Document:

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

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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.

 

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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

 	
  

 

42/59Exhibit 4.7

 	
  

 

Exhibit I

Purchase and 

Assignment Agreement

relating to shares in 

eleven Gesellschaft zur Entwicklung und Vermarktung 

von Netzwerktechnologien mbH

	
  

 	
  

 
	
  

 
	
  

 	
  

 
	
  

 	
 b
 e t w e e n

 
	
  

 	
  

 
	
 1)

 	
 Robert
 Rothe,

 
	
  

 	
 whose address is Berlin 

 
	
  

 	
  

 
	
  

 	
 –
 hereinafter “Seller 1” or “Representative”– 

 
	
  

 	
  

 
	
 2)

 	
 Benjamin
 Pannier,

 
	
  

 	
 whose address is Berlin 

 
	
  

 	
  

 
	
 3)

 	
 Robert
 Strycharczuk,

 
	
  

 	
 whose address is Berlin 

 
	
  

 	
  

 
	
 4)

 	
 Ragna
 Rothe, 

 
	
  

 	
 whose address is Berlin 

 
	
  

 	
  

 
	
 5)

 	
 Jörg
 Jacobs, 

 
	
  

 	
 whose address is Berlin 

 
	
  

 	
  

 
	
  

 	
 –
 the parties referred to under 1) through 5) 

 hereinafter each a “Seller” and
 collectively the 

 “Sellers”– 

 
	
  

 	
  

 
	
  

 	
 a
 n d

 
	
  

 	
  

 
	
 6)

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

 
	
  

 	
  

 
	
  

 	
 –
 hereinafter “Purchaser”– 

 
	
  

 	
  

 
	
 7)

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

 

page 1 of 47

	
  

 	
  

 
	
  

 	
 –
 hereinafter “Commtouch”– 

 
	
  

 	
  

 
	
  

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

 

page 2 of 47

Table of Contents 

	
  

 	
  

 	
  

 
	
 1

 	
 Preamble

 	
 7

 
	
  

 	
  

 	
  

 
	
 2

 	
 Sale and Assignment

 	
 7

 
	
  

 	
  

 	
  

 
	
 3

 	
 Initial Purchase Price

 	
 8

 
	
  

 	
  

 	
  

 
	
 4

 	
 Earn-out

 	
 13

 
	
  

 	
  

 	
  

 
	
 5

 	
 Change of Control Payment

 	
 20

 
	
  

 	
  

 	
  

 
	
 6

 	
 Conditions Precedent

 	
 21

 
	
  

 	
  

 	
  

 
	
 7

 	
 Representations and
 Warranties

 	
 23

 
	
  

 	
  

 	
  

 
	
 8

 	
 Remedies

 	
 35

 
	
  

 	
  

 	
  

 
	
 9

 	
 Tax Indemnities;
 Cooperation in Tax Matters

 	
 40

 
	
  

 	
  

 	
  

 
	
 10

 	
 Conduct Prior To The
 Closing

 	
 43

 
	
  

 	
  

 	
  

 
	
 11

 	
 Confidentiality,
 Announcements and Press Releases

 	
 44

 
	
  

 	
  

 	
  

 
	
 12

 	
 Expenses

 	
 44

 
	
  

 	
  

 	
  

 
	
 13

 	
 Disputes

 	
 45

 
	
  

 	
  

 	
  

 
	
 14

 	
 Representative

 	
 45

 
	
  

 	
  

 	
  

 
	
 15

 	
 Final Provisions

 	
 46

 

page 3 of 47

Directory of Annexes 

	
  

 	
  

 
	
 Annex 1.2 – Shareholders’
 List

 	
 7

 
	
  

 	
  

 
	
 Annex 1.6 – Shareholders’
 Resolution and Consent of the Company

 	
 7

 
	
  

 	
  

 
	
 Annex 3.4a) – List of
 Sellers’ Bank Accounts

 	
 10

 
	
