Document:

FIRST SOUTH BANK
                          SALARY CONTINUATION AGREEMENT

         THIS SALARY CONTINUATION AGREEMENT (the "Agreement") is made this _____
day of ____________________, 1999, by and between FIRST SOUTH BANK, a state bank
with a principal office in Spartanburg, South Carolina (the "Company") and BARRY
L. SLIDER (the "Executive").

                                  INTRODUCTION

         To encourage  the  Executive to remain an employee of the Company,  the
Company is willing to provide salary continuation benefits to the Executive. The
Company will pay the benefits from its general assets.

                                    AGREEMENT

         Now, therefore, in consideration of the mutual covenants and agreements
herein, the Executive and the Company agree as follows:

                                    Article 1
                                   Definitions

     1.1 Definitions.  Whenever used in this Agreement,  the following words and
phrases shall have the meanings specified:

          1.1.1 "Accrual  Balance" means the amount of death benefits payable to
     the  Executive  pursuant to Section 3.1 of this  Agreement and set forth in
     the attached Schedule A.

          1.1.2 "Board" or "Board of Directors"  means the Board of Directors of
     the Company.

          1.1.3 "Change of Control" means

          (i)  the  acquisition  by any person,  group of persons or entities of
               the beneficial  ownership or power to vote more than twenty (20%)
               percent of the Company's outstanding stock, or

          (ii) during any period of two (2)  consecutive  years, a change in the
               majority of the Board  unless the  election of each new  director
               was approved by at least  two-thirds of the directors  then still
               in office who were  directors  at the  beginning  of such two (2)
               year period, or

          (iii)a  reorganization,  merger,  exchange of shares,  combination  or
               consolidation of the Company with one or more other  corporations
               or other legal entities in which the Company is not surviving the
               corporation,  or a transfer  of all or  substantially  all of the
               assets of the Company to another person or entity.

          (iv) Notwithstanding any other provision in this Agreement, "Change of
               Control"  shall not be construed to mean the  formation of a bank
               holding  company or other entity approved in advance by the Board
               or any changes in ownership of the  Company's  assets or stock as
               the result of the formation of such an entity.

          1.1.4  "Code" means the  Internal  Revenue  Code of 1986,  as amended.
     References  to a Code section  shall be deemed to be that section as it now
     exists and to any successor provision.

          1.1.5  "Disability"  means,  if the  Executive is covered by a Company
     sponsored  disability  policy,  total  disability as defined in such policy
     without  regard to any waiting  period.  If the Executive is not covered by
     such a  policy,  Disability  means  the  Executive  suffering  a  sickness,
     accident or injury that, in the judgment of a physician  appointed and paid
     by the Company, prevents the Executive from performing substantially all of
     the  Executive's  normal  duties for the  Company.  As a  condition  to any
     benefits,  the Company may require the Executive to submit to such physical
     or mental  evaluations  and tests as the Company's Board of Directors deems
     appropriate.

<PAGE>

          1.1.6 "Early  Termination"  means the Termination of Employment before
     Normal Retirement Age for reasons other than death, Disability, Termination
     for Cause or following a Change of Control.

          1.1.7 "Early  Termination Date" means the month, day and year in which
     Early Termination occurs.

          1.1.8 "Effective Date" means January 1, 1999.

          1.1.9 "Normal Retirement Age" means the Executive's sixty-fifth (65th)
     birthday.

          1.1.10  "Normal  Retirement  Date"  means  the  later  of  the  Normal
     Retirement Age or Termination of Employment.

          1.1.11 "Plan Year" means a twelve-month  period  commencing on January
     1st and ending on  December  31st of each  year.  The first Plan Year shall
     commence on the Effective Date of this Agreement.

          1.1.12  "Termination  for Cause"  shall have the  meaning set forth in
     Section 5.2.

