AGREEMENT OF MERGER
DATED AS OF NOVEMBER 16, 2001
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER (this "Agreement") dated as of November 16,
2001, is by and among CP SOFTWARE GROUP INC., a California corporation
("Parent"), COMMTOUCH SOFTWARE LTD., an Israeli corporation ("Commtouch"),
MAILCENTRO, INC. ("Acquisition") , a California corporation and a wholly owned
subsidiary of Commtouch Software Ltd. and CPSGNEWCO, INC., a California
corporation ("Merger Sub") and a wholly-owned subsidiary of Parent . Capitalized
terms not otherwise defined herein shall have the meanings ascribed to such
terms in Section 7.8 of this Agreement.
WHEREAS, Commtouch and certain of its subsidiary companies are
interested in selling and transferring to Parent, and Parent is interested in
acquiring, substantially all of Commtouch's and said subsidiaries' business and
assets relating to its Consumer-class Email Services division ("Business"); and
WHEREAS, the parties hereto, in facilitating the sale of the Business,
are interested in effecting the Merger (as defined below) of Merger Sub with and
into Acquisition, with Acquisition as the surviving corporation in such merger,
all in accordance with the provisions of this Agreement;
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, Commtouch, Acquisition, Parent and Merger
Sub hereby agree as follows:
ARTICLE 1
THE MERGER
SECTION 1.1. The Merger. At the Effective Time (as defined below) and
upon the terms and subject to the conditions of this Agreement and the
applicable provisions of the California Corporations Code ("California Law"),
Merger Sub shall be merged with and into Acquisition (the "Merger"), whereupon
the separate existence of Merger Sub shall cease, and Acquisition shall be the
surviving corporation (the "Surviving Corporation"). Parent, as the sole
shareholder of Merger Sub, and Commtouch, as the sole shareholder of Acquisition
hereby undertake to approve the Merger and this Agreement by unanimous written
consent.
SECTION 1.2. Effective Time. Subject to the terms and conditions of
this Agreement, Acquisition and Merger Sub shall duly file the Agreement of
Merger, together with the required officers' certificates, with the Secretary of
State of the State of California, at the time of Closing in accordance with the
relevant provisions of California Law (the time of such filing with the
Secretary of State of California being the "Effective Time").
SECTION 1.3. Closing of the Merger. The closing of the Merger (the
"Closing") will take place at a time and on a date (the "Closing Date") to be
specified by the parties, which shall be no later than January 1, 2002, subject
to satisfaction of the conditions set forth in Article 5 (other than conditions
that by their nature are to be satisfied at the Closing, but subject to the
satisfaction or waiver of those conditions), at the offices of Commtouch Inc.,
0000 Xxxxxxxx Xx., Xxxxxxxx Xxxx, XX 00000, unless another time, date or place
is agreed to in writing by the parties hereto.
SECTION 1.4. Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in this Agreement, the Agreement of Merger and
the applicable provisions of California Law. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time, all the property,
rights, privileges, powers and franchises of Merger Sub and Acquisition shall
vest in the Surviving Corporation, and all debts, liabilities and duties of the
Merger Sub and Acquisition shall become the debts, liabilities and obligations
of the Surviving Corporation.
SECTION 1.4. Conversion of Shares.
(a) At the Effective Time, by virtue of the Merger and without any
further action by Parent, Commtouch, Merger Sub, Acquisition, or any shareholder
thereof, each share of Acquisition, par value $0.01 per share (individually a
"Share" and collectively the "Shares"), issued and outstanding immediately prior
to the Effective Time (except as provided in paragraph (b) of this Section 1.4)
shall, by virtue of the Merger and without any action on the part of
Acquisition, Merger Sub or the holder thereof, be converted into the right to
receive from the Surviving Corporation, U.S.$5,000 per Share in cash without
interest (the "Merger Consideration"), upon surrender of the certificate
formerly representing the Share.
(b) At the Effective Time, each Share owned by Merger Sub or
Acquisition or any other direct or indirect subsidiary of Merger Sub or
Acquisition immediately prior to the Effective Time shall be canceled, and no
payment shall be made with respect thereto; and
(c) At the Effective Time, each share of common stock of Merger Sub
outstanding immediately prior to the Effective Time shall be converted into and
become one share of common stock of the Surviving Corporation with the same
rights, powers and privileges as the shares so converted.
SECTION 1.5 Officers and Directors. At the Effective Time, the officers
and directors of Acquisition shall resign and the officers and directors of
Merger Sub at the Effective Time shall be elected or appointed and qualified to
be the officers and directors of the Surviving Corporation, from and after the
Effective Time, until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's articles of association and/or bylaws.
SECTION 1.6 Articles of Incorporation; Bylaws. Unless otherwise agreed
by the parties hereto prior to the Closing, at the Effective Time, the Articles
of Incorporation and bylaws of Merger Sub as in effect immediately prior to the
Effective Time shall constitute the Articles of Incorporation and bylaws of the
Surviving Corporation unless and until amended in accordance with applicable
law.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF COMMTOUCH AND ACQUISITION
Commtouch and Acquisition hereby represent and warrant to each of Parent and
Merger Sub that:
SECTION 2.1. Organization and Qualification.
(a) Acquisition is a wholly-owned subsidiary of Commtouch and it is
held free and clear of all Liens (as defined herein). Acquisition is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of organization, and it has all requisite power and authority to
own, lease and operate its assets or properties and to carry on their businesses
as now being conducted and is qualified to do business and is in good standing
as a foreign corporation in each jurisdiction where the ownership or operation
of its assets or properties or conduct of its business requires such
qualification, except in the case where the failure to be in such good standing,
have such power and authority or qualification is not, when taken together with
such other failures, reasonably likely to have a Material Adverse Effect.
SECTION 2.2. Capitalization of the Acquisition.
(a) The authorized share capital of the Acquisition consists of one
share, par value $0.01, which was issued and held solely by Commtouch as of the
business day immediately preceding the date of this Agreement. Except as set
forth above, there are no preemptive or other outstanding rights, options,
warrants, conversion rights, stock appreciation rights, redemption rights,
repurchase rights, agreements, arrangements, calls, commitments or rights of any
kind that obligate Acquisition to issue or sell any shares of capital stock or
other securities of Acquisition or any securities or obligations convertible or
exchangeable into or exercisable for, or giving any person a right to subscribe
for or acquire, any securities of Acquisition or any of its subsidiaries, and no
securities or obligations evidencing such rights are authorized, issued or
outstanding. Acquisition does not have any outstanding bonds, debentures, notes
or other obligations the holders of which have the right to vote (or convertible
into or exercisable for securities having the right to vote) with the
shareholders of Acquisition on any matter.
(b) All issued and outstanding Shares and securities of Acquisition are
duly authorized, validly issued, fully paid and non-assessable.
(c) Without limiting the generality of the foregoing, the Board of
Directors of Acquisition has unanimously (i) approved this Agreement and the
transactions contemplated hereby, and (ii) as of the date hereof has not
withdrawn or modified such approval or resolution to recommend.
SECTION 2.3. No Violations.
Neither the execution, delivery and performance of this Agreement by
Commtouch and Acquisition nor the consummation by Commtouch and Acquisition of
the transactions contemplated hereby or thereby will (i) conflict with or result
in any breach of any provision of the respective articles of association and
other charter documents (or similar governing documents) of Commtouch and
Acquisition, (ii) to the best of Commtouch's and Acquisition's knowledge, result
in a violation or breach of or constitute (with or without due notice or lapse
of time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration or Lien) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which Commtouch or Acquisition is
a party or by which any of them or any of their respective properties or assets
may be bound, or (iii) violate any order, writ, injunction, decree, law,
statute, rule or regulation applicable to Commtouch or Acquisition or any of
their respective properties or assets.
SECTION 2.4. No Undisclosed Liabilities.