  

 	
  

 
	
 Annex 3.4b) – Calculation
 of the Closing Cash Payment

 	
 10

 
	
  

 	
  

 
	
 Annex 3.7 – Escrow
 Agreement

 	
 12

 
	
  

 	
  

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

 	
 12

 
	
  

 	
  

 
	
 Annex 4.4(a) – List of
 Eleven Customers

 	
 17

 
	
  

 	
  

 
	
 Annex 4.4(b) – Company
 Business

 	
 17

 
	
  

 	
  

 
	
 Annex 4.5.1 – Consulting
 Agreement

 	
 18

 
	
  

 	
  

 
	
 Annex 6.7.1 – Confirmation
 Letter Transfer Agent

 	
 22

 
	
  

 	
  

 
	
 Annex 6.7.2 – Closing
 Delivery Equity Consideration

 	
 22

 
	
  

 	
  

 
	
 Annex 7.5.1 – List of
 Material Agreements

 	
 24

 
	
  

 	
  

 
	
 Annex 7.5.2 – Material
 Agreements in Default (if any)

 	
 25

 
	
  

 	
  

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

 	
 26

 
	
  

 	
  

 
	
 Annex 7.7 – List of
 Business Insurances

 	
 26

 
	
  

 	
  

 
	
 Annex 7.8 – List of
 Litigation and Arbitration Matters

 	
 27

 
	
  

 	
  

 
	
 Annex 7.11.3 – List of
 Restricted IP

 	
 28

 
	
  

 	
  

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

 	
 28

 
	
  

 	
  

 
	
 Annex 7.11.9 – List of
 Open Source Materials

 	
 29

 
	
  

 	
  

 
	
 Annex 7.11.12 – List of
 Governmental Funding, Facilities or Resources

 	
 30

 
	
  

 	
  

 
	
 Annex 7.12.2 – Tax Filings
 and Payments in Default

 	
 30

 
	
  

 	
  

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

 	
 31

 
	
  

 	
  

 
	
 Annex 7.12.7 – Exceptions
 to Normal Depreciation or Amortization

 	
 32

 
	
  

 	
  

 
	
 Annex 7.15 – List of
 Leased Real Estate

 	
 32

 
	
  

 	
  

 
	
 Annex 7.16 – Conflicting
 Material Contracts

 	
 33

 
	
  

 	
  

 
	
 Annex 8.10 – List of
 Documents Provided in Data Room

 	
 40

 
	
  

 	
  

 

page 4 of 47

Table of Definitions

	
  

 	
  

 
	
 2012 Earn-out Payment

 	
 15

 
	
  

 	
  

 
	
 2012 Platform Revenue

 	
 15

 
	
  

 	
  

 
	
 2013-2015 Platform Revenue

 	
 16

 
	
  

 	
  

 
	
 Acceleration Event

 	
 20

 
	
  

 	
  

 
	
 Additional Escrow Amount

 	
 12

 
	
  

 	
  

 
	
 Additional Taxes

 	
 40

 
	
  

 	
  

 
	
 Agreed Losses

 	
 39

 
	
  

 	
  

 
	
 Allocation Principle

 	
 41

 
	
  

 	
  

 
	
 Annual Earn-out Amount

 	
 15

 
	
  

 	
  

 
	
 Annual Earn-out
 Calculation Statement

 	
 16

 
	
  

 	
  

 
	
 Applicable Expiration Date

 	
 36

 
	
  

 	
  

 
	
 AV Platform Revenue

 	
 16

 
	
  

 	
  

 
	
 Awarded Losses

 	
 39

 
	
  

 	
  

 
	
 Base Earn-out Amount

 	
 14

 
	
  

 	
  

 
	
 Best Knowledge of the
 Sellers

 	
 37

 
	
  

 	
  

 
	
 Breach of Guarantee

 	
 36

 
	
  

 	
  

 
	
 Business Day

 	
 10

 
	
