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").





{PAGE}





         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.,

2029 Stierlin Ct.,  Mountain View, CA 94043,  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.







{PAGE}





         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.





{PAGE}





         (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.







{PAGE}





         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.

Home        Intelligence        Services        Subscriptions        News        About Us

Contact Us       Terms of Use       Resend Documents       Shopping Cart

Copyright © 2008 The Consus Group LLC