Acquisition has no material indebtedness, liabilities or obligations
(whether known or unknown, absolute, accrued, contingent or otherwise and
whether due or to become due) arising out of or relating to the businesses of
Acquisition, except for normal and recurring liabilities that have been incurred
by Acquisition in the ordinary course of business in offering and supporting the
Business, including its obligations under an intercompany agreement with
Commtouch and certain subsidiaries thereof ("Intercompany Agreement"), and
liabilities that, in the aggregate, are not reasonably likely to have a Material
Adverse Effect on Acquisition.
SECTION 2.5. Contracts.
Attached hereto as Exhibit A is a complete copy of the Intercompany
Agreement, including an attachment containing contracts, commitments and
agreements relating to the Business that have been or shall be assigned by
Commtouch and certain of its subsidiary companies to Acquisition by no later
than the Effective Time (hereinafter "Business Agreements"). To the best of
Acquisition's knowledge, there are no liens or other such encumbrances over its
rights in the Business Agreements, there are no conditions, beyond normal market
factors, that might negatively affect the renewal or ongoing viability of the
Business Agreements and there are no pending legal actions by any party with
respect thereto. Additionally, except for such Business Agreements, the rights
and obligations to which Surviving Corporation shall assume within the framework
of this Merger, Acquisition possesses no other agreements or commitments of any
kind that obligate it to any other liabilities or payments of any kind.
SECTION 2.6. ZapZone Network(R).
Commtouch is the sole owner of all assets, rights and obligations in
and of the Business unit known as ZapZone Network/ZZN and, by the Effective
Time, it will have transferred all of such assets, rights and obligations
thereto to Acquisition by way of and as more fully defined in the Intercompany
Agreement.
SECTION 2.7. Litigation.
Except as would not reasonably be expected to have a Material Adverse
Effect or to materially delay or interfere with the consummation of the Merger,
there is no civil, criminal or administrative suits, claims, actions,
grievances, arbitrations, proceedings or investigations pending or, to the best
knowledge of Acquisition, threatened against Acquisition or any of its
respective properties or assets.
SECTION 2.8. Compliance with Applicable Law.
Acquisition is in compliance with the terms of all permits, licenses,
variances, exemptions, orders and approvals necessary for the lawful conduct of
the Business of Acquisition (the "Acquisition Permits"), except where the
failure to hold such Acquisition Permits has not had and would not reasonably be
expected to have a Material Adverse Effect. The business of Acquisition has been
and is being conducted in compliance with all Applicable Laws, except where the
failure to comply has not had and would not reasonably be expected to have a
Material Adverse Effect. To the best knowledge of Commtouch and Acquisition, no
investigation or review by any Governmental Entity with respect to Acquisition
is pending or, to the best knowledge of Commtouch and Acquisition, threatened in
writing.
SECTION 2.9. ZZN Intellectual Property and Software Licenses.
(a) Definition. For purposes of this Agreement, "Intellectual Property"
means: (A) the ZapZone Network and ZZN (together "ZZN") related computer
software, databases, works of authorship, mask works, technology, trade secrets
and other confidential information, know-how, proprietary processes, formulae,
algorithms, models, user interfaces, customer lists, inventions, discoveries,
concepts, ideas, techniques, methods, source codes, object codes and
methodologies, all as relating to ZZN only; and (B) with respect to all of the
foregoing, related confidential data or information (collectively, "Trade
Secrets").
(b) Trade Secrets. Commtouch and/or Acquisition have taken reasonable
steps in accordance with normal industry practice to protect its Trade Secrets.
(c) Ownership; Sufficiency of IP Assets. To Commtouch's best knowledge,
it owns or possesses adequate licenses or other rights to use, free and clear of
Liens, orders and arbitration awards, all of its Intellectual Property used in
connection with ZZN, as currently conducted at the time of the Merger and as
proposed to be conducted thereafter. To
Commtouch's best knowledge, the Intellectual Property identified in Section
2.9(a) above, plus relevant trademarks and domain(s) relating thereto,
constitute all the Intellectual Property rights used or necessary in the
operation of ZZN as it is currently conducted at the time of the Merger and as
proposed to be conducted and as to be assigned to Acquisition within the
framework of the Intercompany Agreement.
SECTION 2.10. Disclaimer of Other Representations and Warranties.
Neither Commtouch nor Acquisition make, and they have not made, any
representations or warranties relating to Acquisition in connection with the
transactions contemplated hereby other than those expressly set forth by them in
this Article II. It is also understood that any cost estimates, projections or
other productions, any data, any financial information or any memoranda or
presentations are not and shall not be deemed to be or to include
representations or warranties of Commtouch and Acquisition, except to the extent
otherwise expressly covered by the representations and warranties in this
Article 2. No person has been authorized by Commtouch and/or Acquisition to make
any representation or warranty relating to Acquisition or the businesses of
Acquisition or otherwise in connection with the transactions contemplated hereby
except as set forth in this Article 2 and, if made, such representation or
warranty must not be relied upon as having been authorized by Commtouch or
Acquisition.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby represent and warrant to Commtouch and Acquisition
as follows:
SECTION 3.1. Organization.
(a) Parent and Merger Sub are duly organized, validly existing and
in good standing under the laws of the State of California.
Each of Parent and Merger Sub has all requisite power and
authority to own, lease and operate its assets or properties
and to carry on its business as now being conducted and is
qualified to do business and in good standing as a foreign
corporation in each jurisdiction where the ownership or
operation of its assets or properties or conduct of their
business requires such qualification, except in the case where
the failure to be in such good standing, have such power and
authority or qualification is not, when taken together with
such other failures, reasonably likely to have a Material
Adverse Effect.
(b) (b) Each of Parent and Merger Sub is duly qualified or
licensed and, where such standard exists, in good standing to
do business in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing
necessary, except in
such jurisdictions where the failure to be so duly qualified
or licensed and in good standing would not have a Material
Adverse Effect.
(c) Merger Sub is a newly incorporated corporation. Except in
connection with this Agreement, Merger Sub has not and will
not prior to the Effective Time conduct any operations, enter
into any agreements and has no and will not have prior to the
Effective Time or the earlier termination of this Agreement
any obligations or liabilities, either accrued, absolute,
contingent or otherwise.
SECTION 3.2. Capitalization of Merger Sub.
The authorized share capital of Merger Sub consists of _____________
shares of Common Stock, par value $0.01, all of which were issued and
outstanding as of the date hereof. All of the issued and outstanding ordinary
shares of Merger Sub are owned by Parent and there are no other outstanding
shares or other voting securities of Merger Sub or rights to acquire the same.
SECTION 3.3. Authority Relative to this Agreement.
Each of Parent and Merger Sub has all necessary corporate power and
authority to execute and deliver this Agreement to perform its obligations under
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
boards of directors of Parent and Merger Sub and by Parent as the sole
shareholder of Merger Sub, and, no other corporate proceedings on the part of
Parent or Merger Sub are necessary to authorize this Agreement or to consummate
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by each of Parent and Acquisition and constitutes,
assuming the due authorization, execution and delivery hereof by Commtouch and
Acquisition, a valid, legal and binding agreement of each of Parent and Merger
Sub enforceable against each of Parent and Merger Sub in accordance with its
terms, subject to any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect relating to creditors'
rights generally or to general principles of equity.
SECTION 3.4. No Violations.
Neither the execution, delivery and performance of this Agreement by
Parent or Merger Sub nor the consummation by Parent or Merger Sub of the
transactions contemplated hereby will (a) conflict with or result in any breach
of any provision of the respective certificates of incorporation or bylaws (or
similar governing documents) of Parent or Merger Sub, (b) result in a violation
or breach of or constitute (with or without due notice or lapse of time or both)
a default (or give rise to any right of termination, amendment, cancellation or
acceleration or Lien) under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which Parent or Merger Sub or
any of Parent's other subsidiaries is a party or by which any of them or any of
their respective properties or assets may be bound or (c) violate any order,
writ, injunction, decree, law, statute, rule or regulation applicable to Parent
or Merger Sub or any of Parent's other subsidiaries or any of their respective
properties or assets.
SECTION 3.5. No Default.
