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EXHIBIT 10.10
SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT is made as of July ___, 1999 by and
among CommTouch Software Ltd., an Israeli company (the "Company"), Vulcan
Ventures Incorporated, a Washington corporation ("Vulcan") and Go2Net, Inc., a
Delaware corporation ("Go2Net," and together with Vulcan, the "Investors").
WHEREAS, the Investors have indicated a desire to purchase from the
Company _______ of the Company's Ordinary Shares concurrently with the closing
of the sale of up to 3,000,000 Ordinary Shares, NIS .05 nominal value in the
Company's initial public offering whereby the gross proceeds of the offering are
at least $40,000,000 and the price to the public is at least $15.00 per share
(the "IPO").
WHEREAS, the Company has indicated a desire to sell such Ordinary
Shares to the Investors and has agreed to register such shares under the
Securities Act on the terms set forth herein.
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. PURCHASE AND SALE OF SHARES.
1.1 SALE AND ISSUANCE OF SHARES. Subject to the terms and conditions
of this Agreement, the Company agrees to sell to Go2Net and Go2Net agrees to
purchase from the Company _________ of the Company's Ordinary Shares. Subject to
the terms and conditions of this Agreement, the Company agrees to sell to Vulcan
and Vulcan agrees to purchase from the Company _________ of the Company's
Ordinary Shares. The Ordinary Shares sold to the Investors are referred to
herein as the "Shares." The purchase and sale of the Shares is intended to be a
private placement and not a public offering or part of a public offering. The
Shares shall have the rights, preferences, privileges and restrictions set forth
in the form of Amended and Restated Articles of Association of the Company to be
filed with the Israeli Registrar of Companies as in effect immediately prior to
the Closing (as defined below).
1.2 THE CLOSING. The purchase and sale of the Shares shall be held at
the Company's offices concurrently with the closing of IPO or, if later, upon
satisfaction or waiver of each of the conditions set forth in Sections 4 and 5
(the "Closing"). At the Closing, the Company will deliver the Shares to the
Investors against payment of the purchase price therefor by wire transfer,
certified check or other form of immediately available funds payable to the
order of the Company. The per share purchase price for the Shares shall be equal
to the per share price at which the Company's Ordinary Shares are offered to the
public in the IPO, less any underwriter discounts and commissions.
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2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby makes the
representations and warranties to the Investors as set forth on the attached
Exhibit A.
3. REPRESENTATION AND WARRANTY OF THE INVESTORS. Each Investor, separately and
not jointly, hereby represents and warrants that
3.1 INVESTMENT INTENT. Each of the Investors hereby, severally and
not jointly, represents and warrants to the Company that it is a "qualified
institutional buyer" as defined in SEC Rule 144A, because in the aggregate it
owns and invests on a discretionary basis at least $100 million in securities of
issuers that are not affiliated with it; for purposes of this representation,
securities shall exclude bank deposit notes and certificates of deposits; loan
participations; repurchase agreements; securities owned but subject to a
repurchase agreement; and currency; interest rate and commodity swaps.
3.2. AUTHORIZATION. Each of the Investors hereby represents,
severally and not jointly, that this Agreement and the related agreements to
which it is a party have been executed by a duly authorized person on its
behalf; and the execution, delivery and performance hereof and thereof have been
duly authorized by all appropriate limited liability company, corporate or
partnership action.
3.3. ENFORCEABILITY. Each of the Investors hereby, severally and not
jointly, represents that such Investor has full legal power to enter into this
Agreement and that the execution and delivery by such Investor of this Agreement
will result in legally binding obligations of such Investor enforceable against
it or him in accordance with the respective terms and provisions hereof and
thereof except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditors' rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief, or other equitable
remedies, and (iii) to the extent the indemnification provisions contained in
this Agreement and the Registration Rights Agreement may be limited by
applicable federal or state securities laws.
3.4 EXEMPTION. Each Investor understands and has been advised by
legal counsel of its choosing, on whom it has relied for this purpose, that the
Shares have not been registered under the Securities Act on the grounds that the
sale provided for in this Agreement and the issuance of securities hereunder are
exempt from registration under the Securities Act pursuant to Section 4(2)
thereof, and that the Company's reliance on such exemption is predicated on the
Investor's representations set forth herein and in a separate Investment
Representation Certificate.
3.5 EXPERIENCE. Each Investor represents, separately and not jointly,
that it is experienced in evaluating and investing in early-stage companies such
as the Company, is familiar with the risks associated with the business and
operations of early-stage companies, has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of its investment, and has the ability to bear the economic risks of its
or his investment. Each such Investor represents that it has had, during the
course of the transaction and prior to its purchase of the Shares, the
opportunity to request information from and ask questions of the Company and its
officers, employees and agents, concerning the Company, its assets, business and
operations and to receive information and answers to such requests and
questions, and that the Investor has reviewed the Company's preliminary
prospectus dated June 3, 1999 to obtain current information about the Company.
