	
  

 	
 (iv)

 	
 with a copy
 to: the Sellers Lawyers

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 c/o Einar Þór Sverrisson, hrl.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 einar@law.is

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 fax: +354
 414 4101

 





	
  

 	
  

 	
  

 
	
 The Buyer:

 	
  

 	
  

 
	
  

 	
 (i)

 	
 name:
 Commtouch Software Ltd.

 
	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 address: 4A
 Hatzoran St., Netanya 42504 Israel

 
	
  

 	
  

 	
  

 
	
  

 	
 (iii)

 	
 fax:
 972-9-8636863

 
	
  

 	
  

 	
  

 
	
  

 	
 (iv)

 	
 for the attention
 of: General Counsel

 
	
  

 	
  

 	
  

 
	
  

 	
 (v)

 	
 with a copy
 to: the Buyer’s Lawyers

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 c/o Benedikt Egill Árnason, hdl.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 benedikt@logos.is

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 fax: +354
 5400 301

 





	
  

 	
  

 
	
 15.3

 	
 To prove service it is sufficient to prove that the notice was
 transmitted by fax to the fax number of the party or, in the case of post,
 that the envelope containing the notice was properly addressed and posted, or
 in the case of email, that no delivery failure notification was received.

 
	
  

 	
  

 
	
 16.

 	
 Further assurance

 
	
  

 	
  

 
	
 16.1

 	
 The Parties shall (at their expense) promptly execute and deliver all
 such documents, and do all such things, as the other Party may require from
 time to time for the purpose of giving full effect to the provisions of this
 Agreement.

 
	
  

 	
  

 
	
 17.

 	
 Counterparts

 
	
  

 	
  

 
	
 17.1

 	
 This Agreement may be executed in any number of counterparts, each of
 which is an original and which together have the same effect as if each party
 had signed the same document.

 
	
  

 	
  

 
	
 18.

 	
 Severance

 
	
  

 	
  

 
	
 18.1

 	
 If any provision of this Agreement (or part of a provision) is found
 by any court or administrative body of competent jurisdiction to be invalid,
 unenforceable or illegal, the other provisions shall remain in force.

 
	
  

 	
  

 
	
 18.2

 	
 If any invalid, unenforceable or illegal provision would be valid,
 enforceable or legal if some part of it were deleted, the provision shall
 apply with whatever modification is necessary to give effect to the
 commercial intention of the Parties.

 


18/44





EXECUTION VERSION


	
  

 	
  

 	
  

 
	
 19.

 	
 Assignment

 
	
  

 	
  

 
	
 19.1

 	
 Except as provided otherwise, the Sellers shall not assign, or grant
 any Encumbrance or security interest over, any of its rights under this
 Agreement or any document referred to in it without the prior written consent
 of the Buyer. 

 
	
  

 	
  

 
	
 19.2

 	
 The Buyer may assign its rights and obligations under this Agreement
 (or any document referred to in the Agreement) to a member of the Buyer’s
 Group.

 
	
  

 	
  

 
	
 19.3

 	
 If there is an assignment pursuant to clause 19.1 or 19.2:

 
	
  

 	
  

 
	
  

 	
 (a)

 	
 the Sellers shall not discharge their obligations under this
 Agreement to the assignor until it receives notice of the assignment;

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 the assignee may enforce this Agreement as if it were a party to it;
 and

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 the liability of the Sellers to any assignee cannot be greater than
 its liability to the Buyer.

 





	
  

 	
  

 
	
 20.

 	
 Governing law and jurisdiction

 
	
  

 	
  

 
	
 20.1

 	
 This Agreement and any disputes or claims arising out of or in
 connection with its subject matter are governed by and construed in
 accordance with the law of Iceland.

 
	
  

 	
  

 
	
 20.2

 	
 The Parties irrevocably agree that the courts of Iceland have
 exclusive jurisdiction to settle any dispute or claim that arises out of or
 in connection with this Agreement or its subject matter or formation
 (including non-contractual disputes or claims).

 
	
  

 	
  

 
	
 20.3

 	
 This Agreement is in English language, in the case of conflict with
 translations the English text shall prevail. This Agreement has been entered
 into on the date stated at the beginning of it. 

 


19/44






EXECUTION VERSION


SCHEDULE 1 Particulars of the Sellers


	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 Name

 	
  

 	
  

 	
 Identification number

 	
  

 	
  

 	
 Shares held

 	
  

 	
  

 	
 Completion
 Payment 

 	
  

 	
  

 	
 Bank account

 	
  

 	
  

 	
 Portion of Commtouch Shares

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 1.

 	
  

 	
 Friðrik Skúlason

 	
  

 	
  

 	
  

 	
  

 	
  

 	
 26,000,000

 	
  

 	
  

 	
 US$ 600,000*

 	
  

 	
  

 	
 Sellers
 Account

 	
  

 	
  

 	
 50%

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.

 	
  

 	
 Björg Marta Ólafsdóttir

 	
  

 	
  

 	
  

 	
  

 	
  

 	
 26,000,000

 	
  

 	
  

 	
 US$ 600,000*

 	
  

 	
  

 	
 Sellers
 Account

 	
  

 	
  

 	
 50%

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 Total

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  52,000,000

 	
  

 	
  

 	
 US$ 1,200,000*

 	
  

 	
  

 	
  

 	
  

 	
  

 	
 750,000

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  (100%)

 	
  

 	
  

 	
  (100%)

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  (100%)

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
 *or as set forth in the Side Letter

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 


20/59







EXECUTION VERSION


SCHEDULE 2 Assets and Liabilities


	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 A. Assets

 
	
  

 	
  

 
	
  

 	
 All assets of FRISK (including
 receivables)shall be the property of the Company, other than the following
 assets:

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 1.

 	
 The property at Þverholt 18. Registration number, 201-1215 (05 0101) and 201-1216
 (06 0101).

 
	
  

 	
 2.

 	
 The domain “complex.is”.

 
	
  

 	
 3.

 	
 Genealogy:

 
	
  

 	
  

 	
  

 	
 a.