Merger Sub is not in breach, default or violation (and no event has
occurred that with notice or the lapse of time or both would constitute a
breach, default or violation) of any term, condition or provision of (a) its
articles of incorporation and other charter documents (or similar governing
documents), or (b) any Applicable Law, except, in each case, where such breach,
default or violation could not reasonably be expected to result in a Material
Adverse Effect.
SECTION 3.6. Litigation.
Except as would not reasonably be expected to have a Company Material
Adverse Effect or to materially delay or interfere with the consummation of the
Merger, there is no civil, criminal or administrative suits, claims, actions,
grievances, arbitrations, proceedings or investigations pending or, to the best
knowledge of Merger Sub, threatened against Merger Sub or any of its respective
properties or assets.
SECTION 3.7. Compliance with Applicable Law.
Merger Sub is in compliance with the terms of all permits, licenses,
variances, exemptions, orders and approvals necessary for the lawful conduct of
its businesses (the "Permits") except where the failure to hold such Permits has
not had and would not reasonably be expected to have a Material Adverse Effect.
The business of Merger Sub has been and is being conducted in compliance with
all Applicable Laws, except where the failure to comply has not had and would
not reasonably be expected to have a Material Adverse Effect. To the best
knowledge of Parent and Merger Sub, no investigation or review by any
Governmental Entity with respect to Merger Sub is pending or, to the best
knowledge of Parent and Merger Sub, threatened in writing.
SECTION 3.8. No Vote Required.
No vote of the holders of Parent Common Stock is required under
Applicable Law in connection with this Agreement or the Merger
SECTION 3.9. Investigation by Parent.
(a) Parent has conducted its own independent investigation, review and
analysis of the business, operations, assets, liabilities, results of
operations, financial condition, technology and prospects of the Business, which
investigation, review and analysis was done by Parent and, to the extent Parent
deemed appropriate, by Parent's representatives. Parent acknowledges that it and
its representatives have been provided adequate access to the personnel,
properties, premises and records of the Business as Parent has requested for
such purpose. In entering into
this Agreement, Parent acknowledges that it has relied solely upon the
aforementioned investigation, review and analysis and not on any factual
representations or opinions of Commtouch, Acquisition or the representatives
thereof (except the specific representations and warranties of Commtouch and/or
Acquisition set forth in Article II of this Agreement). Parent has formed an
independent judgment concerning the Business and Acquisition, and the rights,
obligations, assets and liabilities pertaining thereto.
(b) Parent acknowledges that none of Commtouch, Acquisition, their
respective directors, officers, shareholders, employees, affiliates, controlling
persons, agents, advisors or representatives makes, or has made, any oral or
written representation or warranty, either express or implied, as to the
accuracy or completeness of any of the information (including materials
furnished in Commtouch's or Acquisition's data room, in presentations by
Commtouch's or Acquisition's management, in any estimates, projections,
forecasts, operating plans or budgets concerning financial or other information
relating to the Business or Acquisition delivered or made available to Parent or
otherwise obtained by Parent) provided or made available to the Parent or its
directors, officers, employees, affiliates, controlling persons, agents or
representatives.
(c) Parent agrees, to the fullest extent permitted by law, that neither
Commtouch nor Acquisition, nor any of their respective directors, officers,
employees, shareholders, affiliates, controlling persons, agents, advisors or
representatives shall have any liability or responsibility whatsoever to Parent,
Merger Sub, the Surviving Corporation or their directors, officers, employees,
affiliates, controlling persons, agents or representatives on any basis
(including in contract or tort, under federal or state securities laws or
otherwise) based upon any information provided or made available, or statements
made (including in any memorandum relating to Commtouch, Acquisition or the
Business provided to the Parent, in materials furnished in Commtouch's or
Acquisition's data room, in presentations by Commtouch's or Acquisition's
management or otherwise) to Parent or its directors, officers, employees,
affiliates, controlling persons, advisors, agents or representatives (or any
omission therefrom), including in respect of specific representations and
warranties, other than any specific representations and warranties set forth in
Article II of this Agreement.
SECTION 3.10. Sufficiency of Skill and Knowledge.
Merger Sub understands the type, quality and scope of the Business as
provided by Commtouch to its customers prior to the Effective Time, and Merger
Sub has or will have at the Effective Time the facilities, means, manpower,
finances and other resources to run the Business for at least one year.
ARTICLE 4
COVENANTS
SECTION 4.1. Conducting of Business.
(a) Except as contemplated by this Agreement, during the period
from the date hereof to the Effective Time or the earlier
termination of this Agreement, Commtouch and/or Acquisition
will use all reasonable efforts to ensure that they conduct
the Business in the ordinary course of business in
substantially the same manner as heretofore conducted
consistent with past practice and, to the extent consistent
therewith, they shall seek to preserve intact the service of
key employees and preserve their relationships with customers,
with the intention that its goodwill and ongoing Businesses
shall be unimpaired at the Effective Time.
(b) During the period as from the Effective Time, Merger Sub will
use all reasonable efforts to ensure that it conducts the
Business in the ordinary course of business in a manner so as
to preserve its relationship with customers, with the
intention that the Business' goodwill and revenue generating
capability shall be unimpaired after the Effective Time.
Further, Merger Sub agrees to continue to meet the
requirements of the Service Level Agreement set forth in the
Business Agreements.
(c) Merger Sub undertakes to continue to run the Business for at
least twelve (12) months as from the Effective Time.
SECTION 4.2. Board and Israeli Approvals.
Commtouch, to the extent necessary, shall use reasonable efforts to
obtain, as promptly as practicable after the date of this Agreement set forth in
the opening paragraph above, the following consents, and any other consents that
may be required in connection with the Merger: (i) approval of the Office of the
Chief Scientist of Israel; and (ii) approval of the Investment Center of Israel.
SECTION 4.3. Confidentiality.
Each of the parties hereto will hold, and will cause its consultants
and advisers to hold, in confidence all documents and information furnished to
it by or on behalf of another party to this Agreement in connection with the
transactions contemplated by this Agreement pursuant to the terms of that
certain Confidentiality Agreement entered into between the Commtouch and Parent
dated August 24, 2001 and as amended on October 18, 2001.
SECTION 4.4. Certain Filings; Reasonable Efforts.
(a) Subject to the terms and conditions herein provided, including
Section 4.4(b), each of the parties hereto agrees to use
commercially reasonable efforts to take or cause to be taken
all action and to do or cause to be done all things reasonably
necessary, proper or advisable under Applicable Law to
consummate and make effective the transactions contemplated by
this Agreement, including using commercially reasonable
efforts to (execute any additional instruments necessary to
consummate the transactions contemplated hereby.
(b) (b) Parent and Commtouch will consult and cooperate with one
another, and consider in good faith the views of one another,
in connection with any analyses,
appearances, presentations, letters, white papers, memoranda,
briefs, arguments, opinions or proposals made or submitted by
or on behalf of any party hereto in connection with
proceedings under or relating to any foreign, federal, or
state antitrust, competition, or fair trade law. In this
regard but without limitation, each party hereto shall
promptly inform the other of any material communication
between such party and the Federal Trade Commission, the
Antitrust Division of the United States Department of Justice,
or any other federal, foreign or state antitrust or
competition Governmental Entity regarding the transactions
contemplated herein.
SECTION 4.5. Public Announcements. None of Parent, Merger Sub,
Commtouch or Acquisition shall issue any press release or otherwise make any
public statements with respect to the transactions contemplated by this
Agreement, including the Merger without the prior consent of Parent (in the case
of Commtouch or Acquisition) or Commtouch (in the case of Parent or Merger Sub),
which consent may not be unreasonably withheld, except as may be required by
Applicable Law, or by the rules and regulations of, or pursuant to any agreement
with, the NASD, the Security Exchange Automated Quotation System ("SEAQ") or the
Nasdaq National Market, in which case the party proposing to issue such press
release or make such public statement or disclosure shall use its reasonable
best efforts to consult with the other party before issuing such press release
or making such public statement or disclosure. The first public announcement of
this Agreement and the Merger shall be a joint press release agreed upon by
Parent and Commtouch.