          1.1.13  "Termination of Employment" means that the Executive ceases to
     be employed by the Company for any reason  whatsoever  other than by reason
     of a leave of absence that is approved by the Company. For purposes of this
     Agreement,  if  there  is a  dispute  over  the  employment  status  of the
     Executive or the date of the  Executive's  Termination of  Employment,  the
     Board shall have the sole and absolute right to decide the dispute.

                                    Article 2
                                Lifetime Benefits

     2.1. Normal Retirement Benefit.  Upon termination of Employment on or after
the Normal  Retirement  Age for reasons other than the  Executive's  death,  the
Company shall pay to the Executive the benefit  described in this Section 2.1 in
lieu of any other benefit under this Agreement.

          2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 for
     the first Plan Year is  forty-five  thousand two hundred  thirty  ($45,230)
     dollars as stated on the  attached  Schedule A. The annual  benefit will be
     increased two (2.0%) percent each Plan Year thereafter,  until  Termination
     of Employment.  The Board, in its sole discretion,  may increase the annual
     benefit  under this  Section  2.1.1  beyond  the annual two (2.0%)  percent
     increase;  however,  any such  increase  shall require the  restatement  of
     Schedule A.

          2.1.2 Payment of Benefit.  The Company shall pay the annual benefit to
     the Executive in equal and consecutive monthly  installments payable on the
     first day of each month commencing with the month following the Executive's
     Normal  Retirement  Date  and  continuing  for two  hundred  fifteen  (215)
     additional  months,  for a  total  of two  hundred  sixteen  (216)  monthly
     payments.

     2.2 Early Termination  Benefit.  Upon Early Termination,  the Company shall
pay to the  Executive  the benefit  described in this Section 2.2 in lieu of any
other benefit under this Agreement.

          2.2.1  Amount of Benefit.  The benefit  under this  Section 2.2 is the
     Early  Termination  Annual  Benefit  amount set forth in Schedule A for the
     Plan Year ending immediately prior to the Early Termination Date.

          2.2.2 Payment of Benefit.  The Company shall pay the annual benefit to
     the Executive in equal and consecutive monthly  installments payable on the
     first day of each month commencing with the month following the Executive's
     Normal  Retirement  Age  and  continuing  for  two  hundred  fifteen  (215)
     additional  months,  for a  total  of two  hundred  sixteen  (216)  monthly
     payments.

<PAGE>

     2.3  Disability  Benefit.  If the Executive  terminates  employment  due to
Disability  prior  to  Normal  Retirement  Age,  the  Company  shall  pay to the
Executive the benefit described in this Section 2.3 in lieu of any other benefit
under this Agreement.

          2.3.1  Amount of Benefit.  The benefit  under this  Section 2.3 is the
     Disability  Annual Benefit amount set forth in Schedule A for the Plan Year
     ending immediately prior to the date in which the Termination of Employment
     occurs.  However,  any increase in the annual  benefit  under Section 2.1.1
     would require the  recalculation  of the Disability  benefit on Schedule A.
     The  Disability  Annual Benefit amount is determined by calculating a fixed
     annuity  which is payable in one hundred  seventy-nine  (179) equal monthly
     installments,  crediting  interest  on the unpaid  balance  of the  Accrual
     Balance at an annual rate of seven and one-half (7.5%) percent,  compounded
     monthly.

          2.3.2  Payment of Benefit.  The Company  shall pay the annual  benefit
     amount to the  Executive  in equal  and  consecutive  monthly  installments
     payable on the first day of each month  commencing with the month following
     the  Termination of Employment and continuing for two hundred fifteen (215)
     additional  months,  for a  total  of two  hundred  sixteen  (216)  monthly
     payments.  Upon  petition  by the  Executive,  the  Company,  in  its  sole
     discretion,  may instead pay the benefit in an amount  equal to the Accrual
     Balance in a lump sum within sixty (60) days of  Termination  of Employment
     in lieu of any other benefit under this Agreement.

     2.4 Change of Control Benefit.  Upon Termination of Employment  following a
Change of Control,  the Company shall pay to the Executive the benefit described
in this Section 2.4 in lieu of any other benefit under this Agreement.

