EXHIBIT 99.5
REDEMPTION, AMENDMENT AND EXCHANGE AGREEMENT
REDEMPTION, AMENDMENT AND EXCHANGE AGREEMENT (the "Agreement"), dated
as of October 31, 2004, by and between Commtouch Software Ltd., an Israeli
corporation, with headquarters located at 0X Xxxxxxx Xxxxxx, Xxxxx Industrial
Park, Netanya 42504, Israel (the "Company"), and [Smithfield Fiduciary LLC]
[Omicron Master Trust] [Cranshire Capital L.P.] [Vertical Ventures, LLC] [Israel
Seed IV, L.P.] (the "Investor").
WHEREAS:
A. The Company, the Investor and certain other investors (the "Other
Investors", and collectively with the Investor, the "Investors") have entered
into that certain November SPA, dated as of November 26, 2003 (as certain terms
were amended in that certain November SPA, dated May 18, 2004 ("May SPA"), by
and among the Company and the Investors) (the "November SPA"), pursuant to
which, among other things, the Investors purchased from the Company (i) an
aggregate of US$3,000,000 principal amount of senior secured convertible notes
of the Company (the "Initial Notes"), convertible into the Company's Ordinary
Shares, NIS 0.05 nominal value per share (the "Ordinary Shares") at a conversion
price of US$0.83 per share (as converted, the "Initial Conversion Shares"), in
accordance with the terms of the Initial Notes, and (ii) warrants (the "Initial
Warrants") to acquire additional Ordinary Shares at an exercise price of US$0.83
per share (as exercised, the "Initial Warrant Shares");
B. Subject to the terms and conditions set forth in the November SPA,
the Investors have the right to purchase (the "Purchase Rights"), and the
Company may be required to sell (i) up to an aggregate of US$3,000,000 principal
amount of Additional Notes (as defined in the November SPA) convertible into the
Company's Ordinary Shares at a conversion price of US$0.90 and (ii) Additional
Warrants (as defined in the November SPA) to purchase Ordinary Shares at an
exercise price of US$0.90 per share (as exercised, the "Additional Warrant
Shares");
C. In connection with the transactions set forth in the November SPA,
the Company entered into a Security Agreement, a Debenture and a Guarantee, each
dated as of December 26, 2003 (collectively, the "Security Agreements"),
pursuant to which, among other things, the Grantor (as defined in the Security
Agreements) guaranteed the Company's obligations under the November SPA and
granted to the Collateral Agent (as defined in the Security Agreement) for the
benefit of the Investors a security interest in all the personal property of the
Grantor to secure its guarantee;
D. Contemporaneously with the execution and delivery of the November
SPA, the Company and the Investors entered into a Registration Rights Agreement,
dated as of November 26, 2003 (the "Registration Rights Agreement"), pursuant to
which the Company agreed to provide certain registration rights with respect to
the Registrable Securities (as defined in the Registration Rights Agreement)
under the United States Securities Act of 1933, as amended (the "1933 Act"), and
the rules and regulations promulgated thereunder, and applicable state
securities laws;
E. Pursuant to the terms of a Securities Purchase Agreement, dated as
of the date hereof, by and among the Company and the buyers set forth therein, a
copy of which is attached hereto as Exhibit A (the "Preferred SPA"), the Company
desires to sell certain Series A Preferred Shares, nominal value NIS 0.05 per
share (the "Preferred Shares") in a private placement (the "Private Placement
Transaction");
F. In connection with entering into the Private Placement Transaction,
the Company is entering into a Registration Rights Agreement, dated as of the
date hereof, a copy of which is attached hereto as Exhibit B (the "Preferred
RRA") granting the purchasers of the Preferred Shares registration rights as to
the Ordinary Shares issuable upon conversion of the Preferred Shares;
G. The Company and the Investor desire to enter into this Agreement,
pursuant to which upon satisfaction of certain conditions, among other things,
(i) the Company will prepay the entire outstanding principal amount of the
Investor's Initial Notes for a cash payment equal to [US$800,000] [US$500,000]
[US$700,000] [US$500,000] [US$500,000], plus accrued and unpaid interest on the