SECTION 4.6. Additional Events.
(a) During the period prior to the Effective Time, Commtouch and
Acquisition, on the one hand, and Parent and Merger Sub, on the other hand,
shall promptly notify the other parties in writing of:
(i) the discovery by any of them of any event, condition, fact
or circumstance that occurred or existed on or prior to the date of
this Agreement and that caused or constitutes a breach of any
representation or warranty made by them in this Agreement;
(ii) any breach of any covenant or obligation of any of them;
or
(iii) the discovery of any event, condition, fact or
circumstance that would reasonably be likely to make the timely
satisfaction of any of the conditions set forth in Article 5 impossible
or unlikely.
(b) In the event that the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or substantially all of
its properties and assets to any person, then, and in each such case to the
extent necessary to effectuate the purpose of this Agreement, Surviving
Corporation and Parent shall cause to be made proper provision so that the
successors and assigns of the Surviving Corporation shall succeed to the
obligations set forth in this Agreement.
SECTION 4.7. Assignment of Business Agreements and ZZN.
Prior to or at the Effective Time, Commtouch and certain of its
subsidiary companies shall assign the Business Agreements and all of its rights
and obligations thereto, and Commtouch shall assign all of its rights and
interests in ZZN, including licenses to software and User Accounts relating
thereto, to Acquisition within the framework of the Intercompany Agreement.
Further, at or prior to the Effective Time, Commtouch and certain of its
subsidiary companies shall deliver to Acquisition, by way of the Intercompany
Agreement, all available (i) copies of other Consumer-class Email Services
agreements that have terminated since June 30, 2001 and any other such
terminated agreements that may be easily accessible (ii) customer support logs
relating to the Business Agreements, (iii) correspondence relating to the
Business Agreements and (iv) copies of available promotional literature,
offerings, price lists, etc. that may be reasonably useful to the Surviving
Corporation in the operation of the Business. For purposes of clarification,
those email services agreements relating to Consumer-class Email Services
provided directly to enterprises or through channel partners by Commtouch or in
Japan through Commtouch KK shall not be included within the framework of the
Intercompany Agreement.
SECTION 4.8. Customer Relations.
Prior to or at the Effective Time:
(i) the parties shall cooperate in developing a joint customer
notification of the assignment of Business Agreements to be
sent to each transferred customer of the Business;
(ii) at Parent's or Merger Sub's request, Acquisition will
introduce a Parent or Merger Sub representative to each
transferred customer;
(iii) Acquisition will allow Merger Sub or Parent to participate in
any negotiation with any transferred customer prior to the
Effective Time; and
(iv) Acquisition will promptly advise Merger Sub or Parent of any
customer issues that may affect the ongoing relationship with
such customer.
SECTION 4.9. Collection of Service Fees.
As and from the Closing, Merger Sub undertakes to make reasonable
efforts to collect outstanding amounts under the Business Agreements in a timely
fashion.
SECTION 4.10 Indemnification
(a) Commtouch will indemnify and hold harmless the Parent and Surviving
Corporation and their officers, directors and shareholders, from and against any
claims, actions, damage, expense, liability, loss or deficiency, including
without limitation, reasonable attorneys' fees and other costs and expenses
incident to any suit, action, claim or proceeding arising out of or resulting
from the operation of the Business prior to Closing.
(b) Surviving Corporation and Parent, jointly and severally, will
indemnify and hold harmless Commtouch and it's officers, directors and
shareholders, from and against any claims, actions, damage, expense, liability,
loss or deficiency, including without limitation, reasonable attorneys' fees and
other costs and expenses incident to any suit, action, claim or proceeding
arising out of or resulting from the operation of the Business after Closing.
ARTICLE 5
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 5.1. Conditions to Each Party's Obligations to Effect the
Merger. The respective obligations of each party hereto to effect the Merger are
subject to the satisfaction or, if permitted by Applicable Law, waiver, at or
prior to the Effective Time of the following conditions:
(a) no statute, rule, regulation, executive order or other such order,
shall have been enacted, entered, promulgated or enforced and remain in effect
by any United States federal or state or foreign court or United States federal
or state or foreign Governmental entity that prohibits, restrains, enjoins or
restricts the consummation of the Merger; and
(b) any governmental or regulatory notices, consents, approvals or
other requirements necessary to consummate the transactions contemplated hereby
shall have been given, obtained or complied with, as applicable.
SECTION 5.2. Conditions to the Obligations of Commtouch and
Acquisition. The obligation of Commtouch and Acquisition to effect the Merger is
subject to the satisfaction or, if permitted by Applicable Law, waiver, at or
prior to the Effective Time of the following conditions:
(a) the representations and warranties of Parent and Merger Sub
contained in this Agreement shall be true and correct at and as of the Effective
Time with the same effect as if made at and as of the Effective Time (except to
the extent such representations specifically relate to an earlier date, in which
case such representations shall be true and correct as of such earlier date)
except where failure to be so true and correct, without regard to any
materiality qualifications contained therein, individually or in the aggregate
does not constitute a Material Adverse Effect, and, at the Closing, Parent and
Merger Sub shall have delivered to Commtouch a certificate to that effect,
executed by two (2) executive officers or directors of Parent and Merger Sub;
(b) each of the covenants and obligations of Parent and Merger Sub to
be performed at or before the Effective Time pursuant to the terms of this
Agreement shall have been duly performed in all material respects at or before
the Effective Time and, at the Closing, Parent and Merger Sub shall have
delivered to Commtouch a certificate to that effect, executed by two (2)
executive officers or directors of Parent and Merger Sub; and(c) Parent shall
have performed
all of its payment obligations under that certain Sale and License Agreement
Dated November __, 2001.
SECTION 5.3. Conditions to the Obligations of Parent and Merger Sub.
The respective obligations of Parent and Merger Sub to effect the Merger are
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) the representations and warranties of Commtouch and Acquisition
contained in this Agreement shall be true and correct at and as of the Effective
Time with the same effect as if made at and as of the Effective Time (except to
the extent such representations specifically relate to an earlier date, in which
case such representations shall be true and correct as of such earlier date and
except where the failure to be so true and correct, without regarding to any
materiality qualification contained therein, individually or in the aggregate
does not constitute a Material Adverse Effect) and, at the Closing, the
Commtouch and Acquisition shall have delivered to Parent and Merger Sub a
certificate to that effect, executed by two (2) executive officers or directors
of Commtouch and Acquisition;
(b) each of the covenants and obligations of Commtouch and Acquisition
to be performed at or before the Effective Time pursuant to the terms of this
Agreement shall have been duly performed in all material respects at or before
the Effective Time and, at the Closing, the Commtouch and Acquisition shall have
delivered to Parent and Merger Sub a certificate to that effect, executed by two
(2) executive officers or directors of Commtouch and Acquisition; and
(c) to the extent required, the parties shall have obtained approval of
the Merger or any aspect thereof from the OCS and/or the Investment Center.
