Exhibit 1
June 1, 2001
Rideau Ltd.
C/o Eurodutch Company
Charlotte House
Charlotte Street
Nassau, Bahamas
Dear Sirs:
This letter sets forth the agreement of Rideau Ltd. the Purchaser and
Commtouch Software Ltd the Company regarding the purchase by the Purchaser from
the Company of the Company's Ordinary Shares (the "Ordinary Shares") on the date
hereof. The parties agree as follows:
1. This Agreement relates to the purchase by the Purchaser of 315,789
of the Company's Ordinary Shares at $0.95 per share, for an aggregate
purchase price of $300,000, which purchase is being settled by the
parties on Monday, June 4, 2001.
2. The Company is a corporation duly incorporated and validly existing
under the laws of Israel. The Company has the requisite corporate power
and authority to enter into and perform this Agreement and to issue and
sell the Shares in accordance with the terms hereof. The execution,
delivery and performance of this Agreement by the Company and the
consummation by it of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action. A copy
of the duly executed resolutions of the Board of Directors of the
Company is attached hereto as Exhibit "B". This Agreement has been duly
executed and delivered on behalf of the Company by a duly authorized
officer. A copy of a duly executed incumbency certificate of the
Company's duly authorized officers is attached hereto as Exhibit "C".
This Agreement constitutes, or shall constitute when executed and
delivered, a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms.
3. The Shares to be issued under this Agreement have been duly
authorized by all necessary corporate action and, when paid for or
issued in accordance with the terms hereof, the Shares shall be validly
issued and outstanding, fully paid and nonassessable, and the Purchaser
shall be entitled to all rights accorded to a holder of Ordinary
Shares.
4. The Company represents and warrants that (a) the Ordinary Shares
issued by the Company to the Purchaser have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), pursuant to
a registration statement on Form F-3, Commission File Number 333-46192
(the "Registration Statement"); and (b) the Company has filed a
prospectus supplement to the Registration Statement in connection with
this transaction. Copies of the Registration Statement and the
Prospectus Supplement, each as filed and (in the case of the
Registration Statement) declared effective by the Securities and
Exchange Commission, are annexed hereto as Exhibits "D" and "E",
respectively.
5. The Company has taken all action necessary on its part to list the
Ordinary Shares for trading on the NASDAQ system or any relevant market
or system, if applicable. A copy of the Company's listing application
with NASDAQ or any other relevant market or system is attached hereto
as Exhibit "F."
6. The Company will continue to take all action necessary to continue
the listing or trading of its Ordinary Shares on the NASDAQ National
Market or any relevant market or system, if applicable, and will comply
in all respects with the Company's reporting, listing (including,
without limitation, the listing of the Shares purchased by the
Purchaser) or other obligations under the rules of the NASDAQ National
Market or any relevant market or system.
7. The Company has delivered or made available to the Purchaser true
and complete copies of the filings filed with the Securities and
Exchange Commission under Sections 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") since May 29,
2001 (collectively, the "Commission Filings"). The Company has not
provided to the Purchaser any information which, according to
applicable law, rule or regulation, should have been disclosed publicly
by the Company but which has not been so disclosed, other than with
respect to the transactions contemplated by this Agreement. As of their
respective dates or as subsequently amended, each of the Commission
Filings complied in all material respects with the requirements of the
Exchange Act and the rules and regulations of the Commission
promulgated thereunder and, as of their respective dates, none of the
Commission Filings referred to above contained any untrue statement of
a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
The financial statements of the Company included in the Commission
Filings comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the
Commission or other applicable rules and regulations with respect
thereto. No event or circumstance has occurred or exists with respect
to the Company or its subsidiaries or their respective businesses,
properties, prospects, operations or financial condition, which, under
applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly
announced or disclosed.
8. The Company will promptly notify the Purchaser of (a) any stop
order or other suspension of the effectiveness of the Registration
Statement and (b) the happening of any event as a result of which the
prospectus included in the Registration Statement includes an untrue
statement of a material fact or omits to state a material fact required
to be stated therein, or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
9. The Company may not issue a press release or otherwise make a
public statement or announcement with respect to the completion of the
transaction contemplated hereby without the prior consent of the
Purchaser , unless otherwise required by law in which case the company
will consult with the Purchaser prior to any such disclosure.
10. The Company will indemnify the Purchaser as provided in Exhibit "A"
attached hereto against liability with respect to the Registration
Statement (including, without limitation, the Prospectus Supplement)
relating to the Shares which were sold by the Company to the Purchaser.