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3.6 RESTRICTIONS ON RESALE. Each Investor understands, and has been
advised by legal counsel of its choosing, on whom it has relied for this
purpose, that the Shares may not be sold, transferred, or otherwise disposed of
without registration under the Securities Act or an exemption therefrom, and
that in the absence of an effective registration statement covering the Shares
or an available exemption from registration under the Securities Act, the Shares
must be held indefinitely. Each Investor agrees that in no event will such
Investor make a transfer or disposition of any of the Shares (other than
pursuant to an effective registration statement under the Securities Act),
unless and until (i) such Investor shall have notified the Company of the
proposed disposition, and (ii) if requested by the Company, such Investor shall
have furnished to the Company at the expense of such Investor or its transferee,
an opinion of counsel reasonably satisfactory to the Company to the effect that
such transfer may be made without registration under the Securities Act.
4. CONDITIONS TO THE INVESTORS' OBLIGATION AT CLOSING. The obligation of the
Investors to purchase the Shares at the Closing is subject to the fulfillment to
the Investors' satisfaction on or prior to the Closing of the following
conditions:
4.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Company in Section 2 hereof shall be true and correct
when made, and shall be true and correct as of the Closing with the same force
and effect as if they had been made on and as of such date, subject to changes
contemplated by this Agreement, and the Company shall have provided a
certificate of one of its executive officers dated as of the Closing to this
effect.
4.2. COVENANTS AND AGREEMENTS. The Company shall have performed or
fulfilled all agreements, obligations and conditions contained in this Agreement
required to be performed, observed or fulfilled by the Company on or before
Closing.
4.3 AUTHORIZATIONS. All authorizations, approvals or permits, if any,
of any governmental authority or regulatory body that are required in connection
with the lawful issuance and sale of the Shares pursuant to this Agreement shall
have been duly obtained and shall be effective on and as of the Closing. The
Company's Ordinary Shares shall have been duly approved for inclusion on The
Nasdaq National Market, subject to the closing of the IPO and to official notice
of issuance.
4.4 INITIAL PUBLIC OFFERING OF ORDINARY SHARES. The closing of the
IPO shall have occurred or shall occur simultaneously with the Closing.
4.5 CUSTOMIZED WEB-BASED EMAIL SERVICES AGREEMENT, WARRANT AND
WARRANT REGISTRATION RIGHTS AGREEMENT. The Customized Web-based Email Services
Agreement and the related Warrant issued by the Company to Go2Net and the
Registration Rights Agreement among the Company, Go2Net and Vulcan, each dated
on or about the date of this Agreement, shall have been executed and delivered
by the parties to such agreements.
4.6 EXEMPTION FROM HSR ACT. The acquisition of the Shares shall be
exempt from the filing and notification requirements of the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976 as amended (the "HSR Act").
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5. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING. The obligation of the
Company to sell the Shares at the Closing is subject to the fulfillment to the
Company's satisfaction on or prior to the Closing of the following conditions:
5.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of each Investor contained in Section 3 hereof shall be true as of
the Closing with the same force and effect as if they had been made on and as of
such date, subject to changes contemplated by this Agreement, and each Investor
shall have provided a certificate of one of its executive officers dated as of
the Closing to this effect.
5.2. COVENANTS AND AGREEMENTS. The Investors shall have performed or
fulfilled all agreements, obligations and conditions contained in this Agreement
required to be performed, observed or fulfilled by the Investors on or before
Closing.
5.3 AUTHORIZATIONS. All authorizations, approvals or permits, if any,
of any governmental authority or regulatory body that are required in connection
with the lawful issuance and sale of the Shares pursuant to this Agreement
(including if applicable the approval of the Office of Chief Scientist of the
Israeli Ministry of Trade and Industry) shall have been duly obtained and shall
be effective on and as of the Closing. The Company's Ordinary Shares shall have
been duly approved for inclusion on The Nasdaq National Market, subject to the
closing of the IPO and to official notice of issuance.
5.4 CUSTOMIZED WEB-BASED EMAIL SERVICES AGREEMENT, WARRANT AND
WARRANT REGISTRATION RIGHTS AGREEMENT. The Customized Web-based Email Services
Agreement and the related Warrant issued by the Company to Go2Net and the
Registration Rights Agreement among the Company, Go2Net and Vulcan, each dated
on or about the date of this Agreement, shall have been executed and delivered
by the parties to such agreements.
5.5 PAYMENT OF PURCHASE PRICE. The Investors shall have delivered to
the Company the purchase price for the Shares as set forth in Section 1.2
hereof.
5.6 EXEMPTION FROM HSR ACT. The acquisition of the Shares shall be
exempt from the filing and notification requirements of the HSR Act.
6. COVENANTS OF THE COMPANY AND THE INVESTORS.
6.1 LOCK-UP AGREEMENT. Each Investor shall execute and deliver to the
Company the same lock-up agreement with the Underwriters that all of the
shareholders of the Company have executed and delivered in connection with the
IPO in the form attached as Exhibit B; provided, however, that the lock-up
period shall not exceed 180 days.