ARTICLE 6
TERMINATION; AMENDMENT; WAIVER
SECTION 6.1. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time:
(a) by mutual written consent of Parent, Merger Sub, Commtouch and the
Acquisition;
(b) by Parent and Merger Sub or Commtouch and Acquisition if (i) any
court of competent jurisdiction or other federal or state or foreign
Governmental Entity shall have issued a final order, decree or ruling, or taken
any other final action, restraining, enjoining or otherwise prohibiting the
Merger and such order, decree, ruling or other action is or shall have become
nonappealable or (ii) the Merger has not been consummated by January 1, 2002
(the "Final Date"); provided that no party may terminate this Agreement pursuant
to this clause (ii) if such party's failure to fulfill any of its obligations
under this Agreement shall have been a principal reason that the Effective Time
shall not have occurred on or before said date;
(c) by Commtouch and Acquisition if (i) there shall have been a breach
of any representations or warranties on the part of Parent or Merger Sub set
forth in this Agreement or if
any representations or warranties of Parent or Merger Sub shall have become
untrue such that the conditions set forth in Section 5.2(a) would be incapable
of being satisfied by the Final Date, provided that Commtouch and Acquisition
have not willfully breached any of their obligations hereunder in any material
respect and provided further, however, that Commtouch has provided Parent or
Merger Sub with notice of such breach and such breach shall not have been cured
within ten (10) business days of such notice; (ii) there shall have been a
breach by Parent or Merger Sub of any of their respective covenants or
agreements hereunder materially adversely affecting (or materially delaying) the
ability of Parent, Merger Sub, Commtouch or Acquisition to consummate the
Merger, and Parent or Merger Sub, as the case may be, has not cured such breach
within ten (10) business days after notice by Commtouch thereof, provided that
Commtouch and Acquisition have not willfully breached any of their obligations
hereunder in any material respect; (iii) the Board has convened a meeting to
vote upon the Merger in accordance with this Agreement and shall have failed to
obtain the requisite majority at such meeting (including any adjournments
thereof); or
(d) by Parent and Merger Sub if (i) there shall have been a breach of
any representations or warranties on the part of Commtouch and Acquisition set
forth in this Agreement or if any representations or warranties of Commtouch and
Acquisition shall have become untrue such that the conditions set forth in
Section 5.3(a) would be incapable of being satisfied by the Final Date, provided
that neither Parent nor Merger Sub has willfully breached any of their
respective obligations hereunder in any material respect and provided further,
however, that Parent and Merger Sub have provided Commtouch with notice of such
breach and such breach shall not have been cured within ten (10) business days
of such notice; (ii) there shall have been a breach by Commtouch and Acquisition
of one or more of their covenants or agreements hereunder having a Material
Adverse Effect or materially adversely affecting (or materially delaying) the
ability of Parent, Merger Sub, Commtouch or Acquisition to consummate the
Merger, and Commtouch and Acquisition have not cured such breach within ten (10)
business days after notice by Parent or Merger Sub thereof, provided that
neither Parent nor Merger Sub has willfully breached any of their respective
obligations hereunder in any material respect.
SECTION 6.2. Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 6.1, this Agreement shall
forthwith become void and have no effect without any liability on the part of
any party hereto or its affiliates, directors, officers or shareholders other
than the provisions of this Section 6.2. Nothing contained in this Section 6.2
shall relieve any party from liability for any breach of this Agreement prior to
such termination.
SECTION 6.3. Fees and Expenses.
Each party shall bear its own expenses in connection with this
Agreement and the transactions contemplated hereby.
SECTION 6.4 Amendment.
This Agreement may be amended only by an instrument in writing signed
on behalf of the parties hereto.
SECTION 6.5. Extension; Waiver. At any time prior to the Effective
Time, each party hereto may (i) extend the time for the performance of any of
the obligations or other acts of the other party, (ii) waive any inaccuracies in
the representations and warranties of the other party contained herein or in any
document certificate or writing delivered pursuant hereto or (iii) waive
compliance by the other party with any of the agreements or conditions contained
herein. Any agreement on the part of any party hereto to any such extension or
waiver shall be valid only if set forth in an instrument, in writing, signed on
behalf of such party. The failure of any party hereto to assert any of its
rights hereunder shall not constitute a waiver of such rights.
ARTICLE 7
MISCELLANEOUS
SECTION 7.1. Nonsurvival of Representations and Warranties. The
representations and warranties made herein shall not survive beyond the
Effective Time or a termination of this Agreement, except that the agreements
set forth in Article 1.6, Article 4.1(b) and (c), Article 4.10, this Article 7
and any other provision that, by its very nature and a reasonable interpretation
thereof, is intended to survive, shall survive the Effective Time.
SECTION 7.2. Entire Agreement; Assignment. This Agreement (a)
constitutes the entire agreement between the parties hereto with respect to the
Merger and supersedes all other prior and contemporaneous agreements and
understandings both written and oral between the parties with respect to the
Merger, except for the Confidentiality Agreement, which shall continue in full
force and effect, and shall survive any termination of this Agreement or the
Closing, in accordance with its terms and (b) shall not be assigned by operation
of law or otherwise.
SECTION 7.3. Validity. If any provision of this Agreement or the
application thereof to any person or circumstance is held invalid or
unenforceable, the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected thereby and to
such end the provisions of this Agreement are agreed to be severable.
SECTION 7.4 Notices. All notices and other communications pursuant to
this Agreement shall be in writing and shall be deemed given if delivered
personally, telecopied, sent by nationally-recognized overnight courier or
mailed by registered or certified mail (return receipt requested), postage
prepaid, to the parties at the addresses set forth below or to such other
address as the party to whom notice is to be given may have furnished to the
other parties hereto in writing in accordance herewith. Any such notice or
communication shall be deemed to have been delivered and received (A) in the
case of personal delivery, on the date of such delivery, (B) in the case of
telecopier, on the date sent if confirmation of receipt is received and such
notice is also promptly mailed by registered or certified mail (return receipt
requested), (C) in the case of a nationally-recognized overnight courier in
circumstances under which such courier guarantees next business day delivery, on
the next business day after the date when sent and (D) in the case of mailing,
on the third business day following that on which the piece of mail containing
such communication is posted:
if to Parent or Merger Sub:
C/o CP Software Group
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
______________________
Telecopier: (000) 000-0000
Attention: Corporate Counsel
if to Commtouch or Acquisition to:
c/o Commtouch Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxx, Xxxxxxxxxx 00000
Telecopier: (___) ___-____
Attention: Chief Executive Officer
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
SECTION 7.5. Governing Law and Venue; Waiver of Jury Trial.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS
SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW
OF THE STATE OF CALIFORNIA WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES
THEREOF PROVIDED, HOWEVER, THAT ANY MATTER INVOLVING THE INTERNAL CORPORATE
AFFAIRS OF COMMTOUCH OR PARENT SHALL BE GOVERNED BY THE PROVISIONS OF THE
JURISDICTIONS OF ITS INCORPORATION. The parties hereby irrevocably submit to the
jurisdiction of the courts of the State of California and the Federal courts of
the United States of America located in the State of California solely in
respect of the interpretation and enforcement of the provisions of this
Agreement and of the documents referred to in this Agreement, and in respect of
the transactions contemplated hereby, and hereby waive, and agree not to assert,
as a defense in any action, suit or proceeding for the interpretation or
enforcement hereof or of any such document, that it is not subject thereto or
that such action, suit or proceeding may not be brought or is not maintainable
in said courts or that the venue thereof may not be appropriate or that this
Agreement or any such document may not be enforced in or by such courts, and the
parties hereto irrevocably agree that all claims with respect to such action or
proceeding shall be heard and determined in such a California State or Federal
court. The parties hereby consent to and grant any such court jurisdiction over
the person of such parties and over the subject matter of such dispute and agree
that mailing of process or other papers in connection with any such action or
proceeding in the manner provided in Section 7.4 or in such other manner as may
be permitted by Applicable Law, shall be valid and sufficient service thereof.
(b) The parties agree that irreparable damage would occur and that the
parties would not have any adequate remedy at law in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions of this
Agreement in any Federal court located in the State of California or in
California state court, this being in addition to any other remedy to which they
are entitled at law or in equity.
(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH SUCH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH SUCH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN INDUCED
TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE WAIVERS AND
CERTIFICATIONS IN THIS SECTION 7.5.
SECTION 7.6. Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
SECTION 7.7. Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto and its successors and
permitted assigns and, except as expressly provided herein, nothing in this
Agreement is intended to or shall confer upon any other person any rights,
benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
SECTION 7.8. Certain Definitions. For the purposes of this Agreement
the term:
(a) "Applicable Law" means, with respect to any person, any domestic
or foreign, federal, state or local statute, law, ordinance, rule, regulation,
order, writ, injunction, judgment, decree or other requirement of any
Governmental Entity existing as of the date hereof or as of the Effective Time
applicable to such Person or any of its respective properties, assets, officers,
directors, employees, consultants or agents.