          2.4.1 Amount of Benefit.  The annual benefit under this Section 2.4 is
     the Change of Control Annual Benefit amount set forth on Schedule A for the
     Plan Year in which Termination of Employment occurs.

          2.4.2  Payment of Benefit.  The Company  shall pay the annual  benefit
     amount to the  Executive  in equal  and  consecutive  monthly  installments
     payable on the first day of each month  commencing with the month following
     the Normal  Retirement  Date and continuing  for two hundred  fifteen (215)
     additional  months,  for a  total  of two  hundred  sixteen  (216)  monthly
     payments.

                                    Article 3
                                 Death Benefits

     3.1 Death Benefits. If the Executive dies while employed by the Company and
prior to commencement of any benefits due under Article 2, the Company shall pay
to the Executive's  beneficiary the benefit  described in this Section 3.1. This
benefit shall be paid in lieu of any other benefit under this Agreement.

          3.1.1  Amount of Benefit.  The benefit  under this  Section 3.1 is the
     Accrual  Balance  set  forth  in  Schedule  A  for  the  Plan  Year  ending
     immediately prior to the Executive's death.

          3.1.2  Payment of Benefit.  The  Company  shall pay the benefit to the
     Executive's  beneficiary in a lump sum within sixty (60) days following the
     Executive's death.

                                    Article 4
                                  Beneficiaries

     4.1 Beneficiary  Designations.  The Executive shall designate a primary and
contingent  beneficiary by filing a written  designation  with the Company.  The
Executive  may  revoke or  modify  the  designation  at any time by filing a new
designation.  However,  designations  will  only be  effective  if signed by the
Executive  and  accepted by the Company  during the  Executive's  lifetime.  The
Executive's beneficiary designation shall be deemed automatically revoked if the
beneficiary  predeceases  the Executive,  or if the Executive  names a spouse as

<PAGE>

beneficiary  and the marriage is subsequently  dissolved.  If the Executive dies
without  a valid  beneficiary  designation,  all  payments  shall be made to the
Executive's  surviving spouse, if any, and if none, to the Executive's surviving
descendants,  per stirpes,  and if no surviving spouse and  descendants,  to the
Executive's estate. If Executive dies and subsequently the beneficiary receiving
payments dies,  then any remaining  payments shall be paid pursuant to a written
beneficiary  designation filed with the Company made by such beneficiary,  or if
none to such beneficiary's estate.

     4.2  Facility of Payment.  If a benefit is payable to a minor,  to a person
declared incapacitated,  or to a person incapable of handling the disposition of
his or  her  property,  the  Company  may  pay  such  benefit  to the  guardian,
conservator,  legal  representative or person having the care or custody of such
minor,  incapacitated  person or incapable person. The Company may require proof
of incapacity,  minority or  guardianship  as it may deem  appropriate  prior to
distribution of the benefit.  Such distribution  shall completely  discharge the
Company from all liability with respect to such benefit.

                                    Article 5
                               General Limitations

         Notwithstanding  any  provision  of  this  Agreement  to the  contrary,
Executive  shall  irrevocably  forfeit and the Company shall not pay any benefit
under this  Agreement if any of the events  described in Section 5.1 - 5.3 below
occur:

     5.1 Excess Parachute Payment.  In the event that the benefit payable to the
Executive  pursuant to this  Agreement  should cause a  "parachute  payment," as
defined in Code  Section  280G(b)(2)  of the Code,  then such  benefit  shall be
reduced One Dollar  ($1.00) at a time until the payment  will not  constitute  a
parachute  payment.  In the event the benefit the Executive  receives under this
Agreement  should be  incorrectly  calculated so that such amount  constitutes a
parachute payment, then the Executive will promptly refund to Company the excess
amount.  Excess amount shall mean the amount in excess of the  Executive's  base
amount, as defined in Code Section 280G(b)(3), multiplied by 2.999.