  

 	
  

 
	
 Business Insurances

 	
 27

 
	
  

 	
  

 
	
 Cash

 	
 11

 
	
  

 	
  

 
	
 Cash Consideration

 	
 8

 
	
  

 	
  

 
	
 CEO

 	
 18

 
	
  

 	
  

 
	
 Claim

 	
 40

 
	
  

 	
  

 
	
 Claim Certificate

 	
 37

 
	
  

 	
  

 
	
 Closing

 	
 21

 
	
  

 	
  

 
	
 Closing Cash Payment

 	
 10

 
	
  

 	
  

 
	
 Closing Date

 	
 21

 
	
  

 	
  

 
	
 Closing Memorandum

 	
 23

 
	
  

 	
  

 
	
 Commtouch

 	
 2

 
	
  

 	
  

 
	
 Company

 	
 7

 
	
  

 	
  

 
	
 Company Closing Cash
 Certificate

 	
 11

 
	
  

 	
  

 
	
 Company Intellectual
 Property

 	
 28

 

	
  

 	
  

 
	
 Company Option

 	
 12

 
	
  

 	
  

 
	
 Condition Precedent

 	
 21

 
	
  

 	
  

 
	
 Conflict

 	
 33

 
	
  

 	
  

 
	
 CTO

 	
 18

 
	
  

 	
  

 
	
 Deemed Losses

 	
 38

 
	
  

 	
  

 
	
 Earn-out Arbitrator

 	
 17

 
	
  

 	
  

 
	
 Earn-out Dispute Notice

 	
 17

 
	
  

 	
  

 
	
 Eleven SDK

 	
 16

 
	
  

 	
  

 
	
 Eleven SDK Customer

 	
 17

 
	
  

 	
  

 
	
 Employed by the Company

 	
 20

 
	
  

 	
  

 
	
 Employment by the Company

 	
 20

 
	
  

 	
  

 
	
 Equity Consideration

 	
 8

 
	
  

 	
  

 
	
 Escrow Account

 	
 12

 
	
  

 	
  

 
	
 Escrow Agent

 	
 12

 
	
  

 	
  

 
	
 Escrow Agreement

 	
 12

 
	
  

 	
  

 
	
 Escrow Amount

 	
 10

 
	
  

 	
  

 
	
 Escrow Fund

 	
 12

 
	
  

 	
  

 
	
 Escrow Release Date

 	
 39

 
	
  

 	
  

 
	
 Expiration Dates

 	
 36

 
	
  

 	
  

 
	
 Extraordinary Claims

 	
 36

 
	
  

 	
  

 
	
 Financial Statements

 	
 27

 
	
  

 	
  

 
	
 General Indemnification
 Cap

 	
 37

 
	
  

 	
  

 
	
 Group Company

 	
 17

 
	
  

 	
  

 
	
 Holdback Amount

 	
 39

 
	
  

 	
  

 
	
 Initial Purchase Price

 	
 8

 
	
  

 	
  

 
	
 Intellectual Property

 	
 28

 
	
  

 	
  

 
	
 Leased Real Estate

 	
 32

 
	
  

 	
  

 
	
 Lien

 	
 24

 
	
  

 	
  

 
	
 Material Agreements

 	
 26

 
	
  

 	
  

 
	
 Measurement Period

 	
 17

 
	
  

 	
  

 
	
 New SaaS

 	
 17

 

page 5 of 47

	
  

 	
  

 
	
 Objection Notice

 	
 38

 
	
  

 	
  

 
	
 Open Source Materials

 	
 28

 
	
  

 	
  

 
	
 Parties

 	
 2

 
	
  

 	
  

 
	
 Plan

 	
 12

 
	
  

 	
  

 
	
 Plan Consideration

 	
 12

 
	
  

 	
  

 
	
 Purchaser

 	
 1

 
	
  

 	
  

 
	
 Registered Intellectual
 Property

 	
 28

 
	