(b) "business day" means any day other than a day on which the Nasdaq
National Market is closed;
(c) "Material Adverse Effect" means any circumstance, change in or
effect on the one of the parties that is or is reasonably likely in the future
to be a material adverse effect on the
financial condition and business of one of the parties and its subsidiaries
taken as a whole, but shall exclude any circumstances, change in or effect on a
party arising out of or relating to (i) industry generally, (ii) the United
States economy generally, (iii) the termination of any of the Business
Agreements and (iv) announcement of the existence and terms of the Agreement;
(d) "capital stock" means common stock, preferred stock, partnership
interests, limited liability company interests or other ownership interests
entitling the holder thereof to vote with respect to matters involving the
issuer thereof;
(e) "Consumer-class Email Services" means the service provided to
individual consumers directly and to companies that serve individual consumers
without such individual consumers paying a fee for the email services;
(f) "include" or "including" means "include, without limitation" or
"including, without limitation," as the case may be, and the language following
"include" or "including" shall not be deemed to set forth an exhaustive list;
(g) "Lien" means, with respect to any asset (including any security),
any mortgage, lien, pledge, charge, claim, security interest or encumbrance of
any kind in respect of such asset; provided, however, that the term "Lien" shall
not include (i) statutory liens for Taxes (as defined below) that are not yet
due and payable, (ii) statutory liens for Taxes that are being contested in good
faith by appropriate proceedings (iii) statutory or common law liens to secure
obligations to landlords, lessors or renters under leases or rental agreements
confined to the premises rented, (iv) deposits or pledges made in connection
with, or to secure payment of, workers' compensation, unemployment insurance,
old age pension or other social security programs mandated under Applicable
Laws, (v) statutory or common law liens in favor of carriers, warehousemen,
mechanics and material men, to secure claims for labor, materials or supplies
and other like liens, (vi) minor liens that have arisen in the ordinary course
of business and that do not (in any case or in the aggregate) materially detract
from the value of the assets subject thereto or materially impair the operation
of Commtouch or any of its subsidiaries; (vi) purchase money liens incurred in
the ordinary course of business and liens securing debt which is reflected on
the Company Balance Sheet; and (vii) restrictions on transfer of securities
imposed by applicable state and federal (United States or foreign) securities
laws or the governing documents of Commtouch, Acquisition or Parent, as
applicable;
(h) "person" means any individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization or other
legal entity including any Governmental Entity;
(i) "subsidiary" or "subsidiaries" of Commtouch, Parent, the Surviving
Corporation or any other person means any entity, whether incorporated or
unincorporated, of which at least a majority of the securities or ownership
interests having by their terms ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions is directly or
indirectly owned or controlled by such party or by one or more of its respective
Subsidiaries or by such party and any one or more of its respective
Subsidiaries.
SECTION 7.9. Personal Liability. This Agreement shall not create or
be deemed to create or permit any personal liability or obligation on the part
of any direct or indirect shareholder of Commtouch, Acquisition, Parent or
Merger Sub or any officer, director, employee, agent, representative or investor
of any party hereto.
SECTION 7.10. Taxes. To the extent that any franchise, sales, use,
personal property, excise, value added or other such taxes, except taxes based
on income, are imposed in the United States as a result of the Closing of the
Merger or in relation to the Business thereafter, such taxes shall be paid by
Parent or Merger Sub. Commtouch and/or Acquisition shall be responsible for all
taxes imposed on the Business prior to the Closing.
SECTION 7. 11. Parent Guarantee. To the extent not otherwise stated
herein, Parent guarantees all of the obligations and liabilities of Merger Sub
under this Agreement and, should Merger Sub be in breach of any of its
obligations hereunder, upon Commtouch's first written demand, CPSGV shall
perform or satisfy any such obligations and liabilities as contemplated herein,
including those arising from the assumption of all obligations and liabilities
of Merger Sub under the Intercompany Agreement. The obligation to make an
initial demand upon and/or proceed in any manner against Merger Sub is hereby
waived.
SECTION 7.12. Board Approval. This Agreement is subject to the prior
approval of the Board of Directors of Commtouch.
SECTION 7.13. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which shall constitute one and the same agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed on its behalf as of the day and year first above written.
CP SOFTWARE GROUP, INC.
By:___________________________________
Name:
Title:
Date:
COMMTOUCH SOFTWARE LTD.
By:___________________________________
Name:
Title:
Date:
_________________ INC.
CPSGNEWCO, INC.
By:___________________________________
Name:
Title:
Date:
MAILCENTRO, INC.
By:___________________________________
Name:
Title:
Date:
Exhibit A
INTERCOMPANY AGREEMENT
THIS INTERCOMPANY AGREEMENT (this "Agreement") dated as of November ___, 2001
("Effective Date"), is by and among COMMTOUCH SOFTWARE LTD., an Israeli
corporation ("CTLTD"), and COMMTOUCH INC., a California corporation ("CTINC"),
COMMTOUCH LATIN AMERICA INC., a Delaware corporation ("CTLA"), COMMTOUCH (UK)
LTD., an English corporation ("CTUK"), and MailCentro, Inc., a California
corporation ("Consumer Corp").
WHEREAS, CTLTD, CTINC, CTLA and CTUK (hereinafter jointly and severally
"Commtouch Group") are interested in assigning all of their rights and
obligations to substantially all of its consumer-class email service agreements
to Consumer Corp; and
WHEREAS, Consumer Corp is interested in receiving the assignment of the
stated agreements from the Commtouch Group in consideration of the undertakings
of Consumer Corp as more fully described below;
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, CTLTD, CTINC, CTLA, CTUK and Consumer Corp
hereby agree as follows:
1. EXHIBITS AND DEFINITIONS
The following exhibit is attached hereto and constitutes an integral part
hereof:
1.1 Exhibit A - List of Agreements
For purposes of this Agreement:
o "consumer-class email services" means the service provided to
individual consumers directly and to companies that serve
individual consumers.
o "affiliated company" means any corporation or other business
entity controlled by, controlling or under common control with
Consumer Corp. For this purpose "control" shall mean direct or
indirect beneficial ownership of fifty percent (50%) or more
of the voting or income interest in Consumer Corp or other
business entity.
o "professional services" means staff provided services that are
separately billed to a customer for support of the
consumer-class email services including consultation, set-up,
migration, modification and customization.
2. ASSIGNMENT OF AGREEMENTS
2.1 The Commtouch Group hereby assigns and transfers to Consumer Corp, and
Consumer Corp agrees to assume, all of the Commtouch Group's rights and
obligations under the email service agreements described in Exhibit A
("Business Agreement(s)"). The Commtouch Group represents and declares
that, to the best of its knowledge, the Business Agreements represent
all of the consumer-class email services agreements that it possesses
as of the Effective Date hereof, apart from select agreements
previously identified to Consumer Corp.
2.2 The assignment shall be effective as of the Effective Date. The
preceding notwithstanding, the Commtouch Group shall continue to
provide the services under said agreements until December 31, 2001,
23:59 pm Greenwich Mean Time ("Service Termination Date"), at no extra
charge. Upon the Service Termination Date, Consumer Corp, including any
successor(s) thereto, shall be solely responsible for providing and
maintaining the service, as required under each individual agreement of
Exhibit A.
2.3 Consumer Corp agrees to make best efforts in providing and maintaining
the service to the customers under each such email service agreement at
the levels required by the applicable service level commitments
included in each agreement.
3. ROYALTY PAYMENTS
3.1 As from the Effective Date until the Service Termination Date, Consumer
Corp shall pay to CTLTD, on behalf of the Commtouch Group, royalties
equal to 100% of the cash revenues of any kind earned and/or received
by Consumer Corp during said period.
3.2 As from the Service Termination Date, Consumer Corp shall pay to CTLTD,
on behalf of the Commtouch Group, a royalty as follows:
-------------------------------------------------------------------------------------------------------------
QUARTERLY PERIOD ROYALTY PERCENTAGE (a)
------------------------------------------------------- -----------------------------------------------------
January through March 2002 70% of cash revenues described below
------------------------------------------------------- -----------------------------------------------------
April through June 2002 50% of cash revenues described below
------------------------------------------------------- -----------------------------------------------------
July through September 2002 50% of cash revenues described below
------------------------------------------------------- -----------------------------------------------------
October through December 2002 25% of cash revenues described below
------------------------------------------------------- -----------------------------------------------------
(a) Consumer Corp shall retain for its own use the first $200K of
royalty, which would be otherwise payable to CTLTD, provided
however that Consumer Corp shall retain not more than $150K of
royalty for the period January through March 2002.