 	
 Genealogy library (collection of books, manuscripts, microfiches and
 other information related to genealogy.

 
	
  

 	
  

 	
  

 	
 b.

 	
 All software related to genealogy, in particular the program Espólín,
 and the Islendingabok project. This includes software rights, source code,
 object code, manuals, (in electronic or paper form).

 
	
  

 	
  

 	
  

 	
 c.

 	
 All available data on existing customers of the genealogy program.

 
	
  

 	
  

 	
  

 	
 d.

 	
 The domain “islendingabok.is.

 
	
  

 	
 4.

 	
 Icelandic spelling checker:

 
	
  

 	
  

 	
  

 	
 a.

 	
 Any software directly related to the development of the spelling
 checker (Púki), the grammar checker or related projects.

 
	
  

 	
  

 	
  

 	
 b.

 	
 Manuals, CDs and any marketing material directly associated with
 those projects.

 
	
  

 	
  

 	
  

 	
 c.

 	
 Any software related to the “Vefpúki” project.

 
	
  

 	
  

 	
  

 	
 d.

 	
 Assorted books (mostly dictionaries or books on Icelandic grammar) purchased for the development of
 those projects.

 
	
  

 	
  

 	
  

 	
 e.

 	
 Collections of words and texts, collected for the benefit of those
 projects, in particular texts received from Morgunblaðið.

 
	
  

 	
  

 	
  

 	
 f.

 	
 All available data on customers of the spelling checker.

 
	
  

 	
  

 	
  

 	
 g.

 	
 The domain “puki.is”.

 
	
  

 	
 5.

 	
 Any other rights that relate to the
 property, the domain “complex.is”, genealogy, the Icelandic spelling checker
 and intellectual property. 

 



For the avoidance of doubt, the IP Assets
will be the property of Commtouch Inc. at the Completion Date.


	
  

 	
  

 
	
  

 	
 B.
 Liabilities

 



Liabilities relating to the normal operation
of FRISK, which will not remain at FRISK subsequent to the Division, are as
follows but will be fully
paid by FRISK until the Completion Date: 


	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 1.

 	
 Liabilities relating to employees

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 a.

 	
 Salaries

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 b.

 	
 Accident Insurance

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 c.

 	
 Pension Fund Contributions

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 d.

 	
 Withholding Tax Obligations

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 i.

 	
 Income Tax

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 ii.

 	
 Social Security Tax

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 e.

 	
 Car Allowance 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 f.

 	
 Union Fees

 


21/59





EXECUTION VERSION


	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.

 	
 Liabilities relating to Production Cost

 
	
  

 	
  

 	
  

 
	
  

 	
 3.

 	
 Liabilities relating to Lease Payments for
 Þverholt 18, 105 Reykjavík

 
	
  

 	
  

 	
  

 
	
  

 	
 4.

 	
 Liabilities relating to Operation Cost

 




	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 a.

 	
 Advertising

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 i.

 	
 Internet

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 ii.

 	
 Upload/Payperd/Sigma/CDN

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 iii.

 	
 Printing

 
	
  

 
	
  

 	
  

 	
  

 	
 b.

 	
 Telephone and Internet Access

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 c.

 	
 ISNIC fees

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 d.

 	
 Domain fees

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 e.

 	
 Verisign fees

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 f.

 	
 Fees for VeriCe/Akamai/Hostway hosting

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 g.

 	
 Specialist services

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 h.

 	
 Software Fees

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 i.

 	
 Computer Maintenance

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 j.

 	
 Product Deliver

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 k.

 	
 Security system for the offices at Þverholt
 18, 105 Reykjavík

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 l.

 	
 Debt collecting, INTRUM

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 m.

 	
 Legal and Accounting fees

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 n.

 	
 Cleaning for the offices at Þverholt 18,
 105 Reykjavík

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 o.

 	
 Service-fees to credit card companies

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 C. Contracts

 


22/59





EXECUTION VERSION


SCHEDULE 3 Conditions


	
  

 	
  

 	
  

 	
  

 
	
 1.

 	
 That the Division has entered into force on or before 11 September
 2012.

 
	
  

 	
  

 
	
 2.

 	
 That all the Contract Consents in respect of the Contracts have been
 obtained to the satisfaction of the Buyer. 

 
	
  

 	
  

 
	
 3.

 	
 That the IP Asset Transfer Agreement has been entered into and duly
 executed by FRISK and Commtouch Inc., and completed. 

 
	
  

 	
  

 
	
 4.

 	
 That the Central Bank of Iceland has granted an exemption as
 requested in the exemption request signed by LOGOS legal services and Jonsson
 & Hall Law Firm.

 
	
  

 	
  

 
	
 5.

 	
 That the Company has entered into employment agreements with the
 employees that are detailed in the Disclosure Letter, in the form and
 substance acceptable to the Buyer.

 
	
  

 	
  

 
	
 6.

 	
 That the Employees have executed a declaration in the agreed form
 confirming that any intellectual property created by them in the course of
 their employment by FRISK (prior to the Division) and by the Company
 (following the Division) shall be the property of the Company (the “Employee
 IP Letters”). 

 
	
  

 	
  

 
	
 7.

 	
 That the Company has entered into the Lease Agreement.

 
	
  

 	
  

 
	
 8.

 	
 Each of the representations and warranties contained in this
 Agreement and in the IP Asset Transfer Agreement shall be true and correct as
 of the date hereof and as of the Completion Date as though made on and as of
 the Completion Date (except for those representations and warranties which
 address matters only as of a particular date, which need only be true and
 correct as of such date). 

 
	
  

 	
  

 
	
 9.

 	
 No person:

 






	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (i)

 	
 having commenced, or threatened to commence, any proceedings or
 investigation for the purpose of prohibiting or otherwise challenging or
 interfering with the Transaction or the Division; or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (ii)

 	
 having taken or threatened to take any action as a result of, or in
 anticipation of, the Transaction or the Division, that would be materially
 inconsistent with any of the Warranties; or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (iii)

 	
 having enacted or proposed any legislation or regulation which would
 prohibit, materially restrict or materially delay the implementation of the
 Transaction, the Division or the operations of the Company or FRISK; or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (iv)

 	
 having made a claim against FRISK and/or the Company which has not
 been fairly, fully, clearly and accurately disclosed in the Due Diligence
 Documentation.