  

 	
  

 
	
 Regulation S Investor

 	
 33

 
	
  

 	
  

 
	
 Representative

 	
 1,
 22

 
	
  

 	
  

 
	
 SaaS Technology or
 Platform

 	
 17

 
	
  

 	
  

 
	
 SDK

 	
 17

 
	
  

 	
  

 
	
 SEC

 	
 33

 
	
  

 	
  

 
	
 Securities Act

 	
 33

 
	
  

 	
  

 
	
 Seller

 	
 1

 
	
  

 	
  

 
	
 Seller 1

 	
 1

 

	
  

 	
  

 
	
 Sellers

 	
 1

 
	
  

 	
  

 
	
 Shares

 	
 7

 
	
  

 	
  

 
	
 Straddle Period

 	
 41

 
	
  

 	
  

 
	
 Subsidiaries

 	
 23

 
	
  

 	
  

 
	
 Subsidiary

 	
 23

 
	
  

 	
  

 
	
 Tax Authority

 	
 30

 
	
  

 	
  

 
	
 Tax Benefit

 	
 41

 
	
  

 	
  

 
	
 Tax Dispute

 	
 42

 
	
  

 	
  

 
	
 Tax Procedure

 	
 42

 
	
  

 	
  

 
	
 Tax Refund

 	
 41

 
	
  

 	
  

 
	
 Third Party Claim

 	
 38

 
	
  

 	
  

 
	
 Transaction

 	
 7

 
	
  

 	
  

 
	
 Transaction Fees

 	
 44

 
	
  

 	
  

 
	
 Upside Earn-out Amount

 	
 14

 

page 6 of 47

	
  

 	
  

 	
  

 	
  

 
	
 1

 	
  

 	
 Preamble

 
	
  

 	
  

 	
  

 
	
  

 	
 1.1

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 1.2

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 1.3

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 1.4

 	
  

 	
      The Purchaser is an indirectly wholly
 owned subsidiary of Commtouch.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 1.5

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 1.6

 	
  

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

 
	
  

 	
  

 	
  

 
	
 2

 	
  

 	
 Sale and Assignment

 
	
  

 	
  

 	
  

 
	
  

 	
 2.1

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.2

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.3

 	
  

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

 

page 7 of 47

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.4

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.5

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 
	
 3

 	
  

 	
 Initial Purchase Price

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3.1

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3.2

 	
  

 	
      The Initial Purchase Price shall be
 comprised of: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 3.2.1

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 3.2.2

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

 

page 8 of 47

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 3.2.2.1

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 3.2.2.2

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 3.2.2.3

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 3.2.2.4

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

 

page 9 of 47

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 3.2.2.5

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3.3

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3.4

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3.5

 	
  

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

 

page 10 of 47

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3.6

 	
  

 	
      Cash and Deferred Revenue Adjustment.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 3.6.1

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 3.6.2

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 3.6.3

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 3.6.4

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

 

page 11 of 47

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3.7

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3.8

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3.9

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

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

 

page 12 of 47

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3.10

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 
	
 4

 	
  

 	
 Earn-out 

 
	
  

 	
  

 	
  

 
	
  

 	
 4.1

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 4.2

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 2012 Earn-out

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 4.2.1

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

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 2013 – 2015 Earn-out

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 4.2.2

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 4.2.3

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 i)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 ii)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 4.2.4

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

 

page 13 of 47

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 i)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 ii)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 4.2.5

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 i)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 ii)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 iii)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 4.3

 	
  

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

 

page 14 of 47

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 4.4

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

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

 

page 15 of 47

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 (i)

 	
 anti
 virus products and services or 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 (ii)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 (i)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 (ii)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 (a)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 (b)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 (iii)

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

 

page 16 of 47

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 (iv)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

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

 

page 17 of 47

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 4.5

 	
  

 	
      Continuation
 Requirement.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 4.5.1