Initial Notes through the date of redemption (the "Investor Redemption Amount");
(ii) the Investor shall exchange its Purchase Rights for warrants in the form
attached hereto as Exhibit C to acquire at an exercise price of US$0.90 up to
[888,889] [555,556] [777,778] [555,556] [555,556] Ordinary Shares (as exercised,
"Replacement Warrant Shares") (each, a "Replacement Warrant" and together with
any warrants issued in replacement thereof in accordance with the terms thereof
and any warrants issued to any Other Investor in exchange for the termination of
their respective Purchase Rights, the "Replacement Warrants") and (iii) the
Company shall issue to the Investor a number of Preferred Shares determined by
dividing [US$120,000] [US$75,000] [US$105,000] [US$75,000] [US$75,000] by the
Purchase Price for each Preferred Share as set forth in Section 1(a)(iii) of the
Preferred SPA (the "Investor Preferred Shares");
H. The parties hereto desire that the Replacement Warrant Shares
either be covered by an amendment or supplement to the existing Registration
Statement (as defined in the Registration Rights Agreement) (File No.
333-111734) (the "Current Registration Statement") covering the Ordinary Shares
underlying the Notes or by registration rights terms substantially identical to
those set forth in the Registration Rights Agreement;
I. The Company and the Investors desire to terminate the Security
Agreements and in connection therewith to have the Investors release to the
Company all of the Collateral in the possession of the Collateral Agent and
terminate the financing statements related to the Collateral (as all such
capitalized terms are defined in the Security Agreements);
J. The exchange of the Initial Notes and the Purchase Rights for the
Replacement Warrants and the Investor Preferred Shares is being made in reliance
upon the exemption from registration provided by Section 3(a)(9) of the 1933
Act; and
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K. Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings ascribed to them in the November SPA.
NOW, THEREFORE, the Company and the Investor hereby agree as follows:
1. REDEMPTION OF INITIAL NOTES; EXCHANGE OF PURCHASE RIGHTS.
---------------------------------------------------------
(a) Redemption and Exchange. Subject to satisfaction (or waiver)
of the conditions set forth in Sections 5 and 6, the Company shall at the
Closing (as defined below), in exchange for the Investor surrendering to the
Company its Initial Notes and cancellation of the Purchase Rights, deliver to
the Investor an amount equal to the Investor Redemption Amount, the Replacement
Warrants and the Investor Preferred Shares.
(b) Termination of Security Agreements and Release of
Collateral. At the Closing, the parties hereto will take all actions necessary
such that the Security Agreements shall be terminated, including, without
limitation, the release to the Grantor of any Collateral held by the Collateral
Agent and the filing of any terminations to financing statements.
(c) Closing Date. The date and time of the Closing (the "Closing
Date") shall be at the time of the closing under the Preferred SPA as set forth
in Section 1(a)(i) of the Preferred SPA, subject to notification of satisfaction
(or waiver) of the conditions to the Closing set forth in Sections 5 and 6 below
(or such later date as is mutually agreed to by the Company and the Investor).
The Closing shall occur on the Closing Date at the offices of Xxxxxxx Xxxx &
Xxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
(d) Form of Payment. On the Closing Date, (i) the Company (A)
shall pay to the Investor the Investor Redemption Amount, by wire transfer of
immediately available funds in accordance with the Investor's written wire
instructions, (B) shall issue and deliver to the Investor the Replacement
Warrants, duly executed on behalf of the Company and registered in the name of
the Investor or its designee, and (C) shall issue and deliver to the Investor
stock certificates representing the Investor Preferred Shares and (ii) the
Investor shall (A) take such action as is necessary to cause to terminate the
Security Agreements and (B) deliver to the Company the Investor's Initial Notes
for cancellation.