 


23/59





EXECUTION VERSION


	
  

 	
  

 
	
 10.

 	
 That there has been no material adverse change in the business,
 operations, assets, position (financial, trading or otherwise), profits or
 prospects of FRISK or the Business, taken as a whole, or any event or
 circumstance that may result in such a material adverse change. 

 


24/59





EXECUTION VERSION


SCHEDULE 4 Completion


Part 1.          Conduct between execution and Completion


	
  

 	
  

 
	
 1.

 	
 The Sellers shall procure that the Business shall be conducted in the
 manner provided in this Part 1 of this Schedule 4 from the date of this
 Agreement to Completion.

 
	
  

 	
  

 
	
 2.

 	
 The Sellers shall procure that the Business shall be carried on in
 the normal course.

 
	
  

 	
  

 
	
 3.

 	
 The Sellers shall procure that neither the Company nor FRISK in
 respect of the Business shall:

 






	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (i)

 	
 dispose of any of the Assets or material assets used or required for
 the operation of the Business; or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (ii)

 	
 allot or agree to allot any shares or other securities or repurchase,
 redeem or agree to repurchase or redeem any of the shares; or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (iii)

 	
 pass any resolution; or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (iv)

 	
 enter into, modify or agree to terminate any Contract (as defined in
 paragraph 11 of Schedule 5); or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (v)

 	
 modify, terminate or make any material amendments in respect to the
 Contracts other than in the ordinary course of business; or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (vi)

 	
 incur any capital expenditure in excess of USD 10,000; or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (vii)

 	
 borrow any sum in excess of USD 10,000; or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (viii)

 	
 enter into any lease, lease-hire or hire-purchase agreement or
 agreement for payment on deferred terms; or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (ix)

 	
 pay any dividend or make any other distribution of its assets; or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (x)

 	
 make, or agree to make, material alterations to the terms of employment
 (including benefits) of any of its directors or employees; or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (xi)

 	
 provide or agree to provide any non-contractual benefit to any
 director, employee or their dependants; or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (xii)

 	
 dismiss any of its employees or employ or engage (or offer to employ
 or engage) any person; or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (xiii)

 	
 create any Encumbrance over any of its assets or its undertaking; or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (xiv)

 	
 institute, settle or agree to settle any legal proceedings relating
 to its business, except debt collection in the normal course of business; or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (xv)

 	
 grant, modify, agree to terminate or permit the lapse of any
 intellectual property rights or enter into any agreement relating to any such
 rights; or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (xvi)

 	
 pay any management charge to the Sellers or FRISK or any of their
 connected parties; or

 


25/59





EXECUTION VERSION


	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (xvii)

 	
 incur any liability to the Sellers or FRISK or any of their connected
 parties, other than trading liabilities incurred in the normal course of
 business; or 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (xviii)

 	
           do anything in respect of the Liabilities other than make payments in
 respect of the Liabilities in the ordinary course of business; or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (xix)

 	
 vary the terms on any lease agreements; or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (xx)

 	
 make any material change to the accounting procedures or principles
 by reference to which its accounts are drawn up; or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (xxi)

 	
 waive, release, assign, settle or compromise any claim, suit, action
 or proceeding; or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (xxii)

 	
 enter into any agreement containing any non-competition, “most
 favoured nations” or exclusivity restrictions; or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (xxiii)

 	
           enter into any agreement containing any exclusivity restrictions.

 
	
  

 	
  

 
	
 11.

 	
 The Company and FRISK may do anything falling within paragraph 3 of
 Part 1 of this Schedule 4 if:

 
	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 the Buyer has given prior written consent; or

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 required to effect the Division; or

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 required to effect completion of the IP Asset Transfer Agreement.

 
	
  

 	
  

 
	
 12.

 	
 The Sellers shall use their best endeavours to maintain the trade and
 trade connections of the Company and FRISK.

 
	
  

 	
  

 
	
 13.

 	
 The Sellers shall give to the Buyer as soon as possible full details
 of any material change in the business, financial position or assets of the
 Company and/or FRISK.

 






	
  

 	
  

 
	
 Part 2.

 	
 What the Sellers shall deliver and evidence to the Buyer at
 Completion

 



At Completion,
the Sellers shall deliver to the Buyer, or cause to be delivered: 


	
  

 	
  

 	
  

 
	
  

 	
 1.

 	
 a share register executed by the board of directors of the Company,
 evidencing the transfer of the Shares from the Sellers to the Buyer, free
 from any Encumbrances;

 
	
  

 	
  

 	
  

 
	
  

 	
 2.

 	
 the executed Escrow Agreement;

 
	
  

 	
  

 	
  

 
	
  

 	
 3.

 	
 the executed IP Asset Transfer Agreement;

 
	
  

 	
  

 	
  

 
	
  

 	
 4.

 	
 the executed Lease Agreement;

 
	
  

 	
  

 	
  

 
	
  

 	
 5.

 	
 the executed Share Subscription Letter;

 


26/59





EXECUTION VERSION


	
  

 	
  

 	
  

 
	
  

 	
 6.

 	
 the executed Employee IP Letters for each Employee; 

 
	
  

 	
  

 	
  

 
	
  

 	
 7.

 	
 the executed Contracts Consents; and

 
	
  

 	
  

 	
  

 
	
  

 	
 8.

 	
 any other ancillary documents required under or in connection with
 this Agreement. 

 


27/59







EXECUTION
VERSION


SCHEDULE 5 Warranties


	
  

 	
  

 	
  

 	
  

 
	
 1.

 	
 Power to
 sell the company 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 1.1

 	
  

 	
 Each
 of the Sellers has the necessary power and authority to enter into and
 perform this Agreement and the other documents referred to in it.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 1.2

 	
  

 	
 This
 Agreement and the other documents referred to in it constitute (or shall
 constitute when executed) valid, legal and binding obligations on the Sellers
 in the terms of the Agreement and the documents.