3.3 The royalty shall be calculated on all cash revenue collected by
Consumer Corp from any Business Agreement, or any follow-on or
replacement contract executed by Consumer Corp relating to
consumer-class email services, including any form of outsource services
or licensing of email software, and excluding revenue from Professional
Services. Advertising revenue generated in conjunction with the
Business Agreements shall be included after subtracting any royalties
or other payments due to third parties. The above quarterly periods
reflect the periods during which revenues are earned for consumer-class
email services provided during those periods, and the fact that
payments are received in subsequent periods shall not prejudice the
Commtouch Group's right to earn royalties for the prior period(s).
Payments from a customer shall always be applied initially to amounts
outstanding under any period reflecting the highest percentage revenue
split to the Commtouch Group. For purpose of clarification, should
Consumer Corp transfer or refer any customer to any entity and such
entity collects email related revenues from the customer, such revenues
shall be included in the royalty schedule hereunder.
3.4 Royalty payments to Commtouch will be made monthly by Consumer Corp, in
arrears in the month following each calendar month based on revenue
collected in the preceding month. Revenues collected for the 12 month
period after the Service Termination Date shall be deposited into a
bank lock-box account in which CTLTD and Consumer Corp will have a
joint security interest. Transfers from this account will be based upon
the royalty schedule included hereinabove and will require signatures
from CTLTD and Consumer Corp. For purposes of clarification, it is
understood and agreed that said account will continue to exist until
the amounts to be paid to CTLTD are received by it free and clear of
all liens or other encumbrances.
3.5 Consumer Corp will ensure that all email related revenue collected, as
described above, is transferred by the customers of the consumer-class
email services or Business Agreements directly into the lock-box
account described above.
3.6 Should any revenue be otherwise due under the Business Agreements, or
follow-on or replacement contracts thereto, which is not collectable by
reason of a failure by Consumer Corp to provide the consumer-class
email services in accordance with the terms of the Service Level
Agreements contained in the Business Agreements or follow-on or
replacement contracts and remains uncollected for a period of sixty
(60) days after it would normally be due, such revenue will be included
for purposes of calculating the royalty due to the Commtouch Group
under Article 3.2 above (and the royalty shall be calculated such that
any prior quarterly period(s) outstanding royalties are computed
first). If such revenue is subsequently collected it will not be taken
into account in calculating future royalty payments.
3.7 If any payments from customers under the Business Agreements for
services performed by the Commtouch Group prior to the Effective Time
are received into the lock-box account, Consumer Corp will immediately
release them to CTLTD.
3.8 Consumer Corp represents and warrants that it will take all reasonable
action, in a timely manner, to collect outstanding receivables from the
relevant customers.
3.9 CTLTD agrees to transfer royalties received hereunder to the applicable
Commtouch entity to the extent that such entity has assigned an
agreement(s) on behalf of which the royalties have been earned.
4. TRANSFERENCE OF ADDITIONAL MATERIALS
4.1 The Commtouch Group shall provide to Consumer Corp all agreements and
related customer correspondence relating to customers that have
terminated since June 30, 2001 and that are related to consumer-class
email services, and make available for copying by Consumer Corp other
terminated agreements that are reasonably accessible to the Commtouch
Group. For purposes of clarification, those services provided directly
to enterprises or through channel partners or in Japan through
Commtouch KK shall not be included within the scope of this
sub-paragraph.
4.2 The Commtouch Group shall also provide i) copies of available
correspondence that relates to the transferred agreements and ii)
copies of available correspondence that relate to the transferred
agreements.
4.3 Furthermore, the Commtouch Group shall make available to Consumer Corp
copies of any reasonably available promotional literature, offerings,
price lists, etc. that might be reasonably useful to Consumer Corp. in
the operation of the service.
5. AUDIT RIGHTS
Consumer Corp agrees to prepare and maintain complete and accurate books and
records relating to its collection of fees relating to the Business Agreement,
including follow-on or replacement contracts thereto. The Commtouch Group will
have the right to personally examine on a recurring basis (once per calendar
quarter), at the Commtouch Group's own expense, the relevant records of Consumer
Corp in order to verify that the Commtouch Group has been paid the accurate
royalties, as described above. The Commtouch Group shall provide Consumer Corp
with advance notice of its intention to audit. The audit shall take place at a
time mutually agreeable but not later than fifteen (15) days following notice by
Commtouch Group. Consumer Corp shall provide all information that may reasonably
be required to substantiate the royalty calculation. To the extent that the
audit reveals an underpayment to the Commtouch Group of greater than five (5%),
in addition to paying such underpayment and any legal interest thereon, Consumer
Corp shall pay for the costs of the audit.
6. LIMITATION ON CONTACT WITH FORMER CUSTOMERS
For a period of two (2) years as from the Service Termination Date, the
Commtouch Group undertakes not to offer any services that compete with Consumer
Corp's consumer-class email services to be provided to any customer under a
Business Agreement.
7. ASSIGNMENT OF ZAPZONE NETWORK
As from the Effective Date, CTLTD hereby assigns to Consumer Corp all rights and
title in and to the goodwill and user accounts relating to its proprietary, free
consumer email service known as ZAPZONE NETWORK ("ZZN"). Furthermore, CTLTD
hereby provides to Consumer Corp a royalty-free, perpetual, non-transferable
(except to affiliated companies) license to use the CTLTD software necessary in
running ZZN, and only for the purpose of running ZZN.
CTLTD shall have the right to designate to Consumer Corp during the twelve
months following the Effective Date, the name of a single, qualified third-party
with whom Consumer Corp will negotiate in good faith a marketing agreement
whereby the designated third party may offer domain registration service to the
ZZN customers. The agreement shall be based upon terms that are generally
reasonable in the industry including compensation to Consumer Corp but, in any
case, will include an initial term not to exceed twelve months, an option for
renewal based upon mutual agreement, the right for Consumer Corp to approve the
form and substance of any promotion or offer and a prohibition on the third
party from offering services to ZZN customers which are in the opinion of
Consumer Corp competitive with the Business.
8. REFERRALS
CTLTD or CTINC may refer leads for consumer-class Email Services to Consumer
Corp, and Consumer Corp may refer leads for enterprise email services to CTINC
or CTLTD. For such referred accounts, the referring party will receive 15% of
the first six (6) months' revenue collected from the referred customer. Any
Business Agreement which has terminated as of the Effective Date and provided by
CTLTD or CTINC pursuant to Section 4 shall be treated as referrals under this
section and shall be subject only to the royalty as set forth in this Section.
In the event that one of the members of the Commtouch Group assigns and Consumer
Corp. accepts an executed agreement that is not listed on Exhibit A to Consumer
Corp subsequent to the Effective Date, Consumer Corp shall pay to CTLTD a
royalty based on the terms set forth in Article 3 above, with the Quarterly
Period commencing with the first month during which Consumer Corp earns a fee
under the agreement and the royalty obligation lasting for the equivalent of
four Quarterly Periods.
9. BREACH
A party shall be considered in breach by the other party(ies) if it has
materially failed to perform any material representation, covenant, warranty or
term of this Agreement and said failure is not cured by the breaching party
within thirty (30) days after delivery to it of written notice thereof by a
non-breaching party. Should said failure not be cured within the stated period,
the non-breaching party(ies) shall have all rights available at law. For the
failure to make any payment as and when due, without derogating from any other
rights of the non-breaching party(ies), the breaching party shall be liable for
interest at the maximum lawful rate.