2. AMENDMENTS TO TRANSACTION DOCUMENTS.
------------------------------------
(a) November SPA. The November SPA is hereby amended as follows:
(i) The defined term "Additional Warrant" is hereby
amended to mean the "Replacement Warrant";
(ii) The defined term "Additional Warrant Shares" is
hereby amended to mean the "Replacement Warrant Shares";
(iii) Sections 1(a)(ii), 1(c), 6(b) and 7(b) are hereby
deleted in their entirety;
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(iv) The defined term "Transaction Documents" is hereby
amended to include this Agreement, the Replacement Warrants and the Amended
and Restated Articles of Association of the Company (or any other
organizational document) setting forth the terms, preferences and rights of
the Preferred Shares; and
(v) Section 4(m) of the May SPA is hereby deleted in
its entirety.
(b) Registration Rights Agreement. The Registration Rights
Agreement is hereby amended as follows:
(i) The definition of "Additional Warrants" is hereby
amended to mean the Replacement Warrants.
(ii) The definition of "Additional Warrant Shares" is
hereby amended to mean the Replacement Warrant Shares.
(iii) The definition of "Additional Registrable
Securities" is hereby amended to mean the Replacement Warrant Shares issued
or issuable upon exercise of the Replacement Warrants, the Ordinary Shares
issuable upon conversion of the Investor Preferred Shares and any share
capital of the Company issued or issuable with respect to the Replacement
Warrant Shares, the Replacement Warrants or the Investor Preferred Shares
as a result of any share split, share dividend, recapitalization, exchange
or similar event or otherwise, without regard to any limitations on
exercise of the Replacement Warrants or the Investor Preferred Shares.
(iv) Section 2(b) is hereby amended and restated as
follows:
The Company shall prepare, and, as soon as practicable
but in no event later than 30 days after the Closing
Date (as such term is defined in the Amendment,
Redemption and Exchange Agreements, dated October 31,
2004, by and between the Company and each of the
Investors) (the "Additional Filing Deadline"), file
with the SEC an Additional Registration Statement on
Form F-3 covering the resale of all of the Additional
Registrable Securities. In the event that Form F-3 is
unavailable for such a registration, the Company shall
use such other form as is available for such a
registration, subject to the provisions of Section
2(e). Each Additional Registration Statement prepared
pursuant hereto shall register for resale at least that
number of Ordinary Shares equal to the product of (x)
1.3 and (y) the number Additional Registrable
Securities as of the trading day immediately preceding
the date the Additional Registration Statement is
initially filed with the SEC, subject to adjustment as
provided in Section 2(f). Each Additional Registration
Statement shall contain (except if otherwise directed
by the holders of at least a majority of the
Registrable Securities) the "Selling Shareholders"
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section in substantially the form attached hereto as
Exhibit B and the "Plan of Distribution" attached
hereto as Exhibit B. The Company shall use its best
efforts to have each Additional Registration Statement
declared effective by the SEC as soon as practicable,
but in no event later than the date which is 120 days
after the aforementioned Closing Date (each, an
"Additional Effectiveness Deadline").
(v) Section 2(f) is hereby amended to add the
following sentence at the end of thereof:
Notwithstanding anything in this Agreement to the
contrary, the Registration Delay Payments (as defined
in the Registration Rights Agreement) shall not exceed
$200,000 in the aggregate. Notwithstanding anything
herein to the contrary, such Registration Delay
Payments shall be the exclusive monetary remedy of any
holder by reason of a delay in or reduction of its
ability to sell the underlying Ordinary Shares.
Section 5 is hereby amended to delete the words "and
$5,000 for each Additional Registration Statement" from
the last sentence thereof.
(c) From the date of execution of the definitive Preferred SPA,
which shall take place no later than November 1, 2004, until the earlier of (i)
the Closing Date and (ii) December 14, 2004, the Investor agrees:
(i) to waive all restrictions and rights under
Sections 4(q) and 4(n) of the November SPA and May SPA,
respectively, insofar as these relate to the Private Placement
Transaction; and
(ii) not to exercise its Purchase Rights.