6.2 NOMINATION OF ONE DIRECTOR. Following the IPO and so long as the
Investors hold at least 25% of the aggregate of the Shares and the shares
purchasable pursuant to the exercise of the Warrant, the Company agrees to
appoint or elect one person designated by the Investors (the "Investors'
Nominee") to the board of directors. The Investors' Nominee shall be a senior
officer of one of the Investors. If the Investors' Nominee leaves the board for
any reason, the Investors shall be entitled to nominate a replacement for the
vacancy to be appointed or elected in accordance with the Company's Articles of
Association and Memorandum of Association. The Investors' Nominee
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shall be entitled to the same liability insurance coverage, indemnification and
expense reimbursement as the other directors of the Company. The Company will
enter into a mutually agreeable indemnity agreement with the Investors' Nominee.
6.3 INDEMNIFICATION.
(a) The Company agrees to defend, indemnify and hold the
Investors harmless from and against any withholding tax, tax on capital gains,
dividends or other income, any transfer tax, stamp duty or similar tax, or any
other form of tax, assessment or imposition imposed by the State of Israel with
respect to any of the transactions contemplated this Agreement, the Customized
Web-based Email Services Agreement, the related Warrant issued by the Company to
Go2Net and the Registration Rights Agreement among the Company, Go2Net and
Vulcan, each dated on or about the date of this Agreement, including each
Investor's purchase, holding and sale of Ordinary Shares of the Company in
connection with any of these agreements. Indemnification may take the form of
payment of a "gross-up" amount sufficient to cover any U.S. taxes on the
indemnification payment. This indemnification obligation by the Company is
indefinite in duration.
(b) The foregoing indemnification shall not apply to
Israeli tax on income imposed by reason of or attributable to the
permanent establishment of such Investor in Israel.
(c) Each Investor agrees to use commercially reasonable
best efforts to exercise this Warrant in such manner as to avoid
becoming, as a result of such exercise, a 10% or greater shareholder of the
Company and shall reasonably cooperate with the Company so as to minimize
adverse Israeli tax consequences. The foregoing indemnification shall not apply
to the extent any otherwise indemnifiable tax results from an Investor's failure
to comply with the foregoing agreements in this subsection (c).
(d) An Investor seeking indemnification will: (a) promptly
notify the Company in writing of any claim, suit or proceeding
for which defense or indemnity is claimed; (b) cooperate reasonably with the
Company at the latter's expense; and (c) allow the Company to control the
defense or settlement thereof; provided, however, that the Company may not
consent to entry of any judgment or enter into any settlement without the prior
written consent of the indemnified Investor (which consent shall not be
unreasonably withheld or delayed), unless such judgment or settlement provides
solely for money damages or other money payments which the Company actually pays
on behalf of the indemnified Investor and includes as an unconditional term
thereof a release of the indemnified Investor from all liability in respect of
the claim, suit or proceeding giving rise to the claim for indemnification. The
indemnified Investor will have the right to participate in any defense of a
claim and/or to be represented by counsel of its own choosing at its own
expense.
7. MISCELLANEOUS.
7.1 GOVERNING LAW. This Agreement shall be governed in all respects
by the laws of the State of Delaware as applied to agreements among Delaware
residents entered into and to be performed entirely within Delaware, without
regard to the conflict of law provisions thereof.
7.2 SURVIVAL; ADDITIONAL SECURITIES. The representations and
warranties set forth in Sections 2 and 3 shall survive the Closing indefinitely.
The covenants and agreements set forth in Section 6 shall survive in accordance
with their terms. Any new, substituted or additional securities
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which are by reason of any share split, share dividend, recapitalization or
reorganization distributed with respect to the Shares ("Share Distributions")
shall be immediately subject to the covenants and agreements set forth in
Section 6 to the same extent the Shares are at such time covered by such
provisions.
7.3 SUCCESSORS AND ASSIGNS. The Investors may not assign their rights
under this Agreement prior to Closing. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the respective successors and assigns of the parties hereto. Each Investor
may assign its rights under this Agreement to any successor to substantially all
of its business or assets. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement. Notwithstanding anything to the contrary contained herein,
the covenants set forth in Section 6 shall not be binding upon any entity (other
than an affiliate of the Investor) which acquires any of the Shares or a Share
Distribution in a transaction permitted hereunder.
7.4 ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding and agreement between the parties with regard to the subject
matter hereof.
7.5 NOTICES. Except as otherwise provided, all notices and other
communications required or permitted hereunder shall be in writing, shall be
effective when given, and shall in any event be deemed to be given upon receipt
or, if earlier, (i) five days after deposit with the U.S. postal service or
other applicable postal service, if delivered by first class mail, postage
prepaid, (ii) upon delivery, if delivered by hand, (iii) one business day after
the day of deposit with Federal Express or similar overnight courier, freight
prepaid, if delivered by overnight courier, (iv) one business day after the day
of facsimile transmission, if delivered by facsimile transmission with copy by
first class mail, postage prepaid, or (v) one business day after the day of
transmission, if delivered by transmission to the electronic mail addresses set
forth below the signature of the parties, with copy by first class mail, postage
prepaid; and shall be addressed, (a) if to the Investors, to the Investor's
address set forth below its signature, or to such other address as the Investor
shall have furnished to the Company in writing, or (b) if to the Company, to its
address as set forth below its signature, or to such other address as the
Company shall have furnished to the Investors in writing.