     5.2  Termination  for Cause.  If the  Company  terminates  the  Executive's
employment for:

          5.2.1 any willful act of  misconduct or gross  negligence,  prior to a
     Change of Control,  which is materially injurious to the Company monetarily
     or otherwise;

          5.2.2 a criminal conviction of the Executive for any act involving the
     business and affairs of the Company; or

          5.2.3 a criminal  conviction  of the  Executive  for  commission  of a
     felony, the circumstances of which substantially  relate to the Executive's
     position with the Company.

     5.3 Suicide or  Misstatement.  If the Executive  commits suicide within two
(2) years after the date of this  Agreement,  or if the  Executive  has made any
material misstatement of fact on any application for life insurance purchased by
the Company.

     5.4 No Duplication of Benefits.  Each of the benefits described in Articles
2 and 3 are intended to be separate benefits and mutually exclusive of the other
so that once benefit  payments  commence under one Section the Executive (or his
beneficiary, as the case may be) shall not thereafter receive payments or become
entitled to benefits under another Section.

<PAGE>

                                    Article 6
                           Claims and Review Procedure

     6.1 Claims  Procedure.  The Company  shall notify any person or entity that
makes a claim  pursuant to this Agreement  (the  "Claimant") in writing,  within
ninety (90) days of the Claimant's written  application for benefits,  of his or
her  eligibility or  noneligibility  for benefits  under the  Agreement.  If the
Company  determines  that the  Claimant  is not  eligible  for  benefits or full
benefits,  the notice shall set forth (1) the specific  reasons for such denial,
(2) a specific  reference to the provisions of the Agreement on which the denial
is based, (3) a description of any additional  information or material necessary
for the  Claimant to perfect his or her claim,  and a  description  of why it is
needed,  and (4) an explanation of the Agreement's  claims review  procedure and
other appropriate information as to the steps to be taken if the Claimant wishes
to have the claim  reviewed.  If the Company  determines  that there are special
circumstances  requiring  additional time to make a decision,  the Company shall
notify  the  Claimant  of the  special  circumstances  and the  date by  which a
decision is expected to be made, and may extend the time for up to an additional
ninety (90) day period.

     6.2 Review  Procedure.  If the Claimant is determined by the Company not to
be eligible for benefits, or if the Claimant believes that he or she is entitled
to greater or different  benefits,  the Claimant  shall have the  opportunity to
have such claim reviewed by the Company by filing a petition for review with the
Company  within  sixty  (60) days  after  receipt  of the  notice  issued by the
Company.  Said  petition  shall state the  specific  reasons  which the Claimant
believes  entitle him or her to benefits  or to greater or  different  benefits.
Within sixty (60) days after receipt by the Company of the petition, the Company
shall afford the Claimant (and counsel, if any) an opportunity to present his or
her position to the Company orally or in writing,  and the Claimant (or counsel)
shall have the right to review the pertinent documents. The Company shall notify
the  Claimant  of its  decision  in writing  within  the sixty (60) day  period,
stating  specifically the basis of its decision,  written in a manner calculated
to be understood by the Claimant and the specific provisions of the Agreement on
which the decision is based.  If,  because of the need for a hearing,  the sixty
(60) day  period is not  sufficient,  the  decision  may be  deferred  for up to
another sixty (60) day period at the election of the Company, but notice of this
deferral shall be given to the Claimant.

                                    Article 7
                           Amendments and Termination

     This  Agreement  may be amended or terminated  only by a written  agreement
signed by the Company and the Executive.

                                    Article 8
                                  Miscellaneous

     8.1  Binding  Effect.  This  Agreement  shall  bind the  Executive  and the
Company,  and their  heirs,  beneficiaries,  survivors,  legal  representatives,
personal representatives, assigns, successors, administrators and transferees.