 
	
  

 	
  

 	
  

 	
  

 
	
 2.

 	
 Shares in
 the company and the assets and liabilities

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.1

 	
  

 	
 The
 Shares constitute 100% of the issued share capital of the Company and are
 fully paid, and no other rights to an issuance of unissued Shares are vested
 in any third party.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.2

 	
  

 	
 The
 Company is formed as a result of the Division and has no liabilities other
 than the Liabilities and pursuant to Article 107 (a) (3) of the Act on
 Private Limited Companies No. 138/1994.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.3

 	
  

 	
 No
 dividends or distributions shall be declared, made or paid by the Company or
 FRISK in respect of any period prior to the Completion Date. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.4

 	
  

 	
 The
 Company has not made any dividend or distribution, whether by cash or
 otherwise, to its shareholders. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.5

 	
  

 	
 The
 particulars of Schedule 2 are true, correct and not misleading.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.6

 	
  

 	
 As
 at Completion, the Company shall be a party to the Contracts. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.7

 	
  

 	
 There
 are no other assets, liabilities or contracts which are required for the
 operation of the Business, other than the Assets, Liabilities and Contracts.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.8

 	
  

 	
 Neither
 the Division nor a Change of Control of FRISK will result in the termination
 of, or have any material effect on, any of the Assets, the Liabilities and/or
 the Contracts. 

 
	
  

 	
  

 	
  

 	
  

 
	
 3.

 	
 Information

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3.1

 	
  

 	
 All
 information contained in the Disclosure Documentation is complete, accurate
 and not misleading.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3.2

 	
  

 	
 There
 is no information of material importance that the Sellers are aware of which
 has not been Disclosed. 

 


28/59





EXECUTION
VERSION


	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3.3

 	
  

 	
 The
 particulars relating to the Company, FRISK and the Business in this Agreement
 are true, correct and not misleading.

 
	
  

 	
  

 	
  

 	
  

 
	
 4.

 	
 Compliance with laws

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 4.1

 	
  

 	
 The
 Company and FRISK have at all times conducted their business in all material
 respects in accordance with all applicable laws and regulations.

 
	
  

 	
  

 	
  

 	
  

 
	
 5.

 	
 Licenses and consents

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 5.1

 	
  

 	
 The
 Company has all necessary governmental or regulatory or other licenses,
 consents, permits and authorities necessary to carry on the Business.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 5.2

 	
  

 	
 So
 far as the Sellers are aware, there is no reason why any of those licenses,
 consents, permits and authorities should be suspended, cancelled, revoked or
 not renewed on the same terms.

 
	
  

 	
  

 	
  

 	
  

 
	
 6.

 	
 Insurance

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.1

 	
  

 	
 All
 the insurance policies maintained in respect of the Business are set out in
 the Due Diligence Documentation. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.2

 	
  

 	
 As
 at Completion, the Company has sufficient cover against all losses and
 liabilities including business interruption and other risks that are normally
 insured against by a person carrying on the same type of business as the
 Company. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.3

 	
  

 	
 There
 are no outstanding claims under, or in respect of the validity of, any of
 those policies and there are no circumstances likely to give risk to any
 claim under those policies. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.4

 	
  

 	
 All
 the insurance policies are in full force and effect, are not void or
 voidable, nothing has been done or not done which could make any of them void
 or voidable and neither the Division nor the Transaction will terminate, or
 entitle any insurer to terminate, any such policy. 

 
	
  

 	
  

 	
  

 	
  

 
	
 7.

 	
 Power of attorney

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.1

 	
  

 	
 There
 are no powers of attorney in force given by the Company or by FRISK in
 respect of the operation of the Business.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.2

 	
  

 	
 No
 person, as agent or otherwise, is entitled or authorized to bind or commit
 the Company or FRISK (in respect of the Business), other than as stipulated
 in the Company’s articles of association. 

 


29/59





EXECUTION
VERSION


	
  

 	
  

 	
  

 	
  

 	
  

 
	
 8.

 	
 Disputes
 and investigations

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 8.1

 	
  

 	
 Neither
 the Company nor FRISK is engaged in any litigation, administrative, mediation
 or arbitration proceedings or other proceedings or hearings before any
 statutory or government body, department, board or agency (except for debt
 collection in the normal course of business).

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 8.2

 	
  

 	
 Neither
 the Company nor FRISK is subject to any investigation, inquiry or enforcement
 proceedings by any government, administrative or regulatory body.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 8.3

 	
  

 	
 No
 proceedings, investigation or inquiry as are mentioned in paragraph 8.1 or
 paragraph 8.2 of this Schedule 5 have been threatened or are pending and
 there are no circumstances likely to give rise to any such proceedings.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 9.

 	
 The Company’s and FRISK’s Products

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 9.1

 	
  

 	
 No
 proceedings have been started, are pending or have been threatened against
 either the Company or FRISK in which it is claimed that a product by the
 applicable company is defective, not appropriate for its intended use or has
 caused material damage to any person or property when applied or used as
 intended.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 9.2

 	
  

 	
 No
 proceedings have been started and there are no outstanding liabilities or
 claims pending or threatened against either the Company or FRISK in respect
 of any services supplied by the applicable company for which such company is
 or may become liable and no dispute exists between such company and any of
 their respective customers or clients.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 10.

 	
 Materially Adverse Changes 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 10.1

 	
  

 	
 In
 the prior 12 months ending with the date of this Agreement, the Business has
 not been materially affected in an adverse manner.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 11.