(d) In the event that the Closing does not occur due to the
Company's or the Investor's failure to satisfy the conditions set forth in
Sections 5 and 6 hereof (and the nonbreaching party 's failure to waive such
unsatisfied conditions (s)), the nonbreaching party shall have the option to
terminate this Agreement. Upon such termination, the terms hereof shall be null
and void and the parties shall continue to comply with all terms and conditions
of the Transaction Documents, as in effect prior to the execution of this
Agreement.
3. REPRESENTATIONS AND WARRANTIES
------------------------------
(a) Investor Bring Down. The Investor hereby represents and
warrants as to itself only as set forth in Section 2(a)-(g) and Section 2(h) and
(i) (as to this Agreement) of the November SPA as if such representations and
warranties were made as of the date hereof and set forth in their entirety in
this Agreement. Such representations and warranties in the November SPA to the
transactions thereunder and the securities issued thereby are hereby deemed for
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purposes of this Agreement to be references to the transactions hereunder and
the issuance of the securities hereby.
(b) The investor hereby represents and warrants as to itself
only:
(i) The Investor was not formed for the specific
purpose of acquiring the securities; and
(ii) The Investor, either alone or together with its
representatives, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits
and risks of the prospective investment in the securities, and has so
evaluated the merits and risks of such investment. The Investor is able to
bear the economic risk of an investment in the securities and, at the
present time, is able to afford a complete loss of such investment.
(c) Company Bring Down. The Company represents and warrants to
the Investor as set forth in Section 3 of the November SPA and in Section 3 of
the Preferred SPA as if such representations and warranties were made as of the
date hereof and set forth in their entirety in this Agreement; provided that the
Schedules to the November SPA are replaced in their entirety by the Schedules
attached to this Agreement (the "New Schedules") and the representations and
warranties in the November SPA are qualified in their entirety by the New
Schedules (regardless of whether such representations and warranties provide for
a Schedule).
4. CERTAIN COVENANTS
-----------------
(a) Termination of Security Agreements. At the Closing, the
Security Agreements shall be deemed terminated, and all terms and references
thereto in the November SPA shall be deemed null and void.
(b) Disclosure of Transactions and Other Material Information.
On or before the filing the 6-K Filing pursuant to Section 4(i) of the Preferred
SPA, which shall take place no later than November 4, 2004,, the Company shall
file a Current Report on Form 6-K describing the terms of the transactions
contemplated by this Agreement and by the documents relating to the redemption
and exchange of the Investor's Initial Notes and exchange of the Investor's
Purchase Rights on the Closing Date in the form required by the 1934 Act, and
attaching the material transaction documents (including, without limitation,
this Agreement (and all schedules to this Agreement), and the form of the
Replacement Warrants) as exhibits to such filing (including all attachments, the
"6-K Filing", and the description and attachments, the "6-K Materials"). The 6-K
Materials shall be subject to the Investor's prior approval, not to be
unreasonably withheld or delayed. From and after the filing of the 6-K Filing
with the SEC, the Investor shall not be in possession of any material, nonpublic
information received from the Company, any of its Subsidiaries or any of its
respective officers, directors, employees or agents, that is not disclosed in
the 6-K Filing. The Company shall not, and shall cause each of its Subsidiaries
and its and each of their respective officers, directors, employees and agents,
not to, provide the Investor with any material nonpublic information regarding
the Company or any of its Subsidiaries from and after the filing of the 6-K
Filing with the SEC without the express written consent of the Investor. In the
event of a breach of the foregoing covenant by the Company, any of its
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Subsidiaries, or any of its or their respective officers, directors, employees
and agents, in addition to any other remedy provided herein or in the
Transaction Documents, the Investor shall have the right to make a public
disclosure, in the form of a press release, public advertisement or otherwise,
of the 6-K Materials without the prior approval by the Company, its
Subsidiaries, or any of its or their respective officers, directors, employees
or agents. Provided that the disclosure is made in good faith and reflects
material nonpublic information received by the Investor from the Company, the
Investor shall not have any liability to the Company, its Subsidiaries, or any
of its or their respective officers, directors, employees, shareholders or
agents for any such disclosure. Subject to the foregoing, neither the Company
nor the Investor shall issue any press releases or any other public statements
with respect to the transactions contemplated hereby; provided, however, that
the Company shall be entitled, with the prior approval of the Investor (not to
be unreasonably withheld or delayed), to make any press release or other public
disclosure with respect to such transactions (i) in substantial conformity with
the 6-K Filing and contemporaneously therewith and (ii) as is required by (or
reasonably determined by the Company to be required by) applicable law and
regulations, including the applicable rules and regulations of the Principal
Market (provided that in the case of clause (i) the Investor shall be consulted
by the Company (although the consent of the Investor shall not be required) in
connection with any such press release or other public disclosure prior to its
release).