     8.2 No Guarantee of Employment.  This Agreement is not an employment policy
or contract.  This  Agreement does not give the Executive the right to remain an
employee of the  Company,  nor does it  interfere  with the  Company's  right to
discharge the  Executive.  This Agreement also does not require the Executive to
remain  an  employee  nor  interfere  with the  Executive's  right to  terminate
employment  at any time.  Nothing in this  Agreement  shall be  construed  as an
employment agreement, either express or implied.

     8.3  Non-Transferability.  No amounts payable under this Agreement shall be
transferable  by the  Executive.  Further,  the Executive may not sell,  assign,
alienate, pledge or otherwise encumber any benefits under this Agreement.

<PAGE>

     8.4 Reorganization. The Company shall not merge or consolidate into or with
another  company,  or  reorganize,  or sell  substantially  all of its assets to
another company,  firm, or person unless such succeeding or continuing  company,
firm, or person agrees to assume and  discharge the  obligations  of the Company
under this Agreement.  Upon the occurrence of such event,  the term "Company" as
used in this  Agreement  shall be deemed to refer to the  successor  or survivor
company.

     8.5 Tax Withholding. The Company shall withhold any taxes that are required
to be withheld from the benefits provided under this Agreement.

     8.6  Applicable  Law.  The  Agreement  and all  rights  hereunder  shall be
governed  by the laws of the  State  of South  Carolina,  except  to the  extend
preempted by the laws of the United States of America.

     8.7  Unfunded  Arrangement.  The  Executive  and  any  beneficiary  of  the
Executive  are  general  unsecured  creditors  of the Company for the payment of
benefits  under this  Agreement.  This  Agreement  shall  always be an  unfunded
arrangement.  The benefits represent the mere promise by the Company to pay such
benefits.  The rights to benefits are not subject in any manner to anticipation,
alienation,  sale, transfer,  assignment,  pledge,  encumbrance,  attachment, or
garnishment by creditors.  Any insurance on the  Executive's  life, if any, is a
general  asset  of the  Company  to  which  the  Executive  and the  Executive's
beneficiary  have  no  preferred  or  secured  claim.  Title  to and  beneficial
ownership of any cash or assets  Company may earmark to pay the Executive or his
beneficiary shall at all times remain with the Company.

     8.8 Entire  Agreement.  This  Agreement  constitutes  the entire  agreement
between the Company and the Executive as to the subject matter hereof. No rights
are  granted  to the  Executive  by virtue of this  Agreement  other  than those
specifically set forth herein.

     8.9  Administration.  The Company  shall have powers which are necessary to
administer this Agreement, including but not limited to:

          8.9.1 Interpreting the provisions of the Agreement;

          8.9.2  Establishing  and  revising  the method of  accounting  for the
     Agreement;

          8.9.3 Maintaining a record of benefit payments; and

          8.9.4  Establishing  rules  and  prescribing  any forms  necessary  or
     desirable to administer the Agreement.

     8.10 Named  Fiduciary.  For  purposes  of the  Employee  Retirement  Income
Security Act of 1974, if  applicable,  the Company shall be the named  fiduciary
and plan administrator under the Agreement.  The named fiduciary may delegate to
others certain  aspects of the management and operation  responsibilities  under
this  Agreement  including  the  employment  of advisors and the  delegation  of
ministerial duties to qualified individuals.

     8.11 No Trust Created.  Nothing contained in this Agreement,  and no action
taken  pursuant to its provisions by either party hereto,  shall create,  nor be
construed to create, a trust of any kind or a fiduciary relationship between the
Company and the Executive, his designated beneficiary,  any other beneficiary of
the Executive or any other person.

<PAGE>

     8.12 Date of Birth. The Executive hereby represents to the Company that his
date of birth is November 17, 1952.

     IN WITNESS  WHEREOF,  the Executive and a duly  authorized  Company officer
have executed and sealed this Agreement as of the date first above written.