 	
 Contracts

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 11.1

 	
  

 	
 Neither
 the Company nor FRISK (in respect of the Business) is party to or subject to
 any agreement or arrangement, including any Contract, which:

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (a)

 	
 is
 of an unusual or exceptional nature; or

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (b)

 	
 is
 not in the ordinary and usual course of business of the Company or FRISK; or

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (c)

 	
 may
 be terminated as a result of any Change of Control of the Company or FRISK;
 or

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (d)

 	
 may
 be terminated as a result of the Division or the Transaction;

 


30/59





EXECUTION
VERSION


	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (e)

 	
 so far as the Sellers are
 aware, restricts the freedom of the Company following Completion to carry on
 the whole or any part of the Business in any part of the world in such manner
 as it thinks fit; or

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (f)

 	
 involves agency or
 distributorship; or

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (g)

 	
 involves partnership, joint
 venture, consortium, joint development, shareholders or similar arrangements;
 or

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (h)

 	
 is incapable of complete
 performance in accordance with its terms within six months after the date on
 which it was entered into; or

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (i)

 	
 cannot be readily fulfilled
 or performed by the Company or FRISK on time without undue or unusual
 expenditure of money and effort; or

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (j)

 	
 requires the Company or
 FRISK to pay any commission, finders’ fee, royalty or the like.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 11.2

 	
  

 	
 Each Contract is in full
 force and effect and binding on the parties to it, and neither the Company
 nor FRISK have defaulted under or breached a Contract and to the best of each
 of the Seller’s knowledge:

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (a)

 	
 no other party to a Contract
 has defaulted under or breached such a contract; and

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (b)

 	
 no such default or breach by
 the Company or FRISK or any other party is likely or has been threatened.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 11.3

 	
  

 	
 No notice of termination of
 a Contract has been received or served on either the Company or FRISK or any
 other party to a Contract and, to the best of the each of the Seller’s
 knowledge, there are no grounds for termination, rescission, avoidance or
 repudiation of any such contract.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 11.4

 	
  

 	
 The Contracts constitute all
 of the agreements or arrangements which are of material importance for the
 Business. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 12.

 	
  

 	
 Transactions
 with the sellers 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 12.1

 	
  

 	
 The definition in this
 paragraph applies in this Agreement.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 Connected: a person or a party shall be deemed to be
 connected with any of the Sellers if that person is connected with the any of
 the Sellers as a person connected with an insider within the meaning of
 section 16 of Rules no. 987/2006 of the Icelandic Financial Supervisory
 Authority.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 12.2

 	
  

 	
 Other than the loan from the
 Sellers to FRISK for an amount of around ISK 60-70 million as at the date of
 this Agreement, and the Lease Agreement, there is no outstanding indebtedness
 or other liability (actual or contingent) and no outstanding contract, commitment
 or arrangement between either the Company or FRISK and the Sellers or any
 person or party Connected with the Sellers.

 


31/59





EXECUTION
VERSION


	
  

 	
  

 	
  

 	
  

 
	
  

 	
 12.3

 	
  

 	
 No
 person or party Connected with the Sellers is entitled to a claim of any
 nature against the Company or FRISK, or has assigned to any person the
 benefit of a claim against the Company or FRISK to which the Sellers or any
 person or party Connected with the Sellers would otherwise be entitled.

 
	
  

 	
  

 	
  

 	
  

 
	
 13.

 	
 Finance and
 guarantees

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 13.1

 	
  

 	
 Neither
 the Company, nor FRISK, has any liabilities other than the Liabilities and
 for the avoidance of doubt, no guarantee, mortgage, charge, pledge, lien
 assignment or other security agreement or arrangement has been given by or
 entered into by the Company, FRISK, or any third party in respect of other
 obligations of the Company or FRISK. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 13.2

 	
  

 	
 The
 Sellers are not aware of any reason why any debts owing to the Company or
 FRISK (in respect of the Business) (including account receivables) have
 either prior to the date of this Agreement been realized or will not, within
 three months after the date of this Agreement, realize in cash their full
 amount and none of those debts or any part of them has been outstanding for
 more than two months from its due date for payment. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 13.3

 	
  

 	
 Neither
 the Company nor FRISK is responsible for the indebtedness, or for the default
 in the performance of any obligation, of any other person.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 13.4

 	
  

 	
 As
 at Completion, the Company has sufficient Working Capital consisting of a
 minimum of ISK 25,000,000 (or the equivalence thereof in other currencies) in
 cash.

 
	
  

 	
  

 	
  

 	
  

 
	
 14.

 	
 Insolvency

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 14.1

 	
  

 	
 Neither
 the Company nor FRISK is insolvent or unable to pay its debts within the
 meaning of the insolvency legislation applicable and has not stopped paying
 its debts as they fall due.

 
	
  

 	
  

 	
  

 	
  

 
	
 15.

 	
 Assets

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 15.1

 	
  

 	
 The
 Company is the full legal and beneficial owner of and has good marketable
 title to all of the Assets. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 15.2

 	
  

 	
 The
 Company is at Completion in possession and control of all of the Assets. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 15.3

 	
  

 	
 None
 of the Assets, undertaking or goodwill of the Company is subject to an
 Encumbrance, or to any agreement or commitment to create an Encumbrance, and
 no person has claimed to be entitled to create such an Encumbrance.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 15.4

 	
  

 	
 The
 Assets comprise all the assets necessary for the continuation of the
 Business.

 


32/59





EXECUTION
VERSION


	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 15.5

 	
  

 	
 None
 of the Assets is the subject of any lease, lease hire agreement, hire
 purchase agreement or agreement for payment on deferred terms or is the
 subject of any license or functioning arrangement.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 16.

 	
 Intellectual
 property 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 16.1

 	
  

 	
 As
 at Completion the Company is the sole legal and beneficial owner, and is in
 full possession and control, of the IP Assets, free from any Encumbrances. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 17.