7.6 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended
and the observance of any term of the Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively) only with
the written consent of the Company and the Investors.
7.7 LEGAL FEES. In the event of any action at law, suit in equity or
arbitration proceeding in relation to this Agreement or the Shares or any Share
Distribution, the prevailing party shall be paid by the other party a reasonable
sum for the attorneys' fees and expenses incurred by such prevailing party.
7.8 EXPENSES. Irrespective of whether the Closing is effected, the
Company and the Investors shall each pay their own costs and expenses incurred
with respect to the negotiation, execution, delivery and performance of this
Agreement; except that the Company shall reimburse
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the Investors for their reasonable expenses and attorneys' fees in connection
with the transactions contemplated by this Agreement to the extent such fees and
expenses exceed $15,000.
7.9 TITLES AND SUBTITLES. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
7.10 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be an original, but all of which together shall constitute
one instrument.
7.11 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
7.12 CONFIDENTIALITY. The parties hereto agree that, except with the
prior written permission of the other party, it shall at all times keep
confidential and not divulge, furnish, or make accessible to anyone any
confidential information, knowledge, or data concerning or relating to the
business or financial affairs of such other party to which said party has been
or shall become privy by reason of this Agreement, discussions or negotiations
relating to this Agreement, or the performance of its obligations hereunder.
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IN WITNESS WHEREOF, the parties hereto have executed this Share
Purchase Agreement as of the day and year set forth above.
COMMTOUCH SOFTWARE LTD. GO2NET, INC.
By ________________________________ By ________________________________
Xxxxxx Xxxxxx, Chief Executive Xxxxxx X. Xxxx, Vice President
Officer of Business Development
c/o CommTouch Software Inc. Go2Net, Inc.
0000 Xxxxxxx Xxxxxx, Xxxxx 000 000 0xx Xxxxxx, Xxxxx 0000
Xxxxx Xxxxx, XX 00000 Xxxxxxx, XX 00000
408/653-4340 206/447-1595
408/653-4343 (Facsimile) 206/447-1625 (facsimile)
xxxxxx@xxxxxxxxx.xxx xxx@xx0xxx.xxx
VULCAN VENTURES INCORPORATED
By ________________________________
Xxxxxxx Xxxxx, Vice President
Vulcan Ventures Incorporated
000 000xx Xxxxxx X.X., Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
Exhibits
A Representations and Warranties by the Company
B Form of Lock-Up Agreement
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EXHIBIT A TO SHARE PURCHASE AGREEMENT
COMMTOUCH SOFTWARE LTD., GO2NET, INC. AND VULCAN VENTURES INCORPORATED
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
DEFINED TERMS
Capitalized terms used in this Exhibit A and not defined in
the Share Purchase Agreement among CommTouch Software Ltd., Go2Net, Inc. and
Vulcan Ventures Incorporated shall have the following meanings:
"Act" means the Securities Act of 1933, as amended
"Commission" means the U.S. Securities and Exchange
Commission.
"Firm Shares" means the 3,000,000 Ordinary Shares that the
Company proposes to sell to the Underwriters under the Underwriting Agreement.
"Option Shares" means the 450,000 Ordinary Shares for which
the Company has granted the Underwriters an option to purchase under Section 3
of the Underwriting Agreement.
"Preliminary Prospectus" means any preliminary prospectus
included in the Registration Statement prior to the time it becomes or became
effective under the Act and any prospectus subject to completion as described in
Rule 430A or 434 of the Rules and Regulations.
"Prospectus" means the prospectus included in the
Registration Statement at the time it is or was declared effective by the
Commission, except that if any prospectus (including any term sheet meeting the
requirements of Rule 434 of the Rules and Regulations provided by the Company
for use with a prospectus subject to completion within the meaning of Rule 434
in order to meet the requirements of Section 10(a) of the Rules and Regulations)
filed by the Company with the Commission pursuant to Rule 424(b) (and Rule 434,
if applicable) of the Rules and Regulations or any other such prospectus
provided to the Underwriters by the Company for use in connection with the
offering of the Securities (whether or not required to be filed by the Company
with the Commission pursuant to Rule 424(b) of the Rules and Regulations)
differs from the prospectus on file at the time the Registration Statement is or
was declared effective by the Commission, the term "Prospectus" shall refer to
such differing prospectus (including any term sheet within the meaning of Rule
434 of the Rules and Regulations) from and after the time such prospectus is
filed with the Commission or transmitted to the Commission for filing pursuant
to such Rule 424(b) (and Rule 434, if applicable) or from and after the time it
is first provided to the Underwriters by the Company for such use.