Witnesses:                         COMPANY:

                                   By:------------------------------------------

                                     Its:---------------------------------------

                                  EXECUTIVE:

<PAGE>

                             BENEFICIARY DESIGNATION

                                FIRST SOUTH BANK
                          SALARY CONTINUATION AGREEMENT

                                 BARRY L. SLIDER

I designate the following as beneficiary of any death benefits under this Salary
Continuation Agreement:

Primary:

Contingent:

Note: To name a trust as beneficiary,  please provide the name of the trustee(s)
      and the exact name and date of the trust agreement.

I understand  that I may change these  beneficiary  designations by filing a new
written designation with the Company. I further understand that the designations
will be automatically  revoked if the beneficiary  predeceases me, or, if I have
named my spouse as beneficiary and our marriage is subsequently dissolved.

Signature:

Date:

Accepted by the Company this         day of                   , 1999.
                             -------        ------------------

By:

Title:AMENDMENT NO. 2
                                       TO
                              AMENDED AND RESTATED
                          REGISTRATION RIGHTS AGREEMENT

         This  AMENDMENT  NO. 2 TO  AMENDED  AND  RESTATED  REGISTRATION  RIGHTS
AGREEMENT  (the  "Agreement")  is made as of the 10th day of March,  2000 by and
among Commtouch  Software Ltd., an Israeli  company (the  "Company")  having its
principal  executive offices at 10 Technology Avenue,  Ein Vered 40696,  Israel,
and  the  investors   identified  on  the  signature   page  to  this  Agreement
(collectively, the "Preferred Shareholders").

         In  accordance  with the  provisions  of Section 7 of the  Amended  and
Restated  Registration  Rights Agreement (the "Original Rights  Agreement"),  as
amended and  restated by Amendment  No. 1 to Amended and  Restated  Registration
Rights  Agreement,  dated January 4, 2000 ("Amendment No. 1" and,  together with
the  Original  Rights  Agreement,  as  amended,  the "Rights  Agreement")  which
provides  that any  provision of the Rights  Agreement  may be amended,  and the
exercise  of any  rights  under  the  Rights  Agreement  may be  waived  (either
generally   or  in  a  particular   instance,   and  either   retroactively   or
prospectively) only with the written consent of the Company,  and at least a 51%
majority  in  interest  of the  holders of the Shares (as  defined in the Rights
Agreement), the parties to this Agreement hereby agree as follows:

         1. In the event that the Company  undertakes an underwritten  secondary
offering  of  its  ordinary   shares  during  the  next  sixty  (60)  days  (the
"Offering"),  the  allocation  of the ordinary  shares to be sold in  connection
therewith shall be as follows:

                  (a) First,  to the Company,  in an amount as determined by the
         Board of  Directors  of the Company to be in the best  interests of the
         Company;

                  (b) Second,  following  the  allocation  to the Company of the
         amount  set forth  under  paragraph  (a)  above,  the  number of shares
         included in the registration  and underwriting  will be allocated among
         the  holders  of  ordinary   shares  set  forth  in  Exhibit  A  hereto
         (individually,  a "Holder" and collectively,  the "Holders") requesting
         registration  in  proportion,  as nearly as  practicable,  to the total
         number of ordinary shares offered by such Holders at the time of filing
         of a  registration  statement  in  connection  with the  offering in an
         amount  equal to the balance of the  ordinary  shares  remaining  to be
         sold.

         2. Each Holder waived the 30 days notice provision set forth in section
2 of the Rights  Agreement  and shall notify the Company,  within five  business
days of its receipt of the Company's notice of the Offering, of the total number
of shares such Holder  intends to sell and, to the extent that the  underwriters
of the secondary offering determine it necessary to cutback the number of shares
offered to the public,  each Holder  agrees to a pro rata cutback based upon its
percentage  ownership of the total number of shares  requested to be sold by all
Holders in the secondary offering.