(c) Fees and Expenses. Except as otherwise set forth in this
Agreement, each party shall pay the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such
party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement. The Company shall pay all stamp and other taxes
and duties levied in connection with the sale of the Replacement Warrants and
Investor Preferred Shares.
5. CONDITIONS TO COMPANY'S OBLIGATIONS HEREUNDER.
----------------------------------------------
The obligations of the Company hereunder are subject to the
satisfaction of each of the following conditions, provided that these conditions
are for the Company's sole benefit and may be waived by the Company at any time
in its sole discretion by providing the Investor with prior written notice
thereof:
(a) The Investor shall have executed this Agreement and
delivered the same to the Company.
(b) The Investor shall have delivered to the Company the
Investor's Initial Notes, in furtherance of their cancellation.
(c) The representations and warranties of the Investor shall be
true and correct as of the date when made and as of the Closing Date as though
made at that time (except for representations and warranties that speak as of a
specific date), and such Investor shall have performed, satisfied and complied
in all material respects with the covenants, agreements and conditions required
by this Agreement to be performed, satisfied or complied with by such Investor
at or prior to the Closing Date.
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(d) The Company shall have entered into separate but
substantially identical redemption, amendment and exchange agreements with each
of the Other Investors and all conditions to the closings contemplated by such
agreements shall have been satisfied or waived.
(e) The Company shall have received Shareholder Approval, as
defined under the Preferred SPA, and any required approvals from the Office of
Chief Scientist in the Israeli Ministry of Industry and Trade (the "OCS") and
the Israel Investment Center.
(f) The Investor shall have delivered to the Company such other
documents relating to the transactions contemplated by this Agreement as the
Company or its counsel may reasonably request.
6. CONDITIONS TO INVESTOR'S OBLIGATIONS HEREUNDER.
-----------------------------------------------
The obligations of the Investor hereunder are subject to the
satisfaction of each of the following conditions, provided that these conditions
are for the Investor's sole benefit and may be waived by the Investor at any
time in its sole discretion by providing the Company with prior written notice
thereof:
(a) The Company shall have executed and delivered to such
Investor (i) this Agreement, (ii) the Replacement Warrants (in such
denominations as such Investor shall request) and (iii) the Investor Preferred
Shares.
(b) The Company shall have delivered or caused to be delivered
to the Investor the Investor Redemption Amount by wire transfer of immediately
available funds pursuant to the wire instructions provided by the Investor.
(c) The Investor shall have received and been named in all of
the closing deliverables pursuant to the Preferred SPA in a manner identical to
the buyers set forth in the Preferred SPA, provided that such deliverables will
not include any rights to the issuance of Preferred Shares pursuant to the
Private Placement Transaction.
(d) The Company shall have delivered to the Investor a
notification from Israel counsel to the Company that it has filed with the
Israel Registrar of Companies an Amended and Restated Articles of Association,
setting forth the relative terms, preferences and rights of the Preferred
Shares, in the form attached to the Preferred SPA.