"Registration Statement" means the Company's registration
statement on Form F-1 (File No. 333-78531) as amended at the time it is or was
declared effective by the Commission, and, in the event of any amendment thereto
after the effective date and prior to the First Closing Date (as defined in the
Underwriting Agreement), such registration statement as so amended (but only
from and after the effectiveness of such amendment), including a registration
statement (if any) filed pursuant to Rule 462(b) of the Rules and Regulations
increasing the size
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of the offering registered under the Act and information (if any) deemed to be
part of the registration statement at the time of effectiveness pursuant to
Rules 430A(b) and 434(d) of the Rules and Regulations.
"Representatives" means U.S. Bancorp Xxxxx Xxxxxxx,
Prudential Securities Incorporated, and Warburg Dillon Read LLC in their
capacity as representatives of the Underwriters
"Rules and Regulations" means and the rules and regulations
of the Commission under the Act.
"Securities" means the Firm Shares and any Option Shares
purchased pursuant to this Underwriting Agreement.
"Underwriters" means those persons named as underwriters in
Schedule I of the Underwriting Agreement.
"Underwriting Agreement" means the Purchase Agreement dated
on or about the date of this Agreement among the Company and U.S. Bancorp Xxxxx
Xxxxxxx, Prudential Securities Incorporated, and Warburg Dillon Read LLC, as
Representatives of the several underwriters named therein.
REPRESENTATIONS AND WARRANTIES
(i) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission and each Preliminary
Prospectus, at the time of filing thereof, did not contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; except that the
foregoing shall not apply to statements in or omissions from any Preliminary
Prospectus in reliance upon, and in conformity with, written information
furnished to the Company by an Investor specifically for use in the preparation
thereof.
(ii) As of the Closing Date (A) the Registration Statement
and the Prospectus (in each case, as amended and/or supplemented) conforms in
all material respects to the requirements of the Act and the Rules and
Regulations, (B) the Registration Statement (as amended) does not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
and (C) the Prospectus (as supplemented) does not include an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they are or were made, not misleading; except that the foregoing shall not
apply to statements in or omissions from any such document in reliance upon, and
in conformity with, written information furnished to the Company by an Investor
specifically for use in the preparation thereof. If the Registration Statement
has been declared effective by the Commission, no stop order suspending the
effectiveness of the Registration
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Statement has been issued, and no proceeding for that purpose has been initiated
or, to the Company's knowledge, threatened by the Commission.
(iii) The consolidated financial statements of the Company,
together with the notes thereto, set forth in the Registration Statement and the
Prospectus comply in all material respects with the requirements of the Act and
fairly present the consolidated financial condition of the Company and its
consolidated subsidiaries indicated and the results of operations and changes in
cash flows for the periods therein specified in conformity with United States
generally accepted accounting principles consistently applied throughout the
periods involved (except as otherwise stated therein); and the supporting
schedules included in the Registration Statement present fairly the information
required to be stated therein. No other financial statements or schedules are
required to be included in the Registration Statement or Prospectus. Xxxx, Xxxxx
& Xxxxxx (a member of Ernst & Young International), which has expressed its
opinion with respect to the financial statements and schedules filed as a part
of the Registration Statement and included in the Registration Statement and the
Prospectus, are independent public accountants as required by the Act and the
Rules and Regulations. The summary financial and other data included in the
Registration Statement and the Prospectus present fairly the information shown
therein and have been compiled on a basis consistent with the financial
statements presented therein.
(iv) Each of the Company and CommTouch Software, Inc., a
California corporation (the "Subsidiary"), has been duly organized and is
validly existing as a corporation under the laws of its jurisdiction of
incorporation and the Subsidiary is in good standing under the laws of
California. Each of the Company and the Subsidiary has full corporate power and
authority to own its properties and conduct its business as currently being
carried on and as described in the Registration Statement and the Prospectus,
and is duly qualified to do business as a foreign corporation in good standing
in each jurisdiction in which it owns or leases real property or in which the
conduct of its business makes such qualification necessary and in which the
failure to so qualify would have a material adverse effect on the assets or
properties, business, results of operations, prospects or condition (financial
or otherwise) of the Company and the Subsidiary, taken as a whole (a "Material
Adverse Effect").
(v) Except as contemplated in the Registration Statement
and the Prospectus, subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, neither the Company
nor the Subsidiary has incurred any material liabilities or obligations, direct
or contingent, or entered into any material transactions, or declared or paid
any dividends or made any distribution of any kind with respect to its capital
stock; and there has not been any change in the capital stock (other than a
change in the number of outstanding Ordinary Shares due to the issuance of
shares upon the exercise of outstanding options or warrants), or any material
change in the short-term or long-term debt, or any issuance of options,
warrants, convertible securities or other rights to purchase the capital stock,
of the Company or the Subsidiary, or any change that had a Material Adverse
Effect, or any development involving a prospective Material Adverse Effect.
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(vi) Except as set forth in the Registration Statement and
the Prospectus, there is not pending or, to the knowledge of the Company,
threatened or contemplated, any action, suit or proceeding to which the Company
or the Subsidiary is a party or to which any property or assets of the Company
or the Subsidiary is subject before or by any court or governmental agency,
authority or body, or any arbitrator, which might result in a Material Adverse
Effect.