 	
 Information
 technology 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 17.1

 	
  

 	
 The definitions in this
 paragraph apply in this Agreement.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 IT Contracts: all arrangements and agreements under which
 any third party provides any element of, or services relating to, the IT
 System, including leasing, hire purchase, licensing, maintenance and services
 agreements.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 IT System: all computer hardware (including network and
 telecommunications equipment) and material third party non-proprietary software
 (including associated preparatory materials, user manuals and other related
 documentation) owned, used, leased or licensed by or to FRISK (in respect of
 the Business) or to the Company.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 17.2

 	
  

 	
 As
 at Completion the Company has all the hardware and software licenses
 necessary to use the IT System to carry on the Business as conducted at the
 date of this Agreement. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 17.3

 	
  

 	
 Except
 to the extent provided in the IT Contracts, as at Completion the Company is
 the owner of and in possession of the IT System free from encumbrances and
 all other rights exercisable by third parties. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 17.4

 	
  

 	
 The
 IT Contracts are valid and binding and so far as the Sellers are aware, no
 act or omission has occurred which would, if necessary with the giving of
 notice or lapse of time, constitute a breach of any such contract.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 17.5

 	
  

 	
 Neither
 FRISK nor the Company has received any notice in respect of any claims,
 disputes or proceedings arising or threatened under any IT Contracts.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 17.6

 	
  

 	
 The
 IT Contracts are freely transferable and none of them are liable to be
 terminated or otherwise materially affected by the Division or a Change of
 Control of the Business, and the Sellers have no reason to believe that any
 IT Contracts will not be renewed on the same or substantially the same terms
 when they expire.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 17.7

 	
  

 	
 The
 elements of the IT System:

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (a)

 	
 are functioning
 properly and operate substantially as intended;

 


33/59





EXECUTION
VERSION


	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (b)

 	
 are not defective in any respect; and

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (c)

 	
 have sufficient capacity and performance to meet the
 current business requirements of the Business;

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (d)

 	
 include sufficient user information to enable
 reasonably skilled personnel in the field to use and operate the IT System
 without the need for further assistance; and

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (e)

 	
 have been satisfactorily and regularly maintained
 and the IT System has the benefit of appropriate maintenance and support
 agreements.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 17.8

 	
  

 	
 FRISK, and following the Division the Company have
 implemented appropriate procedures, including in relation to off-site working
 where applicable, for ensuring the security of the IT System and the
 confidentiality and integrity of all data stored in it.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 17.9

 	
  

 	
 FRISK, and following the
 Division the Company have in place a disaster recovery plan which is fully
 documented and would enable the Business to continue if there were
 significant damage to or destruction of some or all of the IT System.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 18.

 	
 Data
 protection

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 So far as the Sellers are
 aware, each of FRISK and the Company have fully complied with the
 requirements of all applicable legislation concerning rights in respect of
 privacy and personal data.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 19.

 	
 Employment

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 19.1

 	
  

 	
 Details of the Employees and
 the contracts of employment for all of the Employees are set out in the
 Disclosure Letter. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 19.2

 	
  

 	
 There is no notice
 outstanding that terminates the contract of employment of any Employee of the
 Company and no dispute outstanding between FRISK or the Company and any of
 its current or former Employees relating to their employment.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 19.3

 	
  

 	
 No offer of a contract of
 employment has been made by FRISK or the Company to any individual which has
 not yet been accepted or which has been accepted but where the individual’s
 employment has not yet started.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 19.4

 	
  

 	
 The acquisition of the
 Shares by the Buyer or compliance with the terms of this Agreement will not,
 so far as any Sellers are aware, cause any directors or senior Employees to
 terminate their employment.

 


34/59





EXECUTION
VERSION


	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 19.5

 	
  

 	
 All
 contracts of employment with the Employees are terminable on three months’
 notice or less without compensation (except compensation payable under the
 applicable law).

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 19.6

 	
  

 	
 No
 Employee has been offered or granted any share option, profit sharing, bonus,
 commission or any other scheme relating to the profit or sales of the
 Business.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 19.7

 	
  

 	
 No
 liability has been incurred in the 12 months prior to Completion by the
 Business in connection with any termination of employment of its Employees
 (including redundancy payments), or for failure to comply with any order for
 the reinstatement or re-engagement of any Employee. No such liability is
 outstanding at Completion.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 19.8

 	
  

 	
 Except
 as provided or allowed for in the Accounts, no former director or Employee,
 or the dependants of any of those people, has been offered or granted a
 payment by the Business in connection with the actual or proposed termination
 or suspension of employment or variation of an employment contract. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 19.9

 	
  

 	
 Insofar
 as they apply to its Employees, FRISK and the Company have complied in all
 material respects with any: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (a)

 	
 legal obligations;

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (b)

 	
 codes of conduct or
 practice; and

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (c)

 	
 collective agreements,
 customs and practice.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 19.10

 	
  

 	
 Neither
 FRISK nor the Company is involved in any material industrial or trade dispute
 or negotiation regarding a claim with any trade union or other group or
 organization representing Employees and, so far as any Seller is aware, there
 is nothing likely to give rise to such a dispute or claim.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 20.

 	
 commtouch
 shares

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Each
 of the Sellers represents, warrants and covenants that he or she will comply
 with the warranties set out in the Share Subscription Letter.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 21.

 	
 Accounts

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 21.1

 	
  

 	
 The definitions in this
 paragraph apply in this Agreement.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 Accounts: the audited accounts of FRISK for the
 financial years ending on 31 December 2010 and 31 December 2011 respectively
 and the annexed directors’ and auditors’ reports.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 Taxation: all forms of taxation including, in
 particular, any charge, tax, duty, levy, impost, withholding or liability
 wherever chargeable imposed for support of national, state, federal,
 municipal or local government or any other person in 

 


35/59





EXECUTION
VERSION


	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 any
 jurisdiction and any penalty, fine, surcharge, interest, charges or costs
 payable in connection with any such taxation.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 21.2

 	
  

 	
 The
 Accounts have been prepared in accordance with the accounting standards,
 principles and practices generally accepted in Iceland and in accordance with
 the law of that jurisdiction.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 21.3

 	
  

 	
 The
 Accounts have been audited by an auditor of good repute qualified in Iceland
 and the auditor has given an auditor’s certificate without qualification.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 21.4

 	
  

 	
 The Accounts:

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (a)

 	
 make
 proper and adequate provision or reserve for all bad and doubtful debts,
 obsolete or slow-moving inventories and for depreciation on non-current
 assets;

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (b)

 	
 do
 not overstate the value of current or non-current assets; and

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (c)

 	
 do
 not understate any liabilities (whether actual or contingent).