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 4.5.2

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 4.5.3

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

 

page 18 of 47

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 4.5.4

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
      i)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
      ii)

 	
           intentional
 damage to Commtouch’s assets;

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
      iii)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
      iv)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
      v)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
      vi)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
      vii)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 4.5.5

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

 

page 19 of 47

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 4.5.6

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 5

 	
  

 	
 Change of Control Payment

 
	
  

 	
  

 	
  

 
	
  

 	
  

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

 
	
  

 	
  

 	
  

 
	
  

 	
 5.1

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 5.2

 	
  

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

 

page 20 of 47

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 5.3

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 5.4

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 
	
 6

 	
  

 	
  

 	
 Conditions Precedent

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.1

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 6.1.1

 	
 Conditions
 to Closing

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
      i)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 6.1.2

 	
 Conditions for Transfer

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
      i)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
      ii)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
      iii)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.2

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.3

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.4

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.5

 	
  

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

 

page 21 of 47

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.6

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.7

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 6.7.1

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 6.7.2

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

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.8

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 6.8.1

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 6.8.2

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 6.8.3

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 6.8.4

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

 

page 22 of 47

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.9

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.10

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 
	
 7

 	
 Representations and
 Warranties

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.1

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.2

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.3

 	
  

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

 

page 23 of 47

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.4

 	
 Business Operations, Business Assets and Loans. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 7.4.1

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 7.4.2

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 7.4.3

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 7.4.4

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.5

 	
 Material Agreements 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 7.5.1

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

 

page 24 of 47

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 i)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 ii)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 iii)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 iv)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 v)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 vi)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 vii)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 viii)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 ix)

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

 

page 25 of 47

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.5.2

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.5.3

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.6

 	
 Employees; Pensions

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.6.1

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.6.2

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.6.3

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.6.4

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.6.5

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

 

page 26 of 47

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.7

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.8

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.9

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.10

 	
  

 	
 Financial Statements 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.10.1

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.10.2

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.10.3

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.10.4

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

 

page 27 of 47

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.10.5

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.11

 	
  

 	
 Intellectual Property Rights

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.11.1

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.11.2

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.11.3

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.11.4

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

 

page 28 of 47

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.11.5

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.11.6

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.11.7

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.11.8

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.11.9

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.11.10

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

 

page 29 of 47

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.11.11

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.11.12

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.12

 	
  

 	
 Tax/Taxes

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.12.1

 	
 “Tax” or “Taxes” shall mean

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 i)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 ii)

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

 

page 30 of 47

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.12.2

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 i)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 ii)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 iii)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 iv)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 v)

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

 

page 31 of 47

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.12.3

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.12.4

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.12.5

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.12.6

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.12.7

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.12.8

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.13

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.14

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.15

 	
  

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

 

page 32 of 47

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.16

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.17

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.18

 	
  

 	
 Securities Law 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.18.1

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

 

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.18.2

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.18.3

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.18.4

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

 

page 34 of 47

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.18.5

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.18.6

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.18.7

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.18.8

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 7.18.9

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.19

 	
  

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

 

page 35 of 47

	
 

	
 

	
 

	
 

	
 

	
8

	
 

	
Remedies

	
 

	
 

	
 

	
 

	
 

	
 

	
8.1

	
 

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

	
 

	
 

	
 

	
 

	
 

	
 

	
8.2

	
 

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

	
 

	
 

	
 

	
 

	
 

	
 

	
8.3

	
 

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

page 36 of 47

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

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

	
 

	
 

	
 

	
 

	
 

	
8.4

	
 

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

	
 

	
 

	
 

	
 

	
 

	
8.5

	
 

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

	
 

	
 

	
 

	
 

	
 

	
8.6

	
 

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

	
 

	
 

	
 

	
 

	
 

	
8.7

	
 

	
     Procedure in respect of Purchaser’s
claims in general:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
8.7.1