(e) The Board of Directors of the Company shall have adopted
resolutions consistent with Section 3(b) of the November SPA after giving effect
to the amendments contemplated by this Agreement.
(f) The Company shall have delivered to the Investor a
certificate, executed by the Secretary of the Company and dated as of the date
hereof, as to (i) the resolutions authorizing the transactions set froth herein
as adopted by the Company's Board of Directors (the "Resolutions"), and (ii) the
Amended and Restated Articles of Association, each as in effect at the Closing
Date, in the form attached hereto as Exhibit D.
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(g) The representations and warranties of the Company shall be
true and correct as of the date when made and as of the Closing Date as though
made at that time (except for representations and warranties that speak as of a
specific date) and the Company shall have performed, satisfied and complied in
all material respects with the covenants, agreements and conditions required by
the Transaction Documents to be performed, satisfied or complied with by the
Company at or prior to the Closing Date. The Investor shall have received a
certificate, executed by the Chief Executive Officer of the Company, dated as of
the Closing Date, to the foregoing effect and as to such other matters as may be
reasonably requested by the Investor in the form attached hereto as Exhibit E.
(h) The Company shall have obtained all governmental, regulatory
or third party consents and approvals, if any, necessary for the issuance of the
Replacement Warrants and the Investor Preferred Shares.
(i) The Company shall have delivered to the Investor such other
documents relating to the transactions contemplated by this Agreement as the
Investor or its counsel may reasonably request.
(j) The Company shall have met all conditions necessary to
consummate the Private Placement Transaction, which will result in gross
proceeds to the Company of not less than US$ 2,000,000, after the consummation
of the transactions contemplated by this Agreement.
7. MISCELLANEOUS.
--------------
(a) Governing Law; Jurisdiction; Jury Trial. All questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the State of New
York. Each party hereby irrevocably submits to the non-exclusive jurisdiction of
the state and federal courts sitting in The City of New York, Borough of
Manhattan, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
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(b) Counterparts. This Agreement may be executed in one or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.
(c) Headings. The headings of this Agreement are for convenience
of reference and shall not form part of, or affect the interpretation of, this
Agreement.
(d) Severability. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
(e) Entire Agreement; Effect on Prior Agreements; Amendments.
Except for the Transaction Documents (to the extent any such Transaction
Document is not cancelled or amended by this Agreement), this Agreement
supersedes all other prior oral or written agreements between the Investor, the
Company, their affiliates and Persons acting on their behalf with respect to the
matters discussed herein, and this Agreement and the instruments referenced
herein contain the entire understanding of the parties with respect to the
matters covered herein and therein and, except as specifically set forth herein
or therein, neither the Company nor the Investor makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be amended other than by an instrument in writing signed by
the Company and the Investor and to the extent that Other Investors may be
affected thereby, by holders of Replacement Warrants representing at least
two-thirds of the aggregate Replacement Warrant Shares issuable upon exercise
thereof; provided, however, to the extent that such amendment relates to the
rights and/or obligations associated with the Investor Preferred shares, the
terms of the Amended and Restated Articles of Association shall govern. No
provision hereof may be waived other than by an instrument in writing signed by
the party against whom enforcement is sought. The Company has not, directly or
indirectly, made any agreements with any of the Investors relating to the terms
or conditions of the transactions contemplated hereby except as set forth or
referenced herein as amended or cancelled by this Agreement.
(f) Notices. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered: (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically or electronically
generated and kept on file by the sending party); or (iii) one Business Day
after deposit with an overnight courier service, in each case properly addressed
to the party to receive the same. The addresses and facsimile numbers for such
communications shall be:
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If to the Company:
Commtouch Software Ltd.