(vii) There are no contracts or documents of the Company or
any of its subsidiaries that are required to be described in the Prospectus or
to be filed as exhibits to the Registration Statement by the Act or by the Rules
and Regulations that have not been so described or filed.
(viii) This Share Purchase Agreement has been duly
authorized, executed and delivered by the Company, and constitutes a valid,
legal and binding obligation of the Company, enforceable in accordance with its
terms, except as rights to indemnity hereunder may be limited by federal, state
or foreign securities laws or the policies underlying such laws and except as
such enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting the rights of creditors generally and subject to general
principles of equity. The execution, delivery and performance of this Share
Purchase Agreement and the consummation of the transactions herein contemplated
will not result in a breach or violation of any of the terms and provisions of,
or constitute a default under, any U.S. or Israeli, state or local statute, any
agreement or instrument to which the Company is a party or by which it is bound
or to which any of its property is subject, the Company's Memorandum of
Association or Articles of Association, or any order, rule, regulation or decree
of any court or governmental agency or body having jurisdiction over the Company
or any of its properties; no consent, approval, authorization or order of, or
filing with, any court or governmental agency or body is required for the
execution, delivery and performance of this Share Purchase Agreement or for the
consummation of the transactions contemplated hereby, including the issuance or
sale of the Shares by the Company, except such as may be required under the Act
or state securities or blue sky laws; and the Company has full power and
authority to enter into this Share Purchase Agreement and to authorize, issue
and sell the Shares as contemplated by this Share Purchase Agreement.
(ix) All of the issued and outstanding shares of equity
securities of the Company, including the outstanding Ordinary Shares, are duly
authorized and validly issued, fully paid and nonassessable, have been issued in
compliance with all Israeli and U.S. federal and state securities laws
(including, without limitation, applicable Israeli securities laws), were not
issued in violation of or subject to any preemptive rights or other rights to
subscribe for or purchase securities, and the holders thereof are not subject to
personal liability by reason of being such holders; and the share capital of the
Company, including the Ordinary Shares, conforms to the description thereof in
the Registration Statement and Prospectus. Except as otherwise stated in the
Registration Statement and Prospectus, there are no preemptive rights or other
rights to subscribe for or to purchase, or any restriction upon the voting or
transfer of, any Ordinary Shares pursuant to the Company's Memorandum of
Association or Articles of Association or any agreement or other instrument to
which the Company is a party or by which the Company is bound. All of the issued
and outstanding shares of capital stock of the Subsidiary have been duly and
validly authorized and issued and are fully paid and nonassessable, and, except
as otherwise
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described in the Registration Statement and the Prospectus (and except for
options granted after the date of the Registration Statement and the Prospectus
to employees of the Company pursuant to the stock option plans described in the
Registration Statement and the Prospectus, which options grants have been
disclosed to the Representatives), the Company owns of record and beneficially,
free and clear of any security interests, claims, liens, proxies, equities or
other encumbrances, all of the issued and outstanding shares of such stock.
Except as described in the Registration Statement and the Prospectus, there are
no options, warrants, agreements, contracts or other rights in existence to
purchase or acquire from the Company or the Subsidiary any shares of the capital
stock of the Company or the Subsidiary. The Company has an authorized and
outstanding capitalization as set forth in the Registration Statement and the
Prospectus.
(x) The Shares which may be sold under the Share Purchase
Agreement by the Company has been duly authorized and, when issued, delivered
and paid for in accordance with the terms hereof, will have been validly issued
and will be fully paid and nonassessable, and the holders thereof will not be
subject to personal liability by reason of being such holders, and conforms to
the description thereof in the Registration Statement and the Prospectus. No
further approval or authority of the shareholders of the Company or the Board of
Directors of the Company is required for the sale and issuance of the Shares
hereunder.
(xi) Neither the filing of the Registration Statement nor
the offering or sale of the Shares as contemplated by this Share Purchase
Agreement gives rise to any rights for or relating to the registration of any
Ordinary Shares or other securities of the Company and no person or entity holds
a right to require registration under the Act of shares of capital stock of the
Company at any other time, except as disclosed in the Registration Statement and
the Prospectus.
(xii) Each of the Company and the Subsidiary holds, and is
operating in compliance in all material respects with, all franchises, grants,
authorizations, licenses, permits, easements, consents, certificates and orders
of any governmental or regulatory body required for the conduct of its business
and all such franchises, grants, authorizations, licenses, permits, easements,
consents, certifications and orders are valid and in full force and effect; and
the Company and the Subsidiary are in compliance in all material respects with
all applicable federal, state, local and foreign (including, without limitation,
Israeli and U.S.) laws, regulations, orders and decrees.
(xiii) The Company and the Subsidiary have good and
marketable title to all property described in the Registration Statement and the
Prospectus as being owned by them, in each case free and clear of all liens,
claims, security interests or other encumbrances except such as are described in
the Registration Statement and the Prospectus; the property held under lease by
the Company and the Subsidiary is held by them under valid, subsisting and
enforceable leases with only such exceptions with respect to any particular
lease as do not interfere in any material respect with the conduct of the
business of the Company or the Subsidiary.