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 21.5

 	
  

 	
 The
 Accounts show a true and fair view of the commitments and financial position
 and affairs of FRISK as at 31 December 2010 and 31 December 2011.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 21.6

 	
  

 	
 The
 Accounts contain either provision adequate to cover, or full particulars in
 notes of, all Taxation (including deferred taxation) and other liabilities
 (whether quantified, contingent, disputed or otherwise) of FRISK on 31
 December 2010 and 31 December 2011.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 21.7

 	
  

 	
 The
 Accounts are not affected by any unusual or non-recurring items or any other
 factor that would make the financial position and results shown by the
 Accounts unusual or misleading in any material respect. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 21.8

 	
  

 	
 The
 Accounts will be filed in accordance with the law of Iceland following
 approval by the Sellers at the next annual general meeting of FRISK.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 21.9

 	
  

 	
 The
 Accounts have been prepared on a basis consistent with the audited accounts
 of, as the case may be, FRISK for the two prior accounting periods without
 any change in accounting policies used.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 22.

 	
 Financial
 and other records

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 22.1

 	
  

 	
 All financial and other
 records relating to the Business and the Company:

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (a)

 	
 have been properly prepared
 and maintained;

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (b)

 	
 constitute an accurate
 record of all matters that ought to appear in them;

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (c)

 	
 do not contain any material
 inaccuracies or discrepancies; and

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (d)

 	
 are in the possession of the
 Company at Completion.

 


36/59





EXECUTION
VERSION


	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 22.2

 	
  

 	
 No
 notice has been received or allegation made that any of those records are
 incorrect or should be rectified.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 22.3

 	
  

 	
 All
 statutory records required to be kept or filed in respect of the Business
 have been properly kept or filed and comply with all material requirements of
 any applicable legislation.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 22.4

 	
  

 	
 All
 statutory records and original deeds belonging to the Company shall be in the
 possession of the Company at Completion.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 23.

 	
 Changes
 since 31 december 2011 until immediately prior to the division

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Since 31 December 2011:

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (a)

 	
 FRISK
 has conducted its business in the normal course and as a going concern;

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (b)

 	
 there
 has been no material adverse change in the Working Capital, turnover,
 indebtedness, financial position or prospects of FRISK;

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (c)

 	
 FRISK
 has not issued or agreed to issue any share or loan capital except as a
 result of the transaction contemplated by this Agreement and agreed between
 the Parties;

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (d)

 	
 no
 dividend or other distribution of profits or assets has been, or agreed to
 be, declared, made or paid by FRISK; 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (e)

 	
 FRISK
 has not borrowed or raised any money or taken any form of financial security,
 and no capital expenditure has been incurred on any individual item by FRISK
 outside the normal course of business and FRISK has not acquired, invested or
 disposed of (or agreed to acquire, invest or dispose of) any individual item
 by FRISK outside the normal course of business; and

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (f)

 	
 no
 shareholder resolutions of FRISK has been passed other than as routine
 business at the annual general meeting.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 24.

 	
 Effect of
 sale of shares

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Neither the
 acquisition of the Shares by the Buyer nor compliance with the terms of this
 Agreement will:

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (a)

 	
 give rise to, or cause to
 become exercisable, any right of pre-emption over the Shares; or

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (b)

 	
 entitle any person to
 receive from the Company any finder’s fee, brokerage or other commission in
 connection with the purchase of the Shares by the Buyer; or

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (c)

 	
 entitle any person to
 acquire, or affect the entitlement of any person to acquire, any Shares; or

 


37/59





EXECUTION
VERSION


	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (d)

 	
 as far as the Sellers are
 aware of, result in any customer or supplier being entitled to reduce
 substantially its existing level of business or to change the terms on which
 it deals with the Company; or 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (e)

 	
 so far as any Seller is
 aware, result in any senior employee leaving the Company; or 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (f)

 	
 result in a breach of law,
 regulation, order, judgment, injunction, undertaking, decree or other like
 imposition; or 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (g)

 	
 result in the creation,
 imposition, crystallization or enforcement of any Encumbrance on any Assets
 or any other assets of the Company.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 25.

 	
 Taxes 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 25.1

 	
  

 	
 No
 Tax will be levied on the Company and/or the Buyer Group in relation to the
 Division or due to FRISK activities prior to the Division.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 25.2

 	
  

 	
 No
 Tax will be levied on the Company and/or the Buyer Group due to the sale of
 the Shares or the IP Assets.

 


38/59





EXECUTION
VERSION


SCHEDULE
6 Particulars of the
Earnout


	
  

 	
  

 	
  

 
	
 1.

 	
 Interpretation

 
	
  

 	
  

 	
  

 
	
 1.1

 	
 The definitions in this paragraph 1.1 apply in this
 Schedule 6.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Earn-out Period: the period from Completion and ending on 31
 March 2015.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Excluded Revenues: the revenues for Zero-Hour Virus Outbreak
 Detection and any revenues that were previously paid as royalties in the
 contract agreement between FRISK and Commtouch Inc.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Revenues: the combined revenues for sales of antivirus
 products by the Buyer’s Group (including the Company), including for F-Prot
 and Command, as calculated in accordance with the revenue recognition rules
 referred to in paragraph 2 below. For the avoidance of doubt,
 “Revenues” shall not include any Excluded Revenues.

 
	
  

 	
  

 	
  

 
	
 2.

 	
 REVENUE RECOGNITION RULES

 
	
  

 	
  

 	
  

 
	
 2.1

 	
 U.S. GAAP
 accounting guidance EITF 08-1 is the guidance that the Buyer will use in
 determining the recognition of the Revenues. 

 
	
  

 	
  

 	
  

 
	
 2.2

 	
 Where the
 Company provides services to customers following Completion under certain
 Contracts for which deferred revenues were previously recognized and payments
 were received by FRISK or the Company prior to Completion, as specified in
 the Disclosure Letter, such deferred revenue shall not be included in the
 calculation of Revenue. 

 
	
  

 	
  

 	
  

 
	
 3.