For purposes of said Exhibit A, capitalized terms used therein without
definition shall have the same meanings therein as are ascribed to said
terms in this Agreement.
11. This Agreement and the legal relations between the parties hereto
with respect to any purchase of Ordinary Shares by the Purchaser
hereunder shall be governed and construed in accordance with the
substantive laws of the State of New York without giving effect to the
conflicts of law principles thereunder.
Delivery of an executed copy of a signature page to this Agreement by
facsimile transmission shall be effective as delivery of a manually executed
copy of this Agreement and shall be effective and enforceable as the original.
Please execute a copy of this letter which, when executed by the
Purchaser, will constitute an Agreement between the Company and the Purchaser.
Very truly yours,
COMMTOUCH SOFTWARE, LTD.
By:
-----------------------------
Name:
Title:
AGREED TO:
PURCHASER:
RIDEAU LTD.
By:
-----------------------------
Name:
Title:
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EXHIBIT 'A'
TERMS OF INDEMNIFICATION
(a) Indemnification by the Company. The Company will indemnify and hold
harmless the Purchaser and each person, if any, who controls the
Purchaser within the meaning of Section 15 of the Securities Act of
1933, as amended (the "Securities Act"); or Section 20(a) of the
Securities Exchange Act, as amended (the "Exchange Act"); from and
against any losses, claims, damages, liabilities, costs and expenses
(including, without limitation, reasonable costs of defense and
investigation and all reasonable attorneys' fees and expenses) to which
the Purchaser and each person, if any, who controls the Purchaser may
become subject, under the Securities Act or otherwise, insofar as such
losses, claims, damages, liabilities and expenses (or actions in
respect thereof) arise out of; or are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained, or
incorporated by reference, in the Registration Statement relating to
Shares being sold to the Purchaser (including the prospectus dated
____________________, 2000, the prospectus supplement dated
_________________ (the "Prospectus Supplement") which are a part of the
Registration Statement), or any amendment or supplement to the
Registration Statement, or (ii) the omission or alleged omission to
state in that Registration Statement or any document incorporated by
reference in the Registration Statement, a material fact required to be
stated therein or necessary to make the statements therein not
misleading (an "Indemnifiable Matter").
The Company will reimburse the Purchaser and each such controlling
person promptly upon demand for any legal or other costs or expenses
reasonably incurred by the Purchaser or the controlling person in
investigating, defending against, or preparing to defend against any
claim relating to an Indemnifiable Matter, except that the Company will
not be liable to the extent such claim, suit or proceeding which
results in a loss, claim, damage, liability or expense arises out of,
or is based upon, an untrue statement, alleged untrue statement,
omission or alleged omission, included in any Prospectus or any
amendment or supplement to the Prospectus in reliance upon, and in
conformity with, written information furnished by the Purchaser to the
Company for inclusion therein provided that the Company shall not be
liable to provide indemnification to the extent that a court of
competent jurisdiction shall have determined by a final judgment (with
no appeals available) that such loss, claim, damage, liability or
action resulted directly from any such acts or failures to act,
undertaken or omitted to be taken by the Purchaser or such person
through its bad faith or willful misconduct; and provided, further,
that with respect to the Prospectus, the foregoing indemnity shall not
inure to the benefit of the Purchaser or any such person from whom the
person asserting any loss, claim, damage, liability or expense
purchased ordinary shares if copies of the Prospectus were timely
delivered to the Purchaser pursuant hereto and a copy of the Prospectus
(as then amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) was not sent or given by or on
behalf of the Purchaser or any such person to such person, if required
by law so to have been delivered, at or prior to the written
confirmation of the sale of the Ordinary Shares to such person, and if
the Prospectus (as so amended or supplemented) would have cured the
defect giving rise to such loss, claim, damage, liability or expense.