<PAGE>

         3. Each Holder hereby grants power of attorney as follows:

                  (a)  The  undersigned  hereby   irrevocably   constitutes  and
         appoints Gideon Mantel and James Collins (the "Attorneys-in-Fact"), and
         each of them,  his  agent and  attorney  in fact,  with  full  power of
         substitution,  with respect to all matters  arising in connection  with
         the  secondary  offering  and sale of the  Company's  ordinary  shares,
         including, but not limited to, the power and authority on behalf of the
         undersigned to do or cause to be done any of the following things:

                           (i) negotiate, determine and agree upon (A) the price
                  at which the ordinary  shares will be offered to the public by
                  the underwriters pursuant to an Underwriting Agreement for the
                  sale of the ordinary  shares (the  "Underwriting  Agreement"),
                  (B) the  underwriting  discount  with  respect to the ordinary
                  shares, and (c) the price at which the ordinary shares will be
                  sold to the Underwriters by the Selling Stockholders  pursuant
                  to the  Underwriting  Agreement,  all of which shall be at the
                  same price or discount at which the company and other  Selling
                  Stockholders offer or sell ordinary shares.

                           (ii)  prepare,  execute and  deliver an  Underwriting
                  Agreement,  but with such  insertions,  changes,  additions or
                  deletions  as the  Attorneys  in  Fact  shall  approve  as not
                  materially  adverse to the  undersigned,  such  approval to be
                  conclusively  evidenced by the  execution  and delivery of the
                  Underwriting Agreement by the Attorneys-in-Fact, including the
                  making of all  representations  and agreements provided in the
                  Underwriting  Agreement  to be made,  and the  exercise of all
                  authority thereunder vested in, the undersigned;

                           (iii) sell, assign, transfer and deliver the ordinary
                  shares  to  the  underwriters  pursuant  to  the  Underwriting
                  Agreement and deliver to the underwriters certificates for the
                  ordinary shares so sold;

                           (iv)  take  any and all  steps  deemed  necessary  or
                  desirable  by the  Attorneys-in-Fact  in  connection  with the
                  registration  of the ordinary  shares under the Securities Act
                  of 1933, as amended (the  "Securities  Act"),  the  Securities
                  Exchange Act of 1934, as amended,  and under the securities or
                  "blue   sky"  laws  of  various   states  and   jurisdictions,
                  including,  without  limitation,  the giving or making of such
                  undertakings,  representations,   warranties,  and  agreements
                  (including,  without limitations,  the restriction on sales of
                  ordinary  shares by the  undersigned)  and the  taking of such
                  other steps as the  Attorneys-in-Fact  may deem  necessary  of
                  advisable;

                           (v) instruct the Company and the Company's  custodian
                  for the  ordinary  shares  (the  "Custodian")  on all  matters
                  pertaining to the sale of the ordinary  shares and delivery of
                  certificates therefor;

                           (vi)  provide,  in accordance  with the  Underwriting
                  Agreement,  for the payment of expenses  of the  offering  and
                  sale  of  the  ordinary   shares  covered  by  a

                                       2

<PAGE>

                  registration  statement  relating  thereto  and  filed  by the
                  Company with the Securities and Exchange Commission;

                           (vii)   retain  legal   counsel  to   represent   the
                  undersigned in connection with any and all matters referred to
                  herein  (which  counsel  will  be  McCutchen,  Doyle,  Brown &
                  Enersen, LLP);

                           (viii)  otherwise  take all actions and do all things
                  necessary  or  proper,   required,   contemplated   or  deemed
                  advisable  or  desirable  by the  Attorneys-in-Fact  in  their
                  discretion, including, if necessary, the endorsement (if blank
                  or otherwise) on behalf of the  undersigned of the certificate
                  or  certificates  representing  the ordinary shares or a stock
                  power or powers  attached to such  certificate or certificates
                  and the  execution  and delivery of any other  documents,  and
                  generally  act for and in the  name  of the  undersigned  with
                  respect to the sale of the ordinary shares to the Underwriters
                  and the reoffering of the ordinary shares by the  Underwriters
                  as fully as could the undersigned if then  personally  present
                  and acting.

