IncrediMail to acquire Smilebox Inc.

Under the terms of the agreement, IncrediMail will pay $25 million substantially in cash at closing, with additional payments of up to $15 million, if certain milestones and performance based conditions are met, payable in two installments on the seven and 14 months anniversary from closing.  Approximately 10% of the acquisition consideration will be held in escrow for 18 months.

Smilebox is an easy-to-use, downloadable desktop application that allows consumers to use personal photos and videos to construct one-of-a-kind creations, including: greeting cards, invitations, slideshows, scrapbooks and photo albums.  Smilebox makes adding your personal touch and connecting with family and friends easy, unique and memorable.

IncrediMail expects Smilebox to generate cash sales in excess of $15 million in 2012 and be EBITDA accretive in the second half of 2012. The Company plans to further elaborate on the acquisition as part of its second quarter 2011 earnings call. The acquisition is expected to close during the third quarter of 2011. After closing, Smilebox will continue to operate from its Redmond-based offices.