0X Xxxxxxx Xxxxxx
Xxxxx Xxxxxxxxxx Xxxx
X.X. Xxx 0000
Xxxxxxx 00000
Xxxxxx
Telephone: (000) 000-0-000-0000
Facsimile: (000) 000-0-000-0000
Attention: Chief Executive Officer
with a copy to:
Commtouch Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxx, Esq.
and
Pillsbury Winthrop LLP
0000 Xxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxx, Esq.
If to the Investor:
To the address set forth under such Investor's name on
the signature page hereof.
with a copy to (for informational purposes only):
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxx, Esq.
or to such other address and/or facsimile number and/or to the attention of such
other Person as the recipient party has specified by written notice given to
each other party five (5) days prior to the effectiveness of such change.
Written confirmation of receipt (A) given by the recipient of such notice,
consent, waiver or other communication, (B) mechanically or electronically
generated by the sender's facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission or (C)
provided by an overnight courier service shall be rebuttable evidence of
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personal service, receipt by facsimile or receipt from an overnight courier
service in accordance with clause (i), (ii) or (iii) above, respectively.
The Company hereby irrevocably appoints Xxxx Xxxxx, Esq. at Commtouch
Inc, 0000 Xxxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxx Xxxx, Xxxxxxxxxx 00000,
Telephone: (000) 000-0000, Facsimile: (000) 000-0000, as its agent for the
receipt of service of process in connection with any action pursuant to any
Transaction Document in the United States. The Company agrees that any document
may be effectively served on it in connection with any action, suit or
proceeding in the United States by service on its agents.
Any document shall be deemed to have been duly served if marked for
the attention of the agent at its address (as set out above) or such other
address in the United States as may be notified to the party wishing to serve
the document and delivered in accordance with the notice provisions set forth in
this Section 7(f).
If the Company's agent at any time ceases for any reason to act as
such, the Company shall appoint a replacement agent having an address for
service in the United States and shall notify each Buyer in writing of the name
and address of the replacement agent. Failing such appointment and notification,
each Buyer shall be entitled by notice to the Company to appoint a replacement
agent to act on the Company's behalf. The provisions of this Section 7(f)
applying to service on an agent apply equally to service on a replacement agent.
(g) Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
assigns, including any purchasers of the Replacement Warrants. The Company shall
not assign this Agreement or any rights or obligations hereunder without the
prior written consent of the Investor, except pursuant to an Organic Change (as
defined in Section 4(b) of the Warrants) with respect to which the Company is in
compliance with Section 4(b) of the Warrants. The Investor may assign some or
all of its rights hereunder without the consent of the Company, in which event
such assignee shall be deemed to be a Investor hereunder with respect to such
assigned rights, but only if the assignee has assumed all obligations (as well
as all rights) of the assignor/Investor.
(h) No Third Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
(i) Survival. The representations and warranties of the Company
and the Investor contained herein, and the agreements and covenants set forth
herein, shall survive the Closing.
(j) Further Assurances. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
12
(k) No Strict Construction. The language used in this Agreement
will be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.
(l) Remedies. The Investor and each holder of the Securities
shall have all rights and remedies set forth in the Transaction Documents and
all rights and remedies which such holders have been granted at any time under
any other agreement or contract and all of the rights which such holders have
under any law; provided, however, that, except as expressly provided herein, the
Investor shall not be deemed to have any third party beneficiary rights under
the Preferred SPA or the Preferred RRA. Any Person having any rights under any
provision of this Agreement shall be entitled to enforce such rights
specifically (without posting a bond or other security), to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law. Furthermore, the Company recognizes that in the
event that it fails to perform, observe, or discharge any or all of its
obligations under this Agreement, any remedy at law may prove to be inadequate
relief to the Investor. The Company therefore agrees that the Investor shall be
entitled to seek temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages and without posting a bond or
other security.
(m) Tax Adjustments.