                  (b) Each  Attorney-in  Fact may act  alone in  exercising  the
         rights and powers conferred on the Attorneys-in Fact by this Agreement,
         and the act of any Attorney-in-Fact  shall be considered the act of the
         Attorneys-in-Fact.   Each   Attorney-in-Fact  is  hereby  empowered  to
         determine, in his sole and absolute discretion, the time or times when,
         the  purposes  for  which,  and the manner in which,  any power  herein
         conferred upon the Attorney-in-Fact shall be exercised.

                  (c) The Custodian,  the Company and the  underwriters  and all
         other persons dealing with the  Attorneys-in-Fact as such may rely upon
         any  writing  believed in good faith to be signed by one or more of the
         Attorneys-in-Fact.

                  (d) The  Attorneys-in-Fact  shall not receive any compensation
for their services rendered hereunder.

         4. Each Holder  hereby  agrees (a) not to sell,  transfer or  otherwise
dispose of their ordinary shares remaining after the secondary  offering without
the prior written consent of the underwriters for a period not to exceed 90 days
after  the  commencement  of the  offering  (the  length  of such  period  to be
negotiated by the Company and the  Underwriters)  and (b) to execute a "lock-up"
agreement  to that effect  which will allow the  underwriters  to provide for an
orderly  distribution  of ordinary  shares in the  proposed  offering and for an
orderly market thereafter.

         5. This  Agreement  shall be governed  by the laws of Israel,  with any
terms relating to United States  securities laws to be interpreted in accordance
with the  federal  laws of the United  States of America.  Any dispute  arising,
under or with respect to this  Agreement  shall be resolved  exclusively  in the
appropriate court in Tel-Aviv, Israel.

         6. This Agreement and the Rights  Agreement shall constitute the entire
agreement among the parties regarding the transactions  contemplated  herein and
therein,  and may not be

                                       3

<PAGE>

amended except in writing.  Except as set forth herein,  all of the terms of the
Rights  Agreement shall remain unchanged and be in full force and effect and are
hereby  ratified  and  confirmed in all  respects.  In the event of any conflict
between  the  provisions  of  this  Agreement  and  the  Rights  Agreement,  the
provisions of this Agreement shall control.  On and after the date hereof,  each
reference in the Rights Agreement to "this  Agreement,"  "hereunder,"  "hereof,"
"herein"  or words of like import  shall mean and be a  reference  to the Rights
Agreement as amended hereby.

         7. This Agreement may be executed in one or more counterparts,  each of
which shall be deemed an original,  but all of which together  shall  constitute
one and the same instrument.

                                       4
<PAGE>

         IN WITNESS  WHEREOF,  the parties have executed this Amendment No. 2 to
Amended and Restated  Registration  Rights  Agreement as of the date first above
written.

COMMTOUCH SOFTWARE LTD.

     By: ___________________________
     Name: _________________________
     Title: ________________________

PREFERRED SHAREHOLDERS:

     By: ___________________________
     Name: _________________________
     Company: ______________________
     Title: ________________________

     By: ___________________________
     Name: _________________________
     Company: ______________________
     Title: ________________________

     By: ___________________________
     Name: _________________________
     Company: ______________________
     Title: ________________________

     By: ___________________________
     Name: _________________________
     Company: ______________________
     Title: ________________________

     By: ___________________________
     Name: _________________________
     Company: ______________________
     Title: ________________________

     By: ___________________________
     Name: _________________________
     Company: ______________________
     Title: ________________________

                                       5
<PAGE>

                                    EXHIBIT A

                              LIST OF SHAREHOLDERS

Preferred Shareholders

     All  parties  who are  parties to the  Registration  Rights  Agreement  who
request participation in the secondary offering.

Ordinary Shareholders

Any of the following who request participation in the secondary offering:

1.   Gideon Mantel

2.   Amir Lev

3.   Isabel Maxwell

4.   James Collins

5.   Nahum Sharfman

                                       6

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00005-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00005-of-00352.parquet"}]]