(xiv) The Company and the Subsidiary own or possess all
patents, patent applications, trademarks, service marks, tradenames, trademark
registrations, service xxxx registrations, copyrights, licenses, inventions,
trade secrets know-how, proprietary techniques, processes and rights
("Intellectual Property") used in the conduct of the business of the Company
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and the Subsidiary as currently carried on (including products, services and
technology contemplated by current research and development projects) and as
described in the Registration Statement and the Prospectus. Except as stated in
the Registration Statement and the Prospectus, no name which the Company or the
Subsidiary uses and no other aspect of the business of the Company or the
Subsidiary will involve or give rise to any infringement of, or license or
similar fees for, any Intellectual Property of others material to the business
or prospects of the Company and neither the Company nor the Subsidiary has
received any notice alleging any such infringement or fee, except as to matters
that will not cause a Material Adverse Effect. To the knowledge of the Company,
its Intellectual Property is not being infringed by any third parties which
infringement could reasonably be expected, whether singly or in the aggregate,
to have a Material Adverse Effect.
(xv) Neither the Company nor the Subsidiary (i) is in
violation of its respective Memorandum of Association, Articles of Association,
charter or by-laws, as the case may be, or other organizational documents (ii)
is in breach of or otherwise in default in the performance of any obligation,
agreement or condition contained in any bond, debenture, note, indenture, loan
agreement or any other contract, lease or other instrument to which any of them
is subject or by which any of them may be bound, or to which any of the property
or assets of the Company or the Subsidiary is subject, nor has any event
occurred nor does any condition exist that with the notice and/or the passage of
time would give rise to such a breach or default or (iii) is in violation of any
law, ordinance, government rule, regulation or court order or decree to which
either of them is subject or by which either of them may be bound or to which
any of the property or assets of the Company or the Subsidiary is subject,
except in the case of clauses (ii) and (iii) for such breaches, defaults or
violations that individually or in the aggregate would not have a Material
Adverse Effect.
(xvi) The Company and the Subsidiary have filed all Israel
and U.S. federal, state, local and foreign income and franchise tax returns
required to be filed and are not in default in the payment of any taxes which
were payable pursuant to said returns or any assessments with respect thereto,
other than any which the Company or the Subsidiary is contesting in good faith.
(xvii) The Company has not distributed and will not
distribute any prospectus or other offering material in connection with the
offering and sale of the Shares other than any Preliminary Prospectus or the
Prospectus or other materials permitted by the Act to be distributed by the
Company.
(xviii) The Shares are duly authorized for quotation on the
NASDAQ National Market System, subject to official notice of issuance, and, on
the date the Registration Statement became or becomes effective, the Company's
Registration Statement on Form 8-A or other applicable form under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), became or will become
effective.
(xix) The Company has no subsidiary or subsidiaries other
than the Subsidiary and the Company owns no capital stock or other equity or
ownership or proprietary interest in any corporation, partnership, limited
liability company, joint venture association, trust or other entity, other than
the Subsidiary.
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(xx) Each of the Company and the Subsidiary maintains a
system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with management's
general or specific authorization; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets; (iii)
access to assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(xxi) Other than as contemplated by the Underwriting
Agreement and a separate fee agreement with U.S. Bancorp Xxxxx Xxxxxxx, the
Company has not incurred any liability for any finder's or broker's fee or
agent's commission in connection with the execution and delivery of this Share
Purchase Agreement, the Underwriting Agreement or the consummation of the
transactions contemplated by such agreements.
(xxii) Neither the Company nor any of its affiliates is
presently doing business with the government of Cuba or with any person or
affiliate located in Cuba.
(xxiii) No labor dispute with the employees of the Company
or any of its subsidiaries exists or, to the knowledge of the Company, is
threatened; and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its principal suppliers or contractors
which could have a Material Adverse Effect. Neither the Company nor any of its
subsidiaries has violated any applicable safety or similar law applicable to its
business nor any federal or state law relating to discrimination in the hiring,
promotion or pay of employees, nor any applicable federal or state wage and
hours law, nor any provisions of the Employee Retirement Income Security Act or
the rules and regulations promulgated thereunder, the violation of any of which
could have a Material Adverse Effect. The Company is not aware of any threatened
or pending litigation between the Company or any of its subsidiaries and any of
its executive officers which, if adversely determined, could have a Material
Adverse Effect, and has no reason to believe that such officers will not remain
in the employment of the Company during the next twelve months.
(xxiv) No transaction has occurred or relationship exists
between or among the Company or the Subsidiary and any of their officers or
directors or any affiliate or affiliates of any such officer or director that is
required to be described in and is not described in the Registration Statement
and the Prospectus.
(xxv) The Company and each of its subsidiaries are insured
by insurers of recognized financial responsibility against such losses and risks
in such amounts as are customary in the business in which they are engaged; and
neither the Company nor any subsidiary has any reason to believe that it will
not be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue their business at a cost that would not have a Material Adverse
Effect.