(i) All payments by the Company to the Investor and
any of their respective assignees in regard or in connection with this
Agreement, the other Transaction Documents or any of the Replacement
Warrants, the Replacement Warrant Shares, the Investor Preferred Shares or
the Ordinary Shares issuable upon conversion of the Investor Preferred
Shares shall be made in freely transferable United States Dollars and free
and clear of and without deduction for any present or future income,
excise, stamp, documentary, property or franchise taxes and other taxes,
levies, fees, duties, withholdings or other charges of any nature
whatsoever ("Taxes"), whether of any governmental agency or authority in
Israel or otherwise, and including any stamp taxes or any other similar
taxes which may be required in Israel for enforcement purposes or any stamp
tax due upon issuance of the shares underlying the Investor Preferred
Shares and the Replacement Warrants. In the event that any withholding or
deduction from any interest, distribution or payment to be made by the
Company hereunder, the other Transaction Documents or any of the
Replacement Warrants, the Replacement Warrant Shares, the Investor
Preferred Shares or the Ordinary Shares issuable upon conversion of the
Investor Preferred Shares is required in respect of any Taxes pursuant to
any applicable law, rule or regulation, then the Company shall promptly:
(a) pay directly or caused to be paid directly to the
relevant authority the full amount required to be so withheld or
deducted;
(b) forward to the Investor an official receipt or
other documentation satisfactory to the Investor evidencing such
payment to such authority; and
(c) pay to the Investor such additional amount or
amounts as is necessary to ensure that the net amount actually
13
received by the Investor will equal the full amount the Investor would
have received had no such withholding or deduction been required.
(ii) The Company further agrees that if any present or
future taxes, fees, duties, withholdings or other charges of any nature
whatsoever imposed by any taxing authority, including franchise taxes and
taxes imposed on or measured by the Investor's net income or receipts
("Further Taxes") are directly or indirectly asserted against the Investor
with respect to any payment of any additional amount described in paragraph
(iii) and received by the Investor hereunder, the Investor may pay such
Further Taxes and the Company will promptly pay to the Investor such
additional amounts (including all penalties, interest or expenses) that the
Investor specifies as necessary to preserve the after-tax return that the
Investor would have received if such Taxes or Further Taxes had not been
imposed.
(iii) If the Company fails to pay any Taxes when due to
the appropriate taxing authority or fails to remit to the Investor the
required receipts or other required documentary evidence, the Company shall
indemnify the Investor for any incremental Taxes, interest, penalties,
expenses and costs that may become payable or are incurred by the Investor
as a result of any such failure. In addition to the foregoing, the Company
hereby indemnifies and holds the Investor harmless for any and all payments
made by any Investor of any Taxes and Further Taxes and for any liabilities
(including penalties, interest, legal costs and expenses) incurred by the
Investor or which may be imposed on any Investor in connection therewith or
any delays in their payment.
[Signature Page Follows]
IN WITNESS WHEREOF, the Investor and the Company have caused this
Redemption, Amendment and Exchange Agreement to be duly executed as of the date
first written above.
COMPANY: INVESTOR:
COMMTOUCH SOFTWARE LTD. SMITHFIELD FIDUCIARY LLC
By: /s/ XXXXXX XXXXXX By: /s/ XXXX X. CHILL
--------------------------------- ----------------------------------
Name: Xxxxxx Xxxxxx Name: Xxxx X. Chill
Title: Chief Executive Officer Title: Authorized Signatory
OMICRON MASTER TRUST
By: /s/ XXXXX XXXXXXXXX
----------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Managing Partner
CRANSHIRE CAPITAL L.P.
By: /s/ XXXXXXXX XXXXX
----------------------------------
Name: Xxxxxxxx Xxxxx
Title: President,
Downsview Capital
The General Partner
VERTICAL VENTURES, LLC
By: /s/ XXXXXX XXXXXXXXX
----------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Partner
ISRAEL SEED IV, L.P.
By: /s/ XXXX XXXXX
----------------------------------
Name: Xxxx Xxxxx
Title: Director,
Israel Venture Partners
2000 Ltd.
Address for Notice:
[______________]
[______________]
[______________]
Attention: ______________
Facsimile: (___) ___-____
Telephone: (___) ___-____
IROQUOIS CAPITAL LP [only for
purposes of agreement to Sections
2(a)(5) and 2(c)(i) above]
By: /s/ XXXXXX XXXXXXXXX
----------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Partner