10. MISCELLANEOUS
10.1 Each party shall be entitled to disclose the existence of this
Agreement, but agrees that the financial terms of this Agreement shall
be treated as confidential and shall not be disclosed to any other
party; provided, however, that each party may disclose the financial
terms of this Agreement (a) as required by a court or other
governmental body, or as otherwise required by law, (b) in confidence,
to its legal counsel, accountants, banks, and current and prospective
financing sources and their advisors, or in connection with an actual
or proposed merger or acquisition, or (c) in connection with the
enforcement of its rights under this Agreement.
10.2 Each party represents and declares to the other party that: (a) such
party is an entity duly organized, validly existing and in good
standing in the jurisdiction of its formation; (b) such party has full
authority to enter into this Agreement, to grant the rights granted
herein, and to perform the obligations assumed hereunder; and (c) this
Agreement, when executed by both parties, represents such party's valid
and binding obligation, enforceable against it in accordance with its
terms, subject to certain general legal enforceability exceptions.
10.3 CTLTD MAKES NO WARRANTIES REGARDING THE ZZN SOFTWARE LICENSED
HEREUNDER, WHETHER EXPRESS OR IMPLIED, AND SPECIFICALLY DISCLAIMS ALL
OTHER WARRANTIES OR CONDITIONS REGARDING SAID SOFTWARE, INCLUDING ANY
IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE. 10.4 This Agreement shall be governed by and construed under
the laws of the State of California and the United States (excluding
the U.N. Convention on Contracts for the International Sale of Goods)
without regard to choice of law principles. The State and Federal
Courts of the County of Santa Xxxxx shall have exclusive jurisdiction
to preside over any matter arising hereunder. In any action or
proceeding to enforce rights under this Agreement, the prevailing party
shall be entitled to recover costs and attorneys' fees.
10.5 Except as otherwise expressly provided in this Agreement, no party may
transfer or assign its rights or delegate its obligations hereunder
without the prior written consent of the other party, which consent
shall not be withheld or delayed unreasonably, provided that each party
shall have the right to transfer this Agreement, and assign all of its
rights and delegate all of its obligations hereunder to any affiliated
company and to any successor by way of merger, acquisition or
consolidation or in connection with the sale or transfer of
substantially all of its business and assets relating to this
Agreement.
10.6 All notices under this Agreement shall be in writing and delivered
personally or by facsimile, commercial overnight courier, or certified
or registered mail, return receipt requested, to a party at its
respective address set forth hereinbelow.
All notices to be provided to the Commtouch Group shall be addressed to
"Controller" and "General Counsel", and addressed as follows:
c/o Commtouch Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxx, XX 00000
Fax: 000-000-0000
All notices to be provided to Consumer Corp shall be provided to
"President", and addressed as follows:
X/x Xxxxxxxxx Xxxxxxxx Xxx.
0 Xxxxxxx Xx.
Poleg Industrial Park
Netanya, Israel 42504
10.7 This Agreement sets forth the entire agreement and understanding of the
parties relating to the subject matter herein and merges and supersedes
all prior discussions between them. No modification of or amendment to
this Agreement, nor any waiver of any rights under this Agreement,
shall be effective unless in writing signed by the party against whom
it is to be enforced. Nothing express or implied in this Agreement is
intended to confer, nor shall anything herein confer, upon any person
other than the parties and the respective successors or permitted
assigns of the parties, any rights, remedies, obligations or
liabilities whatsoever.
10.8 The parties are independent contractors, and nothing in this Agreement
shall be construed to create a joint venture or partnership or other
relationship with duties or incidents different from those of parties
to an arm's-length transaction.
10.9 This Agreement may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed an original, and
such counterparts together shall constitute one and the same
instrument. For purposes hereof, a facsimile copy of this Agreement,
including the signature pages hereto, shall be deemed to be an
original.
10.10 Amounts to be paid by a party shall be exclusive of, and the party
making such payments shall be responsible for, any sales, use,
withholding, excise, and/or value-added or similar taxes (other than
taxes on the net income of the other party).
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the Effective Date by their respective authorized representatives.
MAILCENTRO, INC.
______________________________________________
Authorized Signature
______________________________________________
Printed Name
______________________________________________
Title
______________________________________________
Date
COMMTOUCH SOFTWARE LTD.
______________________________________________
Authorized Signature
______________________________________________
Printed Name
______________________________________________
Title
______________________________________________
Date
COMMTOUCH INC.
______________________________________________
Authorized Signature
______________________________________________
Printed Name
______________________________________________
Title
______________________________________________
Date
COMMTOUCH (UK) LTD.
______________________________________________
Authorized Signature
______________________________________________
Printed Name
______________________________________________
Title
______________________________________________
Date
COMMTOUCH LATIN AMERICA INC.
______________________________________________
Authorized Signature
______________________________________________
Printed Name
______________________________________________
Title
______________________________________________
Date
Exhibit A
List of Agreements
(Included Both Current and Terminated Customers)
ABC Electronico N.I.F
Xxxxx.xxx
ACCA
Admail (algemeen dagblad)
XxxXxxx.xxx Internet S.A
XXX.xxx - Contenidos Digitales
An Feminin
ANM
AOPA
Xxxxxxx.xxx
Ask Jeeves International, Inc.
Xxxx.xxx
Xxx.xxx
Black World Today
BlackVoices - Tribune Interactive
Caixa Online
Cambridge Technology Scramea-NOKNOK
Canoe Limited Partnership
CareMail
Central Newspapers, Inc.
Xxxxxx.xxx
Citaris (Entretente com Mexico)
Clastical Network
Xxxxx0Xxxx.xxx
XxxxxXXxx.xxx
Club-Kasparow Chess Online
Comfm
Community Connect
ConCanoe
Confidential (Basys)
Cooperative Computing Inc DBA CCITriad
Correo Total
Cox Interactive
Darker than xxxx.xxx
E Corp. Associates (Ecofabricmail)
Easy Group
Eggplant - virtual
Elistmo
Ericsson (Zopps)
Ese Sa.
Etnoka
XxxxxxxXxxxxxx.xxx
Fairfax Multimedia Holdings
XxxxXxxx.xxx
France Telecom
Fun Planet
GetAsia
Gimacom
Global Gossip Communications
Groupo Zeta
Xxxx Internet, S.L.
Hard Rock Cafe International
Harvard Square - Xxxxxxxx.xxx
HBCI, Inc.
High Wired
Xxxxxxxxx.xxx
Homestead, Inc.
iAgora LLC
IGN
India Properties
Xxxxx.xxx Portal Pvt. Ltd
Info Pro - Iseek LTD
Infojobs S.L
Interpak
Invention Media Inc.(Moncourier)
IOL - Israel On Line
Irish Times (Itronics Ltd)
Job Science
Lantero
Xxx.xxx
Learning Network (FEN)
Xxx Xxxxxxx (Xxxxxxxx.xxx)
Liberty Surf SA- Francemail
Light Years Integral Comm. AB
Lineabox
Live4now
Lycos Europe
mailco-op
Xxxxxxxx.xxx
Morinda, Inc.
MTVI Group, Inc.
Multimate
Multimedia Mail Co.
Xxxxxx.xxx
Nando
Netbranding Company
Netopia
New world dreem
On Line Partners
OnVantage, Inc.
Oppido
Oxygen
Pan-American Marketing
PCM Uitgevers N.V.-Algemeen Dagblad
Xxxxx Center for Peace
Xxxxxxxx'x
Post Nederlandse
Quadrante
Recoletos Compania de Internet
Repsol
Xxxxx.xxx
Santander Central Hispano Internet
Xxxxx.xxx
Xxxxxxxxxx.xxx
Search Dice
Seimpleday
Shelflink
siam2you
SkyBiz2000
Sports Endeavors, Inc.
Streetnames
Structured Web
TalentedKids
Tf1
The Job Xxxx.xxx
The Yacht Channel
Total Eye Sight
Trading Central
Tricom, S.A.
TV Catalunya
United Breweries India
Universia (BSCH)
Via Networks
Virtual Network S.A (#2)
Visir
Web Internet LLC
Westside
Xxxxxx.xxx
XxxxxxxXxxxxx.xxx
Yupi Internet, Inc.
Zeta Digital