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(xxvi) There are no affiliations with the National
Association of Securities Dealers, Inc. (the "NASD") among the Company's
officers, directors or, to the best knowledge of the Company, any five percent
or greater shareholder of the Company, except as set forth in the Registration
Statement and the Prospectus or otherwise disclosed in writing to the
Representatives.
(xxvii) Neither the Company nor any of its subsidiaries is
an "investment company" nor a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended, and the
rules and regulations thereunder (the "Investment Company Act").
(xxviii) Neither the Company nor any of its subsidiaries
or, to the knowledge of the Company, any other person associated with or acting
on behalf of the Company or any of its subsidiaries including, without
limitation, any director, officer, agent or employee of the Company or any of
its subsidiaries has, directly or indirectly, while acting on behalf of the
Company or any of its subsidiaries, (i) used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity; (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns from corporate funds; (iii) violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended; or (iv) made any other unlawful
payment.
(xxix) The Company has reviewed its operations and that of
its subsidiaries and any third parties with which the Company or any of its
subsidiaries has a material relationship to evaluate the extent to which the
business or operations of the Company or any of its subsidiaries will be
affected by the Year 2000 Problem (defined below). As a result of such review,
the Company has no reason to believe, and does not believe, that the Year 2000
Problem will have a Material Adverse Effect, or result in any material loss or
interference with the Company's business or operations. The "Year 2000 Problem"
as used herein means any significant risk that computer hardware or software
used in the receipt, transmission, processing, manipulation, storage, retrieval,
retransmission or other utilization of data or in the operation of mechanical or
electrical systems of any kind will not, in the case of dates or time periods
occurring after December 31, 1999, function at least as effectively as in the
case of dates or time periods occurring prior to January 1, 2000.
(xxx) The Company does not believe that it is, and upon the
consummation of the transactions contemplated hereby and the application of the
proceeds as described in the Registration Statement and the Prospectus under the
caption "Use of Proceeds" does not believe that it will become, a "passive
foreign investment company" (herein called a PFIC) as defined in Section 1296 of
the Internal Revenue Code of 1986, as amended (herein called the Code).
(xxxi) The Company has not taken and will not take,
directly or indirectly, any action designed to or that might reasonably be
expected to cause or result in stabilization or manipulation of the price of the
Ordinary Shares to facilitate the sale or resale of the Shares.
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(xxxii) The Company has received from the Israel Securities
Authority an exemption from the requirement to publish a prospectus in Israel
for the offer of the Shares in the manner required by the applicable laws of the
State of Israel, which exemption was in full force and effect on the date hereof
and which shall be in full force and effect on the date of the Prospectus, on
the date that any post-effective amendment to the Registration Statement shall
become effective, when any supplement or amendment to the Prospectus is filed
with the Commission, and at the Closing Date. It is further understood that no
public offering (as defined under the laws of the State of Israel) pursuant to
the Prospectus will be made within the State of Israel by the Company.
(xxxiii) Each of the Company and the Subsidiary is in
material compliance with all conditions and requirements stipulated by the
instruments of approval issued by the Investment Center of the Ministry of
Industry and Commerce granted entitling it or any of its operations to the
status of "approved enterprise" under Israeli law and by Israeli laws and
regulations relating to such approved enterprise status except as would not have
a Material Adverse Effect. All information supplied by the Company with respect
to such applications was true, correct and complete in all material respects
when supplied to the appropriate authorities. The Company does not know of any
reason or circumstance that would lead to revocation of its status as an
"approved enterprise."
(xxxiv) Neither the Company nor any of its subsidiaries is
in violation of any conditions or requirements stipulated by the instruments of
approval granted to any of them by the Office of the Chief Scientist in the
Ministry of Industry & Commerce, with respect to any research and development
grants given to it by such office, which violation, individually or in the
aggregate, would have a Material Adverse Effect. The Company qualifies as an
"Industrial Company" within the definition of the Law for the Encouragement of
Industry (Taxes), 1969, of the State of Israel.
(xxxv) No transfer tax, stamp duty or similar tax is
payable by or on behalf of the Investors in connection with: (i) the issuance by
the Company of the Shares; (ii) the purchase by the Investors of the Shares from
the Company; (iii) the consummation by the Company of any of its obligations
under the Share Purchase Agreement; or (iv) assuming the Investors are not
subject to taxation in Israel, resale of the Shares by the Investors.
(xxxvi) The Company has duly and irrevocably appointed the
Subsidiary, a corporation organized under the laws of the State of California,
as its agent to receive service of process in any action against it in any
United States federal or state court arising out of or in connection with the
this Agreement or the transactions contemplated hereby.
(xxxvii) The acquisition of the Shares by the Investors in
accordance with the terms of the Share Purchase Agreement is exempt from the
premerger notification and filing requirements of the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976 as amended.
(xxxviii) The five page list attached as Exhibit A-1 to
this Exhibit A accurately describes for each of the Company's business partners
as of June 30, 1999: its name, launch date, contract date, term date, total
contract minimum, revenue sharing percentages, the party
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responsible for paying for advertisements, ownership of user base, use of
premium services, use of In Box Direct service and use of Bonus Mail service.
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