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

page 37 of 47

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

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

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
8.7.2

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

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
8.7.3

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

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
8.7.4

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

page 38 of 47

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

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

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
8.7.5

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

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
8.7.6

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

	
 

	
 

	
 

	
 

	
 

	
 

	
8.8

	
 

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

	
 

	
 

	
 

	
 

	
 

	
 

	
8.9

	
 

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

page 39 of 47

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

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

	
 

	
 

	
 

	
 

	
 

	
 

	
8.10

	
 

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

	
 

	
 

	
 

	
 

	
 

	
8.11

	
 

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

	
 

	
 

	
 

	
 

	
9

	
 

	
Tax Indemnities; Cooperation in Tax Matters

	
 

	
 

	
 

	
 

	
 

	
 

	
9.1

	
 

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

page 40 of 47

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
9.1.1

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

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
9.1.2

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

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
9.1.3

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

	
 

	
 

	
 

	
 

	
 

	
 

	
9.2

	
 

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

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
9.2.1

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

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
9.2.2

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

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
9.2.3

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

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

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

	
 

	
 

	
 

	
 

	
 

	
 

	
9.3

	
 

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

	
 

	
 

	
 

	
 

	
 

	
 

	
9.4

	
 

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

page 41 of 47

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

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

	
 

	
 

	
 

	
 

	
 

	
9.5

	
 

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

	
 

	
 

	
 

	
 

	
 

	
 

	
9.6

	
 

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

	
 

	
 

	
 

	
 

	
 

	
 

	
9.7

	
 

	
Cooperation in Case of a Tax Procedure/Tax Dispute 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
9.7.1

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

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
i)

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

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
ii)

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

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
iii)

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

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
iv)

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

page 42 of 47

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
9.7.2

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

	
 

	
 

	
 

	
 

	
 

	
 

	
9.8

	
 

	
Procedures in Relation to the Preparation of Tax Returns etc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

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

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
9.8.1

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

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
9.8.2

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

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
9.8.3

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

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
9.8.4

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

	
 

	
 

	
 

	
 

	
 

	
10

	
 

	
Conduct Prior
To The Closing

	
 

	
 

	
 

	
 

	
 

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

page 43 of 47

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

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

	
 

	
 

	
 

	
 

	
 

	
 

	
11

	
Confidentiality, Announcements and Press
Releases

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
11.1

	
 

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

	
 

	
 

	
 

	
 

	
 

	
11.2

	
 

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

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12

	
Expenses

	
 

	
 

	
 

	
 

	
 

	
 

	
 

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

	
 

	
 

	
 

	
 

	
 

	
13

	
Disputes

	
 

	
 

	
 

	
 

	
 

	
 

	
13.1

	
 

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

	
 

	
 

	
 

	
 

	
 

	
 

	
13.2

	
 

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

	
 

	
 

	
 

	
 

	
 

	
 

	
13.3

	
 

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

	
 

	
 

	
 

	
 

	
 

	
14

	
Representative

	
 

	
 

	
 

	
 

	
 

	
 

	
14.1

	
 

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

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

	
 

	
 

	
 

	
 

	
 

	
14.2

	
 

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

	
 

	
 

	
 

	
 

	
 

	
 

	
14.3

	
 

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

	
 

	
 

	
 

	
 

	
 

	
15

	
 

	
Final Provisions

	
 

	
 

	
 

	
 

	
 

	
 

	
15.1

	
 

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

	
 

	
 

	
 

	
 

	
 

	
 

	
15.2

	
 

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

	
 

	
 

	
 

	
 

	
 

	
 

	
15.3

	
 

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

	
 

	
 

	
 

	
 

	
 

	
 

	
15.4

	
 

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

	
 

	
 

	
 

	
 

	
 

	
 

	
15.5

	
 

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

	
 

	
 

	
 

	
 

	
 

	
 

	
15.6

	
 

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

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

	
 

	
 

	
 

	
 

	
 

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

page 47 of 47

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