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Indemnification by the Purchaser. The Purchaser will indemnify and hold
harmless the Company, each of its directors and officers, and each
person, if any, who controls the Company within the meaning of Section
15 of the Securities Act or Section 20(a) of the Exchange Act from and
against any losses, claims, damages, liabilities and expenses
(including reasonable costs of defense and investigation and all
attorneys' fees) to which the Company and each director, officer and
person, if any, who controls the Company may become subject, under the
Securities Act or otherwise, insofar as such losses, claims, damages,
liabilities and expenses (or actions in respect thereof) arise out of
or are based upon, (i) any untrue statement or alleged untrue statement
of a material fact contained, or incorporated by reference, in the
Registration Statement or any Prospectus or Prospectus Supplement or
any amendment or supplement to it, but only to the extent, the untrue
statement, alleged untrue statement, was made in reliance upon, and in
conformity with, written information furnished by the Purchaser to the
Company for inclusion in the Registration Statement, the Prospectus or
Prospectus Supplement or an amendment or supplement thereto, or any
document incorporated by reference in the Registration Statement, (ii)
the omission or alleged omission to state in the Registration Statement
or any Prospectus or Prospectus Supplement or any amendment or
supplement to it, or any document incorporated by reference in the
Registration Statement, a material fact required to be stated therein
or necessary to make the statements therein not misleading, to the
extent, but only to the extent, the untrue statement, alleged untrue
statement, omission or alleged omission was made in reliance upon, and
in conformity with, written information furnished by the Purchaser to
the Company for inclusion in the Registration Statement, the Prospectus
or Prospectus Supplement or an amendment or supplement thereto, or any
document incorporated by reference in the Registration Statement, (iii)
any acts or failures to act, undertaken or omitted to be taken by the
Purchaser or such person through its bad faith or willful misconduct,
to the extent that a court of competent jurisdiction shall have so
determined by a final judgment (with no appeals available), and (iv)
with respect to the Prospectus, if copies of the Prospectus were timely
delivered to the Purchaser pursuant hereto and a copy of the Prospectus
(as then amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) was not sent or given by or on
behalf of the Purchaser or any such person to such person, if required
by law so to have been delivered, at or prior to the written
confirmation of the sale of the Common Stock to such person, and if the
Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such loss, claim, damage, liability or expense .
(b) Indemnification Procedures. Promptly after a person receives notice of
a claim or the commencement of an action, suit or proceeding for which
the person intends to seek indemnification under Paragraph (a), the
person will notify the indemnifying party in writing of the claim or
commencement of the action, suit or proceeding, but failure to notify
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the indemnifying party will not relieve the indemnifying party from
liability under Paragraph (a), except to the extent the indemnifying
party has been materially prejudiced by the failure to give notice. The
indemnifying party will be entitled to participate in the defense of
any claim, action, suit or proceeding as to which indemnification is
being sought, and if the indemnifying party acknowledges in writing the
obligation to indemnify the party against whom the claim, action, suit
or proceeding is brought, the indemnifying party may (but will not be
required to) assume the defense against the claim, action, suit or
proceeding with legal counsel chosen by the indemnifying party. After
an indemnifying party notifies an indemnified party that the
indemnifying party wishes to assume the defense of a claim, action,
suit or proceeding the indemnifying party will not be liable for any
legal or other expenses incurred by the indemnified party in connection
with the defense against the claim, action, suit or proceeding, except
that if, in the opinion of legal counsel to the indemnifying party, one
or more of the indemnified parties should be separately represented in
connection with a claim, action, suit or proceeding the indemnifying
party will pay the fees and expenses of one separate counsel for the
indemnified parties. Each indemnified party, as a condition precedent
to receiving indemnification as provided in Paragraph (a), will, at the
cost and expense of the indemnifying party, cooperate in all reasonable
respects with the indemnifying party in the defense of the claim,
action, suit or proceeding as to which indemnification is sought. No
indemnifying party will be liable for any settlement of any claim,
action, suit or proceeding effected without its prior written consent.
No indemnifying party will, without the prior written consent of the
indemnified party, effect any settlement of a pending or threatened
claim, action or proceeding with respect which an indemnified party is,
or is informed that it may be, made a party and for which it would be
entitled to indemnification, unless the settlement includes an
unconditional release of the indemnified party from all liability and
claims which are the subject matter of the pending or threatened
action.
(c) Contribution. If for any reason the indemnification provided for in
this Agreement is not available to, or is not sufficient to hold
harmless, an indemnified party in respect of any loss, claim, damage,
liability, cost or expense referred to in Paragraph (a), each
indemnifying party will, in lieu of indemnifying the indemnified party,
contribute to the amount paid or payable by the indemnified party, as a
result of the loss, claim, damage, liability, cost or expense (i) in
the proportion which is appropriate to reflect the relative benefits
received by the indemnifying party, on the one hand, and by the
indemnified party, on the other hand, from the sale of stock which is
the subject of the claim, action, suit or proceeding which resulted in
the loss, claim, liability, cost or expense or (ii) if that allocation
is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits of the sale of
stock, but also the relative fault of the indemnifying party and the
indemnified party with respect to the statements or omissions which are
the subject of the claim, action, suit or proceeding that resulted in
the loss, claim, damage, liability, cost or expense as well as any
other relevant equitable considerations.
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