 	
 Procedure For Making Earn-Out
 Payments

 
	
  

 	
  

 	
  

 
	
 3.1

 	
 Promptly
 following the completion of the audited financial statements for each of the
 years ended 31 December 2012, 31 December 2013 and 31 December 2014, and in
 respect of the first quarter of 2015, the filing of the quarterly results to
 the SEC, the Buyer shall prepare and deliver to the Sellers a schedule (the “Earn-out Determination Schedule”) setting
 forth the Revenues and the figure that represents 5% of the Revenues (the “Earn-out
 Payment”) for such
 calendar year (collectively the “Earn-out
 Payments”).

 
	
  

 	
  

 	
  

 
	
 3.2

 	
 For the
 avoidance of doubt, the Earn-out Payment for the year 2012 will be calculated
 from the Revenues created between Completion and 31 December 2012 while the
 Earn-out Payments for the years 2013 and 2014 will be calculated on a full
 calendar year basis, and the Earn-out Payments for 2015 will be calculated
 only in respect to the first quarter of 2015.

 
	
  

 	
  

 	
  

 
	
 3.3

 	
 The Earn-out
 Determination Schedule shall be conclusive and binding upon the Sellers save
 in the event of manifest error. Notwithstanding the foregoing, should the
 Sellers have a reason to believe that the calculation of the Earn-out Payment
 in the Earn-out Determination Schedule does not correctly represent a figure
 that is in fact 5% of the Revenues, the Sellers are permitted to have their
 accountant 

 


39/59





EXECUTION
VERSION


	
  

 	
  

 	
  

 
	
  

 	
 enter the
 Buyer’s accountancy to certify that the Revenues that the calculation is
 based on has been correctly stated. Said right shall be available to Sellers
 for exercise within 45 days following delivery of each Earn-out Determination
 Schedule, and shall only enable Sellers to certify the Earn-out Determination
 Schedule covering the then prior year. Should such examination show that the
 Buyer under-reported Revenues by greater than 3%, the Buyer shall bear the
 cost of such examination; otherwise, the Sellers shall bear the cost of such
 examination.

 
	
  

 	
  

 	
  

 
	
 3.4

 	
 Should the examination
 of the Sellers’ accountant lead to a figure greater than the Revenues figure
 that the Buyer had originally stated and the Buyer is not satisfied with such
 examination, in the absence of mutual agreement of the issue by the parties,
 the Buyer and the Sellers shall agree on the appointment of an independent
 expert and agree on his terms of appointment to resolve the dispute.

 
	
  

 	
  

 	
  

 
	
 3.5

 	
 If the Buyer
 and the Sellers are unable to agree on the appointment of an expert or his
 terms of appointment within fourteen days of either party serving details of
 a suggested expert on the other, either party may request the President of
 the Institute of chartered Accountants of England and Wales to appoint an
 Expert who is a qualified chartered accountant that has experience in U.S.
 GAAP accounting and agree on the reasonable terms of appointment with such
 expert. 

 
	
  

 	
  

 	
  

 
	
 3.6

 	
 The expert is
 required to prepare a written decision and give notice (including a copy) of
 the decision to the parties within a maximum of two months of the matter
 being referred to the expert.

 
	
  

 	
  

 	
  

 
	
 3.7

 	
 The parties are
 entitled to make written submissions to the expert. The expert’s written
 decision on the matters referred to him shall be final and binding on the
 parties in the absence of manifest error or fraud.

 
	
  

 	
  

 	
  

 
	
 3.8

 	
 Each party
 shall bear its own costs in relation to the expert. The expert’s fees and any
 costs properly incurred by him in arriving at his determination shall be
 borne as determined by the expert. Should the expert confirm the Buyer’s
 original calculation (or that the Buyer’s calculation is within a 3% margin
 of error), the Buyer is not obligated to bear the cost of the examination of
 the Sellers’ accountant.

 
	
  

 	
  

 	
  

 
	
 3.9

 	
 Subject to
 clause 6.3, the Buyer shall pay each Earn-out Payment to the Sellers Account
 (or such other account as may be notified by the Sellers’ no less than 10
 Business Days prior to such payment) within 10 Business Days following
 provision of the Earn-out Determination Schedule.

 


40/59





EXECUTION
VERSION


SCHEDULE
7 – Post-Completion
Adjustments


	
  

 	
  

 	
  

 
	
 1

 	
 Adjustment
 in respect to the cash balance of the Company at Completion.

 
	
  

 	
  

 	
  

 
	
 1.1

 	
  

 	
 In
 the event that the cash balance of the Company exceeds ISK 25,000,000 at
 Completion, the surplus shall be transferred to FRISK. FRISK shall be
 entitled to cash balance that exceeds ISK 25,000,000 and is below ISK
 44,000,000. However, any amount exceeding ISK 44,000,000 shall remain with
 the Company. 

 
	
  

 	
  

 	
  

 
	
 1.2

 	
  

 	
 In
 the event that the cash balance of the Company is less than ISK 25,000,000 (or
 the equivalence thereof in other currencies) at Completion, the Buyer is
 entitled to deduct the difference between (i) ISK 25,000,000 and (ii) the
 cash balance of the Company at Completion, from the Completion Payment (using
 the mid-rate of the Central Bank at the date of Completion).

 
	
  

 	
  

 	
  

 
	
 1.3

 	
  

 	
 The
 Sellers undertake to conduct the Business (including the business of the
 Company) in the ordinary course of business consistent with past practice and
 with the view to maintain the business as a going concern and not to do
 anything, either by act or omission, which will have an adverse effect on the
 cash balance of the Company at Closing.

 


41/59






EXECUTION VERSION 


IN WITNESS whereof
this Agreement has been executed on the date first above written.


	
  

 	
  

 
	
 On behalf of COMMTOUCH
 SOFTWARE LTD.

 
	
  

 	
  

 
	
  



 	
  

 
	
 By: /s/Shlomi Yanai

 	
  

 






	
  

 	
  

 	
  

 
	
 By:

 	
  

 	
  

 
	
  

 	
  



 	
  

 
	
  

 	
 /s/Friðrik Skúlason

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
  



 	
  

 
	
  

 	
 /s/Björg Marta Ólafsdóttir

 	
  

 


42/59